Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 111,000 Unit sales for December 2019 103,000 Expected unit sales for January 2020 114,000 Expected unit sales for February 2020 114,000 Expected unit sales for March 2020 116,000 Expected unit sales for April 2020 127,000 Expected unit sales for May 2020 139,000 Unit selling price $12 Waterways likes 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, 2019, totaled $185,400. Direct Materials Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019, totaled 11,400 pounds. 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, 2019, totaled $104,595. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour. Manufacturing Overhead Indirect materials 30¢ per labor hour Indirect labor 50¢ per labor hour Utilities 50¢ per labor hour Maintenance 30¢ per labor hour Salaries $41,000 per month Depreciation $18,100 per month Property taxes $2,500 per month Insurance $1,200 per month Maintenance $1,200 per month Selling and Administrative Variable selling and administrative cost per unit is $1.50. Advertising $15,000 a month Insurance $1,500 a month Salaries $71,000 a month Depreciation $2,500 a month Other fixed costs $2,900 a month Other Information The Cash balance on December 31, 2019, totaled $98,000, but management has decided it would like to maintain a cash balance of at least $700,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.70 per share for 4,740 shares outstanding. The company has an open line of credit with Romney’s Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $530,000 equipment purchase is planned for February.

For the first quarter of 2020, prepare a sales budget.

For the first quarter of 2020, prepare a production budget.

For the first quarter of 2020, prepare a direct materials budget. (Round cost per pound to 2 decimal places, e.g. 0.25 and all other answers to 0 decimal places, e.g. 2,520.)

For the first quarter of 2020, prepare a direct labor budget. (Round time per unit to nearest hour, e.g. 30 minutes will be rounded to 0.5 hours)

For the first quarter of 2020, prepare a manufacturing overhead budget. (Round overhead rate to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 2,520. List Variable Costs first.)

For the first quarter of 2020, prepare a selling and administrative budget. (Enter per unit expenses rounded to 2 decimal places. E.g. 1.25)

For the first quarter of 2020, prepare a schedule for expected cash collections from customers.

For the first quarter of 2020, prepare a schedule for expected payments for materials purchases. (Round answers to 0 decimal places, e.g. 2,520.)

For the first quarter of 2020, prepare a cash budget. (Round answers to 0 decimal places, e.g. 2,520.)

A project will produce cash inflows of $3,100 a year for 3 years. The project's initial cost is $10,400. What is the profitability index value if the required rate of return is 16 percent?

Group of answer choices

0.90

0.33

1.09

0.67

-0.88

Foto Company makes 10,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

An outside supplier has offered to sell the company all of these parts it needs for $42.10 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $36,000 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $5.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

Required:

a. How much of the unit product cost of $47.10 is relevant in the decision of whether to make or buy the part? (Round "Per Unit" to 2 decimal places.)

b. What is the financial advantage (disadvantage) of purchasing the part rather than making it?

c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 10,000 units required each year? (Round "Per Unit" to 2 decimal places.)

How much interest will be earned in the second year on an investment paying 7% interest, compounded annually, if $350 was just credited to the account for interest at the end of year 1?

a. $374.50

b. $325.50

c. $350.00

d. $5,724.50

The following information is for Crane Limited for 2020:

There were no changes during 2020 in the number of common shares, preferred shares, or convertible bonds outstanding. For simplicity, ignore the requirement to book the convertible bonds’ equity portion separately.

Calculate the income effect of the dividends on preferred shares.

Calculate basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.)

Determine an incremental per share effect for 6% preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Calculate the proceeds from assumed exercise of 65,000 options.

Calculate the incremental shares oustanding upon the exercise of options.

Calculate the after-tax interest paid on the 8% bonds.

Determine an incremental per share effect for 8% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Rank the potentially dilutive securities from most dilutive to least dilutive.

Calculate diluted earnings per share for 2020. (Round earnings per share to 2 decimal places, e.g. 15.25.)

Q2

Your uncle has just announced that he is going to give you $15,000 per year at the end of each of the next 4 years.

a.
If the relevant interest rate is 7%, what is the value today of this promise?

b.
If the interest rate changes to 8%, what is the value today of this promise?

c.
Explain how interest rates influence the value of the promise in parts (a) and (b).

Q3

There is a project with the following cash flows :

What is the payback period?

Multiple Choice

a. 4.00 years

b. 3.32 years

c. 3.74 years

d. 3.56 years

e. 2.79 years

You borrow a ten-year loan of $1,500,000. The annual interest rate is 13% that to be repaid every 2 weeks. Assume 52 weeks a year. List the numerical answers and EXCEL formulas of payment, interest, principal paid and end balance of 115th periodic payment in the table provided.

FFB sold bonds at the beginning of the year on June 1, 2014. The bonds had a face value of $2,000 and payments of $50 each due on December 1 and June 1. (The contract or stated rate = 5%, annual). The bonds sold on the market on June 1, 2014, to yield investors a 6% annual rate of return.

Prepare an amortization table for the bond. Use Excel. Consider the fact that liabilities have increased and that interest expense for the fiscal year 2015 has also increased due to the debt. The amount of interest for the year will be shown on your amortization table.

27. The US ináation rate

a. was negative 10% for more than a year during the Great De- pression;

b. rose to a positive 25% in 1933 on an annual basis;

c. rose above 25% during WWII and the Vietnam War;

d. All of the above.

28. The policy coinciding with the end of the Great Depression

a. gave consumers the conÖdence to quickly re-deposit their money in bank;

b. established FDIC deposit insurance;

c. reformed the private bank sector;
d. All of the above.