Financial and Managerial Accounting B:Please complete the attached assignment, please add your answers to the same MS Word file, some questions required full details on how to get the answer or it may need some explanation, so please ensure you full fill all the requirements.

Waterways Continuing Problem 1 WATERWAYS CONTINUING PROBLEM (This is a continuation of the Waterways Problem from Chapters 19 through 22.) WCP23 Waterways Corporation is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers. Sales Unit sales for November 2016 Unit sales for December 2016 Expected unit sales for January 2017 Expected unit sales for February 2017 Expected unit sales for March 2017 Expected unit sales for April 2017 Expected unit sales for May 2017 Unit selling price 122,500 112,083 113,333 112,500 116,667 125,000 137,500 $12 Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2016, totaled $183,750. Direct Materials Item Metal Plastic Rubber Amount used per unit 1 lb @ 58 per lb. 12 oz @ 6 per oz 4 oz @ 5 per oz 2 lbs per unit Inventory, Dec. 31 5,177.5 lbs 3,883.125 lbs 1,294.375 lbs 10,355.0 lbs Metal, plastic, and rubber together are 75 per pound per unit. Waterways likes to keep 10% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 40% is paid in the month of purchase, and 60% is paid in the month after purchase. Accounts Payable on December 31, 2016, totaled $120,595. Raw Materials on December 31, 2016, totaled 10,355 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour. Waterways Continuing Problem 2 Manufacturing Overhead Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Maintenance 30 per labor hour 50 per labor hour 45 per labor hour 25 per labor hour $52,000 per month $16,800 per month $2,500 per month $1,200 per month $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.62. Advertising Insurance Salaries Depreciation Other fixed costs $25,000 a month $1,400 a month $72,000 a month $2,500 a month $3,000 a month Other Information The Cash balance on December 31, 2016, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2017. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $500,000 equipment purchase is planned for February. Instructions For the first quarter of 2017, do the following. (a) (b) (c) (d) (e) (f) (g) (h) (i) Prepare a sales budget. Prepare a production budget. Prepare a direct materials budget. Prepare a direct labor budget. (For calculations, round to the nearest hour.) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar.) Prepare a selling and administrative budget. Prepare a schedule for expected cash collections from customers. Prepare a schedule for expected payments for materials purchases. Prepare a cash budget. Waterways Continuing Problem 3 WATERWAYS CONTINUING PROBLEM (This is a continuation of the Waterways Problem from Chapters 19 through 23.) WCP24 Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and overhead costs for March. Waterways Corporation Manufacturing Overhead Budget (Static) For the Month of March Waterways Corporation Manufacturing Overhead Costs (Actual) For the Month of March Budgeted production in units 117,500 Production in units 118,500 Budgeted costs Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial $ 7,050 11,750 10,575 5,875 42,000 16,800 2,500 1,200 1,300 Costs Indirect materials Indirect labor Utilities Maintenance Salaries Depreciation Property taxes Insurance Janitorial $ 7,100 11,825 10,700 5,900 42,000 16,800 2,500 1,200 1,300 Total budgeted costs $99,050 Total costs $99,325 Waterways produced 118,500 units in March rather than the budgeted number of units. Instructions (a) (b) (c) Prepare a flexible overhead budget based on the following amounts produced. (1) 115,500 units (2) 116,500 units (3) 117,500 units (4) 118,500 units (5) 119,500 units Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable. Waterways Continuing Problem 4 WATERWAYS CONTINUING PROBLEM (This is a continuation of the Waterways Problem from Chapters 19 through 24.) WCP25 Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not \"ideal\" at this point, but the management is working toward that as a goal. At present, the company uses the following standards. Item Metal Plastic Rubber Item Labor Materials Per Unit 1 lb. 12 oz. 4 oz. Direct Labor Per Unit 12 min. Cost 58 per lb. 96 per lb. 80 per lb. Cost $8.00 per hr. Predetermined overhead rate based on direct labor hours = $4.28 The January figures for purchasing, production, and labor are: The company purchased 229,000 pounds of raw materials in January at a cost of 74 a pound. Production used 229,000 pounds of raw materials to make 115,500 units in January. Direct labor spent 15 minutes on each product at a cost of $7.75 per hour. Overhead costs for January totaled $54,673 variable and $63,800 fixed. Instructions Answer the following questions about standard costs. (a) What is the materials price variance? (b) What is the materials quantity variance? (c) What is the total materials variance? (d) What is the labor price variance? (e) What is the labor quantity variance? (f) What is the total labor variance? (g) What is the total overhead variance? (h) Evaluate the variances for this company for January. What do these variances suggest to management? Waterways Continuing Problem 5 WATERWAYS CONTINUING PROBLEM (This is a continuation of the Waterways Problem from Chapters 19 through 25.) WCP26 Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays. Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes. The following information is available to use in deciding whether to purchase the new backhoes. Purchase cost when new Salvage value now Investment in major overhaul needed in next year Salvage value in 8 years Remaining life Net cash flow generated each year Old Backhoes $90,000 $42,000 $55,000 $15,000 8 years $40,425 New Backhoes $200,000 $90,000 8 years $53,900 Instructions (a) (b) (c) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.) (1) Using the net present value method for buying new or keeping the old. (2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.) (3) Comparing the internal rate of return for each choice to the required 8% discount rate. Are there any intangible benefits or negatives that would influence this decision? What decision would you make and why