Question two:

a. Criticize the following quotation "At our company, budgeted revenue is set so high and budgeted expenses so low that no department can ever meet the budget. This way, department managers can never relax; they are motivated to keep working harder no matter how well they are already doing". In addition, explain why budgeted cash flow differs from budgeted net income. b. The following summary information is available regarding KLL PIc. KLL PIc. Profit Plan For the year ending Dec. 31, 2020 Sales Revenue $32,000,000 Net Income $8,000,000 Total Assets $16,000,000 Operating Assets $6,000,000 Total Liabilities $4,000,000 WACC 23% 2% Tax rate Return from Project A $575,000 Cost of project A $450,000 Required: Compute and analyze the: Return on Investment (ROI) for project A Return on Equity (ROE) and its components for the company. Residual income (RI)