Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter IE, Problem 12IE
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 8 as well as the schedules that you prepared in answering Integration Exercises 8 through 11.
Required:
1. Assume that the company expects to collect all of its credit sales in the quarter of sale rather than the original assumption that it will collect 75% of credit sales in the quarter of sale and the remaining 25% in the subsequent quarter. Without changing any of the underlying assumptions in your budgeting assumptions tab, calculate the following revised figures
related to the 2017 budget:
a. Net income (absorption basis).
b.
c. Net cash provided by operating activities.
2. Go to the Budgeting Assumptions tab in your Microsoft Excel worksheet. Change the percentage of sales that are collected in the quarter of sale to 100% and the percentage of sales that are collected in the quarter after sale to 0%. Do your answers to la through 1c match the numbers that appear in your Excel worksheet? If not. why?
3. Refer to the original budgeting assumptions from Integration Exercise 8. Assume that the company expects to pay its direct laborers $19 per hour instead of the original estimate of $ 18 per hour. Without changing any of the underlying assumptions in your budgeting assumptions tab, calculate the following revised figures related to the 2017 budget:
a. Ending finished goods inventory at December 31. 2017.
b. The Break-Even point in unit sales.
c. Variable costing net operating income.
4. Go to the Budgeting Assumptions tab in your Microsoft Excel worksheet. Change the direct labor cost per hour from $18 to $19. Do your answers to 3a through 3c match the numbers that appear in your Excel worksheet? If not, why?
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Students have asked these similar questions
Relevant data from the Poster Company's operating budgets are:
Sales
Direct material purchases
Direct labor
Manufacturing overhead
Selling and administrative expenses
Depreciation included in selling and administrative
Collections from customers
Quarter 1 Quarter 2
Beginning Cash Balance
Add: Cash Receipts
Collections from Customers
$208,480 $211,540
115,300 120,832
75,205 73,298
25,300
23,400
33,400
33,500
1,500
900
Cash payments for purchases
Additional data:
Capital assets were sold in January for $10,000 and $4,400 in May.
Dividends of $4,000 were paid in February. The beginning cash balance was $60,360 and a required minimum cash balance is $39,000.
215,392 240,154
114,290
119,254
Use this information to prepare a cash budget for the first two quarters of the year: If an amount box does not require an entry, leave it blank.
Other Collections
Total Receipts
Total Available Cash
Less: Cash Payments
Purchase of Direct Material
Direct Labor
Manufacturing Overhead
Selling and…
Sales Revenue Approach, Variable Cost Ratio, Contribution MarginRatioArberg Company’s controller prepared the following budgeted income statement for thecoming year:
Required:1. What is Arberg’s variable cost ratio? What is its contribution margin ratio?2. Suppose Arberg’s actual revenues are $30,000 more than budgeted. By how much willoperating income increase? Give the answer without preparing a new income statement.3. How much sales revenue must Arberg earn to break even? Prepare a contribution marginincome statement to verify the accuracy of your answer.4. What is Arberg’s expected margin of safety?5. What is Arberg’s margin of safety if sales revenue is $380,000?
A company uses two major material inputs in its production. To prepare its
manufacturing operations budget, the company has to project the cost changes of these
material inputs. The cost changes are independent of one another. The purchasing
department provides the following probabilities associated with projected cost changes.
Cost Change
Material 1
Material 2
3% increase
0.3
0.5
5% increase
0.5
0.4
10% increase
0.2
0.1
The probability that there will be a 3% increase in the cost of both Material 1 and Material
2 is (E)
a. 15%
O b. 20%
O c. 80%
O d. 40%
Chapter IE Solutions
Introduction To Managerial Accounting
Ch. IE - INTEGRATION EXERCISE I Different Costs for...Ch. IE - Absorption Costing, Variable Costing, Cost,...Ch. IE - Cash Budget, Income Statement, Balance Sheet,...Ch. IE - Prob. 4IECh. IE - Plantwide and Departmental Overhead Allocation;...Ch. IE - Normal Costing versus Actual Costing Darwin...Ch. IE - Prob. 7IECh. IE - Master Budgeting Endless Mountain Company...Ch. IE - Statement of Cash Flows Refer to the information...Ch. IE - Financial Statement Ratio Analysis Refer to the...
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