U Jesse Bladecki S Search Documents - Word Layout References Design Mailings Review View Help 27. estimates revenues based on billable hours. The company expects to charge 8,000 hours to clients in the first quarter, 9,000 hours in the second quarter, 7,000 hours in the third quarter and 8,500 hours in the fourth quarter. The average hourly billing rate is expected to be $100. a. Prepare a services revenue budget for each quarter and include a column for the year ending December 31. (Hint: this is similar to a sales budget except sales are measured in labor hours rather than in units, and revenue is measured as an average hourly billing rate rather than a sales price per unit) b. Since the manager of the company is given a bonus if actual billable hours exceed budgeted billable hours, the manager intentionally underestimated the number of expected billable hours for each quarter. How might this underestimate affect the company? 31. 31, Budgets for Cash Collections from Sales and Cash Payments for Purchases.Specialty Products, Inc., produces fire retardant tarps. The dollar amount of the company's quarterly sales and direct materials purchases are projected to be as follows (this information is derived from the previous exercises): 1st 2nd 3rd 4th Sales $2,340,000 $3,900,000 $4,680,000 $3,120,000 Direct materials purchases $ 289,952 $ 433,056 $ 464,224 $ 362,272 Assume all sales are made on credit. The company expects to collect 80 percent of sales in the quarter of sale and 20 percent the quarter following the sale. Accounts receivable at the end of last year totaled $400,000, all of which will be collected in the first quarter of the coming year. Assume all direct materials purchases are on credit. The company expects to pay 90 percent of purchases in the quarter of purchase and 10 percent the following quarter. Accounts payable at the end of last year totaled $30,000, all of which will be paid in the first quarter of this coming year. Prepare a budget for cash collections from sales for Specialty Products, Inc. Use a format similar to the top section ofFigure 9.11. b. Prepare a budget for cash payments for purchases of materials for Specialty Products, Inc. Use a format similar to the middle section ofFigure 9.11. Round to the nearest dollar ) Focus AA E F -- ON Cheese & Breads Snad Pasteurized Proc Cheese Dic months EXERCISES: Set A continued) 31. Payback Period Calculation The payback period is_ years and Investment Cash Outflow Year 0 Year! Year 2 Cash Inflow Unrecovered Investment Balance BRIEF EXERCISES (continued) 27. Net Present Value Analysis with Multiple Investments The net present value of this investment is shown below. 10% Present Cash Flow In (Out) Factor Item Description Initial investment (today) Additional investment (end of year 1) Annual savings (years 1-15) Net present value Because this is not an annuity, use Figure 8.9 in Appendix. ** Because this is an annuity, use Figure 8.10 in Appendix, ULLINALOTELLI apter 9 Text (2).pdf x + v /us 148956/AppData/local/Microsoft Windows/1NetCache/1E/6YQYX2LY/Chapter%209%20Text562002) pdf MANAGERIAL ACCOUNTING VERSION 2.1 FIGURE 9.11 Cash Budget for Jerry's Ice Cream Jerry's Ice Cream Cash Budget Year Ending December 31 Quarter $ 180,000 144,000 Cash collections from sales Fourth Quarter prior year assumed First Quarter ($240.000 sales) Second quarter ($288.000 sales) Third quarter $360,000 sales) Fourth quarter $312.000 sales Total cash collections $ 96.000 172900 $ 115.200 216.000 $ 144 000 $ 180.000 240,000 288000 360,000 187200 $1255.200 $ 324.000 $ 258.800 $ 331,200 $ 331 200 (30,000) (59,472) Cash payments for purchases of materials Fourth quarter prior year assumed First quarter (584 960 purchases) Second quarter (5102.400 purchases) Third quarter $115.200 purchases Fourth quarter $101.920 purchases! Total cash payments for purchases (25.488 (71.680) (30,720) (80 640 30.000 1849603 (102.400 (115.2001 (34560) 1344 S(105.904 S (89,472) 197,168 $(111360 $ 4034 (53.040) 45.400) (55.000) (63.960) (49,600) (55,000) (76,960) (54,600 55.000 Other cash payments Direct labor Manufacturing overhead Selling and administrative *** Capital expenditures Total other cash payments Excess of collections over payments Beginning cash balance Ending cash balance 166.560 (50.500 (55.000 (25.000 $(197160 200.200 220.000 $(153440 $(1655601 $(186360 5 7020 81 088 - 10.000 $91083 3,072 33,280 91.088 94160 594.160512740 25. 136 127.440 $ 155576