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1.1 REQUIRED
Use the information provided below to prepare the following for February and March 2021. (Use separate monetary columns for each month.)
1.1.1 Sales Budget (2)
1.1.2 Production Budget (6)
1.1.3 Cost of Sales Budget. (8) 1.2
State FOUR (4) external factors that may influence the preparation of the salesbudget. (4)
INFORMATION
Fiamma Limited sells a single product at a price of R50 per unit. The estimated sales volume for three months of 2021 are as follows:
| | Units |
| February March April | 10 000 8 000 9 000 |
Managements policy is to maintain an ending inventory of finished goods each month at a level equal to 40% of the next months budgeted sales.
To make one unit of a finished product, two kilograms of raw materials are required. The cost per kilogram of raw materials is R5.
Other production costs per unit are as follows:
| | January | February | March | April |
| Direct labour Overheads | R12 R8 | R12 R8 | R13 R8.50 | R13 R8.50 |
The first-in-first-out (FIFO) method is used to value inventories.
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