Porter's Problems Co.

Basic Information
For Year Ended December 31, 2007

Budget - Data Input Sheet

Sales Information:
Sales Growth Assumptions: 2% per quarter for the basic model (mature life stage)
5% per quarter for the deluxe model (growth stage)

Sales in units: 2018 2019

Q1 Q2 Q3 Q4 Year total Q1 Q2
Basic 4,000 4,080 4,162 4,245 16,486 4,330 4,416
Deluxe 2,000 2,100 2,205 2,315 8,620 2,431 2,553

Collection Information:
Credit Policy: Cash Sales Credit Sales In same In next In third In fourth Bad
30% 70% Quarter Quarter Quarter Quarter Debt
Collection Policy 60% 30% 9% 0% 1%

Collections from prior year:

Prior Actual Actual Budgeted Receipts in Current Year

Year Sales Collected Q1 Q2 Q3 Q4 Year
Q3 $779,800 $725,214 $49,127 $0 $0 $0 $49,127
Q4 $901,350 $648,900 $189,284 $56,785 $0 $0 $246,069
$238,411 $56,785 $0 $0 $295,196

Manufacturing Information:
Direct Materials Ending Inventory 15% of next quarter's production needs
Basic Bicycle Ending Inventory 20% of next quarter's sales needs
Deluxe Bicycle Ending Inventory 5% of next quarter's sales needs

Direct Material Information: Direct Labor Information:

2017 Hours of DL per Basic bike:
Units Cost per Cost per Ending Hours of DL per Deluxe bike:
Basic Bike Needed Unit Bike Inventory Wages per Hour:
Steel 2 $15.00 $30.00 1295
Rubber Handles 2 $2.00 $4.00 1286 Manufacturing OH Information:
Seat 1 $4.00 $4.00 640 Variable OH Allocation per DL hr:
Chain 1 $6.00 $6.00 652
Tires 2 $10.00 $20.00 1275 Fixed OH per year:
Gear Shift 1 $8.00 $8.00 609 Amount of Fixed OH from Depr:
Brake Unit 1 $6.00 $6.00 658
Standard Cost:
Deluxe Bike Basic Bike
Steel 3.5 $15.00 $52.50 * Deluxe Bike
Special Handles 2 $5.00 $10.00 32
 Porter's Problems Co.
Basic Information
For Year Ended December 31, 2007

Specialty Seat 1 $14.00 $14.00 26 A/P Purchase Payment Policy

Chain 1 $6.00 $6.00 * Payments made in current Q
Tires 2 $10.00 $20.00 * Payments made in next Q
Expanded Shift 1 $25.00 $25.00 34
Brake Unit 1 $6.00 $6.00 *
Prior year purchases
Actual
* inventory for standard items is used for both bikes Total Purch
but only shown here for the Basic Bike $452,650
 Porter's Problems Co.
Basic Information
For Year Ended December 31, 2007

Selling and Administrative Expense Information:

Variable S&A for Basic bikes: $15

2017 Variable S&A for Deluxe bikes: $20
Ending Selling
Inventory Price Fixed S&A Expenses per year:
807 $150
98 $350 Advertising $125,000
Executive Salaries $65,000
Property Taxes $7,800
Office Rent $12,000
Sales Cleaning Fees $6,000
Inventory R&D Costs $18,500
Credit/Collections
Purchasing Cash Flow and Investment Information:
Accounting Requirements
Production
Minimum Cash Balance: $30,000
Dividends

Required Dividend Payment each Qtr: $10,000

Planned Expansion (Purchase of Equipment)

Budgeted Purchases in Current Year
Q1 Q2 Q3
$50,000 $75,000 $40,000

Debt Information:
of DL per Basic bike: 2
DL per Deluxe bike: 5 Amount owed on bond $997,600
Wages per Hour: $14 Interest rate on bond 5%

Information: Line of Credit Max: $2,000,000

Allocation per DL hr: $1.75 Interest Rate on LofC: 12%

Fixed OH per year: $250,000 Common Stock information:

Fixed OH from Depr: 25%
Shares of stock outstanding: 100,000 at

116 Miscellaneous Information:

229
The company's tax rate is: 30%
 Porter's Problems Co.
Basic Information
For Year Ended December 31, 2007

Payment Policy Last year the company paid taxes of: $108,500
current Q 75.0% Amount of last year's tax to pay this year: 105%
25.0% Total tax to prepay this year: $113,925
Payment due each quarter: $28,481

year purchases
Actual Budgeted Payments in Current Year
Paid Q1 Q2 Q3 Q4 Year
$338,700 $113,950 $0 $0 $0 $113,950
 Porter's Problems Co.
Basic Information
For Year Ended December 31, 2007

Bob's Bicycles
ormation: Balance Sheet
As of December 31, 2017

Assets

Current Assets
Cash $30,176
Accounts Receivable $295,196
Direct Materials Inventory $51,413
Finished Good Inventory $116,060
Total Current Assets $492,845

Property, Plant, and Equipment

Building $1,500,000
Equipment $1,500,000
Accumulated Depr - Equipment ($875,000)
Total PPE $2,125,000

