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5/3/2016 Problem 5-35 (Part Level Submission) Print by: Trevor Gurganious BUS_108_001_16S: Financial Evaluation And Managerial Analysis 108 (001) (Spring 2016) / HW5 *Problem 535 (Part Level Submission) GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Month Sales January February $905,800 $1,000,900 March $905,800 Month Sales July $1,510,000 August $1,510,000 September $1,603,300 April $1,156,200 October $1,603,300 May $1,250,600 November $1,510,000 June $1,405,500 December $1,709,200 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. All sales are made on credit. GrowMaster's excellent record in accounts receivable collection is expected to continue, with 60 percent of billings collected in the month after sale and the remaining 40 percent collected two months after the sale. Cost of goods sold, GrowMaster's largest expense, is estimated to equal 40 percent of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased. All purchases are made on account. Historically, 75 percent of accounts payable have been paid during the month of purchase, and the remaining 25 percent in the month following purchase. Hourly wages and fringe benefits, estimated at 30 percent of the current month's sales, are paid in the month incurred. General and administrative expenses are projected to be $1,573,400 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benefits $ 327,100 Advertising 377,800 Property taxes 143,800 Insurance 194,500 Utilities 183,000 Depreciation 347,200 Total $ 1,573,400 Operating income for the first quarter of the coming year is projected to be $329,600. GrowMaster is subject to a 40 percent tax rate. The company pays 100 percent of its estimated taxes in the month following the end of each quarter. GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than http://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 1/2 5/3/2016 Problem 5-35 (Part Level Submission) $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $51,100. *(a) Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Receipts Budget April February sales May June $ $ $ $ $ $ March sales April sales May sales Totals Accounts Receivable balance at the end of second quarter of 2012 $ Attempts: 0 of 3 used *(b) The parts of this question must be completed in order. This part will be available when you complete the part above. *(c) The parts of this question must be completed in order. This part will be available when you complete the part above. *(d) The parts of this question must be completed in order. This part will be available when you complete the part above. Copyright 20002016 by John Wiley & Sons, Inc. or related companies. All rights reserved. http://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 2/2 Problem 5-35 GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Month Sales January February $905,800 $1,000,900 March April May June $905,800 $1,156,200 $1,250,000 $1,405,500 Month Sales July $1,510,000 August $1,510,000 Septembe r October November December $1,603,300 $1,603,300 $1,510,000 $1,709,200 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. All sales are made on credit. GrowMaster's excellent record in accounts receivable collection is expected to continue, with 60 percent of billings collected in the month after sale and the remaining 40 percent collected two months after the sale. Cost of goods sold, GrowMaster's largest expense, is estimated to equal 40 percent of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased. All purchases are made on account. Historically, 75 percent of accounts payable have been paid during the month of purchase, and the remaining 25 percent in the month following purchase. Hourly wages and fringe benefits, estimated at 30 percent of the current month's sales, are paid in the month incurred. General and administrative expenses are projected to be $1,573,400 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benefits $ 327,100 Advertising 377,800 Property taxes 143,800 Insurance 194,500 Utilities 183,000 Depreciation 347,200 Total $ 1,573,400 Operating income for the first quarter of the coming year is projected to be $329,600. GrowMaster is subject to a 40 percent tax rate. The company pays 100 percent of its estimated taxes in the month following the end of each quarter. GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $51,100. Don't show me this message again for the assignment Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Receipts Budget April February sales May June $ $ $ $ $ $ March sales April sales May sales Totals $ Accounts Receivable balance at the end of second quarter of 2012 Don't show me this message again for the assignment Link to Text Prepare the purchases budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Purchases Budget April May April COGS May COGS $ June $ $ June COGS July COGS Totals $ $ $ Don't show me this message again for the assignment Link to Text Prepare the cash payments budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) March purchases Cash Payments Budget April May $ June $ $ $ $ April purchases May purchases June purchases $ Accounts Payable balance at the end of second quarter of 2012 Don't show me this message again for the assignment Link to Text $ Prepare the cash budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) April Beginning Cash balance Financing: Cash Budget May $ June $ Quarter $ $ Ending Cash Balance $ Don't show me this message again for the assignment $ $ $ Problem 5-35 GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Month January February Sales $907,500 $1,004,000 March April May June $907,500 $1,158,500 $1,251,000 $1,400,500 Month July August Septembe r October November December Sales $1,507,500 $1,507,500 $1,609,100 $1,609,100 $1,507,500 $1,703,300 