NOPAT is
a. net income with costs removed that managers at the divisional level are unable to control.
b. net income plus noncash flow amounts.
c. net income less the cost of financing.
d. net income minus noninterest-bearing current liabilities.

Exercise 9-14 (Video)

Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.

Collections from customers: January $85,000, February $150,000.

Payments for direct materials: January $50,000, February $75,000.

Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.

Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 per month. All other overhead costs are paid as incurred.

Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.

Sales of marketable securities in January are expected to realize $12,000 in cash. Danner Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $20,000.

Prepare a cash budget for January and February.

DANNER COMPANY
Cash Budget

For the Quarter Ending February 28, 2020For the Two Months Ending February 28, 2020February 28, 2020

January

February

Direct MaterialsCollections from CustomersBeginning Cash BalanceFinancingRepaymentsDirect LaborManufacturing OverheadDisbursementsBorrowingsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal Receipts

$

$

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:

Collections from CustomersDirect LaborTotal DisbursementsDirect MaterialsTotal Available CashSale of Marketable SecuritiesSelling and Administrative ExpensesDisbursementsTotal ReceiptsBorrowingsRepaymentsReceiptsManufacturing OverheadFinancingEnding Cash BalanceBeginning Cash BalanceExcess (Deficiency) of Available Cash Over Cash Disbursements

    Financing    Excess (Deficiency) of Available Cash Over Cash Disbursements    Total Disbursements    Selling and Administrative Expenses    Manufacturing Overhead    Receipts    Repayments    Disbursements    Ending Cash Balance    Sale of Marketable Securities    Total Available Cash    Total Receipts    Beginning Cash Balance    Borrowings    Collections from Customers    Direct Labor    Direct Materials    

    Total Available Cash    Direct Materials    Collections from Customers    Disbursements    Direct Labor    Sale of Marketable Securities    Ending Cash Balance    Excess (Deficiency) of Available Cash Over Cash Disbursements    Manufacturing Overhead    Financing    Total Disbursements    Receipts    Repayments    Total Receipts    Selling and Administrative Expenses    Beginning Cash Balance    Borrowings    

    Receipts    Repayments    Total Available Cash    Manufacturing Overhead    Beginning Cash Balance    Sale of Marketable Securities    Total Receipts    Financing    Borrowings    Total Disbursements    Selling and Administrative Expenses    Collections from Customers    Direct Labor    Direct Materials    Disbursements    Ending Cash Balance    Excess (Deficiency) of Available Cash Over Cash Disbursements    

Total ReceiptsManufacturing OverheadDirect LaborExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsDisbursementsEnding Cash BalanceBeginning Cash BalanceRepaymentsBorrowingsFinancingSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsDirect MaterialsCollections from Customers

AddLess

:

Sale of Marketable SecuritiesTotal ReceiptsDirect LaborSelling and Administrative ExpensesDirect MaterialsFinancingRepaymentsBeginning Cash BalanceDisbursementsTotal Available CashExcess (Deficiency) of Available Cash Over Cash DisbursementsCollections from CustomersManufacturing OverheadTotal DisbursementsEnding Cash BalanceBorrowingsReceipts

    Sale of Marketable Securities    Collections from Customers    Receipts    Total Receipts    Direct Labor    Selling and Administrative Expenses    Direct Materials    Beginning Cash Balance    Excess (Deficiency) of Available Cash Over Cash Disbursements    Financing    Total Available Cash    Manufacturing Overhead    Repayments    Disbursements    Ending Cash Balance    Total Disbursements    Borrowings    

    Collections from Customers    Selling and Administrative Expenses    Manufacturing Overhead    Total Receipts    Direct Materials    Direct Labor    Repayments    Total Available Cash    Receipts    Sale of Marketable Securities    Disbursements    Beginning Cash Balance    Borrowings    Ending Cash Balance    Total Disbursements    Excess (Deficiency) of Available Cash Over Cash Disbursements    Financing    

