51.00 Question 4 The Bajaj Co Ltd operates a system of flexible budgetary control. A flexible budget is required to show levels of activity at 70%, 80% and 90%. The following is a condensed summary of the relevant information. (a) Sales, based on normal level of activity of 70% (350,000 units) at Rs 200 each. If output is increased to 80% and 90%, selling prices are to be reduced by 2.5% and 5% of the original selling price respectively in order to reach a wider market. (6) Variable costs are Rs 100 per unit (70% is the cost of raw material). In case output reaches 80% level of activity or above, the effective purchase of raw material will be reduced by 5%. () Variable overheads: Salesman's commission is 2% of sales value. (d) Semi-variable overheads (total) at 350,000 units are Rs 1,200,000, they are expected to increase by 5% if output reaches a level of activity of 80% and by a further 10% if it reaches the 90% level. (e) Total fixed overheads are R$ 2,000,000 which are likely to remain unchanged up to 100% capacity