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Management Accounting and Control- Coach Inc.- Report Writing Assignment Help
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Internal Code: IAH286
Interest payable on long and short – term loans is accrued at 10% per annum.
Short – term loan repayments to be made are $2,500,000 at the end of October 2017 and $2,500,000 at the end of
January 2018. Half year interest of $8,000,000 is payable in January 2018.
Depreciation (a manufacturing cost) runs at $700,000 a month and cost of sales is 70% of sales. Materials used during September 2017 and October 2017 are expected to be $11,000,000 for each month. Corporation tax on profits can be calculated at 50%. Corporation tax of $5,000,000 is expected to be paid in December.
Assessment Criteria:
1. Prepare a cash budget for the managing director for September 2017 to February 2018 to determine the phasing of the cash flows that would result from his action plan.
2. Prepare for the managing director, the forecasted cash flows and month-end cash balances for September 2017 to February 2018 if the credit controller does not meet his target and debtors remain at 60 days of sales, as compared with the results following successful implementation of the action plan.
3. Draft a report for the managing director that makes use of the analyses that you have carried out to consider arguments both for and against customer terms of 30 days or 60 days. Your report should also consider some of the wider financial and non-financial factors in addition to the cash flow impact of both scenarios.
Report Writing Assignment Help:
Task: Coach Inc. in China is growing at a rapid rate and its strategy team are actively focusing on this growth area for the company. In anticipation of future growth, the directors of the company have built up their finished goods stocks at an even faster rate to make sure that they can meet customer demand. It is the 1 st September 2017. The Sales Director has reported on the two months of actual sales for July 2017 and August 2017 and has also estimated sales for the next six months: $ July 22,500,000 August 27,000,000 September 29,000,000 October 30,500,000 November 32,500,000 December 35,000,000 January 36,500,000 February 38,000,000 In August 2017, accounts receivable were 60 days sales. The credit controller has targeted debtor days to reduce from 60 days at 31 August 2017 to 45 days at 30 September 2017 and 30 days on 31 October 2017. He has also targeted 30 days to be maintained thereafter. The plant manager has provided a production plan to give required level of production as follows: 1. September 2017 to February 2018 raw material purchases to be $8,600,000 per month. 2. July 2017 and August 2017 were $10,000,000 and $9,000,000 respectively. 3. Materials are bought with supplier payment terms of net 45 days. 4. Salaries and wages are $2,900,000 per month and paid in each month 5. Overheads and utilities are $5,600,000 per month and paid in each month. The commercial manager has estimated that selling and administrative cost to be as follows: 1. September and October 15% of sales 2. November and December 14% of sales 3. January and February 13% of sales All these expenses will be paid in the month that they are incurred. The balance sheet of Coach Inc. in China as at 31 August 2017 was as follows:
Interest payable on long and short – term loans is accrued at 10% per annum.
Short – term loan repayments to be made are $2,500,000 at the end of October 2017 and $2,500,000 at the end of
January 2018. Half year interest of $8,000,000 is payable in January 2018.
Depreciation (a manufacturing cost) runs at $700,000 a month and cost of sales is 70% of sales. Materials used during September 2017 and October 2017 are expected to be $11,000,000 for each month. Corporation tax on profits can be calculated at 50%. Corporation tax of $5,000,000 is expected to be paid in December.
Assessment Criteria:
1. Prepare a cash budget for the managing director for September 2017 to February 2018 to determine the phasing of the cash flows that would result from his action plan.
2. Prepare for the managing director, the forecasted cash flows and month-end cash balances for September 2017 to February 2018 if the credit controller does not meet his target and debtors remain at 60 days of sales, as compared with the results following successful implementation of the action plan.
3. Draft a report for the managing director that makes use of the analyses that you have carried out to consider arguments both for and against customer terms of 30 days or 60 days. Your report should also consider some of the wider financial and non-financial factors in addition to the cash flow impact of both scenarios.