Question & Answer

What is the difference between a shrink fit and expansion fit in assembly?

Distinguish between minimum rental payments and minimum lease payments, and indicate what is included in minimum lease payments.

Some economists argue that recessions generate unemployment ‘scarring’ (i.e. various negative outcomes for the people unemployed and possibly broader society too). What might these scarring effects be and what is likely to be their longer-term impact?

1.    : How might Cody Sexton’s decision differ if he based it on the utilitarian approach versus individualism approach versus practical approach to ethical decision making? Which approach does he appear to be using?

Why might a company choose not to use revaluation accounting?

Glass is classified as a ceramic material; yet glass is different from the traditional and new ceramics. What is the difference?

Behavioural issues associated with reward systems Fitness Forever International sells personal exercise equipment both within Australia and internationally. One division of Fitness Forever produces a product called Absaway, which is a specialised piece of equipment that focuses on exercising the abdominal region. The Absaway is manufactured with both internally sourced and purchased-in components.   The divisional performance report shows that the division made sales of 20 000 units at a price of $100 each. The variable costs were $60 per unit. Fixed costs were $200 000.   Fitness Forever calculates mangers’ bonuses based on profit. The manager of the Absaway division wants to maximize his bonus. To ensure that the divisional margin is reported at its highest possible level, the manager has been producing more units of the Absaway than required based on sales forecasts. Producing more units has the effect of increasing the ending inventory, which, in the income statement, reduces the cost of goods sold (also called cost of sales). This, in turn increases the divisional margin. The extra production of Absaway units has to be stored, thus increasing the need for warehouse space.   Required (a) Comment on the strategy of the manager to produce more units of product than are needed in order boost divisional profits. Is it in the best interest of Fitness Forever? (b) You have been asked to comment on the current reward system at the next board meeting and make recommendations about any changes you think are necessary. What will you say? (LO3, 4 and 5)

A 12-in wafer is processed over a circular area of diameter = 11.75 in. The density of point defects in the surface area is 0.018 defects/in2. The chips to be fabricated are square with an area of 0.16 in2 each. Determine an estimate of the number of good chips using the Bose-Einstein yield computation.

It is possible that as people get richer they will spend a smaller and smaller fraction of each rise in income (and save a larger fraction). Why might this be so? What effect will it have on the shape of the consumption function?

Briefly describe the impairment evaluation process and assessment of receivables on an individual or collective basis.

1.       Do you think it is the responsibility of managers and organizations to help employees increase resilience and manage stress? Why or why not?

Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2014. There are 1,000,000 shares of common stock outstanding as of January 1, 2014, and the cash balance is $400,000. The company has made the following forecasts for the period 2014–2016. 2014 2015 2016 Unit sales (in millions of units) 1.1 1.0 1.3 Sales price per unit $10 $12 $12 Unit purchases (in millions of units) 1.0 1.1 1.2 Purchase price per unit $8 $9 $10 Annual depreciation (in thousands of dollars) $300 $300 $300 Cash dividends per share $0.15 $0.15 $0.15 Cash payments for additions to and replacement of plant and equipment (in thousands of dollars) $350 $350 $350 Income tax rate 40% 40% 40% Operating expenses (exclusive of depreciation) as a percent of sales 15% 15% 15% Common shares outstanding (in millions) 1 1 1 Instructions (a) Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2014–2016. Assume the company would begin LIFO at the beginning of 2014. (1) Year-end inventory balances. (3) Earnings per share. (2) Annual net income after taxes. (4) Cash balance. Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred. (b) Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments.

As compared with the FIFO method of costing inventories, does the LIFO method result in a larger or smaller net income in a period of rising prices? What is the comparative effect on net income in a period of falling prices?

Show the effect of an increase in government expenditure by using (a) the injections and withdrawals diagram; (b) the income/expenditure diagram (see Figures 17.8 and 17.10).

What impact does the financial accelerator have on the marginal propensity to consume domestically produced goods (mpcd)? How does this affect the IS curve?

Using the facts in problem 38, if Jorge and Anita earn an additional $100,000 of taxable income, what is their marginal tax rate on this income?  What is their marginal rate if, instead, they reported an additional $100,000 in deductions?

Could US action to protect its steel industry from foreign competition be justified in terms of the interests of the USA as a whole (as opposed to the steel industry in particular)?

The chairman of the FASB at one time noted that “the flowof standards can only be slowed if (1) producers focus lesson quarterly earnings per share and tax benefits and moreon quality products, and (2) accountants and lawyers relyless on rules and law and more on professional judgmentand conduct.” Explain his comment.

Explain how gains or losses on impaired assets should be reported in income.

Define an organizational ecosystem and show how the general and task environments affect an organization’s ability to thrive.

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

Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows. Income (Loss) Tax Rate 2006 $ 29,000 30% 2007 40,000 30% 2008 17,000 35% 2009 48,000 50% 2010 (150,000) 40% 2011 90,000 40% 2012 30,000 40% 2013 105,000 40% 2014 (60,000) 45% Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized. Instructions (a) What entry(ies) for income taxes should be recorded for 2010? (b) Indicate what the income tax expense portion of the income statement for 2010 should look like. Assume all income (loss) relates to continuing operations. (c) What entry for income taxes should be recorded in 2011? (d) How should the income tax expense section of the income statement for 2011 appear? (e) What entry for income taxes should be recorded in 2014? (f) How should the income tax expense section of the income statement for 2014 appear?

What are the possible disadvantages of vertical mergers?

Compare and contrast the similarities and differences between like-kind exchanges and involuntary conversions for tax purposes.

Indicate how well the percentage-of-sales method and the aging method accomplish the objectives of the allowance method of accounting for bad debts.