Hansell Company’s management wants to prepare budgets for one of its products, duraflex, for July 2010.
The firm sells the product for $80 per unit and has the following expected sales (in units) for these months
in 2010:

April May June July August September
5,000 5,400 5,500 6,000 7,000 8,000

The production process requires 4 pounds of dura-1000 and 2 pounds of flexplas. The firm’s policy is to
maintain an ending inventory each month equal to 10 percent of the following month’s budgeted sales, but
in no case less than 500 units. All materials inventories are to be maintained at 5 percent of the production
needs for the next month, but not to exceed 1,000 pounds. The firm expects all inventories at the end of
June to be within the guidelines. The purchase department expects the materials to cost $1.25 per pound and
$5.00 per pound for dura-1000 and flexplas, respectively.
The production process requires direct labor at two skill levels. The rate for labor at the K102 level is $50
per hour and for the K175 level is $20 per hour. The K102 level can process one batch of duraflex per hour;
each batch consists of 100 units. The manufacturing of duraflex also requires one-tenth of an hour of K175
workers’ time for each unit manufactured.
Variable manufacturing overhead is $1,200 per batch plus $80 per direct labor-hour. The company uses
an actual cost system with a LIFO cost-flow assumption.
Required On the basis of the preceding data and projections, prepare the following budgets:
a. Sales budget for July (in dollars).
b. Production budget for July (in units).
c. Production budget for August (in units).
d. Direct materials purchases budget for July (in pounds).
e. Direct materials purchases budget for July (in dollars).
f. Direct manufacturing labor budget for July (in dollars).

On July 1, 2010 a semi-annual $800,000 5 year bond with contractual (or coupon) rate of 10% had a Net book value of $704,171. The bond had been issued at a discount rate of 16% and matures on December 31, 2012. The total interest expense recorded on June 30, 2011 (rounded) would be:

The answer is $57,640

I need a step by step show of how this is done and why each step is the way that it is. Please prep me for the exam. Please make everything clear.

A PEW POLL TAKEN IN 2010 SURVEYED 830 PEOPLE AGED 18-29, AND FOUND THAT 166 OF
They HAD ONE OR MORE TATTOOS. CAN YOU CONCLUDE THAT THE PERCENTAGE OF PEOPLE
AGED 18-29 WHO HAS A TATTOO IS LESS THAN 25%.

a) WRITE THE HYPOTHESIS TEST.

b) WHAT KIND OF TEST IS IT?

c) WHAT IS THE SAMPLE MEAN?

d) FIND THE STANDARD ERROR.

e) DRAW THE BELL CURVE RELATIVE TO H 0

f) FIND THE Z STAT FOR THE SAMPLE MEAN THAT YOU FOUND IN (C)

g) DRAW THE P-VALUE REGION ON THE STANDARD BELL

h) FIND THE P-VALUE

i) WHAT IS THE RESULT AT α = 0.01?

j) WRITE A SENTENCE ABOUT THE RESULT WITH RESPECT

Consider the following information:

• Cash and cash equivalents at 31 December 2010 = $1.50 million
• Cash and cash equivalents at 31 December 2011 = $1.85 million
• Interest expense = $0.48 million
• Net borrowings = $0.25 million
• Cash dividends = $1.25 million

Given a tax rate of 40%, the firm's FCFF at the end of 2011 is closest to:

Select one:

a. $1,830,000

b. $1,638,000

c. $388,000

Question 13

Question text

Assuming a tax rate of 40%, a $100 increase in which of the following would not impact FCFF and decrease FCFE by $60?

Select one:

a. Notes payable

b. Interest expense

c. Accounts payable

Question 14

Question text

How do net income and EBITDA, respectively, rate as proxies for cash flows in the FCFE and FCFF formulas?

