devry busn278 full course

| June 9, 2016

Question
WEEK 1
Budgeting and Planning (graded)
Discuss the relationship between budgeting and planning. How are they related? What differences exist between the two?

Forecasting Techniques (graded)
Discuss the difference between quantitative and qualitative forecasting. Does one provide a more accurate forecast than the other?

WEEK 2

Linear Regression (graded)
Compare linear regression to the moving averages and smoothing techniques used in Week 1. Why is linear regression more appropriate for long-range forecasts?

Seasonal Variations (graded)
What is seasonality, and what role does it play in regression analysis?

WEEK 3

Expense Budgets (graded)
Nonproduction expenses such as marketing, research and development, and general administrative costs can play an important role in a company’s ability to meet long-term goals. Discuss how the budgets for each of these costs contribute to the company’s success. Which do you think plays the greatest role and why?

Capital Expenditures Budget (graded)
What are capital expenditures, and how can they help a company achieve its long-term objectives?

WEEK 4

Capital Budgeting (graded)
Explain what is meant by the time value of money, and discuss its relevance to the capital budgeting process.

New Business Startups (graded)
Discuss the complications related to creating a forecast and budget for a new business.

This section lists options that can be used to view responses.

EK 5

Master Budget (graded)
The sales budget is the starting point for the master budget. Discuss how it is prepared. Why is its accuracy so important?

Cash Budgeting (graded)
Discuss how managers can use the cash budget as a monitoring and control tool.

WEEK 6
Cost Behavior (graded)
A coworker comes to you with the following problem: “I provided my boss a projection of factory overhead using the high-low method. He was unhappy with the results and told me to do more work and not return until I had a lower cost estimate. My initial analysis was based on data points for the last 24 months. By dropping the three highest data points, I was able to get a lower cost.” Was what your coworker did unethical? Explain.

Variance Analysis (graded)
The differences identified in variance analysis are often interdependent. A favorable variance in one category may lead to an unfavorable variance in another, and vice versa. Identify and describe an example of interdependent variances, and discuss the trade-off that exists.

WEEK 7

Administering the Budget (graded)
Discuss the differences in the reports prepared for upper management compared to the reports prepared for lower-level managers. Why do these differences exist?

Presenting and Defending a Budget (graded)
The sales forecast is often the starting point of the budgeting process. Identify and discuss key assumptions that are made in the creation of the sales forecast. How would you defend these assumptions when presenting your budget to the budget committee?

course proj

Course Project
.equella.ecollege.com/file/8093c1f0-ed06-4ea3-b493-62d81b14c186/1/BUSN278_CH_CourseProject.html#1″>Objectives| .equella.ecollege.com/file/8093c1f0-ed06-4ea3-b493-62d81b14c186/1/BUSN278_CH_CourseProject.html#2″>Guidelines| .equella.ecollege.com/file/8093c1f0-ed06-4ea3-b493-62d81b14c186/1/BUSN278_CH_CourseProject.html#3″>Milestones| .equella.ecollege.com/file/8093c1f0-ed06-4ea3-b493-62d81b14c186/1/BUSN278_CH_CourseProject.html#4″>Grading Rubrics| .equella.ecollege.com/file/8093c1f0-ed06-4ea3-b493-62d81b14c186/1/BUSN278_CH_CourseProject.html#5″>Best Practices
Objectives

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The Budget Proposal project is intended to be a comprehensive evaluation of the key objectives covered throughout this course. It will challenge you to apply your knowledge of the budgeting process (including sales forecasting) when creating a budget proposal for a new business startup. Please use this outline and grading rubric as a guide in completing your Course Project. It provides specific details of the required elements of the project, and will be used by your instructor as a grading guide.

The documents you need to complete the project are located in Doc Sharing. The Course Project Description provides an overview of the project, as well as the information pertaining to the business for which you will prepare the budget proposal. The weekly Project Activity documents provide a detailed description of the project content that is due each week. All of your work will be done in the Budget Proposal Template and the Budget Proposal Workbook.

Guidelines

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The following guidelines should be used when completing your project.

