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Budgetary Problems

The document contains three sections that provide examples and information for preparing flexible and master budgets. The first section provides an example of a flexible budget for a factory. The second section provides information to prepare flexible administration, selling, and distribution cost budgets for a department operating at different capacities. The third section provides information to prepare a master budget for a glass manufacturing company for the next year.

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shivam sharma
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72 views2 pages

Budgetary Problems

The document contains three sections that provide examples and information for preparing flexible and master budgets. The first section provides an example of a flexible budget for a factory. The second section provides information to prepare flexible administration, selling, and distribution cost budgets for a department operating at different capacities. The third section provides information to prepare a master budget for a glass manufacturing company for the next year.

Uploaded by

shivam sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Budgetary Problems

Flexible Budget

1. A factory which expects to operate 7,000 hours, i.e., at 70% level of activity, furnishes details
of expenses as under:

Variable expenses INR1,260


Semi-variable expenses INR 1,200
Fixed expenses INR 1,800

The semi variable expenses go up by 10% between 85% and 95% activity and by 20% above
95% activity. Prepare a flexible budget for 80, 90 and 100 percent activities.

2. A department of company X attains sale of Rs 600,000 at 80% of its normal capacity and its
expenses are given below:

Administration Costs: Amount (Rs)

Office salaries 90,000


General expenses 2 percent of sales
Depreciation 7,500
Rates & taxes 8,750

Selling expenses:
Salaries 8 percent of sales
Travelling expenses 2 percent of sales
Sales office expenses 1 percent of sales
General expenses 1 percent of sales

Distribution Costs:
Wages 15,000
Rent 1 percent of sales
Other expenses 4 percent of sales

Prepare flexible administration, selling and distribution cost budget, operating at 90 percent,
100 percent, and 110 per cent of normal capacity.
Master Budget

1. Float glass Manufacturing company requires you to prepare the Master budget for the
next year from the following information:

Sales: Amount (Rs)


Toughened Glass 6,00,000
Bent Glass 2,00,000
Direct material cost 60% of sales
Direct wages 20 workers @ Rs 150 per month

Factory overheads:
Indirect labour – Rs 500 per month
Works Manager Rs 400 per month
Foreman
Stores & spares 2.5% on sales

Depreciation on machinery Rs 12,600

Light & power Rs 3,000

Repairs & maintenance Rs 8,000

Other sundries 10% on direct wages

Administration, selling and distribution Rs 36,000 per year


expenses

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