Q16-1: What is Zero based budgeting?Q16-2: A companys annual sales budget is for 120000 units spread equally through the year. It needs to have one and three quarters month stock at the end of each month. If opening stock is 12000 units what are the number of units to be produced in the first month of the budget year?Q16-3: The standard costs for a manufacturing business are 12 per unit for direct materials 8 per unit for direct labour and 5 per unit for manufacturing overhead. The sales projection is for 5000 units 3500 units need to be in stock at the end of the period and 1500 units are in stock at the beginning of the period. What will the production budget show in costs for that period?Q16-4: Receivable increase by 15000 and payables increase by 11000. What is the effect on cash flow from the Statement of Cash Flow from these two items?Q16-5: Randy Airplanes Ltd is a privately owned business. It has budgeted for profits (after deducting depreciation of 41000) of 150000. Debtors are expected to increase by 20000 inventory is planned to increase by 5000 and creditors should increase by 8000. Capital expenditure is planned of 50000 income tax of 35000 has to be paid and loan repayments are due totaling 25000. What is the forecast cash position of Randys at the end of the budget year assuming a current bank overdraft of 15000?Q17-1: What are a flexible incremental and activity-based budget? Please explain each.Q17-2: A company has budgeted for materials of 170000 but the actual costs are 164000. The company has also budgeted for labour of 130000 with actual costs being 133000. What is the expense variance and is it favorable or adverse?Q17-3a: How do increases/decreases in costs and/or prices effect each of the variances in standard costing?Q17-3b: How do increases/decreases in production labor effect each of the variances in standard costing?Q18-1: What is the difference between Kaizen costing target costing and life cycle costing?Q18-2: Trans PLC estimates that a new product will sell in sufficient quantities to justify its manufacture at a selling price of 175. The company needs to invest 5 million to produce a quantity of 10000 of these new products per year and requires a return on that investment of 12% per annum. The current prediction is that the product will cost 140 to manufacture. How should Trans reengineer its costs to achieve the target selling price and target rate of return?Q18-3: SkinTans top five customers generate sales revenue of 950000 per annum. Each generates a different gross margin as a consequence of price negotiations that have been carried out over several years. Because of their location each customer incurs different distribution expenses. Sales commissions are paid at the rate of 6% on all sales. Fixed costs are customer specific covering salaries of sales and office staff who service each customer. The following table shows the information for each of the top customers for the previous year.
Carry out a customer profitability analysis and make recommendations in relation to any future strategies SkinTan should take in relation to its top customers.