Huang Industries, Ltd. (HIL) is based in Singapore and manufactures tools used in Asian auto factories. Shanghai Automotive Industry Corporation (SAIC) purchased $ 60 million worth of tools from HIL in a single order that was delivered on June 30, the last day of HIL’s second fiscal quarter. SAIC may return any portion of the order within three months of delivery for a full refund. HIL’s experience with product returns suggests that products that are returned are generally in good enough condition to be restored to inventory and sold at a later date.

SAIC is a long-term customer that aggressively takes advantage of product return rights but is consistent in its behavior. HIL’s accountants estimate that 10 percent of the products shipped to SAIC will eventually be returned.

Part A. Assume that HIL’s gross margin percentage is always 30 percent. Required: How much pretax profit should HIL recognize on the sale in the second fiscal quarter?

Part B. Assume SAIC returned 9 percent of the shipment on September 12. It did not return any additional product before the right of return expired.

Required: Compute the effect of the sale on HIL’s pretax income in the third fiscal quarter. Your answer should include the effect of the product return on September 12 as well as the expiry of the right of return on September 30.

Question 3: [18 marks] You need to prepare the budget for Yellow tree for the quarter ending June 2018. The budget must be prepared monthly. The quarter consists of 13 weeks. The forecasted sales are as follows: April 4 weeks May 5 weeks June 4 weeks July 4 weeks Sales Units 1,250 1,500 1,750 1,800 The company’s policy changed the inventory policy to keep closing inventory of completed units at 25% of the following month’s sales. Opening inventory on the 1st of April was 475 units. The labour information is as follows: Normal working hours 8 hours per day Weekend work None, only if overtime is required. Number of employees 20 currently Additional 10 employees will be employed for the month of June Normal time rate R32.50 per hour Overtime rate 30% above normal time rate per hour Hours per unit 3 hours 10 Required: 1. Calculate the production budget for the quarter. (3) 2. Calculate the budgeted labour hours per month. Split the hours between normal time and overtime. (9) 3. Calculate the budgeted labour cost monthly. Split the cost between normal time and overtime. (6)

(a-1) Use MegaStat or Minitab to deseasonalize Coca-Cola’s quarterly data. (Round your answers to 3 decimal places.)

(a-2) State the adjusted four quarterly indexes. (Round your answers to 3 decimal places.)

(a-3) What is the trend model for the deseasonalized time series? (Round your answers to 2 decimal places.)

y_t =  x_t +

(b) State the model found when performing a regression using seasonal binaries. (A negative value should be indicated by a minus sign. Round your answers to 4 decimal places.)

y_t =  +  t +  Q1 +  Q2 +  Q3

(c) Use the regression equation to make a prediction for each quarter in 2011. (Enter your answers in millions rounded to 3 decimal places.)

Thornton Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Thornton made 71,500 tennis racquets and 30,600 badminton racquets).

Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment.

Required

1. Compute the cost per unit for each product.

2. If management wants to price badminton racquets 30 percent above cost, what price should the company set?

Required A

Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.)

Required B

If management wants to price badminton racquets 30 percent above cost, what price should the company set? (Round intermediate calculations and final answer to 2 decimal places.)

Rundle Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Rundle made 69,000 tennis racquets and 29,800 badminton racquets).

   
Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment.

   
Required

a. Compute the cost per unit for each product.

b. If management wants to price badminton racquets 30 percent above cost, what price should the company set?

Required A.

Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.)

Required B.

If management wants to price badminton racquets 30 percent above cost, what price should the company set? (Round intermediate calculations and final answer to 2 decimal places.)

Buffalo Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

Additional information:

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies:

• Ending finished goods inventory should be 40 percent of next month’s sales.
• Ending direct materials inventory should be 30 percent of next month’s production.

Expected unit sales (frames) for the upcoming months follow:

Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,800 ($650 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $700 per month plus $0.50 per unit sold.

Iguana, Inc., had $10,900 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale.

