Fox Valley Health Care Facilities has three Revenue Producing Departments and four Non-Revenue Producing departments with the data and costs as follows:
|
Departments |
Costs |
Cost Driver |
|
Administration |
$200,000 |
Direct costs |
|
Maintenance |
300,000 |
Square Feet |
|
Purchasing |
250,000 |
Number of Purchase Orders |
|
Dietary |
200,000 |
Number of Meals |
|
Sunny Vale Nursing Home |
500,000 |
Revenue Producing – N/A |
|
In-Patient |
600,000 |
Revenue Producing – N/A |
|
Out-Patient |
210,000 |
Revenue Producing – N/A |
Cost Driver Data
|
Departments |
Square feet |
Purchase Orders |
Meals Served |
|
Administration |
1,200 |
1,600 |
200 |
|
Maintenance |
3,000 |
1,400 |
100 |
|
Purchasing |
1,000 |
1,350 |
150 |
|
Dietary |
4,000 |
1,000 |
200 |
|
Sunny Vale Nursing Home |
25,000 |
1,500 |
600 |
|
In-Patient |
11,000 |
1,300 |
300 |
|
Out-Patient |
4,000 |
2,200 |
100 |
REQUIRED:
1. Prepare a memo describing and comparing the use of the direct method and the step-down method. Include a recommendation as to which you would use and explain that recommendation.
2. Prepare an Excel spreadsheet supporting your memo.
(a) Prepare a Cost report, using the Direct Method.
(b) Prepare a Cost Report, using Step-down Method.
i.Prepare the step-down.
ii.Determine the total amount of costs of each of the non-revenue producing departments that would be allocated to each of the revenue producing departments. Prepare a separate table providing this information.
In: Accounting
|
|
||
| Inputs | ||
| discount rate | 22.50% | |
| revenue growth rate | 2.50% | |
| Initial investment | $800,000.00 | |
| revenue (year 1) | $190,000.00 | |
| (a) complete table below (8 pts) | ||
| Cash flows | ||
| year 0 | ||
| year 1 | ||
| year 2 | ||
| year 3 | ||
| year 4 | ||
| year 5 | ||
| year 6 | ||
| (b) Calculate NPV and IRR (8 pts) | ||
| NPV | ||
| IRR | ||
| (c) Would you accept in this project? Explain your answer (3 pts) | ||
| (d) what is the minimum revenue growth rate that would be consistent with | ||
| accepting this project? (7 pts) | ||
| Answer: | ||
| (e) Explain how to answer this question using Solver (10 pts) | ||
| In Solver (fill in or leave empty appropriate cells below) | ||
| Set objective: | ||
| To: | ||
| By Changing variable cells: | ||
| Subject to the constraints: | ||
In: Finance
|
|
||
| Inputs | ||
| discount rate | 22.50% | |
| revenue growth rate | 2.50% | |
| Initial investment | $800,000.00 | |
| revenue (year 1) | $190,000.00 | |
| (a) complete table below (8 pts) | ||
| Cash flows | ||
| year 0 | ||
| year 1 | ||
| year 2 | ||
| year 3 | ||
| year 4 | ||
| year 5 | ||
| year 6 | ||
| (b) Calculate NPV and IRR (8 pts) | ||
| NPV | ||
| IRR | ||
| (c) Would you accept in this project? Explain your answer (3 pts) | ||
| (d) what is the minimum revenue growth rate that would be consistent with | ||
| accepting this project? (7 pts) | ||
| Answer: | ||
| (e) Explain how to answer this question using Solver (10 pts) | ||
| In Solver (fill in or leave empty appropriate cells below) | ||
| Set objective: | ||
| To: | ||
| By Changing variable cells: | ||
| Subject to the constraints: | ||
In: Finance
Fox Valley Health Care Facilities has three Revenue Producing Departments and four Non-Revenue Producing departments with the data and costs as follows:
|
Departments |
Costs |
Cost Driver |
|
Administration |
$200,000 |
Direct costs |
|
Maintenance |
300,000 |
Square Feet |
|
Purchasing |
250,000 |
Number of Purchase Orders |
|
Dietary |
200,000 |
Number of Meals |
|
Sunny Vale Nursing Home |
500,000 |
Revenue Producing – N/A |
|
In-Patient |
600,000 |
Revenue Producing – N/A |
|
Out-Patient |
210,000 |
Revenue Producing – N/A |
Cost Driver Data
|
Departments |
Square feet |
Purchase Orders |
Meals Served |
|
Administration |
1,200 |
1,600 |
200 |
|
Maintenance |
3,000 |
1,400 |
100 |
|
Purchasing |
1,000 |
1,350 |
150 |
|
Dietary |
4,000 |
1,000 |
200 |
|
Sunny Vale Nursing Home |
25,000 |
1,500 |
600 |
|
In-Patient |
11,000 |
1,300 |
300 |
|
Out-Patient |
4,000 |
2,200 |
100 |
REQUIRED:
Prepare an Excel spreadsheet:
