Clark and Associates provides accounting services. It is preparing its quarterly budgeted income statement for 2022. Ms. Clark anticipates that billable hours in the first quarter of 2022 will increase by 5% over the same quarter of the preceding year, and by 6% in the second quarter. There were 700 billable hours in the first quarter of 2021, and 600 in the second quarter. Ms. Clark billed clients $200 per hour in 2021, and due to strong competition is unable to raise that rate for the foreseeable future. Salary expenses for both accountants and support staff are $20,000 plus 70% of revenue per quarter. Income tax is 30%. Other quarterly expenses are estimated to be as follows: Rent expense $4,500 Depreciation 700 Utilities expense 2,100 Miscellaneous expenses 5% of revenue Instructions Prepare a budgeted quarterly income statement for the first quarter of 2022. (Show computations.)

Question 2 (5 Marks) In September 2022, the management of Whitehorse Company assembles the following data in preparation of budgeted merchandise purchases for the months of October, November, and December. 1. Expected Sales October $700,000 November 800,000 December 600,000 2. Cost of goods sold is expected to be 60% of sales. 3. Desired ending merchandise inventory is 12% of the next month's cost of goods sold. 4. The beginning inventory at October 1 will be the desired amount. Instructions Calculate the budgeted merchandise purchases for November.

Question 3 (5 Marks) Management is considering the following independent alternative courses of action in 2021 in order to maximize the return on investment for the division. 1. Reduce controllable fixed costs by 50% with no change in sales or variable costs. 2. Reduce average operating assets by 30% with no change in controllable margin. 3. Increase sales $200,000 with no change in the contribution margin percentage. Instructions a) Calculate the return on investment for 2022. b) Calculate the expected return on investment for each of the alternative courses of action.

Question 4 (5 Marks) Ozzie Osborne Manufacturing Company's overhead budget for the first quarter of 2022 contained the following data: Variable Costs Indirect Materials $12,000 Indirect Labour 4,000 Utilities 3,000 Maintenance 5,000 Fixed Costs Supervisor's Salary $21,000 Depreciation 5,000 Property taxes 3,000 Actual variable costs for the first quarter were: Indirect Materials $13,300 Indirect Labour 4,200 Utilities 3,050 Maintenance 5,600 Actual fixed costs were as expected except for property taxes, which were $3,100. All costs are considered controllable by the department manager except for the supervisor's salary. The company manufactured and sold 1,100 units; however, its budget was based on 1,000 units. Instructions Prepare a manufacturing overhead responsibility performance report for the first quarter comparing budgeted amounts to actual results and highlighting an favourable or unfavourable variances.

Question 5 (5 Marks) M&H Inc. uses a standard cost accounting system. During January 2022, the company reported the following manufacturing variances: Material price variance $1,500 F Material quantity variance 1,300 U Labour price variance 750 U Labour quantity variance 1,300 U Overhead controllable 600 F Overhead volume 4,000 U In addition, 12,000 units of product were sold at $20 per unit. Each unit sold had a standard cost of $14. Selling and administrative expenses for the month were $11,000. Instructions Prepare an income statement for management for the month ending January 31, 2022.

Question 6 (5 Marks) Centre Black Company planned to produce 40,000 units of product and work at the 100,000 direct labour hours level of activity for 2022. Manufacturing overhead at this level of activity and the predetermined overhead rate is as follows: Predetermined Overhead Rate per Direct Labour Hour Variable manufacturing overhead $600,000 $6 Fixed manufacturing overhead 300,000 3 Total manufacturing overhead $900,000 $9 At the end of 2022, 44,000 units were actually produced and 107,400 direct labour hours were actually worked. Total actual manufacturing overhead costs were $950,000, of which $610,000 was variable. Instructions Calculate the following variances and indicate whether they are favourable or unfavourable: a) Variable overhead budget variance. b) Fixed overhead volume variance