Main Company has two service departments, Factory administration and Maintenance, and two operating departments, Cutting and Assembly. Selected budgeted information relating to these departments for the next year of operation is given below: Service department Operating Department Factory admin Maintenance Cutting Assembly Departmental costs R113 400 R80 000 R700 000 R600 000 Number of employees 3 5 40 60 Total labour hours 4 000 6 000 80 000 120 000 The company allocates service department costs by the step method. Factory administration costs are allocated first on the basis of number of employees and then Maintenance costs are allocated on the basis of total labour hours. The total Maintenance costs allocated to the Cutting Department is closest to: A. R31 068 B. R34 160 C. R32 000 D. R51 240
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.
Main Company has two service departments, Factory administration and Maintenance, and two operating departments, Cutting and Assembly. Selected budgeted information relating to these departments for the next year of operation is given below:
|
|
Service department |
Operating Department |
||
|
|
Factory admin |
Maintenance |
Cutting |
Assembly |
|
Departmental costs |
R113 400 |
R80 000 |
R700 000 |
R600 000 |
|
Number of employees |
3 |
5 |
40 |
60 |
|
Total labour hours |
4 000 |
6 000 |
80 000 |
120 000 |
The company allocates service department costs by the step method.
Factory administration costs are allocated first on the basis of number of employees and then Maintenance costs are allocated on the basis of total labour hours.
The total Maintenance costs allocated to the Cutting Department is closest to:
| A. |
R31 068 |
|
| B. |
R34 160 |
|
| C. |
R32 000 |
|
| D. |
R51 240 |
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