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Popeye limited, a newly opened manufacturing company has an installed capacity to produce 1,00,000 units of consumer products annually. However, its practical capacity is only
Popeye limited, a newly opened manufacturing company has an installed capacity to produce 1,00,000 units of consumer products annually. However, its practical capacity is only 90%. The actual capacity utilisation is substantially lower, as the firm is new to the market and the demand is uncertain. The following budget has been prepared for 90% capacity utilisation: Question 2 A: Popeye limited, a newly opened manufacturing company has an installec capacity to produce 1,00,000 units of consumer products annually. However, its practica capacity is only 90%. The actual capacity utilisation is substantially lower, as the firm is new to the market and the demand is uncertain. The following budget has been prepared for 90% capacity utilisation: Cost Per Unit (In Rs) Direct material 12 Direct Labour 8 Direct expenses 5 Production overheads 10 (40% variable) Administration overheads 5 (100% fixed) Selling and distribution overheads 6 (50% variable) The report by the marketing department says that being a new entrant in the market, the company might not utilise its full capacity of 90% for next few months. Therefore the Cos Accountant of Popeye Itd wants to know the unit variable cost, the unit fixed cost and the total costs under various heads at 60% and at 80% capacity. You are required to present the budget to the cost department at the mentioned capacity levels
Popeye limited, a newly opened manufacturing company has an installed capacity to produce 1,00,000 units of consumer products annually. However, its practical capacity is only 90%. The actual capacity utilisation is substantially lower, as the firm is new to the market and the demand is uncertain. The following budget has been prepared for 90% capacity utilisation:
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