Question 1 Budgeting Fixed and flexible budgeting in an organization

A) A wide variety of jams and marmalades are produced by Cherry Berry Limited, which is sold in supermarkets across England under its own brand. An inexpensive supermarket chain called "Borges" approached Cherry Berry Limited to see if it would be willing to supply Seville marmalade and enable it to be sold in its stores under the "Borges" brand for a limited time, three-month promotional period. Borges needs 50,000 jars of Seville marmalade every month to serve all of its supermarkets throughout the three-month campaign and has paid Cherry Berry Limited £0.85 per jar.

I. Order size must be calculated by multiplying the number of jars shipped each month by delivery time.
50,000 jars * 3 months = 150,000 jars.
II. The next step is to calculate the company's revenue by multiplying the quantity of goods by the promised reward.
150,000 jars * £0.85 = £127,500
It is necessary to calculate the costs doing the calculation below.

1. 
   Orange
   

In order to make one jar of Seville marmalade, 0.125 kilogram of Seville oranges are needed. Seville oranges are purchased in bulk by Cherry Berry Limited at a price of £1.60 per kilogram.
The overall cost of the oranges is being calculated. The number of jars each month multiplied by the unit necessary for each jar of marmalade and the price for one unit required for a kilogram of oranges is needed to determine the size of the oranges needed.
150,000pcs * 0.125kg = 18,750kg * £1.6 = £30,000

2. 
   Sugar
   

Sugar costs £0.32 per kilogram for the firm's usual suppliers, who supply 0.250 kilograms of sugar to manufacture one jar of Seville marmalade for the company.
This means that if we want to know how much overall sugar costs, we need to multiply how many jars there are by how much per-jar sugar costs, and then multiply the entire cost by that price.
150,000 jars * 0.250kg = 37,500kg * £0.32 = £12,000

3. 
   Champagne
   

Each jar of Cherry Berry Limited's Seville marmalade comes with 0.015 liters of Champagne. It pays £5.25 for a 0.75-liter bottle of Champagne purchased straight from a French estate.
In order to calculate the price of Seville champagne marmalade additives, multiply total product by the unit of liters needed for one jar and divide by the number of liters each bottle. The price per bottle must be multiplied by the total number of jars.
150,000 jars * 0.015 liters = 2,250 liters /0.75 liters = 3000 jars * £5.25 = £15,750

4. 
   Glass jars
   

A batch of 100,000 jars of the marmalade costs Cherry Berry Limited £24,000, and the company buys them directly from its suppliers. It is common practice to utilize these jars in the production of Cherry Berry goods. It's important to know how many batches of glass jars you'll need in order to figure out how much each batch will cost. Then, the total cost of the receiving batches is multiplied by the unit batch multiplier.
150,000 jars/100,000 batches = 1.5 batch 1,5 batch * £24,000 = £36,000

5. 
   Fixed Overheads
   

If we accept the order or not, there will be no change in our fixed expenses. As a result, these will be of no use.
Variable Overheads
There was a £0.08 per can variable manufacturing cost. As a result, the price per unit of variable overheads must be multiplied by the total quantity of items produced in order to assess these expenses.
150,000 jars * £0.08 = £12,000

6. 
   Label Cost
   

Borges designs are printed on the labels of each jar of marmalade. A batch of 500,000 labels costs £5,000, and the remaining 350,000 labels from the deal will be thrown away. It's part of the £5,000 total price tag.
7) Machinery Required
Cherries Berry Limited has been offered £10,000 per month to lease machinery needed to make marmalade for Borges by a different company.
In this case, the machine's cost for the three months of operation would be based on the total amount of goods produced.
£10,000 * 3 months = £30,000