Working: 220,800/120,000 * 119500 - 220800 1.84 x 119500 - 220800 219880 - 220800 = -920 Problem: Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.) Annual budgeted overhead costs total $792,000, of which $571,200 is fixed overhead. A total of 119,500 units using 478,000 direct labor hours were produced during the year. Actual variable overhead costs for the year were $261,300, and actual fixed overhead costs were $555,750.
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.
Why is cengage saying - 920 is not the answer to my problem
Working:
220,800/120,000 * 119500 - 220800
1.84 x 119500 - 220800
219880 - 220800 = -920
Problem: Oerstman, Inc., uses a
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