Business Management with Marketing

1

BABM Year 1 2020/2021

Management & Information Systems (BBS-4-MIS)

Financial Forecasting using Excel Exercise 3: Susie’s Beauty Products Susie’s Beauty Products manufactures cleanser, toner and moisturiser which are sold to beauty salons in the area for both internal use and sale to their customers. The company needs a cash flow budget for the six months from April 2021 to September 2021 to see how much cash the business will have in six months’ time. In April, production of the products is expected to be: cleanser 6,000, toner 3,000 and moisturiser 9,000. Production per month is expected to rise by: cleanser 4%, toner 1% and moisturiser 2%. All goods are sold in the month they are manufactured. The selling price per unit of cleanser is £12, toner £8 and moisturiser £19. The cost of materials to manufacture each item is: cleanser £7, toner £4 and moisturiser £15. Labour to manufacture each item is worked out at a cost of £0.40p for each product. Premises rent is £16,000 per year and is paid monthly. Electricity costs £220 per month and is paid quarterly in April, July, October and January. The manager is paid a salary of £2,200 per month, and she also receives a bonus of 1% per month of total income if monthly sales exceed £280,000. At the beginning of April, the business expects to have £30,500 in the bank. Task:

 Prepare a cash flow budget for the six months from April to September 2021. It is important that your budget is easy to read and that important figures are easy to see.