Special-Order Pricing. Barry is conscientious about the quality of his meals, and he has a regular crowd of 400 patrons for his $9.90 lunch. His variable cost for each meal is about $3.10, and he figures his fixed costs, on a daily basis, are about $2,300. From time to time, bus-tour groups with 50 patrons stop by. He has welcomed them because he has capacity to seat 500 diners in the average lunch period, and his cooking and wait staff can easily handle the additional load. The tour operator generally pays for the entire group on a single check to save the wait staff and cashier the additional time. Due to competitive conditions in the tour business, the operator is now asking Barry to lower the price to $4.60 per meal for each of the 50 bus-tour members. (Round your answers to 2 decimal places.)

1-a. What is the incremental profit (loss) per bus-tour meal?

1-b. Should Barry accept the bus-tour offer?

2-a. What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $3.90 per meal?

2-b. Is the offer financially attractive?

The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 65% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of March 1 include cash of $49,000, marketable securities of $70,000, and accounts receivable of $149,050 ($113,000 from February sales and $36,050 from January sales). Sales on account for January and February were $103,000 and $113,000, respectively. Current liabilities as of March 1 include a $65,000, 12%, 90-day note payable due May 20 and $8,000 of accounts payable incurred in February for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $3,900 in dividends will be received in March. An estimated income tax payment of $19,000 will be made in April. Dash Shoes' regular quarterly dividend of $8,000 is expected to be declared in April and paid in May. Management desires to maintain a minimum cash balance of $38,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for March, April, and May. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculations.

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows:

The company’s chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget:

1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2018 is 13,000 units.
2. All sales are on credit. Uncollectible accounts are negligible and can be ignored. Seventy-five percent of all credit sales are collected in the quarter of the sale and 25% are collected in the subsequent quarter.
3. Each quarter’s ending finished goods inventory should equal 15% of the next quarter’s unit sales.
4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter’s ending raw materials inventory should equal 10% of the next quarter’s production needs. The estimated ending raw materials inventory on December 31, 2017 is 5,000 yards.
5. Seventy percent of each quarter’s purchases are paid for in the quarter of purchase. The remaining 30% of each quarter’s purchases are paid in the following quarter.
6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to complete. All direct labor costs are paid in the quarter incurred.
7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $150,000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred.
8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25,000), executive salaries ($64,000), insurance ($12,000), property tax ($8,000), and depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation) are paid in the quarter incurred.
9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company’s lender imposes a simple interest rate of 3% per quarter on any borrowings.
10. Dividends of $15,000 will be declared and paid in each quarter.
11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the “first-out” to production and the most recently completed finished goods are the “first-out” to customers.

Required:

1. Calculate the following budgeted figures for 2017:

a. The total fixed cost.

b. The variable cost per unit sold.

c. The contribution margin per unit sold.

d. The break-even point in unit sales and dollar sales.

e. The margin of safety.

f. The degree of operating leverage

Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 32,200 units of product to finished goods inventory. Its 5,000 units of beginning work in process consisted of $201,500 of direct materials and $440,104 of conversion costs. It has 3,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $688,500 of direct material costs and $3,680,456 of conversion costs were charged to production.

• Beginning work in process consisted of 5,000 units that were 100% complete with respect to direct materials and 40% complete with respect to conversion.
• Of the 32,200 units completed, 5,000 were from beginning work in process. The remaining 27,200 were units started and completed during May.

Assume that Tamar uses the FIFO method to account for its process costing system.

1. Prepare the company’s process cost summary for May using the FIFO method. (Round "Cost per EUP" to 2 decimal places.)

2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory.

Mango & Associates expects the below departments to make the following income for the upcoming year. Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales $ 67,000 $ 37,000 $ 60,000 $ 46,000 $ 32,000 $ 242,000 Expenses Avoidable 11,800 38,800 23,600 16,000 41,400 $ 131,600 Unavoidable 53,400 15,000 4,600 31,800 12,600 $ 117,400 Total expenses 65,200 53,800 28,200 47,800 54,000 249,000 Net income (loss) $ 1,800 $ (16,800 ) $ 31,800 $ (1,800 ) $ (22,000 ) $ (7,000 ) Recompute & prepare departmental income statements (which should include a combined total column) for Mango & Associates taking each of the following separate scenarios into consideration. Part 1 Mango & Associates' management decided to get rid of departments with expected net losses. Part 2 Mango & Associates' management decided to get rid of departments with sales dollars that are less than avoidable expenses.

Transfer pricing is a contentious issue for almost any company where divisions buy from or sell to each other. Stated another way, transfer pricing causes more conflict between divisions than almost any other issue.

What is you experience or knowledge about this issue? How do you suggest that it be resolved?

The ledger of Whispering Winds Company contains the following balances: Retained Earnings $28,000, Dividends $1,500, Service Revenue $51,500, Salaries and Wages Expense $29,000, and Supplies Expense $6,000.

