same as the final quarter of the year ended 30 September 2009 for both the Monty and the Gold. Revenue from garage doors is recognised when they are delivered to a customer’s house. Revenue from installation is recognised when the contract is completed to the customer’s satisfaction. 2 Cost of sales The production process for the Gold is technologically advanced, so annual budgeted fixed production costs of £12 million are expected. For the Monty, annual budgeted fixed production costs are £4 million. These fixed costs have not changed for some years and are incurred evenly over the year, with an equal amount being recognised in each quarter. The variable cost per unit for each product is budgeted at 50% of selling price. 3 Staff bonus As a result of the recession, there was a zero general pay increase for employees. However, a bonus scheme was introduced under which a payment to employees of £600,000 will be made for the full year if revenue for the year ending 30 September 2010 exceeds £26 million. 4 Inventories and receivables Inventories consist mainly of partly-made doors. There is little finished inventory as doors are normally made to order. Sales are normally on 30 day credit terms.
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