The partnership agreement of Jones, King, and Lane provides

1. The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business’s profit or loss in the following sequence:

LO 14-6
• Jones, the managing partner, receives a bonus equal to 20 percent of the business’s profit.
• Each partner receives 15 percent interest on average capital investment.
• Any residual profit or loss is divided equally.
The average capital investments for 2015 were as follows:

How much of the $90,000 partnership profit for 2015 should be assigned to each partner?

2. Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2015, capital balances were as follows:
LO 14-4, 14-5, 14-6

Due to a cash shortage, Purkerson invests an additional $8,000 in the business on April 1, 2015.
Each partner is allowed to withdraw $1,000 cash each month.
The partners have used the same method of allocating profits and losses since the business’s inception:

• Each partner is given the following compensation allowance for work done in the business: Purkerson, $18,000; Smith, $25,000; and Traynor, $8,000.
• Each partner is credited with interest equal to 10 percent of the average monthly capital balance for the year without regard for normal drawings.
• Any remaining profit or loss is allocated 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2015 is $23,600. Each partner withdraws the allotted amount each month.
What are the ending capital balances for 2015?

3. On January 1, 2014, the dental partnership of Left, Center, and Right was formed when the partners contributed $20,000, $60,000, and $50,000, respectively. Over the next three years, the business reported net income and (loss) as follows:
LO 14-4, 14-5, 14-6

During this period, each partner withdrew cash of $10,000 per year. Right invested an additional $12,000 in cash on February 9, 2015.
At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:

• Each partner is entitled to interest computed at the rate of 12 percent per year based on the individual capital balances at the beginning of that year.
• Because of prior work experience, Left is entitled to an annual salary allowance of $12,000, and Center is credited with $8,000 per year.
• Any remaining profit will be split as follows: Left, 20 percent; Center, 40 percent; and Right, 40 percent. If a loss remains, the balance will be allocated: Left, 30 percent; Center, 50 percent; and Right, 20 percent.

Determine the ending capital balance for each partner as of the end of each of these three years.

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ACT 5140 Accounting for Decision Makers – Homework 6

ACT 5140 Accounting for Decision Makers – Homework 6

Question 1

Consider the following per unit amounts based upon the monthy capacity of 500,000 units

Category $/Unit Total
Variable Manufacturing Costs 35.00$
Fixed Manufacturing Costs 16.00$ $8,000,000
Variable Selling Costs 20.00$
Fixed Selling Costs 16.00$ $8,000,000
Capacity cannot be added in the short run and the firm currently sells the product for 100.00$ per unit

The company is currently producing 475,000 units per month.
A potential customer has contacted the firm and offered to purchase 50,000 units this month only
The customer is willing to pay 78.00$ per unit
Since the potential customer approached the firm, there will be no variable selling costs incurred.

Should the company accept the special order? Why or why not? Be specific in your answer showing your work in a financial format.
How much money can the company expect to earn (lose) with the additional transaction? Show your work

Part 2 of this question: Which variables are relevant and explain why you find them to be relevant.

Question 2

Consider the following per unit amounts based upon the monthy capacity of 500,000 units

Category $/Unit Total

Variable Manufacturing Costs $ 21.00
Fixed Manufacturing Costs $ 4.00 $2,000,000
Variable Selling Costs $ 5.00
Fixed Selling Costs $ 3.00 $1,500,000

Capacity cannot be added in the short run and the firm currently sells the product for $43.00 per unit

The company is currently producing 480,000 units per month.
A potential customer has contacted the firm and offered to purchase 50,000 units this month only
The customer is willing to pay $ 30.00 per unit

Additional selling costs by the company will not be incurred because the buyer will pick up the order themselves
Should the company accept the special order? Why or why not? Be specific in your answer showing your work in a financial format.
How much money can the company expect to earn (lose) with the additional transaction? Show your work

Question 3

A consulting company performs a “basic” market analysis for a client
The company incurrs cost of $350,000 in performing the analysis and plans to sell the report to the client for $500,000
After reviewing the intial report, the client asks the firm if it is willing to do a more extensive report
The client offers to pay the consulting company a much higher amount of, $750,000 to include the additional work
If the more extensive report the consulting company estimates that incremental costs of $200,000 would be required to do the additional work

Should the consulting company agree to do the more extensive report?
How much money can the company expect to earn (lose) with the additional transaction? Show your work

Question 4

Assume an engineering company provides services for three types of clients.
Each service requires a different amount of a specific form of specialized labor that is in limited supply.
If the company is limited to 16,500 hours of the specialized labor, how many clients of each type
Questions
Should the engineering company accept in order to maximize operating income?

Also show your calculations for the following:
1. List the type of client that should be served first, second and third
2. Number of hours used for the special labor by each client type
3. Number of customers serviced by each client type
4. Contribution margin dollars to be expected by each client type and total
5. Contribution margin dollars to be expected in total

Client Type Job Wholesale Retail
Revenue per client $3,000 $3,500 $5,300
Variable Cost per client $1,000 $1,200 $2,700
Specialized Labor hours required
per client 8 12 13
Maximum clients available 300 500 700

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U.S. wars in Iraq and Afghanistan, political unrest in South America

U.S. wars in Iraq and Afghanistan, political unrest in South America, growing U.S. antipathy  in Iran, and civil wars in Africa have driven crude oil prices up several times in the last several years.  Although oil prices fell significantly in 2011, they are expected to rise again as the world economy recovers. Adding to the uncertainty, it is predicted that natural gas prices, which fell in concert with significant new gas field discoveries, will rise as more and more utilities switch from using coal or oil to natural gas.

Suppose you are the manager of a public utility that supplies electricity to a significant portion of your geographic region. You preside over electrical generation facilities that can produce electricity using either natural gas or oil, or some combination of both.

In the past several years, you have been faced with skyrocketing, then plummeting, natural gas prices, and now think you face the possibility of more of the same, coupled with the probability of similar volatility in oil prices.

Having been trained in Managerial Economics, you are familiar with production functions, isoquant and isocost analysis, and other tools of microeconomics. How can you use these tools to decide the best path for your company to pursue? What are the pros and cons of using these tools?

Provide specific examples of how to go about making the difficult decisions you must make in the near future as well as an overall blueprint of action.

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CJUS 550 Week 5 BIBLICAL WORLDVIEW ASSIGNMENT

CJUS 550 Week 5 BIBLICAL WORLDVIEW ASSIGNMENT INSTRUCTIONS

For the Biblical Worldview Assignment in this course, you are to write a short essay that critically examines the literature review that you submitted in Module/Week 3 and constructively identifies the gaps and omissions in the literature where a biblical worldview should be internalized and expressed in the life of the criminal justice professional. Your paper must be at least 2 pages. For the first page, it is important that you make the distinction of where and on what grounds the literature comes up short as it relates to what the research has for us versus what God has for us. For the second page, you must demonstrate how you might integrate the biblical worldview into the problem you are studying. Organize and format your paper according to current APA style and cite your references as you would in current APA style. If you need more help understanding how to analyze scholastic literature, consult the corresponding section in your APA manual. Your short essay will be due by 11:59 p.m. (ET) on Sunday of Module/Week 5.

Include the following elements in your short essay:

• A page that critically exposes the gaps or omissions in the literature regarding a biblical worldview
• A page that constructively integrates the biblical worldview into the problem you are studying
• Bibliography of the sources you cited in the short essay
Review the Biblical Worldview Grading Rubric to see how this assignment will be evaluated

Here’s the SOLUTION

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You are to evaluate the proposed acquisition of a new machine

You are to evaluate the proposed acquisition of a new machine which can be purchased for 60,000 including shipping, modification and installation costs. The machine falls into the MACRS three year class life (33,45,15,7) and it will be sold after three years for 20,000. Use of the machine will require an increase in net operating working capital of 2000. The machine is expected to increase revenues by 20,000 per year. The firm’s marginal tax rate is 40%

Calculate the free cash flow for year 0

What is the operating cash flow for Year 1?

Operating cash flow for year 2?

Operating cash flow for year 3?

What is the after tax cash flow from the sale of the machine in year 3?

What is the free cash flow for year 3

Calculate the NPV for the project if the required rate of return is 10%

Here’s the SOLUTION

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Consider an exchange economy with two people, A and B, and two goods

Consider an exchange economy with two people, A and B, and two goods, 1 and 2. There are ten units of each good in the economy. In the initial allocation, person A has 4 units of good 1 and 5 units of good 2; person B has 6 units of good 1 and 5 units of good 2. These consumers can trade according to the prices of the two goods, p1 and p2. That is, each agent decides how many units of each good to supply and demand (trade), given the prices.

 (a) Suppose person A’s utility function is UA = x1x2, where xi is A’s consumption of good i ∈ {1, 2}. Compute A’s preferred final allocation (the allocation that A wants to trade to) as a function of the prices.

(b) Suppose person B’s utility function is UB = y1 +y2 where yi is B’s consumption of good i ∈ {1, 2}. Using your answer to part (a), what is the equilibrium price ratio and the equilibrium final allocation?

Here’s the SOLUTION

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Benjamin Corp. is considering expanding into the sports drink business

Benjamin Corp. is considering expanding into the sports drink business with a new product. Assume that you were recently hired as assistant to the director of capital budgeting and you must evaluate the new project.

The sports drink would be produced in an unused building adjacent to Benjamin’s Arizona plant; Benjamin owns the building, which is fully depreciated. The required equipment would cost $750,000, plus an additional $50,000 for shipping and installation. In addition, inventories would increase by $50,000, while accounts payable would increase by $20,000. All of these costs would be incurred today. The equipment will be depreciated by the straight-line method over the life of the project.

The project is expected to operate for 8 years, at which time it will be terminated. The cash inflows are assumed to begin 1 year after the project is undertaken and to continue until the end of the eighth year. At the end of the project’s life, the equipment is expected to have a salvage value of $100,000.

