Finance Questions [10 marks]

1. [Maximum mark: 6] 20N.2.HL.TZ0.b

Dan, a young entrepreneur, is planning to start his own small business making
hand-made wooden garden benches – Beautiful Benches (BB).

Table 2: Forecasted sales revenue for BB for the first four months
of operation, starting 1 January 2021 (all figures in $)

To be competitive, BB offers its customers credit. They pay 50 % when they buy a
bench and 50 % one month later.

Table 3: Selected forecasted financial information for BB for 2021

(all figures in $ and per month unless stated otherwise)

Dan was advised to pay close attention to BB’s working capital cycle.
Prepare a monthly cash flow forecast for BB for the first four months of
operation. [6]
2. [Maximum mark: 4] 19N.2.HL.TZ0.b.ii

Mutombo Window Fans (MWF)

Mutombo Window Fans (MWF) manufactures and sells window fans to wholesalers
across eastern Africa. Although the business began small, it experienced rapid
internal growth through aggressive, commission-based sales.

Currently, MWF sells 300 window fans per month. Each fan sells at an average price
of $100.

Table 1: Forecasted fixed costs for 2020 (all figures in $)

Table 2: Variable costs per fan for 2020 (all figures in $)

Construct a fully labelled, to scale, break-even chart for MWF for 2020. [4]

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