1. 1. (TCO 7) The cash budget is one of the primary financial budgets. Discuss the importance of the cash budget. Identify the individual sections of the cash budget and the information included in each section. Question 2. 2. (TCO 9) Garner Company requires its marketing managers to submit estimated cost behavior data on all requests for new products or expansions of a product line. Judy Oslo is a new manager. Her calculations show a fixed cost for a new project at $100,000 and a variable cost of $5 per unit. Based on these calculations, the low-volume project would not be profitable. She shares her dismay with Nina Smythe, another manager. Nina strongly advises her to revise her estimates. She points out that several of the costs that had been classified as fixed costs could be considered variable, because they are mixed costs. When the data have been revised, classifying those costs as variable costs, the project appears viable. Part (a): Who are the stakeholders in this decision? Part (b): Is it ethical for Judy to revise the costs as indicated? Briefly explain. Part (c): What should Judy do? Question 3. 3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments. Part (a): Compute each of the following. 1: Payback period 2: Net present value 3: Profitability index 4: Internal rate of return 5: Accounting rate of return (b): Indicate whether the investment should be accepted or rejected. Question 4. 4. (TCO 7) Farris Co.s projected sales are as follows. August $240,000 September $270,000 October $330,000 Farris estimates that it will collect 30% in the month of sale, 50% in the month after the sale, and 18% in the second month following the sale. Two percent of all sales are estimated to be bad debts. How much are Farris Co.'s budgeted cash receipts for October? Question 5. 5. (TCO 8) Northern Companys budgeted and actual sales for 2009 were as follows. Product Budgeted Sales Actual Sales A 6,000 units at $8.00 per unit 6,810 units at $7.80 per unit B 5,000 units at $10.00 per unit 4,720 units at $10.40 per unit Part (a): Calculate the sales volume variance. Part (b): Calculate the sales price variance. Part (c): Calculate the total sales variance. Question 6. 6. (TCO 9) Herbart Company gathered the following information on power costs and factory machine usage for the last 6 months. Power Cost Factory Machine Hours January $24,400 13,900 February 30,300 17,600 March 29,000 16,800 April 22,340 13,200 May 19,900 11,600 June 14,900 6,600 Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. Part (a): What is the estimated variable portion of power costs per factory machine hour? Part (b): What is the estimated fixed power cost each month? Part (c): If it is estimated that 10,000 factory machine hours will be run in July, what is the expected total power cost for July