Sunshine Dresses is preparing a flexible budget for the month of October, using a contribution margin format. Staff have completed the budget if 800 units of product are produced and sold. You must complete the budget if 1,000 units of product are produced and sold. You are given the following information for the flexible budget if 800 units of product are produced and sold: Sales = $64,000 Variable Costs = 12,000 Fixed Costs, regardless of sales level, = $50,000 You are asked to prepare the flexible budget if 1,000 units of product are produced and sold. What is the contribution margin at that level of sales?
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.
- Sunshine Dresses is preparing a flexible budget for the month of October, using a contribution margin format. Staff have completed the budget if 800 units of product are produced and sold. You must complete the budget if 1,000 units of product are produced and sold.
You are given the following information for the flexible budget if 800 units of product are produced and sold:
- Sales = $64,000
- Variable Costs = 12,000
Fixed Costs, regardless of sales level, = $50,000
You are asked to prepare the flexible budget if 1,000 units of product are produced and sold. What is the contribution margin at that level of sales?
2.Sunshine Dresses planned to use 2,000 yards of cotton costing $7 per yard to make 1,000 dresses. In actually making 1,000 dresses, the company used 1,800 yards that cost $8 per yard. Calculate the direct materials quantity variance. Specify dollars and cents. Be sure to specify if a negative or positive number.
3.Using the following information below, calculate the direct labor rate variance:
Actual costs and quantities:
Direct labor cost incurred $1,805
Direct labor hours used 95 hours
Units produced 1,000 units
Direct labor rate per hour $ 20.00
Hours to produce one unit 0.1 hours
Calculate the direct labor rate variance. Report in dollars and cents. Be sure to specify if a negative or a positive number.
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