Cherry, Inc., currently has a machine that costs $10,000 per year to operate. The machine can produce 50,000 units per year. Three years ago the company borrowed $200,000 to purchase the machine; it still owes $125,000 of that amount. Cherry could sell the machine for $70,000 and purchase a new, more efficient machine at a cost of $220,000. The new machine can produce 85,000 units per year; its annual operating costs would be $12,000.Indicate whether each piece of information in this scenario is relevant or irrelevant to the decision to purchase the new machine. Operating cost of old machine    RelevantIrrelevant Production of old machine    RelevantIrrelevant Purchase price of old machine    RelevantIrrelevant Loan balance    RelevantIrrelevant Market value of old machine    RelevantIrrelevant Cost of new machine    RelevantIrrelevant Production of new machine    RelevantIrrelevant Operating cost of new machine    RelevantIrrelevant

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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.