Duffy Corporation

Question 1 (10 marks):

Prescher Company sells three products with the following seasonal sales pattern:

    Products

Quarter A B C
1 40% 30% 10%
2 30% 20% 30%
3 20% 20% 50%
4 10% 30% 10%

The annual sales budget shows forecasts for the different products and their expected selling price per unit to be as follows:

Product Units   Selling Price
A   50,000  $ 16
B   125,000 40
C   62,500  24

Required:
Prepare a sales budget, in units and dollars, by quarters for the company for the coming year.

 
Question 2 (5 marks):

Duffy Corporation has prepared the following sales budget:

Month   Cash Sales  Credit Sales
May $16,000    $68,000
June    20,000  80,000
July    18,000  74,000
August  24,000  92,000
September   22,000  76,000 

Collections are 40% in the month of sale, 45% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible.

Required:
Prepare a schedule of cash collections for July through September.

 
Question 3 (5 marks):

Wright Corporation is reviewing its business strategy. The first step for Wright is to perform an industry analysis. You have been hired to help the company go through the strategy formulation process.

To perform the industry analysis, what areas should Wright focus on and give at least one example of how Wright can effectively deal with each area.

Sample Solution