Question & Answer

Explain how banks become exposed to exchange rate risk. (LO7)

Describe the implementation process for the balanced scorecard.           (LO4)

ROI; residual income; explaining the better measure The following financial data are for the evaluation of performance for Sandy Point Construction:       Sandy Point Construction currently uses return on investment to evaluate investment centre managers. An accounting intern from the local university suggested to the controller that residual income may be a better performance measure.   Required (a)     Calculate ROI for Sandy Point Construction. (b)     Calculate residual income for Sandy Point Construction. (c)     Write a brief memo to the controller explaining why residual income is a better performance measure.

The state of Georgia recently increased its tax on a pack of cigarettes by $2.00.  What type of tax is this?  Why might Georgia choose this type of tax?

Since 2008, the UK government has provided free off-peak bus travel for the over-60s in England and Wales. What do you think the impact of this policy has been on car usage? Is there a case for extending the policy to (a) bus travel for pensioners at all times of the day, as is the case in Scotland (b) bus travel for all?

Are taxpayers required to include all realized income in gross income? Explain.

P.1 What is a polymer? P.2 What are the three basic categories of polymers?

The designer has specified that a 3/8-16 UNC low-carbon bolt (3/8 in nominal diameter, 16 threads/in) in a certain application should be stressed to its proof stress of 33,000 lb/in2 (see Table 32.2). Determine the maximum torque that should be used if C = 0.25.

Behaviour effect of share options Assume you are a senior manager at a publicly listed company. Under the company’s longer-term incentive plan you have recently received a parcel of share options. These share options can only be exercised (converted to shares) after three years.   Required How might this incentive affect your behaviour and decision making?             (LO3)

For each of the following independent situations, indicate the amount the taxpayer must include in gross income and explain your answer: a.       Phil won $500 in the scratch-off state lottery.  There is no state income tax. b.       Ted won a compact car worth $17,000 in a TV game show.  Ted plans to sell the car next year. c.       Al Bore won the Nobel Peace Prize of $500,000 this year.  Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization. d.       Jerry was awarded $2,500 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year. e.       Ellen won a $1,000 cash prize in a school essay contest.  The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education. f.       Gene won $400 in the office March Madness pool.

Assume the facts in E13-5 except that Matt Broderick Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time. Year in Which Vacation Projected Future Pay Rates Time Was Earned Used to Accrue Vacation Pay 2013 $10.75 2014 11.60 Instructions (a) Prepare journal entries to record transactions related to compensated absences during 2013 and 2014. (b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2013, and 2014.

There are 17 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 21.1 Which of the following manufacturing processes are classified as material removal processes (two correct answers): (a) casting, (b) drawing, (c) extrusion, (d) forging, (e) grinding, (f) machining, (g) molding, (h) pressworking, and (i) spinning? 21.2 A lathe is used to perform which one of the following manufacturing operations: (a) broaching, (b) drilling, (c) lapping, (d) milling, or (e) turning? 21.3 With which one of the following geometric forms is the drilling operation most closely associated: (a) external cylinder, (b) flat plane, (c) round hole, (d) screw threads, or (e) sphere? 21.4 If the cutting conditions in a turning operation are cutting speed = 300 ft/min, feed = 0.010 in/rev, and depth of cut = 0.100 inch, which one of the following is the material removal rate: (a) 0.025 in3 /min, (b) 0.3 in3 /min, (c) 3.0 in3 /min, or (d) 3.6 in3 /min? 21.5 A roughing operation generally involves which one of the following combinations of cutting conditions: (a) high v, f, and d; (b) high v, low f and d; (c) low v, high f and d; or (d) low v, f, and d, where v = cutting speed, f = feed, and d = depth? 21.6 Which of the following are characteristics of the orthogonal cutting model (three best answers): (a) a circular cutting edge is used, (b) a multiple-cutting-edge tool is used, (c) a single-point tool is used, (d) only two dimensions play an active role in the analysis, (e) the cutting edge is parallel to the direction of cutting speed, (f) the cutting edge is perpendicular to the direction of cutting speed, and (g) the two elements of tool geometry are rake and relief angle? 21.7 The chip thickness ratio is which one of the following: (a) tc/to, (b) to/tc, (c) f/d, or (d) to/w, where tc = chip thickness after the cut, to = chip thickness before the cut, f = feed, d = depth, and w = width of cut? 21.8 Which one of the four types of chip would be expected in a turning operation conducted at low cutting speed on a brittle work material: (a) continuous, (b) continuous with built-up edge, (c) discontinuous, or (d) serrated? 21.9 According to the Merchant equation, an increase in rake angle would have which of the following results, all other factors remaining the same (two best answers): (a) decrease in friction angle, (b) decrease in power requirements, (c) decrease in shear plane angle, (d) increase in cutting temperature, and (e) increase in shear plane angle? 21.10 In using the orthogonal cutting model to approximate a turning operation, the chip thickness before the cut to corresponds to which one of the following cutting conditions in turning: (a) depth of cut d, (b) feed f, or (c) speed v? 21.11 Which one of the following metals would usually have the lowest unit horsepower in a machining operation: (a) aluminum, (b) brass, (c) cast iron, or (d) steel? 21.12 For which one of the following values of chip thickness before the cut to would you expect the specific energy in machining to be the greatest: (a) 0.010 inch, (b) 0.025 inch, (c) 0.12 mm, or (d) 0.50 mm? 21.13 Which of the following cutting conditions has the strongest effect on cutting temperature: (a) feed or (b) speed?

