A. Sunshine Company has budgeted total sales revenue for the second half year of 2023 as follows: \begin{tabular}{|l|r|} \hline \multicolumn{2}{|c|}{ Budgeted Sales Revenues } \\ \hline & RM \\ \hline July & 215,000 \\ \hline August & 220,000 \\ \hline September & 250,000 \\ \hline October & 260,000 \\ \hline November & 270,000 \\ \hline December & 295,000 \\ \hline \end{tabular} The other information is also provided below: 1) Beginning cash on 31 July is RM200,000. 2) Past experience has indicated that \( 30 \% \) of total sales are cash and the remaining \( 70 \% \) of sales are on credit. Collection of credit sales occurs as follows: \( 50 \% \) in the month of sale, \( 30 \% \) in the month following the sale, and \( 15 \% \) in the second month following the sale. The other \( 5 \% \) is uncollectible. 3) Total materials purchased are at an average of \( 60 \% \) of total sales. The materials purchase costs are paid in full in the same months they are purchased. 4) Monthly salaries and wages are at a cost of RM43,800. 5) The company received interest from the fixed deposit accounts amounted to RM38,000 and RM40,000 in the months of August and October. 6) Taxes to be paid are RM2,000 every month. 7) Monthly rental expenses are RM3,800. 8) The administrative expenses are RM32,000 every month which does not include depreciation of equipment amounted to RM2,000. Required: Help Sunshine Company to: i. Prepare a Schedule of Cash Collections from sales for the months of August, September, October, and November. ii. Prepare a Cash Budget for the months of August, September, October, and November. B. Happy Company has budgeted the following unit sales: \begin{tabular}{|l|r|} \hline \( \mathbf{2 0 2 2} \) & \multicolumn{1}{|c|}{ Units } \\ \hline August & 20,900 \\ \hline September & 22,700 \\ \hline \end{tabular} Matric No: \begin{tabular}{l|r|} \hline October & 23,600 \\ \hline November & 24,500 \\ \hline December & 25,900 \\ \hline \end{tabular} The finished goods units in hand on July 31, 2022, were 2,090 units. Each unit requires 5 \( \mathrm{kg} \) of raw material which is estimated to cost an average of RM8 per \( \mathrm{kg} \). It is the company's policy to maintain a finished goods inventory at the end of each month equal to \( 10 \% \) of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to \( 20 \% \) of the \( \mathrm{kg} \) needed for the following month's production. There were \( 24,250 \mathrm{~kg} \) of raw materials in hand on July 31 , 2022. Required: i. Prepare the Production Budget for the months of August, September, and October 2022. You are also required to fill in the figures in the total column (for those 3 months) of 2022. Include in your table the calculations for ending inventory. (6 marks) \begin{tabular}{|l|c|c|c|c|} \hline & August & September & October & Total \\ \hline & RM & RM & RM & RM \\ \hline Sales units & \multicolumn{3}{|c}{ Note: Copy this Table to your ANSWER Booklet } \\ \cline { 1 - 1 } Add: Ending inventory & & \\ \cline { 1 - 1 } Less: Beginning inventories & & \end{tabular} ii. Prepare the Direct Materials Budget for the months of August, September, and October of 2022. You are also required to fill in the figures in the total column (for those 3 months) of 2022. Include in the table the calculations for ending inventory. \begin{tabular}{|c|c|c|c|c|} \hline & August & September & October & Total \\ \hline & RM & RM & RM & RM \\ \hline Units to be produced & \multirow{6}{*}{\multicolumn{4}{|c|}{ Note: Copy this Table to your ANSWER Booklet }} \\ \hline x Direct materials per unit \( (\mathrm{kg}) \) & & & & \\ \hline Production needed & & & & \\ \hline Add: Ending inventory & & & & \\ \hline Less: Beginning inventory & & & & \\ \hline Direct Materials to be purchased \( (\mathrm{kg}) \) & & & & \\ \hline \end{tabular}
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Schedule of Cash Collections from sales for the months of August, September, October, and November: For August: - Cash sales = 30% of August sales = 0.30 * 220,000 = RM66,000 - Collection from July credit sales = 30% of July sales = 0.30 * 215,000 = RM64,500 - Show more…
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Scenario TourneSol Canada, Ltd. is a producer of high quality sunflower oil. The company buys raw sunflower seeds directly from large agricultural companies, and refines the seeds into sunflower oil that it sells in the wholesale market. As a by-product, the company also produces sunflower mash (a paste made from the remains of crushed sunflower seeds) that it sells into the market as base product for animal feed. The company has a maximum input capacity of 150 short tons of raw sunflower seeds every day (or 54,750 short tons per year). Of course the company cannot run at full capacity every day as it is required to shut down or reduce capacity for maintenance periods every year, and it experiences the occasional mechanical problem. The facility is expected to run at 90% capacity over the year (or on average 150 x 90% = 135 short tons per day). TourneSol is planning to purchase its supply of raw sunflower seeds from three primary growers, Supplier A, Supplier B, and Supplier C. Purchase prices will not set until the orders are actually placed so TourneSol will have to forecast purchase prices for the raw material and sales prices for the refined sunflower oil and mash. The contract is written such that TourneSol is only required to commit to 70% of total capacity up front. Any amounts over that can be purchased only as required for the same price. Historical prices for the last 15 years are in the table below (note that year 15 is the most current year). Historical Price Data Marketing Year Seed Average Price Index $/short ton Oil Average Price Index $/short ton Mash Average Price Index $/short ton 1 125.7 307.8 63 2 192.4 465 80 3 242 652.2 109 4 240 664.2 111 5 284 791.3 114 6 242 732 100 7 270 921 134 8 347.2 1123 133 9 436 1297.3 193 10 432.8 1312 187 11 461 1396 193 12 572 1664 207 13 498 1217.4 242 14 438 1072.4 107 15 434 1304.4 200 Sunflower oil contains a number of fatty acids, some which are desirable in food products and others that are not. One desirable fatty acid is oleic acid. TourneSol produces high oleic oil for the wholesale market, and requires that the oleic acid content be a minimum of 78%. Sunflower oil also contains trace amounts of iodine. The market requires that that iodine content be a minimum of 0.77% and maximum of 0.88% The oleic acid and iodine content for the sunflower seeds from the three suppliers is given in the table below. Supplier Oleic Acid Iodine A 65% 0.85% B 70% 0.73% C 80% 0.92% Because the oleic acid and iodine content varies across the three suppliers, so does the price. It is expected that the cost of supply from the suppliers will be a percentage of the market average price of seeds. Supplier Cost as % of Average Market Price of Seed A 88% B 95% C 92% The company faces an additional variable production cost of $10/short ton and an estimated fixed cost of $1,750,000 over the upcoming production period. The company is asking you to provide a recommendation on the amount of raw material it should purchase from each supplier to minimize its cost of feedstock. Management is also looking for an analysis on the profitability of the company in the next production cycle Prepare a written management report that includes, at a minimum, the following sections: Purpose of the Report Description of the Problem Methodology (which would include the model formulation) Findings or Results Recommendations or Conclusions Be sure to address all relevant points, discuss any assumptions you are making, justify any modeling choices you have made (for example, the choice of time series forecast model), and highlight the following items in your report: a forecast of the next production period’s average price index for raw sunflower seeds, sunflower oil, and sunflower mash, a recommendation for the optimal purchasing strategy from the various suppliers, a cost-volume-profit analysis using for the recommended purchase strategy and the forecasted sunflower oil and mash sales price, a discussion of the risks and uncertainties that are faced by the company, and an analysis and opinion on the profitability of the company in the next production period (accounting for the expected profit or loss and the inherent risks/uncertainties. Remember that you are writing the report from the point of view of a consultant with senior management of TourneSol Canada, Ltd. as the intended audience.
Ameer S.
Reconsider the Profit & Gambit Co. advertising-mix problem presented in Section 2.7. Recall that a major advertising campaign is being planned that will focus on three key products: a stain remover, a liquid detergent, and a powder detergent. Management has made the following policy decisions about what needs to be achieved by this campaign. Sales of the stain remover should increase by at least 3 percent. Sales of the liquid detergent should increase by at least 18 percent. Sales of the powder detergent should increase by at least 4 percent. The spreadsheet in Figure 2.21 shows the linear programming model that was formulated for this problem. The minimum required increases in the sales of the three products are given in the data cells Minimum Increase (G8:G10). The changing cells Advertising Units (C14:D14) indicate that an optimal solution for the model is to undertake four units of advertising on television and three units of advertising in the print media. The objective cell Total Cost (G14) shows that the total cost for this advertising campaign would be $10 million. After receiving this information, Profit & Gambit management now wants to analyze the trade-off between the total advertising cost and the resulting benefits achieved by increasing the sales of the three products. Therefore, a management science team (you) has been given the assignment of developing the information that management will need to analyze this trade-off and decide whether it should change any of its policy decisions regarding the required minimum increases in the sales of the three products. In particular, management needs some detailed information about how the total advertising cost would change if it were to change any or all of these policy decisions. For each of the three products in turn, use graphical analysis to determine how much the total advertising cost would change if the required minimum increase in the sales of that product were to be increased by 1 percent (without changing the required minimum increases for the other two products). Use the spreadsheet shown in Figure 2.21 (available at www.mhhe.com/Hillier6e) to obtain the information requested in part a. For each of the three products in turn, use a parameter analysis report to determine how the optimal solution for the model and the resulting total advertising cost would change if the required minimum increase in the sales of that product were to be systematically varied over a range of values (without changing the required minimum increases for the other two products). In each case, start the range of values at 0 percent and increase by 1 percent increments up to double the original minimum required increase. Use Solver to generate the sensitivity report and indicate how the report is able to provide the information requested in part a. Also use the report to obtain the allowable range for the required minimum increase in the sales of each product. Interpret how each of these allowable ranges relates to the results obtained in part c. Suppose that all the original numbers in Minimum Increase (G8:G10) were to be increased simultaneously by the same amount. How large can this amount be before the shadow prices provided by the sensitivity report may no longer be valid? Below is the beginning of a memorandum from the management science team to Profit & Gambit management that is intended to provide management with the information it needs to perform its trade-off analysis. Write the rest of this memorandum based on a summary of the results obtained in the preceding parts. Present your information in clear, simple terms that use the language of management. Avoid technical terms such as shadow prices, allowable ranges, and so forth.
Cash budgeting, budgeted balance sheet (Continuation of 6 -42) (Appendix) Refer to the information in Problem $6-42$ Budgeted balances at January 31,2018 are as follows: Customer invoices are payable within 30 days. From past experience, Skulas's accountant projects $40 \%$ of invoices will be collected in the month invoiced, and $60 \%$ will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with $50 \%$ of direct materials purchases paid during the month of the purchase, and $50 \%$ paid in the month following purchase. Fixed manufacturing overhead costs include $ 64,000$ of depreciation costs and fixed nonmanufacturing overhead costs include $ 10,000$ of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018 On December $15,2017,$ Skulas's board of directors voted to pay a $ 160,000$ dividend to stockholders on January 31,2018 1. Prepare a cash budget for January $2018 .$ Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. 2. Skulas is interested in maintaining a minimum cash balance of $ 120,000$ at the end of each month. Will Skulas be in a position to pay the $ 160,000$ dividend on January $31 ?$ 3. Why do Skulas's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? 4. Prepare a budgeted balance sheet for January 31,2018 by calculating the January 31,2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity.
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