Ingles Corporation is a manufacturer of tables. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next month’s sales are in the current month’s finished goods inventory. Ingles also purchases sufficient materials to ensure that the current month’s ending materials inventory is 60 percent of the following month’s direct materials required for production. Ingle’s sales budget in units for the next quarter is as follows:

July........................................................................................................ 2,450

August.................................................................................................. 2,900

September............................................................................................. 2,100

Ingle’s ending inventories in units for July 31 are as follows:

Finished goods...................................................................................... 1,900

Materials (legs)...................................................................................... 4,000

Requirements:

Prepare Ingle’s production budget for tables in August.

Prepare Ingle’s August direct materials purchases budget for table legs.

How many employees will be required for the Assembly Department in August?Fractional employees are acceptable since employees can be hired on a part-time basis.Assume a 40-hour week and a 4-week month.

Required information

Problem 14-23 Preparing a master budget for retail company with no beginning account balances LO 14-2, 14-3, 14-4, 14-5, 14-6

[The following information applies to the questions displayed below.]

Munoz 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

A. October sales are estimated to be $400,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.

B. 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.

C. 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 $13,900. Assume that all purchases are made on account. Prepare an inventory purchases budget.

D. The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases.

E. Budgeted selling and administrative expenses per month follow:

*The capital expenditures budget indicates that Munoz will spend $180,600 on October 1 for store fixtures, which are expected to have a $39,000 salvage value and a two-year (24-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

F. 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.

G. Munoz 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 $31,000 cash cushion. Prepare a cash budget.

Required A

October sales are estimated to be $400,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.

Required B

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.

Required C

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 $13,900. Assume that all purchases are made on account. Prepare an inventory purchases budget.

Required D

The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.)

Required E

Prepare a selling and administrative expenses budget.

Required F

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.

Required G

Munoz 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 $31,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.)

Show less

Beginning cash balance

Borrowing (repayment)

Ending cash balance

Financing activity

For inventory purchases

For selling and administrative expenses

Interest expense

Purchase of store fixtures

Surplus (shortage)

Add: Cash receipts

Less: Cash receipts

Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.)

1. How do consumption and investment spending affect aggregate expenditures and output over the business cycle?
   
2. Which is more responsible for volatility - consumption or investment spending or both? Explain your choice.
   
3. How do government actions affect consumption and investment?

300 word response

1. A decline in the interest rate is unlikely to have no effect on GDP? Agree or disagree? Why?
2. “Households tend to increase their spending during a recession because they realize that more spending will cause firms to hire more workers and the problem of unemployment will be solved.” Do you agree or disagree? Explain.

Most mammalian cell types do not undergo homologous recombination (HR), and even mouse ES cells do so at low frequency - about 1/200000 cells. However, if you first introduce a crRNA designed to target a mouse genomic sequence next to a PAM site, plus a source of Cas9 protein and a plasmid with homology arms, most mouse cell types will undergo HR with very high frequency -as high as 1/5 or more of the treated cells. What does this tell you about the mechanism of HR in mammalian cells?

A) The critical first step in HR is introduction of a double strand break at the target gene site.
B) Mouse ES cells have DNA repair systems that are defective compared to other cell types.
C) Cas9 protein directly activates expression of HR system genes in mammalian cells.
D) Mouse ES cells contain a larger number of PAM sites than most cell types.
E) Mouse ES cells already express higher levels of Cas9 than most cell types.

3. Asset management ratios

Asset management ratios are used to measure how effectively a firm manages its assets.

Remember, there are two slightly different equations that can be used to evaluate the management of a firm’s inventory. In either case, the inventory management ratio puts the inventory balance in the denominator and either its corresponding Sales value or the corresponding Cost of Goods Sold (COGS) value in the numerator. In the first (older) sales-based computation, the ratio identifies the number of sales dollars generated with each dollar of inventory held. The second, newer equation—which places COGS in the numerator—compares the costs of producing the firm’s goods with the amount of inventory held. Don’t forget that the components of COGS are direct materials, direct labor, and the overhead associated with producing the firm’s goods and services. Therefore, the COGS-based version of the ratio compares the firm’s inventory with its costs, whereas the Sales-based version compares the inventory balance with the firm’s revenues and profits.

Now, consider the following case:

Mall Toys Co. has a quick ratio of 2.00x, $37,575 in cash, $20,875 in accounts receivable, some inventory, total current assets of $83,500, and total current liabilities of $29,225. The company reported annual sales and cost of goods sold of $100,000 and $70,000, respectively, in the most recent annual report.

Over the past year, Mall Toys Co. sold and replace its ? x   times this year (using the sales-based inventory turnover ratio) and ? times per year (using the COGS-based ratio).

The sales-based inventory turnover ratio across companies in the industry is 4.39x. Based on this information, which of the following statements is true for Mall Toys Co.?

a.Mall Toys Co. is holding more inventory per dollar of sales compared to the industry average.

b.Mall Toys Co. is holding less inventory per dollar of sales compared to the industry average.

On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing:

If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable costing. Filling in the blanks with the following terms chart.

-Fixed manufacturing costs

-Less ending inventory

-Sales

-Variable cost of goods manufactured

-Wages Expense

-Fixed selling and administrative expenses

-Variable cost of goods sold

-Less ending inventory

-Utilities Expense

-Manufacturing margin

-Contribution margin

Rieb Incorporated has provided the following data for the month of September. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.

Manufacturing overhead for the month was overapplied by $7,950.

The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

Required:

Provide the journal entry that would record the allocation of underapplied or overapplied among work in process, finished goods, and cost of goods sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. In which situation does investment spending decrease?

A.when the price level rises, causing interest rates to fall

B.when the price level falls, causing interest rates to fall

C.when the price level rises, causing interest rates to rise

D.when the price level falls, causing interest rates to rise

2. If a central bank targets the interest rate, what does this imply?

A. The central bank must decrease the money supply if the interest rate is above its target.

B. The central bank can then set the money supply at whatever value it wants.

C. The central bank must increase the money supply if the interest rate is above its target.

D. The central bank must not change the money supply.

3. If households view a tax cut as being temporary, how does the tax cut affect aggregate demand?

A. It has the same effect on aggregate demand than if households view the cut as permanent.

B. It has no effect on aggregate demand.

C. It has a stronger effect on aggregate demand than if households view the cut as permanent.

D. It has a weaker effect on aggregate demand than if households view the cut as permanent.

4. What is the most important automatic stabilizer?

A. government spending

B. welfare benefits

C. the tax system

D. unemployment compensation

Carol’s Dress Shop produces high quality formal dresses. In January 2019 they produced 17,000 dresses. For the month of January, the following standard and actual cost data are available. The normal monthly capacity of the company is 30,000 direct labor hours. All material purchased in January was used in January production.

Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs are $102,000 per month and budgeted variable overhead costs are $63,000 per month.

Required

1. Calculate the variable overhead spending variance for January. Label the variance as favorable or unfavorable.
2. Calculate the variable overhead efficiency variance for January. Label the variance as favorable or unfavorable.
3. Calculate the fixed overhead spending variance for January. Label the variance as favorable or unfavorable.
4. Calculate the fixed overhead production volume variance for January. Label the variance as favorable or unfavorable.
5. Which of the variances should be investigated if management considers a variance of more than 5% from standard to be significant?
6. Provide a discussion of the tradeoffs that are most likely to exist between the direct material and direct labor variances.