Total Assets $2,617,845

ses in Current Year Liabilities and Stock Holder's Equity

Q4 Year
$22,000 $187,000 Liabilities
Accounts Payable $113,950
Bonds Payables $997,600
Total Liabilities $1,111,550

Stockholder's Equity
Common Stock (100,000 shares outst $1,000,000
Retained Earnings $506,295
Total Stockholder's Equity $1,506,295

Total Liabilities and Stockholder's Equity $2,617,845

$10 per share

 Porter's Problems Co.
Basic Information
For Year Ended December 31, 2007

~
 Porter's Problems Co.
Sales and Collections Budget
For the Year Ended December 31, 2007

Sales Budget

2018 2019
Q1 Q2 Q3 Q4 Year Q1

Basic Bicycle $ 600,000 $ 612,000 $ 624,240 $ 636,725 $ 2,472,965 $ 649,459

Deluxe Bicycle $ 700,000 $ 735,000 $ 771,750 $ 810,338 $ 3,017,088 $ 850,854
Total Sales Revenue $ 1,300,000 $ 1,347,000 $ 1,395,990 $ 1,447,062 $ 5,490,052 $ 1,500,314

Schedule of Cash Collections

Quarter Collected during
Q1 Q2 Q3 Q4 Bad Debt Year
Collections from 2009 $238,411 $56,785 $0 $0 $295,196
Q1 $936,000 $273,000 $81,900 $0 $9,100 $1,290,900
Q2 $969,840 $282,870 $84,861 $9,429 $1,337,571
Q3 $1,005,113 $293,158 $9,772 $1,298,271
Q4 $1,041,885 $10,129 $1,041,885
$1,174,411 $1,299,625 $1,369,883 $1,419,904 $38,430 $5,263,823
 Porter's Problems Co.
Sales and Collections Budget
For the Year Ended December 31, 2007

2019
Q2

$ 662,448
$ 893,397
$ 1,555,846

hedule of Cash Collections

Remaining A/R Check figure

$0 $1,300,000
$0 $1,347,000
$87,947 $1,395,990
$395,048 $1,447,062
$482,995 $5,490,052
 Porter's Problems Co.
Production Budget
For the Year Ended December 31, 2007

Production Budget

2018 2019
Q1 Q2 Q3 Q4 Year Q1 Q2
Basic Bicycles:
Budgeted Sales 4,000 4,080 4,162 4,245 16,486 4,330 4,416
Desired Ending Inventory 816 832 849 866 866 883
Total Units Needed 4,816 4,912 5,011 5,111 17,352 5,213
Less: Beginning Inventory 807 816 832 849 807 866
Required Normal Bike Production 4,009 4,096 4,178 4,262 16,545 4,347

Deluxe Bicycles:
Budgeted Sales 2,000 2,100 2,205 2,315 8,620 2,431 2,553
Desired Ending Inventory 105 110 116 122 122 128
Total Units Needed 2,105 2,210 2,321 2,437 8,742 2,559
Less: Beginning Inventory 98 105 110 116 98 122
Required Normal Bike Production 2,007 2,105 2,211 2,321 8,644 2,437
 Porter's Problems Co.
Direct Labor Budget
For Year Ended December 31, 2007

Direct Labor Budget

2018
Q1 Q2 Q3 Q4 Year
Required Production
Basic 4,009 4,096 4,178 4,262 16,545
Deluxe 2,007 2,105 2,211 2,321 8,644

DL hours per bicycle

Basic 2 2 2 2 2
Deluxe 5 5 5 5 5

Total DL hours needed

Basic 8,018 8,193 8,356 8,524 33,091
Deluxe 10,035 10,526 11,053 11,605 43,219
Total DL hours needed 18,053 18,719 19,409 20,129 76,310

Cost per DL Hour $14 $14 $14 $14 $14

Total DL Cost $252,742 $262,064 $271,727 $281,803 $1,068,337
 Porter's Problems Co.
Manufacturing Overhead Budget
For Year Ended December 31, 2007

Manufacturing Overhead Budget

2018
Q1 Q2 Q3 Q4 Year
Budgeted DL hours 18,053 18,719 19,409 20,129 76,310
Variable OH rate $1.75 $1.75 $1.75 $1.75 $1.75
Total Variable OH $31,593 $32,758 $33,966 $35,225 $133,542
Fixed OH $62,500 $62,500 $62,500 $62,500 $250,000
Total OH $94,093 $95,258 $96,466 $97,725 $383,542

Total Manufacturing OH $383,542

Budgeted DL Hours 76,310
Predetermined OH for 2007 $ 5.03

Schedule of Cash Disbursements for Overhead

2018
Q1 Q2 Q3 Q4 Year
Total OH $94,093 $95,258 $96,466 $97,725 $383,542
Less: Depreciation and Amortization $15,625 $15,625 $15,625 $15,625 $62,500
Cash Disbursements for OH $78,468 $79,633 $80,841 $82,100 $321,042
Actuals

Actual results Total Units Total Cost

Steel 63,767 $1,002,772
Rubber Handles 34,427 $85,393
Seat 17,214 $60,585
Chain 25,596 $165,545
Tires 51,192 $536,593
Gear Shift 17,214 $141,668
Brake Unit 25,596 $172,145
Special Handles 16,765 $87,874
Specialty Seat 8,383 $149,874
Expanded Shift 8,383 $189,244
$2,591,693

