Formative Assessment 12: SO4 AC1, 2, 3 & 4 US 252040

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Question 1 of 1

1. Question

Link Budget Plans to Operational Objectives

Complete the following in small groups / individually as per the instructions from your facilitator:

12.1 You are a sole trader operating under the name Spice Co. You produce the chemical flavours used to flavour foodstuffs. You have been in operation since 1998. You produce Annual Financial Statements, so that interested parties, such as the bank, clients and suppliers who do business with you and SARS, the Receiver of Revenue, may review these financial statements and make decisions on the results accordingly.

Spice Co.
Statement of Income and Expenditure
For the period 1 September 2XX5 to 31 August 2XX6
	R
Income
Sales	1,500,000
Less: Purchases	700,000
Gross Profit	800,000

Less: Expenditure
Accounting Fees	1,200
Cleaning Materials	5,000
Computer Expenses	20,000
Motor & Travel	50,000
Rental of Factory Premises	200,000
Stationery & Office Expenses	20,000
Staff Refreshments	10,000
Salaries	400,000
Staff Training	1,000
UIF	4,000
Workman’s Compensation	4,000
Net Profit	84,800

Draw up a simple budget for the three-month period from 1 September 2XX6 to 30 November 2XX6. You may work on the assumption that all the costs have gone up by 10% across the board due to higher inflation and increases in the prime lending rate. Your annual income has increased by 15%.

Expense item	September	October	November	Total
Accounting Fees	110	110	110	330
Computer Expenses	173.61	173.61	173.61	1770.83
Motor & Travel	166.67	166.67	166.67	5500.01
Rental of Factory Premises	4583.33	4583.33	4583.33	13749.99
Stationery & Office Expenses	18 333.33	18 333.33	18 333.33
Staff Refreshments	1833.33	1833.33	1833.33
Salaries	916.67	916.67	916.67
Staff Training	36 666.67	36 666.67	36 666.67
Total expenses	91.67	91.67	91.67
	62 875.28	62 875.28	62 875.28

12.2 Explain how operational objectives of the unit are established in line with the unit’s strategic plan:

This response will be reviewed and graded after submission.

Grading can be reviewed and adjusted.