Year 2020 2021 2022 Budgeted Production 20,000 20,000 20,000 Variable production costs Fixed OH production costs Variable selling & admin. expense Fixed selling & admin. expense a. $27,500 b. $47,000 c. $23,000 d. $50,000 Actual Production 16,000 25,000 15,000 e. $42,500 f. ($20,000) g. $53,750 Actual Sales 14,000 22,000 19,000 $8 per unit $100,000 per year The company uses the FIFO inventory method. 2020 was the first year of operation. If operating income under variable costing for year 2021 is $35,000, what was the 2021 operating income under the absorption costing method assuming that overhead was applied to production using a rate based on actual production for each year? $4 per unit $60,000 per year
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.
Step by step
Solved in 4 steps
