Northern Illinois Manufacturing is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Northern Illinois gathered the following information from its managers.

Sales:

Northern Illinois wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Northern Illinois likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December 31 totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $2.40.

Fixed selling and administrative costs per month are:

Other Information:

The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Northern Illinois borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Northern Illinois can pay the entire amount. A $250,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

a. Prepare a sales budget.

b. Prepare a production budget.

c. Prepare a direct materials budget.

d. Prepare a direct labor budget.

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.

Please complete in microsoft excel.

The Aluminum Association reports that the average American uses 56.8 pounds of aluminum in a year. A random sample of 49 households is monitored for one year to determine aluminum usage. If the population standard deviation of annual usage is 12.4 pounds, what is the probability that the sample mean will be each of the following?

Appendix A Statistical Tables

a. More than 60 pounds
b. More than 57 pounds
c. Between 56 and 57 pounds
d. Less than 54 pounds
e. Less than 48 pounds

(Round the values of z to 2 decimal places. Round your answers to 4 decimal places.)

a. enter the probability that the sample mean will be more than 60 pounds

b. enter the probability that the sample mean will be more than 57 pounds

c. enter the probability that the sample mean will be between 56 and 57 pounds

d. enter the probability that the sample mean will be less than 54 pounds

e. enter the probability that the sample mean will be less than 48 pounds

What is the price of a 10-year, $1,000 bond with a 6% coupon rate and semiannual coupons if the bond’s yield to maturity is 9% (APR with semiannual compounding)?

Consider a project with the following cash flows:

Year                     0                 1                      2                      3                      4

Cash Flow      -10,000         4,000               4,000               4,000               4,000

What is the internal rate of return (IRR) of the above project?

Security:         AAA    AA      A         BBB    BB

Yield (%):       5.0       5.5       6.0       6.4       8.0

A mining company needs to raise $100 million in order to begin open pit mining of a coal seam. The company will fund this by issuing 30-year bonds with a face value of $1,000 and a coupon rate of 6%, with the coupons paid annually. The above table shows the yield to maturity for similar 30-year corporate bonds of different ratings. If the mining company's bonds receive an AAA rating, what will be their selling price?

T/F

46. If an auditor is engaged by a client after the entity’s year end, the auditor will automatically encounter a scope limitation with respect to the entity’s ending inventory.

47. When issuing a review or compilation report, should there be a reference to the country of origin of the accounting principles used to prepare the financial statements, similar to the requirement when issuing audited financial statements.

            a. SSARS does not require the reference

            b. SSARS does require the reference.

48. SSARS #21 requires a title for:

            a. A compilation report only.

            b. A review report only.

            c. Both a compilation report and a review report.

            d. None of the above, because only an audit report requires a title and an addressee.

49. The accountant is required to obtain a representation letter from the client in which of the following engagements:

            a. Audit

            b. Review

            c. Compilation

            d. Audit and Review

            e. Audit, review, and compilation

50. When performing which of the following services is the accountant required to perform specific procedures to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern.

            a. Compilation

            b. Review

            c. Both a compilation and review

            d. Neither a compilation or review

The net income reported on the income statement for the current year was $318,700. Depreciation recorded on equipment and a building amounted to $93,980 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

End of Year

Beginning of Year

Cash

$90,370

$95,280

Accounts receivable (net)

111,660

118,570

Inventories

232,780

203,250

Prepaid expenses

12,000

15,310

Accounts payable (merchandise creditors)

96,420

104,940

Salaries payable

15,310

13,420

Required:

A.

Prepare the Cash Flows from Operating Activities section of the statement of cash flows <javascript:void(0)>, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

B.

If the direct method <javascript:void(0)> had been used, would the net cash flow from operating activities have been the same?

Consider the following information for the Intermediate Company for the year 2018:

Units in Beginning Inventory                                      0

Units produced                                                     9,500

Units Sold                                                             5,700

Units Selling Price                                                 $350

Variable costs per unit:

   Direct Materials                                                  $106

   Direct Labor                                                          $42

   Variable Overhead                                                $30

Fixed costs:

   Fixed Costs per unit produced                              $23

   Fixed Selling & Administrative Costs        $440,000

A) Compute Unit Product Cost under Absorption Costing & Variable Costing

B) Compute total operating profit under absorption costing

C) Compute total operating profit under variable costing

D) Compute the value of ending inventory

The Aluminum Association reports that the average American uses 56.8 pounds of aluminum in a year. A random sample of 50 households is monitored for one year to determine aluminum usage. If the population standard deviation of annual usage is 12.2 pounds, what is the probability that the sample mean will be each of the following?

Appendix A Statistical Tables

a. More than 61 pounds
b. More than 56 pounds
c. Between 55 and 57 pounds
d. Less than 54 pounds
e. Less than 49 pounds

(Round the values of z to 2 decimal places. Round your answers to 4 decimal places.)

a. enter the probability that the sample mean will be more than 61 pounds

b. enter the probability that the sample mean will be more than 56 pounds

c. enter the probability that the sample mean will be between 55 and 57 pounds

d. enter the probability that the sample mean will be less than 54 pounds

e. enter the probability that the sample mean will be less than 49 pounds

Gerald is a CEO in Brainies Consulting, Inc. His income in the first year is m1 = $200 and in the second m2 = $200. Assume that the interest rate is r = 100%. His time horizon is limited to these two years.

(a) Find PV and FV of Gerald’s income

(b) Show on the graph (C1; C2) Gerald’s budget set. Mark PV, FV, and the slope of his budget line.

(c) Explain what borrowing/lending strategy gives Gerald each of the two “extreme” consumption points. How much does he borrow/lend in the first period, how much does he pay back/receive in the second period?

(d) Suppose his utility function is:

U(C1; C2) = ln(C1) + ln(C2)

Find Gerard’s optimal choice analytically and show it on the graph. Does the optimal consumption involve saving or borrowing?