A factory is currently running at 50% capacity and produces 2,000 units at a cost of...

 

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A factory is currently running at 50% capacity and produces 2,000 units at a cost of RM360 per unit as per the details listed below: Materials Labour Factory Overheads Administrative Overheads Required: a) 200 b) 60 The current selling price is RM400 per unit. Additional information: 1) At 70% working capacity, material cost per unit increased by 3% and selling price per unit reduced by 3%. RM 60 (RM24 fixed) 40 (RM20 fixed) 2) At 90% working capacity, material cost per unit increased by 6% and selling price per unit decreased by 6%. Estimate the profit of the factory at 70% and 90% of working capacity. Argue on the advantages of a flexible budget as compared to a fixed budget. A factory is currently running at 50% capacity and produces 2,000 units at a cost of RM360 per unit as per the details listed below: Materials Labour Factory Overheads Administrative Overheads Required: a) 200 b) 60 The current selling price is RM400 per unit. Additional information: 1) At 70% working capacity, material cost per unit increased by 3% and selling price per unit reduced by 3%. RM 60 (RM24 fixed) 40 (RM20 fixed) 2) At 90% working capacity, material cost per unit increased by 6% and selling price per unit decreased by 6%. Estimate the profit of the factory at 70% and 90% of working capacity. Argue on the advantages of a flexible budget as compared to a fixed budget.

Answer rating: 100% (QA)

Answer 1Estimation of profit of factory Capacity Units Capacity Units Capacity Units 50 2000 70 2800 ... View the full answer