Direct Labor hours 77,559

Actual Actual Sales

Quantity Sold Revenue
Basic 17,074 $2,475,730
Deluxe 8,356 $2,966,380

Actual Variable Costs

Total Direct Materials $2,591,693
Total Direct Labour $1,126,246
Total Variable Manufacturing Overhead $139,878
Total Variable S&A $438,604

Actual Fixed Costs

Maufacturing Costs $260,000
S&A Costs $237,050
Interest Expense $50,860
Income Tax Expense $171,655

Actual Market Size 2,675,000

Expected Market Size 2,500,000
 Bob's Bicycles
Pro Forma Contribution Margin Income Statement
For Year ended December 31, 2018

Static budget Flexible budget

Basic 16,486 Basic 17,074
Deluxe 8,620 Deluxe 8,356

Per Unit Overall Per Unit Overall

Sales Revenue
Basic $150.00 $2,472,965 $150.00 $2,561,100
Deluxe $350.00 $3,017,088 $350.00 $2,924,600
Total Sales Revenue $5,490,052 $5,485,700

Variable Costs
Direct Materials
Basic $78 $1,285,942 $78.00 $1,331,772
Deluxe $133.50 $1,150,803 $133.50 $1,115,526
Total Direct Materials $2,436,745 $2,447,298

Direct Labor
Basic $28 $461,620.10 $28.00 $478,072
Deluxe $70 211196125 $70.00 $584,920
Total Direct Labor $211,657,745 $1,062,992

Variable Manufacturing Overhead

Basic $3.50 $57,703 $3.50 $59,759
Deluxe $8.75 $75,427.19 $8.75 $73,115
Total Variable Manufacturing Overhead $133,130 $132,874

Variable S&A
Basic $15 $247,296.48 $15.00 $256,110
Deluxe $20 $172,405 $20.00 $167,120
Bad Debt Expense, Basic $1.05 $17,311 $1.05 $17,928
Bad Debt Expense, Deluxe $2.45 $0 $2.45 $20,472
Total Variable S&A $419,701 $423,230

Total Basic Bike Variable Costs $125.55 $2,069,871.54 $126 $2,143,640.70

Total Deluxe Bike Variable Costs $234.70 $2,023,172.68 $234.70 $1,961,153.20

Total Variable Costs $4,093,044 $4,104,794

Basic Bike Contribution Margin $24.45 $403,093 $24.45 $417,459

Deluxe Bike Contribution Margin $115.30 $993,915 $115.30 $963,447
Total Contribution Margin $1,397,008 $1,380,906

Fixed Costs
Manufacturing Costs $250,000 $250,000
S&A Costs $234,300 $234,300
Interest Expense $49,880 $49,880
Income Tax Expense $259,080 $259,080
Total Fixed Costs $793,260 $793,260

Contribution Margin Income $603,748 $587,646

Actual Results
17,074
8,356

Overall

$2,475,730
$2,966,380
$5,442,110

$2,591,693

$1,126,246

$139,878

$438,604

$4,296,421

$1,145,689

$260,000
$237,050
$50,860
$171,655
$719,565

$426,124
 Reconciling Absorption and Variable Net Incomes

Absorption Costing Net Income

Contribution Margin Net Income
Difference to be Reconciled $0

Total POHR
Variable Overhead Rate
Fixed Overhead Rate $0.00

Basic Bikes Deluxe Bikes Total

Units produced
Units sold
Difference between Units Produced and Sold 0 0 0
Fixed Overhead Rate
Production Hours
Applied Fixed Cost per unit $0.00 $0.00
Difference between
Absorption and Variable
Net Income (Difference in $0 $0 $0
Units Produced and Sold *
Applied Fixed Cost per

Calculating Break Even Point and Safety Margin

Budgeted Units Sold Basic

Deluxe

Total Sales

Weighted Average Contribution Margin Weighted

CM/Unit % of Total Sales Average CM
Basic
Deluxe
$0.00

Break-Even Point (in Units)

Fixed Costs
= =
Ave CM

Margin of Safety Calculations

Basic Deluxe
Budgeted Sales
Break-Even Point per Product
Total Break-Even Point
% of Total Sales
Required Sales to Break-Even
Margin of Safety
 Direct Material Variances

