Master Budget £ £ £ Sales £84,700 Less Cost of Sales: Opening Stock £0 Add Purchases £68,370 £68,370 Less Closing Stock £2,150 £66,220 Gross Profit £18,480 Less Expenses Fixed Cost £3,000

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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. 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...
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