CBH Company sells bicycles that they buy from various manufacturers. They are in the process of prepare a Master Budget including the Sales Budget, The Purchasing Budget, the Cash Budget and the Income Statement for 2022. The yearly budget is broken into quarters. The year end is December 31st. 21 Requirement B: Your group has been requested to complete the following CVP analysis for fiscal 2022. Use the CVP Analysis Tab to complete this analysis. Ignore interest expense for this section. 24 1. What is the breakeven point in units sold? What is the breakeven point in sales dollars? 26 2. How many units need to be sold to earn an aftertax profit of $ 500,000 . Assume a tax rate of 30% 27 3. What is the margin of safety in $? 4. If sales were to increase by 15% in 2023 from 2022 projected levels and expense behaviour remains the same for 2023 as in 2022, 29 how much will net income before tax and interest increase by as a percentage. Use operating leverage to answer this. 30 S. If CBH spend $ 50.000 on an advertising campaign, it believes sales (units) will increase 5.00%% 31 without any change in average selling price. Should it take on the advertising? Why or why not? 1- . . A G M N 0 37 Additional details: 38 Below you will see yellow data boxes labeled with the letters A through M. Your instructor will provide your group with 39 the data to enter into these boxes. This data set is unique to your group, so make sure you enter the data correctly. 40 41 Average estimated selli mated selling price per electric bike is $575 42 . There are 1,200 bicycles in Bike Inventory at the end of 2021 with a value of $ |280,000 233 buying price 47 At the end of each quarter, CBH Company wishes to have 60%% of next quarters estimated sales 44 units in Bike Inventory. At the end of 2022 ass 2,000 bikes are required in ending inventory 45 . For each quarter, it is es mated that 75%% of sales will be cash and ] 25%% will be credit sales. 46 Of the credit sales, 80% pay in the quarter of the sale and 20%% pay in the following quarter. 47 Credit sales from Q4 2021 were 48 . Assume operating expenses occur evenly throughout the year and are all paid in cash. 49 For each quarter, 70% of Bike purchases are paid for in cash in the quarter of 50 the purchase and 30% are paid in the following quarter. Total bike purchases in 51 Q4 2021 were $510,000 The expected average purchase price of a bike in 2022 is 375 52 CBH Company will pay $60.000] in dividends in Q4 2022. 53 The cash balance in the bank at the end of 2021 1 5 10,000]. CBH Company wishes to maintain a 54 minimum cash balance of $10,000 in the bank for each quarter. 55 . Budgeted 2022 sales volumes in units for each quarter are: 56 Q1 2000 Q2 2450 (03 4100 Q4 3300 57 . Selling and Administration expenses for the budgeted year are as follows; 50 Sales Wages: 59 Sales wages are a mixed cost (salary and commissions]. COH Company plans on estimating these costs for 2022 60 based on actual historical data using the high-low method. 61 Here are the total sales in units and the total sales wages expense for the last 4 years. 62 Units sold 63 2021 12585 145130 64 2020 12905 164975 Cost difference 27830 2019 11385 174225 Units difference 4730 66 2018 8175 137145 67 68 Fixed Costs: 69 Accounting & professional services 1800 70 Administrative Salaries 77000 71 Advertising 9000 72 Computer costs 4200 73 Depreciation 35000 74 Office Supplies 2300 75 Printing 1400 76 Insurance 1200 77 Property taxes 500 78 Rent D000 79 Utilities 3000 Total Fixed Costs 155400# CBH Company will purchase a new store on 1/1/2012 worth $ 500,000 to be be paid for in 2 equal payments. The first payment will be in 01 and the second in QJ. Taxation it 30 % on taxable income and paid at the end of Q 4 each year. * For Cout of Sales toos]: Add total purchases + Beginning Bike Inventory - Ending Bike Inventory * Interest expense for a quarter s calculated based on the loan balance at the end of the previous quarter and is calculated based on an annual rate of 5.001 The loan balance at the end of 2021 wit 78,000 78000*0.05/4 CASH BUDGET for the year ending 31st December 2022 2 3 4 Year Beginning cash balance Add: Receipts Collections from Customers 10 Total receipts Total available cash: Less: Disbursements Bike Purchases 14 Selling and Administrative expenses Purchase of new store 16 Income Tax expense Dividends 18 Total disbursements: Excess (deficiency) of available cash over cash disbursements Financing Previous period borrowings S 78,000 Interest Costs 975 Excess (deficiency) after interest payment Amount available to pay down loan without considering $10,000 minumum Add: Current period borrowings Less: Repayments considering $10,000 minimum balance Ending cash balance 19 Notes: 30 Minimum cash balance: $10,000 Interest on loan to be paid in each quarter based on the loan balance of the previous quarter. 32 Taxation amount taken from the Income Statement