please answer the attached questions

Question 1 (25 marks) – Incremental Analysis

Kona Company manufactures plastic plates. For 2021, the company reported the following operating results while operating at 70% of plant capacity:

Sales (20,000 units) $100,000

Cost of goods sold 65,000

Gross profit 35,000

Operating expenses 20,000

Net income $15,000

An analysis of costs and expenses reveals that variable cost of goods sold is $1.80 per unit and variable operating expenses are $0.20 per unit. In January 2022, Kona Company receives a special order for 5,000 plates at $4 each from a major party shop. Acceptance of the order would result in $1,000 of shipping costs but no increase in fixed expenses.

Instructions

Prepare an incremental analysis for the special order. Should Kona accept a special order? Prepare a complete work for full mark. (13 marks)

When do managers perform incremental analysis? What are five common types of decisions involving incremental analysis? Provide an example for each type for full mark. (12 marks)

Question 2 (25 marks) – Budgeting Activities

Part I

Prepare a flexible budget report for 2023 based on the information below. Provide full calculation steps for full mark. (14 marks)

Cost	Budget at 4,000 Units	Actual Amounts at 4,500 Units
Direct materials	$185,000	$188,000
Direct labour	226,000	250,000
Indirect labour	22,000	25,000
Indirect materials	14,000	16,000

Cost	Budget at 4,000 units	Variance	Flexible Budget	Variance	Actual at 4,500 units
Direct materials	$185,000				$188,000
Direct labour	226,000				250,000
Indirect labour	22,000				25,000
Indirect materials	14,000				16,000
total

Part II

LUX Company makes lamps, for which the following standards have been developed:

Direct Costs

Standard Inputs

Expected for Each

Unit of Output

Standard Price

Expected per

Unit of Output

Direct materials

3 kilograms

$35 per kilogram

Direct labour

2 hours

$16 per hour

During March, production of 210 lamps was expected, but 200 lamps were completed. Direct materials purchased and used were 620 kilograms at an actual price of $34 per kilogram. Direct labour cost for the month was $8,500, and the actual pay per hour was $17.

Compute the direct-material price variance for March. (4 marks)

Compute the direct-material quantity variance for the month of March. (4 marks)

What is total direct material variance? (3 marks)

Question 3 (25 marks) – Capital Budgeting

Annual cash inflows from two competing investment opportunities are given below. Investment A requires $123,000 initial investment and Investment B requires $115,000. Steal Company has a doubt about which investment opportunity is going to provide a higher return to the company.

Year	Investment A	Investment B
2021	$45,000	50,000
2022	42,000	48,000
2023	41,000	44,000

Required:

Compute the present value of the cash inflows for each investment using a 11% discount rate. Show the calculation steps for the full mark along with the formula. (8 marks)

	Amount of Cash Flows			Present Value of Cash Flows
Year(s)	Investment A	Investment B	Investment A		Investment B
2021	$45,000	50,000
2022	42,000	48,000
2023	41,000	44,000
Total

Compute the Net Present Value (NPV). (6 marks)

	Investment A	Investment B
Present Value of Cash Flows
Initial Cost
Net Present Value (NPV)

What is difference between NPV and Payback period? Explain each method briefly and highlight their differences. (11 marks)

Question 4 (25 marks) – Reporting for control

WOW Company has the following information for its 2021 fiscal period:

Sales	$650,000
Operating Income	$325,000
Shareholders' Equity	$610,000
Average Operating Assets	$880,000
Minimum Required Rate of Return	25%
Gross profit rate	35%

Required:

What is WOW’ s residual income? Briefly explain your findings. (5 marks)

What is WOW’ s return on investment (ROI)? Briefly explain your findings. (5 marks)

Explain responsibility centres and provide an example for each centre? (10 marks)