Question & Answer

What would be the amount paid out in Figure 3.14 if instead of the government buying the surpluses, export subsidies were given to farmers so as to guarantee them a price (plus subsidy) of Pmin?

Assume the following conditions. The last time the FOMC met, it decided to raise interest rates. At that time economic growth was very strong, so inflation was relatively high. Since the last meeting, economic growth has weakened, and the unemployment rate will likely rise by 1 percentage point over the quarter. The FOMC’s next meeting is tomorrow. Do you think the FOMC will revise its targeted federal funds rate? If so, how? (LO4)

Michael Bolton Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profi t 1320 1,200 $3.20 $3.00 $4.50 $0.35 $1.25 1333 900 2.70 2.30 3.50 0.50 0.50 1426 800 4.50 3.70 5.00 0.40 1.00 1437 1,000 3.60 3.10 3.20 0.25 0.90 1510 700 2.25 2.00 3.25 0.80 0.60 1522 500 3.00 2.70 3.80 0.40 0.50 1573 3,000 1.80 1.60 2.50 0.75 0.50 1626 1,000 4.70 5.20 6.00 0.50 1.00 Instructions From the information above, determine the amount of Bolton Company inventory.

Why is the profit-maximising price under monopoly greater than marginal cost? In what way can this be seen as inefficient?

Compute MV Corp.’s 2024 taxable income given the following information relating to its current-year activities. Also, compute MV’s Schedule M-1 assuming that MV’s federal income tax expense for book purposes is $100,000.   • Gross profit from inventory sales of $500,000 (no book-tax differences). • Dividends MV received from 25 percent-owned corporation of $100,000 (assume this is also MV’s pro rata share of the distributing corporation’s earnings). • Expenses other than DRD, charitable contribution (CC), and net operating loss (NOL) are $350,000 (no book-tax differences). • NOL carryforward from 2023 of $10,000. • Cash charitable contribution of $120,000.

Jimmy has fallen on hard times recently.  Last year he borrowed $250,000 and added an additional $50,000 of his own funds to purchase $300,000 of undeveloped real estate.  This year the value of the real estate dropped dramatically and Jimmy’s lender agreed to reduce the loan amount to $230,000.  For each of the following independent situations, indicate the amount Jimmy must include in gross income and explain your answer: a.       The real estate is worth $175,000 and Jimmy has no other assets or liabilities. b.       The real estate is worth $235,000 and Jimmy has no other assets or liabilities. c.       The real estate is worth $200,000 and Jimmy has $45,000 in other assets but no other liabilities.

Compare and contrast the FICA tax burden of S corporation shareholder-employees and LLC members (assume the LLC is taxed as a partnership) receiving compensation for working for the entity (guaranteed payments) and business income allocations to S corporation shareholders and LLC members assuming the owners are actively involved in the entity’s business activities. How does your analysis change if the owners are not actively involved in the entity’s business activities?

There are 20 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 6.1 Which of the following properties or characteristics are inconsistent with the metals (two correct answers): (a) good thermal conductivity, (b) high strength, (c) high electrical resistivity, (d) high stiffness, and (e) ionic bonding? 6.2 Which one of the metallic elements is the most abundant on the earth: (a) aluminum, (b) copper, (c) iron, (d) magnesium, or (e) silicon? 6.3 The predominant phase in the iron-carbon alloy system for a composition with 99% Fe at room temperature is which one of the following: (a) austenite, (b) cementite, (c) delta, (d) ferrite, or (e) gamma? 6.4 A steel with 1.0% carbon is known as which one of the following: (a) eutectoid, (b) hypoeutectoid, (c) hypereutectoid, or (d) wrought iron? 6.5 The strength and hardness of steel increases as carbon content (a) increases or (b) decreases? 6.6 Plain carbon steels are designated in the AISI code system by which of the following: (a) 01XX, (b) 10XX, (c) 11XX, (d) 12XX, or (e) 30XX? 6.7 Which one of the following elements is the most important alloying ingredient in steel: (a) carbon, (b) chromium, (c) nickel, (d) molybdenum, or (e) vanadium? 6.8 Which one of the following is not a common alloying ingredient in steel: (a) chromium, (b) manganese, (c) nickel, (d) vanadium, (e) zinc? 6.9 Solid solution alloying is the principal strengthening mechanism in high-strength low-alloy (HSLA) steels: (a) true or (b) false? 6.10 Which of the following alloying elements are most commonly associated with stainless steel (two best answers): (a) chromium, (b) manganese, (c) molybdenum, (d) nickel, and (e) tungsten? 6.11 Which of the following is the most important cast iron commercially: (a) ductile cast iron, (b) gray cast iron, (c) malleable iron, or (d) white cast iron? 6.12 Which one of the following metals has the lowest density: (a) aluminum, (b) magnesium, (c) tin, or (d) titanium.? 6.13 Which of the following metals has the highest density: (a) gold, (b) lead, (c) platinum, (d) silver, or (e) tun gsten? 6.14 From which of the following ores is aluminum derived: (a) alumina, (b) bauxite, (c) cementite, (d) hematite, or (e) scheelite? 6.15 Which of the following metals is noted for its good electrical conductivity (one best answer): (a) copper, (b) gold, (c) iron, (d) nickel, or (e) tungsten? 6.16 Traditional brass is an alloy of which of the following metallic elements (two correct answers): (a) aluminum, (b) copper, (c) gold, (d) tin, and (e) zinc? 6.17 Which one of the following metals has the lowest melting point: (a) aluminum, (b) lead, (c) magnesium, (d) tin, or (e) zinc?

Within the area where you live, work, or attend school, name three businesses that would likely use job costing.

Jimmy Carter Company has provided information on intangible assets as follows. A patent was purchased from Gerald Ford Company for $2,000,000 on January 1, 2013. Carter estimated the remaining useful life of the patent to be 10 years. The patent was carried in Ford’s accounting records at a net book value of $2,000,000 when Ford sold it to Carter. During 2014, a franchise was purchased from Ronald Reagan Company for $480,000. In addition, 5%, of revenue from the franchise must be paid to Reagan. Revenue from the franchise for 2014 was $2,500,000. Carter estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year of purchase. Carter incurred research and development costs in 2014 as follows. Materials and equipment $142,000 Personnel 189,000 Indirect costs 102,000 $433,000 Carter estimates that these costs will be recouped by December 31, 2017. The materials and equipment purchased have no alternative uses. On January 1, 2014, because of recent events in the field, Carter estimates that the remaining life of the patent purchased on January 1, 2013, is only 5 years from January 1, 2014. Instructions (a) Prepare a schedule showing the intangibles section of Carter’s balance sheet at December 31, 2014.Show supporting computations in good form. (b) Prepare a schedule showing the income statement effect (related to expenses) for the year endedDecember 31, 2014, as a result of the facts above. Show supporting computations in good form.

For the preceding problem, use the inverse lever rule to determine the proportions of liquid and solid phases present in the alloy.

For the preceding problem, use the inverse lever rule to determine the proportions of liquid and solid phases present in the alloy.

When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax basis) and $12,000 of accounts payable from her cash-method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000. Assume the transfer qualifies under §351.   a. What are the amount and character of the gain Jayne must recognize on the exchange?  b. What is Jayne's basis in the Spotfree stock she received in the exchange?

What are some of the fuels used in oxyfuel cutting?

1.    : Goals that are overly ambitious can discourage employees and decrease motivation, yet the idea of stretch goals is proposed as a way to get people fired up and motivated. As a manager, how might you decide where to draw the line between a “good” stretch goal and a “bad” one that is unrealistic?