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. All sales are made on credit. GrowMaster's excellent record in accounts receivable collection is expected to continue, with 60 percent of billings collected in the month after sale and the remaining 40 percent collected two months after the sale. Cost of goods sold, GrowMaster's largest expense, is estimated to equal 40 percent of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased. All purchases are made on account. Historically, 75 percent of accounts payable have been paid during the month of purchase, and the remaining 25 percent in the month following purchase. Hourly wages and fringe benefits, estimated at 30 percent of the current month's sales, are paid in the month incurred. General and administrative expenses are projected to be $1,566,800 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benefits $ 322,400 Advertising 375,800 Property taxes 136,800 Insurance 197,600 Utilities 184,300 Depreciation 349,900 Total $ 1,566,800 Operating income for the first quarter of the coming year is projected to be $324,300. GrowMaster is subject to a 40 percent tax rate. The company pays 100 percent of its estimated taxes in the month following the end of each quarter. GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $57,700. Don't show me this message again for the assignment Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Receipts Budget April May $ June $ $ February sales 401600 0 0 March sales 544500 363000 0 April sales 0 695100 463400 May sales 0 0 750600 Totals 946100 $ $ $ 1058100 1214000 Accounts Receivable balance at the end of second quarter of 2012 $ 500400 Don't show me this message again for the assignment Link to Text Prepare the purchases budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Purchases Budget April May April COGS May COGS $ June $ $ 139020 0 0 350280 150120 0 June COGS 0 392140 168060 July COGS 0 0 422100 489300 542260 Totals $ $ $ 590160 Don't show me this message again for the assignment Link to Text Prepare the cash payments budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) March purchases Cash Payments Budget April May $ $ June $ 108320 0 0 April purchases 366975 122325 0 May purchases 0 406695 135565 June purchases 0 0 442620 $ 475295 $ 529020 $ 578185 Accounts Payable balance at the end of second quarter of 2012 Don't show me this message again for the assignment Link to Text $ 147540 Prepare the cash budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Beginning Cash balance Cash Budget April May $ June $ Quarter $ $ 57700 51227 50198 57700 Collection from Sales 946100 1058100 1214000 3218200 Total cash available to spend 1003800 1109327 1264198 3275900 Payments for inventory 475295 529020 578185 1582500 Wages 347550 375300 420150 1143000 Salaries 26867 26867 26867 80600 Advertising 31317 31317 31317 93500 Property taxes 0 0 34200 34200 Insurance 16467 16467 16467 49400 Utilities 15358 15358 15358 46075 Income taxes 129720 0 0 129720 Total cash disbursements 1042573 994328 1122543 3159445 Cash excess (deficiency) -38773 114998 141655 116455 Minimum cash balance 50000 50000 50000 0 Cash excess (needed) -88773 64998 91655 0 Borrow ings 90000 0 0 90000 Interest 0 1800 270 2070 Repayments 0 63000 27000 90000 Total financing 90000 -64800 -27270 -2070 Less: disbursements Financing: Ending Cash Balance $ 51227 $ 50198 $ 114385 $ 114385 Don't show me this message again for the assignment Problem 6-32 Gerald/Brooke, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Direct materials Direct labor Variable overhead Fixed overhead Standard Price $1.6 per yard $12 per DLH $4 per DLH $6 per DLH Standard Quantity 1.25 yards 0.25 DLH 0.25 DLH 0.25 DLH Standard Cost $2 3 1 1.5 $7.50 Bobby Brickley, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Bobby asked CFO Lila Davis for more information. She provided the following overhead budgets, along with the actual results for November. The company purchased and used 116,400 yards of fabric during the month. Fabric purchases during the month were made at $1.45 per yard. The direct labor payroll ran $251,559, with an actual hourly rate of $12.1 per direct labor hour. The annual budgets were based on the production of 1,004,950 shirts, using 256,500 direct labor hours. Though the budget for November was based on 89,700 shirts, the company actually produced 83,160 shirts during the month. Indirect material Indirect labor Equipment repair Equipment power Total Supervisory salaries Insurance Property taxes Depreciation Utilities Quality inspection Variable Overhead Budget Annual Per November Budget Shirt Actual $452,400 $0.45 $38,000 303,700 0.3 34,460 202,400 0.2 20,000 52,200 0.05 13,900 $1,010,700 $1.00 $106,360 Fixed Overhead Budget Annual November Budget Actual $264,500 $22,100 351,300 31,600 81,300 7,300 320,000 38,000 211,200 21,700 282,000 32,800 Total $1,510,300 $153,500 (a) Calculate the direct materials price and quantity variances for November. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) $ Direct material price variance 17460 $ Direct material quantity variance 19920 Favorable Unfavorable (b) Calculate the direct labor rate and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Direct labor rate variance Direct labor efficiency variance $ Unfavorable 2079 $ Favorable 5226 (c) Calculate the variable overhead spending and efficiency variances for November. (Round answers to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Variable overhead spending variance $ 23200 $ Variable overhead efficiency variance 1742 Unfavorable Favourable (d) Calculate the fixed overhead spending variance for November. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Fixed overhead spending variance $ 27642 Unfavorable Don't show me this message again for the assignment