Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It is from Managerial Accounting, which focuses on Budgeting Please help me to solve all the question and explain it in details. Thank you. Peninsula

It is from Managerial Accounting, which focuses on Budgeting

Please help me to solve all the question and explain it in details.

Thank you.

image text in transcribed
Peninsula Tour Company is located in a tourist town on Georgian Bay. The small town is quiet Wages are $2,000 per month for boat operators and $1, 100 per month for souvenir sales during the winter months but comes alive with tourists from May to October. The company is employees, paid during the first week of the month following the month worked. One person is required to staff a single souvenir booth, and one operator is required for each planning for another season of tours to Flowerpot Island, an attractive island because of rock boat. (Note: to avoid requiring on person to work every day, two employees will be formations on its shoreline that resemble flowerpots. Customers pay for a tour to the island hired for each position and they will work alternate days to earn half the monthly where they are left to hike, and as part of the ticket price they are provided with a return ride rate.) later in the day. The tickets are purchased from the boat operator as they board each boat, which There are no capital expenditures planned for 2019. can take a maximum of 12 passengers. Money can only be borrowed or repaid in multiples of $1,000 at the beginning of the For the coming 2019 season, management is considering selling souvenirs. When returning from month, at a cost of 1% interest per month. Interest is paid on the first day of the month the island and leaving the boat, passengers must walk along the dock and exit at a common spot. following the month borrowed. The plan for the new season is to place a booth selling souvenirs of the island (i.e., a paperweight The company will end the year with no inventory (units remaining will be donated to a in the shape of a natural flowerpot) at the end of the dock. Based on a one-month trial run of a local school) given they have the current year (2018) printed on them and will be of no similar idea last year, management estimates 75% of passengers will purchase a souvenir. use the following year (there is no beginning inventory). Income taxes and other incidental charges are to be ignored. follows: Predicted 2019 monthly tour demand (number of passengers) based on prior year experience Required: May June July August September October 1. Prepare a monthly budgeted income statement for the six month period ending October 31, 450 1.250 5.500 5,000 2,200 400 2019. 2. Prepare a materials purchases budget for souvenirs. Note: Sales activity occurs evenly throughout each month - assume 30 day months. 3. Prepare a monthly cash budget for the eight-month period beginning in April through to November (note: the ending monthly cash balance cannot drop below zero resulting in a The company will run advertisements in a local newspaper at a cost of $180 per month (payable periodic need for borrowing). Hint, borrow $7,000 in April to start the month with a $7,000 monthly in advance). The company estimates that these ads would increase demand by about cash balance. 10%. 4. Prepare monthly budgeted balance sheets for April 30, 2019, through October 31, 2019. 5. Budgeting can be used for planning as well as control. In terms of planning, would you Additional financial data for summer 2019 follows: advise management to start selling souvenirs in May? Hint: break-even analysis will assist in answering this question. Tickets for boat tours sell for $25 each. All sales will be in cash. . Sales price for souvenirs will be $1.75 each. All sales will be in cash. Cost of goods sold will be $0.70 per souvenir, payable on account one month after delivery. The supplier requires an advance seasonal estimate, but actual orders can be placed at the beginning of each month for guaranteed same-day delivery; souvenirs are purchased in boxes of 144 units per box. Docking fees (for ticket sales and boat docking space) are $1,600 per month on a minimum six-month contract, payable monthly in advance (only one docking space is required). Boat rental is $2,550/boat per month, paid one month in advance. Boats are rented as needed on one-month contracts, one boat is required for every 12 customers expected each day (assuming 30 day months). Gasoline is purchased and paid each morning; the total used is $850 per boat each month

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Information For Decisions

Authors: John J. Wild

10th Edition

1260705587, 978-1260705584

More Books

Students also viewed these Accounting questions

Question

Prepare a safe payment approach liquidation schedule. LO2

Answered: 1 week ago

Question

Armed conflicts.

Answered: 1 week ago

Question

Pollution

Answered: 1 week ago