Project #10009 - for expertSOLUTIONS

Part One


Your first client, “Magic Widget” , needs help in the preparation of a cash budget.

Magic Widget is struggling to maintain its position in a highly competitive market place. The Production and Sales Directors therefore require your help on working on a feasible plan to extend the company’s current product range.


The proposal they have put forward involves adapting an existing piece of machinery to produce a new component (code name Big Mac), which would be an upgraded version of a component currently made by a rival company.


The Production Director has obtained a quote to adapt the existing machinery and this would cost £5,000 and be funded at the start of the first month of production.


Following market research by the Sales Director, a selling price of £50 per unit of 007 is considered reasonable. This would reflect a 100% mark-up on the cost of material, which would be bought from a local supplier.


Forecasts are anticipated that 750 units would be sold in the first month, which would increase compounded by 20% per month for the first six months.


The policy of Magic Widget is to allow a one-month credit period for debtors; although it is anticipated that one third of sales of 007 would be cash. Magic Widget anticipates that 10% of sales will not be collected and therefore written off as a bad debt.

 Materials supplies by the local suppler are allowed one months credit.


The policy of Magic Widget is to produce enough of the Big Mac components in the first month to meet the estimated demand for the first two months and then from the second month onwards, to produce the forecasted demand for the following month.


Wages are estimated to be £4 per unit produced and would be payable in the same month as the hours worked.


Other expenses are estimated at £3.50 per unit produced, 50% of which would be paid in the month incurred with the remainder paid in the following month.


Finally promotional and marketing costs associated with the launch of Big Mac are estimated to total £3,000 and would be paid in the first month.




1)      The Directors of Magic Widget have asked you to prepare a cash budget for the component 007 for the first six months of production, showing clearly the estimated cash balances at the end of each month.


2)      Critically discuss the importance of cash budgeting to Magic Widget whilst it launches its new product Big Mac.

(50 marks)


Part 2:


Another Client is an outdoor clothing and sports retailer who has asked you to

provide an analysis of the financial performance of Blacks Leisure Group plc for the year ending February 2011. The Blacks annual accounts are on the Blackboard site.


When  preparing this analysis you should focus your analysis of Blacks Leisure plc in terms of performance, liquidity, efficiency and gearing.  You should include in your analysis the following ratios:


Return on Capital Employed

Debtors (receivables) days

Creditors (payables) days

Current ratio

Gross profit margin

Operating profit margin

Gearing ratio

Interest cover

                                                                                                                                    (50 marks)





Your assignment should be submitted electronically through Blackboard Assessment area for this module, (NOT Turnitin) no later than 23.59 on August 7th 2013. 


Uploading your coursework for marking is very easy. Within the AF2S16 Blackboard site, choose the assessment area. Scroll to the bottom of the page and click the "coursework  link". A new page appears, which you scroll to the bottom of, click the browse button to select your relevant coursework file and then click the upload button

Subject Business
Due By (Pacific Time) 07/08/2013
Report DMCA

Chat Now!

out of 1971 reviews

Chat Now!

out of 766 reviews

Chat Now!

out of 1164 reviews

Chat Now!

out of 721 reviews

Chat Now!

out of 1600 reviews

Chat Now!

out of 770 reviews

Chat Now!

out of 766 reviews

Chat Now!

out of 680 reviews
All Rights Reserved. Copyright by - Copyright Policy