ONLY PART 4.2

PART 4.1 Moqomo Limited manufactures and sells one type of a household bin. The company is preparing budgets for the fourth quarter of 2021 and has gathered the following information to assist in the budget preparation: (a) The marketing department estimates that sales for the next three months will be as follows: October November . December . The selling price of the bin is R250 per unit. Units 2 250 2 500 2 750 7 (b) 50% of the sales are on credit. Credit sales are expected to be collected as follows: 25% in the month of sale, 75% in the month following the month sale. The accounts receivable on 01 October 2021 in respect of sales during September will be R350 000. (c) The company normally maintains finished goods inventories equal to 750 units. The closing inventory at the end of September is expected to be equal to 450 units, but it will normalise in October. REQUIRED: 4.1.1 Prepare the sales budget in Rands, by month (i.e. October, November and December), for the quarter. 4.1.2 Calculate the expected cash collections from customers, by month (i.e. October, November and December), for the quarter 4.1.3 Prepare the production budget in units, by month (i.e. October, November and December), for the quarter PART 4.2 The following efficiency ratios, based on the audited financial statements of Moqomo Limited, presented to you: Debtors' collection period Inventory turnover ratio REQUIRED: 2019 20 days 4,2 times 2020 25 days 4,8 times 4.2.1 4.2.2 4.2.3 4.2.4 Write down the formulas that are used to calculate the debtors' collection period and the inventory turnover ratio. What does the debtors' collection period and inventory turnover ratio indicate to an analyst? Discuss in full your interpretation of the debtors' collection period for 2020. Name one risk of carrying too much inventory. (3) (6) (4) {7} are (2) (2) (2)