Thunder Creek Company is preparing budgets for the first quarter of 2018.

#1 Create a sales budget.

Thunder Creek Company expects sales of 18,000 units in January 2018, 24,000 units in February, 30,000 units in March, 34,000 in April, and 36,000 in May. The sales price is $48 per unit.

#2 Create a production budget.

Thunder Creek wants to finish each month with 20% of next month's sales in units.

#3 Create a Direct Materials Budget

Thunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25% of next month's materials requirements

Thunder Creek Company is preparing budgets for the first quarter of 2018.

#1 Create a sales budget.

Thunder Creek Company expects sales of 18,000 units in January 2018, 24,000 units in February, 30,000 units in March, 34,000 in April, and 36,000 in May. The sales price is $48 per unit.

#2 Create a production budget.

Thunder Creek wants to finish each month with 20% of next month's sales in units.

#3 Create a Direct Materials Budget

Thunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25% of next month's materials requirements

#4 Create a Direct Labor Budget

Thunder Creek Company's workers require 30 minutes of labor to produce each unit of product. The labor cost is $20 per hour

Budget #5: Create a Manufacturing Overhead Budget

1. Thunder Creek Company prepares its Manufacturing Overhead Budget. For each direct labor hour, the variable overhead costs are:
Indirect Materials = $1.00 per DLH; Indirect Labor Cost = $1.30 per DLH; Maintenance = $1.20 per DLH

2. The Fixed Overhead Costs per month are: Salaries of $40,000, Depreciation =$20,000 and Maintenance = $10,000.

3. ROUND the predetermined overhead allocation rate to two decimal places. Manufacturing overhead is allocated using direct labor hours.

Budget #6: Create a Cost of Goods Sold Budget. Thunder Creek Company uses the first-in, first-out (FIFO) inventory costing method.

The Beginning Finished Goods Inventory is $86,400 consisting of 3,600 units.

Budget #7: Selling and Administrative Expense Budget

Thunder Creek Company's variable supplies expense per month is $3.00 per unit. The fixed selling and administrative expenses per month consist of Salaries: $245,000; Advertising: $30,000; and Depreciation: $28,000

Sonic Inc. makes running shoes. The shoes are made out of specialized fabric, foam for cushioning, and rubber for the soles. Each pair of shoes is considered to be one unit. Sonic Inc. is currently preparing their budget for the next quarter (April, May, June). They believe they will sell 5,000 pairs of shoes over the next three months and that they will sell each pair for $ 87 each. They estimate that, on average, each pair of shoes will need 2.5 square feet (sqft) of fabric, 4 ounces of foam and .45 kilograms of rubber. Each pair of shoes should take 3.5 hours of direct manufacturing labor to make. They estimate that for the quarter, they will spend $3.20 on each sqft of fabric, $1.75 on each ounce of foam and $5.50 on each kilogram of rubber. They also estimate they will spend $148,750 on labor, $75,250 on variable manufacturing overhead, and $39,375 on fixed manufacturing overhead. On March 31st, their inventory accounts had these numbers: Fabric: $ 3,843 (1,220 sqft) Foam: $ 3,293 (1,850 ounces) Rubber: $ 1,233 (225 kilograms) Finished Goods: $ 26,532 (495 pairs of shoes) At the end of the quarter, they want these amounts in their ending inventory: Fabric: 1,300 sqft Foam: 1,800 ounces Rubber: 200 kilograms Finished Goods: 500 pairs of shoes Sonic Inc. uses the FIFO method to cost direct materials and finished goods inventory. For the purpose of this budget, the work-in-process inventories are considered to be negligible and ignored and the unit costs of direct materials purchased and finished goods are assumed to be constant for the period. With this information, please prepare these parts of the master budget for Sonic Inc. for the next quarter (April, May, June). a. The Revenues Budget (Schedule 1) b. The Production Budget (Schedule 2) c. The Direct Materials Usage Budget (Schedule 3a) d. The Direct Materials Purchases Budget (Schedule 3b) e. The Direct Manufacturing Labor Budget (Schedule 4) f. The Manufacturing Overhead Cost Budget (Schedule 5) g. The Ending Inventories Budget (Schedule 6A (units); Schedule 6B (dollars)) h. The Cost of Goods Sold Budget (Schedule 7)

On December 31, 2021, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost Rhone-Metro $672,747 and has an expected useful life of six years. Its normal sales price is $672,747. The lessee-guaranteed residual value at December 31, 2025, is $15,000. Equal payments under the lease are $190,000 and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya’s incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation. Use (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Show how Rhone-Metro calculated the $190,000 annual lease payments.
2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)?
3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021.
4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor.
5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second lease payment and amortization).
6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $2,000.

On December 31, 2021, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost Rhone-Metro $402,611 and has an expected useful life of six years. Its normal sales price is $402,611. The lessee-guaranteed residual value at December 31, 2025, is $20,000. Equal payments under the lease are $110,000 and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya’s incremental borrowing rate is 11%. Western Soya knows the interest rate implicit in the lease payments is 9%. Both companies use straight-line depreciation. Use (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Show how Rhone-Metro calculated the $110,000 annual lease payments.

2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)?

3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021.

4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor.

5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second lease payment and amortization).

6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025 assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,200.

Find the value z of a standard Normal variable that satisfies each of the following conditions.

(a) The point z with 20% of the observations falling below it
z=

(b) The point z with 10% of the observations falling above it

z=

Your child will go to the college in 2024 and you are building financial plan to prepare for the college tuitions and fees. The expected cash flow you need in first year is $40,000 and increases by 5% per year. Tuition is due on August 31st each year in 2024, 2025, 2026, and 2027. You will deposit the same amount of money every month from August 31st, 2018 to August 31st, 2024. If you believe that you can earn 4% return every year, how much do you need to save every month?

Today is Sept. 1, 2009. Starting today you plan to invest $1000 every year, first deposit today and last deposit on Sept. 1, 2025. After that, you plan to leave the money in the same account until Sept. 1, 2030. However, the interest rate is 8% compounded quarterly until your last deposit and only 7% compounded annually after that. How much money will you have in your account on Sept. 1, 2030?

a. $34,504.14

b. $35,504.14

c. $48,393.84

d. $49,005.74

e. None of the above

In 2009, American Recovery and Reinvestment Act provided for roughly $800 billion in government spending (most of it) and tax cuts (less) to jumpstart the economy. Do you think this was the correct approach? Cite three reasons why or why not. Would your opinion change if you were in the auto industry at the time?

luebear Company produces two products: dirt bikes and four wheelers. The dirt bike sells for $8,000, and the four wheeler sells for $10,000. Projected sales of the two products for the coming four quarters are given below.

Dirt Bikes Four Wheelers First Quarter 10,000 15,000 Second Quarter 12,000 17,000 Third Quarter 13,000 18,000 Fourth Quarter 8,000 14,000

The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 4,200 dirt bikes and 5,300 four wheelers were in inventory on January 1. Company policy dictates that ending inventory should equal 15 percent of the next quarter’s sales for dirt bikes and 20 percent of next quarter’s sales for four wheelers.

Required: a. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. (5 points) b. Prepare a separate production budget for each product for each of the first three quarters of the year. (5 points