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[answered] List the operating budgets in order of completion:


1. ?List the operating budgets in order of completion: (2 points each)???????????????????? page 1 of 7

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2. List the Financial Budgets in order of completion: (2 points each)

??????? ________________________________________

??????? ________________________________________

??????? ________________________________________

??????? ________________________________________

3. Which of the following is not a guideline for budget preparation? (2 points)

a.

Revise budget to include planning decisions

b.

Know the sources of budget information

c.

Limit the use of a budget to one user group

d.

Establish the format of the budget

4. Which of the following budgets must managers prepare before they can prepare a direct materials

?purchases budget? (2 points)

??? a.?

Labor budget

??? b.

Overhead budget

??? c.

Production budget

??? d.

Cost of goods manufactured budget

5. Joe's Ceramics company expects to begin the coming year with 7,000 ceramic pots in finished goods inventory.

It expects to sell 95,000 ceramic pots and end the year with 12,000 pots in the finished goods inventory.

?Five pounds of clay go into each ceramic pot. The company expects to have 2,000 pounds of clay on hand at the beginning of the coming year and wishes to end the year with 4,000 pounds in inventory.

????????????????????????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????

????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Page 2 of 7

a. Prepare a production budget showing the number of ceramic pots that the company must manufacture

to carry out these plans.(24 points)

?????????????????????????????????????????????????? ______________________________________________________________

?????????????????????????????????????????????????? ______________________________________________________________

?????????????????????????????????????????????????? ______________________________________________________________

????????????????????????????????????????????????? ______________________________________________________________

????????????????????????????????????????????????? ______________________________________________________________

????????????????????????????? ????????????????????______________________________________________________________

????????????????????????????????????????????????? ______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

? ?????????????b. Prepare a direct materials purchases budget showing the number of pounds of clay that the company must purchase during the year. (30 points)

??????????????????????????????????????????? ?????_______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

???????????????????????????????????????????????? _______________________________________________________________

??????????????????? ?????????????????????????????_______________________________________________________________???????????????????????????????????????????????????????????????

_______________________________________________________________

_______________________________________________________________

???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

?? 6. A performance management and evaluation system is a set of procedures that account for and report on which of the following? (2 points)

???????????????????? a. qualitative performance.

???????????????????? b. Financial and nonfinancial performance.

???????????????????? c. Employee performance.

???????????????????? d. Standard performance.

??

?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Page 3 of 7

7.? The manager of Center A of Harry International is responsible for generating cash inflows and incurring

costs with the goal of generating returns for the company. The manager has no responsibility for

assets. What type of responsibility center is Center A? (2 points)

???????????? a. Cost center.

???????????? b. Discretionary cost center.

???????????? c. Revenue center.

???????????? d. Profit center.?

??? 8. The performance of Steve, the manager of Center B, is evaluated the end of every month, by comparing

the amount spent on manufacturing overhead with the budgets prepared at the beginning of the

month. What type of responsibility center is Center B? (2 points)

???????????? a. Profit center.

???????????? b. Discretionary cost center.

???????????? c. Cost center.

???????????? d. Revenue center.

?????? 9. ?How is the contribution margin calculated when utilizing variable costing? (2 points)

????????????????? a. Sales less variable cost of goods sold.

????????????????? b. Sales less cost of goods sold.

????????????????? c. Sales less variable cost of goods sold, less variable selling and administrative expenses,?

????????????????????? less fixed cost of goods sold, less fixed selling and administrative expenses.

???????????????????? d. Sales less variable cost of goods sold, less variable selling and administrative expenses.??

10. Prepare a brief performance report utilizing the following information. (25 points)

?????????????????????????

??????????????????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???????????????

??????????????? ?????Account:???????????? Actual results???? ____________???? __________??? _________???? ____________??????????????

??????????? Direct materials???????? ___________???? ____________???? __________??? _________????? ____________??????

