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Master Budget
Flexible Budget and Performance Analysis
Blow
Rainy Days
Bills
Give
Retirement
House/Car
Investing
7.1 Master Budget
After studying Master Budget, you should be able to:
 Define budgeting and other terminologies
 Descri...
What is a Budget?
o A budget is a financial plan of the resources needed to carry out tasks and meet
financial goals. It i...
The Purposes of the Budget
• Defining broad objectives and goals;
• Coordinating the activities of the organization;
• All...
Types of Budget Period
• Master budget is usually prepared on a quarterly or an annual basis.
• Capital budget is for majo...
Sample Budget Committee
Top
Management
Middle
Management
Department
Head A
Department
Head B
Middle
Management
Department
...
The Budget Management Process
1. The top management will inform middle management about upcoming budget
activities.
2. The...
Master Budget - Sales Budget Schedule
The first step in developing the master budget.
Modern Mountain Enterprise
Sales Bud...
Master Budget - Production Budget Schedule
Shows the number of units of services or goods that
are to be produced during a...
Master Budget – Direct Materials Budget Schedule
Shows the number of units and the cost of material to be
purchased and us...
Master Budget – Direct Labor Budget Schedule
Shows the number of hours and the cost of the direct labor
to be used during ...
Master Budget - Manufacturing Overhead Budget Schedule
Shows the cost of overhead expected to be incurred in the
productio...
Master Budget Schedule – SGA Expense Budget Schedule
Shows the planned amounts of expenditures for selling, general
and ad...
Master Budget Schedule – Cash Receipts Budget Schedule
Details the expected cash collections during a budget period.
Moder...
Master Budget - Cash Disbursement Budget Schedule
Details the expected cash payment during a budget period.
Modern Mountai...
Master Budget - Cash Budget Schedule
Details the expected cash receipts and disbursements during a budget period.
Modern M...
Master Budget – COGMS Budget Schedule
Details the direct material, direct labor, and manufacturing-overhead costs to be
in...
Type of manufacturing cost Amount
Materials, Tent fabric (Schedule 3: 12 x $9 per yard) 108.00
Materials, Tent poles (Sche...
Master Budget – Budgeted Income Statement Schedule
Shows the expected revenue and expenses for the budget period,
assuming...
Master Budget – Budgeted Cash Flow Schedule
Provides information about the expected sources and uses of cash for operating...
Master Budget – Budgeted Balance Sheet Schedule Sheet
Shows the expected end-of-period balances for the company’s assets, ...
7.2 Flexible Budget and Performance Analysis
After studying flexible budget and performance analysis,
you should be able t...
Static Budget versus Flexible Budget
• Static budget is prepared at the
beginning of the budgeting period
and is valid for...
Maria's Parlor Shop
Static Budget
For the Month Ended March 31
Budgeted number of client-visits 5,000
Budgeted variable ov...
Performance Analysis
Maria's Parlor Shop
Static Budget Performance Report
For the Month Ended March 31
Actual Budgeted Var...
Maria's Parlor Shop
Flexible Budget
For the Month Ended March 31
Budgeted number of client-visits 5,000
Cost per
client-vi...
Performance Analysis
Maria's Parlor Shop
Flexible Budget Performance Analysis
For the Month Ended March 31
Budgeted number...
Case Analysis
Maria's Parlor Shop
Performances Between Static and Flexible
For the Month Ended March 31
Overhead Costs Sta...
Master Budget and Flexible Budget Performance Analysis
Master Budget and Flexible Budget Performance Analysis
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Master Budget and Flexible Budget Performance Analysis

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Areas in the Managerial Accounting. Understand the process of Master Budget and analyze the performance of a Flexible Budget.

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  • Example of planning, expanding a building or plant, what are the cost? How are we going to finance? Can we afford or we need to borrow from the bank? Controlling is like having budget submitted or countercheck every quarter, making sure that all activities in the budget are being followed and no illegal transactions involved. Must be well explained and supported with documents if there major variances on each activities from the budget during the period.
