University Office Supply makes two types of staplers: manual and electric. Both staplers use the same spring mechanism, but the manual stapler uses a red cover and a solid metal base, whereas the electric stapler uses a black cover and a clear plastic base. University expects to sell 7,000 manual staplers and 5,000 electric staplers during the next quarter, which is an unusually high demand for them. To meet the demand for the next quarter, University has 500 manufacturing hours available. To meet demand, they will nee
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.
University Office Supply makes two types of staplers: manual and electric. Both staplers use the same spring mechanism, but the manual stapler uses a red cover and a solid metal base, whereas the electric stapler uses a black cover and a clear plastic base. University expects to sell 7,000 manual staplers and 5,000 electric staplers during the next quarter, which is an unusually high demand for them.
To meet the demand for the next quarter, University has 500 manufacturing hours available. To meet demand, they will need to outsource some parts.During in-house production, University incurs a fixed cost for setup and a variable cost for manufacturing. For outsourced units, University only incurs a purchase cost. These costs, as well as the manufacturing time per unit for in-house production as given in the table below:
Help University minimize their total cost of meeting demand.
| Part | Fixed Cost | Variable Cost | Purchase Cost | Manufacturing Time per Unit (min.) |
| Spring Mechanism | $1,000 | $0.40 | $0.65 | 0.9 |
| Red Cover | $1,200 | $2.90 | $3.45 | 2.2 |
| Black Cover | $1,900 | $3.15 | $3.70 | 3 |
| Solid Metal Base | $1,500 | $0.30 | $0.50 | 0.8 |
| Clear Plastic Base | $1,500 | $0.55 | $0.70 | 1 |
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