Q1. Clearlite Limited is a company producing household lamps. You are required to produce a Flexible Budget based upon the following levels of production: 9,000; 10,000 and 11,000 lamps per month. The following budgeted information is provided. 1 Sufficient raw material can be purchased from supplier ABC Limited at a cost of £2 per lamp to fulfil production of 9,000 lamps per month. Above this level, any balance must be sought from an importer (XYZ gmbh) at £2.20 per lamp. 2 At 8,000 lamps of output, 10 operators are required. 1 additional operator is required for each additional 1,000 lamps produced. Operators are paid £1,000 per month. 3 Supervisors are paid £1,600 per month. Supervisors can oversee only 4 operators. 4 Electricity costs consist of a standing charge of £100 per month plus running costs of £0.05 per lamp produced. 5 Minimum heating costs of £1,500 per month will be incurred up to an output of 8,000 lamps. For output of between 8,001 and 10,000 units, a 20% increase in those costs will apply. Output above 10,001 units will incur costs of £2,100 per month. 6 Fixed overheads, comprising depreciation of existing machinery and rent, amounts to £2,200. 7 If production exceeds 10,001, a new machine would be hired costing an additional £300 per month.