QUESTION 1

(20 MARKS)

1.1

REQUIRED

Use the information provided below to prepare the Pro-forma Statement of Comprehensive Income of Mentos Limited for the year ended 31 December 2024. Note: The statement must include the gross profit, operating profit, profit before tax and profit after tax. (10 marks)

INFORMATION

The following budgeted figures have been provided by Mentos Limited for the year ended 31 December 2023:

R

Sales (60% cash; 40% credit)

2 700 000

Cost of sales

1 080 000

Administrative and selling expenses

810 000

Interest expense

30 000

Profit before tax

780 000

Profit after tax

569 400

The following forecasts were made for 2024:

1.

Cash sales are expected to increase by 20% whilst credit sales are expected to increase by 30%.

2.

The gross margin ratio is expected to increase by 5 percentage points.

3.

Administrative and selling expenses will represent the same percentage of sales as for 2023.

4.

A new loan will be taken and the interest expense will increase by 30%.

5.

The company tax is calculated as a percentage of the profit before tax and the tax rate is the same as for 2023.

REQUIRED

Prepare the production plan for each month of the quarter ending 31 March 2024. INFORMATION

The information given below was supplied by Philips Enterprises:

(6 marks)

The expected sales for the period 01 December 2023 to 30 April 2024 are as follows :

Units

December 2023

16 000

January 2024

7 000

February 2024

8 000

March 2024

11 000

April 2024

12 000

Production for each month equals 60% of the current months projected sales and 40% of the following months projected sales.

1.3

REQUIRED

Study the information given below and calculate the cost (as a percentage, expressed to two decimal places) to Oudtshoorn Stores of not accepting the discount.

(4 marks)

INFORMATION

Jimbo Wholesalers credit terms to Oudtshoorn Stores are 60 days but the supplier is prepared to allow a 2.5% rebate if Oudtshoorn Stores pays the account within 12 days