Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020.

Lowell has a labor contract that calls for a wage increase to $9 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1.

Lowell expects to begin the year with 16,100 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 50% of the second following month’s sales.

Prepare a production budget for Lowell Company by month and for the first quarter of the year.

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Prepare a direct labor budget for Lowell Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round Direct labor hours per unit answers to 1 decimal place, e.g. 52.7.)

A machine shop is trying to decide which of two types of metal lathe to purchase. The more versatile Japanese lathe costs $32,000,and will generate an annual profit of$16,000 for three years. Its trade-in value after three years will be about $10,000. The more durable German lathe costs $42,000, and will increase profits by $12,000 per year for six years. Its trade-in value at that point is estimated at $15,000. Based on an NPV calculation at a 10% cost of capital, which lathe should be purchased?

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

1. The gross margin is 25% of sales.

2. Actual and budgeted sales data:

3. 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.

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

5. 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.

6. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets).

7. Equipment costing $2,800 will be purchased for cash in April.

8. 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.

Required:

Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Complete the schedule of expected cash collections.

Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

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

Starting with your identified 2019 level of revenue, you expect that revenue will increase by 10% in 2020. You anticipate annual revenue growth will slow by 1% per year to the long-run industry growth rate of 5% by 2025. • You expect EBIT to be 12.5% of sales each year. • You expect any increase in net working capital requirements each year to be 10% of any year-on-year annual increases in revenue. • You expect capital expenditures to equal depreciation expenses in each year. • Nike’s Tax rate is 20%. • Nike’s weighted average cost of capital (WACC) is 9%.

Case 1 - Suppose you believe Nike's initial revenue growth rate in 2020 will be between 8% and 14% (with growth slowing linearly to 5% by year 2025). What range of prices for Nike stock is consistent with these forecasts? Case 2 – Beginning again with your base case assumptions, suppose you believe Nike's initial EBIT margin (as a % of revenue) will be between 9% and 14% of revenue. What range of prices for Nike stock is consistent with these forecasts? Case 3 – Beginning again with your base case assumptions, you observe that similar companies in the apparel industry have WACCs ranging from 7.5% to 10%. What range of prices for Nike stock is consistent with these forecasts? Case 4 - What range of stock prices is consistent if you vary the estimates in cases 1 – 3 simultaneously? Put another way, what is the range of stock prices you might expect if the worst/best case scenarios occur from each of the previous three cases simultaneously.

7) Determine a terminal value for​ Nike’s FCF from 2026 and beyond​ (value expressed in millions of 2025​ dollars).

The terminal​ value, in 2025​ dollars, of​ Nike's free cash flows from 2026 onward​ is:____ million dollars.​ (please round your answer to ONE decimal​ point)

8) Determine​ Nike’s Enterprise Value​ (as of the end of​ FY2019)

​Nike's Enterprise​ Value, as of the end of​ FY2019, is: $____million dollars. ​ (please round your answer to ONE decimal​ place)

• Describe the Neoclassical model of aggregate demand and aggregate supply.
• Describe the policy implications of the Neoclassical perspective.
• Describe the interrelationship between the Neoclassical and Keynesian economic models.

In 2009, American Recovery and Reinvestment Act provided for roughly $800 billion in government spending (most of it) and tax cuts (less) to jumpstart the economy. Do you think this was the correct approach? Cite three reasons why or why not. Would your opinion change if you were in the auto industry at the time?

Periodic inventory by three methods; cost of goods sold

The units of an item available for sale during the year were as follows:

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Periodic inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory 40 units at $124 Mar. 10 Purchase 50 units at $136 Aug. 30 Purchase 20 units at $142 Dec. 12 Purchase 90 units at $144 There are 60 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Ending Inventory and Cost of Goods Sold Inventory Method Ending Inventory Cost of Goods Sold First-in, first-out (FIFO) $ $ Last-in, first-out (LIFO) Weighted average cost PreviousNext

Periodic inventory by three methods; cost of goods sold

The units of an item available for sale during the year were as follows:

There are 40 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Periodic inventory by three methods; cost of goods sold

The units of an item available for sale during the year were as follows:

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.