8-2: Letsgo Travel TrailersKasus Letsgo Travel Trailers ini dirancang untuk mendorong diskusi mahasiswa interaksi antara berbagai area fungsional perusahaan, misalnya, dampak dari proyeksi penjualan dan tingkat persediaan yang diinginkan pada produksi. Kasus ini juga memungkinkan instruktur untuk mendiskusikan baik jangka pendek dan strategi jangka panjang. Dalam jangka pendek, masalah utama Letsgo itu terjadi karena adanya penjualan dan produksi jadwal tidak merata, yang dapat menyebabkan masalah produk berkualitas. Penggunaan pendekatan alternatif untuk perencanaan produksi dan manajemen kas juga diperkenalkan dalam kasus tersebut.Letsgo memproduksi trailer perjalanan digunakan terutama oleh keluarga muda dan pensiunan yang tertarik pada cahaya, murah trailer yang dapat dengan mudah ditarik oleh sebuah mobil keluarga menengah. Industri trailer perjalanan diperkirakan akan mengalami tingkat pertumbuhan yang tinggi (dalam kasus ini, setidaknya sampai 2020) terutama disebabkan oleh penuaan "baby-boomer " populasi. Namun lingkungan berubah, dan banyak faktor akan mempengaruhi proyeksi tingkat pertumbuhan penjualan Travel Letsgo Trailer itu. Perubahan dalam industri aluminium dan meningkatnya permintaan untuk bahan bangunan ringan akan mempengaruhi kemampuan Letsgo untuk mengakses bahan baku kritis. Tren demografi dan perubahan permintaan dan produksi aluminium akan memiliki efek mendalam pada keberhasilan masa depan atau kegagalan Letsgo.Penganggaran, didekati sebagai upaya tim, dapat menjadi alat koordinasi yang kuat. Kerjasama yang efektif di antara area fungsional (yaitu, penjualan, produksi, pembelian, dan keuangan) akan memungkinkan Letsgo untuk menegosiasikan kontrak vendor utama menguntungkan dan menerapkan JIT. Sayangnya, saat ini Letsgo pendekatan penganggaran sebagai latihan matematika yang akan dilakukan oleh akuntansi, berdasarkan sempit melihat proyeksi penjualan. Selain itu, Newman, direktur perusahaan, melakukan proyeksi penjualan dengan sedikit atau tanpa menyebutkan sumber daya dari luar atau masukan dari Letsgo itu manajer fungsional dan karyawan line.Dalam jangka panjang, Letsgo pasti akan menghadapi peningkatan kompetisi di luar seperti keinginan pemasaran untuk pertumbuhan populasi baby- boomer pensiunan meningkat. Kasus ini memungkinkan diskusi tentang proyeksi penjualan dan kebutuhan untuk mengidentifikasi kedua faktor demografi yang mendasari yang dapat mempengaruhi penjualan masa depan dan kekuatan pasar yang lebih terbatas, seperti hambatan untuk masuk dan ancaman -biaya produksi yang lebih rendah.Pendekatan yang disarankan untuk pertanyaan kasus ikuti. Instruktur tidak perlu mengambil pendekatan yang disarankan secara eksplisit untuk semua pertanyaan, namun, karena kasus ini memungkinkan banyak kesempatan bagi instruktur untuk memandu diskusi kelas menjadi lebih atau kurang mendalam pada banyak pertanyaan kasus. Silakan lihat kasus addendum di mana kami menyediakan artikel terbaru dari The Wall Street Journal. Artikel ini dapat digunakan untuk memperbarui beberapa informasi yang terdapat dalam kasus ini.

Pendekatan yang Disarankan untuk PertanyaanKasus

Pertanyaan 1Sumber proyeksi penjualan Letsgo yang tidak terungkap dalam kasus ini. Proyeksi mungkin terlalu optimis. Penjualan aktual meningkat 8,1 % 1992-1993, 7,5 % 1993-1994, 11,4 % 1994-1995, 10,2 % 1995-1996, dan 18,8 % 1996-1997. Kenaikan proyeksi 20 % 1997-1998 dan untuk setiap tahun antara tahun 1998 dan 2002 tampaknya tidak dibuktikan oleh pengalaman sebelumnya. Pemeriksaan data demografis yang mendasari (misalnya, proyeksi jumlah pensiunan, faktor kesehatan, tingkat pendapatan, dll ) akan menambahkan dukungan ke nomor diproyeksikan. Analisis kompetitif juga menyerukan ( yang saat ini pesaing Letsgo itu, apa saja hambatan masuk dalam lini bisnis, dll ).Penjualan Letsgo adalah sangat musiman, dengan lebih dari 40 % dari penjualan yang terjadi hanya dalam waktu tiga bulan ( Februari, Maret, dan April ). Ini mungkin tampak aneh kepada siswa bahwa orang yang membeli trailer perjalanan di bulan Februari dan Maret, sampai siswa menjadi sadar bahwa perusahaan menjual trailer untuk gerai ritel, seperti LL Bean, yang dimulai mempersiapkan untuk musim panas di awal musim semi.Apakah Letsgo berencana untuk berkonsentrasi hanya pada pasar pensiunan ? Presiden perusahaan muncul untuk mempertimbangkan masa depan untuk menjadi pensiunan. Tidak jelas, bagaimanapun, bahwa perusahaan telah memadai dimanfaatkan riset pasar. Apakah data pasar mendukung keyakinan Newman ? Selanjutnya, strategi perusahaan perlu diklarifikasi. Penganggaran menyediakan alat komunikasi untuk menerapkan strategi. Anggaran anggaran produksi dan bahan pembelian harus mencerminkan produk. Jika perusahaan menyerah pasar keluarga muda dan berkonsentrasi pada pensiunan, bagaimana seharusnya produk dimodifikasi ( jika sama sekali ) ? Kurangnya keterlibatan dalam proses penganggaran oleh bidang fungsional dapat menghalangi perusahaan dalam menyesuaikan produk ke pasar.CatatanuntukInstruktur: An Excel spreadsheet filesolusitertanam di masing-masinglarutanpamerandalamcatatanmengajar (satudalampertanyaan 2 danduadalampertanyaan 3). Andadapatmembukaobjek spreadsheet yang mengikutidenganmelakukanhalberikut: 1. Klikkanan di manapun di area worksheet. 2. Pilih "worksheet objek" dankemudianpilih "Open." Untukkembalikedokumen Word, pilih "File" dankemudian "Close dankembalike..." saatAndaberadadalam modus spreadsheet. LayarkemudianharusmengembalikanAndakedokumen Word 3. Andajugadapatmenggunakanmetodeiniuntukmenyalinsebagianatauseluruh spreadsheet tertanamkesebuah spreadsheet Excel untukAndagunakansendiri.

