Thornton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:
Required
October sales are estimated to be $400,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 30 percent per month. Prepare a sales budget.
The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.
The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,500. Assume that all purchases are made on account. Prepare an inventory purchases budget.
The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.
Budgeted selling and administrative expenses per month follow:
| Salary expense (fixed) | $ | 19,500 | |
| Sales commissions | 4 | % of Sales | |
| Supplies expense | 2 | % of Sales | |
| Utilities (fixed) | $ | 2,900 | |
| Depreciation on store fixtures (fixed)* | $ | 5,500 | |
| Rent (fixed) | $ | 6,300 | |
| Miscellaneous (fixed) | $ | 2,700 | |
*The capital expenditures budget indicates that Thornton will spend $167,000 on October 1 for store fixtures, which are expected to have a $35,000 salvage value and a two-year (24-month) useful life.
Use this information to prepare a selling and administrative expenses budget.
Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.
Thornton borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $27,000 cash cushion. Prepare a cash budget.
Thornton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:
Prepare a pro forma income statement for the quarter.
Prepare a pro forma balance sheet at the end of the quarter.
Prepare a pro forma statement of cash flows for the quarter.
In: Accounting
Rundle Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:
Problem 14-23 Part 1
Required
October sales are estimated to be $350,000, of which 35 percent will be cash and 65 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.
The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.
The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,100. Assume that all purchases are made on account. Prepare an inventory purchases budget.
The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases.
Budgeted selling and administrative expenses per month follow:
| Salary expense (fixed) | $ | 19,100 | |
| Sales commissions | 4 | % of Sales | |
| Supplies expense | 2 | % of Sales | |
| Utilities (fixed) | $ | 2,500 | |
| Depreciation on store fixtures (fixed)* | $ | 5,100 | |
| Rent (fixed) | $ | 5,900 | |
| Miscellaneous (fixed) | $ | 2,300 | |
Use this information to prepare a selling and administrative expenses budget.
Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.
Rundle borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $23,000 cash cushion. Prepare a cash budget.
Rundle Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:
Problem 14-23 Part 2
Prepare a pro forma income statement for the quarter.
Prepare a pro forma balance sheet at the end of the quarter.
Prepare a pro forma statement of cash flows for the quarter.
In: Accounting
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.
In: Accounting
The ice rink is very crowded, and there are a lot of inexperienced people learning to ice skate there. Tara is originally skating at 4.5 m/s and collides with Sarah who is at rest. After the collision, they hang on to each other in an effort to not fall over. They are no longer watching where they are going and end up running into Millicent who was just standing there. Then they all hang on to each other to avoid falling over. They fall over after 1.5 seconds. How far did the three girls travel before falling over? Assume that all three girls have a mass of about 55 kg.
A high school physics teacher is looking for fun new ways to get his students excited about learning momentum. He decides to try the somewhat dangerous demonstration of sticking a firecracker in an empty soda can and lighting it. After he lights the firecracker, the soda can and firecracker will travel very quickly in opposite directions. The mass of an empty soda can is 13.68 g (according to the first result from Google), and the mass of a small firecracker is 45 g. The teacher estimates that the firecracker should have a speed of 35 m/s. How fast should he expect the soda can to travel? Is this demonstration a good idea?
In: Physics
Which of the following is an abstract statement?
Multiple Choice
Top of Form
Most of our employees produce highly satisfactory work.
Of the 15 candidates who applied for the job, 12 had advanced business degrees.
The new international sales division will be launched in October 2018.
Income for the last quarter of 2015 was higher by 10 percent.
Karishma accepted the CEO position on December 20, 2015.
In: Other
Cooley Landscaping Company borrows $300,000 for a new front-end dirt loader. The bank is willing to loan the funds at 8.5% APR with QUARTERLY payment at the end of each quarter for the next 10 years. What is the QUARTERLY payment and how much of the first payment is used to pay for the interest?
In: Finance
Christopher invested $11,000 into a fund earning 5.50% compounded monthly. She plans to withdraw $900 from the fund at the end of every quarter. If the first annuity withdrawal is to be made 2 years from now, how long will it take for the fund to be depleted? how many years and months?
