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## In Method B, what would be the cost-per-unit of producing Android01 using factory space as the allocation basis? What would be the cost-per-unit using labor as the allocation basis?

Paper , Order, or Assignment Requirements

Step 1: Allocate Costs

You have been asked to look at production options for the Android01 since production methods and allocation of costs have implications for cost-per-unit. There are two alternative methods of production being considered. Begin by gathering data (using financial information in decision making), then answer various questions to determine the suitability of the project.

Production A

Costs are as follows:

\$4.5 million per year in rent for factory and machinery

components and labor in the amount of \$12 million will produce 300 units per year

Production B

In an alternative production method, the production of Android01 will share some production facilities and service divisions with Processor01. Fixed costs are \$5 million per year, and are to be assigned at the rate of 30 percent to Android01 and 70 percent to Processor01.

The variable cost of the production facilities and service divisions is \$20 million per year. The square footage of factory space and labor needed for the production of 500 units of Processor01 and 300 units of Android01 are listed below.

Sq. Ft. Labor

Processor01 (500 units) 70,000 120

Android01 (300 units) 30,000 80

The remaining cost for the production of Android01 is for components, at \$25,000 per unit.

Question 1: In Method B, what would be the cost-per-unit of producing Android01 using factory space as the allocation basis? What would be the cost-per-unit using labor as the allocation basis?

Before starting on your calculations, review materials on production cost allocation.

Submit your Allocation of Costs Report and Calculations. Be sure to show your calculations in Excel and provide a narrative analysis in PowerPoint. Your narrative analysis should summarize the results of your analysis and make recommendations for the benefit of

company.

Step 2: Activity-Based Costing

An alternate method of assigning costs is activity-based costing. The major activity for the production of both Processor01 and Android01 is component assembly. There will be a total of 125,000 assemblies per year for the production of 500 units of Processor01 and 300 units of Android01 at a total cost of \$25 million. Each unit of Android01 will require 180 assemblies. The remaining cost for the production of Android01 is for components, at \$25,000 per unit.

Question 2: What would be the cost per unit of producing Android01 using activity-based costing?

3.1 Identify numerical or mathematical information that is relevant in a problem or situation.
3.2 Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.
3.3 Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.
3.4 Employ software applications and analytic tools to analyze, visualize, and present data to inform decision-making.
10.5 Develop operating forecasts and budgets and apply managerial accounting techniques to support strategic decisions.

Paper , Order, or Assignment Requirements

Purpose of Assignment

The purpose of this assignment is to allow the student to calculate the project cash flow using net present value (NPV), internal rate of return (IRR), and the payback methods.

Assignment Steps

Resources: Corporate Finance

Create a 350-word memo to management including the following:

Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows.

Calculate the following time value of money problems:

If you want to accumulate \$500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%?
What is the future value if you plan to invest \$200,000 for 5 years and the interest rate is 5%?
What is the interest rate for an initial investment of \$100,000 to grow to \$300,000 in 10 years?
If your company purchases an annuity that will pay \$50,000/year for 10 years at a 11% discount rate, what is the value of the annuity on the purchase date if the first annuity payment is made on the date of purchase?
What is the rate of return required to accumulate \$400,000 if you invest \$10,000 per year for 20 years. Assume all payments are made at the end of the period.

Calculate the project cash flow generated for Project A and Project B using the NPV method.

Which project would you select, and why?
Which project would you select under the payback method? The discount rate is 10% for both projects.

## Prepare Blue’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

Intermediate Accounting
Paper , Order, or Assignment Requirements

Question 1
Sandhill Enterprises owns the following assets at December 31, 2017.
Cash in bank—savings account 71,700 Checking account balance 27,000
Cash on hand 8,400 Postdated checks 900
Cash refund due from IRS 38,800 Certificates of deposit (180-day) 94,380

What amount should be reported as cash?
Cash to be reported \$

Question 2
Blue Family Importers sold goods to Tung Decorators for \$45,000 on November 1, 2017, accepting Tung’s \$45,000, 6-month, 5% note.

Prepare Blue’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Question 3
Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of \$3,345 per month, has just purchased a new Acura. You decide to test the accuracy of the accounts receivable balance of \$182,860 as shown in the ledger.