Of direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct materials purchases for March 1 totaled $2,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $160 in depreciation. During April, Iguana plans to pay $3,100 for a piece of equipment.

Required:
1) Compute the following for Iguana, Inc., for the second quarter (April, May, and June).     

2) Complete Iguana's budgeted income statement for quarter 2

3) Compute the budgeted cash receipts for Iguana.

4) Compute the budgeted cash payments for Iguana.

5) Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance.

Question 3 Classique Designs sells a variety of merchandise, including school shoes for girls. The business began the last quarter of 2013 with 30 pairs of the “Aerosoles” brand at a total cost of $54,000. The following transactions, relating to the “Aerosoles” brand were completed during the quarter: October 3 Purchased 45 pairs of shoes at a cost of $1,900 each. October 15 Sold 55 pairs to Casually Elegant Ltd at a unit price of $2,780 October 26 Purchased 70 pairs at a cost of $2,400 each but these were subject to a trade discount of 5%. November 10 Sold 60 pairs to Best City Store which yielded total sales revenue of $192,000. November 14 Owing to an increased demand for this brand, the manager of Classique purchased 80 additional pairs of the “Aerosole” brand at a unit cost of $2,500, but additionally there was freight charge of $100 on each pair. November 24 Sold 60 pairs of shoes to Big Buy Company at a price of $3,600 each. November 30 A physical stock count on that date revealed that there were 42 pairs of the “Aerosoles” brand in the warehouse. December 4 Purchased 75 pairs of shoes at a total cost of $213,750. December 15 5 pairs of the shoes purchased on December 4 were returned to the supplier as they were of the wrong description. December 30 Sold 70 pairs to Regal Ltd. at a unit selling price of $4,400. All purchases were on account and received on the dates stated and Classique Designs uses the FIFO method to account for inventory. Required: i) Prepare a perpetual inventory record for Classique Designs, to determine the value of ending inventory at December 31, 2013, and the total amount to be assigned to cost of goods sold for the period. ii) Calculate the gross profit for the period. iii) You are told that 15 of the units sold on November 24, 2013 were on account. State the journal entries necessary to record the transactions on November 14 and November 24, assuming the business uses the: - Periodic inventory system - Perpetual inventory system.

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

1. The gross margin is 25% of sales.

2. Actual and budgeted sales data:

3. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.

4. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.

5. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory.

6. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,700 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $837 per month (includes depreciation on new assets).

7. Equipment costing $2,900 will be purchased for cash in April.

8. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

Question 1.

juanma Party Supplies Co. is creating its budget for the second quarter of the upcoming year.

Revenue estimates are $1,495,000 for April, $1,430,000 for May, and $1,560,000 for June. While markups on individual items vary, the company controller estimates that the average selling price exceeds the average purchase cost by 25%. In terms of inventory, Juanma tries to maintain merchandise on hand at the end of one month equal to 20% of the cost of goods sold for the next month.

In addition to the cost of goods purchased, Juanma budgets 80 hours of labor, at a cost of $10 per hour, for every $10,000 of revenue. Many stores adjust the number of checkout clerks, stock people, and other labor costs based on actual sales, which influences the volume of workers needed. Juanma ’s supervisory staff costs $25,500 per month and rent and utilities amount to $38,000 per month. All other expenses, including $12,000 for depreciation on store fixtures, amount to $74,000 per month.

Prepare the master budget information for May—that means:

1) Purchases budget for May (Hint: for the May purchases budget, you will have to use the CGS baby formula to back into amounts for beginning inventory)

2) Direct labor budget for May

3) Budgeted income statement for May

4) Budget cash budget, using these assumptions in addition to what you computed above:

-Juanma collects 90% of its revenue in the month of sale and the balance in the following month.

-Juanma pays for 75% of its purchases in the month of purchase and the balance in the following month

-In May, Juanma intends to purchase and pay for new display units costing 24,000.

-Beginning cash balance for May is forecasted to be $25,000. Normally Juanma maintains a cash balance of $25,000.