Even though this is not a scientific-type writing assignment, and is mostly creative in nature, references are still important. At least one authoritative, outside reference is required (anonymous authors are not acceptable). These should be listed on the last page (titled Works Cited).
Appropriate citations are required.
All DeVry University policies are in effect, including the plagiarism policy.
The Final Budget Proposal and Presentation are due during Week 7 of this course. Weekly drafts are due as indicated in the Course Project Description document located in Doc Sharing.
Any questions about this paper may be discussed in the weekly Q & A discussion topic.
This project is worth 180 total points and will be graded on quality of content, organization, proper use of citations as necessary, and grammar and sentence structure.
The formatting standards outlined in the Budget Proposal Template should be followed.
Milestones

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Each week you will complete a section of the project in draft form. In Week 7, you will submit the final version of the project’s Budget Proposal Template, Budget Proposal Workbook, and Budget Presentation in PowerPoint.

Week Deliverable Points
1 Section 1.0 Executive Summary (Draft) 10
2 Section 2.0 Sales Forecast (Draft) 10
3 Section 3.0 Capital Expenditure Budget (Draft) 10
4 Section 4.0 Investment Analysis (Draft) 10
5 Section 5.1 Pro Forma Income Statement and 5.2 Balance Sheet (Draft) 10
6 Section 5.3 Pro Forma Cash Budget (Draft) 10
7 Final Budget Proposal Template and Budget Proposal Workbook 90
7

Budget Presentation in PowerPoint

30

Grading Rubrics

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Detailed grading rubrics for the weekly drafts and the final project are located in the weekly Project Activity documents in Doc Sharing.

Best Practices

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Complete a first draft and then go back to edit, evaluate, and make any changes required.
Use visual communication to clarify and support the written part of your report. The Budget Proposal Template indicates where visual aids are required. You may include additional forms of visual communication to support your assumptions and ideas.
Consider your audience when preparing the Budget Presentation.
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homework

HOMEWORK 2

(TCO 3) Using the following information regarding actual sales for Sam’s Ski Supplies, calculate the regression (trend) line:

Sales for Sam’s Ski Supplies ($000s)

Month First Year Second Year

January 380 400

February 340 360

March 320 330

April 280 290

May 265 270

June 230 235

July 220 230

August 200 205

September 210 220

October 250 270

November 400 450

December 450 502

y = 264.92 + 2.79x

y = 264.92 + 1.67x

y = 283.64 + 2.79x

y = 283.64 + 1.67x

Question 2. Question : (TCO 3) Using the following information regarding actual sales for Sam’s Ski Supplies, project sales for March of Year 3 using simple linear regression:

Sales for Sam’s Ski Supplies ($000s)

Month First Year Second Year

January 380 400

February 340 360

March 320 330

April 280 290

May 265 270

June 230 235

July 220 230

August 200 205

September 210 220

October 250 270

November 400 450

December 450 502

308.62

326.94

328.61

330.28

Question 3. Question : (TCO 3) Using the following information regarding actual sales for Paradise Pools, calculate the seasonal ratio for June of Year 3:

Sales for Paradise Pools ($000s)

Month First Year Second Year

January 84 84

February 80 82

March 88 98

April 100 120

May 150 160

June 200 210

July 240 250

August 220 215

September 180 195

October 160 165

November 120 130

December 92 100

0.67

0.77

1.08

1.41

Comments:

Question 4. Question : (TCO 3) Using the following information regarding actual sales for Seafood City, calculate the seasonal forecast of sales for Friday of Week 3:

Sales for Seafood City ($)

Day Week 1 Week 2

Monday 1,700 1,800

Tuesday 1,900 2,000

Wednesday 2,100 2,100

Thursday 2,300 2,200

Friday 4,200 4,300

Saturday 4,400 4,600

Sunday 2,100 2,200

2,822.29

3,006.17

4,300.00

5,614.30

Question 5. Question : (TCO 3) The regression statistic that measures the degree of association between the dependent and independent variable is the:

correlation coefficient.

coefficient of determination.

standard error of the estimate.

HOMEWORK 3

(TCO 4) The greatest portion of the marketing budget is typically used for

salespersons’ salaries and commissions.

advertising.

transportation.

order processing.

Question 2. Question : (TCO 4) A typical R&D division budget is divided into which of the following two sections?

Controllable and noncontrollable

Material and immaterial

Research and development

Fixed and variable

Question 3. Question : (TCO 4) Which of the following statements regarding the general and administrative expense budget is notcorrect?

Historical cost data adjusted for current conditions is an appropriate measure of budgeted costs.

The salary budget should include vacation, holidays, and sick leave.

Common general and administrative expenses include taxes, executive salaries, and travel expenses.

There is little use in identifying costs as discretionary or nondiscretionary.

