Question

47. The following budget estimates are available from a factory working at 50% of its
capacity
Rs.
Variable expenses
60,000
Semi variable expenses
20,000
Fixed expenses
10,000
Prepare a budget for 75% of the capacity assuming that semi-variable expenses
increase by 10% for every 25%.​

Answer 1

Explanation:

Problem 1

Prepare a flexible budget for the production of 80% and 100% activity on the basis of the following information.

Production at 50% Capacity 5,000 Units

Raw Material $80 per unit

Direct Labor $50 per unit

Direct Expenses $15 per unit

Factory Expenses $50,000 (50) (Fixed)

Administration Expenses $60,000 (Variable)

Solution

Flexible Budget at a Capacity of

Capacity of

Output Units 50%

5,000 80%

8,000 100%

10,000

$ $ $

Raw Material 4,00,000 6,40,000 8,00,000

Labor 2,50,000 40,000 50,000

Direct Expenses 75,000 1,20,000 1,50,000

Prime Cost 7,25,000 11,60,000 14,50,000

Factory Expenses 50% fixed (50,000) 25,000 40,000 50,000

Factory Cost 7,75,000 12,25,000 15,25,000

Admin Expenses fixed 40% (60,000) 24,000 24,000 24,000

Variable 60% 36,000 57,600 72,000

Total Cost 8,35,000 13,06,000 16,21,000