Water Control, Inc. manufactures water pumps and uses a standard cost system. The standard factory overhead costs per water pump are based on direct labor hours and are shown below. Variable overhead (4 hours at $8/hour) Fixed overhead (4 hours at $5/hour) Total overhead cost per unit $32 20 $52 *Based on a capacity of 100,000 direct labor hours per month. The following additional information is available for the month of November. • 22,000 pumps were produced although 25,000 had been scheduled for production. • 94,000 direct labor hours were worked at a total cost of $940,000. • The standard direct labor rate is $9 per hour. The standard direct labor time per unit is four hours. Variable overhead costs were $740,000. • Fixed overhead costs were $540,000.
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.
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