Pertanyaan 2

Produksi: Jadwal produksi tampaknya ditentukan oleh penjualan dan pemasaran. Tingkat persediaan murah hati diciptakan oleh kebijakan memiliki di tangan pada akhir setiap bulan jadi baik ( trailer selesai ) sebesar 300 trailer ditambah 20 % dari proyeksi penjualan bulan depan di unit. "Biaya " dari kebijakan ini adalah dalam pergudangan. Keuangan dipengaruhi oleh kebutuhan untuk mengarahkan dolar yang signifikan untuk penyimpanan dan pembiayaan persediaan besar. Siswa dapat menunjukkan just-in -time ( JIT ) sebagai solusi. JIT memerlukan barang yang akan dikirimkan bebas cacat dan tepat waktu, bagaimanapun, dan produksi jadwal sebagaimana tercantum dalam larutan berkas Excel menunjukkan potensi masalah yang signifikan baik dengan kualitas dan ketepatan waktu produksi.Siswa harus dipromosikan untuk melihat jadwal produksi dari perspektif manajer produksi. Produksi bervariasi dari yang rendah 1.000 trailer pada bulan Juni sampai yang tertinggi 4.600 trailer Maret. Untuk memenuhi tertinggi produksi, manufaktur akan hampir pasti akan dipaksa untuk mempekerjakan pekerja paruh waktu atau bekerja lembur yang luas, yang keduanya meningkatkan potensi masalah kualitas dan penundaan produksi. Selanjutnya, kebutuhan untuk menurunkan produksi pada bulan Mei dan Juni akan pasti menyebabkan PHK, yang dapat meningkatkan biaya tenaga kerja dan berdampak pada kualitas masa depan perusahaan menjadi dikenal untuk praktek kerja yang buruk.Selain itu, perusahaan tidak muncul untuk mengikuti selesai kebijakan persediaan barang sendiri. Persediaan barang selesai pada tanggal 31 Desember 1997, dianggarkan menjadi 1.000 unit, tetapi kebijakan akan menunjukkan angka hanya 800 (yaitu, 300 + [ 2.500 penjualan Januari x 0,20 ] ).Kasus ini mencatat bahwa perusahaan tidak melacak barang dalam proses ( WIP ) persediaan. Hal ini tampaknya menjadi cacat berpotensi serius dalam pengendalian manajerial. Kurangnya kontrol atas WIP melanggar tanggung jawab manajemen fidusia untuk melindungi dan mengontrol aset pemegang saham. Akuntansi untuk persediaan tidak, bagaimanapun, satu-satunya cara untuk mengendalikan WIP. Letsgo dapat melacak produksi secara langsung dengan memantau waktu throughput atau tingkat output.Apakah anggaran enam bulan memadai untuk perencanaan dan pengendalian? Sebagian besar perusahaan berencana setidaknya 12 bulan ke depan, sebuah fakta yang dapat mendorong diskusi tentang "penganggaran terus menerus." Ketersediaan penjualan perkiraan lima tahun ke depan mungkin juga diskusi prompt anggaran perencanaan tiga sampai lima tahun dan peran anggaran dalam mencapai sasaran strategis jangka panjang.Bahan Pembelian Anggaran : Jadwal produksi yang tidak merata tercermin dalam lembaran aluminium jadwal pembelian merata. Penyusunan anggaran pembelian bahan memungkinkan siswa untuk mulai mengenali kebutuhan yang lebih luas untuk koordinasi lintas - fungsional. Pembelian serta produksi dan keuangan dipengaruhi oleh musim produk.Selanjutnya, penggunaan harga $ 6 untuk biaya aluminium sheet tampaknya terlalu optimis. Mengingat produksi dan pembelian anggaran perusahaan, tampaknya hampir mustahil untuk membeli untuk mendapatkan lembaran aluminium yang diperlukan pada harga ini. Beberapa siswa mungkin menyarankan JIT