Brief 4 Dejan Lazaroski
To: Professor Debra Petrizzo
From: Dejan Lazaroski
Subject: Problem 12-36
Date: 09/28/2014
Business Brief
Tyva produces popular undyed cloth sandals in Regular and Deluxe style. The company is preparing its budget for June 2013, based on past experience sales. The company sells Regular sandals for $120 and Deluxe for $195 collecting 60% of the revenues in the month of sales and 38% the following month.
Analysis
The budgeted collections accounts receivable from May and June are $802,800. The company collects the sales on account, 60% the first month and 38% the next month. In this situation, substantial amount of cash inflow is receivable, compared with the rate of 80% that are Accounts payable in the first month for materials purchasing. The company also increase the inventory by $7.031.
The month of June is budgeted to be sold 2000 units of Regular sandals and 3000 units of Deluxe sandals. The Deluxe model has higher gross margin per unit versus Regular model. This difference would influence negative on the budgeted net income if the company sell less Deluxe model.
If you refer to Appendix A, between May’s and budgeted June’s balance sheet, account changes are expected in the Retained Earning as most significant. The Retained Earnings in June are higher in June compared with May. There are expected changes in budgeted June in the inventories and in the Cash as Assets.
Conclusion
Tyva can improve the net income if sells more of the Deluxe model of sandals, because of the higher contribution margin per unit versus the other Regular model.
Reference
Datar, S. and Rajan, M. (2014). Managerial Accounting. (1st ed.). Boston: Pearson Prentice Hall
Appendix A
Appendix B
5-Step Critical Thinking Decision-Making Process Matrix
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem…
(Study the problem to clarify what you need to know to solve it. Distinguish problems over which you have some control from problems
From: Dejan Lazaroski
Subject: Problem 12-36
Date: 09/28/2014
Business Brief
Tyva produces popular undyed cloth sandals in Regular and Deluxe style. The company is preparing its budget for June 2013, based on past experience sales. The company sells Regular sandals for $120 and Deluxe for $195 collecting 60% of the revenues in the month of sales and 38% the following month.
Analysis
The budgeted collections accounts receivable from May and June are $802,800. The company collects the sales on account, 60% the first month and 38% the next month. In this situation, substantial amount of cash inflow is receivable, compared with the rate of 80% that are Accounts payable in the first month for materials purchasing. The company also increase the inventory by $7.031.
The month of June is budgeted to be sold 2000 units of Regular sandals and 3000 units of Deluxe sandals. The Deluxe model has higher gross margin per unit versus Regular model. This difference would influence negative on the budgeted net income if the company sell less Deluxe model.
If you refer to Appendix A, between May’s and budgeted June’s balance sheet, account changes are expected in the Retained Earning as most significant. The Retained Earnings in June are higher in June compared with May. There are expected changes in budgeted June in the inventories and in the Cash as Assets.
Conclusion
Tyva can improve the net income if sells more of the Deluxe model of sandals, because of the higher contribution margin per unit versus the other Regular model.
Reference
Datar, S. and Rajan, M. (2014). Managerial Accounting. (1st ed.). Boston: Pearson Prentice Hall
Appendix A
Appendix B
5-Step Critical Thinking Decision-Making Process Matrix
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem…
(Study the problem to clarify what you need to know to solve it. Distinguish problems over which you have some control from problems