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budgeting

AAbdiaziz5y ago
Many thanks for the assistance. A firm sets its fixed budget at 100 percent capacity. the budgeted sales is 300000 and a budgeted net profit is 50000 budgeted cost are 70 percent fixed and 30 percent variable what is the flexed budget for net profit at 80 percent capacity. . the Answer from the examiners comment says 5000. solution 100 percent capacity 300000 less profit 50000 gives 250000 fc at 70 percent equals 175000 VC at 30 percent equals 75000 at 80 percent capacity 300000*80/100 equals 240000 fc remains the same 175000 VC will change obviously but I Can not work out the figure. could you please help me to finish off the question to get the 5000. thank you very much.
John MoffatJohn MoffatTutor5y ago#1
At 100% capacity, the total costs are 300,000 - 50,000 = $250,000. Therefore the fixed costs are 70% x 250,000 = $175,000, and the variable costs are 30% x 250,000 = $75,000. So the contribution at 100% capacity is 300,000 - 75,000 = $225,000. Therefore the contribution at 80% capacity is 80% x 225,000 = $180,000, and the profit is 180,000 - 175,000 = $5,000.
AAbdiaziz5y ago#2
thank you very much
John MoffatJohn MoffatTutor5y ago#3
You are welcome :-)
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