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SUBMIT BY : $7^{TH}$ OCTOBER $202411$:$59$ PM $-$ EARLIER SUBMISSION IS

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Question One $(40$ Marks$)$

a$)$ Discuss the key contemporary budgeting issues that organizations face in today's

dynamic economic environment. In your answer, include the following points:

Economic Uncertainty: Explain how global economic fluctuations, such as inflation

and geopolitical risks, impact budgeting and financial forecasting. $(5$ Marks$)$

Technological Integration: Describe how advancements in technology, such as Al

and data analytics, are transforming traditional budgeting methods. Discuss new

approaches like rolling forecasts and zero$-$based budgeting. $(5$ Marks$)$

Sustainability and ESG Reporting: Analyze the growing importance of

environmental, social, and governance $($ESG$)$ goals in budgeting and resource

allocation. $(5$ Marks$)$

Remote Work and Supply Chain Challenges: Evaluate how the rise of remote work

and supply chain disruptions have influenced organizational budgeting strategies.

$(5$ Marks$)$

b$)$ The managing director of Pivot Pvt$.$ asks for your assistance in arriving at a

decision as to whether to continue manufacturing a component diode or to buy it

from an outside supplier. The component diode is used in the finished product

"Cellular".

The following data relating to component diode is supplied:

$($i$)$ The annual requirement of diode is $10,000$ units. The lowest quotation from the

outside supplier is $$8\mathrm{.}00$ per unit.

$($ii$)$ The Diode is manufactured in the machine shop. If the diode is bought, certain

machinery will be sold at its book value and the residual capacity of the machine

shop will remain idle.

$($iii$)$ The total expenses of the machine shop for the year ending $31/12/2001$ are as

follows;

Material $$135,000$

Direct Labour $$100,000$

Indirect Labour $$40,000$

Power and fuel $$6,000$

Repairs and maintenance $$11,000$

Rate, taxes, and insurance $$16,000$

Depreciation $$20,000$

Other overhead Expenses $$29,000$

$($iv$)$ During the year the machine shop manufactured $10,000$ diodes.

$($v$)$ The following expenses of the machine shop apply to manufacturing of diodes

Materials $$35,000$

Direct Labour $$56,000$

Indirect Labour $$12,000$

Power and fuel $$600$

Repairs and Maintenance $$1,000$

$($vi$)$ The sale of machinery used for the manufacture of diodes would reduce as

follows:

Depreciation by $$4,000$;

Insurance $$2,000$

$($vii$)$ If diodes were bought, the following additional expenses would be incurred.

Freight $$1$ per unit

Inspection $$10,000$ per annum.

Required

Prepare a report to the Managing Director showing the comparison of expenses of

machine shop. $(20$mks$)$

a$)$ When the component is made

b$)$ When the component is bought.

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