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Budgeting Expert Needed COURSE CODE : BCO 322 COURSE NAME: BUDGETING & CONTROL Task brief & rubrics Task This is Re sit Assignment: · Individual task

Budgeting Expert Needed COURSE CODE : BCO 322 COURSE NAME: BUDGETING & CONTROL Task brief & rubrics

Task

This is Re sit Assignment:

· Individual task

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Budgeting Expert Needed COURSE CODE : BCO 322 COURSE NAME: BUDGETING & CONTROL Task brief & rubrics

Task

This is Re sit Assignment:

· Individual task

· You must answer all the questions.

· When solving problems, you must clearly explain all the steps you are doing, and why are you making those steps.

· Show all your workings, a numeric answer is not enough.

· You should submit a document in Excel format showing all calculations.

Formalities:

· Use one page per answer.

· Cover, Table of Contents, References and Appendix are excluded of the total wordcount.

· Font: Arial 12,5 pts.

· Text alignment: Justified.

Submission: Wednesday 8 September 2021, 23:59 Barcelona time.

Weight: Resit – worth 100% of the overall grade – Please remember resits are capped at 70%

It assesses the following learning outcomes:

· Develop an understanding and working knowledge of real-world budget issues.

· Prepare cash budgets and predicted a pro forma income statement and a pro forma balance sheet.

· Cash Budget

· Flexible budgeting

· Analysis of variances

Assignment:

1.- You have the following monthly budget from a company:

 

Jan

Feb

Mar

Abr

May

Jun

Direct sales

40.000

34.000

50.000

24.589

60.000

115.896

Sales to distributors

49.000

48.000

50.000

75.000

30.000

100.100

Purchases to local suppliers

21.360

19.680

24.000

23.901

21.600

51.839

Purchases from imports

32.040

29.520

36.000

35.852

32.400

100.200

Direct personnel costs

10.000

10.000

10.000

10.000

10.000

10.000

Margin

25.600

22.800

30.000

29.836

26.000

53.957

Margin % over sales

29%

28%

30%

30%

29%

25%

Indirect personnel costs

5.000

5.000

5.000

5.000

5.000

5.000

Sales department

10.000

10.000

10.000

10.000

10.000

10.000

Sales agent

8.900

8.200

10.000

9.959

9.000

21.600

Administration

2.000

2.000

2.000

2.000

2.000

2.000

Depreciation

200

200

200

200

200

200

Interest

500

500

500

500

500

500

Taxes

 

 

225

 

 

225

 

 

 

 

 

 

 

Operating income

-1.000

-3.100

2.075

2.177

-700

14.432

Prepare a cash forecast considering the following:

Direct sales paid 60 days

Sales to distributors 20% cash, 25% after 30 days, 55% after 60 days.

Local suppliers paid 90 days, import suppliers paid 30 days.

Personnel cost (Direct personnel cost + Indirect personnel cost +Sales department + Administration) and taxes, are paid at the end of the month.

Commissions from sales agent (10%) are paid after receiving full amount from the customers (Direct customers and distributors).

Starting cash January 1st is 10.000€

At the end of December, the company has a loan of 20.000€. The company pays interest every month, based on an annual interest of 6%, (0.5% per month), calculated in base of the loan balance of the previous month.

Their credit facility has a maximum amount of 400.000€

The company wants to hold a minimum cash balance of 20.000€

Prepare a cash planning.

The company issued Bonds 5 years ago, and they have to pay 500.000€ by June 30th.

Will they be able to pay in time?

What is the final cash balance by June 30th.?

(50 points)

2) Case:

You are working as a financial advisor for Mr. Xavier Gomez, who is a well-known investor. Today Mr. Xavier Gomez has explained to you a new business project that he has, and he wants you to prepare projected financial statements to have an idea of the profitability of the project.

Following we have the data that Mr. Xavier Gomez has delivered to you:

Sales: The expected sales are 10.000.000 units, when the market is fully developed, we will need a period of five years in order to achieve that level. He expects to sale 10% on the first year, 30% on the second year, 60% on the third year, 80% on the fourth year until achieving 100% on the year 5.

The sales price per unit is 2.8€ per unit.

Direct materials: The recipe of the product explains that direct material will have a cost of 1.5€ per unit.

Production labor: The first year the plant needs 4 technicians with a cost of 32500€ per person per year, 38 production workers with an annual cost of 28.000€ per employee per year, and 1 manager with a cost of 90.000€ per person per year. The next years the production labor will increase, due to the fact that the production of the plant will also be increasing. The year 2 the cost will be 7.25% higher than year 1, the year 3 the cost will be 16% higher than year 1, the year 4 the cost will be 22% higher than year 1 and in year 5 the cost will be 30% higher than year 1.

Investment: the required investment is 8.500.000€, of which 5.000.000 will be depreciated over a period of 10 years and the rest will be depreciated over a period of 4 years. No more investments will be required during the years 2 until 5.

Utilities expense: We expect a cost of 0.18€ per unit on the first year, and 0.21 for the remaining years.

Quality control: the control will be outsourced, and we expect a cost of 3% of our sales per year.

General and administration costs are expected to be 200.000€ for the first year. For the following years the cost should increase in line with the sales volume, having a cost of 2.5% of sales.

The days to collect accounts receivable are 60, the days to pay suppliers are also 60.

The company will need an inventory of 30 days.

Mr. Xavier Gomez is ready to invest 5.000.000€. The investments need to be paid upfront and the rest of money needed will come from a bank credit line, you should make your own estimation of the amount needed.

The tax rate is 25% and the interest rate is 3.5%.

Mr. Xavier Gomez is requesting from you a proposal of Profit & loss account for the next 5 years and a balance sheet for the same period.

(50 points)

Rubrics

Descriptor

9-10

The student demonstrates an excellent understanding of the concepts.

8-8.9

The student demonstrates a good understanding of the concepts.

7-7.9

The student demonstrates a fair understanding of the concepts.

6-6.9

The student demonstrates some, but insufficient understanding of the concepts.

3-5.9

The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.

1-2.9

The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.

0

The student leaves the question blank or cheats.

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