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CORPORATION PINANCE EASY TURN TOY COMPANY Easy-Turn is a company that manufacture It has been in business particular type of toy to manufacturers three months

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CORPORATION PINANCE EASY TURN TOY COMPANY Easy-Turn is a company that manufacture It has been in business particular type of toy to manufacturers three months and finds itself with more orders taken than it has the funds to produce the goods on order. The company realizes that it must find a sour the company has a bright future and that a good source of short- term credit would be the missing ingredient to make this company a succesS of financing and convince this source that The company's sales for the first quarter have been 20,000 for January. 30,000 units for Pebruary, and 40,000 units for March. The selling price of the good is s3 per unit and is sold to its customers offering a discount if paid within the period from sale to the end of month or net 60 days, 60% of each month's sales are expected to be collected in the month following the sale and 8% of ach month's sales are expected to be collected in the 2nd month following the sale. Credit terms are not expected to change in the next year from the present credit policy The relationship between factory costs and the rate of output are indicated in the operating statement. Inventories of finished goods, however, are always valued at a "normal cost" of $2.10 per unit, that is, $2 per unit variable and $.10 per unit fixed. The s.10 per unit fixed is a figure based on the entire year's production and not one quarter Expected Unit sales and Production for the next 6 months: sales April August September September Materials are purchased each month for production and they are paid in the month in which they are purchased. A safety stock of raw materials is kept on hand to furnish a 30,000 unit production if needed. Cost of supplies and miscellaneous variable and fixed actory costs are paid in the mont Direct labor, indirect labor, and supervision costs make up factory payroll. These, as well as selling commissions and all administration costs, are paid half in the are paid in full in the month after they are incurred. quarterly and a disbursement of $3,000 will n which they are incurred, half in the following month Property taxes are paid be made for these in April and July. CORPORATION PINANCE EASY TURN TOY COMPANY Easy-Turn is a company that manufacture It has been in business particular type of toy to manufacturers three months and finds itself with more orders taken than it has the funds to produce the goods on order. The company realizes that it must find a sour the company has a bright future and that a good source of short- term credit would be the missing ingredient to make this company a succesS of financing and convince this source that The company's sales for the first quarter have been 20,000 for January. 30,000 units for Pebruary, and 40,000 units for March. The selling price of the good is s3 per unit and is sold to its customers offering a discount if paid within the period from sale to the end of month or net 60 days, 60% of each month's sales are expected to be collected in the month following the sale and 8% of ach month's sales are expected to be collected in the 2nd month following the sale. Credit terms are not expected to change in the next year from the present credit policy The relationship between factory costs and the rate of output are indicated in the operating statement. Inventories of finished goods, however, are always valued at a "normal cost" of $2.10 per unit, that is, $2 per unit variable and $.10 per unit fixed. The s.10 per unit fixed is a figure based on the entire year's production and not one quarter Expected Unit sales and Production for the next 6 months: sales April August September September Materials are purchased each month for production and they are paid in the month in which they are purchased. A safety stock of raw materials is kept on hand to furnish a 30,000 unit production if needed. Cost of supplies and miscellaneous variable and fixed actory costs are paid in the mont Direct labor, indirect labor, and supervision costs make up factory payroll. These, as well as selling commissions and all administration costs, are paid half in the are paid in full in the month after they are incurred. quarterly and a disbursement of $3,000 will n which they are incurred, half in the following month Property taxes are paid be made for these in April and July

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