The closing entries are as follows:

Enter the balances in T-accounts, post the closing entries, and underline and balance the accounts.

9. X Company currently buys 10,000 units of a component part each year from a supplier for $7.10 each but is considering making them instead. Variable costs of making would be $4.90 per unit; additional annual fixed costs would be $6,000. Equipment would have to be purchased for $33,000 and will last for 7 years, at which time it will have a disposal value of $5,000. Assuming a discount rate of 4%, what is the net present value of making the part instead of continuing to buy it?

10. X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:

Maintenance work will be necessary on the new equipment in Year 3, costing $2,000. The current equipment will last for five more years; the life of the new equipment is also five years. Assuming a discount rate of 4%, what is the net present value of replacing the current equipment?

1. You are required to prepare the Sales price variance and Revenue sales quantity variance by taking any of your choice Saudi based company and suggest the suitable reasons for the variances. (3 Points)

Answer:

Playground Steel Factory is a leading manufacturer and supplier of Restaurant Seating, Tables & Other related Furniture, Indoor & Outdoor Playgrounds for Restaurants, Public & Private Parks, Public Houses, Hospitals, Schools and Furniture Seating for Shopping Centers, Sun Shades & Car Shades in the whole Kingdom of Saudi Arabia and Middle East Countries.

The Factory expected to sell 50,000 units from one of its products "Hospital seats" during 2018, the following is the planned sales and variable costs for 2018.

Sales (50,000 units)                      SR 3,000,000

Variable costs                                  1,750,000

During the year, a competitor came out with a similar hospital seats at a lower price. Management reacted by dropping its selling price for the hospital seat, but the actual sales dropped to 45,000 units at 55 SR per seat.

The cost accounting department prepare the sales price variance and revenue sales quantity variance.

E8-24 The Whole Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two​ direct-cost categories: direct materials and direct manufacturing labor. The Whole Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing​ labor-hours.

Requirements 1. Prepare a variance analysis of fixed manufacturing overhead cost. 2. Is fixed overhead underallocated or​ overallocated? By what​ amount? 3. Comment on your results. Discuss the variances and explain what may be driving them.

The following is some budget data for the Whole Bread Company for 2017 and additional infomation for the year ended Decmeber​ 31, 2017​:

Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Data Table Planned (budgeted) output 2,800,000 baguettes Actual production 2,700,000 baguettes Budgeted direct manufacturing labor 56,000 hours Actual direct manufacturing labor 48,500 hours Actual fixed manufacturing overhead $284,000 Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Same Budgeted Lump Sum Actual Costs Regardless of Flexible Allocated Incurred Output Level Budget Overhead Fixed MOH

On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $39,000, $67,000, and $69,000, respectively. Over the next three years, the business reported net income and (loss) as follows:

During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018.

At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:

• Each partner is entitled to interest computed at the rate of 10 percent per year based on the individual capital balances at the beginning of that year.
• Because of prior work experience, Angela is entitled to an annual salary allowance of $10,000 per year and Diaz is entitled to an annual salary allowance of $9,900 per year.
• Any remaining profit will be split as follows: Angela, 20 percent; Diaz, 35 percent; and Krause, 45 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 30 percent; Diaz, 45 percent; and Krause, 25 percent.

Determine the ending capital balance for each partner as of the end of each of these three years. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

Laraia Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

   Sales (3,000 units)   $150,000     
   Variable expenses   90,000     
   Contribution margin   60,000     
   Fixed expenses   48,000     
   Net operating income   $12,000     

g. If the variable cost per unit increases by $5, spending on advertising increases by $3,000, and unit sales increase by 450 units, what would be the estimated net operating income?
h. What is the break-even point in unit sales?
i. What is the break-even point in dollar sales?
j. Estimate how many units must be sold to achieve a target profit of $54,000.
k. What is the margin of safety in dollars?
l. What is the margin of safety percentage?
m. What is the degree of operating leverage?
n. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Given answer from Cheggs expert for quick ratio: Quick Ratio (QR) = (Cash&Cash Equivalents + Current Receivables+Prepaid Expenses or (CA-Inventory)/CL where CA: Current Assets and CL: liabilities

Given answer from Cheggs expert for Days’ Sales in Inventory = (Ending Inventory * 365) / Cost of Goods Sold

Given answer from Cheggs expert for Operating cycle:

Operating Cycle = Days of Sales Inventory + Days of Sales Outstanding - Days payable outsatanding

My Questions:

1) For quick ratio calculation why weren't 'prepaid expenses' substructed, too?

2) I have the impression that the 'Operating cycle' was asked to be calculated not the 'net operating cycle'. Can you please help since all the formula used in the answer confused me? I did not find any reference for the formula day payable outstanding and the average inventory can be found only for year 2018....

3) Can 'Days' sales in inventory' be calculated by using 'sales' instead of CoGs? (that was our tutor's suggestion)

Explain the usefulness of a flexible budget in specific business cases.: Explanation clearly details the usefulness of a flexible budget and why it provides more useful information than a static budget report.