‘The expenses budgeted for production of 10,000 units in a factory are furnished below : Per unit Materials Labour ‘Variuble factory overheads: Fixed factory overhead (Rs. 1,00,000) Variable expenses (Direct) Selling expenses (10 % Fixed) Distibution expenses (20 % Fixed) ‘Administrative expenses (Rs, $0,000) ‘Total cost of sale per unit ‘You are required to prepare a bodget forthe production of 8,000 units, lBlancuseee?Solution: Flexible Budget ‘Ousput 10,000 erie Ouipur 8,000 units Per unit Amount | Por we Asoo ‘Wariabie Expenses = Material cost 70 | 700,000 70 | 5,60,000 Labour cost 25 | 2,s0,000 2s | 2,00,000 Direct expenses (variable) 3 "50,000 3 40,000 Prime cost Too | 10,00,000 roo” | #,00,000 ‘Add = Faccory overheads = ‘Variable overheads 20 | 200,000 20 | 1.60.00 Fixed overheads to | 100,000. 1250 | 100,000 Works cost 120 | #3,00,000 132.30 | 10,60,000 Add + Administrative expenses Fixed (Assumed) 5 50,000 6.25 50,000. Cost of production 13s) 13,50,000 13875 ‘Add + Selling Expenses Fined — 10 5b of Rs, 13 130 13,000 163 13,000 Variable — 90 96 of Rs. 13 1030 | 1,17,000 30 93,600: ‘Add + Distribution Expenses: Fixed — 20 96 of Rs? Lao) 14,000 173 14,000 Variable ~ 80 9 of Rs7 5.60 56,000 5.60 44.800 ‘Total Cost of Sales 158 | _15,50,000 15943) 12,75,800H R # BAagy