The Norwegian company Barbacoa AS imports gas-heated barbeque grills from a manufacturer in China. The grills are distri

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The Norwegian Company Barbacoa As Imports Gas Heated Barbeque Grills From A Manufacturer In China The Grills Are Distri 1 (587.05 KiB) Viewed 60 times

The Norwegian Company Barbacoa As Imports Gas Heated Barbeque Grills From A Manufacturer In China The Grills Are Distri 2 (369.92 KiB) Viewed 60 times

The Norwegian Company Barbacoa As Imports Gas Heated Barbeque Grills From A Manufacturer In China The Grills Are Distri 3 (324.07 KiB) Viewed 60 times

The Norwegian company Barbacoa AS imports gas-heated barbeque grills from a manufacturer in China. The grills are distributed to Norwegian customers through three channels: the chain of hardware stores Nerdia, the chain of furniture stores Reidar, and from the company's own e- commerce platform. Barbacoa AS has six employees: The Managing Director, who also owns 30 % of the shares of the company. Two Key Account Managers, who are in changes of sales to Nerdia and Reidar. A Logistics Manager, who is responsible for the supply chain and warehouse. A Technical Manager, who handles the contact with the manufacturer as well as technical support to customers. • An accountant who handles bookkeeping, payroll, and payments as well as having the responsibilities for the IT-infrastructure and the E-commerce platform. Barbacoa's budget process is as follows: • In November each year, the company makes activity plans for the forthcoming year. The demand for barbeque grills is highly seasonal, with more than 80% of the annual sales coming from the second and third quarter of the year. A Master Budget for the forthcoming calendar year is then made early December, with a budgeted income statement, a cash flow budget, and a budgeted balance sheet. The annual budgets are broken up in four quarterly budgets, to help the company to better follow up the seasonal variations in income and net cash flow. These quarterly budgets are often revised when new relevant information is available. . . The budgets for the third quarter of 2022 are now up for revision, due several things that have happened since the first version was made in December 2021. The original Q3 budgets were based on the following assumptions: 1. The company plans to purchase 5 200 grills from their Chinese manufacturer. 2. The company expects a total sale of 8 600 grills. 3. The average purchase price charged by the manufacturer in Guangzhou is USD 240.00 including freight to Norwegian warehouse. The budgeted exchange rate is 1 USD = 9.20 NOK. This purchase price and exchange rate has also been used for purchases made in previous periods. 4. The sales are expected to be split as follows: Nerdia 50 %, Reidar 30 % and Internet sales 20 %. 5. Nerdia and Reidar pays on average kr 2 900 per grill, the Internet customers that order directly from the company pays kr 3 950. 6. Freight costs from Norwegian warehouse are paid by the customer. 7. The monthly salaries are as follows: 1) Managing Director: kr 100 000 2) Key Account Managers: kr 65 000 each 3) Logistics Manager: kr 60 000 4) Technical Manager: kr 60 000 5) Accountant: kr 55 000 8. In addition, the two Key Account Managers receives a bonus of 2.0 % of the orders to Nerdia and Reidar. 9. Instead of July salaries, the personnel are paid 12.0% of their salaries in 2021 as holiday pay. This amounts to kr 518 000, which is accrued for in the balance sheet. 10. The company makes an accrual for 12.0 % holiday pay each month in 2022. Basis for this calculation is the fixed salary and the bonus. 11. The company's National Insurance Contribution ("arbeidsgiveravgift") equals 14.1% of the salaries and holiday pay. Basis for this calculation is the fixed salaries, the bonus, and the holiday pay. 12. Social security costs for the 2021 holiday pay are accrued for in the balance sheet per 31.12.2021 and carried forward to the opening balance of Q3, 2022. 13. Budgeted depreciation is kr 12 000 per month 14. Budgeted rent, office and warehouse costs are kr 32 000 per month 15. Company cars and other travel costs are budgeted to kr 14 000 per month 16. Other budgeted payable operating costs amount to kr 10 000 per month. 17. The financial income and costs are insignificant. 18. Budgeted Payable taxes are 22.0% of the budgeted profit 19. For the sake of simplification, Barbacoa's budgets disregard the effect of VAT. Hence, all the above figures are ex VAT.
