A company is at present working at 90% of its capacity and producing 13,500 units per annum. It operates a flexible budgetary control system. Following figures are obtained from its budget : 100% $ 90% $ Sales Fixed expenses Semi-fixed expenses Variable expenses 15,00,000 3,00,500 97,500 1,45,000 13,500 16,00,000 3,00,500 1,00,500 1,49,500 15,000 Units made Labour and material cost per unit are constant under present conditions. Profit margin is 10 per cent. (a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent. (b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices.
A company is at present working at 90% of its capacity and producing 13,500 units per annum. It operates a flexible budgetary control system. Following figures are obtained from its budget : 100% $ 90% $ Sales Fixed expenses Semi-fixed expenses Variable expenses 15,00,000 3,00,500 97,500 1,45,000 13,500 16,00,000 3,00,500 1,00,500 1,49,500 15,000 Units made Labour and material cost per unit are constant under present conditions. Profit margin is 10 per cent. (a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent. (b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:A company is at present working at 90% of its capacity and
producing 13,500 units per annum. It operates a flexible budgetary control system. Following
figures are obtained from its budget :
100%
$
90%
$
Sales
Fixed expenses
Semi-fixed expenses
Variable expenses
15,00,000
3,00,500
97,500
1,45,000
13,500
16,00,000
3,00,500
1,00,500
1,49,500
15,000
Units made
Labour and material cost per unit are constant under present conditions. Profit margin is 10
per cent.
(a) You are required to determine the differential cost of producing 1,500 units by increasing
capacity to 100 per cent.
(b) What would you recommend for an éxport price for these 1,500 units taking into account
that overseas prices are much lower than indigenous prices.
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