Jeremy White

Advanced Managerial/Cost Accounting

Dr. Chad Greenfield
Unit 4 Assignment
9-1

1.

April
February sales:
March sales:
April sales:
May sales:
June sales:
Total cash collections

May

$ 23,000
182,000
60,000

$265,000

$ 26,000
210,000
100,000
$336,000

June

$ 30,000
350,000
40,000
$420,000

Total
$ 23,000
208,000
300,000
450,000
40,000
$1,021,000

2.
Accounts receivable as of June 30:
From May sales: ..............................................................................
From June sales:..............................................................................
Total accounts receivable as of June 30 ..........................................

$ 50,000
160,000
$210,000

9-15

1. Production budget:
Budgeted sales .....................................
Add desired ending inventory ..............
Total needs ............................................
Less beginning inventory ......................
Required production .............................

July
35,000
11,000
46,000
10,000
36,000

August
40,000
13,000
53,000
11,000
42,000

Sept
50,000
9,000
59,000
13,000
46,000

October
30,000
7,000
37,000
9,000
28,000

2. During July and August the company is building inventories in anticipation of sales in September. This
will result in production which exceeds sales during these months. However, In September and October
inventories are being reduced in anticipation of a decrease in sales during the last months of the year.

3.

Required production (units) .................

Material H300 needed ..........................
Production ............................................
+ Add desired ending ............................
Total material H300 needs ....................
-Less beginning inventory (cc) ..
Material H300 purchases .....................

July
36,000
3 cc
108,000
63,000
171,000
54,000
117,000

August
42,000
3 cc
126,000
69,000
195,000
63,000
132,000

Sept.
46,000
3 cc
138,000
42,000
180,000
69,000
111,000

3rd
Quarter
124,000
3 cc
372,000
42,000
414,000
54,000
360,000

9-17

1. December cash sales ..........................................................

Collections:
October sales: .................................................................
November sales...............................................................
December sales: ..............................................................
Total cash collections ......................................................

72,000
315,000
120,000
$590,000

2. Payments to suppliers:
November purchases A/P ...............................................
December purchases: .....................................................
Total cash payments ........................................................

$161,000
84,000
$245,000

3.

$ 83,000

Ashton Company
Cash Budget
For the Month of December
Cash balance, beginning ...........................................................
Add cash receipts: Collections from customers ........................
Total cash available before current financing ...........................
Less disbursements:
Payments to suppliers for inventory .....................................
Selling and administrative .....................................................
New web server.....................................................................
Dividends ...............................................................................
Total disbursements ..................................................................
Excess of cash from disb. ..........................................................
Financing:

$ 40,000
590,000
630,000
$245,000
380,000
76,000
9,000
710,000
(80,000)

Borrowings ............................................................................
Repayments ...........................................................................
Interest ..................................................................................
Total financing ...........................................................................
Cash balance .............................................................................

100,000
0
0
100,000
$ 20,000

12-8
1.
-

Division A: = 5% X 4 = 20%
Division B: = 4% X 2 = 8%
Division C: = 3.2% x 5 = 16%

2.

Average operating assets .........................

Required rate of return ............................
Required operating income .....................

Division A
$3,000,000
14%
$ 420,000

Actual operating income ..........................

Required operating income .....................
Residual income .......................................

$ 600,000
420,000
$ 180,000

Division B
$7,000,000

10%
$ 700,000

Division C
$5,000,000
16%
$ 800,000

$ 560,000
700,000
$(140,000)

$ 800,000
800,000
$
0

Division A
20%

Division B
8%

Division C
16%

Reject
14%

Accept
10%

Reject
16%

Accept

Accept

Reject

3.

Return on investment .....................................

Investment opportunity yielding 15%, it
probably would ...........................................
Return for computing residual income ...........
Investment opportunity yielding 15%, it
probably would ...........................................

12A-3.

1.
Sales ..........................................
Expenses:
By the division...........................
Transfer price paid ....................
Total expenses ..........................
Net operating income ...............

Division A
$2,500,000

Division B
$1,200,000

Company
$3,200,000

1,800,000

400,000
500,000
900,000
$ 300,000

2,200,000

1,800,000
$ 700,000

Division A outside sales

16,000 $125 ........................................................................
Division B outside sales
(4,000 units $300 per unit) .............................................
Total outside sales ................................................................

2,200,000
$1,000,000

$2,000,000
1,200,000
$3,200,000

2.
Yes Division A should sell the 1000 additional circuit boards to division B in both instances it increases
the financial outcome of both division A and division B It increased a $175 increase to the selling price
of Division B as well as yields $75 more into the contribution margin in every way the sale would mean
great things financially for division B and the sale in my opinion should take place.