Exercise 22-12
Oriole Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available.
| 1. | Sales: 20,500 units quarter 1; 22,200 units quarter 2. | |
| 2. | Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%. | |
| 3. | Fixed costs per quarter: sales salaries $10,500, office salaries $6,250, depreciation $4,340, insurance $2,000, utilities $860, and repairs expense $690. | |
| 4. | Unit selling price: $24. |
Prepare a selling and administrative expense budget by quarters for
the first 6 months of 2020. (List variable expenses
before fixed expense.)
| ORIOLE COMPANY Selling and Administrative Expense Budget June 30, 2020For the Six Months Ending June 30, 2020For the Quarter Ending June 30, 2020 |
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Quarter |
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1 |
2 |
Six Months |
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Total VariableTotal FixedTotal Selling and Administrative ExpensesUtilitiesVariable ExpensesSales CommissionsAdvertisingDepreciationBudgeted Sales in UnitsFixed ExpensesInsuranceDelivery ExpenseOffice SalariesRepairs ExpenseSales Salaries |
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DepreciationRepairs ExpenseFixed ExpensesVariable ExpensesTotal Selling and Administrative ExpensesAdvertisingBudgeted Sales in UnitsDelivery ExpenseInsuranceOffice SalariesTotal FixedTotal VariableUtilitiesSales CommissionsSales Salaries |
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Repairs Expense Total Fixed Advertising Sales Commissions Fixed Expenses Insurance Sales Salaries Total Variable Variable Expenses Budgeted Sales in Units Depreciation Total Selling and Administrative Expenses Utilities Delivery Expense Office Salaries |
$ | $ | $ | ||
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Budgeted Sales in Units Office Salaries Delivery Expense Repairs Expense Total Fixed Sales Commissions Advertising Fixed Expenses Variable Expenses Depreciation Insurance Total Variable Sales Salaries Total Selling and Administrative Expenses Utilities |
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Total Fixed Delivery Expense Total Selling and Administrative Expenses Depreciation Total Variable Fixed Expenses Insurance Utilities Office Salaries Repairs Expense Budgeted Sales in Units Sales Commissions Advertising Sales Salaries Variable Expenses |
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Budgeted Sales in Units Sales Salaries Delivery Expense Fixed Expenses Depreciation Insurance Advertising Total Fixed Sales Commissions Office Salaries Repairs Expense Total Selling and Administrative Expenses Total Variable Utilities Variable Expenses |
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Sales SalariesDelivery ExpenseInsuranceRepairs ExpenseVariable ExpensesSales CommissionsTotal FixedOffice SalariesFixed ExpensesUtilitiesAdvertisingTotal Selling and Administrative ExpensesBudgeted Sales in UnitsDepreciationTotal Variable |
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Advertising Depreciation Office Salaries Total Fixed Fixed Expenses Insurance Variable Expenses Budgeted Sales in Units Delivery Expense Repairs Expense Utilities Sales Commissions Sales Salaries Total Selling and Administrative Expenses Total Variable |
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Delivery Expense Sales Salaries Depreciation Fixed Expenses Sales Commissions Utilities Insurance Total Fixed Variable Expenses Total Variable Budgeted Sales in Units Advertising Office Salaries Repairs Expense Total Selling and Administrative Expenses |
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Utilities Insurance Fixed Expenses Depreciation Office Salaries Total Selling and Administrative Expenses Total Variable Variable Expenses Delivery Expense Repairs Expense Advertising Budgeted Sales in Units Sales Commissions Sales Salaries Total Fixed |
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Total Variable Utilities Total Fixed Budgeted Sales in Units Variable Expenses Advertising Sales Commissions Delivery Expense Depreciation Fixed Expenses Insurance Office Salaries Sales Salaries Repairs Expense Total Selling and Administrative Expenses |
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Sales Commissions Total Variable Depreciation Sales Salaries Total Fixed Total Selling and Administrative Expenses Budgeted Sales in Units Insurance Delivery Expense Utilities Office Salaries Fixed Expenses Repairs Expense Variable Expenses Advertising |
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Variable Expenses Office Salaries Utilities Total Variable Budgeted Sales in Units Sales Commissions Advertising Sales Salaries Fixed Expenses Total Fixed Delivery Expense Insurance Depreciation Total Selling and Administrative Expenses Repairs Expense |
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Repairs Expense Delivery Expense Depreciation Total Fixed Budgeted Sales in Units Total Selling and Administrative Expenses Insurance Fixed Expenses Office Salaries Utilities Sales Commissions Sales Salaries Total Variable Variable Expenses Advertising |
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Variable ExpensesUtilitiesAdvertisingSales SalariesBudgeted Sales in UnitsTotal FixedRepairs ExpenseDelivery ExpenseTotal Selling and Administrative ExpensesFixed ExpensesTotal VariableOffice SalariesDepreciationInsuranceSales Commissions |
$ | $ | $ | ||
In: Accounting
intermidate accounting 1
Question 2 – Case
International Technologies Ltd.
