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Microsoft Word - SA 4 Financial Planning and Control_ XXXXXXXXXXdocx

Financial Planning and Control Summative Assessment: Outline & Rubric

Summative Assessment Outline

Financial Planning and Control

Competency Name: Financial Planning and Control

Competency Statement: Demonstrate knowledge and application of the 3 key steps of financial planning – 1 forecasting the firm’s

short-term and long-term financial needs; 2 developing budgets to meet those needs, and 3 establishing financial controls to see if

the company is achieving its goal.

Summative Assessment Submission Title: Financial Planning and Control Accounting Problems

Competency Objectives:

1. Develop a forecast of short- and long-term financing needs and pro forma financial statements.

2. Prepare a budget and use variance analysis to evaluate performance.

3. Demonstrate knowledge of standard costing and variances.

4. Perform profitability and cost analyses of businesses and business segments.

5. Construct a balanced scorecard for strategic planning and control purposes considering both quantitative and qualitative

data.

Program Learning Outcomes: N/A

Institutional Learning Outcomes: N/A

Purpose of this Assessment

The final assessment for this competency is to complete a series of comprehensive financial accounting problems that address

budgeting, forecasting, standard costing, variance analysis, profitability, and cost analysis using a balance scorecard.

Items Required for Submission

A comprehensive solution set to a selection of managerial accounting problems that involve:

• Preparing Forecasting/Proforma Statements

• Preparing Capital Budgets

Financial Planning and Control Summative Assessment: Outline & Rubric

• Generating Operating Budgets

• Demonstrating a knowledge of standard costing and variances

• Performing profitability and cost analyses of businesses and business segments

• Constructing a balanced scorecard for strategic planning and control purposes, considering both quantitative and qualitative data

Step ONE: Preparation

In order to prepare for this assignment, it is important to carefully review the entire scenario for each problem found in Appendix A.

When reviewing each problem, the following questions should be considered:

1. What possible tasks are required?

2. What you will need to complete the problem?

3. What formulas will you need?

4. What resources from this competency might you reference to successfully complete this problem?

5. Think about possible plans of action for what steps you will take—what strategies will you use to tackle each problem?

Step TWO: Perform Calculations & Explain Methods

For each problem (found in Appendix A):

1. Use your plan of action to solve each problem, clearly outlining the procedures used, providing a concise explanation of each

step, labeling relevant formulas, and showing worked out calculations and complete solutions. You may use an Excel

spreadsheet or a calculator to help you perform the necessary calculations, but all corresponding work must be shown

completely.

2. Answer all questions posed in the problem; if applicable, analyze and evaluate your results and provide a contextual explanation

of the solutions you obtained.

3. Review your calculations and solutions and make sure that an external viewer would be able to follow your methodology and

make sense of your calculations and corresponding explanations. Make certain that you have completed all steps of each

problem.

Financial Planning and Control Summative Assessment: Outline & Rubric

Step THREE: Complete Checklist for Submission

Before you submit, check to see if you believe you have met the criteria noted below.

Did you….

ü Answer all parts of each question completely and accurately?

ü Provide clear and accurate steps, calculations, and solutions?

ü Include an insightful analysis and evaluation of results where relevant?

ü Provide a comprehensive and accurate description of each of the four areas of a balanced scorecard, an accurate and clear definition of a

key performance indicator (KPI), and meaningful real world examples of KPIs for each balanced score card area?

Step FOUR: Submit Your Work

• Your completed final assessment documents should be submitted through the Final Assessment page of your competency.

Financial Planning and Control Summative Assessment: Outline & Rubric

Scoring Rubric for Summative Assessment:

Criterion EMERGING (1) DEVELOPING (2) PROFICIENT (3) EXEMPLARY (4)

Forecasting / Pro forma

Statements

Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Capital Budgets Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Operating Budgets Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Standard Costing and

Variances

Does not answer all parts

of each question

completely and provides a

weak analysis and

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

Financial Planning and Control Summative Assessment: Outline & Rubric

evaluation of results where

applicable.

steps, calculations, and

solutions clearly, and

insightfully analyzing and

evaluating results where

applicable.

calculations, and solutions

clearly, and insightfully

analyzing and evaluating

results where applicable.

calculations, and

solutions clearly, and

insightfully analyzing and

evaluating results where

applicable.

Profitability and Cost

Analysis

Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations and solutions

clearly, and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Balanced Score Card

Provides a limited

description of each of the

four areas of a balanced

scorecard, an inadequate

definition of a KPI, and

real world examples of

KPIs that do not align to

each balanced score card

area.

