QUESTION 3 -(28 marks) (34 minutes) This question has two parts that are related. PARTA Bethu (Pty) Ltd ("Bethu") is a local company that manufactures and sells different types of shoes. One of these shoe types is sneakers. Its head office is in Umthata, Eastern Cape Province The company has a December year-end The management accountant (Mr Venter) of Bethu is currently in quarantine after contracting COVID-19. You have been requested by the CFO (Ms. Mbonambi) to act as a management accountant and assist with preparing a monthly cash budget for the sneakers section of the business Ms. Mbonambi has provided you with the budgeted contribution statement for the sneakers section for the month of January 2022, which was prepared by Mr Venter, and she indicated that you may use the contribution statement to help you prepare the cash budget The sneakers section has its own bank account and the closing bank balance of this account on 31 December 2021 was R225 000 (Positive) Budgeted contribution statement for the sneakers section for the month of January 2022 Sales R 2 225 000 Less : Variable cost of sales 1 297 500 Opening inventory 187 500 Purchases Polypropylene Leather Suede Closing inventory ? 205 000 750 000 470 000 (315 000) Contribution 927 500 Less: Fixed costs Manufacturing overheads Selling expense 257 500 205 000 52 500 Net profit before tax 670 000 Additional information: Only 30% of Bethu's sneaker sales is on credit. 75% of credit sales is collected within the month of sale and 25% in the month following the month of sale. Total budgeted credit sales for December 2021 were R900 000 70% of inventory purchases in January will be on cash bases. 60% of credit purchases are settled in the month of purchase and 40% in the month following the month of purchase. Total budgeted credit purchases for December 2021 was R1 560 000 The company is liable to settle its tax liability amounting to R 130 600 at the end of January 2022 . Total budgeted credit sales for December 2021 were R900 000. 70% of inventory purchases in January will be on cash bases. 60% of credit purchases are settled in the month of purchase and 40% in the month following the month of purchase. Total budgeted credit purchases for December 2021 was R1 560 000 The company is liable to settle its tax liability amounting to R 130 600 at the end of January 2022 Included in manufacturing overheads is an amount of R40 000 which relates to monthly depreciation The company will sell one of its old materials cutting machines for an estimated cash amount of R 50 100 at the end of January All other expenses in the above budgeted contribution statement will be incurred on cash bases. PART B Bethu has recently introduced running shoes specifically designed for school pupils who participate in athletics. Subsequent to donations that the company made to various unprivileged pupils in different schools, Bethu has received a once-off order from Atteridge - group of schools ("Atteridge") to supply them with 1 000 pairs Atteridge will pay for the order but then donate the pairs to some of their pupils whose parents cannot afford a pair In the absence of Mr. Venter, Ms. Mbonambi drafted the total cost estimate for the order, as request by Attendge. She has indicated to you that her technical knowledge of relevant costing is rusty, and therefore requested that you review her calculations The information below is her estimates: R 110 000 75 000 Labour Factory workers (1 100 hours @ R100) Supervisors (500 hours @ R150) Direct materials Suede Polypropylene (100 kg @ R55) Fixed overheads Factory rental Finance cost Variable overheads Total cost estimate 250 000 5 500 70 000 58 000 180 000 748 500 Additional Information: Bethu usually adds a 15% mark-up on cost to all its once-off orders Factory workers will be pulled from another order called "Project Ubuntu" in order for the company to meet Atteridge's deadline Bethu earns a contribution of R15 per hour from Project Ubuntu. The supervisors are permanent employees of Bethu, therefore they are expected to work as per normal working schedule . Additional information: Bethu usually adds a 15% mark-up on cost to all its once-off orders Factory workers will be pulled from another order called "Project Ubuntu" in order for the company to meet Atteridge's deadline Bethu earns a contribution of R15 per hour from Project Ubuntu. The supervisors are permanent employees of Bethu, therefore they are expected to work as per normal working schedule. 100 kg of Polypropylene is available in stock. Polypropylene is regularly used by the company, and the order requires 500 kg In the 2021 financial period, the company raised a loan of R900 000 on which it pays annual finance cost of R58 000 The once-off order will have specific fixed cost of R55 000 . You have received an email from one of your high school friends, Sandy, who works in the procurement section of Atteridge In her email she detailed that if you can work together you can generate extra income from the school's order, she suggested that you overcharge the school and equally share the excess amount. Furthermore, she mentioned that she has added two of her siblings on the list of unprivileged pupils that the school identified. She mentioned that the two siblings are top athletes at the University of Makerere and therefore deserve a pair each REQUIRED PARTA Marks Prepare the Bethu (Pty) Ltd cash budget for January 2022 for the (a) sneakers section of the business and calculate the expected closing balance in the related bank account as at 31 January 2022 PART B (11) (b) Prepare the revised/final total order price for Atteridge - group of schools using relevant costing principles. Provide reasons for the inclusion or exclusion of each cost item. (11) (c) Respond to your friend's (Sandy's) email: your email should address the following (6) 1) Identify ("what") and explain ("why") two ethical concerns/qualitative factors that you may have. Note: In the email, refer to yourself as "Student"; do not use your name or Surname. TOTAL 28