Short Answer Question 1

(a) Identify and explain the key principles of budgetary control.

(b) Describe a variety of forecasting techniques.

Short Answer Question 2

The following budgeted sales in units were identified for Giraffe
Corporation with consideration of high level performance using materials
and processes that are environmentally friendly. The budget also
considered social factors within the context of the current timeframes and
logistics of the organisation including the capacity of the organisation.

Quarter 1 2 3 4 Total
Sales 700 2,000 3,300 12,000 18,000

(a) The Giraffe Corporation organizational aims, projects and forecasts

includes efficient production that meets market needs in a cost
effective manner using environmentally friendly material and is
socially conscientious. Ensuring timely delivery is important
especially given the process includes both routine and non-routine
tasks. Are the budget objectives consistent with organizational aims,
projects and forecasts? Fill out the following table to answer the
question. Note: you do not need to use numbers in this part of the
question.

Budget objectives
Budget Giraffe Corporation organizational
consistent with
Objectives aims, projects and forecasts
organizational aims,
projects and forecasts?
High level Consistent/Inconsistent
performance
Fit the logistics
of the
organisation
including the
capacity of the
 organization
Materials and Consistent/Inconsistent
processes are
environmentall
y friendly
Consideration Consistent/Inconsistent
of social factors
Fit within Consistent/Inconsistent
timeframes

Each unit is budgeted to sell for $6 and the budgeted expenditure for the
four quarters are: $10,000, $16,000, $5,000 and $3,000. The Giraffe
Corporation have a strict cash only policy and also pays cash on delivery.
The budgeted figures are projections from last year’s actual figures where
this year’s sales price was expected to increase by 15% and the quarter
sales were expected to increase by 10%. The expenses are expected to
increase by 5%. The cash balance is maintained at 10% of the profit.
What was last year’s annual expenses, annual revenue and cash balance?

(b) The firm has been approached by McQuiggan PTY. LTD. who have
offered a new process and materials that would make products 20%
cheaper than they are currently. The new materials however are non-
biodegradable unlike the current materials. The McQuiggan PTY. LTD.
materials do not need the extended rinsing used in the current
process which equates to a 20 minute quicker production run. Whilst
the current system has been deemed as highly efficient by an
independent commercial engineer the timeframes are only being met
with 5 minutes to spare. A concern for the organization is that
McQuiggan PTY. LTD. has not received certification of social
awareness like Giraffe Corporation. It is clear that the revenue,
expenditure and cash would all be higher if the change was
undertaken. Would the cash, expenditure and revenue items under
the current system or the McQuiggan system ensure relevance to the
identified objectives of the budget? Fill out the following table to
answer the question.

Budget Giraffe Corporation cash, McQuiggan PTY. LTD. cash,

Objectives expenditure and revenue expenditure and revenue
items items
High level Relevant/Not Relevant Relevant/Not Relevant
performance
Fit the logistics of
 Budget Giraffe Corporation cash, McQuiggan PTY. LTD. cash,
Objectives expenditure and revenue expenditure and revenue
items items
the organisation
including the
capacity of the
organization
Materials and Relevant/Not Relevant Relevant/Not Relevant
processes are
environmentally
friendly
Consideration of Relevant/Not Relevant Relevant/Not Relevant
social factors
Fit within Relevant/Not Relevant Relevant/Not Relevant
timeframes

Short Answer Question 3

The Purple Dog Corporation’s sales staff determined the following sales
data for next year after evaluation of the market research, current trends
and past performances. The number of expected sales of Puppy Perfume
and Big Dog Hair Treatment is 80,000 units and 30,500 units respectively.
The sales price is expected to be $9 for Puppy Perfume and $7.50 for Big
Dog Hair Treatment. Management has approved the projections. Purple
Dog Corporation wants to have 6,000 units of Puppy Perfume and 1,500
units of Big Dog Hair Treatment remaining at the end of the production.
The stock at start was 1,000 units of Puppy Perfume and 3,000 units of
Big Dog Hair Treatment. The raw material stock on hand was 3,500
kilograms for Puppy Perfume and 500 kilograms for Big Dog Hair
Treatment. Puppy Perfume requires 1.5 kilograms of material and Big Dog
Hair Treatment require 1 kilograms. The required stock at end is 11,000
kilograms for Puppy Perfume and 4,500 for Big Dog Hair Treatment. The
cost per kilogram of the material is 18 cents.
There are three aspects to the production of Puppy Perfume and Big Dog
Hair Treatment being stripping, churning and slicing. The amount of
minutes per labour type for Puppy Perfume is 1, 1 and 1 respectively. For
Big Dog Hair Treatment it is 0.5, 0.5 0.5. Production staff are paid $32
per hour.

