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