suggest steps the company might take to reduce its losses and establish profitability,

the cenario:

Roots Corporation reported quarterly loss of $5.6 million in first quarter of 2018. Comparing to last year, the net loss increased from $5.1 to $5.6 million. The clothing retailer applies expansion strategy in US and is opening its first “brand activation centre” in Boston that will allow shoppers to familiarize themselves with the Canadian brand. It also plans to open 10 to 14 stores in the US by the end of 2019. Sales from corporate retail stores and e-commerce channels accounted for $44.2 million, up nine per cent from $40.5 million in last year’s first quarter. Jim Gabel, president and CEO of Roots, explained, “while sales in the quarter were good, we believe they would have been even stronger had we not faced a major ice storm across approximately 80 per cent of our store network in mid-April.” Roots remains confident about achieving its full-year target, between $35 million and $40 million of adjusted net income and between $410 million and $450 million of sales for fiscal 2019.

Reference:

Roots reports quarterly loss despite improvement in sales. (June 13, 2018). Retrieved from:https://www.thestar.com/business/2018/06/13/roots-reports-quarterly-loss-despite-improvement-in-sales.html

For planning purposes, senior executives at a large national clothing maker and retailer need to understand and forecast quarterly sales revenue. The available data are contained in the table attached below. The data is in units of hundreds of millions of dollars ($100M).

You have been tasked with describing the historical data and with developing preliminary forecasts for 2018 based on the historical data from the first quarter of 2011 (quarter 1) through the last quarter of 2017 (quarter 28).

a. Perform a linear time series regression (“Trend Analysis” in Minitab or “Trendline” in Excel) of the historical data using excel or minitab

b.   State the equation of the fitted regression line.

c. On the basis of this regression analysis, calculate and state the sales revenue forecasts for all four quarters of 2018.

d. Calculate and state the RMSE of this simple linear regression. [Hint: Different from forecasting, for regression RMSE = ?SSE/?(n-2).]

e. Calculate and state the forecast values for all four quarters of 2018 by the following time series decompositions. Perform the time series decompositions in Minitab. (Go to Stat > Time Series > Decomposition; for all decompositions, set the seasonal length)

e1.   Additive with seasonal only.

e2.   Additive with trend plus seasonal.

e3.   Multiplicative with seasonal only.

e4.   Multiplicative with trend plus seasonal.

e5.   On the basis of the Minitab time series decomposition plots, do you recommend forecasting with the trend component alone (as you were asked to do in part d above), the seasonal component alone (parts e(1) and e(3), or with both the trend and seasonal components together (parts e(2) and e(4). Briefly state why.

f. Calculate and state the accuracy of each of the forecasting methods in part e using the RMSE as the measure. (Note: MSE is stated on the Minitab graphs as “MSD.” RMSE is the square root of this value.)

f1. Which is the most accurate method of the decomposition methods used in part e? Briefly state why.

   f2. What are the most accurate forecasts? Briefly state why

Deferred Annuities: How much must you invest on January 1, 2014 in order to withdraw $10,000 each January 1 in years 2020 through January 1 2025 assuming an 8% interest rate?

Water Sport Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist:

a. The Marketing Department has estimated sales as follows for the remainder of the year (number of water tubes):

The selling price of the water tubes is $50.

b. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern:

The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $169,500.

3. The company maintains finished goods inventories equal to 20% of the following month’s sales. The inventory of finished goods on July 1 will be 1,680 units.
4. Each water tube requires 4 kilograms of synthetic polyisoprene rubber compound. To prevent shortages, the company would like the inventory of synthetic rubber compound on hand at the end of each month to be equal to 20% of the following month’s production needs. The inventory of synthetic rubber compound on hand on July 1 will be 6,480 kilograms.
5. The synthetic rubber compound costs $2.50 per kilogram. Water Sport pays for 70% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for synthetic rubber compound purchases will be $17,100 on July 1.

Required:
1. Prepare a sales budget, by month and in total, for the third quarter. (Show your budget in both units of water tubes and dollars.) Also prepare a schedule of expected cash collections, by month and in total, for the third quarter.

2. Prepare a production budget for each of the months July through October.

3. Prepare a direct materials purchases budget for synthetic rubber compound, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for synthetic rubber compound, by month and in total, for the third quarter.

Income Statement and Supporting Schedules. The following financial information is for Caravelli Company. (Note that the most current financial information is presented in the first column.)

