A public limited company produces and sells three products. All products are manufactured in the same facilities under a common administrative control. The budgeted income statement for 2009 is as follows:
|
Particulars |
Products |
||
|
X Rs. |
Y Rs. |
Z Rs. |
|
|
Sales |
4,00,000 |
10,00,000 |
6,00,000 |
|
Variable expenses: |
|||
|
Cost of goods sold |
1,80,000 |
5,40,000 |
3,00,000 |
|
Selling |
60,000 |
1,80,000 |
90,000 |
|
Fixed expenses: |
|||
|
Overheads |
72,000 |
1,80,000 |
1,08,000 |
|
Administrative |
32,000 |
80,000 |
48,000 |
|
Income before tax |
56,000 |
20,000 |
54,000 |
|
Income tax @ 40% |
22,400 |
8,000 |
21,600 |
|
Net income |
33,600 |
12,000 |
32,400 |
Fixed expenses are allocated among the products in proportion to their budgeted sales volume:
- Compute the budget BEP of the company as a whole.
- What would be effect on the budgeted income if half of the budgeted sales volume of product Y was shifted to products X and Z in equal rupee amounts, so that the total budgeted sales in rupees remain the same?
- What would be the effect of the shift in the product-mix suggested in (b) above on the budgeted BEP of the whole company?