The Volksland Motors Group is based in the Northern frontier of Mill-land City,
an industrial estate in the Republic of Zee Land. The company’s planning and
actual budgets for December appear below:

The Volksland Motors Group
Budgeted and actual report for the year ending December 31 st , 2020

A ) From the data above, assess the budget and prepare report showing The
Volksland Motor Group’s revenue and spending variance for December.
Based on this report with analysis of profitability ratios, which area/s of
activity should be of concern to the management and WHY?

B) Outline the importance of possible uses of financial information including
cash budgeting by different stakeholders. Show drawbacks of budgeting
and suggest practical ways through which The Volksland Motor Group’s
could go about minimising these?

C) The Executive Board of The Volksland Motor Group after reviewing
annual report have decided to explore options to fulfil objective of green
energy. Director production has suggested to use of solar panels to
reduce energy cost and meet green energy objectives. The solar panels
require investment of £600,000 after Zeeland Govt grant with useful life
of 25 years. This investment will save annual energy cost by £120,000. Solar panels require annual maintenance cost of £10,000 after three
years of use. Recommend the viability of this investment using appraisal
technique (NPV, Payback, Discounted Cash Flow etc) that company
could employ in evaluating their options in this respect (based on their
circumstances). It is noted that cost of capital is 10% and inflation is 4%
in Zeeland.

D) Evaluate by demonstrating an understanding of different sources of
finance available to The Volksland Motor Group to fund solar energy
project. Explain the measures they can/should adopt to ensure
sustainability in their operations
 

Production (q) Revenues Variable production cost: Direct Material Direct Labour Machining cost Other variable cost Fixed Production cost: Indirect Labour Depreciation Insurance Production Taxes Administrative Expenses Marketing Expenses Research and development Net Operating Income Required: ACTUAL ('000) 21 000 35,000 5 000 4 386 4 600 9 000 1 850 1.000 874 463 2 452 1 696 1 226 2 453 BUDGET ('000) 17 000 29,400 4 294 3 580 3 900 7 650 1 601 1.000 874 440 1 838 1 080 920 2 223