1. Bonita Industries estimates its sales at 170000 units in the first quarter and that sales will increase by 21000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Cash collections for the third quarter are budgeted at

a. $4346000.

b. $5205500.

c. $2979500.

d. $6216588.

2. Waterway Industries estimates its sales at 130000 units in the first quarter and that sales will increase by 24000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

Cash collections for the third quarter are budgeted at

a. $6078800.

b. $3462200.

c. $7102200.

d. $5108600.

3.

Whispering WindsCompany is considering two capital investment proposals. Estimates regarding each project are provided below:

The company requires a 10% rate of return on all new investments.

The cash payback period for Project Nuts is

a. 6.39 years.

b. 4.03 years.

c. 14.33 years.

d. 5.38 years.

4. Coronado Industries reported the following information for 2019:

• All sales are on credit.
• Customer amounts on account are collected 50% in the month of sale and 50% in the following month.

How much cash will Coronado receive in November?

a. $1100000

b. $1140000

c. $1240000

d. $550000

5. The following information was taken from Bonita Industries’s cash budget for the month of July:

If the company has a policy of maintaining a minimum end of the month cash balance of $480000, the amount the company would have to borrow is

a. $310000.

b. $136000.

c. $60000.

d. $170000.

SBS Ltd is the world’s leading internet-based media services provider. Both OzTV and RockTV invested millions in SBS Ltd. However, accounting scandals and fraud allegations had caused the company’s stock crashing, and forced the company to seek bankruptcy protection in Singapore and Malaysia. You are the auditor for SBS Ltd for the year ended 30 June 2019.

The following information pertains to SBS’s sales and accounts receivable:

The consolidated revenue has increased by 184 percent from the year 2017 to 2019.
Revenue in Singapore, which has a reputation as a difficult market for foreign companies to enter, had increased from $97,000 in the first quarter of 2018 to approximately $59 million in the first quarter of 2019.
In the second quarter of 2019, sales have grown by 104 percent but accounts receivable grew by 128 percent.
The average collection days outstanding has increased from 138 days in 2018 to 160 days for the six-month period ended 30 June 2019.
Required:

a) Based on the above information, explain one (1) assertion for sales that you should be most concerned with.

b) Based on the above information, explain two (2) assertions for accounts receivable that you should be most concerned with.

c) Explain one (1) audit procedure that you should perform in order to verify the assertion identified in (a) for sales and one (1) audit procedure for the assertion identified in (b) for accounts receivable.

In the "Drop Zone" ride at Canada's Wonderland, riders are dropped from a great height and then decelerated safely to a stop before hitting the ground. One possible technological application of Faraday's principle and Lenz's law is the ride's braking mechanism. If the ride is simulated by dropping a magnet with the north side down into an open copper pipe,

a) What is the direction of current flow in the pipe?

b) What is the direction of the induced magnetic field?

c) Why does this situation result in decreased acceleration of the magnet/ride? Explain well.

d) Would this situation be any different if the south end of the magnet was dropped down instead? Explain.

1. If the Consumer Price Index is 125, then prices have

a. risen 25 percent in the last year.

b. risen 25 percent since the base year.

c. declined 75 percent since the base year.

2. In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $600, and investment was $2000. What were Talikastan’s exports in 2015? (Hint: Use the formula: GDP = C + I + G + X - M)

a. -$900

b. -$600

c. $200

d. $300

3. Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

a. caused measured GDP to fall.

b. not caused any change in measured GDP.

c. caused measured GDP to rise.

d. caused the unemployment rate to increase.

e. declined 25 percent since the base year.

4. Most goods and services produced at home (e.g. making coffee or assembling a desk bought from Home Depot)

a. and most goods and services produced illegally are included in GDP.

b. are included in GDP while most goods and services produced illegally are excluded from GDP.

c. and most goods and services produced illegally are excluded from GDP.

d. are excluded from GDP while most goods and services produced illegally are included in GDP

5. Suppose GDP in an economy is $3,542 billion. Personal Consumption Expenditures (C) are $2,343 billion, Government Spending (G) is $865 billion, and Gross Private Domestic Investment (I) is $379 billion. Net foreign factor income (NFFI) is $ 10 billion.

