Hillyard Company

7/25/2019 Hillyard Company

http://slidepdf.com/reader/full/hillyard-company 1/18

I. TITLE OF THE CASE: Completing a Master Budget (Hillyard

Company)II. FACTS OF THE CASE:

a. Hillyard Company, an ofce supplies specialty store, prepares its

master budget on a quarterly basis. The olloing data ha!e been

assembled to assist in preparing the master budget or the "rst

quarter#$s o %ecember &' (the end o the prior quarter), the companys

general ledger shoed the olloing account Balances#

Debits Credits

Cash *,+++$ccount ecei!able --,++

+

n!entory /+,+++

Building and 0quipment &1+,+++

$ccount 2ayable 3&,+++

Capital 4toc5 6++,+++

etained 0arnings '+3,+++

Totals $ 702,0

00

702,0

00

b. $ctual sales or %ecember and budgeted sales or the ne7t our

months are as ollos#

%ec8'+ 9-*+,+++

:an8'' ++,+++

;eb8'' /++,+++

Mar8'' &++,+++

$pr8'' -++,+++

c. 4ales are -+< or cash and *+< on credit. $ll payments on credit

sales are collected in the month olloing sale. The accounts

recei!able at %ecember &' are a result o %ecember credit sales.



d. The companys gross margin is +< o sales. (n other ords, cost

o goods sold is /+< o sales.)e. Monthly e7penses are budgeted as ollos# salaries and ages,

9-1,+++ per month# ad!ertising, 91+,+++ per month= shipping, 6<

o sales= other e7penses, &< o sales. %epreciation, including

depreciation on ne assets acquired during the quarter, ill be

9-,+++ or the quarter.. 0ach months ending in!entory should equal -6< o the olloing

months cost o goods sold.g. >ne8hal o a months in!entory purchases is paid or in the month

o purchase= the other hal is paid in the olloing month.

h. %uring ;ebruary, the company ill purchase a ne copy machine

or 9',1++ cash. %uring March, other equipment ill be purchased

or cash at a cost o 9*,6++.i. %uring :anuary, the company ill declare and pay 96,+++ in cash

di!idends. ?. Management ants to maintain a minimum cash balance o

9&+,+++. The company has an agreement ith a local ban5 that

allos the company to borro at the beginning o each month. The

interest rate on these loans is '-< per month and or simplicity e

ill assume that interest is not compounded. The company ould,

as ar as it is able, repay the loan plus accumulated interest at the

end o the quarter.

III. ANALYSIS/SOLUTIONS:

@sing the data abo!e, complete the olloing statements and

schedules or the "rst quarter#



Step 1. n order to complete the requirements, identiy "rst the 4ales

Budget or the end quarter rom the gi!en abo!e#

Hillyard Company4ales Budget

;or the Auarter ended March &+,-+''

'. Complete the schedule o e7pected cash collection#

i!en that credit shall be collected the olloing month and only

the cash can be reected in the collection o the current month,

belo are the corresponding monthly data or the e7pected cash

collection.

Hillyard Company07pected Cash Collection


!"#!r$ Febr#!r$ %!r&' (#!rter

$ccount ecei!able%ecember &' (*+< o-*+,+++.++)

--,+++.++ --,+++.++

!"#!r$ 2011 S!)es

-+<o ++,+++.++ *+,+++.++ *+,+++.++

*+<o ++,+++.++

&-+,+++.++ &-+,+++.++

Febr#!r$ 2011 S!)es

-+<o /++,+++.++

'-+,+++.++ '-+,+++.++

*+<o /++,+++.++

*+,+++.++ *+,+++.++

%!r&' 2011 S!)es

!"#!r$ Febr#!r$ %!r&' (#!rter

Budgeted 4ales in%ollars

++,+++.++ /++,+++.++ &++,+++.++ ',&++,+++.++

T*t!) +#detedS!)es -

00,000.00

00,000.00

00,000.00

1,00,000.00



-+<o &++,+++.++ /+,+++.++ /+,+++.++

T*t!) C!s' C*))e&ti*" -0,000.00

0,000.00

0,000.00

1,2,000.00

2.!. Calculate or the merchandise purchases budget#

Step 1. Calculate or the Budgeted Cost o oods 4old#

!"#!r$ Febr#!r$ %!r&' (#!rter

4ales in %ollars ++,+++.++ /++,+++.+

+&++,+++.++

',&++,+++.++

ross Margin '/+,+++.++ -+,+++.+

+'-+,+++.++

6-+,+++.++

+#deted C*st *3 4**ds S*)d -

20,000.00 0,000.

