An engineer purchased 12years ago a heavy planner for P50,000.00 As the life of planner was 20years, a straight-line depreciation reserve has been provided on that basis. Now the firm wishes to replace the old planner with a newly designed planner possessing several advantages. It can sell old planner for P10,000.00. The new machine will cost P70,000.00. How much new capital will be required to make the purchase

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Q: None

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A:

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.