Prepare a revised pro forma forecast assuming level

Question

        

Answer 1

For the following assignment that is about to Toys-4-Kids manufacture plastic toys Toys-4-Kids manufacture plastic toys. Sales and production are extremely seasonal. The subsequent list of figures is a quarterly pro forma forecast indicating external financing requires for 2012. Assumptions are in parentheses. Continuing through Toys-4-Kids introduced in the above information, the company's production manager has quarreled for years that it is inefficient to create on a seasonal basis. She believes the company must switch to level production throughout the year, building up ended goods inventory in the 1st two quarters to meet the peak selling needs in the last two. She believes the company can decrease its cost of goods sold from 70 to 65 % through level production. (Recall that production managers classically want to restrict production to left shoes only so as to decrease costs.)