Scribd Logo
Upload

Welcome to Scribd!

  • Budget

    Uploaded by

    vasanthgurusamyns
    7 views7 pages
    Okay, here are the steps to solve this problem: (a) Sales Given: Margin of safety = Rs. 10,000 MOS represents 40% of sales Let total sales be Rs. x Then, MOS (40% of x) = Rs. 10,000 0.4x = Rs. 10,000 x = Rs. 10,000/0.4 = Rs. 25,000 (b) Break even sales Given: P/V ratio is 50% Break even point = Fixed costs/P/V ratio P/V ratio = 50% = 0.5 Fixed costs = ? Let break even sales be Rs

    Original Description:

    Original Title

    31.12.22

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Okay, here are the steps to solve this problem: (a) Sales Given: Margin of safety = Rs. 10,000 MOS represents 40% of sales Let total sales be Rs. x Then, MOS (40% of x) = Rs. 10,000 0.4x = Rs. 10,000 x = Rs. 10,000/0.4 = Rs. 25,000 (b) Break even sales Given: P/V ratio is 50% Break even point = Fixed costs/P/V ratio P/V ratio = 50% = 0.5 Fixed costs = ? Let break even sales be Rs

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    7 views7 pages

    Budget

    Uploaded by

    vasanthgurusamyns
    Okay, here are the steps to solve this problem: (a) Sales Given: Margin of safety = Rs. 10,000 MOS represents 40% of sales Let total sales be Rs. x Then, MOS (40% of x) = Rs. 10,000 0.4x = Rs. 10,000 x = Rs. 10,000/0.4 = Rs. 25,000 (b) Break even sales Given: P/V ratio is 50% Break even point = Fixed costs/P/V ratio P/V ratio = 50% = 0.5 Fixed costs = ? Let break even sales be Rs

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 7

    BUDGET

    1.

    ANSWER:
    Particulars units
    Estimated sales 40,000
    + closing balance 7,000
    - opening balance 5,000
    ESTIMATED PRODUCTION 42,000

    MATERIAL PROCRUMENT BUDGET


    PARTICULARS RAW MATERIALS
    A (units) B (units)
    Estimated consumption 1,26,000 2,10,000
    Add : expected closing stock 15,000 25,000
    Add: closing material on order 8,000 10,000
    1,49,000 2,45,000
    Less: expected opening stock 12,000 20,000
    Less: opening material on order 7,000 11,000
    Estimated procurement 1,30,000 2,14,000
    2.

    Prepare sales budget for 2009.

    ANSWER:
    SALES BUDGET FOR 2009
    DIVISION A (Rs 10 per unit) B (Rs 5 per unit) TOTAL

    Units Amount Units Amount


    I 3,00,000 30,00,000 6,00,000 30,00,000 60,00,000
    II 6,75,000 67,50,000 7,20,000 36,00,000 1,03,50,000
    III 1,80,000 18,00,000 70,000 3,50,000 21,50,000
    TOTAL 11,55,000 1,15,50,000 13,90,000 69,50,000 1,85,00,000
    3. Prepare a flexible budget for overhead expenses on the basis of the following data
    and determine the overhead at 70%, 80% and 90% plant capacity.

    ANSWER:
    FLEXIBLE BUDGET
    PARTICULARS CAPACITY
    70% 80% 90%
    VARIABLE OVERHEAD
    Indirect labour 10,500 12,000 13,500
    Indirect material 3,500 4,000 4,500

    SEMI-VARIABLE OVERHEAD
    Power (30% fixed) 6,000 6,000 6,000
    (70% variable) 12,250 14,000 15,750

    Repairs (60% fixed) 1,200 1,200 1,200


    (40% variable) 700 800 900

    FIXED OVERHEADS
    Depreciation 11,000 11,000 11,000
    Insurance 3,000 3,000 3,000
    Salaries 10,000 10,000 10,000
    Total (A) 58,150 62,000 65,850
    DIRECT LABOUR HOURS (B) 1,08,500 1,24,000 1,39,500
    DIRECT LABOUT HOUR RATE (A/B) Rs 0.54 Rs 0.50 Rs 0.47

    DEPRECIATION
    STRAIGHT LINE METHOD
    An asset is purchased for Rs.50,000. Depreciation is to be provided annually
    according to Straight Line Method. The useful life of the asset is 5 years and the
    residual value is 5,000.You are required to find out the rate of depreciation and
    prepare asset account for the first three years.

    Answer:
    Determination of amount of depreciation:
    COST OF ASSET - SCRAP VALUE / LIFE OF ASSET
    50,000 - 5,000 / 5 = Rs 9,000

    Determine the rate of depreciation:


    DEPRECIATION AMOUNT / ORIGINAL COST OF ASSET * 100
    9,000/50,000 * 100 = 18%

    ASSET A/C
    Dr Cr
    Date Particulars Amount Date Particulars Amount
    1st year To Bank 50,000 1st year By 9,000
    depreciation
    By bal c/d 41,000
    50,000 50,000
    nd
    2 year To bal b/d 41,000 2nd year By 9,000
    depreciation
    By bal c/d 32,000
    41,000 41,000
    3rd year To bal b/d 32,000 3rd year By 9,000
    depreciation
    By bal c/d 23,000
    32,000 32,000
    4th year To bal b/d 23,000
    WRITTEN DOWN VALUE
    A machine was bought on 1.1.03 for 12,000 Rs. On 30th June 2004 it acquired
    additional machinery at a cost of Rs.2,000. On 31st March 2005 one of the original
    machines which had cost of Rs.500 was found to have become obsolete and was sold
    as scrap for Rs.50. It was replaced on that date by a new machine costing Rs.800.
    Charge depreciation on 15% per annum on WDV basis and prepare ledger account for
    first three years.

    ANSWER:

    MACHINERY A/C
    Dr Cr
    Date Particulars Amount Date Particulars Amount
    1.1.03 To Bank 12,000 31.12.03 By 1,800
    depreciation
    By bal c/d 10,200
    12,000 12,000
    1.1.04 To bal b/d 10,200 31.12.04 By 1,680
    depreciation
    (10,200 *
    15% +
    2,000 *
    15% * 6/12)
    30.6.04 To bank 2,000 By bal c/d 10,520
    12,200 12,200
    1.1.05 To bal b/d 10,520 31.3.05 By 14
    depreciation
    on original
    machine
    31.3.05 To bank 800 By sale of 50
    machine
    By loss on 297
    sale
    31.12.05 By 1,614
    depreciation
    (10,520 *
    15% + 800
    * 15% *
    9/12)
    By bal c/d 9,345
    11,320 11,320
    1.1.06 To bal b/d 9,345

    Working notes:
    Cost on 1.1.03 500
    - dep. @ 15% 75
    WDV on 1.1.04 425
    - dep @ 15% 64
    WDV on 1.1.05 361
    - dep for 3 months @ 15% 14
    WDV on 31.3.05 347
    - sale value 50
    Loss 297

    HOMEWORK
    1.

    2.
    3. Reliable Battery Co. furnishes you the following income information for the
    current year divided into two subparts:

    4. Margin of safety Rs.10,000 which represent 40% of sales. P/V Ratio 50%.
    Calculate. (a) Sales (b)Break even sales c)Fixed Cost (d)Profit

    You might also like