Case Study 3

Haithem LLC Trading Company has produced 22,500 units which is 22.5% capacity level in the factory. The company has used raw material to make the production worth of RO 67 per unit. The company has incurred direct labour cost at RO 57 per unit along with direct expenses RO 46 per unit. The company spent RO 137,500 on fixed expenses in the factory with per unit cost of RO 6. Other factor expenses for the total production of 22,500 units has arrived at RO 15 per unit. Administration expenses were incurred RO 22 per unit out of which fixed expenses belongs to 40%. Company has appointed a salesman for selling the products produced in the company at RO 19 per unit produced out of which 25% belongs to fixed. The company has also incurred distribution expenses of RO 18 per unit out of which 30% are variable.

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

1. 25,000 units. [2.5 Marks]
2. 30,000 units. [5 Marks]