Sino Apparel Company
Essay by shinnizles • December 9, 2012 • Essay • 396 Words (2 Pages) • 989 Views
Anh Tran, chairman of Sino Apparel Company was conducting a budget meeting with his senior staff. It is November 2012, and the group is discussing the preparation of the master budget for the year ended 31 December 2013.
"Last year was a tough one", Tran starts: "the economy did not recover as much as we had hoped and there was increased competition from overseas. I have decided to acquire a computerized manufacturing system to ensure our competitiveness in the market. We shall make the acquisition on the 1st of January 2013. It is also expected that it will take almost the year to train the personnel and reorganize the processes to take full advantage of the new system." In response to a question about financing the acquisition, Anh Tran replied "The new computerized system will cost $750,000. We will also need to purchase $100,000 of additional equipment to complete installation of the system. The system will be financed with 20% of equity and 80% of debt . Since we have got a very good credit history, we will not have problems in convincing the bank for a two-year loan."
With that the meeting ended, and the budget process commenced.
Anh Tran, chairman of Sino Apparel Company was conducting a budget meeting with his senior staff. It is November 2012, and the group is discussing the preparation of the master budget for the year ended 31 December 2013.
"Last year was a tough one", Tran starts: "the economy did not recover as much as we had hoped and there was increased competition from overseas. I have decided to acquire a computerized manufacturing system to ensure our competitiveness in the market. We shall make the acquisition on the 1st of January 2013. It is also expected that it will take almost the year to train the personnel and reorganize the processes to take full advantage of the new system." In response to a question about financing the acquisition, Anh Tran replied "The new computerized system will cost $750,000. We will also need to purchase $100,000 of additional equipment to complete installation of the system. The system will be financed with 20% of equity and 80% of debt . Since we have got a very good credit history, we will not have problems in convincing the bank for a two-year loan."
With that the meeting ended, and the budget process commenced.
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