Exercise 1: Schedule of Expected Cash Collection

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Strategic Cost

Exercise 1: Schedule of Expected Cash Collection


Requirement 1

Sales July August September Total


May 43,000 - - 43,000
June 378,000 54,000 - 432,000
July 120,000 420,000 60,000 600,000
August - 180,000 630,000 810,000
September - - 100,000 100,000
Total Cash Collection 541,000 654,000 790,000 1,985,000

Requirement 2
Accounts Receivable as of September
Sales from August 90,000
Sales from September 350,000
50,000 400,000
Total Accounts Receivable 490,000
Strategic Cost
July Semptember Quarter
Budgeted sale 30,000 45,000 60,000 135,000
Add: Ending inventory 4,500 6,000 5,000 5,000
Total needs 34,500 51,000 65,000 140,000
Less: Beg. Inventory (3,000) (4,500) (6,000) (3,000)
Required Production 31,500 46,500 59,000 137,000
Strategic Cost
Year 2 Year 3
First Second Third Fourth First
Calculator produced 60,000 90,000 150,000 100,000 80,000
Multiply: Small chips per calculator
3 3 3 3 3
Total production need- Chips 180,000 270,000 450,000 300,000 240,000

Year 2 Year 3
First Second Third Fourth First
Production need- Chips 180,000 270,000 450,000 300,000 1,200,000
Add: Ending inventory- Chips 54,000 90,000 60,000 48,000 48,000
Total need- Chips 234,000 360,000 510,000 348,000 1,248,000
Less: Beginning inventory- Chips (36,000) (54,000) (90,000) (60,000) (36,000)
Required purchses- Chips 198,000 306,000 420,000 288,000 1,212,000
Multiply: Cost per Chips 200 200 200 200 200
Cost of Purchases 39,600,000 61,200,000 84,000,000 57,600,000 242,400,000
Strategic Cost

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year


Units to be produced 5,000 4,400 4,500 4,900 18,800
Direct Labor-hours 0.40 0.40 0.40 0.40 0.40
Total direct Labor Hours Needed 2,000 1,760 1,800 1,960 7,520
Direct Labor Cost per Hour 11 11 11 11 11
Total Direct Labor Cost 22,000 19,360 19,800 21,560 82,720

Requirement 2
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Units to be produced 5,000 4,400 4,500 4,900 18,800
Direct Labor-hours 0.40 0.40 0.40 0.40 0.40
Total direct Labor Hours Needed 2,000 1,760 1,800 1,960 7,520
Regular Hours Paid 1,800 1,800 1,800 1,800 7,200
Overtime Hours Paid 200 - - 160 360

Wages for Regular Hours 19,800 19,800 19,800 19,800 79,200


Overtime Wages 3,300 - - 2,640 5,940
Total Direct Labor Cost 23,100 19,800 19,800 22,440 85,140
Strategic Cost

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year


Bugeted Direct Labor- Hours 5,000 4,800 5,200 5,400 20,400
Variable Overhead Rate 1.75 1.75 1.75 1.75 1.75
Variable Manufacturing Overhead 8,750 8,400 9,100 9,450 35,700
Fixed Manufacturing Overhead 35,000 35,000 35,000 35,000 140,000
Total Manufacturing Overhead 43,750 43,400 44,100 44,450 175,700
Less: Depreciation (15,000) (15,000) (15,000) (15,000) (60,000)

Cash Disbursement- Manufacturing Overhead 28,750 28,400 29,100 29,450 115,700

Requirement 2
Total Manufacturing Overhead 175,700
Total direct labor-hours for a year 20,400
Manufacturing Overhead rate for the year 8.61
Strategic Cost
1st Quarter 3rd Quarter 4th Quarter Year
Budgeted unit sale 12,000 14,000 11,000 10,000 47,000

Variable selling and administrative expense per unit 2.75 2.75 2.75 2.75 2.75
Variable expense 33,000 38,500 30,250 27,500 129,250

Fiexed andselling administrative expense:


Advertising expense 12,000 12,000 12,000 12,000 48,000
Excutive salaries 40,000 40,000 40,000 40,000 160,000
Depreciation 16,000 16,000 16,000 16,000 64,000
Insurance - 6,000 - 6,000 12,000
Property taxes - - 6,000 - 6,000
68,000 74,000 74,000 74,000 290,000
Total fixed and selling administrative expense

Total selling andadministrative expense 101,000 112,500 104,250 101,500 419,250


Strategic Cost

Quarter (000 ommited)


1 2 3 4 Year
Cash balance, beginning 9 5 5 5 9
Add: Collection from customer 76 90 125 100 391
Total cash available 85 95 130 105 400
Less disbursement:
Purchaseof inventory 40 58 36 32 166
Operating expenses 36 42 54 48 180
Equipment purchases 10 8 8 10 36
Dividends 2 2 2 2 8
Total disbursements 88 110 100 92 390
Excess (deficiency) of cash
available over disbursements (3) (15) 30 13 10

Financing:
Borrowings 8 20 - - 28
Repayments (including
interest) - - (25) (7) (32)
Total financing 8 20 (25) (7) (4)
Cash balance, ending 5 5 5 6 6

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