Overall: AP AQ SP EQ
Actual DM Expenditures Budgeted DM Expenditures
$ 2,591,693 $ 2,447,298
Total DM Variance
$ 144,395
unfavourable
Steel: AP AQ SP EQ
$15.73 63,767 $15.00 63,394
AP x AQ AQ x SP SP x EQ
$ 1,002,772 $ 956,498 $ 950,910
Steel Price Variance Steel Quantity Variance
$ 46,274 $ 5,588
unfavourable Unfavourable
Total Steel Variance
$ 51,862
unfavourable
Rubber AP AQ SP EQ
Handles: $2.48 34,427 $2.00 34,148
AP x AQ AQ x SP SP x EQ
$ 85,393 $ 68,854 $ 68,296
Rbr. Handles Price Variance Rbr. Handles Quantity Variance
$ 16,539 $ 558
unfavourable unfavourable
Total Rubber Handles Variance
$ 17,097
unfavourable
Seat: AP AQ SP EQ
$3.52 17,214 $4.00 17,074
AP x AQ AQ x SP SP x EQ
$ 60,585 $ 68,854 $ 68,296
Seat Price Variance Seat Quantity Variance
$ (8,269) $ 558
favorable unfavoruable
Total Seat Variance
$ (7,711)
favorable
Chain: AP AQ SP EQ
$6.47 25,596 $6.00 25,430
AP x AQ AQ x SP SP x EQ
$ 165,545 $ 153,577 $ 152,580
Chain Price Variance Chain Quantity Variance
$ 11,967 $ 997
unfavourable unfavourable
Total Chain Variance
$ 12,965
unfavourable
Tires: AP AQ SP EQ
 51,192 $10.00 50,860
AP x AQ AQ x SP SP x EQ
$ 536,593 $ 511,925 $ 508,600
Tires Price Variance Tires Quantity Variance
$ 24,668 $ 3,325
unfavorable unfavorable
Total Tires Variance
$ 27,993
unfavorable
Gear AP AQ SP EQ
Shift: 17,214 $8.00 17,074
AP x AQ AQ x SP SP x EQ
$ 141,668 $ 137,708 $ 136,592
Gear Shift Price Variance Gear Shift Quantity Variance
$ 3,960 $ 1,116
unfavorable unfavorable
Total Gear Shift Variance
$ 5,076
unfavorable
Brake AP AQ SP EQ
Unit: 25,596 $6.00 25,430
AP x AQ AQ x SP SP x EQ
$ 172,145 $ 153,577 $ 152,580
Brake Price Variance Brake Quantity Variance
$ 18,567 $ 997

Total Brake Variance

$ 19,565

Specialty AP AQ SP EQ
Handles: 16,765 $5.00 16,712
AP x AQ AQ x SP SP x EQ
$ 87,874 $ 83,827 $ 83,560
Sp. Handles Price Variance
Sp. Handles Quantity Variance
$ 4,048 $ 267

Total Specialty Handles Variance

$ 4,314

Specialty AP AQ SP EQ
Seat: 8,383 $14.00 8,356
AP x AQ AQ x SP SP x EQ
$ 149,874 $ 117,358 $ 116,984
Sp. Seat Price Variance Sp. Seat Quantity Variance
$ 32,517 $ 374

Total Specialty Seat Variance

$ 32,890
Expanded AP AQ SP EQ
Shift: 8,383 $25.00 8,356
AP x AQ AQ x SP SP x EQ
$ 189,244 $ 209,567 $ 208,900
Exp. Shift Price Variance Exp. Shift Quantity Variance
$ (20,323) $ 667
favorable unfavorable
Total Expanded Shift Variance
$ (19,656)
favorable
Direct Labor Variances

AP AQ SP
$14.52 77,559 $14.00
AP x AQ AQ x SP SP x EQ
$ 1,126,246 $ 1,085,826 $ 1,062,992
DL Price Variance DL Quantity Variance
$ 40,420 $ 22,834
unfavorable unfavorable
Total DL Variance
0.05616357 $ 63,254
unfavorable
EQ
75,928
Variable Overhead Variances

Overall: AP AQ SP EQ
Actual Variable OH Expenditures Budgeted Variable OH Expenditures
$ 139,878 $ 133,130
Total Variable OH Variance
$ 6,748

Variable OH AP AQ SP EQ
$1.80 77,559 $1.75 75,928
AP x AQ AQ x SP SP x EQ
$ 139,878 $ 135,728 $ 132,874
VOH Spending Variance VOH Efficiency Variance
$ 4,150 $ 2,854
unfavorable unfavorable
Total Variable OH Variance
$ 7,004
unfavorable
Production SP EQ SP SQ
Volume: $1.75 75,928 $1.75 76,074
SQ x EQ SP x SQ
$ 132,874 $ 133,130
Total Variable OH Production Volume Variance
$ (256)
favorable

Fixed Overhead Variances

Spending: AP AQ SP SQ
$3.35 77,559
AP x AQ SP x SQ
$ 260,000 $ 250,000
Total Fixed OH Variance
$ 10,000

Production AP AQ SP SQ
Volume: $3.28 77,559
AP x AQ SP x SQ
$ 254,394 $ 250,000
Total Fixed OH Variance
$ 4,394
 Basic Deluxe Basic Deluxe

Sales Variances (Revenue)

Actual Sales

Actual Volume
x
Actual Selling Price
=
17074 8356

$2,475,730.00 $2,966,380.00 Sales Price Variance

-$85,370.00 $41,780.00
unfavorable favorable

$5,442,110.00

The reason for the price and quantity variances may be because of some special orders or last minute that required mo
were returned.
There could also be price fluctuations meaning that the price of one or all of the products have increased or decreased
have changed overtime.
 Basic Deluxe Basic Deluxe

Flexible Budget Sales

Actual Volume
x
Standard Selling Price
=
17,074 8,356
$150.00 $350.00
$2,561,100.00 $2,924,600.00 Sales Quantity Variance
$88,135.20 -$92,487.50
favorable unfavorable

