Chapter 11. Ch 11-18 Build a Model

Note: You can assume that variable costs are constant so that the average of them is the variable cost relevant for a change in sales.

The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

I have project that the first-year revenue of $20,000 and a 15% growth rate for the next two years. The complete cost of sales is projected to average 50% of gross sales, including 40% for the purchase of equipment and 10% for the purchase of additional items. Net income is projected to reach $70,000 in four three as sales increase and operations become more

12) Suppose a firm has $1500 in variable costs and $500 in fixed costs when it produces 500

Blanco Company estimates that its variable manufacturing overhead (all requiring cash expenditures) is $32 per direct labor hour. The total fixed manufacturing overhead of $1,881,120 per month includes depreciation on the factory building of $120,000 per month and depreciation on the factory equipment of $30,000 per month for total depreciation of $150,000 per month. (Thus, the cash spent for fixed manufacturing overhead is $1,731,120 ($1,881,120 – $120,000 – $30,000) per month.) Cash disbursements for manufacturing overhead occur in the same month in which the company incurs the cost. Be sure to show the calculation of the average predetermined overhead rate for the quarter as a whole only—total budgeted manufacturing overhead cost

In the first 6 months of business, Solomon has only spent $500 on advertising. She intends on increasing her annual budget up to four times for the next year. This gives her $4000 to spend on advertising. One of the emerging trends is creating a website. The website would cost her $2088 to start up and an additional $588 to maintain each year. Exhibit 3 shows calculations of Advertising. The website is a good way to promote the website, offer coupons, have contact information, menu items and prices, and ability to book

From the above information, we can know the expected cash flow, with starting a new racket, bring to us. First of all, we need to know the expected sales and expected variable costs, which are not indicated directly.

The PRECEDE-PROCEED model is a planning model that can be used to design health promotion and education intervention. PRECEDE stands for “Predisposing, Reinforcing, and Enabling Factors in Educational Diagnosis and Evaluation” while PROCEED stands for “Policy, Regulatory, and Organizational constructs in Educational and Environmental Development.” The PRECEDE-PROCEED model is based on the assumption that PROCEED is the treatment plan of the diagnosis established through PRECEDE. In other words, the model proposes an outcome of interest for which an intervention will be designed. This model consists in 8 phases.

One administrator can manage 40 basic servers; e Current consumer price for each Zinc basic server = $1,700; Tronn server = $2,000; f Assume a 50-50 sharing of the savings gain with the customer; VIUP = value-in-use price

a.) Discretionary fixed costs may be altered in the short-term by current managerial decisions; an example can be advertising, training or even development in which a company can always alter these decisions and bring it back later. Committed fixed costs differ due to it being long term and it cannot be reduced in the short-term; such examples are depreciation on buildings

Digging deeper, the first number we examine is how many computer hours PDS has to sell to break even. We will assume the intercompany hours billed at $400 will average 205 per month. The variable costs include power, parts of operation wages, and materials. Next, we calculate the unit contribution (sales – variable cost). The average cost for power is the total 3-month power cost divided by the total time computers were used during this time (total revenue plus service hours) or 5028/1110 = $4.53. Operations cost

Consider a computer manufacturing company. They have a plant that receives an order for 50 computers. They need to determine how much it costs to manufacture these computers.

sales volume ⎞ ⎛ unit variable sales volume ⎞ ⎛ unit fixed ⎜ ⎟ −⎜ ⎟ − ⎜ sales price × ⎟ ⎜ expense × ⎟ expenses = 0 in units ⎠ ⎝ in units ⎠ ⎝

We present four scenarios (modest, reasonable expected, excellent and worst case) in our projections. We project out five years (years 1 to 5). We use the contribution margin income statement format with the financial projections. Variable costs include the materials and variable payroll. Fixed costs include the rent and electricity. Sales and variable costs are based on units or sandwiches and other products sold at the shop.