Isphase,Inc There Are No Beginning Inventories

question 38

Essay

Isphase,Inc.has provided the following financial data for the year:
$$\begin{array} { | l | r |r| } \hline \text { Units produced and sold } & 3,500& \text { units } \\\hline \text { Sales price } & \$ 220& \text { per unit } \\\hline \text { Direct materials } & \$ 25 &\text { per unit } \\\hline \text { Direct labor } & \$ 45& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 30& \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 20& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 105,000& \text { per year } \\\hline \text { Fixed selling and administrative costs } & \$ 140,000 &\text { per year } \\\hline\end{array}$$ There are no beginning inventories.Prepare an income statement for the year using the traditional format.

Calculate the net present value (NPV) of adopting a lockbox system for cash collections.

Understand and calculate the amount of average daily receipts from customers.

Grasp the concept of collection time and its impact on firm's cash flow.

Define key terms related to cash management such as target cash balance, zero-balance account, and transaction motive.

---

Definitions:

Earnings Announcement

The public declaration of a company's profitability for a specific period, often impacting its stock price.

Credit Risk

The risk that a lender may not receive the owed principal and interest, leading to disrupted cash flows and increased costs for collections.

Quarterly Cash Flows

The movement of cash into and out of a business over a three-month period, often used to indicate the company's liquidity, efficiency, and financial health.

Technology Companies

Firms that produce or provide technology products and services, including software development, electronics manufacturing, and information technology services.