Question

Mohammed LLC Trading Company has produced 15,000 units which is 50% capacity level in the factory. The company has used raw material to make the production worth of RO 65 per unit. The company has incurred direct labour cost at RO 32 per unit along with direct expenses RO 25 per unit. The company spent RO 150,000 on fixed expenses in the factory with per unit cost of RO 10. Other factor expenses for the total production of 15,000 units has arrived at RO 8 per unit. Administration expenses were incurred RO 5 per unit and fixed expenses belongs to 65%. Company has appointed a salesman for selling the products produced in the company at RO 9 per unit produced out of which 20% belongs to fixed. The company has also incurred distribution expenses of RO 7 per unit out of which 40% are variable.

Requirements: The company has approached the you and ask to prepare the flexible budgets for two more required capacity levels; -

1-20,000 units and   

2-30,000 units                                                                                                     

Answer 1

Other Factory Expenses have been considered as Variable.

Units	15000	20000	30000
Variable Costs
Raw Material	975,000	1,300,000	1,950,000
Direct Labor	480,000	640,000	960,000
Direct Expenses	375,000	500,000	750,000
Other Factory Expenses	120,000	160,000	240,000
Administration Expenses	26,250	35,000	52,500
Selling Expenses	108,000	144,000	216,000
Distribution Expenses	42,000	56,000	84,000
Total Variable Costs	2,126,250	2,835,000	4,252,500
Fixed Costs
Fixed Expenses	150,000	150,000	150,000
Administration Expenses	48,750	48,750	48,750
Selling Expenses	27,000	27,000	27,000
Distribution Expenses	63,000	63,000	63,000
Total Fixed Costs	288,750	288,750	288,750
Total Costs	2,415,000	3,123,750	4,541,250

Since format was not given, i have used, general format, so if you have any query kindly comment with your query and please mark thumbs up.