Question 1 Herbert Limited makes a single product, whose unit budget details are as follows: Selling price Less Costs: Direct material $ 4 Direct labour Direct production expenses 6 4 Variable selling expenses Contribution Additional information: 1. Unit sales are expected to be: $ 30 a (23) 7 September October 900 June July August 1,000 800 400 600 1. Credit sales will account for 60 per cent of total sales. Debtors are expected to pay in the month following sale for which there will be a cash discount of 2 per cent. 2. Stock levels will be arranged so that the production in one month will meet the next month's sales demand. 3. The purchases of direct materials in one month will just meet the next month's production requirements. 4. Suppliers of direct materials will be paid in the month following purchase. 5. Labour costs will be paid in the month in which they are incurred. All other expenses will be paid in the month following that in which they are incurred.