Chapman Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Chapman does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow.
a. Assume that Chapman has decided to accept one of the two jobs. Identify the information relevant to selecting one job versus the other. Recommend which job to accept and support your answer with appropriate computations.
b. Assume that Job A is no longer available. Chapmanâ€™s choice is to accept or reject Job B alone. Identify the information relevant to this decision. Recommend whether to accept or reject Job B. Support your answer with appropriate computations.
14-20 Preparing a cash budget
Medical Clinic has budgeted the following cash flows.
|For inventory purchases||90,000||72,000||85,000|
|For S&A expenses||31,000||32,000||27,000|
|Kinnion Medical had a cash balance of $8,000
on January 1. The company desires to
cushion of $5,000. Funds are assumed
to be borrowed, in increments of $1,000 and repaid
the last day of each month; the interest rate is 1 percent per month. Kinnion pays its vendor
the last day of the month also. The
company had a monthly $40,000 beginning balance in its
of credit liability account from this yearâ€™s quarterly results.
book says that the Feb. Cash Surplus before financing activities is $7010. I
can’t seem to figure out how they came to that conclusion.
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