Question & Answer

1. Draw a diagram with the same two countries and with the same production possibilities and exchange ratio as in Figure 24.5. But this time show how much would be imported and exported for each country if, after trade, the LDC consumes 500 million kilos of wheat. Fill the figures in on a table like Table 24.5. 2. If the opportunity cost ratio of wheat for cloth is 1/2 in the LDC, why is the slope of the production possibility curve 2/1? Is the slope of the production possibility curve always the reciprocal of the opportunity cost ratio? 3. Show (graphically) that, if the (pre-trade) opportunity cost ratios of the two countries were the same, there would be no gain from trade – assuming that the production possibility curves were straight lines and did not shift as a result of trade.

1.            If you were a student interested in pursuing a career in project management how important do you think being a CAPM would be?

Under what circumstances would making a product illegal (a) cause a fall in its price; (b) cause the quantity sold to fall to zero?

A turning operation is carried out on aluminum (100 BHN). Cutting speed = 5.6 m/s, feed = 0.25 mm/rev, and depth of cut = 2.0 mm. The lathe has a mechanical efficiency = 0.85. Based on the specific energy values in Table 21.2, determine (a) the cutting power and (b) gross power in the turning operation, in Watts.

Assume that oil begins to run out and that extraction becomes more expensive. Trace through the effects of this on the market for oil and the market for other fuels.

Rex loves to work with his hands and is very good at making small figurines. Three years ago, Rex opened Bronze Age Miniatures (BAM) for business as a sole proprietorship. BAM produces miniature characters ranging from sci-fi characters (his favorite) to historical characters like George Washington (the most popular). Business has been going very well for him, and he has provided the following information relating to his business. Calculate the business taxable income for BAM assuming that BAM elects to account for their inventory of miniatures.  a) Rex received approval from the IRS to switch from the cash method of accounting to the accrual method of accounting effective January 1 of this year. At the end of last year, BAM reported accounts receivable that had not been included in income under the accrual method of $14,000 and accounts payable that had not been deducted under the accrual method of $5,000. b) In March, BAM sold 5,000 miniature historical figures to History R Us Inc. (HRU), a retailer of historical artifacts and figurines, for $75,000. c) HRU was so impressed with the figurines that it purchased in March that it wanted to contract with BAM to continue to produce the figurines for them for the next three years. HRU paid BAM $216,000 ($12 per figurine) on October 30 of this year to produce 500 figurines per month for 36 months beginning on November 1 of this year. BAM delivered 500 figurines on November 30 and again on December 30. Rex elects to use the deferral method to account for the transaction.  d) Though the sci-fi figurines were not quite as popular, BAM sold 400 figurines at a sci-fi convention in April. Rex accepted cash only and received $11,000 for these sales. e) In January, BAM determined that it would not be able to collect on $2,000 of its beginning-of-the-year receivables, so it wrote off $2,000 of specific receivables. This year BAM sold 100,000 other figurines on credit for $120,000. BAM estimates that it will be unable to collect 5 percent of the sales revenue from these sales, but it has not been able to specifically identify any accounts to write off.  f) Assume that BAM correctly determined that its cost of goods sold using an appropriate inventory method is $54,000 this year.  g) The sci-fi convention in April was held in Chicago, Illinois. Rex attended the convention because he felt it was a good opportunity to gain new customers and to get new ideas for figurines. He paid $350 round-trip airfare, $100 for entrance to the convention, $210 for lodging, $65 for cab fare, and $110 for meals during the trip. He was busy with business activities the entire trip. h) On August 1, BAM purchased a 12-month insurance policy that covers its business property for accidents and casualties through July 31 of next year. The policy cost BAM $3,600. i) BAM reported depreciation expense of $8,200 for this year. j) Rex had previously operated his business out of his garage, but in January he decided to rent a larger space. He entered into a lease agreement on February 1 and paid $14,400 ($1,200 per month) to possess the space for the next 12 months (February of this year through January of next year). k) Before he opened his doors for business, Rex spent $30,000 investigating and otherwise getting ready to do business. He expensed $5,000 immediately and is amortizing the remainder using the straight-line method over 180 months. l) In December, BAM agreed to a 12-month, $8,000 contract with Advertise-With-Us (AWU) to produce a radio ad campaign. BAM paid $3,000 up front (in December of this year), and AWU agreed that BAM would owe the remaining $5,000 only if BAM’s sales increased by 15 percent over the 9-month period after the contract was signed.  m) In November of this year, BAM paid $2,500 in business property taxes (based on asset values) covering the period December 1 through November 30 of next year. In November of last year, BAM paid $1,500 for business property taxes (based on asset values) covering the period December 1 of last year through November 30 of this year. BAM’s business income is $134,053 computed as gross income of $166,250 less deductible business expenses of $32,197 as follows:

