Selena Jordan has decided to set up her own cookery business in Kilkenny selling two types...

Transcribed Image Text:

Selena Jordan has decided to set up her own cookery business in Kilkenny selling two types of chocolate dripping cakes, Kinder Bueno chocolate drip and Curly Wurly chocolate drip. Selena hopes to commence production in June 2021. She has € 5,000 of savings to use in the business but will require additional bank funding to get the business started. Selena has prepared the following relating to her business: Estimated Sales Demand Number of Cakes June July August September October Kinder Bueno Chocolate Drip Curly Wurly Chocolate Drip 1,000 1,500 1,600 1,800 2,000 1,500 1,650 1,800 2,200 2,100 Selena has obtained orders from a hotel that specialises in arranging conferences and events. She also has orders from local restaurants and coffee shops. She estimates that 30 % of her customers will pay cash immediately and has agreed to give one month's credit to the remaining customers. 1. The Kinder Bueno chocolate drip cake will have a selling price of €75.00 each while the Curly Wurly chocolate drip cake will sell for €80.00 cach for the first thrce months. She intends to increase both prices by 10 % after that time. 2. The cakes are made using this same basic ingredient but with different toppings. Selena has calculated that for each variety of cake, the basic ingredient is 20 % of selling price while the cost of the topping is 8 %% of the selling price. 4. Selena will receive a grant amounting to €5,100, paid in two equal instalments, June 2021 and September 2021. 5. She will need to purchase and pay for equipment in June costing €4,800. The equipment is expected to last for 4 years and will have no scrap value. 6. Selena has found suitable premises, which will cost €1,200 per month to rent. The landlord requires one month's rent as a deposit and this must be paid with the first month's rent. 7. Other operating expenditure includes power, packaging, insurance, administration expenses amounting to €3,000 per annum spread evenly over the year. This includes monthly depreciation of €100. 8. Selena will employ two staff in the business and will pay wages of E1,320 each per month. The relevant costs are paid in the month in which they are incurred. Required a) Prepare a cash budget in June for the 5 months commencing 1" June 2021. (30 marks) b) Comment briefly on Selena's cash flow for the first 5 months. (3.33 marks) (Total 33.33 marks) Selena Jordan has decided to set up her own cookery business in Kilkenny selling two types of chocolate dripping cakes, Kinder Bueno chocolate drip and Curly Wurly chocolate drip. Selena hopes to commence production in June 2021. She has € 5,000 of savings to use in the business but will require additional bank funding to get the business started. Selena has prepared the following relating to her business: Estimated Sales Demand Number of Cakes June July August September October Kinder Bueno Chocolate Drip Curly Wurly Chocolate Drip 1,000 1,500 1,600 1,800 2,000 1,500 1,650 1,800 2,200 2,100 Selena has obtained orders from a hotel that specialises in arranging conferences and events. She also has orders from local restaurants and coffee shops. She estimates that 30 % of her customers will pay cash immediately and has agreed to give one month's credit to the remaining customers. 1. The Kinder Bueno chocolate drip cake will have a selling price of €75.00 each while the Curly Wurly chocolate drip cake will sell for €80.00 cach for the first thrce months. She intends to increase both prices by 10 % after that time. 2. The cakes are made using this same basic ingredient but with different toppings. Selena has calculated that for each variety of cake, the basic ingredient is 20 % of selling price while the cost of the topping is 8 %% of the selling price. 4. Selena will receive a grant amounting to €5,100, paid in two equal instalments, June 2021 and September 2021. 5. She will need to purchase and pay for equipment in June costing €4,800. The equipment is expected to last for 4 years and will have no scrap value. 6. Selena has found suitable premises, which will cost €1,200 per month to rent. The landlord requires one month's rent as a deposit and this must be paid with the first month's rent. 7. Other operating expenditure includes power, packaging, insurance, administration expenses amounting to €3,000 per annum spread evenly over the year. This includes monthly depreciation of €100. 8. Selena will employ two staff in the business and will pay wages of E1,320 each per month. The relevant costs are paid in the month in which they are incurred. Required a) Prepare a cash budget in June for the 5 months commencing 1" June 2021. (30 marks) b) Comment briefly on Selena's cash flow for the first 5 months. (3.33 marks) (Total 33.33 marks)

Answer rating: 100% (QA)

Cash Budget Jule July August September October Beginning cash balance 5000 40460 187760 364100 56992... View the full answer