  • Transcript of "Master Budget and Flexible Budget Performance Analysis"

    1. 1. Master Budget Flexible Budget and Performance Analysis Blow Rainy Days Bills Give Retirement House/Car Investing
    2. 2. 7.1 Master Budget After studying Master Budget, you should be able to:  Define budgeting and other terminologies  Describe the purposes of budgeting  Identify different types of budget period  Understand budget sample committee  Explain the budget management process  Understand the master budget cycle and its preparation
    3. 3. What is a Budget? o A budget is a financial plan of the resources needed to carry out tasks and meet financial goals. It is also the quantitative expression of the goals the organization wishes to achieve and the cost of attaining these goals. o Budgeting is the act of preparing a budget. o Master Budget is a summary of all phases of a company’s plans and goals for the future. o Budget committee is responsible for coordinating the preparation of the budget. o Planning involves developing objectives and preparing various budgets to achieve the goals. o Control involves the steps taken by management to ensure that the objectives set down at the planning stage are attained and to ensure that all parts of the organization function in a manner consistent with organizational policies. An effective budgeting system must include both planning and control.
    4. 4. The Purposes of the Budget • Defining broad objectives and goals; • Coordinating the activities of the organization; • Allocating resources; • Communicating management’s approved plans; • Uncovering and preparing for potential bottleneck in the operations before they occur; • Motivating managers to achieve the desired results; and • Setting a standard or benchmark for evaluating actual performance.
    5. 5. Types of Budget Period • Master budget is usually prepared on a quarterly or an annual basis. • Capital budget is for major expenditures for equipment or addition of product line and might cover as long as 5 – 10 years. • Responsibility budget which are segments of the master budget relating to the aspect of business that is the responsibility of a particular manager are often prepared monthly. • Cash budget may be prepared on a day-to-day or monthly basis.
    6. 6. Sample Budget Committee Top Management Middle Management Department Head A Department Head B Middle Management Department Head C Department Head D
    7. 7. The Budget Management Process 1. The top management will inform middle management about upcoming budget activities. 2. The middle management will then call the attention of the budget committee. 3. A budget committee with representation from the different functional areas is generally considered an effective body to oversee budget policies, preparation and administration. 4. The Controller or Chief Finance Officer may be selected to serve as head of the committee and coordinates the budgeting operation throughout the organization. 5. The budget committee decides how budgets shall be prepared, passes on the final budget ,and settles disputes in one segment of the business and another when differences of opinion arise. 6. Before submission of department’s budget, the budget committee will conduct budget hearing. The middle management will then decide whether to approve or reject as per resources and time. 7. The committee receives the approved budget report of different areas and arrange the plan based on the top priority. 8. Upon implementation, the CFO will then distribute financial resources. 9. Department heads must monitor and evaluate every projects.
    8. 8. Master Budget - Sales Budget Schedule The first step in developing the master budget. Modern Mountain Enterprise Sales Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Sales in units 5,000 15,000 20,000 10,000 50,000 Unit sales price 225 225 225 225 225 Total sales revenue 1,125,000 3,375,000 4,500,000 2,250,000 11,250,000
    9. 9. Master Budget - Production Budget Schedule Shows the number of units of services or goods that are to be produced during a budget period. Modern Mountain Enterprise Production Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Sales in units (Schedule 1) 5,000 15,000 20,000 10,000 50,000 Add: Desired ending inventory finished goods 1,500 2,000 1,000 500 500 Total units required 6,500 17,000 21,000 10,500 50,500 Less: Expected beginning inventory finished goods 500 1,500 2,000 1,000 500 Units to be produced 6,000 15,500 19,000 9,500 50,000
    10. 10. Master Budget – Direct Materials Budget Schedule Shows the number of units and the cost of material to be purchased and used during a budget period. Modern Mountain Enterprise Direct Materials Budget For the Year Ending December 31, 20x2 Quarter Raw Materials A - Tent Fabric 1st 2nd 3rd 4th Year Tents or units to be produced (Schedule 2) 6,000 15,500 19,000 9,500 50,000 Raw Materials per unit yards of fabric 12 12 12 12 12 Raw Materials required for production 72,000 186,000 228,000 114,000 600,000 Add: Desired ending inventory of raw materials 18,600 22,800 11,400 7,200 7,200 Total raw materials required 90,600 208,800 239,400 121,200 607,200 Less: Expected beg. inventory of raw materials 7,200 18,600 22,800 11,400 7,200 Raw materials to be purchased 83,400 190,200 216,600 109,800 600,000 Cost per yard 9 9 9 9 9 Total raw materials purchases 750,600 1,711,800 1,949,400 988,200 5,400,000 Raw Materials B - Tent Poles Tents to be produced (Schedule 2) 6,000 15,500 19,000 9,500 50,000 Poles kits required per tent 1 1 1 1 1 Tent pole kits to be purchased 6,000 15,500 19,000 9,500 50,000 Cost per tent pole kit 20 20 20 20 20 Total cost of tent pole kit purchases 120,000 310,000 380,000 190,000 1,000,000 Total cost of raw materials purchases 870,600 2,021,800 2,329,400 1,178,200 6,400,000
    11. 11. Master Budget – Direct Labor Budget Schedule Shows the number of hours and the cost of the direct labor to be used during the budget period. Modern Mountain Enterprise Direct Labor Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Units to be produced (Schedule 2) 6,000 15,500 19,000 9,500 50,000 Direct labor required per unit 0.5 0.5 0.5 0.5 0.5 Total direct labor hours required 3,000 7,750 9,500 4,750 25,000 Direct labor cost per hour 15 15 15 15 15 Total direct labor cost 45,000 116,250 142,500 71,250 375,000 Please Note: The company is using part-time laborers for seasonal demand and production. This is the strategy used by the company and direct labor may be adjusted up and down to meet short term needs. Since employees are on a part-time basis, it will fall under unit-level cost which is variable cost. But if employees were retained even with low production, it will fall under facility and general level cost which is fixed cost.
