The Budgeted Cost of a factory specializing in the production of a single product at the optimum capacity of 6,400 units p.a. is Rs. 7,04,192, the details of which is as follows:
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Fixed Cost |
82,752 |
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Variable Cost: |
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Power |
5,760 |
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Repairs |
6,800 |
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Miscellaneous Expenses |
2,160 |
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Direct Materials |
1,97,120 |
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Direct Labour |
4,09,600 |
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6,21,440 |
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Budgeted Total Cost |
7,04,192 |
Having regard to a possible impact on the turnover by market trends, the company decides to have a Flexible Budget with a production target of 3,200 units and 4,800 units at 50% and 75% capacity of production respectively. Assume that the Selling Price per unit is maintained at Rs. 160 at present. Administration and Selling and Distribution Expenses continue to remain at Rs. 14,400.
Prepare a Flexible Budget at 50% and 75% capacity and indicate the effect on the Net Profit.