Activity 7

a. Sales budget
Units Sales price
Wine shelves 6,000 R115.000
Wine casks 4,380 R287.000

b. Production budget
Shelves
Projected sales 6,000
+ Closing inventory 523
= Production required 6,523
- Opening inventory 600
= Budgeted production 5,923
c. Direct material budget
Wood
Unit requirements:
Shelves 1.600
Casks 6.000
Needed for production:
Shelves 9,477
Casks 26,820
+ Closing inventory 1,160
= Total material required 37,457
- Opening inventory 1,134
= Purchases in kg 36,323
x Cost per m/kg R24.250
= Purchases amount R880,828
Small differences may occur due to rounding off

d. Direct labour budget: Unskilled

Hours Rate per hour
Unit requirements:
Shelves 1.400
Casks 3.000
Shelves 8,292 R15.000
Casks 13,410 R15.000
21,702

Direct labour budget: Skilled

Hours Rate per hour
Unit requirements:
Shelves 1.000
Casks 1.500
Shelves 5,923 R24.000
 Casks 6,705 R24.000
12,628

Total 34,330

e. Manufacturing overheads budget

Shelves
Total time per unit 2.400
Labours hrs used 14,215
POR R3.250
MOH allocated R46,199
Total R128,671

f. Cost of sales budget

Material used for production
Wood
Metal
Direct labour
Prime cost
Manufacturing overheads
Total manufacturing cost
Adjustment for finished goods inventory
Opening inventory
Closing inventory
Cost of sales

Calculation of unit cost per product

Shelves
Wood R38.800
Metal R0.000
Skilled labour R24.000
Unskilled labour R21.000
Manufacturing overheads R7.800
R91.600

8. Projected income statement

Sales
Cost of sales
Gross profit
Sales value
R690,000
R1,257,060
R1,947,060

Casks
4,380
380
4,760
290
4,470

Metal

0.000
0.250

0
1,118
112
1,230
127
1,103
R26.240
R28,930

Labour cost

R124,383
R201,150
R325,533

Labour cost

R142,152
 R160,920
R303,072

R628,605

Casks
4.500
20,115
R4.100
R82,472

R909,521
R880,197
R29,323
R628,605
R1,538,126
R128,671
R1,666,797
(R15,583)
R127,898
(R143,481)
R1,651,214

Casks
R145.500
R6.560
R36.000
R45.000
R18.450
R251.510

R1,947,060
(R1,651,214)
R295,846
 Activity 8
Dec Jan Feb
Opening cash balance R28,000 R12,110 R8,970
Receipts R36,160 R58,760 R59,600
Cash sales R8,000 R14,000 R10,000
Debtors collection R28,160 R33,760 R49,600
Loan R11,000
Cash available R64,160 R70,870 R68,570
Payments R52,050 R61,900 R60,363
Creditors R41,250 R45,000 R35,625
Dividends R1,000
Selling expenses R7,200 R11,700 R8,500
Administrative expenses R3,600 R5,200 R4,100
Loan repayment R11,000
Interest on loan R138
Closing cash balance R12,110 R8,970 R8,208

Loan will be repayed at the end of February.

Debtors collection
Dec Jan Feb
October R4,800
November R20,160 R5,760
December R3,200 R22,400 R6,400
January R5,600 R39,200
February R4,000
R28,160 R33,760 R49,600

Creditors payments
Dec Jan Feb
November R15,000
December R26,250 R26,250
January R18,750 R18,750
February R16,875
R41,250 R45,000 R35,625