Budgeting: comprehensive problem Judd’s Reproductions makes reproductions of antique tables and…

Budgeting: comprehensive problem Judd’s Reproductions makes reproductions of antique tables and chairs and sells them through three sales outlets. The product line consists of two styles of chairs, two styles of tables, and three styles of cabinets. Although customers often ask Judd Molinari, the owner/manager of Judd’s Reproductions, to make other products, he does not intend to expand the product line.
The planning group at Judd’s Reproductions prepares a master budget for each fiscal year, which corresponds to the calendar year. It is December 2011, and the planners are completing the master budget for 2012.
Unit prices are $200, $900, and $1,800 for the chairs, tables, and cabinets, respectively. Customers pay (1) by cash and receive a 5% discount, (2) by credit card (the credit card company takes 3% of the revenue as its fee and remits the balance in the month following the month of sale), or (3) on account (only exporters buy on account). The distribution of cash, credit card, and exporter sales is 25%, 35%, and 40%, respectively. Of the credit sales to exporters, Judd’s Reproductions collects 30% in the month following the sale, 50% in the second month following the sale, and 17% in the third month following the sale, with 3% going uncollected. Judd’s Reproductions recognizes the expense of cash discounts, credit card fees, and bad debts in the month of the sale.
Judd’s employs 40 people who work in the following areas: 15 in administration, sales, and shipping; 2 in manufacturing supervision (director and a scheduler); 9 in manufacturing fabrication and assembly (carpenters); and 14 in manufacturing, finishing, and other areas (helpers, cleaners, and maintenance crew).
The carpenter hours required to make the parts for and assemble a chair, table, or cabinet are 0.4, 2.5, and 6, respectively. Production personnel have organized the work so that each carpenter hour worked requires 1.5 helper hours. Therefore, production planners maintain a ratio on average of 1.5 helpers for every carpenter. The company pays carpenters and helpers $24 and $14 per hour, respectively (including all benefits).
Judd’s Reproductions guarantees all employees pay for at least 172 hours per month regardless of the hours of work available. When the employees are not doing their regular jobs, they undertake maintenance, training, community service, and customer relations activities. Judd’s pays each employee weekly for that week’s work. If an employee works 172 hours or less during the month, Judd’s still pays the employee for 172 hours at his or her normal hourly rate. The company pays 150% of the normal hourly rate for every hour over 172 that the employee works during the month. Planners add new carpenters if the projected total monthly overtime is more than 5% of the total regular carpenter hours available. Judd’s has a policy of no employee layoffs. Any required hiring is done on the first day of each month.
For a factory, Judd’s Reproductions rents a converted warehouse that costs $600,000 per year. The company pays rent quarterly beginning January 1 of each year. Judd’s pays other fixed manufacturing costs, which include manufacturing supervision salaries and amount to $480,000 annually, paid in equal monthly amounts.
The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Judd’s recognizes depreciation at the rate of 10% of the year-end balance of the machinery and equipment account. Statistical studies of cost behavior have determined that supplies, variable support, and maintenance costs vary with the number of carpenter hours worked and are $5, $20, and $15 per hour, respectively
The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Judd’s recognizes depreciation at the rate of 10% of the year-end balance of the machinery and equipment account. Statistical studies of cost behavior have determined that supplies, variable support, and maintenance costs vary with the number of carpenter hours worked and are $5, $20, and $15 per hour, respectively
Annual administration salaries, fixed selling costs, and planned advertising expenditures are $300,000, $360,000, and $600,000, respectively. Judd’s Reproductions makes these expenditures in equal monthly amounts. Packaging and shipping costs for chairs, tables, and cabinets are $15, $65, and $135, respectively. Variable selling costs are 6% of each product’s list price. Judd’s Reproductions pays packaging, shipping, and variable selling costs as incurred.
Using its line of credit, Judd’s Reproductions maintains a minimum cash balance of $50,000. All line-of-credit transactions occur on the first day of each month. The bank charges interest on the line-of-credit account balance at the rate of 10% per year. Judd’s pays interest on the first day of each month on the line-of-credit balance outstanding at the end of the previous month. On the first of each month, the bank pays interest at the rate of 3% per year on funds exceeding $50,000 in the company’s cash account at the end of the previous month.

Realized sales for October and November and expected sales for December 2011 appear in the following table:

Sales staff estimates the unit demand for 2012 as follows: chairs, 1,000, plus a random number uniformly distributed between 0 and 50, plus 15% of the previous month’s sales of chairs; tables, 200, plus a random number uniformly distributed between 0 and 20, plus 15% of the previous month’s sales of tables; and cabinets, 100, plus a random number uniformly distributed between 0 and 10, plus 15% of the previous month’s sales of cabinets. This estimation process resulted in the demand forecasts and the sales plan found in the following table:

Planners project the Judd’s Reproductions balance sheet at January 1, 2012, to be as follows:

Required

(Round quantities up in the problem.)

(a) Prepare a sales forecast, staffing plan, production plan, estimated cash flow statement, pro forma income statement for the year ended December 31, 2012, and pro forma balance sheet at December 31, 2012.

(b) The level of bad debts concerns the Judd’s Reproductions controller. If Judd’s insists on cash payments from exporters who would be given the cash discount, the sales staff expects that total sales to exporters in 2012 will fall by 5% (sales in 2011 will not be affected). Based on the effect of this change on profitability, is it desirable? (Round sales forecasts to the nearest unit.)

(c) Ignore the changes described in part b and return to the data in the original example. The sales staff is considering increasing the advertising budget from $600,000 to $900,000 and cutting prices by 5% beginning on January 1, 2012. This should increase sales by 30% in 2012. Based on the effect of this change on profitability, is it desirable? (Round sales forecasts to the nearest unit.)

(d) Is there a criterion other than profitability that may be used to evaluate the desirability of the changes proposed in parts b and c? If yes, what is that criterion, and why is it important? If no, why is profitability the sole relevant criterion?

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Online Academic Experts
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Nursing
Thank you so much for your help! :)
Customer 453167, May 11th, 2022
Psychology
thank you!
Customer 452947, October 21st, 2021
Business Studies
First of all, the writer made sure that he completely understood my assignment and all the guidelines before he began writing. My paper was finished very fast and well before the specified deadline. I thought it was written excellently. He definitely completely grasped the topic. Overall, he is a great writer and I couldn't have asked for better.
Customer 452441, November 29th, 2021
Social Sciences
Very fast report with excellent information on the topic. Thank you for your speedy service in such a short time.
Customer 453213, June 15th, 2022
Business Management
Awesome job, Thank you
Customer 453201, June 12th, 2022
Sociology
THANK YOUUUUU
Customer 452591, March 18th, 2021
Business Studies
Thank you very much for a good job done and a quick turn around time.
Customer 452615, March 31st, 2021
Nursing
Thank you
Customer 453087, March 5th, 2022
Business and administrative studies
excellent
Customer 453201, October 22nd, 2022
Business Studies
Thank you so much! I had to take my dog to the ER and had no time for the assignment. I really appreciate your help! I can't thank you enough! I really appreciate the work and integrity put into it. Thank you for taking it seriously and not bullshiting the paper.
Customer 452815, July 26th, 2021
Nursing
Paper much better compared to the one prior revision request. References need to be no more than the past 5 years.
Customer 452547, July 20th, 2021
Economics
For some reason I did not get an email that the order was done, but it was on time regardless
Customer 453291, October 16th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Live ChatWhatsApp