A company has identified the following overhead costs and cost drivers for the coming year: Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level Machine setup Number of setups $ 20,000 200 Inspection Number of inspections 130,000 6,500 Material handling Number of material moves 80,000 8,000 Engineering Engineering hours 50,000 1,000 Total $280,000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials $5,000 $12,000 $8,000 Direct labor $2,000 $ 2,000 $4,000 Units completed 100 50 200 Number of setups 1 2 4 Number of inspections 20 10 30 Number of material moves 30 10 50 Engineering hours 10 50 10 If the company uses activity-based costing, compute the cost of each unit of Job 102.
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 has identified the following overhead costs and cost drivers for the coming year:
|
Overhead Item |
Cost Driver |
Budgeted Cost |
Budgeted Activity Level |
||||
|
Machine setup |
Number of setups |
$ 20,000 |
200 |
||||
|
Inspection |
Number of inspections |
130,000 |
6,500 |
||||
|
Material handling |
Number of material moves |
80,000 |
8,000 |
||||
|
Engineering |
Engineering hours |
50,000 |
1,000 |
||||
|
Total |
$280,000 |
The following information was collected on three jobs that were completed during the year:
|
|
Job 101 |
Job 102 |
Job 103 |
|||
|
Direct materials |
$5,000 |
$12,000 |
$8,000 |
|||
|
Direct labor |
$2,000 |
$ 2,000 |
$4,000 |
|||
|
Units completed |
100 |
50 |
200 |
|||
|
Number of setups |
1 |
2 |
4 |
|||
|
Number of inspections |
20 |
10 |
30 |
|||
|
Number of material moves |
30 |
10 |
50 |
|||
|
Engineering hours |
10 |
50 |
10 |
If the company uses activity-based costing, compute the cost of each unit of Job 102.
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