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 Topic: Becker homework questions ( Topic Closed)
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berry0331
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Joined: 04 Sep 2011
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Posts: 49
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| Posted: 22 Jan 2012 at 11:54 | IP Logged
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Can anyone help me out with these problems below? I don't understand
how to calculate the first question even though I have looked at the
answer key.
1. The treasury analyst for Garth Manufacturing has estimated the cash
flows for the first half of next year (ignoring any short-term borrowings)
as follows:
Cash (millions)
January $2 (inflow) $1 (Outflow)
February 2 (inflow) 4 (outflow)
March 2(inflow) 5 (outflow)
April 2(inflow) 3 (outflow)
May 4(inflow) 2 (outflow)
June 5(inflow) 3(outflow)
Garth has a line of credit of up to $4 million on which it pays interest
monthly at a rate of 1 percent of the amount utilized. Garth is expected to
have a cash balance of $2 million on January 1 and no amount utilized on
its line of credit. Assuming all cash flows occur at the end of the month,
approximately how much will Garth pay in interest during the first half of
the year?
a. $61,000
b. $80,000
c. $132,000
d. $240,000
Choice "a" is correct.
2. ChemKing uses a standard costing system in the manufacture of its
single product. The 35,000 units of raw material in inventory were
purchased for $105,000, and two units of raw material are required to
produce one unit of final product. In November, the company produced
12,000 units of product. The standard allowed for material was $60,000,
and there was an unfavorable quantity variance of $2,500.
The materials price variance for the units used in November was:
a. $2,500 unfavorable.
b. $11,000 unfavorable.
c. $12,500 unfavorable.
d. $2,500 favorable.
Choice "c" is correct. $12,500 unfavorable materials price variance.
The actual units of material is $25,000 deriving from the quantity
variance formula and I know how to get it but I thought the actual units of
material was $35,000, which was given, since it says the material was
purchased at this amount and the formula for material price variance =
(actual price-standard pice)* actual quantities PURCHASED. Am I thinking
the wrong thing?
Thanks to anyone who wanted to help!
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CPA1979
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Joined: 02 Aug 2010
Location: United States
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Posts: 210
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| Posted: 22 Jan 2012 at 15:42 | IP Logged
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Okay first of all, I think these are Becker's questions and not released
exam questions.
For the first one, here's how I approached it. They borrowed 2 mil at the
end of March, this is the first month where they needed to borrow, and
paid 20k in interest. Then at the end of April they need another 1 mil at
which point they paid 30k. 20k for the 2 mil open bal. on LOC and 10k for
the newly borrowed 1 mil. At the end of May they have 2 mil from
operation to spare so he paid down 2 mill and paid 10k in interest on the
1 mil outstanding balance.
Then by the end of June he would pay down the last 1 mil and my
assumption another 1% which would leave him with a total of $70k in
interest and which point I would take a guess between answers a or b, but
honestly, I would have gone for a as it is the least amount. Again, I stress
these are probably Becker’s own questions and that’s why they are over
the top difficult.
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