Paton Engineering only produce two types of lawn mower, both for exclusive sale to Dobbie's Garden Centre. Budgeted product details for 2023 are as follows

 

	Highcut	Lowcut
Selling Price per mower	E600	E500
Raw material per mower	E220	E180
Labour cost per mower	£40	£30
Variable costs per mower	£50	£40
Share of fixed costs	£40,000	£32,000
Volume	1,000 mowers	850 mowers

 

Required

 

Consider each question independently

 

a. What is Paton Engineering's budgeted profit for 2023?

 

 

 

b. If Dobbies' decided that they only wanted Paton Engineering to manufacture the Lowcut mower in 2023, what would be the breakeven point for the Lowcut Mowers?

 

c. Paton Engineering has been offered he use of a blades harpening machine for 2023 at an annual rental of £7,500. This would save 12% of the labour costs. Would it be beneficial for Paton Engineering to rent the blade sharpening machine?

 

 

 

d. Explain the significance to Paton Engineering of understanding their operational gearing?