#9

Lenci Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,100 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Actual results for May:

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for May would be closest to:

Garrison 16e Rechecks 2018-06-07

$2,750 F

$3,595 F

$3,595 U

$2,750 U

#10

Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December:

Data used in budgeting:

Actual results for December:

The direct labor in the planning budget for December would be closest to:

Garrison 16e Rechecks 2018-06-07

$18,690

$18,550

$17,845

$17,980

#16

Pippin Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

The company has reported the following actual results for the product for June:

The labor rate variance for the month is closest to:

$1,020 U

$920 U

$1,020 F

$920 F

Stolte Trimble Corporation (STC) uses a perpetual inventory system. At the beginning of May, STC had 30 units of inventory, of which 10 units were purchased in March for $60 per unit and 20 units were purchased in April for $66 per unit. STC uses its perpetual inventory system to account for the following transactions.

Assume Stolte Trimble Corporation (STC) uses weighted average cost in its perpetual inventory system. Prepare the journal entry for each transaction.

JE -

1-Record the sale of units to customers on credit terms n/60.

2-Record the cost of units sold to customers on credit terms n/60.

3-Record the purchase of units on credit terms n/45.

4-Record the sale of units to customers on credit terms n/60.

5-Record the cost of units sold to customers on credit terms n/60.

5

An airline is planning on making changes to its Frequent Flyer program. Before implementing them, they want to know what their customers think about the changes. They plan to sample a portion of their customers who are members of their Frequent Flyer program. They have two lists:

• One sorted by what level of frequent flyer the customer is: Gold (15 or more flights a year; about 15% of customers), Silver (5 to 14 flights a year; about 25% of customers); Bronze (less than 5 flights a year; about 60% of customers)

• One sorted by city the customer normally flys out of: There are 15 Canadian “hubs” or cities on this list

1. (a) Which of the two lists would you use if you plan to use Stratified Sampling and why? Then give 1 or 2 lines explaining how you would use the list to get your sample of customers. (1 + 1 = 2 marks)

2. (b) Which of the two lists would you use if you plan to use Cluster Sampling and why? Give 1 line explaining how you would use the list to get your sample if you use “single stage” clustering. Then give 1 line explaining how you would use the list if you use “multi - stage” clustering. (1 + 1 + 1 = 3 marks)

Question

The management of a busy petrol station is concerned that customers are being lost because of long waiting times sometimes required at their petrol pump. Over a two weeks period a careful study has been taken of the arrival of cars and the length of time taken to serve customers at the petrol station. The tables below show the arrival rates and the service time distribution:

• Assuming that the petrol station has only one pump and only one member of staff attend the customers, simulate the arrival of the first 10 customers and calculate the following:

(a)     Average inter-arrival time.

2. Average service time.
3. Average waiting time.
4. Average queue length.

Use the random numbers given below for the simulation.

89,34,07,65,37,11,29,80,28,34,08,14,75,92,01,48,21,83,63,91.

Catena’s Marketing Company has the following adjusted trial balance at December 31, 2021. No dividends were declared. However, 470 shares issued at the end of the year for $4,700 are included below:

Prepare a classified statement of financial position at December 31, 2021.

General Lighting During the first quarter of the current year, the company sold 4,000 batteries on credit for $150 each plus state sales tax of 6%. Refer to General Lighting. The price of each battery includes a $1.95 federal excise tax. Any taxes collected must be paid to the appropriate governmental units at the end of the quarter. Which of the following is the proper journal entry to record for the sale of the batteries?

a. Accounts Receivable 636,000, Sales Tax Expense 36,000, Excise Tax Expense 7,800, Sales Revenue 643,800

b. Accounts Receivable 636,000, Sales Revenue 592,200, Sales Tax Payable 36,000, Federal Excise Tax Payable 7,800

c. Accounts Receivable 636,000, Excise Tax Expense 7,800, Sales Revenue 607,800, Sales Tax Payable 36,000

d. Accounts Receivable 643,800, Sales Revenue 600,000, Sales Tax Payable 36,000, Federal Excise Tax Payable 7,800

The comparative financial statements for Halley Company for 2018 and 2019 are presented below.

Other Information:

(a) All Sales to customers are made on credit.

(b) There have been no sales of Building and Equipment during 2019.

Question 2 (continued)

Bill Bailey, the CEO of Halley Company is most concerned. Although he has made a profit of $44,000 in 2019 his cash balance during the year has increased by only $1,000.

Required: [Show all workings where necessary]

(a) Determine the following amounts that relate to Halley’s Cash Flow from Operations for the 2019 financial year:

1. How much cash did Halley receive from its customers in 2019?

2. How much cash was paid to Halley’s suppliers of Inventory during 2019?

3. How much cash did Halley spend on Salaries and wages during 2019?

4. How much cash did Halley spend on Interest payments during 2019?

5. How much cash did Halley pay in Income taxes during 2019?

6. What was the Cash Flow from Operations for the 2019 financial year?

(b) What was the Cash Flow from Investing Activities for the 2019 financial year?

(c) What was the Cash Flow from Financing Activities for the 2019 financial year?

(d) Use your analysis in parts (a) (b) and (c) to explain to Bill how he has generated a profit of $44,000 yet has seen his cash balance only increase by $1,000. Do you think Bill should be concerned about this situation?

Ayayai Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows:

All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,010 of depreciation per month.

Other data:

The company’s cash balance on January 1, 2017, is expected to be $60,600. The company wants to maintain a minimum cash balance of $50,500.

Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

Logan Distributing Company of Atlanta sells fans and heaters to retail outlets throughout the Southeast. Joe Logan, the president of the company, is thinking about changing the firm's credit policy to attract customers away from competitors. The present policy calls for a 1/10, net 30 cash discount. The new policy would call for a 3/10, net 50 cash discount. Currently, 30 percent of Logan customers are taking the discount, and it is anticipated that this number would go up to 50 percent with the new discount policy. It is further anticipated that annual sales would increase from a level of $391,000 to $603,500 as a result of the change in the cash discount policy. The increased sales would also affect the inventory level. The average inventory carried by Logan is based on a determination of an EOQ. Assume sales of fans and heaters increase from 15,000 to 22,600 units. The ordering cost for each order is $201, and the carrying cost per unit is $1.45 (these values will not change with the discount). The average inventory is based on EOQ/2. Each unit in inventory has an average cost of $11. Cost of goods sold is equal to 65 percent of net sales; general and administrative expenses are 15 percent of net sales; and interest payments of 14 percent will only be necessary for the increase in the accounts receivable and inventory balances. Taxes will be 40 percent of before-tax income. For average collection period, assume the customer pays on the last day possible (if they are getting the discount, that is day 10; if not, that is day 30 with the original policy and day 50 with the proposed policy).