Question & Answer

: What is the virtual network approach to structure? Is the use of authority different compared to other forms of departmentalization? Explain.

The immutability of blockchain technology, which makes it very difficult to tamper with data stored on the network, is one of its primary benefits. In light of the various issues that people and companies encounter when it comes to forging and manipulating contracts and other business papers, how do you anticipate blockchain technology developing going forward? Provide a few instances of prospective applications for blockchain technology. (LO2)

Explain how cost data is sourced in a costing framework.

What constitutes “significant influence” when an investor’s financial interest is below the 50% level?

Flagstad Inc. presented the following data. Net income $2,500,000 Preferred stock: 50,000 shares outstanding, $100 par, 8% cumulative, not convertible 5,000,000 Common stock: Shares outstanding 1/1 750,000 Issued for cash, 5/1 300,000 Acquired treasury stock for cash, 8/1 150,000 2-for-1 stock split, 10/1 Instructions Compute earnings per share.

Why are different hardness tests and scales required?

Why would banks not be prepared to offer a forward exchange rate to a firm for, say, five years’ time?

Briefly explain the accounting requirements for stock compensation plans under GAAP.

The chairman of the FASB at one time noted that “the flowof standards can only be slowed if (1) producers focus lesson quarterly earnings per share and tax benefits and moreon quality products, and (2) accountants and lawyers relyless on rules and law and more on professional judgmentand conduct.” Explain his comment.

Imagine that two countries, Richland and Poorland, can produce just two goods, computers and coal. Assume that for a given amount of land and capital, the output of these two products requires the following constant amounts of labour:                                 Richland Poorland 1 computer 2 4 100 tonnes of coal 4 5          Assume that each country has 20 million workers. (a)  Draw the production possibility curves for the two countries (on two separate diagrams). (b)  If there is no trade, and in each country 12 million workers produce computers and 8 million workers produce coal, how many computers and tonnes of coal much will each country produce? What will be the total production of each product? (c)  What is the opportunity cost of a computer in (i) Richland; (ii) Poorland? (d)  What is the opportunity cost of 100 tonnes of coal in (i) Richland; (ii) Poorland? (e)  Which country has a comparative advantage in which product? (f)   Assuming that price equals marginal cost, which of the following would represent possible exchange ratios? (i) 1 computer for 40 tonnes of coal; (ii) 2 computers for 140 tonnes of coal; (iii) 1 computer for 100 tonnes of coal; (iv) 1 computer for 60 tonnes of coal; (v) 4 computers for 360 tonnes of coal. (g)  Assume that trade now takes place and that 1 computer exchanges for 65 tonnes of coal. Both countries specialise completely in the product in which they have a comparative advantage. How much does each country produce of its respective product? (h)  The country producing computers sells 6 million domestically. How many does it export to the other country? (i)   How much coal does the other country consume? (j)   Construct a table like Table 24.4 to show the no-trade and with-trade positions of each country?

ROI; residual income; breakeven point; contribution margin Mirror Industries laminating division, BrightShine, incurred the following costs and expenses in the last period.       During the period, BrightShine produced 300 000 units of industrial photo prints, which were sold for $2 each. Mirrors’s investment in BrightShine was $500 000 and $700 000 at the beginning and ending of the year, respectively. BrightShine’s weighted average cost of capital is 15 per cent.   Required (a)        Determine BrightShine’s return on investment for the year. (b)        Compute BrightShine’s residual income (loss) for the year. (c)        How many industrial photo print units did BrightShine have to sell during the year to break even? (d)        What was BrightShine’s contribution margin for the year?

What is meant by the ‘prisoners’ dilemma game’ when applied to the behaviour of oligopolists? What will determine the outcome of the game?

What will determine the elasticity of this curve?

The price of Garner stock is $40. There is also a call option on Garner stock that is at the money, with a premium of $2.00. There is also a put option on Garner stock that is at the money, with a premium of $1.80. Why would investors consider writing this call option and this put option? Why would some investors consider buying this call option and this put option?

Sprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.   The net income for 2014 was $25,000. Assume that total assets are the same in 2013 and 2014. Instructions Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company. (a) Current ratio. (c) Debt to assets. (b) Acid-test ratio. (d) Return on assets.

Assume the same information as in IFRS14-5, except that the bonds were issued at 84.95 to yield 12%. Prepare the journal entries to record (a) the issuance of the bonds, (b) the payment of interest and related amortization on July 1, 2014, and (c) the accrual of interest and the related amortization on December 31, 2014. (Round to the nearest dollar.)

EVA for segments Following is information for the Fulcrum Company’s three business segments located in Europe.       Fulcrum’s applicable tax rate for the segments is 30 per cent, and its weighted average cost of capital for each segment is 10 per cent.   Required Determine the segment with the highest EVA.

Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, company’s primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the cash flow statements for two recent years for the company. Current Year Prior Year Cash fl ows from operating activities: Net income $ 17,523 $ 838,955 Adjustments to reconcile net income to net cash provided by operating activities Deferred income taxes (69,524) (146,590) Depreciation and amortization 316,416 181,348 Changes in assets and liabilities: Accounts receivable, trade (38,267) (25,947) Inventories (1,599,014) (1,289,293) Prepaid and other current assets (444,794) (113,205) Deposits and other assets (24,240) (83,044) Accounts payable 2,017,059 (284,567) Accrued expenses 61,321 170,755 Accrued interest payable, debentures — (58,219) Other — (8,960) Income taxes payable — 117,810 Net cash provided by (used for) operating activities 236,480 (700,957) Net cash used for investing activities (2,102,892) (4,422,953) Net cash (used for) provided by fi nancing activities (315,353) 9,685,435 Net change in cash and cash equivalents (2,181,765) 4,561,525 Other information: Current liabilities $ 4,055,465 $ 1,995,600 Total liabilities 4,620,085 2,184,386 Net sales 20,560,566 17,025,856 Instructions (a) Note that net income in the current year was only $17,523 compared to prior-year income of $838,955, but net cash flow from operating activities was $236,480 in the current year and a negative $700,957 in the prior year. Explain the causes of this apparent paradox. (b) Evaluate Vermont Teddy Bear’s liquidity, solvency, and profitability for the current year using cash flow-based ratios.

The following table shows a selection of exchange rate indices (effective exchange rates) for the years 2011 to 2020, based on 2011 = 100.   2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Australian $ 100.0 102.92 98.18 92.39 85.21 84.03 86.31 82.54 78.82 77.43 US $ 100.0 103.33 106.20 109.11 125.17 125.97 124.84 121.94 126.12 124.89 Japanese yen 100.0 102.54 83.08 76.60 72.43 81.74 78.12 77.94 81.31 82.30 Sterling 100.0 104.38 101.83 108.00 115.04 102.05 95.67 96.12 95.70 94.77 Euro 100.0 93.97 99.03 99.26 89.19 91.08 93.65 96.77 94.08 94.79 S Korean won 100.0 100.53 108.53 115.72 118.84 114.17 116.96 118.01 113.58 110.79           Source: Based on data from Monthly Effective Exchange Rate Indices (narrow) (Bank for International Settlements, April 2021).. (a) Explain what is meant by an exchange rate index or an effective exchange rate. (b) Calculate the annual rate of appreciation or depreciation for each currency for each year from 2011. It is suggested that you use an Excel spreadsheet. (c) Calculate the percentage appreciation or depreciation of each currency when comparing 2020 with 2010.

Evaluate balanced scorecard design             Frieda’s Fizz brews specialty soft drinks, including root beer and other flavours. Its vision is 'To proudly produce and sell extraordinarily smooth, rich, and delicious soft drinks to satisfy kids of all ages.' The entity has a reputation for high quality and unique flavour, enabling it to sell soft drinks at a premium price to gourmet grocery stores in the local area. The entity’s managers plan to expand the business to other geographic regions, but they want to ensure that they maintain high quality as the entity grows. They have decided to implement a balanced scorecard, and they have chosen the following balanced scorecard measures: Financial Perspective 1.       Breakdown of manufacturing cost per case: ingredients, direct labour, packaging materials, and overhead 2.       Operating profit per case 3.       Return on investment          Customer Perspective 4.       Number of customer complaints relating to taste, freshness, package integrity, appearance, and foreign objects 5.       Quality index (an internal measure of manufacturing quality, including microbiology and chemistry) 6.       Percentage sales growth          Internal Business Process Perspective 7.       Ratio of plant production hours to total available time 8.       Throughput (number of cases packaged) 9.       Waste and scrap as a percent of total production cost          Learning and Growth Perspective 10.     Number of work-related injuries 11.     Number of training hours per employee 12.     Number of community volunteer hours per employee   Required  (a)    Explain why uncertainties exist about the best balanced scorecard measures for Frieda’s Fizz. (Do not discuss any of the measures already listed. Instead, focus on why any set of measures might not provide ideal information and on why the managers cannot know with certainty which set of measures is best.) (b)     For the balanced scorecard perspective:                                               (i)          Describe the strengths and weaknesses of the measures chosen for that category.                                             (ii)          Reach a conclusion about the reasonableness of the set of balanced scorecard measures for that category. (c)     What are the pros and cons of implementing a balanced scorecard? (d)     How valuable do you think the balanced scorecard will be in helping the managers of Frieda’s Fizz meet its vision? Explain. (e)     The managers of Frieda’s Fizz want your evaluation of their proposed balanced scorecard. Use the information you learned from the preceding analyses to write a memo to the managers presenting your evaluation of                                               (i)          whether they should adopt a balanced scorecard                                             (ii)          the proposed balanced scorecard design.

Briefly describe the structure and role of the Securities and Exchange Commission. (LO4)

In each of the following independent situations, determine the taxpayer’s filing status and the number of personal and dependency exemptions the taxpayer is allowed to claim.Frank is single and supports his 17-year-old brother, Bill.Bill earned $3,000 and did not live with Frank

How would a central bank’s aversion to inflation affect how much the MP curve moves vertically downwards in response to a reduction in cost-push inflation?

Explain why mutual funds are attractive to small investors. How can mutual funds generate returns to their shareholders? (LO1)

Many governments around the world during the COVID-19 pandemic introduced job retention schemes allowing workers to be furloughed. Is this a use of fiscal policy to affect aggregate demand or aggregate supply?