$2,765.20 -$50,707.50

-$47,942.30
unfavourable

st minute that required more time or defective bikes that

ave increased or decreased or demand for one of the products

 Basic Deluxe

Static Budget Sales

Budgeted Volume
x
Standard Selling Price
=
16,486 $8,620.25
$150.00 $350.00
$2,472,964.80 $3,017,087.50

$5,490,052.30
 Porter's Problems Co.
Ending Inventory Budget
For Year Ended December 31, 2007

Ending Finished Goods Inventory Budget

Item Quantity Cost Total

Production Cost per Basic Bike
DM Steel 2 units $15 each $30
Rubber Handles 2 set $2 each $4
Seat 1 unit $4 each $4
Chain 1 unit $6 each $6
Tires 2 unit $10 each $20
Gear Shift 1 unit $8 each $8
Brake Unit 1 unit $6 each $6
Total DM $78
DL 2 hours $14 per hour $28
OH 2 hours $5.03 per DL hour $10
Unit Production Cost $116
Ending finished goods inventory in units - Basic Bikes 866
Ending finished goods inventory in dollars - Basic Bikes $ 100,495

Production Cost per Deluxe Bike

DM Steel 3.5 units $15 each $53
Special Handle 2 set $5 each $10
Specialty Seat 1 unit $14 each $14
Chain 1 unit $6 each $6
Tires 2 unit $10 each $20
Expanded Shift 1 unit $25 each $25
Brake Unit 1 unit $6 each $6
Total DM $134
DL 5 hours $14 per hour $70
OH 5 hours $5.03 per DL hour $25
Unit Production Cost $229
Ending finished goods inventory in units - Deluxe Bikes 122
Ending finished goods inventory in dollars - Deluxe Bikes $ 27,790

Total Ending Finished Goods Inventory $ 128,285

 Porter's Problems Co.
Selling and Administrative Expense Budget
For Year Ended December 31, 2007

Selling and Administrative Budget

2018
Q1 Q2 Q3 Q4 Year
Budgeted sales (by bicycle)
Basic 4,000 4,080 4,162 4,245 16,486
Deluxe 2,000 2,100 2,205 2,315 8,620

Variable S&A Expense

Basic $15 $15 $15 $15 $15
Deluxe $20 $20 $20 $20 $20

Total Variable S&A

Basic $60,000 $61,200 $62,424 $63,672 $247,296
Deluxe $40,000 $42,000 $44,100 $46,305 $172,405
Total Variable S&A $100,000 $103,200 $106,524 $109,977 $419,701

Budgeted Fixed S&A Expenses

Advertising $31,250 $31,250 $31,250 $31,250 $125,000
Executive Salaries $16,250 $16,250 $16,250 $16,250 $65,000
Property Taxes $1,950 $1,950 $1,950 $1,950 $7,800
Office Rent $3,000 $3,000 $3,000 $3,000 $12,000
Cleaning Fees $1,500 $1,500 $1,500 $1,500 $6,000
R&D Costs $4,625 $4,625 $4,625 $4,625 $18,500
Total Budgeted Fixed S&A Expense $58,575 $58,575 $58,575 $58,575 $234,300

Total S&A Expense $158,575 $161,775 $165,099 $168,552 $654,001

 Porter's Problems Co.
Cash Budget
For Year Ended December 31, 2007

Cash Budget

2018
Q1 Q2 Q3 Q4
Cash Balance, Beginning $30,176 $35,420 $98,071 $240,281
Add Receipts:
Cash Collected from Customers $1,174,411 $1,299,625 $1,369,883 $1,419,904
Total Cash Available $1,204,587 $1,335,045 $1,467,954 $1,660,184

Less: Manufacturing Outflows

Direct Materials $578,431 $607,550 $619,056 $640,250
Direct Labor $252,742 $262,064 $271,727 $281,803
Variable OH $31,593 $32,758 $33,966 $35,225
Fixed OH $46,875 $46,875 $46,875 $46,875
Total Manufacturing Outflows $909,641 $949,247 $971,623 $1,004,154

Less: Selling & Admin Outflows

Variable Selling and Admin $100,000 $103,200 $106,524 $109,977
Fixed Selling and Admin $58,575 $58,575 $58,575 $58,575
Total Selling and Administrative Outflows $158,575 $161,775 $165,099 $168,552

Total Cash Outflows from Operations $1,068,216 $1,111,022 $1,136,722 $1,172,707

Cash Available from Normal Operations $136,371 $224,023 $331,232 $487,478

Less: Investments
Equipment Purchases $50,000 $75,000 $40,000 $22,000
Cash Available after Investments $86,371 $149,023 $291,232 $465,478

Miscellaneous Cash Flows

Income Taxes $28,481 $28,481 $28,481 $28,481
Bond Interest Payments $12,470 $12,470 $12,470 $12,470
Sale of Stock, issue of other debt, etc. $0 $0 $0 $0
Dividends $10,000 $10,000 $10,000 $10,000
Total Miscellaneous Cash Flows $50,951 $50,951 $50,951 $50,951
Total Cash before Line of Credit $35,420 $98,071 $240,281 $414,527

