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1.(TCO 7) The cash budget is one of the primary financial budgets. Discuss the importance of the cash budget. Identify the individual sections of the cash budget and the information included in each section. (Points : 20)Question 2.2.(TCO 9) Distinguish between fixed budgets and flexible budgets. When are each an appropriate means of evaluating a manager’s performance and why?(Points : 20)
Question 3.3.(TCO 6) Tom Bat became a baseball enthusiast at a very early age. All of his baseball experience has provided him valuable knowledge of the sport, and he is thinking about going into the batting cage business. He estimates that the construction of a state-of-the-art building and the purchase of necessary equipment will cost $630,000. Both the facility and the equipment will be depreciated over 12 years using the straight-line method and are expected to have zero salvage values. His required rate of return is 10%. Estimated annual net income and cash flows are $49,000 and $101,500, respectively.For this investment, calculate the following.Part (a): the net present valuePart (b): the internal rate of returnPart (c): the payback period(Points : 30)Question 4.4.(TCO 7) The management of Horton Company estimates that credit sales for August, September, October, and November will be $270,000, $375,000, $420,000, and $240,000, respectively. Experience has shown that collections are made as follows.In month of sales25%In first month after sale60%In second month after sales10%Determine the collections from customers in October and November. Show all computations.(Points : 30)Question 5.5.(TCO 8) Northern Company’s budgeted and actual sales for 2009 were as follows.ProductBudgeted SalesActual SalesA6,000 units at $8.00 per unit6,810 units at $7.80 per unitB5,000 units at $10.00 per unit4,720 units at $10.40 per unitPart (a): Calculate the sales volume variance.Part (b): Calculate the sales price variance.Part (c): Calculate the total sales variance.(Points : 30)
Question 6.6.(TCO 9) Mace Company accumulates the following data concerning a mixed cost, using miles as the activity level.Miles DrivenTotal CostJanuary10,000$15,000February8,00013,500March9,00014,400April7,50012,500Compute the variable and fixed cost elements using the high-low method.(Points : 30)