LO23-4, LO23-5, accounting assignment help

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LO23-4, LO23- Barnum Distributors wants a projection of cash receipts and cash payments for the month of November. On November 28, a note will be payable in the 5 amount of $98,500, including interest. The cash balance on November 1 is $29,600. Accounts payable to merchandise creditors at the end of October PROBLEM were $217,000. 23.3A Budgeting for Cash The company’s experience indicates that 70 percent of sales will be collected during the month of sale, 20 percent in the month following the sale, and 7 percent in the second month following the sale; 3 percent will be uncollectible. The company sells various products at an average price of $11 per unit. Selected sales figures are as follows: Because purchases are payable within 15 days, approximately 50 percent of the purchases in a given month are paid in the following month. The average cost of units purchased is $7 per unit. Inventories at the end of each month are maintained at a level of 2,000 units plus 10 percent of the number of units that will be sold in the following month. The inventory on October 1 amounted to 8,000 units. Budgeted operating expenses for November are $220,000. Of this amount, $90,000 is considered fixed (including depreciation of $35,000). All operating expenses, other than depreciation, are paid in the month in which they are incurred. The company expects to sell fully depreciated equipment in November for $8,400 cash. Instructions Prepare a cash budget for the month of November, supported by schedules of cash collections on accounts receivable and cash payments for purchases of merchandise. LO23-2, LO23- Snells is a retail department store. The following cost-volume relationships were used in developing a flexible budget for the company for the current 4 through year: LO23-6 PROBLEM 23.7A Preparing and Using a Flexible Budget Management expected to attain a sales level of $12 million during the current year. At the end of the year, the actual results achieved by the company were as follows: Instructions 1. Prepare a schedule comparing the actual results with flexible budget amounts developed for the actual sales volume of $10,500,000. Organize your schedule as a partial multiple-step income statement, ending with operating income. Include separate columns for (1) flexible budget amounts, (2) actual amounts, and (3) any amount over (under) budget. Use the cost-volume relationships given in the problem to compute the flexible budget amounts. Page 1029 2. Write a statement evaluating the company’s performance in relation to the plan reflected in the flexible budget. LO24-3 through Heritage Furniture Co. uses a standard cost system. One of the company’s most popular products is an oak entertainment center that looks like an old LO24-5 icebox but houses a television, stereo, or other electronic components. The PROBLEM per-unit standard costs of the entertainment center, assuming a “normal” 24.7A volume of 1,000 units per month, are as follows: Computing, Journalizing, and Analyzing Cost Variances Page 1067 During July, 800 entertainment centers were scheduled and produced at the following actual unit costs: Instructions 1. Compute the following cost variances for the month of July: 1. Materials price variance 2. Materials quantity variance 3. Labor rate variance 4. Labor efficiency variance 5. Overhead spending variance 6. Volume variance 2. Prepare journal entries to assign manufacturing costs to the Work in Process Inventory account and to record cost variances for July. Use separate entries for (1) direct materials, (2) direct labor, and (3) overhead costs. 3. Comment on any significant problems or areas of cost savings revealed by your computation of cost variances. Also comment on any possible causal relationships between significant favorable and unfavorable cost variances. LO24-1, LO24- Ripley Corporation has supplied the following information obtained from its standard cost system in June: 3, LO24-4 PROBLEM 24.8A Understanding Cost Variances: Solving for Missing Data The following journal entries were made during June with respect to Ripley’s standard cost system: Page 1068 Instructions 1. Determine the actual quantity of materials purchased and used in production during June. 2. Determine the standard quantity of materials allowed for the productive output achieved during June. 3. Determine the actual average direct labor rate in June. 4. Determine the standard direct labor hours allowed for the production output achieved during June. 5. Determine the total overhead costs allowed for the production output achieved during June. 6. Prepare a journal entry to record the transfer of all work in process to finished goods at the end of June. 7. Close all cost variances directly to the Cost of Goods Sold account at the end of June. 8. Was Ripley’s production output in June more or less than its normal level of output? How can you tell? LO25-2 PROBLEM 25.4A Tootsie Roll Industries has two business segments, one for operations in the U.S. and one for operations in Mexico and Canada. The information below (in thousands) comes from a recent annual report. Find the ROI for each segment for each year. Tootsie Roll Industries Segment Performance Evaluation Instructions Find and analyze segment ROI by using the DuPont method described in this chapter. Explain the performance difference between the two segments across the two years by using the information from the DuPont breakdown of ROI. Bob Banker is the manager of one location of the Fastwhere Inc. chain, which is a delivery service. Banker’s location is currently earning an ROI of 14 percent on existing average capital of $750,000. The minimum required return for Fastwhere Inc. is 12 percent. Banker is considering several PROBLEM additional investment projects, which are independent of existing operations and are independent of each other. The following table lists the projects: 25.5A LO25-2 through LO25-4 ROI and Residual Income Page 1105 Instructions 1. Which of the projects would Banker choose for investment if his objective were to maximize his location’s ROI? 2. Which projects increase the value of Fastwhere Inc.? 3. Which projects have a negative residual income? 4. Create two rankings for the projects in order of acceptability if Banker is evaluated (1) on ROI and (2) on residual income. 5. On the basis of the projects in the list explain why underinvestment is a problem when using ROI for evaluation purposes. LO26-1 Marengo is a popular restaurant located in Chilton Resort. Management feels that enlarging the facility to incorporate a large outdoor seating area will enable Marengo to continue to attract existing customers as well as handle large banquet parties that now must be turned away. Two proposals PROBLEM are currently under consideration. Proposal A involves a temporary walled structure and umbrellas used for sun protection; Proposal B entails a more 26.4A permanent structure with a full awning cover for use even in inclement weather. Although the useful life of each alternative is estimated to be 10 Capital Budgeting years, Proposal B results in higher salvage value due to the awning protection. The accounting department of Chilton Resort and the manager Using of Marengo have assembled the following data regarding the two proposals: Multiple Models through LO26-4 Page 1139 Instructions 1. For each proposal, compute the (1) payback period, (2) return on average investment, and (3) net present value, discounted at management’s required rate of return of 15 percent. (Round the payback period to the nearest tenth of a year and the return on investment to the nearest tenth of a percent.) Use Exhibits 26–3 and 26–4 where necessary. 2. On the basis of your analysis in part a, state which proposal you would recommend and explain the reasons for your choice.
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LO23-4, LO23-5
Operating exp = 220,000 - 35000 = 185000
O...


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