The following information rel tö questions Lugger Ltd is a small engineering company in which one department manufactures a specialised component for another company. Currently the annual demand for this component is 9,000 units and the price is £20 per unit. The annual budgeted costs for the component are set out below. Materials 63,000 Direct labour 18,000 Machine lease 25,000 costs Other fixed costs 45,000 Total costs 151,000 Direct labour represents the full cost of employing the two workers who operate the machine, their wages are not dependent on the level of production. Recently Lugger has discussed the possibility of leasing a different machine. This would enable cheaper raw materials to be used, costing only £3 per unit. The new machine would have an annua lease payment of £55,000. ki0 Calculate margin of safety for the present machine and optional one, using current demand. Give your answers in terms of units produced. Present Optional A. 3,615 3,117 B. 2,230 3,823 2,230 +) 2,058 3,615 4,882
The following information rel tö questions Lugger Ltd is a small engineering company in which one department manufactures a specialised component for another company. Currently the annual demand for this component is 9,000 units and the price is £20 per unit. The annual budgeted costs for the component are set out below. Materials 63,000 Direct labour 18,000 Machine lease 25,000 costs Other fixed costs 45,000 Total costs 151,000 Direct labour represents the full cost of employing the two workers who operate the machine, their wages are not dependent on the level of production. Recently Lugger has discussed the possibility of leasing a different machine. This would enable cheaper raw materials to be used, costing only £3 per unit. The new machine would have an annua lease payment of £55,000. ki0 Calculate margin of safety for the present machine and optional one, using current demand. Give your answers in terms of units produced. Present Optional A. 3,615 3,117 B. 2,230 3,823 2,230 +) 2,058 3,615 4,882
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:The following information relates to questions 9 and 10
Lugger Ltd is a small engineering company in which one department manufactures a specialised component for
another company. Currently the annual demand for this component is 9,000 units and the price is £20 per unit. The
annual budgeted costs for the component are set out below.
Materials
63,000
Direct labour
18,000
Machine lease
25,000
costs
Other fixed costs
45,000
Total costs
151,000
Direct labour represents the full cost of employing the two workers who operate the machine, their wages are not
dependent on the level of production. Recently Lugger has discussed the possibility of leasing a different machine.
This would enable cheaper raw materials to be used, costing only £3 per unit. The new machine would have an annual
lease payment of £55,000.
k10 Calculate margin of safety for the present machine and optional one, using current demand. Give your
answers in terms of units produced.
Present Optional
A.
3,615 3,117
B.
2,230 3,823
2,230
2,058
D
3,615
4,882
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