Brockley’s Clothing and Design Store

BTEC YEAR 12- BUSINESS RESOURCES – UNIT TWO

TUTOR MS NJONGE

Work due on the 20th feb 2013

GRADING CRITERIA

P6: Illustrate the use of budgets, as a means of exercising financial control of a selected company

M4: Analyse the reasons why costs need to be controlled to budget.

D3: Evaluate the problems they have identified from unmonitored costs and budgets

Scenario

Brockley’s Clothing and Design Store is a small business that is run by Brooke from a small rented shop. She designs and makes fashionable jeans. In most months she produces and sells 2000 pairs of fashionable female jeans at £12 per jeans. Brooke would like help producing a cash flow forecast so that she can manage her business finances better and plan for unforeseen events that may have an impact on her business costs and revenues. She was attending a conference abroad in the month of July and was away from the shop. During that month she was not able to deliver all her orders sales fell to 1,000 jeans in the month of July. It was also noted that the telephone charges were slightly high by about 25% in the same month of july However after she was back things are assumed to go back to normal.

Brooke always manages to sell almost double in the month of December and has therefore to double her purchase of materials in the month of November. She has applied for an additional loan of £ 5,000. The bank has agreed and will advance this amount in the month of August. Repayments of £1,500 per month beginning in September. She will use the money to help her buy and additional three sewing machines for £ 5,000 each also in August.

Develop a cash flow forecast for Brooke on a computer spreadsheet showing total cash in and out of her business each month. Currently she has £ 1,000 in her business account. Your cash flow should be for the period June to December. Quarterly bills for insurance and electricity.

Below is a list of the cash outflows

Cash outflows

amount

How often

Rent

4,000

Every month

Materials

6,000

Every month

Salaries

6,500

Every month

Loan repayments

1,000

Every month