Question 01

Wowy Tourism Corporation uses 800,000 tons of rice per year. The carrying costs are $80/ton. The cost per order is $
a/ Calculate the economic order quantity per order?
b/ Calculate the optimal number of orders per year?
c/ Calculate the total costs of optimal inventory?

Question 02
Wowy Tourism Corporation has presented the following information

Current Assets
Cash
Marketable Securities
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Current Liabilities
Accounts Payable
Accrued Expenses
Current Tax Payable
Deposits and Credit Balances
Current Portion of Loan
Total Current Liabilities

Revenue
Credit Sales
Cost of Good Sold
Revenue for the year 2XX2 was $500,000 (38% of this was credit sales) and the cost of good sold was $380,000.
Required:
a/ For both years calculate the working capital?
b/ For both years calculate the current asset ratio?
c/ Calculate the account receivable turnover for Wowy? Calculate the account receivable collection period for Wowy
d/ Calculate the inventory turnover for Wowy? Calculate days in inventory for Wowy?

Question 03
The conference department of the HNH Tourism Corporation has fixed costs of $1,160 per day. A university is seekin
The university would like HNH to provide morning coffee, lunch, afternoon tea and to prepare conference materials t
providing food and drink during the day is $28 per attendee. In addition, preparing the conference materials would co
conference will be attended by between 80 and 100 people.
Required:
(a) What is the total average cost per attendee if the conference has an attendance of 80 people?
(b) What is the total average cost per attendee if the conference has an attendance of 100 people?
(c) Explain why the cost per attendee is affected by the number of people that attend the conference?
(d) If 100 people attend the conference and the corporation wants to earn a profit of 36% on revenue, what price per p
conference will be attended by between 80 and 100 people.
Required:
(a) What is the total average cost per attendee if the conference has an attendance of 80 people?
(b) What is the total average cost per attendee if the conference has an attendance of 100 people?
(c) Explain why the cost per attendee is affected by the number of people that attend the conference?
(d) If 100 people attend the conference and the corporation wants to earn a profit of 36% on revenue, what price per p

Question 04
Wowy Tourism Corporation has presented the following information
From the balance sheet
Cash $ 989,000.00
Account receivables $ 323,000.00
Other current assets $ 202,000.00
Non-current assets $ 398,000.00
Total assets

Current liabilities $ 762,000.00

Non-current liabilities $ 450,000.00
Stockholders’ equity $ 700,000.00
Total liabilities and equity
Fill in the blank and compute the following ratios: (a) current ratio, (b) debt ratio, (c) receivable turnover, (d) asset tur

Question 05
Wowy Tourism Corporation has presented the following information
Income Statement 20XX
Cost of goods sold $ 6,390.00
Depreciation $ 880.00
Interest $ 500.00
Dividend paid $ 140.00
Selling and general expenses $ 3,000.00
Addition to retained earnings $ 380.00
Tax rate 35%
What are the sales for 20XX?

Question 06
The marketing department of Wowy Tourism Corporation has projected the following sales in the last six months of t
Wowy Tourism Corporation projected sales (in $000)
Jul Aug
Tours $ 243.00 $ 342.00
Rooms $ 1,123.00 $ 1,231.00
Most of Wowy Tourism Corporation’s sales are made to corporate clients. Past experience indicates that 25% of tour
collected two months following the sale. In the past, 40% of room sales have been for cash, 50% is collected in the m
Prepare a schedule showing Wowy Tourism Corporation’s projected cash receipts in September, October, November
Most of Wowy Tourism Corporation’s sales are made to corporate clients. Past experience indicates that 25% of tour
collected two months following the sale. In the past, 40% of room sales have been for cash, 50% is collected in the m
Prepare a schedule showing Wowy Tourism Corporation’s projected cash receipts in September, October, November

Question 07
DVH Tourism Corporation has annual fixed costs of $2,645,088. The corporation is open for 360 nights in the year a
room occupancy are $46 per room night.
Required:
(a) How many room nights would the corporation sell to break even?
(b) If the corporation pays 34% tax, how many rooms must be sold in order to make an after-tax profit of $1,399,036.

Question 08
Prepare the short balance sheet using the following DVH Tourism Corporation’s financial data:
1. Owner contributes $1,992,000 cash to commence business.
2. Purchased a van for $382,000 ; paying $282,000 in cash and obtaining a loan for the balance.
3. Purchased game equipment stock on credit for $100,000.
4. Billed clients $121,000 for tours.
5. Received $98,000 from customers billed in (4) above.
6. The accountant has determined that $63,600 of inventory stock has been used.
7. Paid $51,200 for miscellaneous expenses (telephone, electricity, etc.).
8. Repaid 80% of the loan taken out for the van.
9. Other long-term debt $6,200.

