Capacity Units

50% 15000 Cost Per Unit Cost for 15000 Cost for 6000 Direct Material 0.552 8280 3312 Direct Wages 0.744 11160 4464 Variable & other Exp 0.264 3960 1584 Total Variable Cost 1.56 23400 9360 Selling Price if 6000 units Sold @1.45 30000 8700 Contribution 6600 -660 Total Contribution 5940 Less - Fixed Cost 6000 Total Loss 60 Calculation of Profit / Loss if offer price is increased by 20 % i.e. 1.74

Total Variable Cost Sales Contribution Total Contribution Less - Fixed Cost Total Profit

Cost for 15000 Cost for 6000 1.56 23400 9360 as calculated above 30000 10440 6600 1080 7680 6000 1680

Details To Mateial To Wages To Production Overhead Total

Unit Cost 1000

1000

Process I Total Details 2600 By Normal Loss 2000 By Process II 2000 6600 Total

Unit Cost Total 50 2 100 950 6.84 6500 1000 6600

Working Note 1. Calculation of Cost of Good transferred to Process II =(Total Cost - Scrap Value from Normal Loss )/ (Input - Normal Loss) =(6600-100)/(1000-50) = Rs. 6.84 Per Unit Process II Unit Cost Total Details 950 6.84211 6500 By Normal Loss 1980 By Normal Loss 3000 By Process III 3000 950 14480 Total

Details To Process I To Mateial To Wages To Production Overhead Total

Unit Cost Total 95 4 380 15 16.4912 247.4 840 16.4912 13853 950 14480

Working Note 1. Calculation of Cost of Good transferred to Process III =(Total Cost - Scrap Value from Normal Loss )/ (Input - Normal Loss) =(14480-380)/(950-95) = Rs. 16.50 Per Unit Process III Unit Cost Total Details 840 16.4912 13853 By Normal Loss 2962 By Finished Goods 4000 4000 36 33.873 1220 876 26035 Total

Details To Process II To Mateial To Wages To Production Overhead To Abnormal Gain Total

Unit Cost Total 126 5 630 750 33.873 25405

876

26035

Working Note 1. Calculation of Cost of Finished Goods transferred to Stock and Abnormal Gain =(Total Cost - Scrap Value from Normal Loss )/ (Input - Normal Loss) =(24815-630)/(840-126) = Rs. 33.873 Per Unit

Statement Showing Flexible Budget 60% 75% 1000 1250 Rs. Rs. Direct Material 600,000 937,500 Direct Labour 400,000 600,000 Direct Expense 200,000 250,000 Machine Expense (Assume Fixed) 100,000 100,000 Motive Power (Assume Variable) 100,000 125,000 Other Factory Overhead - Fixed 64,000 64,000 Other Factory Overhead - Variable 16,000 20,000 Office Overhead - Fixed 72,000 72,000 Office Overhead - Variable 48,000 60,000 Selling Overhead - Fixed 20,000 20,000 Selling Overhead - Variable 20,000 25,000 Total Cost 1,640,000 2,273,500 Selling Price Per Unit 2,000 2,000 Sales 2,000,000 2,500,000 Profit 360,000 226,500 Profit Per Unit 360 181 Capacity Sales Units