Question

Abc company prepared a cost volume profit budget analysis for each plant as per details below:

a. Profit plan for plant 1 shows annual budgeted fixed costs rs. 12,00,000, variable costs rs. 8,40,000 and sales value of production rs. 22,00,000. Allocated head office budgeted fixed costs are rs. 3,20,000. You are asked to prepare an analysis indicating the breakeven point before and aftr cost allocation. Explain why the breakeven point change (in rs.) is greater than the allocated amount.

b. Plant 2 produces a product that sells at rs. 40. It costs rs. 42.50 when 15,000 units are produced. At a production level of 20,000 units the cost per unit is rs. 38.125. What is the the breakeven sales in amount and units.

c. Plant 3, budgeted income and cost estimates are as follows: sales (annual) rs. 10,00,000 fixed costs rs. 4,00,000 variable costs rs. 3,00,000 head office allocated costs rs. 3,50,000 loss rs. 50,000 sale of plant is under consideration. What is your recommendation based on the data given? Justify your recommendation.

d. Plant 4 produces one product, the budgeted income and cost estimates are as follows sales (annual) @ rs.200 rs. 20,00,000 fixed costs rs. 7,47,500 variable costs rs. 13,50,000 head office allocated costs rs. 5,02,500 loss rs. 6,00,000 how many additional units must be manufactured in the plant in order to breakeven? What would be the profit pick-up per unit above breakeven?

Answer 1

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