Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in the southern U.S. The owners would like to estimate weekly gross revenue as a function of advertising expenditures. Data for a sample of eight markets for a recent week follow.
|
Market |
Weekly Gross Revenue ($100s) |
Television Advertising ($100s) |
Newspaper Advertising ($100s) |
|
| Mobile | 102.3 | 5.0 | 1.6 | |
| Shreveport | 51.9 | 3.0 | 3.2 | |
| Jackson | 75.5 | 4.0 | 1.5 | |
| Birmingham | 127.2 | 4.4 | 4.0 | |
| Little Rock | 137.8 | 3.6 | 4.3 | |
| Biloxi | 101.4 | 3.5 | 2.3 | |
| New Orleans | 237.8 | 5.0 | 8.4 | |
| Baton Rouge | 219.6 | 6.9 | 5.8 | |
| (a) | Use the data to develop an estimated regression equation with the amount of television advertising as the independent variable. |
| Let x represent the amount of television advertising. | |
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) | |
| = + x | |
| Test for a significant relationship between television advertising and weekly gross revenue at the 0.05 level of significance. What is the interpretation of this relationship? | |
| The input in the box below will not be graded, but may be reviewed and considered by your instructor. | |
| (b) | How much of the variation in the sample values of weekly gross revenue does the model in part (a) explain? |
| If required, round your answer to two decimal places. | |
| % | |
| (c) | Use the data to develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables. |
| Let x1 represent the amount of television advertising. | |
| Let x2 represent the amount of newspaper advertising. | |
| If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) | |
| = + x1 + x2 | |
| Test whether each of the regression parameters β0, β1, and β2 is equal to zero at a 0.05 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable? | |
| The input in the box below will not be graded, but may be reviewed and considered by your instructor. | |
| (d) | How much of the variation in the sample values of weekly gross revenue does the model in part (c) explain? |
| If required, round your answer to two decimal places. | |
| % |
In: Economics
Chapter 9: Applying Excel: Excel Worksheet (Part 1 of 2)
Download the Applying Excel form and enter formulas in all cells that contain question marks.
For example, in cell B30 enter the formula "= B20".
Notes:
In the text, variances are always displayed as positive numbers. To accomplish this, you can use the ABS() function in Excel. For example, the formula in cell C31 would be "=ABS(E31?B31)".
Cells D31 through D39 and G31 through G39 already contain formulas to compute and display whether variances are Favorable or Unfavorable. Do not enter data or formulas into those cells—if you do, you will overwrite these formulas.
After entering formulas in all of the cells that contained question marks, verify that the amounts match the numbers in the example in the text.
Check your worksheet by changing the revenue in cell D4 to $16.00; the cost of ingredients in cell D5 to $6.50; and the wages and salaries in cell B6 to $10,000. The activity variance for net operating income should now be $850 U and the spending variance for total expenses should be $410 U. If you do not get these answers, find the errors in your worksheet and correct them.
Save your completed Applying Excel form to your computer and then upload it here by clicking “Browse.” Next, click “Save.” You will use this worksheet to answer the questions in Part 2
| Chapter 9: Applying Excel | |||||||
| Data | |||||||
| Revenue | $16.50 | q | |||||
| Cost of ingredients | $6.25 | q | |||||
| Wages and salaries | $10,400 | ||||||
| Utilities | $800 | + | $0.20 | q | |||
| Rent | $2,200 | ||||||
| Miscellaneous | $600 | + | $0.80 | q | |||
| Actual results: | |||||||
| Revenue | $27,920 | ||||||
| Cost of ingredients | $11,110 | ||||||
| Wages and salaries | $10,130 | ||||||
| Utilities | $1,080 | ||||||
| Rent | $2,200 | ||||||
| Miscellaneous | $2,240 | ||||||
| Planning budget activity | 1,800 | meals served | |||||
| Actual activity | 1,700 | meals served | |||||
| Enter a formula into each of the cells marked with a ? below | |||||||
| Review Problem: Variance Analysis Using a Flexible Budget | |||||||
| Construct a flexible budget performance report | |||||||
| Revenue | |||||||
| and | |||||||
| Actual | Spending | Flexible | Activity | Planning | |||
| Results | Variances | Budget | Variances | Budget | |||
| Meals served | ? | ? | ? | ||||
| Revenue | ? | ? | ? | ? | ? | ||
| Expenses: | |||||||
| Cost of ingredients | ? | ? | ? | ? | ? | ||
| Wages and salaries | ? | ? | ? | ? | ? | ||
| Utilities | ? | ? | ? | ? | ? | ||
| Rent | ? | ? | ? | ? | ? | ||
| Miscellaneous | ? | ? | ? | ? | ? | ||
| Total expenses | ? | ? | ? | ? | ? | ||
| Net operating income | ? | ? | ? | ? | ? | ||
In: Accounting
Required information
[The following information applies to the questions
displayed below.]