Select one:

a. Good

b. No use

c. Poor

A 2010 Pew Research poll asked 1,306 Americans "From what you've read and heard, is there solid evidence that the average temperature on earth has been getting warmer over the past few decades, or not?". The table below shows the distribution of responses by party and ideology, where the counts have been replaced with relative frequencies. Earth is warming Not warming Don't know (or refuse) Total Conservative Republican 0.11 0.2 0.02 0.33 Mod/Lib Republican 0.06 0.06 0.01 0.13 Mod/Cons Democrat 0.25 0.07 0.02 0.34 Liberal Democrat 0.18 0.01 0.01 0.2 Total 0.6 0.34 0.06 1 a) Are believing that the earth is warming and being a liberal Democrat mutually exclusive? not mutually exclusive mutually exclusive b) What is the probability that a randomly chosen respondent believes the earth is warming or is a liberal Democrat? (please round to four decimal places) c) What is the probability that a randomly chosen respondent believes the earth is warming given that he is a liberal Democrat? (please round to four decimal places) d) What is the probability that a randomly chosen respondent believes the earth is warming given that he is a conservative Republican? (please round to four decimal places) e) Does it appear that whether or not a respondent believes the earth is warming is independent of their party ideology? belief in global warming and party ideology are dependent belief in global warming and party ideology are independent f) What is the probability that a randomly chosen respondent is a moderate/liberal Republican given that he does not believe that the earth is warming? (please round to four decimal places)

On March 31, 2010, Home Decorating Pavilion received a bank statement containing a balance of $9,750. The balance in the firm's checkbook and Cash account on the same date was $10,290. The difference between the two balances is caused by the items listed below.

* A $2,875 deposit made on March 30 does not appear on the bank statement.
* Check 358 for $485 issued on March 29 and Check 359 for $1,650 issued on March 30 have not yet been paid by the bank.
* A credit memorandum shows that the bank has collected a $1,100 note receivable and interest of $110 for the firm.
* A service charge of $25 appears on the bank statement.
* A debit memorandum shows an NSF check for $525. (The check was issued by Dane Smithey, a credit customer.)
* The firm's records indicate that Check 341 of March 1 was issued for $900 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $800.
* The bank made an error by deducting a check for $560 issued by another business from the balance of Home Decorating Pavilion's account.

Requirements

Prepare the bank reconciliation at March 31, 2010.

Journalize any transactions required from the bank reconciliation.

FINANCIAL INFORMATION

CMI budgeted direct labor costs for 2010 at $60,000,000. Based on expected sales, the company estimated that raw material purchased and used would be $300,000,000. Manufacturing overhead was budgeted at $196,000,000. It is currently allocated to production on the basis of machine hours (MH). As mentioned above, computers are priced at full production cost plus a mark-up of 50%.

EXHIBIT 1 shows the expected direct manufacturing costs for two of the company’s computers. The Cortland 1000 is a very popular computer with a large production and sales volume. By contrast, the Cortland 2000, described above, is a state-of-the-art scientific computer with several special features. In particular, the Cortland 2000

Uses a new processing chip imported from Sweden.

Has special patented random access memory (RAM) that gives it extremely high input/output speed.

Is manufactured in very small batches to assure uniform quality from one computer to the next, to satisfy the users of the machines who have very high expectations for the performance of the machines they purchase.

Mr. Works’ concerns arose when Ms. Nomer told him that she thought the company’s traditional overhead allocation system was providing misleading cost information about the different types of products. She developed an analysis of the 2010 manufacturing overhead costs, shown in EXHIBIT 2. She classified the overhead costs described above into activities. She also gathered data, shown in EXHIBIT 3, for the 2010 production of the Cortland 1000 and the Cortland 2000. Mr. Works commented on the data:

I don’t know quite what to make of all this. Clearly I need some further explanation and analysis. I guess what I really need is some sense of what is the true manufacturing cost of each computer. I thought I knew that, but I didn’t really. Even though we cannot at this point change prices for 2010, we at least need to know if we’re covering full production cost on the Cortland 2000 and have something left to contribute to the company’s selling, general and administrative expenses. I thought this was so, but now … well, I’m not so sure. We’d better figure this out before we begin our budget cycle for 2011. Maybe I need to go back to school!

