Karen’s Restaurant has three sales revenue departments with direct costs and average monthly figures given in the following information:

The restaurant also has the following indirect, undistributed costs:

Administrative and general expenses       $18,000

Marketing expenses               $15,000

Utilities expense                   $ 7,500

Property operation and maintenance       $18,180

Depreciation expense               $21,000

Insurance expense               $ 6,000

Required:

Prepare a consolidated departmental contributory income statement showing each of the three divisions side by side for comparison. Do not allocate indirect costs.

Allocate the indirect costs to the divisions side by side for comparison. Administrative, general, and marketing costs are allocated based on sales revenue. The remaining indirect costs are allocated based on square footage used by each division: Round all percentage calculations to a whole percentage.

Dining 3,600 sq. ft.   Banquet 4,500 sq. ft.   Beverage 900 sq. ft.

After allocating the indirect costs, would you consider closing any of the divisions? Why or why not?

Calculate the contributory income percentage for each of the three divisions.

Calculate the cost of sales, wages and salaries costs, and other direct costs as a percentage of sales revenue for each of the divisions.

If there were a shift of $12,000 in sales revenue from the banquet area to the dining room, would you expect the restaurant’s overall operating income to increase or decrease? Explain your reasoning to support your answer.

Assuming that the shift of $12,000 of sales revenue does occur, total sales revenue will not change. Total indirect, undistributed costs will not change. Recalculate cost of sales, wages and salaries costs, and other direct costs for each division (using the percentages in 5 above) to find the new departmental operating income.

After allocating the indirect costs, would you now consider closing any of the divisions? Why or why not?

Sharp Focus Technology Ltd (Sharp) manufactures and sells three models of camera. Sales revenue and direct costs for November of 2019 are shown as follows: Model Beginner   Intermediate Pro-level

Units produced and sold 400 200 100

Unit selling price $6,000 $15,000 $33,000 Direct materials $700,000 $1,600,000 $1,820,000 Direct labour $600,000     $750,000 $840,000 Machine hours consumed 300 90 60

Manufacturing overhead incurred in the month includes the following: Activity $ Engineering 300,000 Quality control 298,500 Machinery 751,500 Materials handling 300,000

-------------- 1,650,000.

The company adopts a simple costing system by allocating the manufacturing overhead based on the machine hours which are used to manufacture the three models.

Sharp’s CEO recently has learned that an activity-based costing system can provide more accurate cost information through analysing how the products use the activities during the operating processes. The following data were collected from operations in the quarter: Activity Cost driver Beginner Intermediate Pro-level Engineering No. of engineering hours 6 10 24 Quality control No. of inspection hours 36 120 204 Machinery No. of machine hours 300 90 60 Materials handling No. of orders 5 5 20

Required:

a ) Prepare a product line income statement showing the profitability % of each model: i using the current simple costing system ii using the activity-based costing system Show all workings clearly.

b) Compare and explain the differences in profitability of the three product models under both product costing systems. What are the implications for Sharp’s pricing strategy?

2. 2. A firm has the following three projections of revenue estimates:

Current Year1 Year 2 Year 3

Revenue $1,500 $1,650 $1,815 $2,000

EAT $95 $106 $117 $130

The company also receives a royalty net after taxes of $10 million per year. It is expected that the cash flows equal to depreciation will have to be reinvested to keep the firm operating. Further, capital expenditures equal to 60 percent of the net cash flow will need to be invested to keep the firm growing. Other items on the balance sheet remain unchanged. The CFO believes that it will just forecast for the first three years and then simply assume a 6 percent annual growth rate after the third year.

T-bills yield 8 percent and the market return is 13 percent. The company’s beta using Hamada equation is 1.2. What is the value of the company or what would you pay for the firm if you were interested in it.

3. A firm has the following three projections of revenue estimates:

Current Year1 Year 2 Year 3

Revenue $1,500 $1,650 $1,815 $2,000

EAT $95 $106 $117 $130

The company also receives a royalty net after taxes of $10 million per year. It is expected that the cash flows equal to depreciation will have to be reinvested to keep the firm operating. Further, capital expenditures equal to 60 percent of the net cash flow will need to be invested to keep the firm growing. Other items on the balance sheet remain unchanged. The CFO believes that it will just forecast for the first three years and then simply assume a 6 percent annual growth rate after the third year.

T-bills yield 8 percent and the market return is 13 percent. The company’s beta using Hamada equation is 1.2. What is the value of the company or what would you pay for the firm if you were interested in it.

Shalit Corporation's 2011 sales were $8 million. Its 2006 sales were $4 million.

