Question & Answer

How do volume discounts from suppliers affect our assumption that the cost function is linear? Explain how we incorporate this type of cost into a CVP analysis.

2. What are the advantages and disadvantages of presenting data graphically with the axes starting from zero?

Jimmy is a sole proprietor of a small dry-cleaning business. This month Jimmy paid for his groceries by writing checks from the checking account dedicated to the dry-cleaning business. Why do you suppose Jimmy is using his business checking account rather than his personal checking account to pay for personal expenditures?

Lease versus buy decision; ROI; residual income; EVA; manager          incentives Refer to the information in Problem 18.21. The manager of Sandy Point Construction is considering a new project. She can buy or lease equipment that will reprocess tailings from old mines to remove any traces of gold left behind by the original separating processes. The purchase price of the equipment is $150 000. The cost to lease is $2000 per month. She estimates the return (incremental revenues minus incremental expenses, including lease cost) to be $40 000 per year. She knows that purchasing the equipment will increase the value of average operating assets. If she leases the equipment, expenses will increase, but not assets. (In other words, the lease will be accounted for as an operating lease.) Although it is more cost effective to purchase the equipment, she has decided to lease it.   Required (a)     Calculate the new ROI if the equipment is (i) purchased or (ii) leased. (b)     Calculate the new residual income if the equipment is (i) purchased, or (ii) leased. (c)     One of the adjustments that can be made using EVA is to treat all operating lease costs as if they were purchases — in other words, to capitalise the lease. If Sandy Point Construction used EVA with this adjustment, how might the manager’s incentives and behaviour change? Explain.

Was a ‘hard Brexit’ (reverting to WTO rules and negotiating bilateral trade deals) necessarily an inferior alternative for the UK to remaining in the European single market or, at least, in the customs union?

: Describe the innovation strategies that managers implement for changing products and workflow technologies, such as a bottom-up approach and open innovation.

Explain the rights of common stockholders that are not available to other individuals. (LO2)

(Threshold Concept 7) 1. What market failures could be corrected by the use of welfare benefits? Does the payment of such benefits create any problems for society? (Threshold Concept 7) 2. Assume that the government sees litter as a market failure that requires government action. Give some examples of policies it could adopt to reduce litter.

How many tax brackets are there in the corporate tax rate schedule?

The board of directors of Ichiro Corporation is considering whether or not it should instruct the accounting department to shift from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available. Sales 21,000 units @ $50 Inventory, January 1 6,000 units @ 20 Purchases 6,000 units @ 22 10,000 units @ 25 7,000 units @ 30 Inventory, December 31 8,000 units @ ? Operating expenses $200,000 Instructions Prepare a condensed income statement for the year on both bases for comparative purposes.

Discuss the concept of asymmetric information. Explain why it may motivate firms to repurchase some of their stock. (LO4)

Balanced scorecard measures for customer perspective Leyland College is in the process of developing a balanced scorecard. The administrators decided that their customers are parents and future employers of their students. They believe the students are their products.   Required Discuss whether each of the following potential measures would be useful for the customer perspective in the balanced scorecard. (a)     Parent ratings of satisfaction with the high school curriculum (b)     Graduation rate (c)     Percentage of students employed during the summer after graduation (d)     Employer satisfaction ratings for Flowing Wells High School graduates (e)     Monthly earnings of graduates (f)      Number of graduates attending classes beyond high school (g)     Cost per student per year (h)     Number of classes per student per semester (i)      Average number of college credit hours completed per teacher

1. What effect did these developments have on (a) the Phillips curve; (b) the aggregate supply curve? 2. What policy implications follow from these arguments?

All else being equal, would a taxpayer with passive losses prefer to have wage income or passive income?

Explain how the maturity of mortgage-backed securities can be affected by interest rate movements. (LO4)

A stepping motor has 200 step angles. Its output shaft is directly coupled to leadscrew with pitch = 0.250 in. A worktable is driven by the leadscrew. The table must move a distance of 5.00 in from its present position at a travel speed of 20.0 in/min. Determine (a) the number of pulses required to move the table the specified distance and (b) the required motor speed and pulse rate to achieve the specified table speed.

