Home # 1 & 2 (Chapter # 2) Cost Classification and Cost of Goods Sold

Home # 1, 2, 3 & 4 (Chapter # 3) Cost Volume Profit Analysis

& Contribution Method & Contribution Method

Home # 1, 2 & 3 (Chapter # 4) Standard Costing & Variance Analysis

Home # 1 & 2 (Chapter # 5) Profit Planning HOME WORK # 1 Mynor Corporation manufactures and sells a seasonal product that has peak sales in the third quarter. The following information concerns operations for Year 2the coming yearand for the rst two quarters of Year 3: a. The companys single product sells for $8 per unit. Budgeted sales in units for the next six quarters are as follows (all sales are on credit)

b. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the companys balance sheet showed $65,000 in accounts receivable, all of which will be collected in the rst quarter of the year. Bad debts are negligible and can be ignored. c. The company desires an ending nished goods inventory at the end of each quarter equal to 30% of the budgeted unit sales for the next quarter. On December 31, Year 1, the company had 12,000 units on hand. d. Five pounds of raw materials are required to complete one unit of product. The company requires ending raw materials inventory at the end of each quarter equal to 10% of the following quarters production needs. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand. e. The raw material costs $0.80 per pound. Raw material purchases are paid for in the following pattern: 60% paid in the quarter the purchases are made, and the remaining 40% paid in the following quarter. On January 1, Year 2, the companys balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be paid for in the rst quarter of the year. Prepare the following budgets and schedules for the year, showing both quarterly and total gures: 1. A sales budget and a schedule of expected cash collections. 2. A production budget. 3. A direct materials budget and a schedule of expected cash payments for purchases of materials. ________________________

HOME WORK # 2 Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available: a. The cash balance at the beginning of September is $9,000. b. Actual sales for July and August and expected sales for September are as follows: July August September Cash Sales $6,500 $5,250 $7,400 Sales on Account 20,000 30,000 40,000 Total Sales $26,500 $35,250 $47,400

c. Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. d. Purchases of inventory will total $25,000 for September. Twenty percent of a months inventory purchases a4re paid for during the month of purchase. The accounts payable remaining from Augusts inventory purchases total $16,000, all of which will be paid in September. e. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, $4,000 is for depreciation. f. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month. g. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the companys bank to bolster the cash position as needed. Required: 1. Prepare a schedule of expected cash collections for September. 2. Prepare a schedule of expected cash disbursements during September for inventory purchases. 3. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September.

Home # 1, 2, 3 & 4 (Chapter # 5) Capital Budgeting Techniques HOME WORK # 1 (Apply NPV Method)

HOME WORK # 2 (Apply Payback Period) York Company needs a new milling machine. The company is considering two machines: machine A and machine B. Machine A costs $15,000, has a useful life of ten years, and will reduce operating costs by $5,000 per year. Machine B costs only $12,000, will also reduce operating costs by $5,000 per year, but has a useful life of only five years. Which machine should be purchased according to the payback method? HOME WORK # 3 (Apply Internal Rate of Return) Harper Company is contemplating the purchase of a machine capable of performing certain operations that are now performed manually. The machine will cost $50,000, and it will last for five years. At the end of the five-year period, the machine will have a zero scrap value. Use of the machine will reduce labor costs by $18,000 per year. Harper Company requires a minimum return of 20% on all investment projects. Should the machine be purchased?

HOME WORK # 4 (Apply Least Cost Approach) Val-Tek Company is considering replacing an old threading machine with a new threading machine that would substantially reduce annual operating costs. Selected data relating to the old and new machines are presented below: Old Machine New Machine Overhauling/Purchase Cost $40,000 $250,000 Salvage Value Now $30,000 - Annual Cash Operating Cost $150,000 $90,000 Salvage Value in Six Years $0 $50,000 Remaining Life 6 Years 6 Years

Val-Tek Company uses a 10% discount rate. Should the company replace the old threading machine? Use Least Cost Method. ____________________________________________