1. Prepare a Cost report, using the Direct Method.
2. Prepare a Cost report, using the Reciprocal Method.
3. Prepare a Cost Report, using Step-down Method.
i.Prepare the step-down.
ii.Determine the total amount of costs of each of the non-revenue producing departments that would be allocated to each of the revenue producing departments. Prepare a separate table providing this information.
In: Accounting
In: Nursing
A home theater in a box is the easiest and cheapest way to provide surround sound for a home entertainment center. A sample of prices is shown here (Consumer Reports Buying Guide, 2004). The prices are for models with a DVD player and for models with a DVD player.
In: Statistics and Probability
True or false:
1. Letters Rogatory is the best and fastest way to serve process in foreign nations because they are sent through a respected diplomatic embassy to embassy channels.
2. Venue means that within any nation, several states may have proper jurisdiction to have a trial.
3. A comparison of “forum non conveniens” and “forum shopping” demonstrates how the courts look at many of the same characteristics, such as why is one forum favored over another.
4. In the case Russian Entertainment v. Close Up, the issue was whether the franchisee violated the terms and conditions of the franchise requirement
In: Economics
9.Executive Compensation Critics have charged that compensation to top managers in the United States is too high and should be cut back. For example, focusing on large corporations, Dara Khosrowshahi (now at Uber, formerly of Expedia) has been one of the best-compensated CEOs in the United States, earning about $95 million in 2016. Are such amounts excessive? In answering, it might be helpful to recognize that superstar athletes such as Cristiano Ronaldo, top earners in the entertainment field such as James Cameron and Oprah Winfrey, and many others at the top of their respective fields earn at least as much, if not a great deal more
In: Finance
In: Operations Management
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 | $ | 3,375,000 | |||
| Cost of goods sold | |||||
| Direct materials | $ | 975,000 | |||
| Direct labor | 300,000 | ||||
| Machinery repairs (variable cost) | 60,000 | ||||
| Depreciation—Plant equipment (straight-line) | 330,000 | ||||
| Utilities ($45,000 is variable) | 205,000 | ||||
| Plant management salaries | 215,000 | 2,085,000 | |||
| Gross profit | 1,290,000 | ||||
| Selling expenses | |||||
| Packaging | 75,000 | ||||
| Shipping | 105,000 | ||||
| Sales salary (fixed annual amount) | 270,000 | 450,000 | |||
| General and administrative expenses | |||||
| Advertising expense | 130,000 | ||||
| Salaries | 261,000 | ||||
| Entertainment expense | 100,000 | 491,000 | |||
| Income from operations | $ | 349,000 | |||
Phoenix Company’s actual income statement for 2017
follows.
| PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017 |
|||||
| Sales (18,000 units) | $ | 4,128,000 | |||
| Cost of goods sold | |||||
| Direct materials | $ | 1,187,000 | |||
| Direct labor | 368,000 | ||||
| Machinery repairs (variable cost) | 63,000 | ||||
| Depreciation—Plant equipment (straight-line) | 330,000 | ||||
| Utilities (fixed cost is $158,000) | 211,000 | ||||
| Plant management salaries | 226,000 | 2,385,000 | |||
| Gross profit | 1,743,000 | ||||
| Selling expenses | |||||
| Packaging | 87,250 | ||||
| Shipping | 119,000 | ||||
| Sales salary (annual) | 287,000 | 493,250 | |||
| General and administrative expenses | |||||
| Advertising expense | 138,000 | ||||
| Salaries | 261,000 | ||||
| Entertainment expense | 103,500 | 502,500 | |||
| Income from operations | $ | 747,250 | |||
Required:
1. Prepare a flexible budget performance report
for 2017.
In: Finance