    12. 12. Master Budget - Manufacturing Overhead Budget Schedule Shows the cost of overhead expected to be incurred in the production process during the budget period. Quarter 1st 2nd 3rd 4th Year Unit Level Cost Units (Schedule 2) 6,000 15,500 19,000 9,500 50,000 Indirect Material 18,000 46,500 57,000 28,500 150,000 Electricity for Machinery 6,000 15,500 19,000 9,500 50,000 Total unit level cost 24,000 62,000 76,000 38,000 200,000 Batch Level Cost Production Runs 12 31 38 19 100 Setup at $400 per run 4,800 12,400 15,200 7,600 40,000 Purchasing and material handling at $600 per run 7,200 18,600 22,800 11,400 60,000 Quality control and inspection at $500 per run 6,000 15,500 19,000 9,500 50,000 Total batch level cost 18,000 46,500 57,000 28,500 150,000 Product Level Cost New tent designs 1 1 1 1 4 Design Engineering 1,200 1,200 1,200 1,200 4,800 Total product level cost 1,200 1,200 1,200 1,200 4,800 Facility and general operation level cost Supervisory salaries 52,500 52,500 52,500 52,500 210,000 Insurance and property taxes 11,300 11,300 11,300 11,300 45,200 Maintenance 47,500 47,500 47,500 47,500 190,000 Utilities 40,000 40,000 40,000 40,000 160,000 Depreciation 110,000 110,000 110,000 110,000 440,000 Total facility and general operation level cost 261,300 261,300 261,300 261,300 1,045,200 Total overhead 304,500 371,000 395,500 329,000 1,400,000 Less: Depreciation 110,000 110,000 110,000 110,000 440,000 Total cash disbursement for overhead 194,500 261,000 285,500 219,000 960,000
    13. 13. Master Budget Schedule – SGA Expense Budget Schedule Shows the planned amounts of expenditures for selling, general and administrative expenses during the budget period. Modern Mountain Enterprise Selling, General, and Administrative Expense Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Unit Level Expenses Units (Schedule 1) 5,000 15,000 20,000 10,000 50,000 Sales commissions 6,250 18,750 25,000 12,500 62,500 Total unit level expense 6,250 18,750 25,000 12,500 62,500 Customer level Expenses Sales personnel salaries 16,000 16,000 16,000 16,000 64,000 Computer operator salaries 18,000 18,000 18,000 18,000 72,000 Telephone operator salaries 6,000 6,000 6,000 6,000 24,000 Total customer level expenses 40,000 40,000 40,000 40,000 160,000 Facility and general operation level expenses Sales manager's salary 15,000 15,000 15,000 15,000 60,000 Media Advertising 61,000 61,000 61,000 61,000 244,000 Administrative salaries 220,000 220,000 220,000 220,000 880,000 Total facility and general operation level expenses 296,000 296,000 296,000 296,000 1,184,000 Total SGA Expenses 342,250 354,750 361,000 348,500 1,406,500
    14. 14. Master Budget Schedule – Cash Receipts Budget Schedule Details the expected cash collections during a budget period. Modern Mountain Enterprise Cash Receipts Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Sales Revenue (Schedule 1) 1,125,000 3,375,000 4,500,000 2,250,00011,250,000 Collections in quarter of sale (80% of revenue) 900,000 2,700,000 3,600,000 1,800,000 9,000,000 Collections in quarter following sale (18% of prior quarter's revenue) 405,000 202,500 607,500 810,000 2,025,000 Total Cash Receipts 1,305,000 2,902,500 4,207,500 2,610,00011,025,000 Quarter 1st 2nd 3rd 4th Year Expected uncollectible accounts (2% of revenue) 22,500 67,500 90,000 45,000 225,000
