Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 21, Problem 21.21EX
Capital expenditures budget
On January 1, 20Y6, the controller of Omicron Inc. is planning capital expenditures for the years 20Y6-20Y9. The following interviews helped the controller collect the necessary information for the capital expenditures budget:
Director of facilities: A construction contract was signed in late 20YS for the construction of a new factory building at a contract cost of $10,000,000. The construction is scheduled to begin in 20Y6and be completed in 20Y9.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase 51.5 million in equipment in late 20Y7. I expect that an additional $200,000 will be needed early in the following year (20Y8) to test and install the equipment before we can begin production If sales continue to grow, I expect we'll need to invest another $1,000,000 in equipment in 20Y9.
Chief Operating Officer: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in 20Y9 by at least 35%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, I would expect the cost of the expansion to be proportional to the size of the expansion.
Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn't make sense to do this until after the new factory building is completed and producing product. During 20Y8, once the factory is up and running, we should equip the whole facility with wireless technology. I think it would cost us $800,000 today to install the technology. However, prices have been dropping by 25% per year, so it should be less expensive at a later date.
Chief financial Officer: I am excited about our long-term prospects. My only short-term concern is managing our
Use this interview information to prepare a capital expenditures budget for Omicron Inc. for the years 20Y6-20Y9.
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Capital Expenditures Budget
On January 1, 20Y6, the controller of Omicron Inc. is planning capital expenditures for the years 20Y6-20Y9. The following interviews helped th
controller collect the necessary information for the capital expenditures budget:
Director of Facilities: A construction contract was signed in late 20Y5 for the construction of a new factory building at a contract cost of $10,000,
The construction is scheduled to begin in 20Y6 and be completed in 20Y9.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $1.5 million in equipment in late 20Y7. I expect th
additional $200,000 will be needed early in the following year (20Y8) to test and install the equipment before we can begin production. If sales cc
to grow, I expect we'll need to invest another $1,000,000 in equipment in 20Y9.
Chief Operating Officer: We have really been growing lately. I…
Fairview Medical Supply has applied for a loan. First American Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Fairview Medical Supply's controller, you have assembled the following information:
a.
March 31 equipment balance, $52,700; accumulated depreciation, $41,100.
b.
April capital expenditures of $42,700 budgeted for cash purchase of equipment.
c.
April depreciation expense, $500.
d.
Cost of goods sold, 60% of sales.
e.
Other April operating expenses, including income tax, total $13,400, 30%of which will be paid in cash and the remainder accrued at April 30.
f.
March 31 owners' equity, $93,600.
g.
March 31 cash balance, $40,100.
h.
April budgeted sales, $91,000, 70% of which is for cash. Of the remaining
30%, half will be collected in April and half in May.
i.
April cash collections on March sales, $29,200.
j.
April cash payments of March 31 liabilities incurred…
Chapter 21 Solutions
Financial & Managerial Accounting
Ch. 21 - Prob. 1DQCh. 21 - Briefly describe the type of human behavior...Ch. 21 - What behavioral problems are associated with...Ch. 21 - What behavioral problems are associated with...Ch. 21 - Under what circumstances would a static budget be...Ch. 21 - How do computerized budgeting systems aid firms in...Ch. 21 - Why should the production requirements Set forth...Ch. 21 - Prob. 8DQCh. 21 - A. Discuss the purpose of the cash budget. B. If...Ch. 21 - Give an example of how the capital expenditures...
Ch. 21 - Flexible budgeting At the beginning of the period,...Ch. 21 - Production budget Pasadena Candle Inc. projected...Ch. 21 - Direct materials purchases budget Pasadena Candle...Ch. 21 - Direct labor cost budget Pasadena Candle Inc....Ch. 21 - Cost of goods sold budget Prepare a cost of goods...Ch. 21 - Prob. 21.6BECh. 21 - Personal budget At the beginning of the school...Ch. 21 - Flexible budget for selling and administrative...Ch. 21 - Static budget versus flexible budget The...Ch. 21 - Flexible budget for Assembly Department Steelcase...Ch. 21 - Production budget Weightless Inc. produces a Bath...Ch. 21 - Sales and production budgets Sonic Inc....Ch. 21 - Prob. 21.7EXCh. 21 - Prob. 21.8EXCh. 21 - Prob. 21.9EXCh. 21 - Prob. 21.10EXCh. 21 - Direct materials purchases budget Anticipated...Ch. 21 - Direct labor cost budget Ace Racket Company...Ch. 21 - Production and direct labor cost budgets Levi...Ch. 21 - Factory overhead cost budget Sweet Tooth Candy...Ch. 21 - Cost of goods sold budget Delaware Chemical...Ch. 21 - Cost of goods sold budget The controller of...Ch. 21 - Prob. 21.17EXCh. 21 - Schedule of cash collections of accounts...Ch. 21 - Schedule of cash payments for a service company...Ch. 21 - Prob. 21.20EXCh. 21 - Capital expenditures budget On January 1, 20Y6,...Ch. 21 - Forecast sates volume and sales budget For 20Y8,...Ch. 21 - Sales, production, direct materials purchases, and...Ch. 21 - Budgeted income statement and supporting budgets...Ch. 21 - Cash budget The controller of Bridgeport...Ch. 21 - Budgeted income statement and balance sheet As a...Ch. 21 - Forecast sales volume and sales budget Sentinel...Ch. 21 - Sales, production, direct materials purchases, and...Ch. 21 - Budgeted income statement and supporting budgets...Ch. 21 - Cash budget The controller of Mercury Shoes Inc....Ch. 21 - Budgeted income statement and balance sheet As a...Ch. 21 - Nursing staff budget Mercy Hospital staffs its...Ch. 21 - Parking lot staff budget Adventure Park is a large...Ch. 21 - Prob. 3ADMCh. 21 - Prob. 21.1TIFCh. 21 - Communication The city of .Milton has an annual...
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