Home Counties Appliance PLC manufactures three types of lawnmower:

manual, diesel, and electric. The production costs are as follows:

Maximum labour hours available 60 000 hours for the year. Fixed overheads are allocated at £2 per labour hour.
Required:

(a) Prepare a budget to maximize profit for the coming year. (14 marks)

(b) Discuss why and on what basis you have prepared this budget.

Transcribed Image Text:

Models Materials Labour (4 per hour) Variable overhead Fixed Overheads Manual Diesel Electric 15 22 30 16 20 20 4 6 8 Total costs 43 Selling Price 50 2355 10 10 57 65 Profit 7 Expected maximum demand 10 000 5.000 2.000