1. You are going to draw up the annual budget for FMH (Pty) Ltd. The following information was collected: (10)
   • After thorough research, the owner determined that expected sales would be 3500 units for the first quarter, increasing by 500 units/quarter.
   • The selling price/unit is R30 for the year
   • 55% of the sales were for cash
   • 45% of the sales were on credit.
   • Debtors would pay 30days after the purchase
   • The outstanding debts of R37 000 at the beginning of the year shall all be collected in the first period.

2. Suppose FMH (Pty) Ltd decided that they want to manufacture 20% of the future quarter stock in the preceding quarter and have it in advance. Draw up a production budget using the following information please(10)
   • Calculate what the opening and final stock must be for each quarter
   • Opening stock (20% x 3500)
   • Closing stock (20% x 4000)
   • Direct material cost are R5.00 per unit
   • Direct material purchases are paid 50% cash in the quarter of purchase and 50% in the following quarter.
   • Accounts payable if R14 500 at the beginning of the year will be paid in full in the first quarter.