| ----------------------------------------------------------------------------------------------- | White Products wishes to purchase goods in one month for sale in the next. On March 31, the company has 23,000 portable music players in stock, although sales for the next month (April) are estimated to total 26,700 players.Total salesof players are expected to be 20,300 in May and 21,500 in June. | | | Portable music players are purchased at a wholesale price of $90. The supplier has a financing arrangement by which White Products pays 60 percent of thepurchaseprice in the month when the players are delivered and 40 percent in the following month. White purchased 31,000 players in March. | Ads by Wander BurstAd Options | Required: | | (a) | Estimate purchases (in units) for April and May. | | | | | (b) | Estimate the cash required to make purchases in April and May. | | | | | --------------------------------------------------------------------------------------------------------------------- | Nassau Products is preparing a cash budget for April. The following information onaccounts receivablecollections is available from past collection experience: |
| | | | Percent of current months sales collected this month | 25 | % | | Percent of prior months sales collected this month | 62 | | | Percent of sales two months prior to current month collected this month | 7 | | | Percent of sales three months prior to current month collected this month | 4 | | | The remaining 2 percent is not collected and iswritten offasbad debts. Credit sales to date are: |
| | | | April-estimated | $ | 290,000 | | March | | 261,000 | | February | | 230,000 | | January | | 274,000 | | Required: | | What are the estimatedcash receiptsfrom accounts receivable collections in April? | | | -------------------------------------------------------------------------------------------- | Sanjanas Sweet Shoppe operates on the boardwalk of a New England coastal town. Thestoreonly opens for the summer season and the business is heavily dependent on the weather and the economy in addition to new competition. Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first step in planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise and experience, she develops the following: |
| Scenario | Gross Margin per Customer (Price - Cost of Goods) | Number of Customers | | Good | $6.6 | 46,000 | | Fair | 5.6 | 36,000 | | Poor | 1.8 | 31,000 | | Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possiblescenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs to be $46,000 plus $2 for every customer in excess of 36,000. The marketing and administrative costs are estimated to be $13,100 plus 3 percent of the gross margin. |
| Required: | | Prepare an analysis of the possible operating income for Sanjana similar to that inExhibit 13.15. | | --------------------------------------------------------------------------------- | The following information is available for year 1 for Dancer Components: |
| | | | Salesrevenue (270,000 units) | $ | 5,400,000 | | | Manufacturingcosts | | | | Materials | $ | 319,000 | | Variable cash costs | | 269,000 | | Fixed cash costs | | 619,000 | | Depreciation | | 1,887,000 | | Marketing and administrative costs | | | | Marketing (variable, cash) | | 800,000 | | Marketing depreciation | | 285,000 | | Administrative (fixed, cash) | | 968,000 | | Administrative depreciation | | 140,000 | | | Total costs | $ | 5,287,000 | | | Operating profits | $ | 113,000 | | | All depreciation charges are fixed and are expected to remain the same for year 2.Sales volumeis expected to increase by 19 percent, but prices are expected to fall by 6 percent. Material costs per unit are expected to decrease by 9 percent. Other unit variable manufacturing costs are expected to decrease by 2 percent per unit. Fixed manufacturing cash costs are expected to increase by 6 percent. | | Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 11 percent. Inventories are kept at zero. Dancer operates on a cash basis. | | Required: | | Prepare a budgeted income statement for year 2.(Do not roundintermediate calculations. Round your answers to the nearestdollar amount.) | | | ------------------------------------------------------------------------------------------------ | The board of directors of the Cortez Beach Yacht Club (CBYC) is developing plans to acquire more equipment for lessons and rentals and to expand club facilities. The board plans to purchase about $67,000 of new equipment each year and wants to begin a fund to purchase a $617,000 piece of property for club expansion. |
| The club manager is concerned about the clubs capability to purchase equipment and expand its facilities. One club member has agreed to help prepare the followingfinancial statementsand help the manager ascertain whether the plans are realistic. Additional information follows the financial statements. |
| CORTEZ BEACH YACHT CLUB Statement of Income (Cash Basis) For the Year Ended October 31 |
| | Year 9 | | | Year 8 | | Cash revenues | | | | | | | Annual membershipfees | $ | 880,000 | | $ | 617,000 | | Lesson and class fees | | 490,100 | | | 377,000 | | Miscellaneous | | 5,700 | | | 4,700 | | | | Total cash received | $ | 1,375,800 | | $ | 998,700 | | | | Cash costs | | | | | | | Managers salary and benefits | $ | 89,000 | $ | 89,000 | | Regular employees wages and benefits | 397,000 | 397,000 | | Lesson and class employees wages and benefits | | 407,000 | | | 317,000 | | Supplies | | 35,400 | | | 34,400 | | Utilities (heat and light) | | 47,400 | | | 33,400 | | Mortgage interest | | 78,700 | | | 84,100 | | Miscellaneous | | 5,700 | | | 4,700 | | | | Total cash costs | $ | 1,060,200 | | $ | 959,600 | | | | $ | 315,600 | | $ | 39,100 | | Cash income | |
| (1) | Other financial information as of October 31, Year 9: |
| (a) | Cash in checking account, $22,500. | | (b) | Petty cash, $1,450. | | (c) | Outstanding mortgage balance, $924,000. | | (d) | Accounts payablefor supplies and utilities unpaid as of October 31, Year 9, and duein November Year 9, $6,700. | | (2) | The club purchased $67,000 worth of sailing equipment during the current fiscal year (ending October 31, Year 9). Cash of $37,000 was paid on delivery, with the balance due on October 1, which had not been paid as of October 31, Year 9. | | (3) | The club began operations in year 3 in rental quarters. In October Year 5, it purchased its current property (land and building) for $1,506,000, paying $274,000 down and agreeing to pay $77,000 plus 4 percent interest annually on the previously unpaid loan balance each November 1, starting November 1, Year 6. | | (4) | Membership rose 2 percent during year 9, approximately the same annual rate of increase the club has experienced since it opened and that is expected to continue in the future. | | (5) | Membership feeswere increased by 16 percent in year 9. The board has tentative plans to increase them by 8 percent in year 10. | | (6) | Lesson and class fees have not been increased for three years. The number of classes and lessons has grown significantly each year; the percentage growth experienced in year 9 is expected to be repeated in year 10. | | (7) | Miscellaneous revenues are expected to grow in year 10 (over year 9) at the same percentage as experienced in year 9 (over year 8). | | (8) | Lesson and class employees wages and benefits will increase to $613,150. The wages and benefits of regular employees and the manager will increase 16 percent. Equipment depreciation and supplies, utilities, and miscellaneous expenses are expected to increase 20 percent. |
| (a) | Construct a cash budget for year 10 for Cortez Beach Yacht Club.(Do not roundintermediate calculations. Round your answers to the nearest dollar amount.) |
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