Marina Morgan

Fantastic, Inc Historical Information Sales in Gallons Year 2001 2002 2003 2004 2005

Super 411,000 412,000 405,000 430,000 420,000

Stupendous none none 186,250 223,500 268,200

Projected Selling Price for 2006 per gallon Super Stupendous $10.30 $15.45

Inventory and material information Desired Ending Beginning Inventory Inventory 56,550 cans 61,700 cans 63,300 lbs 49,700 31,700 gal 24,850 gal 70,000 53,750 lbs 35,000 gal 27,000 gal

Cans Pigment Super Stp'dous Finished Good Inv Super Stp'dous

2005 Prices Cans Super pigment Stupendous pigment Expected 2006 prices: Cans Super pigment Stupendous pigment Usage Standards

$0.40 $2.75 per pound $3.75 per pound

$0.02 increase over 2005 prices $0.14 increase over 2005 prices $0.19 increase over 2005 prices

Marina Morgan

Super Stupendous

2 pounds per gallon 2 pounds per gallon

Direct Labor and machine hour information information 2005 labor rate - both departments Expected 2006 rate increase Production standards and information Machine hours/gallon Labor hours per machine hr. 2005 machines available Annual capacity per machine Machine hours per machine Maximum annual hours per employee Employees per supervisor Overhead information 2005 information Indirect materials Indirect labor rate-annual Employee fringe benefits Health benefits per employee Utilities Maintenance Insurance Property taxes Supplies Depreciation - mfg Variable $0.20 per gal 20% of wages $1,500 per employee $0.40 per Mhr $0.20 per Mhr $10,000 $50,000 $10,000 $5,000 $250,000 annually* annually* annually* annually* annually** Fixed $50,000 per supervisor Super 0.12 1.25 26 15,000 1,800 2,000 8 hours hours gal hours hours Stp'dous 0.12 1.25 20 15,000 1,800 2,000 8 hours hours gal hours hours $8.25 per hour $0.25 Per hour rate increase over 2005

* These items are allocated to dpts based upon production levels in gallons **The 2005 alloction ws $141,300 for Super and $108,700 to Stupendous It is expected that the following changes will occur in 2006: Variable Fixed

Marina Morgan

Indirect materials Indirect labor rate-annual Employee fringe benefits Health benefits per employee Utilities Maintenance Insurance Property taxes Supplies Depreciation - mfg 2005 equip Depreciation- new purchases

no change 2.50% increase per employee no change $200 increase per employee no change $0.05 inc.per Mhr $500 annual increase* $500 annual increase* 8% annual increase* $200 annual increase* no change Five year life**

* These items are allocated to dpts based upon production levels in gallons **The 2005 alloction ws $141,300 for Super and $108,700 to Stupendour 2005 depreciation Super $141,300 Cash Purchases for each new piece of equipment $5,000 Stupendous $108,700 Increase Debt $25,000

Selling department information 2005 information Variable Commissions Salaries Fringe benefits Health benefits Advertising Meals&entertainment Depreciation $0.35 per can 20% commissions per 100 cans $10 sold $50 per week per representative $7,500 $15,000 per representative 20% salaries $1,500 per representative Fixed

It is expected that the following changes will occur in 2006: Variable Commissions no change Fixed

Marina Morgan

Salaries Fringe benefits Health benefits Advertising Meals&entertainment Depreciation

no change per 100 cans $12 sold

No change no change salaries $200 increase per representative

$60 per week per representative no change 10

It is expected number of sales reps Employees during 2006

Administrative Department Information 2005 information Variable Salaries Fringe benefits Health benefits Professional fees Office supplies Telephone Depreciation Fixed $250,000 20% $1,500 $20,000 $0.03 per gal sold $0.02 per gal sold $6,000 annually annual wages per employee annually

It is expected that the following changes will occur in 2006: Variable Salaries Fringe benefits Health benefits Professional fees Office supplies Telephone Depreciation Fixed 3% annual increase no change $200 increase per employee $1,500 annual increase $0.01 inc per gal sold $0.0025 inc per gal sold no change 9 7.50%

It is expected number of admin. Employees during 2006 It is expected that interest rates will be 2005 Balance sheet Cash

150,000

Marina Morgan

Account receivable Inventory - raw materials Inventory - finished goods Plant and equipment Less accumulated depr Total assets Accounts payable Accrued wages Accrued other Long-term debt Common stock Additional Paid-in Retained earnings Total liab and equity

827,000 383,037 551,835 1,775,000 -615,000 3,071,872 383,016 76,097 74,083 1,125,000 400,000 495,000 518,676 3,071,872

