You are required to fulfil all the requirements outlined in this assignment, which are based ona case study provided below. Please carefully review the guidance and requirements specified.
The assignment has been designed to help you apply many of the concept that you have learned
in class to a hypothetical company.
LEARNING OUTCOMES TO BE ASSESSED
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Explain the purposes of budgeting and prepare the master budget components and
flexible budgets and relate the budget to planning and control (CLO 2.1).
GUIDELINE
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The project must be double spaced, using Times New Roman 12-point.
An official cover sheet should be attached with the individual assignment with the
student number, course, module number and title. Do not include your name.
Good standards of written English and presentation are expected, and marks will be
deducted if these standards are not met. For more details on the marking scheme for the
assignment, please refer to the appendix.
PLAGIARISM
You are reminded that the assignment should be your own work, and that material copied from
textbooks, from the coursework of other students, from the lecture slides, or downloaded from
the internet constitutes plagiarism unless proper acknowledgement is provided. All references
should be provided in standard Harvard format.
Helmex Corporation Case Study
The Business Situation:
Helmex Corporation, a leading helmet manufacturer known for its innovative designs and
safety features, is gearing up for its annual strategic planning session. The management team
wants to ensure that the company is well-positioned to meet market demand, manage its
resources effectively, and maintain financial health in the competitive market of sports and
safety equipment. The company has historically seen peak sales in the third quarter, aligning
with the start of many sports seasons and increased consumer focus on outdoor activities.
In preparation for this planning session, the management team requires detailed financial
budgets that will guide their decision-making process. The team is aware that accurate
budgeting is critical for aligning the company’s operational activities with its financial goals
and ensuring that Helmex Corporation remains responsive to market conditions.
The Chief Financial Officer (CFO) of Helmex Corporation has provided recent operational
data and has outlined specific requirements to the budgeting team, consisting of finance and
accounting professionals, and now wants to extend the exercise to the company’s interns for
educational purposes.
As part of your internship with Helmex Corporation, a manufacturer with peak helmet sales
in the third quarter, you are given a valuable opportunity to contribute to the company’s
annual strategic planning session. The management team relies on meticulous financial
planning to navigate the competitive market of sports and safety equipment successfully.
With the data for the forthcoming year and the first two quarters of the following year at
hand, your role is to synthesize this information into actionable financial documents that will
steer the company’s decisions.
By addressing these requirements, you will provide Helmex Corporation with the necessary
financial planning tools to optimize their operations and financial management for the
upcoming periods. This exercise will also enhance your understanding of the practical
application of budgeting in a real-world business scenario.
The following information concerns operations for Year 2 (2023) — the coming year — and
for the first two quarters of Year 3 (2024):
a. The company’s helmets sell for $50 per unit. The budgeted sales in units for the next
six quarters (all sales are on credit) are as follows:
Year
Quarter
Budgeted unit sales
Year 2
1
35,000
2
55,000
3
120,000
Year 3
4
45,000
1
75,000
2
85,000
b. Sales are collected in the following pattern: 70% in the quarter the sales are made, and
the remaining 30% in the following quarter. On January 1, Year 2 (2023), Helmex
Corporation’s balance sheet showed $55,000 in accounts receivable, all of which will
be collected in the first quarter of the year. Bad debts are negligible and can be
ignored.
c. Helmex Corporation desires an ending finished goods inventory at the end of each
quarter equal to 25% of the budgeted unit sales for the next quarter. On December 31,
Year 1 (2022), the company had 10,000 units on hand.
REQUIREMENTS
1. Prepare a sales budget for Year 2, showing both quarterly and total figures.
2. Prepare a schedule of expected cash collections for Year 2, showing both quarterly
and total figures.
3. Prepare a production budget for Year 2 and Year 3, showing both quarterly and total
figures.
4. Discuss how budgeting can guide Helmex Corporation through the competitive sports
equipment industry, emphasizing its role in resource allocation, cost management, and
strategic planning during peak sales periods.
5. Explain why accurate sales forecasting is essential for Helmex Corporation’s
budgeting, particularly how it impacts production, inventory, and financial planning
for peak third-quarter sales.
APPENDIX
Marking Scheme for the group project:
This assignment is allocated a total of 10 marks. The evaluation criteria are segmented into
categories, cumulatively accounting for 100%:
1. Accuracy and Completeness (55%): Comprehensive assessment of the accuracy of
all relevant calculations. This includes an evaluation of numerical accuracy,
application of appropriate methodologies, and the completeness and correctness of
any prepared documents or analyses. The criterion ensures that all necessary
information is accurately captured and properly utilized in the project’s context.
2. Depth of Understanding and Insight (35%): This criterion evaluates the depth of
the student’s understanding of the subject matter and the ability to provide insightful
analysis. It assesses how thoroughly students grasp the underlying principles and
concepts of the project’s topic, including the complexity of the issues explored. The
emphasis is on demonstrating a nuanced understanding, critical thinking, and the
ability to synthesize information from various sources to offer original insights or
solutions.
3. Clarity, Structure, and Language Proficiency (10%): Evaluation of the project
report’s organizational structure, logical flow, and overall clarity. This criterion
further assesses the use of professional and precise language, grammatical accuracy,
and the strategic use of visuals and explanations to support and articulate complex
ideas clearly.
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