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Case 6 Sweats Galore

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Submitted By edwardsmay04
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Answer Key: Case 6 - Sweats Galore

Question 1 It's always important to set goals to measure the success of any business. However, the first three goals are more of a mission statement while the fourth is an objective for the company. The problem is there no plan and one objective. What is he going to do if the company doesn't net the $25,000? Or what if it nets the $25,000 but there is not enough cash to sustain the business? There needs to be more objectives to make allowances for these types of situations. There needs to be a plan of action where goals change from period to period. Otherwise, the business cannot succeed.

Question 2 Hi-Lo Maintenance Units Cost September 8,000 $1,914.00 January 2,000 $1,716.00 Difference 6,000 $198.00 Cost/unit $0.033

Hi-Lo Utilities Units Cost September 8,000 $1,400.00 January 2000 $1,100.00 Difference 6,000 $300.00 Cost/Unit $0.050 January Sales 12000 January /unit cost 16 January Units 750 Maintenance Cost January Units 750 Cost/unit $0.033 Total Variable Costs $24.75 Utilities Cost January Units 750 Cost/Unit $0.05 Total Variable Costs $37.50 Question 3 Sales Budget 1 Q 2 Q 3 Q 4 Q Year Next yr 1Q Expected Unit Sales 8,000 10,000 20,000 12,000 50,000 18,000 x Unit Selling Price $16 $16 $16 $16 $16 = Total Revenue $ $128,000 $160,000 $320,000 $192,000 $800,000

1Q 2Q 3Q 4Q Year
Question 4 Total Revenue $128,000 $160,000 $320,000 $192,000 $800,000 Accounts Receivable $0 $38,400 $48,000 $96,000 $182,400 Collected $89,600 $112,000 $224,000 $134,400

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