(1) Collections from customers \$441,540
(2) Merchandise purchased 713,600
(3) Ending merchandise inventory 200,700
(4) Goods are marked to sell at 40% above cost

Compute an estimate of the ending balance of accounts receivable from customers that should appear in the ledger and any apparent shortages. Assume that all sales are made on account.
The ending balance of accounts receivable from customers \$

Apparent shortage \$

Question 4
The trial balance before adjustment of Whispering Inc. shows the following balances.
Dr. Cr.
Accounts Receivable \$96,700
Allowance for Doubtful Accounts 3,050
Sales Revenue (all on credit) \$723,000
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 5% of gross accounts receivable and (b) 6% of gross accounts receivable and Allowance for Doubtful Accounts has a \$1,654 credit balance. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Question 5
Sandhill, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April.

1. On April 1, it established a petty cash fund in the amount of \$265.

2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows.
Delivery charges paid on merchandise purchased \$76
Supplies purchased and used 41
Postage expense 49
I.O.U. from employees 33
Miscellaneous expense 52

The petty cash fund was replenished on April 10. The balance in the fund was \$12.

3. The petty cash fund balance was increased by \$116 to \$381 on April 20.

Prepare the journal entries to record transactions related to petty cash for the month of April. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Question 6
Kimmel Company uses the net method of accounting for sales discounts. Kimmel also offers trade discounts to various groups of buyers.

On August 1, 2017, Kimmel sold some accounts receivable on a without recourse basis. Kimmel incurred a finance charge.

Kimmel also has some notes receivable bearing an appropriate rate of interest. The principal and total interest are due at maturity. The notes were received on October 1, 2017, and mature on September 30, 2019. Kimmel’s operating cycle is less than one year.
Using the net method, how should Kimmel account for the sales discounts at the date of sale? What is the rationale for the amount recorded as sales under the net method?Using the net method, what is the effect on Kimmel’s sales revenues and net income when customers do not take the sales discounts?What is the effect of trade discounts on sales revenues and accounts receivable? Why?
How should Kimmel account for the accounts receivable factored on August 1, 2017? Why?

How should Kimmel account for the note receivable and the related interest on December 31, 2017? Why?
Question 8
From inception of operations to December 31, 2017, Buffalo Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Buffalo’s usual credit terms are net 30 days.

The balance in Allowance for Doubtful Accounts was \$147,300 at January 1, 2017. During 2017, credit sales totaled \$9,061,900, the provision for doubtful accounts was determined to be \$181,238, \$90,619 of bad debts were written off, and recoveries of accounts previously written off amounted to \$16,980. Buffalo installed a computer system in November 2017, and an aging of accounts receivable was prepared for the first time as of December 31, 2017. A summary of the aging is as follows.
Classification by

Month of Sale Balance in

Each Category Estimated %

Uncollectible
November–December 2017 \$1,265,100 2%
July–October 677,000 10%
January–June 421,600 24%
Prior to 1/1/17 157,300 74%
\$2,521,000

Based on the review of collectibility of the account balances in the “prior to 1/1/17” aging category, additional receivables totaling \$61,300 were written off as of December 31, 2017. The 74% uncollectible estimate applies to the remaining \$96,000 in the category. Effective with the year ended December 31, 2017, Buffalo adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.
Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2017. Show supporting computations in good form. (Hint: In computing the 12/31/17 allowance, subtract the \$61,300 write-off.)

## Write a report for senior managers on how they could improve the company’s financial performance and achieve the primary business goals, such as profit and shareholders’ wealth maximization.

Paper , Order, or Assignment Requirements

Consider a newly-listed company of interest to you and using the 2009/2010 annual accounting reports describe its business and financial environment. Subsequently, critically discuss the following topics:
a) Write a report for senior managers on how they could improve the company’s financial performance and achieve the primary business goals, such as profit and shareholders’ wealth maximization.
b) Analyze the sources of finance and the capital structure of the company. Comment on the short- and long- term financial strategy of the company.
c) Write a report detailing the factors contributing to the selection of the dividend policy of the company. Make recommendations on the decision-making process and the range of influences considered.
d) Investigate the capital investment process of the company. Consider areas for improvement.
e) Comment on the risk exposure and the risk-return profile of the company. Analyze the implications and provide recommendations in your report.
f) Write a report to explain the benefits gained from getting listed in the sock market and compare the financial positions of the company before and after the flotation.
g) Evaluate the business strategies of the company.
h) If the company has acquired or merged with another company, analyze the acquisition / merger motives, process, planning and integration.Make recommendations for improvement should any future acquisition / mergers be contemplated. If not, then you may use another company to discuss the issues set above.
i)Analyze the executive incentives of the company.
j) In what ways could the company take steps to ensure greater efficiency of the stock market pricing of its shares?

## What price (p) maximizes total contribution (TC)?

Accounting Excel
Paper , Order, or Assignment Requirements

Demand and Revenue Management
Name ______________________
READ “DRM_Week3_ONLINE_Notes.doc” in this same folder.
ANSWER the questions and e-mail to me by end-of-day 10/8/2017. (Late submissions will be penalized.)
RENAME this file as “lastname_firstname_Week_3and5.doc” but with your name, of course!
NOTE: This assignment mostly covers material from Chapters 2-3 of PRO and Chapters 3-5 of DM, but may use concepts from earlier material as well.
This is a Word document, so just add space as needed between questions, but leave the original questions!
If you have any doubt, show work or explain for partial credit, or else the answers will be graded as “all or nothing”.
Hint: Clever use of Excel might make some answers much easier to answer!
Maximum of 100 points on assignment
Tactical Questions:
1. (10 pts total) Chapter 2, Problem 1 on page 36 of PRO (“Brain and Company…”)
a. (5pt) see text
b. (5pt) see text
2. (10-15 pts total) If price elasticity of demand (ϵ) is 3,
a. (5pt) How does demand change if the price is increased 1%
b. (5pt) How does demand change if the price is decreased 5%
c. BONUS (5pt) How does demand change if the price is decreased 50%
3. (15-20 pts total) The Basic PRO Problem. Dizzy Toys © has created a new toy, RoboWoman™, loved by girls and boys alike, that costs \$5 to make. They are not sure what price they should charge for this awesome new toy, but they want to maximize profits. Initial market research has hinted at a linear PRF of d(p)=14000-700p.
HINT: See slides 59-60 of Week 3 ONLINE slides!
a. (5 pts) What price (p) maximizes total contribution (TC)?
b. (5 pts) What is the demand at the optimal price (p*)?
c. (5 pts) What is the TC at p*?
d. BONUS (5 pts) What is the satiating price (P)?
4. (20-30 pts total) Pricing with Competition: The Multinomial Logit (MNL). Consider Example 3.7 on page 57 of PRO. It is relatively easy for a company to change its price, but difficult to change its price elasticity since this is based on factors such as brand reputation and customer loyalty. Re-create the chart from the example in Excel using Equation 3.13 (Note that I divided price by 1000 to keep the numbers reasonable and prevent rounding errors in Excel). You should get a result like this:
Model Price bj e^(-bipi/1000) Market Share (μi(p))
Audio Two 400 2.5 0.368 30.8%
Koshiba 650 3.077 0.135 11.3%
Takata and Fuji 500 2.4 0.301 25.3%
Soundmaster 750 2.4 0.165 13.9%
Cacophonia 1200 1.25 0.223 18.7%
1.193 100.0%
Assuming elasticity (bj) does not change (which is of course a BIG assumption for a large price change!), what is Takata and Fuji’s market share if it…
a. (5pt) decreases its price to \$400?
b. (5pt) increases the price to \$625?
c. (10pt) At \$400, Takata and Fuji is at the same price point as Audio Two. Assuming their costs are exactly the same, which company is in the “better” position? Why? (Hint: Use more than just the market share to explain!)
d. BONUS (10pts) If it costs \$350 to make an item (and elasticities don’t change), find the price that maximizes Takata and Fuji’s Total Contribution.
5. (20-30 pts total) The Logit Price-Response Function. (Based on Problem 3 on page 70 of PRO) An auto manufacturer can manufacture compact cars for an incremental cost of \$5,000 apiece. She faces a logit price-response function for sales in the next month (see equation 3.11 on page 53), with parameters C=40,000, b=0.0005, and market price ṕ=\$12,000.
a. (5) Keeping the price as variable p, what is the unit margin (contribution) from each additional sale?
b. (5) What is the price-response function, d(p), for this manufacturer?
c. (5) At a price of \$10,000, what is the demand?
d. (5) Roughly, what is the shape of the willingness-to-pay distribution?
e. BONUS (5 pts) What price maximizes Total Contribution?
f. BONUS (5 pts) What price maximizes Revenue?
Strategy Questions:
g. (10 pts total) Accurate demand plans are crucial for a company. They are used by Finance to predict revenues and cash flows. They are used by Operations to help determine long-term capacity and short-term scheduling. How can Sales and Marketing (the organization that should be in charge of forming the demand plan) be held accountable for:
h. (5pts) Underestimating the demand
i. (5pts) Overestimating the demand
6. (5 pts) Explain the roles of demand plan “dashboards” and the benefits they offer.
7. (10 pts) What is the goal of “demand management” and “integrated business management”? What 4 repeating steps are used to execute a “proper” DM process?

