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Fixed cost ₹3,00,000; variable cost ₹40 per unit; selling price ₹100. At 10,000 units, flexible-budget profit is:
A₹2,00,000
B₹3,00,000
C₹4,00,000
D₹6,00,000
Answer & Solution
Correct answer: B. ₹3,00,000
1. Total contribution = (100 − 40) × 10,000 = ₹6,00,000.
2. Less fixed cost ₹3,00,000.
3. Profit = 6,00,000 − 3,00,000 = ₹3,00,000.
4. The flexible budget restates the plan at the actual activity level.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.8.1 Illus 6_
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