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Frenchies is a medium-sized regional bakery that specializes in providing orders to grocery and convenience stores. Because of the popularity of its brand, it has also opened a small café for walk-in business. In order to maintain its high quality standard, Frenchies produces only three products: breakfast muffins, fresh bread, and chocolate chip cookies. Although business has been good in the past few years, a lucky contact with a large chain has recently allowed it to expand its brand out of the local region. Growth has been high since the new contract went into effect. In 2020, Frenchies sold 45,000 one-dozen packages of muffins for $5.50 each, 65,000 one-dozen packages of cookies for $4.75 each, and 85,000 one-dozen loaves of bread for $5.25 each. They will raise prices to  $6.00 for muffins, $5.25 for cookies, and $5.75 for bread for 2021. Sales will drop some in the first quarter of 2021. They always drop off a bit after the holidays anyway, but with the increase in sales prices, a 20 percent drop from the fourth quarter of 2020 results is forecasted. Sales will grow steadily at about 5 percent a quarter with these new prices during 2021. Fourth-quarter sales will be high because of the holidays let’s say 20 percent, instead of 5 percent, from the third to the fourth quarter. The first quarter of the 2022 will continue the 5 percent growth as though the holiday jump didn’t occur. Frenchies gives their business customers a lot of leeway in paying. They collect 30 percent of the credit sales within the current quarter, 45 percent in the following quarter, and 25 percent in the quarter after that. Total sales were $802,000 in third quarter and $1,002,500 in the fourth quarter of 2020.  They will be still collecting quite a bit of that money in 2021 based on our collection breakdown. Frenchies cookies and bread would dry out if they kept them too long so they normally keep only about two days’ worth of inventory on hand to avoid shipping issues or problems with the café based on a 90-day quarter. Frenchies' raw materials are needed for the next quarter, so they keep 15 percent of the next quarter’s raw materials on hand at all times.  1. General impression/ recommendations for the company after analyzing the budget?

Frenchies is a medium-sized regional bakery that specializes in providing orders to grocery and convenience stores. Because of the popularity of its brand, it has also opened a small café for walk-in business. In order to maintain its high quality standard, Frenchies produces only three products: breakfast muffins, fresh bread, and chocolate chip cookies. Although business has been good in the past few years, a lucky contact with a large chain has recently allowed it to expand its brand out of the local region. Growth has been high since the new contract went into effect. In 2020, Frenchies sold 45,000 one-dozen packages of muffins for $5.50 each, 65,000 one-dozen packages of cookies for $4.75 each, and 85,000 one-dozen loaves of bread for $5.25 each. They will raise prices to  $6.00 for muffins, $5.25 for cookies, and $5.75 for bread for 2021. Sales will drop some in the first quarter of 2021. They always drop off a bit after the holidays anyway, but with the increase in sales prices, a 20 percent drop from the fourth quarter of 2020 results is forecasted. Sales will grow steadily at about 5 percent a quarter with these new prices during 2021. Fourth-quarter sales will be high because of the holidays let’s say 20 percent, instead of 5 percent, from the third to the fourth quarter. The first quarter of the 2022 will continue the 5 percent growth as though the holiday jump didn’t occur. Frenchies gives their business customers a lot of leeway in paying. They collect 30 percent of the credit sales within the current quarter, 45 percent in the following quarter, and 25 percent in the quarter after that. Total sales were $802,000 in third quarter and $1,002,500 in the fourth quarter of 2020.  They will be still collecting quite a bit of that money in 2021 based on our collection breakdown. Frenchies cookies and bread would dry out if they kept them too long so they normally keep only about two days’ worth of inventory on hand to avoid shipping issues or problems with the café based on a 90-day quarter. Frenchies' raw materials are needed for the next quarter, so they keep 15 percent of the next quarter’s raw materials on hand at all times.  1. General impression/ recommendations for the company after analyzing the budget?

