BUSI 101 1nd Edition Lecture 25Outline of Last Lecture I. Budgeting Continueda. Page 140 in Coursepack (3 problems)b. Page 187 in the Coursepack (Practice Exam Problems)c. Page 416 in the Textbooki. Problems E9-6, E9-13, E9-19Outline of Current Lecture II. Budgeting Continueda. E9-4AIII. Introduction to Chapter 10a. Page 151 in Coursepackb. Managerial Accounting Textbooki. E10-10IV. Exam Practice Problemsa. Page 200Current LectureE9-4A)January FebruaryCash+C/R60,000 51,000These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Collections Collections W/N/R Sales of Securities Borrow=Available -C/D Payment for purchases DL OHD S+A Div.=End Cash326,00015,000401,000112,00090,00070,00078,000(depreciation)51,000372,0006000+9000429,000 or 438,000412,000123,000100,00075,00084,0006,00041,000+9,000=50,000January FebruaryNovember Sales (250,000) .20=50,000December Sales (320,000) .30=96,000 .20=64,000January Sales (360,000) .50=180,000 .30=108,000February Sales (400,000) .50=200,000Totals 326,000 372,000A/R @ 2/28=272,000=.20(560,000)+.50(400,000)Payments for Purchases January FebruaryDecember Purchases (100,000) .40=40,000January Purchases (120,000) .60=72,000 .40=48,000February Purchases (125,000) .60=75,000Totals 112,000 123,000A/P @ 2/28=50,000=.40(125,000)Page 151 in CoursepackROI=NI/investment=(sales/investment)(net income/sales)Ex. 1) ROI=20%, NI Sales=5%20%=(40,000/10,000)(2000/40,000)Cash Turnover=4x5%Ex. 2)(10,000/33331/3=IC)(500/10,000)Cash Turnover=3x5%=15%=ROIPage 1521. Maritime(750,000/250,000)(37,500/750,000)3x5%=15%2. Farm(400,000/200,000)(20,000/400,000)ROI10%=2=Cash TurnoverX5% income percentage of sale3. Industrial(450,000/100,000)(13,500/450,000)=3%4.5x3=13.5%=100,000Page 153Residual Income=NI – (% of desired return)(investment)1. (200,000/1,000,000)=20%R.I.=200,000-(.15)(1,000,000)=50,000Century1. ROI=(540,000/3,000,000)=18%2. Residual Income=540,000-(.16x3,000,000)/480,000)=60,0003. A. Assume 1,000,000 and NI=170,000ROI=540,000+170,000=(710,000/4,000,000)=17.75%B. 710,000-(.16x4,000,000)/640,000=70,000, YESStatic Budget – geared for only one activity level Flexible Budget – geared for more than one activity levelY=a+bxTotals Costs=Fixed Cost+(Variable Cost/unit)(# of units)Ex. 10-10)Page 445F=favorable, U=unfavorableBudget @10,000Actual Diff.SC 2400/8000=(.3)(10,000) 3,000 2,600 400FAE 720/8000=(.09)(10,000) 900 850 50FTE 3600/8000=(.45)(10,000)4500 4100 400FFree Samples 1600/8000=(.20) 2000 1400 600F(10,000)Page 200 in the Coursepack31. Sales-VC =CM 100,000-Direct or Controllable FC 40,000=Segment Margin or Controllable Margin 60,000(If positive – KEEP division)Answer: B32. C33. IL V 45,000/20,000=2.25m/hFS V 4,000/20,000=.20m/hIM V 21,000/20,000=1.05 m/hD F 15,000=3.50m/h15,000=3.50(21,000)=73,500+15,000=88,500Answer: C34. y=a+bx120,000=40,000+5.00(x)80,000/5=xx=16,000Answer: C35. C36. Budget ActualCost Center Contribution Margin 600,000 580,000Revenue Center Contribution Fixed Cost200,000 220,000Profit Center Answer:BInvestment Center Segment margin or controlled margin400,000 360,00020,000 U+20,000 U40,000 below37. 10%=45,000/450,000Answer: A38. CM 200,000-DFC 100,000=Cont. Margin 100,000100,000/400,000=25%Answer: A39. RI=80,000-(.08x800,000)/64,000=16,000Answer: C40. Answer: