Hendry Limited produces a mini-kitchen called Town Cook, which is enjoying extensive popularity amongst young children. The following data is available for the month: Selling price (per unit) R 116 Units in opening inventory 600 Units manufactured 2 550 Units sold 3 050 Units in closing inventory 100 Variable costs per unit: Direct materials R12,00 Direct labour R50,00 Variable manufacturing overhead R6,50 Variable selling and administrative R10,00 Fixed costs: Fixed manufacturing overhead R81 000 Fixed selling and administrative R19 000 The company produces the same number of units every month, although the sales in units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month Question = Prepare an income statement for the month using the absorption costing method
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.
Read the case study below and answer the questions that follow.
Hendry Limited produces a mini-kitchen called Town Cook, which is enjoying extensive popularity amongst young children.
The following data is available for the month:
Selling price (per unit) R 116
Units in opening inventory 600
Units manufactured 2 550
Units sold 3 050
Units in closing inventory 100
Variable costs per unit:
Direct materials R12,00
Direct labour R50,00
Variable manufacturing overhead R6,50
Variable selling and administrative R10,00
Fixed costs:
Fixed manufacturing overhead R81 000
Fixed selling and administrative R19 000
The company produces the same number of units every month, although the sales in units vary from month to month. The
company’s variable costs per unit and total fixed costs have been constant from month to month
Question = Prepare an income statement for the month using the absorption costing method
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