Question 1 (25%) In the attached Excel-file you will find the original budgeted income statement for Q3, 2022, made back in December 2021, which concludes with a profit after taxes of kr 4 835 510. Due to changes in the company' plans and activities as well as macroeconomic changes, it is now time to revise the budget and calculate the impact of eight different changes: 1. The company will launch a summer campaign together with the Nerdia-Group. The average price per unit will be reduced to kr 2 600 per unit and it is expected this will increase the sales volume by 1 700 units. 2. The budgeted Internet sales is expected to increase to 2020 units. The total number of sold units will then increase from 8 600 units in the original budget to 10 600 units in the revised budget. 3. The bonus to the two Key Account Managers will now be 2.5%. 4. The average USD rate is expected to be 8.90, both for purchases in Q3 and in previous periods. 5. Due to the increased shipping rates, the price for the barbecue grills will increase to USD 260.00 per unit. 6. A new technical supervisor will start to work for the company on June 15, 2022. Her fixed salary will be kr 48 000 per month. She will work two full months in Q3. 7. A new company car will be purchased for kr 480 000 and will be delivered and paid for early June. The car will be depreciated linearly over 10 years from June 2022, with an expected scrap value after 10 years of kr 40 000. 8. The company car costs will increase by kr 7 000 per month.
. . . Question 2 (25 %) In the attached Excel-file you will find the original budgeted balance sheet for Q3, 2022, made back in December 2021, which concludes with a total balance sum of kr 19 571 100 per 31st August 2022. Here is some additional information about the various balance sheet items: Inventory value: The opening balance consists of 5 800 barbeque grills. Accounts Receivable: The closing balance amounts to 1/3 of the total sales in Q3, 2022 Accounts Payable: The closing balance amounts to 1/3 of the purchases of goods in Q3, 2022. Other payable costs are paid in the month they occur. Payable holiday pay: The opening balance consists of kr 594 000 in holiday pay earned in 2021 to be paid in July 2022 as well as accrued holiday pay for the first six months of 2022, kr 321 000. Payable social security costs: The opening balance consists of an accrual for social security costs of kr 82 000 for May. This will be paid on 15th July 2022 together with the social security costs of kr 85 000 for June. The closing balance consists of the remaining social security costs for Q3, to be paid on 15th September 2022. Make a revised budgeted balance sheet for Q3, based on the information available, with new figures per 31st August 2022 for: Company cars Inventory Accounts Receivable Retained earnings Accounts Payable Payable holiday pay Payable social security costs Payable corporate tax For the balance of the bank deposit account per 31st August 2022 you should use the balance sheet equation. . . . . . .
Question 3 (15%) In the attached Excel-file you will find the original budgeted cash flow for 23, 2022, made back in December 2021, which concludes with a net cash flow of kr-333 833 during this period. Make a revised cash flow budget for Q3, based on your revised budgeted income as well as your revised budgeted balance sheet. Question 4 (35%) Barbacoa AS' Chinese supplier is a traditional manufacturing company that produces and sells two types of barbeque grills, the coal-driven Baconizer and the gas-driven TasteMaster. It is only the latter that is imported to Norway. The company has previously used a costing model, where indirect production costs have been allocated to the two products with the help of a distribution rate where production time has been defined as the underlying cost driver. Their newly employed CFO wants to introduce Activity-based costing and has made an analysis of the budgeted indirect production costs for 2022 (all figures in Chinese Yuan): Total activity costs Fixed costs in % Activity 6 200 000 90.00 % Procurement Machinery set-up and calibration 4 800 000 100.00% Available capacity 4 000 purchase orders 800 production lines 22 000 2008 production hours 800 inspections 1 200 service jobs Budgeted capacity Budgeted capacity utilization utilization Baconizer Taste Master 1 800 1 400 purchase orders purchase orders 20 400 300 production lines production lines 8 000 10 400 production production hours hours 240 420 inspections inspections 400 540 service jobs service jobs 6 400 000 82.00% Production Quality inspections Maintenance of equipment 3 600 000 88.00% 3 000 000 74.00 % Facility costs 8 000 000 84.00% N/A N /A N/A N/A Total 32 000 000 The direct production costs per unit are as follows: Baconizer Taste Master Direct material 52.00 106.00 Direct labor 104.00 212.00 Packaging 36.00 42.00 Total 192.00 360.00 The planned production and sales in 2022 is: • Baconizer: 120 000 units Taste Master: 240 000 units . Use the template in the Excel spreadsheet to make an ABC-costing model for one unit of Baconizer and one unit of Taste Master, as well as a calculation of the costs for excess capacity in the Production Department.