    15. 15. Master Budget - Cash Disbursement Budget Schedule Details the expected cash payment during a budget period. Modern Mountain Enterprise Cash Disbursements Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Cost of raw materials purchases (Schedule 3) 870,600 2,021,800 2,329,400 1,178,200 6,400,000 Cash payments for purchases made during the quarter (60% of current quarter's purchases) 522,360 1,213,080 1,397,640 706,920 3,840,000 Cash payment for prior quarter's purchases (40% of prior quarter purchases) 471,280 348,240 808,720 931,760 2,560,000 Total Cash Purchases for raw materials purchases 993,640 1,561,320 2,206,360 1,638,680 6,400,000 Other Cash Disbursements Direct Labor (Schedule 4) 45,000 116,250 142,500 71,250 375,000 Unit Level Cost (Schedule 5) 24,000 62,000 76,000 38,000 200,000 Batch and Product Level Cost (Schedule 5) 19,200 47,700 58,200 29,700 154,800 Facility and general operations (Schedule 5) 151,300 151,300 151,300 151,300 605,200 Unit Level Expenses (Schedule 6) 6,250 18,750 25,000 12,500 62,500 Customer Level Expenses (Schedule 6) 40,000 40,000 40,000 40,000 160,000 Facility and general operations (Schedule 6) 296,000 296,000 296,000 296,000 1,184,000 Total Other Cash Disbursements 581,750 732,000 789,000 638,750 2,741,500 Total Cash Disbursements 1,575,390 2,293,320 2,995,360 2,277,430 9,141,500
    16. 16. Master Budget - Cash Budget Schedule Details the expected cash receipts and disbursements during a budget period. Modern Mountain Enterprise Cash Budget For the Year Ending December 31, 20x2 Quarter 1st 2nd 3rd 4th Year Cash receipts (Schedule 7) 1,305,000 2,902,500 4,207,500 2,610,000 11,025,000 Less: Cash disbursement (Schedule 8) 1,575,390 2,293,320 2,995,360 2,277,430 9,141,500 Change in cash balance during quarter due to operations (270,390) 609,180 1,212,140 332,570 1,883,500 Proceeds from bank loan (1/2/x2) 1,000,000 1,000,000 Payments for construction of plant addition (500,000) (120,000) (80,000) (300,000) (1,000,000) Repayment of principal on bank loan (end of each quarter) (250,000) (250,000) (250,000) (250,000) (1,000,000) Interest on bank at 10% per year (25,000) (18,750) (12,500) (6,250) (62,500) Change in cash balance during the year 821,000 Cash balance 1/1/x2 10,000 Cash balance 12/31/x2 831,000
    17. 17. Master Budget – COGMS Budget Schedule Details the direct material, direct labor, and manufacturing-overhead costs to be incurred and shows the cost of the goods to be sold during the budget period. Modern Mountain Enterprise Budgeted Cost of Goods and Manufactured and Sold For the Year Ending December 31, 20x2 Direct materials (Schedule 3 for details): Raw materials inventory Jan. 1 (7,200 yards per fabric x $9 per yard) 64,800 Add: Purchases (Schedule 3) 6,400,000 Raw materials available for use 6,464,800 Less: Raw material inventory Dec. 31 64,800 Direct materials used 6,400,000 Direct labor (Schedule 4) 375,000 Manufacturing overhead (Schedule 5) 1,400,000 Total manufacturing cost 8,175,000 Add: Work in process Jan. 1 - Subtotal 8,175,000 Less: Work in process Dec. 31 - Cost of goods manufactured 8,175,000 Add: Finished goods inventory Jan. 1 (Schedule 2 - beg and end are the same) 81,750 Cost of goods available for sale 8,256,750 Less: Finished goods inventory Dec. 31 (500 units x $163.50) 81,750 Cost of goods sold 8,175,000
    18. 18. Type of manufacturing cost Amount Materials, Tent fabric (Schedule 3: 12 x $9 per yard) 108.00 Materials, Tent poles (Schedule 3: 1 x $20 per kit) 20.00 Labor (Schedule 4: 0.5 x $15 per hour) 7.50 Unit level M. Overhead (Schedule 5: 200,000/50,000 units) 4.00 Batch level M. Overhead (Schedule 5: 150,000/50,000 units) 3.00 Product level M. Overhead (Schedule 5: 4,800/50,000 units) 0.10 Facility level M. Overhead (Schedule 5: 1,045,200/50,000 units) 20.90 Total absorption cost per unit 163.50 Modern Mountain Enterprise Manufacturing Cost Schedule For the Year Ending December 31, 20x2
    19. 19. Master Budget – Budgeted Income Statement Schedule Shows the expected revenue and expenses for the budget period, assuming that planned operations are carried out. Modern Mountain Enterprise Budgeted Income Statement For the Year Ending December 31, 20x2 Sales revenue (Schedule 1) 11,250,000 Less: Cost of goods sold (Schedule 10) 8,175,000 Gross margin 3,075,000 Other expenses: Selling, general, and administrative expenses (Schedule 6) 1,406,500 Uncollectible account expense (Schedule 7: 2% x 11,250,000) 225,000 Interest expense (Schedule 9) 62,500 Total other expenses 1,694,000 Net Income 1,381,000
