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To prepare a flexible budget and forecast profit at 60%, 75%, and 100% capacity, we'll need to follow these steps:

1. **Fixed Expenses:** These remain constant across all levels of capacity.
2. **Semi-variable Expenses:** They change based on the capacity level:
   - They remain constant up to 65% capacity.
   - Increase by 10% between 65% and 80% capacity.
   - Increase by an additional 20% between 80% and 100% capacity.
3. **Variable Expenses:** These vary directly with production levels, so we will scale them up based on the given capacity.

### Step-by-Step Solution

#### 1. Fixed Expenses:
Fixed expenses do not change with production levels:
   - Wages and Salary = Rs. 84,000
   - Rent and Rates = Rs. 56,000
   - Depreciation = Rs. 70,000
   - Estimated expenses = Rs. 90,000
   - Total Fixed Expenses = \( 84,000 + 56,000 + 70,000 + 90,000 = Rs. 3,00,000 \)

#### 2. Semi-variable Expenses:
Semi-variable expenses at 60% capacity:
   - Maintenance Charge = Rs. 25,000
   - Indirect Labour = Rs. 99,000
   - Sales Dept Salaries = Rs. 29,000
   - Other Administrative Expenses = Rs. 26,000
   - Total = \( 25,000 + 99,000 + 29,000 + 26,000 = Rs. 1,79,000 \)

**Adjustments for different capacities:**
- 60% capacity = Rs. 1,79,000 (as given)
- 75% capacity = Rs. 1,79,000 * 1.10 = Rs. 1,96,900 (10% increase)
- 100% capacity = Rs. 1,96,900 * 1.20 = Rs. 2,36,280 (further 20% increase)

#### 3. Variable Expenses:
Variable expenses at 50% capacity are:
   - Materials = Rs. 24,000
   - Labour = Rs. 2,56,000
   - Chargeable Expense = Rs. 38,000
   - Total = \( 24,000 + 2,56,000 + 38,000 = Rs. 3,18,000 \)

**Scaling for other capacities:**
- Variable expenses per unit = Rs. 3,18,000 / 0.50 = Rs. 6,36,000 at 100%
   - At 60% capacity = Rs. 3,81,600 (60% of Rs. 6,36,000)
   - At 75% capacity = Rs. 4,77,000 (75% of Rs. 6,36,000)
   - At 100% capacity = Rs. 6,36,000

#### 4. Total Costs at each level:
   - **60% capacity:** \( 3,00,000 + 1,79,000 + 3,81,600 = Rs. 8,60,600 \)
   - **75% capacity:** \( 3,00,000 + 1,96,900 + 4,77,000 = Rs. 9,73,900 \)
   - **100% capacity:** \( 3,00,000 + 2,36,280 + 6,36,000 = Rs. 11,72,280 \)

#### 5. Sales and Profit at each level:
   - **60% capacity:** 
     - Sales = Rs. 12,00,000 
     - Profit = Sales - Total Cost = \( 12,00,000 - 8,60,600 = Rs. 3,39,400 \)
   - **75% capacity:** 
     - Sales = Rs. 14,00,000 
     - Profit = Sales - Total Cost = \( 14,00,000 - 9,73,900 = Rs. 4,26,100 \)
   - **100% capacity:** 
     - Sales = Rs. 17,00,000 
     - Profit = Sales - Total Cost = \( 17,00,000 - 11,72,280 = Rs. 5,27,720 \)

### Summary:
- **At 60% capacity:** Profit = Rs. 3,39,400
- **At 75% capacity:** Profit = Rs. 4,26,100
- **At 100% capacity:** Profit = Rs. 5,27,720

Would you like more details on any specific step?

Here are some related questions:
1. How do semi-variable expenses impact profit margins at different production levels?
2. Why is it important to differentiate between fixed, variable, and semi-variable expenses in budgeting?
3. How does the increase in semi-variable expenses affect the overall cost structure?
4. What are the implications of fixed costs remaining constant regardless of capacity?
5. How would an unexpected change in variable expenses impact the budget forecast?

**Tip:** In flexible budgeting, understanding expense behavior at different levels of production helps to anticipate how changes in sales volume will affect profitability.

Prepare a flexible budget for the half-year ending and forecast the profit at 60%, 75%, and 100% capacity based on the given manufacturing data for fixed, semi-variable, and variable expenses.

Learn how to prepare a flexible budget for a manufacturing company based on fixed, semi-variable, and variable expenses. The problem covers budgeting concepts with capacity adjustments, detailed expense breakdowns, and profit forecasting. Suitable for accounting and finance students.

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