Provides a mostly

accurate description of

each of the four areas of a

balanced scorecard, a

somewhat accurate

definition of a KPI, and

somewhat relevant real

world examples of KPIs for

each balanced score card

area.

Provides an accurate

description of each of the

four areas of a balanced

scorecard, an accurate

definition of a KPI, and

relevant real world

examples of KPIs for each

balanced score card area.

Provides a

comprehensive and

accurate description of

each of the four areas of

a balanced scorecard, an

accurate and clear

definition of a KPI, and

meaningful real world

examples of KPIs for

each balanced score card

area.

Appendix A: Managerial Accounting Problems

Problem #1: Proforma Statements

Prepare a common size income statement given the following information:

Revenues = $100,000

COGS = $43,000

SG&A = $22,000

Depreciation = $10,000

Financial Planning and Control Summative Assessment: Outline & Rubric

Interest Owed = $5,000

Tax Rate = 40%

Problem #2: Proforma Statements

Prepare a pro forma income statement from the data and common size income statement from #1, assuming that the sales will grow by

5% and all expenses but interest and taxes will scale with sales.

Problem #3: Capital Budgets

Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a

salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's

required rate of return is 12%.

Required:

Ignoring the time value of money, calculate the net cash inflow or outflow resulting from this investment opportunity.

Problem #4: Capital Budgets

Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a

salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's

required rate of return is 12%.

Factors: Present Value of $1

(r = 12%)

Year XXXXXXXXXX

Year XXXXXXXXXX

Year XXXXXXXXXX

Year XXXXXXXXXX

Required:

(1) Using the Present Value Factors for $1, calculate the net present value of this investment (ignoring taxes).

(2) Based on your answer in requirement 1, should Rambus purchase the production machine?

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #5: Capital Budgets

Lockwood Company would like to purchase a production machine for $900,000. The machine is expected to have a life of five years,

and a salvage value of $100,000. Annual maintenance costs will total $40,000. Annual savings are predicted to be $350,000. The

company only accepts projects that have a payback period of less than three years.

Required:

(1) Calculate the payback period for this project rounded to the nearest month. Show your work.

(2) Should the company accept this proposal? Explain.

Problem #6: Operating Budgets

Cathy’s Cookies produces cookies for resale at local grocery stores. The company is currently in the process of establishing a master

budget on a quarterly basis for this coming fiscal year, which ends December 31. Prior year quarterly sales were as follows (1 unit = 1

batch):

First quarter: 8,000 units

Second quarter: 9,600 units

Third quarter: 12,000

units

Fourth quarter: 10,400

units

Unit sales are expected to increase 20%, and each unit is expected to sell for $5. Management prefers to maintain ending finished

goods inventory equal to 15% of next quarter's sales. Assume finished goods inventory at the end of the fourth quarter budget period is

estimated to be 2,000 units.

Required:

(1) Prepare a sales budget for Cathy’s Cookies.

(2) Prepare a production budget for Cathy’s Cookies.

XXXXXXXXXXWhat can you interpret about Cathy’s Cookies Sales Budget? Trends?

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #7: Operating Budgets

Marker Products, Inc. sells all of its products on credit. The company expects to collect 65%of sales in the quarter of sale and 35% the

quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter

of the coming year. Marker's sales budget shows the following projected sales revenues:

Quarter 1: $8,800,000

Quarter 2: $11,000,000

Quarter 3: $11,440,000

Quarter 4: $10,560,000

Required:

Prepare a budget for cash collections from sales for each of the four quarters.

Problem #8: Standard Costing and Variances

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company

expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese).

Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based

on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's

actual results showing sales of 45,000 units.

Required:

(1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead.

(2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.

Problem #9: Standard Costing & Variances

Financial Planning and Control Summative Assessment: Outline & Rubric

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 3.0 pounds of direct

materials to produce one unit (batch) of product at a cost of $8 per pound. Actual results are in for last year, which indicates 45,000

batches of cheese were sold. The company purchased 160,000 pounds of materials at $7.50 per pound, and used 145,000 pounds in

production.

Required:

(1) Calculate the materials price variance.

(2) Calculate the materials quantity variance.

(3) Suggest several possible reasons for the materials price and quantity variances calculated in requirements (1) and (2).