Line of Credit
Beginning Balance (not a Cash Flow) $0 $0 $0 $0
Interest (not a Cash Flow) $0 $0 $0 $0

Loans $0 $0 $0 $0
Repayments
Principal $0 $0 $0 $0
Interest $0 $0 $0 $0
Ending Cash Balance $35,420 $98,071 $240,281 $414,527
 Porter's Problems Co.
Cash Budget
For Year Ended December 31, 2007

Cash Budget

2018
Year
$30,176

$5,263,823
$5,293,999

$2,445,287
$1,068,337
$133,542
$187,500
$3,834,665

$419,701
$234,300
$654,001

$4,488,667
$805,332

$187,000
$618,332

$113,925
$49,880
$0
$40,000
$203,805
$414,527

$0

$0

$0
$0
$414,527
 Bob's Bicycles
Pro Forma Income Statement
For Year ended December 31, 2018

Sales $5,490,052
Cost of Goods Sold ($3,884,140)
Gross Profit $1,605,912

Less Selling and Administrative ($654,001)

Bad Debt Expense ($38,430)
Income before Interest and Taxes $913,480

Interest Expense ($49,880)

Income before Taxes $863,600

Income Taxes Expense ($259,080)

Net Income $604,520

EPS $6.05
 Income Statement Calculations
COGS
Beginning FG inventory $116,060
DM
Beginning $51,413
Plus: Purchased $2,492,737
Less: Ending ($99,663)
Total DM $2,444,487
DL $1,068,337
OH (Manufacturing) $383,542
Total Cost of Goods Available for Sale $4,012,426
Less: Ending Inventory $128,285
COGS $3,884,140

Ending Inventory

Steel 2,584 $15 $38,754

Rubber Handles 1,304 $2 $2,608
Seat 652 $4 $2,608
Chain 1,018 $6 $6,106
Tires 2,035 $10 $20,352
Gear Shift 652 $8 $5,216
Brake Unit 1,018 $6 $6,106
Special Handles 731 $5 $3,656
Specialty Seat 366 $14 $5,118
Expanded Shift 366 $25 $9,139
$99,663

Interest Expense
Line of Credit interest accrued $0
Bond interest accrued $49,880
Total Interest Accrued $49,880
 Bob's Bicycles
Pro Forma Statement of Cash Flows
For Year ended December 31, 2018

Cash Flow from Operating Activities

Net Income $604,520
Adjustments:
Change in Accounts Receivable ($187,799) (a.)
Change in Raw Materials Inventory ($48,250) (b.)
Change in Finished Good Inventory ($12,225) (c.)
Change in Accounts Payable $47,450 (d.)
Change in Interest Payable $0 (e.)
Change in Income Tax Payable $145,155 (f.)
Depreciation $62,500 $6,831 (g.)
Total Cash Flow from Operating Activities $611,351

Cash Flow from Investing Activities

Cash Paid for Equipment ($187,000) (g.)
Total Cash Flow from Investing Activities ($187,000)

Cash Flow from Financing Activities

Cash Received from Loans $0 (g.)
Cash Paid on Loans $0 (g.)
Cash Paid as Dividends ($40,000) (g.)
Total Cash Flow from Financing Activities ($40,000)

Total Change in Cash $384,351

Cash Balance, 1/1/10 $30,176
Cash Balance, 12/31/10 $414,527
 Calculating the Adjustments from Current Assets
(a.) beginning accounts receivable $295,196
ending accounts receivable $482,995
adjustment from accounts receivable ($187,799)

(b.) beginning raw materials inventory $51,413

ending raw materials inventory $99,663
adjustment from raw materials inventory ($48,250)

(c.) beginning finished goods inventory $116,060

ending finished goods inventory $128,285
adjustment from finished goods inventory ($12,225)

Calculating the Adjustments from Current Liabilities

(d.) ending accounts payable $161,400
beginning accounts payable $113,950
adjustment from accounting payable $47,450

(e.) ending interest payable $0

beginning interest payable $0
adjustment from interest payable $0

(f.) ending income tax payable $145,155

beginning income tax payable $0
adjustment from income tax payable $145,155

(g.) from cash budget

 Bob's Bicycles
Pro Forma Balance Sheet
As of December 31, 2018

Assets

Current Assets
Cash $414,527 (a.)
Accounts Receivable, net $482,995 (b.)
Raw Materials Inventory $99,663 (c.)
Finished Good Inventory $128,285 (d.)
Total Current Assets $1,125,470

Property, Plant, and Equipment

Building $1,500,000 (e.)
Equipment $1,687,000 (g.)
Accumulated Depr - Building and Equipment ($937,500) (h.)
Total PPE $2,249,500

Total Assets $3,374,970

Liabilities and Stock Holder's Equity

Current Liabilities
Accounts Payable $161,400 (i.)
Interest Payable $0 (j.)
Income Tax Payable $145,155 (k.)
Total Current Liabilities $306,555

Long-term Liabilities
Bonds Payables $997,600 (l.)
Loan Payable $0 (m.)
Total Long-term Liabilities $997,600
Total Liabilities $1,304,155

Stockholder's Equity
Common Stock (100,000 shares outstanding) $1,000,000 (n.)
Retained Earnings $1,070,815 (o.)
Total Stockholder's Equity $2,070,815