Trusted Technologies Ltd. (TTL) provides “technology solutions” to manufacturing companies. TTL is a wholly owned subsidiary of Global World International Inc. (GWI), a publicly owned conglomerate. In 20X5, TTL was performing poorly and GWI considered selling the company for the best offer. As a last resort, GWI hired turnaround specialist, Jane Bowen, to more effectively manage and salvage TTL. Ms. Bowen’s employment contract specifies that in addition to an annual salary she would receive a $10 million cash bonus after the end of the 20X8 fiscal year if TTL meets a number of performance objectives over the 20X6 to 20X8 period. For 20X6 and 20X7, Ms. Bowen achieved the objectives. To meet the performance objectives for 20X8, TTL must report net income in excess of $30 million.
It is now January 25, 20X9. TTL’s financial statements for the year ended December 31, 20X8 have been received at GWI’s corporate offices. TTL’s net income for 20X8 is reported to be $30,550,000. GWI’s CFO has examined the financial statements and is satisfied with most aspects of them but is concerned with the reporting of some transactions and economic events. The issues of concern are described in the following Exhibit A.
Ms. Bowen has already called the CFO to arrange a meeting to discuss the financial statements and the payment of the bonus.
You are the staff member with Friedlan & Jones LLP, CPAs, GWI’s external auditor. The CFO met with the engagement manager and asked her to examine the issues of concern as a special engagement between your firm and GWI. The CFO wants a report that explains the problem in each issue, identifies reasonable alternatives, and provides full support for any conclusions. The engagement manager asked you to prepare a report to her that she will use in her next meeting the CFO on this issue.
Required:
Prepare the report requested by the audit manager.
Exhibit A Issues Identified on Your Review of TTL’s 20X8 Financial Statements
1) In the last week of December 20X8, TTL shipped a $1,250,000 control system to a new customer. The system is a standard product that had some minor modifications to meet needs of the customer. For the first time TTL bundled the control system with a number of other services. Jane indicated that she thought this would generate more business. The customer has been having financial difficulties, so TTL provided special financing terms that gave the customer four months to pay instead of the usual 30 days. Payment is guaranteed by the company that owns the customer. Included in the selling price is:
Control system—standalone value $1,100,000. Cost of system $710,000;
Standard two-year warranty against defects and failure to meet specification. This warranty is not sold separately. Average cost of fulfilling warranty claims per contract is $28,000;
Training—TTL will provide onsite training for staff on how to use the control system and maximize the benefit from it. Training will be provided in late January over a one-week period. Standalone value $85,000. Cost of providing training is $60,000;
Technical support—TTL will provide comprehensive technical support to address technical and operation problems with the system. This service can be purchased separately but was included in the overall purchase price following negotiations. Standalone value is $105,000;
Parts service—TTL will provide ship all needed replacement parts to the customer as needed for three years. The customer is responsible for installing the parts. Standalone value is $180,000. Average cost of providing parts in contracts like this over the term of the arrangement is $82,000
The order was scheduled to be shipped in early January, but because of an opening in the production schedule TTL was able to complete the order several weeks early. Once the order was completed, it was shipped to the customer. The customer agreed to accept early delivery before TTL shipped the order. The goods were received in good order by the customer on December 31, 20X8. TTL recognized revenue when the goods were delivered, as it normally does.
2) In September 20X6 TTL introduced a new type of system for auto parts manufacturers, based on a new technology. Because it was a new product using a new technology it came with a four-year rather than the standard two-year warranty. Once the product is established TTL plans to reduce the warranty coverage to two years. Since this product was introduced TTL has sold 385 systems.
Until August 20X7 warranty claims were small. However, beginning in September 20X8 warranty claims, particularly on older systems—ones sold in 20X6—became more frequent. To date, warranty claims that have cost TTL between $1,000 and $2,000 to fulfil have been made on seven of the 28 units sold in the fourth quarter of 20X6 (the first quarter the product was sold).
Jane Bowen thinks that most of the problems have arisen because of poor installation by third-party installers. She contends that since mid-20X7 all installers have been trained by TTL on how to do the job. Jane doesn’t think there will be more than 15 or 20 systems needing extensive service.
Information obtained from the chief engineer indicated that she examined the system and is satisfied there is no design flaw. However, she is concerned that there may be a problem with units that operate in humid conditions. She said that all seven of the systems that had the large warranty claims operated in humid conditions. Of the 385 systems sold about 170 are operated in humid conditions.
3) Early in 20X8, TTL entered into a contract to with a digital marketing company called “Digital Consultants” (DC). DC will provide TTL one year of service around the latest trends in digital technology, and will provide recommendations on how to reach a broader audience through their online platforms. In return, TTL will help to update DC’s internal reporting systems. TTL would normally charge $80,000 for this type of work. DC recently quoted a similar project for digital marketing consultations for around $65,000.
In: Accounting
an investor has a portfolio worth 12.3 million dollars, made up of ten different types of securities. the beta of the portfolio is 3.8. the investor sold security A whose beta is 1.25 for 4 million dollars. he then invested the full amount of the sale in security C whose beta is 1.6. interest rate on treasury bills is 8 percent and market rate is 11 percent.
1.compute the required rate or return of the new portfolio
2. two months later, the investor invested additional 2.7 million dollars in the portfolio by including security D. compute the beta of security D, assuming the required rate of return on the portfolio is now 18.143 percent.
In: Finance
The barrier to C-C bond rotation in bromoethane
is 15 kJ/mol. What energy can you assign to an
H-Br eclipsing interaction?
Use strain energy increments from the table below in your
calculation.
(Specify units, kJ/mol; Calculate to nearest 0.1 energy units)
|
Energy cost |
|||
|
Interaction |
Cause |
(kJ/mol) |
(kcal/mol) |
| H ↔ H eclipsed | Torsional strain |
4.0 |
1.0 |
| H ↔ CH3 eclipsed | Mostly torsional strain |
6.0 |
1.4 |
| CH3 ↔ CH3 eclipsed | Torsional and steric strain |
11.0 |
2.6 |
| CH3 ↔ CH3 gauche | Steric strain |
3.8 |
0.9 |
In: Chemistry
An Environmental Engineer took a sample from the Holston River below King Port, Tennessee. The biochemical oxygen demand (BOD) test is conducted over a period of time in days. 1 2 4 6 8 10 12 14 16 18 20 Time (days) BOD (mg/litre) 0.6 0.7 1.5 1.9 2.1 2.6 2.9 3.7 3.5 3.7 3.8 She assumed that linear regression model is appropriate for the data, and she fitted a linear regression model as follows: y = 0.658 +0.178 x If you know that x is the time, and y is BOD. Find the coefficient of determination of the linear model
In: Statistics and Probability
|
Fitzgerald Industries has a new project available that requires an initial investment of $5.1 million. The project will provide unlevered cash flows of $843,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .4. The company’s bonds have a YTM of 6.4 percent. The companies with operations comparable to this project have unlevered betas of 1.23, 1.16, 1.38, and 1.33. The risk-free rate is 3.8 percent and the market risk premium is 7 percent. The tax rate is 23 percent. |
|
What is the NPV of this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89) |
In: Finance
Use the following to answer Questions. The table includes summary of data concerning advertising expenditures and computer sales for ACME electronics.
