Multiple Choice Questions on XYZ Ltd has a factory that works at 75 capacity Variable costs at this level are Rs 2 800 semi varia........... for Punjab Government (Allied) Exams Preparation

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Multiple Choice Questions

XYZ Ltd has a factory that works at 75 capacity Variable costs at this level are Rs 2 800 semi varia...........

Costing ( Revenue Account ) Basics of Cost Control and Analysis
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    XYZ Ltd has a factory that works at 75% capacity. Variable costs at this level are Rs. 2,800, semi-variable costs Rs. 3,240 and fixed costs Rs. 1,920. If semi-variable costs are expected to rise by 10% between 75% to 95% capacity utilisation, the budgeted cost for 90% utilisation is:

    Rs. 8,904

    Incorrect Answer

    Rs. 8,844

    Correct Answer

    Rs. 9,552

    Incorrect Answer

    Rs. 8,520

    Incorrect Answer
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    Explanation:

    - The factory works at 75% capacity with variable costs at Rs. 2,800 and semi-variable costs at Rs. 3,240. Fixed costs are Rs. 1,920.

    - At 90% capacity utilisation, variable costs increase proportionally: \( \frac{2800}{75} \times 90 = 3360 \).

    - Semi-variable costs are expected to rise by 10%: \( 3240 \times 1.10 = 3564 \).

    - Fixed costs remain unchanged at Rs. 1,920.

    - Total budgeted costs at 90% utilisation: Rs. 3,360 + Rs. 3,564 + Rs. 1,920 = Rs. 8,844.

    ?? Correct Answer: Option 2, Rs. 8,844

    By: Rohit Middha
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