1st Term - Spring 2020

College : College of Business Course Title : Business Finance

Administration
Course Code : FIN 301 Section : B
Instructor : HASAN MOUDUD Date : 13th February 2020
Total Mark : 65 Time : 55 Mints

Student Name: ………………………………… ID# .............................

This Paper consists 4 (Four) theoretical questions. You are required to answer them all.

1. Write short notes on each topic. (3x5 Marks)

i. Financial Forecasting.
ii. Net Working Capital
iii. Opportunity Cost

2. You have saved BDT 20,000 for a 3-day Tour at Sajek Hill Resort. There are two types of
room at Sajek Hill Resort. Category-A will cost BDT 25,000 for 3 days and category-B will
cost BDT 30,000 for 3days. If room prices are expected to remain constant for the next three
years and you expect to earn 10% per year on your investments, will your savings be enough
to afford any types of room for 3 days? Why or why not? (10 marks)

3. Suppose, you have just joined in Finance Department at Company “XYZ” which produces
rubber-soles. Now, your Finance Manager has forecasted 4 (four) quarters sales for year
2020 as 25,000; 26,000; 23,000 and 21,000 units. Selling price for the rubber-sole is 10 tk
per unit. From each quarter’s sales, 60 percent is collected as cash in the present quarter and
the rest is collected as cash in the following quarter.

i. Now, if you have an account receivable of 150,000 tk, prepare a Sales and Cash
Collection Budget for each Quarter of 2020. (10 marks)

ii. Prepare a Production Budget for each Quarter of 2020 if, (10 marks)

 ending inventory is 10 percent of the next quarter’s sales and that the ending
inventory for the 4th quarter is 1,000 units and beginning inventory for the 1st
quarter is 1,500 units.

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iii. Prepare a Direct Material and a Cash Disbursement Budget for each Quarter of 2020 if,
(15 marks)

 Ending material inventory is 10 percent of the next quarter's production needs;

the ending materials inventory for the fourth quarter is 750 kg; beginning
materials inventory for the 1st quarter is 650 kg and 70 percent of each quarter's
purchases are paid in that quarter, with the remainder being paid in the following
quarter.

 Also, .10 kg of materials is needed per unit of product at a cost of 40 tk per kg.

 And there is an account Payable of 25,000 tk.

iv. Prepare a Direct Labor Budget for each Quarter of 2020 if Budget if,
(5 marks)

 1 minute of labor are required per unit of product and that the hourly rate is 50 tk.

THE END

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