Dan Wood Ltd commenced business on 1* January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 | 2,500 3,800 Production in units 2,700 2,400 | 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram 4 hours at K10 per hour Variable production overheads 150% of direct labour 10% of sales value Direct labour Sales commission Fixed production overheads Fixed selling overheads K10,000 К35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: (a) Prepare a profit statement for each of the three months using absorption costing principles (b) Prepare a profit statement for each of the three months using marginal
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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