Select from the following to answer questions A through D

(8 points) 1. Select from the following to answer questions A through D:i. Zero-Basedii. Formulaiii. Operatingiv. Accrualv. Capitalvi. Flexible(2 points) A. To test a budget for the impact of changes in forecasted service volume on revenue and expenses, you would use a(n) ___________________ budget.(2 points) B. A(n) ____________________ budget represent forecasts of revenue and support earned and resources used during a fiscal year.(2 points) C. Decision packages are normally associated with a(n) _____________ budget.(2 points) D. ______________________ budgets are based on cash flows.(12 points) 2. Answer the following questions regarding break-even analysis:(2 points) A. The difference between marginal revenue and marginal cost is called the ______ ____________________ .(2 points) B. If an organization sells ten fewer tickets to its annual gala than are needed to break even, the gala will produce (circle the correct answer)i. a loss or deficitii. break even resultsiii. a profit or surplus(8 points) C. March to Save the Pets expects to have $25,000 in fixed costs. If their fixed costs do not change but the amount each marcher raises through pledges declines from $75 to $65 and their variable cost/unit increases from $35 to $40, how much will their break-even quantity increase?(2 points) 3. A support variance is the difference between ___________________ support and __________________ support.(8 points) 4. Save the Pets provides food and shelter for stray and abused dogs. The budgeted consumption of food is 1 pounds per day per dog. The clinic estimates the price of the food will be $0.65 per pound. It has budgeted feeding an average of 100 dogs per day. The clinic actually fed an average of 120 dogs per day. Each dog consumed .75 pounds of food and the average price per pound of food was $0.85.What is save the Pet’s Total Daily-Food-Expense Variance? Is it Favorable or Unfavorable?(10 Points) 5. Answer the following questions about the value of money over time.(6 Points) A. If you put $500 in the bank today and earn 2% simple interest, the future value at the end of 5 years will be:How much would you have if the interest were compounded annually?(2 points) B. A capital project should be rejected if the net present value is _____________. (circle the correct answer)i. less than zeroii. greater than zeroiii. equal to zero (2 points) C. If an interest rate sets the present value of cash inflows equal to the present value of cash outflows it is called: (circle the correct answer.)1. The cost of capital2. The discount rate3. The internal rate of return4. The hurdle rate(10 points) 6. Eye-Zapers Clinic has determined that the cash flows from a new Ophthalmic laser system will be as follows:The machine has a four-year life and the discount rate for the clinic is 9.5% per year. Should Eye-Zapers buy the new laser? Explain why?(12 points) 7. The Taos Museum owns a corporate bond issued by Walmart with face value at maturity of $100,000 and a coupon rate of 9% that will mature in June of 2013 exactly 10 years from today. In today’s market, the interest rate for that bond is a 6.3%. The bond pays interest every six months. If Taos were to sell the bond today, how much would it be worth?(13 points) 8. Urban Summer provides inner-city children with summer camping experiences. They are in the process of replacing all of their tents. Outdoor Outfitters has given them proposals for two different types of tents. The first is made by Lifelong Adventures (LA), has an expected life of six years. The second, made by Outdoor experiences (OE), lasts five years. The projected costs of buying and using the two types of tents are shown below. Urban Summer’s cost of capital is 10%. Based on the projected cash flows below, which of the two tents should Urban Summer buy? Support your answer.(25 points) 9. Since 2001, Rover Rescue Incorporated (RRI) has rescued dogs from local animal shelters, provided them with temporary homes and placed them with new families. RRI is a virtual organization that relies largely on a network of volunteers and a web site to deliver its services.After running deficits during its first three years of operation, RRI wants to prepare a formal operating budget for fiscal year 2004. The executive director believes RRI will rescue a total of 750 puppies and adult dogs during 2004. The mix of animals and adoption fees are projected to be as follows.Ten percent of those who adopt dogs from RRI have historically donated an average of $85.00 more than the organization’s suggested adoption fees. The executive director believes that trend is likely to continue during fiscal year 2004. RRI also receives donations and sells merchandise through its web site. In a typical week, RRI will receive six donations of $25 and sell merchandise valued at $60 to eight web visitors. Merchandise costs RRI an average of 40% of its sale price. Board members have also agreed to donate a total $5,000 to RRI during fiscal year 2004.RRI’s single largest expense was providing the dogs in its care with veterinary services. Every animal that RRI rescued is given a preliminary veterinary exam. Seventy-five percent of the animals taken from animal shelters need to be spayed or neutered prior to placement. In addition, many of the volunteers who were responsible for evaluating animals at the shelters have a soft spot in their hearts for dogs with special health problems. On average, ten percent of the animals taken from shelters needed extensive veterinary services. The table below shows the average cost and demand for each of the three major categories of veterinary services.RRI would like to take every dog from a shelter and immediately place it in a temporary foster home until it is adopted. Unfortunately, foster homes are not always available. Historically, 40% of the dogs RRI rescues spend an average of 8 days in a commercial kennel at a cost to RRI of $10 per day before a foster home becomes available.RRI has a full time Executive Director who is paid $27,500 per year and a part-time intern who is paid $15 per hour and works an average of six hours per week. The organization rents a 500 square foot office at a cost of $10 per square foot per year to house its staff and web servers. Two web servers will be purchased on January 1st 2004 and put into service immediately. The servers will cost $4,500. The servers have a useful life of three years and will have no residual value. Phone costs average $3,000 per year. High-speed Internet access costs RRI $2,500 per year.(15 points) A. Prepare an operating budget for RRI for fiscal year 2004.(10 points) B. Prepare a flexible budget reflecting a 10% decrease in overall adoptions volume. Assume that the proportion of puppies and adult dogs remains constant, as does the proportional demand for veterinary services.