Identify and strengths and/or weakness in analysis

Assignment Help Financial Accounting

Reference no: EM1310214

You have been asked to attend the corporate meeting next week to discuss the performance of your division. To help you prepare for the meeting, you requested the following information from the Chief Financial Officer.

Balance Sheet

	A	B	C	D	E
1	Assets	2008
2	Cash	$14,000
3	Short-term investments.	71,632
4	Accounts receivable	878,000
5	Inventories	1,716,480
6	Total current assets	$2,680,112
7	Gross fixed assets	1,220,000
8	Less: accumulated depreciation	383,160
9	Net fixed assets	$836,840
10	Total assets	$3,516,952
11
12	Liabilities and equity	2008
13	Accounts payable	$359,800
14	Notes payable	300,000
15	Accruals	380,000
16	Total current liabilities	$1,039,800
17	Long-term debt	500,000
18	Common stock (100,000 shares)	1,680,936
19	Retained earnings	296,216
20	Total equity	$1,977,152
21	Total liabilities and equity	$3,516,592
22
23		2008
24	Sales	$7,035,600
25	Cost Of Goods Sold	5,800,000
26	Selling and Administrative Expenses	612,960
27	Depreciation	120,000
28	Total Operating Costs	$6,532,960
29	EBIT	$502,640
30	Interest Expense	80,000
31	EBT	$422,640
32	Taxes (40%)	169,056
33	Net Income	$253,584
34
35		2008
36	Stock Price	$6.00
37	Shares Outstanding	100,000
38	EPS	($0.95)
39	DPS	$0.11
40	Tax Rate	40%
41	Book Value Per Share	$7.91
42	Lease Payments	$40,000
43
44	Statement of retained earnings, 2008
45	Balance of retained earnings, 12/31/2007	$203,768
46	add: net income, 2008	($95,136)
47	less: dividend paid, 2008	($11,000)
48	Balance of retained earnings, 12/31/2008	$97,632
49
50	Master Budget for 2008
51	Sales (350,000 units of A @ $15 and 350,000 units of B @ $5)	$7,000,000
52	Cost of goods sold	5,810,000
53	Contribution margin	$1,190,000
54	Selling and Administrative expenses	155,000
55	Operating income	$1,035,000
56
57	Standard variable manufacturing cost per unit:
58		Product A		Product B
59	Direct Materials	10 pieces @ $.50	$5.00 per unit	5 pounds @ $.30	$1.50 per unit
60	Direct Labor	1 hour @ $3.00	$3.00 per unit	.3 hours @ $2.50	.75 per unit
61	Variable overhead	1 hour @ $2.00	$2.00 per unit	.3 hours @ $2.50	.75 per unit
62	Total		$10.00 per unit		$3.00 per unit
63
64	Actual variable manufacturing cost:
65	Product A	Materials	$2,519,000	(5,038,000 pieces)
66		Labor	1,509,000	( 503,000 hours)
67		Overhead	1,006,000	( 503,000 hours)
68	Product B	Materials	4,530,000	(3,020,000 pounds)
69		Labor	150,000	( 200,000 hours)
70		Overhead	150,000	( 200,000 hours)
71	Total		$9,864,000

Required:

A. Identify and strengths and/or weakness you identified in your analysis.

B. Any recommendations you feel are warranted at this time.

Reference no: EM1310214

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