Problem #10: Standard Costing & Variances

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to

produce one unit (batch) of product at a cost of $10 per hour. Actual results are in for last year, which indicates 45,000 batches of

cheese were sold. The company's direct labor workforce worked 27,500 hours at $9 per hour.

Required:

(1) Calculate the labor rate variance.

(2) Calculate the labor efficiency variance.

(3) Suggest several possible reasons for the labor rate and efficiency variances.

Problem #11: Standard Costing & Variances

Jake’s cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to

produce one unit (batch) of product, and the variable overhead rate is $5.00 per hour. Actual results are in for last year, which indicates

45,000 batches of cheese were produced and sold. The company's direct labor workforce worked 27,500 hours, and variable overhead

costs totaled $144,000.

Required:

(1) Calculate the variable overhead spending variance.

(2) Calculate the variable overhead efficiency variance.

(3) Suggest several possible reasons for the variable overhead spending and efficiency variances.

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #12: Profitability & Cost Analysis

Car Deals Inc. has two divisions: New Cars and Used Cars. The following segmented financial information is for the most recent fiscal

year:

New Cars

Division

Used Cars

Division

Sales $9,000,000 $18,000,000

Cost of goods sold 3,300,000 8,700,000

Allocated overhead 1,050,000 2,550,000

Selling and administrative expenses 585,000 630,000

The New Cars division had average operating assets totaling $17,400,000 for the year, and the Used Cars division had average

operating assets of $22,800,000. Assume the cost of capital rate is 15%, and the company's tax rate is 40%.

Required:

a. Prepare a segmented income statement, including the profit margin ratio for each division at the bottom of the segmented income

statement.

b. Calculate return on investment (ROI) for each division.

c. Calculate residual income for each division.

d. Summarize the answers to parts a, b, and c. What does this information tell you about each division?

Problem #13: Balanced Scorecard

a. List the four areas of a balanced scorecard. Describe each area clearly and concisely.

b. Define a KPI

c. Pick a real world company and give an example of a KPI for each balanced scorecard area for that company.

Financial Planning and Control Summative Assessment: Outline & Rubric

Summative Assessment Outline

Financial Planning and Control

Competency Name: Financial Planning and Control

Competency Statement: Demonstrate knowledge and application of the 3 key steps of financial planning – 1 forecasting the firm’s

short-term and long-term financial needs; 2 developing budgets to meet those needs, and 3 establishing financial controls to see if

the company is achieving its goal.

Summative Assessment Submission Title: Financial Planning and Control Accounting Problems

Competency Objectives:

1. Develop a forecast of short- and long-term financing needs and pro forma financial statements.

2. Prepare a budget and use variance analysis to evaluate performance.

3. Demonstrate knowledge of standard costing and variances.

4. Perform profitability and cost analyses of businesses and business segments.

5. Construct a balanced scorecard for strategic planning and control purposes considering both quantitative and qualitative

data.

Program Learning Outcomes: N/A

Institutional Learning Outcomes: N/A

Purpose of this Assessment

The final assessment for this competency is to complete a series of comprehensive financial accounting problems that address

budgeting, forecasting, standard costing, variance analysis, profitability, and cost analysis using a balance scorecard.

Items Required for Submission

A comprehensive solution set to a selection of managerial accounting problems that involve:

• Preparing Forecasting/Proforma Statements

• Preparing Capital Budgets

Financial Planning and Control Summative Assessment: Outline & Rubric

• Generating Operating Budgets

• Demonstrating a knowledge of standard costing and variances

• Performing profitability and cost analyses of businesses and business segments

• Constructing a balanced scorecard for strategic planning and control purposes, considering both quantitative and qualitative data

Step ONE: Preparation

In order to prepare for this assignment, it is important to carefully review the entire scenario for each problem found in Appendix A.

When reviewing each problem, the following questions should be considered:

1. What possible tasks are required?

2. What you will need to complete the problem?

3. What formulas will you need?

4. What resources from this competency might you reference to successfully complete this problem?

5. Think about possible plans of action for what steps you will take—what strategies will you use to tackle each problem?

Step TWO: Perform Calculations & Explain Methods

For each problem (found in Appendix A):

1. Use your plan of action to solve each problem, clearly outlining the procedures used, providing a concise explanation of each

step, labeling relevant formulas, and showing worked out calculations and complete solutions. You may use an Excel

spreadsheet or a calculator to help you perform the necessary calculations, but all corresponding work must be shown

completely.

2. Answer all questions posed in the problem; if applicable, analyze and evaluate your results and provide a contextual explanation

of the solutions you obtained.

