Question

Prepare Flexible Budget for production 80% and 100% activity on the basis of the following information Production at 50% capacity - 5000 units Raw Material - 80/- per unit Direct Labour - 50/- per unit Direct Expenses - 15/- per unit Factory Expenses - 50000/- (50% Fixed) Administrative Expenses - 60000/- (60% Variable)

Answer 1

Flexible Budget at a Capacity of

Capacity of

Output Units 50%

5,000 80%

8,000 100%

10,000

$ $ $

Raw Materials 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 40% Fixed (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