Part III(5 Points):Prepare a one-page business reportt hat includes a synopsis of the case and your credit decision for LAF. Include in your report your justification for the credit decision (hint: the importance of the cash budget when determining a credit decision and the financial position and performance from Pro forma financial statements).

Little Annin FlagmakersCost of Goods Sold Budget (USD)Cost of Goods Sold (FIFO)UnitsCost/unitTotal CostBeg. FG inventoryAdd: Cost of Goods Mfg'dGood Available for SaleLess: Ending FG inventoryCost of Good SoldLittle Annin FlagmakersSelling and Administrative Expense Budget (USD)AprilMayJuneQuarterBudgeted sales in unitsVariable S&A per unitTotal Variable S&ATotal Fixed S&ATotal S&A ExpenseLess: DepreciationCash Disbursements for S&ALittle Annin FlagmakersCash Budget (USD)AprilMayJuneQuarterCash Balance, Beginning:Add: Receipts Cash CollectionsTotal Cash AvailableLess Disbursements: Direct Materials Direct Labor Manufacturing Overhead Selling and Administrative Dividends Equipment PurchasesTotal DisbursementsExcess (deficiency) of cash available:Financing: Borrowing Repayments InterestTotal FinancingCash Balance, ending:Little Annin FlagmakersBudgeted Income Statement (USD)Quarter Ending: June 30Net SalesLess: Cost of Goods SoldGross MarginLess: S&A ExpensesNet Operating IncomeLess: Interest ExpenseNet IncomeComputation of Net Sales:Sales:Less uncollectible amounts:Net Sales:Little Annin FlagmakersBudgeted Balance Sheet (USD)Ending March 31stEnding June 30thCurrent Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods InventoryPlant and Equipment: Land Buildings and Equipment Accumulated DepreciationTotal Assets:Liabilities: Accounts PayableStockholder's Equity: Common Stock Retained EarningsTotal Liabilities and stockholder's equity:

Exhibit 1: Excel Data Input Section Input Data (USD) 35 36 37 Other cash outflows Cash dividends paid each month Equipment purchases May Equipment purchases June US$15.000 US$47.820 US$154,600 2 3 4 5 6 7 8 Budgeted sales April (units) May (units) June units) July (units) August (units) Expected 2,500 6,000 3,000 2.500 2.000 20% Desired ending inventory Finished Goods Raw Materials Cash (USS) 402 43 US$ 30.000 10 Selling Price unit US$120.00 11 45 4096 Cash collection pattern Month of sale Following month Uncollectable 12 13 14 15 16 17 18 19 47 48 49 50 51 52 53 Beginning account balances-Mar. 31 Cash (USS) Accounts Receivable (US$) FG inventory (US$75/unit) FG cost per unit FG inventory (units) Raw Materials (a US$7.00/1b) Raw Materials (lb) Accounts Payable (USS) US$37.745 US$132.000 US$30,750 US$75.00 410 US$32,200 4,600 US$85.000 Cash payments for inaterials Month of purchase Following month 4000 oluyla 21 22 23 Production requirements Raw material per unit (lb) Raw mat. cost per lb Direct labor hours per unit Direct labor rate per hour Variable MOHD per DL hour Fixed MOHD per month Depreciation in Fixed MOHD Land Buildings and equipment Accumulated Depreciation Common stock Retained eamings 57 58 59 24 US$520,000 US$1,800,000 (US$750,000) US$500,000 US$1,247,695 US$7.00 0.5 US$40.00 US$10 US$57.950 US$20,000 25 26 27 28 29 US$1 25 30 31 32 33 Selling & adninistrative costs Variable S&A cost per una sold Fixed S&A cost per month Depreciation in Fixed S&A cost US$63.000 US$10.000 34 Exhibit 1: Excel Data Input Section Input Data (USD) 35 36 37 Other cash outflows Cash dividends paid each month Equipment purchases May Equipment purchases June US$15.000 US$47.820 US$154,600 2 3 4 5 6 7 8 Budgeted sales April (units) May (units) June units) July (units) August (units) Expected 2,500 6,000 3,000 2.500 2.000 20% Desired ending inventory Finished Goods Raw Materials Cash (USS) 402 43 US$ 30.000 10 Selling Price unit US$120.00 11 45 4096 Cash collection pattern Month of sale Following month Uncollectable 12 13 14 15 16 17 18 19 47 48 49 50 51 52 53 Beginning account balances-Mar. 31 Cash (USS) Accounts Receivable (US$) FG inventory (US$75/unit) FG cost per unit FG inventory (units) Raw Materials (a US$7.00/1b) Raw Materials (lb) Accounts Payable (USS) US$37.745 US$132.000 US$30,750 US$75.00 410 US$32,200 4,600 US$85.000 Cash payments for inaterials Month of purchase Following month 4000 oluyla 21 22 23 Production requirements Raw material per unit (lb) Raw mat. cost per lb Direct labor hours per unit Direct labor rate per hour Variable MOHD per DL hour Fixed MOHD per month Depreciation in Fixed MOHD Land Buildings and equipment Accumulated Depreciation Common stock Retained eamings 57 58 59 24 US$520,000 US$1,800,000 (US$750,000) US$500,000 US$1,247,695 US$7.00 0.5 US$40.00 US$10 US$57.950 US$20,000 25 26 27 28 29 US$1 25 30 31 32 33 Selling & adninistrative costs Variable S&A cost per una sold Fixed S&A cost per month Depreciation in Fixed S&A cost US$63.000 US$10.000 34