Assumptions in the Case Study Analysis

Case 1
Case 2

Case 3

1
1
2
3
4
1
2
3

Barrel Cost to be Included in Inventory Cost

Barrel Cost to be Included in Inventory Cost
Warehousing Cost to be included
Labour cost to be included
Depriciation Cost to be included
Barrel Cost to be Included in Inventory Cost
Warehousing Cost to be included
Labour cost to be included

Income Statement
Particulars

Given
1987

Net Sales

1988

42000

Cost of Goods sold:

Federal Excise Taxes on barrels sold
Cost of Product Charged to sales
Bulk whiskey inventory July 1, of each year-172000 barrels
Plus: Cost of whiskey produced to inventory (43000 barrels in 1987
and 63000 barrrels in 1988 at an average cost of $52.40/50 gallon
barrels in both years

31605
9013

9013

2253

3301
11266

Less: Bulk whiskey inventory June 30 of respective year (172000 and

192000 barrels, at an average production cost)

9013

10061
2253

Cased Goods and in process July 1, of respective year

Cased Goods and in process June 30, of respective year

4140
4140

4140
4140
0
33858

Other costs charged to Cost of Goods sold:

Cost of barrels used during year at $63.00 per barrel
Occupancy costs: factory building
rented building
Warehouse labor and warehouse supervisor
Labor and supplies expense of chemical laboratory
Depriciation: factory equipment
warehouse equipment
Cost of govt. supervision and bonding facilities
Cost of bottling liquor(labor, glass, and miscellaneous supplies)
Total Cost of goods sold
Gross profits from operations
Less : Selling and advertising expenses
Administrative and general expense
NET PROFIT (loss)

2709
265
272
188
136
24
12
6
458

3969
297
572
334
166
24
20
14
458
4070
37928
4072

1568
1000

1874
1228
2568
1504

Given

Case 1
1988

1987

Case 2
1988

1987

Case 3
1988

1987

1988

42000

42000

42000

42000

42000

42000

42000

31605

31605

31605

31605

31605

31605

31605

19849

19849

4962
12314

7270
24811

19849
2253

22157

4140
4140

0
265
272
188
136
24
12
6
458
5854
39712
2288

0
36567

1361
37928
4072

1885
38452
3548

1874
1228
2568
1504

26109

3102
962

5823
4140
4140

0
37428

0
0
0
0
0
24
12
6
458
472
37936
4064

31932

5823
4140
4140

0
0
0
0
0
0
0
14
458

1568
1000
3102
446

23293

0
37464

464
37928
4072

8639
29116

5859
4140
4140

0
0
0
0
0
0
0
6
458

1874
1228
2568
1504

26261

0
37464

23293

5823
32120

5859
4140
4140

0
297
572
334
166
24
20
14
458

1568
1000
3102
-814

23437

4140
4140

23293

8683
29296

4962

0
36567

23437

5859
27119

4962

0
33858

23437

0
37428

0
0
0
0
0
24
20
14
458
500
37928
4072
1568
1000
2568
1504

516
37944
4056
1874
1228
3102
954

Particulars

Given

Case 1

Case 2

Current Assets:

1987

1988

1987

1988

1987

Cash
Accounts Receivable - Trade (Less Allowances for
doubtful accounts of approximately $330000)
Inventories :
Bulk whiskey in barrels at average production cost ( no
excise tac included)
Bottled and cased whiskey, 175000 gallons in each
year at an average cost of $22.50 per gallon (including
excise tax)
Inventory in process
raw material and supplies
Prepaid Expenses
Total Current Assets
Total Fixed Assets

2548

632

2548

632

2548

2854

3662

2854

3662

2854

9013

10061

19849

20897

25293

3938
202
800
881
20236
2474

3938
202
472
777
19744
2788

4253
202
800
881
31387
2474

4253
202
472
777
30895
2788

Total Assets

22710

22532

33861

33683

4404.2
202
800
881
36982.2
2474
39456.2

5598
7000

5034
8200

5598
7000

5034
8200

5598
7000

3600
6512
0

3600
5698
0

3600
6512
11151

3600
5698
11151

22710

22532

33861

33683

3600
6512
16746.2
39456.2

Total Current Liabilities

Total Noncurrent liabilities
Stockholders Equity:
Common Stock held principally by members of Dobbins
Family
Earnings retained in the business
Additional Retained Earnings

Total Liabilities and capital

Case 2

Case 3

1988

1987

1988

632

2548

632

3662

2854

3662

28125

23293

24341

4411.26
202
472
777
38281.26
2788
41069.26

4353.11
202
800
881
34931.11
2474
37405.11

4405.11
202
472
777
34491.11
2788
37279.11

5034
8200

5598
7000

5034
8200

3600
5698
18537.26
41069.26

3600
6512
14695.11
37405.11

3600
5698
14747.11
37279.11