Question 1
An organization\'s budgets will often be prepared to cover: one month.? one quarter.? one year.? periods longer than one year.? All of these.
Darling Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:?Actual units produced: 12,000?Actual variable overhead incurred: $730,000?Actual machine hours worked: 60,000?Budgeted fixed overhead $72,000?Planned level of machine-hour activity 50,000?If Darling estimates four hours to manufacture a completed unit, the company\'s standard fixed overhead rate per machine hour would be: $12.00.?? $14.40.?? $14.60.?? $15.00. some other amount.
Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 50,000 units, as follows:?Direct materials $100,000?Direct labor 50,000?Variable overhead 75,000?Fixed overhead 100,000?Actual costs incurred were: direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Trois Elles evaluated performance by the use of a flexible budget, a performance report would reveal a total variance of: $3,000 favorable.?? $23,000 favorable.?? $27,000 unfavorable.?? $42,000 unfavorable.?? none of these amounts.
Digregory makes all purchases on account, subject to the following payment pattern:?Paid in the month of purchase: 30%?Paid in the first month following purchase: 60%?Paid in the second month following purchase: 10%?If purchases for January, February, and March were $200,000, $180,000, and $230,000, respectively, what were the firm\'s budgeted payments in March? $69,000.?? $138,000.?? $177,000.?? $197,000.?? Some other amount.
Which of the following budgets is based on many other master-budget components? direct labor budget.? overhead budget.? sales budget.? cash budget.? selling and administrative expense budget.?
Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm\'s budgeted collections for May? $21,000.? $60,000.? $69,000.? $75,000.? Some other amount.
Bird plans to sell 5,000 units each quarter next year. During the first two quarters each unit will sell for $12; during the last two quarters the sales price will increase $1.50 per unit. What is Bird\'s estimated sales revenue for next year? $240,000.? $255,000.? $270,000.? $244,000.? Some other amount.?
A formal budget program will almost always result in: higher sales.? more cash inflows than cash outflows.? decreased expenses.? improved profits.? a detailed plan against which actual results can be compared.?
Yorkley Corporation plans to sell 41,000 units of its single product in March. The company has 2,800 units in its March 1 finished-goods inventory and anticipates having 2,400 completed units in inventory on March 31. On the basis of this information, how many units does Yorkley plan to produce during March? 40,600.? 41,400.? 43,800.? 46,200.? Some other amount.?
Martin Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:?Actual units produced: 9,000?Actual variable overhead incurred: $54,400?Actual machine hours worked: 16,000?Standard variable overhead cost per machine hour: $3.50? If Martin estimates two hours to manufacture a completed unit, the company\'s variable-overhead efficiency variance is: $1,600 favorable.?? $1,600 unfavorable.?? $7,000 favorable.?? 7,000 unfavorable.?? some other amount not listed above.
Verna\'s makes all sales on account, subject to the following collection pattern: 20% are collected in the month of sale; 70% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for October, November, and December were $70,000, $60,000, and $50,000, respectively, what was the budgeted receivables balance on December 31? $40,000.? $46,000.? $49,000.? $59,000.? Some other amount.
Interspace Merchandising anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit. Actual sales and sales commissions totaled 31,500 units and $182,700, respectively. If the company used a static budget for performance evaluations, Interstate would report a cost variance of: $6,300U.? $6,300F.? $8,700U.? $8,700F.? some other amount not listed above.
The comprehensive set of budgets that serves as a company\'s overall financial plan is commonly known as: an integrated budget.? a pro-forma budget.? a master budget.? a financial budget.? a rolling budget.?
A company\'s plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a: pro-forma budget.? master budget.? financial budget.? profit plan.? capital budget.
Wilson Corporation is budgeting its equipment needs on an ongoing basis, with a new quarter being added to the budget as the current quarter is completed. This type of budget is most commonly known as a: capital budget.? rolling budget.? revised budget.? pro-forma budget.? financial budget.?
The budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows comprise: the final portion of the master budget.? the depiction of an organization\'s overall actual financial results.? the first step of the master budget.? the portion of the master budget prepared after the sales forecast and before the remainder of the operational budgets.? the second step of the master budget.?
A manufacturing firm would begin preparation of its master budget by constructing a: sales budget.? production budget.? cash budget.? capital budget.? set of pro-forma financial statements.
Generally speaking, budgets are not used to: identify a company\'s most profitable products.? evaluate performance.? create a plan of action.? assist in the control of profit and operations.? facilitate communication and coordinate activities.?
Del\'s Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 90,000 hours were actually worked. One of the company\'s cost functions is expressed as follows:?Y = $16PH + $640,000 where PH is defined as process hours?What is Del\'s flexible budget for the preceding cost function? $1,280,000?? $2,080,000?? $1,984,000?? $1,221,000?? $2,112,000
A budget serves as a benchmark against which: actual results can be compared.? allocated results can be compared.? actual results become inconsequential.? allocated results become inconsequential.? cash balances can be compared to expense totals.?