Total Liabilities and Stockholder's Equity $3,374,970 $0

 Notes to the Balance Sheet

(a.) from the Cash Budget, ending balance

(b.) from the sales budget, the amounts from Q3 and Q4 that have not yet been collected:
Quarter Sold Collected Remaining
Q3 $1,395,990 $1,298,271 $97,719
Q4 $1,447,062 $1,041,885 $405,177
$502,897
Less: Bad Debt $19,901
A/R, net $482,995

(c.) from income statement calculations

(d.) from the ending inventory budget

(e.) from prior year, no change

(g.) total from prior year, plus the current investment (shown in the cash budget.)
2017 Q1 Q2 Q3 Q4 Total
$1,500,000 $50,000 $75,000 $40,000 $22,000 $1,687,000

(h.) total from prior year, plus the current year's depreciation (shown in the OH budget)
2017 Q1 Q2 Q3 Q4 Total
($875,000) ($15,625) ($15,625) ($15,625) ($15,625) ($937,500)

(i.) from the raw materials budget, the amount from Q4 that has not yet been paid:
Quarter Purchased Paid Remaining
Q4 $645,601 $484,201 $161,400

(j.) Interest accrued (from the income statement), less interest paid
Interest accrued $49,880
Interest paid $49,880
Interest payable $0

(k.) the difference between income tax expense (income statement) and income tax paid (cash budget)
Income tax accrued $259,080
Income tax paid $113,925
Income tax payable $145,155

(l.) from prior year, no change

(m.) the difference between loans taken out and repayments

loans $0
repayments $0
loan balance $0
(n.) from prior year, no change

(o.) Retained earnings equals beginning retained earnings plus net income less dividends
retained earnings, beginning $506,295
plus net income $604,520
less dividends paid $40,000
retained earnings, ending $1,070,815
Notes to the Balance Sheet

(income statement) and income tax paid (cash budget)

d earnings plus net income less dividends
 Porter's Problems Co.
Direct Materials and Cash Disbursements for Materials Budgets
For Year Ended Dec. 31, 2007

Direct Materials Budget

2018 2019
Q1 Q2 Q3 Q4 Year Q1
Required Production
Normal 4,009 4,096 4,178 4,262 16,545 4,347
Deluxe 2,007 2,105 2,211 2,321 8,644 2,437

Direct Materials Needed

Basic
Steel 8,018 8,193 8,356 8,524 33,091 8,694
Rubber Handles 8,018 8,193 8,356 8,524 33,091 8,694
Seat 4,009 4,096 4,178 4,262 16,545 4,347
Chain 4,009 4,096 4,178 4,262 16,545 4,347
Tires 8,018 8,193 8,356 8,524 33,091 8,694
Gear Shift 4,009 4,096 4,178 4,262 16,545 4,347
Brake Unit 4,009 4,096 4,178 4,262 16,545 4,347
Deluxe
Steel 7,025 7,368 7,737 8,124 30,253 8,530
Special Handles 4,014 4,211 4,421 4,642 17,288 4,874
Specialty Seat 2,007 2,105 2,211 2,321 8,644 2,437
Chain 2,007 2,105 2,211 2,321 8,644 2,437
Tires 4,014 4,211 4,421 4,642 17,288 4,874
Expanded Shift 2,007 2,105 2,211 2,321 8,644 2,437
Brake Unit 2,007 2,105 2,211 2,321 8,644 2,437
Totals
Steel 15,043 15,561 16,093 16,647 63,344 17,224
Rubber Handles 8,018 8,193 8,356 8,524 33,091 8,694
Seat 4,009 4,096 4,178 4,262 16,545 4,347
Chain 6,016 6,202 6,389 6,583 25,189 6,784
Tires 12,032 12,403 12,778 13,166 50,378 13,568
Gear Shift 4,009 4,096 4,178 4,262 16,545 4,347
Brake Unit 6,016 6,202 6,389 6,583 25,189 6,784
Special Handles 4,014 4,211 4,421 4,642 17,288 4,874
Specialty Seat 2,007 2,105 2,211 2,321 8,644 2,437
Expanded Shift 2,007 2,105 2,211 2,321 8,644 2,437

Desired Ending Inventory

Steel 2,334 2,414 2,497 2,584 2,584
Rubber Handles 1,229 1,253 1,279 1,304 1,304
Seat 614 627 639 652 652
Chain 930 958 987 1,018 1,018
Tires 1,860 1,917 1,975 2,035 2,035
Gear Shift 614 627 639 652 652
Brake Unit 930 958 987 1,018 1,018
Special Handles 632 663 696 731 731
Specialty Seat 316 332 348 366 366
Expanded Shift 316 332 348 366 366
 Porter's Problems Co.
Direct Materials and Cash Disbursements for Materials Budgets
For Year Ended Dec. 31, 2007