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.1.1MBA
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Frenchies is a medium-sized regional bakery that specializes in providing orders to grocery and convenience stores. Because of the popularity of its brand, it has also opened a small café for walk-in business. In order to maintain its high quality standard, Frenchies produces only three products: breakfast muffins, fresh bread, and chocolate chip cookies. Although business has been good in the past few years, a lucky contact with a large chain has recently allowed it to expand its brand out of the local region. Growth has been high since the new contract went into effect. In 2020, Frenchies sold 45,000 one-dozen packages of muffins for $5.50 each, 65,000 one-dozen packages of cookies for $4.75 each, and 85,000 one-dozen loaves of bread for $5.25 each. They will raise prices to  $6.00 for muffins, $5.25 for cookies, and $5.75 for bread for 2021. Sales will drop some in the first quarter of 2021. They always drop off a bit after the holidays anyway, but with the increase in sales prices, a 20 percent drop from the fourth quarter of 2020 results is forecasted. Sales will grow steadily at about 5 percent a quarter with these new prices during 2021. Fourth-quarter sales will be high because of the holidays let’s say 20 percent, instead of 5 percent, from the third to the fourth quarter. The first quarter of the 2022 will continue the 5 percent growth as though the holiday jump didn’t occur. Frenchies gives their business customers a lot of leeway in paying. They collect 30 percent of the credit sales within the current quarter, 45 percent in the following quarter, and 25 percent in the quarter after that. Total sales were $802,000 in third quarter and $1,002,500 in the fourth quarter of 2020.  They will be still collecting quite a bit of that money in 2021 based on our collection breakdown. Frenchies cookies and bread would dry out if they kept them too long so they normally keep only about two days’ worth of inventory on hand to avoid shipping issues or problems with the café based on a 90-day quarter. Frenchies' raw materials are needed for the next quarter, so they keep 15 percent of the next quarter’s raw materials on hand at all times. 

1. General impression/ recommendations for the company after analyzing the budget?

Estimated % drop: Sales: Q4 RR PERR Q1 Q2 Q3 Q4 Current Year Q1 Last Year Q2 Next Year Sales Price/Item: Collection Information: Credit Policy: Cash Sales Credit Sales 20% Muffins Quarter Q3 Q4 45,000 36,000 37,800 39,690 49,613 43,758 45,946 $6.00 Collection in Current Quarter Collection in Following Quarter Collection in 3rd Quarter Collections from Last Year's Sales: Sold $802,000 $1,002,500 Manufacturing Information: Ending Inventory Goal: Raw Materials Goal: Estimated Growth: Cookies Case Data 65,000 52,000 54,600 57,330 71,663 63,206 66,367 $5.25 Prior Year 10% 90% 30% 45% 25% Received $621,550 $370,925 15% Bread 85,000 68,000 71,400 74,970 93,713 82,654 86,787 $5.75 Current Year 5% Q1 $180,450 $406,013 $586,463 37.0% Estimated Additional Holiday Increase: Sales Numbers Trasposed for Copying Muffins $0 $225,563 $225,563 Q1 Cookies Bread Q1 Q1 36,000 52,000 68,000 40.5% Payments in Current Year Q2 Q3 10% Collection Schedule Transposed for Copying 90% Q1 Q2 Q3 30% 45% 25% 2021 Q2 $0 $0 $0 37,800 2021 Q2 54,600 2021 Q2 71,400 22.5% Q4 $0 $0 $0 = Signifies original case assumptions. Q3 57,330 20% Q4 Q3 39,690 49,613 Q4 71,663 Q3 Q4 74,970 93,713 2022 Q1 Q2 43,758 45,946 2022 Q1 Q2 63,206 66,367 2022 Q1 Q2 82,654 86,787
