A factory is currently running at 50% capacity and produces 5,000 units at a cost of Rs.
900 per unit as per details given below
Material Rs. 50
Labour Rs. 15
Factory Overheads Rs. 15(Rs. 6 fixed)
Administrative overheads Rs. 10 (Rs. 5 fixed)
The current selling price is Rs 100 per unit. At 60% working, material cost per unit increases by
2% and selling price per unit falls by 2%. At 80% working, material cost per unit increases by
5% and selling price per unit falls by 2.5%
Prepare a flexible budget showing profit of the factory at 60% and 80% working
Answers
Answer:
Answer to the question can be given as follows:-
Capacity 60% 80%
Production/Sales (units) 6,000 8,000
Material 51.00 52.50
Labour 15.00 15.00
Variable Factory O/H 9.00 9.00
Variable Adm. O/H 5.00 5.00
Total Variable Cost 80.00 81.50
Sales /Unit 98.00 95.00
Contribution 18.00 13.50
Total Contribution 1,08,000 1,08,000
Fixed O/H 55,000 55,000
(5000 x 6 + 5000 x 5)
Profit 53,000 53,000
Answer:
Explanation:
Marginal cost statement
60 % 80%
Variable cost :
Materials 306000 420000
Labour 90000 120000
Factory overheads 54000 72000
Administrative overheads 30000 40000
Total variable costs 480000 652000
sales 588000 760000
Contribution 108000 108000
Fixed costs :
Factory overhead 30000 30000
Administration overheads 25000 25000
Total Fixed costs 55000 55000
Profit 53000 53000
% of profit on sale 9 % 7%