Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,950 units, but its actual level of activity was 5,900 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting: Fixed element per month Variable element per unit Revenue $ 0 $ 30.40 Direct labor $ 0 $ 6.10 Direct materials 0 9.10 Manufacturing overhead 37,500 1.80 Selling and administrative expenses 26,700 1.30 Total expenses $ 64,200 $ 18.30 Actual results for October: Revenue $ 178,595 Direct labor $ 34,010 Direct materials $ 52,300 Manufacturing overhead $ 48,275 Selling and administrative expenses $ 34,170 The activity variance for selling and administrative expenses in October would be closest to:
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.
Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,950 units, but its actual level of activity was 5,900 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:
Data used in budgeting:
| Fixed element per month | Variable element per unit | |
|---|---|---|
| Revenue | $ 0 | $ 30.40 |
| Direct labor | $ 0 | $ 6.10 |
| Direct materials | 0 | 9.10 |
| Manufacturing overhead | 37,500 | 1.80 |
| Selling and administrative expenses | 26,700 | 1.30 |
| Total expenses | $ 64,200 | $ 18.30 |
Actual results for October:
| Revenue | $ 178,595 |
|---|---|
| Direct labor | $ 34,010 |
| Direct materials | $ 52,300 |
| Manufacturing overhead | $ 48,275 |
| Selling and administrative expenses | $ 34,170 |
The activity variance for selling and administrative expenses in October would be closest to:
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