Requirement 1: Prepare GPB Inc's cash budget for the four months ending on December 31, 2016 for the two alternatives: #1) creating pottery using the existing kiln (Wood-Mizer KD 150) and #2) creating pottery using the new kiln (Wood-Mizer KD 250).

Requirement 2: For each alternative, prepare a budgeted income statement for the four months ending December 31, 2016, and a budgetted balance sheet at December 31, 2016.

(Note: For each alternative this is one cash budget that covers four months and not four one-month cash budgets. same applies to the budgetted income statement.)

Requirement 3: On the basis of financial considerations only, what alternative should GPB Inc. consider doing? What non-financial factors might George consider in his decision?

Narrative George P. Burdell, acting as GPB wood kilned pottery to sell Inc., designs and creates through a local craft shop. Because this is a hobby, does not consider labor piece. costs his financials.The pottery sells at an average market price for $50 per The local craft shop charges a 10% commission remits the net proceeds to and Inc., at the end of December. George sold 50 pieces each year for the past two years and expects to sell 76 pieces this year. He has clay in enough inventory to make 76 sets. He per piece for the George uses a Wood-Mizer cl KD 150 Lumber Kiin that he purchased for cash exactly two years ago. The kiln is depreciated at the rate of $1oo per month. The Accounts Payable balance relates to the clay inventory and is payable by September 30. George is considering buying a wood-Mizer KD 250 Lumber Kiln so that he can produce more intricate patterns in clay and more pieces per burn. The new kiln costs $6,60o and would be depreciated at $18o per month. His bank has agreed to lend him $6,6oo at 996 interest per year, with $2,20o payment of principal, plus accrued interest payable each December 31. George believes he can produce 66 products with more intricate patterns in time for the Christmas rush if he does not produce any ofthe other pieces of pottery. He predicts that each more intricate designed piece will sell for and average price of $65. Clay costs $18 per piece. George's supplier will sell him clay on credit, payable December 31. George plans to keep his old kiln whether or not he buys the new kiln. The balance sheet for his pottery business at August 31, 2016, is as follows