Question 3 (October 2018)

Dyson Company Malaysia manufactures the cyclonic vacuum cleaner which us to be sold in Asia for RM2,000 per vacuum. The following information is in relation to the budgeted production and sales of cyclonic vacuum cleaners for the last quarter of 2017.

1. Budgeted sales in units:

July 10,000
August 12,000
September 14,000
October 13,500
November 13,800
December 14,500

60% of the sales will be collected one month after sales.
30% of the sales will be collected two months after sales.
10% of the sales will be collected three months after sales.

2. Variable production cost per vacuum:
RM
Direct materials 30.00
Direct labour 21.00
Overhead 16.00

3. Budgeted production in units:

August 12,000
September 14,000
October 13,500
November 13,800
December 14,500

4. It is the company policy to pay creditors for material two months after purchases are made.

5. Wages and variable overhead are paid within the month they are incurred.

6. Sales commission are 8% on sales and are to be paid one month after sales are made.

7. Fixed overhead is RM210,000 per month, which includes depreciation of RM65,000.

8. Fixed selling and administration is RM72,000 per month which is payable in the month it is incurred.

9. One of the old machines will be sold for RM12,000 in the month of November and a new machine will be replace it in the same month at a cost of RM78,000.

10. The company will pay dividends which was declared at RM100,000 at the end of December.

11. It is expected that the cash balance on 30th September will be RM80,000.



Required:
a) Prepare a schedule of expected cash collections from customer for the last quarter of 2017.                                                                                                         

b) Prepare schedule for payment of materials for the last quarter of 2017.            

c) Prepare a cash budget for the last quarter of 2017.                                        
(Total: 30 Marks)

Write a two to three (2-3) page paper in which you: choose a US company: Assess the factors that contributed to the financialstatement restatement, signifying the executive management team’s attitude toward the restatement. Suggest how the restatement may have been avoided during the initial reporting process. Explain the impact to the company’s stock price when the restatement was released and to future earnings forecast, indicating whether or not you believe the impact to the stock price was justified. Evaluate the restatement in terms of management’s ethical violations according to the requirements of the Sarbanes-Oxley Act, providing recommendations to management on how to avoid these problems in the future. Provide support for your recommendations. Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.

Problem 5. On November 1, 2017, US Pelican Company entered into a 90 day forward contract of £200,000 pounds to hedge a commitment to purchase special equipment on February 1, 2018 from a British firm Raven Inc. Assume Pelican uses a 12% interest rate.

The relevant exchange rates are of dollars per pound:

Instructions

1. What journal entry did Pelican record on November 1, 2017?

2. What journal entry did Pelican record on December 31, 2017?

3. What journal entry did Pelican record on February 1, 2018 if the purchase was made?

4. If this is a “forecasted transaction”, what journal entry did Pelican record on November 1, 2017, on December 31, 2017, and on February 1, 2018 if the purchase was made?

Toyota Motor Company, headquartered in Japan, needs US$10,000,000 for three years to finance working capital for its plant in Long Beach, CA. Toyota has two alternatives for borrowing:

1. Borrow $10,000,000 in New York at 3.00% per annum.
2. Borrow ¥1,200,000,000 in Tokyo at 1.00% per annum, and exchange these yen at the present exchange rate of ¥120/$ for U.S. dollars.

For both loans, Toyota will make no payments until the end of three years, when principal and accumulated interest will be paid.

At what ending exchange rate would Toyota be indifferent between borrowing U.S. dollars and borrowing yen?

Mini-Case Study:

Coca-Cola Enterprises provides us with a good example of a company that has several types of plants. Coca-

Cola operates factories that produce both raw materials and finished goods. Some factories produce the syrup that forms the basis of the Coca-Cola products you are familiar with. Other factories combine the syrup with carbonated water during the bottling process to make the finished Coca-Cola products. The finished goods, which consist of cases of bottles and cans of Coca-Cola products, are then shipped to regional distribution centers for storage until they are transported to end customers, such as retailers. The syrup factory, the bottling factory, and the distribution center are all considered plants in Coca-Cola’s SAP ERP system.

Q1. Briefly describe the key business processes and the related materials and plants to deliver the finish good to the end customers in Coca-Cola Enterprises.

Q2. Explain the benefits of the enterprise systems in supporting end-to-end processes and in avoiding the silo effect within Coca-Cola Enterprises.

Steven’s Stationery a well-known stationary store in town .The business maintains individual inventory records for each merchandise they are selling. The following information has been extracted from the records of Steven’s Stationery about one of its popular products. There are 50 units at the beginning of October costing $ 30 each. Date Purchase Date Sales October-09 100 units @ 28 October-11 100 units @ 50 October-17 70 units @ 27 October-15 20 units @ 50 October-25 80 units @ 26 October-29 110 units @ 50

Required:

a. Determine the cost of goods sold, ending inventory and gross profit for the month ended October, assume company opts FIFO as a cost flow assumption.

b. Assume Steve has an objective to save taxes, Keeping the price trends of purchases Do you think company has opted the right cost flow assumption? Why or why not.

c.Assume the value of ending inventory is mistakenly overstated by $ 500, how this error effects (over or understates) the following for the period

I.Cost of goods sold

II.Gross profit

d.Equity.Can we apply the idea of inventory shrinkage in this company? If yes record the inventory shrinkage assume a physical count indicates there are 80 units on hand on October 31.

the W's scientist at a pharmacy firm conducted an experiment of study the effectiveness of an herbal compound to treat common cold. individual was exposed to a cold virus, they was given herb or sugar solution. after several days they check each person condition, using a cold severity scale ranging from 0 to 5. no evidence of benfit of the compound

Suppose that a researcher had estimated the first 5 autocorrelation coeffcients using a series of length 100 observations, and found them to be (from 1 to 5): 0.207, -0.013, 0.086, 0.005, -0.022.
Test each of the individual coefficient for significance, and use both the Box-Pierce and Ljung-Box tests to establish whether they are jointly significant.

Suppose there are n = 100 firms in the market each with the cost function is C(y) = 5 + y + 0.5y^2. What is the inverse market supply curve? What is the market supply curve? Draw the market supply curve. (Hint: Go from individual supply to market supply. Finish by getting inverse market supply.)