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ACC10707 Session 2, 2020 Assessment 3Business Analysis and Interpretation1. An Enterprises has the following business transaction estimates relating to the final quarter of 2020.$ $ $October November DecemberCredit Sales 105600 112000 138000Cash Sales 21200 26420 31200Receipts from Accounts Receivable `1. calculate calculate calculateWages 28200 28200 28200Office Furniture 6000 7800 0Prepayments 0 0 5275Administrative Expense 10000 10000 11900Depreciation on Office Furniture 2500 2500 2500Receipt of Loan 0 100000 0Credit Purchases 42000 42000 58000Payments of Accounts Payable 2. calculate calculate calculateAccrued Expenses 0 0 6700Notes1.Actual Receipts (money in) from Accounts Receivable are 70% of the previousmonths Credit Sales and the balance of 30% owing is received in the followingmonth. For example if we had Credit Sales of $100000 in January we wouldexpect to receive 70% of that $100000 in February and the balance (30%) inMarch.Credit Sales for September 2020 were $80,000 as they were in August 2020.Cash Sales were $16,500 in August 2020 and $18,000 in September of 2020.2. Payment of Accounts Payable is paid 60% of purchases in the month ofpurchase and the remaining 40% in the month following. Purchases inSeptember 2020 were $36,000.3. The cash balance at 1 October 2020 was $52,890RequiredPrepare a cash budget month by month for the quarter ending 31 December 2020.Note that marks will be deducted for each incorrect posting to the cash budget.(15 Marks).2. A bicycle company is considering a range of bicycle offerings to extend its current single range. A year 1 estimate of expanding their bicycle range is as follows:Bicycle 1 Bicycle 2 Bicycle 3Volume 1,600 1,600 800Selling price $500 $1200 $900Variable cost/unit $350 $620 $590Fixed assembly costs $90,000 $136,000 $164,000Additional information (further fixed costs)Sales and Marketing $172,000Administration $190,000Occupancy & Rent $376,000Required:a. Calculate the weighted average contribution margin (WACM) per bike.b. Determine the break-even level of bikes overall and per bike-type.c. The company is concerned about the estimates around price volume and costs. The company is thinking about raising the price of Bicycle 1 by 15% with an impact of reducing sales volume by 10%. At the same time, the company would like to try decreasing the price of bicycle 2 by 15% with an increase in sales units of 20%.What’s the likely impact on planned profits? Show workings. What do you advise?Show all calculations (15 Marks).3. A company owned exclusively by residents in the New South Wales coastal communityof Coffs Harbour is offered three projects for which the cash flows are as per the tablebelow in thousands of dollars. The directors work on 12 per cent as their RRR. Assumeall cash flows occur at the end of the relevant years. There are no salvage values factoredinto the expected cash flows, and no salvage values are expected.Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5A -900 300 260 300 220 140B -800 180 180 240 260 260C -820 500 120 120 120 380Required:a. Calculate the Accounting Rate of Return, Payback Period and Net Present Value for each project. Show workings.b. Rank the projects and advise the directors which projects, if any, to accept. Giveyour reasons.Show all calculations (15 Marks).
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