QUESTION 4 4.1 In November 20x1 Cisp Limited started making budget plans for the 12 months commencing 01 January 2002. The projected sales volume was R8 700000 as compared to an estimated R7 350 000 for the financial year ended 31 December 20x1. The estimates of the operating results for the current year (20x1) are shown in the Salement of Comprehensive Income below. Following this statement are the specific working assumptions with which to plan the financial results for the next year. Statement of Comprehensive Income for the year ended 31 December 20x1 Assumptions for the financial year 2012: - Manufacturing labour will fall to \( 24 \% \) of sales because volume efficiency would offset higher wage rates. - Materials cost would increase to \( 14.5 \% \) of sales because some price increases would not be offset by better utifisation. - Overhead costs would fise above the current level by \( 6 \% \) of the \( 20 \times 1 \) Rand amount, reflecting higher costs. Additional variable costs would be incurred at the rate of \( 11 \% \) of the incremental sales volume. - Depreciation will increase by R20000, reflecting the addition of some production machinery. - Seling expenses would rise more proportionately, by R250 000, since addifional effort would be required to increase sales volume. - General administrative expenses would drop to \( 8.1 \% \) of sales. - Income tax is estimated at \( 30 \% \) of pre-tax profis. Required Prepare a Pro Forma Statement of Comprehensive Income for Cisp Limited for 2012. (20 marks) 4.2 Due to the liming differences, the cash coming in and going out of the project's account may not be the same as the sales figures or expenses for the month. State five (5) examples that would influence cash flow finings.
