Please complete the Cash-Flow Statement. I have attached the directions, income statement and transactions list. Thank you!

Income Statement Calculations JointsOrtho Company January - December 2015 Revenue Gross Sales Net Sales 452,025,000 # of hips sold * price = monthy revenu 452,025,000 Cost of Goods Sold Materials Cost of Goods Sold 4,000,000 4,000,000 Gross Profit (Loss) 1000000 worth of raw materials ever 448,025,000 Expenses Advertising Depreciation Employee Benefits Program Interest Expense Office Expense Salaries/Wages Taxes Telephone/Utitlities Vehicle Expenses Total Expenses Net Income (Loss) 9,040,500 645,171 550,000 15,000 2,161,371 56,955,150 14,400 225,075 (Jan , Feb, March) revenue * .02 + (Ap NEED SALVAGE VALUE TO CALCULATE 53314.29 a month * 12= 639771.48 + 6000000/12 = 500000 year which lea one time set up cost 177714.29 a month *12 = 2132571.48 Multiplies revenue for each month by 1200 a month * 12 = 14,400 15000 a month *12= 180,000+ 75(yea sold * price = monthy revenue Sum all 12 months worth of raw materials every three months b, March) revenue * .02 + (Apr, May, June) revenue * .02 + (July, Aug, Sept) revenue * .02 + (Oct, Nov, Dec) * .02 LVAGE VALUE TO CALCULATE FOR BUILDING AND MACHINERY 9 a month * 12= 639771.48 + 5400 (gym memberships for a year)= 645171.48 /12 = 500000 year which leaves 5500000 remaining, therefore 5500000*.10= 550000 set up cost 29 a month *12 = 2132571.48 + 28800 (truck driver yearly) = 2161371.48 s revenue for each month by .126 and added the products of all 12 months onth * 12 = 14,400 month *12= 180,000+ 75(yearly license fee)= 180,075 + 45000 for the truck = 225075 Month Transaction # Repeat? Balance Sheet Cash Flow January 1 Borrow No $6,000,000 for building with 10 year mortgage at 10% annum 2 Pay manager Yes, every monthly salary month of $6,000 per month 3 Pay for Yes, every Increase Outflow building: set month, at asset of up what will the end of building every but be office month decrease space, cash, manufacturi decrease ng space and liabilities warehouse space. Set a depreciation schedule, How much percentage of depreciation per year? Set up cost will be $15,000 for January but it won't repeat every month Income Statemen t Add to Outflow Liabilities Outflow Expense Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 6 Order $3,000,000 worth of machinery/eq uipment for manufacturing . Pay down. Increase Outflow - Expense receivable investing s of activities equipmen $1,500,00 t, increase 0 liabitily with half being account payable 7 Receive machines and pay remaining amount due Turn Outflow - Expense receivable investing to assets, activities increase the other liability $1,500,00 decrease 0 account payable 8 Hire Yes, every employees - month Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs Outflow Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 11 Start up prodution, pay workers for the month Expense 12 Book Yes, every manufact depreciation month uring (for machine overhead and is equipment?) included and other in Work in manufacturing Progress overhead and costs for the Finished month; Goods property taxes Inventory $6,000,000 worth is . 666% which is $39,960 per year https://smarta sset.com/taxe s/delawareproperty-taxcalculator#DR WtQPKLqt Major coporation can pay up to $500,000 per year on insurance and lability, so I'm assuming we're paying about $240,000 per year ($20,000 per month) since it's a manufacturing Finish increase cost of manufacturing inventorie good 2,000 hips s, sold? and move decrease them into cost of finished goods good inventory solds Cost of Goods Sold 14 Pay for the 3 month supply of raw materials received in Transaction 10 Expense 16 Take an order for 1,200 hip replacements 13 Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Reduce current inventory of 2,000 hips 17 Ship and invoice customer for 1,200 hip replacement s Decrease inventory, increase account receivable 18 Receive payment for 1,200 hip replacements (1,200 X $36,750 = $44,100,000) Decrease Inflow account receivable , increase cash New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Income Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) New 6 Buy a commercial truck for $45,000 http://www.co mmercialtruckt rader.com/ New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense Increase Outflow Asset, Increase Liabilities Expense Outflow Expense New 8 February Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Expense Outflow Outflow 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - create 1,500 hips, sold 1,000 hips New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 March Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense 2 Pay manager Yes, every monthly salary month of $6,000 per month Expense 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Expense Outflow Outflow 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - create 1,700hips, sold 1,100 hips New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense April New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) Expense 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 16-18 Manufacture and month's supply of hip replacements - create 2,000 hips, sold 1,200 hips Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense May & June New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month Expense 16-18 Manufacture and month's supply of hip replacements - For