Concept explainers
Tanya Williams is the new
The new accounts manager is paid a salary plus a bonus of $15 for every new account she generates above the budgeted amount. Thus, if the annual budget calls for 500 new accounts, and 540 new accounts are obtained, Williams’s bonus will be $600 (40 × $15).
Williams believes the economy of the county will continue to grow at the same rate in 20x2 as it has in recent years. She has decided to submit a budgetary projection of 700 new accounts for 20x2.
Required: Your consulting firm has been hired by the bank president to make recommendations for improving its operations. Write a memorandum to the president defining and explaining the negative consequences of budgetary slack. Also discuss the bank’s bonus system for the new accounts manager and how the bonus program tends to encourage budgetary slack.
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Managerial Accounting: Creating Value in a Dynamic Business Environment
- First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $37000 apiece. Installation costs will amount to about $15000 per machine. Each machine has a projected useful life of 10 years. Due to rapid growth in the Southside district, these two machines (combined) are expected to handle 50000 cash transactions per year. On average, each cash transaction is expected to save $0.30 in teller expenses. If First National has a 0.10 cost of capital, what is the NPV of this project?arrow_forwardWilson Bryant Air Conditioning, a Middle Georgia HVAC company, wanted to build a web-based project tracking for all small HVAC companies in Middle Georgia. Wilson Bryant Air Conditioning asked SunTrust Bank for a loan of $5 million presenting their idea. They had an agreement with the SunTrust that they will repay the loan by allocating 80% of the company's profits each year for the first 4 years to SunTrust. In the fifth year, the company will pay the remaining balance on the loan in cash. The company assumes that it will not earn any profit in the first year. Also, the company anticipates that the profits will be $1.5 million per year in years 2 through 4. If the SunTrust accepts the deal at an interest rate of 14% per year, and the company's plan will work to perfection, what is the projected amount of the last loan payment (in year 5)? Draw the cash flow diagram.arrow_forwardPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULAS5.- Sandra Alcocer goes to her bank to ask for your help to get her out of her current predicament. She needs to have $625,000.00 in 6 years. Today she deposits $90,000.00 in an account that pays 8.25% compounded monthly. Sandra wants to know exactly how much she should deposit in two years to complete and have the desired amount at the end of the term. Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach and then the result. Above all, to check the procedure and/or the formulas used, especially when you use excel. TO CONSIDER THE YEAR AS 360 DAYS (WHICH IS COMMERCIAL) (only if required)arrow_forward
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- A new college graduate has a job with Boeing Aerospace. She plans to borrow $10,000 now to help in buying a car. She has arranged to repay the entire principal plus 8% per year interest after 5 years. Identify the engineering economy symbols involved and their values for the total owed after 5 years.arrow_forwardPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASProblem 5:An account executive at Santander branch CETYS, receives a deposit from an important client-student, surnamed Cuevas Ronchas for $30,000.00; in an account that generates 6% interest, capitalizable monthly. After two years, he decides to make new deposits at the end of each year, so that after three years from this decision, he has $200,000.00 at the time of the last deposit. Find the amount of annual deposits he has to make for the last 3 years. The solution involves calculating a future value and then a present value. Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach and then the result. Above all, to check the procedure and/or the formulas used, especially when you use excel.arrow_forwardPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASProblem 5:An account executive at Santander branch CETYS, receives a deposit from an important client-student, surnamed Cuevas Ronchas for $30,000.00; in an account that generates 6% interest, capitalizable monthly. After two years, he decides to make new deposits at the end of each year, so that after three years from this decision, he has $200,000.00 at the time of the last deposit. Find the amount of annual deposits he has to make for the last 3 years. The solution involves calculating a future value and then a present value. Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach and then the result. Above all, to check the procedure and/or the formulas used, especially when you use excel. Please, not in written form, please do it in excel Please, not in written form, please do it in excel Please, not in written…arrow_forward
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