Question 2 Denvon (Pty) Ltd is a small manufacturing company in Cape Town that manufactures desks. In the past, the financial director has noticed the following relationship between total overheads incurred and production levels: Level of production 5 000 desks 7 500 desks Average overhead cost per unit R44 R36 At the start of the current year, in accordance with the above relationship, the financial director budgeted to manufacture 6 625 desks (which represents normal capacity). However, at the end of the year financial director noticed that the actual overhead expenditure was R250 000 and the total desks manufactured were actually 7 250. REQUIRED: Calculate the following: 1. The budgeted overhead cost for the current year 2. The under/over recovery on overheads for the current year

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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.