**2.** Tory Company sells a single product. Troy estimates demand and costs at various activity levels as follows:

Units Sold Price Total Variable Costs Fixed Costs

120,000 $48 $3,000,000 $1,000,000

147,500 $45 $3,500,000 $1,000,000

160,000 $40 $4,000,000 $1,000,000

180,000 $35 $4,500,000 $1,000,000

200,000 $30 $5,000,000 $1,000,000

**How much profit will Troy have if a price of $45 is charged?**

**3. **The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.25 above full cost. Management estimates that the variable cost of the globe will be $60 per unit and fixed costs per year will be $240,000.

Assuming sales of 1,200 units, what is the full selling price of a globe with a 0.25 markup?

**4. **PowerDrive, Inc. produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was:

Direct material $625,000

Direct labor 375,000

Variable overhead 125,000

Fixed overhead 1,500,000

Total cost $2,625,000

At the start of the current year, the company received an order for 3,800 drives from a computer company in China. Management of PowerDrive has mixed feelings about the order. On the one hand they welcome the order because they currently have excess capacity. Also, this is the company’s first international order. On the other hand, the company in China is willing to pay only $130 per unit.

**What will be the effect on profit of accepting the order?**

Year Project “Alpha,” $ Project “Beta,” $

1 70,000 40,000

2 32,000 40,000

3 32,000 40,000

4 9,000 40,000

**Assuming that GrowMorc Inc.”s cost of capital for these projects is 10 percent:
**

**b. **Calculate net present values for each project and indicate which one you would undertakeusingthis decision rule.

**c. **Calculate internal rates of return for each project. Which project would you select using the IRR rule?

**d.** Calculate the profitability index for each project and indicate your decision using this rule.

**e.** Can you think of any situations where, because of a change in the cost of capital, you might be confronted with conflicting decisions using the NPV and IRR rules? Show how this might happen.

$321, $286, $290, $330, $310, $250, $270,$ 280,$ 299,$265,$ 291, $275, $281

**For each problem:
**

**2. **Select or note the (alpha) level of significance (for the test)

**3.** Identify [for later Calculation] the test statistic formula (e.g.: z, t)

**4. **Determine the Critical Value and Formulate a Decision Rule based on the critical value

**5.** Derive and Compute The Test Statistic Value

**6. **Make a Decision: Decide to Reject or not Reject the Null Hypothesis

**7. **State the implication(s) to the original exercise scenario.

Accounts receivable 4times

Inventory 8times

Plant and equipment 2times

All $620,000 of the sales will be collectible. However, collection costs will be 3 percent of sales, and production and selling costs will be 73 percent of sales. The cost to carry inventory will be 4 percent of inventory. Depreciation expense on plant and equipment will be 15 percent of plant and equipment. The tax rate is 35 percent.

**a. **Compute the investments in accounts receivable, inventory, and plant and equipment based on the turnover ratios. Add the three together.

**b. **Compute the accounts receivable collection costs and production and selling costs and then add the two figures together.

**c.** Compute the costs of carrying inventory.

**d.** Compute the depreciation expense on new plant and equipment.

**e. **Compute the total of all costs from parts b through d.

**f.** Compute income after taxes.

**g-1.** What is the aftertax rate of return? (Input your answer as a percent rounded to 2 decimal places.)

**g-2. **If the firm has a required return on investment of 12 percent, should it undertake the promotional campaign described throughout this problem?

** b SE**

Intercept -4.61 0.45

Water Temp. 0.51 0.37

Water Depth 12.33 5.13

Predator (0=No, 1=Yes) -8.71 1.56

**a. **Calculate the test statistics for each explanatory variable in the model. Which predictors explain a significant amount of variation in the response variable?

**b. **Write out the full regression equation for predicting the density of bluntnose minnows in this stream.

**c.** Interpret the estimate for Predator in context.

**d.** Predict the bluntnose minnow density in a part of the stream that is 12°C, 2.5 meters deep, and has a predator present. (1pt)

** Computers DVDs Pizzas**

Year Price Quantity Price Quantity Price Quantity

2014 $900 10 $10 100 $15 2

2015 $1,000 10.5 $12 105 $16 2

2016 $1,050 12 $14 110 $17 3

**a.** Calculate the nominal GDP for Utopia for each of the three years.

**b. **What is the percentage change in nominal GDP from 2015 to 2016.

**c. **Calculate the real GDP for Utopia using 2014 prices (2014=base year) for each of the three years.

**d. **What is the percentage change in real GDP from 2015 to 2016.

**e. **Discuss why economists consider real GDP a more accurate measure of growth in the economy?

-You should construct a table like the one below and fill in the blanks to answer the questions.

**Year Nominal GDP Growth rate Real GDP Growth rate
**

2014 —— N/A ——- N/A

2015 —— —— ——- ——-

2016 —— —— ——- ——-

]]>Estimated selling price$49Cost38Estimated selling costs15Normal profit9

There were 1,050 units of product X on hand at December 31, 2017. Product X was incorrectly valued at $38 per unit for reporting purposes. All 1,050 units were sold in 2018.

**Compute the effect of this error on net income for 2017 and the effect on net income for 2018, and indicate the direction of the misstatement for each year.**

**Required:**

What is the intrinsic value (per share) of the company if the market required rate of return is 11.5% p.a?

]]>

Cool Cooking Tools Ltd, manufacturer of gourmet cooking utensils, uses job costing. Manufacturing overhead is applied to production at a predetermined overhead rate of 150 per cent of direct labour cost. Any overapplied or underapplied manufacturing overhead is closed to cost of goods sold at the end of each month. Additional information:

Page 163

Job SR22, consisting of ceramic spoon rests, was the only job in process on 31 January, with accumulated costs as follows:

Direct material $4000

Direct labour 2000

Applied manufacturing overhead 3000

Total $9000

Jobs BS67, TR29 and GT108 were started during February.

Direct materials requisitions during February totalled $26 000.

Direct labour cost of $20 000 was incurred during February.

Manufacturing overhead incurred in February was $32 000.

The only job still in process on 28 February was job number GT108, with costs of $2800 for direct material and $1800 for direct labour.

**Required:
**

**2. **Calculate the amount of overapplied or underapplied overhead to be closed to cost of goods sold on 28 February.

**3.** Prepare journal entries to record the events described in requirements 1 and 2.

Gender of Automobile Buyer ColorMaleFemale Silver459270 Black534287 Red488362

**a. **Choose the competing hypotheses to determine whether color preference depends on gender. H0: Color preference is independent of gender; HA: Color preference is dependent on gender.H0: Color preference is dependent on gender; HA: Color preference is independent of gender.

**b.** Find the critical value at the 10.0% significance level. (Round your answer to 2 decimal places.)

Critical value

**c. **Calculate the value of the test statistic. (Round the intermediate calculations to at least 4 decimal places and final answer to 2 decimal places.)

Test statistic

**d-1. **What is the conclusion? Do not reject H0; there is not enough evidence to support the claim that color preference is not independent.Reject H0; there is not enough evidence to support the claim that color preference is not independent.Do not reject H0; there is enough evidence to support the claim that color preference is not independent.Reject H0; there is enough evidence to support the claim that color preference is not independent.

**d-2. **Does your conclusion suggest that the company should target advertisements differently for males versus females?