Example of flexible and fixed budget, Cost Accounting

Assignment Help:

Example of Flexible and Fixed Budget

A company has budgeted to produce and sell 100,000 units of cakes throughout the next period. The selling price per cake is Sh. 20 and variable cost per cake is Sh. 12.  Fixed overheads are budgeted to at Sh. 6000,000.

Additional information

1. Fixed costs will raises to Sh. 700,000 in that activity is in excess of 110,000 units; Fixed costs will decreases to Sh. 480,000 where activity level is less than 90,000 units.

2. Variable costs will fall with 5 percent per unit cake of all units where activity is in excess of 100,000 cakes due to the economies of scale.

The real results of the period in that 115,000 units cakes were produced and then sold were:

1. Sales revenue Sh. 2,242,500

2. Variable costs Sh. 1,320,000

3. Fixed costs Sh. 67,000

Required

1. Prepare a summary that Implies the budgeted results for activity levels from 80,000 to 120,000 cakes utilizing the above information.

2. Prepare a control statement comparing budgeted along with real results where a fixed budget system is utlized based on 100,000 units.

Solution

                                    Flexible Budget Summary

Units

 80,000

90,000

100,000

110,000

 120,000

Sales Revenue

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

Variable cost

690,000

108,000

120,000

1,254,000

1,368,000

Contribution

640,000

720,000

800,000

946,000

1,032,000

Fixed Costs

480,000

600,000

  600,00

600,000

700,000

Net Profit

160,000

  120,00

200,000

346,000

332,000

 

  Control Statement (Fixed Budget)

 

Budget

Actual

Variance

Units

100,000

115,00

15,00 (F)

Sales Revenue

2,000,000

2,242,500

242,500 (A)

Variable Cost

1,200,000

1,320,000

120,000    F  

Contribution

800,000

922,500

122,500 (A)

Fixed Costs

600,000

670,000

70,000 (A)

Net Profit

200,000

252,500

525,000 (F)


Related Discussions:- Example of flexible and fixed budget

Methods of costing, METHODS OF COSTING : 1. Job costing :  Job costing ...

METHODS OF COSTING : 1. Job costing :  Job costing is the essential costing technique appropriate to those industries somewhere the work consist of separate contracts, or batch

Determine the expected range of returns , Series Arithmetic Mean ...

Series Arithmetic Mean Standard Deviation   Small-company stocks 15.9  % 32.8  %   Large-company

Calculate the economic profit and relevent cost, A. Bolero Industries Ltd. ...

A. Bolero Industries Ltd. has been approached by a customer who would like a special job to be done for her, and is willing to pay $60,000 for it. The job would require the followi

Basic, sir i want to know the whole procress of costing

sir i want to know the whole procress of costing

Variable cost, how variable cost help in decision making.with suitable exam...

how variable cost help in decision making.with suitable example

Prepare cost sheet, The Pacific Manufacturing Company operates a job-order ...

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based

QUESTION AND ANSWER, question and answer: XYZ trading purchased 6,850 killo...

question and answer: XYZ trading purchased 6,850 killos of material at a total cost of 21,920.00. The material price variance was 1,370.00 favorable. The standard price per killo w

Difference between expenses and expenditure, The difference among expenses ...

The difference among expenses and expenditure. Expense is the outflow from a profit oriented organization whereas expenditure is the outflow from non-profit organization.

Activity Based Costing, How do I figure the estimated activity and estimate...

How do I figure the estimated activity and estimated allocation base?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd