1. The Robinson Diner, managed by Ina Fay, needs your assistance in preparing its 20X8 operating budget. Since the diner is a sole proprietorship, it will not pay income taxes. Information is in the Excel.
   1. Prepare the operating budget for 20X8. (9 points)

Mt. Olive Pickle Co. exports pickle products to the Eurozone and invoices its customers in U.S. dollars. Aldi in Germany has purchased​ $1,000,000 of pickle products from Mt.​ Olive, with payment due in 6 months. The payment will be made with a​ bankers' acceptance issued by Deutsche Bank at a fee of​ 2.65% per annum. Mt. Olive has a WACC of​ 9.0% per annum. If Mt. Olive holds this acceptance to​ maturity, what is its annualized percentage​ all-in-cost (AIC). Assume a​ 360-day year.
A.
​11.69%
B.
​11.99%
C.
​12.42%
D.
​12.89%

Here are the abbreviated financial statements for Planner’s Peanuts:

a. If sales increase by 20% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20%), what must be the balancing item?

b. What will be the value of this balancing item?

The state’s Secretary of Education is considering the purchase of a new computer for $100,000. A cost study indicates that the new computer should save the Department of Education $30,000, measured in real dollars, during each of the next eight years. The real interest rate is 20 percent and the inflation rate is 10 percent. As a governmental agency, the Department of Education pays no taxes. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-39 Part 1 Required: Compute the nominal interest rate. (Enter your answer as a decimal not as a percentage (e.g., enter 12% as 0.12).

We are evaluating a project that costs $842,318, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 56,424 units per year. Price per unit is $37, variable cost per unit is $18, and fixed costs are $423,844 per year. The tax rate is 35%, and we require a return of 22% on this project.

In percentage terms, what is the sensitivity of NPV to changes in the units sold projection? (Round answer to 2 decimal places. Do not round intermediate calculations)

Topic: Sensitivity Analysis

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

4) Using the direct method, what amount of Maintenance Department costs will be allocated to Department B?

A) $96,000

*B) $100,000

C) $110,000

D) $122,000

5) Using the direct method, what amount of Personnel Department costs will be allocated to Department B? $75,000

6) Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

A) $84,143

B) $69,231

C) $66,734

D) $71,443

7) Using the direct method, what amount of Maintenance Department costs will be allocated to Department A?

8) Using the direct method, what amount of Personnel Department costs will be allocated to Department A?

A) $25,000

B) $28,000

C) $30,000

D) $20,000

9) Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Coyote Ltd, a private company reporting under ASPE, reported the following for the years ended May 31, 2017, and 2016

Coyote Ltd.

Balance sheet May 31

Additional information

1. Profit for 2017 was $108,000

2. common shares were issued for $50,000

3. Land with a cost of $50,000 was sold at a loss of $20,000

4. Purchased land with a cost of $100,000 with a $55,000 down payment and financed the remainder with a mortgage note payable.

5. No equipment was sold during 2017

Instruction:

1. Prepare a cash flow statement for the year using the indirect method.

2. Is it unfavorable for a company to have a net cash outflow from financing activities?

3. Using horizontal analysis, calculate the percentage change between 2016 and 2017.

4. Using vertical analysis, calculate the percentage of the base amount for each year.

5. Based on your calculation in part (3) and (4), identify any significant changes from 2016 to 2017.

The Collins Co. has just gone public. Under a firm commitment agreement, the company received $33.50 for each of the 4.25 million shares sold. The initial offering price was $35.90 per share, and the stock rose to $44.00 per share in the first few minutes of trading. The company paid $920,000 in legal and other direct costs and $280,000 in indirect costs.
  
What is the net amount raised? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Net amount raised            $
  
What are the total direct costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Direct costs            $
  
What are the total indirect costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Indirect costs            $
  
What are the total costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Total costs            $
  
What was the flotation cost as a percentage of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Flotation cost percentage             %

Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of $45,000, average invested assets of $2,150,000, and a hurdle rate of 10 percent.

1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

   a. Company sales and cost of goods sold increase by 40 percent.  

b. Operating expenses decrease by $9,000.        
  

   c. Operating expenses increase by 20 percent.

Preparing a consolidated income statement - with noncontrolling interest, but no AAP or intercompany profits

A parent company purchased an 80% interest in its subsidiary several years ago with no AAP (i.e., purchased at book value). Each reports the following income statement for the current year.

a. Compute the Income (loss) from subsidiary of $126,000 reported by the parent company.  

b. Prepare the consolidated income statement for the current year.

Do not use negative signs with your answers.

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