BUSINESS MANAGEMENT 1 MEMO

PREPPARED BY BRILLIANT.
ASSIGNMENT 1.
Question 1
TutorMuten Bookshops has been in operation for 15 years and employs 75 people across stores throughout
South Africa. Over the past five years, sales of new and second-hand books have declined by 40%.
However, sales of eBooks have steadily increased by 10% each year over the same time period. Recently,
a customer satisfaction survey was conducted and the results confirmed what the sales figures showed, that
increasing numbers of customers prefer eBooks. As a result of these findings, a restructure of staffing was
planned and the Human Resource Manager conducted a job analysis. The job analysis identified a number
of staff changes, including terminations, to ensure the ongoing success of the business. The proposed
restructure has been communicated to employees and has resulted in a drop in morale.

a) What level of management is the Human Resource Manager and give other management levels?
[5]
- HR manager Mid-level
- top management
- board of directors
- Low-level managers (first-line), supervisors,
- Workers
b) Discuss any 5 generic task of the managers at the TutorMuten Bookshops [10]
- Planning
- Decide
- Organising
- Leading
- Motivate
- Control
- Communicate
(one mark for stating the correct role and the other one for explain/example)
Question 2
Hwashu is a leading South African shoe designer and manufacture. Management have decided to expand
their range and offer street wear shoes for man and women
a) Define the term planning and outline a typical planning process which P. should undertake as
they work to expand their range. [8]
Page 6.
Planning process
1. Decide
2. Organize and delegate
3. Lead
4. Motivate
 5. Communicate
6. Control
b) Hwashu was a small business what characteristic did the company have for it to be categories as a
small business. [9]

- 6 60 employees
- GA income of more than R 1 million and not more that 14 million
- Assets more than 5 million and less than 10 million

c) The management would want to their business to be a medium enterprise in 3 years time what do
they need to achieve to be a medium to larger business. [8]
Have Gross Income more than R14Million but less than R500 million per annum.
Have total assets of more than R10 million and less than R50 million.
Have more than 60 employees but less than 500 employees.
Structure the business into logical sequences
Appoint 2 or more middle managers.

Question 3
Complete the following table for Brits Inc for the financial year ending 31 December 2016. The
business maintains gross margin of 60% and no stock losses occurred during the period in
question. Use correct symbol for the variance (20)
BUDGETED ACTUAL BUDGETED ACTUAL
2015 2015 VARIANCE 2016 2016 VARIANCE
Income

Sales 500 000 480000 -20000 510 000 505000 -5000

Rent income 40 000 50000 10 000 45 000 53 000 8000
Discount
received 35000 30 000 -5000 31500 36 000 4 500

Expenses

Cost of Sales 200000 192 000 8000 204000 202000 2000

Rent and rates 40 000 38000 2000 49000 45 000 4000
Salaries 68000 80 000 -12000 71 000 70000 1000
Insurance 23500 22 000 1500 25000 23000 ?
Electricity 16000 12000 4000 9000 12000 3000
 Fuel 21500 24500 -3000 12300 13 500 -1200

Net Profit 249000 191500 ? 216200 228500 ?

3b) An Independent Project is a project whose cash flows are not affected by the accept/reject decision
for other projects. Thus, all Independent Projects which meet the Capital Budgeting criterion should be
accepted.

Mutually Exclusive Projects are a set of projects from which at most one will be accepted. For example,
a set of projects which are to accomplish the same task. Thus, when choosing between "Mutually Exclusive
Projects" more than one project may satisfy the Capital Budgeting criterion. However, only one, i.e., the
best project can be accepted.

4 a) Question 4

a) Giving examples, state and explain 3 elements of manufacturing costs (9)

b) Distinguish between production costs and non-production costs, giving examples (6)
c) Calculate manufacturing costs from the following table. (10)
Direct materials 350 000
Direct labor: 250 000
Variable overhead: 100 000
Fixed overhead 65 000
Selling expenses 40 000
General expenses 20 000
Administrative 45 000
expenses

4 a)

Direct Material (explain and give examples to earn all marks)

Direct Labour
Manufacturing
4 b)
Production costs include, direct labor, direct material, these are costs that can directly be traced to the
finished product.
Non production, include Administrative costs, marketing, these are costs associated with the general
management of the organization.
4 c)

Direct materials 350 000

Direct labor: 250 000
 Variable overhead: 100 000
Fixed overhead 65 000
Manufacturing 765000
costs

Question 5

Income statement September October November December

Credit Sales 210 000 210 000 210 000 210 000
Cost of sales (150 000) (150000) (150 000) (150 000)
Gross Profit 60000 60000 60000 60000
Expenses paid in cash (20 000) (20 000) (20 000) (20 000)
40000 40000 40000 40000
Bank balance
Opening balance for the month 210 000 170000 0 40000
Movement during the month -20000 -170000 40000 40000
Expenses paid in cash 20000 -20000 -20000 -20000
Creditors settlements in cash 0 -150000 -150000 -150000
Cash receipts from debtors 0 0 210000 210000
Closing balance 170000 0 40000 0

Increasing in the collection period, causing a rise in expected sales

September October November December
Sales 210 000 245 000 266 000 280 000
Cost of sales -150000 -175000 -190000 -200000
Gross Profit 60 000 70 000 76 000 80 000
Expenses paid in cash -20000 -20000 -20000 -20000
Net Profit 40000 50000 56000 60000

Bank balance
Opening balance for the month 210 000 190 000 20000 35000
Movement during the month -20000 -170000 15000 -10000
Creditors settled in cash 0 -150000 -175000 -190000
Expenses paid in cash -20000 -20000 -20000 -20000
Cash receipts from debtors 0 0 210000 200000
Close balance for the month 190000 20000 35000 25000