(c) Concise Limited makes a component for one of the engines that it builds. It uses,...

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Accounting

(c) Concise Limited makes a component for one of the enginesthat it builds. It uses, on average, 2,000 of these components,steadily throughout the year. The component costs $16 per unit tomake and it costs an additional $320 to setup the productionprocess each time a batch of components is made. The holding costper unit is 10% of the unit production cost. The company makesthese components at a rate of 200 per week, and the factory is openfor 50 weeks per annum. Calculate the Economic Batch Quantity EBQ.(d) List and explain seven key purposes of a budgetingsystem. (e) Briefly explain any four (4) approaches tobudgeting

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1 CALCULATION OF ECONOMIC BATCH QUANTITY DEMAND 2000 UNITS PER UNIT COST 16 PER UNIT SETUP COST 320 HOLDING COST 160 10 OF PER UNIT COST EBQ 2UXPS WHERE U ANNUAL DEMAND P SETTING UP COST PER BATCH S STORAGE OR INVENTROY CARRYING COST PER ANNUM EBQ 2 X2000X320160 EBQ 895 UNITS PEE BATCH 2 SEVEN KEY PURPOSE OF BUDGETING SYSTEM i Efficiency It brings efficiency and economy in the working of the business enterprises The budget is an impersonal policeman that maintains ordered efforts and bring about efficiency in results ii Accountability It establishes divisional and departmental responsibility It thus prevent buck passing See Answer

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