The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 300,000 units with revenues of $3,300,000. Total variable costs were budgeted at $2,100,000 and fixed costs at $975,000. During the period, actual production and actual sales were 280,000 units. The actual revenues were $3,450,000. Actual variable costs were $11.50 per unit. Actual fixed costs were $1,005,000. Required: Prepare a flexible budget for Cherrylawn Corporation
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
Required:
Prepare a flexible budget for Cherrylawn Corporation.
A flexible budget is a financial plan that can adjust to changes in activity levels or volumes. Unlike a static budget that remains fixed despite actual performance, a flexible budget adapts to the actual level of activity. It is an essential tool for businesses and organizations to manage their finances in dynamic environments and make more accurate financial projections.
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