Enterprise Company manufactures Product Stina using three different raw

materials. The product details are as follows:

Selling price per unit is R$2500\mathrm{.}00$

Material A $3$kg R$35$ per kg

Material B $2$kg R$50$ per kg

Material C $4$kg R$45$ per kg

Direct labour $8$ hours R$80$ per hour

The company is considering its budgets for the next year and has made the following

estimates of sales demand for Product Stina for July to October $2023$:

July August September October

$400$ units $300$ units $600$ units $450$ units

It is the company policy to hold inventories of finished goods at the end of each month

to $50\%$ of the following month$$s sales demand and it is expected that the stock at the

start of the budget period will meet this policy.

At the end of the production process, the products are tested: it is usual for $10\%$ of

those tested to be faulty. It is not possible to rectify these faulty units.

Raw material inventories are expected to be as follows on $01$ July $2023$:

Material A $1000$ kg

Material B $400$ kg

Material C $600$ kg

Inventories are to be increased by $20\%$ in July and the remain at their new level for the

foreseeable future.

Labour is paid on an hourly rate based on attendance. In addition to the unit direct

labour hours shown above, $20\%$ of attendance time is spent on tasks which support

production activity.

Budgeted variable overhead rates are as follows:

Indirect material R$12$ per labour hour

Indirect labour R$12$ per labour hour

Power R$6$ per labour hour

Maintenance R$2$ per labour hour

Budgeted fixed overheads are as follows:

Depreciation R$50000$

Supervision R$150000$

Power R$100000$

Maintenance R$120000$

Estimated non$-$manufacturing overheads:

Stationery R$10000$

Salaries R$320000$

Office R$30000$

Commission R$18000$

Advertising R$15000$

Miscellaneous R$8000$

The balance sheet for the previous year end was as follows:

$($ R $)($ R $)($ R $)$

Fixed assets:

Land and buildings R$15000000$

Less: depreciation R$1500000$ R$13500000$

Current Assets: R$850000$

Inventories R$520000$

Debtors R$210000$

Cash R$120000$

Less: Current liabilities: $($R$300000)$

Creditors R$180000$

Loan R$120000$ R$14050000$

Equity:

Shareholders$$ interests $$

$1004000$ ordinary shares of

R$12\mathrm{.}50$ each

R$12550000$

Reserves R$1500000$ R$14050000$

 

 

Required:

Prepare the following budgets for the quarter from July to September $2023$ inclusive:

$1.$ Sales budget.

$2.$ Production budget.

$3.$ Raw material usage budget.

$4.$ Raw material purchases budget.

$5.$ Direct Labour budget.

$6.$ Production overhead budget.

$7.$ Selling and Administration budget

$8.$ Master budget.