Financial Budgets Cash Outflows Country Club Road Nurseries

The document describes the operations and costs of Country Club Road Nurseries over a year. It grows and sells plants from January to October. It employs 15 full-time and up to 20 part-time seasonal workers. Total fixed costs are $55,000 per month. Variable costs depend on the season and activities, ranging from $5-20 per employee hour. To determine the nursery's cash outflows for the year, its monthly expenses including wages, fixed costs, and variable costs based on employee hours must be calculated.

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Financial Budgets Cash Outflows Country Club Road Nurseries

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trilocksp Singh

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Solved: Financial budgets cash outflows Country Club

Road Nurseries
Financial budgets cash outflows Country Club Road Nurseries

Financial budgets: cash outflows Country Club Road Nurseries grows and sells garden plants.
The nursery is active between January and October each year. During January, the potting
tables and equipment are prepared. The potting and seeding are done in February. In March
and April, the plants are cultivated, watered, and fertilized. May and June are the peak selling
months. July, August, and September are the peak months for visiting customers in their homes
to provide them with advice and help solve their problems. During October, the equipment and
buildings are secured for the winter months, and in November and December, full-time
employees take their paid holidays, and the business is closed.
The nursery employs 15 full-time staff and, depending on the season, up to 20 part-time staff.
The full-time staff members are paid an average salary of $2,700 per month and work 160 hours
per month. The part-time staff members are paid $10 per hour. Because the nursery relies on
local students for part-time work, there is no shortage of trained people willing to work the hours
that are available. The ratio of full-time employee hours worked to part-time employee hours
worked is as follows: January, 5:1; February, 5:1; March, 3:1; April, 3:1, May, 1:1; June, 1:1;
July, 1:1; August, 1:1; September, 2:1; and October, 4:1. Because part-time students are used
mainly for moving and selling activities, their work creates very little incremental support costs.
Fixed costs, other than wages, associated with this operation are about $55,000 per month. The
cost drivers in this operation are the activities that the full-time employees undertake. These
cost drivers are proportional to the hours worked by the full-time employees. The variable costs
depend on the season and reflect the common employee activities during that season. Average
variable costs per employee hour worked are as follows: January, $15; February, $15; March,
$15; April, $15; May, $5; June, $5; July, $20; August, $20; September, $20; and October, $10.
These variable costs include both support items such as power and water and direct items such
as soil and pots. Assume that all expenses are paid in the month they are incurred. On the
basis of the information provided, determine the cash outflows for the upcoming year.