May create 1,200 hips, sold 1,000 hips; For June create 1,500 hips, sold 800 (vacation time, people go through less surgery) New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense July New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) Expense 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 16-18 Manufacture and month's supply of hip replacements - create 1,000 hips, sold 800 hips Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense August & Septembe r New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - For August create 1,000 hips, sold 800 hips; For September create 1,200 hips, sold 1,000 Expense New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense October New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages Expense 9 Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing, and metal injection molding materials (will be ordered every 3 months) Expense 10 Yes, every Increase Outflow 3 months receivable (Jan, , increase April, July, account Oct) payable Yes, every Increase 3 months asset, (Jan, decrease April, July, receivable Oct) Receive 3 mon 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 14 Pay for the 3 month supply of raw materials received in Transaction 10 16-18 Manufacture and month's supply of hip replacements - create 2,000 hips, sold 1,200 hips Yes, every Decrease Outflow 3 months payable, (Jan, increase April, July, liabilities Oct) Expense New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense November & December New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Pay manager Yes, every monthly salary month of $6,000 per month Expense 2 Outflow 3 Depreciation Yes, every Depreciati Outflow on Loss of building month Expesnse 4 Hire Yes, every managers and month employees; pay fringe benefits of $10 per month for gym membership for 45 employees. Total of $450 per month Outflow Expense 5 Pay employee Yes, every health, life, month and disability premiums, plus FICA, unemploymen t and withholding taxes. Total amount paid for benefits per month for all employees $53,314.29 (calculations is on sheet 3) Outflow Expense 8 Hire Yes, every Depreciait Outflow employees - month on Loss Expense 1st month's salary/wages (can be found on sheet "Transaction 5") EXCLUDE MANAGER WAGE, set up machinery depreciation, set up standing costs - pay wages 12 Book Yes, every depreciation month and other manufacturing overhead costs for the month 16-18 Manufacture and month's supply of hip replacements - For November create 1,500 hips, sold 1,200 hips; For September create 1,100 hips, sold 1,000 Expense New 1 Advertising Yes, every and quarter promotions 2% of revenue (since we said 8% per year) Outflow Expense New 2 Unanticiapted costs 10% of total projected costs per year Outflow Expense New 4 annual license fee of $75 http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf New 3 Sales tax Yes, every (.126% of month goods solds per month of gross receipts - total receipt for goods sold) - this is for all businesses in DE. we're technically not a corporation in DE so we're not subject to the 8.7% federal taxable income. http://revenue. delaware.gov/ services/curre nt_bt/cra.pdf Outflow Expense New 5 Hire truck Yes, every driver with month Class A CDL driver for East Cost and pay $20/hour for 30 hours a week (they might not need to drive all the time) Outflow Expense New 7 Total Yes, every expense/cost month for the truck $15,000 per month ($180,000 per year which includes maintenance, gas, insurance, etc.) http://www.driv ebigtrucks.co m/truckingnews/the-realoperatingcost-of-acommercialtruck/ Outflow Expense New 8 Telephone, Yes, every payable Outflow utlities bill month http://www $1,200 per .investope month, in DE, dia.com/e it's estimated xamto be around guide/cfa$600 per levelmonth for 1/financial regular commercial statement https://www.ei s/balancea.gov/electricit sheety/sales_reven compone ue_price/pdf/t ntsable5_b.pdf liabilities.a sp Expense Additional Info Can include FV of n/a investment and NPV in paper Straightline depreciation over 10 years; Most nonresidential property has recovery period of about 39 years (so almost 40). Since we're doing depreciation for 10 years, I'm going to assume the salvage value of the building after 10 years will be 75% of $6,000,000 = which is $4,500,000. So depreciation cost for 10 years would be $1,500,000. 1/10 years = 10% depreciation per year. 10% X $1,500,000 = $150,000 per year depreciation. $1,500,000/12 months = $12,500 per month. Nonresidential real property with with 39 years recovery period https://www.irs.gov/pub lications/p946/ch04.ht ml According to BLS, wages and salaries make up 70% of total compensation while benefits such as paid leave, supplemental pay, health insurance benefits, retirement and savings, and other legally required benefits make up 30% of total compensation. I did the math on the third sheet http://www.bls.govew s.release/ecec.nr0.htm Straightline depreciation; standing costs mean fixed costs - so depreciation over the years and monthly wages; Depreciation will also be set for 10 years, I'm assumng salvage value will be $500,000. With straightline, depreciation cost would be $2,500,000/10 years $250,000 per year; $20,833.33 per month; will be recorded in transaction 12 same as Transaction #8, so maybe skip? manufacturing overhead includes depreciation on machine, people who clean the