(a) Use Excel to prepare the following budgets (forecast/projection) for

the Purple Dog Corporation Ltd:
 Sales Budget
 Production Budget
 Direct Materials Budget
 Labour Budget
(b) The sales of Puppy Perfume and Big Dog Hair Treatment is very
seasonal with summer enjoying half of the sales, winter accounting
for 10% of the sales and the other two seasons sharing the balance
of sales equally. Calculate the monthly milestones of sales needed to
meet the budget and confirm the sales milestone using the following
tables.

Sales Milestone Table

Product
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
in units
Puppy
Perfum
e
Big Dog
bath
wash
Total
Sales Milestone Confirmation Table
Product Annual Units
Puppy Perfume
Big Dog bath wash
Total

(c) Prepare a Cash Budget for July for the Purple Dog Corporation Ltd.
They expect to receive 10% of their monthly sales for cash and to
receive 20% the month after, 30% the month after, 20% the month
after and 15% the month after and 5% of the sales were expected to
become bad debts. Sundry cash inflow is expected to be $800.00.
Indirect labour is expected to be $30,000 and indirect materials is
expected to cost $30,000. Fixed overheads is expected to be
$320,000. All cash outflows were expected to be equal each month.

(d) You have identified an average opportunity for a sale is uncovered

4% of the number of phone calls made by outbound marketing which
is when the person has not been referred to you. You have invested
in a phone system that is able to log calls made by which phone
connection. Develop at least four Key Performance Indictors for your
sales staff to help you achieve the sales budget.
(e) Your manager Jerry Signmeadow requires that you have the budgets
ready to send next Friday. He wants the sales budget ready and
delivered to the sales manager George Cantstandya, the production
budget ready inclusive of the direct material and direct labour
budgets and delivered to the production manager Cosmo Craner and
the cash budget delivered to the finance manager Elaine Stanford.
Jerry prefers that all the budgets are sent to all managers via one
email. Prepare an email to send to the managers ensuring to copy in
your manager Jerry Signmeadow. Use the next Friday’s date from
today i.e. when you are doing this exercise. Each employee at Purple
Dog Corporation have their first name only and @purpledog.com as
their email address. Using the template below prepare an email to
distribute the budget reports using Jerry Signmeadow’s timeline.
Undertake this activity on your actual email and scan a copy as part
of your assessment. It is necessary to actually scan in an actual
email as part of the evidence to show you are using digital systems
to assist with the role. A suggestion would be to write the email on
your smart phone and take a screen shot. On an iPhone a screen
shot can be done by holding down the on/off button which is on the
top right hand side of the phone in tandem with the menu button
which is the circle in the middle at the bottom of the phone. The
screen shot will appear in the Camera section. If you haven’t done
this before be patient as you may not time the presses perfectly on
the first few tries but after that it is a great tool to use into the
future.

To: @purpledog.com @purpledog.com @purpledog.com

CC: @purpledog.com
Date:
Subject:
Dear

Regards,
Attachments: Budget, Budget, budget, budget,
Budget
(f) Place the entry “Budgets Ready” in your electronic diary on next
Friday and take a photograph of it and send it in as part of the
assessment.

(g) At the end of the period Purple Dog Corporation sold 79,000 units of
Puppy Perfume and 31,000 units of Big Dog Hair Treatment. The
sales price finished up being $8.50 for Puppy Perfume and $7.80 for
Big Dog Hair Treatment. Establish the variances for the period.

(h) Email your manager Jerry and seek direction from him regarding the
variances.

(i) Jerry has directed you to prepare a report on the budget variances
for the executive committee and the shareholders of Purple Dog.
Jerry has made it clear the figures detailing the variances must be
explained clearly.

Short Answer Question 4

The following are the responses you received whilst liaising with clients on
the bad and doubtful debt list. Rank the likelihood of the business being
paid from 1. Highly likely to pay imminently to 5. Highly unlikely to ever
being paid.
Marg: Thanks for the call and I am sorry that my payment is late. I was
on a family holiday in Fiji for a fortnight and the money for the flights and
accommodation meant there was not enough in the account to honour the
direct debit arrangement set up to pay you.
John replied: I recently purchased a property having sold my previous
property. Subsequent to the sale but prior to being paid the buyer
withdrew. I was suing him but he went into bankruptcy. I am hoping to
honour your debt but at the moment my cash outflows are greater than
my inflows.
Beth replied: I am not paying as I am bankrupt and I don’t feel guilty for
using your products and pretending that I would pay.
Cindy replied: I am borrowing some money from a friend to pay you.
Sam replied: Sorry I didn’t get your invoice and this would be because the
address you read out to me is not my address. Please email me the
invoice and I am happy to pay it.

Short Answer Question 5

(a) Explain the principles of double-entry bookkeeping.

(b) Describe the key features of organisational procedures and policy for
financial administration.

(c) Outline the key principles of statistical analysis and measures of

variance.