|
Ad Expenditures ($1000) |
Computer Sales ($1000) |
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2.5 |
6.1 |
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3.8 |
4.9 |
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3.1 |
5.9 |
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2.1 |
6.8 |
In: Statistics and Probability
“Minister of labour, Thulas Nxesi, has gazetted South Africa’s
new minimum wage which will take effect from 1 March 2020.
The gazette states that the new national minimum wage is R20.76 –
an increase of 3.8%”.
Adapted from:
https://businesstech.co.za/news/government/374920/6-planned-laws-that-government-has-just-announced-for-south-africa/
Accessed: 21/02/2020
Provide a discussion on the welfare effect of the above, that
illustrates the case for when the above results in unemployment in
the market for domestic workers as well as a case for when the
above has no effect on the market for domestic workers. Use a
diagram to support your discussion.
N.B.N.B Please include diagram
In: Economics
|
Years |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
|
Retail Sales |
5.2% |
0.3% |
-3.3% |
3.0% |
4.9% |
3.9% |
3.1% |
4.2% |
3.8% |
3.9% |
3.6% |
|
e-commerce Sales |
19% |
4.1% |
2.8% |
17.1% |
17.5% |
14.9% |
13.0% |
14.6% |
14.7% |
14.0% |
16.0% |
Does Retail Stores Growth Reduced by E-commerce Growth?
Null Hypothesis: Ho: Retail stores growth doesn’t reduce by E-commerce growth.
Alternative Hypothesis: Ha: Retail stores growth does reduce by E-commerce growth
Do the chi-square test for goodness of fit. with the level of significance is 0.05
In: Statistics and Probability
A some association On-Line Discount Broker Survey polls members on their experiences with discount brokers. As part of the survey, members were asked to rate the quality of the speed of execution with their broker as well as provide an overall satisfaction rating for electronic trades. Possible responses (scores) were no opinion (0), unsatisfied (l), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker summary scores were computed by calculating a weighted average of the scores provided by each respondent. A portion of the survey results follow:
| Brokerage | Speed | Satisfaction | |
| Scottrade, Inc. | 3.6 | 3.9 | |
| Charles Schwab | 2.5 | 2.3 | |
| Fidelity Brokerage Services | 2.8 | 2.6 | |
| TD Ameritrade | 2.9 | 2.4 | |
| E*Trade Financial | 3.4 | 3.7 | |
| Vanguard Brokerage Services | 3.8 | 3.9 | |
| USAA Brokerage Services | 3.2 | 3.7 | |
| Thinkorswim | 3.0 | 2.8 | |
| Wells Fargo Investments | 3.3 | 2.8 | |
|
3.7 | 3.8 | |
| Zecco.com | 2.9 | 2.4 |
a. Develop the least squares estimated regression equation. Enter negative value as negative number.
Satisfaction = ___?_____ + ____?____ SPEED (to 4 decimals)
d. Provide an interpretation for the slope of the estimated regression equation (to 4 decimals).
The slope of the estimated regression line is approximately ____?___ . So, a one unit _______(increase/decrease) in the speed of execution rating will increase the overall satisfaction rating by approximately ____?___ points.
e. Suppose Charles Schwab developed new software to increase their speed of execution rating. If the new software is able to increase their speed of execution rating from the current value of 2.5 to the average speed of execution rating for the other 10 brokerage firms that were surveyed, what value would you predict for the overall satisfaction rating? ___________ (to 3 decimals)
In: Statistics and Probability