Evening Star, Inc. produces binoculars of two quality levels: field and professional. The field model requires three direct-labor hours, while the professional binoculars require five hours. The firm uses direct-labor hours for flexible budgeting. Required:1. How many standard hours are allowed in May, when 200 field models and 300 professional binoculars are manufactured?2. Suppose the company based its flexible overhead budget for May on the number of binoculars manufactured, which is 500. What difficulties would this approach cause?
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.
Evening Star, Inc. produces binoculars of two quality levels: field and professional. The field model requires three direct-labor hours, while the professional binoculars require five hours. The firm uses direct-labor hours for flexible budgeting.
Required:
1. How many standard hours are allowed in May, when 200 field models and 300 professional binoculars are manufactured?
2. Suppose the company based its flexible overhead budget for May on the number of binoculars manufactured, which is 500. What difficulties would this approach cause?
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