SCENARIO #1: BASE CASE The following planning assumptions should be used in your BASE CASE BUDGET...

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SCENARIO #1: BASE CASE The following planning assumptions should be used in your BASE CASE BUDGET SCENARIO. Product Listing/Sales Forecast Assumptions Product Selling Price Volumes Year 2 Year 2 Year 2 Year 2 Year 3 Q1 Q2 Q3 Q4 Q1 1 oz Sage $2.80 1,000 1,540 1,360 900 500 3 oz Clover $8.00 7,150 9,461 7,024 6,560 4,825 Assumptions for Cash Collections from Customers Customers pay 60% in cash, 40% credit; All credit sales are collected in following quarter Uncollectible accounts are negligible and thus ignored Planned Inventory Levels/Inventory Costs Assumptions At the end of each quarter, HB wants to have on hand an inventory of items valued at $20,000 (510 units of 1 oz Sage and 3,393 units of 3 oz Clover) plus 80% of the expected cost of goods sold for the following quarter COGS averages 70% of Gross Sales on each product Assumptions for Cash Disbursements for Purchases Purchases are 50% in cash, 50% credit; All credit purchases are paid for in the following quarter The company does not currently receive favorable terms from its suppliers; therefore, no discounts are taken SCENARIO #1: BASE CASE The following planning assumptions should be used in your BASE CASE BUDGET SCENARIO. Product Listing/Sales Forecast Assumptions Product Selling Price Volumes Year 2 Year 2 Year 2 Year 2 Year 3 Q1 Q2 Q3 Q4 Q1 1 oz Sage $2.80 1,000 1,540 1,360 900 500 3 oz Clover $8.00 7,150 9,461 7,024 6,560 4,825 Assumptions for Cash Collections from Customers Customers pay 60% in cash, 40% credit; All credit sales are collected in following quarter Uncollectible accounts are negligible and thus ignored Planned Inventory Levels/Inventory Costs Assumptions At the end of each quarter, HB wants to have on hand an inventory of items valued at $20,000 (510 units of 1 oz Sage and 3,393 units of 3 oz Clover) plus 80% of the expected cost of goods sold for the following quarter COGS averages 70% of Gross Sales on each product Assumptions for Cash Disbursements for Purchases Purchases are 50% in cash, 50% credit; All credit purchases are paid for in the following quarter The company does not currently receive favorable terms from its suppliers; therefore, no discounts are taken