Duoprod Ltd$,$ manufactures two products, the Alpha and Beta for use in the catering

industry. The company has the following estimated data for the products for the

months of October, November, December and January:

Alpha Beta

Sales $$ Oct $($units$)5,0002,000$

Sales$-$ Nov $($units$)6,0004,000$

Sales $$ Dec $($units$)8,000`5,500$

Sales $$ Jan $($units$)7,0004,800$

Sales Price per unit $()5090$

Direct Materials per unit $($kg$)23$

Direct Labour per unit $($hrs$)24$

Opening Stock on $1$ Oct $($units$)2,5001,000$

The following information is also available:

$1.$ It is company policy to hold stocks of finished goods at the end of each month

equal to $50\%$ of the estimated sales of the following month.

$2.$ Opening stocks of raw materials at $1$ Oct are $10,000$kgs and the intention is to

increase stocks by $4,000$kgs at the end of each month compared to the

previous month end up to and including the end of December.

$3.$ Sales are paid $50\%$ in cash in the month of sale and $50\%$ on credit. Of credit

sales, $60\%$ are received one month after sale, and the remaining $40\%$ are

received two months after sale. Sales revenue in the September profit and loss

account was $300,000.$

$4.$ Direct Materials cost $5$ per kg$.$ Our suppliers require payment one month after

delivery.

$5.$ Direct Labour costs $10$ per hour.

$6.$ Variable overhead is incurred at a rate of $2$ per direct labour hour.

$7.$ The company pays a sales commission of $2\%$ of sales payable in the month

after sale.

$8.$ The company expects to replace some old machinery in October. The

machinery has an estimated net book value at the point of sale of $40,000$ and

will generate a loss on disposal of $10,000.$

$9.$ New machinery will be purchased to replace the old machinery at a cost of

$200,000.$ The company has elected to pay the full amount at the point of

purchase.

$10.$ Fixed selling and administration costs historically amount to $20,000$ per

month, which includes $8,000$ of depreciation. This will increase to $25,000$ per

month due to the depreciation charge associated with the new machinery.

$11.$ The company has the following balances in the general ledger as at $30$ Sept:

a$.$ Bank $140,000($DR$)$

b$.$ Trade Debtors $190,000($DR$)$

c$.$ Trade Creditors $110,000($CR$)$