Problem 21-4A Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 are as follows: January February Sales $381,600 $424,000 Direct materials purchases 127,200 132,500 Direct labor 95,400 106,000 Manufacturing overhead 74,200 79,500 Selling and administrative expenses 83,740 90,100 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 $1,060 of depreciation per month. Other data: 1. Credit sales: November 2016, $265,000; December 2016, $339,200. 2. Purchases of direct materials: December 2016, $106,000. 3. Other receipts: January—Collection of December 31, 2016, notes receivable $15,900; February—Proceeds from sale of securities $6,360. 4. Other disbursements: February—Payment of $6,360 cash dividend. The company’s cash balance on January 1, 2017, is expected to be $63,600. The company wants to maintain a minimum cash balance of $53,000. Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February. Expected Collections from Customers January February November $ $ December January February Total collections $ $ Expected Payments for Direct Materials January February December $ $ January February Total payments $ $ LINK TO TEXT Prepare a cash budget for January and February in columnar form. (Do not leave any answer field blank. Enter 0 for amounts.) COLTER COMPANY Cash Budget January February $ $ : : : : $ $

Situation:

You work for a clothing manufacturing company that makes high quality light weight denim jeans and tee shirts. All of your products are 100% cotton of the highest quality and are known for their excellent workmanship. The company marketing department recently held a brainstorming activity with key customers and other stakeholders and has recognized there is a great deal of short-term potential in the idea of making facial masks which are increasingly required to be worn in response to the COVID 19 outbreak. Though many companies and individuals are making masks, your company is in a unique position to do this with a creative twist. Here is the idea:Facial masks increasingly render facial recognition software in all its various forms and uses useless. The idea is to use technology that would allow customers to upload a photo of their face, then graphically transfer the lower portion of the face to a custom-made mask that would effectively show an individual’s entire face while wearing it. Senior management agrees that this has some great potential in the short term and would like to convert one of the tee shirt manufacturing lines to custom mask production. You have been asked to create a project plan and report your plans back to leadership within 3 days.

Your Task:

Your project is to convert the line and make it ready for production of 5000 custom masks a week for 4 weeks (total of 20,000 masks), with the project starting in just three weeks. Said another way, you have three weeks to get things ready for production. The shipping department will take the completed masks and make them ready for shipping, so this will not be included in the scope of your work. You have been told that time is the most critical constraint so your budget is flexible.

1. Please write a statement of Project Scope

Global Services is considering a promotional campaign that will increase annual credit sales by $630,000. The company will require investments in accounts receivable, inventory, and plant and equipment. The turnover for each is as follows:  
  

     
All $630,000 of the sales will be collectible. However, collection costs will be 4 percent of sales, and production and selling costs will be 74 percent of sales. The cost to carry inventory will be 8 percent of inventory. Depreciation expense on plant and equipment will be 20 percent of plant and equipment. The tax rate is 25 percent.

a. Compute the investments in accounts receivable, inventory, and plant and equipment based on the turnover ratios. Add the three together.
  

   

b. Compute the accounts receivable collection costs and production and selling costs and then add the two figures together.
  

  

c. Compute the costs of carrying inventory.
  

  

d. Compute the depreciation expense on new plant and equipment.
  

    

e. Compute the total of all costs from parts b through d.
  

  

f. Compute income after taxes.
  

  

g-1. What is the aftertax rate of return? (Input your answer as a percent rounded to 2 decimal places.)
  

   

g-2. If the firm has a required return on investment of 14 percent, should it undertake the promotional campaign described throughout this problem?

Jobs R Us, Inc. is a recruiting firm that specializes in post – college placement in the finance industry. Its clients are currently concentrated in the North-Eastern United States. It is contemplating expanding into the Mid-West and accesses the risk of the new venture to be similar to that of the existing company.

Your RBS summer intern created a summary for Jobs R Us, Inc. potential in the Midwest market over the next 5 years:

Revenue is expected to be $7,500,000 in the first year and grow 8% per year for the next 4 years.

Variable cost is expected to be 45% of revenue.

Fixed cost (including depreciation) is expected to be $1,250,000 of revenue each year.

Depreciation expense is expected to be $75,000 each year.

Maintenance capex is expected to be $150,000 each year.

Change in Net working capital is expected to be $100,000 in year 1, growing at the same percentage as revenue thereafter.

Taxes are 40%.

Initial investment today is estimated to be $2,500,000.

After tax cost of capital is 12%

What is the NPV?

(answer in millions. round to 1 decimal)

1. Magic Mountain accounts for revenues using the contract-based approach. It operates a ski resort. Ski Season tickets are sold throughout the year, and entitle the holder to ski any day all season long. They are non-refundable. When should Magic Mountain recognize revenue for the season tickets?

a. at the time of sale

b. on the day the mountain first opens for skiing

c. throughout the ski season

d. at the end of the ski season

2. Frenzo Furniture Co. is a manufacturer of specialty furniture, and uses the contract-based approach for revenue recognition. Because each piece of furniture is custom manufactured, the company requires a contract prior to beginning the production process. Contract terms include a payment of 40% of the estimated cost of the finished piece before production begins. Frenzo Furniture Co. should record the collection as a

a. credit to sales revenue

b. credit to unearned revenue

c. credit to inventory

d. credit to cost of goods sold

Please include a brief explanation for the chosen answer for each question.

The following information is related to Nash Company for 2017.

Nash Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Nash sold the wholesale operations to Rogers Company. During 2017, there were 547,900 shares of common stock outstanding all year.

1. Prepare a multiple-step income statement.

2. Prepare a retained earnings statement.

Problem 4-1

The following information is related to Flint Company for 2017.

Flint Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Flint sold the wholesale operations to Rogers Company. During 2017, there were 463,100 shares of common stock outstanding all year.

Prepare a multiple-step income statement.

Prepare a retained earnings statement.

Use the following Adjusted Trial Balance and Statement of Retained Earnings to prepare the CLASSIFIED BALANCE SHEET for Hang in There Company for April 30, 2020

Hang in There Company

Statement of Retained Earnings

April 30, 2020

Retained Earnings, May 1, 2019                   $18,200

Net Income for the Year         10,200

Dividends0        

Retained Earnings, April 30, 2020                  $28,400

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 net operating income in the flexible budget for December would be closest to:

Garrison 16e Rechecks 2018-06-07

Multiple Choice

$16,430

$16,994

$11,795

$11,974

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $31 per job, and the actual mobile lab operating expenses for February were $8,670. The company expected to work 130 jobs in February, but actually worked 138 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February