=+7. A small company producing a single product estimates that it will seIl the following amounts of its product in the next few months:

Month January February March April Estimated sales (units)

900 1800 1200 600 It wishes to construct a profit budget for the first 3 months of the new year and has made the following estimates:

(a) The product will seIl at an ex-factory price of El2 per unit.

(b) Variable production costs comprise:

direct labour E1.50 per unit direct materials E2. 7 5 per uni t variable overhead EO.75 per unit.

(c) Fixed costs are:

production fixed costs E8000 per month selling and administration E 1500 per month.

The production fixed costs include 0000 per month depreciation on machinery and other fixed assets.