??????????? _____________??????? ____________??? ____________???? __________??? _________????? ____________

??????????? _____________??????? ____________??? ____________???? __________??? _________????? ____________

??????????? _____________??????? ____________??? ____________???? __________??? _________????? ____________

?????????? Total Costs???????????????? ____________??? ____________???? __________??? _________???? _____________

?????

??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Page 4 of 7

?11. Using the following information, prepare: 1) Traditional Income statement (18 points),

?????????????? 2) Variable Costing Income statement (21 points).

????????????????????????????????????????????????????????????????????????? Sales?? $ 5,000,000

??????????????????????????????? Variable Cost of Goods Sold?????? 1,500,000

??????????????????????????????? Variable Selling Expenses?????????????? 700,000

??????????????????????????????? Fixed Selling expenses???????????????????? 175,000

???????????????? ???????????????Fixed manufacturing costs????????????? 500,000?????

???????????????? Traditional Income Statement:?????????????? ???????????????????????Variable Costing Income Statement:?

????????????????? _______________________________________???????? ________________________________

????????????????? _______________________________________ ????????________________________________

?????? ???????????_______________________________________???????? ________________________________

????????????????? _______________________________________?? ??????________________________________

????????????????? _______________________________________???????? ________________________________

????????????????? Operating Income?????????????????? $ ______________?????? ??________________________________??

?????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????Operating Income?? $ ____________

?????????????????

????????????????? 12.? As the staff accountant for Investment Center 916, calculate the October 2014 ROI, ?

?????????????????????????? Using the following information: (round your answers to 2 decimal places) (2 points)

???????? ?????????????????????????????????????October 2014 Profit Margin???????? 35%

????????????????????????????????????????????? October 2014 Sales????????????????????? $1,500,000

????????????????????????????????????????????? Assets at September 2014????????? $1,750,000

????????????????????????????????????????????? Assets at October 2014?????????????? $1,530,000

?????????????????????????? ROI = ____________________________________________________________

?????????????? 13. Gunnies Inc. produces and sells dog food. Each bag contains 20 pounds of dog food. The following information is provided by the company. Compute the standard unit cost per bag, show all

calculations:? (7 points)

?????????????? Direct material quantity standard???????? ???20 pounds per unit (bag)

?????????????? Direct materials price standard???????? $ 0.02 per pound

?????????????? Direct labor time standard?????????????????????? ?.1 hour per unit

????? ?????????Direct labor rate standard?????????????????? $ 11.50 per hour

?????????????? Variable overhead rate standard?????? $?? 2.50 per machine hour

?????????????? Fixed overhead standard??????????????????? $?? 1.50 per machine hour

?????????????? Machine hour standard???????????????????????????? 0.25 hours per unit

??????????????????????????????????????????????????????????????????????????????????????????????? ??????????????????????????????????????????????????????????????? ???????

??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ???? ??Page 5 of 7

?????????????? The standard unit cost per bag is:

??????????????????????? a. $ 2.55

??????????????????????? b. $ 2.21

??????????????????????? c. $ 2.15

??????????????????????? d. $ 2.80?

?????????????? 14. Regis Company has a tax rate of 25 percent and is considering a capital project that will ?????

????????????????? Make the following annual contribution to operating income:

???????????????

????????????????????????????????????????? Cash revenues?? 175,000.00

??????????????????????????????????? Noncash revenues?? ??? ?5,000.00

??????????????????????????????????????? Cash expenses???? (45,000.00)

????????????????????????????????????? Depreciation?????????? (20,000.00)

Operating income before income taxes???? 115,000.00

????????????????????????????????????? Income taxes????????? ?(28,750.00)

???????????????????????????????????? Operating income?? ??86,250.00 ???

??????????????????? Determine the net cash inflows for this project using the following:

?????? ??????????????????????a) Receipts and disbursements method (show calculations; 6 points)

???????????????????????????

???????????????????????????? b) Income adjustment method (show calculations; 6 points)

?????? 15. Which is not a method used for evaluating proposed capital investments? (2 pts)

?????????????????????????????? a. Net present value.

