Practice Quiz- 0%

Started:
Sep 23 at 7:48pm
Quiz Instructions
This is a practice quiz for your individual in-class reinforcement activities. You can attempt it for unlimited times and after your submission the system will show you
the correct answer.

The password to attempt this quiz is RMIT2021

Questions in this quiz should been seen as an indication for question types rather than examinable topics. Your
real test question might be from any topic from topic 1 to topic 10.
 

You and your group are now managing a 5-star hotel on Lucro Island.  Your hotel comprises the following:

8 Single rooms
14 Double rooms
3 Penthouses

You have realised that the profit budget you have been preparing each year doesn’t provide enough detail to support the management roles
you need to undertake.  As a result, you have decided you require more specific budgets. 

As a starting point you and your team are going to prepare a Sales Budget, Materials Budget (bathroom amenities[1]) and Labour Budget
(room cleaning) for the single rooms in your hotel and have collected the following information.

Expected Single Room Occupancy Rates for each quarter are as follows: (for ease of calculations assume 90 nights in a quarter):
Q1 = 80%, Q2 = 70%  
Q3 = 50% and Q4 = 90%
Expected Average Selling Price per single room per night for quarters 1 and 4 will be $250.  For quarters 2 and 3 it will be $200.  The
average selling price per single room per night will differ, as quarters 1 and 4 are peak season for holiday makers, therefore you will charge
higher rates.
Expected Material Requirements: For each night a single room is occupied you expect to use $10 of materials (bathroom amenities.).
At the beginning of quarter 1 you will have $300 of materials on hand and require $400 in ending inventory for each quarter.
Expected Labour Requirements: For each night a single room is occupied you expect to require 30 minutes of labour time for cleaning
the room. You pay your staff $25 per hour.
Cash receipts from the customers: 70% customers will pay their bills within the quarter when they live in the hotel. 25% customers will
pay their bills one quarter after they live in the hotel. 5% customers will pay their bills two quarters after they live in the hotel.

Activity

Prepare the Sales Budget, Materials Budget and Labour Budget and Cash Budget (only for cash receipts from the customers) for the single
rooms in your Hotel. (Note that your Lucro Island hotel is a service business, not a manufacturing business, therefore doesn’t ‘produce’
anything.  As a result, it doesn’t need a production budget).   

Use the templates on the following page to record your budgets.

[1] Bathroom amenities include shampoo, conditioner etc.

Question 1 0 pts

Sales Budget Q1 Q2 Q3 Q4
 
576 504
Number of rooms occupied per quarter 648
360
   
 
Selling Price per room night 250 200 200
250

Expected sales revenue  

 144000 100800 72000 162000

Question 2 0 pts

Materials Budget Q1 Q2 Q3 Q4

Number of occupied room nights 576 504 360 648

Required materials per room night 10 10 10 10

Total materials requried 5760 5040 3600 6480

Add: Required ending inventory 400 400 400 400

Less: Beginning Inventory 300 400 400 400

Total material purchases 5860 5040 3600 6480

Question 3 0 pts

What are the total expected labour costs for Q1?

7,200

Question 4 0 pts

What are the total expected labour costs for Q2?

6,300

Question 5 0 pts

What are the total expected labour costs for Q3?

4,500
Question 6 0 pts

What are the total expected labour costs for Q4?

8,100

Question 7 0 pts

What are the total cash receipts from the customers for Q3?

82,800

Question 8 0 pts

What are the total cash receipts from the customers for Q4?

136,440

Question 9 0 pts

Rustica, a ‘bespoke’ designer kitchen company, is investigating an investment option.

Project name: New Production line

1) Cost to purchase production line for the new product: $740,000

2) Investment life: 5 yrs

3) Expected production volume: 21,000 boxes per year. Each box could be sold for $21.

4) Variable cost includes direct materials-$3 per box; direct labour cost-$2 per box and variable overhead-$3 per box.

5) Fixed manufacture cost is $20,000/year and fixed selling and admin cost is $70,000/year

6) $30,000 system updating cost is required in year 2 and year 4.

7) According to the depreciation guide from the tax office this production line will be fully depreciated after 5 years (no residual value).
However, Rustica accountant believes it can be sold for 100,000 at the end of year 5.

