UNIVERSITY OF CAPE COAST

COLLEGE OF DISTANCE EDUCATION

POSTGRADUATE UNIT
MASTER OF BUSINESS ADMINISTRATION PROGRAMME
2022/2023 BLOCK 1 SEMESTER 2

BUS 805D – ACCOUNTING AND FINANCE FOR MANAGERS

TUTORIAL SET 1

QUESTION 1

You are presented with the following forecasted cash flow data for your organisation for the period
November 2022 to June 2023.
2022 2022 2023 2023 2023 2023 2023 2023
Nov Dec Jan Feb Mar Apr May June
GH¢ GH¢ GH¢ GH¢ GH¢ GH¢ GH¢ GH¢
Sales 80,000 100,000 110,000 130,000 140,000 150,000 160,000 180,000
Purchases 40,000 60,000 80,000 90,000 110,000 130,000 140,000 150,000
Wages 10,000 12,000 6,000 20,000 24,000 28,000 32,000 36,000
Overheads 10,000 10,000 15,000 15,000 15,000 20,000 20,000 20,000
Dividends 20,000 40,000
Capital expenditure 30,000

You are also told the following:

i. Sales are 40% cash 60% credit. Credit sales are paid two months after the month of sale.
ii. Purchases are paid the month following purchase.
iii. 75% of wages are paid the month after they are declared.
iv. Overhead are paid the month after they are incurred.
v. Dividends are paid three months after they are declared.
vi. Capital expenditure is paid two months after it is incurred.
vii. The opening cash balance is GH¢ 15,000.

The managing director is pleased with the above figures as they show sales will have increased by more
than 100% in the period under review. In order to achieve this he has arranged a bank overdraft with a
ceiling of GH¢50,000 to accommodate the increased inventory levels and wage bill for overtime worked.

Required
a) Prepare a cash flow forecast for the six-month period January to June 2023.

Comment on your results in the light of the managing director’s comments and offer advice.
 QUESTION 2
(a) Esi Mansa is a manager of a retail shop at Anafo, Cape Coast trading under the business name
Esmans Enterprise.

The cash book and bank statement for the month of September 2020 are given below:

Cash Book (Bank Column)

Sept. GH¢’000 Sept. GH¢’000

1 Balance b/d 2,160 1 Wages and Salaries 1,400
4 King 130 6 Kofi 380
7 Cash 220 11 Bukari 500
12 Jacky 800 15 Akpa 350
17 Cash 180 17 Okoro 170
22 Cash 120 30 Kufo 100
28 Bito 70 31 Balance c/d 980
31 Bose 200
3,880 3,880

Oct. 1 Bal. b/f 980

Bank Statement

Date Particulars Debit Credit Balance

Sept. GH¢’000 GH¢’000 GH¢’000
1 Balance 2,160
1 Cash 1,400 760
4 Cheque – King 130 890
6 Cash – Kofi 380 510
7 Cash 220 730
11 Cash – Bukari 500 230
12 Cheque – Jacky 800 1,030
17 Cash 180 1,210
17 Cash – Okoro 170 1,040
22 Cash 120 1,160
28 Cheque – Bito 70 1,230
29 Cheque (dishonoured) - Bito 70 1,160
30 Cash - Kufo 100 1,060
30 Bisi Co Ltd: Dividend 250 1,310
31 Bank Charges 50 1,260

You are required to prepare:

(i) Adjusted Cash Book.

(ii) Bank Reconciliation Statement as at 30th September, 2020.

(b) Good financial and accounting records can provide a number of benefits to an organisation.
Discuss four of such benefits.
 QUESTION 3
a) Explain four uses of cost-volume-profit analysis in a business organisation.

b) Ceccy Fabrics Limited produces garments. Financial data for its next quarter’s operations are as
follows:
Planned output 800 units
Selling price per unit GH¢200
Variable cost per unit GH¢120
Fixed costs GH¢40,000

Required:
i. What is Ceccy Fabrics Limited breakeven point in units?
ii. What is the breakeven in sales value using contribution margin ratio?
iii. What is the margin of safety?
iv. Assuming that Ceccy Fabrics Limited intends to embark on a special promotion next quarter
that will cost GH¢6,000. It will also increase selling per unit by GH¢8 and increase variable
cost per unit by GH¢4.
Should Ceccy Fabrics Limited embark on the special promotion? Give reasons for your
answer.