Question 4. Question : (TCO 4) Capital expenditures that meet the needs of the manager’s division are called

special capital expenditures.

routine capital expenditures.

normal capital expenditures.

standard capital expenditures.

Question 5. Question : (TCO 4) Which of the following is not a capital budgeting decision?

Constructing new studios

Replacing old equipment

Scrapping obsolete inventory

Remodeling an office building

HOMEWORK 5

(TCO 7) The financial budgets include the:

cash budget and the selling and administrative expense budget.

cash budget and the pro forma balance sheet.

pro forma balance sheet and the pro forma income statement.

cash budget and the production budget.

Question 2. Question : (TCO 7) In a production budget, the units to be produced are the budgeted sales units plus:

beginning inventory.

desired ending inventory.

desired ending inventory plus beginning inventory.

desired ending inventory minus beginning inventory.

Question 3. Question : (TCO 7) The production budget shows planned sales of 43,000. Beginning inventory is 6,400. Units to be produced are 44,400. What is the desired ending inventory?

5,000

6,400

7,800

12,800

Question 4. Question : (TCO 7) If there were 70,000 pounds of raw materials on hand on January 1, 140,000 pounds are desired for inventory at January 31, and 420,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?

350,000 pounds

560,000 pounds

280,000 pounds

490,000 pounds

Question 5. Question : (TCO 7) ABC Company expects the following sales and collection pattern for the last four months of the year:

Month Cash Sales Credit Sales Total Sales

September $25,000 $65,000 $90,000

October $28,000 $72,000 $100,000

November $26,000 $68,000 $94,000

December $30,000 $71,000 $101,000

•?????????5% of credit sales are collected in the same month

•?????????65% of sales are collected in the following month

•?????????25% of sales are collected in the second following month

What are the projected cash collections for the month of December?

$65,750

$92,200

$95,750

$99,000

HOMEWORK 6

(TCO 9) Fixed costs normally will not include

property taxes.

direct labor.

rent on buildings.

depreciation on buildings and equipment.

Question 2. Question : (TCO 9) Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

Direct materials cost

Direct labor cost

Variable manufacturing overhead

Fixed manufacturing overhead

Question 3. Question : (TCO 9) The Wiscow Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at 2,300 machine hours. The records also indicated that overhead of $9,730 was incurred at 2,600 machine hours. What is the fixed cost using the high-low method to estimate the cost equation?

$3,264

$5,434

$2,170

$7,604

Question 4. Question : (TCO 8) Southern Company’s budgeted and actual sales for 2009 were:

Product Budgeted Sales Actual Sales

X 20,000 units at $5.00 per unit 17,500 units at $5.30 per unit

Y 35,000 units at $9.00 per unit 37,300 units at $8.80 per unit

What is the total sales variance for the two products?

$2,210 Favorable

$5,990 Favorable

$6,990 Favorable

$8,200 Favorable

Question 5. Question : (TCO 8) Southern Company manufactures Product X. The standard cost of one unit of output is $12.00 (four pieces at $3.00 per piece). During the first quarter, 5,000 units were made, at an actual cost of $10.50 per unit (three pieces at $3.50 per piece). What is the total material variance?

$7,500 Favorable

$15,000 Favorable

$7,500 Unfavorable

$15,000 Unfavorable

Instructor Explanation: Total Material Variance = (Standard Quantity x Standard Price) versus (Actual Quantity x Actual Price)

Total Material Variance = (5,000 units x 4 pieces x $3.00) versus (5,000 units x 3 pieces x $3.50)

Total Material Variance = (20,000 x $3.00) versus (15,000 x $3.50) = $7,500 Favorable

midterm

MIDTERM

(TCO 1) Why are budgets useful in the planning process?

They provide management with information about the company’s past performance.

They help communicate goals throughout the organization.

They guarantee the company will be profitable if it meets its objectives.

They enable the budget committee members to earn their paychecks

Question 2. Question : (TCO 2) The quantitative forecasting method that uses actual sales from recent time periods to predict future sales, assuming each period has equal influence on the prediction of future sales, is the _____.

: moving average model

weighted moving average model

exponential smoothing model

equal average model

Points Received: 5 of 5

Comments:

Question 3. Question : (TCO 3) The regression statistic that measures how many standard errors the coefficient is from zero is the _____.

: correlation coefficient

coefficient of determination

standard error of the estimate

t-statistic

Points Received: 0 of 5

Comments:

Question 4. Question : (TCO 4) Capital expenditures are incurred for all of the following reasons except _____.