Write a short essay explaining how financial futures might reduce systemic risk and how financial futures might increase systemic risk within financial markets.

What would the isoquant map look like if there were (a) continuously increasing returns to scale; (b) continuously decreasing returns to scale?

What is the feature that distinguishes glass from the traditional and new ceramics?

Why is it necessary to develop a definitional framework for the basic elements of accounting?

Name some products that are produced by extrusion.

Michaels Company had available at the end of 2014 the information shown on the next page. MICHAELS COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2014 AND 2013 2014 2013 Cash $ 10,000 $ 4,000 Accounts receivable 20,500 12,950 Short-term investments 22,000 30,000 Inventory 42,000 35,000 Prepaid rent 3,000 12,000 Prepaid insurance 2,100 900 Supplies 1,000 750 Land 125,000 175,000 Buildings 350,000 350,000 Accumulated depreciation—buildings (105,000) (87,500) Equipment 525,000 400,000 Accumulated depreciation—equipment (130,000) (112,000) Patents 45,000 50,000 Total assets $910,600 $871,100 Accounts payable $ 22,000 $ 32,000 Income taxes payable 5,000 4,000 Salaries and wages payable 5,000 3,000 Short-term notes payable 10,000 10,000 Long-term notes payable 60,000 70,000 Bonds payable 400,000 400,000 Premium on bonds payable 20,303 25,853 Common stock 240,000 220,000 Paid-in capital in excess of par—common stock 25,000 17,500 Retained earnings 123,297 88,747 Total liabilities and stockholders’ equity $910,600 $871,100 MICHAELS COMPANY INCOME STATEMENT AND DIVIDEND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2014 Sales revenue $1,160,000 Cost of goods sold 748,000 Gross margin 412,000 Operating expenses Selling expenses $ 79,200 Administrative expenses 156,700 Depreciation/Amortization expense 40,500 Total operating expenses 276,400 Income from operations 135,600 Other revenues/expenses Gain on sale of land 8,000 Gain on sale of short-term investment 4,000 Dividend revenue 2,400 Interest expense (51,750) (37,350) Income before taxes 98,250 Income tax expense 39,400 Net income 58,850 Dividends to common stockholders (24,300) To retained earnings $ 34,550 Instructions Prepare a statement of cash flows for Michaels Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are classified as available-for-sale.

1.      : Recommend strongly to the president that Tacoma pay the bonuses as promised. The legal contracts and financial situation don’t matter. Be prepared to resign if the bonuses are not paid as you promised. Your word and a motivated sales team mean everything to you.

Assume the bonds in BE14-2 were issued at 98. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually.

Sesame Company purchased a computer system for $74,000 on January 1, 2013. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2015, Sesame revised these estimates to a total useful life of 4 years and a salvage value of $10,000. Prepare Sesame’s entry to record 2015 depreciation expense.

On August 1 of year 0, Dirksen purchased a machine for $20,000 to use in its business. On December 4 of year 0, Dirksen sold the machine for $18,000. a. What are the amount and character of the gain or loss Dirksen will recognize on the sale?  b. Dirksen depreciated the machinery using MACRS (seven-year recovery period). What are the amount and character of the gain or loss Dirksen will recognize on the sale if the machine was sold on January 15 of year 1 instead?

Explain how the Financial Reform Act of 2010 applies to hedge funds. (LO4)

High-speed machining (HSM) is being considered to produce the aluminum part in Problem 22.15. All cutting conditions remain the same except for the cutting speed and the type of insert used in the cutter. Assume the cutting speed will be at the limit given in Table 22.1. Determine (a) the new time to machine the part and (b) the new metal removal rate. (c) Is this part a good candidate for high-speed machining? Explain.

Rayburn Corporation has a building that it bought during year 0 for $850,000. It sold the building in year 5. During the time it held the building, Rayburn depreciated it by $100,000. What are the amount and character of the gain or loss Rayburn will recognize on the sale in each of the following alternative situations?    a. Rayburn receives $840,000.  b. Rayburn receives $900,000. c. Rayburn receives $700,000.