Case Study 3

Khalfan LLC Trading Company has produced 35,000 units which is 17.5% capacity level in the factory. The company has used raw material to make the production worth of RO 48 per unit. The company has incurred direct labour cost at RO 39 per unit along with direct expenses RO 37 per unit. The company spent RO 120,500 on fixed expenses in the factory with per unit cost of RO 3.4428. Other factor expenses for the total production of 35,000 units has arrived at RO 22 per unit. Administration expenses were incurred RO 19 per unit on which fixed expenses belongs to 30%. Company has appointed a salesman for selling the products produced in the company at RO 18 per unit out of which 40% belongs to fixed. The company has also incurred distribution expenses of RO 17 per unit out of which 35% are variable.

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

1. 45,000 units and [2.5 Marks]
2. 60,000 units [5 Marks]