Product line 634, PL 634,

Product line 634, PL 634, is the highest selling product in Division ABC and is part of the fast growing XYZ Group. Assume you are trying to help plan the 2011-2013 budget for PL 364. The following projections and estimates have been made thus far:

1. Sales for year 2010 totaled $118 Million. This includes all third party sales and sales amoungst Bosch Affiliates. It is the organization’s goal to increase sales by 12% annually through 2013.

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2. A goal has been set to keep variable costs at about 70% of sales.

3. Operational fixed costs for 2011 are targeted to be $25 million with an incremental increase of 5% until 2013. Depreciation and amortization will account for 30% of total fixed costs.

4. Actual cash balance at the end of 2010 will be $5 million. Starting in 2011, it is planned that working capital other than cash will compound at the same rate as sales and increase by these incremental amounts only.

5. Income tax rate for entire period is 39%.

6. Sales of fixed assets: 2011, $2.5 million; 2012, $2.7 million; 2013, $3 million.

7. Expenses from corporate functions allocated to PL 364: 2011, $1 million; 2012, $1.2 million; 2013, $1.3 million.

8. Capital Expenditures: 2011, $2.4 million; 2012, $2.5 million; 2013, $2 million

9. Other SP&A Expenditures: 2011, $13 million; 2012, $14 million; 2013, $16 million.

10. Debt Payment: 2011, $800,000; 2012, $900,000; 2013, $1.3 million.

11. Interest Expense: 2011, $700,000; 2012, $900,000; 2013, $1.4 million.

Use this information for PL 634 to prepare an Excel workbook with four worksheets with the following features:

1. First Worksheets: Document any assumptions you made in creating your financial statements.

2. Second Worksheet: Prepare a traditional income statement for 2011,2012, and 2013.

3. Third Worksheet: Prepare a statement of cash flows for 2011, 2012, and 2013 (including beginning and ending cash balance).

4. Fourth Worksheet: Document risks or opportunities that you have identified based on PL 634’s financial statements.

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