xed element per month Variable element per unit Revenue $ 0 $ 35.40 Direct labor $ 0
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.
Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 7,900 units, but its actual level of activity was 7,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
| Fixed element per month | Variable element per unit | |
|---|---|---|
| Revenue | $ 0 | $ 35.40 |
| Direct labor | $ 0 | $ 6.00 |
| Direct materials | 0 | 12.50 |
| Manufacturing |
36,000 | 1.70 |
| Selling and administrative expenses | 26,700 | 0.70 |
| Total expenses | $ 62,700 | $ 20.90 |
Actual results for May:
| Revenue | $ 278,900 |
|---|---|
| Direct labor | $ 47,230 |
| Direct materials | $ 101,105 |
| Manufacturing overhead | $ 49,500 |
| Selling and administrative expenses | $ 30,590 |
The direct materials in the flexible budget for May would be closest to:
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