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35 cost to produce (per unit)

10000 monthly costs


55 selling costs (per unit)

VARIABLE COSTS
FIXED COSTS

Medieval Adventures Company BALANCE SHEET


ASSETS
Cash
146,250
A/C
68,750
Inventory
35,000
250,000
EQUITIES
Common Stock 250,000
Retained Earnings
0
250,000

500
750
1000
500
3000
5000

November sales
december sales
Expected January Sales
increases every month after that!!
expected May sales!
expected September sales

30 days in advanced of predicted sales


COSTS PAID IN CASH IN THE MONTH IN WHICH THEY WERE INCURRED.
DID NOT STRICTLY ENFORCE CREDIT TERMS
60000 Profit by March 31 end.
BANK BALANCE WAS ALMOST ZERO SO MATERIAL COULD NOT BE PURCHASED.
NEEDED TO PURCHASE MORE CASH

Medieval

Monthly
October
November
December
January
February
March
April
May
June
July
August
September
October

Adventures Company

Unit Sales
??
500
750
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500

Production

Sales Revenue

Variable
Production Costs

??
750
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000

$27,500.00
$41,250.00
$55,000.00
$82,500.00
$110,000.00
$137,500.00
$165,000.00
$192,500.00
$220,000.00
$247,500.00
$275,000.00
$302,500.00

$26,250.00
$35,000.00
$52,500.00
$70,000.00
$87,500.00
$105,000.00
$122,500.00
$140,000.00
$157,500.00
$175,000.00
$192,500.00
$210,000.00

What We

Know:

Unit Cost
Unit Selling
Monthly
Opening
Products
Payments

To Produce
Price
Fixed
Capital
Made One
Made By

Costs
$10,000.00
(cash)
$250,000.00
Month Prior To Shipping (Inventory)
Customers 30-60 days
After Sale

Month
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct

Cash
A/R
Inventory
Assets
$146,250.00
$68,750.00
$35,000.00
$250,000.00
$111,250.00
$96,250.00
$52,500.00
$260,000.00
$72,500.00 $137,500.00
$70,000.00
$280,000.00
$30,000.00 $192,500.00
$87,500.00
$310,000.00
-$2,500.00 $247,500.00
$105,000.00
$350,000.00
-$25,000.00 $302,500.00
$122,500.00
$400,000.00
-$37,500.00 $357,500.00
$140,000.00
$460,000.00
-$40,000.00 $412,500.00
$157,500.00
$530,000.00
-$32,500.00 $467,500.00
$175,000.00
$610,000.00
-$15,000.00 $522,500.00
$192,500.00
$700,000.00
$12,499.00 $577,500.00
$210,000.00
$799,999.00

35
55

(Accts Rec)

Q1
-$40,000.00 would be needed for a loan starting in MARCH/APRIL timeframe
Starting in August they can cover their cash problem.

Q2
Because they are paying costs IMMEDIATELY, while waiting 2 months for cash coming in. They could have avoided
Q3
Calculate CF with indirect method

Fixed Costs

$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,000.00
$10,001.00

Monthly Cash
Monthly Income Collections

$0.00
$5,000.00
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
$80,000.00
$90,000.00
$99,999.00

$27,500.00
$41,250.00
$55,000.00
$82,500.00
$110,000.00
$137,500.00
$165,000.00
$192,500.00
$220,000.00
$247,500.00

Monthly Cash
Flow

-$35,000.00
-$38,750.00
-$42,500.00
-$32,500.00
-$22,500.00
-$12,500.00
-$2,500.00
$7,500.00
$17,500.00
$27,499.00

Notes Pay
Stock
R/E
L+OE
$0.00
$250,000.00
$0.00
$250,000.00
$0.00
$250,000.00
$10,000.00
$260,000.00
$0.00
$250,000.00
$30,000.00
$280,000.00
$0.00
$250,000.00
$60,000.00
$310,000.00
$0.00
$250,000.00
$100,000.00
$350,000.00
$0.00
$250,000.00
$150,000.00
$400,000.00
$0.00
$250,000.00
$210,000.00
$460,000.00
$0.00
$250,000.00
$280,000.00
$530,000.00
$0.00
$250,000.00
$360,000.00
$610,000.00
$0.00
$250,000.00
$450,000.00
$700,000.00
$0.00
$250,000.00
$549,999.00
$799,999.00

CASH BUDGET

$0.00
$0.00
$35,000.00
$38,750.00
$42,500.00
$32,500.00
$22,500.00
$12,500.00
$2,500.00
-$7,500.00
-$17,500.00
-$27,499.00

DERIVED
CASH
FLOW-->

ng in. They could have avoided this by being less lax with cash receivables.

Deferred
Net Income Taxes
A/R

$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$99,999

$0
$0
$0
$0
$0
$0
$0
$0

Prepaid
Expenses Payables Disposal

Inv

-$55,000
-$55,000
-$55,000
-$55,000
-$55,000
-$55,000
-$55,000
-$55,000

-$17,500
-$17,500
-$17,500
-$17,500
-$17,500
-$17,500
-$17,500
-$17,500

0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0

$0
$0
$0
$0
$0
$0
$0
$0

Cash Flow

-$42,500
-$32,500
-$22,500
-$12,500
-$2,500
$7,500
$17,500
$27,499