: as preventive maintenance

to counteract competition

decreased production

improvement in product quality

Points Received: 0 of 5

Comments:

Question 5. Question : (TCO 5) Which of the following is not true when ranking proposals using zero-base budgeting?

Due to changing circumstances, a low-priority item may later become a high-priority item.

Decision packages are ranked in order of increasing benefit.

Divisional and departmental managers submit initial recommendations, with top management making the final ranking.

Nonfunded packages should also be ranked.

Points Received: 0 of 5

Comments:

Question 6. Question : (TCO 6) Which of the following ignores the time value of money?

Internal rate of return

Profitability index

Net present value

Payback period

Points Received: 5 of 5

Comments:

Question 7. Question : (TCO 1) Budgeting is a planning and control system. Discuss how budgeting contributes to these two functions of management.

Question 8. Question : (TCO 2) There are a variety of forecasting techniques that a company may use. Identify and discuss the four main qualitatative approaches, including their advantages and disadvantages.

Question 9. Question : (TCO 2) Use the table Television Sales Time Series to answer the questions below.

Television Sales Time Series

(in thousands)

Day Sales Day Sales

1 24.0 9 26.0

2 25.0 10 27.0

3 26.0 11 27.0

4 27.0 12 26.5

5 28.5 13 28.0

6 28.0 14 27.0

7 27.0 15 29.0

8 27.5

Part (a): What is the project sales for Day 16 using a 3-day moving average?

Part (b): What is the project sales for Day 16 using a 6-day moving average?

Part (c): Use the mean absolute deviation (MAD) and mean square error (MSE) to determine which average provides the better forecast.

Comments:

Question 10. Question : (TCO 3) Use the table “Food and Beverage Sales for Luigi’s Italian Restaurant” to answer the questions below.

Food and Beverage Sales for Luigi’s Italian Restaurant

($000s)

Month First Year Second Year

January 218 237

February 212 215

March 209 223

April 251 174

May 256 174

June 216 135

July 131 142

August 137 145

September 99 110

October 117 117

November 137 151

December 213 208

Part (a): Calculate the regression line and forecast sales for February of Year 3.

Part (b): Calculate the seasonal forecast of sales for February of Year 3.

Part (c): Which forecast do you think is most accurate and why?

Question 11. Question : (TCO 6) Davis Company is considering two capital investment proposals. Estimates regarding each project are provided below.

Project A Project B

Initial Investment $800,000 $650,000

Annual Net Income $50,000 45,000

Annual Cash Inflow $220,000 $200,000

Salvage Value $0 $0

Estimated Useful Life 5 years 4 years

The company requires a 10% rate of return on all new investments.

Part (a): Calculate the payback period for each project.

Part (b): Calculate the net present value for each project.

Part (c): Which project should Jackson Company accept and why?

Question 12. Question : (TCO 6) Mimi Company is considering a capital investment of $250,000 in new equipment. The equipment is expected to have a 5-year useful life with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $75,000, respectively. Mimi’s minimum required rate of return is 10%.

Part (a): Calculate the payback period.

Part (b): Calculate the net present value.

Part (c): Calculate the accounting rate of return.

final

1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5)

It facilitates the coordination of activities.
It provides definite objectives for evaluating performance.
It provides assurance that the company will achieve its objectives.
It provides early warning signs of potential threats.

2. (TCO 2) Which of the following is not a qualitative forecasting method? (Points : 5)

Executive opinions
Sales force polling
Delphi method
Classical decomposition

3. (TCO 3) Which of the following statements regarding the t-statistic is true? (Points : 5)

The t-statistic cannot be negative.
The t-statistic measures how many standard errors the coefficient is away from the independent variable.
The higher the t-value, the more confidence we have in the coefficient.
Low t-values indicate high reliability.

4. (TCO 4) Which of the following statements regarding the risk associated with R&D activities is incorrect? (Points : 5)

The amount of time between the R&D activity and the cash flows from the project does not affect risk.
Greater risk is associated with creating new products than improving existing products.
Risk increases as the time between the R&D activity and the cash flows from the project increases.
Assessing risk is a vital part of research and development.

5. (TCO 5) Program budgeting does not include: (Points : 5)

Controlling
Programming
Budgeting
Planning

6. (TCO 6) The payback period technique ___________ (Points : 5)

should be used as a final screening tool.
can be the only basis for the capital budgeting decision.
is relatively easy to compute and understand.
considers the expected profitability of a project.