0010,000.00

70,000.00

Step 2. Calculate or the %esired 0nding n!entory#

!"#!r$ Febr#!r$ %!r&'

Cost of Goods Sold for Next Month &/+,+++.++ '*+,+++.++

'-+,+++.++

2ercentage o De7t MonthEs C>4 +.-6 +.-6 +.-6Desired E"di" I"5e"t*r$

- 60,000.0

0,000.0

00,000.0

0

Step . 4ummariFe the data or the Merchandise 2urchasesBudget#

Hillyard Companyn!entory 2urchase Budget


!"#!r$

Febr#!r

$ %!r&' (#!rter

Budgeted Cost o oods 4old-+,+++.+

+&/+,+++.

++'*+,+++.

++1*+,+++.+

+

$dd# %esired 0nding n!entory 3+,+++.++6,+++.+

+&+,+++.+

+&+,+++.++

Total Deeds&&+,+++.+

++6,+++.

++-'+,+++.

++*'+,+++.+

+

Gess# Beginning n!entory /+,+++.++3+,+++.+

+6,+++.+

+/+,+++.++



e8#ired I"5e"t*r$ 9#r&'!se-

270,000.00

1,000.00

1,000.00

70,000.00

2.b Calculate or the 4chedule o 07pected Cash %isbursements8Merchandise 2urchases

Step 1. Calculate or the monthly purchases considering thepayment scheme o paying hal or the current month and the otherhal on to the ne7t month#

Hillyard CompanyCash %isbursement or 2urchase


!"#!r$Febr#!r

$ %!r&' (#!rter

%ecember 2urchase

3&,+++.+

+ 3&,+++.++

:anuary 2urchase (6+< +-1+,+++.++)

'&6,+++.++

'&6,+++.++

-1+,+++.++

;ebruary 2urchase (6+<&'6,+++.++)

'61,6++.++

'61,6++.++

&'6,+++.++

March 2urchase (6+< o'/6,+++.++)

*-,6++.++ *-,6++.++

T*t!) C!s' Disb#rsee"t 3*r

9#r&'!se -

22,000.

00

262,00.

00

20,000.

00

70,00.0

0

&. Complete the Cash %isbursement or >perating 07penses#

Step 1. Calculate or the monthly >ther 07penses

!"#!r$ Febr#!r$ %!r&'

S!)es ++,+++.++

/++,+++.++

&++,+++.++

9er&e"t!e *3 S!)es 3*r *t'ere;pe"ses

+.+& +.+& +.+&

Ot'er E;pe"ses-

12,000.00

1,000.00

6,000.00

Step 2. Calculate or the monthly 4hipping 07penses

!"#!r$ Febr#!r$ %!r&'



S!)es ++,+++.++

/++,+++.++

&++,+++.++

9er&e"t!e *3 S!)es 3*r s'ippi"e;pe"ses

+.+6 +.+6 +.+6

S'ippi" E;pe"ses

-

20,000.00 0,000.00 1,000.00

Step . Complete the Cash %isbursement or >perating 07pensestable

Hi))$!rd C*p!"$

C!s' Disb#rsee"t 3*r Oper!ti" E;pe"sesF*r t'e (#!rter e"ded %!r&' 0,2011

!"#!r$ Febr#!r$ %!r&' (#!rter4alaries and ages

-1,+++.++

-1,+++.++

-1,+++.++

*',+++.++$d!ertising

1+,+++.++ 1+,+++.++

1+,+++.++

-'+,+++.++

4hipping 07penses -+,+++.++

&+,+++.++

'6,+++.++

/6,+++.++

>ther 07penses '-,+++.++

'*,+++.++

3,+++.++ &3,+++.++

T*t!) C!s'Disb#rsee"t -

126,000.00

1,000.00

121,000.00

6,000.00

. Complete the Cash Budget#

Step 1# 4ummariFe all cash transactions



Hi))$!rd C*p!"$

C!s' +#det

F*r t'e (#!rter e"ded %!r&' 0,2011

!"#!r$ Febr#!r$ %!r&' (#!rter+ei""i" C!s'

