Question & Answer

1.              If you were Amara, how would you try to conduct yourself at the oil company? Would you act differently from your normal personality? Do you think your approach would be successful? Why or why not?

Is the eurozone an optimal currency area? Explain your answer.

1.    : If you are the CEO of a global company, how might you determine whether a globalization, multidomestic, or glocalization strategy would work best for your enterprise? What factors would influence your decision?

Tim is a plumber who joined a barter club. This year Tim exchanges plumbing services for a new roof. The roof is properly valued at $2,500, but Tim would have billed only $2,200 for the plumbing services. What amount of income should Tim recognize on the exchange of his services for a roof? Would your answer change if Tim would have normally billed $3,000 for his services?

1.              : What does it mean to be "true to yourself"? Is being true to yourself more important than achieving personal career success in a male-dominated company? Is it okay to enable the continuation of an "unhealthy" work environment for women? Why do you think the way you do about this?

Do you agree that, if some people gain and if no one loses, then this will be an ‘improvement’ in the well-being of society? Does it depend on who gains? Would it be possible for there to be an improvement in the well-being of society without there being a Pareto improvement?

A plastic extrusion process produces round extrudate with a mean diameter = 28.6 mm. The process is in statistical control and the output is normally distributed with standard deviation = 0.53 mm. Determine the process capability.

Value chain in the public sector Traditionally, government organisations have tended to operate in silos, focusing on their own objectives and managing and protecting their own budgets. Recently, however, faced with seemingly intractable economic, social and environmental problems, many government organisations have sought to develop new ways of working. In particular, they have sought to explore how their objectives overlap and depend on other organisations and how they might share information and resources. One example is provided by attempts to reduce crime and enhance public safety in the criminal justice sector.   In New Zealand the Ministry of Justice is the lead agency in the justice sector. The sector includes the New Zealand Police, the Serious Fraud Office, Child Youth and Family, the Department of Corrections and the Crown Law Office.   The organisations in the criminal justice system can be thought of as being involved in a ‘pipeline’ that begins with crime prevention and the investigation of crime and proceeds all the way through to rehabilitation (see the figure below). Looking at the sector as a pipeline, we can see that policies and actions in any part of the system will affect other parts of the system. By working as a coordinated ‘justice sector’, changes can be made that result in the best outcomes for the sector as a whole.   Within this pipeline, the operations within one agency, Public Prisons, can be further analysed to show the links between its key activities and between the department and other organisations in the sector.   Key activities follow this path: • offenders are convicted in the courts • offenders are sentenced and sent to prison • prisoners undergo an initial assessment • the serving of the sentence is planned • the offender’s sentence is managed, including provision of relevant rehabilitation programs • the offender’s release is planned and managed.   Required (a) With reference to the information provided, distinguish between the structural and executional cost drivers in this value chain. (b) Is there an ability for governments to outsource any of these value chain activities?

Use the information for IBM from BE21-6. Assume the direct-financing lease was recorded at a present value of $150,000. Prepare IBM’s December 31, 2014, entry to record interest.

What is a capital good? Provide an example.

Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $20,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $20,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 12 percent on her investments. When should she pay the $20,000 bill—this year or next?

Generally, a selling partner’s capital account carries over to the purchaser of the partnership interest. Under what circumstances will this not be the case?

Assume that the government cuts its expenditure and thereby runs a public-sector surplus. (a)  What will this do initially to equilibrium national income? (b)  What will it do to the demand for money and initially to interest rates? (c)  Under what circumstances will it lead to (i) a decrease in money supply; (ii) no change in money supply? (d)  What effect will (i) and (ii) have on the rate of interest compared with its original level?

In each of the following independent situations, determine the taxpayer’s filing status and the number of dependents the taxpayer is allowed to claim.

If a bank shifts its loan policy to pursue more credit card loans, how will its net interest margin be affected? (LO2)

Using the IS/MP framework illustrate how the financial accelerator affects the extent of the rise in output following a positive demand-side shock.

Bedard Corporation reported net income of $300,000 in 2014 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stock at $10 per share. The average market price of the stock during the year was $15. Compute diluted earnings per share.

Scatter plot; cost function using regression The following scatter plot and simple regression results used revenue as a potential cost driver for research and development costs. Required (a)          Discuss whether the scatter plot suggests that revenue is a cost driver for research and development costs. (b)          Using the regression results, write the cost function for research and development costs. (c)           Based on the regression results, discuss whether it would be appropriate to use total revenue as a cost driver for research and development costs. (d)          If you use the cost function from part (b) to estimate next month’s research and development costs, what assumptions are you making? Identify at least three assumptions and discuss their reasonableness.

1.       : Why do you think workplace stress is skyrocketing? Do you think it is a trend that will continue? Explain the reasons for your answer.

What are some of the common examples of the conversion strategy?

Khamsah Mining Company has purchased a tract of mineral land for $900,000. It is estimated that this tract will yield 120,000 tons of ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 6,000 tons of ore will be mined the first and last year and 12,000 tons every year in between. (Assume 11 years of mining operations.) The land will have a salvage value of $30,000. The company builds necessary structures and sheds on the site at a cost of $36,000. It is estimated that these structures can serve 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $60,000. This machinery cost the former owner $150,000 and was 50% depreciated when purchased. Khamsah Mining estimates that about half of this machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and removal costs will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated equally between these two classes of machinery. Instructions (a) As chief accountant for the company, you are to prepare a schedule showing estimated depletion and depreciation costs for each year of the expected life of the mine. (b) Also compute the depreciation and depletion for the first year assuming actual production of 5,000 tons. Nothing occurred during the year to cause the company engineers to change their estimates of either the mineral resources or the life of the structures and equipment.

Explain why many savings institutions experience financial problems at the same time. (LO3)

Price-cap regulation was abandoned in the gas and electricity industries because the regulator (Ofgem) felt that there was sufficient competition. Consider whether this was a wise decision.

1.       : Stick to your principles and refuse to fudge the numbers. Tell Tessa you will work overtime to help develop an alternate proposal that stays within the budget by providing more training to employees who work directly with customers and fewer training hours for those who don’t have direct customer contact.

What are the carryover and carryback periods for a net operating loss? Does a corporation have the option to choose the years to which it carries back a NOL? Explain.