    20. 20. Master Budget – Budgeted Cash Flow Schedule Provides information about the expected sources and uses of cash for operating, investing, and financing activities during a particular period of time. Modern Mountain Enterprise Budgeted Statement of Cash Flows For the Year Ending December 31, 20x2 Cash flows from operating activities: Cash receipts from customers (Schedule 7) 11,025,000 Cash payments To suppliers of raw materials (Schedule 8) 6,400,000 For direct labor (Schedule 4) 375,000 For manufacturing overhead expenditures (Schedule 5) 960,000 For selling, general, and administrative expenses (Schedule 6) 1,406,500 For interest (Schedule 9) 62,500 Total cash payments 9,204,000 Net cash flow from operating activities 1,821,000 Cash flow from investing activities: Construction of building addition (Schedule 9) (1,000,000) Net cash used by investing activities: (1,000,000) Cash flow from financing activities: Principle of bank loan 1,000,000 Repayment of bank loan (1,000,000) Net cash provided by financing activities - Net increase in cash and cash equivalents 821,000 Balance in cash and cash equivalents, beginning of year 10,000 Balance in cash and cash equivalents, end of year 831,000
    21. 21. Master Budget – Budgeted Balance Sheet Schedule Sheet Shows the expected end-of-period balances for the company’s assets, liabilities, and owner’s equity, assuming that planned operations are carried out. Modern Mountain Enterprise Budgeted Balance Sheet For the Year Ending December 31, 20x2 Assets Current Assets: Cash (schedule 9) 831,000 Accounts receivables (Schedule 7: 18% of 4th quarter) 405,000 Inventory: Raw materials (schedule 10) 64,800 Finished goods (schedule 10) 81,750 Supplies 42,000 Total inventory 188,550 Total current assets 1,424,550 Long-lived assets: Building (balance from last year plus 1M construction of plant) 9,200,000 Equipment 2,280,000 Less: Accumulated depreciation on building and equipment (last year's + 440,000 in Sched. 5) (2,323,550) (43,500) Building and equipment, net of accumulated depreciation 9,156,450 Total assets 10,581,000 Liabilities and Owner's Equity Current Liabilities: Accounts payable (Schedule 8) 471,280 Total current liabilities 471,280 Long-term liabilities Note payable (non-interest bearing; due on December 21, 20x4 4,100,000 Total liabilities 4,571,280 Owner's Equity (balance from last year's + net income) 6,009,720 Total liabilities and owner's equity 10,581,000
    22. 22. 7.2 Flexible Budget and Performance Analysis After studying flexible budget and performance analysis, you should be able to: • Identify the difference between static budget and flexible budget • Prepare a static budget and explain the performance analysis • Prepare a flexible budget and explain the performance analysis
    23. 23. Static Budget versus Flexible Budget • Static budget is prepared at the beginning of the budgeting period and is valid for only the planned level of activity. • A static budget is suitable for planning but is inappropriate for evaluating how well costs are controlled. • A flexible budget shows what costs should be for various levels of activity. • Flexible budget is an alternative to the static budget. A flexible budget adjusts revenues, costs, and expenses to the actual volume experienced and compares these amounts to actual results. If the actual level of activity differs from what was planned, it would be misleading to compare actual cost to the static budget. If the activity is higher than expected, variable costs should be higher than expected; and if activity is lower than expected, variable costs should be lower than expected.
