Highview Merchandise Company Assumptions Sales in units Percentage Change = 0% A
ID: 2467137 • Letter: H
Question
Highview Merchandise Company Assumptions Sales in units Percentage Change = 0% ACTUAL FORECAST Month January February March April May June July August September Units 20,000 24,000 28,000 35,000 45,000 60,000 40,000 36,000 32,000 Other Assumptions Operating expenses Variable: (per unit) Selling price per unit $9.00 Sales commissions $ 0.50 Unit cost $5.00 Shipping & handling $ 0.40 Fixed: (per month) Ending cash balance (per month) $10,000 Wages and salaries $34,800 Ending inventory as percentage Rent 7,000 of next month's sales 90% Utilities 2,400 Percentage of purchases paid in: Insurance expired 1,000 Current month 60% Depreciation 2,500 Following month 40% Other S&A 3,700 Percentage of sales collected in: Advertising Campaign - Current month 30% Following month 50% Second following month 20% New fixed assets purchased in May $25,000 Quarterly dividends $12,000 Line-of-credit annual interest 10% Balance Sheet as of March 31 (Actual) Assets Actual A/R to be collected in: Cash $14,000 April April May Total Accounts Receivable 219,600 43,200 126,000 50,400 219600 Inventory 157,500 Unexpired insurance 14,400 Highview Merchandise Company Budgeted Statements Budgeted Income Statement April May June Total Check Figures Sales $0 $0 $0 $0 Less variable expenses Cost of goods sold - - - - Sales commissions - - - - Shipping & handling - - - - Total variable expenses - - - - Contribution margin - - - - Less fixed expenses Wages and salaries - - - - Rent - - - - Utilities - - - - Insurance expired - - - - Depreciation - - - - Other S&A - - - - Advertising Campaign - - - - Total fixed expenses - - - - Net Operating Income - - - - $ 279,800 Less: Interest Expense - - - - Net Income $0 $0 $0 $0 $ 278,648 Cash Budget April May June Total Beginning cash balance $0 $0 $0 $0 Cash collections (from schedule b.) - - - - Total cash available - - - - Cash disbursements Inventory purchases (from schedule e.) - - - - Operating expenses - - - - Capital Acquisitions - - - - Interest - - - - Dividends - - - - Total disbursements - - - - Minimum cash balance - - - - Total cash needed - - - - Cash excess (deficit) - - - - Financing Borrowing - - - - Repayments - - - - Total cash from financing - - - - Ending cash balance $0 $0 $0 $0 Line-of-Credit Balance - - - - - 7,440 Fixed assets, net of depreciation 172,700 Total Assets $578,200 Liabilities and Stockholder's Equity Accounts payable, purchases $85,750 Dividends payable 12,000 Capital stock, no par 300,000 Retained earnings 180,450 Total liabilities and stockholder's equity $578,200 Highview Merchandise Company Assumptions Sales in units Percentage Change = 0% ACTUAL FORECAST Month January February March April May June July August September Units 20,000 24,000 28,000 35,000 45,000 60,000 40,000 36,000 32,000 Other Assumptions Operating expenses Variable: (per unit) Selling price per unit $9.00 Sales commissions $ 0.50 Unit cost $5.00 Shipping & handling $ 0.40 Fixed: (per month) Ending cash balance (per month) $10,000 Wages and salaries $34,800 Ending inventory as percentage Rent 7,000 of next month's sales 90% Utilities 2,400 Percentage of purchases paid in: Insurance expired 1,000 Current month 60% Depreciation 2,500 Following month 40% Other S&A 3,700 Percentage of sales collected in: Advertising Campaign - Current month 30% Following month 50% Second following month 20% New fixed assets purchased in May $25,000 Quarterly dividends $12,000 Line-of-credit annual interest 10% Balance Sheet as of March 31 (Actual) Assets Actual A/R to be collected in: Cash $14,000 April April May Total Accounts Receivable 219,600 43,200 126,000 50,400 219600 Inventory 157,500 Unexpired insurance 14,400 Highview Merchandise Company Budgeted Statements Budgeted Income Statement April May June Total Check Figures Sales $0 $0 $0 $0 Less variable expenses Cost of goods sold - - - - Sales commissions - - - - Shipping & handling - - - - Total variable expenses - - - - Contribution margin - - - - Less fixed expenses Wages and salaries - - - - Rent - - - - Utilities - - - - Insurance expired - - - - Depreciation - - - - Other S&A - - - - Advertising Campaign - - - - Total fixed expenses - - - - Net Operating Income - - - - $ 279,800 Less: Interest Expense - - - - Net Income $0 $0 $0 $0 $ 278,648 Cash Budget April May June Total Beginning