You have just been hired into a management position which requires the application of your budgeting skills. You find out that budgeting has not been a priority of the company. You have contacted various areas on the organization and have accumulated the information below to assist you in preparing a comprehensive budget.

Manufacturing Inc. produces a part used in the production of engines.

Actual Sales and Projected Sales in Units:

March (Actual) ......... 38,000

April ..........44,000

May ........... 45,000

June ........... 50,000

July ........... 52,000

Sales are the following type: 55% Cash Sales collected in month of sales -- 45% Credit Sales collected in the following month of sale

The following data pertains to the manufacturing process.

1. Finished goods inventory --- March 31st --- 35,200 Units --- $148.71 budgeted cost to make a unit --- Desired ending finished goods for each month 80% of next month's sales volume.

2. Direct materials used:

Direct Material : Metal

Per-Unit Usage : 10 pounds

Cost Per Pound: $8.00

The beginning balance of each month needs to be able to produce 50% of that month's estimated sales volume

Beginning material in pounds as of April 1st 220,000

Direct Materials paid in month purchased.

3. The direct labor used per unit --- 4 hours--- $13.00 per hour --- direct labor paid in month incurred

4. Overhead each month is estimated based on direct labor hours per variable cost. All costs that use cash are paid in month incurred.

--------------------------------------------------------Fixed Cost ---------------------Variable cost

Supplies -------------------------------------------N/A -------------------------------- $1.00

Power -----------------------------------------------N/A ---------------------------------$0.50

Maintenance -------------------------------------$28,000 ----------------------------$0.40

Supervision ------------------------------------- $16,000 --------------------------------N/A

Depreciation -------------------------------------$20,000 --------------------------------N/A

Taxes ---------------------------------------------- $12,000 --------------------------------N/A

Other ---------------------------------------------- $80,000 -------------------------------$1.10
Total ------------------------------------------------ $156,000 ----------------------------- $3.00

5. Monthly selling and administrative expenses are based on units sold per variable cost. All costs that use cash are paid in month incurred.

------------------------------------------------------- Fixed Cost ----------------------------- Variable Cost

Salaries ------------------------------------------- $30,000 -----------------------------------N/A

Commissions ------------------------------------ N/A ------------------------------------------- $1.00

Depreciation ------------------------------------- $10,000 ----------------------------------- N/A

Shipping ------------------------------------------ N/A ------------------------------------------ $0.60

Other --------------------------------------------- $20,000 -------------------------------------- $0.40

Total ---------------------------------------------- $60,000 -------------------------------------- $2.00

6. Unit selling price = $165 per unit

7. Cash balance as of April 1st = $120,000

Prepare the following second quarter budgets- 1. Sales Budget per month and quarter, 2. Production Budget per month and quarter, 3. Direct materials purchase budget per month and quarter, 4. Manufacturing Cost budget per month and quarter, 5. Selling and Administrative expenses budget per month and quarter.

Income statements and balance sheets data for Virtual Gaming Systems are provided below.

Required:

1. Calculate the following risk ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

2. Calculate the following profitability ratios for 2018 and 2019: (Round your answers to 1 decimal place.)

How will audit effort be allocated among geographical areas for REIT companies (self-storage companies)?

Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3.

1. Determine the amount of depreciation expense for the three years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.)

2. What method yields the highest depreciation expense for Year 1?

Straight-line method

Units-of-output method

Double-declining-balance method

All three depreciation methods

3. What method yields the most depreciation over the three-year life of the equipment?

Straight-line method

Units-of-output method

Double-declining-balance method

All three depreciation methods

Suppose Dansko Integrated has the following revenue and expenses for 2018:

Revenues of $8,500,000
Cost of Goods Sold of $2,550,000
Depreciation Expenses of $800,000
Income Taxes of $1,144,000
Interest Expenses of $90,000
Other Expenses of $500,000
Sales, General, & Administrative Expenses of $1,700,000

Create an income statement with amounts in thousands

What is the value of Earnings Before Interest & Taxes?

