Master Budget free essay sample

Ergodesign Ltd is a medium company which operates in Central Scotland. It makes specially designed quality office furniture like desks, chairs and many office accessories. The company manufactures office furniture to the customer requirements and has good reputation of quality products and customer service. The production takes 40,320 direct labour hours, 28,000 for machining. They get about 1,750 orders per year and 650 production runs. Ergodesign Ltd employs 36 workers, 24 involved in production, storage and delivery, another 12 work in research and development, finance, administration, and sales and marketing. The company works 48 weeks a year. This allows time for holidays periods and maintenance of machinery and equipment. They operate 35 hours a week. Ergodesign Ltd has a spare capacity in production affected by economic crisis in the market and managers are therefore keen to get more contracts to fill in that gap. The designers have been working to make a new special very good quality chair for people with back and posture problems. We will write a custom essay sample on Master Budget ? or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They produced last year a prototype with an aluminium frame which flexes and moves with the body. A prototype was tested by the group of office workers with back and posture related problems. The test was successful. They want to sell these chairs to the final customers for 300-500?. It was demonstrated at an industrial innovation fair. At this fair one wholesaler informed them he wants to buy these chairs from Ergodesigh Ltd. The wholesaler is interested to sell these chairs to international and UK retailers. He currently supply similar chair but last year his international supplier was not able to make quantity required so therefore he is looking for a new UK supplier of quality products. The Managing Director wants to investigate production facilities and make a small trial batch to ensure that it meets wholesaler requirements. The wholesaler is very happy about quality of product and is willing to pay ? 195 for each chair and guarantee sales of 1800 units in first year. In year two and three he expects demand will increase by 20%. After year three it’s likely that demand would level off for the foresible future. The Managing Director is satisfied to the feasibility of new product and he has a plan to make and assemble the chair rather than sub-contracting that, however Ergodesigh Ltd needs to purchase a new CNC laser for cutting the aluminium frame for ? 125,000 to make specially designed features of the chair and increase production volume.