Management Accounting questions

QUESTION 1 - 14 MARKS The Ritz-Carlton has hotels and resorts in the Carribean and Mexico. You are provided with the following budget information for 2020. Suppose that for one of these hotels, management expects occupancy rates to be 95% in December, January and February; 85% in November, March and April; and 70% the rest of the year. This hotel has 300 rooms and the average room rental is $290 per night of this, on average, 10% I received as a deposit the month before the stay. 60% is received in the month of the stay and 28% is collected the month after the stay. The remaining 2% is never collected. Most of the costs of running the hotel are fixed. The variable costs are only $30 per occupied room per night. Fixed salaries including benefits) run $400,000 per month depreciation is $350,000 per month, other fixed operating costs are $120,000 per month and interest expense is $600,000 per month. Variable costs and salaries are paid in the month they are incurred Depreciation is recorded at the end of each quarter, other fixed operating costs are paid as incurred and interest is paid each June and December a) Prepare a monthly cash budget for this Ritz-Carlton Hotel for the entire year. For simplicity assume that there are 30 days in cach month b) What is the expected annual profit for this Ritz-Carlton Hotel for the 2020 year? c) How much would the hotel's annual profit increase if occupancy rates increased by 5% each month in the off season that is from 70% to 75% in May through October)? lenovo Take20Home%20Assignment%20Portion.pdf QUESTION 2 - 10 MARKS Cedric Inc. is considering two mutually exclusive projects. Project 1 requires an investment of $100,000 while project 2 requires an investment of $110,000. Revenues and costs for each project are shown below. PROJECT 1 Year Revenues Variable costs Fixed costs $40,000 10,000 5,000 $60,000 $70,000 15,000 20,000 5,000 6,000 PROJECT 2 $80,000 20,000 8,000 Year Revenues Variable costs $60,000 20,000 7,000 $75,000 25,000 7,000 $51,000 17.000 7,000 $45,000 15,000 8,000 Fixed costs The company estimates that at the end of the fourth year Project I would have a salvage value of $20,000 and Project 2 would have a salvage value of $10,000. a) Determine the net present value of each project using a 14% discount rate. lenovo QUESTION 3-8 MARKS Abbey Company uses a joint process to produce products L, M and N. Each product may be sold at split-off or processed further and then sold. Joint processing costs for the year amounted to $500,000. Other information is presented below: Separable Processing Sales Value Costs after Sales Value Product at Spliteoll Split-off at Completion L S420,000 $140,000 $530,000 250,000 40,000 360,000 280,000 70,000 340,000 Required: a) Which products, if any, should be processed further? b) Using only the information above, calculate net income if all three products were sold at the split off point? c) Using only the information above, calculate net income If all three products were processed further? lenovo leno QUESTION 4 - 8 MARKS The following information is available for Hupp Corporation and its two divisions, Apple and Orange: Company Apple Orange as a whole Division Division Net sales $400,000 $100,000 $300,000 Fixed costs: Controllable by division manager 55,000 30,000 Controllable by others 30,000 10,000 20,000 Variable costs: Cost of merchandise sold 85,000 35,000 50,000 Operating expenses 60,000 20,000 40,000 Unallocated costs 10,000 25,000 Required: a) Compute the contribution margin for the Apple Division. b) Compute the contribution controllable by the manager of the Orange Division c) Compute the contribution by segment for the Apple Division d) Compute the income before income taxes for Hupp Corporation. lenovo Tau 0.0 .home%20Assignments Portion.pdf QUESTION 5 - 10 MARKS The Walton Manufacturing Company has developed the following standards for one of their products, a walnut fem stand. STANDARD VARIABLE COST CARD One Walnut Fern Stand Materials: 5 square feet x S8 per square foot S40.00 Direct labour: 2 hours x $10/DLH $20.00 Variable manufacturing overhead: 2 hours x S5/DLH S10.00 Total standard variable cost per unit $70,00 The company records materials price variances at the time of purchase. The following activity occurred during the month of April: Materials purchased: 5,000 square feet costing $46,000 Materials used: 4,250 square feet Units produced 900 units Direct labour 2,200 hours costing $19.800 Actual variable manufacturing overhead: S10,500 a) Calculate the direct materials price and usage variances. b) Calculate the direct labour rate variance, the direct labour efficiency variance, and the total direct labour variance c) Compute the variable manufacturing overhead spending and efficiency