Nurseries grows and sells garden plants. The nursery is active between January a
ID: 2395220 • Letter: N
Question
Nurseries grows and sells garden plants. The nursery is active between January and October each year. During January, the potting tables and equipment are prepared. The potting and seeding are done in February. In March and April, the plants are cultivated, watered, and fertilized. May and June are the peak selling months. July, August, and September are the peak months for visiting customers in their homes to provide them with advice and help solve their problems. During October, the equipment and buildings are secured for the winter months, and in November and December, full-time employees take their paid holidays, and the business is closed.
The nursery employs15 full-time staff and, depending on the season, up to 20 part-time staff. The full-time staff members are paid an average salary of $2,000 per month and work 220 hours per month. The part-time staff members are paid $15 per hour. Because the nursery relies on local students for part-time work, there is no shortage of trained people willing to work the hours that are available. The ratio of full-time employee hours worked to part-time employee hours worked is as follows: January, 5:1 ; February, 5:1 ; March, 3:1 ; April, 3:1 , May, 1:1 ; June, 1:1 ; July, 1:1 ; August, 1:1 ; September, 2:1 ; and October, 4:1. Because part-time students are used mainly for moving and selling activities, their work creates very little incremental support costs. Fixed costs, other than wages, associated with this operation are about $64,000 per month. The cost drivers in this operation are the activities that the full-time employees undertake. These cost drivers are proportional to the hours worked by the full-time employees. The variable costs depend on the season and reflect the common employee activities during that season. Average variable costs per employee hour worked are as follows: January, $ 20 February,
$20 ; March, $20 ; April, $20 ; May, $7 ; June, $7 ,July, $10 ; August, $10 ; September, $10 ; and October, $8.
These variable costs include both support items such as power and water and direct items such as soil and pots. Assume that all expenses are paid in the month they are incurred.
Requirement
On the basis of the information provided, determine the cash outflows for the upcoming year.
Start by completing budgeted cash outflows for the months January through June. Then July through December (For amounts with a 0 balance, make sure to enter "0" in the appropriate cell.)
Jan
Feb
Mar
Apr
May
Jun
Full-time staff
Full-time hours
Part-time hours
Cash outflows
Full-time wages
Part-time wages
Variable costs
Capacity-related costs
Total outflows
Jan
Feb
Mar
Apr
May
Jun
Full-time staff
Full-time hours
Part-time hours
Cash outflows
Full-time wages
Part-time wages
Variable costs
Capacity-related costs
Total outflows
Explanation / Answer
Particulars January February March April May June July August September October November December Full time staff 15 15 15 15 15 15 15 15 15 15 15 15 Full time hours 3300 3300 3300 3300 3300 3300 3300 3300 3300 3300 Part time staff 3 3 5 5 15 15 15 15 8 4 Part time hours 660 660 1100 1100 3300 3300 3300 3300 1650 825 Total employee hours worked 3960 3960 4400 4400 6600 6600 6600 6600 4950 4125 Cash outflows Full time wages 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 Part time wages 3300 3300 5500 5500 16500 16500 16500 16500 8250 4125 0 0 Variable Costs 79200 79200 88000 88000 46200 46200 66000 66000 49500 33000 Capacity related costs 64000 64000 64000 64000 64000 64000 64000 64000 64000 64000 64000 64000 Total outflows 176500 176500 187500 187500 156700 156700 176500 176500 151750 131125 94000 94000
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