Sales and Production Budget II You have been assigned to prepare the cash budget, which is one portion of the master budget for Marble Company. According to a credit agreement with the company’s bank, Marble Company promises to have a minimum cash balance of $65,000 at each month-end. In return, the bank has agreed that the company can borrow up to $175,000 at a monthly interest rate of 2%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company repays loan principal with any cash in excess of $40,000 on the last day of each month. The company has a cash balance of $60,000 and a loan balance of $125,000 at January 1. Marble Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year.

1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated should be indicated in parentheses “( )”.)
2. If the cash receipts and payments changed to the values shown in the table below, how would the budget change?

3. Cash Receipts		Cash Payments
   January February March	$500,000    $475,000 $500,000	$450,000 $375,000 $525,000

4. Write a business letter to the CEO analyzing the cash budgets of this company and state your recommendations based on the initial cash receipts and cash payments and on the cash receipts and cash payments changes.

Shaker Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2017 are as follows.

For the last 4 years, Shaker Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2017, 100,000 machine hours are budgeted.

Jeremy Nolan, owner-manager of Shaker Stairs Co., recently directed his accountant, Bill Seagren, to implement the activity-based costing system that he has repeatedly proposed. At Jeremy Nolan’s request, Bill and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.

Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor. At Steve’s request, Bill prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 stairways.

Correct answer iconYour answer is correct.

Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Round answer to 2 decimal places, e.g. 12.25.)

Correct answer iconYour answer is correct.

What is the manufacturing cost per stairway under traditional costing? (Round answer to 2 decimal places, e.g. 12.25.)

Correct answer iconYour answer is correct.

Calculate activity-based overhead rate for each activity. (Round answers to 2 decimal places, e.g. 12.25.)

Incorrect answer iconYour answer is incorrect.

Caluclate total overhead assigned under ABC.

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Incorrect answer iconYour answer is incorrect.

What is the manufacturing cost per stairway under the proposed activity-based costing? (Round answer to 2 decimal places, e.g. 12.25.)

7. What are some potential opportunities you might recognise associated with introducing cloud computing?

On July 1, MTC Wholesalers had a cash balance of $245,000 and accounts payable of $138,600. Actual sales for May and June, and budgeted sales for July, August, September, and October are:

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $39,200 each month and are paid during the month incurred.

Required
Prepare purchases and cash budgets for July, August, and September.

Do not use a negative sign with your answers.

Do not use a negative sign with your answers.

5. Direct labor variances - Find the missing information:

6. Chuck makes Supersized Chucky-Puffs. Chuck determined the standards for each unit (bag) of Chucky-Puff produced requires 1.5 gallons of ingredients (direct materials) and 0.75 direct labor hours. Chuck expects to pay $2 per gallon of ingredients and his employees a rate of $10 per hour. Based on the company’s forecasts, Chuck is expecting to sell 15,000 units (bags) during the year. At the end of year, Chuck actually sold 16,000 units (bags) and used 20,000 gallons of ingredients and paid $1.9 per gallon. Further, Human resources informed Chuck that he incurred $80,000 in direct labor costs from 10,000 direct labor hours (assume no overtime is used).

a. What is the material price variance?

b. What is the material quantity variance?

c.What is the labor rate variance?

d. What is the labor usage variance?

7. Responsibility Accounting:

a. What is a cost center? Give an example of a cost center ____________________________________________________________________________________________________________________________________________________________

b. What is a Profit center? Give an example of a profit center ____________________________________________________________________________________________________________________________________________________________

c. What is an investment center? Give an example of an investment center ____________________________________________________________________________________________________________________________________________________________

d. What is management by exception: __________________________________________________________________________________________________________________________________________________________________________

e. The Mega Division of Green Corporation is an investment center. It has $1,000,000 of operating assets. During 2018, the Mega Division earned operating income of $300,000 on $6,000,000 of sales. Green’s companywide return on investment or desired rate of return is approximately 10% SHOW WORK FOR CREDIT!

1. What is the ROI?______________________

2. What is the margin? ____________________

3. What is the turnover? _____________________

4. What is the residual income? _______________

10. Why should you prioritise the introduction of cloud computing?

FUTURE OF REVENUE RECOGNITION

I. Do the new standards increase comparability across industries and capital

markets?

II. Do the new standards provide better disclosure, so investors and other

users of financial statements better understand the economics behind the

numbers?

III. Possibility of Fraud with new FASB standards

Direct Materials Variances Bellingham Company produces a product that requires 8 standard pounds per unit. The standard price is $5.5 per pound. If 3,400 units required 26,700 pounds, which were purchased at $5.66 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Dawes​, Vickerman​, and Wrester are liquidating their partnership. Before selling the assets and paying the​ liabilities, the capital balances are Dawes $46,000​; Vickerman​, $25,000​; and Wrester​, $23,000. The​ profit-and-loss-sharing ratio has been 3​:1​:1 for Dawes​, Vickerman​, and Wrester​, respectively. The partnership has $84,000 cash, $ 41,000 ​non-cash assets, and $31,000 accounts payable.

