Barry's Belts Case Study - Accounting and Finance Assignment Help

Assignment Task:

Task:

Question 01: 
Barry's Belts has a stock item with an Economic Order Quantity of 800 units. • Lead time is one week. • Safety stock level is two weeks usage. • Annual usage over a 52 week year is 52,000 units in total. • Cost per order is $50. • Carrying cost per unit per annum is $2.03. • The cost per unit paid to the supplier is $20. Required: (a) Calculate under the above EOQ conditions: • The order costs per annum. • The carrying costs per annum. • The amount paid to the supplier for a year. 
(b) A new supplier is offering the current price except that she will give a 1% discount for orders of 10,400 units. Calculate, using the same safety stock as before, the following annual costs if Barry's Belts Accepts the discount offer: • The order costs per annum. • The carrying costs per annum. • The amount paid to the supplier for a year.

Question 02: Currently Bob's Mowers currently sells on a cash basis only. It has average monthly sales of $100,000 with Variable expenses being 30% of the sales price. Variable expenses are paid for at the time of sale. Proposal One (Credit terms of 1 month). • By offering 1 month credit to all customers, it is thought that total sales will increase by 10%. • Variable expenses percentage to remain at 30%. • 40% of customers would pay on time. • 56% would pay in two months. • The remainder would become bad debts. 
Proposal Two (Credit terms of 1 month with a discount offer of 8%) • Total sales and variable expenses as per Proposal One. • If a discount of 8% were offered to those who pay on time: » Those who pay on time would increase to 60%. » No amounts received at 2 months. » 36% would pay at 3 months. » Bad debts would remain the same at 4%. Required: Evaluate each of the THREE systems above (i.e. Currently, Proposal One, and Proposal Two). Assume 1% per month interest rate.

Question 3 
(511 What is wnrkino Canital? 
 

Question 4 
(a) Following information extracted from the financial statements of Smiths Ltd: 
Current assets  Inventory 2,275 Accounts receivable 1,775 Other Current assets 75 Total Current Assets 4,125 
Total Non-Current assets 4,375 
Total Assets 8,500 
Current liabilities  Account payable 1,225 Bank overdraft 2,050 Other current liabilities 1,225 Total Current Liabilities 4,500 
Non-Current liabilities 2,500 Total Liabilities 7,000 Net Assets 1,500 
Equity Share capital 1,050 Retained eamings 450 
Total Equity 1,500 
(b) Total Sales (Credit) $10,000 Less Cost of Sales $6,000 Gross Profit $4,000 Less Total Expenses $2,425 Net Profit Before Tax $1,575 Less Tax $475 Net Profit after Tax $1,100 
Additional Information Current Year Opening Inventory $1,855 Opening Accounts receivable $1,425 Opening Equity $1,450 
Calculate following ratios: • Current Ratio • Liquid Ratio • Inventory Turnover • Average collection period • Return on Total Assets • Return on Equity 
Question 5 The following extract is taken from the financial statements of B. Good Ltd. 
 

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