Question
Following data has been extracted from the records of
BCG Ltd. Machine hours: 8,00,000 (Maximum), 3,00,000 (Minimum). Manufacturing Overheads (₹ in lakh): 52 (Maximum), 32 (Minimum). With the above details calculate the Fixed Cost.Solution
The fixed cost is ₹ 20 lakh. Variable cost per unit = Manufacturing overheads (maximum) - Manufacturing overheads (minimum) / (Maximum machine hours - Minimum machine hours) = (52 lakh - 32 lakh) / (8,00,000 - 3,00,000) = 4 rs per unit Variable cost at minimum machine hours= 300000*4 = 12,00,000 Fixed cost = Manifacturing overheads(minimum) – variable cost(minimum) 3200000-1200000 = 20 lakh
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