1) Sales Budget and Expected Cash Collections
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
|
|
Budgeted unit sales |
11,000 |
12,000 |
14,000 |
13,000 |
The selling price of the company’s product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.
Required:
2) Prepare a Flexible Budget
Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company’s static budget for May appears below:
|
Puget Sound Divers |
|
|
Budgeted diving-hours (q) |
100 |
|
Revenue ($365.00q) |
$36,500 |
|
Expenses: |
|
|
Wages and salaries ($8,000 + $125.00q) |
20,500 |
|
Supplies ($3.00q) |
300 |
|
Equipment rental ($1,800 + $32.00q) |
5,000 |
|
Insurance ($3,400) |
3,400 |
|
Miscellaneous ($630 + $1.80q) |
810 |
|
Total expense |
30,010 |
|
Net operating income |
$ 6,490 |
During May, the company’s actual activity was 105 diving-hours.
Required:
Prepare a flexible budget for May.
3) Prepare a Flexible Budget Performance Report
Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:
|
Vulcan Flyovers |
|||
|
Actual |
Flexible |
Static |
|
|
Flights (q) |
48 |
48 |
50 |
|
Revenue ($320.00q) |
$13,650 |
$15,360 |
$16,000 |
|
Expenses: |
|||
|
Wages and salaries ($4,000 + $82.00q) |
8,430 |
7,936 |
8,100 |
|
Fuel ($23.00q) |
1,260 |
1,104 |
1,150 |
|
Airport fees ($650 + $38.00q) |
2,350 |
2,474 |
2,550 |
|
Aircraft depreciation ($7.00q) |
336 |
336 |
350 |
|
Office expenses ($190 + $2.00q) |
460 |
286 |
290 |
|
Total expense |
12,836 |
12,136 |
12,440 |
|
Net operating income |
$ 814 |
$ 3,224 |
$ 3,560 |
The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.
Required:
In: Accounting
Part I: Soft Drink Case (randomized block ANOVA) A soft drink producer has developed four new products with different flavors. The company wants to know whether customers have different preferences for these four products. Six persons were asked to sample taste and rate each flavor on a scale of 1- 20. The data are given in the Excel dataset “drink.xls” which is attached. Based on the data given, with a significance level of α = 0.05, conduct a formal hypothesis test to check whether there exists different preferences.
| Person | Flavor 1 | Flavor 2 | Flavor 3 | Flavor 4 |
| 1 | 19 | 20 | 12 | 17 |
| 2 | 18 | 17 | 17 | 18 |
| 3 | 17 | 18 | 16 | 19 |
| 4 | 13 | 19 | 12 | 14 |
| 5 | 10 | 13 | 7 | 18 |
| 6 | 13 | 12 | 11 | 16 |
In: Statistics and Probability
On February 1, 2018, Cromley Motor Products issued 6% bonds,
dated February 1, with a face amount of $95 million. The bonds
mature on January 31, 2022 (4 years). The market yield for bonds of
similar risk and maturity was 8%. Interest is paid semiannually on
July 31 and January 31. Barnwell Industries acquired $95,000 of the
bonds as a long-term investment. The fiscal years of both firms end
December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1
and PVAD of $1) (Use appropriate factor(s) from the tables
provided.)
Required:
1. Determine the price of the bonds issued on February 1,
2018.
2-a. Prepare amortization schedules that indicate
Cromley’s effective interest expense for each interest period
during the term to maturity.
2-b. Prepare amortization schedules that indicate
Barnwell’s effective interest revenue for each interest period
during the term to maturity.
3. Prepare the journal entries to record the
issuance of the bonds by Cromley and Barnwell’s investment on
February 1, 2018.
4. Prepare the journal entries by both firms to
record all subsequent events related to the bonds through January
31, 2020.
(Req-3 JE's: FEB 1, 2018: Record the issuance of the bonds by Cromley. FEB 1 2018: Record the Bond investment by Barnwell.)
(Req-4(Cromley): 1 Record the payment of interest for Cromley Company. 2 Record the accrued interest for Cromley Company. 3 Record the payment of interest for Cromley Company. 4 Record the payment of interest for Cromley Company. 5 Record the accrued interest for Cromley Company. 6 Record the payment of interest for Cromley Company.)
(Req-4(Barnwell): 1 Record the receipt of interest for Barnwell Company. 2 Record the accrued interest for Barnwell Company. 3 Record the receipt of interest for Barnwell Company. 4 Record the receipt of interest for Barnwell Company. 5 Record the accrued interest for Barnwell Company. 6 Record the receipt of interest for Barnwell Company.)
