ASSIGNMENT
A factory is currently working at 50% capacity and produces 10,000 units. Prepare a Flexible Budget
and estimate the Profit of the Company when it works at 60% and 80% capacity and advise to the
Company. At 60% working Raw Material Cost increases by 2% and selling price falls by 2%. At 80%
Raw Material cost increases by 5% and selling price falls by 5%. At 50% capacity working the
product costs Rs.180 is made up as follows:
Material Rs.100
Labour Rs.30
Factory overheads Rs.30 (40% fixed)
Administrative overheads Rs.20 (50% fixed)
Also find out Break Even Point at the above stated capacity utilisation.
The following data are available of a manufacturing company for a year.
Fixed Expenses [Link].000
Salaries and Wages 1,520
Rent, Rates and Taxes 1,056
Depreciation 1,184
Sundry Administration Expenses 1,040
Variable Expenses Semi-Variable Expenses
At 50% Capacity [Link].000 At 50% Capacity [Link].000
Materials 3,472 Repairs and Maintenance 560
Labour 3,264 Indirect Labour 1,264
Other Expenses 1,264 Salesmen Salaries 608
Sundry Administration Expenses 448
Semi-Variable expenses remain constant between 45 percent and 65 percent of capacity, increasing by
10% between 65 percent and 80 percent capacity and by 20% between 80 percent and 100 percent
capacity.
Sales at Various Levels are [Link].000
50% of Capacity 16,000
60% of Capacity 19,200
75% of Capacity 24,000
90% of Capacity 28,800
100% of Capacity 32,000
Prepare a Flexible Budget for the year and forecast the Profit at 50%,60%,75% and 100% of
capacity.
The cost of an article at the capacity level of 5,000 units is given below. For a variation of 25% in
capacity above or below this level the individual expenses vary as per details given against each cost.
Particulars Rs. Nature of
Variability
Material Cost 2,50,000 100% Variable
Labour Cost 1,50,000 100% Variable
Power 12,500 80% Variable
Repairs 20,000 75% Variable
Stores 10,000 100% Variable
Inspection 500 20% Variable
Depreciation 1,00,000 100% Variable
Administration Overheads 50,000 25% Variable
Selling Overheads 30,000 50% Variable
Total 6,23,000
You are required to prepare the production cost budget at 4,000 and 6,000 units.
Following details are available from the records of a firm. Prepare a cash budget for the 3 months
ending 30.06.2024.
Month Sales Materials Wages Overheads
(Rs.) (Rs.) (Rs.) (Rs.)
February 14,000 9,600 3,000 1,700
March 15,000 9,000 3,000 1,900
April 16,000 9,200 3,200 2,000
May 17,000 10,000 3,600 2,200
June 18,000 10,400 4,000 2,300
Additional Information:
(a) 10% sales are on cash.
(b) 50% of the credit sales are collected next month and the balance in the following month.
(c) Period of credit allowed by suppliers 2 months.
(d) Delay in payment of wages 1/4th month.
(e) Delay in payment of overheads ½ month.
(f) Cash and Bank Balance on 1.04.2024 is expected to be 6,000.
(g) Plant and Machinery will be installed in February at a cost of 96,000. The monthly instalment
of Rs.2,000 are payable from April 2024 onwards.
Advance to be received for sale of vehicle Rs.9,000 in June.
i) Dividend from investments Rs.1,000 is expected to be received in June 2024.
(j) Advance Income Tax to be paid in June 2024 Rs.2,000.
From the following information , value closing stock on 31-12-2018 applying-
(a) FIFO (b) Weighted average
Stocks (kgs) on 1-12-2018 5,000 units @ Rs.14
Purchases (kgs)
(i) On 18-12-2018 4,200 units @ Rs.13
(ii) On 23-12-2018 3,800 units @ Rs.9
Sales (kgs)
(i) On 7-12-2018 1,200 units
(ii) On 16-12-2018 2,600 units
(iii)On 19-12-2018 1,800 units
(iv)On 30-12-2018 3,400 units
POR Ltd. manufactures a special product. The following particulars were collected for the year 2018-
19:
i) Monthly demand 7,500 units
ii) Cost of placing an order Rs.500
iii) Reorder Period 5 to 8 weeks
iv) Cost per unit Rs.60
v) Carrying cost % p.a. 10%
vi) Normal usage 500 units per week
vii) Minimum usage 250 units per week
viii) Maximum usage 750 units per week
Required:
1. Reorder quantity 2. Minimum Stock Level 3. Reorder Level
4. Maximum Stock Level 5. Average Stock Level
Following is the data taken from the records of a concern manufacturing a special part:
Selling Price per unit Rs.20
Direct Material Cost per unit Rs.5
Direct Labour Cost per unit Rs.3
Variable Overheads Cost per unit Rs.4
Budgeted level of output and sales – 80,000 units
Fixed overheads Rs.4,00,000
You are required to –
[a] Find out (i) BEP sales (units & rupees), (ii) P/V ratio, (iii) Margin of safety.
[b] Calculate the impact of the following on break-even point, P/V Ratio & Margin of safety.
(i) If selling price per unit is increased by 30%, and
(ii) If selling price per unit is decreased by 10%.
A Ltd. produces and sells a single article at Rs.10 each. The marginal cost of production is Rs.6 each
and fixed cost is Rs. 400 per annum.
Calculate:
(a) P/V Ratio
(b) The Break-even sales (in Rs. and numbers).
(c) The sales to earn a profit of Rs.500
(d) Profit at sales Rs.3,000
(e) New Break-even point if sales price is reduced by 10%
(f) Margin of Safety at sales Rs.1,500
(g) Selling Price per unit if the break-even point is reduced to 80 units.
The following figures are available from the records of B Ltd. as at 31st March:
2024 2025
Rs. lakhs Rs. lakhs
Sales 150 200
Profit 30 50
Calculate:
(a) The P/V ratio and total fixed expenses
(b) The break-even level of sales
(c) Sales required to earn a profit of Rs.90 lakhs.
(d) Profit or loss that would arise the sales were Rs.280 lakhs.
X Ltd. has 3 production departments and 2 service departments. The expenses are as given below:
Particulars Amount
(Rs.)
Consumable Stores 15,400
Supervision 22,800
Rent & Rates 10,000
Insurance 2,000
Depreciation 30,000
Power 9,000
Light & Heat 4,000
Total 93,200
The following information is available:
Production Dept. Service Dept.
Items Machine Assembly Finishing Stores Repairs &
Shop Shop Dept. Mtnc.
Direct Material 34% 39% 13% 4% 10%
Direct Wages 35% 22% 27% 10% 7%
Area ([Link].) 5,250 3,500 4,375 1,750 2,625
Asset Value 2,00,000 2,25,000 50,000 12,500 12,500
H.P. x Hours x L.F 10,800 7,200 - - -
Prepare the Primary Distribution Statement using the most appropriate basis for apportionment.
The machine shop, assembly shop and finishing Departments have issued stores requisitions in the
ratio of 9;6:5 and repairs requests in the ratio of 2;3:1. Prepare the Secondary Distribution on
non-reciprocal (direct distribution) basis.
From the following particulars you are required to work out the earnings of a worker for a week
under
(a) Straight piece-rate (b) Differential piece-rate
(c) Halsey Premium scheme (50% sharing) (d) Rowan premium scheme
Weekly working hours 48
Hourly wage rate Rs.7.50
Piece rate per unit Rs.3.00
Normal time taken per piece 20 minutes
Normal output per week 120 pieces
Actual output for the week 150 pieces
Differential piece-rate 80% of piece-rate when output below normal
and 120% of piece rate when output above normal
Assume that the worker is assured of time wages for 48 hours per week although the work was done
in 40 hours.