Financial Management Questionnaire Assignment Essay
Order ID:89JHGSJE83839 Style:APA/MLA/Harvard/Chicago Pages:5-10 Instructions:
Financial Management Questionnaire Assignment Essay
Prior to the COVID-19 Pandemic, Wallflower Merchandise Ltd was experiencing an upswing in the demand for their newly launched product. Even though they have closed down operations due to the pandemic, they want to be ready to start up operations again once it is safe to do so.
They have asked you to do an analysis based on the last 3 months of operations before they shut down:Wallflower Merchandise LtdIncome StatementsFor the 3 months ended March 31, 2020JanFebMarSales in Units2,0002,2502,500Sales$ 200,000$ 225,000$ 250,000Cost of Goods Sold$ 120,000$ 135,000$ 150,000Gross Margin$ 80,000$ 90,000$ 100,000Selling and Admin Expenses:Rent Expense$ 10,000$ 10,000$ 10,000Shipping Expenses$ 10,000$ 11,000$ 12,000Salaries and Commissions$ 27,000$ 30,000$ 33,000Consulting Expense$ 4,000$ 4,000$ 4,000Promotional Expense$ 8,000$ 8,000$ 8,000Total Selling and Admin Expenses$ 59,000$ 63,000$ 67,000Net Operating Income$ 21,000$ 27,000$ 33,000
Required:
Identify each of the company’s expenses as either variable, fixed or mixed. (3 marks)
For the mixed expenses, state the cost formula, while showing all of your work. (4 marks)
While the company is shut down for COVID, what is the minimum value for the total monthly expenses that they will incur? (1 mark)
Friedman Inc. is developing a plan to finance its asset base. The firm has $3,750,000 in current assets, of which 20% are permanent, and $9,000,000 in capital assets. Long-term rates are currently 9.0%%, while short-term rates are at 6.0%%. Friedman’s tax rate is 20%.
Required:
a) Construct a conservative financing plan with 75% of assets financed by long-term sources. If Friedman’s earnings before interest and taxes are $4,500,000, what will their earnings after tax be? Round to the nearest dollar. (3 marks)An alternative and more aggressive plan would be to finance 55% of total assets with long-term financing. Assuming that EBIT was again $4,500,000, what will net income be under this alternative? Round to the nearest dollar. (3 marks)
Which plan (conservative or aggressive) is riskier? Explain. (2 marks)
The Sunset Corporation manufactures 10,000 units of Part 2461. At this level of activity, the cost per unit is as follows:Direct materials14.4Direct labour21Variable manufacturing overhead9.6Fixed manufacturing overhead25Total cost per part70
An outside supplier has offered to sell them 10,000 units of Part 2461 each year for $54 per unit. If Sunset Corporation accepts this offer, the facilities now being used to manufacture Part 2461 could be rented to another company at an annual rental of $150,000. However, Sunset Company has determined that $15 of the fixed manufacturing overhead being applied to Part 2461 would not go away even if the part was purchased from the outside supplier.
Required:
To assist the manager in making a decision, prepare an analysis showing the total cost of each alternative. Recommend if Sunset Corporation should accept the outside supplier’s offer. Show all of your work (10 marks)
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Financial Management Questionnaire Assignment Essay