+!)!"&e

*,+++.++ &+,+++.++ &+,*++.++ *,+++.++

Add: C!s'C*))e&ti*"

&+,+++.++

+,+++.++

6+,+++.++

',-*,+++.++

T*t!) C!s' A5!i)!b)e

&6-,+++.++

1+,+++.++

61+,*++.++

',&&-,+++.++

Less: C!s'Disb#rsee"t

n!entory2urchase

--*,+++.++

-3-,6++.++

-+,+++.++

1/+,6++.++

>perating07pense

'-3,+++.++

'6,+++.++

'-',+++.++

&36,+++.++

0quipment2urchase

8 ',1++.++ *,6++.++ */,-++.++Cash %i!idend

6,+++.++ 8 8 6,+++.++T*t!) C!s'Disb#rsee"t

+-,+++.++

&3,-++.++

6,6++.++

',-*/,1++.++

E;&ess/De<&ie"&$

(6+,+++.++

)

&+,*++.++

'-6,&++.+

+

6,&++.++

Fi"!"&i":

Borroing

*+,+++.++ *+,+++.++epayments

8 (*+,+++.++)

(*+,+++.++)

nterest

8 (-,++.++) (-,++.++)

T*t!) Fi"!"&i"

*+,+++.++ 8 (*-,++.++

)

(-,++.++)

E"di" C!s'+!)!"&e

- 0,000.0

00,00.00

2,600.00

2,600.00

Step 2: nterest as obtained using the olloing data#



4ince the company required to maintain a minimum cash balance o 9&+,+++.++ and a 96+,+++.++ cash de"ciency as posted atersummariFing the cash transactions, a borroing orth 9*+,+++.++must be done to "nance these requirements.

@sing the 9*+,+++ principal amount and the interest rate o '-< e

calculate the interest#

I 2 7 r 7 there 2 I principal amount I 9*+,+++

r I interest rate I '-< t I interest time I &J'- (quarterly)

nterest I 9*+,+++ 7 .'- 7 .-6I"terest = -2,00

. 2repare an absorption costing income statement or the quarter

ending March &' as shon in 4chedule 3 in the chapter#

Hillyard Company

Budgeted ncome 4tatement

;or the Auarter ended March &+, -+''

. 2repare a

balance

sheet as o March

&'.Step 1. 4ol!e or

the $ccount

ecei!able;or the

recei!ables

S!)es 1,00,000

.00Less: Cost o oods 4old

1*+,+++.++

4r*ss %!ri" 6-+,+++.++

Less: >perating 07penses &36,+++.++

%epreciation

-,+++.++Oper!ti" I"&*e *&,+++.++

Less: nterest 07pense -,++.++

Net I"&*e 0,00.00



o sales on credit or the month o March amounting to *+< o

9&++,+++.++#$ccount ecei!able I *+< K 9&++,+++A&&*#"t e&ei5!b)e I - 20,000Step 2. 4ol!e or the Building and 0quipment

Total BL0 I Beginning BL0 De 2urchases N %epreciation Total BL0 I 9&1+,+++ (9*,6++ 9',1++.++) 8 9-,6++.++ Total BL0 I 9&1+,+++ 9 */,-++ 8 9-,+++T*t!) +#i)di" !"d E8#ipe"t = -1,200.00Step . 4ol!e or $ccount 2ayable#;or the payment o March purchases amounting to 6+< o the

9'/6,+++.++$ccount 2ayable I 6+< K 9'/6,+++A&&*#"t 9!$!b)e = -2,00

Hillyard CompanyBudgeted Balance 4heet

$s o Auarter ended March &+, -+''

C#rre"t Assets

Cash -,3++.++

$ccount ecei!able -+,+++.++

n!entory &+,+++.++

T*t!) C#rre"t Assets &'-,3++.++

+#i)di" !"d E8#ipe"t ',-++.++

T*t!) Assets

727,100.00

Li!bi)ities !"d E8#it$

$ccount 2ayable *-,6++.++

E8#it$:

Common 4toc5 6++,+++.++

etained 0arnings#

Beginning '+3,+++.++

$dd# Det ncome *+,/++.++

Total '*3,/++.++

Gess# Cash%i!idend

6,+++.++',/++.+

+



T*t!) Li!bi)it$ !"d E8#it$

727,100.00

I>. CONCLUSION

$ master budget by de"nition is the aggregation o all loer8le!el

budgets produced by a companyEs !arious unctional areas, and also

includes budgeted "nancial statements, cash orecast, and a "nancing

plan. The master budget is typically presented in either a monthly or

quarterly ormat, or usually co!ers a companyEs entire "scal year. $n

e7planatory te7t may be included ith the master budget, hich

e7plains the companyEs strategic direction, ho the master budget ill

assist in accomplishing speci"c goals, and the management actions

needed to achie!e the budget.n Hillyard Company, determining the e7pected cash collections,

merchandise purchase budget, e7pected cash disbursements or

merchandise purchases, e7pected cash disbursements or selling and

administrati!e e7penses, cash budget, absorption costing income

statement and balance sheet are important actors in the success o

the companys ob?ecti!es and goals. t shall also properly allocate

resources, pro!ide areas or impro!ement in determining hich part o

the process ha!e bottlenec5s and instill a culture o coordination,

sense o sufciency and aid the company toards meeting budgeted

sales. By determining the production schedule, management can

chec5 hether there ould be necessary ad?ustments needed in labor,

direct materials and all aspect related to the production o the goods.

$n estimated o the cash inos and outos using the cash budget

can also help the management in properly allocating the resource or



re!enue generating acti!ities and as chec5ing mechanism or possible

liquidity problems.>. ECO%%ENDATION

$ master budget is the central planning tool that a management team

uses to direct the acti!ities o a corporation, as ell as to ?udge the

perormance o its !arious units. ith this Hillyard Company shall

continue using these tools in order to chec5 on possible problems and

plan ahead. i!en the Budgeted Balance 4heet, e can see that

Hillyard Company has high $ccount ecei!ables. Management may

loo5 into this as an opportunity to chec5 hether they can consider

steps on ho to impro!e the collection method o the company.;rom the data o the Budgeted ncome 4tatement, Hillyard Company

orecasted the company to earn 9 *+,/++.++ hich indicates that it is

still earning ell. 4ince the company is maintaining a 9&+,+++ cash

balance and there as an e7cess o 9'-,3++.++ cash, the management

can create in!estment programs or these e7tra cash to generate more

re!enues.>I. EFEENCES

http#JJde5ushtia."les.ordpress.comJ-+'-http#JJ.accountingtools.comJmaster8budget

CASE 2

I. TITLE OF THE CASE: 4easonal 2roducts Corporation. FACTS OF THE CASE:

4easonal 2roducts Corporation e7pects the olloing monthly sales#

:anuary.................. 9-+,+++ May........... 9',+++ 4eptemberO..9-+,+++

;ebruary................ '6,+++ :une........... &,+++ >ctober........................................-6,+++

March..................... 6,+++ :uly............ '+,+++ Do!ember. .. .. ...............................&+,+++

$pril....................... &,+++ $ugust....... ',+++ %ecember. .. .. ...............................--,+++

Total annual sales I 9'/*,+++

http://dekushtia.files.wordpress.com/2012

http://www.accountingtools.com/master-budget

http://www.accountingtools.com/master-budget

http://dekushtia.files.wordpress.com/2012



4ales are -+ percent or cash in a gi!en month, ith the remainder

going into accounts recei!able. $ll *+ percent o the credit sales are

collected in the month olloing the sale. 4easonal 2roducts sells all o

its goods or 9- each and produces them or 9' each. 4easonal

2roducts uses le!el production, and a!erage monthly production is

equal to annual production di!ided by '-.

III. STATE%ENT OF THE 9O+LE%/E(UIED:

a. enerate a monthly production and in!entory schedule in units.

Beginning in!entory in :anuary is 6,+++ units. (Dote# To do part a, you

should or5 in terms o units o production and units o sales.)

b. %etermine a cash receipts schedule or :anuary through

%ecember. $ssume that dollar sales in the prior %ecember ere

9'6,+++. or5 part b using dollars.

c. %etermine a cash payments schedule or :anuary through

%ecember. The production costs (9' per unit produced) are paid or in

the month in hich they occur. >ther cash payments, besides those

or production costs, are 9/,+++ per month.

d . Construct a cash budget or :anuary through %ecember. The

beginning cash balance is 9',+++, and that is also the required

minimum.

e. %etermine total current assets or each month. (Dote# $ccounts

recei!able equal sales minus -+ percent o sales or a gi!en month.

I>. ANALYSIS/SOLUTIONS:!. Monthly 2roduction and n!entory 4chedule in units

Step 1. Calculate the 2roduction Ge!el per month#



$nnual 2roduction in units I $nnual 4ales J 4ales 2rice per unit I 9'/*,+++ J 9-

A""#!) 9r*d#&ti*" i" #"its I ,000 #"its

2roduction le!el per month I $nnual 2roduction in units J '- I *,+++J'- months

9r*d#&ti*" )e5e) per *"t' = 7,000 #"its/*"t'Step 2. Calculate the monthly 4ales in units

Se!s*"!) 9r*d#&ts C*rp*r!ti*"%*"t')$ S!)es i" U"its

%*"t' %*"t')$S!)es

9ri&e/U"it

S!)es

:anuary -+,+++.++

- '+,+++

;ebruary '6,+++.++

- 1,6++

March 6,+++.++

- -,6++

$pril &,+++.++

- ',6++

May ',+++.++

- 6++

:une &,+++.++

- ',6++

:uly '+,+++.++

- 6,+++

$ugust ',+++.++

- 1,+++

4eptember -+,+++.++ - '+,+++

>ctober -6,+++.++

- '-,6++

Do!ember

&+,+++.++

- '6,+++

%ecember

--,+++.++

- '',+++

Step . Complete the Monthly 2roduction and n!entory 4chedule

in units using the ormula belo#

E"di" I"5e"t*r$ = +ei""i" I"5e"t*r$ ? 9r*d#&ti*"

@)e5e) B S!)esSe!s*"!) 9r*d#&ts C*rp*r!ti*"

%*"t')$ 9r*d#&ti*" !"d I"5e"t*r$ S&'ed#)e



%*"t' +ei""i"I"5e"t*r$

9r*d#&ti*"@)e5e)

S!)es E"di"I"5e"t*r$@-1 per#"it

!"#!r$ 6,+++ 1,+++ '+,+++ -,+++

Febr#!r$ -,+++ 1,+++ 1,6++ ',6++%!r&' ',6++ 1,+++ -,6++ /,+++Apri) /,+++ 1,+++ ',6++ '',6++

%!$ '',6++ 1,+++ 6++ '*,+++

#"e '*,+++ 1,+++ ',6++ -&,6++ #)$ -&,6++ 1,+++ 6,+++ -6,6++

A##st -6,6++ 1,+++ 1,+++ -6,6++

Septeber -6,6++ 1,+++ '+,+++ --,6++

O&t*ber --,6++ 1,+++ '-,6++ '1,+++N*5eber '1,+++ 1,+++ '6,+++ 3,+++

De&eber 3,+++ 1,+++ '',+++ 6,+++

b. 2repare a Cash eceipts 4cheduleStep 1. ;rom the gi!en data, sol!e "rst or the Cash 4ales o

