Question
Factory Update & Cash Flow Lexies borrowed $300,000 on Oct. 1, 2020, to prepare for a factory update. The full $300,000 was repaid on Nov.
Factory Update & Cash Flow
Lexies borrowed $300,000 on Oct. 1, 2020, to prepare for a factory update. The full $300,000 was repaid on Nov. 30, 2020, but Lexies paid two interest payments of $4,500 for the borrowings.
The factory update cost $400,500 which was paid on Oct. 31,2020. This addition to depreciable PP&E caused the fixed manufacturing overhead to raise to $30,750 per month in November with $15,750 being non-cash.
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Spring 2020 Spreadsheet Project | ||||||
| Name: | ||||||
| Lexie's Wool Sweaters | ||||||
| Projected Budgeting Data | ||||||
| Sales & Collections | ||||||
| October 2020 | November 2020 | December 2020 | January 2021 | February 2021 | ||
| Sales in Units (Sweaters) | 30,000 | 34,000 | 55,000 | 47,000 | 32,000 | |
| Selling Price per Sweater | $ 100.00 | |||||
| Cash Sales Collected in the Month of Sale | 30% | |||||
| Credit Sales Collected in the Month of Sale | 50% | |||||
| Credit Sales Collected in the Following Month | 20% | |||||
| Ending FG Inventory Requirement | 3% | of next months unit sweater sales | ||||
| Ending FG Inventory, September 30 , 2020 | 1,500 | sweaters | ||||
| Product Input Expenses | ||||||
| Direct Materials | ||||||
| Ending RM Inventory, September 30, 2020 | 8265.60 | yards | ||||
| Yards of Wool Required per Sweater | 4 | yards per sweater | ||||
| Raw Materials Cost per Yard of Wool | $ 3.50 | per yard | ||||
| Ending RM Inventory Requirement | 7% | of next months sweater production needs | ||||
| Wool Purchases Paid for in the Month of Purchase | 85% | |||||
| Wool Purchases Paid for in the Month following the Purchase | 15% | |||||
| Direct Labor | ||||||
| Number of Workers Required for the Making of Each Sweater | 5 | workers | ||||
| Labor Hours Required per Worker per Unit of FG (Sweater) | 0.5 | hours | ||||
| Labor Cost per Hour | $ 15.00 | per hour | ||||
| Manufacturing Overhead | ||||||
| Variable Manufacturing Overhead | $ 11.75 | per sweater | ||||
| Fixed Manufacturing Overhead | $ 30,200.00 | per month (Oct.) | $ 30,750.00 | per month (Nov. & beyond) | ||
| Noncash Fixed Manufacturing Overhead (included in above) | $ 10,250.00 | per month (Oct.) | $ 15,750.00 | per month (Nov. & beyond) | ||
| Selling & Administrative Expenses | ||||||
| Variable S&A | $ 7.37 | per unit sold | ||||
| Fixed S&A | $ 23,900.00 | per month | ||||
| Noncash Fixed S&A (included in above) | $ (10,750.00) | per month | ||||
| Factory Update & Cash Flow | ||||||
| Factory Update (PP&E) | $ 400,500.00 | paid on October 31, 2020 | ||||
| Principle Borrowed on October 1, 2020 | $ 300,000.00 | |||||
| Principle Repaid on November 30, 2020 | $ 300,000.00 | |||||
| Interest Payment on Borrowings in October & November | $ 9,000.00 | per month (paid in following month) | ||||
fill out a cash budget in excel using formulas only
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
978-1111222284
