Porter's Problems Co. Basic Information For Year Ended December 31, 2007 Budget - Data Input Sheet Sales Information: Sales Growth Assumptions: 2% per quarter for the basic model (mature life st 5% per quarter for the deluxe model (growth stage) Sales in units: 2010 2011 Q1 Q2 Q3 Q4 Year total Q1 Q2 Basic 4,000 4,080 4,162 4,245 16,486 4,330 4,416 Deluxe 2,000 2,100 2,205 2,315 8,620 2,431 2,553 Collection Information: Credit Policy: Cash Sales Credit Sal In same In next In third In fourthBad 30% 70% Quarter Quarter Quarter Quarter Debt Collection Policy 60% 30% 9% 0% 1% Collections from prior year: Prior Actual Actual Budgeted Receipts in Current Year Year Sales Collected Q1 Q2 Q3 Q4 Year Q3 $779,800 $725,214 $49,127 $0 $0 $0 $49,127 Q4 $901,350 $648,900 ### $56,785 $0 $0 $246,069 ### $56,785 $0 $0 $295,196 Manufacturing Information: ct Materials Ending Inventory 15% of next quarter's production needs asic Bicycle Ending Inventory 20% of next quarter's sales needs luxe Bicycle Ending Inventory 5% of next quarter's sales needs Direct Material Information: Direct Labor Informa 2009 Hours of DL per Nor Units Cost per Cost per Ending Hours of DL per Specia Basic Bike Needed Unit Bike Wages Steel 2 $15.00 $30.00 1295 Rubber Handles 2 $2.00 $4.00 1286 Manufacturing OH Inf Seat 1 $4.00 $4.00 640 Variable OH Allocation p Chain 1 $6.00 $6.00 652 Tires 2 $10.00 $20.00 1275 Fixed OH Gear Shift 1 $8.00 $8.00 609 Amount of Fixed OH f Brake Unit 1 $6.00 $6.00 658 Standard Cost: Deluxe Bike Basic Bike Steel 3.5 $15.00 $52.50 * Deluxe Bike Special Handles 2 $5.00 $10.00 32 y
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Porter's Problems Co.Basic Information
For Year Ended December 31, 2007
Budget - Data Input SheetSales Information:Sales Growth Assumptions: 2% per quarter for the basic model (mature life stage)
5% per quarter for the deluxe model (growth stage)2009
Collection Information:Credit Policy: Cash Sales Credit SalesIn same In next In third In fourth Bad
30% 70% Quarter Quarter Quarter Quarter Debt
Collection Policy 60% 30% 9% 0% 1%
Collections from prior year:
Prior Actual Actual Budgeted Receipts in Current YearYear Sales Collected Q1 Q2 Q3 Q4 YearQ3 $779,800 $725,214 $49,127 $0 $0 $0 $49,127 Q4 $901,350 $648,900 $189,284 $56,785 $0 $0 $246,069
$238,411 $56,785 $0 $0 $295,196
Manufacturing Information:Direct Materials Ending Inventory 15% of next quarter's production needs
Basic Bicycle Ending Inventory 20% of next quarter's sales needsDeluxe Bicycle Ending Inventory 5% of next quarter's sales needs
Direct Material Information: Direct Labor Information:2009 Hours of DL per Normal bike:
Units Cost per Cost per Ending Hours of DL per Specialty bike:Basic Bike Needed Unit Bike Inventory Wages per Hour:Steel 2 $15.00 $30.00 1295Rubber Handles 2 $2.00 $4.00 1286 Manufacturing OH Information:Seat 1 $4.00 $4.00 640 Variable OH Allocation per DL hr:Chain 1 $6.00 $6.00 652Tires 2 $10.00 $20.00 1275 Fixed OH per year:Gear Shift 1 $8.00 $8.00 609 Amount of Fixed OH from Depr:Brake Unit 1 $6.00 $6.00 658
Standard Cost:
Deluxe Bike Basic Bike 116Steel 3.5 $15.00 $52.50 * Deluxe Bike 229Special Handles 2 $5.00 $10.00 32
Chain 1 $6.00 $6.00 * Payments made in current QTires 2 $10.00 $20.00 * Payments made in next QExpanded Shift 1 $25.00 $25.00 34Brake Unit 1 $6.00 $6.00 *
Prior year purchasesActual Actual
* inventory for standard items is used for both bikes Total Purch Paidbut only shown here for the Basic Bike $452,650 $338,700
Porter's Problems Co.Basic Information
For Year Ended December 31, 2007
Selling and Administrative Expense Information:
Variable S&A for Normal bikes: $15 Variable S&A for Specialty bikes: $20
Selling
Price Fixed S&A Expenses per year:
$150
$350 Advertising $125,000
Executive Salaries $65,000
Property Taxes $7,800Office Rent $12,000
Sales Cleaning Fees $6,000
Inventory R&D Costs $18,500
Credit/Collections
