# Budgeting help

Registered Posts: 9 Regular contributor ⭐ 😼 ⭐

A company has budgeted to make and sell 54,000 units in the coming year.

Each unit takes 15 labour minutes to make and requires 1.8kg of raw material.
The quality control department can test 4,000 units each month. A contract has been placed to purchase 90,000kg of raw material at an agreed price.
Further supplies can be obtained on the open market but the price is likely to be much higher. The company employs 6 production workers.
Each worker works 1,950 hours a year in normal time.

Complete the following analysis.

There is labour available to make ( ) units in normal time.
Therefore ( ) hours of overtime will be needed.
The raw material contract will provide enough to make ( ) units.
Therefore ( ) kg will have to be purchased on the open market.
Quality control can test ( )units in the year. It will be necessary to
make alternative arrangements for( )units.

Thank you

• Registered Posts: 3 New contributor 🐸
There is labour available to make (46,800) units in normal time.
Therefore (1800) hours of overtime will be needed.
The raw material contract will provide enough to make (50,000) units.
Therefore (7,200) kg will have to be purchased on the open market.
Quality control can test (48,000)units in the year. It will be necessary to
make alternative arrangements for(6000)units.

Workings:

6x1950 = 11,700 (available hours). 11,700 x 60 (to get answer in minutes) / 15 = 46,800
54,000-46,800 = 7200. 7200 x 15 (mins) = 108,000 / 60 = 1800
90,000/1.8kg = 50,000
54,000-50,000 = 4000. 4000 x 1.8kg = 7,200kg
4000 x 12 months = 48,000 units
54,000 units - 48,000 units = 6000 units

I think this is right. Just passed my Budgetting exam today. Let us know if there is anything you don't understand.. or if I got it wrong.. haha
• Registered Posts: 9 Regular contributor ⭐ 😼 ⭐
Thanks Louise and congratulations on passing.