    Excess (Deficiency) of Available Cash Over Cash Disbursements    Sale of Marketable Securities    Total Available Cash    Disbursements    Direct Materials    Borrowings    Ending Cash Balance    Collections from Customers    Financing    Selling and Administrative Expenses    Direct Labor    Total Disbursements    Manufacturing Overhead    Total Receipts    Receipts    Beginning Cash Balance    Repayments    

    Financing    Disbursements    Manufacturing Overhead    Direct Labor    Borrowings    Receipts    Repayments    Total Receipts    Ending Cash Balance    Excess (Deficiency) of Available Cash Over Cash Disbursements    Selling and Administrative Expenses    Sale of Marketable Securities    Total Available Cash    Total Disbursements    Beginning Cash Balance    Direct Materials    Collections from Customers    

    Total Receipts    Selling and Administrative Expenses    Receipts    Total Disbursements    Disbursements    Manufacturing Overhead    Financing    Ending Cash Balance    Sale of Marketable Securities    Excess (Deficiency) of Available Cash Over Cash Disbursements    Beginning Cash Balance    Repayments    Borrowings    Total Available Cash    Collections from Customers    Direct Labor    Direct Materials    

Total Available CashManufacturing OverheadDisbursementsDirect LaborFinancingTotal DisbursementsReceiptsBeginning Cash BalanceTotal ReceiptsDirect MaterialsBorrowingsCollections from CustomersEnding Cash BalanceRepaymentsExcess (Deficiency) of Available Cash Over Cash DisbursementsSale of Marketable SecuritiesSelling and Administrative Expenses

Beginning Cash BalanceDirect LaborTotal ReceiptsEnding Cash BalanceBorrowingsDisbursementsCollections from CustomersDirect MaterialsReceiptsRepaymentsSale of Marketable SecuritiesExcess (Deficiency) of Available Cash Over Cash DisbursementsSelling and Administrative ExpensesFinancingManufacturing OverheadTotal Available CashTotal Disbursements

LessAdd

:

Direct LaborTotal ReceiptsExcess (Deficiency) of Available Cash Over Cash DisbursementsBeginning Cash BalanceDisbursementsDirect MaterialsSelling and Administrative ExpensesRepaymentsTotal Available CashReceiptsManufacturing OverheadTotal DisbursementsBorrowingsFinancingSale of Marketable SecuritiesCollections from CustomersEnding Cash Balance

AddLess

:

RepaymentsTotal DisbursementsTotal ReceiptsSelling and Administrative ExpensesBeginning Cash BalanceDirect LaborDirect MaterialsReceiptsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsManufacturing OverheadSale of Marketable SecuritiesFinancingTotal Available CashBorrowingsCollections from Customers

Collections from CustomersTotal Available CashDirect LaborEnding Cash BalanceDirect MaterialsDisbursementsExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingRepaymentsTotal ReceiptsManufacturing OverheadReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal DisbursementsBeginning Cash BalanceBorrowings

$$

One test that is often conducted for the acquisition and payment cycle is the Accounts Payable Cutoff Test. What category does this test fall under? Can you explain the test and why it is performed?

Freese, Inc., is in the process of preparing the fourth quarter budget for 2016, and the following data have been assembled: The company sells a single product at a price of $70 per unit. The estimated sales volume for the next six months is as follows: September 14,300 units October 13,200 units November 15,400 units December 22,000 units January 9,900 units February 11,000 units All sales are on account. The company's collection experience has been that 30% of a month's sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $680,680 on September 30, 2016. Management's policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month's budgeted sales. The finished goods inventory on September 30, 2016, is expected to be 3,960 units. To make one unit of finished product, 4 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory is expected to be 22,176 pounds on September 30, 2016. The cost per pound of raw material is $6, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $100,267 on September 30, 2016.

Required: a. Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2016.

b. Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2016.

c. Prepare a production budget in units, by month and in total, for the fourth quarter of 2016.

d. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2016.

e. Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter of 2016. (Do not round intermediate calculations.)

