MAA103 - Accounting for Decision Making - Trimester 1 2025

IMMediate

Part A: Budgeting Case Study (10 Marks)

Due Date:Friday 16^th May (Week 10).

Description:

For this part of the assignment, your team will need to produce a budget report for a business looking to expand its storefront. This assignment includes preparing two budgets (a budgeted income statement and a cash budget) and a report based on the forecasted numbers from these two budgets. The case study is described in detail below.

Business Case Study:

You (and your team) work in a business advisory firm trading as 'Gliding Solo', a business that provides strategic and financial advice to other businesses. Your role in the firm is that of a business consultant, where you are often required to produce financial projections and reports for clients.

Tracie Morris and Conor Wu are equal business partners in 'Ebike City' and have approached your firm looking for business advice for the year 2025. Tracie and Conor can't decide on what strategy to take to grow the business. Currently, they are considering expanding their business. Since the COVID-19 lockdown has been lifted in Melbourne, business has steadily been picking up to pre-COVID-19 levels and they are thinking of taking the next step in growing the firm by setting up a new storefront.

'Ebike City' has two distinct income streams - selling two kinds of electric bikes (eBike) one product is the Pedal Classic, which comes with one electric motor, and the other is the Folding Urban Dream, which is a compact design with two electric motors. Currently, all sales are made through an online store, and they conduct repairs out at a warehouse in the inner suburb of Brunswick, Melbourne. Repairs are charged at a set price per hour.

Conor spends most of his time designing and repairing bikes while Tracie primarily looks after the retail and business management side of the business.

Tracie and Conor want to expand their business and open a new storefront in the city centre. They expect that with the brick-and-mortar storefront, they will be able to increase eBike sales of both models but also billable repair hours. They have done some market research and have provided you with information on what they think the expansion project will do for their business (details can be found in the Group_Information worksheet tab once you enter your Student ID's and Group ID).

Tracie and Conor have also provided you with their previous year's financial data for the business before the expansion. This information can be found in the same spreadsheet document under the FactSheet worksheet tab.

To facilitate your work, templates for the budgeted income statement and cash budget are provided, along with a host of other budget templates. You will only need to produce the Budgeted Income Statement and Cash Budget; however, it is highly recommended you use the other pages as additional workspace should you need them. All information in this task is provided in the document so further research will not be necessary for completing this part of the assessment task.

Should you need any additional information or require clarification, Tracie and Conor have asked that you post your questions on the discussion forums, and they will try their best to answer the queries there.

