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)

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Answer 1

Answer:ABC Ltd. has prepared a budget for the production of one lakh units of the only commodity manufactured by them for a costing period as under:

Raw Materials

Direct Labour

Direct Expenses

Works overheads ( 60% fixed )

Administration overheads (80% fixed) Selling overheads ( 50% fixed )

अवधि के दौरान वास्तविक उत्पादन केवल 60,000 इकाइयों का था। संशोधित बजटेड लागत प्रति इकाई ज्ञात कीजिये।

The actual production during the period was only 60,000 units. Calculate the revised budgeted cost per unit.

(Answer : Rs. 7.75]

ExplanationExplanation:

Answer 2

Answer :

A flexible budget for 80% activity would have a total cost of 129000 (32000 for raw materials, 20000 for direct labor, 6000 for direct expenses, 25000 for factory expenses, and 36000 for administrative expenses) and for 100% activity would have a total cost of 162500 (40000 for raw materials, 25000 for direct labor, 7500 for direct expenses, 25000 for factory expenses, and 60000 for administrative expenses).

Explanation :

To Find,

Flexible Budget for production 80%

Flexible Budget for production 100%

Given,

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)

Flexible Budget for 80% Activity:

Production: 4000 units

Raw Material Cost: 32000 (4000 units x 80/- per unit)

Direct Labour Cost: 20000 (4000 units x 50/- per unit)

Direct Expenses: 6000 (4000 units x 15/- per unit)

Factory Expenses: 25000 (50% fixed)

Administrative Expenses: 36000 (60% variable, calculated as 0.6 x 60000)

Total Cost: 129000

Flexible Budget for 100% Activity:

Production: 5000 units

Raw Material Cost: 40000 (5000 units x 80/- per unit)

Direct Labour Cost: 25000 (5000 units x 50/- per unit)

Direct Expenses: 7500 (5000 units x 15/- per unit)

Factory Expenses: 25000 (50% fixed)

Administrative Expenses: 60000 (60% variable)

Total Cost: 162500

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