?????????????????????????????? b. Payback method.

?????????????????????????????? c. Accounting rate of return.

?????????????????????????????? d. Carrying value of equipment.?

????????

?????????? 16. Depreciation expense influences cash flows because it directly affects which of

?????????????? the following? (2 points)

?????????????

???????????????????????? a. cash received from revenues during the current period.

???????????????????????? b. the carrying value of the asset.

???????????????????????? c. revenues earned by the equipment.

???????????????????????? d. the amount of income taxes paid by the company.

???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Page 6

???????? 17.? Projected disposal or residual values of replacement equipment are relevant to capital

???????????? Investment analysis because: (2 points)

??????????????

????????????????? a. they represent future cash inflows and usually differ among the

????????????????????? alternatives.

????????????????? b. they represent future cash inflows.

????????????????? c. the usually differ from the alternatives.

????????????????? d. they reduce income taxes.??

????? 18. Sabrina Company has a tax rate of 30 percent and is considering a capital project? ??

???????????? That will make the below annual contribution to operating income. ?

???????????? ?Using the income adjustment procedure, net cash inflows are (4 points):

??????????????????

?????????????????????????????? Cash revenues?? ??????????4,000,000

???????????????????????? Noncash revenues? ?????????????110,000

????????????????????????? Cash expenses??????? ????????(2,000,000)

??????????????????????????????? Depreciation???? ??????????? ??(60,000)

? Operating income before income taxes ?2,050,000

??????????????????????????????? Income taxes???? ??????????? ?(512,500)

??????????????????????? Operating income???? ??????????1,537,500

????? The correct answer is:

?????????????????????????? a. 1,537,500

?????????????????????????? b. 1,487,500

?????????????????????????? c. 1,597,500

?????????????????????????? d. 2,110,000

?????????? 19. The following data have been gathered for a capital investment decision.

?????? ???????????Cash inflows:? year 1????????????? 50,000

??????????????????????????????????????????? year 2???????????? 60,000

??????????????????????????????????????????? year 3???????????? 40,000

??????????????????????????????????????????? year 4??????????? ?50,000

??????????????????????????????????????????? year 5???????????? 40,000???

??????????????????????

??????????????? ??????????????

?????????????????? (3 points each)

??????????????????? a. Compute the present value of each of the cash inflows of the investment.

??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Page 7

?????????????? b. What would have been the present value of the cash flows if they were received

In equal Installments over the five-year period at the same discount rate?

?????????????????? (Assume the total cash inflows remain the same.)

?

????????????? c. If the answer to part a and b differ, explain the reasons why:

?????????????????? ?

?

20. Radio Company makes several models of radios for the auto industry. One of the components is currently purchase for $ 220.00 per 100 units. Management is reviewing the

????????????????? possibility of making the part in-house.? Annual production of this one model radio is 70,000

????????????????? units. ?Fixed costs are $ 38,500.00 (which is unchanged whether the part is made or purchased), variable cost per unit for direct materials is $ 0.70, $ 0.55 per unit for direct labor, and $ 0.70 per unit for variable overhead.? Using the incremental analysis, make a decision as to whether Radio Company should manufacture the part or purchase the part from an outside vendor. (8 points)?

????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????Difference

??????????????????????????????????????????????????????????????????????????????????????????????????? Make? ???????????????Buy??? ????????????????In favor of Make

??????????????????? Direct Materials __________________??????????? _________???? _________???????? _____________

????????????????? Direct Labor??????? __________________???????????? _________??? _________????????? _____________

?????????????????? Variable Overhead _______________????????????? _________??? _________????????? _____________

?????????????????? Purchased Parts _________________????????????? _________??? _________????????? _____________

???????????????? ?????????Totals????????????????????????????????????????????????????????????? $? _________? $?? _________ $? _____________

?

????????????????? Decision: ____________________________________________________________________

????????????????????????????????? ??____________________________________________________________________

 


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