1.       : What is an organization’s workflow technology? How do an organization’s strategy and workflow technology influence the type of structure that will be most effective?

What are the relative advantages of the cash and accrual methods of accounting?

1.      : Do you think the complaints of lower-paid sales associates are legitimate? Why or why not? How do you suggest that Lauren respond to these complaints, such as the gripe that the system offers few opportunities for large commissions in some departments?

Assume that there is a fall in aggregate demand (for goods). Trace through the short-run and long-run effect on employment.

Adams Inc. will deposit $30,000 in a 12% fund at the end of each year for 8 years beginning December 31, 2014. What amount will be in the fund immediately after the last deposit?

1.       : What are the characteristics of an open communication climate? Describe the organizational benefits of managers cultivating an open communication climate.

What are some common examples of the timing strategy?

Discuss the behavioural issues that need to be considered when establishing a standard cost.

A stepping motor has 200 step angles. Its output shaft is directly coupled to leadscrew with pitch = 0.250 in. A worktable is driven by the leadscrew. The table must move a distance of 5.00 in from its present position at a travel speed of 20.0 in/min. Determine (a) the number of pulses required to move the table the specified distance and (b) the required motor speed and pulse rate to achieve the specified table speed.

Give some examples of decisions you have taken recently that were made under conditions of uncertainty. With hindsight do you think you made the right decisions?

Normal and abnormal spoilage Franklin Fabrication produces custom-made security doors and gates. Currently two jobs are in process, 359 and 360. During production of Job 359, the supervisor was on holidays and the employees made several errors in cutting the metal pieces for the two doors in the order. The spoiled metal pieces cost $20 each and had zero scrap value. In addition, an order of five gates that had been manufactured for Job 360 required a fine wire mesh that sometimes tore as it was being mounted. Because a similar wire could be used that was much easier to install, the customer had been warned that costs could run over the bid if any difficulty was encountered in installing the wire. One of the gates was spoiled during the process of installing the wire. The cost of the materials and direct labour for the gate was $150. The gate and metal were hauled to the dump and discarded.   Required (a)          Should the spoilage for Job 359 be categorised as normal or abnormal spoilage? Explain. (b)          Should the spoilage for Job 360 be categorised as normal or abnormal spoilage? Explain. (c)           Prepare spoilage journal entries for both jobs.

What are the three alternative accounting methods available to a seller that is exposed to continued risks of ownership through return of the product?

Which of the following are positive statements and which are normative? (a)  Cutting the higher rates of income tax will redistribute incomes from the poor to the rich. (b)  It is wrong that inflation should be reduced if this means that there will be higher unemployment. (c)  It is incorrect to state that putting up interest rates will reduce inflation. (d)  The government should introduce road pricing to address the issue of congestion. (e)  Current government policies should be aimed at reducing the deficit rather than stimulating growth.

Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September. Sept. 1 Kawabata begins practice as a dentist and invests $20,000 cash. 2 Purchases dental equipment on account from Green Jacket Co. for $17,280. 4 Pays rent for office space, $680 for the month. 4 Employs a receptionist, Michael Bradley. 5 Purchases dental supplies for cash, $942. 8 Receives cash of $1,690 from patients for services performed. 10 Pays miscellaneous office expenses, $430. 14 Bills patients $5,820 for services performed. 18 Pays Green Jacket Co. on account, $3,600. 19 Withdraws $3,000 cash from the business for personal use. 20 Receives $980 from patients on account. 25 Bills patients $2,110 for services performed. 30 Pays the following expenses in cash: Salaries and wages $1,800; miscellaneous office expenses $85. 30 Dental supplies used during September, $330. Instructions (a) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Owner’s Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account. (b) Prepare a trial balance. (c) Prepare an income statement, a statement of owner’s equity, and an unclassified balance sheet. (d) Close the ledger. (e) Prepare a post-closing trial balance.

