Reference no: EM132717805

NMP LTD., a newly established manufacturing company, has an installed capacity to produce 100,000 units of a consumer product annually. However, its practical capacity is only 90%. The actual capacity utilization may be substantially lower, as the firm is new to the market and the demand is uncertain. The following budget has been prepared for 90% capacity utilization.

Problem 1: You are required to prepare the budgets at 70% and 80% levels of capacity utilization giving clearly the :

(I) Unit Variable Costs

(II) Unit Fixed Cost

(III) Total Cost under various heads at all the above levels