Example: The Benson Co. manufactures two models of hair dryers, A and B. Budgeted sales data for the coming year is as follows: Model A Model B Units Sales Mix 30,000 50,000 Unit Selling Price $50 $20 Contribution Margin $20 $10 Unit Contribution Ratio 40% 50% Required: 1. Compute the total number of units to be sold at the breakeven point. 2. Compute the number of units of each model to be sold at breakeven. 3. Compute the total sales dollars at breakeven. 4. Compute the sales dollars for each model at breakeven. 5. If sales revenue were to total $3,000,000 during the coming year, how much net income would be earned? Assume that the actual sales mix, fixed costs, and unit contribution margins were the same as budgeted and that the firm has an effective federal income tax rate of 35%.
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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