Gibson Corporation makes custom-order furniture to meet the needs of persons with disabilities. On January 1, 2018, the company had the following account balances: $88,000 for both cash and common stock. In 2018, Gibson worked on three jobs. The relevant direct operating costs follow: Direct Labor Direct Materials Job 1 $ 4,300 $ 5,300 Job 2 2,100 2,200 Job 3 8,400 3,700 Total $ 14,800 $ 11,200 Gibson’s predetermined manufacturing overhead rate was $.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $5,672. Gibson paid cash for all costs. The company completed and delivered Jobs 1 and 2 to customers during the year. Job 3 was incomplete at the end of the year. The company sold Job 1 for $16,100 cash and Job 2 for $8,100 cash. Gibson also paid $3,300 cash for selling and administrative expenses for the year. Gibson uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account. Required Record the preceding events in a horizontal statements model. The first row shows beginning balances. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense category) in the horizontal financial statements model. Determine the gross margin for the year.

Transcript Company is preparing a cash budget for June. The company has $125,000 cash at the beginning of the month and anticipates having total sales of $1,222,000, consisting of 25% cash sales and 75% credit card sales. The bank charges 3 percent for credit card deposits. The firm sets its selling price at 150 percent of the cost of purchases and pays the cost of each month's sales at the end of the month.

Other cash disbursements are $66,000 per month, 4 percent of the total sales and the cash purchase of a new tractor for $125,000. In addition, a $545,000 note will be due this month for equipment purchased last year. Transcript Company has an agreement with its bank to maintain a cash balance of $125,000.

Required: What is the cash balance and what amount, if any, must the company borrow during June?

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

1. The gross margin is 25% of sales.
2. Actual and budgeted sales data:

3. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.
4. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.
5. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory.
6. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $945 per month (includes depreciation on new assets).
7. Equipment costing $2,300 will be purchased for cash in April.
8. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Complete the schedule of expected cash collections.

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $250,000 and will yield the following expected cash flows. Management requires investments to have a payback period of three years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Required:  

1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
3. Determine the net present value for this investment.

Complete this question by entering your answers in the tabs below.

• Required 1

• Required 2
• Required 3

Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.)

Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round your break-even time answer to 1 decimal place.)

Determine the net present value for this investment.

Problem 6-8A (Part Level Submission) Mercer Inc. is a retailer operating in British Columbia. Mercer uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Mercer Inc. for the month of January 2019. Date Description Quantity Unit Cost or Selling Price January 1 Beginning inventory 100 $15 January 5 Purchase 140 18 January 8 Sale 110 28 January 10 Sale return 10 28 January 15 Purchase 55 20 January 16 Purchase return 5 20 January 20 Sale 90 32 January 25 Purchase 20 22 Collapse question part (a1) Incorrect answer. Your answer is incorrect. Try again. Calculate the Moving-average cost per unit at January 1, 5, 8, 10, 15, 16, 20, & 25. (Round answers to 3 decimal places, e.g. 5.252.) Moving-Average Cost per unit January 1 $Entry field with incorrect answer 17 January 5 $Entry field with incorrect answer 19.33 January 8 $Entry field with incorrect answer 23.31 January 10 $Entry field with incorrect answer 23.56 January 15 $Entry field with incorrect answer 23.35 January 16 $Entry field with incorrect answer 25.33 January 20 $Entry field with incorrect answer 25.39 January 25 $Entry field with incorrect answer 25.38

Direct Materials, Direct Labor, and Factory Overhead Cost Variance Analysis

Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,400 units of product were as follows:

Each unit requires 0.25 hour of direct labor.

Required:

a. Determine the direct materials price variance, direct materials quantity variance, and 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.

b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

c. Determine variable factory overhead controllable variance, the fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 45,000 units.

Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 18% return on investment (ROI) on invested assets of $1,000,000.

