Flexible and static budgets problems
- 1. Flexible and static budgets Problem 1: The monthly budgets for manufacturing overheads of concerns are as follows. Capacity budgeted production (units) 60% 100% 600 1000 Rs. Rs. Wages 1200 2000 Consumable stores 900 1500 Maintenance 1100 1500 Power and Fuel 1600 2000 Depreciation 4000 4000 Insurance 1000 1000 Required: I. Indicate which of items are fixed, variable and semi variable. II. Prepare a budget for 80% capacity level. Problem 2: The monthly budgets for manufacturing overheads of concerns are as follows. Capacity budgeted production (units) 60% 1200 Rs. 2400 1800 2200 3200 8000 2000 100% 2000 Rs. 4000 3000 3000 4000 8000 2000 Wages Consumable stores Maintenance Power and Fuel Depreciation Insurance Required: I. Indicate which of items are fixed, variable and semi variable. II. Prepare a budget for 80% capacity level.
- 2. Problem 3: Capacity budgeted production (units) 80% 2,000 Rs. Rs.4,000 900 800 1,000 3,000 1,000 100% 2,500 Rs. Rs.5,000 1,000 900 1,250 3,000 1,200 Direct labor Utilities Supplies Indirect labor Depreciation of machinery Misc. expenses Required: Prepare the allowable flexible budget on the assumption that 2,600 units were produced. Problem 4: Fixed direct material direct labor supervision indirect material property tax maintenance power insurance depreciation Required: Prepare a flexible budget at 92% level. Rs.500 250 300 600 200 175 1,600 Total cost 80% Rs.16,000 9,000 500 1,450 300 1,400 280 175 1,600 100% Rs.20,000 11,250 500 1,750 300 1,600 300 175 1,600
- 3. Problem 5 Prepare a flexible budget for 90,000 units. production in units sales cost of goods sold gross profit operating expenses (Rs. 90,000 fixed) operating income income taxes (30% of operating income) net income 70,000 Rs.1,400,000 840,000 560,000 370,000 190,000 57,000 133,000 80,000 90,000 Rs.1,600,000 Rs. 960,000 640,000 410,000 230,000 69,000 161,000 Problem 6: Prepare a flexible budget at 50% and 70% capacities. The following particular is at 60% capacity level. variable overheads indirect labor indirect material semi variable cost electricity (40% fixed) repair and maintenance (20% variable) fixed overhead depreciation insurance salaries total Rs. 6,000 18,000 30,000 3,000 16,500 4,500 15,000 93,000
- 4. Problem 7: The following data is at 60% capacity level. Prepare the budget at 80% and 100% level. Production at 60% capacity level 600 units. Materials Labor Expenses factory expenses (40% are fixed) Administrative expenses (60% fixed) Rs. 100 per unit 40 per unit 10 per unit 40,000 30,000 Problem 8: The controller of the ABC Corporation decided to prepare a flexible budget ranging from 80% to 100% of capacity level for the next year with 50,000 hours as the 100% activity level. The direct labor rate is Rs. 7.50 per hour. Annual fixed expenses Rs. Depreciation 9,000 Insurance 1,500 Maintenance cost 24,000 Property taxes 1,500 Supervisor salary 36,000 Variable expenses Shop supplies 0.10 per D/L Hour Indirect labor 0.45 per D/L Hour Payroll taxes and benefits 18% of labor cost Semi variable expenses (from five years) Year D/L hour Power and light Inspection 1 44,000 Rs.15,000 Rs.9,200 2 40,000 1,400 9,000 3 45,000 1,600 9,200 4 49,000 1,650 10,000 5 50,000 1,700 10,200 Required: Prepare a flexible budget at 80%, 90% and 100% capacity level. Other expenses Rs.8,000 7,500 8,200 8,800 8,900