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CMA Intermediate · Management Accounting · Forecasting, Budgeting and Budgetary Control

Ananya Appliances budgets sales of 6,000 units at Rs 500 each. Variable cost is Rs 300 per unit and fixed production overhead is Rs 4,00,000, of which Rs 40,000 is depreciation. Cash-based overhead budgeting excludes non-cash items. What is the budgeted cash fixed overhead plus total variable cost, assuming production equals sales?

The amount is Rs 21,60,000. Variable cost is 6,000 units at Rs 300, or Rs 18,00,000. Cash fixed overhead excludes the Rs 40,000 depreciation, leaving Rs 3,60,000. Adding them gives Rs 21,60,000.

  1. ARs 21,60,000Correct
  2. BRs 18,00,000
  3. CRs 22,00,000
  4. DRs 19,60,000

Explanation

Variable cost = 6,000 x 300 = Rs 18,00,000. Cash fixed overhead = 4,00,000 - 40,000 = Rs 3,60,000. Total = Rs 21,60,000. Rs 22,00,000 includes depreciation, which is non-cash.

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