Project is to produce 200 widgets and is scheduled
1.) Project is to produce 200 widgets and is scheduled to take five weeks. Each unit is planned to cost $90. The project is severely cost constrained. Performance data for the project at the end of week three is presented below:
- 120 total units were planned to be produced
- 130 units have actually been produced
- The financial manager reported that the business had actually spent $13,000 on the project by the end of week three.
Please answer the following questions
- Quantify cost variance. Is the project ahead or behind budget?
- Quantify schedule variance. Is the project ahead or behind schedule?
- Quantify cost performance efficiency. Is the project performing better or worse than planned?
- Quantify schedule performance efficiency. Is the project performing better or worse than planned?
- What is the forecast of project cost at completion assuming current cost performance efficiency remains the same? How much budget variance is expected at completion?
- What is the forecast of funding needed to complete the project (from this point forward)?
- What cost performance efficiency would be required for the remainder of the project to complete the project within the original budget?
- As the project financial manager, what recommendations would you make
2.) This question is based on the information provided in the abbreviated year-end Income Statement and abbreviated year-end Balance Sheet for NMC Corporation shown below.
NMC Corporation Income Statement for the Calendar Year (January 1 - December 31) | Thousands of dollars (except stock price, earnings per share, and dividends per share) |
Net sales | $3000 |
Cost and expenses: | $2734 |
EBIT | $266 |
Less interest expense: | $66 |
Earnings before taxes | $200 |
Taxes | $80 |
Net income before preferred dividends | $120 |
Dividends to preferred stockholders | $8 |
Net income available to common stock holders | $112 |
Per share common stock: | |
Stock Price | $26.50 |
Earnings per share | $2.24 |
Dividends per share | $1.84 |
NMC Corporation Balance Sheet (Average of beginning and end of year) | Assets (thousands of dollars) | Liabilities and Equity (thousands of dollars) | |
Cash | $50 | Accounts payable | $60 |
Market securities | $0 | Notes payable | $100 |
Accounts receivable | $350 | Accrued Wages | $10 |
Inventories | $300 | Accrued Taxes | $130 |
Total Current Assets: | $700 | Total Current Liabilities: | $300 |
Net plant and equipment: | $1300 | Total Long Term Debt: | $800 |
Total Stock Holder’s Equity: | $900 | ||
Total Assets: | $2000 | Total liabilities and equity: | $2000 |
8a. Calculate the NMC financial ratios contained in the following table
Financial Ratios | NMC Values | Industry Values |
Current Ratio | 2.5 times | |
Quick (Acid) Ratio | 1.0 times | |
Total Debt to Total Assets | 40% | |
Return on Assets (ROA) | 9% | |
Price/Earnings Ratio | 12.5 times |
8b. Compare your results to the industry ratios and describe what NMC should do to improve its position in the market.
-
Rating:
/5
Solution: Project UMUC is to produce 200 widgets and is scheduled