x Introductory Post E: cj Hill Question 2 - Team ed ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=http: {Gmail YouTube c Team Project A @ Part 2 of 3 eBook References Today's moment Sigmund Freud' Maps Google Saved Required information [The following information applies to the questions displayed below] Endless Mountain Company manufactures a single product popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for next year and reports a beginning balance sheet as follows: Endless Mountain Company Balance Sheet December 31, This Year Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500 units) 32,250 Total current assets $ 349,700 Plant and equipment: Buildings and equipment 900,000 Accumulated depreciation (292,000) Plant and equipment, net 608,000 Total assets $ 957,700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 158,000 Stockholders? equity: Common stock $ 419,800 Retained earnings 379,900 Total stockholders' equity 799,700 Total liabilities and stockholders' equity $ 957,700 The company's chief financial officer (CFO), in consultation with various managers across the organization, developed the following set of assumptions to help create next year's budget: Q Search Help wr (5 All Bookmarks Save & Exit Submit 11:52 AM Qe se a * dx @& 5/6/2025 Tir treye eters A ors (ones (eae Cr) G 23 ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=http: 252Fnewconnect.mheducation.com? {Gmail YouTube Maps () Google (5 All Bookmarks Team Project A @ Saved Help Save &Exit | Submit ) 1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. - Notice the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of the following year is 13,000 units. 2. All sales are on credit. Uncollectible accounts are negligible and can be ignored. Seventy-five percent of all credit sales Part 2 of 3 are collected in the quarter of the sale and 25% are collected in the subsequent quarter. =~ 3. Each quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. 4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter's ending raw materials inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials inventory on December 31 of next year is 5,000 yards. eBook 5. Seventy percent of each quarter's purchases are paid for in the quarter of purchase. The remaining 30% of each quarter's purchases are paid in the following quarter. 6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hour to complete. All direct labor costs are paid in the quarter incurred. 7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $150,000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred. 8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25,000), executive salaries ($64,000), insurance ($12,000), property tax ($8,000), and depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation) are paid in the quarter incurred. 9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company's lender imposes a simple interest rate of 3% per quarter on any borrowings. 10. Dividends of $15,000 will be declared and paid in each quarter. 11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means the most recently purchased raw materials are the \"first-out\" to production and the most recently completed finished goods are the \"first-out\" to customers As References 61F | 11:52 AM O Q Search 5/6/2025 oe F = Haze oa > x www.google.com X A Discussion X Introductory Post Exa x| M McGraw Hill X Question 2 - Team Pr X Class AC 205 Interme * * Question Eleven Hon X X G 2% ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/question-group/kEZASsB... ABP V M Gmail YouTube Maps G Google All Bookmarks Team Project A i Saved Help Save & Exit Submit Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 2 Required: 1. To help assess the company's liquidity, calculate the following at December 31 of next year: Part 2 of 3 a. Working capital b. Current ratio 2. To help assess the company's asset management, calculate the following for next year: a. Accounts receivable turnover b. Average collection period c. Inventory turnover d. Average sale period e. Operating cycle 3. To help assess the company's debt management, calculate the following for next year: a. Times interest earned ratio b. Equity multiplier 4. To help assess the company's profitability, calculate the following for next year: a. Net profit margin percentage b. Return on equity 5. For each of the measures and ratios computed in requirements 1 through 4, indicate whether, generally speaking, management would prefer to see it increase or decrease over time. * Answer is not complete. Complete this question by entering your answers in the tabs below. Mc Graw Hill 19 61.F Haze Q Search L 11:52 AM 5/6/2025www.google.com X A Discussion X Introductory Post Exa x| M McGraw Hill X Question 2 - Team Pr X Class AC 205 Interme * * Question Eleven Hon X X C 2% ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/question-group/kEZASsB... ABP V M Gmail YouTube Maps Google All Bookmarks Team Project A i Saved Help Save & Exit Submit Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 2 ! Required information Part 2 of 3 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 To help assess the company's asset manageme Required 4 e the following for next year: Note: Do not round intermediate calculations. a. Accounts receivable turnover b. Average collection period c. Inventory turnover d. Average sale period e. Operating cycle Note: Use 365 days in a year. Round your answers to 2 decimal places. Show less A a. Accounts receivable turnover 12.38 b. Average collection period 29.48 days c. Inventory turnover d. Average sale period days e. Operating cycle days Mc Graw Hill 19 61.F 11:53 AM Haze Q Search L 5/6/2025