3. Review your calculations and solutions and make sure that an external viewer would be able to follow your methodology and

make sense of your calculations and corresponding explanations. Make certain that you have completed all steps of each

problem.

Financial Planning and Control Summative Assessment: Outline & Rubric

Step THREE: Complete Checklist for Submission

Before you submit, check to see if you believe you have met the criteria noted below.

Did you….

ü Answer all parts of each question completely and accurately?

ü Provide clear and accurate steps, calculations, and solutions?

ü Include an insightful analysis and evaluation of results where relevant?

ü Provide a comprehensive and accurate description of each of the four areas of a balanced scorecard, an accurate and clear definition of a

key performance indicator (KPI), and meaningful real world examples of KPIs for each balanced score card area?

Step FOUR: Submit Your Work

• Your completed final assessment documents should be submitted through the Final Assessment page of your competency.

Financial Planning and Control Summative Assessment: Outline & Rubric

Scoring Rubric for Summative Assessment:

Criterion EMERGING (1) DEVELOPING (2) PROFICIENT (3) EXEMPLARY (4)

Forecasting / Pro forma

Statements

Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Capital Budgets Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Operating Budgets Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations, and solutions

clearly and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Standard Costing and

Variances

Does not answer all parts

of each question

completely and provides a

weak analysis and

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

Financial Planning and Control Summative Assessment: Outline & Rubric

evaluation of results where

applicable.

steps, calculations, and

solutions clearly, and

insightfully analyzing and

evaluating results where

applicable.

calculations, and solutions

clearly, and insightfully

analyzing and evaluating

results where applicable.

calculations, and

solutions clearly, and

insightfully analyzing and

evaluating results where

applicable.

Profitability and Cost

Analysis

Does not answer all parts

of each question

completely and provides a

weak analysis and

evaluation of results where

applicable.

Partially answers all parts

of each question

completely and accurately,

showing and explaining all

steps, calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Mostly answers all parts of

each question completely

and accurately, showing

and explaining all steps,

calculations and solutions

clearly, and insightfully

analyzing and evaluating

results where applicable.

Answers all parts of each

question completely and

accurately, showing and

explaining all steps,

calculations, and

solutions clearly and

insightfully analyzing and

evaluating results where

applicable.

Balanced Score Card

Provides a limited

description of each of the

four areas of a balanced

scorecard, an inadequate

definition of a KPI, and

real world examples of

KPIs that do not align to

each balanced score card

area.

Provides a mostly

accurate description of

each of the four areas of a

balanced scorecard, a

somewhat accurate

definition of a KPI, and

somewhat relevant real

world examples of KPIs for

each balanced score card

area.

Provides an accurate

description of each of the

four areas of a balanced

scorecard, an accurate

definition of a KPI, and

relevant real world

examples of KPIs for each

balanced score card area.

Provides a

comprehensive and

accurate description of

each of the four areas of

a balanced scorecard, an

accurate and clear

definition of a KPI, and

meaningful real world

examples of KPIs for

each balanced score card

area.

Appendix A: Managerial Accounting Problems

Problem #1: Proforma Statements

Prepare a common size income statement given the following information:

Revenues = $100,000

COGS = $43,000

SG&A = $22,000

Depreciation = $10,000

Financial Planning and Control Summative Assessment: Outline & Rubric

Interest Owed = $5,000

Tax Rate = 40%

Problem #2: Proforma Statements

Prepare a pro forma income statement from the data and common size income statement from #1, assuming that the sales will grow by

5% and all expenses but interest and taxes will scale with sales.

Problem #3: Capital Budgets

Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a

salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's

required rate of return is 12%.

Required:

Ignoring the time value of money, calculate the net cash inflow or outflow resulting from this investment opportunity.

Problem #4: Capital Budgets

Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a

salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's

required rate of return is 12%.

Factors: Present Value of $1

(r = 12%)

Year XXXXXXXXXX

Year XXXXXXXXXX

Year XXXXXXXXXX

Year XXXXXXXXXX

Required:

(1) Using the Present Value Factors for $1, calculate the net present value of this investment (ignoring taxes).

(2) Based on your answer in requirement 1, should Rambus purchase the production machine?

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #5: Capital Budgets

Lockwood Company would like to purchase a production machine for $900,000. The machine is expected to have a life of five years,

and a salvage value of $100,000. Annual maintenance costs will total $40,000. Annual savings are predicted to be $350,000. The

company only accepts projects that have a payback period of less than three years.

