The Chief Cost Accountant of Vikas Limited found to his surprise that the actual profit for the period ending 30th June 2007 was the same as budgeted in spite of realising 10% more than the budgeted selling prices. The following were the results: 

You are required to assist the Chief Cost Accountant in preparing the necessary explanations as to why the profit remained the same despite an increase in sales.

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Particulars Sales Variable costs of sales Fixed costs Profit Budget Rs. 5,00,000 3,00,000 1,00,000 1,00,000 Actuals Rs. 8,25,000 5,75,000 1,50,000 1,00,000