Question

Cost accounting

Q1. Being a student of the managerial accounting course you are requested to analyze the financial statements of any company you may choose by using financial ratios covering profitability, solvency, efficiency and liquidity aspects and based the results of the performance kindly conduct SWOT analysis for the analyzed company.

Q2 .Give a numerical example for explaining how is the flexible budget prepared.

Answer 1

Q2

a flexible budget is prepared for different levels of activity showing different activity or capacity levels in horizontal columns and budgeted figures against different activity or capacity levels in the vertical columns.

The expenses are usually recorded under three groups, namely, variable, semi-variable and fixed. Budgeted figures for any level of activity not specifically covered in the flexible budget can be obtained by interpolation.

FLEXIBLE BUDGET for the period ending. 60% 80% 100% Capacity 1. Prime Cost: Direct Material Direct Labour Direct Expenses 2. Variable Overheads : 3. Marginal Cost (1+2) 4. Sales 5. Contribution (4-3) 6. Fixed Overheads Factory Overheads Administrative Overheads Selling & Distribution Overhead tillatt 7. Profit/Loss (5-6) ILLUSTRATION 12. The expenses budgeted for production of 10,000 units in a factory are furnished below: Per unit Materials Labour Variable Factory Overheads Fixed Factory Overheads ( 1,00,000) Variable Expenses (Direct) Selling Expenses (10% fixed) Distribution Expenses (20% fixed) Administrative Expenses (Fixed - 50,000) Total cost of sales per unit You are required to prepare a budget for the production of 6000 units and 8,000 units.

Particulars FLEXIBLE BUDGET Output 6,000 units Per Unit Amount Output 8,000 units Per Unit Amount 70.00 25.00 5.00 100.00 4,20,000 1,50,000 30,000 6,00.000 70.00 25.00 5.00 100.00 5,60,000 2,00.000 40,000 8,00,000 20.00 16.67 Variable or Production Expenses : Material Labour Direct Variable Expenses Prime Cost Factory Overheads : Variable Overheads Fixed Overheads Works Cost Administrative Expenses Fixed Cost of Production Selling Expenses : Fixed 10% of 13 Variable90% of 13 Distribution Expenses : Fixed 20% of 7 Variable-80% of 7 Total Cost of Sales 136.67 8.33 145.00 1,20,000 1,00,000 8,20,000 50,000 8,70,000 20.00 12.50 132.50 6.25 138.75 1,60,000 1,00,000 10,60,000 50,000 11.10,000 2.17 11.70 13,000 70,200 1.63 11.70 13,000 93,600 2.33 5.60 166.80 14,000 33,600 10,00.800 1.75 5.60 14,000 44.800 12,75,400 159.43