Bokgoni Corporation has the following budgeted sales for the selected four-month period:

Month

Unit Sales

July

20,000

August

35,000

September

25,000

October

30,000

Sales price per unit is R180

Plans are to have an inventory of finished product equal to 20% of the unit sales for the next month. There was 4,000 units in beginning inventory on July 1st.

Three Kilogram of materials are required for each unit produced. Each Kilogram of material costs R20. Inventory levels for materials equal 30% of the needs for the next month.

Desired ending inventory for September is 25,200 Kilogram of material. Beginning inventory for July was 20,700 Kilogram of material.

Each unit requires 0.6 hours of direct labor and the average wage rate is $16 per hour.

Variable overhead rate is R3.50 per direct labor hour. There is also fixed overhead of R22,000 per month.

The company pays a 3% commission on sales.

Company has fixed selling and administrative expenses as follows:

Rent R6,000/month

Utilities R1,200/month

Advertising R400/month

Office Salaries R35,000/month

Required:

A.

Prepare sales budget for July, August, and September and in total for the quarter.

(2 marks)

B.

Prepare production budgets for July, August, and September and in total for the quarter.(4 marks)

C.

Prepare direct materials purchases budget in Rand Amountsfor July, August, and September and in total for the quarter.(6 marks)

D.

Prepare direct labor budget in hours and total cost for July, August and September and in total for the quarter.(3 marks)