Of the total raw materials placed in production for the year, $36,000 was for indirect materials. The company had $3,795,000 in sales for the year ended December 31, 2016. The company also had the following costs for the year:

Required:

1. Prepare a schedule of raw materials placed in production for the year ended December 31, 2016.

2. Prepare a schedule of cost of goods manufactured for the year ended December 31, 2016.

3. Prepare a schedule of cost of goods sold for the year ended December 31, 2016.

4. Prepare an income statement for the year ended December 31, 2016.

5. Describe the three types of costs included in cost of goods sold on the income statement. (Dollar amounts are not necessary in your descriptions.)

Brent Robertson and his banker were reviewing the quarterly income statements for his consulting business, Robertson and Associates, Inc. The banker was impressed with the growth of sales revenue and net income for the second quarter of this year compared with the second quarter of last year. Brent knew it had been a good quarter, but he didn't think it had been spectacular. Suddenly, Brent realized that he failed to close out the revenue and expense accounts for the prior quarter, which ended in March. Because those temporary accounts were not closed out, their balances were included in the second quarter amounts for the current year. Brent then realized that the banker had the financial statements but not the general ledger or any trial bal- ances. Thus, the banker would not be able to see that the accounting cycle from the first quarter was not properly closed and that this failure was creating a misstated income statement for the second quarter of the current year. The banker then commented that the business seemed to be performing so well that he would approve a line of credit for the business. Brent decided to not say anything because he did not want to lose the line of credit. Besides, he thought, it really did not matter that the income statement was misstated because his business would be sure to repay any amounts borrowed.

Should Brent have informed the banker of the mistake made? should he have redone the second quarter's income statement ? was Brent's failure to close the prior quarter's revenue and expense accounts unethical? Does the fact that the business will repay the loan matter?

Below you are given the first five values of a quarterly time series of sales.

21. Refer to data above. When a naïve method is used, what is the forecast on the sales in Quarter 2 of Year 2.

a. 20 b. 44 c. 27 d. 30

22. Refer to data in Q21. When a three-quarter moving average is used, what is the forecast on the sales in Quarter 2 of Year 2.

a. 20.5 b. 44.3 c. 26.7 d. 30.2

23. Refer to data in Q21. When a three-quarter weighted moving average (W1= 0.5, W2 = 0.3, and W3 = 0.2) is used, what is the forecast on the sales in Quarter 2 of Year 2. (Hint: Ft+1 = W1Dt + W2D ( t – 1) + W3D ( t – 2) )

a. 24.4 b. 30.2 c. 22.8 d. 31.2

24. Refer to data in Q21. When an exponential smoothing model is used with a smoothing parameter alpha of 0.30 and a Q1-Year 2 forecast is 20, what is the forecast on the sales in Quarter 2 of Year 2. (Hint: Ft+1 = aYt + (1 – a)Ft)

a. 27.2 b. 29.2 c. 31.2 d. 33.2

25. Refer to data in Q21. The equation for the trend line of quarterly sales is Ft = 24.4 + 1.2t. What is the forecast on the sales in Quarter 2 of Year 2. (Hint: t=1 for Q1-Year 1, 2 for Q2-year 1, and so on )

a. 31.2 b. 30.4 c. 32.2 d. 31.6

Please show how each answer was obtained. Thank you!

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

The gross margin is 25% of sales.

Actual and budgeted sales data:

Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.

Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.

One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory.

Monthly expenses are as follows: commissions, 12% of sales; rent, $2,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $981 per month (includes depreciation on new assets).

Equipment costing $1,800 will be purchased for cash in April.

Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

1. Complete the following schedule:

2. Complete the following:

3. Complete the following cash budget:

Required 2

Required 3

Complete the following cash budget: (Cash deficiency, repayments and interest should be indicated by a minus sign.)

1. The Marketing Department has estimated sales as follows for the remainder of the year (in units):

The selling price of the beach umbrellas is $11 per unit.

2. All sales are on account. Based on past experience, sales are collected in the following pattern:

Sales for June totaled $297,000.

3. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.

4. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:

5. Gilden costs $0.80 per foot. One-half of a month’s purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $54,920.

Required:

1. Calculate the estimated sales, by month and in total, for the third quarter.

2. Calculate the expected cash collections, by month and in total, for the third quarter.

3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.

4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter.

5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter.

6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter.

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:

The Marketing Department has estimated sales as follows for the remainder of the year (in units):

The selling price of the beach umbrellas is $13 per unit.

All sales are on account. Based on past experience, sales are collected in the following pattern:

Sales for June totaled $377,000.

The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.

Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:

Gilden costs $0.60 per foot. One-half of a month’s purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $42,990.

Required:

1. Calculate the estimated sales, by month and in total, for the third quarter.

2. Calculate the expected cash collections, by month and in total, for the third quarter.

3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.

4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter.

5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter.