Prepare a variance analysis on the Unit Sales, Sales Price, Fixed Overhead and Administration expenses
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.
Please help
The CNC company have acess to the following information to prepare for the budget.
Direct Materials: Cost RM1 per kg, and required amount per unit is 2.5kg. The number of hours workers require to finish a product is 2 hours. The direct labor rate is RM5.00 per hour. Production also require 2 machine hours per unit.
Manufacturing
|
Variable Overheads |
Total Estimate Cost (RM) |
Allocation Basis |
|
Cleaning |
18,000.00 |
Direct Labour Hours |
|
Maintenance |
12,000.00 |
Machine Hours |
|
Supervision |
24,000.00 |
Direct Labour Hours |
The following fixed overheads were also estimated
|
Fixed Manufacturing Overheads |
Total Estimated Cost (RM) |
|
Insurance |
36,000.00 |
|
Advertising |
14,000.00 |
|
Depreciation |
10,000.00 |
|
Administration Cost |
Total Estimate Cost (RM) |
|
Managers Salary |
108,000.00 |
|
Utilities in Main Office |
12,000.00 |
The actual results of operations are as follows.
|
Units |
100,000 |
|
|
|
|
Price (RM) |
12.00 |
|
|
|
|
Sales (RM) |
|
|
|
1,200,000.00 |
|
Variable Costs |
Quantity Used |
Rate (RM) |
|
|
|
Direct Materials |
240,000 |
0.80 |
192,000.00 |
|
|
Direct Labour |
150,000 |
4.50 |
675,000.00 |
|
|
Variable Overheads |
Quantity Used |
Rate (RM) |
|
|
|
Cleaning |
150,000.00 |
0.120 |
18,000.00 |
|
|
Maintenance |
200,000.00 |
0.060 |
12,000.00 |
|
|
Supervision |
150,000.00 |
0.320 |
48,000.00 |
|
|
Total Variable Overhead |
|
|
78,000.00 |
|
|
Fixed Overheads |
|
|
|
|
|
Insurance |
|
|
36,000.00 |
|
|
Advertising |
|
|
14,000.00 |
|
|
Depreciation |
|
|
10,000.00 |
|
|
Total Fixed Cost |
|
|
60,000.00 |
|
|
Total |
|
|
|
1,005,000.00
|
|
Administration |
|
|
|
|
|
Managers Salary |
|
|
180,000.00 |
|
|
Utilities |
|
|
12,000.00 |
|
|
Total Administration Cost |
|
|
|
192,000.00 |
|
NET OPERATING INCOME |
|
|
|
3,000.00 |
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