Kent Corporation developed the following budgeted costs for the current year: Direct materials P120,000 Direct Labor 330,000 Factory overhead 429,000 Total P879,000 The following activity bases were also budgeted for the year: Labor hours 9,600 Machine hours 6,000 Units to be produced 12,000 Based on the current backlog, Kent expects to produce 3,500 units during the first quarter that requires 2,600 labor hours and 1,700 machine hours. For this production, Kent incurred direct materials of P38,000 and direct labor of P94,000. Required: Calculate the predetermined overhead rate and applied overhead cost using the following application base: Physical output Percentage of direct labor cost Percentage of direct materials cost Direct labor hours Machine hours
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.
- Kent Corporation developed the following budgeted costs for the current year:
Direct materials P120,000
Direct Labor 330,000
Factory
Total P879,000
The following activity bases were also budgeted for the year:
Labor hours 9,600
Machine hours 6,000
Units to be produced 12,000
Based on the current backlog, Kent expects to produce 3,500 units during the first quarter that requires 2,600 labor hours and 1,700 machine hours. For this production, Kent incurred direct materials of P38,000 and direct labor of P94,000.
Required: Calculate the predetermined overhead rate and applied overhead cost using the following application base:
- Physical output
- Percentage of direct labor cost
- Percentage of direct materials cost
- Direct labor hours
- Machine hours
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