ASSESSMENT INSTRUMENT
BUS 330/500D
Road King Trucks
Introduction
Michael Livingston has recently been hired as the CEO of Road King Trucks, Inc.
Previously he had been the marketing manager for a large manufacturing company and had established a reputation for identifying new consumer trends. Road King Trucks Inc. is a California-based truck manufacturing company. The company is well known for manufacturing large, heavy-duty trucks at a reasonable cost. One of its greatest achievements is that its trucks can be easily modified or customized for different applications. Road King Trucks also builds school buses.
The company is considering an expansion of its current product line to include transit buses. Mr. Livingston feels
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Evaluate the quality of the project, by using appropriate capital budgeting techniques. GJS File: Road King Trucks Rev 2.doc
Last Revised: 4/30/2010
6)
Would you recommend that Road King Trucks accept or reject the project? What are the key factors on which you base your recommendation?
Your final report is due in Blackboard on Sunday March 10, 2013 at midnight.
GJS File: Road King Trucks Rev 2.doc
Last Revised: 4/30/2010
Exhibit 1: Sales and Cost Forecast
The sales forecast is based on projected levels of demand. All the numbers are expressed in today’s dollars. The forecasted average inflation per year is 3.5%
.
Price per bus
$220,000
Units sold per year
11,000
Labor cost per bus
$50,000
Components & Parts $95,000 per bus
Selling General &
$250,000,000
Administrative
(fixed)
NOTE: Average warranty cost per year per bus for the first five years is $1,000. The present value of this cost will be used as a cost figure for each bus. Afterwards, the bus operator will become responsible the repairs on the buses.
The buses can be produced for twenty years. Afterwards, the designs become obsolete.
Engine choices
Engine
Detroit engines
Marcus engines
Price per engine, including installation
$20,000
$18,000
Average annual warranty cost per year for five $1,000
$1,500
years. Afterwards, the bus operator will become responsible for the repairs on the buses.*
The chosen
The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &
While it is true that Ms. Forthright had always exceeded her budgeted sales, the extent to which she diverts away from the managers projections does not necessarily means that she is violating honesty and integrity. Her decision on what her budgeted sales for the year is highly relevant to the data available to her. Her projections tends to lie between the field manager and the marketing manager’s predictions, which can be reasonable because in the past years, the field manager’s projections tend to be over what the actual sales of the year will be.
Seven models were created in order to obtain the model in which all-remaining variables are statistically significant and the final equation to predict sales is as follow:
* Our company’s sales forecast has been based on performance from previous years along with market circumstances. We are looking at the future of the business objectively which we then can evaluate past to
The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services and has estimated demand in three categories low, medium and high.
The second task that needed to be finished was to forecast the income statement and the balance sheet for the next two years. We grew sales at a 15% rate, which is the stated rate from Koh. Also, in forecasting the balance sheet, we only showed debt financing for the capital expenditure of the DVD manufacturing equipment, which was the requested structure. Other relevant facts and assumptions for preparing the financial forecast are stated below-
For current assets for each of the following three years, we are projecting the same percentage of 32% of sales. Assets that are constantly flowing in and out of a organization in the normal course of its business as cash converted into goods and then back into cash show small growth if any, in periods of time. The assets that are expected to last or be in use for less than one year will also show the small growth if any due their usage life expectancy. Because of these facts of our current assets, we will continue to use the projected 32% of sales as in previous years. Because this projection served correctly in previous years, we will again use it for the next three years. This decision is based on past accurateness and the consistency of the company.
1. In the last five years the growth in sales for the company has been around 10% per annum, except for the 1997, the growth was 18.78%. In the case, nothing is mentioned that company has made any drastic changes in its strategy to grow faster. In such a scenario, projected a consistent growth of 20% per annum for the next 5 years is too optimistic.
While you might think Highway Kings would be some kind of 1980s road movie, it’s actually a fun 5-reel, 9-payline video slot from Playtech, the industry giants that have brought the world games like Goddess of Life and Golden Tour. If you’re looking for big wins, this might be your game, because your potential earnings could come reach up to a jaw dropping 10,000 credits.
Use the Percentage Sales Method and a 20% increase in sales to forecast Micro Chip's
Higher management may request that the sales management team to show a detailed forecast of the results of the modification after the modification is in process. Sales and the profit
Estimated sales for two years = No. of display units * capacity * inventory turnover * 2
Upon, identifying the aforementioned data we proceeded onto creating our chart. We then moved onto to literally type our chart title and axis titles for this particular chart. Subsequently, we advanced forward and inserted the trend line, in addition, to discovering the manner. In which, we could access and display our equation (Kleen, 2013). Therefore, the following equation was disclosed as an integral component of this process, this modus operandi was displayed as y=0.648x+111.65. Consequent to, us completing the previously mentioned steps. We proceeded to search for methods via utilization of YouTube with regards to forecasting sales for year two.
Cornwell is a glass manufacturer, with a variety of different glass in its production. The company utilizes an advanced forecasting system that uses data from past years to find seasonal factors and long-term trends. The current system yields data from its previous weeks to find the most recent trends. The following table presents the forecasted demands for the coming year on a weekly basis.
There are several steps to get the correct contribution impact (Exhibit 4). First, Culinarian should figure out the sales averages from march to may in. In 2004 March to May, Culinarian did the price promotion, so the data has less credibility. However, 2002 & 2003’s date can be used because there are no promotions during these periods. So, average Sales from March to May in 2002 & 2003 is 91,247 + 78,778/2 = 85,012. Next step, Culinarian should calculate the forecast units. It can base on the historical growth. The historical growth rate is 21% here. According to this way, the forecast units should be 102,865. Then, Culinarian can get the average variable costs according to consultant and sales manager’s assumption. The average variable cost is $45. This number is an estimate, based on the assumption that the consultant overestimated the cost while the sales manager underestimated the cost. Finally, Culinarian can use the formula and get its incremental contribution impact. From this method, Culinarian can have an increase by $432,169 in its contribution.