The executive report part

3. Report 1) Should Lambda Inc. accept the special order? Based on the estimated financial impact of the special order on the master budget, determine whether Lambda Inc. should accept the special order. Assume that the special order also follows a cash collection schedule identical to that of regular orders under the annual contract. 2) The buyer asks Lambda Inc. whether the special order price can go lower. The buyer wants to minimize the required capital for a massive sales and promotion campaign, which is essentially the material cost of Z350 to the buyer. The buyer proposes to share some of the excess profits from the event. The share for suppliers will be proportional to the cost-saving each supplier can provide to the buyer by participating in the special order. Lambda Inc., considering the proposal, wants to gather accounting information to help decision-making. Lambda Inc. wants to set a low price to increase the expected profit from the profit-sharing as long as the selling price is high enough to avoid a loss in the special order. What is the lowest possible price Lambda Inc. can set for the special order? Use the information available in the base and the alternative budgets. Sales Budget sales unit selling price sales revenue 92 4500 units $45.00 $202,500.00 93 Q4 3500 units 8500units $45.00 $45.00 $157,500 $382,500 Q1 2500 units $45.00 $112,500 $ Cash Collection Budget 92 $202,500 93 $157,500 sales revenue Collection in six month 04 $382,500 $202,500 01 $112,500 $157,500 Production Budget sales add: closing inventory 4500 420 Q2 4500 units 420 units 4920 units 540 units 4380 units 23 Q4 01 3500 units 8500 units 2500 units 1020 units 300 units 540 units 4520 units 8800 units 3040 units 420 units 1020 units 300 units 4100 units 7780 units 2740 units 4920 units 540 less: opening inventory Production 4380units direct materials purchase budget Production PCB Per Unit Total Required add: closing inventory 92 4380 units 1 unit 4380 units 410 units 4790 units 438 units 4352 units $12.00 $52,224 93 04 Q1 4100 units 7780 units 2740 units 1 unit 1 unit 1 unit 4100 units 7780 units 2740 units 778 units 274 units 438 units 4878 units 8054 units 3178 units 410 units 778 units 274 units 4468 units 7276 units 2904 units $12.00 $12.00 $12.00 $53,616 $87,312 $34,838 Production 4380 4100 7780 2740 TPU 95A per 3 Gms 3 Gms 3 Gms 3 Gms Total Requin 13140 Gma 12300 Gms 23340 Gms 8220 Gms add: closing 1230 Gms 2334 Gms 822 Gms 1314 Gms 14370 Gms 14634 Gms 24162 Gms 9534 Gms less.opening 1314 Gms 1230 Gms 2334 Gms 822 Gms 13056 Gms 13404 Gms 21828 Gms 8712 Gms Rate $0.20 $0.20 $0.20 $0.20 purchase cos $2,611.20 $2,680.80 $4,365.60 $1,742.40 less.opening inventory Rate purchase cost Payment Schedule Total purchase Cash Next Quarter 40% The total payment Q2 Q3 Q4 Q1 $54,835.20 $56,296.80 $91,677.60 $36,590.40 $32,901.12 $33,778.08 $55,006.56 $21,954.24 $74,300.00 $21,934.08 $22,518.72 $36,671.04 $107,201.12 $55,712.16 $77,525.28 $58,625.28 Labour Budget Q2 Production Hour Per Unit (hr) Total hour (hr) Hour Rate Total labour cost 4380 units 1 hr 2190 hr $10.00 $21,900 Q3 4100 units 1 hr 2050 hr $10.00 $20,500 Q4 7780 units 1 hr 3890 hr $10.00 $38,900 Q1 2740 units 1 hr 1370 hr $10.00 $13,700 3. Report 1) Should Lambda Inc. accept the special order? Based on the estimated financial impact of the special order on the master budget, determine whether Lambda Inc. should accept the special order. Assume that the special order also follows a cash collection schedule identical to that of regular orders under the annual contract. 2) The buyer asks Lambda Inc. whether the special order price can go lower. The buyer wants to minimize the required capital for a massive sales and promotion campaign, which is essentially the material cost of Z350 to the buyer. The buyer proposes to share some of the excess profits from the event. The share for suppliers will be proportional to the cost-saving each supplier can provide to the buyer by participating in the special order. Lambda Inc., considering the proposal, wants to gather accounting information to help decision-making. Lambda Inc. wants to set a low price to increase the expected profit from the profit-sharing as long as the selling price is high enough to avoid a loss in the special order. What is the lowest possible price Lambda Inc. can set for the special order? Use the information available in the base and the alternative budgets. Sales Budget sales unit selling price sales revenue 92 4500 units $45.00 $202,500.00 93 Q4 3500 units 8500units $45.00 $45.00 $157,500 $382,500 Q1 2500 units $45.00 $112,500 $ Cash Collection Budget 92 $202,500 93 $157,500 sales revenue Collection in six month 04 $382,500 $202,500 01 $112,500 $157,500 Production Budget sales add: closing inventory 4500 420 Q2 4500 units 420 units 4920 units 540 units 4380 units 23 Q4 01 3500 units 8500 units 2500 units 1020 units 300 units 540 units 4520 units 8800 units 3040 units 420 units 1020 units 300 units 4100 units 7780 units 2740 units 4920 units 540 less: opening inventory Production 4380units direct materials purchase budget Production PCB Per Unit Total Required add: closing inventory 92 4380 units 1 unit 4380 units 410 units 4790 units 438 units 4352 units $12.00 $52,224 93 04 Q1 4100 units 7780 units 2740 units 1 unit 1 unit 1 unit 4100 units 7780 units 2740 units 778 units 274 units 438 units 4878 units 8054 units 3178 units 410 units 778 units 274 units 4468 units 7276 units 2904 units $12.00 $12.00 $12.00 $53,616 $87,312 $34,838 Production 4380 4100 7780 2740 TPU 95A per 3 Gms 3 Gms 3 Gms 3 Gms Total Requin 13140 Gma 12300 Gms 23340 Gms 8220 Gms add: closing 1230 Gms 2334 Gms 822 Gms 1314 Gms 14370 Gms 14634 Gms 24162 Gms 9534 Gms less.opening 1314 Gms 1230 Gms 2334 Gms 822 Gms 13056 Gms 13404 Gms 21828 Gms 8712 Gms Rate $0.20 $0.20 $0.20 $0.20 purchase cos $2,611.20 $2,680.80 $4,365.60 $1,742.40 less.opening inventory Rate purchase cost Payment Schedule Total purchase Cash Next Quarter 40% The total payment Q2 Q3 Q4 Q1 $54,835.20 $56,296.80 $91,677.60 $36,590.40 $32,901.12 $33,778.08 $55,006.56 $21,954.24 $74,300.00 $21,934.08 $22,518.72 $36,671.04 $107,201.12 $55,712.16 $77,525.28 $58,625.28 Labour Budget Q2 Production Hour Per Unit (hr) Total hour (hr) Hour Rate Total labour cost 4380 units 1 hr 2190 hr $10.00 $21,900 Q3 4100 units 1 hr 2050 hr $10.00 $20,500 Q4 7780 units 1 hr 3890 hr $10.00 $38,900 Q1 2740 units 1 hr 1370 hr $10.00 $13,700