FrontGrade Systems allocates manufacturing overhead based on machine hours. Each connector should require 11 machine hours. According to the static budget, FrontGrade expected to incur the following: 1,100 machine hours per month (100 connectors × 11 machine hours per connector) $5,500 in variable manufacturing overhead costs $8,250 in fixed manufacturing overhead costs During August, FrontGrade actually used 1,000 machine hours to make 110 connectors and spent $5,600 in variable manufacturing costs and $8,300 in fixed manufacturing overhead costs. FrontGrade’s standard variable manufacturing overhead allocation rate is a. $5.00 per machine hour. b. $5.50 per machine hour. c. $7.50 per machine hour. d. $12.50 per machine hour.
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.
FrontGrade Systems allocates manufacturing
1,100 machine hours per month (100 connectors × 11 machine hours per connector)
$5,500 in variable
$8,250 in fixed manufacturing overhead costs
During August, FrontGrade actually used 1,000 machine hours to make 110 connectors and spent $5,600 in variable manufacturing costs and $8,300 in fixed manufacturing overhead costs.
FrontGrade’s standard variable manufacturing overhead allocation rate is
a. $5.00 per machine hour.
b. $5.50 per machine hour.
c. $7.50 per machine hour.
d. $12.50 per machine hour.
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