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adhuka's - Students' Handbook on Strategic Cost Management & Performance Evaluation - CA Final 1. Profitability Statement as Budgeted (using Marginal Costing) (Output = 2,10,000 units) Total ( Lakhs) P.u. ) 500 Assuming the Company has decided to buy component X from outside, which proposal for the use of Idle/Spare Capacity will you select? Find out the increase in profits due to acceptance of those proposals. Solution: Particulars Computation 1050.00 Sales 2,10,000 units x 500 Less: Variable Costs 430.50 Materials 205 2,10,000 units x * 205 105.00 Component X (See Note 1) 50 2,10,000 units FG x 2 units of Xx? 25 201.60 Direct Wages (See Note 2) 96 2,10,000 units x 2 hours x 48 ph 54.60 26 Factory OH 2,10,000 units x (40% x 65) 44.10 21 Selling & Distribution OH 2,10,000 units x (70% x 30) 835.80 Total Variable Costs 398 214.20 Contribution 102 Less: Fixed Costs 8.40 Component X (Fixed Portion) 32,000 for 1,000 units, so for 4,20,000 units of X 81.90 Factory OH 2,10,000 units