The Haverly Company expects to finish the current year with the following financial results, and is developing its annual plan for next year.

The following facts are available.

• Payables are almost entirely due to inventory purchases and can be estimated through COGS, which is approximately 40% purchased material.
• Currently owned assets will depreciate an additional $1100000 next year.
• There are two balance sheet accruals. The first is for unpaid wages. The current payroll of $31 million is expected to grow by 11% next year. The closing date of the year will be six working days after a payday. The second accrual is an estimate of the cost of purchased items that have arrived in inventory, but for which vendor invoices have not yet been received. This materials accrual is generally about 9% of the payables balance at year end.
• The combined state and federal income tax rate is 42%.
• Interest on current and future borrowing will be at a rate of 14%.

PLANNING ASSUMPTIONS

Income Statement Items

1. Revenue will grow by 13% with no change in product mix. Competitive pressure, however, is expected to force some reductions in pricing.
2. The pressure on prices will result in a 2% deterioration (increase) in the next year's cost ratio.
3. Spending in the marketing department is considered excessive and will be held to 10% of revenue next year.
4. Because of a major development project, expenses in the engineering department will increase by 15%.
5. Finance and administration expenses will increase by 8%.

Assets and Liabilities

6. An enhanced cash management system will reduce cash balances by 5%.
7. The ACP will be reduced by 15 days. (Calculate the current value to arrive at the target.)
8. The inventory turnover ratio (COGS/inventory) will decrease by 0.5x.
9. Capital spending is expected to be $7 million. The average depreciation life of the assets to be acquired is five years. The firm uses straight-line depreciation, and takes a half year in the first year.
10. Bills are currently paid in 50 days. Plans are to shorten that to 30 days.
11. A dividend totaling $2 million will be paid next year. No new stock will be sold.

Develop next year's financial plan for Haverly on the basis of these assumptions and last year's financial statements. Include a projected income statement, balance sheet and a statement of cash flows. Enter your dollar answers in thousands. For example, an answer of $200 thousands should be entered as 200, not 200000. Round dollar answers and intermediate calculations to the nearest thousand. Round the percentage values to 1 decimal place. Enter all amounts in Income Statement as a positive numbers. Use a minus sign, to indicate a negative cash outflow, or a decrease in cash in Balance Sheet and Cash Flow Statement.

More time on the Internet: A researcher polled a sample of 1052 adults in the year 2010, asking them how many hours per week they spent on the Internet. The sample mean was 10.19 with a standard deviation of 13.8 A second sample of 2022 adults was taken in the year 2012. For this sample, the mean was 10.87 with a standard deviation of 14.92. Assume these are simple random samples from populations of adults. Can you conclude that the mean number of hours per week spent on the Internet increased between 2010 and 2012? Use the α = 0.01 level of significance.

1. State the null and alternative hypothesis

2. Compute the p-value and Testing Value

3. Do you reject the null hypothesis? Explain?

4. Can you conclude that the mean number of hours per week spent on the Internet increased between 2010 and 2012?

When managers set goals for employees at the beginning of the year, they often “negotiate” the goal.When doing so, how would you recommend they think about how difficult the goal should be to achieve?

The following is the income statement for Nikov and Co. for the year ended 31 December 2014, along with information relating to the preceding year.

Income statement for the year ended 31 December

Required:

Analyse the performance of the business for the year to 31 December 2014 in so far as the information allows.

The following data are available for Sellco for the fiscal year ended on January 31, 2017:

+b. Assume that net income using the weighted-average cost flow assumption is $13,400. Calculate net income under FIFO and LIFO. (Round unit cost to 2 decimal places.)

+

The full content of this question did not transfer to your assignment. Please try again.
reload

Income Statement

For the Year Ended December 31, 2018

Sales                                                               $8,500,000

Manufacturing Expenses

Variable                                $3,250,000

Fixed overhead                       640,000       3,890,000

Gross Margin                                                  $4,610,000

Selling and administrative expenses

Commissions                           $580,000

Fixed marketing expenses       300,000

Fixed admin expenses               450,000      1,330,000

Net Operating Income                                     $3,280,000

Fixed Interest expenses                                       230,000    

Income before Taxes                                      $3,050,000     

Income Taxes (21%)                                            640,500

Net Income                                                     $2,409,500

Your company is considering out-sourcing the sales and marketing to an agency specializing in these types of sales. The outsourcing would remove the commissions, reduce the marketing by $270,000, and reduce the fixed administrative expenses by $35,000. The out-sourcing firm, Jangler Marketing, will charge a fee of 14% of sales. Jangler requires a 3-year contract. Jangler believes that it can increase sales by 10% for 2019 and 13% each year after (2020 and 2021). The company believes that with its current sales and marketing staff, sales will increase by 8% for 2019 and 9% in each year after (2020 and 2021).

1.Prepare contribution format projected income statements for 2019, 2020 & 202a assuming the company hires Jangler Marketing.

2.Prepare contribution format projected income statements assuming the outsourcing is rejected.

The client has a subsidiary in the USA and another in Canada, which this year together accounted for 8% of the group’s revenue, profit and net assets. Neither subsidiary is audited although both use external professional accountant to prepare the financial statement. The client’s management was unwilling to ask local accountants to perform a full audit.

Discuss the most appropriate type of opinion the auditor should issue. Explain briefly the reason for the opinion.

The following table shows the U.S. rates of personal tax as of the year 2016, and these tax rates presented in this table are marginal tax rates. (This is Table 3.7 on Page 74 of your textbook.)

Based on this table, answering the following questions:

(Please show your intermediate processes, instead of just a final number for your answers. Only round your final answers to two decimal places.)

(a1) Suppose there is a person called Alpha who has an annual income of $300,000 and Alpha’s spouse has an annual income of $20,000. What dollar amount of tax do Alpha and Alpha’s spouse each need to pay respectively, if they choose to file their taxes separately? What dollar amount of tax do they need to pay if they choose to file their taxes jointly?

(a2) What are the average tax rates for Alpha and Alpha’s spouse respectively, if they choose to file separately? What is the average tax rate if they choose to file jointly?

(b1) Suppose there is another person called Beta who has an annual income of $160,000 and Beta’s spouse also has an annual income of $160,000. What dollar amount of tax do Beta and Beta’s spouse each need to pay respectively, if they choose to file their taxes separately? What dollar amount of tax do they need to pay if they choose to file their taxes jointly?

(b2) What are the average tax rates for Beta and Beta’s spouse respectively, if they choose to file separately? What is the average tax rate if they choose to file jointly?

(c) Based on what you obtained from (a1) to (b2), what are the conclusions you could infer regarding the ways of filing taxes? (What are the advantages and disadvantages of these two ways?)

This year Evan graduated from college and took a job as a deliveryman in the city. Evan was paid a salary of $72,100 and he received $700 in hourly pay for part-time work over the weekends. Evan summarized his expenses below:

Calculate Evan's AGI and taxable income if he files single. Assume that interest payments were initially required on Evan’s student loans this year.