ACTUAL SALES 'R' BUDGETED SALES 'R' JAN 20 000 APR 65 000 FEB 26 000 MAY 100 000 MAR 40 000 JUN 50 000 JUL 30 000 AUG 28 000 SEPT 25 000 The concentration of sales before and during May is due to Mother's Day. Sufficient stock should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid R4.00 for a pair of earrings. Half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and are payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: 4% of sales Variable: Sales commission Fixed: Advertising Rent Salaries Utilities Insurance Depreciation R200 000 R18 000 R106 000 R7 000 R3 000 R14 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase a new equipment for R16 000 during May and another new equipment in June for R40 000; both purchases will be for cash. The company declares dividends of R15 000 each quarter, payable in the first month of the following quarter. A listing of the company's ledger accounts as at 31 March is given below: R Assets Cash 74 000 Debtors (R26 000 Feb sales; R320 000 346 000 March sales Stock 104 000 Prepaid insurance 21000 Property and equipment (net) 950 000 Total assets 1 495 000 ACTUAL SALES 'R' BUDGETED SALES 'R' JAN 20 000 APR 65 000 FEB 26 000 MAY 100 000 MAR 40 000 JUN 50 000 JUL 30 000 AUG 28 000 SEPT 25 000 The concentration of sales before and during May is due to Mother's Day. Sufficient stock should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid R4.00 for a pair of earrings. Half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and are payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: 4% of sales Variable: Sales commission Fixed: Advertising Rent Salaries Utilities Insurance Depreciation R200 000 R18 000 R106 000 R7 000 R3 000 R14 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase a new equipment for R16 000 during May and another new equipment in June for R40 000; both purchases will be for cash. The company declares dividends of R15 000 each quarter, payable in the first month of the following quarter. A listing of the company's ledger accounts as at 31 March is given below: R Assets Cash 74 000 Debtors (R26 000 Feb sales; R320 000 346 000 March sales Stock 104 000 Prepaid insurance 21000 Property and equipment (net) 950 000 Total assets 1 495 000