Flexible Budget Examples( Chapter 18)

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Solution of Problem No. 18-2LeParticulars80%Direct Labor hours 40,000Variable Expenses:1Shop supplies (0.10 per direct labor hours) 4,0002Indirect labor (0.45 per direct labor hours) 18,0003Payrol taxes &Fringe benefit (W-1) 57,2404Power and Light (W-2) 1,2005Inspection (W-3) 4,8006Other semi variable expenses (W-4) 5,600TOTAL VARIABLE EXPENSES 90,840Fixed Expenses:1Depreciation Expenses 9,0002Insurance 1,5003Maintenance Cost 24,0004Property tax 1,5005Supervision Staff 36,0006Power and Light (W-2) 2007Inspection (W-3) 4,2008Other semi variable expenses (W-4) 1,900TOTAL FIXED EXPENSES 78,300TOTAL FACTORY OVERHEAD 169,140WORKINGSW-1Calculation of Payrol taxes & fringe benefitAmount of Direct Labor Cost = 50,000 hours x 7.50 375,000Amount of Indirect Labor Cost = 50,000 hours x 0.45 22,500

Total amount of Payrol 397,500Amount of tax (Rs. 397,500 x 18%) 71,550W-2CALCULATION OF POWER & LIGHTHoursHigh Value 50,000Low Value 40,000Difference in Value 10,000300Difference in hours 10,000Variable Cost per hour 0.03Total Amount of semi variable expenses = 1,700Less: Variable portion (50,000 hours x 0.03) (1,500)Fixed Portion 200W- 3CALCULATION OF INSPECTION:HoursHigh Value 50,000Low Value 40,000Difference in Value 10,0001,200Difference in hours 10,000Variable Cost per unit = 0.12Total Amount of semi variable expenses = 10,200Less: Variable portion (50,000 hours x 0.12) (6,000)Fixed Portion 4,200Variable per hour cost = Difference in CostVariable per unit cost = Difference in Cost

W- 4CALCULATION OF OTHER SEMI VARIABLE EXPENSESHoursHigh Value 50,000Low Value 40,000Difference in Value 10,0001,400Difference in hours 10,000Variable Cost per unit = 0.14Total Amount of semi variable expenses = 8,900Less: Variable portion (50,000 hours x 0.14) (7,000)Fixed Portion 1,900Variable per unit cost = Difference in Cost

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good job done!!!!!!!!!!!!!!!!!

reply04 / 22 / 2011