manufacturing area, and people who perform maintenance on equipment, Insurance and property taxes on the manufacturing equipment and facilities. * Under the straight-line method of depreciation, recognize depreciation expense evenly over the estimated useful life of an asset. The straight-line calculation steps are: Determine the initial cost of the asset that has been recognized as a fixed asset. Subtract the estimated salvage value of the asset from the amount at which it is recorded on the books. Determine the estimated useful life of the asset. It is easiest to use a standard useful life for each class of assets. Divide the estimated useful life (in years) into 1 to arrive at the straight-line depreciation rate. Multiply the depreciation rate by the asset cost (less salvage value). Straight Line Depreciation Example Pensive Corporation purchases the Procrastinator Deluxe machine for $60,000. It has an estimated salvage value of $10,000 and a useful life of five years. Pensive calculates the annual straightline depreciation for the machine as: Purchase cost of $60,000 - estimated salvage value of $10,000 = Depreciable asset cost of $50,000 1 / 5-year useful life = 20% depreciation rate per year 20% depreciation rate x $50,000 depreciable asset cost = $10,000 annual depreciation wages and salaries (70%) total benefits compensa (30%) of tion total comp o 15 of the workers will be paid at the rate of $18/hour for 40 hours per week (molding specialists )= $10,800 per week OR $43,200 per month ### ### o 10 of the workers will be paid at the rate of $16/hour for 40 hours per week (machinin g specialists ) = $6,400 per week OR $25,600 per month ### ### o 5 of the workers will be paid at the rate of $13/hour for 40 hours per week (cleaning and maintena nce) = $2,600 per week OR $10,400 per month ### ### o 10 of the workers will be paid at the rate of $17/hour for 40 hours per week (shipping and receiving) = $6,800 per week OR $27, 200 per month ### ### o 3 shift supervisor s will be paid at the rate of $20/hour for 40 hours per week = $2,400 per week OR $9,600 per month ### ### o 1 plant manager will be paid a salary of $6,000 per month ### ### o1 administra tive/huma n resources person at the rate of $15/hour for 40 hours per week = $600 per week OR $2,400 per month ### ### Total per ### Month ### ### OPERATING ACTIVITIES(ACTIVITIES RELATED TO NET INCOME) Cash receipts from the following: Sales of good or services Interest received from loans Dividends received from investments Cash payments for the following: Merchandise purchased from suppliers Materials used to manufacture products Employee payroll Interest paid to Lenders Income taxes Other operating expenses Investing Activities (activities related to noncurrent assests) Cash receipts from the following: Sale of long-term investments(e,g. bonds and stocks of other companies) Collecttion of principal for loans made to other entities Cash payments for the following Purchase of long-term investments (e.g. bonds and stocks of other companies) Purchase of property, plant and equipment Loans made to other entities Financing Activities (activities related to noncurrent liabilities and owners' equity) Cash receipts from the following: Issuance of notes (e.g. a loan with a bank) Issuance of bonds Issuance of common stock Cash payments for the following: Principal amount of loans* Principal amount of bonds* Repurchase of common stock (treasury stock) Cash dividends 1 Project Information: There are a lot of opportunities in this project to be creative. While some data are provided, you may wish to include additional information and this is encouraged. In other words, if it's not there, you are to include it! Critically thinking and creativity are vital to your success in the work place and this project is a great chance to build those talents. You may want to devise a plan for additional manufacturing plants or you may want to discuss ways to better communicate with the owners. The possibilities are endless, but the time for the project is not! Be creative and have fun. This is the time to take risks as it is a classroom setting. Background of Project The industry of medical devices involves a number of monitoring and reconstructive devices. Some of those devices include cardiac and diabetic care as well as hip and knee replacements. The owners of a medical device manufacturing firm called \"JointsOrtho\" have recently reviewed information about the expected growth of the aging population in the United States. Every day 10,000 Americans are turning age 65. The population of older adults is expected to reach 89 million people by the year 2050. This figure is more than double the number of older adults in the United States in 2010. Orthopedic medical devices are one of the fastest growing areas in medical device manufacturing. The owners of JointsOrtho or JO, manufacture full hip and knee replacements and would like to have your firm set up a financial plan for opening a new manufacturing plant that makes medical devices often used for Orthopedics. Specifically you will set up a plant that manufactures Full Hip Replacements in Delaware. Each Full Hip Replacement will be sold throughout the United States at a cost of $36,750 each, including shipping, etc. Sales are expected to be between 1,000 and 1,200 hips per month. This figure is above what they are already producing in their first plant. Depreciation for equipment should be set to 10 years. Beyond the information provided you are unable to get any further guidance from the owners or the Financial Department at the other warehouse location. Remember, you are setting up a project proposal and sending your recommendations to the owners of JointsOrtho. You will be presenting it to them in teleconference. You may wish to do the written portion of the assignment in a Word Document or PowerPoint. If you use PowerPoint be sure to use the notes section to write out detailed information. A reference sheet/page is required for either format you select. The Financial Statements can be included in the same document or submitted separately. 