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Q Search (Cmd + Ctri + U) OP Home Insert Draw Page Layout Formulas Data Review View Automate Comments Share A 27 V ab v Insert v x Delete v Paste B U Y EV % 9 00 Conditional Format Cell Sort& Find & Sensitivity Add-ins Analyse Formatting as Table Styles Format v Filter Select Data C3 v fx B D E F G H K L M N FactSheet - Data on 2024 Financial Year Jan-2024 Feb-2024 Mar-2024 Apr-2024 May-2024 Jun-2024 Jul-2024 Aug-2024 Sep-2024 Oct-2024 Nov-2024 Dec-2024 Sales Volume - Pedal Classic 212 223 198 203 19 25 243 21 130 160 175 188 Sales Volume - Folding Urban Dream 287 301 307 300 311 410 404 323 292 286 396 403 Service Volume - No. of Hours (Repairs) 261 274 279 273 283 373 367 294 265 260 360 366 Selling Price - Pedal Classic 500.00 Cost Price - Pedal Classic 300.00 10 Selling Price - Folding Urban Dream 800.00 Cost Price - Folding Urban Dream 500.00 Service Revenue Per Hour (Repairs) un 130.00 15 Number of Sale Assistants: 2 Wage Rate Per Employee Per Month S 6,000 Number of Office Staff: 6 20 Wage Rate Per Employee Per Month $ 3,500 Number of Repair Technicians 8 Wage Rate Per Employee Per Month $ 5,500 Additional Information: Both Tracie and Conor are owners within the business and each of them draws an amount of $1900 per month. Each owner plans on increasing the drawings to $5700 per month starting from January of 2025. 26 As the manager, Tracie keeps a close eye on inventory management and would like to always maintain a monthly ending inventory requirement of 20% of next month's sales. You can assume the beginning inventory for January 2025 to be 0 units for both 27 Pedal Classic and Folding Urban Dream ebikes. All purchases of inventory with the current supplier are on a credit basis, with 60% of the amount settled in the same month of purchase and the remaining 40% settled one month after the month of purchase. You can assume that all credit amounts for 28 purchase of inventory prior to January 2025 have been settled. Group_Information FactSheet Cash_Budget IncomeStatement_Budget Sales Budget Cost of Sales Budget Purchases Budget Selling & Admin Expense Budget Schedule of Cash + Ready To Accessibility: Investigate 130%AutoSave @ (n) BO-G-. Search (Cmd + Ctrl + U) Lut en L189 1D) ez [MCC Og eeu Data Review View Automate eRe nc (asian gat ails Tote Additional Information: Both Tracie and Conor are owners within the business and each of them draws an amount of $1900 per month. Each owner plans on increasing the drawings to $5700 per month starting from January of 2025. |As the manager, Tracie keeps a close eye on inventory management and would like to always maintain a monthly ending inventory requirement of 20% of next month's sales. You can assume the beginning inventory for January 2025 to be 0 units for both Pedal Classic and Folding Urban Dream ebikes. |All purchases of inventory with the current supplier are on a credit basis, with 60% of the amount settled in the same month of purchase and the remaining 40% settled one month after the month of purchase. You can assume that all credit amounts for purchase of inventory prior to January 2025 have been settled. The business typically will have 70% of their sales of Pedal Classic and Folding Urban Dream ebikes as cash, with the remaining 30% on credit. Of the credit sales, 50% is collected in the month of sales, 30% is collected one month after the sales, and 20% is collected two months after the sales. You can assume that all credit amounts for sale of inventory prior to January 2025 have been settled. |All customers coming in for ebikes repairs pay for the service in cash 100% of the time. The business has the following non-current assets: In 2024, the business purchased one specialised equipment to provide repairs for the ebikes. The total cost of such one equipment is $21840 and it is expected to last 5 years. Other office equipment has a total cost of $18240 and depreciates at 20% per annum. Shop fittings were originally purchased at $85920 and depreciate at 10% per annum. All non-current assets have $0 residual value and are depreciated using the straight-line method of depreciation. Other Fixed Costs: Marketing expense of $1920 per annum is paid and incurred evenly across 12 months. $6000 of business insurance is paid in advance every year on 1st January. This insurance covers the period 1st Jan to 31st Dec every year (50% store; 50% office). Bank fees work out to be $80 per month and are paid at the end of each quarter. On average, the office supplies are purchased, paid and expensed every month to the amount of $120. Council rates are $1176 per year and are usually paid in December each year. The rates cover the period 1st Jan to 31st Dec every year. (60% store; 40% office) @ FactSheet @ Cash_Budget @ IncomeStatement_Budget Sales Budget Cost of Sales Budget Purchases Budget Selling & Admin Expense Budget Schedule of Ca Ee] % UN ext XSL oT OY AN =) ee r ) + 130% AutoSave A H FC ... Q Search (Cmd + Ctri + U) OP Home Insert Draw Page Layout Formulas Data Review View Automate Comments Share AA 6 7 V ab v Insert v Delete v Paste B I U V V % 9 00 Conditional Format Cell Sort & Find & Sensitivity Add-ins Analyse Formatting as Table Styles Format v Filter Select Data C3 X V fx B C D E F G H L M N 37 Other Fixed Costs: Marketing expense of $1920 per annum is paid and incurred evenly across 12 months. 38 $6000 of business insurance is paid in advance every year on 1st January. This insurance covers the period 1st Jan to 31st Dec every year (50% store; 50% office). 39 Bank fees work out to be $80 per month and are paid at the end of each quarter. 40 On average, the office supplies are purchased, paid and expensed every month to the amount of $120. 41 42 Council rates are $1176 per year and are usually paid in December each year. The rates cover the period Ist Jan to 31st Dec every year. (60% store; 40% office) Rent is paid at the start of each quarter and works out to be $8000 per month. (80% store; 20% office) 43 44 Water, gas and electricity are combined under utility expense which adds up to $609 per quarter and is usually paid at the end of each quarter. (70% store; 30% office) *Note: Quarter 1 runs from 1 Jan- 31 Mar; Quarter 2 runs from 1 Apr - 30 Jun; Quarter 3 runs from 1 Jul - 30 Sep; Quarter 4 runs from 1 Oct - 31 Dec. Group_Information FactSheet Cash_Budget IncomeStatement_Budget Sales Budget Cost of Sales Budget Purchases Budget Selling & Admin Expense Budget Schedule of Cash + Ready to Accessibility: Investigate 130%AutoSave Q AF ? C ... Q Search (Cmd + Ctri + U) OP Home Insert Draw Page Layout Formulas Data Review View Automate Comments Share Calibri (Body) 11 AA A V General Insert v x Delete Paste Conditional Format Cell Sort & Find & Sensitivity Add-ins Analyse BIUV - V MVAv Formatting as Table Styles Format v Filter Select Data C6 XV fx AB G M Q W N Jan - 25 Feb - 25 Mar-25 Apr-25 May-25 Jun-25 Jul -25 Aug - 25 Sep - 25 Oct-25 Nov-25 Dec-25 TOTAL Gross Profit Other Income: Operating Expenses: Selling Expenses: General & Administrative Expenses: Total Operating Expense Net Operating Profit Non-Operating Income and Expenses Profit (Loss) before income tax Group_Information FactSheet Cash_Budget IncomeStatement Budget Sales Budget Cost of Sales Budget Purchases Budget Selling & Admin Expense Budget Schedule of Cas + Ready So Accessibility: Investigate 90%