8) Tax rate is 30%. Discount rate for the company is 10%

Required:  Calculate the NPV

  Y0 Y1 Y2 Y3 Y4 Y5

 
Initial
-740000          
Investment

       
441000
Sales Rev   441000 441000 441000 441000
 

Total        
-168000 -168000
Variable
-168000 -168000 -168000
Cost    
          
Total Fixed
  -90000 -90000 -90000 -90000 -90000
Cost

   
Updating
    -30000   -30000  
Cost

       
Depreciation -148000
  -148000 -148000 -148000 -148000
Expense
 

Additional  
Rev from
          100000
selling
assets

       
Taxable 5000
  35000 5000 35000 135000
Income
 

     
-10500 -1500
Tax Expense   -10500 -1500 -40500
   

     
After Tax 24500 3500
  24500 3500 94500
Income
   

     
Add Back 148000 148000
  148000 148000 148000
Depreciation
   

         
Net cash
  172500 151500 172500 151500 242500
flow

         
Discount
 
Factor

         
Present
Value
 

NPV          
 

Question 10 0 pts

EnviroPak Ltd is a small private company, specialising in the manufacture of takeaway packaging, which offer an eco-friendly alternative to
disposable food containers.  The business’s accountant Kam has prepared a draft version of EnviroPak’s Balance Sheet and Income
Statement for the financial year ended 30 June 2018.   Kam knows she has made several mistakes in classifying the elements of the Balance
Sheet and Income Statement because the income statement shows EnviroPak has made a loss of $306,600 and the Balance Sheet doesn’t
balance!  Kam’s statements have been reproduced below.

EnviroPak Ltd - Draft Income Statement for the year ended 30 June 2018

Cash at Bank 245,000

Accrued Wages 22,000

Gross profit 267,000

Expenses

Bank Loan 320,000

Interest expense 24,000

Prepaid Rent 2,600

Depreciation Expense 43,000

Donations Expense 10,000

Accounts Receivable      14,000

Other expenses 23,000

Earnings before interest and tax -169,600

Accounts Payable 12,000

Profit before tax -181,600

Income tax expense 125,000

Profit for the period from continuing operations -306,600

EnviroPak Ltd – Draft Balance Sheet AS AT 30 June, 2018

Assets Liabilities

Current Assets Current Liabilities

Wages Expense 78,000 Drawings -25,000

Cost of Sales 376000 Inventory 98,000

Rent Expense 31,200 Electricity expense 18,000

Sales revenue 1,244,000 Non-current liabilities

Prepaid Utilities 2,100 Trucks 90,000

Property Plant and Equipment 578,000 Advertising Expense 45,000

Non-current Assets   Total Liabilities 226,000

 Retained Profits 468,700 Owner’s Equity

Mortgage 52,000 Insurance Expense 72,000

  Contributions 198,000

    Intangibles 18,000

Total Owner’s Equity 288,000

Total Assets 2,830,000 Total Liabilities and Owner’s Equity 514,000

Please complete the tables below using the information above. Your submission will not automatically be graded.  For solutions, please see the
next question in the quiz.

EnviroPak Ltd – CORRECTED Draft Income Statement for the year ended 30 June 2018

Sales revenue 1244000

Less: Cost of sales 376000

Gross profit 868000

Expenses

Insurance 72000

Advertising 45000

Wages 78000

Electricity expense 18000

Depreciation 43000

Donations expense 10000

Rent expenses 31200

Other expenses 23000

Earnings before interest and tax 547800

Interest expense 24000

 Profit before tax
523800

Income tax expense 125000

Profit for the period from continuing operations 398800

EnviroPak Ltd – CORRECTED Draft Balance Sheet AS AT 30 June, 2018

Assets Liabilities

Current Assets Current Liabilities

Cash at bank 245000 Accounts payable 12000

Inventory 98000 Accrued wages 22000

Accounts receivable 14000 Non-current liabilities

Prepaid rent 2600 Bank loan 320000

Prepaid utilites 2100 Mortage 52000

Non-current Assets  Total Liabilities 406000

 

Trucks 90000 Owner’s Equity

Property Plant and 578000 Retained profits 468700

Intangibles 18000 Contributions 198000

  Drawings -25000

    Total Owner’s Equity 641700

 

Total Assets 1047700

  Total Liabilities and Owner’s Equity   1047700

Question 11 0 pts
Are you ready to see the solutions for the Financial Accounting Question above? 

Please answer yes and submit your response to see the solutions. 

Yes

No

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