Problem: With the following data for a 60 % activity, prepare a budget for production at 80 % and 100 %

capacity. Production at 60 % capacity is 300 units. Materials - Rs. 100 per unit, Labor - Rs. 40 per unit,
Expenses - Rs. 10 per unit, Factory expenses - Rs. 40,000 (40% fixed), Administrative expenses - Rs. 30,000
(60% fixed).
Solution: Flexible Budget
60%
Particulars 80% Capacity 100% Capacity
Capacity
300 units 400 units 500 units
Material (Rs. 100 per unit) 30,000 40,000 50,000
Labor (Rs. 40 per unit) 12,000 16,000 20,000
Expenses (Rs.10 per unit) 3,000 4,000 5,000
Variable Factory Expenses (Rs.80 per unit) 24,000 32,000 40,000
Variable Administrative Expenses (Rs.40 per unit) 12,000 16,000 20,000
Fixed Factory Expenses (40 % of Rs.40,000) 16,000 16,000 16,000
Fixed Administrative Expenses (60% of Rs. 30,000) 18,000 18,000 18,000
Total 1,15,000 1,42,000 1,69,000

Problem: Prepare the Sales Budget from the following data:

Produc
January February
t
X 1200 units 1800 units
Y 3600 units 5400 units
The sales area A and B account for 60% and 40% sale of product X and 30% and 70% sale of product Y
respectively. The selling price per unit of product X: Rs. 24 and the selling price per unit of product Y: Rs. 30
in both the sales areas.
Solution:
Sales Budget for January
Product Area Units Amount (Rs.) Amount (Rs.)
X A (@60%) 720 24 17,280
B (@40%) 480 24 11,520
Total 1,200 28,800
Y A (@30%) 1,080 30 32,400
B (@70%) 2,520 30 75,600
Total 3,600 1,08,000

Sales Budget for February

Product Area Units Amount (Rs.) Amount (Rs.)
X A (@60%) 1,080 24 25,920
B (@40%) 720 24 17,280
Total 1,800 43,200
Y A (@30%) 1,620 30 48,600
B (@70%) 3,780 30 1,13,400
Total 5,400 1,62,000

Total Sales Budget

Product Area Units Amount (Rs.) Amount (Rs.)
X A 1,800 24 43,200
B 1,200 24 28,800
3,00
Total 72,000
0
 Y A 2,700 30 81,000
B 6,300 30 1,89,400
9,00
Total 2,70,000
0