Question: Shoaib Co., is a manufacturing company. A summary of the budgeted profit statement for its next financial year is provide. The details is provided below: Rs. Rs. Sales (9,000 units at Rs. 32) 288,000 Less: Direct material 54,000 Direct wages 72,000 Production overhead Fixed 42,000 Variable 18,000 186,000 Gross profit 102,000 Less: Admin and marketing cost: Fixed 36,000 Variable 27,000 63,000 Net profit 39,000
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: Shoaib Co., is a manufacturing company. A summary of the budgeted profit statement for its next financial year is provide. The details is provided below:
|
Rs. |
Rs. |
|
|
Sales (9,000 units at Rs. 32) |
288,000 |
|
|
Less: Direct material |
54,000 |
|
|
Direct wages |
72,000 |
|
|
Production |
||
|
Fixed |
42,000 |
|
|
Variable |
18,000 |
|
|
186,000 |
||
|
Gross profit |
102,000 |
|
|
Less: Admin and marketing cost: |
||
|
Fixed |
36,000 |
|
|
Variable |
27,000 |
|
|
63,000 |
||
|
Net profit |
39,000 |
Required:
- Calculate breakeven point in units and amount.
- How many units must be sold to earn profit before tax Rs. 32,500.
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