Unit sales are expected to total 1,200,000 units per year, and the expected sales price is $3.50 per unit. Cash operating costs for the project (total operating costs less depreciation) are expected to total 70% of dollar sales. Benjamin’s tax rate is 40%, and its WACC is 15%. Tentatively, the sports drink project is assumed to be of equal risk to Benjamin’s other assets. You have been asked to evaluate the project and to make a recommendation as to whether it should be accepted or rejected.

Required:

Using net present value recommend whether or not Benjamin should purchase the new equipment.

Here’s the SOLUTION

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Jimmy Brown is a manager with Solomon Industries, Inc., (SII)

Read the following employee profiles:

Employee #1

Jimmy Brown is a manager with Solomon Industries, Inc., (SII) a supply company in South Carolina. SII serves as a warehouse for other companies that deliver and store their goods using SII’s facility as temporary storage.  Jimmy was born in 1955 and spent 20 years in the military. Upon retiring, he was hired as a production supervisor for SII. Originally from SC, he is the night shift supervisor working 12 hour shifts from 7:00 pm to 7:00 am Monday through Thursday supervising 12 employees. Jimmy is a traditional Baby Boomer as he grew up in the 60′s, his dad worked, his mom stayed home, and he is the oldest of three children; a brother and a sister 2 and 4 years younger, respectively. Jimmy received his bachelor of arts degree while in the military in chemical engineering. Turnover is pretty high at SII as Jimmy is constantly training new employees. He had the option of moving to the day shift but he worked nights his whole military career and likes this shift so he asked to continue working this shift.  His present staff consists of 1 employee over the age of 50 and the rest of the employees range from 20-40 years of age.

Employee #2

Michael Johnson was born in 1976 in Ohio. He has a technical background graduating in 1997 in computer science and moved to SC in 2010 with his new bride.  Michael’s parents divorced when he was 2 years old and he rarely saw his biological father. His mom worked two jobs almost 7 days a week until she remarried when he was 10. His step dad travelled often with his job and had two daughters from a previous marriage. Their mom died 3 years before he married Michael’s mom.   Michael applied for the Information Technology position but at the last minute the position was closed because the employee decided not to leave the company so Michel took on the responsibility of being the day shift supervisor. He works 7:00 am to 7:00 pm Monday through Thursday with Solomon Industries, Inc., (SII) a supply company in South Carolina. SII serves as a warehouse for other companies that deliver and store their goods using SII’s facility as temporary storage. Turnover is not as high as his night shift counterpart, but still has some turnover.  The company allows tenured employees to move to the shift they desire if positions are available. Michael manages 15 employees, 8 are over the age of 50, 2 are new employees under 21 years old, and the remaining are between 21-50 years of age.

As a manager, you are tasked with creating a 350-word performance management plan for Employee 1 and Employee 2.

Include how your management approach would change to fit the employees needs
Assess the approaches you would use to monitor the behavior of each employee
What are the legal implications?
How would you evaluate the effectiveness of your approach?

Here’s the SOLUTION

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Most publicly traded companies participate in derivative contracts

Derivative Contracts – Most publicly traded companies participate in derivative contracts, also known as arbitrage transactions. Think back to the company you selected in the Week 1 Assignment. Assume that you have been asked by your CFO to prepare an analysis of the company’s derivative contracts presented in the company’s most recent SEC 10-K. Think about the derivative contracts, the risks and benefits presented, and why the company is entering into each contract. Consider how you might go about summarizing the risks and benefits of the derivative contracts.

To prepare:

For the company you selected for the Week 1 Assignment, examine the Item 7 “Management Discussion and Analysis” section of the firm’s SEC 10-K.
Summarize three of the derivative contracts into which the company has entered.
Describe each of the three contracts and consider the risks presented by each.
Weigh the benefits each contract might bring to the company (financial consequence or impact).
Consider why the company is entering into each contract.
Consider whether each of these transactions is related to the company’s business or outside their business.

Estimated: 2- to 3-page analysis of the company’s derivative contracts. Your paper must: Analyze the risks presented by each of the three derivative contracts.

  Explain the financial benefit each contract is meant to bring to the company from the company’s perspective.
Specify whether these derivative contracts relate directly or indirectly to the company’s business.
  Evaluate the risks and benefits of the three derivative contracts for the company (for example, whether you think the risk is worth the price or if better alternatives exist that the company could pursue).

Here’s the SOLUTION

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Markov Corporation owns forests that are harvested with the wood sold

Markov Corporation owns forests that are harvested with the wood sold to papermaking companies. Markov purchases a new tract of forest on January 1, Year One, for $360,000. Company officials estimate that 4,000 tons of wood can be harvested from the forest and sold. After that, the land will be worth about $20,000.

In Year One, 2,500 tons of wood are harvested, and 2,200 are sold for $120 per ton. Make any necessary journal entries.

In Year Two, the remaining 1,500 tons of wood are harvested, and then 1,800 tons are sold for $120 per ton. Make any necessary journal entries.

Here’s the SOLUTION

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