AC 249 Exam #2 Problem 1 (60 points) lete the following budget using the attached schedules. Problem 2 (10 points) The following information applies to Company A's materials cost. Actual Cost: 4,100 lbs. @ $5.07 per 1b. = $20,787 Standard Cost: 4,000 lbs. @ $5.00 per 1b. = $20,000 Direct Materials Cost Variance: $787 Calculate the price and quantity variance. Problem 3(10 points) Company A is considering a potential investment. This investment requires a cash outflow of $25,000. The investment is expected to generate equal annual cash flows of $4,500. Calculate the payback period.Problem 4(10 points) Data for Budget Company A is evaluating a potential investment. This investment requires a cash outflow Budgeted Sales of $18,000. The investment is expected to yield equal annual cash flows of $6,500 for 3 December (Actual) $75,000 years. The Company requires a 10% rate of return. Calculate the net present value of the January $55,000 investment. Should the Company accept this investment opportunity? February $80,000 March $35,000 April $60,000 Budgeted Expenses Wages and Salaries $5,000 Freight-out 5% Advertising $3,500 Depreciation $2,000 Other Expenses 1.50% Other Data Essay (10 points) Minimum Inventory % of Next Month's COGS 40% Describe the four factors, which make capital budgeting decision to be so difficult and $20,000 risky. Ending Inventory for Dec. Sales Mix: Cash 10% Credit 90% Note: Credit sales collected in the following month COGS 60% Inventory Paid: Current Month 50% Month After Purchase 50% Dec. Accounts Payable $3,000 Dec. Cash Balance $11,500 Minimum Cash Balance $10,000Schedule A: Sales Budget January February March Credit Sales Cash Sales Total Sales Schedule B: Cash Collections January February March Cash Sales Prior Collections Total Collections Schedule C: Purchases Budget January February March Desired Ending Inventory Cost of Goods Sold Total Needed Beginning Inventory Total Purchases Schedule D: Cash Disbursements for Purchases January February March For December For January For February For March Total DisbursementsSchedules E and F: Operating Expenses and Cash Disbursements January February March Cash Expenses: Salaries & Wages Freight-out Advertising Other Expenses Total Disbursements Noncash Expenses: Depreciation Total Expenses Cash Budget January February March Beginning Cash Balance Minimum Cash Balance Available Cash Balance Cash Receipts & Disbursements Collections from Customers Inventory Purchases Operating Expenses Net Cash Excess or (Deficiency) Financing: Borrowing Repayment Ending Cash Balance