The following information has been by New Inc. in preparing its budget for November and December 2020. January (in Millions) February (in Millions) Units to be sold 180 220 Units to be produced 240 200 Direct Labor hours 480 400 Insurance of factory 400 400 Salaries : selling 260 260 Depreciation ( factory building) 200 200 Light and heat (factory) 680 600 Advertising 300 300 Indirect Factory Labor 760 660 Factory Supplies 600 500 Direct material consumption 1200 1000 Lubricants for factory machine 360 300 Calculate the following: Variable FOH Rate Total Variable FOH Total Fixed FOH
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following information has been by New Inc. in preparing its budget for November and December 2020.
|
|
January (in Millions) |
February (in Millions) |
|
Units to be sold |
180 |
220 |
|
Units to be produced |
240 |
200 |
|
Direct Labor hours |
480 |
400 |
|
Insurance of factory |
400 |
400 |
|
Salaries : selling |
260 |
260 |
|
|
200 |
200 |
|
Light and heat (factory) |
680 |
600 |
|
Advertising |
300 |
300 |
|
Indirect Factory Labor |
760 |
660 |
|
Factory Supplies |
600 |
500 |
|
Direct material consumption |
1200 |
1000 |
|
Lubricants for factory machine |
360 |
300 |
Calculate the following:
- Variable FOH Rate
- Total Variable FOH
- Total Fixed FOH
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