:anuary using %ecembers data# :anuary 2rior Months 4ales I %ecember 4ales K *+<

I 9'6,+++ K .*+

:anuary 2rior Months 4ales I -12,000.00

Step 2. Complete the monthly Cash eceipts 4chedule rom

:anuary through %ecember#

Se!s*"!) 9r*d#&ts C*rp*r!ti*"C!s' e&eipts S&'ed#)e

!" Feb %!r Apr %!$ #"e

4ales 9-+,+++ 9'6,+++ 96,+++ 9&,+++ 9',+++ 9&,+++

-+< Cash4ales

,+++ &,+++ ',+++ /++ -++ /++

*+< 2riorMonths 4ales

'-,+++ '/,+++ '-,+++ ,+++ -,++ *++

T*t!) re&eipts-1,00

0-16,00

0-1,000 -,00 -2,00 -1,00

#)$ A# Sept O&t N*5 De&

4ales 9'+,+++ 9',+++ 9-+,+++ 9-6,+++ 9&+,+++ 9--,+++

-+< Cash -,+++ -,*++ ,+++ 6,+++ /,+++ ,++



4ales

*+< 2riorMonths 4ales

-,++ *,+++ '',-++ '/,+++ -+,+++ -,+++

T*t!) re&eipts -,00-10,0

0-1,200

-21,000

-2,000

-2,00

c. $ccomplish the Cash 2ayments 4chedule or :anuary through

%ecemberStep 1. Complete the Cash 2ayments 4chedule using the gi!en

data#Se!s*"!) 9r*d#&ts C*rp*r!ti*"

C!s' 9!$e"ts S&'ed#)eC*"st!"t pr*d#&ti*"

!" Feb %!r Apr %!$ #"e

2roduction Cost(9'Junit)

1,+++.++

1,+++.++

1,+++.++

1,+++.++

1,+++.++

1,+++.++

>ther cash payments/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+

T*t!) p!$e"ts1,000

.001,000

.001,000

.001,000

.001,000

.001,000

.00


2roduction Cost(9'Junit)

1,+++.++

1,+++.++

1,+++.++

1,+++.++

1,+++.++

1,+++.++

>ther cash payments/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+/,+++.+

+

T*t!) &!s'p!$e"ts

1,000.00

1,000.00

1,000.00

1,000.00

1,000.00

1,000.00

d. Construct a cash budget or :anuary through %ecember using the

ormulas belo#C##)!ti5e +!)!"&e I Cash o Beginning CashC##)!ti5e L*!" @&#rre"t I Monthly Goan or repayment

(pre!ious month i there is any) Monthly Goan or repayment o

current monthE"di" +!)!"&e I Cumulati!e Balance Monthly Goan or

repayment o current monthSe!s*"!) 9r*d#&ts C*rp*r!ti*"

C!s' 9!$e"ts S&'ed#)eC!s' +#det



!" Feb %!r Apr %!$ #"e

Cash o 9&,+++ 9/,+++

8+8 (9*,++)

(9'+,++)

(9'',/++)

Beginning cash ',+++ ,+++ '+,+++

'+,+++

',/++ ',+++

Cumulati!e cashbalance ,+++ '+,+++ '+,+++ ',/++ (*,*++) ('+,/++)Monthly loan or(repayment)

8+8 8+8 8+8 8+8 3,*++ '',/++

Cumulati!e loan 8+8 8+8 8+8 8+8 3,*++ -',++E"di" &!s' b!)!"&e -,0

00-10,0

00-10,0

00-

1,00

-1,000

-1,000


Cash o (9

*,/++)

(9-,-+

+)

9

-,-++

9

*,+++

9'&,+

++

9'6,+

+Beginning cash ',+++ ',+++ ',+++ ',+++ ',+++ ',+++Cumulati!e cashbalance

(1,/++)

(',-++) &,-++ 3,+++ ',+++

'/,++

Monthly loan or(repayment)

*,/++ -,-++ (-,-++) (*,+++)

('&,+++)

(3,+++)

Cumulati!e loan &+,+++

&-,-++

&+,+++

--,+++

3,+++ 8+8

E"di" &!s' b!)!"&e -1,00

0

-1,000

-1,000

-1,00

0

-1,000

-7,00

The data abo!e shoed ho 4easonal 2roducts Corporation managed to

schedule the a!ailment o loans and repayments.