Marina Morgan

Fantastic, Inc. Sales Volume Projection

Sales in Gallons Year 2001 2002 2003 2004 2005

Super 411,000 412,000 405,000 430,000 420,000

Stupendous none none 186,250 223,500 268,200

Super Paint Volume Projection using Exponential Smoothing

Year 2001 2002 2003 2004 2005 Totals

Actual Sales Weighted in Gallons Weight Sales 411,000 1 411,000 412,000 2 824,000 405,000 3 1,215,000 430,000 4 1,720,000 420,000 5 2,100,000 6,270,000

Sales Volume Projection for 2006

418,000

15 6270000 Stependous Paint Volume Projection using Growth Function Known x's Known y's Year Stupendous 2003 186,250 New x 2004 223,500 Year 2005 268,200 2006 Projection of Stupendous 2006 sales volume 321,840

Fantastic Inc. Sales Budget For the Year Ended December 31, 2006 Stupendous Paint 321,840 $15.45 $4,972,428

Super Paint Projected Sales Volume Selling Price Projected Sales 418,000 $10.30 $4,305,400

Total 739,840

$9,277,828

Fantastic Inc. Production Budget For the Year Ended December 31, 2006 Stupendous Paint 321,840 27,000 348,840 24,850 323,990

Super Paint Projected Sales Volume Desired Ending Inventory Units Needed Beginning Inventory Projected Production 418,000 35,000 453,000 31,700 421,300

Total 739,840 62,000 801,840 56,550 745,290

Fantastic Inc. Direct Materials Budget For the Year Ended December 31, 2006 Stupendous Paint xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx

Super Paint Cans (Units) Projected Production-gallons Desired ending inventory Units needed Beginning inventory(gal) Purchases needed Cost per unit Cost of can purchases Pigments (pounds) Projected Production-gallons Pounds per gallon Pound needed for production Desired ending inventory Pounds needed Beginning inventory Purchases needed in pounds Cost per pound Cost of pigments xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx

Total 745,290 61,700 806,990 56,550 750,440 $0.42 $315,185 Cans Super Pigment Stupendous Total 25,914.00 202,300.00 211,775.00 439,989.00

421,300 2 842,600 70,000 912,600 63,300 849,300 $2.89 $2,454,477 xxxxxxxxx

323,990 2 647,980 53,750 701,730 49,700 652,030 $3.94 $2,568,998 xxxxxxxxx $5,023,475 $5,338,660

Fantastic Inc. Direct Labor Budget For the Year Ended December 31, 2006 Stupendous Paint 323,990 0.12 38,879 1.25 48,599 2,000 25 Please use ROUND function here

Super Paint Projected employees needed Projected production Machine hours needed per gallon Machine hours needed Labor hours per machine hours Labor hours needed Maximum hours per employee Projected employees needed Projected Labor costs Labor hours needed (from above) Predicted labor rate Labor dollars needed Direct labor fringe benefits Direct labor health benefit Total Direct labor costs 421,300 0.12 50,556 1.25 63,195 2,000 32

Total

63,195 $8.50 537,158 107,432 54,400 $698,989

48,599 $8.50 413,092 82,618 42,500 $538,210

57 Watch for rounding here!! Please be sure this is a whole number Remember to round up! Suggestion - use ROUNDUP function.

950,250 This is the total wage figure for cash payments and accrual 190,050 This is an "other expense" 96,900 This is an "other expense" $1,237,199

Fantastic Inc. Manufacturing Overhead Budget For the Year Ended December 31, 2006 Stupendous Paint

Super Paint Number of supervisors Direct labor employees needed Direct labor employees/supervisor Supervisors needed Manufacturing Overhead Variable overhead Indirect materials Utilitities Variable maintenance Total variable overhead Fixed Overhead Supervisor salaries Supervisor fringe benefits Supervisor health insurance Fixed maintenance Insurance Property taxes Supplies Depreciation - manufacturing Total fixed overhead Total manufacturing overhead

Total

32 8 4

25 8 4 8 Watch for whole number here! Use round up function

$84,260 20,222 12,639 117,121

$64,798 15,552 9,720 90,069

$149,058 35,774 22,359 207,191

205,000 41,000 6,800 5,952 28,625 6,122 2,947 159,300 455,746 $572,867

205,000 41,000 6,800 4,548 21,875 4,678 2,253 120,700 406,854 $496,923

410,000 82,000 13,600 10,500 50,500 10,800 5,200 280,000 Remember to depreciation old and new equipment 862,600 $1,069,791

and new equipment

Fantastic Inc. Capital Expenditures Budget For the Year Ended December 31, 2006 Stupendous Paint 38,879 1,800 22 20 51 Remember to round up to a whole machine!!

Super Paint Machine hours needed Machine hours per machine Number of machine needed* Machines Jan 1, 2006 Machine purchases needed ($30,000 per machine) Cost per machine Total cost of desired purchases Cash outlay for purchases Increase in debt for purchases 50,556 1,800 29 26

Total

3 $30,000 $90,000 $15,000 $75,000

2 $30,000 $60,000 $10,000 $50,000

$30,000 $150,000 $25,000 $125,000

* Remember to round up! For example: If you calculation determines that you will need 30.1 machines, you will have to purchase 31 machines.