In: Finance
True or False: Of the major economies in the world, the United States had the highest growth rate of real GDP per capita between 1982 and 2009.
・True
・False
Japan experienced average annual real GDP per capita growth of 2.0% between 1982 and 2009. Which of the following helped most to contribute to that growth?
・Redistributive policies designed to decrease poverty
・Privatization of previously nationalized industries
・Spending on research and development
In: Economics
Derek Atienza
Brewer: Introduction to Managerial Accounting, 7e: CSUDH ACC231-04 Spring 2018
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CH7 Homework |
instructions | help |
Question 1 (of 2)Question 2 (of 2) Save & ExitSubmit
2.
value:
10.00 points
| The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: |
| Current assets as of March 31: | ||
| Cash | $ | 7,100 |
| Accounts receivable | $ | 18,400 |
| Inventory | $ | 37,200 |
| Building and equipment, net | $ | 122,400 |
| Accounts payable | $ | 22,050 |
| Capital stock | $ | 150,000 |
| Retained earnings | $ | 13,050 |
| a. | The gross margin is 25% of sales. |
| b. | Actual and budgeted sales data: |
| March (actual) | $46,000 |
| April | $62,000 |
| May | $67,000 |
| June | $92,000 |
| July | $43,000 |
| c. |
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. |
| d. | Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold. |
| e. |
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. |
| f. |
Monthly expenses are as follows: commissions, 12% of sales; rent, $1,900 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $918 per month (includes depreciation on new assets). |
| g. | Equipment costing $1,100 will be purchased for cash in April. |
| h. |
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 data above: | ||||||||||||||||||||||||||||||||||
| 1. | Complete the following schedule. | |||||||||||||||||||||||||||||||||
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| 2. |
Complete the following:
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| Budgeted cost of goods sold for April = $62,000 sales × 75% = $46,500. | |
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Add desired ending inventory for April = $50,250 × 80% = $40,200. |
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| 3. |
Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.)
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| 4. |
Prepare an absorption costing income statement for the quarter ended June 30.
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| 5. | Prepare a balance sheet as of June 30. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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In: Accounting
You have to use the numbers that is given to figure out what the question is asking.
1. You are the Nutrition and Food Services Director and your Chief Financial Officer (CFO) has requested that you evaluate the inventory within the department. Specifically, the CFO wishes to know if the facility is effectively managing the inventory.
To accomplish this task, you will evaluate the inventory turnover from the previous quarter. You have determined the following information:
Inventory value at the beginning of the quarter: $47,000
Purchases made during the quarter: $225,000
Inventory at the end of the period: $67,999
Your Procurement Specialist has determined the value of inventory for each month of the quarter. Those figures are as follows:
Month #1 = $42,000 Month #4 = $48,353
Month #2 = $44,996 Month #5 = $45,921
Month #3 = $49,214 Month #6 = $46,555
To assist you in completing this question, you will need the following calculations:
A).
Inventory at beginning of period $XXX
+ Purchases during the period +XXX
Total value of available food $XXX
-Inventory at end of period -XXX
Cost of goods sold during period $XXX
B). Inventory turnover = Cost of goods sold/Average inventory value
What is your inventory turnover ratio?
What does a high inventory ratio indicate?
What does a low inventory ratio indicate?
How do you interpret your inventory ratio to your CFO?
2. Your CFO has asked you to conduct a break-even analysis of your hospital cafeteria for the upcoming fiscal year.
To assist you in completing this question, you will need the following calculation:
Your costs for the upcoming fiscal year:
Insurance: $1,500.00 (fixed cost)
Salaries: $594,259.00 (semi-variable cost—80% is variable)
Utilities: $20,000.00 (semi-variable cost—60% is fixed.)
Food license: $2,300.00 (fixed cost)
Supplies: $453,816.00 (variable cost)
Projected Sales: $1,253,743.00
What is the break-even point, in sales, for this cafeteria for the upcoming fiscal year?
In: Accounting