Question & Answer

Assume now that the firm has monopoly power in hiring out equipment, and thus faces a downward-sloping demand curve. Draw in two such demand curves on a diagram like Figure 10.13(b), one crossing the MC curve in the horizontal section, and one in the vertical section. How much will the firm supply in each case and at what price? (You will need to draw in MR curves too.) Is the MC curve still the supply curve?

Variances and flexible budgets Sherry North is the supply manager for West Industries, a manufacturer of garden furniture for the major department store in Australia. As part of her bonus plan, Sherry must meet the materials budget that was established at the beginning of the year. As West Industries manufactures three products in large volumes, standard costs are easily established for the factors of production. The reports for the first half of the year indicate that the materials variance is unfavourable. In an attempt to achieve her bonus target Sherry has been purchasing lower-grade materials at reduced costs for a new supplier. Management have been very pleased with the turnaround in the variance.   Required What implications do Sherry’s actions have for West Industries as a whole (especially in relation to other variances that may be reported in the production area)?

Whitney received $75,000 of taxable income in 2024.  All of the income was salary from her employer.  What is her income tax liability in each of the following alternative situations?

{Research} Janice Traylor is single.She has an 18-year-old son named Marty.Marty is Janice’s only child.Marty has lived with Janice his entire life.However, Marty recently joined the Marines and was sent on a special assignment to Australia.During the current year, Marty spent nine months in Australia.Marty was extremely homesick while in Australia, since he had never lived away from home.However, Marty knew this assignment was only temporary, and he couldn’t wait to come home and find his room just the way he left it.Janice has always filed as head of household, and Marty has always been considered a qualifying child (and he continues to meet all the tests with the possible exception of the residence test due to his stay in Australia).However, this year Janice is unsure whether she qualifies as head of household due to Marty’s nine-month absence during the year.Janice has come to you for advice on whether she qualifies for head of household filing status.What do you tell her?

What is the difference between tax avoidance and tax evasion?

Which item has the same value for both the static budget and the flexible budget?

What are the arguments for reward systems at the executive level to      contain a longer-term component?             (LO3)

The first IBM personal computer was based on the Intel 8088 CPU, which was released in 1979. The 8088 had 29,000 transistors and 40 I/O pins. The final version of the Pentium III (1 GHz) was released in 2000. It contained 28,000,000 transistors and had 370 I/O pins. (a) Determine the Rent’s rule coefficient values m and C assuming that a transistor can be considered a circuit. (b) Use the value of m and C to predict the number of I/O pins required for the first Pentium 4 assuming that it is manufactured with 42,000,000 transistors. (c) The first Pentium 4, released in 2001, used 423 I/O pins. Comment on the accuracy of your prediction.

Describe the economic trade-off faced by the Fed in achieving its economic goals. (LO4)

In 2024, Lisa and Fred, a married couple, have taxable income of $400,000.  If they were to file separate tax returns, Lisa would have reported taxable income of $225,000 and Fred would have reported taxable income of $175,000.  What is the couple’s marriage penalty or benefit?

Cole Inc. owns shares of Marlin Corporation stock classified as an available-for-sale investment. At December 31, 2014, the available-for-sale securities were carried in Cole’s accounting records at their cost of $875,000, which equals their fair value. On September 21, 2015, when the fair value of the securities was $1,200,000, Cole declared a property dividend whereby the Marlin securities are to be distributed on October 23, 2015 to stockholders of record on October 8, 2015. Prepare all journal entries necessary on those three dates.

What are debentures? How do they differ from subordinated debentures? (LO2)

Assume that ACW Corporation has 2024 taxable income of $1,500,000 for purposes of computing the §179 expense. The company acquired the following assets during 2024 (assume no bonus depreciation):

Compare and contrast an employee’s FICA tax payment responsibilities with those of a self-employed taxpayer.

Way Corporation disposed of the following tangible personal property assets in the current year. Assume that the delivery truck is not a luxury auto. Calculate Way Corporation’s 2024 depreciation deduction (ignore §179 expense and bonus depreciation for this problem).

What is a conversion coating?

Rank the following three single taxpayers in order of the magnitude of taxable income (from lowest to highest) and explain your results. Assume none of the taxpayers contributed to charity this year.

Define “cost” as applied to the valuation of inventories.

Identify two major disadvantages of plasma arc cutting.

Explain why some companies that issue bonds engage in interest rate swaps in financial markets. Why do they not simply issue bonds that require the type of payments (fixed or variable) that they prefer to make? (LO1)

Which die-casting machines usually have a higher production rate, cold-chamber or hot-chamber, and why?

The Fed uses a targeted federal funds rate when implementing monetary policy. However, the Fed’s main purpose in its monetary policy is typically to have an impact on the aggregate demand for products and services. Reconcile the Fed's targeted federal funds rate with its goal of having an impact on the overall economy. (LO2; LO3)

A groove weld has a cross-sectional area = 0.045 in2 and is 10 inches long. (a) What quantity of heat (in Btu) is required to accomplish the weld, if the metal to be welded is medium carbon steel? (b) How much heat must be generated at the welding source, if the heat transfer factor = 0.9 and the melting factor = 0.7?

Describe each of the two types of sheet-metal-bending operations: V-bending and edge bending

Assume a calendar-year corporation has a deficit in current E&P of ($120) and positive accumulated E&P of $120. Under this circumstance, a cash distribution of $120 to the corporation’s sole shareholder on June 30 will not be treated as a dividend because E&P on December 31 is $0. True or false? Explain.