16.12 Corby Thirlwell Limited manufactures ornamental birdbaths made out of reconstituted stone. The company works on a rolling budget system, and its senior management is currently examining forecasts for the month of June 2013. June is a big month for sales in the birdbath business, and the directors are optimistically forecasting sales of 3250 units. They intend to launch a sales incentive scheme to encourage the sales staff to sell more birdbaths; from the beginning of 2013 each birdbath sold will result in a payment of

£1.50 to the salesperson. The selling price of each birdbath is £65. The production cost structure of one birdbath is as follows:

Per unit £

Direct materials 18.00 Direct labour 12.57 Production overhead recovery 13.86 Production cost 44.43 Administrative overheads for June 2013 are forecast at £12 479, and selling and distribution overheads (excluding the cost of commission) are forecast at

£10 220.

i) Identify two advantages of the system of rolling budgeting.

ii) Prepare a budget income statement for the month of June 2013.