2,900.00 3,950.00 8,600 4,300 2,580 1,720 240.00 9.20 2,208.00 22.00% 3 Budgeted income statement Q3, 2022: 4 5 Sales price per unit; Nerdia and Reidar 6 Sales price per unit; Internet sales 7 Total sales in units 8 Sales through Nerdia-chain 9 Sales through Reidar-chain 0 Sales through own E-commerce platform -1 Average purchase price in USD -2 USD rate -3 Average purchase price in NOK 4 Corporate tax rate -5 .6 Sales income -7 Costs of goods sold -8 Gross margin -9 Salaries 20 Bonus to Key Account Managers -1 Holiday pay 2 Social security contribution -3 Total salaries and personnel -4 Depreciation 5 Rent, office and warehouse costs 26 Company cars and travel costs -7 Other payable operating costs 28 Total operating costs 9 Budgeted profit before taxes Q3, 2022 0 Payable taxes 1 Budgeted profit before taxes Q3, 2022 2 26,746,000 18,988,800 7,757,200 29.00% 810,000 249,400 127,128 167,300 1,353,828 36,000 96,000 42,000 30,000 204,000 6,199,372 1,363,862 4,835,510
Budgeted balance sheet Q3, 2022: Company cars nventory Accounts Receivable Bank deposits Sum assets 01.06.2022 637,200 12,806,400 2,716,900 5,089,200 21,249,700 Change -36,000 -7,507,200 6,198,433 -333,833 -1,678,600 31.08.2022 601,200 5,299,200 8,915,333 4,755,367 19,571,100 0 0 Share capital Premium fund Retained earnings Accounts Payable Payable holiday pay Payable social security costs Payable corporate tax Short-term loan from owners Sum equity and liabilities 240,000 1,530,000 7,244,100 6,038,600 915,000 82,000 0 5,200,000 21,249,700 4,835,510 -2,211,400 -466,872 300 1,363,862 -5,200,000 -1,678,600 240,000 1,530,000 12,079,610 3,827,200 448,128 82,300 1,363,862 0 19,571,100
Budgeted cash flow budget 23, 2022, indirect method: Budgeted profit before taxes Paid taxes Depreciation Reduction of inventory Increased Accounts Receivable Reduced Accounts Payable Reduced other short-term liabilities Net cash flow Q3 6,199,372 0 36,000 7,507,200 -6,198,433 -2,211,400 -5,666,572 -333,833
Activity-based costing model: Calculation of activity rates: Variable Procurement Machinery set-up and calibration Production costs Quality inspection Maintenance of equipment Facility costs Fixed per purchase order per production line per production hour per inspection job per service job Product costing: Baconizer Taste Master Direct material Direct labor Packaging Total direct costs per unit 0.00 0.00 Procurement costs, variable Procurement costs, fixed Machinery set-up and calibration, variable Machinery set-up and calibration, fixed Production costs, variable Production costs, fixed Quality inspections, variable Quality inspections, fixed Maintenance of equipment, variable Maintenance of equipment, fixed Facility costs, variable Facility costs, fixed Total indirect costs per unit 0.00 0.00
Variable 65 66 Activity-based costing model: 67 68 Calculation of activity rates: 69 70 Procurement 71 Machinery set-up and calibration 72 Production costs 73 Quality inspection 74 Maintenance of equipment 75 Facility costs 76 Fixed per purchase order per production line per production hour per inspection job per service job