sebagai solusi yang mungkin. Sementara JIT dapat membantu perusahaan mendapatkan lembaran aluminium pada jumlah tahunan lebih dekat ke $ 6 per meter persegi, masalah perusahaan sebelumnya dalam membayar pinjaman mungkin mencerminkan masalah kas umum. JIT mengharuskan pengguna untuk mematuhi jadwal pembayaran yang ketat untuk menjaga hubungan yang menguntungkan dengan pemasok utama.Anggaran Kas : Letsgo akan mampu membayar kembali pinjaman diantisipasi $ 800.000 dalam 90 hari ( 1 Januari-31 Maret ). Selanjutnya, perusahaan akan perlu meminjam tambahan $ 1.411.000 untuk membiayai operasi melalui 31 Mei.Letsgo tampaknya merencanakan kenaikan harga jual trailer di Mei 1998, dari $ 1.000 per Trailer menjadi $ 1.100 per Trailer. Siswa harus mempertanyakan kurangnya kejelasan mengenai harga jual. Berpotensi lebih penting, bagaimanapun, adalah waktu dan daya saing seperti peningkatan. Dengan meningkatkan harga jual trailer pada bulan April hanya sebelum waktu penjualan paling lambat tahun (Juni, Juli, dan Agustus) Letsgo dapat mendorong penjualan turun lebih jauh. Siswa dapat memimpin dalam diskusi tentang bagaimana harga jual ditetapkan ( persaingan, strategi pasar ) dan dampak potensial terhadap produksi dan profitabilitas. Pemeriksaan lebih dekat dari struktur biaya Letsgo, bagaimanapun, mengungkapkan biaya tahun 1998 untuk memproduksi satu trailer $ 950 ( bahan, tenaga kerja, dan panas - light - daya rata-rata $ 600, dengan peralatan sewa, penyusutan, dan biaya penjualan / administrasi ditambahkan $ 350 ). Kenaikan harga $ 1.100 mencerminkan tekanan biaya, memperkuat kurangnya jelas Letsgo tentang strategi formal.Biaya yang dianggarkan untuk sewa peralatan, pembelian peralatan, depresiasi, dan biaya penjualan / administrasi menimbulkan pertanyaan. Mengapa, misalnya, jangan sewa peralatan hanya bervariasi dalam bulan April ? Siswa mengharapkan salah satu dari dua skenario. Entah penyewaan peralatan harus berbeda dengan produksi ( skenario produksi yang sangat wajar tapi sulit dari aspek praktis ), atau jumlah yang harus tetap datar selama periode enam bulan seluruh. Bahkan, apa yang terjadi adalah penggantian disewa dengan peralatan yang dimiliki. Newman berencana untuk mengganti semua peralatan menyewa dengan peralatan yang dimiliki selama tiga tahun ke depan. Ini penggantian disewa dengan peralatan yang dimiliki juga bertanggung jawab untuk peningkatan beban penyusutan pada bulan April. Kebijakan perusahaan adalah untuk memulai beban penyusutan pada peralatan baru setelah kuartal di mana peralatan itu dibeli. Siswa harus mengakui penyusutan sebagai biaya non - tunai.Penggantian disewa dengan peralatan yang dimiliki, yang tampaknya sedang dibiayai baik melalui operasi atau dengan pembiayaan jangka pendek, dapat memulai diskusi tentang peran kendaraan pembiayaan yang berbeda. Utang jangka panjang atau penerbitan modal akan, dalam banyak kasus, menjadi kendaraan pembiayaan lebih.Keberadaan saldo kas minimum dapat mendorong diskusi mahasiswa kebutuhan untuk jumlah optimal cash- in-the - bank pada setiap saat. Peran Direksi dalam menetapkan saldo kas minimum yang harus dipertahankan, sementara tidak selalu khas, dapat mendorong diskusi tentang peran Dewan dan tanggung jawab yang ditanggung oleh anggotanya.