Washington County’s Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board’s decision appear below.
| Cost of acquiring additional land for runway | $ | 63,000 | |
| Cost of runway construction | 305,000 | ||
| Cost of extending perimeter fence | 19,880 | ||
| Cost of runway lights | 32,000 | ||
| Annual cost of maintaining new runway | 16,000 | ||
| Annual incremental revenue from landing fees | 25,000 | ||
In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $115,000. The old snowplow could be sold now for $11,500. The new, larger plow will cost $7,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $76,000 per year in additional tax revenue for the county.
In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 10 percent.
Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)
In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 10 percent. The County Board of Representatives believes that if the county conducts a promotional effort costing $30,500 per year, the proposed long runway will result in substantially greater economic development than was projected originally. However, the board is uncertain about the actual increase in county tax revenue that will result.
Required:
Suppose the board builds the long runway and conducts the promotional campaign. What would the increase in the county’s annual tax revenue need to be in order for the proposed runway’s internal rate of return to equal the county’s hurdle rate of 10 percent? (Round intermediate and final answer to the nearest dollar amount.)
|
In: Accounting
Required information
[The following information applies to the questions
displayed below.]
Washington County’s Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board’s decision appear below.
| Cost of acquiring additional land for runway | $ | 63,000 | |
| Cost of runway construction | 305,000 | ||
| Cost of extending perimeter fence | 19,880 | ||
| Cost of runway lights | 32,000 | ||
| Annual cost of maintaining new runway | 16,000 | ||
| Annual incremental revenue from landing fees | 25,000 | ||
In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $115,000. The old snowplow could be sold now for $11,500. The new, larger plow will cost $7,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $76,000 per year in additional tax revenue for the county.
In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 10 percent.
Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)
In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 10 percent. The County Board of Representatives believes that if the county conducts a promotional effort costing $30,500 per year, the proposed long runway will result in substantially greater economic development than was projected originally. However, the board is uncertain about the actual increase in county tax revenue that will result.
Required:
Suppose the board builds the long runway and conducts the promotional campaign. What would the increase in the county’s annual tax revenue need to be in order for the proposed runway’s internal rate of return to equal the county’s hurdle rate of 10 percent? (Round intermediate and final answer to the nearest dollar amount.)
|
In: Accounting
Presented below is an amortization schedule related to Riverbed
Company’s 5-year, $140,000 bond with a 7% interest rate and a 5%
yield, purchased on December 31, 2018, for $152,123.
|
|
Cash |
Interest |
Bond Premium |
Carrying Amount |
||||
|---|---|---|---|---|---|---|---|---|
|
12/31/18 |
$152,123 | |||||||
|
12/31/19 |
$9,800 | $7,606 | $2,194 | 149,929 | ||||
|
12/31/20 |
9,800 | 7,496 | 2,304 | 147,625 | ||||
|
12/31/21 |
9,800 | 7,381 | 2,419 | 145,206 | ||||
|
12/31/22 |
9,800 | 7,260 | 2,540 | 142,666 | ||||
|
12/31/23 |
9,800 | 7,134 | 2,666 | 140,000 |
The following schedule presents a comparison of the amortized cost
and fair value of the bonds at year-end.
