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Please see my attached accounting questions- thank you for your help Chapter 15 1. Curtis Salter, the president of Kasimer Computer Services, needs your help.
Please see my attached accounting questions- thank you for your help
Chapter 15 1. Curtis Salter, the president of Kasimer Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal year 2015. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative $ 75.00 40.00 7.20 4.30 $400,000 150,000 a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 30,000 hours of services in 2015. b. A marketing consultant suggests to Mr. Salter that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Kasimer charges customers $70 per hour, the firm can achieve 38,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if the firm raises its rate to $80 per hour, the number of service hours will decline to 25,000. Prepare a flexible budget using the new assumption. 2. Lloyd Publications established the following standard price and costs for a hardcover picture book that the company produces. Required a. - d. Prepare the pro forma income statement that would appear in the master budget and also flexible budget income statements, assuming production volumes of 29,000 and 31,000 units. Determine the sales and variable cost volume variances, assuming volume is actually 31,000 units. Indicate whether the variances are favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) 3. Lloyd Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Planned fixed costs Manufacturing overhead Selling, general, and administrative $ 36.40 8.50 3.70 6.10 6.30 $127,000 45,000 Assume that Lloyd actually produced and sold 27,000 books. The actual sales price and costs incurred follow. Actual price and variable costs Sales price Materials cost Labor cost Overhead cost Selling, general, and administrative costs Actual fixed costs Manufacturing overhead Selling, general, and administrative $ 35.40 8.70 3.60 6.15 6.10 $112,000 51,000 4. Austen Educational Services had budgeted its training service charge at $78 per hour. The company planned to provide 24,000 hours of training services during 2015. By lowering the service charge to $63 per hour, the company was able to increase the actual number of hours to 25,400. Required a. Determine the sales volume variance and indicate the effect of the variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) b. Determine the flexible budget variance and indicate the effect of the variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) 5. Helton Corporation's balance sheet indicates that the company has $270,000 invested in operating assets. During 2014, Helton earned operating income of $53,000 on $567,000 of sales. Required a. Compute Helton's profit margin for 2014. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).) b. Compute Helton's turnover for 2014. (Round your answer to 2 decimal places.) c. Compute Helton's return on investment for 2014. (Round intermediate calculations and final answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).) d. Recompute Helton's ROI under each of the following independent assumptions. (Do not round intermediate calculations. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) 6. Cole Corporation operates three investment centers. The following financial statements apply to the investment center named Morrison Division. MORRISON DIVISION Income Statement For the Year Ended December 31, 2014 Sales $ 135,000 revenue Cost of goods 78,500 sold Gross margin Operatin g expenses Selling expenses Depre ciation expense 56,500 (5,000) (8,000) Operatin g income Nonoper ating item Loss of sale of land Net income 43,500 (15,000) $ 28,500 MORRISON DIVISION Balance Sheet As of December 31, 2014 Assets Cash Accounts receivable Merchandise inventory Equipment less accum. dep. Nonoperatin g assets Total assets Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liab. and stk. equity $ 18,580 42,266 37,578 90,258 9,000 $ 197,682 $ 9,637 72,000 80,000 36,045 $ 197,682 Required c. Calculate the ROI for Morrison. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).) Cole has a desired ROI of 10 percent. Headquarters has $96,000 of funds to assign to its investment centers. The manager of the Morrison Division has an opportunity to invest the funds at an ROI of 12 percent. The other two divisions have investment opportunities that yield only 11 percent. d. Calculate the new ROI for Morrison division, if the investment opportunity is adopted by Morrison. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45)) e- Based on the original data calculate the residual income. (Round your answer to the nearest dollar 1. amount.)Step by Step Solution
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