Advanced (9 marks; 16 minutes)

SOURCE: ADAPTED FROM CIMA FOUNDATION LEVEL PAPER 2 The management accountant of J Ltd, a supplier of farm machinery components, is compiling the budget for next year. Forecast sales for the rst seven months of 2XX4 are as follows:

Other relevant information:
Units held in inventory at the end of the month are maintained at 25% of the following month’s sales.
Suppliers are paid two months after the inventory has been received.
The purchase cost per unit is R7,20, increasing to R8,40 from April 2XX4.
The warehouse section consists of 4 employees who each earn R950,00 per month, and a supervisor who earns R1 200,00 per month.
A monthly bonus equivalent to 15% of normal earnings is paid to everyone in the warehouse section if sales exceed 5 500 units per month.
Normal wages are paid in the month in which they arise. Any bonus is paid one month after it is earned.