Case Manufactured Homes Essay

1895 words - 8 pages

1. The key aspects of Manufactured Homes(MNH) are the selling of manufactured homes at a big price range with the focus on the lower end of the market and the financial participation. MNH sells the mortgages of the customers to unrelated financial institutions and earn money by the difference in the interest rates.
MNH sold mobile homes in the Southeast US, primarily to low-income individuals who could not afford a traditional single-family home. The company sells affordable comfort. The company believed that its focus on the lower end of the market had two advantages. First, since its customers were seeking to fulfill an essential housing need, sales were less affected by changes in ...view middle of the document...

More home owners selected a conventional home over manufactured homes and the mortgages were financed at lower interest rates which meant a mortgage prepayment for MNH. This became a problem and they had to increase their credit sales provision.
MNH has a big scope advantage. Because of its size it benefits financially from volume buying. This is one of the most important reasons that many independent dealers are seeking a working relationship with MNH and a lot of companies are willing to be acquired.

2. Most of Manufactured Homes’ sales were credit sales where the customer paid a down payment of 5 to 10 percent of the sales price and entered into an installment sales contract with the company to pay the remaining amount over periods ranging from 84 to 180 months. This leads to lower monthly payments for their customers which is an added advantage. The sold manufactured homes are recorded as sales and as accounts receivable. The income of a sale is recognized when the payment is received.
Under existing financing arrangements, the majority of installment contracts are sold, with recourse to unrelated financial institutions at an agreed upon rate which is below the contractual interest rate of the installment contract. Under this agreement, Manufactured Homes was responsible for payments to the financial institution if the customer failed to make the payments specified in the installment contract.

The accounting under this principle is quite reasonable. The sales are recorded when a down payment is made, mostly 10% of the total payment. When a down payment is made there will be a smaller chance that the buyer will renounce its purchase, because he already paid a part of it. The period a customer has to make the down payment, 84 to 180 months, it very long because a lot can change in such a large time range (is a warning sign).
The assumptions that have to be made are that the customers will be able to pay the down payment within time and that they will be able to pay the rest of the money. They account for it as a sale when the down payment is made but the inventory account is decreased as a customer bought a manufactured home and a receivables are increased, but it is not yet sure that the payment will be made.
We do not agree with the assumptions made because the company cannot assume that the customer will be able to pay for the amount that is accounted for.

3. To improve liquidity a firm may sometimes decide to sell part of its receivables to an financial institution, after which the financial institutions services the collection of the receivables. Once the receivables have been sold, the seller (MNH) must decide whether it accounts for the transaction as a sale (a reduction of receivables) or as a received loan collateralized by receivables (debt).
The transfer of the receivables are accounted for as a decrease of accounts receivable rather than as an increase in debt. This is not the proper way to account for this...

Other Papers Like Case Manufactured Homes

Future of Solar Energy Essay

1190 words - 5 pages time. Nevertheless, in the last decade a collection of photovoltaic cell panels have began to appear mostly everywhere, via the rooftops of homes, businesses, airport terminals, large factories and schools. The most interesting thing about this obvious growth though has been the large number of new homes having solar energy being incorporated into their designs. It’s amazing to see houses being retrofitted with solar panels on their rooftops across

Legal and Ethical Views Essay

913 words - 4 pages established work has taken place on Smallman Street in Pittsburgh PA. But they had to relocate since the business in the downtown region was a bit much, so they moved to New Kensington, PA in 1891. Which in this case their business was on the downside of fabrication, but more upscale on extraction on manufactured raw materials that we are currently using today. As time has passed Alcoa is also known for aluminum in vehicles, which is the

Case Study Of The Love Canal Environmental Disaster

1087 words - 5 pages groundwater sampling and analysis program following qualitative identification of a number of organic compounds in the basements of 11 homes adjacent to the Love Canal” (Environmental Sampling). The five steps involved in risk assessment were applied to this case by the strange odors and substances that were reported by residents and from the pieces of phosphorus that made their way to the surface of the schoolyard, seeing that the schoolyard children

Case Study of the Love Canal Environmental Disaster

1095 words - 5 pages number of organic compounds in the basements of 11 homes adjacent to the Love Canal” (Environmental Sampling). The five steps involved in risk assessment were applied to this case by the strange odors and substances that were reported by residents and from the pieces of phosphorus that made their way to the surface of the schoolyard, seeing that the schoolyard children and newborn babies were being affected the most. Because of these facts and

‘Countries at Very Low Levels of Economic Development Face Such Huge Challenges That They Cannot Hope to Address Them Without Assistance from the Rest of the World’. to What Extent Do You Agree with...