    24. 24. Maria's Parlor Shop Static Budget For the Month Ended March 31 Budgeted number of client-visits 5,000 Budgeted variable overhead cost: Hairstyling supplies (@ $1.20 per client-visit) 6,000 Client gratuities (@ $4 per client-visit) 20,000 Electricity (@ $0.20 per client-visit) 1,000 Total variable overhead cost 27,000 Budgeted fixed overhead cost: Support staff wages and salaries 8,000 Rent 12,000 Insurance 1,000 Utilities other than electricity 500 Total fixed overhead cost 21,500 Total budgeted overhead cost 48,500
    25. 25. Performance Analysis Maria's Parlor Shop Static Budget Performance Report For the Month Ended March 31 Actual Budgeted Variances Results Client-visits 5,200 5,000 200 F Variable overhead costs: Hairstyling supplies 6,400 6,000 400 U Client gratuities 22,300 20,000 2,300 U Electricity 1,020 1,000 20 U Total variable overhead cost 29,720 27,000 2,720 U Fixed overhead cost: Support staff wages and salaries 8,100 8,000 100 U Rent 12,000 12,000 0 Insurance 1,000 1,000 0 Utilities other than electricity 470 500 30 F Total fixed overhead cost 21,570 21,500 70 U Total overhead cost 51,290 48,500 2,790 U
    26. 26. Maria's Parlor Shop Flexible Budget For the Month Ended March 31 Budgeted number of client-visits 5,000 Cost per client-visit Activity (in client-visits) Overhead Costs 4,900 5,000 5,100 5,200 Variable overhead cost: Hairstyling supplies 1.20 $5,880 6,000 6,120 6,240 Client gratuities 4.00 19,600 20,000 20,400 20,800 Electricity 0.20 980 1,000 1,020 1,040 Total variable overhead cost $5.40 26,460 27,000 27,540 28,080 Budgeted fixed overhead cost: Support staff wages and salaries 8,000 8,000 8,000 8,000 Rent 12,000 12,000 12,000 12,000 Insurance 1,000 1,000 1,000 1,000 Utilities other than electricity 500 500 500 500 Total fixed overhead cost 21,500 21,500 21,500 21,500 Total budgeted overhead cost $47,960 48,500 49,040 49,580
    27. 27. Performance Analysis Maria's Parlor Shop Flexible Budget Performance Analysis For the Month Ended March 31 Budgeted number of client-visits 5,000 Actual number of client-visits 5,200 Cost per client-visit Actual Costs Incurred for 5,200 Client-Visits Flexible Budget Based on 5,200 Client-Visits Variance Results Overhead Costs Variable overhead cost: Hairstyling supplies 1.20 $6,400 6,240 160 U Client gratuities 4.00 22,300 20,800 1,500 U Electricity 0.20 1,020 1,040 20 F Total variable overhead cost $5.40 29,720 28,080 1,640 U Budgeted fixed overhead cost: Support staff wages and salaries 8,100 8,000 100 U Rent 12,000 12,000 - Insurance 1,000 1,000 - Utilities other than electricity 470 500 30 F Total fixed overhead cost 21,570 21,500 70 Total budgeted overhead cost $51,290 49,580 1,710 U
    28. 28. Case Analysis Maria's Parlor Shop Performances Between Static and Flexible For the Month Ended March 31 Overhead Costs Static Budget Flexible Budget Variable overhead cost: Hairstyling supplies 400 U 160 U Client gratuities 2,300 U 1,500 U Electricity 20 U 20 F Total variable overhead cost 2,720 U 1,640 U Budgeted fixed overhead cost: Support staff wages and salaries 100 U 100 U Rent - 0 - 0 Insurance - 0 - 0 Utilities other than electricity 30 F 30 F Total fixed overhead cost 70 U 70 U Total Budgeted Overhead Cost 2,790 U 1,710 U
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