Bull and Finch Company wants a fixed-for-floating swap. It expects interest rates to rise far above the fixed rate that it would pay and remain very high until the swap maturity date. Should it consider negotiating for a rate-capped swap with the cap set at 2 percentage points above the fixed rate? Explain. (LO6)

Remuneration plan    (LO2, 4, 5) Matahari Ltd manufactures and installs renewable energy systems. It has four divisions in Australia: Wind, Thermal Solar, Photo Voltaic (PV) and Installation. The company was listed on the Australian Stock Exchange in 2013. The CEO, William Smith, believes that divisional managers should be given a high degree of autonomy and held accountable for the performance of their divisions. He believes that if the divisions prosper then the company and its shareholders will prosper. Before the beginning of each financial year, William reviews performance and then sets a return-on-investment (ROI) target for each division for the coming year. ROI is defined as the operating profit as a percentage of the book-value of the assets employed. Targets are set in consultation with the respective divisional manager with due regard to the prevailing market conditions. William makes sure that the ROI target is challenging but achievable. Over the past 10 years, the ROI targets have tended to increase slightly each year. Key personnel within each division are awarded a performance bonus, if and only if, the ROI of that division exceeds the target. For the past 7 years, Matahari has been using a bonus and incentive scheme to motivate and reward key personnel. The scheme is based on the distribution of a bonus pool. The size of the bonus pool is 10% of Matahari’s residual income for the year and is capped at $1.5 million per year. The bonus pool is distributed to divisions on the basis of  the ROI achieved by each division. If a division does not reach its target, it does not receive a bonus. If a division achieves its target, it receives a bonus score equal to the division’s actual ROI less the division's target ROI, up to a maximum of 5.00 points. The bonus pool is then distributed according to each division’s score relative to the total bonus score. The bonus awarded to a division is then distributed to key personnel as determined by the divisional manager. William is disappointed that Chloe Lee, the manager of the PV Division, has not taken the opportunity to increase her division’s production capacity. The shareholders are supportive and would be happy to finance the expansion. William recalls that divisional managers have been reluctant to submit investment proposals on several occasions in the past. William has also found himself starting to think more about the suitability of the bonus system and underlying performance measures. A member of William’s business network has suggested that Matahari would benefit from the adoption of a balanced scorecard. William gets nervous when people start talking about non-financial measures; he thinks his focus on a small number of key financial measures has worked well to date and aligns with shareholder interests.            Required (a)   For the year ended 30 June 2019, Matahari’s residual income was $13 939 000. The target and actual ROI’s for each division are given in the Table below. Calculate the bonus awarded to each division by completing the Table below.     (b) State two key strengths of the existing bonus plan. (c) Identify one key weakness of the existing bonus plan and suggest a change that would alleviate the weakness.

A sheet metal steel part with surface area = 15.0 in2 is to be chrome plated. What average plating thickness will result if 15 amps are applied for 10 minutes in a chromic acid-sulfate bath?

Dennis contributed business assets to a new business in exchange for stock in the company. The exchange did not qualify as a tax-deferred exchange. The fair market value of these assets was $287,000 on the contribution date. Dennis’s original basis in the assets he contributed was $143,000, and the accumulated depreciation on the assets was $78,000. a. What is the business’s basis in the assets it received from Dennis?  b. What would be the business’s basis if the transaction qualified as a tax-deferred exchange?

] Dontae’s employer has offered him the following employment package. What is Dontae’s gross income from his employment?

Provide an example of an expense associated with the production of tax-exempt income and explain what might happen if Congress repealed the prohibition against deducting expenses incurred to produce tax-exempt income.

Under which of the following circumstances is there likely to be a net gain from trade diversion (refer to Figure 24.14): (a) a small difference between the EU price and the Russian pre-tariff price, and a large difference between the EU price and the Russian price with the tariff, or vice versa; (b) Elastic or inelastic Polish demand and supply curves; (c) The Polish demand and supply curves close together or far apart?

An analyst recently suggested that there will be a major economic expansion that will favorably affect the prices of highrated, fixed-rate bonds because the credit risk of bonds will decline as corporations improve their performance. Assuming that the economic expansion occurs, do you agree with the analyst’s conclusion? Explain. (LO2)

Name some manufacturing processes that produce very poor surface finishes.

Solve Problem 19.12 except that the operation is warm rolling and the strain-hardening exponent is 0.18. Assume the strength coefficient remains at 20,000 lb/in2 .