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ACC 206 Final Paper - Cash flow statement

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Question;You?ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities.As the controller of ABC Company, the CEO has come to you with a new opportunity that he?s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC?s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide.Create a cash flow statement from information given:ABC Company's current financial information (before/without expansion) Dec. 31,20X2 Dec. 31,20X1Cash $50,000 $70,000Accounts receivable (net) $120,000 $180,000Merchandise inventory $350,000 $280,000Property plant, & equipment $400,000 $300,000Less: Accumulated depreciation $(170,000) $(100,000)Total assets $750,000 $730,000Accounts payable $250,000 $210,000Income taxes payable $40,000 $10,000Common stock $240,000 $240,000Retained earnings $220,000 $270,000Total liabilities & stock, equity $750,000 $730,000The firm's accrual-basis income statement revealed the following data: Sales $1,200,000Cost of goods sold $800,000selling and administrative expenses $250,000Depreciation expense $70,000Income taxes $30,000Dividends declared and paid during 20X2 $100,000ABC purchased $100,000 of equipment for cash on August 14, 20X2 (There was no interest expense.) ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.

 

Paper#40282 | Written in 18-Jul-2015

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