Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data: UNITS PRODUCED TOTAL COST January 1,100 ₱12,530 February 1,200 13,260 March 1,400 14,720 April 1,500 15,450 May 1,800 17,640 June 2,100 19,830 July 2,000 19,100 August 1,900 18,370 September 1,400 14,720 October 1,500 15,450 November 1,300 13,990 December 1,700 16,910 TOTAL 18,900 191,970 Required: Calculate the variable cost per unit and the total fixed cost using the following: High-low point 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.
Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data:
|
UNITS PRODUCED |
TOTAL COST |
|
|
January |
1,100 |
₱12,530 |
|
February |
1,200 |
13,260 |
|
March |
1,400 |
14,720 |
|
April |
1,500 |
15,450 |
|
May |
1,800 |
17,640 |
|
June |
2,100 |
19,830 |
|
July |
2,000 |
19,100 |
|
August |
1,900 |
18,370 |
|
September |
1,400 |
14,720 |
|
October |
1,500 |
15,450 |
|
November |
1,300 |
13,990 |
|
December |
1,700 |
16,910 |
|
TOTAL |
18,900 |
191,970 |
Required: Calculate the variable cost per unit and the total fixed cost using the following:
- High-low point method
- Average method (compare the two lowest quarters)
- Graphical method
- Method of least squares
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