Newton Company manufactures and sells one product. The company assembled the following projections for its first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 20 Direct labor $ 16 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: 4 $ 2 Fixed manufacturing overhead Fixed selling and administrative $450,000 $ 70,000 expenses During its first year of operations Newton expects to produce 25,000 units and sell 20,000 units. The budgeted selling price of the company's only product is $66 per unit.
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.
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