Question 09
Wowy Tourism Corporation has presented the following information
Manager’s salary (per year) $ 333,000.00
Outstanding Loan $ 222,000.00
Interest rate 10%
Book value of Equipments $ 122,000.00
Depreciation Rate 20%
Licence (per year) $ 5,000.00
Insurance (per year) $ 4,000.00
Maintenance (per year) $ 3,000.00
Other salaries (per year) $ 555,000.00
Variable costs (% revenue) 67%
Initial investment by Wowy's owners $ 13,585,191.60
Before-tax operating profit target 50%
Required: What sales revenue does the Wowy Tourism Corporation have to achieve in order to make its before-tax op

Question 10
TAK Tourism Services Corporation’s assets have a book value of $9,876,543 and the owners believe the assets shoul
The corporation has several fixed costs which include 10% interest charged on a $6,543,210 bank loan, $543,210 of e
year. The manager estimates that operating expenses will be $1,999,999. Calculate TAK Tourism Services Corporatio
TAK Tourism Services Corporation’s assets have a book value of $9,876,543 and the owners believe the assets shoul
The corporation has several fixed costs which include 10% interest charged on a $6,543,210 bank loan, $543,210 of e
year. The manager estimates that operating expenses will be $1,999,999. Calculate TAK Tourism Services Corporatio

Question 11
In the last financial year AAA Tourism Corporation achieved a revenue of $49.12million and a gross profit margin of
Quarter Inventory
1 $ 800,000.00
2 $ 900,000.00
3 $ 900,000.00
4 $ 700,000.00
Required:
a/ Calculate the corporation’s inventory turnover and the average day of inventory?
b/ Comment on AAA Tourism Corporation’s liquidity, assuming most of its competitors (BBB Corp) record an inven
rrying costs are $80/ton. The cost per order is $60.

2XX1 2XX2

$ 7,800.00 $ 7,300.00
$ 7,500.00 $ 7,500.00
$ 25,000.00 $ 24,000.00
$ 10,400.00 $ 12,000.00
$ 2,500.00 $ 2,600.00

$ 4,400.00 $ 4,200.00
$ 3,600.00 $ 5,600.00
$ 4,500.00 $ 3,400.00
$ 700.00 $ 400.00
$ 10,700.00 $ 9,500.00

$ 500,000.00
38% of Revenue
$ 380,000.00
s) and the cost of good sold was $380,000.

account receivable collection period for Wowy?

tory for Wowy?

d costs of $1,160 per day. A university is seeking a quote in connection with a conference it is planning to hold next year.
rnoon tea and to prepare conference materials to be distributed to all conference attendees. The corporation’s cost of
n, preparing the conference materials would cost the corporation $5 per attendee. The university has estimated that the

attendance of 80 people?
attendance of 100 people?
ple that attend the conference?
rn a profit of 36% on revenue, what price per person should be charged?
attendance of 80 people?
attendance of 100 people?
ple that attend the conference?
rn a profit of 36% on revenue, what price per person should be charged?

From the income statement

Net sales $ 4,289,000.00
Cost of goods sold $ 3,189,000.00
Gross profit
Operating expenses $ 660,000.00
Net income

debt ratio, (c) receivable turnover, (d) asset turnover, (e) return on equity, (g) return on assets?

d the following sales in the last six months of the current financial year.
ism Corporation projected sales (in $000)
Sep Oct Nov Dec
$ 432.00 $ 789.00 $ 987.00 $ 897.00
$ 1,321.00 $ 1,310.00 $ 1,230.00 $ 1,320.00
nts. Past experience indicates that 25% of tour sales are for cash, 30% is collected in the month following the sale, 45% is
s have been for cash, 50% is collected in the month following the sale, 10% is collected two months following the sale.
ash receipts in September, October, November and December?
nts. Past experience indicates that 25% of tour sales are for cash, 30% is collected in the month following the sale, 45% is
s have been for cash, 50% is collected in the month following the sale, 10% is collected two months following the sale.
ash receipts in September, October, November and December?

corporation is open for 360 nights in the year and charges an average room rate of $223. The variable costs associated with

order to make an after-tax profit of $1,399,036.32?

poration’s financial data: Calculate the shareholder's equity and prepare a balance sheet for the GGG
owned by GGG, dated 31/12/20XX:
ng a loan for the balance. 1. Assets include building $55,000, inventories $8,000, equipment $15,00
$12,000.
2. Liabilities include payable to suppliers $37,000.
3. Know that GGG borrows an amount that equals 50% total long-term as
been used.
).

ve to achieve in order to make its before-tax operating profit target?

76,543 and the owners believe the assets should generate a 66% return after tax. Assume tax is charged at the rate of 32%.
rged on a $6,543,210 bank loan, $543,210 of equipment and fittings depreciation and other fixed costs of $876,120 per
9. Calculate TAK Tourism Services Corporation’ s sales?
76,543 and the owners believe the assets should generate a 66% return after tax. Assume tax is charged at the rate of 32%.
rged on a $6,543,210 bank loan, $543,210 of equipment and fittings depreciation and other fixed costs of $876,120 per
9. Calculate TAK Tourism Services Corporation’ s sales?

e of $49.12million and a gross profit margin of 40%. Its end-of-quarter inventory balance were as follows:

f inventory?
of its competitors (BBB Corp) record an inventory turnover of 60?
 is planning to hold next year.
The corporation’s cost of
rsity has estimated that the
ets?

onth following the sale, 45% is

months following the sale.
onth following the sale, 45% is
months following the sale.

e variable costs associated with

d prepare a balance sheet for the GGG Tourism Services Corporation,

nventories $8,000, equipment $15,000, account receivable $5,300 and cash

liers $37,000.
nt that equals 50% total long-term assets.

x is charged at the rate of 32%.

fixed costs of $876,120 per
 x is charged at the rate of 32%.
fixed costs of $876,120 per

were as follows: