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Master & Flexible Budget

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Master and Flexible Budgets ACC/543 January 28, 2013 Thomas Benscoter

MEMORANDOM Date: January 28, 2012 To. Guillermo Furniture Company From: Ashley Lee, Ebony De La Torre, Janelle Durham, Misha Cross
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Re: Master and Flexible Budgets Guillermo Furniture: Master and Flexible Budgets A master budget can be a communication tool in which the company’s employees can perceive how their hard work affects the company’s goals. The budget is an outline of a company's plans that sets detailed goals for an organization regarding sales, production, distribution, and financing. This tool can also reveal if employees are meeting their goals set forth by the company in the budget and make corrections to employees. The following memorandum on Guillermo Furniture Store includes a master budget. The explanation of the relationship between fixed and variable cost used in the budget will occur. The difference between static and flexible budgets and how a flexible budget lends itself to a cost-volume profit analysis will be discussed. Fixed and Variable Costs Fixed costs in a budget remain constant even when volumes fluctuate. Fixed costs include a portion of the benefits and the depreciation, indirect labor, insurance, property tax and, supplies for a total of $ $596,067 per year. This amount remains the same regardless of the amount of items produced. The amount of fixed costs in a company’s cost structure determines the magnitude of operating leverage. Guillermo chose to automate production…...

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