A business produces three products A, B and C for which the standard variable costs and budgeted
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Question:
A business produces three products A, B and C for which the standard variable costs and budgeted selling prices are as follows:
A | B | C | |
Direct Material | 3 | 6 | 8 |
Direct Wages | 4 | 4 | 10 |
Variable overhead | 3 | 5 | 7 |
Selling price | 18 | 25 | 48 |
In two successive periods, sales are as follows:
| A | B | C |
Units | Units | Units | |
Period I | 10,000 | 10,000 | 10,000 |
Period II | 20,000 | 13,000 | 5,000 |
The budgeted fixed overheads amounted to Rs 1,35,000 for each period. In spite of increased sales the profit for the second period has fallen below that of the 1st period. Present figures to management to show why this fall in profit should or should not have occurred.
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