TransPacific Airlines (TPA) budgeted 105 million passenger miles, or 5% of the total market for the year just completed, at a contribution margin of 65 cents per mile. The budgeted average price was 77 cents per passenger mile. The operating data for the year show that TPA flew 90.72 million passenger miles with an average price of 58 cents per passenger mile. The terrorist activity in the early part of the year in several countries in the region decreased the total miles flown by all airlines for the year by 10%. There is no flexible-budget variance for all costs. Required: 1. In an effort to understand the operating results, you are asked to compute the following. (Do not round Intermediate calculations. Enter your answers in whole dollars.) a. Selling price variance b. Sales volume variance c. Market size variance d. Market share variance

TransPacific Airlines (TPA) budgeted 105 million passenger miles, or 5% of the total market for the year just completed, at a contribution margin of 65 cents per mile. The budgeted average price was 77 cents per passenger mile. The operating data for the year show that TPA flew 90.72 million passenger miles with an average price of 58 cents per passenger mile. The terrorist activity in the early part of the year in several countries in the region decreased the total miles flown by all airlines for the year by 10%. There is no flexible-budget variance for all costs. Required: 1. In an effort to understand the operating results, you are asked to compute the following. (Do not round Intermediate calculations. Enter your answers in whole dollars.) a. Selling price variance b. Sales volume variance c. Market size variance d. Market share variance

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

See similar textbooks

Similar questions

TransPacific Airlines (TPA) budgeted 150 million passenger miles, or 5% of the total market for the year just completed, at a contribution margin of 110 cents per mile. The budgeted average price was 122 cents per passenger mile. The operating data for the year show that TPA flew 129.60 million passenger miles with an average price of 76 cents per passenger mile. The terrorist activity in the early part of the year in several countries in the region decreased the total miles flown by all airlines for the year by 10%. There is no flexible-budget variance for all costs. Required: 1. In an effort to understand the operating results, you are asked to compute the following. (Do not round Intermediate calculations. Enter your answers in whole dollars.) Answer is complete but not entirely correct. a. Selling price variance S 83 Unfavorable 1b. Sales volume variance S 2 Favorable c. Market size variance S 20 Unfavorable d. Market share variance S 80 Unfavorable
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,780,000 Quarter 2 5,580,000 Quarter 3 3,150,000 Quarter 4 8,400,000 In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,450,000 and for the fourth quarter of the current year are $7,060,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. Quarter Cash Sales Credit Sales 3, current year $fill in the blank $fill in the blank 4, current year fill in the blank fill in the blank 1, next year fill in the blank fill in the blank…
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,620,000 Quarter 2 5,150,000 Quarter 3 4,890,000 Quarter 4 8,480,000 In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,040,000 and for the fourth quarter of the current year are $7,680,000. Required: Question Content Area 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. Quarter Cash Sales Credit Sales 3, current year $fill in the blank 1d3d12fb3fb1016_1 $fill in the blank 1d3d12fb3fb1016_2 4, current year fill in the blank…
In the process of preparing a budget for the second quarter of the current fiscal year, Anderson Welding, Inc., has forecasted foreign sales of 1,200,00 foreign currency (FC). The company is concerned that the dollar will strengthen relative to the FC and has decided to hedge one-half of the forecasted foreign sales with a forward contract to sell FC in 90 days. Assume that all 1,200,000 of the forecasted sales are shipped 60 days after acquiring the contract and that payment of the sales invoices occurs 30 days after shipment, with terms FOB shipping point.Selected rate information is as shown below. Days remaining on forward contract 90 days 60 days 30 days 0 days Spot rate . . . . . . . . . . Forward rate . $1.900 1.890 $1.920 1.910 $1.880 1.900 $1.850 1.850 Assume that contract premiums or discounts are to be amortized over the term of the contract using the implicit interest rate of 0.1757% per 30-day period. This results in amortization of $2,004, $2,000, and…
Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.• Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.• The cost of goods sold is 65% of sales.• The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month.• Payment for merchandise is made in the month following the purchase.• Other monthly expenses to be paid in cash are $21,900.• Monthly depreciation is $20,000.• Ignore taxes. Balance Sheet October 31 Assets: Cash $16,000 Accounts receivable (net of allowances for uncollectable accounts $74,000 Merchandise inventory $140,400 Property, plant and equipment (net of $500,000 accumulated depreciation) $1,066,000 Total Assets: $1,296,400…
2. Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,780,000 Quarter 2 5,690,000 Quarter 3 630,000 Quarter 4 8,200,000 In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,080,000 and for the fourth quarter of the current year are $7,220,000. Required: Question Content Area 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. Quarter Cash Sales Credit Sales 3, current year $fill in the blank b0590a054f99004_1 $fill in the blank b0590a054f99004_2 4, current year fill in the blank…
Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.• Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.• The cost of goods sold is 65% of sales.• The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month.• Payment for merchandise is made in the month following the purchase.• Other monthly expenses to be paid in cash are $21,900.• Monthly depreciation is $20,000.• Ignore taxes. BALANCE SHEET OCTOBER 31 ASSETS Cash 16,000 Accounts Rec.(allowances for uncollected accts) 74,000 mechandise inventory 140,400 Property, plants & equipment (500,000 accumulated depreciation) 1,066,000 TOTAL ASSETS 1,296,400 Liabilities & stockholders equity Accts payable 240,000…
QC Corp has the following budget amounts for the current year: $1,100,000 for prevention costs and $880,000 for appraisal costs. Internal failure equals $100 per failed item and external failure has a total budget of $660,000. The Product Testing department has proposed a new method of testing products. If management decides to implement the new method, $2.20 per unit of appraisal costs will be saved, up to a level of 150,000 tests. No additional savings are expected past the 150,000 level. The new method involves $104,500 in training costs and $71,500 in yearly testing supplies. If the new testing method is implemented what is the revised budget for appraisal costs, assuming 550,000 units are tested during the current year?
BOBA Company budgeted sales of 400,000 calculators at P40 per unit last year. Variable manufacturing costs were budgeted at P16 per unit, and fixed manufacturing costs at P10 per unit. A special order for 40,000 calculators at P23 each was received by BOBA in March. BOBA has sufficient plant capacity to manufacture the additional quantity without incurring any additional fixed manufacturing costs. Acceptance of the special order would not affect BOBA’s normal sales and no selling expenses would be incurred. What would be the effect (increase/decrease) on net operating income if the special order were incur accepted?
Sales Forecast and Budget Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built- in hard drive; they can be put into fanny packs for use while working out. It is now early January, and Audio-2-Go's budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows: Model Number Sold Price Revenue A-1 18,000 $70 $1,260,000 A-2 40,000 85 3,400,000 A-3 58,000 110 6,380,000 A-4 16,000 120 1,920,000 A-5 2,500 200 500,000 < $13,460,000 In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following: a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 40 percent. The number of units of Model A-1 to be sold was forecast to be 50…
Freesia Products has a current year budget of $972,000 for prevention costs. Freesia is considering the automation of some prevention activities saving $86,400 in variable prevention costs. The new method will require $43,200 in training costs and $108,000 in annual equipment costs. The budgeted production level is 162,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $15 per failed unit. The internal failure rate is expected to be 3% of all units. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's external failure rate is 4.00% of units sold. The new proposal will reduce the external failure rate by 50%. How much do external failure costs change if all changes are as anticipated with the new prevention automation? Assume all finished goods units…