Elm Company makes a product that has peak sales in September of each year. The company has prepared a sales budget for the third quarter of 2003, as shown below.
July August September
Budgeted sales $500,000 $600,000 $750,000
The company is in the process of preparing a cash budget for the third quarter and must determine the cash collections by month. Collections on sales are expected to be as follows.
70% in the month of sale
20% in the month following the month of sale
8% in the second month following the month of sale
The accounts receivable balance as of June 30 is $195,000, of which $45,000 represents uncollected May sales and $150,000 represents uncollected June sales.
a. What were the total sales for May and June?
b. What are the expected cash collections for each month of the third quarter.
The question mentions that the uncollected sales proceeds for May are 45,000 so the total sales of May are 100/10 x 45,000 because this is 10% of the total sales. So May sales = $450,000.
Tablet Scenario- CVP Analysis
It's New Year's Day, 2016. You just had a great New Year's Eve celebration; you finished analyzing the performance of Tablet Development and are ready to charge ahead into the future. As you turn on the TV and try to open your eyes, you notice something strange (again). The TV commentator is saying something about New Year's Day, 2012. You have a sinking feeling, and sure enough, it's back to 1/1/2012. You realize that you are in Time Warp 2.
This time you decide to do your decision making differently. You are going to use a technique that you became familiar with last year, CVP analysis. And you are going to decide all of your decisions at once. No feeling your way through it this time. You are going to make all of your decisions now, for the next four years and just cruise through it this time.
You analyze the results of your first set of decisions that you made in Time Warp 1, from 2012 to 2015 (Excel Spreadsheet attached). You have the data, you kept it all. But now you are going to use CVP analysis to help you determine your new strategy. And you have a tool to use, the CVP Calculator.
You analyze the results using CVP and develop your complete four year strategy. You decide to make notes about your analysis and your reasoning process; just in case you have to do this again (You are praying that you can finally move ahead this time when you get to 2016.)
You finish your report that shows your strategy that you are going to use these next four years during Time Warp 2. And stop and take a big breath before you move ahead into 2012.
(In other words â?" DON'T RUN THE SIMULATION. JUST TURN IN THE REPORT.)
Do not run the simulation. You develop a revised strategy and make a case for this new strategy using analysis and relevant theories.
KEYS TO THE ASSIGNMENT
The key aspects of this assignment that should be covered and taken into account in preparing your paper include:
The revised strategy consists of the Prices, R&D Allocation %, and any product discontinuations for the X5, X6, and X7 PDAs for each of the four years: 2012, 2013, 2014, and 2015.
You must present a rational justification for this strategy. In other words, you must Make a Case for your proposed strategy using financial analysis and relevant theories.
Use the CVP Calculator and review the PowerPoint that explains CVP and provides some examples.
You need to CRUNCH some numbers (CVP Analysis) to help you determine your prices and R&D allocations.
Make sure your proposed changes in strategy are firmly based in this analysis of financial and market data and sound business principles.
Present your analysis professionally making strategic use of tables, charts and graphs.View Full Posting Details