Q1:

Angelo Diaz has decided to go into business selling computer accessories that are popular among university students. He will operate the business in a shopping centre, mostly on weekends. He is trying to organise himself for the start of the first quarter, so he needs to prepare a few budgets. Use the following information in order to help him achieve this goal.

Angelo estimates expected sales for January to be 800, February to be 1,200, March to be 2,000 and April to be 3,000. He expects a gross profit ratio of 0.4. He will keep sixty per cent of the next month?s sales in the ending finished goods inventory.

Angelo will pay himself a monthly salary of 150. He will pay his best friend 60 to help him with miscellaneous errands. He estimates that general operating costs will be 130 monthly. In addition, since his cousin is the owner of the shopping centre where he will locate his store, he will only pay 100 per month in rent. However, he plans to upgrade his space at the shopping centre, which will cost 500, of which 200 will be paid in January and 300 in February. All other costs must be paid for as incurred. He will begin January with 400 in the bank.

He expects that forty per cent of sales will be paid for in cash. He expects customers will put the rest on credit and pay in instalments in subsequent months. For the purposes of this assignment, assume the following:

30% will be paid in the month of sale and 10% of people who pay in the month of sale will qualify for a 20% discount.

Another 20% will be received the month following the sale and 5% the second month following the sale.

5% of credit sales will never be received.

For the purposes of this Assignment, you can also assume the following:

Payments for merchandise are made 30% in the month of purchase and 70% the following month.

Interest is charged at a rate of 24% per year, and payments of interest only are due at end of each quarter.

All loans are borrowed at the very beginning of the month, and payments are made at the very end of the month.

Angelo must maintain a minimum cash balance of 1,000.

Required:

Help Angelo by doing the following:

Prepare a schedule of cash receipts for the first quarter.

Prepare a schedule of inventory purchases for the first quarter.

Prepare a schedule of cash disbursements for the first quarter.

Prepare a cash budget for January and February.

Calculate how much interest is owed on February 28.

Q2:

ABC is a company that manufactures a type of docking station for a laptop. You will analyse its income statement for the 2014 fiscal year (shown below).

Sales	2,400,000
Variable cost of goods sold	1,680,000
Variable sales commissions	120,000
Contribution margin	600,000
Selling expense	105,000
Sales commissions expense	48,000
Administrative expense	212,000
Net income	235,000

Variable costs per unit are 6.

Required: (Round all answers to 2 decimal places.)

Calculate break even in pounds.

Calculate break even in units.

Calculate break even in pounds if the sales price increases by 10% and fixed costs increase by 12,000.

Calculate break even in pounds if total sales increase by 10% and fixed costs increase by 10%.

Calculate sales (in pounds) to achieve 600,000 after tax (tax rate is 40%).

Q3:

The table below shows the cost information for Company A and Company B.

	Company A	Company B
Variable cost per unit	50	20
Total contribution margin	600,000	700,000
Total sales revenue	1,000,000	1,400,000
Fixed costs	600,000	490,000

Required: Using the table above, calculate the following:

Selling price per unit for both companies.

Break even in pounds for Company A.

Break even in units for Company B.

Q4:

The following table lists jobs and the financial events (actual costs and balances) for a crane company called SAP for the year 2014.

Jobs	Beginning Balance
Total DM cost	DLH/unit	DM 50,000
ABC 30,000	600	FG 70,000
XYZ 20,000	450	WIP 0

DM: direct material

DLH: direct labour hours

WIP: work in progress

FG: finished goods

SAP uses a job order costing system and pays workers at a rate of 20 per hour. It estimates overhead at 1,200,000 and bases it on expected operation activity of 400,000 hours. Both Job ABC and Job XYZ consist of ten cranes.

Required: Using the information above, calculate the total cost of each job.