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NMP LTD., a newly established manufacturing company, has an installed capacity to produce 100,000 units of a consumer product annually. However, its practical capacity is only 90%. The actual capacity utilization may be substantially lower, as the firm is new to the market and the demand is uncertain. The following budget has been prepared for 90% capacity utilization.
Problem 1: You are required to prepare the budgets at 70% and 80% levels of capacity utilization giving clearly the :
(I) Unit Variable Costs
(II) Unit Fixed Cost
(III) Total Cost under various heads at all the above levels
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