1. At what rate have sales been growing? Round your answer to two decimal places

e) If the claims submitted by the Contractor cannot be agreed by the Architect, advice the Contractor what can he do and what are the dispute resolution mechanisms available within PAM 2006 for him to resolve the claim issues ?

As the management accountant for Pleasanton Raft Company, Inc., you have been asked to attend a planning session for the next season. The owner, Mara Mason specifically wants to be able to predict her fuel costs each coming week.

Mara typically staffs the desk at the river – answering the phone, checking in customers, and taking payment – while her staff drives the customers and rafts out to the river. Since she is not actively driving the van, it has been her process to maintain a separate bank account specifically for fuel costs, and giving the debit card tied to the account to her staff. That way, staff members can easily fill the tank on the way back from dropping off customers. To limit her risk, Mara wants to keep a low balance in this account, just sufficient to pay fuel costs for the upcoming week. To that end, she currently checks the balance in the account each Monday morning, and transfers in just enough funds to bring the balance to $275.

This past season, Mara had some cash flow issues – there were a couple of occasions this year where the company debit card was declined for insufficient funds at the gas station. This can be a serious problem. If the van runs out of gas, she is not able to transport customers to the river, and she will potentially lose customers. Also, if the charge does go through, she is liable for overdraft fees. Therefore, Mara wants to improve from her current process of refilling that account to $275 at the beginning of each week.

Mara started out by collecting data – on each Monday morning, she recorded the price of gas and the number of reservations for the coming week (see the attached Excel spreadsheet). She would like to use one of these measures to estimate the week’s fuel costs, but she is not sure which one would give her the best estimate. The number of reservations tells her how many customers have reserved boats for the coming week, but some reservations are later cancelled (or no-shows) and many customers show up unannounced for a trip down the river. In addition, the price of gas on Monday morning usually does not stay the same through the entire week. Mara knows that neither of these variables will perfectly predict her fuel costs, but figures that anything would be better than her current process.

DATA:

Fuel COST INFO IS IN THE TABLE - Please let me know what more info do you need? The comments keep saying the same thing but I did provide the info.

Required:

Write a 1-2 page memo, as the accountant of Pleasanton Rafts, addressed to Mara Mason describing your analysis and the outcomes. Make sure you respond to the following items:

1. Of the three cost estimation methods covered in this class (high-low method, scatter diagrams, or least squares regression), which would give the most accurate cost estimates? Explain why that method is more accurate, and how it works.

As the management accountant for Pleasanton Raft Company, Inc., you have been asked to attend a planning session for the next season. The owner, Mara Mason specifically wants to be able to predict her fuel costs each coming week.

Mara typically staffs the desk at the river – answering the phone, checking in customers, and taking payment – while her staff drives the customers and rafts out to the river. Since she is not actively driving the van, it has been her process to maintain a separate bank account specifically for fuel costs, and giving the debit card tied to the account to her staff. That way, staff members can easily fill the tank on the way back from dropping off customers. To limit her risk, Mara wants to keep a low balance in this account, just sufficient to pay fuel costs for the upcoming week. To that end, she currently checks the balance in the account each Monday morning, and transfers in just enough funds to bring the balance to $275.

This past season, Mara had some cash flow issues – there were a couple of occasions this year where the company debit card was declined for insufficient funds at the gas station. This can be a serious problem. If the van runs out of gas, she is not able to transport customers to the river, and she will potentially lose customers. Also, if the charge does go through, she is liable for overdraft fees. Therefore, Mara wants to improve from her current process of refilling that account to $275 at the beginning of each week.

Mara started out by collecting data – on each Monday morning, she recorded the price of gas and the number of reservations for the coming week (see the attached Excel spreadsheet). She would like to use one of these measures to estimate the week’s fuel costs, but she is not sure which one would give her the best estimate. The number of reservations tells her how many customers have reserved boats for the coming week, but some reservations are later cancelled (or no-shows) and many customers show up unannounced for a trip down the river. In addition, the price of gas on Monday morning usually does not stay the same through the entire week. Mara knows that neither of these variables will perfectly predict her fuel costs, but figures that anything would be better than her current process.

DATA:

FULE COST INFO IS IN THE TABLE - Please let me know what more info do you need? The comments keep saying the same thing but I did provide the info.

Required:

Write a 1-2 page memo, as the accountant of Pleasanton Rafts, addressed to Mara Mason describing your analysis and the outcomes. Make sure you respond to the following items:

1. Of the three cost estimation methods covered in this class (high-low method, scatter diagrams, or least squares regression), which would give the most accurate cost estimates? Explain why that method is more accurate, and how it works.

1) list five differences between a commercial loan and an investment security.

2) which carries the lower rate of interest?

3) describe the difference between general obligation and revenue obligation municipal securities