SECTION A

Exquisite Bedding Ltd$.$

You have recently been appointed as Management Accountant for Exquisite Bedding Ltd$,$ a small company that manufactures a specialized bed for the elderly which is sold to the public and its wholly owned subsidiary company, Ultimate Care Ltd$.,$ a retail department store. The company uses a rolling budgetary control system and is in the process of preparing the budget for the four months' period from September to December $2020.$

During a preliminary review, you established that the company intends to sell each bed produced for $$219$ to Ultimate Care Ltd$.$ in addition to individual customers on the same credit terms. However, the Managing Director is concerned about the performance of both entities think a different pricing strategy should be used for the beds sold to Ultimate Care Ltd$.$ The current strategy might impact adversely on the company as a whole, in particular, the sub$-$optimization of goals, stakeholders' expectations and the behavior of managers and employees.

Exquisite Bedding Ltd secured a cash loan of $$120,000($from Barclays Bank$)$ that was secured on the land and buildings at an interest rate of $\frac{71}{2}\%$ and this is due to be received in November $2020.$ The repayment of the loan will begin March $2020,$ however, monthly interest payment will begin in December $2020.$ Also, machinery costing $$112,000$ will be received in November and paid for in December $2020.$

You have been provided with the following budgeted balance sheet information as at September $1,2020$ well as estimates and other operating data:

Exquisite Bedding Ltd

Budgeted Balance sheet as at September $1,2020$

ASSETS

Non$-$current assets

Land and buildings

Machinery and equipment

Motor vehicles

Current assets

Closing stock:

Raw materials

Finished goods

Receivables

Cash at bank

$\backslash$table$[[$Cost$,\backslash$table$[[$Depreciation to$-],[$date$]],$Net book value$],[$$$,$$$,S$