Answer ALL questions in this section. 

1. Identify and briefly explain any four ways in which Corporations differ from Sole proprietors and Partnerships (8 marks)

2. Outline any four roles of commercial banks in Botswana. (4 marks)

3. Eric Clothing Limited's annual demand for materials X is 50 000 units, and the ordering cost is P10 000 per order and each unit costs P3 000. The estimated cost of holding unit of stock is 15% of the purchase cost. Required:

a. Calculate the economic order quantity (EOQ) and; (4 marks)

b. Calculate the total annual costs of material X. (4 marks)

4. Distinguish between the following:

a. Operating cash flow and the free cash flow of a business. (6 marks)

b. Public offering market from Private offering market. (6 marks)

c. Ramuthunyana (Pvt) Ltd. is comparing budget and actual data for the last four months. Budget Actual P P Sales 950 000 922 500 Cost of sales Raw materials 133 000 130 500 Direct labour 152 000 153 000 Variable production overheads 100 700 96 300 Fixed production overheads 125 400 115 300 438 900 427 400 The budget was prepared based on 95 000 units produced and sold, but actual production and sales for the four months period were 90 000 units. Ramuthunyana (Pvt) Ltd uses standard costing and absorbs fixed production overheads on a machine hour basis. A total of 28 500 standard machine hours were budgeted. A total of 27 200 machine hours were actually used in the period.

Required:

Prepare a revised budget at the new level of activity using a flexible budgeting approach (8 marks)