The Numbers In The Beige Cells Write Formulas To

The Numbers In The Beige Cellswrite Formulas To

Input the numbers in the beige cells. Write formulas to compute values (e.g., profit, resource utilization) in the blue cells. The assignment involves creating various budgets and solving linear programming problems related to manufacturing and operational planning, with specific emphasis on formula creation, financial calculations, constraints, and profit maximization.

Specifically, it encompasses preparing master budgets for LBL Corporation, including sales, production, direct materials, cash collection, cash payments, cash budgets, manufacturing overhead, and income statements. The task also involves solving production mix problems for Electrocomp Corporation through graphical LP methods and optimizing course offerings at Western College of Business under given constraints.

The purpose is to develop detailed, professional Excel models using formulas, cell references, and proper budgeting techniques. The models should incorporate all relevant data, constraints, and calculations as specified, utilizing formulas over manual entry to ensure accuracy and dynamic updating. The ultimate goal is to produce comprehensive, correct, and well-organized financial and operational budget reports and decision-making models aligned with provided data and constraints.

Sample Paper For Above instruction

Introduction

The planning and budgeting processes are fundamental to effective financial management and operational efficiency in manufacturing and educational institutions. In this analysis, we explore detailed budgeting for LBL Corporation’s first quarter operations, alongside solving a linear programming (LP) problem faced by Electrocomp Corporation and an optimization problem for course offerings at Western College of Business. The purpose is to demonstrate comprehensive Excel-based modeling, including formula creation, constraint handling, and decision analysis, relevant for managerial decision-making and strategic planning.

LBL Corporation Master Budget Development

LBL Corporation's master budget construction begins with estimating sales revenue based on projected unit sales and prices. For January through March, the sales figures are converted from dollar amounts to units by dividing total sales by the unit price of $10. This provides the baseline for subsequent budgets. The sales budget (Table 1) is foundational, informing production, inventory, and cash flow projections.

Next, the production budget aligns with sales forecasts, adjusted for desired ending inventory levels — 25% of the following month’s sales units. Beginning inventory figures, along with ending inventory targets, inform the calculation of required production units. The production budget directly impacts the direct materials budget, as raw materials needed depend on production volume, with each unit requiring two square feet at $2.00 per square foot.

Purchases of raw materials are calculated to ensure sufficient inventory for production, factoring in the carryover and desired ending inventory of 15% of the next month’s needs. Since suppliers pay 20% in the current month and the balance in the following month, accounts payable must be tracked accordingly. The formulae here involve referencing previous month’s payables and current purchase requirements, maintaining accrual accuracy.

The direct labor budget calculates total labor hours required per month by multiplying units to be produced by 0.01 hours per unit, then applying an $11/hour rate. Overhead costs include variable costs ($1.20 per unit), fixed rent ($5,000/month), and other fixed costs ($3,000/month). The fixed overhead per unit ($0.80) consolidates these fixed costs on a per-unit basis, vital for COGS calculations in the income statement.

Capital expenditures for computers are scheduled monthly, and operating expenses include variable costs per unit ($1.00) and fixed expenses ($1,000/month). All expense budgets are built in tandem, with reference cells ensuring consistency and formulas automating calculations.

The cash budget models cash collections based on sales, with 30% collected in cash immediately and the remainder on credit in the following month. The cash disbursements schedule incorporates payments for materials, labor, overhead, and operating expenses, referencing the respective budgets and ensuring accurate cash flow projections.

Financing aspects involve maintaining a minimum cash balance of $4,000, borrowing up to $50,000 with interest at 1% per month, and repaying excess cash surpluses. The model calculates borrowing needs, interest costs, and repayments monthly, with references to the cash budget to adjust for actual cash balances.

The comprehensive models culminate in a budgeted income statement for the quarter, integrating all expense and revenue data. Cost of goods sold is derived from production, unit costs, and inventory adjustments, showcasing the integrated nature of the budgeting and financial reporting processes.

Electrocomp Corporation Production Mix LP Model

The LP problem for Electrocomp involves determining the optimal number of air conditioners and fans to maximize profit, subject to wiring and drilling resource constraints. The problem is formulated using variables for quantities produced, with constraints for resource usage:

• 3 hours wiring per AC, 2 hours drilling per AC
• 2 hours wiring per fan, 1 hour drilling per fan
• 240 wiring hours available, 140 drilling hours available
• Profit of $25 per AC, $15 per fan

The graphical approach involves plotting the constraint lines and identifying corner points where profit is maximized. The solution suggests operating at the intersection of the constraints that yields the highest total profit, with an analysis of slack or surplus in resources. When additional constraints are added, such as minimum and maximum production limits, the feasible region shifts, impacting the optimal solution and resource slack/surplus. These constraints are modeled explicitly, and the optimal solutions are identified through corner-point analysis, ensuring maximum profit while respecting the constraints.

Optimizing Course Offerings at Western College

The college’s course offering problem involves minimizing faculty salaries while satisfying minimum course requirements. The variables are the number of undergraduate and graduate courses, with costs of $2,500 and $3,000 respectively. Constraints include:

• At least 30 undergraduate courses
• At least 20 graduate courses
• Sum of undergraduate and graduate courses at least 60

The linear programming model minimizes total salaries while meeting constraints, leading to an optimal solution that is efficiently obtainable through graphical or simplex methods. The solution indicates the exact number of each course type to offer to minimize costs, with analysis of slack in each constraint highlighting potential underutilizations or excess capacities.

Conclusion

The comprehensive approach to budgeting and optimization demonstrated here underscores the importance of accurate formula development, constraint management, and dynamic referencing in Excel models. Such models support managerial decision-making by providing clear, data-driven insights into operational and financial planning, resource allocation, and strategic capacity utilization. Proper implementation ensures accuracy, flexibility, and accountability in organizational planning processes, crucial for sustained success in competitive environments.

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