Hi - I need some help with the following: You have been engaged by Jasper Indust
ID: 2538010 • Letter: H
Question
Hi - I need some help with the following:
You have been engaged by Jasper Industries to examine its projected nancial statements for 2016.
The Packaging Division’s operating forecast assumes that the Lamar facility will be completed and operating at 46% of capacity on February 2, 2016. It is highly improbable that the facility will be operational before December 31, 2015. For every month’s delay in opening the facility, the revenues of the Packaging Division are reduced by $164,000 and operating earnings are reduced by $48,000.
1. Determine the estimated completion date of the Lamar facility:
2. Estimate the financial impact of the Lamar facility opening:
Explanation / Answer
Statement showing date of Commission of 100% capacity Schedule Comissioned date 31-Dec-15 46% Capacity Caompleted by 02-Feb-2016 Delay in Completion of 46% of Capacity from Scheduled date 33 Days 100% of capcity will be competed by (a) 72 Days ( 33/46%*100%) Already time taken in Completion of 46% of Capacity comissioned (b) 33 Days Time Required to completion of totall 100 % Capacity 39 Days Date of Comission of 100% capacity 12-Mar-16 Statement Showing Financial Impact Decline in Revenue of Packaging Division/Month $164,000.00 Decline in Operating Earning/Month $48,000.00 Total Decline in Revenue & Earning/Month delay $212,000.00 No. of Days in delay to 100% capacity Commision 72 Days Total Decline in Revenue & Earning in 72 Days (a) $493,287.00 ( $212000*72/31) Revenue & Earning recovered by Operating at 46% capacity for 39 Days (b) $266,710.00 ( 493287/72*39)*40%