Balanced scorecard perspectives, performance objectives, and measures Perspectives, performance objectives and potential performance measures for the balanced scorecard at Holiday Resorts are as follows: Perspectives (i)         Financial (ii)        Customer (iii)       Internal business (iv)       Learning and growth   Performance objectives A.      Reduce housekeeping costs B.      Improve the quality of and results from advertising campaigns C.      Decrease vacancy rate during the off-season D.      Increase number of return customers E.      Increase overall profits F.      Increase the use of Internet-based reservations G.     Retain high-quality employees H.      Increase the number of activities available to customers I.       Improve the quality of stay for holiday makers J.       Provide employee training in quality customer service K.     Reduce error rate in reservations   Potential performance measures 1.       Operating margin 2.       Customer complaint rate 3.       Survey customers at check-in about how they first heard about the resorts 4.       Housekeeping cost per room 5.       Number of employee hours spent in training 6.       Error rate in reservation process 7.       Percentage of reservations made using the website 8.       Customer surveys about satisfaction and quality 9.       Employee turnover rates 10.     Number of activities per resort that are available to customers 11.     Percentage and number of return customers 12.     Number of hours of employee training offered 13.     Vacancy rates 14.     Customer focus groups inquiring about quality and potential success of advertising 15.     Number of suggestions that improve quality of service   Required (a)     For each perspective (i–iv), identify at least one appropriate performance objective (A–K). (b)     For each performance objective (A–K), identify at least one appropriate performance measure (1–15). (c)     Explain the links between the measures.

Should management be excited if all variances for the period are           favourable?

A U.S. insurance company purchased British 20-year Treasury bonds instead of U.S. 20-year Treasury bonds because the coupon rate was 2 percentage points higher on the British bonds. Assume that the insurance company sold the bonds after five years. Its yield over the five-year period was substantially less than the yield it would have received on the U.S. bonds over the same five-year period. Assume that the U.S. insurance company had hedged its exchange rate exposure. Given that the lower yield was not because of default risk or exchange rate risk, explain how the British bonds could have generated a lower yield than the U.S. bonds. (Assume that either type of bond could have been purchased at the par value.) (LO2, LO5)

A sine bar is used to determine the angle of a part feature. The length of the sine bar is 6.000 in. The rolls have a diameter of 1.000 in. All inspection is performed on a surface plate. In order for the sine bar to match the angle of the part, the following gage blocks must be stacked: 2.0000, 0.5000, 0.3550. Determine the angle of the part feature.

A stepping motor with 100 step angles is coupled to a leadscrew through a gear reduction of 9:1 (9 rotations of the motor for each rotation of the leadscrew). The leadscrew has 5 threads/in. The worktable driven by the leadscrew must move a distance = 10.00 in at a feed rate of 30.0 in/min. Determine (a) number of pulses required to move the table, and (b) the required motor speed and pulse rate to achieve the desired table speed.

Presentations What is the purpose of the economic presentations made during a FOMC meeting? (LO2)

What is the significance of the term ‘endogenous’ in endogenous growth theory? What, according to this theory, determines the long-run rate of economic growth?

Martin Buber Co. purchased land as a factory site for $400,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Martin Buber paid $2,200 to an engineering firm for a land survey, and $68,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor’s charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at the end of 3 months and $1,540,000 upon completion. Interest costs of $170,000 were incurred to finance the construction. Instructions Determine the cost of the land and the cost of the building as they should be recorded on the books of Martin Buber Co. Assume that the land survey was for the building.

Cost of rework; control of scrap; accounting for scrap Dapper Dan Draperies manufactures and installs custom-ordered draperies.   Required (a)     For all drapes, occasionally the sewing equipment malfunctions and the drape must be reworked. Explain how to account for the cost of rework when it is needed. (b)     Explain how to account for the cost of rework when customers choose a fabric that is known to require rework. (c)      Explain why scrap will always arise in this business. (d)     Dapper Dan can sell scraps to quilting groups or just throw them away. List several factors that could affect this decision. (e)      If Dapper Dan decides to sell scraps, explain the accounting choices for recording the sales value.