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This group assignment is graded out of 100 marks with a weighting of 10% of your overall coursework grade

Management

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This group assignment is graded out of 100 marks with a weighting

of 10% of your overall coursework grade. ONLY ONE group

member should submit the assignment on moodle.

During March of 2021 Baby So Soft Ltd. formulated its 2022 sales and purchases forecast and

budget for Diapers as follows:

Diapers Sales & Purchases forecast and budget

Details Sales Units Sales $ Purchases $

November 2021 5,600 2,800,000 2,000,000

December 2021 3,800 1,900,000 1,500,000

January 4,800 2,400,000 3,824,000

February 5,400 2,700,000 4,080,000

March 3,200 1,600,000 2,448,000

April 2,000 1,000,000 1,900,000

May 3,200 1,600,000 2,400,000

June 2,400 1,200,000 2,700,000

July 3,000 1,500,000 1,400,000

August 2,200 1,100,000 1,600,000

September 4,000 2,000,000 1,000,000

Notes:

a) The company planned to sell one Diaper for $500 during 2022.

b) The closing stock level for both products at the end of each month is to be held at a level

equal to ten percent (10%) of the budgeted sales for the preceding month. Closing raw

material stock in units in store at the end of each month is to be equivalent to twenty

percent (20%) of the forecasted sales for the next month.

c) The warehouse and stores managers estimate a monthly spoilage of 35 Diapers and a

monthly deterioration of 10 units of Cotton. They have suggested that a provision should

be made for these items’ damages and deterioration in store.

d) It takes (2) units of Cotton to produce one Diaper. The cost of one unit of cotton is $400.

e) At the end of December 2021, the bank balance was $50,000.

f) 70% of the company’s sales were for cash; and 30% was received two months after sale

while 60% of purchases are for cash; 40% is paid for one month later.

g) Taxation for the first quarter of 2022 amounting to $1,200,000 was due in March 2022.

h) The company is to receive a government stimulus package of $4,500,000 paid in equal

amounts in the first quarter of 2022.

i) In February of 2022 delinquent debtors repaid $3,500,000 of their debt to restore their

reputation with Baby So soft Ltd.

j) Operating expenses amounted to $4,500,000 for 2022. Miscellaneous expenses

amounting to $200,000 monthly was not included in the operating expenses budget.

k) In March 2022 the CEO’s company car was sold to his secretary for $1,500,000.

l) Rental income amounting to $4,800,000 per annum is budgeted for 2022.

m) A delivery van was bought for $2,000,000 and payment were made evenly in February

and March of 2022.

n) A new plant for production was built in February for $1,500,000.

o) Salesmen are paid commission based on the amounts collected from sales each month.

The amount is 2% of sales collection each month.

Required:

For the period, January 2022 to March 2022 do the following:

a) The sales budget for both products for 2022. (4 marks)

b) The production budget for both products for 2022. (20 marks)

c) The direct raw materials usage budget for both products for 2022. (4 marks)

d) The direct raw materials purchases budget for both products for 2022. (30 marks)

e) A cash collection summary from sales showing cash and credit collections separately for

the first quarter of 2022. (6 marks)

f) A payment summary for purchases showing cash purchases and credit purchases

separately for the first quarter of 2022. (6 marks)

g) A cash budget for the first quarter of 2022. Clearly show amounts for cash sales, credit

sales, cash purchases, credit purchases and totals. (30 marks)