2 You will need to provide information to the owners of JointsOrtho that includes what it will cost to open a facility and hire workers and determine if the facility will breakeven within the first 12 months. You will be hiring a total of 3 shift supervisors and a total of 45 employees (including shift supervisors) to do various manufacturing of the hips, clean up, shipping, etc. The 45 workers will be paid as follows: 15 of the workers will be paid at the rate of $18/hour for 40 hours per week (molding specialists) 10 of the workers will be paid at the rate of $16/hour for 40 hours per week (machining specialists) 5 of the workers will be paid at the rate of $13/hour for 40 hours per week (cleaning and maintenance) 10 of the workers will be paid at the rate of $17/hour for 40 hours per week (shipping and receiving) 3 shift supervisors will be paid at the rate of $20/hour for 40 hours per week 1 plant manager will be paid a salary of $6,000 per month 1 administrative/human resources person at the rate of $15/hour for 40 hours per week Criteria for the project: This project is meant to develop your critical thinking skills while allowing you to be creative. This project includes both Financial Statements and Writing. Use the grading rubric to help guide your work! Discuss and critically analyze whether this is a good expansion. Make recommendations and submit an Executive Summary along with the full report. Discuss and critically analyze if the need exists from your research to open an additional facility to produce knee replacements. Critically evaluate the next steps the company should make with regards to expansion. Should the company open the expansion? Sections to include in your response: Purpose Statement: A purpose statement helps tell your reader what to expect but it also keeps you on track. I compare the purpose statement to typing in the address on your GPS or writing down the address of your destination. Executive Summary: One page written to the owners of JointsOrtho explaining your findings on opening the new warehouse Written Components: Written document with critical analysis of the Risk/Return and Time Value of Money, Three Project Risk types, etc., Explain fixed and variable costs as they pertain to this type of business. Financial Statements: At a minimum to include an Income Statement, Cash Flow Statement and Balance Sheet. There will be several transactions provided that students will update within their Financial Statements, however student may wish to expand upon their statements and include a summary of additional transactions, etc. that they included. Break Even Analysis: Will opening this plant Break Even within the first year? 3 Conclusions: Provide a critical analysis of the financial statements and written components of the paper. References: Support all decisions with literature from United States of America only! You will be provided with some transactions for the purpose of getting you started with what to include, but you are expected to come up with and support additional transactions. For instance you decide to hire an additional manager. You will need to put this information into the Financial Statement in the correct area. (All Transactions are attached in another document) Transactions: The following are a few transactions to get your group going on the Financial Statements. You may wish to include others. These are hypothetical as you are just trying to decide if the JointsOrtho Company should open a new facility. The numbers are based on a site the company is interested in buying and the information from when the first manufacturing plant opened. Transaction 1: Borrow $6,000,000.00 for building with 10 year mortgage at 10% annum Transaction 2: Pay your salary of $6,000/month Transaction 3: Pay for building: Set up what will be office space, manufacturing space and warehouse space. Set a depreciation schedule Transaction 4: Hire managers & Workers. Pay salaries and fringe benefits and taxes Transaction 5: Pay employee health, life and disability premiums, plus FICA, un-employment and withholding taxes Transaction 6: Order $3,000,000 worth of machinery/equipment for manufacturing. Pay down. Transaction 7: Receive machines and pay remaining amount due Transaction 8: Hire employees- Expense 1st Months' salary/wages, set up machinery depreciation, set-up standing costs Transaction 9: Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing and metal injection molding materials. *Note: These raw materials will need to be ordered every 3 months. Transaction 10: Receive 3 month supply of raw materials Transaction 11: Start up production. Pay workers for the month Transaction 12: Book depreciation