Operating Budget

Create an operating budget for the first quarter of a new business.

Projected Sales are:

Month #1: $65,000

Month #2: $97,500

Month #3: $130,000

Month #4: $110,500

These sales are based on selling one product with a selling price of $6.50

Create a Production Budget based on Units (not dollars).

Desired Finished Goods Ending Inventory each month is 10% of the next month’s projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year).

Create a Direct Materials Purchase Budget

Each unit produced requires 10# of direct materials at a cost of $0.08 per pound.

Desired Ending Direct Materials Inventory is 10% of the next month’s material requirements.

Create a Direct Labor Budget

Direct Labor Costs are $15/hour

Each unit requires 5 minutes of labor

Create an Overhead Budget

Variable Overhead Expenses are:

Supplies ($.02 per unit)

Inspection ($.10 per unit)

Maintenance and Repair ($.03 per unit)

Utilities ($.01 per unit)

Fixed Overhead Expenses are $1100 monthly.

Create a Selling and Administrative Budget

Variable Selling & Administrative Expenses are:

Sales Commissions ($.03 per unit)

Delivery ($.01 per unit)

Office Support ($.02 per unit)

Fixed Selling & Administrative Expenses are $2500 monthly.

Combine all Budgets to Create a Budgeted Income Statement

Complete a Budgeted Income Statement for months 1 through 3, and a Budgeted Income Statement that reflects the total first quarter.

**********TEMPLATE FOR ASSIGNMENT IS BELOW, COPIED FROM EXCEL***********************

Without using google or encyclopedia, in your own words write a definition for each:

1. Finance

2. Bonds

3. Financial Assets

4. Financial Instruments

5. Securitized assets

What is the present value and future value of the following cash flow stream at a rate of 8.00%? Years: 0 1 2 3 4 CFs: $0 $75 $225 $0 $500

As a source of financing, once retained earnings have been exhausted, the weighted average cost of capital will

provide one examle for the following (Foundation of Risk Management and Insurance)

1)Large Deductible Plan

2)Captive Insurers

3)Retrospective Rating Plan

4)Securitization

5)Hedging

Which of the following is NOT a task?

1) Calculate settlement amount

2) Determine if customer is liable for damage

3) Insurance policy does not cover the damage

4) Check insurance policy details

The stem direction of a note starts to point downward when the note is on the _____ line of the staff? (Hint: the bottommost line is the first line)

ADP is adenosine diphosphate. How many high-energy linkages (or bonds) does ADP contain? How do you know?

A. 1    

B. 2     

C. 3     

D. 4