Fantastic Inc. Budgeted Cost of Goods Manufactured For the Year Ended December 31, 2006 Direct Materials Beginning Direct Materials Inventory Material Purchases Direct materials available for use Ending Direct Materials Inventory Total Raw Materials Used Direct Labor Overhead Cost of Goods Manufactured.

$383,037 Remember to look at the Beginning Balance Sheet 5,338,660 5,721,697 439,989 5,281,708 1,237,199 1,069,791 $7,588,698

Units costs for products Super Cost of materials per unit Unit cost for Direct labor Unit Cost for overhead Total unit cost for 2006 production Units in finished goods inventory Value of finished goods inventory $6.20 1.66 1.36 9.22 35,000 $322,661 Stupendous $8.30 1.66 1.53 11.50 27,000 $310,500 $633,161 Use this figure on the ending balance sheet Total Remember the cost of the cans

Fantastic Inc. Selling Department Budget For the Year Ended December 31, 2006 Fixed Commissions Salaries Selling fringe benefits Selling health benefits Advertising Meals & Entertainment Depreciation Totals Variable $258,944 $150,000 30,000 17,000 31,200 7,500 $235,700 $399,514 51,789 88,781 Total $258,944 150,000 81,789 17,000 88,781 31,200 7,500 $635,000

Fantastic Inc. Administrative Budget For the Year Ended December 31, 2006 Fixed Salaries Administrative fringe benefits Administrative health benefits Professional fees Office supplies Telephone Depreciation Total administative costs $257,500 51,500 15,300 21,500 $29,594 12,947 6,000 $351,800 $42,541 Variable Total $257,500 51,500 15,300 21,500 29,594 12,947 6,000 $394,341

Fantastic Inc. Budgeted Income Statement (Absorption) For the Year Ended December 31, 2006 Sales Cost of Sales Beginning finished goods inventory Cost of goods manufactured Good available for sale Ending inventory Cost of goods sold Gross margin Selling expenses Administrative expenses Total selling and admin. Expenses Operating Income Interest expense Income before tax Income tax (40% rate) Net income 635,000 394,341 1,029,340 741,116 93,750 647,366 258,946 $388,419 $9,277,828

$551,835 7,588,698 8,140,533 633,161 7,507,372 1,770,456

Remember to look at the beginning balance sheet

Remember to look at COGMfg statement

Fantastic Inc. Cash Budget For the Year Ended December 31, 2006 Increase in Cash Cash receipts Cash payments for materials Wages and commissions paid Other expenses paid Interest paid on long-term debt Income taxes paid Cash paid for new fixed assets Long-term debt repayment Dividend paid Total increases and decreases Prior year cash Cash balance December 31, 2006 $9,138,388 $5,276,788 2,224,663 820,765 93,750 258,946 25,000 255,000 200,000 9,138,388 xxxxxxxxxx xxxxxxxxxx 9,154,912 xxxxxxxxxx xxxxxxxxxx -16,524 150,000 $133,476 Use this balance on the balance sheet Decrease in Cash

Total

Fantastic Inc. Balance Sheet December 31, 2006 Assets Cash Accounts receivable Inventory - raw materials Inventory - finished goods Plant and equipment Less accumulated depreciation Total Assets Liabilities Accounts payable Accrued wages Accrued other Long-term debt Total liabilities Stockholders' equity Common stock Additional paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

$133,476 966,440 439,989 633,161 1,925,000 (895,000) $3,203,066

Remember to look at the COGMfg Remember to look at the COGMfg

$444,888 93,416 67,880 995,000 $1,601,184

Be sure NOT to include employee benefits Do not include non-cash expenses but remember employee benefits

400,000 495,000 707,095 1,602,095 $3,203,280

Strengths&Weaknesses - and Recommendations What strengths does Fantastic, Inc. have? 1. From sales projection we can see that projected sales valume Stupendous will increase by 20 %. 2. From Cash budget we can see that cash receivable will increase and payments for materials will decrease. 3. Total assets will increase by 4%

What weaknesses does Fantastic, Inc. have? 1. From sales projection we can see that projected sales valume Super will decrease by 20 %. 2. Compare balance sheet from 2005 and 2006 total cash will decrease by 12%. 3. Total liabilities and equity will increase by 4%

What are your recommendations? Because company sales increase they need more asstes, which increase the AFN. Accounts Payable will increase in 2006 by 16% If company begins paying sooner , that will reduces liabilities. ROI = 12% show us that company investment is in risk I will propose to increse price per gal in order to increse revenue.

erials will decrease.