Nandipha-Thabo partnership has built up a small but successful business that has been in operation for over ten years. The business makes a range of ladies' dresses which are sold through boutiques and selected regional department stores. The image

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Nandipha-Thabo partnership has built up a small but successful business that has been in operation for over ten years. The business makes a range of ladies' dresses which are sold through boutiques and selected regional department stores. The image of an exclusive label is maintained by not selling through national department stores. The question sets out the mission statement and objectives of the company. It then sets out the budget details for 2023, as agreed by line managers after negotiation in the later month of 2022, together with the balance sheet expected at 31 December 2022 as a starting point to the budget preparation for 2023. Mission statement and Objectives Nandipha-Thabo Partnership Mission statement The company intends to maintain its position in a niche market in supplying fashionable designer dresses at affordable prices for the discerning buyer. The relatively small scale of the operation will be maintained as part of the attraction of the product. The two working partners, who together own the business, are committed to maintaining a close relationship with customers and staff so that quality of service remains uppermost at all times. Objectives • The company intends to recruit high-quality staff. • The company will continue its no-quibble money-back-within-30-days policy. The company has a target gross profit of at least 35% on total sales. Budget details for 2023 as agreed by line managers after negotiations The information presented in Table T1 to T5 has been agreed by the line managers as a basis for preparation of the master budget and its component parts for 2023. Sales and production volumes and direct costs: T1 Units sales for year Units selling price Unit variable cost: Direct material Direct labour Other costs: T2 Production heat and light Production business rates Partners' salaries Rent of premises Office staff salaries Marketing and distribution Working capital targets: T3 Debtors at end of the year Trade creditors for material Stock of raw materials Stock of finished goods Evening 900 R510 R100 R80 Smart casual 1 200 R210 R80 R70 R7 000 for the year R5 000 for the year R60 000 for the year R10 000 for the year R56 250 for the year 20% of sales Holiday wear 1 500 R150 Sales and purchases are planned to be spread evenly over the year. R70 R65 One and a half months' sales One month's purchases Enough for 80% of next month's production No stock held, as goods are made to order and delivered to the customer when completed Capital budget plans: T4 Purchase one new cutting and sewing machine at R80 000, at the start of the year. Depreciate all machinery for full year at 15% per annum on a straight-line basis. Statement of Financial Position at 31 December 2022: T5 Equipment at cost Accumulated depreciation Net book value Stock of raw materials: For 56 evening @ R100 each For 85 smart casuals @R80 each For 80 holiday wear @ R70 each Trade debtors Cash Trade creditors Net current asset Total assets less current liabilities Partners' ownership interest R 5 600 6 800 5 600 83 000 3 000 104 000 23 000 R 100 000 30 000 70 000 81 000 151 000 151 000 Required: From the information presented in Tables: T1 to T5, prepare a master budget on Microsoft Excel. The master budget should consist of the following budgets (Sales budget, Production budget, Direct materials budget, Direct labour budget, Credit sales collection, Production overheads budget, Total production budget, Administration expense budget, Marketing expense budget, Credit purchases payment, Budgeted profit and loss account, Budgeted cash flow statement and Budgeted statement of financial position).

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