Required:Prepare the company's flexible budget for July.Alyeski ToursFlexible BudgetFor the Month Ended July 31RevenueExpenses:Vessel operating costsAdvertisingAdministrative costsInsuranceTotal expenseNet operating income Exercise 9-3 Prepare a Flexible Budget with More Than One Cost Driver [LO9-3]Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two costdrivers the number of cruises and the number of passengers-that it uses in its budgeting and performance reports. The companypublishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers canbe accommodated on the tour boat. Data concerning the company's cost formulas appear below:Fixed Cost per Month Cost per Cruise Cost per Passenger$475.00Vessel operating costsAdvertising$ 6,700$ 2,800$3.00$1.50Administrative costs$39.00$5,200$3,900InsuranceFor example, vessel operating costs should be $6,700 per month plus $475.00 per cruise plus $3.00 per passenger. The company'ssales should average $33.00 per passenger. In July, the company provided 59 cruises for a total of 3,000 passengers.

Budget means the expected value of future. Budget is not affected by the actual value as it is…

Required: Prepare the company's flexible budget for July. Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income

Required: Prepare the company's flexible budget for July. Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 5P: OPTIMAL CAPTTAL BUDGET Marble Construction estimates that its WACC is 10% if equity comes from...

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OPTIMAL CAPTTAL BUDGET Marble Construction estimates that its WACC is 10% if equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to 10.8%. The company believes that it will exhaust its retained earnings at 2,500,000 of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects: Project Size IRR A 650,000 14.0% B 1,050,000 13.5 C 1,000,000 11.2 D 1,200,000 11.0 E 500,000 10.7 F 650,000 10.3 G 700,000 10.2 Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects should be accepted, and what is the firm's optimal capital budget?
Exercise 9-3 (Static) Prepare a Flexible Budget with More Than One Cost Driver [LO9-3] Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Cruise Cost per Passenger Vessel operating costs $ 5,200 $ 480.00 $ 2.00 Advertising $ 1,700 Administrative costs $ 4,300 $ 24.00 $ 1.00 Insurance $ 2,900 For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company’s sales should average $25 per passenger. In July, the company provided 24 cruises for a…
Ch. 8 Total Budgeted Cost of Goods Sold Problem. Please solve the following problem and explain each step. S&P's direct material cost is $6.50 per unit. The direct laboer is $30 per hour and each unit takes 1/2 hour to produce. Variablel Manufacturing Overhead is $2.75 per unit and total fixed overhead is $63,000. A sales commission of $5 is paid on each unit. If S&P expects to produce 9,000 units and sell 7,000 units, the total budgeted cost of goods sold for the year is?
Exercise 9-4 Direct Labor Budget [LO9-5] The production manager of Rordan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 10,800 8,000 8,400 10,700 Each unit requires 0.65 direct labor-hours, and direct laborers are paid $16 per hour. Required: 1. Complete the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.) 2. Complete the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least…
Exercise 10-4 Prepare a Flexible Budget Performance Report [LO10-4] Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below: Vulcan FlyoversOperating DataFor the Month Ended July 31 ActualResults FlexibleBudget PlanningBudget Flights (q) 52 52 50 Revenue ($355.00q) $ 16,100 $ 18,460 $ 17,750 Expenses: Wages and salaries ($3,100 + $92.00q) 7,840 7,884 7,700 Fuel ($34.00q) 1,930 1,768 1,700 Airport fees ($840 + $35.00q) 2,530 2,660 2,590 Aircraft depreciation ($10.00q) 520 520 500 Office expenses ($210 + $1.00q) 430 262 260 Total expense 13,250 13,094 12,750 Net operating income $ 2,850 $ 5,366 $ 5,000 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a…
12.1 Problem 8-25 (Algo) Cash Budget with Supporting Schedules; Changing Assumptions [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 460,000 $ 990,000 $ 440,000 $ 340,000 Cost of goods sold 322,000 693,000 308,000 238,000 Gross margin 138,000 297,000 132,000 102,000 Selling and administrative expenses: Selling expense 89,000 94,000 55,000 34,000 Administrative expense* 42,000 56,000 34,400 32,000 Total selling and administrative expenses 131,000 150,000 89,400 66,000 Net operating income $ 7,000 $…
Exercise 9-2 Production Budget [LO9-3] Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Sales in Units April 60,000 May 80,000 June 100,000 July 85,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 20% of the following month’s sales. The inventory at the end of March was 12,000 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.
Exercise 8-2 Production Budget [LO8-3] Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit Sales April 72,000 May 85,000 June 112,000 July 91,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 20% of the following month’s unit sales. The inventory at the end of March was 14,400 units. Required: Prepare a production budget by month and in total, for the second quarter.
10 Problem 8-24 (Static) Cash Budget with Supporting Schedules [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 600,000 $ 900,000 $ 500,000 $ 400,000 Cost of goods sold 420,000 630,000 350,000 280,000 Gross margin 180,000 270,000 150,000 120,000 Selling and administrative expenses: Selling expense 79,000 120,000 62,000 51,000 Administrative expense* 45,000 52,000 41,000 38,000 Total selling and administrative expenses 124,000 172,000 103,000 89,000 Net operating income $ 56,000 $ 98,000 $ 47,000 $…
15 Problem 8-25 (Static) Cash Budget with Supporting Schedules; Changing Assumptions [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 600,000 $ 900,000 $ 500,000 $ 400,000 Cost of goods sold 420,000 630,000 350,000 280,000 Gross margin 180,000 270,000 150,000 120,000 Selling and administrative expenses: Selling expense 79,000 120,000 62,000 51,000 Administrative expense* 45,000 52,000 41,000 38,000 Total selling and administrative expenses 124,000 172,000 103,000 89,000 Net operating income $ 56,000…
xercise 8-4 (Algo) Direct Labor Budget [LO8-5] The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 8,200 6,500 7,100 8,000 Each unit requires 0.25 direct labor-hours, and direct laborers are paid $12.00 per hour. Required: 1. Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. 2. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 1,800 hours of work each quarter. If the number of required direct labor-hours is less than this…
11 Problem 8-30 (Static) Integration of the Sales, Production, and Direct Materials Budgets [LO8-2, LO8-3, LO8-4] Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 30,000 October 20,000 August 70,000 November 10,000 September 50,000 December 10,000 The selling price of the beach umbrellas is $12 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $300,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet…