Question 4. Dawn is preparing a budget for her operation. She has forecasted revenue of $1,200,000 for t budget period and now wants to complete the variable expense portion of her forecast. Dawn reviewed her historical cost percentage records. She then established her target variable cost percentages for several variable cost categories. Use Dawn's target cost percentages to comp. her variable expense forecast and then answer the questions that follow. Revenue Forecast: S1,200,000 Varlable Expense Cost Historical Variable Target Expense Percentage Expense Percentage 2.8% Expense Forecast Marketing 3.0% 36,000 Glassware 0.25 0.15 1,800 Paper products 0.25 0.25 3,000 Linens 1.0 0.75 9,000 Flowers and decorations 0.50 0.25 3,000 Kitchen utensils 0.25 0.25 3,000 1. What is the amount Dawn will budget for marketing? 2. What is the amount Dawn will budget for linens? 3. What is the amount Dawn will budget for kitchen utensils? 4. What would be the impact on marketing costs if Dawn sets that expense at 3 percent of revenue and then exceeds her forecasted revenue anmount?
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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