Purchasing Cash Flow and Investment Information:Accounting RequirementsProduction
Minimum Cash Balance: $30,000 Dividends
Required Dividend Payment each Qtr: $10,000
Planned Expansion (Purchase of Equipment)Budgeted Purchases in Current Year
Cash Disbursements for OH $78,468 $79,633 $80,841 $82,100 $321,042
Porter's Problems Co.Ending Inventory Budget
For Year Ended December 31, 2007
Ending Finished Goods Inventory Budget
Item Quantity Cost TotalProduction Cost per Basic BikeDM Steel 2 units $15 each $30
Rubber Handles 2 set $2 each $4Seat 1 unit $4 each $4Chain 1 unit $6 each $6Tires 2 unit $10 each $20Gear Shift 1 unit $8 each $8Brake Unit 1 unit $6 each $6
Total DM $78DL 2 hours $14 per hour $28OH 2 hours $5.03 per DL hour $10
Unit Production Cost $116 Ending finished goods inventory in units - Basic Bikes 866 Ending finished goods inventory in dollars - Basic Bikes $ 100,495
Production Cost per Deluxe BikeDM Steel 3.5 units $15 each $53
Special Handles 2 set $5 each $10Specialty Seat 1 unit $14 each $14Chain 1 unit $6 each $6Tires 2 unit $10 each $20Expanded Shift 1 unit $25 each $25Brake Unit 1 unit $6 each $6
Total DM $134DL 5 hours $14 per hour $70OH 5 hours $5.03 per DL hour $25
Unit Production Cost $229 Ending finished goods inventory in units - Deluxe Bikes 122 Ending finished goods inventory in dollars - Deluxe Bikes $ 27,790
Total Ending Finished Goods Inventory $ 128,285
Porter's Problems Co.Selling and Administrative Expense Budget
Total Manufacturing Outflows ($909,641) ($949,247) ($971,623) ($1,004,154)
Less: Selling & Admin OutflowsVariable Selling and Admin ($100,000) ($103,200) ($106,524) ($109,977)Fixed Selling and Admin ($58,575) ($58,575) ($58,575) ($58,575)
Total Selling and Administrative Outflows ($158,575) ($161,775) ($165,099) ($168,552)
Total Cash Outflows from Operations ($1,068,216) ($1,111,022) ($1,136,722) ($1,172,707)Cash Available from Normal Operations $136,371 $224,023 $331,232 $487,478
(i.) from the raw materials budget, the amount from Q4 that has not yet been paid:Quarter Purchased Paid Remaining
Q4 $645,601 $484,201 $161,400
(j.) Interest accrued (from the income statement), less interest paidInterest accrued $49,880 Interest paid $49,880 Interest payable $0
(k.) the difference between income tax expense (income statement) and income tax paid (cash budget)Income tax accrued $259,080 Income tax paid ($113,925)Income tax payable $145,155
(l.) from prior year, no change
(m.) the difference between loans taken out and repaymentsLoans $0 Repayments $0 Loan Balance $0
(n.) from prior year, no change
(o.) New retained earnings is the old retained earnings (2006 Bal Sheet) + net income - dividends paidRE, beginning $506,295 + Net Income $604,520 - Dividends Paid ($40,000) New RE $1,070,815
Notes to the Balance Sheet
the difference between income tax expense (income statement) and income tax paid (cash budget)
New retained earnings is the old retained earnings (2006 Bal Sheet) + net income - dividends paid
Bob's BicyclesPro Forma Statement of Cash FlowsFor Year ended December 31, 2010
Cash Flow from Operating ActivitiesNet Income $604,520 Adjustments:
Change in Accounts Receivable ($187,799) (a.)Change in Raw Materials Inventory ($48,250) (b.)Change in Finished Good Inventory ($12,225) (c.)Change in Accounts Payable $47,450 (d.)Change in Interest Payable $0 (e.)Change in Income Tax Payable $145,155 (f.)Depreciation $62,500 $6,831 (g.)
Total Cash Flow from Operating Activities $611,351
Cash Flow from Investing ActivitiesCash Paid for Equipment ($187,000) (g.)
Total Cash Flow from Investing Activities ($187,000)
Cash Flow from Financing ActivitiesCash Received from Loans $0 (g.)Cash Paid on Loans $0 (g.)Cash Paid as Dividends ($40,000) (g.)
Total Cash Flow from Financing Activities ($40,000)
Total Change in Cash $384,351 Cash Balance, 1/1/10 $30,176 Cash Balance, 12/31/10 $414,527