Grade: %) (20 marks) GRADING RUBRIC: 100 marks 1. The concept of budgeting, objectives, procedure and benefits of budget 2. Sales Budget (5 marks) 3. Schedule of cash collection (14 marks) 4. Production budget (12 marks) 5. Material budget (15 marks) 6. Schedule of cash payment-14marks 7. Cash budget (10 marks) 8. Advice (5marks) 9. Presentation and referencing (5 marks) Questions to answer 1. Explain the concept of Budgeting in detail, highlighting the objectives procedure and benefits of preparing budget 2. From the case scenario given below you are required to: 1. Prepare a sales budget, by month and in total, for the third quarter. (Show your budget in both units and dollars.) Also prepare a schedule of expected cash collections, by month and in total, for the third quarter. II. Prepare a production budget for each of the months July-October III. Prepare a direct materials budget, by month and in total, for the third quarter. IV. Prepare a schedule of expected cash disbursements for raw material, by month and in total, for the third quarter V. Prepare a cash budget by month and in total for the third quarter VI. Based on the budgets you have prepared above, what advice do you have for the management of Aliexpress? Submission method: One soft copy on BBL to be submitted for each group no later than 2pm on 24 June, 2020. Late submission will be penalized. Page 2 of 3 Case scenario: Aliexpress manufactures specific electrical products. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): Months July August September October November December Sales in units 49,500 83,700 66,350 34,450 25,480 26.225 The selling price of each product is 518 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 35 percent in the month of sale 55 percent in the month following sale 5 percent uncollectible Sales for June totaled $380.500 Cash balance on 30 June is $9,000 The company maintains finished goods inventories equal to 24.5% of the following month's sales. This requirement will be met at the end of June. Each electrical product requires 4.6 units of raw material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of the raw material to be equal to 55% of the following month's production needs. The inventory of raw material on hand at the beginning and end of the quarter will be: June 30: 34,900 units Raw material costs 80.71 per unit. One-half of a month's purchases of raw material is paid for in the month of purchase the remainder is paid for in the following month. The accounts payable on July I for purchases of raw material during June will be $78,000 End of case scenario Page 3 of 3