|
12/31/19 |
12/31/20 |
12/31/21 |
12/31/22 |
12/31/23 |
||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Amortized cost |
$149,929 | $147,625 | $145,206 | $142,666 | $140,000 | |||||
|
Fair value |
$149,300 | $149,800 | $147,000 | $143,800 | $140,000 |
| (a) | Prepare the journal entry to record the purchase of these bonds on December 31, 2018, assuming the bonds are classified as held-to-maturity securities. | |
| (b) | Prepare the journal entry related to the held-to-maturity bonds for 2019. | |
| (c) | Prepare the journal entry related to the held-to-maturity bonds for 2021. | |
| (d) | Prepare the journal entry to record the purchase of these bonds, assuming they are classified as available-for-sale. | |
| (e) | Prepare the journal entries related to the available-for-sale bonds for 2019. | |
| (f) | Prepare the journal entries related to the available-for-sale bonds for 2021. |
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
(a) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
(b) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
(c) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
(d) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
||
|
(e) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
|
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
||
|
(To record interest revenue.) |
||||
|
enter an account title to record adjustment |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record adjustment |
enter a debit amount |
enter a credit amount |
||
|
(To record adjustment.) |
||||
|
(f) |
choose a transaction date Dec. 31, 2018Dec. 31, 2019Dec. 31, 2021 |
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
|
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record interest revenue |
enter a debit amount |
enter a credit amount |
||
|
(To record interest revenue.) |
||||
|
enter an account title to record adjustment |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record adjustment |
enter a debit amount |
enter a credit amount |
||
|
(To record adjustment.) |
In: Accounting
At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
| Cash balance, September 1 (from a summer job) | $6,680 |
| Purchase season football tickets in September | 90 |
| Additional entertainment for each month | 230 |
| Pay fall semester tuition in September | 3,600 |
| Pay rent at the beginning of each month | 320 |
| Pay for food each month | 180 |
| Pay apartment deposit on September 2 (to be returned December 15) | 500 |
| Part-time job earnings each month (net of taxes) | 830 |
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.
| Priscilla Wescott | ||||
| Cash Budget | ||||
| For the Four Months Ending December 31 | ||||
| September | October | November | December | |
| Estimated cash receipts from: | ||||
| $ | $ | $ | $ | |
| Total cash receipts | $ | $ | $ | $ |
| Less estimated cash payments for: | ||||
| $ | ||||
| $ | $ | $ | ||
| Total cash payments | $ | $ | $ | $ |
| Cash increase (decrease) | $ | $ | $ | $ |
| Cash balance at end of month | $ | $ | $ | $ |
b. Are the four monthly budgets that are
presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Priscilla Wescott?
Priscilla can see that her present plan sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ at the end of December, with no time left to adjust.
In: Accounting
At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
| Cash balance, September 1 (from a summer job) | $6,680 |
| Purchase season football tickets in September | 90 |
| Additional entertainment for each month | 230 |
| Pay fall semester tuition in September | 3,600 |
| Pay rent at the beginning of each month | 320 |
| Pay for food each month | 180 |
| Pay apartment deposit on September 2 (to be returned December 15) | 500 |
| Part-time job earnings each month (net of taxes) | 830 |
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.
| Priscilla Wescott | ||||
| Cash Budget | ||||
| For the Four Months Ending December 31 | ||||
| September | October | November | December | |
| Estimated cash receipts from: | ||||
| $ | $ | $ | $ | |
| Total cash receipts | $ | $ | $ | $ |
| Less estimated cash payments for: | ||||
| $ | ||||
| $ | $ | $ | ||
| Total cash payments | $ | $ | $ | $ |
| Cash increase (decrease) | $ | $ | $ | $ |
| Cash balance at end of month | $ | $ | $ | $ |
b. Are the four monthly budgets that are
presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Priscilla Wescott?
Priscilla can see that her present plan sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ at the end of December, with no time left to adjust.
In: Accounting
On December 31, 2019, Novak Inc. has taxable temporary differences of $2.21 million and a deferred tax liability of $618,800. These temporary differences are due to Novak having claimed CCA in excess of book depreciation in prior years. Novak’s year end is December 31. At the end of December 2020, Novak’s substantively enacted tax rate for 2020 and future years was changed to 30%. For the year ended December 31, 2020, Novak’s accounting loss before tax was $494,500. The following data are also available. 1. Pension expense was $87,600 while pension plan contributions were $111,000 for the year. (Only actual pension contributions are deductible for tax.) 2. Business meals and entertainment were $38,000. (They are one-half deductible for tax purposes.) 3. For the three years ended December 31, 2019, Novak had cumulative, total taxable income of $123,300 and total income current tax expense/income tax payable of $34,524. 4. During 2020, the company booked estimated warranty costs of $31,300 and these costs are not likely to be incurred until 2024. 5. In 2020, the company incurred $150,000 of development costs (only 50% of which are deductible for tax purposes). 6. Company management has determined that it is probable that only one half of any loss carryforward at the end of 2020 will be realized. 7. In 2020, the amount claimed for depreciation was equal to the amount claimed for CCA.
Prepare income tax reconciliation statement Prepare the journal entries to record income taxes for the year ended December 31, 2020, and the income tax reconciliation note.
In: Accounting
At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
| Cash balance, September 1 (from a summer job) | $7,060 |
| Purchase season football tickets in September | 100 |
| Additional entertainment for each month | 250 |
| Pay fall semester tuition in September | 3,800 |
| Pay rent at the beginning of each month | 340 |
| Pay for food each month | 190 |
| Pay apartment deposit on September 2 (to be returned December 15) | 500 |
| Part-time job earnings each month (net of taxes) | 880 |
a. Prepare a cash budget for September, October, November, and December. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.
| Craig Kovar | ||||
| Cash Budget | ||||
| For the Four Months Ending December 31 | ||||
| September | October | November | December | |
| Estimated cash receipts from: | ||||
| $ | $ | $ | $ | |
| Total cash receipts | $ | $ | $ | $ |
| Less estimated cash payments for: | ||||
| $ | ||||
| $ | $ | $ | ||
| Total cash payments | $ | $ | $ | $ |
| Cash increase (decrease) | $ | $ | $ | $ |
| Cash balance at end of month | $ | $ | $ | $ |
b. Are the four monthly budgets that are
presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Craig Kovar?
Craig can see that his present plan sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ at the end of December, with no time left to adjust.
In: Accounting
Phoenix Company’s 2017 master budget included the following
fixed budget report. It is based on an expected production and
sales volume of 15,000 units.
|
PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017 |
|||||
| Sales | $ | 3,300,000 | |||
| Cost of goods sold | |||||
| Direct materials | $ | 945,000 | |||
| Direct labor | 225,000 | ||||
| Machinery repairs (variable cost) | 45,000 | ||||
| Depreciation—Plant equipment (straight-line) | 300,000 | ||||
| Utilities ($30,000 is variable) | 195,000 | ||||
| Plant management salaries | 200,000 | 1,910,000 | |||
| Gross profit | 1,390,000 | ||||
| Selling expenses | |||||
| Packaging | 90,000 | ||||
| Shipping | 90,000 | ||||
| Sales salary (fixed annual amount) | 235,000 | 415,000 | |||
| General and administrative expenses | |||||
| Advertising expense | 100,000 | ||||
| Salaries | 230,000 | ||||
| Entertainment expense | 75,000 | 405,000 | |||
| Income from operations | $ | 570,000 | |||
Required:
1&2. Prepare flexible budgets for the company
at sales volumes of 14,000 and 16,000 units and classify all items
listed in the fixed budget as variable or fixed.
3. The company’s business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2017 budgeted amount of $570,000 if this level is reached without increasing capacity?
4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2017 could fall to 12,000 units. How much income (or loss) from operations would occur if sales volume falls to this level? (Enter any loss with minus sign.)
In: Accounting