2) The sales budget calculates how much the company will spend to produce the required number of units. The president should do further consideration in terms of capital and labor costs. Does company have an adequate capital to produce the required number of units? And if the answer is no, they should look for other alternatives such as borrowing and others. 3) The sales budget is to estimate the profitability.
SciTronics’ profit as a percentage of sales in 2008 was 5.7 %. 2. This represented an increase from 3.4 % in 2005. 3. SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg.
Although the customers only needed the shipment the following year, this would be a way to exceed the targeted budget. Instead of offering the customers an early discount for receiving the merchandise earlier, Campbell sent the merchandise and reported the sales to be included in the financial reports. As a result of this procedure, the reported sales for the fourth quarter exceeded the budgeted amount with $80,000.00. The actual sales revenue for the year was over with $14,000.00. The internal auditors questioned why the two shipments were done before December 31, since the requested dates were in the following year.
Chapter 9: Forecasting Exchange Rates Small Business Dilemma Exchange Rate Forecasting by the Sports Exports Company 1. Explain how Logan can use technical forecasting to forecast the future value of the pound. Based on the information provided, do you think that a technical forecast will predict future appreciation or depreciation in the pound? Logan can apply the technical forecastby reviewing historical values of the British pound to forecast the future values as a continuation of a recent trend that has been detected. As the historical trend shows a consistent upward trend in the pound’s value, therefore it is believed the technical forecast would likely reflect appreciation of the pound.
Financial Analysis * The tax rate is approximately 30% 5.618.8=29.79% 5.418.1=29.83% 5.418=30% * Based on the industry average, a sports store of similar size should be making around $21000 or 67% more profitable than Rhodes’ store. * Assuming the lots are of the same size and bear the same tax burden, if the unused lot is sold off property taxes would be reduced by $6000 at the 2008 rate. All else being equal, this would increase net profit by 6000×0.30=$1800, for a total of $14400. Profit as a percentage of sales would increase from 2.1% to 2.4%. * Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest.
The student’s decision saves $811,249 by the first quarter that is well over target. This reduces the working capital shortfall and enables EHC to increase patient volume. The next decision to make is to decide between two loan options. The student selects loan option two that has a six-month total interest payment of $53,873 over option one that has a six-month total interest for $56, 589. Option two is the choice because the $2,716 savings difference in total interest from option two outweighs the $1,043 in interest savings from option one.
Analyse the impact of budgeting changing… Impact of changing Ms.Wangs expenditure and income is that in Wang 1 she was earning less cash sales then in the revised. An example of this is in sales during the month of February the total was £2000, and then in the revised she sold £2051 so she gains an extra cash sales of £51. This is favourable for Ms.Wang as she has gained money. Budgeting has enabled Tidy Team to gain more sales, which means more of a cash flow forecast. Throughout the months January to December all of Tidy Team’s cash sales were favourable.
By looking at the cost comparisons it seems evident that there is the potential for substantial savings by outsourcing the bracket. The apparent risks are the quoted lead-time of four weeks and the order quantity. The order quantity would need to be carefully calculated to keep inventory costs to a minimum as well as making sure there is the correct amount of safety stock. Alternatives The two main alternatives are to outsource the manufacturing of the outrigger bracket to Mayes Steel Fabricators or to keep B&L Inc. manufacturing the item. Outsourcing the component would lower the company’s expenses but the amount is dependent on the order quantity and inventory costs.
Using product offered by Continental Bank would require a higher cost for J&L, and illiquid compared with NYMEX. However, they won’t need to post a margin at the beginning of the contract. The use of a monthly average price a net would be an advantage to J&L. 3. Using the estimate of 4.5 million gallons per month, how would you construct a futures hedge for the next 12 months?
One suggestion is that the company reposition its water as a premium product, justifying a higher price. If successful, the company believes that it could charge 20% more for its water than it does now. 1. What is the maximum sales loss (in % and units) that Healthy Spring could tolerate before a 20% price increase would fail to make a positive contribution to its profitability? The maximum sales loss would be 25% before they can tolerate before a 20% price increase, which amount to 1,500 bottles per day instead of 2,000.