A small clothing manufacturer expects to sell 12,000 shirts in the upcoming quarter. The selling price per shirt is Rs.250, the variable cost per shirt is Rs.180, and the fixed manufacturing overheads for the quarter are Rs.500,000. Prepare a production budget (in rupees) for the quarter and compute the expected profit.

Step-by-step solution

1. Calculate total sales revenue: $12,000\times 250=3,000,000$ rupees.
2. Determine total variable costs: $12,000\times 180=2,160,000$ rupees.
3. Add fixed manufacturing overheads: $2,160,000+500,000=2,660,000$ rupees – this is the total cost for the quarter.
4. Compute expected profit: $3,000,000-2,660,000=340,000$ rupees.
5. Thus the production budget (total cost) is $2,660,000$ rupees, and the expected profit is $340,000$ rupees.

Concept tested: Production budget and profit calculation

Published 13 October 2026 · How this solution was prepared and checked