and other manufacturing overhead costs for the month Transaction 13: Finish manufacturing 2,000 hips and move them into finished goods inventory 4 Transaction 14: Pay for the 3 month supply of raw materials received in Transaction 10 Transaction15: Manufacture and months' supply of hip replacements Transaction 16: Take an order for 1,200 hip replacements Transaction 17: Ship and invoice customer for 1,200 hip replacements Transaction 18: Receive payment for 1,200 hip replacements 5 Summary of Project You will set up a manufacturing plant (as part of JointsOrtho's expansion) for Full Hip Replacements in Delaware You are setting up a project proposal and sending your recommendations to the owners of JointsOrtho You will need to provide information that includes o what it will cost to open a facility o hire workers o determine if the facility will breakeven within the first 12 months. Format chosen - Word document What needs to be included: Financial Statements & Paper In Financial Statements - Income statement Cash flow statement Balance sheet Any additional financial statements Add additional transactions & provide explanation for added ones Break Even Analysis - will the plant break even in first year In Paper - Structure of Paper Purpose Statement: A purpose statement helps tell your reader what to expect but it also keeps you on track. I compare the purpose statement to typing in the address on your GPS or writing down the address of your destination. Executive Summary: One page written to the owners of JointsOrtho explaining your findings on opening the new warehouse Written Components: Written document with critical analysis of o Risk/Return o Time Value of Money o Three Project Risk types, etc., o Explain fixed and variable costs as they pertain to this type of business. Content needed to address in paper Discuss and critically analyze whether this is a good expansion. Should the company open the expansion? 6 Discuss and critically analyze if the need exists from your research to open an additional facility to produce knee replacements. Break Even Analysis - Will plant break even in the first year? Make recommendations and submit an Executive Summary along with the full report. Critically evaluate the next steps the company should make with regards to expansion. Conclusions - include analysis/summary of financial statements and summarize paper content References Numbers/Data Given: Each Full Hip Replacement is sold at $36,750 (including shipping) Expected sales (above other plants) - 1,000 and 1,200 hips per month Depreciation - 10 years Employees Total of 3 shift supervisors Total of 45 employees (including shift supervisors) o 15 of the workers will be paid at the rate of $18/hour for 40 hours per week (molding specialists) = $10,800 per week o 10 of the workers will be paid at the rate of $16/hour for 40 hours per week (machining specialists) = $6,400 per week o 5 of the workers will be paid at the rate of $13/hour for 40 hours per week (cleaning and maintenance) = $2,600 per week o 10 of the workers will be paid at the rate of $17/hour for 40 hours per week (shipping and receiving) = $6,800 per week o 3 shift supervisors will be paid at the rate of $20/hour for 40 hours per week = $2,400 per week o 1 plant manager will be paid a salary of $6,000 per month o 1 administrative/human resources person at the rate of $15/hour for 40 hours per week = $600 per week Transactions: The following are a few transactions to get your group going on the Financial Statements. You may wish to include others. These are hypothetical as you are just trying to decide if the JointsOrtho Company should open a new facility. The numbers are based on a site 7 the company is interested in buying and the information from when the first manufacturing plant opened. Transaction 1: Borrow $6,000,000.00 for building with 10 year mortgage at 10% annum Transaction 2: Pay your salary of $6,000/month Transaction 3: Pay for building: Set up what will be office space, manufacturing space and warehouse space. Set a depreciation schedule Transaction 4: Hire managers & Workers. Pay salaries and fringe benefits and taxes Transaction 5: Pay employee health, life and disability premiums, plus FICA, un-employment and withholding taxes Transaction 6: Order $3,000,000 worth of machinery/equipment for manufacturing. Pay down. Transaction 7: Receive machines and pay remaining amount due Transaction 8: Hire employees- Expense 1st Months' salary/wages, set up machinery depreciation, set-up standing costs Transaction 9: Place order for raw materials at a cost of $1,000,000 which will include Machining, Casting, Grinding, Polishing and metal injection molding materials. *Note: These raw materials will need to be ordered every 3 months. Transaction 10: Receive 3 month supply of raw materials Transaction 11: Start up production. Pay workers for the month Transaction 12: Book depreciation and other manufacturing overhead costs for the month Transaction 13: Finish manufacturing 2,000 hips and move them into finished goods inventory Transaction 14: Pay for the 3 month supply of raw materials received in Transaction 10 Transaction15: Manufacture and months' supply of hip replacements Transaction 16: Take an order for 1,200 hip replacements Transaction 17: Ship and invoice customer for 1,200 hip replacements Transaction 18: Receive payment for 1,200 hip replacements