Pertanyaan 3Anggaran Produksi: ( CATATAN: solusi yang dihasilkan untuk Pertanyaan 3 berbeda dari solusi yang diterbitkan oleh penulis kasus ini, dalam dua hal : ( 1 ) pengobatan arus kas keluar untuk upah (tenaga kerja ) biaya, dan ( 2 ) pengobatan arus kas untuk bahan pembelian ( kedua bahan aluminium dan non - aluminium. untuk menghasilkan solusi untuk pertanyaan 3 kami membuat beberapa asumsi, yang jelas diidentifikasi dalam kasus itu sendiri. asumsi ini, bagaimanapun, tidak termasuk dalam kasus awal. ) asumsi alternatif adalah mungkin. ini bagian rangka, oleh karena itu, menggambarkan perlunya asumsi dan analisis sensitivitas ketika mengevaluasi kebijakan operasional, seperti rencana produksi (khususnya, rencana untuk kelancaran produksi.Sebuah jadwal produksi tingkat akan memungkinkan departemen produksi untuk menjaga kualitas yang lebih baik dengan mempekerjakan dan melatih korps pekerja. Penggunaan pekerja paruh waktu dan lembur akan diminimalkan. 3.000 unit per bulan paling dekat mencerminkan proyeksi enam bulan penjualan ( 18.000 diproduksi, 17.500 diproyeksikan untuk dijual ) ; sayangnya, pemotongan bulanan dalam hasil penjualan di stockouts pada bulan Maret, April, dan Mei - musim penjualan perdana. Stockouts juga dapat dilihat sebagai bagian dari strategi, cara untuk mengontrol kualitas produk dan meningkatkan permintaan. Strategi ini digunakan oleh perusahaan-perusahaan seperti Harley Davidson dan Lexus autos. 3.500 unit per bulan, tampaknya lebih masuk akal dari perspektif penjualan dan produksi ( menyelaraskan setidaknya masalah lintas - fungsional dari kedua daerah ). Sayangnya, keuangan masih menderita dari kebutuhan untuk menyimpan dan membiayai persediaan yang berlebihan, yang akan tumbuh menjadi 7.000 trailer dengan 31 Juli. Penyusunan anggaran bahan pembelian dan anggaran kas pada tingkat produksi 3.500 unit, bagaimanapun, mengungkapkan keuntungan besar untuk menjadi diperoleh melalui JIT, penjual perdana, dan kontrol kas.Dengan tingkat produksi di 3.500 trailer per bulan, pembelian dapat menarik vendor utama karena permintaan tingkat dalam aluminium ( 105.000 meter persegi per bulan ). Namun, sebagaimana tercermin dalam anggaran kas, Letsgo akan perlu meminjam dana tambahan dibandingkan dengan situasi yang digambarkan dalam Pertanyaan 2. Sejumlah asumsi eksplisit dibuat tentang bahan dan biaya tenaga kerja dan pembayaran untuk menghasilkan anggaran kas untuk Pertanyaan 3. Siswa mungkin memikirkan cara-cara untuk mengurangi kebutuhan pinjaman terkait dengan tingkat produksi yang direncanakan dari 3.500 unit per bulan.Siswa harus diminta untuk melihat masalah produksi sebagai masalah perusahaan - lebar dengan ketergantungan pada produk musiman tunggal. Solusi jangka panjang terletak baik dengan diversifikasi produk atau produksi dikendalikan dan penjualan ( misalnya, membatasi jumlah trailer yang tersedia ).Penyusunan tiga set belum terhubung terpisah dari produksi, pembelian, dan anggaran kas acquaints siswa dengan kekuatan anggaran sebagai alat perencanaan.

Pertanyaan 4 - MasalahLetsgo menderita pola penjualan berorientasi pelanggan. Pemeriksaan Bukti 1 dalam kasus ini mengungkapkan perubahan signifikan dalam penjualan dari bulan ke bulan. Pada tahun 1997, misalnya, penjualan turun dari tinggi 3.981 Maret yang rendah dari 793 pada bulan Juli, dengan penurunan terbesar ( 1.485 trailer ) terjadi antara bulan April dan Mei. Jenis jadwal permintaan menciptakan masalah yang signifikan untuk produksi, yang mengarah ke masalah kualitas dan kesulitan dalam mengamankan vendor utama.Sebagai departemen individu mencoba untuk berurusan dengan pola penjualan didominasi musiman, tindakan mereka secara tidak sengaja berdampak pada daerah lain dari perusahaan. Sayangnya, sistem bonus individual saat ini hanya cenderung memperburuk masalah. Misalnya, sebagai wakil presiden Letsgo tentang pemasaran berjuang untuk meningkatkan penjualan ( konsisten dengan skema bonus nya ), masalah produksi akan meningkat. Termudah waktu untuk meningkatkan penjualan selama periode permintaan pelanggan yang tinggi. Sebagai marketing melayani pelanggan dalam upaya untuk memperoleh peningkatan penjualan dan bonus 20 %, ayunan bulan akan dibesar-besarkan. Produksi akan mengalami peningkatan masalah kualitas sebagai manajer produksi, Tom Sloan, mencoba untuk berurusan dengan perubahan signifikan dalam tenaga kerja dan tuntutan material. Selanjutnya, ayunan permintaan bahan akan, pada gilirannya, negatif mempengaruhi pembelian, mencegah Vicky Draper dari implementasi JIT. Perdana vendor enggan untuk berurusan dengan perusahaan-perusahaan yang berbeda-beda kebutuhan bahan secara dramatis, karena fluktuasi tersebut juga mempengaruhi penjadwalan produksi mereka.Sulit, jadwal produksi Letsgo yang berorientasi pelanggan memiliki dampak negatif pada pemasok, pekerja, manajer, dan pelanggan. Permintaan tenaga kerja tidak merata menyebabkan lembur yang berlebihan dan tidak efisiennya penggunaan tenaga kerja, yang mengarah ke masalah kualitas. Kebutuhan bahan tidak merata juga dapat mempengaruhi kualitas, sebagai Draper mencoba untuk mengisi pesanan bahan sambil menurunkan biaya dalam upaya untuk mendapatkan bonus nya.

Rekomendasi

Letsgoharusmengembangkanpengukurankinerjadenganpertimbangankualitas yang kuat.Sementaraskema bonus saatinimunculuntukmelayanipelanggan, denganmendorongpenjualanuntukmemenuhisemuapermintaanpelanggan, dampak yang sebenarnyapadapelanggannegatifkarenamasalahkualitas.

