Master Budget Project
Okay Company is preparing to build its master budget. The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information:
a. This will be the first year of operation for Okay Company.
b. Budgeted unit sales by quarter for 2017 are projected as follows: First quarter 6,300, Second quarter 6,100, Third quarter 6,100 & Fourth quarter 6,450. First and second quarter 2018 budgeted sales units is 6,400 each quarter.
c. The selling price is $45 per unit. Sales are estimated to be collected 75% in cash and 25% credit. Of the credit sales, 85% are estimated to be collected in the quarter following the sale and 15% are collected in the second quarter following the sale.
d. Since this is the first year of operations there is no beginning inventory of finished goods at the beginning of the year. Okay’s ending finished good inventory policy is 35% of the following quarter’s unit sales needs.
e. Each unit uses 0.50 hours of direct labor and 2 units of direct materials. Laborers are paid $12 per hour and one unit of direct materials costs $4.50.
f. Since this is the first year of operations there is no beginning inventory of direct materials at the beginning of the year. Okay plans to have 30% of the direct materials needed for the next quarter’s production units on hand at the end of each quarter.
g. Okay buys direct materials on account. 80% of the purchases are paid for in the quarter of acquisition, and the remaining 20% are paid for in the following quarter.
h. Fixed overhead totals $25,000 each quarter. Of this total, $5,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred.
i. Variable overhead is budgeted at $3 per units produced. All variable overhead expenses are paid for in the quarter incurred.
j. Fixed selling and administrative expenses total $15,000 per quarter, including $2,500 depreciation.
k. Variable selling and administrative expenses are budgeted at $1.25 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
l. Okay will pay quarterly dividends of $10,000. During the fourth quarter, $135,000 of equipment will be purchased.

Required: Prepare a master budget for Okay Company for each quarter of 2017 and for the year in total. The following component budgets must be included:
1.(2 points) Calculate the Ending Cash Balance if 1st Quarter Sales is changed to 6,000 units
2.(2 points) For correct formulas in excel spreadsheet.

Chris Inc. has accumulated the following information for its second-quarter income statement for 20X2:

Additional Information

1. First-quarter income before taxes was $114,000, and the estimated effective annual tax rate was 40 percent. At the end of the second quarter, expected annual income is $760,000, and a dividend exclusion of $46,000 and a business tax credit of $15,000 are anticipated. The combined state and federal tax rate is 50 percent.
2. The $434,000 cost of goods sold is determined by using the LIFO method and includes 7,500 units from the base layer at a cost of $12 per unit. However, you have determined that these units are expected to be replaced at a cost of $26 per unit.
3. The operating expenses of $244,000 include a $74,000 factory rearrangement cost incurred in April. You have determined that the second quarter will receive about 25 percent of the benefits from this project with the remainder benefiting the third and fourth quarters.

Required:
a. Calculate the effective annual tax rate expected at the end of the second quarter for Chris Inc.
  

b. Prepare the income statement for the second quarter of 20X2. Your solution should include a computation of income tax (or benefit):
  

Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2017.

Your assistant has prepared two budgets: (1) the manufacturing overhead budget shows expected costs to be 125% of direct labor cost, and (2) the direct materials budget for Tarr shows the cost of Tarr purchases to be $301,000 in quarter 1 and $427,500 in quarter 2.

Requirements

Prepare a sales Budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, selling and administrative budget, and income statement budget for the 2 quarters of 2017.

Exercise 8-16

You are the vice president of finance of Novak Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2020. These schedules appear below.

The computation of cost of goods sold in each schedule is based on the following data.

Debra King, the president of the corporation, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. King that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions.

Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions.

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Schedules Computing Ending Inventory

Statistics

EXERCISE 2. Anna Sheehan is the manager of the Spendwise supermarket chain. She would like to be able to predict paperback book sales (books per week) based on the amount of shelf display space (in feet) provided. Anna gathers data for a sample of 11 weeks.

a) Plot a scatter diagram b) What kind of relationship exists between these two variables? c) Compute the correlation coefficient. d) Determine the sample regression equation e) Estimate paperback book sales for a week in which 4 feet of shelf space are provided. Answer. b) positive c) 0,95 d) Y = 36,4053X + 32,4576 e) 178,0779.

EXERCISE 3. A random sample of 5 families shows the following information concerning annual family income and annual expenditure on durable goods (refrigerators, washing machines, stereos and so on):

a) Determine the estimated regression equation Y = aX + b; b) Estimate the annual expenditure on durable goods of a family earning 12000 euros per year. Answer. a) Y = 0,31X – 0,79; b) 293 euros.

Please show your workings, I have provided you with the possible answers but they might be wrong as well due our book. Thank you in advance!

The patient recovery time from a particular surgical procedure is normally distributed with a mean of 4 days and a standard deviation of 1.6 days. Let X be the recovery time for a randomly selected patient. Round all answers to 4 decimal places where possible. a. What is the distribution of X? X ~ N(,)

b. What is the median recovery time? days

c. What is the Z-score for a patient that took 5.3 days to recover?

d. What is the probability of spending more than 3.4 days in recovery?

e. What is the probability of spending between 3.8 and 4.3 days in recovery?

f. The 70th percentile for recovery times is days.

Noventis Corporation prepared the following estimates for the four quarters of the current year:

Additional Information

• First-quarter administrative costs include the $180,000 annual insurance premium.
• Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
• No special items affect income during the year.
• Noventis estimates an effective income tax rate for the year of 40 percent.

1. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.

2. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.

14) To purchase studio space, on April 3, 2025 a pianist takes out a 30-year loan of $120,000 at an annual interest rate of 11%. The first monthly payment is to be made on May 3, 2025; the final payment is scheduled to be made April 3, 2055. The monthly payment is $1,142.79 . [Note: If you use the table you’ll get that the monthly payment is $1,142.40, but the table produces an approximation. $1,142.79 is the precise payment.]

a) Calculate the total interest charged over the course of the loan, assuming that nothing but the standard payment is made each month.

b) How much will she owe immediately after making the payment on June 3, 2025? (= the second payment) Round appropriately to the nearest penny.

c) Suppose that as part of that June 3, 2025 payment she pays an extra $300 as an overpayment. Calculate the dollar amount of interest which this saves in the future. Round your answer down to the nearest $10.

A country’s GDP is being measured by expenditure. Various categories of expenditure are recorded as follows: Households’ spending on consumption = $100bn, Firms’ spending on capital goods = $15bn, Firms’ addition to inventories = $1bn, Government spending on services = $10bn, Government spending on capital goods = $2bn, Government transfers (social security etc) = $10bn, Exports = $12bn, Imports = $10bn. What is the correct estimate of GDP?