Question & Answer

Illustrate the effect of a fall in demand for an imperfectly competitive firm (a) in the presence of menu costs and (b) in the absence of menu costs?

For each of the following, determine the expected cash flows. Cash Flow Probability Estimate Assessment (a) $ 4,800 20% 6,300 50% 7,500 30% (b) $ 5,400 30% 7,200 50% 8,400 20% (c) $(1,000) 10% 3,000 80% 5,000 10%

Suppose you asked your favorite AI learning tool “For purposes of §351, what constitutes property?” and the AI tool responded as follows: Is the AI response correct?  Explain.

A cup-drawing operation is performed in which the inside diameter = 80 mm and the height = 50 mm. The stock thickness = 3.0 mm, and the starting blank diameter = 150 mm. Punch and die radii = 4 mm. Tensile strength = 400 MPa and yield strength = 180 MPa for this sheet metal. Determine (a) drawing ratio, (b) reduction, (c) drawing force, and (d) blankholder force.

What are some of the reasons and defects that make rework an integral step in the PCB fabrication sequence?

According to the injection molding video, name the four types of mold design most common in industry.

1. Assume that you wanted the following information. In which cases could you (i) buy perfect information, (ii) buy imperfect information, (iii) be able to obtain information without paying for it, (iv) not be able to obtain information? (a)  Which washing machine is the most reliable? (b)  Which of two vacant jobs is more satisfying? (c)  Which builder will repair my roof most cheaply? (d)  Which builder is best value for money? (e)  How big a mortgage would it be wise for me to take out? (f)   Should I take a degree or get a full-time job? (g)  What brand of washing powder washes whiter? (h)  Will a house need any work done on it over the next few years? In which cases are there non-monetary costs to you of finding out the information? How can you know whether the information you acquire is accurate or not? 2. Make a list of pieces of information a firm might want to know, and consider whether it could buy the information and how reliable that information might be. 3. What has been the impact of the Internet on the provision of information?

As an illustration of the difficulty in identifying monopolies, try to decide which of the following are monopolies: BT; a local evening newspaper; food sold in a university outlet; a village post office; Interflora; the London Underground; ice creams in the cinema; Guinness; the board game ‘Monopoly’. (As you will quickly realise in each case, it depends how you define the industry.)

Jackie has just opened her copy of the Code for the first time.  She looks at the table of contents and wonders why it is organized the way it is.  She questions whether it makes sense to try and understand the Code’s organization.  What are some reasons why understanding the organization of the Internal Revenue Code may prove useful?

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?

Explain how the value of the dollar affects stock valuations. (LO3)

Presented below is a combined single-step income and retained earnings statement for Nerwin Company for 2014. (000 omitted) Net sales revenue $640,000 Costs and expenses Cost of goods sold $500,000 Selling, general, and administrative expenses 66,000 Other, net 17,000 583,000 Income before income tax 57,000 Income tax 19,400 Net income 37,600 Retained earnings at beginning of period, as previously reported 141,000 Adjustment required for correction of error (7,000) Retained earnings at beginning of period, as restated 134,000 Dividends on common stock (12,200) Retained earnings at end of period $159,400 Additional facts are as follows. 1. “Selling, general, and administrative expenses” for 2014 included a charge of $8,500,000 that was usual but infrequently occurring. 2. “Other, net” for 2014 included an extraordinary item (charge) of $6,000,000. If the extraordinary item (charge) had not occurred, income taxes for 2014 would have been $21,400,000 instead of $19,400,000. 3. “Adjustment required for correction of an error” was a result of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made). 4. Nerwin Company disclosed earnings per common share for net income in the notes to the financial statements. Instructions Determine from these additional facts whether the presentation of the facts in the Nerwin Company income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revised statement.)

Explain the role of the SEC, FINRA, and the stock exchanges in regulating the securities industry. (LO2)

Where can authoritative IFRS be found related to investments?

Parsons Inc. has proposed a change from the completedcontract to the percentage-of-completion method for financial reporting purposes. The auditor indicates that a change would be permitted only if it is to a preferable method. What difficulties develop in assessing preferability?

Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Turbulent Indigo Inc. for the year ended December 31, 2014. (a) Plant assets that had cost $20,000 6 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for $5,300. (b) During the year, 10,000 shares of common stock with a stated value of $10 a share were issued for $43 a share. (c) Uncollectible accounts receivable in the amount of $27,000 were written off against Allowance for Doubtful Accounts. (d) The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of land for $39,000 cash. (e) A 3-month U.S. Treasury bill was purchased for $100,000. The company uses a cash and cash equivalent basis for its cash flow statement. (f) Patent amortization for the year was $20,000. (g) The company exchanged common stock for a 70% interest in Tabasco Co. for $900,000. (h) During the year, treasury stock costing $47,000 was purchased. Instructions State where each item is to be shown in the statement of cash flows, if at all.

Describe a direct placement of bonds. What is an advantage of a private placement? What is a disadvantage? (LO1)

What is so special about the superalloys? What distinguishes them from other alloys?

: Summarize the personal dilemmas and common dysfunctions that may arise when working in teams.

Graber Corporation runs a long-haul trucking business. Graber incurs the following expenses: replacement tires, oil changes, and a transmission overhaul. Which of these expenditures may be deducted currently and which must be capitalized? Explain.

1.      : How accurate is Adam Wainwright’s analysis of the situation at Guitarras Torres? Do you think craftsmanship is incompatible with increasing productivity in this company? Why or why not?

On December 31, 2010, Beckford Company issues 150,000 stockappreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2011; $1 on December 31, 2012; $10 on December 31, 2013; and $9 on December 31, 2014. The service period is 4 years, and the exercise period is 7 years. Instructions (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (b) Prepare the entry at December 31, 2014, to record compensation expense, if any, in 2014. (c) Prepare the entry on December 31, 2014, assuming that all 150,000 SARs are exercised.

Los Lobos Corp. uses the direct method to prepare its statement of cash flows. Los Lobos’s trial balances at December 31, 2014 and 2013, are as follows.December 31 2014 2013 Debits Cash $ 35,000 $ 32,000 Accounts receivable 33,000 30,000 Inventory 31,000 47,000 Property, plant, and equipment 100,000 95,000 Unamortized bond discount 4,500 5,000 Cost of goods sold 250,000 380,000 Selling expenses 141,500 172,000 General and administrative expenses 137,000 151,300 Interest expense 4,300 2,600 Income tax expense 20,400 61,200 $756,700 $976,100 Credits Allowance for doubtful accounts $ 1,300 $ 1,100 Accumulated depreciation—plant assets 16,500 15,000 Accounts payable 25,000 15,500 Income taxes payable 21,000 29,100 Deferred tax liability 5,300 4,600 8% callable bonds payable 45,000 20,000 Common stock 50,000 40,000 Paid-in capital in excess of par 9,100 7,500 Retained earnings 44,700 64,600 Sales revenue 538,800 778,700 $756,700 $976,100 Additional information: 1. Los Lobos purchased $5,000 in equipment during 2014. 2. Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses. 3. Bad debt expense for 2014 was $5,000, and write-offs of uncollectible accounts totaled $4,800. Instructions Determine what amounts Los Lobos should report in its statement of cash flows for the year ended December 31, 2014, for the following items. (a) Cash collected from customers. (d) Cash paid for income taxes. (b) Cash paid to suppliers. (e) Cash paid for selling expenses. (c) Cash paid for interest.

Workman Company purchased a machine on January 2, 2014, for $800,000. The machine has an estimated useful life of 5 years and a salvage value of $100,000. Depreciation was computed by the 150% declining-balance method. What is the amount of accumulated depreciation at the end of December 31, 2015?

Stephanie is 12 years old and often assists neighbors on weekends by babysitting their children. Calculate the 2024 standard deduction Stephanie will claim under the following independent circumstances (assume that Stephanie’s parents will claim her as a dependent). a. Stephanie reported $950 of earnings from her babysitting. b. Stephanie reported $1,500 of earnings from her babysitting. c. Stephanie reported $18,000 of earnings from her babysitting.