CAPS - Education SAN CA Intermediate Profit in any year is budgeted to be 16-2/3 of sales. Actual cost The following percentage increases in costs are expected for next year. Increase % 6 3 7 7 10 Direct Martial wn 7.5 10 Direct Wages Variable Production overhead Variable Administration overhead Fixed Production overhead 10 Fixed Selling and Distribution overhead Administration overhead 7 . You ar 10 You are required; a). The a). to prepare for next year a flexible on act budget statement on the assumption that the company operates at 85% of capacity ; your b). to statement should show both contribution and profit. the b b). to discuss briefly three problem which may arise from the change in capacity level. c). to diffe Question 8 d). it You have been asked to examine the budgeting system at QED Limited manufactures be

Question 7 T U Limited is in an industry sector which is recovering from the recent recession. The directors of the company hope next year to be operating at 85% of capacity although currently the company is operating at only 65% of capacity. 65% of capacity represents output Units. of 10000 units of the single product which is produced and sold. One hundred direct workers are employed on production for 200000 hours in the current year. The fixed budgets for the current year are; Capacity level 55% 65% 75% Direct Martial Rs. 846200 Rs. 1000000 Rs. 1153800 Direct Wages 14880850 1750000 2019150 Production overhead 596170 650000 703830 Selling and Distribution overhead 192310 200000 207690 Administration overhead 120000 120000 120000 Total costs 3235530 3720000 4204470

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