Question & Answer

Why, under oligopoly, might a particular industry be collusive at one time and yet highly price competitive at another?

Juliette formed a new business to sell sporting goods this year. The business opened its doors to customers on June 1. Determine the amount of start-up costs Juliette can immediately expense (not including the portion of the expenditures that are amortized over 180 months) this year in the following alternative scenarios. a. She incurred start-up costs of $2,000. b. She incurred start-up costs of $45,000. c. She incurred start-up costs of $53,500. d. She incurred start-up costs of $63,000. e. How would you answer parts (a) through (d) if she formed a partnership or a corporation and she incurred the same amount of organizational expenditures rather than start-up costs (how much of the organizational expenditures would be immediately deductible)?

1.       : Explain the difference between risk and ambiguity. How might decision making differ for a risky situation versus an ambiguous situation?

You have been asked to provide the managing director with an approximate cost function for the entity’s activities, and it must be done by this afternoon. Some members of the board of directors want to understand why performance varies so much across store locations. They have asked for a quick analysis today and want a more detailed analysis next week. Which cost estimation technique(s) should you consider using? Explain.

How do whole life and term insurance differ from the perspective of insurance companies? From the perspective of the policyholders? (LO3)

Try this brain teaser. A monopoly would be expected to face an inelastic demand. After all, there are no direct substitutes. An yet,  if it produces where MR = MC, MR must be positive and demand must therefore be elastic. Therefore the monopolist must face an elastic demand! Can you solve this conundrum?

1.              : Continue the current policy that leaves it up to the Muslim workers as to when they leave the assembly line to perform their sunset rituals.

For taxpayers qualifying for home office deductions, what are considered to be indirect expenses of maintaining the home? How are these expenses allocated to personal and home office use? Can taxpayers choose to calculate home office expenses without regard to actual expenses allocated to the home office? Explain.

The board of directors of Gifford Corp. declared cash dividends of $260,000 during the current year. If dividends payable was $85,000 at the beginning of the year and $90,000 at the end of the year, how much cash was paid in dividends during the year?

When interest is involved in installment-sales transactions, how should it be treated for accounting purposes?

Why is flash desirable in impression die forging?

Omar (single) is a 50 percent owner in Cougar LLC (taxed as a partnership). Omar works half time for Cougar and receives a guaranteed payment of $50,000. Cougar LLC reported $450,000 of business income for the year. Before considering his 50 percent business income allocation from Cougar and the self-employment tax deduction (if any), Omar’s adjusted gross income is $210,000 (includes $50,000 guaranteed payment from Cougar and $180,000 salary from a different employer). Omar reports itemized deductions of $40,000. Answer the following questions for Omar. a. What is Omar’s self-employment tax liability? b. What would be Omar’s self-employment tax liability if he didn’t receive any salary. c. Assume the original facts and that the business income allocated to Omar is not from a specified service, what is Omar’s deduction for qualified business income? Assume that 81.82 percent of the self-employment tax is from self-employment income included in QBI [i.e., $225,000 business income allocation/$275,000 (business income allocation plus guaranteed payment)]. That is, the $50,000 guaranteed payment is not qualified business income. Ignore the wage-based limitation. d. What is Omar’s net investment income tax liability (assume no investment expenses)? e. What is Omar’s additional Medicare tax liability?

1. Show how each country could gain from trade if the LDC could produce (before trade) 3 wheat for 1 cloth and the developed country could produce (before trade) 2 wheat for 5 cloth, and if the exchange ratio (with trade) was 1 wheat for 2 cloth. Would they both still gain if the exchange ratio was (a) 1 wheat for 1 cloth; (b) 1 wheat for 3 cloth? 2. In question 1, which country gained the most from a trade exchange ratio of 1 wheat for 2 cloth?

George Solti, the controller for Garrison Lumber Company, has recently hired you as assistant controller. He wishes to determine your expertise in the area of inventory accounting and therefore asks you to answer the following unrelated questions. (a) A company is involved in the wholesaling and retailing of automobile tires for foreign cars. Most of the inventory is imported, and it is valued on the company’s records at the actual inventory cost plus freight-in. At year-end, the warehousing costs are prorated over cost of goods sold and ending inventory. Are warehousing costs considered a product cost or a period cost? (b) A certain portion of a company’s “inventory” is composed of obsolete items. Should obsolete items that are not currently consumed in the production of “goods or services to be available for sale” be classified as part of inventory? (c) A company purchases airplanes for sale to others. However, until they are sold, the company charters and services the planes. What is the proper way to report these airplanes in the company’s financial statements? (d) A company wants to buy coal deposits but does not want the financing for the purchase to be reported on its financial statements. The company therefore establishes a trust to acquire the coal deposits. The company agrees to buy the coal over a certain period of time at specified prices. The trust is able to finance the coal purchase and pay off the loan as it is paid by the company for the minerals. How should this transaction be reported?

What are some of the costs of providing accounting information? What are some of the benefits of accounting information? Describe the cost-benefit factors that should

Which of the following are macroeconomic issues, which are microeconomic ones and which could be either depending on the context?                (a)  Inflation.                (b)  Low wages in certain sectors.                (c)  The rate of exchange between the pound and the euro.                (d)  Why the prices of fresh fruit and vegetables fluctuate more than those of cars.                (e)  The rate of economic growth this year compared with last year.                (f)   The decline of traditional manufacturing industries.                (g)  Immigration of workers

List (a) the similarities and (b) the differences in the accounting treatments of depreciation and cost depletion.

How does whole life insurance serve as a form of savings to policyholders? (LO3)

Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation.  Riverbend’s taxable income is $2,100,000 before deducting the dividends-received deduction (DRD) and a $100,000 charitable contribution.

Janelle wants to create an S corporation called J’s Dance Shoes (JDS). Describe how the items below affect her eligibility for an S election. a. Because Janelle wants all her shareholders to have an equal say in the future of JDS, she gives them equal voting rights and decides shareholders who take a more active role in the firm will have priority in terms of distribution and liquidation rights.

The worktable of a numerical control machine tool is driven by a closed-loop positioning system which consists of a servomotor, leadscrew, and optical encoder. The leadscrew has 4 threads/in and is coupled directly to the motor shaft (gear ratio = 1:1). The optical encoder generates 200 pulses per motor revolution. The table has been programmed to move a distance of 7.5 in at a feed rate = 20.0 in/min. (a) How many pulses are received by the control system to verify that the table has moved the programmed distance? What are (b) the pulse rate and (c) motor speed that correspond to the specified feed rate?

Of all of the current rapid prototyping technologies, which one is the most widely used?

Jayhawk Forecasting Services analyzed several factors that could affect interest rates in the future. Most factors were expected to place downward pressure on interest rates. Jayhawk also expected that although the annual budget deficit was to be cut by 40 percent from the previous year, the deficit would still be very large. Because Jayhawk believed that the deficit’s impact would more than offset the effects of other factors, it forecast interest rates to increase by 2 percent. Comment on Jayhawk’s logic. (LO2)

1.              : How would you suggest that Baker modify his leadership style if he wants to succeed Davidson in two years? Be specific.

What is a sensor?