7. (TCO 6) The profitability index is computed by dividing the ___________ (Points : 5)

total cash flows by the initial investment.
present value of cash inflows by the present value of each outflow.
initial investment by the total cash flows.
initial investment by the present value of cash flows.

8. (TCO 6) A company projects annual cash inflows of $85,000 each year for the next five years if it invests $300,000 in new equipment. The equipment has a five-year life and an estimated salvage value of

$75,000. What is the accounting rate of return on this investment? (Points : 5)

28.3%
13.3%
15%
43.3%

9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its ten-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____.

(Points : 5)

5 years
6 years
7 years
8 years

10. (TCO 6) Hyde Inc. is comparing several alternative capital budgeting projects as shown below:

Projects A B C

Initial Investment $110,000 $90,000 $50,000

Present value of cash inflows $100,000 $100,000 $60,000

Using the profitability index, rank the projects, starting with the most attractive. (Points : 5)

A, C, B.
A, B, C.
C, A, B.
C, B, A.

11. (TCO 6) Cleaners, Inc. is considering purchasing equipment costing $30,000 with a six-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its

useful life with no salvage value. Cleaners requires a 10% rate of return. What is the approximate net present value of this investment? (Points : 5)

$13,800
$1,794
$886
$2,748

12. (TCO 7) Which of the following would not appear as a fixed expense on a selling and administrative expense budget? (Points : 5)

Freight-out
Office salaries
Property taxes
Depreciation

13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each

month equal to 30% of next month’s budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company

to meet its goals? (Points : 5)

107,400 units
102,000 units
96,600 units
138,000 units

14. (TCO 8) Standards that are based on efficient activity with allowances for unavoidable losses are called _______ (Points : 5)

basic standards.
maximum efficiency standards.
currently attainable standards.
expected standards.

15. (TCO 9) A static budget is appropriate for __________ (Points : 5)

variable overhead costs.
direct materials costs.
fixed overhead costs.
none of these.

16. (TCO 9) If the activity level increases 10%, total variable costs will ___________. (Points : 5)

remain the same
increase by more than 10%
decrease by less than 10%
increase 10%

17. (TCO 9) At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted

to $6,000. Using the high-low method, what is the estimated fixed cost element of power costs? (Points : 5)

$12,000
$6,000
$3,600
$8,400

18. (TCO 10) Which of the following statements regarding budget reports is incorrect? (Points : 5)

The cost of budget reports should not outweigh the benefits.
Budget reports are used for planning, control, and information.
Reports prepared for upper management typically have fewer details than reports prepared for lower-level managers.
Reports are prepared more frequently for upper management than for lower-level managers.

Page 2

1. (TCO 7) The first step in creating the master budget is the sales budget. Describe this budget and the information it includes. Why is the accuracy of the sales budget important? (Points : 20)

2. (TCO 9) Understanding how costs behave can help managers plan operations and choose between various courses of action.

Part (a) Identify and describe the three types of cost behavior, including examples of each Part.

Part (b) As a manager, which cost behavior would you prefer and why? (Points : 20)

3. (TCO 6) Yappy Company is considering a capital investment of $320,000 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $65,000, respectively. Yappy requires a 10% return on all new investments.

Part (a) Compute each of the following:
1: Payback period.
2: Net present value.
3: Profitability index.
4: Internal rate of return.
5: Accounting rate of return.

(b) Indicate whether the investment should be accepted or rejected. (Points : 30)

4. (TCO 7) Roswell Company has budgeted sales revenue as follows for the next 4 months as follows:

February

$150,000

March

$120,000

April

$105,000

May

$165,000

Past experience indicates that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 35% in the month following the sale, and 3% in the second month following the sale. The other 2% is uncollectible.

Prepare a schedule which shows expected cash receipts from sales for the month of May.

5. (TCO 8) Eastern Company’s budgeted and actual sales for 2009 were:

Product

Budgeted Sales

Actual Sales

A

35,300 units at $2.00 per unit

32,700 units at $2.60 per unit

B

27,900 units at $5.00 per unit

29,200 units at $4.70 per unit

Part (a) Calculate the sales volume variance.
Part (b) Calculate the sales price variance.
Part (c) Calculate the total sales variance.

6. (TCO 9) The Mays Clinic has the following monthly telephone records and costs:
Calls

Costs

2,000

$2,400

1,500

2,000

2,200

2,600

2,500

2,900

2,300

2,700

1,700

2,200

Identify the fixed and variable cost elements using the high-low method.

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