What are net exports (NX)?

a. 7049

b. 3587

c. – 45

d. + 45

e. 3532

Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow:

(Note: Morrisey & Brown, Ltd.’s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

Required:

1. Identify each of the company’s expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 5,360-unit level of activity using the contribution format.

4. Assume that the company’s sales are projected to be 4,650 units in the next quarter. Prepare a contribution margin income statement.

Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow: MORRISEY & BROWN, LTD. Income Statements For the Four Quarters Ending December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales in units 5,000 4,500 5,600 5,100 Sales revenue A$ 500,000 A$ 450,000 A$ 560,000 A$ 510,000 Less: Cost of goods sold 300,000 270,000 336,000 306,000 Gross margin 200,000 180,000 224,000 204,000 Less: Operating expenses: Advertising expense 21,500 21,500 21,500 21,500 Shipping expense 36,000 38,000 42,400 37,900 Salaries and commissions 81,000 79,000 92,200 87,900 Insurance expense 6,500 6,500 6,500 6,500 Depreciation expense 15,500 15,500 15,500 15,500 Total operating expenses 160,500 160,500 178,100 169,300 Net income A$ 39,500 A$ 19,500 A$ 45,900 A$ 34,700 (Note: Morrisey & Brown, Ltd.’s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

Required: 1. Identify each of the company’s expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 5,600-unit level of activity using the contribution format.

4. Assume that the company’s sales are projected to be 4,750 units in the next quarter. Prepare a contribution margin income statement.

Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow:

(Note: Morrisey & Brown, Ltd.’s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

Required:

1. Identify each of the company’s expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 5,600-unit level of activity using the contribution format.

4. Assume that the company’s sales are projected to be 4,750 units in the next quarter. Prepare a contribution margin income statement.

Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow:

(Note: Morrisey & Brown, Ltd.’s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

Required:

1. Identify each of the company’s expenses (including cost of goods sold) as being variable, fixed, or mixed.

2-a. Using the high-low method, separate each mixed expense into variable and fixed elements.

2-b. Using the high-low method, state the cost formula for each mixed expense.

3. Redo the company's income statement at the 5,840-unit level of activity using the contribution format.

4. Assume that the company’s sales are projected to be 4,850 units in the next quarter. Prepare a contribution margin income statement.

In a given quarter, a company buys inventories from suppliers in an amount equal to 30% of the following quarter's forecasted sales. Sales of the first quarter are projected to be $39,750. The company has a payables period of 120 days. Sales of the second quarter are projected to increase at 30.60% from the first, while sales of the third quarter are projected to increase at 10.80% from the second. Assuming quarter of 90 days, what is total cash payment made in the third quarter for inventory purchases?

Question 1

Lady Gaga Inc. is a company that manufactures and sells flashy women’s apparel. Recently, the company’s budget committee completed preliminary work on its master budget. Based on management's sales forecast, required production for the next three months is budged to be as follows:

Every unit sold is produced using 50 centimeters (0.5 meters) of fabric, which is purchased in one meter-length rolls at an average price of $50 per meter. Management wants to maintain an ending inventory of fabric equal to 80% of next month’s expected production requirements (of fabric). These standards remain unchanged from the previous year.

Required: Prepare a direct materials budget for the three months ending July 31, excluding quarterly totals.

Question 2

Sherry's Shoes, Inc. has estimated the following sales in units for each of the next three quarters:

Management at Sherry's Shoes, Inc. wished to maintain an inventory of finished goods at the end of each quarter equal to 25% of the next quarter's expected sales. The finished goods on hand at the beginning of the budget period conformed to management's standard.

Required:

Prepare a production budget for the first two quarters of 2020, with total column.