The Chiappi Cycle Company is one of the biggest manufacturers of aluminium bicycle frames. The following actual information for the 2019 financial year is available:

CONTRIBUTION INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2019

The Total Variable Costs per frame is made up as follows:

Sales revenue R42 750 000

Less total variables cost R17 100 000

CONTRIBUTION R25 650 000

LESS FIXES COSTS R10 750 000

NET PROFIT R14 900 000

Total Direct Material R 1 500 per frame

Total Direct Labour R 1 800 per frame

Total Other Variable Costs R 500 per frame

The Total Fixed Costs is made up as follows:

Fixed Manufacturing Overheads R 8 000 000.00

Fixed Marketing and Admin Costs R 2 750 000.00

It was expected that the company would not have any opening or closing stocks for the 2020 financial year.

The company planned to increase its selling price by 15% for the 2020 financial year.

The company is also planning to increase its Variable Marketing Expenses that is included in the Total Variable Costs from the current R 100.00 per frame paid to their salespersons to R

200.00 per frame.

It was also expected that the following increases for the 2020 financial year would occur: Direct Materials - price increase by 5%

Direct Labour - increase by R 975 000.00 plus R 200.00 per frame

Salary increase - indirect labour totalling R 80 000.00

Salary increase - sales manager totalling R 25 000.00

Required:

a.Fixed or Static Budget in the form of a contribution income statement which is reflected below for the 2020 financial year at an expected activity level of 5 000 frames.