Question 4
The balance sheet for December 31, 2012, and December 31, 2011, and the income statement for the year ended December 31, 2012, for Celtics, Inc., follow: Celtics, Inc. Balance Sheet December 31, 2012 and 2011 2012 2011 Assets Cash $ 25,000 $ 20,000 Accounts Receivable (net) 60,000 70,000 Inventory 80,000 100,000 Land 50,000 50,000 Building and Equipment 130,000 115,000 Accumulated Depreciation (85,000) (70,000) Total Assets $ 260,000 $ 285,000 Liabilities and Stockholders' Equity Accounts Payable $ 30,000 $ 35,000 Income Taxes Payable 4,000 3,000 Wages Payable 5,000 3,000 Current Notes Payable 50,000 60,000 Common Stock 110,000 100,000 Retained Earnings 61,000 84,000 Total Liabilities and Stockholders' Equity $ 260,000 $ 285,000 Celtics, Inc. Income Statement For the Year ended December 31, 2012 Sales $ 500,000 Expenses: Cost of Goods Sold 330,000 Selling and Administrative 90,000 Interest Expense 5,000 Total Expenses 425,000 Income Before Taxes 75,000 Income Tax Expense 30,000 Net Income $ 45,000 Note: Cash Dividends of $68,000 were declared and paid during 2012. Selling and Administrative includes Depreciation Expense of $15,000. Required: [One Sheet only] a. Prepare the complete statement of cash flows for 2012 in complete and good form. (For operating section use the indirect method) b Prepare cash flows from operations only, using direct method, and in good form. c Find "Cash Conversion Cycle" [See Fraser, 10e, p 204; use yearend B/S numbers & show work] d Determine FLI Comment on result.
Question 5
6) Quattro Corporation signed a lease from Cinco Leasing Company of July 1 Year 1, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of $10,000 per year are required by the term of the lease, with the first payment due upon signing. Quattro?s incremental borrowing rate is 8%, but its implicit interest rate is unknown. Present value of an annuity at 8% for 5 years = 3.993 Present value of an annuity at 8% for 4 years = 3.312 On its December 31, 20X3 financial statements, Quatto would display the following amounts in the indicated accounts: Equipment ; Accumulated Depreciation; Lease Payable e) $0;$0;$0 f) $43,120; $5,390; $33,120 g) $43,120; $4,312; $33,120 h) $49,930; $6,241; $39,930 7) Finance Here Sales & Service provides leased-based financing for its full line of commercial generators. Sales of the generators are properly accounted for as operating sales-type leases. Terms of the leases include return of the generators to Finance Here Sales & Service for resale in secondary markets. The company estimates that the non-guaranteed residual values on generators are equal to an average of 10 percent of the historical cost of the generators. Finance Here Sales & Service can expect that: ?? A) Cost of goods sold will be equal to the historical cost of the generators sold. ? B) Cost of goods sold will be greater than the historical cost of the generators sold. ? C) Cost of goods sold will be less than the historical cost of the generators sold. ? D) The relationship of cost of goods sold and the historical cost of the generators cannot be determined. 8) Capius Corporation issued 2000 bonds in $1000 individual denominations. Each bond has twenty detachable warrants. The bonds and warrants were sold at 110. At the time the bond were issued each warrant had a market value to one percent of the face value of one bond. Capius will account for this transaction as: E) Bond payable with an unamortized premium and a credit to Additional Paid In Capital Warrants F) Bond payable with an unamortized premium and a debit to Additional Paid In Capital Warrants G) Bond payable with an unamortized discount and a credit to Additional Paid In Capital Warrants H) Bond payable with an unamortized discount and a debit to Additional Paid In Capital Warrants,Michael,thank you so much, this has really helped! I will continue to come to you for assistance, I am so grateful!,Here are some more questions that I have for you. Thank you again, and PLEASE be sure to let me know how I can leave the best feedback for you!! 1) White Industries started their operations on January 1, Year 1 and recorded $400,000 in warranty expense during the year. Warranty expense was the only difference between the company's pretax financial income and its tax return income of $900,000. White will be required to pay these warranties at a rate of $100,000 per year beginning in Year 2. Although White fully expects to earn in excess of $100,000 in Year 2 and Year 3, the company believes it is more likely than not that it will incur a loss after Year 3. The enacted tax rate is 25% in current and future periods. What will White record as its income tax expense in Year 1? A. $100,000 B. $125,000 C. $175,000 D. $225,000 2) Erika?s Surf Shop had taxable income in Year 2 of $500,000 and pretax financial income of $600,000. The company had a cumulative $200,000 difference between its taxable income and pretax financial statement income at December 31, Year 1. These differences were solely related to accelerated depreciation methods used for income tax purposes. The enacted tax rate increased to 30 percent in Year 2 compared to an enacted rate of 20 percent in the prior year. At December 31, Year 2, the company would record a deferred tax expense of: A. $40,000 B. $50,000 C. $90,000 D. $150,000 3) For the year ended December 31, Laramie Industries has a depreciation expense per its tax return greater than its financial statement tax expense, and had recorded warranty expense (associated with a one-year guarantee on its products) in its financial statements. Pretax income is less than tax return income as a result of these reconciling items. As a result of these transactions, Laramie will display: A. A current deferred tax asset and noncurrent deferred tax liability B. A noncurrent deferred tax asset and a current deferred tax liability C. A net current tax asset D. A net noncurrent tax asse