variances lenovo leno QUESTION 1 - 14 MARKS The Ritz-Carlton has hotels and resorts in the Carribean and Mexico. You are provided with the following budget information for 2020. Suppose that for one of these hotels, management expects occupancy rates to be 95% in December, January and February; 85% in November, March and April; and 70% the rest of the year. This hotel has 300 rooms and the average room rental is $290 per night of this, on average, 10% I received as a deposit the month before the stay. 60% is received in the month of the stay and 28% is collected the month after the stay. The remaining 2% is never collected. Most of the costs of running the hotel are fixed. The variable costs are only $30 per occupied room per night. Fixed salaries including benefits) run $400,000 per month depreciation is $350,000 per month, other fixed operating costs are $120,000 per month and interest expense is $600,000 per month. Variable costs and salaries are paid in the month they are incurred Depreciation is recorded at the end of each quarter, other fixed operating costs are paid as incurred and interest is paid each June and December a) Prepare a monthly cash budget for this Ritz-Carlton Hotel for the entire year. For simplicity assume that there are 30 days in cach month b) What is the expected annual profit for this Ritz-Carlton Hotel for the 2020 year? c) How much would the hotel's annual profit increase if occupancy rates increased by 5% each month in the off season that is from 70% to 75% in May through October)? lenovo Take20Home%20Assignment%20Portion.pdf QUESTION 2 - 10 MARKS Cedric Inc. is considering two mutually exclusive projects. Project 1 requires an investment of $100,000 while project 2 requires an investment of $110,000. Revenues and costs for each project are shown below. PROJECT 1 Year Revenues Variable costs Fixed costs $40,000 10,000 5,000 $60,000 $70,000 15,000 20,000 5,000 6,000 PROJECT 2 $80,000 20,000 8,000 Year Revenues Variable costs $60,000 20,000 7,000 $75,000 25,000 7,000 $51,000 17.000 7,000 $45,000 15,000 8,000 Fixed costs The company estimates that at the end of the fourth year Project I would have a salvage value of $20,000 and Project 2 would have a salvage value of $10,000. a) Determine the net present value of each project using a 14% discount rate. lenovo QUESTION 3-8 MARKS Abbey Company uses a joint process to produce products L, M and N. Each product may be sold at split-off or processed further and then sold. Joint processing costs for the year amounted to $500,000. Other information is presented below: Separable Processing Sales Value Costs after Sales Value Product at Spliteoll Split-off at Completion L S420,000 $140,000 $530,000 250,000 40,000 360,000 280,000 70,000 340,000 Required: a) Which products, if any, should be processed further? b) Using only the information above, calculate net income if all three products were sold at the split off point? c) Using only the information above, calculate net income If all three products were processed further? lenovo leno QUESTION 4 - 8 MARKS The following information is available for Hupp Corporation and its two divisions, Apple and Orange: Company Apple Orange as a whole Division Division Net sales $400,000 $100,000 $300,000 Fixed costs: Controllable by division manager 55,000 30,000 Controllable by others 30,000 10,000 20,000 Variable costs: Cost of merchandise sold 85,000 35,000 50,000 Operating expenses 60,000 20,000 40,000 Unallocated costs 10,000 25,000 Required: a) Compute the contribution margin for the Apple Division. b) Compute the contribution controllable by the manager of the Orange Division c) Compute the contribution by segment for the Apple Division d) Compute the income before income taxes for Hupp Corporation. lenovo Tau 0.0 .home%20Assignments Portion.pdf QUESTION 5 - 10 MARKS The Walton Manufacturing Company has developed the following standards for one of their products, a walnut fem stand. STANDARD VARIABLE COST CARD One Walnut Fern Stand Materials: 5 square feet x S8 per square foot S40.00 Direct labour: 2 hours x $10/DLH $20.00 Variable manufacturing overhead: 2 hours x S5/DLH S10.00 Total standard variable cost per unit $70,00 The company records materials price variances at the time of purchase. The following activity occurred during the month of April: Materials purchased: 5,000 square feet costing $46,000 Materials used: 4,250 square feet Units produced 900 units Direct labour 2,200 hours costing $19.800 Actual variable manufacturing overhead: S10,500 a) Calculate the direct materials price and usage variances. b) Calculate the direct labour rate variance, the direct labour efficiency variance, and the total direct labour variance c) Compute the variable manufacturing overhead spending and efficiency variances lenovo leno