Details of this Paper

BUSI-320 Corporate Finance-2013 Fall-B Assignment 2

Description

solution


Question

Question;1.Problem 4-1 Growth and financing [LO4];Philip Morris is excited because;sales for his clothing company are expected to double from $650,000 to;$1,300,000 next year. Philip notes that net assets (Assets ? Liabilities);will remain at 50 percent of Sales. His clothing firm will enjoy a 12 percent;return on total sales. He will start the year with $250,000 in the bank and;is already bragging about the two Mercedes he will buy and the European;vacation he will take.;(a);Compute his likely cash balance or;deficit for the end of the year. Start with beginning cash and subtract the;asset buildup (equal to 50 percent of the sales increase) and add in;profit.(Negative amount should be indicated;by a minus sign. Omit the "$" sign in your response.);Ending cash balance;$;(b);Does his optimistic outlook for;his cash position appear to be correct?;2.Problem 4-3 Growth and financing [LO4];Galehouse Gas Stations, Inc.;expects sales to increase from $1,710,000 to $1,910,000 next year. Mr.;Galehouse believes that net assets (Assets ? Liabilities) will represent 45;percent of sales. His firm has a 8 percent return on sales and pays 20;percent of profits out as dividends.;(a);What effect will this growth have;on funds?(Negative amount should be;indicated by a minus sign. Omit the "$" sign in your response.);The cash;balance will change by $.;(b);If the dividend payout is only 15;percent, what effect will this growth have on funds?(Omit the "$" sign in your response.);The cash;balance will change by $.;3.Problem 4-4 Sales projections [LO2];The Alliance Corp. expects to sell;the following number of units of copper cables at the prices indicated, under;three different scenarios in the economy. The probability of each outcome is;indicated.;Outcome;Probability;Units;Price;A;.30;260;$;27;B;.50;440;42;C;.20;650;52;What is the expected value of the;total sales projection? (Omit the;"$" sign in your response.);Total expected value;$;4.Problem 4-6 Sales projections [LO2];Cyber Security Systems had sales;of 3,200 units at $60 per unit last year. The marketing manager projects a 15;percent increase in unit volume sales this year with a 40 percent price;increase. Returned merchandise will represent 5 percent of total sales.;What is your net dollar sales;projection for this year? (Omit the;"$" sign in your response.);Net sales;5.Problem 4-8 Production requirements [LO2];Sales for Western Boot Stores are;expected to be 49,000 units for October. The company likes to maintain 25;percent of unit sales for each month in ending inventory (i.e., the end of;October). Beginning inventory for October is 13,000 units.;How many units should Western;Boot produce for the coming month?;Units to be produced;6.Problem 4-11 Cost of goods sold-FIFO [LO2];On December 31 of last year;Wolfson Corporation had in inventory 560 units of its product, which cost $18;per unit to produce. During January, the company produced 960 units at a cost;of $21 per unit.;Assuming that Wolfson Corporation;sold 1,020 units in January, what was the cost of goods sold (assume FIFO;inventory accounting)? (Omit the;"$" sign in your response.);Cost of goods sold;$;7.Problem 4-13 Cost of goods sold-LIFO and FIFO;[LO2];At the end of January, Mineral;Labs had an inventory of 925 units, which cost $9 per unit to produce. During;February the company produced 1,650 units at a cost of $13 per unit.;(a);If the firm sold 2,350 units in;February, what was the cost of goods sold? (Assume LIFO inventory;accounting.)(Omit the "$" sign in;your response.);Cost of goods sold;(b);If the firm sold 2,350 units in;February, what was the cost of goods sold? (Assume FIFO inventory;accounting.)(Omit the "$" sign in;your response.);Cost of goods sold;8.Problem 4-14 Gross profit and ending inventory;[LO2];The Bradley Corporation produces a;product with the following costs as of July 1, 2011;Material;$;4 per unit;Labor;2;per unit;Overhead;2;per unit;Beginning;inventory at these costs on July 1 was 3,650 units. From July 1 to December;1, 2011, Bradley produced 13,300 units. These units had a material cost of;$2, labor of $4, and overhead of $2 per unit. Bradley uses FIFO inventory;accounting.;(a);Assuming that Bradley sold 14,300;units during the last six months of the year at $13 each, what would gross;profit be?(Omit the "$" sign in;your response.);Gross profit;$;(b);What is the value of ending;inventory?(Omit the "$" sign in;your response.);Ending inventory;$;9.Problem 4-15 Gross profit and ending inventory;[LO2];The Bradley Corporation produces a;product with the following costs as of July 1, 2011;Material;$ 4;per unit;Labor;4;per unit;Overhead;2;per unit;Beginning;inventory at these costs on July 1 was 3,750 units. From July 1 to December;1, 2011, Bradley produced 13,500 units. These units had a material cost of;$4, labor of $6, and overhead of $3 per unit. Bradley uses LIFO inventory;accounting.;(a);Assuming that Bradley sold 16,000;units during the last six months of the year at $18 each, what would gross;profit be?(Omit the "$" sign in;your response.);Gross profit;$;(b);What is the value of ending;inventory?(Omit the "$" sign in;your response.);Ending inventory;$;10.Problem 4-19 Schedule of cash receipts [LO2];Watt's Lighting Stores made the;following sales projections for the next six months. All sales are credit;sales.;March;$;48,000;June;$;52,000;April;54,000;July;60,000;May;43,000;August;62,000;Sales in January and February were;$51,000 and $50,000, respectively.;Experience has shown that of total sales;10 percent are uncollectible, 35 percent are collected in the month of sale;45 percent are collected in the following month, and 10 percent are collected;two months after sale.;(a);Prepare a monthly cash receipts;schedule for the firm for March through August.(Omit the "$" sign in your response.);(b);Of the sales expected to be made;during the six months from March through August, how much will still be uncollected;at the end of August? How much of this is expected to be collected;later?(Omit the "$" sign in your;response.);Amount;Uncollected;$;Expected to be;collected;$

 

Paper#45456 | Written in 18-Jul-2015

Price : $27
SiteLock