Planning and Control:

Scenario:

ABC Retail Ltd$.$ is preparing its budget for the upcoming financial year. The management has provided the following information for the upcoming year:

Sales Forecast:

Estimated sales for Q$1$: R$300,000$

Estimated sales for Q$2$: R$350,000$

Estimated sales for Q$3$: R$400,000$

Estimated sales for Q$4$: R$450,000$

Cost of Goods Sold $($COGS$)$:

COGS is estimated at $60\%$ of sales.

Operating Expenses:

Fixed operating expenses: R$120,000$ per year

Variable operating expenses are estimated at $10\%$ of sales.

Other Information:

ABC Retail Ltd$.$ plans to invest R$50,000$ in new equipment during the year.

The company anticipates receiving R$25,000$ in other income.

Actual Performance $($for variance analysis$)$:

Actual sales for Q$1$: R$280,000$

Actual sales for Q$2$: R$360,000$

Actual sales for Q$3$: R$420,000$

Actual sales for Q$4$: R$440,000$

Required:

$3\mathrm{.}1$ Create a quarterly sales budget based on the provided sales forecast. $(10$ marks$)$

$3\mathrm{.}2$ Calculate the budgeted COGS for each quarter and the total for the year. $(5$ marks$)$

$3\mathrm{.}3$ Calculate the total operating expenses $($fixed and variable$)$ for each quarter and the total for the year. $(5$ marks$)$

$3\mathrm{.}4$ Calculate the sales variances $($both favorable and unfavorable$)$ for each quarter based on actual sales compared to the budgeted sales. $(10$ marks$)$