Inventory Costing Methods-Periodic Method
Merritt Company uses the periodic inventory system. The following May data are for an item in Merritt's inventory:

Calculate the cost of goods sold for May and ending inventory at May 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) the weighted-average cost methods.

Do not round until your final answers. Round your final answers to the nearest dollar.

For a study conducted by the research department of a pharmaceutical company, 295 randomly selected individuals were asked to report the amount of money they spend annually on prescription allergy relief medication. The sample mean was found to be $17.60 with a standard deviation of $5.70. A random sample of 235 individuals was selected independently of the first sample. These individuals reported their annual spending on non-prescription allergy relief medication. The mean of the second sample was found to be $18.40 with a standard deviation of $4.40 . As the sample sizes were quite large, it was assumed that the respective population standard deviations of the spending for prescription and non-prescription allergy relief medication could be estimated as the respective sample standard deviation values given above. Construct a 95% confidence interval for the difference between the mean spending on prescription allergy relief medication () and the mean spending on non-prescription allergy relief medication (). Then complete the table below. Carry your intermediate computations to at least three decimal places. Round your answers to at least two decimal places. What is the lower limit of the 95% confidence interval? What is the upper limit of the 95% confidence interval?

The Big Chocolate Company is preparing its master budget for the 3^rd quarter ending September 30. The following sales units were forecasted for this 3^rd quarter. In addition to the budgets sales in units for these months, the forecasted sales in units for October were 45,000 units. Each unit is expected to sell for $44 per unit.

a. Prepare the sales budget for July, August, and September.

The Big Chocolate Company is preparing its master budget for the 3^rd quarter ending September 30. The following sales units were forecasted for this 3^rd quarter. In addition to the budgets sales in units for these months, the forecasted sales in units for October were 45,000 units.

The company wants to end each month with ending finished goods inventory equal to 30% of next month’s forecasted sales in units. Ending inventory from June is 13,400 units.

Prepare the production budget for July, August, and September.

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Data Scenario: 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 40,000 May 50,000 June 60,000 July 65,000 Sales are the following type: 60% Cash sales collected in month of sale 40% Credit sales collected in the following month of sale The following data pertains to the manufacturing process. 1. Finished goods inventory March 31st 32,000 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 Per-Unit Usage Cost per Pound Metal 10 pounds $8 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 200,000 3. The direct labor used per unit 4 hours $9.25 per hour 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 $1.00 Power 0.50 Maintenance $28,000 0.40 Supervision 16,000 Depreciation 200,000 Taxes 12,000 Other 80,000 1.10 Total $336,000 $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 $50,000 Commissions $1 Depreciation 40,000 Shipping 0.6 Other 20,000 0.4 Total $110,000 $2.00 6. Unit selling price $174 per unit 7. Cash balance as of April 1st $160,000 Required: You must use cell references on the BudgetSolution worksheet, by referencing this worksheet that contains the data. Prepare the following second quarter budgets and answer the questions listed below

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. 6. Cash budget per month and quarter. 7. Based on the quarterly cash budget you prepared, provide recommendations on cash management. Your comments should be directed at management. 8. Budgeted income statement (ignore income tax) for the quarter. 9. What if the company decides to lay off one of the administrative staff. The monthly salaries will be reduced by $5,000, what budgets are effected? Why? What is the New Net income(Loss) for the quarter?

QUESTION TWO

1. Why is it difficult to empirically determine the degree to which government spending crowds
   out private provision of public goods?                                                                              [5 Marks]
2. Suppose 20 people each have the demand Q = 20 - 2P for streetlights, and 5 people have the demand Q = 18 - 2P for streetlights. The cost of building each streetlight is 10. If it is impossible to purchase a fractional number of streetlights, how many streetlights are socially optimal?                                                                                                                     [6 Marks]
3. Some goods and services are provided directly by the government, while others are funded publicly but provided privately. What is the difference between these two mechanisms of public financing? Why do you think the same government would use one approach sometimes and the other approach at other times?                                                           [6 Marks]
4. Consider the four basic questions of public finance listed in Lecture 1. Which of these questions are positive—that is, questions that can be proved or disproved—and which are normative— that is, questions of opinion? Explain your answer.      
5. People in your neighbourhood pay annual dues to a neighbourhood association. This association refunds neighbourhood dues to selected home owners who do a particularly nice job of beautifying their yards. At the most recent home owners’ association meeting, home owners voted to end this practice because they felt that it was unfair that some people would not have to pay their share of the costs of maintaining the neighbourhood. What is likely to happen to the overall level of neighbourhood beautification? Explain.                    
   1. [6 Marks]
6. Consider the rival and excludable properties of public goods. To what degree is radio broadcasting a public good? To what degree is a highway a public good?              [5 Marks

Can someone show me how this is supposed to look in a table format. I want to double check that I'm formatting and doing the numbers properly. Thank you!

