1.) Corn Co incurs a cost of $39 per unit, of which $15 is variable, to make a product that normally sells for $50. A foreign wholesaler offers to buy 5522 units at $22 each. Corn will incur shipping costs of $2 per unit. Compute the increase or decrease in net income Corn will realize by accepting the special order using differential analysis and complete the below table. Should they accept the special order? Round all answers to the nearest whole unit and whole dollar. Enter negative numbers with a minus sign. Enter zeros where appropriate.
2.) Jackson Co must decide whether to make or buy some of its components. The variable costs of producing 92000 electrical cords for its floor lamps are $21 per unit. The fixed costs associated with making the cords is $435000. Instead of making the cords, the company has the opportunity to buy the cords at $26 per unit. However, 30% of the fixed costs will remain. Prepare a differential analysis showing whether the company should make or buy the electrical cords. Round all answers to the nearest whole unit and whole dollar. Enter negative numbers with a minus sign. Enter zeros where appropriate.
3.) Beltway Company is preparing their sales and selling expense budgets for the next quarter (October, November, December). Beltway produces and sells one product. The budgeted sales price for this product is $55 per unit. The company expects to sell 12,000 units in October. They are budgeting a 3% increase in unit sales each month after October.
Prepare the sales budget for the quarter (in units and dollars). Round all answers to the nearest whole unit and whole dollar.
4.) The January 1st inventory of finished units for Ryan and Son's Company is 3,000. During January the company plans to sell 34,000 units and desires a January 31st inventory of 5,000 units.
How many units should the company plan on producing in January?
5.) Halifax, Inc. is trying to prepare their budget for the third quarter. As part of the budget they need to determine the total cash that will be collected from sales for each month. Halifax reports the following budgeted sales information necessary to calculate budgeted cash collections:
June July August September
Sales $674,930 $634,790 $661,060 $642,080
35% of the monthly sales listed above are cash sales and are therefore collected right away and 65% of the sales are on account. The amount sold on account each month is collected the following month.
Calculate the amount of cash collected in July, August, and September. Round all answers to the nearest whole dollar.
6.) Given the following information, how much direct labor should be budgeted for February?
Selected data for the month of February:
Planned production 39,000 units
Direct labor hours per unit 1.25 hours
Direct labor rate $12 per hour
7.) Kaiser, Inc. has the following budgeted cash collections from the cash receipts budget and cash payments (excluding loan principal repayments and interest payments) from the cash disbursements budget for the next quarter (April, May, & June).
Cash
Receipts Cash
Payments
April $34,438 $31,450
May $35,298 $42,378
June $30,842 $27,551
In addition, Kaiser's beginning cash balance as of April 1 is $15,240.
Kaiser, Inc. would like to maintain a minimum $15,000 cash balance at all times. In order to achieve this goal Kaiser has negotiated a line of credit with the bank. If the preliminary cash balance falls below $15,000 Kaiser will borrow the necessary funds to keep their balance above the desired amount. If the preliminary cash balance is above the $15,000 minimum balance they will use any excess to pay down any outstanding loan balance at the time. The interest rate on any outstanding line of credit balance is 6% per year. The interest is paid at the end of each month and is computed on the beginning loan balance for the month. They have a zero balance on their line of credit on April 1st.
Prepare the cash budget for the quarter.
Enter cash disbursements and loan repayments as a negative number. Round all calculations to the nearest whole dollar.
8.) Applewood Company is a service based company. They are putting together their budgeted income statement for next year. They project their next year's budget based on prior year's results. Their prior year's income statement follows:
Applewood Company
Actual Income Statement
For Prior Year
Sales 899,500
Expenses:
Sales commission expense 98,945
Rent expense 22,200
Advertising expense 89,669
Salaries expense 220,000
Payroll tax expense 24,399
Depreciation 25,000
Total Expenses 480,213
Income before taxes 419,287
Income tax expense 125,786
Net Income/(Loss) 293,501
Applewood's management also predicts the following information to assist in preparing the budget for the next year.
1. Sales will increase by 8%.
2. Sales Commissions are 11% of sales.
3. Rent expense for next year is $1,850 per month for January - August and will increase to $2,100 on September 1st.
4. Advertising expense is 12% of sales.
5. Salaries are expected to increase by 3%.
6. Payroll tax expense is expected to remain 7.65% of commissions and salaries combined.
7. Depreciation expense is expected to remain unchanged.
8. The income tax rate is 30%.
Prepare a budgeted income statement for the next year. Round all calculations to the nearest whole dollar.