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Financal problems




Question;Norman;Concrete Company pours concrete slabs for single-family dwellings. Wayne;Construc- tion Company, which operates outside Norman?s normal sales territory;asks Norman to pour 40 slabs for Wayne?s new development of homes. Norman has;the capacity to build 300 slabs and is presently working on 250 of them. Wayne;is willing to pay only $2,500 per slab. Norman esti- mates the cost of a;typical job to include unit-level materials, $1,000, unit-level labor, $600;and an allocated portion of facility-level overhead, $700.;Required;Should;Norman accept or reject the special order to pour 40 slabs for $2,500 each?;Support your answer with appropriate computations.Problem 14-22;Patel Company is;a retail company that specializes in selling outdoor camping equipment. The;company is considering opening a new store on October 1, 2006. The company;president formed a planning committee to prepare a master budget for the first;three months of operation. He assigned you, the budget coordinator, the;following tasks.;Required;a. October sales are estimated to be $120,000 of;which 40 percent will be cash and 60 percent will be credit. The company;expects sales to increase at the rate of 25 percent per month. Prepare a sales;budget.;b. The company expects to collect 100 percent of;the accounts receivable generated by credit sales in the month following the;sale. Prepare a schedule of cash receipts.;c. The cost of goods sold is 60 percent of;sales. The company desires to maintain a minimum ending inventory equal to 10;percent of the next month?s cost of goods sold. Ending inventory at December 31;is expected to be $12,000. Assume that all purchases are made on account.;Prepare an inventory purchases budget.;d. The company pays 70 percent of accounts;payable in the month of purchase and the remaining 30 percent in the following;month. Prepare a cash payments budget for inventory purchases.;e. Budgeted selling and administrative expenses;per month follow.;Salary expense (fixed) $18,000;Sales commissions 5 percent of Sales;Supplies expense 2 percent of Sales;Utilities (fixed) $1,400;Depreciation on store equipment (fixed)* $4,000;Rent (fixed) $4,800;Miscellaneous (fixed) $1,200;*The capital expenditures budget indicates that;Unici will spend;$164,000 on October 1 for store fixtures, which;are expected to have a;$20,000 salvage value and a three-year;(36-month) useful life.;f.Utilities and sales commissions are paid the;month after they are incurred, all other expenses are paid in the month in;which they are incurred. Prepare a cash payments budget for selling and;administrative expenses.


Paper#50899 | Written in 18-Jul-2015

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