Timber Construction constructs furniture.  They’ve decided they need to layout out their budgets for the first Quarter of 2019 to see if they will make a profit and have cash for a future expansion that will cost $400,000. They always must keep $100,000 minimum in the checking account every month.  (Assume the beginning of the Quarter has the minimum cash balance.)  The CEO also wants to have a minimum of a 10% profit margin for the Quarter to ensure stability. The CEO has said she wants to sell 5000 units in January, 6000 units in February, and 5500 in March.  Looking forward into the second Quarter, she hopes to sell 7000 units in April.  Each item sale price will be set at $150/unit. To build each unit, the purchasing agent says he can get the lumber for $50/unit, paint for $4/unit, and miscellaneous supplies for $5/unit.  The production manager, based on past experience, says it costs about 2 hours/unit at $20/hour in labor costs.  You are able as CFO to pull the other costs for the budgets:  Utilities are about $6/unit, Factory salaries run $25,000/month, Factory property taxes average $5,000/month, and depreciation on Factory equipment is $22,000/month.  Advertising costs average $4,000/month.  Sales Commission is .5% of Gross Sales.  CEO Salary is $150,000/year; CFO Salary is $120,000/year; Admin Assistant is $48,000/year. (Ignore payroll taxes.)  Miscellaneous office expenses are about $1,000/month. Office Equipment is depreciated at $500/month.  Cash payments are processed in the month of.  The CEO would like 40% of next month’s production ready to sell so there is no shortages. Cash is collected 60% in the month of sale, and the remainder in the following month.  Expected balances for certain accounts are listed below for your use.

Accounts Receivable on 1/1 is $240,000

Accounts Payable on 1/1 is $180,000

Accounts Payable on 3/31 is $200,000

Retained Earnings on 1/1 is $1,400,000

Income Tax Rate is 30%

Finished Goods, 1/1 is $160,000

Finished Goods, 3/31 is $280,000

WIP, 1/1 is $20,000

WIP, 3/31 is $25,000

Raw Materials desired beginning, 1/1 is $60,000 (Lumber $49,000; Paint $5,000; Misc. Supplies $6,000)

Raw Materials desired ending, 3/31 is $84,000 (Lumber $70,000; Paint $6,000; Misc. Supplies $8,000)

What was the 3/31 balance in Accounts Receivable?

Will they have enough money on March 31 to move forward with the expansion?  Why or why not?

What is the profit margin? Does it meet the CEO’s minimum requirement?

Prepare a Sales Budget, Production Budget, Direct Materials Budget, Direct Labor Budget, Factory Overhead Budget, Cost of Goods Sold, Selling & Admin Expense Budget, Proforma Income Statement, Cash Receipts Budget, Cash Payments Budget, Cash Budget.

Use formulas and cell references when using Excel.

Essay Questions:

45.   First, write out the equilibrium conditions in the Goods and Services market and the Loanable Funds Market for a closed economy (i.e. the “supply equals demand” equations for each).

46.    As we’ve learned, a third market – the Labor Market – typically does not reach an equilibrium where supply of labor equals demand for labor. What do we call the “normal” unemployment rate that persists even when wages have [incompletely] adjusted

47.   Say that businesses in the economy collectively think that the markets in which they sell their goods will soon experience increasing demand. In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

48.   Say that the government reduces the taxes it collects as a percent of interest income.   In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

49.    Say that businesses and households suspect that the rate of inflation in the economy will be higher in the future. In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

50.   Name and briefly describe at least three determinants of an economy’s long-run level of output.

51.    What do we call this specific long run level of output?

52.   Say we have two economies with similar levels of technology, institutional quality, natural resources, physical capital stock, and human capital. Country A has a lower savings rate than Country B. Which country do you expect to grow (in terms of GDP per capita) faster?

53.   Say we have two economies with similar levels of technology, institutional quality, natural resources, human capital, and savings rates. Country A has a lower physical capital stock than Country B. Which country do you expect to grow (in terms of GDP per capita) faster?

Explain why there is more danger when you fall and bounce as opposed to falling without bouncing.