Question & Answer

If the negotiated wage rate were somewhere between W1 and W2, what would happen to employment?

An integrated circuit used in a microprocessor will contain 1000 logic gates. Use Rent's rule with C = 3.8 and m = 0.6 to determine the approximate number of input/output pins required in the package.

Geraldo recently won a lottery and chose to receive $100,000 today instead of an equivalent amount in ten years, computed using an 8 percent rate of return.  Today, he learned that interest rates are expected to increase in the future.  Is this good news for Geraldo given his decision?

The volume of manufacturing in a period has an effect on income calculated using absorption costing but has no effect on income calculated using variable costing. Explain.

The cash method of accounting is generally preferred by taxpayers. Describe two types of businesses that are not allowed to use the cash method.

Potlatch Corporation has issued various types of bonds such as term bonds, income bonds, and debentures. Differentiate between term bonds, mortgage bonds, debenture bonds, income bonds, callable bonds, registered bonds, bearer or coupon bonds, convertible bonds, commodity-backed bonds, and deep discount bonds.

During the credit crisis in the 2008–2009 period, banks were criticized for restricting their credit. Write a short essay to explain why you think banks should or should not be allowed to restrict their credit during a credit crisis.

Reynolds Custom Builders (RCB) was established in 1987 by Avery Conway and initially built high-quality customized homes under contract with specific buyers. In 2002, Conway’s two sons joined the company and expanded RCB’s activities into the high-rise apartment and industrial plant markets. Upon the retirement of RCB’s long-time financial manager, Conway’s sons recently hired Ed Borke as controller for RCB. Borke, a former college friend of Conway’s sons, has been associated with a public accounting firm for the last 6 years. Upon reviewing RCB’s accounting practices, Borke observed that RCB followed the completedcontract method of revenue recognition, a carryover from the years when individual home building was the majority of RCB’s operations. Several years ago, the predominant portion of RCB’s activities shifted to the high-rise and industrial building areas. From land acquisition to the completion of construction, most building contracts cover several years. Under the circumstances, Borke believes that RCB should follow the percentage-of-completion method of accounting. From a typical building contract, Borke developed the  BLUESTEM TRACTOR PLANT Contract price: $8,000,000 2014 2015 2016 Estimated costs $1,600,000 $2,880,000 $1,920,000 Progress billings 1,000,000 2,500,000 4,500,000 Cash collections 800,000 2,300,000 4,900,000 Instructions (a) Explain the difference between completed-contract revenue recognition and percentage-of-completion revenue recognition. (b) Using the data provided for the Bluestem Tractor Plant and assuming the percentage-of-completion method of revenue recognition is used, calculate RCB’s revenue and gross profit for 2014, 2015, and 2016, under each of the following circumstances. (1) Assume that all costs are incurred, all billings to customers are made, and all collections from customers are received within 30 days of billing, as planned. (2) Further assume that, as a result of unforeseen local ordinances and the fact that the building site was in a wetlands area, RCB experienced cost overruns of $800,000 in 2014 to bring the site into compliance with the ordinances and to overcome wetlands barriers to construction. (3) Further assume that, in addition to the cost overruns of $800,000 for this contract incurred under part (b)(2), inflationary factors over and above those anticipated in the development of the original contract cost have caused an additional cost overrun of $850,000 in 2015. It is not anticipated that any cost overruns will occur in 2016.

Should a remuneration plan include a cash bonus or share options?      Under which circumstances would either be appropriate?             (LO3 and 4)

Katie, a single taxpayer, is a shareholder in the S Corporation, Engineers One, a civil engineering company. This year, Katie’s share of net business income from Engineers One is $200,000 (net of the associated for AGI self-employment tax deduction). Assume that Katie’s allocation of wages paid by Engineers One to its employees is $300,000 and her allocation of Engineers One’s qualified property is $150,000 (unadjusted basis of equipment, all purchased within past three years). Assume Katie has no other business income and no capital gains or qualified dividends. Her taxable income before the deduction for qualified business income is $400,000. a. Calculate Katie’s deduction for qualified business income. b. Assume the same facts provided above, except Katie’s net business income from Engineers One is $400,000 (net of the associated for AGI self-employment tax deduction) and taxable income before the deduction for qualified business income is $350,000.

Cruise Industries purchased $10,800 of merchandise on February 1, 2014, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,500 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. Instructions (a) Assuming that Cruise uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (b) Assuming that Cruise uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (c) At what amount would the purchase on February 1 be recorded if the net method were used?

Describe liquid phase sintering

The following are some costs incurred by a sports footwear manufacturer. Assume the manufacturer wants to increase output over a relatively short time period: i.e. in the economic short-run. Decide whether each one of the following is a fixed cost or a variable cost of expanding output in the short run or has some element of both. Clearly explain any assumptions you have made. (a) The cost of synthetic leather and mesh materials. (b) The fee paid to an advertising agency. (c) Wear and tear on machinery. (d) Business rates on the factory. (e) Electricity for heating and lighting. (f) Electricity for running the machines. (g) Basic minimum wages agreed with the union. (h) Overtime pay. (i) Depreciation of machines as a result purely of their age (irrespective of their condition).

What key measures should be included in a sustainability balanced       scorecard?

How do insurance companies manage credit risk and liquidity risk? (LO5)

How do insurance companies finance the real estate market? (LO3)

Identify some of the present and future products associated with nanotechnology.

What is a policy loan? When are policy loans popular? Why? (LO3)

What is NAIC, and what is its purpose? (LO2)

Identify some of the different forms of polymer matrix composite molding compounds

EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $200,000. The redemption represented 20 percent of the corporation’s outstanding stock. The redemption was treated as an exchange by the shareholder. By what amount does EG reduce its E&P as a result of the redemption under the following E&P assumptions?

The U.S. Treasury attempted to resolve the credit crisis by establishing a plan to buy mortgage-backed securities held by financial institutions. Explain how the plan could improve the situation for MBS. (LO5)

Briefly comment on how legislation and societal expectations could influence the scope of sustainability management practice within organisations.

Hyundai is considering opening a plant in two neighboring states. One state has a corporate tax rate of 10 percent. If operated in this state, the plant is expected to generate $1,000,000 pretax profit. The other state has a corporate tax rate of 2 percent. If operated in this state, the plant is expected to generate $930,000 of pretax profit. Which state should Hyundai choose? Why do you think the plant in the state with a lower tax rate would produce a lower before-tax income?

1.      Match each primary value chain activity with its definition. a.       Marketing and sales activities b.      Service activities c.       Operations d.      Outbound logistics   e.       Inbound logistics