Question 1 - Orlo Company is planning their budget for the first half of 2012. Their budgeted sales for the last part of 2011 and the first 6 months of 2012 are as follows:
|
Month
|
Sales
|
|
Nov-11
|
$200,000
|
|
Dec-11
|
$150,000
|
|
Jan-12
|
$100,000
|
|
Feb-12
|
$75,000
|
|
Mar-12
|
$125,000
|
|
Apr-12
|
$150,000
|
|
May-12
|
$200,000
|
|
Jun-12
|
$250,000
|
Based on past collection history, Orlo expects to collect 50% of sales on account in the month of the sale, 35% in the month following the sale, and 10% in the second month following the sale. All sales are on account.
Required: Prepare a cash receipts budget for Orlo for January through June of 2012. You may fill in the blue area with the projected sales if it will help you.
Question 2 - Orlo Company has the following production planned for the first six months of 2012:
|
Jan-12
|
50000
|
|
Feb-12
|
37500
|
|
Mar-12
|
62500
|
|
Apr-12
|
75000
|
|
May-12
|
100000
|
|
Jun-12
|
125000
|
Orlo's variable manufacturing overhead costs are $2 per unit produced. All other costs are fixed, and include depreciation: $10,000; Indirect Labor, $37,000; Taxes and Insurance, $17,500.
Required: Prepare the overhead budget for the first six months of 2012. You may use the blue area to fill in the production in units, if you like.
Question 3 - Orlo Company has the following material standard for the manufacture of its Icee Kupps:
5 oz of plastic at $.10 per oz.
In a recent month, Orlo purchased 16,000 oz. of plastic for a total cost of $1,560. It used 12,000 oz. to make 2,200 cups.
Required: Calculate the price and quantity variances for Orlo. Be sure to indicate if variance is favorable or unfavorable by putting an F or a U right after the number. For instance, 95F.
Question 4 - Orlo's income information for the month of December, 2011, is shown below. Orlo has 2 divisions: the Icee Kupp Division and the KeepitHot Plate Division.
|
Icee Kupp
|
KeepitHot Plate
|
|
Sales
|
$125,000
|
$300,000
|
|
Variable costs
|
50,000
|
175,000
|
|
Fixed costs, traceable
|
$25,000
|
50,000
|
|
Fixed costs, common
|
25,000
|
50,000
|
REQUIRED: Prepare a income statement segmented by division for the company. Prepare statements for company as a whole and each division.
Question 5 - Orlo's 2 divisions, the Icee Kupp Division and the KeepiHot Plate Division, have the following amounts in their accounts below:
|
Icee Kupp
|
KeepitHot Plate
|
|
Average operating assets
|
200,000
|
350,000
|
|
Sales
|
$125,000
|
$300,000
|
|
Net income
|
$25,000
|
$75,000
|
|
Required rate of return
|
15%
|
18%
|
1. Calculate each divisions return on investment. Then calculate each division;s residual income. Round to 2 decimal places. Put a minus in front of negative numbers.
2. If the manager is evaluated based on Return on Investment, which company or companies would turn down an investment opportunity of $100,000 that yielded $19,000 in net income?
3. If the manager is evaluated based on residual income, which company or companies would turn down an investment opportunity of $100,000 that yielded a $17,000 net income?
Attachment:- Assignment.rar