INFORMATION The following information was provided by Peppe Ltd: 1. The budgeted sales schedule for the...

Transcribed Image Text:

INFORMATION The following information was provided by Peppe Ltd: 1. The budgeted sales schedule for the five months ended 31 March 2024 is as follows: November 2023 December 2023 January 2024 February 2024 R280 000 R400 000 R260 000 R240 000 2. 3. March 2024 R280 000 The balance of the sales is on credit and these customers pay two months after the sale. The monthly purchases of materials equals 25% of the sales value (excluding discounts) of the same month but are paid for in the month after the purchase. Fixed costs are estimated at R36 000 per month and they are payable in the month in which they are incurred. The fixed costs exclude depreciation of R14 000 per month. 5. Variable manufacturing overheads, which are paid monthly, amount to R60 000 for December 2023 and are expected to increase by 10% each month. 6. Marketing overheads are expected to amount to R30 000 for December 2023 and are calculated as a percentage of the sales (excluding discounts) for December 2023. The same percentage of sales applies to the marketing overheads for the next three months. Marketing overheads are paid for in the month after they are incurred. 4. Cash sales account for 70% of the total sales. Sixty percent (60%) of the cash sales is subject to a discount of 10%. 7. Production salaries and wages are R80 000 per month and are paid for in the applicable month. An increase of 8% is expected with effect from 01 February 2024. 8. A machine that costs R100 000 is expected to be purchased on credit on 28 February 2024. A deposit of R20 000 will be paid on 28 February 2024 and the balance plus finance charges of R2 000 will be paid in five equal monthly instalments commencing March 2024. 9. Interest at a rate of 12% per year is payable monthly on a loan from Gen Bank. The loan balance is expected to be R192 000 on 31 December 2023. The loan agreement stipulates that instalments of R24 000 plus interest be made at the end of each month. 10. A favourable bank balance of R80 000 is expected on 31 December 2023. INFORMATION The following information was provided by Peppe Ltd: 1. The budgeted sales schedule for the five months ended 31 March 2024 is as follows: November 2023 December 2023 January 2024 February 2024 R280 000 R400 000 R260 000 R240 000 2. 3. March 2024 R280 000 The balance of the sales is on credit and these customers pay two months after the sale. The monthly purchases of materials equals 25% of the sales value (excluding discounts) of the same month but are paid for in the month after the purchase. Fixed costs are estimated at R36 000 per month and they are payable in the month in which they are incurred. The fixed costs exclude depreciation of R14 000 per month. 5. Variable manufacturing overheads, which are paid monthly, amount to R60 000 for December 2023 and are expected to increase by 10% each month. 6. Marketing overheads are expected to amount to R30 000 for December 2023 and are calculated as a percentage of the sales (excluding discounts) for December 2023. The same percentage of sales applies to the marketing overheads for the next three months. Marketing overheads are paid for in the month after they are incurred. 4. Cash sales account for 70% of the total sales. Sixty percent (60%) of the cash sales is subject to a discount of 10%. 7. Production salaries and wages are R80 000 per month and are paid for in the applicable month. An increase of 8% is expected with effect from 01 February 2024. 8. A machine that costs R100 000 is expected to be purchased on credit on 28 February 2024. A deposit of R20 000 will be paid on 28 February 2024 and the balance plus finance charges of R2 000 will be paid in five equal monthly instalments commencing March 2024. 9. Interest at a rate of 12% per year is payable monthly on a loan from Gen Bank. The loan balance is expected to be R192 000 on 31 December 2023. The loan agreement stipulates that instalments of R24 000 plus interest be made at the end of each month. 10. A favourable bank balance of R80 000 is expected on 31 December 2023.

Answer rating: 100% (QA)

Here are the calculations for Peppe Ltds expected cash flows for the five months ended 31 March 2024 ... View the full answer