Question #1 - Chapter 6 (show work)

Lazaro Inc. sells two product lines. The sales mix of the product lines is: Standard, 60%; and Deluxe, 40%. The contribution margin ratio of each line is: Standard, 40%; and Deluxe, 45%. Lazaro's fixed costs are $1,575,000.

Instructions

What is the dollar amount of Deluxe sales at the break-even point?

Question #2 - Chapter 7 (show work)

Speedy Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows.

Direct materials$150

Direct labor70

Variable overhead (70% of direct labor)49

Fixed overhead (30% of direct labor)21

Manufacturing cost per unit$290

The unassembled bikes are sold to retailers at $450 each.

Speedy currently has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity can be used to assemble the bikes and sell them at $495 each. Assembling the bikes will increase direct materials by $5 per bike, and direct labor by $10 per bike. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes.

Instructions

(a)Prepare an incremental analysis for the sell-or-process-further decision.

(b)Should Speedy sell or process further? Why or why not?

Question #3 - Chapter 8 (show work)

Goliath Corporation is in the process of setting a selling price for a new product it has just designed. The following data relate to this product for a budgeted volume of 60,000 units.

Per UnitTotal

Direct materials$30

Direct labor40

Variable manufacturing overhead10

Fixed manufacturing overhead$1,800,000

Variable selling and administrative expenses6

Fixed selling and administrative expenses1,440,000

Goliath uses cost-plus pricing to set its target selling price. The markup on total unit cost is 30%.

Instructions

Compute each of the following for the new product:

1.Total variable cost per unit, total fixed cost per unit, and total cost per unit.

2.Target selling price.

Question #4 - Chapter 9(show work)

The beginning cash balance is $20,000. Sales are forecasted at $700,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $500,000. Accounts receivable from previous accounting periods totaling $12,000 will be collected in the current year. The company is required to make a $20,000 loan payment and an annual interest payment on the last day of the year. The loan balance as of the beginning of the year is $120,000, and the annual interest rate is 10%.

Instructions

How much will be reported as 'cash' on the budgeted balance sheet?

Question #5 - Chapter 9 Essay question

Budgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Since budgets affect people, identify several negative aspects if budgets are not implemented properly. (one page minimum)