Information for 2020:

1.   Sales forecast: January: 2,600 units; February: 4,500 units; March: 10,200 units; April: 12,000 units. The unit sales price is $125. All sales are on credit and collections are 30% in the month of sale, 60% the following month, and 10% two months following the sale. Accounts receivable as of the end of December is $4,600 and this amount is expected to be collected in January.

2. End of month inventory must equal 40% of next month’s sales. The inventory at the end of December was 150 units.

3. The following are the expected costs for direct materials, direct labor and manufacturing overhead:

DM                             DL                                         Overhead

January          $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced     

February        $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced

March          $15/unit $28/unit              $15,500 + $8.00 per unit produced

A. Direct materials are paid 60% in the month incurred and 40% in the following month.

      Account payable for materials at the end of December is $2,900; this amount will be paid in January.

B. Direct labor is paid in the month incurred.

C. Overhead costs are paid in the month incurred. Fixed overhead includes depreciation of $7,000 per month.

4.   Selling costs are sales commissions: $5 per unit sold; shipping costs: $1 per unit sold. Administrative costs per month are: salaries: $3,000; rent: $2,000; depreciation: $1,500. All costs are paid in the month incurred.

5. The company plans to purchase equipment in January costing $15,000 and will pay for it in cash.

6. The company plans to pay $4,500 cash dividends in February.

7. The cash balance as of December 31 is $25,050. The company borrows money only if the cash balance falls below $5,000 at the end of the month. The company has a revolving credit with US Bank to borrow in increments of $1,000 at the beginning of each month at interest of 12% annual rate. The company repays interest at the end of each month and principle (or portion) at the end of the month when they have the resources to do so. As of December 31, the company has no outstanding loans.

Required:

Based on the information given, prepare the following budgets for each month of the first quarter of 2020 and the quarter totals:

1. Sales Budget, including a schedule of expected cash collections;
2. Production Budget (in units);
3. Direct material, including schedule of expected cash disbursements;
4. Direct labor budget;
5. Manufacturing Overhead Budget;
6. Selling and Administrative Expenses Budget;
7. Cash Budget.

***ONLY NEED QUESTIONS 6 & 7 ANSWERED***

Information for 2020:

1.   Sales forecast: January: 2,600 units; February: 4,500 units; March: 10,200 units; April: 12,000 units. The unit sales price is $125. All sales are on credit and collections are 30% in the month of sale, 60% the following month, and 10% two months following the sale. Accounts receivable as of the end of December is $4,600 and this amount is expected to be collected in January.

2. End of month inventory must equal 40% of next month’s sales. The inventory at the end of December was 150 units.

3. The following are the expected costs for direct materials, direct labor and manufacturing overhead:

DM                             DL                                         Overhead

January          $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced     

February        $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced

March          $15/unit $28/unit              $15,500 + $8.00 per unit produced

A. Direct materials are paid 60% in the month incurred and 40% in the following month.

      Account payable for materials at the end of December is $2,900; this amount will be paid in January.

B. Direct labor is paid in the month incurred.

C. Overhead costs are paid in the month incurred. Fixed overhead includes depreciation of $7,000 per month.

4.   Selling costs are sales commissions: $5 per unit sold; shipping costs: $1 per unit sold. Administrative costs per month are: salaries: $3,000; rent: $2,000; depreciation: $1,500. All costs are paid in the month incurred.

5. The company plans to purchase equipment in January costing $15,000 and will pay for it in cash.

6. The company plans to pay $4,500 cash dividends in February.

7. The cash balance as of December 31 is $25,050. The company borrows money only if the cash balance falls below $5,000 at the end of the month. The company has a revolving credit with US Bank to borrow in increments of $1,000 at the beginning of each month at interest of 12% annual rate. The company repays interest at the end of each month and principle (or portion) at the end of the month when they have the resources to do so. As of December 31, the company has no outstanding loans.

Required:

Based on the information given, prepare the following budgets for each month of the first quarter of 2020 and the quarter totals:

1. Sales Budget, including a schedule of expected cash collections;
2. Production Budget (in units);
3. Direct material, including schedule of expected cash disbursements;
4. Direct labor budget;
5. Manufacturing Overhead Budget;
6. Selling and Administrative Expenses Budget;
7. Cash Budget.

The opening case in Chapter 12, “Big Data and the Internet of Things Drive Precision Agriculture,” demonstrates how the effective use of data analytics can help employees and managers at all levels, in many different industries, make better decisions. Using Purdue’s University College of Agriculture as an example, explain how you think this technology could help a company with which you are familiar.

Do male college students spend more time studying than female college students? This was one of the questions investigated by the authors of an article. Each student in a random sample of 46 male students at a university in England and each student in a random sample of 38 female students from the same university kept a diary of how he or she spent time over a 3-week period.

For the sample of males, the mean time spent studying per day was 283.0 minutes and the standard deviation was 160.4 minutes. For the sample of females, the mean time spent studying was 183.8 minutes and the standard deviation was 166.4 minutes. Is there convincing evidence that the mean time male students at this university spend studying is greater than the mean time for female students? Test the appropriate hypotheses using

α = 0.05.

(Use μ₁ for male students and μ₂ for female students.)

State the appropriate null and alternative hypotheses.

