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Problem 5 flexible and static budgets
- 1. Problem 5 Prepare a flexible budget for 90,000 units. production in units sales cost of goods sold gross profit operating expenses (Rs. 90,000 fixed) operating income income taxes (30% of operating income) net income 70,000 Rs.1,400,000 840,000 560,000 370,000 190,000 57,000 133,000 80,000 90,000 Rs.1,600,000 Rs. 960,000 640,000 410,000 230,000 69,000 161,000 Solution production in units sales cost of goods sold gross profit operating expenses (Rs. 90,000 fixed) operating income income taxes (30% of operating income) net income 70,000 Rs.1,400,000 840,000 560,000 370,000 190,000 57,000 133,000 80,000 Rs.1,600,000 960,000 640,000 410,000 230,000 69,000 161,000 Sales 20 X 90,000 = 1,800,000 Cost of goods sold 12 X 90,000 = 1,080,000 Gross profit 8 Operating expenses (Rs. 90,000 fixed) 5 X 90,000 = 450,000 Operating income 3 X 90,000 = 270,000 Income taxes (30% of operating income) 270,000 X 30% = 81,000 Net income 189,000 90,000 Rs.1,800,000 1,080,000 720,000 450,000 270,000 81,000 189,000 X 90,000 = 720,000