Total Needs
Steel 17,377 17,975 18,590 19,231 65,928
Rubber Handles 9,247 9,446 9,635 9,828 34,395
Seat 4,623 4,723 4,818 4,914 17,197
Chain 6,946 7,160 7,376 7,600 26,207
Tires 13,892 14,320 14,752 15,201 52,414
Gear Shift 4,623 4,723 4,818 4,914 17,197
Brake Unit 6,946 7,160 7,376 7,600 26,207
Special Handles 4,646 4,874 5,117 5,373 18,019
Specialty Seat 2,323 2,437 2,559 2,687 9,009
Expanded Shift 2,323 2,437 2,559 2,687 9,009

Less: Beginning Inventory

Steel (1,295) (2,334) (2,414) (2,497) (1,295)
Rubber Handles (1,286) (1,229) (1,253) (1,279) (1,286)
Seat (640) (614) (627) (639) (640)
Chain (652) (930) (958) (987) (652)
Tires (1,275) (1,860) (1,917) (1,975) (1,275)
Gear Shift (609) (614) (627) (639) (609)
Brake Unit (658) (930) (958) (987) (658)
Special Handles (32) (632) (663) (696) (32)
Specialty Seat (26) (316) (332) (348) (26)
Expanded Shift (34) (316) (332) (348) (34)

Direct Materials to be Purchased

Steel 16,082 15,641 16,176 16,734 64,633
Rubber Handles 7,961 8,217 8,382 8,549 33,109
Seat 3,983 4,109 4,191 4,275 16,557
Chain 6,294 6,230 6,418 6,613 25,555
Tires 12,617 12,459 12,836 13,226 51,139
Gear Shift 4,014 4,109 4,191 4,275 16,588
Brake Unit 6,288 6,230 6,418 6,613 25,549
Special Handles 4,614 4,242 4,454 4,677 17,987
Specialty Seat 2,297 2,121 2,227 2,338 8,983
Expanded Shift 2,289 2,121 2,227 2,338 8,975

Cost per unit of Direct Materials

Steel $15 $15 $15 $15 $15
Rubber Handles $2 $2 $2 $2 $2
Seat $4 $4 $4 $4 $4
Chain $6 $6 $6 $6 $6
Tires $10 $10 $10 $10 $10
Gear Shift $8 $8 $8 $8 $8
Brake Unit $6 $6 $6 $6 $6
Special Handles $5 $5 $5 $5 $5
Specialty Seat $14 $14 $14 $14 $14
Expanded Shift $25 $25 $25 $25 $25
 Porter's Problems Co.
Direct Materials and Cash Disbursements for Materials Budgets
For Year Ended Dec. 31, 2007

Cost of Direct Materials to be purchased

Steel $241,225 $234,613 $242,646 $251,006 $969,490
Rubber Handles $15,922 $16,434 $16,763 $17,098 $66,218
Seat $15,934 $16,434 $16,763 $17,098 $66,230
Chain $37,765 $37,378 $38,507 $39,678 $153,329
Tires $126,175 $124,593 $128,357 $132,261 $511,386
Gear Shift $32,116 $32,869 $33,526 $34,197 $132,707
Brake Unit $37,729 $37,378 $38,507 $39,678 $153,293
Special Handles $23,068 $21,210 $22,271 $23,384 $89,934
Specialty Seat $32,155 $29,695 $31,179 $32,738 $125,767
Expanded Shift $57,220 $53,026 $55,677 $58,461 $224,384
Total Cost $619,308 $603,630 $624,198 $645,601 $2,492,737

Schedule of Cash Payments

Quarter
Q1 Q2 Q3 Q4 Year
Accounts Payable, Beginning $113,950 $0 $0 $0 $113,950
Q1 $464,481 $154,827 $0 $0 $619,308
Q2 $0 $452,723 $150,908 $0 $603,630
Q3 $0 $0 $468,148 $156,049 $624,198
Q4 $0 $0 $0 $484,201 $484,201
Total Cash Paid for Materials $578,431 $607,550 $619,056 $640,250 $2,445,287
Contribution Margin Variances

Flexible Budget
Actual Contribution Margin Contribution Margin

Actual Volume Actual Volume

x x
Actual Contribution Margin Budget Contribution Margin
= =

Flexible Budget Variance

Static Budget Variance

Weighted Average Contribution Margin

Static Budget Contribution Margin
Total Static Budget Sales
(Basic + Deluxe)

Budget Sales Mix Static Budget Sales

Basic
Deluxe
0 0%

Actual Sales Mix

Basic
Deluxe
0 0%

Flexible Budget
Contribution Margin

Actual Sales Mix Budget Sales Mix

x x
Actual Volume Actual Volume
 x x
Budget Contribution Margin Budget Contribution Margin

Basic

Sales Mix Variance

Deluxe

Sales Mix Variance

Total

Flexible Budget
Contribution Margin

Actual Market Share Expected Market Share

x
Actual Market Size Actual Market Size
x x
Weighted Average CM Weighted Average CM

Market Share Variance

 Static Budget
Contribution Margin

Budgeted Volume
x
ion Margin Budget Contribution Margin
=

CM Volume Variance

Total Actual Sales Expected Sales Mix

Static Budget
Contribution Margin

Budget Sales Mix

x
Budgeted Volume
 x
ion Margin Budget Contribution Margin

Sales Quantity Variance

Sales Quantity Variance

Total

Expected Market Share

x
Expected Market Size
x
Weighted Average CM

Market Size Variance

\