Please answer each question and show how they were completed.

Woodsons Hand Care and Cleaner is owned and operated by husband and wife, Eric and Heather Woodson. The company has been in operation for several years and manufacturers a special quality hand sanitizer that not only cleans but moisturizes. The company has been quite successful selling the hand sanitizer in a 10-fluid ounce pump over the past several months but is experiencing a slow decline in profits for the past quarter, according to reports generated by the administrative staff . Heather serves as the Chief Financial Officer for the Company but has only worked in the business for 1 years once their youngest child started first grade. Eric takes care of operations, logistics, etc. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties.

The company had been consistently reporting net profits over the past several quarters but a decline in profits over the past couple of quarters is quite noticeable. The Woodsons are troubled by this performance and believe they need an expert to review the companys records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy.

Two distinct areas that you are investigating are manufacturing operations and cash flow management. Details are provided below for both areas.

PART TWO:

Cash flow and Financing

Eric and Heather agree that there also is a need for better forecasting regarding the companys cash inflows and outflows. After a series of questions, you determined that (1) the company had not prepared a cash budget for several quarters and (2) is not up to date on its payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below.

Pertinent Information:

The business manager/accountant and Heather provided projections for the 1st quarter 2021 (January through March 2021) and other information outlined below:

1. Total sales 4th quarter 2020: 58,500 10-oz bottles; Sales price is $8/bottle

2. Total Sales for the 1st quarter 2021 are projected to increase 5% above the 4th quarter 2020 total sales due to an aggressive marketing program that began December 1, 2020. Total quarter sales per month are expected to be realized as follows: 40% in January, 35% in February, and 25% in March. The sales budgets expressed in sales dollars and in the number the number of bottles sold are as follows:

PROJECTED	Oct	Nov	Dec	TOTAL QTR
SALES REVENUE
SALES	$126,945	$177,723	$203,112	$507,780
SALES: PRICE X QUANTITY	$126,945	$177,723	$203,112	$507,780

Number of Bottles Sold	Oct	Nov	Dec	TOTAL QTR
Number of Bottles Sold	15,356	21,499	24,570	61,425

3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.30% of total sales b. Credit sales.70% of total sales

4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 50% b. Collected one month after the sale month, 30% c. Collected the second month after the sale month, 20%

5. Cost Classifications based on 4th quarter 2020 information:

Product Costs	Variable Costs	Fixed Costs
Raw Materials Cost (See corrected COGs Schedule in Part 1, Required #1))	$ ?
Direct Labor	114,000
Overhead:
Rent-Factory		$ 36,000
Indirect Labor	16,800
Insurance Factory (55%)		3,630
Utility-Factory (75%)	5,400	1,800
Depreciation-factory building		18,200
Period Costs
Advertising		64,000
Selling & Administrative Wages and Salaries	18,000	67000
Utility-Selling & Administrative	1,680	720
Insurance-Administrative		2,970
Depreciation-Administrative		27,000

6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred.

7. Direct labor is paid at the end of the month

8. Raw material purchases are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials budget is as follows:

PROJECTED	Oct	Nov	Dec	TOTAL QTR
RAW MATERIAL PURCHASES
NEEDED FOR SALES	$34,503	$48,304	$55,205	$138,012
DESIRED ENDING	8,626	12,076	13,801
LESS: BEGINNING	(40,800)	(8,626)	(12,076)
PURCHASES	$2,329	$51,755	$56,930	$111,013

9. Additional monthly obligation paid in cash include:

1. Property taxes, due February 27, 2021: $2,790

2. Employee payroll taxes due March 15, 2021: $900,

You have determined that you are going to provide the following information to the Woodsons:

1. Determine the variable cost PER 10-oz bottle for EACH variable cost identified in the table above in #5.

2. Prepare a contribution margin income statement for the total 4th quarter 2020 and for the projected total 1st quarter 2021.

3. Prepare a projected traditional multi-step income statement for the total 1st quarter 2021. (See Part 1, Required #2 and exhibit #1). HINT: You will need to prepare a detailed schedule of cost of goods sold for the quarter. Additional information needed is below:

Inventory Data:	1-Oct		31-Dec
Raw Materials	$40,800		$66,780
Work-in-Process	84,000		75,600
Finished Goods	144,000		129,600

4. A schedule of collections from credit sales for each month of the 1st quarter 2021. Previous months credit sales are: November 2020 credit sales, $ 91,550 December 2020 credit sales, $86,210

5. A schedule of payment for raw materials for each month of the 4th quarter. Previous months credit (on account) purchases are: November 2020 purchases on account, $56,560 December 2020 purchases on account, $52,800

6. A forecasted cash budget for (a) the total 1st quarter 2021 and (b) for each month in the 1st h quarter 2021 based on the information provided above. Beginning cash balance on January 1, 2021 is $242,800.