Desmond Desmond makes a single product for which the standard cost card is as follows: £ Materials 5 kg at £1.20 per kg 6.00 Labour 3 hours at £3 per hour 9.00 Variable overhead 3 hours at £2.80 per hour 8.40 23.40 Contribution 16.60 Selling price 40.00 Budgeted sales were 10,000 but production was budgeted at 11,000 to build up inventory from the opening 500 units. Fixed overheads were budgeted at £14,000. Actual results were as follows: 11,500 items were produced and 11,000 sold for total revenue of £430,000 58,000 kg were bought and used at a total cost of £69,000 35,000 hours were worked at a cost of £110,000 Variable overhead was £97,000 and fixed overhead was £14,500 Produce an operating statement for the period which reconciles the budgeted and actual profit under a marginal costing system.
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.
Desmond
Desmond makes a single product for which the
|
|
|
£ |
|
Materials |
5 kg at £1.20 per kg |
6.00 |
|
Labour |
3 hours at £3 per hour |
9.00 |
|
Variable overhead |
3 hours at £2.80 per hour |
8.40 |
|
|
|
23.40 |
|
Contribution |
|
16.60 |
|
Selling price |
|
40.00 |
Budgeted sales were 10,000 but production was budgeted at 11,000 to build up inventory from the opening 500 units. Fixed overheads were budgeted at £14,000.
Actual results were as follows:
11,500 items were produced and 11,000 sold for total revenue of £430,000
58,000 kg were bought and used at a total cost of £69,000
35,000 hours were worked at a cost of £110,000
Variable overhead was £97,000 and fixed overhead was £14,500
Produce an operating statement for the period which reconciles the budgeted and actual profit under a marginal costing system.
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