1474 words - 6 pages billion in aid to help them rebuild their infrastructure. There are arguments for and against trade, the case for aid is that the aid can be used in many ways e.g. economic development, humanitarian projects, social development and environmental improvement. There is a larger case against aid which is that it does not always reach who it is intended for due to corrupt governments, also the countries lack the basic infrastructure to use the aid

Whirlpool Environment

1268 words - 6 pages $5,000 plus other possible money to the homeowners in punitive damages based on the deduction of property value and clean up from the leak. Whirlpool may also have to pay out perpetuity, given the event the contamination can’t be cleaned up. The other lawsuit deals with an inherently defective line of front loading washing machines manufactured since 2001 by Whirlpool. This class action lawsuit calls for Whirlpool to compensate for the purchase

Administration of Medication

1694 words - 7 pages to them e.g. (note:‘medical treatment’ means medical or dental treatment which is conducted by, or under the direction of, a registered medical practitioner, registered dentist or non-medical prescriber). Certain drugs will, however, require COSHH assessment because of the potential risks to others involved in their administration and disposal. This is particularly the case with cytotoxic drugs. Following amendments made in 1999, a breach

Meth Mouth

1187 words - 5 pages Methamphetamine was first developed in 1893. It wasn’t until 1919 that it was turned into a crystalized form. Adolf Hitler actually received daily injections of methamphetamines for the last three years of his life to assist with depression and fatigue. It is highly addictive and tolerance develops quickly, requiring higher dosages or frequency. By the 1960’s Crystal Meth was being manufactured illegally in many homes. With eighty dollars’ worth

American Imperialism

1797 words - 8 pages embrace Saipan and their willingness to cooperate for the importation of raw material to be finally manufactured (at minimum wage) to wherever these retailers pleased. By the 1990s, Saipan was employed primarily by the previously mentioned retailers but they were almost 90% employed by the United States government (Bowe, 2007). To make the case for American Cultural Imperialism, this is the perfect example of how America took over virtually every

Easykey Marketing Plan

2255 words - 10 pages convenience of their lives by providing innovative electronics solutions” by making our customers lives much easier in situations like caring a baby or heavy groceries and not struggling to find the right key and unlocking the door manually. As a convenience step, ‘Easy Key’ also has a regular key built in just in case the batteries located in the receiver run out. Consumer Product Classification ‘Easy key’ is a product that

Corrigan Corp

4214 words - 17 pages operations in the Philippines. Table 2.2 shows the list of products manufactured by Fosroc Philippines. Table 2.2 - Fosroc Philippines Products as of January 2015 Product | Type | Nitocote CM210 | Cementitious | Nitoproof 100-120 | Bitumen membrane | Nitoproof 1000 | Cold-applied Polyurethane | Proofex WG | Epoxy Resin | Brushbond ICW | Crystalline Capillary | Nitoproof 600 | Elastomeric | Conplast U447 | Concrete Admixture | Sika

Related Essays

Manufactured Homes Essay

1381 words - 6 pages Manufactured Homes 1. Manufactured Home business focuses on the lower end of the market. Its key aspects are marketing, price competitive (target individuals in the low income category) and offering both single and multi-sectional units. We think that the company does have a viable business, because revenues are increasing over the years (1984-1986). This can be caused due to the fact that revenues are being split in two sources: the sale

Manufactured Homes Essay

1824 words - 8 pages HUISWERK WEEK 3 (E6 C32 & E8 C39) + OPGAVE E7 DQP 29 & 31  Case 6-32 a. A review provides limited assurance about the fair presentation of financial statements in accordance with generally accepted accounting principles but far less assurance than an audit. Presumably, the bank decided that the assurances provided by a review were needed before a loan could be approved, but an audit was not necessary. A review includes a CPA firm

Fleetwood Enterprises Essay

1887 words - 8 pages Conclusion Appendix A: xx – Aman to include for her section B: 1990 Ratio Analysis C: D: XX * Business Analysis Fleetwood Enterprises, Inc. was the nation's largest maker of both manufactured housing and recreational vehicles (including motor homes, travel trailers, folding trailers, and truck campers) in the late 1980's and early 1990's. As a whole, Fleetwood recreational vehicles span the full range of the market

Power Factor Correction Using Boost Converter

4108 words - 17 pages developed and manufactured by Cos Phi Inc. out of London Ontario. The unit is tied into the residential service panel and provides capacitance and surge suppression. By adding capacitance into the system the power factor for any motor loads (air conditioners, washers, dryers, fans, fridges, and dishwashers) is improved. Thirty homes were selected for the pilot project. These homes where fed by three 50kVA transformers. Homes from two of the