e. %etermine total monthly assets#

Step 1. 4ol!e or the $ccounts ecei!ables#

i!en that A&&*#"ts e&ei5!b)e I Monthly 4ales N -+< o

Monthly 4ales



%*"t'%*"t')$

S!)es20 *3 S!)es

A&&*#"tse&ei5!b)e

!"#!r$ -+,+++.++ ,+++.++ '/,+++.++

Febr#!r$ '6,+++.++ &,+++.++ '-,+++.++

%!r&' 6,+++.++ ',+++.++ ,+++.++

Apri) &,+++.++ /++.++ -,++.++%!$ ',+++.++ -++.++ *++.++

#"e &,+++.++ /++.++ -,++.++

#)$ '+,+++.++ -,+++.++ *,+++.++

A##st ',+++.++ -,*++.++ '',-++.++

Septeber

-+,+++.++ ,+++.++ '/,+++.++

O&t*ber -6,+++.++ 6,+++.++ -+,+++.++

N*5eber

&+,+++.++ /,+++.++ -,+++.++

De&eber

--,+++.++ ,++.++ '1,/++.++

Step 2. 4ummariFe the data or the total $ssets using the 0nding cash

balance or the Cash input and 0nding n!entory rom the 2roduction

and n!entory 4chedule or the n!entory input#

Se!s*"!) 9r*d#&ts C*rp*r!ti*" Assets

%*"t' C!s' A&&*#"tse&ei5!b)e

I"5e"t*r$ T*t!)C#rre"t

!"#!r$ 9 ,+++ 9'/,+++ 9 -,+++ 9--,+++

Febr#!r$ '+,+++ '-,+++ ',6++ -&,6++

%!r&' '+,+++ ,+++ /,+++ -+,+++

Apri) ',/++ -,++ '',6++ '6,6++

%!$ ',+++ *++ '*,+++ '3,*++

#"e ',+++ -,++ -&,6++ -/,3++

#)$ ',+++ *,+++ -6,6++ &,6++

A##st ',+++ '',-++ -6,6++ &1,1++

Septeber

',+++ '/,+++ --,6++ &3,6++

O&t*ber ',+++ -+,+++ '1,+++ &*,+++

N*5eber ',+++ -,+++ 3,+++ &,+++

De&eber 1,++ '1,/++ 6,+++ &+,+++

The asset data abo!e shos the asset build up rom the most liquid (cash) to

the least liquid (in!entory).

CONCLUSION:



4easonal 2roducts Corporation approach in using the le!el production method

is useul since the pro?ected sales are not balanced. 4ales climb up starting

only rom :uly to pea5 on Do!ember and start to slo don starting :anuary.

This imbalance in sales pro?ection can pose a problem i production schedule

is not careully planned. hen the company has spi5es in production

demand, it might need to pay o!ertime, add a shit or hire contract or5ers

to "ll orders but during slo periods, it might be contractually bound to pay

idle or5ers. $ le!el production ansers this problem by maintaining the

capacity o the production including labor.

Constant production also maintains constant cash payments schedules and

relies on the orecasted sales or the cash receipts schedules and accounts

recei!ables.

>II. ECO%%ENDATION

@sing the production le!eling 4easonal 2roducts Corporation produce

intermediate goods at a constant rate so that urther processing may also be

carried out at a constant and predictable rate. Ge!el production is bene"cial

in times here there are spi5es in demand by le!eling the output here e7tra

goods are 5ept as in!entory and shall be disposed during pea5 seasons. This

ay, labor costs are reduced. Ge!el production also eliminates the pressure

or the company to o!erboo5 the production acility, transport acility and

maintain supply and demand o ra materials thus maintaining good

relationships ith customers and suppliers.

>III. EFEENCES

http#JJen.i5ipedia.orgJi5iJ2roductionPle!eling

http://en.wikipedia.org/wiki/Production_leveling

http://en.wikipedia.org/wiki/Production_leveling

Documents

Hillyard Company