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Master Budget Project

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Managerial Accounting Project

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Master Budget Project

  1. 1. Master Budget Project Earrings Ltd.
  2. 2. Earrings Ltd. Analysis • Sales revenues inconsistent due to seasonal fluctuations • Cash borrowed to pay for these seasonal changes
  3. 3. What-If Scenarios 1. Sublease unused warehouse space for $4000/month 2. Change ending inventory to 60% of next quarter to even out seasonal fluctuations 3. Change advertising to be a variable expense of 20% of next month to increase ROI
  4. 4. Quarter 2 Impact • Equity increases by $272,900 while Liabilities remain constant: $1,618,700 $1,891,600 $1,519,700 $1,792,600 $1,000,000 $1,100,000 $1,200,000 $1,300,000 $1,400,000 $1,500,000 $1,600,000 $1,700,000 $1,800,000 $1,900,000 $2,000,000 Baseline Combined Scenarios What-If Scenario: All Changes implemented Assets Equity
  5. 5. Master Budget Project Hillyard Company
  6. 6. Hillyard Company Analysis • Very weak bottom line numbers • Office Supplies are not a growing market so you must compete for market share
  7. 7. Scenario 1 • Go after B2B market • Cut Advertising by $20,000/month ($52,000 to $32,000 • Hire 2 full-time B2B salesmen at $4000/month plus variable 5% sales commission • Cut fixed costs while focusing on revenue growth
  8. 8. Scenario 2 • Use Net 30 to entice early payments • Revenue boost due to 1% collection fees on Credit • Estimated 50% pay cash and 50% pay Credit
  9. 9. Scenario 3 • Reduce borrowing costs by 50% • Find bank/funding pool to give .5%/month loans • Fed rates are very low, and our budget estimates show our default rate risk is very low

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