Finance – 5questions | Management homework help

  

1. Problem #5, p. 109
 

Cyber security Systems had sales of 3,000 units at $50 per unit last year. The marketing manager projects a 20 percent increase in unit volune sales this year with a 10 percent price increase. Returned merchandise will represent 6 percent of total sales. What is your dollar sales projection for this year.

Net Sales in Unit 

= Original Quantity*(1+Percent Increase)*(1-Percent Return)

= 3000*(1+20%)*(1-6%) 

= 3384

Net Sales in Dollar = 3384*(50*110%) = 186,120

2. Problem #9, p. 109
 

Delsing Plumbing Company has begining inventory of 14,000 units, will sell 50,000 units for the month, and desires to reduce ending inventory to 40 percent of begining inventory. How many units should Delsing produce?

Number of unit to be produced = 50000 + 14000*40%-14000 = $41600

3. At the end of January, Higgins Data Systems had an inventory of 600 units, which cost $16 per unit to produce. During February the company produced 850 units at a cost of $19 per unit. If the firm sold 1,100 in February, what was its cost of goods sold (assume LIFO inventory accounting)?

COGS = 850*19 + 250*16 = $20150

4.. Victoria’s Apparel has forecast credits sales for the fourth quarter of the year as:
September (actual) ……………… $50,000
Fourth Quarter
October …………………………………. $40,000
November ……………………………… $35,000
December ………………………………..$60,000
Experience has shown that 20 percent of sales receipts are collected in the month of sale, 70 percent in the following month, and 10 percent are never collected. Prepare a schedule of cash receipts for Victoria’s Apparel covering the fourth quarter (October through December).

  

Victoria’s   Apparel
  Schedule of cash receipts
  October through December

  

Sep

October

November

December

Total

 

Sales

$50,000

$40,000

$35,000

$60,000

 

Collections

 

20% of Current Sales

$8,000

$7,000

$12,000

$27,000

 

Collections

 

70% of Previous Month   Sales

$35,000

$28,000

$24,500

$87,500

 

Total Cash Receipts

$43,000

$35,000

$36,500

$114,500

5. The Manning Company has financial statements as shown below, which are representative of the company’s historical average. The firm is expecting a 20 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase is sale is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization. In the existing store. Among liabilities, only current liabilities vary directly with sales. Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds.
Income Statement
Sales $200,000
Expenses 158,000
Earnings before interest and taxes $42,000
Interest 7,000
Earnings before taxes $35,000
Taxes $15,000
Earnings after taxes $20,000
Dividends $6,000
 

Balance Sheet
Assets
Cash $5,000
Accounts receivable 40,000
Inventory 75,000
Current assets $120,000
Fixed assets 80,000
Total assets 200,000
 

Liabilities and Stockholders’ Equity
Accounts payable 25,000
Accrued wages 1,000
Accrued taxes 2,000
Current liabilities 28,000
Notes payable 7,000
Long-term debt 15,000
Common Stock 120,000
Retained earnings 30,000
Total liabilities and stockholders’ equity 200,000

Profit Margin = 20000/200000 = .10 or 10%

Dividend Payout ratio = 6000/20000 = .30 or 30%

Increase in Sales = 200000*20% = 40000

Increase in Retained Earning = 240000*10%*(1-.30) = $16800

Required Increase Increase in Asset = (120000/200000)*40000 = 24000

Required Increase in Liabilities = (28000/2000000)*40000 = 5600

Net Increase in Asset = 24000-5600 = 18400

Net Financing Required = 18400-16800= $1,600

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