Transcribed Image Text:Estimated % drop: Sales: Q4 RR PERR Q1 Q2 Q3 Q4 Current Year Q1 Last Year Q2 Next Year Sales Price/Item: Collection Information: Credit Policy: Cash Sales Credit Sales 20% Muffins Quarter Q3 Q4 45,000 36,000 37,800 39,690 49,613 43,758 45,946 $6.00 Collection in Current Quarter Collection in Following Quarter Collection in 3rd Quarter Collections from Last Year's Sales: Sold $802,000 $1,002,500 Manufacturing Information: Ending Inventory Goal: Raw Materials Goal: Estimated Growth: Cookies Case Data 65,000 52,000 54,600 57,330 71,663 63,206 66,367 $5.25 Prior Year 10% 90% 30% 45% 25% Received $621,550 $370,925 15% Bread 85,000 68,000 71,400 74,970 93,713 82,654 86,787 $5.75 Current Year 5% Q1 $180,450 $406,013 $586,463 37.0% Estimated Additional Holiday Increase: Sales Numbers Trasposed for Copying Muffins $0 $225,563 $225,563 Q1 Cookies Bread Q1 Q1 36,000 52,000 68,000 40.5% Payments in Current Year Q2 Q3 10% Collection Schedule Transposed for Copying 90% Q1 Q2 Q3 30% 45% 25% 2021 Q2 $0 $0 $0 37,800 2021 Q2 54,600 2021 Q2 71,400 22.5% Q4 $0 $0 $0 = Signifies original case assumptions. Q3 57,330 20% Q4 Q3 39,690 49,613 Q4 71,663 Q3 Q4 74,970 93,713 2022 Q1 Q2 43,758 45,946 2022 Q1 Q2 63,206 66,367 2022 Q1 Q2 82,654 86,787
Muffins Cookies Bread Budgeted Sales Selling price per dozen 28828 Q2 Total Sales Revenue from Muffins Q3 Budgeted Sales Selling price per dozen Q4 Total Sales Revenue Total Sales Revenue for Cookies Collections from last year Q1 Budgeted Sales Selling price per loaf Total Sales Revenue for Bread Total Cash Collections Sales Budget Q1 36,000 $6.00 $216,000 Q2 Quarter 52,000 54,600 $5.25 $5.25 $273,000 $286,650 Q1 $586,463 $325,600 37,800 $6.00 $226,800 $0 $0 $0 $912,063 Q3 Schedule of Cash Collections Quarter 39,690 49,613 $6.00 $6.00 $238,140 $297,675 $0 $0 $923,843 308,083 68,000 $5.75 $391,000 71,400 74,970 93,713 $5.75 $5.75 $5.75 $5.75 $410,550 $431,078 $538,847 $1,771,474 $880,000 $924,000 $970,200 $1,212,750 $3,986,950 Q4 Q2 $225,563 $0 $356,400 $198,000 $341,880 57,330 235,593 71,663 $5.25 $5.25 $5.25 $300,983 $376,228 $1,236,861 Q3 Total 2021 Q4 163,103 $6.00 $978,615 $0 $0 Total 2021 $812,025 $880,000 $924,000 $374,220 $207,900 $358,974 $392,931 $751,905 $0 $448,718 $448,718 $931,194 $1,049,549 $3,816,648 Q1 2022 43,758 $6.00 $262,549 $275,677 Q2 63,206 66,367 $5.25 $5.25 $331,833 $348,425 Accts. Rec. 12/31/2021 45,946 $6.00 82,654 86,787 $5.75 $5.75 $475,263 $499,026 $1,069,646 $1,123,128 $0 $0 $218,295 $764,033 $982,328
Transcribed Image Text:Muffins Cookies Bread Budgeted Sales Selling price per dozen 28828 Q2 Total Sales Revenue from Muffins Q3 Budgeted Sales Selling price per dozen Q4 Total Sales Revenue Total Sales Revenue for Cookies Collections from last year Q1 Budgeted Sales Selling price per loaf Total Sales Revenue for Bread Total Cash Collections Sales Budget Q1 36,000 $6.00 $216,000 Q2 Quarter 52,000 54,600 $5.25 $5.25 $273,000 $286,650 Q1 $586,463 $325,600 37,800 $6.00 $226,800 $0 $0 $0 $912,063 Q3 Schedule of Cash Collections Quarter 39,690 49,613 $6.00 $6.00 $238,140 $297,675 $0 $0 $923,843 308,083 68,000 $5.75 $391,000 71,400 74,970 93,713 $5.75 $5.75 $5.75 $5.75 $410,550 $431,078 $538,847 $1,771,474 $880,000 $924,000 $970,200 $1,212,750 $3,986,950 Q4 Q2 $225,563 $0 $356,400 $198,000 $341,880 57,330 235,593 71,663 $5.25 $5.25 $5.25 $300,983 $376,228 $1,236,861 Q3 Total 2021 Q4 163,103 $6.00 $978,615 $0 $0 Total 2021 $812,025 $880,000 $924,000 $374,220 $207,900 $358,974 $392,931 $751,905 $0 $448,718 $448,718 $931,194 $1,049,549 $3,816,648 Q1 2022 43,758 $6.00 $262,549 $275,677 Q2 63,206 66,367 $5.25 $5.25 $331,833 $348,425 Accts. Rec. 12/31/2021 45,946 $6.00 82,654 86,787 $5.75 $5.75 $475,263 $499,026 $1,069,646 $1,123,128 $0 $0 $218,295 $764,033 $982,328
