The company has decided that security light’s (new Product) selling price of product is £750 oer unit, total sales - 150

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The company has decided that security light’s (new Product)
selling price of product is £750 oer unit, total sales - 1500 units
total budgeted sales is: November- 500 units, December 500 units
and January 500 units. The company has just concluded a deal to get
a bank loan of £19,000 on the 1st November 2022. The interest on
this loan will be paid every month. The company will be required to
make 12 equal payments to repay the loan starting from the end of
December.
From their costs estimates, total fixed cost estimated to be
£110,200 and it will be shared equally throughout the period. The
variable cost is £230 per unit. The fixed costs are for the whole
period, so they are not affected by the level of service. However,
the variable costs will increase with services output (ie sales
output multiplied with variable cost per product).
Variable cost will be paid on the basis of 60% in the month of
purchase and 40% the following month. Similarly, revenue from the
sale of new security light will be on the basis of 60% cash in the
same month, and the remaining 40% credit to be paid the following
month.
One of the other products that JKL Ltd has been producing is the
Basic lights for which you have been provided with the following
information:
Sales Revenue -£30
Direct labour (1 hour) -£(10)
Direct material (1 kg) -£(8)
Fixed overheads- £(3)
Standard profit -£9
The budgeted output for the previous quarter was 800 units of
the Basic Lights; the actual output was 850 units, which was sold
for £32,000. There were no inventories at the start or end of the
previous quarter.
The actual production costs were:
Direct labour (840 hours) - £1100
Direct materials (1,200 kg)-£ 9500
Fixed overheads- £ 2900
The use of management tools such as Budgets and variance
analysis. A computation of your cash budget for the first 3 months.
Produce a variance statement showing the direct labour, direct
materials, fixed overheads and sales variances.