Jessica Rabbit Case Project Team Member Names Sales B ✓ Solved

Names Jessica Rabbit Case Project Team Member Names Sales B

Please use this worksheet to complete the respective budget displayed on the Tab. The following boxes in red must be filled-in with the appropriate data from your budget. Failure to show a budget will result in a score of zero for this section.

Jessica Rabbit and George Foreman are contemplating becoming business partners of an outdoor grill company appropriately named, “Outdoor Chef Grill.” Jessica has been a customer of George Foreman’s grills for years. George accepted her proposal to be a business partner, as he believes that Jessica’s name and image will bring in a new demographic of shoppers. Although Jessica is an outgoing lady, she has not managed her personal money and needs to obtain funding for her capital contribution. Potential investors have asked for budgets and forecasts for the revenue and expenses of the company. Since George’s finance department is in the process of preparing budgets for 4Q of 2019, he is having the finance department create a special monthly forecast budget for Roger as well as an annual forecast and budget. You, being one of George’s employees, are asked to prepare the monthly budget for October 2019.

Budget Requirements: Using the information below, please prepare: 1. Sales Budget including a schedule of expected cash collection. 2. Production Budget 3. Direct Materials budget including a schedule of expected cash disbursements. 4. Direct Labor Budget 5. MOH Budget including cash disbursements for overhead 6. S&A budget including cash disbursements for S&A 7. Budgeted Income Statement. 8. Cash Budget. For Budgets 1-6: There are two product lines, Master & Backyard, prepare only one of each budget that includes the data for both products. For Budgets 7 & 8: The financial data will NOT BE SEPARATED BY PRODUCT LINE and all numbers will be combined.

Selected information concerning sales and production for October 2019 is summarized as follows: The sales budget must be divided up by product (Backyard and Master). Estimated sales for October by sales territory are provided. Outdoor Chef Grill has a beginning accounts receivable balance of $550,000 in the month of October and expects to collect 30% of that balance. In addition, their accounting department has estimated that 80% of sales for the Master Grill will be paid in cash and 70% of the Backyard grill will be paid in cash.

Paper For Above Instructions

Executive Summary

In contemplating the establishment of "Outdoor Chef Grill," the collaboration of Jessica Rabbit and George Foreman is anticipated to tap into new consumer demographics while ensuring robust financial management and rigorous budget preparation. This paper outlines the budget for October 2019, ensuring adherence to directives specified for the Sales, Production, Direct Materials, Direct Labor, Manufacturing Overhead (MOH), Selling & Administrative (S&A), Budgeted Income Statement, and Cash Budget, while also considering overall financial health and requisite analyses.

Sales Budget

The sales budget for October was divided by product lines “Backyard” and “Master,” reflecting specific sales territories and projected sales volume. The details are as follows:

• Maine:
  • Backyard: 280 units at $750/unit = $210,000
  • Master: 250 units at $1,500/unit = $375,000
• Vermont:
  • Backyard: 210 units at $800/unit = $168,000
  • Master: 160 units at $1,600/unit = $256,000
• New Hampshire:
  • Backyard: 305 units at $850/unit = $258,250
  • Master: 275 units at $1,700/unit = $467,500

Total Sales: Backyard = $636,250, Master = $1,098,500, Overall = $1,734,750.

Production Budget

The production budget details the units to be produced for each product line. To calculate the required units, the following is determined: beginning inventory, required ending inventory, and sales demand.

Ending inventory for Backyard is 5% of November’s estimated sales while Master is 2% of November’s. Thus, producing for both product lines considering beginning inventories:

• Backyard: 640 units (620 sales + 31 ending - 36 beginning)
• Master: 1,150 units (1,150 sales + 23 ending - 18 beginning)

Direct Materials Budget

The direct materials budget outlines the materials necessary for production and their associated costs per unit.

For Backyard Grills:

• Grates: 3 units x 640 units = 1,920 units
• Stainless steel: 24 lbs x 640 units = 15,360 lbs
• Burner subassemblies: 2 units x 640 units = 1,280 units
• Shelves: 4 units x 640 units = 2,560 units

The forecasted purchase costs of raw materials are essential in ensuring liquidity.

Direct Labor Budget

The direct labor requirements for each grill line is crucial for cost management and performance assessment. Labor time and hourly rates are as follows:

• Backyard Chef: 3.4 hrs at average $15.50/hr = $52.00/unit
• Master Chef: 4.8 hrs at average $15.50/hr = $74.50/unit

MOH Budget

With a breakdown of fixed and variable manufacturing overhead, a total estimate of $41,000 for variable overhead will be revisited throughout the budget period.

S&A Budget

Fixed S&A costs including advertising and salaries are estimated for October 2019 as vital for strategic investments.

Income Statement Budget

The projected income statement incorporates revenues, COGS, and expenses to determine net income.

Cash Budget

Cash inflows from collections along with cash disbursements must always reflect in the cash management of the firm, particularly maintaining the target minimum cash balance of $500,000.

Conclusion

Preparation of these budgets will enable Jessica Rabbit and George Foreman to formulate informed decisions while ensuring financial viability and strategic growth in their new business venture. Emphasis will be placed on accurate forecasting, diligent financial management, and proactive response mechanisms to any emerging challenges.

References

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• Maness, T. S., & Zietlow, D. (2016). Short-Term Financial Management. South-Western College Pub.
• Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2018). Financial Accounting. Wiley.
• Shillinglaw, G. (2017). Management Accounting. University of Utah Press.
• Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory and Practice. Cengage Learning.
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• Albert, R. D. (2016). The Essentials of Business Planning. The University of Michigan Press.