Question

QUESTION 3 [20 MARKS] PCL (Pty) Ltd gave you the following expenses that were budgeted to produce 10,000 units in their factory as shown below: Pula Materials 70 Labour 25 Variable factory overheads 20 Fixed factory overhead (P100,000) 10 Direct Variable expenses 5 Selling expenses (10% were fixed costs) 13 Distribution expenses (20% were fixed) 7 Fixed Administrative expenses (P50,000) 5 Total cost of sale per unit 155 Required: Prepare a flexible budget for the production of 8,000 units.

Answer 1

	Flexible Budget (8000 Units)
Particulars	Per Unit		Total
Sales	155.00	8000*155	12,40,000.00
Less: Operating Expenses
Material	70.00	8000*70	5,60,000.00
Labour	25.00	8000*25	2,00,000.00
Factory Overheads	20.00	8000*20	1,60,000.00
Fixed Factory Overheads			1,00,000.00
Operating Income			2,20,000.00
Less: Admin & Selling Expenses
Variable Expenses	5.00	8000*5	40,000.00
Selling Expenses
Variable Part (90%)	11.70	(13*10000)*90%/10000	93,600.00
Fixed Part (10%)		(13*10000units)*10%	13,000.00
Distribution Expenses
Variable Part (80%)	5.60	(7*10000)*80%/10000	44,800.00
Fixed Part (20%)		(7*10000units)*00%	14,000.00
Fixed Admin Expenses			50,000.00
Net Income			-35,400.00