A company sells bags. Next month's budget is as follows: Selling Price = $50/bag Variable Expenses per unit- $25/bag Total Fixed Expenses for one month = $10,000/month Volume of Bag Sales = 1,000 bags Based on the company's budgeted sales, what is the company's Margin of Safety in dollars? Show all your work for full credit.
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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