## Calculate the cash flows if the company uses forward contracts to hedge its CHF exposures.

Paper , Order, or Assignment Requirements

Purchase of goods CHF230,000 to pay in 3 months
Purchase of goods CHF300,000 to pay in 6 months
Sales of goods CHF500,000 to receive in 6 months
Purchase of goods EUR560,000 to pay in 3 months
Purchase of goods EUR250,000 to pay in 6 months
Sales of goods EUR470,000 to receive in 6 months

Given the following market data:

Exchange rate quotes from bank:
GBP/CHF GBP/EUR
Spot 1.7725 – 1.7735 Spot 1.1698 – 1.1708
3-m fwd 44/32 discount. 3-m fwd 41/50 premium
6-m fwd 92/80 discount 6-m fwd 98/107 premium

Interest rates Borrowing Deposit
GBP 5% 3.5 %
CHF 3% 2%
EUR 6% 4%

a. Calculate the cash flows if the company uses forward contracts to hedge its CHF exposures.
b. Calculate the cash flows if the company uses forward contracts to hedge its EUR exposures.
c. Calculate the cash flows if the company uses money market hedging technique to hedge its CHF exposures.
d. Calculate the cash flows if the company uses money market hedging technique to hedge its EUR exposures.
e. Summarise the results of the calculations above make recommendations in a way that helps the company’s executives to make a quick hedging decision for each transaction.

## calculate each projects net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).

Paper , Order, or Assignment Requirements

You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of \$10,000, and the cost of capital for each is 12%. The projects expected net cash flows are shown in the table below.
Expected Net Cash Flows
Year Project X Project Y
0 \$10,000 \$10,000
1- 6,500 3,500
2- 3,000 3,500
3- 3,000 3,500
4- 1,000 3,500
a. Use the Homework Student Workbook to calculate each projects net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).
b.Which project or projects should be accepted if they are independent?
c.Which project or projects should be accepted if they are mutually exclusive?

## Prepare a detailed multi-step income statement

Paper , Order, or Assignment Requirements

Scenario: An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years.
SIMON COMPANY
Income Statement
For the Year Ended December 31, 2017
Revenues
Net sales
\$850,000
Other revenues
22,000
872,000
Cost of goods sold
555,000
Gross profit
317,000
Operating expenses
Selling expenses
109,000
103,000
212,000
Net earnings
\$105,000
As an experienced, knowledgeable accountant, you review the statement and determine the following facts:
1. Net sales consist of: sales \$911,000, less freight-out on merchandise sold \$33,000, and sales returns and allowances \$28,000.
2. Other revenues consist of sales discounts \$18,000 and rent revenue \$4,000.
3. Selling expenses consist of salespersons’ salaries \$80,000, depreciation on equipment \$10,000, advertising \$13,000, and sales commissions \$6,000. The commissions represent commissions paid. At December 21, \$3,000 of commissions have been earned by salespersons but have not been paid. All compensation should be recorded as Salaries and Wages Expense.
4. Administrative expenses consist of office salaries \$47,000, dividends \$18,000, utilities \$12,000, interest expense \$2,000, and rent expense \$24,000, which includes prepayments totaling \$6,000 for the first quarter of 2018.
Prepare a detailed multi-step income statement with a brief explanation of 700 words. Assume a 25% tax rate.

## Explain what ratio analysis is to your classmates.

Paper , Order, or Assignment Requirements

1. Explain what ratio analysis is to your classmates. The following information should be included in your post.
• What do you find most difficult about ratio analysis?
• How is understanding ratio analysis beneficial to you as a manager?
• How is ratio analysis beneficial to you as an investor?
• What, in your opinion, are the two most important ratio analyses? Why?
• Who are the users of ratio analysis?
• What is the importance of ethics as it would be applied to ratio analysis?
2. The purpose of this assignment is to build understanding of various issues facing business and society today.
This assignment will require some research. Through this research the student will:
Learn the background history of the chosen topic,
Discover why this topic is controversial,
Explain both sides of the controversy, and
Develop an opinion
Topic:

Casual dress codes are beneficial for the company.