Reference no: EM131784200

Question 1 - Orlo Company is planning their budget for the first half of 2012.  Their budgeted sales for the last part of 2011 and the first 6 months of 2012 are as follows:

Month	Sales
Nov-11	$200,000
Dec-11	$150,000
Jan-12	$100,000
Feb-12	$75,000
Mar-12	$125,000
Apr-12	$150,000
May-12	$200,000
Jun-12	$250,000

Based on past collection history, Orlo expects to collect 50% of sales on account in the month of the sale, 35% in the month following the sale, and 10% in the second month following the sale. All sales are on account.

Required:  Prepare a cash receipts budget for Orlo for January through June of 2012. You may fill in the blue area with the projected sales if it will help you.

Question 2 - Orlo Company has the following production planned for the first six months of 2012:

Jan-12	50000
Feb-12	37500
Mar-12	62500
Apr-12	75000
May-12	100000
Jun-12	125000

Orlo's variable manufacturing overhead costs are $2 per unit produced.  All other costs are fixed, and include depreciation:  $10,000; Indirect Labor, $37,000; Taxes and Insurance, $17,500.

Required:  Prepare the overhead budget for the first six months of 2012.  You may use the blue area to fill in the production in units, if you like.

Question 3 - Orlo Company has the following material standard for the manufacture of its Icee Kupps:  

5 oz of plastic at $.10 per oz.

In a recent month, Orlo purchased 16,000 oz. of plastic for a total cost of $1,560. It used 12,000 oz. to make 2,200 cups.

Required: Calculate the price and quantity variances for Orlo. Be sure to indicate if variance is favorable or unfavorable by putting an F or a U right after the number. For instance, 95F.

Question 4 - Orlo's income information for the month of December, 2011, is shown below.  Orlo has 2 divisions:  the Icee Kupp Division and the KeepitHot Plate Division.

	Icee Kupp	KeepitHot Plate
Sales	$125,000	$300,000
Variable costs	50,000	175,000
Fixed costs, traceable	$25,000	50,000
Fixed costs, common	25,000	50,000

REQUIRED:  Prepare a income statement segmented by division for the company. Prepare statements for company as a whole and each division.

Question 5 - Orlo's 2 divisions, the Icee Kupp Division and the KeepiHot Plate Division, have the following amounts in their accounts below:

	Icee Kupp	KeepitHot Plate
Average operating assets	200,000	350,000
Sales	$125,000	$300,000
Net income	$25,000	$75,000
Required rate of return	15%	18%

1. Calculate each divisions return on investment.  Then calculate each division;s residual income. Round to 2 decimal places.  Put a minus in front of negative numbers.

2. If the manager is evaluated based on Return on Investment, which company or companies would turn down an investment opportunity of $100,000 that yielded $19,000 in net income?

3. If the manager is evaluated based on residual income, which company or companies would turn down an investment opportunity of $100,000 that yielded a $17,000 net income?

Attachment:- Assignment.rar