12. Sales forecast based on external data. Nelson Heating and Ventilating Company estimates the coming year's sales revenue based on external data. The company's main businessis shopping mall construction, and it uses the square footagestates. Last year, it completed heating and ventilating systems in four shopping malls with an average size of 3,050,000 square feet for sales revenues of $9,632,000. Nelson is theprimary contractor for one-third of the new malls in the four-state area. This coming year, 15 new malls are under construction with an average size of 4,532,000 square feet. What isNelson's anticipated sales revenue for the coming year?each mall as a "yardstick" for many financial statements and projections. The company does business in four MidwestHints: Make sure to round all intermediate calculation to at least five decimal places.What is Nelson's anticipated sales revenue?$ (Round to the nearest dollar.) Production cash outflow. California Cement Company produces its products two months in advance of anticipated sales and ships to warehouse centers the month before sale. Theinventory safety stock is 19% of the anticipated month's sale. Beginning inventory in September 2014 was 33,645 units. Each unit costs $2.88. The average sales price per unit is$5.79. The cost is made up of 29% labor, 62% materials, and 9% shipping (to the warehouse). The company pays for labor the month of production, shipping the month afterproduction, and raw materials the month prior to production. What is the production cash outflow for products produced in the month of September 2014, and in what months does itoccur? Note: September production is based on November anticipated sales. The following are the fourth-quarter sales for 2014: $1,799,000 (October), $1,506,000 (November),and $2,040,000 (December).What is the production cash outflow for the month of September 2014 production?The labor cost is S. (Round to the nearest dollar.)The raw materials cost is $. (Round to the nearest dollar.)The shipping cost is $. (Round to the nearest dollar.)In what months does the production cash outflow for the month of September 2014 production occur?The production cash outflow for the month of September 2014 production is as follows: (Select the best response. Due to rounding, numbers below might differ from your original answersa few dollar units)O A. August labor, $230,414; September for raw materials, $492,610; October for shipping, $71,508.O B. August for shipping, S71,508; September raw materials, $492,610; October for labor, $230,414.OC. August for raw materials, $492,610; September for shipping, $71,508; October for labor, $230,414.O D. August for raw materials, $492,610; September for labor, $230,414; October for shipping, $71,508.

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EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 1PROB

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Ranger Industries has provided the following information at June 30: Other information: Average selling price, 196 Average purchase price per unit, 110 Desired ending inventory, 40% of next months unit sales Collections from customers: In month of sale20% In month after sale50% Two months after sale30% Projected cash payments: Inventory purchases are paid for in the month following acquisition. Variable cash expenses, other than inventory, are equal to 25% of each months sales and are paid in the month of sale. Fixed cash expenses are 40,000 per month and are paid in the month incurred. Depreciation on equipment is 2,000 per month. REQUIREMENT You have been asked to prepare a master budget for the upcoming quarter (July, August, and September). The components of this budget are a monthly sales budget, a monthly purchases budget, a monthly cash budget, a forecasted income statement for the quarter, and a forecasted September 30 balance sheet. The worksheet MASTER has been provided to assist you. Ranger Industries desires to maintain a minimum cash balance of 8,000 at the end of each month. If this goal cannot be met, the company borrows the exact amount needed to reach its goal. If the company has a cash balance greater than 8,000 and also has loans payable outstanding, the amount in excess of 8,000 is paid to the bank. Annual interest of 18% is paid on a monthly basis on the outstanding balance.
A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
Schedule of cash payments for service company Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows: Depreciation, insurance, and property taxes represent 9,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. Seventy percent of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.
Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of 15.9 million and cost of goods sold of 8.75 million. Advertising is a key part of Coral Seas business strategy, and total marketing expense for the year is budgeted at 2.8 million. Total administrative expenses are expected to be 675,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income. Required: 1. Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year. 2. What if Coral Seas had interest payments of 500,000 during the year? What effect would that have on operating income? On income before taxes? On net income?
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?
Pilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?
Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Production cash outflow. California Cement Company produces its products two months in advance of anticipated sales and ships to warehouse centers the month before sale. The inventory safety stock is 21% of the anticipated month's sale. Beginning inventory in September 2014 was 33,207 units. Each unit costs $2.86. The average sales price per unit is $5.68. The cost is made up of 33% labor, 57% materials, and 10% shipping (to the warehouse). The company pays for labor the month of production, shipping the month after production, and raw materials the month prior to production. What is the production cash outflow for products produced in the month of September 2014, and in what months does it occur? Note: September production is based on November anticipated sales. The following are the fourth-quarter sales for 2014: $1,769,000 (October), $1,519,000 (November), and $2,193,000 (December). What is the production cash outflow for the month of September 2014…
Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be? Group of answer choices $210,000 $157,500 $202,500 $135,000
A firm purchases $32 million of materials from suppliers in January, $28 million in February and $25 million in March. Forty percent are supplied cash on delivery. The remainder needs to be paid for in the following month. What is the cash outflow in February?
Management wants to know if there will be a need for short-term financing in February. Essential information is as follows: Estimated sales for January and February are $1.1 million and $750,000, respectively. Sixty percent of sales are for cash and 40 percent are credit sales that are collected the next month. Cash disbursements that vary with sales are 35 percent of sales. Fixed operating disbursements are $400,000 a month. Depreciation expense is $50,000 a month. A tax payment of $70,000 is due in January. A bond payment of $250,000 is owed and will be due in February. The cash balance at the beginning of January is $12,000. Management seeks a minimum cash balance of $9,000. December credit sales were $110,000. Round your answers to the nearest dollar. Use a minus sign to enter shortage of cash, if any. January February Excess (shortage) of cash $ $ The firm need short-term funds in February.

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