Q1. Fortune, Inc., is preparing its master budget for the first quarter. The comp-any sells a single product at a price of $25 per unit. Sales in units; are forecasted at 39,000 for January, 59,000 for February, and 49,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter fallows.
Commissions - 9% of sales dollars
Rent - $23,000 per month
Advertising - 14% of sales dollars
Office salaries - $80,000 per month
Depredation - $53,000 per month
Interest - 14% annually on a $250,000 note payable
Tex rate - 40%
Prepare a budgeted income statement for this first quarter.
Q2. Business Solutions second quarter 2016 fixed budget performance report for its computer furniture operations follows. The $160,930 budgeted expenses include $109,810 in variable expenses for desks and $15,120 in variable expenses for chairs, as well as $36,000 fixed expenses. The actual expenses include $37,6100 fixed expenses. List fixed and variable expenses separately.
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Fixed Budget
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Actual Results
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Variances
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Desk sales (in units)
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139
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145
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Chair sales (in units)
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54
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62
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Desk sales
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$186,260
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$192,850
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$6,590 F
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Chair sales
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29,160
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34,410
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5,250 F
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Total expenses
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160,930
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169,810
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8,880 U
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Income from operations
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$54,490
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$57,450
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$2,960 F
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Prepare a flexible budget performance report that shows any variances between budgeted results and actual results.
The following information applies to the questions displayed below.
Trico Company set the following standard unit costs for its single product.
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Direct material (26 lbs. @ $5 per lb.)
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$130.00
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Direct labor (10 hrs. @10 per hr.)
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100.00
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Factory overhead - variable (10 hrs. @ $6 per hr.)
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60.00
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Factory overhead - fixed (10 hrs. @ $9 per hr.)
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90.00
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Total standard cost
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$380.00
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The predetermined overhead rate is based on a planned operating volume of 50% of the productive capacity of 70,000 units per quarter. The following flexible budget information is available.
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Operating Levels
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Production in units
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40%
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50%
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60%
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Standard direct labor hours
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28,000
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35,000
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42,000
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Budgeted overhead
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280,000
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350,000
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420,000
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Fixed factory overhead
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$3,150,000
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$3,150,000
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$3,150,000
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Variable factory overhead
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$1,680,000
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$2,100,000
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$2,520,000
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During the current quarter, the company operated at 60% of capacity and produced 42,000 units of product actual direct labor totaled 417,000 hours. Units produced were assigned the following standard costs:
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Direct materials (1,092,000 lbs. @ $5 per lb.)
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$5,460,000
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Direct labor (420,000 hours @ $10 per hr.)
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4,200,000
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Factory overhead (420,000 hrs. @ 15 per hr.)
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6,300,000
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Total standard cost
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$15,960,000
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Actual costs incurred during the current quarter follow:
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Direct material (1,087,000 lbs. @ $5.10 per lb.)
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$5,543,700
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Direct labor (417,000 hrs. @ $9.75 per hr.)
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4,065,750
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Fixed factory overhead costs
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3,697,925
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Variable factory overhead costs
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3,461,887
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Total actual costs
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$16,769,262
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Q3. Required: Compute the direct materials cost variance, including its price and quantity variances.
Q4. Compute the direct materials cost variance, including its price and quantity variances.
Q5. Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Assume that Beyer requires a 15% return on its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
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Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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Total
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Net cash flows
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$80,000
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$45,000
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$82,000
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$142,000
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$45,000
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$394,000
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a. Compute the net present value of this investment.
b. Should Beyer accept the investment?
Q6. A machine can be purchased for $190,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value.
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Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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Net income
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$12,800
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$31,800
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$76,000
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$47,900
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$127,200
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Compute the machine's payback period (ignore taxes).
Q7. A machine costs $200,000 and is expected to yield an after-tax net income of $5,000 each year Management predicts this machine has a 11-year service life and a $40.,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return.
The following information applies to the questions displayed below.
Manning Corporation is considering a new project requiring a $100,000 investment in test equipment with no salvage value. The project would produce $69,500 of pretax income before depreciation at the end of each of the next six years. The company's Income tax rate is 32%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (FV of $1, PV of $1, FVA of $1 and PVA of $1) Use MACRS) (Use appropriate factor(s) from the tables provided.)
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Straight-Line Depreciation
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MACRS Depreciation
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Year 1
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$10,000
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$20,000
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Year 2
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20,000
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32,000
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Year 3
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20,000
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19,200
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Year 4
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20,000
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11,520
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Year 5
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20,000
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11,520
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Year 6
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10,000
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5,760
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Totals
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$100,000
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$100,000
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Q8. Complete the following table assuming use of straight-line depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes.
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Income Before Depreciation
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Straight-Line Depreciation
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Taxable Income
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Income Taxes
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Net Cash Flows
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Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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Year 6
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Q9. Complete the following table assuming use of MACRS depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes.
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Income Before Depreciation
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MACRS Depreciation
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Taxable Income
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Income Taxes
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Net Cash Flows
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Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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Year 6
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Q10. Compute the net present value of the investment if straight-line depreciation is used. Use 12% as the discount rate.
Q11. Compute the net present value of the investment if MACRS depreciation is used. Use 12% as the discount rate.
Q12. Advertising department expenses of $25,300 and purchasing department expenses of $20,200 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.
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Department
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Sales
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Purchase Orders
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Books
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$182,400
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1,025
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Magazines
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87,400
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625
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Newspapers
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110,200
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850
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Total
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$380,000
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2,500
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Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments. (Amounts to be deducted should to be indicated with minus sign.)
Attachment:- Assignment File.rar