A.) Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 18% on this new component.

B.) Assuming that the volume is 36,000 units, compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 18% on this new component.

Comprehensive Accounting Cycle Review

ACR7.1  (Perpetual Method) Jeter Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledgers for Jeter are indicated in the working papers presented below. Also below are a series of transactions for Jeter Co. for the month of January. Credit sales terms are 2/10, n/30. The cost of all merchandise sold was 60% of the sales price.

Instructions

(a)  

Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal as shown in Illustration 7.9, a cash payments journal as shown in Illustration 7.16, and a two-column general journal.

(b)  

Post the journals to the general ledger.

(c)  Prepare a trial balance at January 31, 2020, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.

• 1.Office supplies at January 31 total $900.
• 2.Insurance coverage expires on October 31, 2020.
• 3.Annual depreciation on the equipment is $1,500.
• 4.Interest of $50 has accrued on the note payable.

(d)  

Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.

(e)  

Prepare and post adjusting and closing entries.

(f)  

Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

ACR7.2  (Periodic Inventory) McBride Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.

In addition, the following transactions have not been journalized for January 2020.

Instructions

(a)  

Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.

(b)  

Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.

(c)  Prepare a trial balance at January 31, 2020, using a worksheet. Complete the worksheet using the following additional information.

• 1.Supplies at January 31 total $700.
• 2.Insurance coverage expires on October 31, 2020.
• 3.Annual depreciation on the equipment is $1,500.
• 4.Interest of $30 has accrued on the note payable.
• 5.Inventory at January 31 is $15,000.

(d)  

Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.

(e)  

Prepare and post the adjusting and closing entries.

(f)  

Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

1) An negative feature of Exchange Traded Funds (ETFs) is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with a mutual fund

C. ETFs charge higher fees to investors than mutual funds

D. none of the above

2) An negative feature of mutual funds is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with an ETF

C. mutual funds typically have very high beta

D. none of the above

3) An attractive feature of mutual funds is:

A. the price of the fund always matches the Net Asset Value

B. the investor has more control over tax implications of trading than with a mutual fund

C. mutual funds typically charge lower fees to investors than ETFs

D. mutual funds consistently produce positive alphas

4) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 0.5 and an alpha of -1%.

A. this result shows that the manager took relatively low risk when investing

B. the alpha reported is good, considering the level of risk taken

C. both (A) and (B) are true

D. none of the above

5) A negative alpha for a mutual fund means:

A. the fund invested in assets which were below average levels of risk

B. the fund manager’s returns were lower than expected

C. the fund’s shares decreased in value during the period being analyzed

D. all of the above

6) An index fund should _______ for us to conclude that it performed well.

A. have a positive alpha

B. have a beta significantly greater than 1

C. have a beta equal to 1.

D. have an alpha equal to 0.

7) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 1.5 and an alpha of 2%.

A. the alpha is low, considering the high risk that was taken

B. this result shows that the manager did not add any value to performance with his/her decision-making

C. both (A) and (B) are true

D. none of the above

Duchess Company's records show the following account balances at December 31,2018

Sales 19,000,000

Cost of Goods Sold 11,000,000

General an administrative expenses 1,200,000

Selling Expenses 700,000

Interest expense 900,000

Income tax has not yet been determined. The following events also occurred during 2018. All transactions are material in amount.

1. 500,000 in restructuring costs were incurred in connection with plant closings.

2. Inventory costing 600,000 was written off as obsolete. Material losses of this type are considered to be unusual.

3. The company experienced a negative foreign currency translation adjustment of 400,000 and had unrealized gain investments of 380,000.

Required: Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company's effective tax rate on all items affecting comprehensive income is 40%. Each component of other comprehensive income should be displayed net of tax. Calculate earnings per share if there were 1,000,000 shares outstanding at January 1, 2018 and 400,000 additional shares were issued in July 2018.

Calculate the times earned interest ratio(amounts to be deducted should be indicated with a minus sign)