ent power failure of Ceramics Plant, a disbursement a day would be $3,500. To avoid future power failures, it is recommended to purchase a standby machine for $30,000 which is estimated to have a useful life of 14 years, $7,000 salvage value at the end of this time. Previous records illustrate normal power failure of 4 days each year. Annual maintenance and operation would cost $3,200 for 4 days. Minimum required rate of return is 17%. Will you recommend

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.