EXHIBIT 1

Direct Manufacturing Costs for ONE Computer

EXHIBIT 2

Analysis of 2010 Budgeted Manufacturing Overhead Costs

EXHIBIT 3

Production Data for Cortland 1000 and Cortland 2,000 Computers

* “Received order size” is the number of computers one order of raw materials will build. Thus, for example, (see above) the company receives 2 orders of raw materials for the Cortland 1,000. Calculation: 20,000 computers per year, divided by 10,000 computers each order will build = 2 orders per year.

REQUIRED:

Calculate the predetermined overhead rate the company is currently using. (Where should you look for the machine hours?)

Using the information from the exhibits and Q1, calculate the manufacturing cost of ONE Cortland 1000 and ONE Cortland 2000.

Calculate the selling price, under the current system, of ONE Cortland 1000 and ONE Cortland 2000.

Next, you are going to begin to analyze the ABC system. In order to do this, however, your study of Exhibits 2 and 3 should have told you that you are going to have to convert the information the company currently measures into the information you need for the ABC analysis. First, how many raw material orders did the company receive for each model?

How many batches of each model did the company pack and ship?

How many machine setups does Cortland do for each model?

Calculate a rate for each activity in Exhibit 2.

Use the rates calculated in Q7 to apply overhead to each product line: Cortland 1000 and 2000.

Calculate the overhead per computer for a Cortland 1000 and a Cortland 2000.

Calculate the manufacturing cost of ONE Cortland 1000 and ONE Cortland 2000 using ABC overhead allocation.

Show how the company would determine a selling price for each model under the ABC system.

Should Mr. Works adopt an ABC system for internal analysis? Your answer should address the question very specifically to this case – no generalities about ABC from the book. It should contain two points in favor of ABC, and two drawbacks that he should be aware of.

Mr. Works is also concerned about future product development. They have several new models under development at this time. If an ABC system is used, list two characteristics of a new model that will make it more costly to manufacture.

Don’t try to begin answering questions until you have studied the case information carefully. Careless reading will result in errors!

BACKGROUND

CMI manufactures several different models of computers, distributed to retail outlets throughout the 50 states. The company is proud of the user-friendly computers it produces, in particular their graphics capability. CMI claims the superb graphics are what distinguish its products from competitors.

CMI purchases raw materials in components and subassemblies made to its specifications from a very small group of highly reliable suppliers. It uses a single facility to house both manufacturing facility and administrative and sales offices.   The factory workers operate three kinds of machines. Inspecting machines check the raw materials and test components and subassemblies to assure they are working to specifications. Soldering machines solder various components as necessary. Finally assembly machines put all the components and subassemblies together into finished computers. The processes can vary by computer model.

Depreciation, maintenance and repairs on the three types of machines account for about 40% of CMI’s overhead cost. The remainder of the overhead is made up of labor involved in receiving and handling the raw materials, adjusting and setting up machines for each new batch of computers, and inspecting and packing finished computers for shipping. Additional costs include insurance and depreciation on handling equipment, supplies, and utilities. The actual manufacturing effort (soldering, inspecting and assembly) is primarily automated, so CMI uses very little direct labor. The company also operates on a lean production model, so almost no inventories exist at the end of any period.

Most of the computers are sold in large orders to national electronic chains. However, the Cortland 2000 is not such a machine. It represents a recent effort by CMI to enter the scientific computing market. The quantity manufactured and sold of this machine is expected to be much lower than other models even when it gains its hoped-for market share. Fewer customers exist for this more sophisticated, powerful, high-priced machine. Nonetheless, Mr. Works has believed from the conception of this product that, when all manufacturing costs were considered, the Cortland 2000 would contribute a reasonable amount to CMI’s selling and administrative costs and profit. The name recognition it brought in its elite community should enhance sales of the more generally used computers.

(b Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. On July 1, 2013 Stevenson sold the equipment for $100,000. The journal entry to record the sale of the equipment will include. (5 points)