Hrm 531 Week 2 Mini Case

District Attorney’s Office -Administrative Assistant. Handled all travel arrangement for attorneys and clerical staff: transportation, hotel, food, etc. Entered information in on a data base for all new employees also removed information when employees were dismissed. Submitted work time sheets for employees, distribute payroll checks to employees.

A. The new policy regarding the alternate work week schedule was a result of employee complaints.

The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &

The revenue is $600,600*1.2= $720,720. The variable cost changes as sales increases and fixed cost stays the same, the gross profit is $175,500. After tax, the net income is $100,557.

Estimate the project’s operating cash flows for each year of the project’s economic life. (Hint: Use Table 2 as a guide)

The first capital project request that will be analyzed is Gopher Place. This store would come at a cost of $23 million which is $5.4 million more expensive than the prototype. The NPV and IRR for Gopher place is $16.8 million and 12.3% respectively. Sales at this location could decrease by 5.3% and still achieve the prototypes NPV. However sales would have to rise by 2.2% to achieve the prototype IRR. With a sales decline of 10 percent the store NPV would decline by $4.7 million and the IRR would decline by 1.3 percentage points. Target already operated five stores in this market and this store would be expected to derive 19% of its sales from these

Using the CAPM model, the cost of equity for this project worked out round to 15% and the

a. Assuming the most current operational cost levels, what sales must it generate to recoup the above investment?

NPV/Initial Investment 2,37 NOTES: Cash (Net Working Capital) = Minimum Cash Balance as % of Sales x Revenue = 0.03 x 4,500 = 135 Account Receivable (Net Working Capital) = Days Sales Outstanding / 365 x Revenue = 59.17 / 365 x 4,500 = 729,5 Inventories (Net Working Capital) = Total Production Costs / Inventory Turnover = 2762,20 / 7.68 = 359.7 Accounts Payable (Net Working Capital) = Days Payable Outstanding / 365 x (Total Production Expenses - Depreciation) = 30.76 / 365 x (3917.20 - 152.20) = 317.3 Corporate tax rate, t = 40% EBIT = Operating Profit

Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or {1.5hrs.X (54,000+10, 2000)}.Expected annual manufacturing overhead is $1,557,480.Thus, the predetermined overhead rate is $16.17 OR ($1,557,480 /96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $ 19 per unit for both the home and the commercial models.

The below analytical graphs will depict and projects potential sales/gross margins figures from year to year when operational. Overall sales of $70 000. Financial statements (profit/loss, cash flow and balance) have been prepared to depict financial operations for the first month of operation as well as if business was to remain operation for 3 consecutive years.

COGS, R&D and SG&A were all modeled as percentage of sales figures and it was assumed that these accounts stabilized as sales plateau and efficiencies in production are realised. Hence COGS, R&D and SG&A were predicted at 30%, 8% and 22% respectively. Due to the consistent nature of Contract Revenue at $3.5

In Year 1, the operation budget will use 70% of the startup loan and first year revenue, which includes our sales of current and new inventory. The remaining 30% is for Year 2, which will be a break-even point financially and the company will not need any loans. In Year 3, the company will be making $408,000 net profit.

²R166 500 (18 000 x R9,25) + R135 000(18 000 x R7,50) + R45 000 (18 000 x R2,50*)

AC505 - Capital Budgeting Problem Data: Cost of new equipment Expected life of equipment in years Disposal value in 5 years Life production - number of cans Annual production or purchase needs Initial training costs Number of workers needed Annual hours to be worked per employee Earnings per hour for employees Annual health benefits per employee Other annual benefits per employee-% of wages Cost of raw materials per can Other variable production costs per can Costs to purchase cans - per can Required rate of return Tax rate Make Cost to produce Annual cost of direct material: Need of 1,000,000 cans per year Annual cost of direct labor for new employees: Wages Health benefits Other benefits Total wages and benefits Total annual production