H₀: μ₁ − μ₂ > 0 and H_a: μ₁ − μ₂ < 0

H₀: μ₁ − μ₂ = 0 and H_a: μ₁ − μ₂ > 0

H₀: μ₁ − μ₂ < 0 and H_a: μ₁ − μ₂ > 0

H₀: μ₁ − μ₂ = 0 and H_a: μ₁ − μ₂ < 0

H₀: μ₁ − μ₂ > 0 and H_a: μ₁ − μ₂ = 0

Find the test statistic and P-value. (Use a table or technology. Round your test statistic to one decimal place and your P-value to three decimal places.)

t=

P-value=

State the conclusion in the problem context.

We reject H₀. We have convincing evidence that the mean time male students at this university spend studying is greater than the mean time for female students.

We fail to reject H₀. We have convincing evidence that the mean time male students at this university spend studying is greater than the mean time for female students.    

We fail to reject H₀. We do not have convincing evidence that the mean time male students at this university spend studying is greater than the mean time for female students.

We reject H₀. We do not have convincing evidence that the mean time male students at this university spend studying is greater than the mean time for female students.

Company A has a market value of equity of $2,000 million and 80 million shares outstanding. Company B has a market value of equity of $400 million and 25 million shares outstanding. Company A announces at the beginning of 2019 that is going to acquire Company B.

The projected pre-tax gains in operating income (in millions of $) from the merger are:

The projected pre-tax gains in operating income are expected to grow at 4% after year 2023. The company is using a discount rate of 8% to value the synergies. The marginal corporate tax rate is 35%.

Company A has decided to pay a $300 million premium for Company B. Assume that capital markets are efficient and that there is a 100% probability the deal will be closed.

If Company A were to make a 100% stock offer for Company B, what would the exchange ratio be? Remember that the exchange ratio is the number of Company A’s shares that the shareholders of Company B will receive in exchange for each of their shares.

Conflict among managers emerged soon after a French company acquired a Swedish firm. The Swedes perceived the French management as hierarchical and arrogant, whereas the French thought the Swedes were naive, cautious, and lacking an achievement orientation. Identify the source(s) of conflict that best explains this conflict, and describe ways to reduce dysfunctional conflict in this situation

CASE TWO, J.J. HEVA COMPANY J.J. Heva Company is an American company that prepares its financial statements under US GAAP. In 2014, the company reported income of $5,000,000 wit stockholders’ equity of $40,000,000 on December 31, 2014. In anticipation of possible adoption of IFRS by the US companies, the management wishes to explore possible impacts of the conversion on the company’s financial statements. You are hired to prepare a reconciliation schedule to convert 2014 income as well as stockholders’ equity on December 31, 2014 from US GAAP basis to IFRS. The following information is provided by the company’s accounting department: 1) In 2012, the company’s pension plan was amended and consequently created a past service cost of $75,000. Half of the past service cost was attributable to already vested employees who had an average remaining service life of 15 years, and half of the past service cost was attributable to non-vested employees who, on average, had two more years until vesting. The company has no retired employees. 2) In 2014, the company entered into a contract to provide engineering services to a long term customer over a 12-month period. The fixed price is $300,000 and the company estimates with high degree of reliability that the project is 30 percent complete at the end of 2014. 3) The company publicly announced a restructuring plan in 2014 and created a valid expectation on the part of the employees to be terminated that the company will carry out the restructuring. The estimated cost of restructuring is $500,000. No legal obligation to restructure exists as of December 31, 2014. 4) Stock options were granted to key officers on January 1, 2014. The grant date fair value per option was $10, and a total of 9,000 options were granted. The options vest in equal installments over three years: one-third in 2013, one-third in 2014, and one-third in 2015. A straight line method is utilized to recognize compensation expense related to stock options. 5) On January 1, 2013, the company issued $10,000,000 of 5% bonds at par value that matures in five years on December 31, 2017. Costs incurred in issuing the bonds were $500,000. Interest is paid on bonds annually. Assume the effective interest rate is 6.193%. Make sure your reconciliation statement is accompanied by an adequate explanation and reference for every one of your adjustments. Ignore income taxes.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO.

Vollie Company, is a packaging company and implementing waste management. The company making boxes from timber. Legally, the company can damp the scrap of the timber to the Resource Recovery Centers. Milena, the CEO of the company has high awareness of environment safety. She is considering recycling the timber waste. Milena is thinking of buying a machine, which process the scrap timber to paper. The paper can be sold as an additional product line. This investment requires $ 4 500 000. It is estimated that this machine will last eight years, and it is estimated at the end of eight year the machine can be sold for 300,000. The expected annual incremental income of selling papers as follow:

YEAR INCOME

1: $3 200 000

2 :3 500 000

3 :3 900 000

4 :4 100 000

5 :4 900 000

6 :4 500 000

7 :4 200 000

8 :4 100 000

Vollie has a cost of capital equal to 12%. The company applies a straight-line depreciation method.

1. Compute the payback period (1 mark)

2. Calculate the NPV of the proposed project

3. Based on payback and NPV, provide your opinion, should accept or reject the project.  Justify your answer   (1 mark).

4. Explain the impacts of your decision in (3) to the business sustainability/environmental performance