Proxemiks Solutions Ltd is a manufacturing company that has started operations in the current year. The company manufactures Product R, Product S and Product T. The company is in the process of preparing budgets for Year 2. Details of the revenues and expenses for Year 1 (current year) are given below:

Required
1. Prepare the actual statement of profit or loss for Proxemiks Solutions Ltd for Year 1.
2. According to the top management of Proxemiks Solutions Ltd, the following should be considered when developing the budgeted statements for Year 2:
• The demand for the products is expected to remain constant.
• A 90% learning curve applies to the time taken by the workforce to manufacture Product R after the first 350 units are manufactured.
• A 90% learning curve applies to the time taken by the workforce to manufacture Product S after the first 450 units are manufactured.
• A 90% learning curve applies to the time taken by the workforce to manufacture Product T after the first 1,000 units are manufactured.
• The cost of raw materials for all three products will increase by 15%.
• The other administrative expenses are expected to increase by 10% for Product R and Product T.
• The other administrative expenses are expected to decrease by 5% for Product S.
(a) Calculate the direct labour costs for each product. Note: Log (0.9) ÷ Log (2) = 0.1520.
(b) Prepare a budgeted statement of profit or loss for the next year.

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Revenue Demand for product (in units) Selling price per unit Expenses Wages for labour workforce per unit Wages for labour workforce per hour Cost of raw materials Depreciation of office equipment Rent Other administrative expenses Product R 350 2,500 £1,500 £300 £30,000 £15,000 £12,000 £20,000 Product S 400 2,750 £1,800 £450 £40,000 £15,000 £12,000 £30,000 Product T 500 1,800 £1,200 £400 £50,000 £15,000 £12,000 £25,000