Raja Ltd manufactures and sells a single product and has estimated sales revenue of 302.4 lakh during the year based on 20% profit on selling price.…

18. Workings Statement Showing “Total Variable Cost for the year" Particulars Amount (₹) Estimated Sales Revenue 3,02,40,000 Less: Desired Profit Margin on Sale @ 20% 60,48,000 Estimated Total Cost 2,41,92,000 Less: Fixed Selling and Distribution Overheads 69,12,000 Total Variable Cost 1,72,80,000 Statement Showing “Variable Cost per unit" Particulars Variable Cost p.u. (₹) Direct Materials: A: 6 Kg. @160 per kg. 960 B: 3 Kg. @100 per kg. 300 Labour Cost: Machine Shop: 4 hrs @140 per hour 560 Assembly Shop: 2 hrs @70 per hour 140 Factory Overheads: 20% of (₹ 560 +140) 140 Variable Selling & Distribution Expenses 60 Total Variable Cost per unit 2,160 (i) Calculation of number of units of product proposed to be sold and selling price per unit: Number of Units Sold = Total Variable Cost / Variable Cost per unit = 1,72,80,000 /2,160 = 8,000 units Selling Price per unit = Total Sales Value / Number of Units Sold = 3,02,40,000 / 8,000 units = 3,780 (ii) Production Budget (units) Particulars Units Budgeted Sales 8,000 Add: Closing Stock 3,000 Total Requirements 11,000 Less: Opening Stock (2,500) Required Production 8,500 (iii) Materials Purchase Budget (Kg.) Particulars Material A Material B Requirement for Production 51,000 (8,500 units × 6 Kg.) 25,500 (8,500 units × 3 Kg.) Add: Desired Closing Stock 8,000 5,500 Total Requirements 59,000 31,000 Less: Opening Stock (7,500) (4,000) Quantity to be purchased 51,500 27,000