Karantika Ltd operates at capacity and makes glass-topped coffee table. At the end of 2019, Karantika Ltd’s management accountant gathered the following data to prepare budgets for the first six months 2020: Units sales per quarter and the selling price per unit are estimated as follows: Unit sales Price per unit January 2,700 $400 February 2,600 $400 March 2,800 $550 April 2,600 $550 May 2,650 $500 June 2,600 $500 July 3,000 $500 August 3,000 $550 Sales on November 2019 were 2,500 units and on December 2,400 units at a selling price of $450. 20% of sales are cash sales and 80% are credit sales. From experience, Karantika Ltd collected 40% of credit sales within the month of sale, 30% in the following month and 25% in two months after the month of sale. 5% of credit sales is uncollectable. The bad debt is calculated at the end of six month. The beginning inventories (BI) on 1 January 2020 and the desired ending inventories (EI) at the end of each month are as follows: BI (1/1/19) EI (end of each month) Tables:500 (at $210/unit) 20% of following month estimated sales Wood: 1,400 b.m. 25% b.m. needed for next month’s budgeted production (units) Glass 500 sheets 20% sheets needed for next month’s budgeted production (units) Materials and labour requirements Direct materials: Wood: 2 board meters (b.m.) per table Glass: 1 sheet per table Direct manufacturing labour: 4 hours per table Costs of direct materials and labour: Wood: $16 per b.m. Glass: $22 per sheet Direct labour: $25 per labour-hour Direct materials are purchased in the month of production and are paid 60% in the month of purchase and 40% in the following month. Wages and salaries are paid monthly. Variable manufacturing overhead is $25 per direct manufacturing labour-hour. There is also $210,000 in fixed manufacturing overhead costs per month. Fixed costs include $40,000 depreciation of factory equipment. The fixed manufacturing overhead rate is based on the number of units produced budgeted every six months, at the beginning of each semester, calculated dividing the budgeted fixed overhead costs by the budgeted number of units produced for the semester. Variable and fixed costs are paid in the month incurred. Sales commissions are paid monthly at the rate of 10% of month’s sales revenue. There is $160,000 in fixed non-manufacturing costs (administrative expenses) budgeted per month including $20,000 depreciation costs of office equipment. Variable and fixed non-manufacturing costs are paid in the month incurred. Karantika Ltd has estimated the following payments in the first semester 2020: January: Loan for $40,000 plus interest payable at 31 December 2019 for $2,000 were paid on 2 January 2020. End of January: Dividends $100,000 Beginning of May: Purchase of land $200,000 Beginning of June: Purchase of equipment for $300,000. Estimated of useful life 5 year with zero residual value. Karantika Ltd maintain a 18% open line of credit for $400,000. Interests are paid at the end of each month. Karantika Ltd maintains a minimum cash balance of $20,000. The company borrows on the first day of the month and repays loans on the last day of the month, both in multiples of $1,000. The income tax is 30%. Karantika Ltd’s balance sheet at 31 December 2019 is as follows: ASSETS LIABILITIES Cash 32,000 Accounts payable ** 64,000 Accounts receivable * 700,200 Interest payable 2,000 Inventory: Wood 22,400 Loan payable 40,000 Inventory: Glass 11,000 SHAREHOLDER’S EQUITY Inventory: Finished goods 105,000 Share capital 801,600 Plant and equipment, net 450,000 Retained earnings 413,000 Total assets 1, 320,600 Total Liabilities and Shareholder’s equity 1,320,600 *At the beginning of the year there is no allowance of doubtful debt ** Account payable is from the direct material purchase. Required: Prepare a monthly master budget for Karantika Ltd’s for the first semester 2020. The following component budgets must be included ( round the number with two decimals): Sales revenue budget Production budget (in units) Direct materials usage and purchases budget for each direct materials and total direct materials (in units and dollars) Direct manufacturing labour budget Manufacturing overhead budget Manufacturing overhead rate for the semester Ending finished goods inventory budget (unit cost and total cost) at June 2020. Selling and administrative expenses budget Cash budget Cost of goods sold at 30 June 2020 Budgeted income statement for the first semester 2020 Budgeted balance sheet as of 30 June 2020 (including separately the two direct materials inventory) Note. There is no beginning and ending balance of WIP in each month. Can you please
do the cash disbursements, cash collections manufacturing overhead
budget, cash budget?

Question 1

You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $4,950,000 this year. Depreciation, the increase in net working capital, and capital spending were $330,000, $166,000, and $580,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $28,000,000 in debt and 485,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.45 percent indefinitely. The company’s WACC is 9.75 percent and the tax rate is 22 percent. What is the price per share of the company's stock?

Question 2

Dewey Corp. is expected to have an EBIT of $2,700,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $205,000, $110,000, and $210,000, respectively. All are expected to grow at 19 percent per year for four years. The company currently has $15,500,000 in debt and 820,000 shares outstanding. At Year 5, you believe that the company's sales will be $27,900,000 and the appropriate price-sales ratio is 2.6. The company’s WACC is 8.8 percent and the tax rate is 25 percent. What is the price per share of the company's stock?

Lambda Company, which produces tool boxes, uses a standard cost system and carries all inventories at standard. The standard manufacturing overhead costs per switch are based on direct labour hours and are shown below: Variable overhead (5 hours @ $12 per direct manufacturing labour hour) $ 60 Fixed overhead (5 hours @ $15* per direct manufacturing labour hour) 75 Total overhead per box $135 *Based on capacity of 200,000 direct manufacturing labour hours per month. The following information is available for the month of December: • 46,000 boxes were produced although 40,000 boxes were scheduled to be produced. • 225,000 direct manufacturing labour hours were worked at a total cost of $5,625,000. • Variable manufacturing overhead costs were $2,750,000. • Fixed manufacturing overhead costs were $3,050,000.

