Activity-Based Budget for Merit Industries; Banana Computer
See attached files.
Activity-Based Budget
Merrit Industries Inc. has the following budget information available for February:
Administration $40,000
Advertising $15,000
Assembly 1/2 hour per unit X $8
Direct materials 2 pounds per unit X $3
Inspection $200 per batch of 1,000 units
Manufacturing overhead $2 per unit
Manufactured units 20, 000
Product development $15,000
Sales units 20,000 units X $30
Setup cost $10 per batch of 1,000 units
Required
Prepared a February activity-based budgeting income statement
P21-41
Developing a Master Budget for a Manufacturing Organization: Challenge problem
Banana Computer Accessories assembles a computer networking device from kits of imported components. You have been asked to develop a quarterly and annual operating budget and pro-forma income statement for 2010. You have obtained the following information:
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When using a flexible budget, a decrese in activity within the relevant range:
1-decreases variable cost per unit
2-decreases total costs
3-increases totoal fixed costs
4-increases variable cost per unit
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1- the difficulty in developing such a budget due to high cost of gathering th
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Master Budget Data:
Sales, 2,500 clients at $35 each.
Variable Costs, $25 per client.
Total Fixed Costs - $15,000.
Actual Results at Actual Prices:
Sales, 3,000 clients at $36 per clients.
Total Variable Costs - $80,000.
Total Fixed Costs - $15,7
How does management use an operating budget?
How do they use an activity-basedbudget?
What are the similarities and differences between these types of budgets?
How does management use an operating budget? How do they use an activity-basedbudget? What are the similarities and differences between these two budgets?