Required:

(1) Calculate the payback period for this project rounded to the nearest month. Show your work.

(2) Should the company accept this proposal? Explain.

Problem #6: Operating Budgets

Cathy’s Cookies produces cookies for resale at local grocery stores. The company is currently in the process of establishing a master

budget on a quarterly basis for this coming fiscal year, which ends December 31. Prior year quarterly sales were as follows (1 unit = 1

batch):

First quarter: 8,000 units

Second quarter: 9,600 units

Third quarter: 12,000

units

Fourth quarter: 10,400

units

Unit sales are expected to increase 20%, and each unit is expected to sell for $5. Management prefers to maintain ending finished

goods inventory equal to 15% of next quarter's sales. Assume finished goods inventory at the end of the fourth quarter budget period is

estimated to be 2,000 units.

Required:

(1) Prepare a sales budget for Cathy’s Cookies.

(2) Prepare a production budget for Cathy’s Cookies.

XXXXXXXXXXWhat can you interpret about Cathy’s Cookies Sales Budget? Trends?

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #7: Operating Budgets

Marker Products, Inc. sells all of its products on credit. The company expects to collect 65%of sales in the quarter of sale and 35% the

quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter

of the coming year. Marker's sales budget shows the following projected sales revenues:

Quarter 1: $8,800,000

Quarter 2: $11,000,000

Quarter 3: $11,440,000

Quarter 4: $10,560,000

Required:

Prepare a budget for cash collections from sales for each of the four quarters.

Problem #8: Standard Costing and Variances

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The master budget indicates that the company

expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese).

Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based

on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's

actual results showing sales of 45,000 units.

Required:

(1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead.

(2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.

Problem #9: Standard Costing & Variances

Financial Planning and Control Summative Assessment: Outline & Rubric

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 3.0 pounds of direct

materials to produce one unit (batch) of product at a cost of $8 per pound. Actual results are in for last year, which indicates 45,000

batches of cheese were sold. The company purchased 160,000 pounds of materials at $7.50 per pound, and used 145,000 pounds in

production.

Required:

(1) Calculate the materials price variance.

(2) Calculate the materials quantity variance.

(3) Suggest several possible reasons for the materials price and quantity variances calculated in requirements (1) and (2).

Problem #10: Standard Costing & Variances

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to

produce one unit (batch) of product at a cost of $10 per hour. Actual results are in for last year, which indicates 45,000 batches of

cheese were sold. The company's direct labor workforce worked 27,500 hours at $9 per hour.

Required:

(1) Calculate the labor rate variance.

(2) Calculate the labor efficiency variance.

(3) Suggest several possible reasons for the labor rate and efficiency variances.

Problem #11: Standard Costing & Variances

Jake’s cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to

produce one unit (batch) of product, and the variable overhead rate is $5.00 per hour. Actual results are in for last year, which indicates

45,000 batches of cheese were produced and sold. The company's direct labor workforce worked 27,500 hours, and variable overhead

costs totaled $144,000.

Required:

(1) Calculate the variable overhead spending variance.

(2) Calculate the variable overhead efficiency variance.

(3) Suggest several possible reasons for the variable overhead spending and efficiency variances.

Financial Planning and Control Summative Assessment: Outline & Rubric

Problem #12: Profitability & Cost Analysis

Car Deals Inc. has two divisions: New Cars and Used Cars. The following segmented financial information is for the most recent fiscal

year:

New Cars

Division

Used Cars

Division

Sales $9,000,000 $18,000,000

Cost of goods sold 3,300,000 8,700,000

Allocated overhead 1,050,000 2,550,000

Selling and administrative expenses 585,000 630,000

The New Cars division had average operating assets totaling $17,400,000 for the year, and the Used Cars division had average

operating assets of $22,800,000. Assume the cost of capital rate is 15%, and the company's tax rate is 40%.

Required:

a. Prepare a segmented income statement, including the profit margin ratio for each division at the bottom of the segmented income

statement.

b. Calculate return on investment (ROI) for each division.

c. Calculate residual income for each division.

d. Summarize the answers to parts a, b, and c. What does this information tell you about each division?

Problem #13: Balanced Scorecard

a. List the four areas of a balanced scorecard. Describe each area clearly and concisely.

b. Define a KPI

c. Pick a real world company and give an example of a KPI for each balanced scorecard area for that company.

Answered 16 days AfterMay 14, 2021

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