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This question is worth a total of 14 points A. Serrano is opening Serrano Realty on January 2.  For several weeks she has been busy putting together an operating budget for the first quarter of operation for her new business.  Ms. Serrano has estimated her selling and administrative (S&A) costs as follows:                                                                                January            February           March             Depreciation                                       $    500             $   500           $   500             Marketing expenses                            $ 1,000             $   700           $   500             Miscellaneous costs                            $    250             $   200           $   200             Rent expense                                      $ 2,500             $2,500           $2,500             Salary expense                                    $ 2,000             $4,000           $4,000             Sales commissions                             $    500             $   600           $   700             Utilities expense                                 $    500             $   400           $   500               Total S&A costs before interest       $ 7,250             $8,900           $8,900 All selling and administrative costs are paid when incurred except utilities, marketing expenses, and sales commissions.  These items are paid in the month following the month incurred.           Required:  (NOTICE there are three (3) questions to this problem!) 1. Prepare a schedule of cash payments for selling and administrative expenses for January through March.  List each item and then total the month. (LABEL YOUR ACCOUNTS)        Jan.                              Feb.                             March   TOTAL Cash Payments                $                                 $                                       $   2.  How much will be owed for utilities as of March 31?   3.  Compute the amount of sales commissions payable as of March 31.      

Which of the following budgets or schedules uses data contained in the selling and administrative expense budget? 

EXTRA CREDIT  – possible 5 points – Can be answered only if all of your previous questions are completed! What factors could lead to an increase in sales revenue that would not merit congratulations to the marketing manager?

Weeks Company wants an ending inventory each month equal to 30% of that month’s cost of goods sold.  Cost of goods sold for February is projected at $90,000.  Ending inventory at the end of January was $24,000.  Based on this information purchases for February will be: 

Sneezy Company has two investment opportunities.  Both investments cost $5,000 and will provide the following net cash flows:            Year Investment A Investment B 1 $3,000 $3,000 2   3,000   4,000 3   3,000   2,000 4   3,000   1,000 The total present value of Investment A’s cash flows assuming a 10% minimum rate of return is (Do not round your present value factors and intermediate calculations.  Round your answer to the nearest whole dollar):

Dopey is considering a capital project that costs $16,000.  The project will deliver the following cash flows:            Year 1 Year 2 Year 3 Year 4 Year 5 $8,000 $6,000 $5,000 $6,000 $5,000  Using the incremental approach, the payback period for the investment is:

Which capital budgeting technique defines returns in terms of income instead of cash flows? 

All of the following are capital investments except? 

Mental break time.  This is your last Accounting test here at CCC.  You deserve an easy question.  What is the Accounting Equation?

The review of a capital budgeting decision to determine whether a project was accepted that should have been rejected or whether a project was rejected that should have been accepted is referred to as: