Question & Answer

What is a binary vision system?

Developing a reward system and reward targets You are a remuneration consultant. The board of a large multi-national bank has asked you to draft a proposal for a new reward system for senior executives. Currently all senior executives are paid a fixed salary. Your investigations at the entity reveal its mission is to be ‘the number one provider of quality banking services in the southern hemisphere’. You note that the entity has planned for 10 per cent profit growth over the next five years with a corresponding growth in share price. The entity has identified customer satisfaction, product quality and product innovation as the key indicators of success.   The directors are concerned as company profits have been declining. They consider a revised remuneration scheme may motivate senior executives to grow profits and the share price.   Required Prepare a report to the board outlining a new remuneration plan for the executives of the entity.             (LO2, 3 and 4)

A firm under monopoly or oligopoly that aims to maximise sales revenue will tend to produce more than one that aims to maximise profits. Does this conclusion also apply under (a) perfect competition and (b) monopolistic competition, given that there is freedom of entry?

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.

Assume that countries in the eurozone decide to pursue a deflationary fiscal policy. What effect is this likely to have on the UK economy?

Where are gains and losses related to cash flow hedges involving anticipated transactions reported?

Washington Company has the following stockholders’ equity accounts at December 31, 2014. Common Stock ($100 par value, authorized 8,000 shares) $480,000 Retained Earnings 294,000 Instructions (a) Prepare entries in journal form to record the following transactions, which took place during 2015. (1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $20 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $102 per share. (5) 500 shares of outstanding stock were purchased at $105 per share. (6) 350 of the shares purchased in (5) above were resold at $96 per share. (b) Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2015 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

Moana is a single taxpayer who operates a sole proprietorship. She expects her taxable income next year to be $250,000, of which $200,000 is attributed to her sole proprietorship. Moana is contemplating incorporating her sole proprietorship. Using the single individual tax brackets and the corporate tax rate in Appendix C, find out how much current tax this strategy could save Moana (ignore any Social Security, Medicare, or self-employment tax issues). How much income should be left in the corporation?

An extruder barrel has a diameter of 4.0 in and an L/D ratio of 28. The screw channel depth = 0.25 in, and its pitch = 4.8 in. It rotates at 60 rev/min. The viscosity of the polymer melt is 100 x 10- lb-sec/in2 . What head pressure is required to obtain a volume flow rate = 150 in3 /min?-

Chippewas Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2014, to expand its production capacity to meet customers’ demand for its product. Chippewas issues an $800,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The company will pay off the note in five $160,000 installments due at the end of each year over the life of the note. Instructions (Round to nearest dollar in all computations.) (a) Prepare the journal entry(ies) at the date of purchase. (b) Prepare the journal entry(ies) at the end of the first year to record the payment and interest, assuming that the company employs the effective-interest method. (c) Prepare the journal entry(ies) at the end of the second year to record the payment and interest. (d) Assuming that the equipment had a 10-year life and no salvage value, prepare the journal entry necessary to record depreciation in the first year. (Straight-line depreciation is employed.)

The chief accountant for Dickinson Corporation provides you with the following list of accounts receivable written off in the current year. Date Customer Amount March 31 E. L. Masters Company $7,800 June 30 Stephen Crane Associates 6,700 September 30 Amy Lowell’s Dress Shop 7,000 December 31 R. Frost, Inc. 9,830 Dickinson Corporation follows the policy of debiting Bad Debt Expense as accounts are written off. The chief accountant maintains that this procedure is appropriate for financial statement purposes because the Internal Revenue Service will not accept other methods for recognizing bad debts. All of Dickinson Corporation’s sales are on a 30-day credit basis. Sales for the current year total $2,200,000, and research has determined that bad debt losses approximate 2% of sales. Instructions (a) Do you agree or disagree with Dickinson’s policy concerning recognition of bad debt expense? Why or why not? (b) By what amount would net income differ if bad debt expense was computed using the percentageof- sales approach?

Define and distinguish the two terms heat transfer factor and melting factor in welding.

Using the facts in problem 36, if Campbell earns an additional $15,000 of taxable income, what is her marginal tax rate on this income?  What is her marginal rate if, instead, she had $15,000 of additional deductions?

During a recent management meeting at Sunset Consulting Services, a team member questioned why the costing system had multiple indirect cost pools given it would be easier just to have one.  Provide a brief response to explain why the business has adopted multiple indirect costs pools.

1. What would be the ‘first-best’ solution to the problem of an infant industry not being able to compete with imports? 2. Protection to allow the exploitation of monopoly/monopsony power can be seen as a ‘first-best’ policy for the country concerned. Similarly, the use of tariffs to counteract externalities directly involved in the trade process (e.g. the environmental costs of an oil tanker disaster) could be seen to be a first-best policy. Explain why.

Calvin reviewed his canceled checks and receipts this year (2024) for charitable contributions, which included an antique painting and IBM stock. He has owned the IBM stock and the painting since 2005. Calculate Calvin’s charitable contribution deduction and carryover (if any) under the following circumstances. Donee Item Cost FMV Hobbs Medical Center IBM stock $ 5,000 $ 22,000 State Museum antique painting 5,000 3,000 A needy family food and clothes 400 250 United Way Cash 8,000 8,000 a.              Calvin’s AGI is $100,000. b.             Calvin’s AGI is $100,000, but the State Museum told Calvin that it plans to sell the painting. c.              Calvin’s AGI is $50,000. d.             Calvin’s AGI is $100,000 and Hobbs is a nonoperating private foundation. e.              Calvin’s AGI is $100,000, but the painting is worth $10,000.

Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled “Non-cash investing and financing activities.” Give three examples of significant non-cash transactions that would be reported in this schedule.

Stansfield Corporation had the following activities in 2014. 1. Payment of accounts payable $770,000. 4. Collection of note receivable $100,000. 2. Issuance of common stock $250,000. 5. Issuance of bonds payable $510,000. 3. Payment of dividends $350,000. 6. Purchase of treasury stock $46,000. Compute the amount Stansfield should report as net cash provided (used) by financing activities in its 2014 statement of cash flows.

Evaluate grading scheme; professional responsibilities Variance analysis reflects information about actual performance relative to a standard. Variance analysis reports provide managers with information about the performance of employees, from direct labour to supervisors and managers. Grades provide similar information for recruiters who want to hire graduating students. Following is information about Professor Grader’s performance measurement system.   Professor Grader is popular; almost all of his students receive As. This phenomenon is widely attributed to Professor Grader’s superior teaching skills. Grades for this professor’s courses are determined as follows:       A student needs 700 points for an A, 600 points for a B, 500 for a C, and 400 for a D. From the 200 points given for perfect attendance, a student loses 5 points for every class missed (out of 40 class meetings); however, attendance is seldom taken.   If the major assignment paper is 20 pages or longer, 200 points are earned; 10 points are lost for each page less than 20 (thus, a 12-page paper is worth 120 points).   Professor Grader has given the same mid-semester exam for the past 20 years. To reduce the number of exam copies in students’ files, Professor Grader does not return the exams; grades are simply reported to individual students. A student group obtained a copy of the exam 15 years ago. They have chosen not to share the exam with any person not a member of the group; thus Professor Grader usually observes that grades on this exam are nearly normally distributed.   The final exam is a take-home exam that the students have two weeks to complete.   Required (a)     Is it possible to develop a perfect system for measuring student performance in a course? Why? (b)     How much variation is likely in student performance for each of the four graded items? Explain. (c)     Describe the weaknesses in Professor Grader’s grading system as a performance measurement system. (d)     What are Professor Grader’s professional responsibilities to various stakeholders in this situation? (e)     Discuss whether Professor Grader has acted ethically in this situation. Describe the ethical values you use to draw your conclusions. (f)      Is it ethical for students in this situation to access a copy of the prior mid-semester exam or to seek assistance in completing take-home assignments? Does Professor Grader’s system affect the students’ responsibilities? Describe the ethical values you use to draw your conclusions.

Effects of robotic equipment on overhead rates 'Our costs are out of control, our accounting system is screwed up, or both!' screamed the sales manager. 'We are simply non-competitive on a great many of the jobs we bid on. Just last week we lost a customer when a competitor underbid us by 25 per cent! And I bid the job at cost because the customer has been with us for years but has been complaining about our prices.'                                 This problem, raised at the weekly management meeting, has been getting worse over the years. The Johnson Tool Company produces parts for specific customer orders. When the entity first became successful, it employed nearly 500 skilled machinists. Over the years the entity has become increasingly automated and now uses a number of different robotic machines. It currently employs only 75 production workers but output has quadrupled.   The problems raised by the sales manager can be seen in the portions of two bid sheets brought to the meeting (as reproduced). The bids are from the cutting department, but the relative size of these three types of manufacturing costs is similar for other departments.   The cutting department charges overhead to products based on direct labour hours. For the current period, the department expects to use 4000 direct labour hours. Departmental overhead, consisting mostly of depreciation on the robotic equipment, is expected to be $1 480 000.   An employee can typically set up any job on the appropriate equipment in about 15 minutes. Once machines are operating, an employee oversees five to eight machines simultaneously. All that is required is to load or unload materials and monitor calibrations. The department’s robotic machines will log a total of 25 000 hours of run time in the current period.   For bid 74683 the entity was substantially underbid by a competitor. The entity did get the job for bid 74687, but the larger jobs are harder to find. Small jobs arise frequently, but the entity is rarely successful in obtaining them.             Required (a)     Critique the cost allocation method used within the current cost accounting system. (b)     Suggest a better approach for allocating overhead. Allocate costs using your approach and compare the costs of both jobs under the two systems. (c)      Discuss the pros and cons of using job costs to determine the price for a job order.

Assume a free-floating exchange rate. Draw a diagram like Figure 25.6, only this time show an initial equilibrium national income with a balance of payments surplus.          (a)  Mark the size of the surplus.          (b)  Show the resulting shifts in the (X–M) and the E curves.          (c)  Mark the eventual equilibrium.          (d)  Show the size of the income and substitution effects (of the change in the exchange rate).          (e)  Under what circumstances will the income effect be (i) ‘desirable’; (ii) ‘undesirable’?          (f)   Could the income effect of the change in the exchange rate ever be larger than the substitution effect?

Regina Henry deposited $20,000 in a money market certificate that provides interest of 10% compounded quarterly if the amount is maintained for 3 years. How much will Regina Henry have at the end of 3 years?

Clydesdale Corporation has a cumulative temporary difference related to depreciation of $580,000 at December 31, 2014. This difference will reverse as follows: 2015, $42,000; 2016, $244,000; and 2017, $294,000. Enacted tax rates are 34% for 2015 and 2016, and 40% for 2017. Compute the amount Clydesdale should report as a deferred tax liability at December 31, 2014.

What is a partnership interest, and what specific economic rights or entitlements are included with it?

At what company was the Six Sigma quality program first used?