(Profit Budget and Cash Forecast) Griffin Metals Co. has provided the following data:
Anticipated volumes (assume production equals sales each quarter):
|
Quarter 1 |
100,000 tonnes |
|
Quarter 2 |
110,000 tonnes |
|
Quarter 3 |
105,000 tonnes |
|
Quarter 4 |
120,000 tonnes |
The selling price is expected to be $300 per tonne for the first six months and $310 per tonne thereafter. Variable costs per tonne are predicted as $120 in the first quarter, $125 in the second and third quarters, and $130 in the fourth quarter.
Fixed costs (in $”000 per quarter) are estimated as follows:
|
Salaries and wages |
$3,000 for the first half-year, increasing by 10% for the second half-year |
|
Maintenance |
$1,500 |
|
Rates |
$400 |
|
Insurance |
$120 |
|
Electricity |
$1,000 |
|
Depreciation |
$5,400 |
|
Other costs |
$2,500 in the first and fourth quarters, $1,800 in the second and third quarters |
|
Interest |
$600 |
|
Capital expenditure |
$6,500 in the first quarter, $2,000 in the second quarter, $1,000 in the third quarter, and $9,000 in the fourth quarter |
|
Dividend payment |
$10,000 in the third quarter |
|
Debt repayments |
$1,000 in the first quarter, $5,000 in the second quarter, $4,000 in the third quarter and $3,000 in the fourth quarter |
Griffin has asked you to produce a profit budget and a cash forecast for the year (in four quarters) using the above data.