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Frenchies is a medium-sized regional bakery that specializes in providing orders to grocery and convenience stores. Because of the popularity of its brand, it has also opened a small café for walk-in business. In order to maintain its high quality standard, Frenchies produces only three products: breakfast muffins, fresh bread, and chocolate chip cookies. Although business has been good in the past few years, a lucky contact with a large chain has recently allowed it to expand its brand out of the local region. Growth has been high since the new contract went into effect. In 2020, Frenchies sold 45,000 one-dozen packages of muffins for $5.50 each, 65,000 one-dozen packages of cookies for $4.75 each, and 85,000 one-dozen loaves of bread for $5.25 each. They will raise prices to  $6.00 for muffins, $5.25 for cookies, and $5.75 for bread for 2021. Sales will drop some in the first quarter of 2021. They always drop off a bit after the holidays anyway, but with the increase in sales prices, a 20 percent drop from the fourth quarter of 2020 results is forecasted. Sales will grow steadily at about 5 percent a quarter with these new prices during 2021. Fourth-quarter sales will be high because of the holidays let’s say 20 percent, instead of 5 percent, from the third to the fourth quarter. The first quarter of the 2022 will continue the 5 percent growth as though the holiday jump didn’t occur. Frenchies gives their business customers a lot of leeway in paying. They collect 30 percent of the credit sales within the current quarter, 45 percent in the following quarter, and 25 percent in the quarter after that. Total sales were $802,000 in third quarter and $1,002,500 in the fourth quarter of 2020.  They will be still collecting quite a bit of that money in 2021 based on our collection breakdown. Frenchies cookies and bread would dry out if they kept them too long so they normally keep only about two days’ worth of inventory on hand to avoid shipping issues or problems with the café based on a 90-day quarter. Frenchies' raw materials are needed for the next quarter, so they keep 15 percent of the next quarter’s raw materials on hand at all times. Using this information, complete the three tabs in the worksheet. Just fill in the forecasted data in the blue boxes and copy the formulas to complete the sheets.

 

With the information above, how does it translate into the a Production Budget Plan as shown in one of the images?

Muffins Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Cookies Required Muffin Production Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Bread Required Cookie Production Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Required Bread Production Production Budget Q1 36,000 0 36,000 0 36,000 Q2 68,000 0 68,000 0 68,000 Quarter 37,800 0 37,800 0 37,800 52,000 54,600 0 52,000 0 52,000 Q3 Q4 39,690 49,613 0 49,613 0 39,690 0 39,690 0 49,613 71,663 0 57,330 0 0 54,600 57,330 71,663 0 0 0 54,600 57,330 71,663 71,400 74,970 93,713 0 0 71,400 74,970 0 0 71,400 74,970 0 93,713 0 93,713 Total 2022 163,103 0 163,103 0 163,103 235,593 0 235,593 0 235,593 308,083 0 308,083 0 308,083 Q1 2023 43,758 0 43,758 0 43,758 Q2 82,654 0 82,654 0 82,654 45,946 43,758 348,425 0 43,758 0 43,758 86,787
Transcribed Image Text:Muffins Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Cookies Required Muffin Production Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Bread Required Cookie Production Budgeted Sales Desired Ending Inventory Total Units Needed Less: Beginning Inventory Required Bread Production Production Budget Q1 36,000 0 36,000 0 36,000 Q2 68,000 0 68,000 0 68,000 Quarter 37,800 0 37,800 0 37,800 52,000 54,600 0 52,000 0 52,000 Q3 Q4 39,690 49,613 0 49,613 0 39,690 0 39,690 0 49,613 71,663 0 57,330 0 0 54,600 57,330 71,663 0 0 0 54,600 57,330 71,663 71,400 74,970 93,713 0 0 71,400 74,970 0 0 71,400 74,970 0 93,713 0 93,713 Total 2022 163,103 0 163,103 0 163,103 235,593 0 235,593 0 235,593 308,083 0 308,083 0 308,083 Q1 2023 43,758 0 43,758 0 43,758 Q2 82,654 0 82,654 0 82,654 45,946 43,758 348,425 0 43,758 0 43,758 86,787
Sales: Estimated % drop: Q4 Q1 Q2 Q3 Q4 Q1 Q2 Last Year Current Year Next Year Sales Price/Item: Collection Information: Credit Policy: Cash Sales Credit Sales Muffins Quarter Q3 Q4 20% 45,000 36,000 37,800 39,690 49,613 Collection in Current Quarter Collection in Following Quarter Collection in 3rd Quarter Collections from Last Year's Sales: Manufacturing Information: 43,758 45,946 $6.00 Sold $802,000 $1,002,500 Ending Inventory Goal: Raw Materials Goal: Cookies Case Data 65,000 Estimated Growth: 52,000 54,600 57,330 71,663 Prior Year 63,206 66,367 $5.25 Received 10% 90% 30% 45% 25% $621,550 $370,925 15% Bread 85,000 68,000 71,400 74,970 93,713 82,654 86,787 $5.75 Current Year 5% Q1 $180,450 $406,013 $586,463 37.0% Sales Numbers Trasposed for Copying Muffins $0 $225,563 $225,563 Estimated Additional Holiday Increase: 20% Bread Q1 Cookies Q1 Q1 36,000 52,000 68,000 10% Collection Schedule Transposed for Copying 90% Q1 Q2 Q3 30% 45% 25% 40.5% Payments in Current Year Q2 Q3 2022 Q2 37,800 $0 $0 $0 2022 Q2 54,600 2022 Q2 71,400 22.5% Q4 $0 $0 $0 Q3 39,690 Q3 57,330 = Signifies original case assumptions. Q3 74,970 Q4 49,613 Q4 71,663 Q4 93,713 2023 Q1 Q2 43,758 45,946 2023 Q1 Q2 43,758 66,367 2023 Q1 Q2 82,654 86,787
Transcribed Image Text:Sales: Estimated % drop: Q4 Q1 Q2 Q3 Q4 Q1 Q2 Last Year Current Year Next Year Sales Price/Item: Collection Information: Credit Policy: Cash Sales Credit Sales Muffins Quarter Q3 Q4 20% 45,000 36,000 37,800 39,690 49,613 Collection in Current Quarter Collection in Following Quarter Collection in 3rd Quarter Collections from Last Year's Sales: Manufacturing Information: 43,758 45,946 $6.00 Sold $802,000 $1,002,500 Ending Inventory Goal: Raw Materials Goal: Cookies Case Data 65,000 Estimated Growth: 52,000 54,600 57,330 71,663 Prior Year 63,206 66,367 $5.25 Received 10% 90% 30% 45% 25% $621,550 $370,925 15% Bread 85,000 68,000 71,400 74,970 93,713 82,654 86,787 $5.75 Current Year 5% Q1 $180,450 $406,013 $586,463 37.0% Sales Numbers Trasposed for Copying Muffins $0 $225,563 $225,563 Estimated Additional Holiday Increase: 20% Bread Q1 Cookies Q1 Q1 36,000 52,000 68,000 10% Collection Schedule Transposed for Copying 90% Q1 Q2 Q3 30% 45% 25% 40.5% Payments in Current Year Q2 Q3 2022 Q2 37,800 $0 $0 $0 2022 Q2 54,600 2022 Q2 71,400 22.5% Q4 $0 $0 $0 Q3 39,690 Q3 57,330 = Signifies original case assumptions. Q3 74,970 Q4 49,613 Q4 71,663 Q4 93,713 2023 Q1 Q2 43,758 45,946 2023 Q1 Q2 43,758 66,367 2023 Q1 Q2 82,654 86,787
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