M/s Anushree Enterprises is currently working at 50% capacity and produces 10000 units.

At 60% working raw material cost increases by 2% and selling price falls by 2%.
At 80% working raw material cost increases by 5% and selling price falls by 5%.
At 50% capacity working the product costs 18 per unit and is sold at 20 per unit. The unit cost
of 18 is made up as follows:
Material 10
Wages 3
Factory Overheads 3 (40% fixed)
Administrative Overheads 2 (50% fixed)
Prepare a statement showing the estimated profit of the business when it is operated at 60%
and 80% capacity. It may be noted the fixed overhead remain constant up to 100% capacity.
Increase in raw material cost and decrease in selling price are to be calculated with reference
to the figure given for 50% capacity usage.

The budgeted output of an industry specializing in the production of a one product at the
optimum capacity of 6,400 units per annum amounts to Rs. 1, 76,048 as detailed below:

Particulars Rs. Rs.

Fixed costs 20,688

Variable costs:
Power 1,440
Repairs 1,700
Miscellaneous 540
Direct material 49,280
Direct Labour 1,02,400 1,55,360
Total cost 1,76,048

The company decides to have a flexible budget with a production target of 3,200 and 4,800
units (the actual quantity proposed to be produced being left to a later date before
commencement of the budget period) Prepare a flexible budget for production levels of 50%
and 75%. Assuming, selling price per unit is maintained at Rs. 40 as at present; indicate the
effect on net profit.
Administrative, selling and distribution expenses continue at Rs.3, 600.

A department of Avon Company attains sales of Rs. 6, 00,000 at 80% of its normal capacity.
The expenses are given below:
Office salary 90000
General expenses 2% of sales
depreciation 7500
Rent and rates 8750
Selling cost:
salaries 8% of sales
Travelling expenses 2% of sales
Sales office 1% of sales
General expenses 1% of sales
Distribution cost:
 wages 15000
rent 1% of sales
Other expenses 4% of sales
Draw a flexible Administrative, selling and distribution budget operating at 90% and 110% of
normal capacity.

The budget manager of Jupiter electrical is preparing flexible budget for the accounting year
starting from 1st July 2017.
The company produces one product. Direct material costs Rs. 7 per unit, direct labour averages
Rs. 2.50 per hour and requires 1.6 hours to produce one unit of product.
Salesmen are paid commission of Re. 1 per unit sold. Fixed selling and administration expenses
amount to Rs. 85000 per year.
Manufacturing overhead is estimated in the following amounts as under:

Volume of production in units 120000 150000

Indirect material 264000 330000
Indirect labour 150000 187500
Inspection 90000 112500
maintenance 84000 102000
supervision 198000 234000
Depreciation of plant & equipment 90000 90000
Engineering services 94000 94000
Total manufacturing overhead 970000 1150000
Prepare a total cost of budget for 140000 units of production.