Waterways Corporation Is A Private Corporation Formed Fo ✓ Solved

Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, perform rapid and responsible service, and serve the community and the employees who represent them in each community.

The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products. Waterways was founded by Will Winkman, who is the company president and chief executive officer (CEO). Working with him from the company's inception is Will's brother, Ben, whose sprinkler designs and ideas about the installation of proper systems have been a major basis of the company's success. Ben is the vice president who oversees all aspects of design and production in the company. The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees.

The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Helen Hines. The installation and training division is overseen by vice president Henry Writer, who supervises the managers of the six local installation operations. Each of these local managers hires his or her own local service people. These service employees are trained by the home office under Henry Writer's direction because of the uniqueness of the company's products.

There is a small human resources department under the direction of Sally Fenton, a vice president who handles the employee paperwork, though hiring is actually performed by the separate departments. Teresa Totter is the vice president who heads the sales and marketing area; she oversees 10 well-trained salespeople. The accounting and finance division of the company is run by Ann Headman, who is the chief financial officer (CFO) and a company vice president. She is a member of the Institute of Management Accountants and holds a certificate in management accounting. She has a small staff of accountants, including a controller and a treasurer, and a staff of accounting input operators who maintain the financial records.

A partial list of Waterways' accounts and their balances for the month of November follows. Accounts Receivable: $275,000, Advertising Expenses: $54,000, Cash: $260,000, Depreciation—Factory Equipment: $16,800, Depreciation—Office Equipment: $2,400, Direct Labor: $42,000, Factory Supplies Used: $16,800, Factory Utilities: $10,200, Finished Goods Inventory, November 30: $68,800, Finished Goods Inventory, October 31: $72,550, Indirect Labor: $48,000, Office Supplies Expense: $1,600, Other Administrative Expenses: $72,000, Prepaid Expenses: $41,250, Raw Materials Inventory, November 30: $52,700, Raw Materials Inventory, October 31: $38,000, Raw Materials Purchases: $184,500, Rent—Factory Equipment: $47,000, Repairs—Factory Equipment: $4,500, Salaries: $325,000, Sales Revenue: $1,350,000, Sales Commissions: $40,500, Work in Process Inventory, October 31: $52,700, Work in Process Inventory, November 30: $42,000.

Paper For Above Instructions

Organizational Chart of Waterways Corporation

The organizational structure of Waterways Corporation can be illustrated as follows:

  • Will Winkman (CEO)

    • Ben Winkman (Vice President of Design and Production)

    • Ann Headman (CFO)

    • Sally Fenton (Vice President, Human Resources)

    • Teresa Totter (Vice President, Sales and Marketing)

    • Henry Writer (Vice President, Installation and Training)

    • Todd Senter (Factory Manager)

    • Helen Hines (Purchasing Manager)

Cost of Goods Manufactured Schedule for November

To prepare the cost of goods manufactured schedule, we gather relevant data from the financial information provided:

  • Direct Materials Used:

    • Raw Materials Inventory, Oct 31: $38,000

    • Plus: Raw Materials Purchases: $184,500

    • Less: Raw Materials Inventory, Nov 30: ($52,700)

    • Total Direct Materials Used: $169,800

  • Direct Labor: $42,000

  • Manufacturing Overhead:

    • Indirect Labor: $48,000

    • Factory Supplies Used: $16,800

    • Factory Utilities: $10,200

    • Depreciation—Factory Equipment: $16,800

    • Rent—Factory Equipment: $47,000

    • Repairs—Factory Equipment: $4,500

    • Total Manufacturing Overhead: $143,300

  • Total Manufacturing Costs: $42,000 (Direct Labor) + $169,800 (Direct Materials Used) + $143,300 (Overhead) = $355,100

  • Work in Process Inventory:

    • Work in Process Inventory, Oct 31: $52,700

    • Less: Work in Process Inventory, Nov 30: ($42,000)

    • Cost of Goods Manufactured: $355,100 + $52,700 - $42,000 = $365,800

Income Statement for the Month Ended November 30

Waterways Corporation

Income Statement

For the Month Ended November 30

  • Sales Revenue: $1,350,000

  • Cost of Goods Sold (COGS):

    • Beginning Finished Goods Inventory: $72,550

    • Cost of Goods Manufactured: $365,800

    • Less: Ending Finished Goods Inventory: ($68,800)

    • Total COGS: $365,800 + $72,550 - $68,800 = $369,550

  • Gross Profit: $1,350,000 - $369,550 = $980,450

  • Operating Expenses:

    • Advertising Expenses: $54,000

    • Other Administrative Expenses: $72,000

    • Sales Commissions: $40,500

    • Total Operating Expenses: $166,500

  • Net Income: $980,450 - $166,500 = $813,950

Partial Balance Sheet as of November 30

Waterways Corporation

Partial Balance Sheet

As of November 30

  • Assets:

    • Current Assets:

      • Cash: $260,000

      • Accounts Receivable: $275,000

      • Prepaid Expenses: $41,250

      • Raw Materials Inventory: $52,700

      • Finished Goods Inventory: $68,800

      • Total Current Assets: $697,750

    • Fixed Assets:

      • Factory Equipment (Less Depreciation): $Calculation needed for this section.

  • Liabilities:

    • (Detailed figures on liabilities needed to complete this section)

Conclusion

Waterways Corporation has shown impressive growth and profitability as indicated by the constructed financials. Continuous oversight in quality and a skilled workforce underpins its success. Focusing on strategic growth while balancing operational efficiency will be essential moving forward.

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