A public limited company produces and sells three products. All products are manufactured in the same facilities under a common administrative control. The budgeted income statement for 2009 is as follows:
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Products |
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X Rs. |
Y Rs. |
Z Rs. |
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Sales |
4,00,000 |
10,00,000 |
6,00,000 |
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Variable expenses: |
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Cost of goods sold |
1,80,000 |
5,40,000 |
3,00,000 |
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Selling |
60,000 |
1,80,000 |
90,000 |
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Fixed expenses: |
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Overheads |
72,000 |
1,80,000 |
1,08,000 |
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Administrative |
32,000 |
80,000 |
48,000 |
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Income before tax |
56,000 |
20,000 |
54,000 |
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Income tax @ 40% |
22,400 |
8,000 |
21,600 |
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Net income |
33,600 |
12,000 |
32,400 |
Fixed expenses are allocated among the products in proportion to their budgeted sales volume:
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