Answered Essay: The following information relates to a landscaping business. At 30 June 2018, it had a bank balance of $26 500. Provided b

00 vodafone AU令 5:01 PM 0 learn.scu.edu.au business. At 30 June 2018, it had a bank balance of S26 500. Provided below are estimates for receipts and payments for the three months ending 30 September 2018. Reselpts Procends trom the 10000 20000 Supplies New equipment Purchase of 42000 a. Prepare a monthly cash budget for the three months ending 30 September 2018. 12 Marks b. The owners were wondering what the effect would be on the cash position if they did not buy the new equipment, but instead took advantage of a new rental arrangement. The equivalent equipment would cost S10 000 per month under the rental arrangement. Redraft the cash budget to show the impact of the rental alternative. Based on the information available, should they lease or buy the equipment? 9 marks 2. The landscaping business plans to introduce various aged trees to their product range in 2018. They have provided the following information relating to its planned activities. Lyearold 꼴yearsold years old Sales mix (250,000 units) 75,000 Selling price S28 Variable cost/unit 18 Total fixed cost $402,800 Required a. Calculate the break-even point in total units and units per product based on the 2018 data. 15 marks. b. Calculate the before tax profit (loss) that would be achieved in 2018 based on the above data. This calculation relates to the information from question 2 only. 2 marks. c. Management is concerned about competition for some of its trees, and wants to increase its sales of 3 years old trees relative to 1 year old trees. This initiative would increase annual fixed costs by S50 000 and alter the sales mix to 30 per cent for 2 years old trees, 30 per cent for 3 years old trees and 40 per cent for 1 year old trees. On the available data, would you recommend the initiative? Show 50,000 S45 27 125,000 S20 12

The following information relates to a landscaping business. At 30 June 2018, it had a bank balance of $26 500. Provided below are estimates for receipts and payments for the three months ending 30 September 2018. a. Prepare a monthly cash budget for the three months ending 30 September 2018. b. The owners were wondering what the effect would be on the cash position if they did not buy the new equipment, but instead took advantage of a new rental arrangement. The equivalent equipment would cost $10 000 per month under the rental arrangement. Redraft the cash budget to show the impact of the rental alternative. Based on the information available, should they lease or buy the equipment? The landscaping business plans to introduce various aged trees to their product range in 2018. They have provided the following information relating to its planned activities. Required a. Calculate the break-even point in total units and units per product based on the 2018 data. b. Calculate the before tax profit (loss) that would be achieved in 2018 based on the above data. This calculation relates to the information from question 2 only. c. Management is concerned about competition for some of its trees, and wants to increase its sales of 3 years old trees relative to 1 year old trees. This initiative would increase annual fixed costs by $50 000 and alter the sales mix to 30 per cent for 2 years old trees, 30 per cent for 3 years old trees and 40 per cent for 1 year old trees. On the available data, would you recommend the initiative? Show workings.

Expert Answer

 

1)
LandScaping Business
Cash Budget July Aug Sept
Beginning Bal. $26,500 -$74,000 -$38,200
Add: Budgeted Cash Receipts:
Fees $140,000 $160,000 $200,000
Proceeds from Sale of Non current assets $100,000
Total Cash Available for Use $166,500 $86,000 $161,800
Less: Cash Disbursements
Salaries and wages $70,000 $70,000 $70,000
Supplies $8,500 $9,200 $12,000
New equipment $120,000
Purchase of plants $42,000 $45,000 $61,000
Total Disbursements $240,500 $124,200 $143,000
Budgeted Ending Cash Balance -$74,000 -$38,200 $18,800
b)
LandScaping Business
Cash Budget July Aug Sept
Beginning Bal. $26,500 $36,000 $61,800
Add: Budgeted Cash Receipts:
Fees $140,000 $160,000 $200,000
Proceeds from Sale of Non current assets $100,000
Total Cash Available for Use $166,500 $196,000 $261,800
Less: Cash Disbursements
Salaries and wages $70,000 $70,000 $70,000
Supplies $8,500 $9,200 $12,000
Rent $10,000 $10,000 $10,000
Purchase of plants $42,000 $45,000 $61,000
Total Disbursements $130,500 $134,200 $153,000
Budgeted Ending Cash Balance $36,000 $61,800 $108,800
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