Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected operation in the next quarter follow. Clients Revenues Eastside 25,000 $ 660,000 8,100 $ 99,000 Westside 6,250 $ 440,000 2,700 $ 198,000 Total 31,250 $ 1,100,000 10,800 $ 297,000 $ 660,000 Staff hours Staff costs General operating costs Required: a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses revenue to allocate general operating costs. b. Based on the rates computed in requirement (a), what is the expected surplus (revenues less costs) for each center?
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.
Pre-determined overhead rate
The rate that is determined by taking the proportion of total cost of overheads with respect to the desired allocation base is called as pre-determined overhead rate. This rate can be in terms of percentage or in numbers depending on the base applied for.
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