Calculate:

The variable overhead spending variance for December

The variable manufacturing overhead efficiency variance for December

The fixed manufacturing overhead spending variance for December

The fixed overhead production volume variance for December was

What amount should be credited to the allocated manufacturing overhead control account for the month of December?

Under the 2-variance method, the flexible budget variance for December was

Under the 3-variance method, the spending variance for December was

As a real estate analyst, you are requested by the manager to construct a simple linear regression for the relationship between the house value (x) and the upkeep spending (y).

(a) Write the simple linear regression equation below.

(b) What are b0 and b1?

(c) Interpret the meanings of b0 and b1.

(d) If the house value (x) is 150, what will the upkeep spending (y) be, using the simple linear regression model 4a?

(e) Draw the scatterplot showing the relationship between the house value (x) and the upkeep spending (y).

4. As a real estate analyst, you are requested by the manager to construct a simple linear regression for the relationship between the house value (x) and the upkeep spending (y).

(a) Write the simple linear regression equation below.

(b) What are b0 and b1?

(c) Interpret the meanings of b0 and b1.

(d) If the house value (x) is 150, what will the upkeep spending (y) be, using the simple linear regression model 4a?

(e) Draw the scatterplot showing the relationship between the house value (x) and the upkeep spending (y).

Walkenhorst Company’s machining department prepared its 2019 budget based on the following data:

The department uses machine hours to apply factory overhead to production. In 2019, the department used 88,000 machine hours and incurred $636,000 in total manufacturing overhead cost to manufacture 43,000 units. Actual fixed overhead cost for the year was $380,000.

Required:

Determine for the year:

1. The fixed, variable, and total factory overhead application rates (per machine hour). (Round your answers to 2 decimal places.)

2. The total flexible budget, for factory overhead cost based on output achieved in 2019.

3. The production volume variance. State whether this variance was favorable (F) or unfavorable (U).

4. The total overhead spending variance. State whether this variance was favorable (F) or unfavorable (U).

5. The overhead efficiency variance. State whether this variance was favorable (F) or unfavorable (U).

6. The variable overhead spending variance and the fixed overhead spending variance. State whether each variance is favorable (F) or unfavorable (U).

From 77 of its restaurants, Noodles & Company managers collected data on per-person sales and the percent of sales due to "potstickers" (a popular food item). Both numerical variables failed tests for normality, so they tried a chi-square test. Each variable was converted into ordinal categories (low, medium, high) using cutoff points that produced roughly equal group sizes. At α = .01, is per-person spending independent of percent of sales from potstickers? Potsticker % of Sales Per Person Spending Low Medium High Row Total Low 11 4 8 23 Medium 6 11 6 23 High 4 13 14 31 Col Total 21 28 28 77 Click here for the Excel Data File

(a) The hypothesis for the given issue is H0: Percentage of Sales and Per-Person Spending are independent. No Yes

(b) Calculate the chi-square test statistic, degrees of freedom, and the p-value. (Round your test statistic value to 2 decimal places and p-value to 4 decimal places. Leave no cells blank - be certain to enter "0" wherever required.) Test statistic d.f. p-value

(c) We reject the null and find dependence. No Yes

1. How would you describe the state of the U.S. economy during the Great Depression?

a-There was a prolonged period of very high unemployment and negative or low GDP growth. There was a brief period of deflation.

b-There was a prolonged period of very high unemployment and very high rates of inflation. GDP growth was slow.

c-There was a prolonged period of very low unemplyment and negative real interest rate. GDP growth was slow.

d-There was a prolonged period of very low unemplyment and negative real interest rate. GDP growth was slow.

2.Will deflation make an economic downturn more or less severe?

a-More severe. Deflation increases the real value of debt leading to more bankruptcies.

b-Less severe. Deflation lowers the real value of debt leading to fewer bankruptcies.

c-Less severe. Deflation increases the real value of debt leading to greater investment and spending by savers.

d-More severe. Deflation lowers the real value of debt and prices leading to more consumer spending.

e-More severe. Deflation increases the real value of debt leading to lower prices, more output and more bankruptcies.

f-Less severe. Deflation leads to lower prices, more consumer spending and economic expansion.

In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 20 units at a total cost of $5.30 per unit. Nicole purchased 20 more units at $7.30 in February. In March, Nicole purchased 20 units at $9.30 per unit. In May, 40 units were purchased at $9.10 per unit. In June, NGS sold 40 units at a selling price of $11.30 per unit and 50 units at $11.70 per unit.

4.value: 0.25 pointsRequired information Required: 1. State whether the transportation cost included in each purchase should be recorded as a cost of the inventory or immediately expensed. Cost of the Inventory Immediately Expensed

5.value:

2. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Round "Cost per Unit" to 2 decimal places.)

6.value:

4. Would a different inventory cost flow assumption allow Nicole’s Getaway Spa to better minimize its income tax?

The LIFO method would allow Nicole’s Getaway Spa to better minimize income tax. Product costs have been increasing, so LIFO will produce the highest Cost of Goods Sold, which results in the lowest Income before Income Tax Expense.

The FIFO method would allow Nicole’s Getaway Spa to better minimize income tax. Product costs have been increasing, so FIFO will produce the highest Cost of Goods Sold, which results in the lowest Income before Income Tax Expense.