1- Nature Solutions Inc., produces an energy drink that is very popular in the fall-winter season. Units sold are anticipated as:

October 4,800

November 8,640

December 17,280

January 13,440

Total 44,160 units

If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup.

However, Nature Solutions Inc. decides to go with level production to avoid being out of merchandise. The company will produce the 44,160 units over four months at a level of 11,040 per month.

Part A

What is the ending inventory in units at the end of each month? complete the table

Beginning Inventory Units Produced Units Sold Ending Inventory

October 0

November

December

January

Part B

If the inventory costs $10 per unit and will be financed at the bank at a cost of 0.6% per month, what is the monthly financing cost and the total for the four months? Complete the following table:

Ending Inventory (# of units) Total Inventory Cost $ Inventory Financing Cost $

October

November

December

January

Total Financing Cost

2- Surgical supplies Inc. is a well-known and reputable supplier of integrated heart monitoring devices. The firm is currently debating whether to expand its sales overseas. While the firm expects an extra $10,400,000 in sales if it enters foreign markets, it also knows that 6% of its sales will ultimately be un collectible. In addition, selling costs will be 4% on all new sales and the firm's production costs are 60% of sales. Surgical supplies Inc tax rate is 30%.

a) Calculate surgical supplies additional net income from the new sales.

b) If the average investment in accounts receivable is $2,000,000 and management requires that any new project earn a minimum of 12% return on investment. Should the firm enter the foreign markets? Please explain.