2.3 REQUIRED Use the information provided below to determine the optimum mix of products that should be produced by Volex Limited. Also indicate the total contribution that would be earned. INFORMATION Volex Limited has only 2 500 machine hours available to produce three products viz. Product A, Product B and Product C. The following budgeted information relates to the three products for January 2024: Product A Product B R60 R75 R36 R30 4 hours 5 hours 280 units 300 units Sales price per unit Variable costs per unit Machine hours required per unit Estimated sales demand Product C R90 R60 2.5 hours 320 units
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.
Lets understand the basics.
When any input is scare resource to complete demanded output of various products then management try to choose best possible products to produce.
For choosing it, management calculate contribution margin generated per scare resource for each product.
Product with highest contribution per scare resource are chosen first to product and then ranking is made in decreasing order of contribution margin per scare resource product.
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