In: Accounting
The following information relates to the 2020 debt and equity
investment transactions of Pina Colada Ltd., a publicly accountable
Canadian corporation. All of the investments were acquired for
trading purposes and accounted for using the FV-NI model, with all
transaction costs being expensed. No investments were held at
December 31, 2019, and the company prepares financial statements
only annually, each December 31, following IFRS.
| 1. | On February 1, the company purchased Williams Corp. 12% bonds, at par value for $530,000, plus accrued interest. Interest is payable April 1 and October 1. | |
| 2. | On April 1, semi-annual interest was received on the Williams bonds. | |
| 3. | On July 1, 9% bonds of Saint Inc. were purchased. These bonds, with a par value of $190,000, were purchased at par plus accrued interest. Interest dates are June 1 and December 1. | |
| 4. | On August 12, 3,100 shares of Scotia Corp. were acquired at a cost of $58.00 per share. A 1% commission was paid. | |
| 5. | On September 1, Williams Corp. bonds with a par value of $106,000 were sold at 104.3 plus accrued interest. | |
| 6. | On September 28, a dividend of $0.53 per share was received on the Scotia Corp. shares. | |
| 7. | On October 1, semi-annual interest was received on the remaining Williams Corp. bonds. | |
| 8. | On December 1, semi-annual interest was received on the Saint Inc. bonds. | |
| 9. | On December 28, a dividend of $0.55 per share was received on the Scotia Corp. shares. | |
| 10. | On December 31, the following fair values were determined: Williams Corp. bonds 101.85; Saint Inc. bonds 97; and Scotia Corp. shares $61.50. |
In: Accounting
Subscribers to a store’s coupon distribution list are each emailed a randomly generated discount code which consists of 4 letters followed by 3 digits (some customers may getthe same code). Most codes are for 25% off online shopping on Cyber Monday, but customers whose codes consist of all different letters and 3 digits in increasing order(e.g. MATH014) get 50% off instead.
What is the probability that a code will consist of all different letters and 3 digits in increasing order?
In a group of 10 subscribers, what is the probability that at least two subscribers will get 50% off?
In a group of 1000 subscribers, what is the expected value and standarddeviation for the number of subscribers who will get 50% off?
In: Statistics and Probability
At Elmo’s, an old-fashioned barber shop in Melbourne, FL, 70% of all customers get a haircut, 40% get 3. At Elmo’s, an old-fashioned barber shop in Melbourne, FL, 70% of all customers get a haircut, 40% get a shave, and 95% get a haircut or a shave. Let A = customer gets a haircut and B = customer gets a shave.
a. Draw a Venn diagram showing the relationship between the events A and B. (4 points)
b. What is the probability that a randomly selected customer gets both a haircut and a shave? _________________________________(3)
c. What is the probability that a randomly selected customer a haircut or a shave, but not both? _________________________________(3)
d. What is the probability that a randomly selected customer gets a shave, given that he gets a haircut? ________________________________
In: Statistics and Probability
Chapter 7 Question 2:
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:
| Beginning inventory | 0 | |
| Units produced | 44,000 | |
| Units sold | 39,000 | |
| Selling price per unit | $ | 75 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 561,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 15 |
| Direct labor cost per unit | $ | 9 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 660,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
In: Accounting
Metro Telcom Systems develops, sells, and installs computer systems. The company has divided its customer base into five regions, and it has 15 representatives who sell and install the company’s systems. The company wants to allocate salespeople to regions so that they maximize daily sales revenue. However, whereas the sales increase as the number of increases, they do so at a declining rate, according to the following nonlinear formula:
total sales = a - (b/x)
Following are the a and b parameters for daily sales in each region:
| Region | |||||
| 1 | 2 | 3 | 4 | 5 | |
| a | 15,000 | 24,000 | 8,100 | 12,000 | 21,000 |
| b | 9,000 | 15,000 | 5,300 | 7,600 | 12,500 |
Because some of the regions are in urban areas and some are not, the representatives’ daily expenses will differ among regions. The company has a daily expense budget of $6,500, and the daily expenses (including travel costs) per representative for each region average $355 for region 1, $540 for region 2, $290 for region 3, $275 for region 4, and $490 for region 5. Formulate and solve a nonlinear programming model for this problem to determine the number of representatives to allocate to each region to maximize daily sales.
In: Physics
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:
| Beginning inventory | 0 | |
| Units produced | 43,000 | |
| Units sold | 38,000 | |
| Selling price per unit | $ | 77 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 568,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 17 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 860,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
In: Accounting
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:
| Beginning inventory | 0 | |
| Units produced | 46,000 | |
| Units sold | 41,000 | |
| Selling price per unit | $ | 80 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 564,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 18 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 782,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
In: Accounting