The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 64 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $4,000 per month plus $44 per course plus $5 per student. The company’s sales should average $870 per student.

The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 60 students. The actual operating results for September appear below:

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

1) The Enterprise purchased an equipment on January 1^st, 2011 that had an estimated useful life of 10 years.The equipment cost $50,000 and estimated residual value was $5,000 at the time of purchase. After three full years of use, the equipment was sold for cash and recognized a $3,000 gain on the sale of that equipment. How much cash did the enterprise receive for the equipment?

2) Aqua Company started the year with the following:

Assets $100,000; Liabilities $60,000; Common Stock $30,000; and a Retained Earnings balance. During the year,

a) The company earned revenue of $200,000. $190,000 of that revenue was collected in cash, the remainder was still outstanding at the end of the year

b) The company started the year with $20,000 in Accounts Receivable, all the amount was collected during the year

c) Aqua Company incurred expenses of $180,000 and 10% of those expenses were unpaid as of the end of the year

d) Aqua company declared and paid dividends of $5,000 during the year

Make the equations in these orders (Table

Item : Assets = Liabilities + Common Stock + Retained Earnings

Beginning Balance Assets = Liabilities + Common Stock + Retained Earnings

A) Assets = Liabilities + Common Stock + Retained Earnings

B) Assets = Liabilities + Common Stock + Retained Earnings

C) Assets = Liabilities + Common Stock + Retained Earnings

D) Assets = Liabilities + Common Stock + Retained Earnings

Ending Balance for Assets = Liabilities + Common Stock + Retained Earnings

The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)

b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

c. Suppose the appropriate discount rate is 13 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
NPV           $

Exercise 9-14 Prepare a Flexible Budget Performance Report [LO9-4]

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.30 per car washed.

The actual operating results for August appear below.

Required:

Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Problem 8-2 Calculating Project NPV

The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 35 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)

b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
NPV           $

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,920 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Bonobo’s Balloons Inc. purchased the $60,000 par value bonds of Gnomes R Us on January 1, 2020. The coupon rate is 8% and the bonds mature in 5 years. The market rate of interest is 12%. The bonds pay interest semi-annually every June 30 and December 31. The bonds were purchased for $51,167.90 and were classified as available-for-sale. Bonobo’s Balloons uses the effective-interest rate method to amortize bond discounts and premiums. At December 31, 2020, the market value of the bonds was $65,000. Bonobo’s Balloons sold the bonds on January 1, 2021, for $65,000.

Instructions

1. Compute the carrying value of the investment at December 31, 2020.
2. Compute the amount of interest revenue earned on this investment at June 30, 2020.
3. Compute the amount of unrealized gain or loss recognized on December 31, 2020. In which financial statement should this amount be reported?
4. Compute the amount of gain or loss recognized on the sale of the investment at January 1, 2021. In which financial statement should this amount be reported?
5. If this investment was instead classified as held-to-maturity, how would this have affected the amount of unrealized gain or loss on December 31, 2020, and how would this have affected its reporting?

Computations:

Carrying value at December 31, 2020:

Interest revenue at June 30, 2020:

Unrealized gain/loss at December 31, 2020:

Gain or loss at January 1, 2021:

Requirement 5:

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. The pizzeria’s cost formulas appear below: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.50 Kitchen staff $ 5,930 Utilities $ 620 $ 0.40 Delivery person $ 3.20 Delivery vehicle $ 640 $ 1.60 Equipment depreciation $ 408 Rent $ 1,890 Miscellaneous $ 740 $ 0.20 In November, the pizzeria budgeted for 1,590 pizzas at an average selling price of $16 per pizza and for 230 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 1,690 Deliveries 210 Revenue $ 27,600 Pizza ingredients $ 7,390 Kitchen staff $ 5,870 Utilities $ 890 Delivery person $ 672 Delivery vehicle $ 988 Equipment depreciation $ 408 Rent $ 1,890 Miscellaneous $ 796 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,680 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

BRAND purchased equipment for $290,000 cash, sold equipment costing $150,000 with a book value of $100,000, and declared and paid dividends during 2021. No new notes payable were issued during the year.

Financial data follows.  All balances are normal.  

Prepare BRANDS Statement of Cash Flows for 2021, using the indirect method.

Cash Flows from Operating Activities (CFO) =

Cash Flows from Investing Activities (CFI) =

Cash Flows from Financing Activities (CFF) =

Net increase/decrease in Cash =

When entering answers, enter them as whole numbers