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The Gourmand Cooking School runs short cooking courses at its small campus. Management has identied two cost drivers it uses in its budgeting and performance reportsthe number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 61 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Month Course Student Instructor wages $2.960 Classroom supplies $310 Utilities $1,200 $ 90 Campus rent $5,000 Insurance $2,000 Administrative expenses $4,000 $ 46 $ 5 ' For example, administrative expenses should be $4,000 per month plus $46 per course plus $5 per student. The company's sales should average $880 per student. The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 51 students. The actual operating results for September were as follows: Actual Revenue $50,780 Instructor wages $11,120 Classroom supplies $18,760 Utilities $ 1,970 Campus rent $ 5,000 Insurance $ 2,140 AdminiStrative expenses $ 3.915 [ Required: Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Required: Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.. zero variance). Input all amounts as positive values.) Courses Students 51 Revenue Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses 3 915 - - - - - - Total expense 42 905 - - - - - _ Net operating income 7-375 - - - - -! Ray Company provided the following excerpts from its Production Department's exible budget performance report. Required: Complete the Production Department's Flexible Budget Performance Report. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round "rate per hour" answers to 2 decimal places.) Laborhours (q) Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory administration Total expense Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering takeout and free home delivery services. The pizzeria's owner has determined that the shop has two major cost driversthe number of pizzas sold and the number of deliveries made. Thepuzenascofonnmasappearbdow: Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Fixed Co St per Month $6,350 $ 830 $ 850 $ 576 $2,3 10 $ 950 Cost per Pizza $ 4.40 $ 0.50 $ 0.25 Cost per Delivery $3.30 $1.40 In November, the pizzeria budgeted for 2,220 pizzas at an average selling price of $21 per pizza and for 200 deliveries. Data concerning the pizzeria's actual results in November were as follows: Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous Actual Results $ $ $ $ $ $ $ $ $ 2,320 180 49,490 11,170 5,290 995 594 1,030 576 2,310 922 KEC'UII'ED: 1. Complete the exible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "PI for favorable, "U" for unfavorable, and \"None" for no effect (i.e., zero variance). Input all amounts as positive values.) Pizzas Deliveries Revenue Expenses: Pizza ingredients Kitchen staff 6,290 Utilities 995 Delivery person 594 Delivery vehicle 1,030 Equipment depreciation Rent 2,310 Miscellaneous Total expense $ 25,603 Net operating income Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company's mine to its two steel millsthe Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $155,100 per year, consisting of $0.2 per ton variable cost and $105,100 xed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 64% of the Transport Services Department's capacity and the Southern Plant requires 36%. During the year, the Transport Services Department actually hauled 114,000 tons of ore to the Northern Plant and 51,200 tons to the Southern Plant. The Transport Services Department incurred $361,000 in cost during the year, of which $52,900 was variable cost and $308,100 was xed cost. Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the $308,100 in fixed cost should be charged to each plant? 3. Should any of the Transport Services Department's actual total cost of $361,000 be treated as a spending variance and not charged to the plants? Complete this question by entering your answers in the tabs below. Required 3 Required 1 H RequiredZ How much of the Transport Services Department's variable costs should be charged to each plant? Variable cost charged to Northern Plant Variable cost charged to Southern Plant "I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for this year are given below: Sales $ 21, 500, 000 Variable expenses 13 , 565, 000 Contribution margin 7,935, 000 Fixed expenses 5,995, 000 Net operating income $ 1,940, 000 Divisional average operating assets $ 4,301,500 The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313,700. The cost and revenue characteristics of the new product line per year would be: Sales $9, 255, 000 Variable expenses 65% of sales Fixed expenses $2, 552, 650 Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual incomenew product line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Req 5 Req 6A to 6C Req 6D 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less1. ROI for this year 2. ROI for the new product line by % itself 3. ROI for next year %Req 1 to 3 Req 4 Reg 6A to (SC 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Ofce Products Division's residual income for the new product line by itself. c. Compute the Ofce Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. Show less A Residual income for this year 2. Residual income for the new product line by itself 3. Residual income for next year The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 1.006.000 $ 50.30 Variable expenses 603.600 30.18 Contribution margin 402,400 20.12 Fixed expenses 324,400 16.22 Net operating income 78,000 3.90 Income taxes @ 4095 31,200 1.56 Net income $ 46,800 $ 2.34 [ The company had average operating assets of $502,000 during the year. Required: 1. Compute the company's margin. turnover, and return on investment (ROI) for the period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $91,000. 3. The company achieves a cost savings of $7,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increases average operating assets by $124,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $8,000 per year. 5. As a result of a more intense effort by sales people, sales are increased by 20%; operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss, thereby lowering net operating income. 7. At the beginning of the year, the company uses $180,000 of cash (received on accounts receivable) to repurchase some of its common stock. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Compute the company's margin, turnover, and return on investment (ROI) for the period. (Round your intermediate calculations and final answer to 2 decimal places.) Margin % Turnover ROI %Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Using Lean Production, the company is able to reduce the average level of inventory by $91,000. (Round your intermediate calculations and final answer to 2 decimal places.) Effect Margin Turnover ROIRequired 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 The company achieves a cost savings of $7,000 per year by using less costly materials. (Round your intermediate calculations and final answer to 2 decimal places.) M_I __I ROI % Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 The company purchases machinery and equipment that increases average operating assets by $124,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $8,000 per year. (Do not round intermediate calculations and round your nal answers to 2 decimal places.) m_l __I ROI /o Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 As a result of a more intense effort by sales people, sales are increased by 20%; operating assets remain unchanged. (Round your intermediate calculations and final answer to 2 decimal places.) m_l_ Iza-_I_ Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 At the beginning of the year, obsolete inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss, thereby lowering net operating income. (Round your intermediate calculations and final answer to 2 decimal places.) w_l_ Iza-_l_ Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 At the beginning of the year, the company uses $180,000 of cash (received on accounts receivable) to repurchase some of its common stock. (Round your intermediate calculations and final answer to 2 decimal places.) w_l Iza-_l