What would be the effect on budgeted income

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Reference no: EM13501927

The budgeted income statement by product lines of Multi Products Ltd.,

for 2003 is as follows:


Product A

 Product B

Product C

Sales

Rs. 2,00,000

Rs. 5,00,000

Rs. 3,00,000

Variable expenses:




Cost of goods sold

90000.00

1,70,000

1,50,000

Selling expenses

30000.00

90,000

45,000

Overhead:




Fixed

36000.00

90,000

54,000

Administrative

16000.00

40,000

24,000

Income before tax

28000.00

10,000

27,000

Income tax @ 40% 

11200.00

4,000

10,800

Net income

16800.00

6,000

60,200

All products are manufactured in the same facilities under common administrative control. Fixed expenses are allocated among the products in proportion to their budgeted sales volume:

(a) Computer the budgeted break-even point of the company as a whole, from the data provided.

(b) What would be the effect on budgeted income if half of the budgeted sales volume of Product B were shifted to Product A and C in equal rupee amounts, so that the total budgeted sales in rupee remains the same?

(c) What could be the effect of the shift in the product-mix suggested in (b) above on the budgeted break-even point of the whole company?

Reference no: EM13501927

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