$10\mathrm{.}11$ There is a continuing demand for three sub$-$assemblies, A$,$ B$,$ and C$,$ made and sold by MW Limited. Sales are in the ratios of A: $1,B$:$2,C$:$4,$ and selling prices are A: R$215,$ B: R$250,$ C: R$300.$

Each sub$-$assembly consists of a copper frame onto which are fixed the same components but in differing quantities, as follows:

$\backslash$table$[[$Sub$-$assembly,Frame,Component,Component,Component$],[,,$D$,$E$,$F$],[$A$,1,5,1,4],[$B$,1,1,7,5],[$C$,1,3,5,1],[$Buying in costs per unit,R$20,$R$8,$R$5,$R$3]]$

Operation times by labour for each subassembly are:

$\backslash$table$[[$Sub$-$assembly,Skilled hours,Unskilled hours$],[$A$,2,2],[$B$,1\mathrm{.}5,2],[$C$,1\mathrm{.}5,3]]$

The skilled labour is paid R$6$ per hour, and unskilled labour is paid R$4\mathrm{.}50$ per hour. The skilled labour is located in a machining department, and the unskilled labour in an assembly department. A five$-$day week of $37\mathrm{.}5$ hours is worked, and each accounting period is for four weeks. Variable overhead per sub$-$assembly is A: R$5,$ B: R$4,$ and C: R$3\mathrm{.}50.$ At the end of the current year, stocks are expected to be as shown below, but because interest rates have increased and the company utilises a bank overdraft for working capital purposes, it is planned to effect a

Budgets

$10\%$ reduction in all finished sub$-$assemblies and bought$-$in stocks during Period $1$ of the forthcoming year.

Forecast stocks at current year end are:

$\backslash$table$[[$Stock$,$Quantity$],[$Sub$-$assembly A$,300],[$Sub$-$assembly B$,700],[$Sub$-$assembly C$,1600],[$Copper frames,$1000],[$Component D$,4000],[$Component E$,10000],[$Component F$,4000]]$

Work$-$in$-$progress stocks are to be ignored.

Overheads for the forthcoming year are budgeted to be as follows:

Production

R$728000$

Selling and distribution R$364000$

Administration R$338000$

These costs, all fixed, are expected to be incurred evenly throughout the year and are treated as period costs.

Within Period $1,$ it is planned to sell one thirteenth of the annual requirements, which are to be the sales necessary to achieve the company profit target of R$6\mathrm{.}5$ million before tax.

Required:

$($a$)$ Prepare budgets in respect of Period $1$ of the forthcoming year for

$($i$)$ sales, in quantities and value

$($ii$)$ production, in quantities only

$($iii$)$ materials usage, in quantities

$($iv$)$ materials purchases, in quantities and value

$($v$)$ labour force budget, that is$,$ numbers of people needed in each of the machining department and the assembly department.

$($b$)$ Discuss the factors to be considered if the bought$-$in stocks were to be reduced to one week's requirements. This has been proposed by the purchasing officer but resisted by the production director.