QUESTION FOUR

Businesses may face various risks when goods are ordered from suppliers and when the goods are received.

In view of the above provide examples of the various risks that are faced by businesses and the internal control activities that need to be undertaken with regard to the ordering and receipt of goods.

You are required to critique the statement above. (4 marks)

Budgets are half used if they serve only as a planning device.

4.2 Outline to your friend some factors that the management of her company may have taken into account to forecast sales. (5 marks)

Your friend, who works for a company selling household appliances, recently told you that she finds it amazing that the company seems to forecast sales each year so well. She cannot explain how it is able to do it.

4.3 Prepare a sales budget for the period 1 November 2021 to 31 January 2022. (6 marks)

The following is the sales forecast (in units) of Leeds Ltd that manufactures two products viz. product X and product Y: November 2021 December 2021 January 2022 Product X 3 000 4 500 4 000 Product Y 4 000 6 000 5 000

The selling price per unit of product X is R20 and the selling price of product Y is R30.

use the information provided below to calculate the expected production cost for March 2021. (10 marks)

INFORMATION Lyn Limited manufactures Product X. An estimate of the number of units to be sold during March and April 2021 is given below: March 1 500 April 1 900

It is anticipated that:

4.4

1 .There will be no work-in-process at the end of any month. .

2 .Finished units equal to 40% of the expected sales of the following month will be in inventory at the end of each month.

The budgeted production and production costs for the year ending 31 December 2021 are as follows: Production 18 000 units Direct materials cost per unit R25 Direct labour cost per unit R15 Other manufacturing costs R54 000