المحاسب الإداري المعتمد الجزء 1 D. Cost Management

Clearpath: Service Progress and Seasonal Cash

Clearpath Equipment Assurance

Questions: 6 Answered:

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Question of 6 Clearpath: Service Progress and Seasonal Cash

Clearpath: Service Progress and Seasonal Cash Case-based question

The case

Clearpath sells annual on-site calibration programs to laboratory operators. Customers pay the full annual contract price in January. Each contract specifies a series of substantially similar calibration services transferred as performed; it does not include a separate stand-ready service. Under Clearpath's U.S. GAAP assessment, this series is one performance obligation satisfied over time. Weighted completed service units faithfully measure progress.

For the year, the original budget was 3,000 contracts at an average price of $900. Actual activity was 3,200 contracts at an average price of $870, all active for the full year. All contracted work was completed. Actual annual operating costs were $2,040,000: $408,000 fixed and $1,632,000 variable.

Quarter	Share of annual weighted services completed	Share of annual variable operating cost
Q1	20%	20%
Q2	30%	30%
Q3	25%	25%
Q4	25%	25%

Fixed operating costs are incurred evenly across the four quarters. Clearpath plans to replace its single annual expense target with coordinated operating, financial, and monthly cash budgets.

Assumptions

Revenue follows the stated weighted service progress measure, not the January cash receipt or cost incurrence by itself.
Contract consideration is fixed; there are no refunds, financing components, contract changes, taxes, or uncollectible balances.
All annual and quarterly cost figures are expenses of the stated period; no inventory or capitalization adjustments are needed.
For revenue variances, the price variance is actual revenue minus flexible-budget revenue (actual contracts at the original $900 price), and the volume variance is flexible-budget revenue minus static-budget revenue; favorable means higher revenue.
The master budget sequence question specifies Clearpath's internal approval dependencies; other organizations may sequence overlapping schedules differently.

Arrange the five steps Clearpath applies under the U.S. GAAP revenue recognition framework in their standard conceptual order.

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Allocate the transaction price to the identified performance obligations.
Recognize revenue as each performance obligation is satisfied.
Identify the enforceable contract with the customer.
Determine the transaction price.
Identify the distinct performance obligations promised in the contract.

Saving…

Classify each budget description: retains the original 3,000-contract activity assumption throughout the year Original activity retained ; values actual contract volume using original unit standards Actual volume at standard rates ; provides the initial resource plan approved before the year starts Initial resource plan ; separates volume effects from rate effects when placed between the static budget and actual results Volume and rate separation ; leaves its expense benchmark unchanged when contract volume changes Unchanged expense target ; adjusts variable cost allowances for actual activity while retaining fixed cost budgets within the relevant range Variable allowance at actual volume ; yields the original revenue target of 3,000 contracts at $900 each Original revenue target .

For Clearpath's completed full-year contracts, the absolute total revenue variance from the original budget is Total revenue variance magnitude and is Total revenue variance direction . The absolute contract-volume revenue variance is Contract volume variance magnitude and is Contract volume variance direction . The absolute average-price revenue variance is Average price variance magnitude and is Average price variance direction .

Using actual annual contracts and the specified service-progress measure, calculate Clearpath's Q2 operating income. Enter whole dollars rounded to the nearest dollar; use a minus sign if Q2 has an operating loss.

Answer USD

A whole number. A negative amount may be written with a minus sign or in brackets.

Order Clearpath's six budget deliverables under this internal policy: contract demand is approved before service staffing and expense plans; those plans produce a preliminary operating income statement; the preliminary income plan and collection/payment schedules feed the cash and financing budget; the approved cash and financing balances then feed the balance sheet; the final statement of cash flows reconciles the completed projected statements. Assume financing charges are zero and no revisions are needed.

Dragging, or the arrow buttons, to reorder.

Prepare the budgeted balance sheet using approved ending cash and financing balances.
Approve the contract sales and revenue budget.
Prepare the final budgeted statement of cash flows.
Prepare the cash and financing budget from planned collections and payments.
Prepare the service staffing, capacity, and operating expense budgets.
Prepare the preliminary budgeted operating income statement.

Saving…

Which TWO decisions would a monthly cash budget help Clearpath make? Select exactly TWO.

Select two answers. Selected 0 / 2

Answer Recognize all annual service revenue in January because customers have already paid. Determine when a short-term investment of excess January cash can mature without disrupting later service payments. Identify months when projected cash falls below the required minimum and arrange financing in advance. Avoid preparing a service staffing plan because cash collections determine labor requirements. Conclude that positive annual operating income rules out cash shortages.

The marks, the correct answers and the explanations appear as soon as the answers are submitted. Unanswered questions earn no marks.

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