Letsgodapatmelayanikebutuhanpelanggan, terutama yang senior, yang menghargaikualitas, denganmenerapkanukurankinerja yang berkualitas reward.Selainitu, kinerjasemuamanajerharusdievaluasidalamsuasanatim.Sebagaicontoh, skema bonus yang efektifakanmenghadiahiwakilpresidenpenjualandanpemasaranuntukkeuntungandalamkualitas yang diciptakanolehpergeseranke flat produksijadwal saran dalamPertanyaan 3. Dengancara yang sama, manajerproduksiharusdihargai, sebagian, untukpenghematanbiaya JIT, kontrak vendor yang utama yang bisa, praktis, dapatdiperolehhanyaketikajadwalproduksikonsisten.

Varying productionCase 8-2: Letsgo Travel TrailersData Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =1,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Question 2 SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetBudgeted sales (units)2,5004,0005,0003,0002,0001,00017,500Add: Desired ending inventory1,1001,300900700500500500Total needs3,6005,3005,9003,7002,5001,50018,000Less: Beginning inventory (units)1,0001,1001,3009007005001,000Required Production2,6004,2004,6002,8001,8001,00017,000Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)2,6004,2004,6002,8001,8001,00017,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)78,000126,000138,00084,00054,00030,000510,000Plus: Desired ending inventory of materials63,00069,00042,00027,00015,00015,00015,000Total material needs141,000195,000180,000111,00069,00045,000525,000Less: Beginning inventory39,00063,00069,00042,00027,00015,00039,000Total units of sheet metal purchases102,000132,000111,00069,00042,00030,000486,000Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$612,000$792,000$666,000$414,000$252,000$180,000$2,916,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100$850,000$870,000$1,320,000$1,110,000$690,000$420,000$5,260,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000$4,080,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,694,000$3,163,000$3,734,000$2,957,000$2,272,000$1,810,000$16,630,000Estimated cash balance before financing/investements:-$892,500-$533,900-$483,900$793,100$1,678,100$585,100$645,100Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$0$0$0$0$0$800,000(2) Required to bring end. Bal. to $100k min.$193,000$634,000$584,000$0$0$0$1,411,000Principal repayments (end of period)$0$0$0$693,000$1,518,000$0$2,211,000Interest expense$0Total financing effects$993,000$634,000$584,000($693,000)($1,518,000)$0$0Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$160,100$585,100$645,100Excess cash (to be invested)$0$0$0$0$60,000$485,000$545,000Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined

Production of 3,000 per monthQuestion 3 (a)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMerchandise purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Solution 3,000 per monthSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,0003,0003,0003,0003,0003,00018,000Add: Beginning inventory (units)1,0001,500500-1,500-1,500-5001,000Total units available4,0004,5003,5001,5001,5002,50019,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory1,500500-1,500-1,500-5001,5001,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)Sheet metal needed per trailer (sq. yds.)Total metal needed for production (sq. yds.)Plus: Desired ending inventory of materialsTotal material needsLess: Beginning inventoryTotal units of sheet metal purchasesCost per unit (sq. yard)Budgeted sheet metal purchases ($)Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balanceAdd: estimated cash collections:Nov salesDec salesJan salesFeb salesMar salesApril salesMay salesJune salesTotal cash collectionsTotal cash availableWagesHeat, light, and powerEquipment rentalEquipment purchasesSelling & admin.Total cash disbursementsEstimated cash balance before financing/investements:Financing:Borrowings (beginning of period):(1) Current loan request from the bank(2) Required to bring end. Bal. to $100k min.Principal repayments (end of period)Interest expenseTotal financing effectsEstimated ending cash balance before investmentsExcess cash (to be invested)Estimated ending cash balance

To be determinedGiven the stockout situation associated with a constant production level of 3,000 units per month, it does not make sense to complete the rest of the requested budgets.

Production of 3,500 per monthQuestion 3 (b)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Totals23,32228,000Budgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,500unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,500trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted labor (wage) cost per unit, January-June (original case facts):Ratio of Total Material Purchases to Aluminum Purchases:Total Wages Paid, January-June period =$4,080,000Total Material Purchases, March through June =$3,540,000Total Units Produced, January-June period =17,000Total Aluminum Purchases, Feb. through May =2124000Average Wage Cost per Unit Produced =$240Ratio of Total Purchases to Alum. Purchases =166.67%Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchasesWages$840,000$840,000$840,000$840,000$840,000$840,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Solution for 3,500 per monthSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,5003,5003,5003,5003,5003,50021,000Add: Beginning inventory (units)1,0002,0001,50005002,0001,000Total units available4,5005,5005,0003,5004,0005,50022,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory2,0001,50005002,0004,5004,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)3,5003,5003,5003,5003,5003,50021,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)105,000105,000105,000105,000105,000105,000630,000Plus: Desired ending inventory of materials52,50052,50052,50052,50052,50052,50052,500Total material needs157,500157,500157,500157,500157,500157,500682,500Less: Beginning inventory39,00052,50052,50052,50052,50052,50039,000Total units of sheet metal purchases118,500105,000105,000105,000105,000105,000643,500Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$711,000$630,000$630,000$630,000$630,000$630,000$3,861,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100Non-aluminum materials$474,000$420,000$420,000$420,000$420,000Aluminum (Sheet Metal)$711,000$630,000$630,000$630,000$630,000Total Materials purchases$850,000$1,185,000$1,050,000$1,050,000$1,050,000$1,050,000$6,235,000Wages$840,000$840,000$840,000$840,000$840,000$840,000$5,040,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,910,000$3,310,000$3,200,000$3,065,000$3,040,000$3,040,000$18,565,000Estimated cash balance before financing/investements:-$1,108,500-$680,900$50,100$685,100$910,100-$644,900-$1,289,900Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$800,000(2) Required to bring end. Bal. to $100k min.$409,000$781,000$50,000$0$0$745,000$1,985,000Principal repayments (end of period)000$585,000$810,0000$1,395,000Interest expenseTotal financing effects$1,209,000$781,000$50,000($585,000)($810,000)$745,000$1,390,000Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$100,100$100,100$100,100Excess cash (to be invested)$0$0$0$0$0$0$0Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined

Varying productionCase 8-2: Letsgo Travel TrailersData Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =1,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Question 2 SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetBudgeted sales (units)2,5004,0005,0003,0002,0001,00017,500Add: Desired ending inventory1,1001,300900700500500500Total needs3,6005,3005,9003,7002,5001,50018,000Less: Beginning inventory (units)1,0001,1001,3009007005001,000Required Production2,6004,2004,6002,8001,8001,00017,000Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)2,6004,2004,6002,8001,8001,00017,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)78,000126,000138,00084,00054,00030,000510,000Plus: Desired ending inventory of materials63,00069,00042,00027,00015,00015,00015,000Total material needs141,000195,000180,000111,00069,00045,000525,000Less: Beginning inventory39,00063,00069,00042,00027,00015,00039,000Total units of sheet metal purchases102,000132,000111,00069,00042,00030,000486,000Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$612,000$792,000$666,000$414,000$252,000$180,000$2,916,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100Less: cash disbursements:Total Mataerials purchases$850,000$870,000$1,320,000$1,110,000$690,000$420,000$5,260,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000$4,080,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,694,000$3,163,000$3,734,000$2,957,000$2,272,000$1,810,000$16,630,000Estimated cash balance before financing/investements:-$892,500-$533,900-$483,900$793,100$1,678,100$585,100$645,100Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$0$0$0$0$0$800,000(2) Required to bring end. Bal. to $100k min.$193,000$634,000$584,000$0$0$0$1,411,000Principal repayments (end of period)$0$0$0$693,000$1,518,000$0$2,211,000Interest expense$0Total financing effects$993,000$634,000$584,000($693,000)($1,518,000)$0$0Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$160,100$585,100$645,100Excess cash (to be invested)$0$0$0$0$60,000$485,000$545,000Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined

Production of 3,000 per monthQuestion 3 (a)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMerchandise purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,0003,0003,0003,0003,0003,00018,000Add: Beginning inventory (units)1,0001,500500-1,500-1,500-5001,000Total units available4,0004,5003,5001,5001,5002,50019,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory1,500500-1,500-1,500-5001,5001,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)Sheet metal needed per trailer (sq. yds.)Total metal needed for production (sq. yds.)Plus: Desired ending inventory of materialsTotal material needsLess: Beginning inventoryTotal units of sheet metal purchasesCost per unit (sq. yard)Budgeted sheet metal purchases ($)Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balanceAdd: estimated cash collections:Nov salesDec salesJan salesFeb salesMar salesApril salesMay salesJune salesTotal cash collectionsTotal cash availableLess: cash disbursements:Total Merchandise purchasesWagesHeat, light, and powerEquipment rentalEquipment purchasesSelling & admin.Total cash disbursementsEstimated cash balance before financing/investements:Financing:Borrowings (beginning of period):(1) Current loan request from the bank(2) Required to bring end. Bal. to $100k min.Principal repayments (end of period)Interest expenseTotal financing effectsEstimated ending cash balance before investmentsExcess cash (to be invested)Estimated ending cash balance

To be determinedGiven the stockout situation associated with a constant production level of 3,000 units per month, it does not make sense to complete the rest of the requested budgets.

Production of 3,500 per monthQuestion 3 (b)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Totals23,32228,000Budgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,500unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,500trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted labor (wage) cost per unit, January-June (original case facts):Ratio of Total Material Purchases to Aluminum Purchases:Total Wages Paid, January-June period =$4,080,000Total Material Purchases, March through June =$3,540,000Total Units Produced, January-June period =17,000Total Aluminum Purchases, Feb. through May =2124000Average Wage Cost per Unit Produced =$240Ratio of Total Purchases to Alum. Purchases =166.67%Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchasesWages$840,000$840,000$840,000$840,000$840,000$840,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,5003,5003,5003,5003,5003,50021,000Add: Beginning inventory (units)1,0002,0001,50005002,0001,000Total units available4,5005,5005,0003,5004,0005,50022,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory2,0001,50005002,0004,5004,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)3,5003,5003,5003,5003,5003,50021,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)105,000105,000105,000105,000105,000105,000630,000Plus: Desired ending inventory of materials52,50052,50052,50052,50052,50052,50052,500Total material needs157,500157,500157,500157,500157,500157,500682,500Less: Beginning inventory39,00052,50052,50052,50052,50052,50039,000Total units of sheet metal purchases118,500105,000105,000105,000105,000105,000643,500Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$711,000$630,000$630,000$630,000$630,000$630,000$3,861,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100Less: cash disbursements:Total Materials purchases:Non-aluminum materials$474,000$420,000$420,000$420,000$420,000Aluminum (Sheet Metal)$711,000$630,000$630,000$630,000$630,000Total Materials purchases$850,000$1,185,000$1,050,000$1,050,000$1,050,000$1,050,000$6,235,000Wages$840,000$840,000$840,000$840,000$840,000$840,000$5,040,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,910,000$3,310,000$3,200,000$3,065,000$3,040,000$3,040,000$18,565,000Estimated cash balance before financing/investements:-$1,108,500-$680,900$50,100$685,100$910,100-$644,900-$1,289,900Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$800,000(2) Required to bring end. Bal. to $100k min.$409,000$781,000$50,000$0$0$745,000$1,985,000Principal repayments (end of period)000$585,000$810,0000$1,395,000Interest expenseTotal financing effects$1,209,000$781,000$50,000($585,000)($810,000)$745,000$1,390,000Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$100,100$100,100$100,100Excess cash (to be invested)$0$0$0$0$0$0$0Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined

Varying productionCase 8-2: Letsgo Travel TrailersData Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =1,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Question 2 SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetBudgeted sales (units)2,5004,0005,0003,0002,0001,00017,500Add: Desired ending inventory1,1001,300900700500500500Total needs3,6005,3005,9003,7002,5001,50018,000Less: Beginning inventory (units)1,0001,1001,3009007005001,000Required Production2,6004,2004,6002,8001,8001,00017,000Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)2,6004,2004,6002,8001,8001,00017,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)78,000126,000138,00084,00054,00030,000510,000Plus: Desired ending inventory of materials63,00069,00042,00027,00015,00015,00015,000Total material needs141,000195,000180,000111,00069,00045,000525,000Less: Beginning inventory39,00063,00069,00042,00027,00015,00039,000Total units of sheet metal purchases102,000132,000111,00069,00042,00030,000486,000Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$612,000$792,000$666,000$414,000$252,000$180,000$2,916,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100$850,000$870,000$1,320,000$1,110,000$690,000$420,000$5,260,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000$4,080,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,694,000$3,163,000$3,734,000$2,957,000$2,272,000$1,810,000$16,630,000Estimated cash balance before financing/investements:-$892,500-$533,900-$483,900$793,100$1,678,100$585,100$645,100Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$0$0$0$0$0$800,000(2) Required to bring end. Bal. to $100k min.$193,000$634,000$584,000$0$0$0$1,411,000Principal repayments (end of period)$0$0$0$693,000$1,518,000$0$2,211,000Interest expense$0Total financing effects$993,000$634,000$584,000($693,000)($1,518,000)$0$0Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$160,100$585,100$645,100Excess cash (to be invested)$0$0$0$0$60,000$485,000$545,000Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined

Production of 3,000 per monthQuestion 3 (a)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Variable component of targeted ending inventory (% of next month's sales) =20%Totals23,32228,000Fixed component of targeted ending inventory (in units) =300unitsBudgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,000unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,000trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMerchandise purchases$870,000$1,320,000$1,110,000$690,000$420,000$330,000Wages$624,000$1,008,000$1,104,000$672,000$432,000$240,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000Solution 3,000 per monthSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,0003,0003,0003,0003,0003,00018,000Add: Beginning inventory (units)1,0001,500500-1,500-1,500-5001,000Total units available4,0004,5003,5001,5001,5002,50019,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory1,500500-1,500-1,500-5001,5001,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)Sheet metal needed per trailer (sq. yds.)Total metal needed for production (sq. yds.)Plus: Desired ending inventory of materialsTotal material needsLess: Beginning inventoryTotal units of sheet metal purchasesCost per unit (sq. yard)Budgeted sheet metal purchases ($)Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balanceAdd: estimated cash collections:Nov salesDec salesJan salesFeb salesMar salesApril salesMay salesJune salesTotal cash collectionsTotal cash availableWagesHeat, light, and powerEquipment rentalEquipment purchasesSelling & admin.Total cash disbursementsEstimated cash balance before financing/investements:Financing:Borrowings (beginning of period):(1) Current loan request from the bank(2) Required to bring end. Bal. to $100k min.Principal repayments (end of period)Interest expenseTotal financing effectsEstimated ending cash balance before investmentsExcess cash (to be invested)Estimated ending cash balance

To be determinedGiven the stockout situation associated with a constant production level of 3,000 units per month, it does not make sense to complete the rest of the requested budgets.

Production of 3,500 per monthQuestion 3 (b)Data Input AreaExhibit 1: Actual and Projected Sales in Number of Trailers199219931994199519961997Actual sales13,76514,88015,99117,80919,63423,32219981999200020012002Projected sales28,00033,60040,32048,38458,060Monthly Sales Breakdowns for 1997 (actual) and 1998 (projected):19971998ActualProjectedActual sales dollars for last two months of 1997 and budgeted salesJanuary1,9832,500dollars for the first six months of 1998 are as follows:February3,2184,000March3,9815,000November 1997 (actual)$1,439,000April3,2403,000December 1997 (actual)$2,131,000May1,7552,000January 1998 (budgeted)$2,500,000June9011,000February 1998 (budgeted)$4,000,000July7631,000March 1998 (budgeted)$5,000,000August6111,000April 1998 (budgeted)$3,000,000September1,6222,000May 1998 (budgeted)$2,200,000October1,6782,000June 1998 (budgeted)$1,100,000November1,4392,000December2,1312,500Totals23,32228,000Budgeted inventory, 12-31-971,000unitsBudgeted production (constant per month) =3,500unitsSheet Metal (aluminum) needed per trailer(sq. yds.) =30Targeted materials ending inventory (sq. yds.) =50%times next month's production needsBudgeted production, July =3,500trailersMaterials inventory (sq. yds.), January 1st =39,000Budgeted materials cost/sq. yd. =$6.00Cash Balance, January 1 =$100,000Minimum cash balance required =$100,000Pattern of cash collections (sales on account):Collected in month of sales =25%Collected in month after month of sales =10%Collected in second month following month of sales =60%Estimated Uncollectible accounts =5%Balance of Accounts Payable, 12-31-97 (merchandise) =$850,000Budgeted labor (wage) cost per unit, January-June (original case facts):Ratio of Total Material Purchases to Aluminum Purchases:Total Wages Paid, January-June period =$4,080,000Total Material Purchases, March through June =$3,540,000Total Units Produced, January-June period =17,000Total Aluminum Purchases, Feb. through May =2124000Average Wage Cost per Unit Produced =$240Ratio of Total Purchases to Alum. Purchases =166.67%Budgeted expenses:JanuaryFebruaryMarchAprilMayJuneMaterials purchasesWages$840,000$840,000$840,000$840,000$840,000$840,000Heat, light, power$130,000$195,000$220,000$135,000$110,000$110,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000Depreciation$250,000$250,000$250,000$275,000$275,000$275,000Selling & administrative expenses$400,000$400,000$400,000$400,000$400,000$400,000SolutionSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalProduction BudgetProduction (constant per month)3,5003,5003,5003,5003,5003,50021,000Add: Beginning inventory (units)1,0002,0001,50005002,0001,000Total units available4,5005,5005,0003,5004,0005,50022,000Less: Budgeted sales2,5004,0005,0003,0002,0001,00017,500Ending inventory2,0001,50005002,0004,5004,500Purchases Budget--Sheet Metal (aluminum)Six-MonthJanuaryFebruaryMarchAprilMayJuneTotalTrailer production (units)3,5003,5003,5003,5003,5003,50021,000Sheet metal needed per trailer (sq. yds.)30303030303030Total metal needed for production (sq. yds.)105,000105,000105,000105,000105,000105,000630,000Plus: Desired ending inventory of materials52,50052,50052,50052,50052,50052,50052,500Total material needs157,500157,500157,500157,500157,500157,500682,500Less: Beginning inventory39,00052,50052,50052,50052,50052,50039,000Total units of sheet metal purchases118,500105,000105,000105,000105,000105,000643,500Cost per unit (sq. yard)$6.00$6.00$6.00$6.00$6.00$6.00$6.00Budgeted sheet metal purchases ($)$711,000$630,000$630,000$630,000$630,000$630,000$3,861,000Cash budgetSix-MonthJanuaryFebruaryMarchAprilMayJuneTotalBeginning cash balance$100,000$100,500$100,100$100,100$100,100$100,100$100,000Add: estimated cash collections:Nov sales$1,439,000$863,400$863,400Dec sales$2,131,000$213,100$1,278,600$1,491,700Jan sales$2,500,000$625,000$250,000$1,500,000$2,375,000Feb sales$4,000,000$1,000,000$400,000$2,400,000$3,800,000Mar sales$5,000,000$1,250,000$500,000$3,000,000$4,750,000April sales$3,000,000$750,000$300,000$1,800,000$2,850,000May sales$2,200,000$550,000$220,000$770,000June sales$1,100,000$275,000$275,000Total cash collections$1,701,500$2,528,600$3,150,000$3,650,000$3,850,000$2,295,000$17,175,100Total cash available$1,801,500$2,629,100$3,250,100$3,750,100$3,950,100$2,395,100$17,275,100Non-aluminum materials$474,000$420,000$420,000$420,000$420,000Aluminum (Sheet Metal)$711,000$630,000$630,000$630,000$630,000Total Materials purchases$850,000$1,185,000$1,050,000$1,050,000$1,050,000$1,050,000$6,235,000Wages$840,000$840,000$840,000$840,000$840,000$840,000$5,040,000Heat, light, and power$130,000$195,000$220,000$135,000$110,000$110,000$900,000Equipment rental$390,000$390,000$390,000$340,000$340,000$340,000$2,190,000Equipment purchases$300,000$300,000$300,000$300,000$300,000$300,000$1,800,000Selling & admin.$400,000$400,000$400,000$400,000$400,000$400,000$2,400,000Total cash disbursements$2,910,000$3,310,000$3,200,000$3,065,000$3,040,000$3,040,000$18,565,000Estimated cash balance before financing/investements:-$1,108,500-$680,900$50,100$685,100$910,100-$644,900-$1,289,900Financing:Borrowings (beginning of period):(1) Current loan request from the bank$800,000$800,000(2) Required to bring end. Bal. to $100k min.$409,000$781,000$50,000$0$0$745,000$1,985,000Principal repayments (end of period)000$585,000$810,0000$1,395,000Interest expenseTotal financing effects$1,209,000$781,000$50,000($585,000)($810,000)$745,000$1,390,000Estimated ending cash balance before investments$100,500$100,100$100,100$100,100$100,100$100,100$100,100Excess cash (to be invested)$0$0$0$0$0$0$0Estimated ending cash balance$100,500$100,100$100,100$100,100$100,100$100,100$100,100

To be determined