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Hello sir,
In the last part of the question they have stated that the manager is considering delaying payments to the trainers by one month , I don’t understand how it does have no effect on cost for Quater1 , won’t the payment get delayed by one month and fall in quarter 2 , And the payment of one month of the quarter 2 get delayed and fall in quarter 3 ?
Also I don’t see any adjustment made for it in the revised forecasts
Sir can u please also explain the additional room hire charges included in the revised forecasts, 1000 in Q1 and 1200 in Q2 , I can’t understand where did the amounts come fromAlthough delaying payment to trainers will affect the cash flows, we are preparing profit statements and therefore the expense in each quarter remains the same, regardless of when payment is actually made.
With regard to the extra room hire charges (which are in Q3 and Q4 – not Q1 and Q2) it is because in those quarters sales will be up by 20%. Since the question also says they want to have similar class sizes, then 20% more students will mean having 20% more rooms. So in Q3 there is an extra 20% x 5,000, and in Q3 an extra 20% x 6,000.
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