QUESTION 4

Designs Ventures is a small business owned and run by Kwesi Foh from a small rented art studio at
Akyem, Cape Coast. He designs and makes T-shirts for craft shops. In most months he produces and
sells 1,000 T-Shirts at GH¢50 each.
Kwesi would need your assistance in preparing a cash budget so that he can manage his business
finances better and plan for unforeseen events that may have an impact on his business costs and
revenues. He was sick a few months ago and was unable to meet some orders. As a result, his revenue
was down and he has to use a bank overdraft to cover a large electricity bill. The overdraft has now
been paid off but Kwesi does not want to run out of cash again.

Develop a cash budget for Kwesi showing total cash in and out of his business each month and his cash
balances. He currently has GH¢15,000 in his business account at a bank and has made you the list of
regular outgoings shown below:

Your cash budget should be for the period June to December. Quarterly bills for electricity and the
telephone, and insurance premiums are payable in June, September and December. Kwesi always
manages to sell more T-shirts during the Fetu Afahye festival so he has asked you to double his
purchases and paints in August and double his sales revenue in September.
 Designs Ventures
Cash outflow Amount How often?
GH¢
Rent for studio 750 Each month
Materials 2,500 Each month
Paints 250 Each month
Loan repayments 350 Each month
Telephone 600 Every 3 months
Bus fare 180 Each month
Cleaner 200 Each month
Electricity 1,500 Every 3 months
Insurance 800 Every 3 months
Kwesi’s wage 8,000 Each month

He has also applied for a bank loan of GH¢50,000. The bank has agreed and will advance this amount in
July. Repayments of GH¢5,000 per month begins in August. He will use the money to help a new equipment
for GH¢25,000, also in August. Kwesi will use the machine to make new designs.

Required:
a) Prepare cash budget for Designs Ventures for June to December. [12 marks]
b) Suggest four measures which Kwesi Foh can use to overcome any cash shortage
in her business. [8marks]

QUESTION 5

Grace Yeboah will be seeking early retirement at the end of June, 2023. She plans to
open a retail shop on 1st August, 2023. She will withdraw GHS 30,000 from her
private bank account and pay it into the business bank account.
She provides you with the following forecasts for the four months ending on
30th November, 2023:

(i) On 1st August, 2023:

▪ She will pay GHS 3,000 rent for the six months ending 31st January, 2022.
▪ She will purchase and pay for shop fixtures and fittings GHS 2,700.
▪ She will purchase a delivery van GHS 18,400, paying an initial deposit of GHS
4,000 on 1st August.
▪ She will settle the balance and repay 24 monthly instalments of GHS600 payable on
the first of each month thereafter.
(ii) She will employ two assistants. Each will receive a salary of GHS 780 per
calendar month.
 (iii) The purchases for the four months are expected to be : August GHS 25,000;
September GHS 16,000; October GHS 18,000; November GHS 20,000
(iv) Suppliers will be paid one month after the purchases are made.
(v) Sales are expected to be: August GHS 27,000; September GHS 29,700; October
GHS 32,400; November GHS 36,000.
(vi) Grace anticipates that one third of her sales will be for cash the remainder
will be credit sales. Debtors are expected to pay one month after the sales have
been made.
(vii) General expenses for the shop are expected to be: August GHS 2,300;
September GHS 4,800; October GHS 3,300; November GHS 6,000.
(viii) Grace will withdraw GHS 2,000 per calendar month for her own private
expenses.

Required
i. Prepare a cash budget for the four months ending 30th November, 2023.
ii. Discuss two ways in which Grace Yeboah might address any cash shortages
during August to November 2023.