Illustration 4 A firm at present operates at 60% of its capacity. At this level and at the level of 50% utilisation of capacity, the figures relating to its operations could be summarised as stated below: 50% 60% Materials 10,00,000 12,00,000 Labour 8,00,000 9,00,000 Manufacturing overheads 6,00,000 6,60,000 Administrative overheads 3,50,000 3,50,000 Selling and distribution overheads 4,50,000 5,00,000 Research and development 1.50.000 2.00.000 Total 33,50,000 38,10,000 Profit 1,50,000 3,90,000 Sales 35,00,000 42,00,000 Draw up the budget at 80% utilisation of capacity assuming that (i) sales at this level can be maintained only by a flat 5% reduction in the selling price; (ii) economy in purchase of material will equal to 2-1/2% of the current amounts; (ii) the research and development expenditure will be pegged at $2,50,000 per annum; and (iv) administrative overheads will require 10% increase