cash balance $0 $0 $0 $0 Cash collections (from schedule b.) - - - - Total cash available - - - - Cash disbursements Inventory purchases (from schedule e.) - - - - Operating expenses - - - - Capital Acquisitions - - - - Interest - - - - Dividends - - - - Total disbursements - - - - Minimum cash balance - - - - Total cash needed - - - - Cash excess (deficit) - - - - Financing Borrowing - - - - Repayments - - - - Total cash from financing - - - - Ending cash balance $0 $0 $0 $0 Line-of-Credit Balance - - - - - 7,440 Fixed assets, net of depreciation 172,700 Total Assets $578,200 Liabilities and Stockholder's Equity Accounts payable, purchases $85,750 Dividends payable 12,000 Capital stock, no par 300,000 Retained earnings 180,450 Total liabilities and stockholder's equity $578,200Explanation / Answer
Ans-
Highview Merchandise Company Sales Budget Month Detail April May June July August Sales Units 35,000 45,000 60,000 40,000 36,000 × Price per Unit 9.00 9.00 9.00 9.00 9.00 Total Sales 315,000.00 405,000.00 540,000.00 360,000.00 324,000.00 Production Budget Month Detail April May June July August Sale Units 35,000 45,000 60,000 40,000 36,000 Planned ending units (45000*0.9),(60000*0.9),(40000*0.9) 40,500 54,000 36,000 32,400 28,800 Beginning units (35000*0.9),(45000*0.9),(60000*0.9) 31,500 40,500 54,000 36,000 32,400 Planned production units (Sales units+Planned endingunits -Beginning units) 44,000 58,500 42,000 36,400 32,400 × Cost per Direct Material unit 5.00 5.00 5.00 5.00 5.00 Budgeted Direct Material Cost 220,000.00 292,500.00 210,000.00 182,000.00 162,000.00 Operating expenses Month Detail April May June July August Sales Units 35,000 45,000 60,000 40,000 36,000 × Sales commissions per unit sold 0.50 0.50 0.50 0.50 0.50 Total Variable Selling and Administrative Expense 17,500.00 22,500.00 30,000.00 20,000.00 18,000.00 Fixed Exp. 3,700.00 3,700.00 3,700.00 3,700.00 3,700.00 Total 21,200.00 26,200.00 33,700.00 23,700.00 21,700.00 Schedule of Expected Cash Payments Month Detail April May June July Beginning AP 85,750.00 - - - 85,750.00 Beginning AP Payment-Current month 100% April (220000*0.6)(220000*0.4) 132,000.00 88,000.00 - - 220,000.00 next month - May (292500*0.6)(292500*0.4) - 175,500.00 117,000.00 - 292,500.00 Payment of Current Month Purchase 60% June (210000*0.6)(210000*0.4) - 126,000.00 84,000.00 210,000.00 Payment of last Month Purchases 40% July (182000*0.6) 109,200.00 182,000.00 Payment of last to last Month Purchases - Total Expected Payments 217,750.00 263,500.00 243,000.00 193,200.00 990,250.00 Bad Debts - Schedule of Expected Cash Collections Month Detail April May June July Sales Beginning AR Collection 100% Beginning AR 169,200.00 50,400.00 - - 219,600.00 next month - April (315000*0.3)(315000*0.5) 94,500.00 157,500.00 63,000.00 - 315,000.00 Collection of Current Month Sales 30% May (405000*0.3)(405000*0.5) - 121,500.00 202,500.00 81,000.00 405,000.00 Collection of last Month Sales 50% June (540000*0.3)(540000*0.5) - - 162,000.00 270,000.00 540,000.00 Collection of last to last Month Sales 20% July 180,000.00 360,000.00 Bad Debts - Total Collections 263,700.00 329,400.00 427,500.00 531,000.00 1,839,600.00 Cash Budget Month Particulars April May June July Total Beginning Cash balance 14,000.00 - - 3,650.00 Add: cash collections 263,700.00 329,400.00 427,500.00 531,000.00 1,716,000.00 Total cash available 277,700.00 329,400.00 427,500.00 534,650.00 1,569,250.00 Less: cash Disbursements - Purchases of inventory 217,750.00 263,500.00 243,000.00 193,200.00 917,450.00 Operating expenses 21,200.00 26,200.00 33,700.00 23,700.00 104,800.00 Purchases of Fixed Assets - 25,000.00 - - 25,000.00 Manufacturing Overhead - - - - - Wages & Salaries 34,800.00 34,800.00 34,800.00 34,800.00 139,200.00 utilities 2,400.00 2,400.00 2,400.00 2,400.00 9,600.00 Quarterly Dividend - - 12,000.00 - 12,000.00 Shipping & handling (.40per sellign unit) 14,000.00 18,000.00 24,000.00 16,000.00 14,400.00 Factory Rent 7,000.00 7,000.00 7,000.00 7,000.00 Total cash disbusrement 297,150.00 376,900.00 356,900.00 277,100.00 1,308,050.00 Cash surplus/Deficit (19,450.00) (47,500.00) 70,600.00 257,550.00 261,200.00 Financing - Borrowing 19,450.00 47,500.00 66,950.00 Repayment 66,950.00 66,950.00 Interest - Net cash from Financing - Budgeted ending cash balance - - 3,650.00 257,550.00 261,200.00Related Questions
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