1.1 REQUIRED

Use the information provided below to prepare the following for February and March 2021. (Use separate monetary columns for each month.)

1.1.1 Sales Budget (2)

1.1.2 Production Budget (6)

1.1.3 Cost of Sales Budget. (8) 1.2

State FOUR (4) external factors that may influence the preparation of the salesbudget. (4)

INFORMATION

Fiamma Limited sells a single product at a price of R50 per unit. The estimated sales volume for three months of 2021 are as follows:

	Units
February March April	10 000 8 000 9 000

Managements policy is to maintain an ending inventory of finished goods each month at a level equal to 40% of the next months budgeted sales.

To make one unit of a finished product, two kilograms of raw materials are required. The cost per kilogram of raw materials is R5.

Other production costs per unit are as follows:

	January	February	March	April
Direct labour Overheads	R12 R8	R12 R8	R13 R8.50	R13 R8.50

The first-in-first-out (FIFO) method is used to value inventories.