Calculate the sales, materials, labour, variable overheads, fixed overheads variances in as much detail as possible
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.
A company manufactures Cricket Bats. In May 2010 the budgeted sales and production were 19,000
bats and the
Std Cost Std Cost
Material (2kgs @ $5/kg) 10
Labour (3 hrs at $12/hr) 36
Marginal Cost 49
Selling Price 68
Contribution 19
Total fixed costs in the period were budgeted at $100,000 and were absorbed on the basis of labour
hours worked.
In May 2010 the following results were achieved.
40,000kg of wood were bought at a cost of $196,000, this produced 19,200 cricket bats. No
inventory of raw materials is held. The labour was paid for 62,000 hours and the total cost was
$694,000. Labour worked for 61,500 hours.
Variable overheads in the period were $67,000.
The sales price was reduced to protect the sales levels. However, only 18,000 cricket bats were sold
at an average price of $65.
Total fixed costs in May were $107,000.
Calculate the sales, materials, labour, variable overheads, fixed overheads variances in as much
detail as possible
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