Case 6 Sweats Galore

1579 Words Apr 16th, 2011 7 Pages
Answer Key: Case 6 - Sweats Galore

Question 1 It's always important to set goals to measure the success of any business. However, the first three goals are more of a mission statement while the fourth is an objective for the company. The problem is there no plan and one objective. What is he going to do if the company doesn't net the $25,000? Or what if it nets the $25,000 but there is not enough cash to sustain the business? There needs to be more objectives to make allowances for these types of situations. There needs to be a plan of action where goals change from period to period. Otherwise, the business cannot succeed.

Question 2 Hi-Lo Maintenance Units Cost
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Question 5 SWEATS GALORE Shirt Purchases Budget For the Year Ending December 31, 2008 1Q 2Q 3Q 4Q Year Next Yr 1Q Shirts to be silk-screened 8,000 10,000 20,000 12,000 50,000 18000 Add: Desired Ending % 25% 25% 25% 25% 25% Plus: Desired ending inventory 2,500 5,000 3,000 4,500 15,000 Total shirts required 10500 15000 23000 16500 65,000 Less: Beginning inventory 0 2500 5000 3000 10500 Total shirts needed 10500 12500 18000 13500 54500 Cost per shirt $10 $10 $10 $10 $10 Total cost of shirt purchases $105,000 $125,000 $180,000 $135,000 $545,000 Question 6 SWEATS GALORE Schedule of Expected Payments for Purchases For the Year Ending December 31, 2008 1Q 2Q 3Q 4Q Year Accounts receivable 1/1/08 –0– $63,000 $75,000 $108,000 $246,000 First quarter $42,000 Second quarter $50,000 Third quarter $72,000 Fourth quarter $54,000 Total payments $42,000 $113,000 $147,000 $162,000 $464,000

Question 7 SWEATS GALORE Silk-Screen Labor Budget For the Year Ending December 31, 2008 1Q 2Q 3Q 4Q Year Units to be produced 8,000 10,000 20,000 12,000 50,000 Silk-screen labor hours per unit 0.12 0.12 0.12 0.12 0.12 *Total required silk-screen labor hours 960 1,200

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