The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 280,500 units with revenues of $3,366,000. Total variable costs were budgeted at $1,963,500 and fixed costs at $972,000. During the period, actual production and actual sales were 256,100 units. The actual revenues were $3,448,000. Actual variable costs were $5.95 per unit. Actual fixed costs were $1,002,000. Required: Prepare a profit variance analysis. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
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.
Subject: acounting
Step by step
Solved in 3 steps with 3 images