Requirements:

1. Assuming the partnership sells the​ non-cash assets for $45,000​, record the journal entries for the sale of​ non-cash assets, allocation of gain or loss on​ liquidation, the payment of the outstanding​ liabilities, and the distribution of remaining cash to partners. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

-Journalize the sale of the​ non-cash assets for $45,000.

-Journalize the allocation of the gain or loss to the​ partners' capital accounts.

-Journalize the payment of the liabilities.

-Journalize the distribution of remaining cash to the partners.

2. Assuming the partnership sells the​ non-cash assets for $19,000​, record the journal entries for the sale of​ non-cash assets, allocation of gain or loss on​ liquidation, the payment of the outstanding​ liabilities, and the distribution of remaining cash to partners.  ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

-Journalize the sale of the​ non-cash assets for $19,000.

-Journalize the allocation of the gain or loss to the​ partners' capital accounts.

-Journalize the payment of the liabilities.

-Journalize the distribution of remaining cash to the partners.

Statement of cash flows

Natasha Bush operates Natasha’s Cafe as a sole trader. Although she is not legally required to, she wants to prepare a statement of cash flows for her business from the following ledger account balances as at 31 March 2019 and 31 March 2018:

Additional information

• During the year shop equipment that had cost $5,000 and accumulated depreciation of $3,200 was sold for $1,500. New equipment was purchased.
• During the current financial period, Natasha sold the cafe’s delivery van for $19,800. A new, more economical, hybrid van was purchased for $40,000.
• Other expenses includes depreciation expense.
• You are not required to account for taxes.

Tasks

1. Give two reasons why you think Natasha wants to prepare a statement of cash flows.
2. Using the information provided, prepare a statement of cash flows for the year ended 31 March 2019.
3. Discuss whether or not you think Natasha would be happy with what the cash flow statement shows her about her business.

If a company excluded the tax refund from taxable income, and did not record an unrecognized tax benefit, what must the company believe about whether the IRS and tax courts will challenge and allow this exclusion? Explain using the language of FIN 48.

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:

The company also established the following cost formulas for its selling expenses:

The planning budget for March was based on producing and selling 19,000 units. However, during March the company actually produced and sold 24,000 units and incurred the following costs:

1. Purchased 160,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.

2. Direct-laborers worked 60,000 hours at a rate of $15.00 per hour.

3. Total variable manufacturing overhead for the month was $336,600.

4. Total advertising, sales salaries and commissions, and shipping expenses were $260,000, $480,000, and $165,000, respectively.

1. What raw materials cost would be included in the company’s flexible budget for March?

2. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

3. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

4. If Preble had purchased 175,000 pounds of materials at $7.20 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

5. If Preble had purchased 175,000 pounds of materials at $7.20 per pound and used 160,000 pounds in production, what would be the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

7. What is the direct labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

8. What is the direct labor rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input the amount as a positive value.)

he following information is available for Sage Hill, Inc. for the year 2017.

Common shares outstanding for 2017 total 23,000 (000 omitted).

Prepare an income statement for Sage Hill Inc. for the year 2017 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

The year has passed and Ron has become used to being able to come to you with more and more complex finance and accounting questions about this Ukrainian Division. He has come into your office in the middle of November of the following year. Your projects are going quite well as he has a new task for you. He’s been reviewing the operations of the Ukrainian plant and has some questions about the Income Statement. The plant appears to be much more profitable than the other bottling plants within the company and he’s wondering about implementing some of the practices that he has seen there into Canadian Bottling sites. He has provided you with the Income Statement that the Canadian finance team has provided him and wants some key pieces of information from you.

An executive summary of their financial position has been provided by the Ukrainian Management team; all of this information appears to be useful to them but, only some is relevant to you. Highlights of the financial figures are as follows:

Required:

1. Identify all the expenses above as being either Fixed or Variable. For expenses labeled Shipping, Amortization and Electricity, explain why you chose either fixed or variable.
2. Using your cost behaviour breakdown, calculate the Contribution Margin for each unit produced.
3. What would be the number of units necessary to produce for a breakeven scenario? (5Marks)
4. Management has recently discovered that they are now able to lower their labour costs from 67,000 to 55,000 within the year with all other costs remaining the same. What is the Contribution Margin now?
5. Calculate the Gross Profit Margin and Net Profit Margin Ratios. (4 Marks

J&J, Inc., manufactures two products that it sells to the same market. Excerpted below are its budgeted and actual operating results for the year just completed:

Industry volume was estimated to be 1,425,000 units at the time the budget was prepared. Actual industry volume for the period was 1,720,000 units. J&J measures variances using contribution margin. The market share variance is: (Round percentage answers to nearest whole percent and other values to 2 decimal places.)