Ask your questions and get Academic Help within 24 hrs of time.
We help students in there study question to understand the subject and learn it in great detail.
If you can't find your questions among the questions posted here you can e-mail your questions at:
Get Live Support
We help students to learn, solve and understand questions. We have highly experienced tutors always looking forward to share there knowledge. At present we help only management students.
QUESTIONS PAGE------ 1 2 3 4 5 6 7 8
13-49 Variances
Study Appendix 13. Consider the following data regarding factory overhead:
Variable Fixed
Budget for actual hours of input $45,000 $70,000
Applied 41,000 64,800
Budget for standard hours allowed
for actual output achieved ? ?
Actual incurred 48,500 68,500
Using the above data, fill in the following blanks with the variance amounts. Use F for favorable or U
for unfavorable for each variance.
Total Overhead &n bsp; Variable Fixed
1. Spending variance ______ _ _____ ______
2. Efficiency variance ______ ______ ______
3. Production-volume variance ______ ______ ______
4. Flexible-budget variance ______ ______ ______
5. Underapplied overhead _______ ______ ______
________________________________________________________________________
a Using the information provided, construct a monthly cash budget for October through December 2008. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing?
b Construct a pro forma income statement for the first fiscal quarter of 2009 and a pro forma balance sheet as of December 31, 2008. What is your estimated external financine needed for December 31?
c Does the December 31, 2008, estimated external financing equal your cash surplus (deficit) for this date from your cash budget?
d Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2008.
Noble Selected Information and Financial Statements
Sales (20 percent for cash, the rest on 30-day credit terms):
2008 Actual 2008 Projected
July August September October November December
76,000 88,000 266,000 125,000 51,000 53,000
Purchases (all on 60-day terms):
2008 Actual 2008 Projected
July August September October November December
116,000 122,000 257,000 62,000 27,000 26,000
Salaries payable monthly 20,000
Principal payment on debt due in December 25,700
Interest due in December 9,000
Dividend payable in December 15,000
Taxes payable in November 19,000
Addition to accumulated depreciation in December 4,000
Cash balance on October 1, 2005 35,000
Minimum desired cash balance 15,000
Noble’s annual income statement and balance sheet for September 30, 2008 appear below.
Additional information about the company's accounting methods and expectations for
the last three months of 2008 appear in the footnotes.
Noble
Annual Income Statement
Fiscal Year ended September 30, 2008 ($ 000)
Net sales 1,581.6
Cost of goods sold1 1,098.0
Gross profits 483.6
Selling and administrative expenses2 240.0
Interest expense 18.0
Depreciation3 16.0
Net profit before tax 209.6
Tax at 33% 69.2
Net profit after tax 140.4
Noble
Balance Sheet
September 30, 2008 ($ 000)
Assets
Cash 34.0
Accounts receivable 212.8
Inventory 425.0
Total current assets 671.8
Gross fixed assets 135.0
Accumulated depreciation 52.0
Net fixed assets 83.0
Total assets 754.8
Liabilities
Bank loan 0.0
Accounts payable 379.0
Accrued expenses4 55.0
Current portion long-term debt5 25.7
Taxes payable 56.0
Total current liabilities 515.7
Long-term debt 120.0
Shareholders' equity 119.1
Total liabilities and equity 754.8
1. Cost of goods sold consists entirely of items purchased during the quarter.
2. Selling and administrative expenses consist entirely of salaries.
3. Depreciation is straight-line at the rate of $4,000 per quarter.
4. Accrued expenses are not expected to change in the last quarter.
5. $25.7 due December 2008. No payments for remainder of year.
.________________________________________________________________________
Assume the following:
XYZ Company exports their product from the U.S. to the U.K. They accept payment in pounds and then convert them to dollars. The British demand for these products are positively related to economic conditions in the U.K.
British and U.S. inflation and interest rates are similar.
XYZ Company believes that the U.S. trade deficit from trade between the U.S. and the U.K. will adjust to changing prices between the two countries, while capital flows will adjust to interest rate differentials.
XYZ Company believes that the value of the pound is very sensitive to changing international capital flows and only moderately sensitive to changes in international trade flows.
The U.K. inflation rate is expected to decline and U.S. inflation rate is expected to rise.
The U.K. interest rates are also expected to decline while U.S. interest rates are expected to increase.
Question
XYZ Company believes international capital flows shift in response to changing interest rate differentials. Is there any reason why the changing interest rate differentials will not necessarily cause international capital flows to significantly change in this example? Why?