Given your knowledge of how interest rates are influenced by various factors reflecting the demand for funds and the supply of funds available in the credit markets, write a short essay to explain how and why interest rates will change over the next three months.

There are 23 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 on the quiz is based on the total number of correct answers 30.1 The feature that distinguishes fusion welding from solid-state welding is that melting of the faying surfaces occurs during fusion welding but not in solid-state welding: (a) true or (b) false? 30.2 Which of the following processes are classified as fusion welding (three correct answers): (a) electrogas welding, (b) electron-beam welding, (c) explosion welding, (d) forge welding, (e) laserbeam welding, and (f) ultrasonic welding? 30.3 Which of the following processes are classified as fusion welding (two correct answers): (a) diffusion welding, (b) friction welding, (c) pressure gas welding, (d) resistance welding, and (e) roll welding? 30.4 Which of the following processes are classified as solid-state welding (three correct answers): (a) diffusion welding, (b) friction stir welding, (c) resistance spot welding, (d) roll welding, (e) thermit welding, and (f) upset welding? 30.5 An electric arc is a discharge of current across a gap in an electrical circuit. The arc is sustained in arc welding processes by the transfer of molten metal across the gap between the electrode and the work: (a) true or (b) false? 30.6 Which one of the following arc welding processes uses a nonconsumable electrode: (a) FCAW, (b) GMAW, (c) GTAW, or (d) SMAW? 30.7 MIG welding is a term sometimes applied when referring to which one of the following processes: (a) FCAW, (b) GMAW, (c) GTAW, or (d) SMAW? 30.8 \"Stick\" welding is a term sometimes applied when referring to which one of the following processes: (a) FCAW, (b) GMAW, (c) GTAW, or (d) SMAW? 30.9 Which one of the following AW processes uses an electrode consisting of continuous consumable tubing containing flux and other ingredients in its core: (a) FCAW, (b) GMAW, (c) GTAW, or (d) SMAW? 30.10 Which one of the following arc-welding processes produces the highest temperatures: (a) CAW, (b) PAW, (c) SAW, or (a) TIG welding? 30.11 Resistance-welding processes make use of the heat generated by electrical resistance to achieve fusion of the two parts to be joined; no pressure is used in these processes, and no filler metal is added: (a) true or (b) false? 30.12 Metals that are easiest to weld in resistance welding are ones that have low resistivities since low resistivity assists in the flow of electrical current: (a) true or (b) false? 30.13 Oxyacetylene welding is the most widely used oxyfuel welding process because acetylene mixed with an equal volume of oxygen burns hotter than any other commercially available fuel: (a) true or (b) false? 30.14 The term \"laser\" stands for \"light actuated system for effective reflection\": (a) true or (b) false? 30.15 Which of the following solid-state welding processes applies heat from an external source (two best answers): (a) diffusion welding, (b) forge welding, (c) friction welding, and (d) ultrasonic welding? 30.16 The term weldability takes into account not only the ease with which a welding operation can be performed, but also the quality of the resulting weld: (a) true or (b) false? 30.17 Copper is a relatively easy metal to weld because its thermal conductivity is high: (a) true or (b) false?

Cartman Corporation owns 90 shares of SP Corporation. The remaining 10 shares are owned by Kenny (an individual). After several years of operations, Cartman decided to liquidate SP Corporation by distributing the assets to Cartman and Kenny. The tax basis of Cartman’s shares is $10,000, and the tax basis of Kenny’s shares is $7,000.  SP reported the following balance sheet at the date of liquidation:

Why is depreciation recapture not required when assets are sold at a loss?

Kamal contributed $10,000 in cash and a capital asset he had held for three years with a fair market value of $20,000 and tax basis of $10,000 for a 5 percent capital and profits interest in Green Valley LLC. a. If Kamal sells his LLC interest 13 months later for $30,000 when the tax basis in his partnership interest is still $20,000, how much gain does he report, and what is its character? b. If Kamal sells his LLC interest two months later for $30,000 when the tax basis in his partnership interest is still $20,000, how much gain does he report, and what is its character? [Hint: See Reg. §1.1223-3.]