CMA Intermediate · Cost Accounting · Budget and Budgetary Control
A flexible budget at 8,000 units shows total cost of ₹5,20,000 and at 10,000 units ₹6,00,000. Assuming linear behaviour, what is the budgeted total cost at 9,000 units?
The budgeted cost is ₹5,60,000. Variable cost per unit is ₹80,000 divided by 2,000 units, i.e. ₹40, and fixed cost is ₹2,00,000. At 9,000 units the cost is 2,00,000 plus 9,000 times 40, which equals ₹5,60,000.
- A₹5,60,000Correct
- B₹5,40,000
- C₹5,80,000
- D₹5,50,000
Explanation
Variable cost per unit = (6,00,000 − 5,20,000)/(10,000 − 8,000) = ₹40. Fixed cost = 5,20,000 − 8,000×40 = ₹2,00,000. At 9,000 units: 2,00,000 + 3,60,000 = ₹5,60,000. Check: midpoint of 5,20,000 and 6,00,000 is 5,60,000.
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