Question
Question 1. Dandys manufacturers Company Ltd, makers of product Y has prepared its budget for 2018, based on two activity levels of 80% and 100%
Question 1.
Dandys manufacturers Company Ltd, makers of product Y has prepared its budget for 2018, based on two activity levels of 80% and 100% with production units of 2800 and 3500 units respectively.
The budget is as follows
80% 100%
Sales $224000 $2800000
Direct material 84000 105000
Direct labour 50400 63000
Production overhead 48800 53000
The companys actual result for the period is as follows
Sales in Units 3150 units
Sales $252000
Direct material $ 94000
Direct Labour $ 60000
Overhead (60% of amounts is fixed) $ 50000
Required
Prepare a flexible budget for a production level of 70% and 90% and compare the flexible budget at 90% level of activity with the actual result. (25)
Question 2
A business supplies the following figures about its activities
Fixed $ 300000
Variable cost $ 20 per unit
Forecast output (sales) 20000 units
Selling price $50 per unit
Required
Illustrate by means of breakeven chart
- The breakeven point
- The profit at full capacity
- The margin of safety
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