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.
