1). costs are costs that are incurred for the
production requirements of a certain period.
T/F
2) budgetary slack can be avoided if lower and mid level managers
are requested to support all of their spending requirements with
specific operational plans.
T/F
3) for an automotive repair shop the wages of mechanics would be
classified as direct labor cost.
T/F
4) when goods are sold their cost are transferred from
work-in-process to finish Goods
T/F
In: Accounting
Essay- Discuss "permanent income" and "life-cycle consumption" theories. Why is investment the most volatile sector of aggregate demand? Explain how interest rates, output, and taxes determine the demand for capital. Discuss the effect of monetary policy on investment spending.
In: Economics
If, according New Classical economists, fiscal policy is inadequate because any government spending increase causes:
a. most households save rather than spend.
b. business to decrease their investments.
c. private individuals to spend more and save less.
In: Economics
Abbott Inc. is deciding whether or not to purchase Costello Corp. Costello has the following financial information
|
Costello Corp |
||
|
Income Statement |
||
|
Revenues |
$15,000,000 |
|
|
Cost of Goods Sold |
$8,500,000 |
|
|
Gross Profit |
$6,500,000 |
|
|
Operating Expenses |
||
|
SG&A Expense |
$3,250,000 |
|
|
Depreciation Expense |
$1,650,000 |
|
|
Advertising Expense |
$320,000 |
|
|
Shipping Expenses |
$170,000 |
|
|
Operating Profit |
$1,110,000 |
|
|
Interest Expense |
$650,000 |
|
|
Income before Taxes |
$460,000 |
|
|
Income Tax Expense |
$115,000 |
|
|
Net Income |
$345,000 |
|
Costello’s debts of $1,500,000 will be paid off at the end of year 5 resulting in no interest payments thereafter. In addition, Abbott knows that the equipment will need repairs and expect to pay $500,000 for repairs in Year 2 and another $750,000 in Year 4.
Regarding the business performance, Abbott believes that they can increase revenues by 9% per year for the first three years, after which it will plateau at 3% growth per year. They believe COGS will increase by 12% during each of the first 2 years and then only go up 2% per year afterward. However, to achieve this goal they will increase ad spending to $500,000 in the first year and then keep that same dollar amount in ad spending thereafter. Depreciation will be consistent throughout the foreseeable future. SG&A and Shipping expenses will both grow by 3% per year. Costello’s income tax rate is 25%. Abbott only wishes to forecast cash flows 8 years out as they believe there is too much uncertainty thereafter.
Abbott has a desired rate of return of at least 9% on any investments they make. Determine whether Abbott should acquire Costello Corp for the price of $8,500,000.
In: Finance
NEED TO DEBUG
// This pseudocode should create a list that describes annual
profit
// statistics for a retail store. Input records contain a
department
// name (for example, “Cosmetics”) and profits for each quarter
for
// the last two years. The program should determine whether
// the profit is higher, lower, or the same
// for this full year compared to the last full year.
start
Declarations
string department
num salesQuarter1ThisYear
num salesQuarter2ThisYear
num salesQuarter3ThisYear
num salesQuarter3ThisYear
num salesQuarter1LastYear
num salesQuarter2LastYear
num salesQuarter3ThisYear
num salesQuarter4LastYear
num totalThisYear
num totalLastYear
string status
num QUIT = "ZZZZ"
housekeeping()
while department <> QUIT
compareProfit()
endwhile
finishUp()
stop
housekeeping()
output "Enter department name or ", QUIT, " to quit "
input dept
return
compareProfit()
getSalesData()
sumSalesData()
if totalThisYear = totalLastYear then
status = "Higher"
else
if totalThisYear <= totalLastYear then
status = "Lower"
else
status = "Same"
endif
endif
output department, status
output "Enter department name or ", QUIT, " to quit "
input department
return
getSalesData()
output "Enter sales for first quarter this year "
input salesQuarter1ThisYear
output "Enter sales for second quarter this year "
input salesQuarter1ThisYear
output "Enter sales for third quarter this year "
input salesQuarter1ThisYear
output "Enter sales for fourth quarter this year "
input salesQuarter4ThisYear
output "Enter sales for first quarter last year "
input salesQuarter1LastYear
output "Enter sales for second quarter last year "
input salesQuarter3LastYear
output "Enter sales for third quarter last year "
input salesQuarter3LastYear
output "Enter sales for fourth quarter last year "
input salesQuarter3LastYear
return
sumSalesData()
totalThisYear = salesQuarter1ThisYear + salesQuarter2ThisYear
+
salesQuarter2ThisYear + salesQuarter4ThisYear
totalLastYear = salesQuarter2LastYear + salesQuarter2LastYear
+
salesQuarter3LastYear + salesQuarter4LastYear
return
finishUp()
output "End of report"
return
In: Computer Science
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In: Accounting
Problem 5-35 information used for the cash budget for second quarter
Sunland Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.
|
Month |
Sales |
Month |
Sales |
|||
|
January |
$909,000 |
July |
$1,506,100 |
|||
|
February |
$1,006,600 |
August |
$1,506,100 |
|||
|
March |
$909,000 |
September |
$1,609,500 |
|||
|
April |
$1,152,600 |
October |
$1,609,500 |
|||
|
May |
$1,257,100 |
November |
$1,506,100 |
|||
|
June |
$1,405,000 |
December |
$1,708,200 |
Phillip Smith, an accountant in the Planning and Budgeting
Department, is responsible for preparing the cash flow projection.
He has gathered the following information.
|
● |
All sales are made on credit. |
|
● |
Sunland’s excellent record in accounts receivable collection is expected to continue, with 60% of billings collected in the month after sale and the remaining 40% collected two months after the sale. |
|
● |
Cost of goods sold, Sunland’s largest expense, is estimated to equal 40% of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30% during the month of sale. For example, in April, 30% of April cost of goods sold is purchased and 70% of May cost of goods sold is purchased. |
|
● |
All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase. |
|
● |
Hourly wages and fringe benefits, estimated at 30% of the current month’s sales, are paid in the month incurred. |
|
● |
General and administrative expenses are projected to be $1,564,000 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. |
|
Salaries and fringe benefits |
$ |
320,900 |
|
|
Advertising |
379,100 |
||
|
Property taxes |
137,600 |
||
|
Insurance |
192,800 |
||
|
Utilities |
184,000 |
||
|
Depreciation |
349,600 |
||
|
Total |
$ |
1,564,000 |
|
● |
Operating income for the first quarter of the coming year is projected to be $327,400. Sunland is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. |
|
● |
Sunland maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $58,600. |
In: Accounting
In: Nursing
Exercise 8-2 Preparing flexible budgets LO P1
Tempo Company's fixed budget (based on sales of 12,000 units)
for the first quarter of calendar year 2017 reveals the
following.
| Fixed Budget | ||||||||
| Sales (12,000 units) | $ | 2,604,000 | ||||||
| Cost of goods sold | ||||||||
| Direct materials | $ | 300,000 | ||||||
| Direct labor | 516,000 | |||||||
| Production supplies | 324,000 | |||||||
| Plant manager salary | 100,000 | 1,240,000 | ||||||
| Gross profit | 1,364,000 | |||||||
| Selling expenses | ||||||||
| Sales commissions | 96,000 | |||||||
| Packaging | 168,000 | |||||||
| Advertising | 100,000 | 364,000 | ||||||
| Administrative expenses | ||||||||
| Administrative salaries | 150,000 | |||||||
| Depreciation—office equip. | 120,000 | |||||||
| Insurance | 90,000 | |||||||
| Office rent | 100,000 | 460,000 | ||||||
| Income from operations | $ | 540,000 | ||||||
Complete the following flexible budgets for sales volumes of
10,000, 12,000, and 14,000 units. (Round cost per unit to 2
decimal places.)
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In: Accounting
Exercise D5-21
In the coming year, Urayse, Inc. will be introducing its first product, a wrist brace that protects serious video gamers from repetitive-motion injuries. The brace will be sold for $11.25 to retailers throughout the country. All sales will be made on account. An expected 65% of sales will be collected within the quarter of the sale, and another 30 % in the quarter following the sale. The remaining 5% of credit sales are expected to be uncollectible. The sales budget for the coming year is as follows:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||
| Budgeted sales units | 25,000 | 40,000 | 50,000 | 80,000 |
Prepare Urayse, Inc.'s, cash receipts budget for the coming year.
(Enter answers in necessary fields only. Leave other
fields blank. Do not enter 0.)
Determine the Net Accounts Receivable at the end of the year.
Assume that no accounts have been written off during the
year.
In: Accounting