The following information is budgeted for Plumbing Limited for next quarter:

All sales at the company are on credit: 40% are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. The company wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed. All borrowings are made at month-end. The interest rate is 2% per month, which is paid in the following month.

Required:

i. Prepare a cash budget for May. The company expects to have $24,000 of cash on hand at the beginning of May.  

ii. Davey Pichai, a first-year undergraduate student, has recently joined as a summer intern in the accounting department at Plumbing Limited. While having lunch in the company’s cafeteria, Zarik Adler – Davey’s mentor at Plumbing Limited – observed that Davey mainly views budgets as a planning and controlling tool. Zarik was thinking to broaden Davey’s understanding of budgeting by providing a few examples of how budgets can also facilitate decision-making tasks in a company. Imagine yourself as Zarik and discuss three decision-making tasks that the above cash budget (refer to the Part-A above) could facilitate in the company.[Maximum word limit: 250 words].

Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month Units April 2,530 May 2,420 June 2,310 The target ending inventory of finished products is as follows. March 31 2,050 April 30 2,300 May 31 2,100 June 30 2,300 2 units of material are required for each unit of finished product. Production for July is estimated at 2,710 units to start building inventory for the fall sales period. Rensing’s policy is to have an inventory of raw materials at the end of each month equal to 60% of the following month’s production requirements. Raw materials are expected to cost $7 per unit throughout the period. Calculate the May raw materials purchases in dollars. Raw material purchases cost $

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows:

    April   May   June
Sales   50,000   40,000   60,000
Production   60,000   50,000   50,000

Cash-related production costs are budgeted at $8 per unit produced. Of these production costs, 35% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $80,000 per month. The accounts payable balance on March 31 totals $179,000, which will be paid in April.

All units are sold on account for $14 each. Cash collections from sales are budgeted at 75% in the month of sale, 15% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $488,000 ($98,000 from February's sales and $390,000 from March’s sales).

Required:

a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation.

b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.

A fair quarter is flipped three times. For each of the following probabilities, use the formula for the binomial distribution and a calculator to compute the requested probability. Next, look up the probability in the binomial probability distribution table. (Enter your answers to three decimal places.)

(a) Find the probability of getting exactly three heads.


(b) Find the probability of getting exactly two heads.


(c) Find the probability of getting two or more heads.


(d) Find the probability of getting exactly three tails.

Considering the following information regarding the performance of a portfolio manager in a recent quarter.

What is the market return of the portfolio in percentage?

What is the return of the manager's portfolio in percentage?

What is the Alpha (in percentage) of the manager's portfolio compared to benchmark (market)?

Identify the contributions (in percentage) of security selection to relative performance.

Identify the contributions (in percentage) of asset allocation to relative performance.

Bob deposits $1,500 at the beginning of each quarter for sixteen years in a fund earning a nominal rate of interest of 6% convertible monthly. The interest from this fund is paid out monthly and can only be reinvested at an effective annual rate of 5.2%. Find Bob’s yield rate for the twenty-year period.

For the second quarter of the following year Cloaks Company has projected sales and production in units as follows:

Cash-related production costs are budgeted at $8 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the next month. $170,000 per month will account for Selling and administrative expenses. On January 31 the accounts payable balance totals $210,000, which will be paid in February.

All units are sold on account for $12 each. Cash collections from sales are budgeted at 60% in the month of sale, 20% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. On January 1 accounts receivable totaled $630,000 ($100,000 from November’s sales and the remaining from December).

Required:

1. Prepare a schedule for each month showing budgeted cash receipts for Cloaks Company.

In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered productivity improvement courses. The effort was completed in the last quarter of the current year. The controller’s office has gathered the following year-end data to assess the results of this effort:

Required

1. Prepare a summary contribution income statement for each of the 2 years, and calculate the change in operating income.

2. Compute the partial operational productivity ratios for each production factor in each year.

3. Compute the partial financial productivity ratios for each production factor in each year.

Lichens and mycorrhizae (all of the major types that we studied this quarter) are biotrophic relationships between fungi and one or more photosynthetic partners (plants, algae, Cyanobacteria). What basic characteristics do they have in common or share and how do they differ from one another. How many major groups of fungi have evolved these types of relationships?

The demand for roses was estimated using quarterly figures for the period 1971 (3rd quarter) to 1975 (2nd quarter). Two models were estimated and the following results were obtained:

Y = Quantity of roses sold (dozens)

X₂ = Average wholesale price of roses ($ per dozen)

X₃ = Average wholesale price of carnations ($ per dozen)

X₄ = Average weekly family disposable income ($ per week)

X₅ = Time (1971.3 = 1 and 1975.2 = 16)

ln = natural logarithm

The standard errors are given in parentheses.

1. lnY_t=0.627-1.273 ln X_2t + 0.937 ln X_3t + 1.713 ln X_4t - 0.182
2. ln X_5t

                                    (0.327)            (0.659)           (1.201)             (0.128)

            R² = 77.8%                              D.W. = 1.78                             N = 16

B.        ln Y_tÙ = 10.462 - 1.39 ln X_2t

                                       (0.307)

            R² = 59.5%                              D.W. = 1.495                           N = 16

Correlation matrix:

a) How would you interpret the coefficients of ln X₂, ln X₃ and ln X₄ in model A?                

What sign would you expect these coefficients to have? Do the results concur with your expectation?                                                                                                                                 

b) Are these coefficients statistically significant?                                                                   

c) Use the results of Model A to test the following hypotheses:

i) The demand for roses is price elastic                                                                                   

ii) Carnations are substitute goods for roses                                                               

iii) Roses are a luxury good (demand increases more than proportionally as income rises)  

d) Are the results of (b) and (c) in accordance with your expectations? If any of the tests are statistically insignificant, give a suggestion as to what may be the reason.                        

e) Do you detect the presence of multicollinearity in the data? Explain.                                            

f) Do you detect the presence of serial correlation? Explain                                                   

g) Do the variables X₃, X₄ and X₅ contribute significantly to the analysis? Test the joint significance of these variables.        

h) Starting from model B, assuming that at the time point of January, 1973, there was a disaster that heavily affected the quantity of roses produced. Suggest a model to check if we have to use two different models for the data before and after the disaster. (Using dummy variable).