Prepare cash budget for the 6 months to December 31, 2021 for presentation to your bank manager who you hope will be prepared to give you an overdraft facility to supplement the R20,000 you intend introducing into your business (a) Calculate the closing balance for October.
Question 7
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You are contemplating leaving your full-time employment to concentrate your ability on the marketing of a new low-energy portable heater. You have spoken to a group of manufacturers of similar product, and you have produced the following data based upon the production of 1200 heaters in the six months to December 31, 2021.
R R Unit selling price 160 Less: Direct materials 50 Direct labour 30 Fixed Admin 4.00 Rent 7.50 Rates 2.50 Mark up 65
Your initial plan is to produce 200 units per month and to start selling in August 2021. The August September October November December Unit 50 80 120 180 200 All sales will be made on 30 days credit.
Machinery will cost you R24, 000. This you propose financing on hire purchase terms; deposit payable July 1, 2021, R2,400; followed by 24 monthly instalments of R1,000 each. Raw materials suppliers will deliver an equal amount of parts at the beginning of each month. They will allow you 60 days credit.
Wages and administrative expenses will be paid in the month in which they are incurred. Rent and rates of the premises will be paid quarterly in advance commencing on July1, 2021. REQUIRED: Prepare (a) Calculate the closing balance for October. |
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Question 8
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Bongani Limited manufactures a product that sells for R120. He manufactured and sold 12 500 units during the previous month. The following additional information, for this activity level, is available:
Total direct material cost R281 250 Direct labour cost per hour R12 Direct labour hours needed per product 1 ½ Total variable manufacturing overheads R122 500 Sales commission (of the selling price) 2 ½ % Total fixed manufacturing overheads R360 000 Other fixed costs in total R420 000
Do the following calculations, according to the instructions given: Required: The workers at Bongani’s plant threaten to strike if they do not receive a pay increase of 10%. The sales people want a commission of 3%. The only supplier of the direct material has increased its price by 5% per unit. All other factors remain the same as for the current month. What influence will these actions have on the breakeven units and margin of safety ratio of Bongani? (b) Calculate Bongani’s break-even units after these actions.
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