The following gifts are received and sold in the current year:

Determine the basis for gain and basis for loss and realized gain or realized loss. Enter "0" if the field should be blank or if an amount is zero.

The fixed cost allocation rate is based on expected sales and is therefore equal to

$ 225,000/15,000 books​ =$ 15 per book.

Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this​ objective? Show your work.

a. Incorporate a charge of 5​% of the cost of the ending inventory as an expense for evaluating the manager. ​(Complete all answer boxes. For a​ $0 change, make sure to enter​ "0" in the appropriate​ cell.) Please show formulas for solving

Explain the current capital structure of Amazon and recommendations to optimize capital structure. Include cost of debt and equity (e.g. interest rates, preferred dividends, other required annual cash payments from financing).

“[M]anagement take risks … but the processes that generate those … are somewhat removed from the classical processes of choosing from alternative actions in terms of expected value”.

Discuss this statement in 500 words

On September 1, the balance of the Accounts Receivable control account in the general ledger of Montgomery Company was $10,520. The customers’ subsidiary ledger contained account balances as follows: Hurley $1,450, Andino $2,290, Fowler $2,080, and Sogard $4,700. At the end of September, the various journals contained the following information. Sales journal: Sales to Sogard $750, to Hurley $1,100, to Giambi $1,360, and to Fowler $1,120. Cash receipts journal: Cash received from Fowler $1,370, from Sogard $2,130, from Giambi $330, from Andino $1,710, and from Hurley $1,190. General journal: An allowance is granted to Sogard $110. -Set up control and subsidiary accounts and enter the beginning balances. -Post the various journals. Post the items as individual items or as totals, whichever would be the appropriate procedure. -Prepare a schedule of accounts receivable and prove the agreement of the controlling account with the subsidiary ledger at September 30, 2017. -

Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $112 per machine hour. Production information follows.

The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow.

The firm’s total overhead of $12,073,600 is subdivided as follows: manufacturing setups, $2,634,240; machine processing, $7,244,160; and product shipping, $2,195,200.

Required:

1. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.

2. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing.

3. Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much?

4. Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?

Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.

Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing. (Round activity based application rates, overhead application and the final answers to 2 decimal places.)

• Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? (Do not round intermediate calculations. Round activity based application rates, overhead application and the final answers to 2 decimal places.)

  	Type A store cabinet line is

• Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?

  	Yesradio button unchecked1 of 2 Noradio button checked2 of 2

Q) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.

Required:

a. Classify each of the following costs as either direct or indirect with respect to production process.

b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.

Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics: Sales price $80.00 per radio Variable costs $32.00 per radio Fixed costs $360,000.00 per month Crest is subject to an income tax rate of 40.00% a. How many receivers must Crest sell every month to break even? b. How many receivers must Crest sell to earn a monthly operating profit of $90,000.00 after taxes?

2. Cesar's Bottlers bottle soft drinks in a factory that can operate either one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $2.00 per case bottled and the variable cost of $0.90 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices: Daily Volume Range Total Fixed (# of cases bottled) Costs per Day 1 Shift 0 - 2,000 $1,980.00 2 Shifts 2,001 - 3,600 $3,740.00 3 Shifts 3,601 - 5,000 $5,170.00 a. Calculate the break-even point(s). b. If Cesar's Bottlers can sell all the units it can produce, should it operate at one, two or three shifts?

Q.1) Emirates Steel Company reported the following accounting values:

Required:

Part 1:

a. Compute contribution margin.

b. Compute contribution margin percentage.

c. Compute gross margin.

d. Compute gross margin percentage.

e. Compute operating income.

Part-2:

Write a note on the above retrieved ratios and give comments whether investment in the shares of M/s Emirates Steel Company is a prudent decision as an investor or not? In both cases, respond why you taken decision of ‘Yes’ or ‘No’ (give reasons)?

Q.2) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.

Required:

a. Classify each of the following costs as either direct or indirect with respect to production process.

b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.

What two companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved.