Required Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. (Hint It will be necessary to calculate some per-unit data to accomplish this ) Note: Enter your answers in thousands. Do not round intermediate calculations. Enter all amounts as positive values. Revised Product Line Earnings Statements Annual Costs of Operating Each Product Line Fiber-Treats Carbo-Crunch Totals Sales in units 0 Sales in dollars $ Unit-level costs O Total unit-level costs Product-level costs Facility-level costs Total facility-level costs Total product cost Profit on products Sale of Sugar-Bits equipment Segment earningsThe following excerpt is from Perez Company's 2019 annual report filed with the SEC Management evaluates the performance of our operating segments separately to individually monitor the different factors affecting financial performance. Our Company manages income taxes and certain treasury-related items, such as interest income and expense, on a global basis within Corporate. We evaluate segment performance based primarily on net operating revenues and operating income (loss). Selected segment data for The Perez Company for the 2019 and 2018 fiscal years follow. Dollar amounts are in millions. Europe, Middle Latin Asia East, & Africa America North America 2019 Fiscal Year Pacific Net operating revenues $ 8, 432 5, 386 9:861 5, 922 Income before taxes 5, 026 3, 861 3) 737 3,499 Identifiable operating assets 5.905 3, 766 19, 269 3,722 2018 Fiscal Year Net operating revenues $ 8, 141 5, 176 7, 647 3,943 Income before taxes 5 069 3, 616 3, 990 3, 558 Identifiable operating assets 5, 497 3 , 655 18, 216 3, 674 Required a. Compute the ROI for each of Perez's geographical segments for each fiscal year, Which segment appears to have the best performance during 2019 based on their ROIs? Which segment showed the most improvement from 2018 to 2019? Note: Round your percentage answers to 1 decimal place (i.e., 0.234 should be entered as 23.4) and other answers to nearest dollar amount. b. Assuming Perez's management expects a minimum return of 30 percent, calculate the residual income for each segment for each fiscal year. Which segment appears to have the best performance based on residual income? Which segment showed the most improvement from 2018 to 2019? Note: Enter your answers in millions. Negative amounts should be indicated by minus sign. Round your percentage answers to 1 decimal place (i.e., 0.234 should be entered as 23.4) and other answers to nearest dollar amount. Europe, Middle East, & North Africa Latin America Asia Pacific America a. Return on Investment (2019) 1% a Return on Investment (2018) 96 a. Which segment appears to have the best performance during 20 19 based on their ROIs? a. Which segment showed the most improvement from 2018 to 2019? b Residual Income (2019) b Residual Income (2012) b. Which segment appears to have the best performance based on residual income? h Which canment choured the mact improvement from 2018 in 20192 of 5 NextThey bought a used taco cart for $15,000. This cost, along with the cost for supplies to get started, a business license, and street vendor license brought their initial expenditures to $20,000. They withdrew $3,000 from personal savings they had accumulated by working part time during college, and they borrowed $15,000 from Maria's parents. They agreed to pay interest on the outstanding loan balance each month based on an annual rate of 4 percent They will repay the principal over the next few years as cash becomes available. They were able to rent space in a parking lot near the campus they had attended, believing that the students would welcome their food as an alternative to the typical fast food that was currently available. After two months in business, September and October, they had average monthly revenues of $24,000 and out-of-pocket costs of $19,000 for rent, ingredients, paper supplies, and so on, but not interest. Devin thinks they should repay some of the money they borrowed, but Maria thinks they should prepare a set of forecasted financial statements for their first year in business before deciding whether or not to repay any principal on the loan. She remembers a bit about budgeting from a survey of accounting course she took and thinks the results from their first two months in business can be extended over the next 10 months to prepare the budget they need. They estimate the cart will last at least five years, after which they expect to sell it for $3,000 and move on to something else in their lives. Maria agrees to prepare a forecasted (pro forma) income statement, balance sheet, and statement of cash flows for their first year in business, which includes the two months already passed. Required a. Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her expectations for the business. Assume no principal will be repaid on the loan Complete this question by entering your answers in the tabs below. Income Cash Flows Balance Sheet Statement Prepare the budgeted income statement. Budgeted Income Statement $ Cash Flows >Maria Gutierrez and Devin Cuncan recently graduated from the same university After graduation they decided not to seek jobs at established organizations but, rather, to start their own small business hoping they could have more flexibility in their personal lives for a few years. Maria's family has operated Mexican restaurants and taco trucks for the past two generations, and Maria noticed there were no taco truck services in the town where their university was located. To reduce the amount they would need for an initial investment, they decided to start a business operating a taco cart rather than a taco truck, from which they would cook and serve traditional Mexican-style street food. They bought a used taco cart for $15,000. This cost, along with the cost for supplies to get started, a business license, and street vendor license brought their initial expenditures to $20,000. They withdrew $3,000 from personal savings they had accumulated by working part time during college, and they borrowed $15,000 from Maria's parents. They agreed to pay interest on the outstanding loan balance each month based on an annual rate of 4 percent They will repay the principal over the next few years as cash becomes available. They were able to rent space in a parking lot near the campus they had attended, believing that the students would welcome their food as an alternative to the typical fast food that was currently available. After two months in business, September and October, they had average monthly revenues of $24,000 and out-of-pocket costs of $19,000 for rent, ingredients, paper supplies, and so on, but not interest Devin thinks they should repay some of the money they borrowed, but Maria thinks they should prepare a set of forecasted financial statements for their first year in business before deciding whether or not to repay any principal on the loan. She remembers a bit about budgeting from a survey of accounting course she took and thinks the results from their first two months in business can be extended over the next 10 months to prepare the budget they need. They estimate the cart will last at least five years, after which they expect to sell it for $3,000 and move on to something else in their lives. Maria agrees to prepare a forecasted (pro forma) income statement, balance sheet, and statement of cash flows for their first year in business, which includes the two months already passed Required a. Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her expectations for the business. Assume no principal will be repaid on the loan. Complete this question by entering your answers in the tabs below. Income Cash Flows Balance Sheet Statement Prepare the budgeted income statement. Budgeted Income StatementTarget Corporation believed it could increase the company's profits by closing its stores in Canada. Other companies have also tried to improve their financial performance by downsizing. In November 2017, General Electric announced it would begin a downsizing operation that would result in their exiting businesses that were using over $20 billion in assets in the next one to two years. In January 2018, Newell Brands, the company whose products include Tupperware, Sharpie pens, Elmer's Glue, and Rawlings sports products, announced it would be reducing its product offerings to the extent that it would close half of its facilities and reduce its revenues by 20 percent. Consider the additional information presented as follows, which is hypothetical. All dollar amounts are in thousands, unit amounts are not. Assume that a manufacturer of breakfast cereals decides to eliminate one of its products called Sugar-Bits from a segment that currently produces three products. As a result, the following are expected to occur: . The number of units sold for the segment is expected to drop by only 41,200 because of the elimination of Sugar-Bits, since most customers are expected to purchase a Fiber-Treats or Carbo-Crunch product instead. The shift of sales from Sugar-Bits to Fiber- Treats and Carbo-Crunch is expected to be evenly split. In other words, the sales of Fiber-Treats and Carbo-Crunch will each increase by 112,000 units. 2. Rent is paid for the entire production facility, and the space used by Sugar-Bits cannot be sublet. 3. Utilities costs are expected to be reduced by $25,200. 4. All of the supervisors for Sugar-Bits were terminated. No new supervisors will be hired for Fiber-Treats or Carbo-Crunch. 5. All of the equipment being used to produce Sugar-Bits will be sold at its current market value of $35,600. 6. Facility-level costs will continue to be allocated between the product lines based on the number of units produced. Product Line Earnings Statements (Dollar amounts are in thousands) Annual Costs of Operating Each Product Line Fiber-Treats Carbo-Crunch Sugar-Bits Total Sales in units 508, 860 508 , 800 265, 200 1, 282, 800 Sales in dollars $ 508, 800 $ 508, 800 $ 265, 200 $ 1, 282, 800 Unit-level costs: Cost of production 50, 880 50, 880 29, 400 131, 160 Sales commissions 6, 360 6, 360 2, 520 15, 240 Shipping and handling 11, 448 10, 176 4,920 26, 544 Miscellaneous 3 , 816 2, 544 2, 400 8,760 Total unit-level costs 72, 504 69, 960 39, 240 181, 704 Product-level costs: Supervisors' salaries 4,920 3,720 2, 400 11, 040 Facility-level costs: Rent 49, 200 49, 200 24, 000 122, 400 Utilities 63, 600 63, 600 33, 150 160, 350 Depreciation on equipment 204, 900 204, 000 108, 006 516,000 Allocated companywide expenses 12, 720 12, 720 6, 630 32,070 Total facility-level costs 329, 520 329, 520 171, 780 830, 820 Total product cost 406, 944 403, 200 213, 420 1, 023, 564 $ 105, 600 $ 51, 780 Profit on products $ 101, 856 $ 259, 236 Required Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. (Hint It will be necessary to calculate some per-unit data to accomplish this.) Required a. Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her expectations for the business. Assume no principal will be repaid on the loan. Complete this question by entering your answers in the tabs below. Income Statement Cash Flows Balance Sheet Prepare the budgeted statement of cash flows. Note: Cash outflows should be indicated by a minus sign Budgeted Statement of Cash Flows Cash flows from operating activities Outflows for Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities Inflows from Net cash flows from financing activities Net Change in Cash $ would have made a lot more money if I'd stayed within my budget. I guess I'll have to wait for another bad year before I get a bonus. Like I said, this is the dumbest place I've ever worked." SMW's master budget and the actual results for the most recent year of operating activity follow. Master Budget Actual Results Variances Number of units For U 153, 000 163, 000 10 , 000 Sales revenue $ 33, 660, 090 $ 36, 186, 900 $ 2, 526, 000 F Variable manufacturing costs Materials (4, 896, 000) (5, 399,090) 503, 000 Labor (4, 284, 000 (4, 483, 080) 199, 000 C Overhead (2, 142, 090) 12, 333, 000 191,000 Variable selling, general, and administrative costs (5, 355, 000) (5 , 552, 000) 197 , 000 1C Contribution margin 16, 983, 006 18, 419, 006 1, 436, 060 Fixed costs Manufacturing overhead (7, 986, 600 7, 896, 000 90, 600 Selling, general, and administrative costs (7, 108, 000) (7, 147, 000) 39 , 000 Net income $ 1, 888 , 406 $ 3,376,000 $ 1, 487, 600 Required c. Prepare a flexible budget and recalculate the budget variances. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Flexible Budget Actual Results Variances Number of units 163,000 Sales revenue $ 36,186,000 Variable manufacturing costs Materials 5 399 000 Labor 4,483,000) Overhead (2,333,000) Variable selling, general & administrative 5,552,000) Contribution margin 18,419,000 Fixed costs Manufacturing overhead 7,896,000) Selling, general & administrative (7, 147,000) Net income $ 3,376,000Jasmin Sylvera is the manufacturing production supervisor for Stuart Motor Works (SMW), a company that manufactures electrical motors for industrial applications. Trying to explain why she did not get the year-end bonus that she had expected, she told a friend, "This is the dumbest place I've ever worked. Last year the company set up this budget assuming it would sell 153,000 units. Well, it sold only 143.000. The company lost money and gave me a bonus for not using as much materials and labor as was called for in the budget. This year, the company has the same 153,000 units goal and it sells 163,000. The company's making all kinds of money. You'd think I'd get a big bonus. Instead, management tells me I used more materials and labor than was budgeted. They said the company would have made a lot more money if I'd stayed within my budget. I guess I'll have to wait for another bad year before I get a bonus Like I said, this is the dumbest place I've ever worked." SMW's master budget and the actual results for the most recent year of operating activity follow Master Budget Actual Results Variances For U Number of units 153,000 163 , 000 10 ,000 Sales revenue $ 33, 660 , 060 $ 36, 186, 006 $ 2, 526, 000 Variable manufacturing costs Materials (4, 896, 000) (5, 399,000) 503 , 000 Labor (4, 284, 000 (4, 483,000) 199 , 000 Overhead (2, 142, 000) (2, 333, 000) 191,006 ME CCC Variable selling, general, and administrative costs (5, 355, 000 (5, 552, 000 197 , 000 Contribution margin 16, 983, 000 18,419, 090 1, 436,000 Fixed costs Manufacturing overhead (7,986, 600 (7, 896,600) 90, 690 Selling, general, and administrative costs (7, 108, 000 7, 147, 800 39 , 000 Net income $ 1, 888, 490 $ 3, 376, 000 $ 1, 487, 600 Required c. Prepare a flexible budget and recalculate the budget variances. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Flexible Budget Actual Results Variances Number of units 63,000 Sales revenue 36, 186,000 Variable manufacturing costs Materials (5,399,000) Labor 4,483,000) Overhead (2,333,000) Variable selling, general & administrative 5,552,000) Contribution marain 18 419 000income (loss). Selected segment data for The Perez Company for the 2019 and 2018 fiscal years follow. Dollar amounts are in millions Europe, Middle Latin Asia East, & Africa America North America Pacific 2019 Fiscal Year Net operating revenues $ 8, 432 $ 5, 386 $ 9, 861 Income before taxes $ 5,922 5,026 3, 861 3, 737 3, 499 Identifiable operating assets 6.905 3 , 766 19, 269 3, 722 2018 Fiscal Year Net operating revenues $ 8, 141 5, 176 $ 7, 647 $ 5,943 Income before taxes 5,069 3, 616 3,990 3 , 558 Identifiable operating assets 5, 497 3, 655 18, 216 3 , 674 Required a. Compute the ROI for each of Perez's geographical segments for each fiscal year. Which segment appears to have the best performance during 2019 based on their ROIs? Which segment showed the most improvement from 2018 to 2019? Note: Round your percentage answers to 1 decimal place (i.e., 0.234 should be entered as 23.4) and other answers to nearest dollar amount. b. Assuming Perez's management expects a minimum return of 30 percent, calculate the residual income for each segment for each fiscal year. Which segment appears to have the best performance based on residual income? Which segment showed the most improvement from 2018 to 2019? Note: Enter your answers in millions. Negative amounts should be indicated by minus sign. Round your percentage answers to 1 decimal place (i.e., 0.234 should be entered as 23.4) and other answers to nearest dollar amount. Europe, Middle East, & North Africa Latin America Asia Pacific America a. Return on Investment (2019) % % % % a. Return on Investment (2018) a. Which segment appears to have the best performance during 2019 based on their ROIs? a. Which segment showed the most improvement from 2018 to 2019? b. Residual Income (2019) b. Residual Income (2018) b. Which segment appears to have the best performance based on residual income? b. Which segment showed the most improvement from 2018 to 2019?Required a. Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her expectations for the business. Assume no principal will be repaid on the loan Complete this question by entering your answers in the tabs below. Income Statement Cash Flows Balance Sheet Prepare the budgeted balance sheet. Note: Amounts to be deducted should be indicated by a minus sign. Budgeted Balance Sheet Assets Total assets Liabilities Equity Total liabilities and equity $