Flexible Budget Lecture 1
Flexible Budget Lecture 1
Flexible Budget Lecture 1
Cap 2
Budget and Budgetary control
Particulars In percentage
Direct Materials 8
Direct Labour 5
Variable Factory Overheads 5
Variable Selling Overheads 8
Fixed Factory Overheads 10
Fixed Selling Overheads 15
Administrative Overheads 10
PREPARE flexible budget for the period 2022-23 at 85% level of capacity. Also
ascertain profit and contribution.
Solution,
b. Selling Overhead
∆ 𝑖𝑛 𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 360,000 − 320,000 40,000
𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 = = =
∆ 𝑖𝑛 𝑢𝑛𝑖𝑡𝑠 65,000 − 55,000 10,000
= 4 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
𝑇𝑜𝑡𝑎𝑙 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑎𝑡 55,000𝑢𝑛𝑖𝑡𝑠 = 55,000 × 4 = 220,000
𝑇𝑜𝑡𝑎𝑙 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 = 320,000 − 220,000 = 100,000