QUESTION THREE Easy Spread Ltd is a food processing company whose main product is margarine. The CEO,...

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Finance

QUESTION THREE
Easy Spread Ltd is a food processing company whose mainproduct is margarine. The CEO, Grant, is contemplating expandingthe business by selling its margarine products into the growingIndonesian market. He asks you, as the company’s accountant,whether financial planning structures and processes within thecompany are set up to deal with this expansion of operations andgreater financial complexity associated with export trading.
You know that the company has developed very detailedprocesses for preparing its production and cash budgets. But otherareas of budgeting, especially financial, and capital budgets havenot been formally established. You tell the CEO you will look intoit and provide him with advice in next month’s meeting.
The budget committee of the company has provided the followinginformation:
· Cash sales are 70% of total sales.
· Debtors are expected to pay: 60% of in the month of sales;and 40% in the month following the sale.
2019 Sales
April $400,000 Actual sales
May $400,000 Actual sales
June $700, 000 Estimated sales
July $900,000 Estimated sales
REQUIRED:
(a) Prepare a schedule of expected receipts from debtors forJune and July 2019. (Show all workings as part of youranswer).
(b) Distinguishes between the various types of budgets andtheir purpose that the company should put in place as part of theoverall planning and control process. (limit 120 words)
(c) Provide three examples of how the sales budget will impactbudgets set in other related parts of the organization. (limit 60words)
(d) Discuss the steps that would be necessary to establish afully integrated set of budgets that will enable effective planningand control for the company in the future and gain positiveco-ordination and behavioral change necessary to attain corporateobjectives. (limit 90 words)

(e) Discuss one major advantage and disadvantage Net PresentValue has as a capital evaluation technique as compared to othertechniques such as Payback and Internal Rate of Return. (80words)

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4.3 Ratings (635 Votes)

a SCHEDULE OF EXCEPTED RECEIPT Cash Receipt in June from Sales of May 160000 40000040 June July A Estimated Sales 700000 900000 BA60 Receipt from the current months sale 420000 540000 C Receipt from previous months sale 160000 280000 DBC Expected Receipts from debtors 580000 820000 b VARIOUS TYPES OF BUDGETS Sales Budget Estimates Sales in units and See Answer

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QUESTION THREEEasy Spread Ltd is a food processing company whose mainproduct is margarine. The CEO, Grant, is contemplating expandingthe business by selling its margarine products into the growingIndonesian market. He asks you, as the company’s accountant,whether financial planning structures and processes within thecompany are set up to deal with this expansion of operations andgreater financial complexity associated with export trading.You know that the company has developed very detailedprocesses for preparing its production and cash budgets. But otherareas of budgeting, especially financial, and capital budgets havenot been formally established. You tell the CEO you will look intoit and provide him with advice in next month’s meeting.The budget committee of the company has provided the followinginformation:· Cash sales are 70% of total sales.· Debtors are expected to pay: 60% of in the month of sales;and 40% in the month following the sale.2019 SalesApril $400,000 Actual salesMay $400,000 Actual salesJune $700, 000 Estimated salesJuly $900,000 Estimated salesREQUIRED:(a) Prepare a schedule of expected receipts from debtors forJune and July 2019. (Show all workings as part of youranswer).(b) Distinguishes between the various types of budgets andtheir purpose that the company should put in place as part of theoverall planning and control process. (limit 120 words)(c) Provide three examples of how the sales budget will impactbudgets set in other related parts of the organization. (limit 60words)(d) Discuss the steps that would be necessary to establish afully integrated set of budgets that will enable effective planningand control for the company in the future and gain positiveco-ordination and behavioral change necessary to attain corporateobjectives. (limit 90 words)(e) Discuss one major advantage and disadvantage Net PresentValue has as a capital evaluation technique as compared to othertechniques such as Payback and Internal Rate of Return. (80words)