1. HC3152e Business Applications

   Tutorial 4 (Week 5)

   E-Environment

   Read the following Case The implications of globalisation for consumer attitudes

   The article starts by discussing anti-globalisation. It then explores the implications of variations in the characteristics of different cultures on businesses providing services to them. At the end of the article, research about attitudes to globalisation is summarised, along with its implications for businesses trading internationally.

   Globalisation, or maybe more specifically, anti‐ globalisation issues, are never far from the headlines, whether it’s coverage of the latest anti‐WTO demonstration or news that McDonald’s has replaced Ronald McDonald in France with Asterix-in a move to ‘appease anti‐globalisation protesters’.

   But what does globalisation actually mean? Stemming from the application of free market principles it has manifested the belief that the world is small and that consumers are becoming more and more alike, thus allowing companies to use the same advertising and marketing across regions and countries. Such a doctrine has enabled companies to act global and think global, much to the distaste of the anti‐globalisation lobbies. Indeed, in 1985 it was Friends of the Earth that coined the slogan ‘think global, act local’ in its desire to counter such global forces – particularly with regard to environmental issues.

   However, such ‘glocalisation’ [global localisation] makes a lot of sense for multinational companies operating today and planning new market entry, for a number of reasons. Firstly, the term globalisation for many Europeans is virtually synonymous with that of ‘Americanisation’. For some this has negative con‐ notations of materialism, loss of native culture and the encroachment of the English language. At its extreme, it drives many of the anti‐globalisation activists. Thus there is real risk that companies will damage their brand and reputation if they don’t recognise the importance of localisation when considering market entry.

   Secondly, consumers are as different as they are similar – local and regional cultures have a profound effect in shaping consumer demand. These difference are potentially more interesting than the similarities, in that they can allow product and service differentiation as well as new approaches to segmentation and marketing communications. To take advantage of such opportunities, businesses have to have a clear insight into how and why consumers in one market may differ from ones in another.

   Feelings of anti‐Americanisation are a strong under‐ current in Europe. Businesses have to plan how to counter such a groundswell of feeling if planning on entering new markets – given that some 50% of Europeans believe that ‘our society is too Americanised’ and such an attitude has increased over the past 10 years. While the degree of agreement varies within Europe (e.g. 67% of Spaniards agreeing with the statement, as compared with 44% of Brits), it is a significant influence of customer behaviour. To compound matters, multinational companies are the least trusted of 27 entities when European consumers have been asked to state which they trust to be honest and fair.

   As a result, not only have we seen an increase in consumer activism (such as anti‐WTO protests, growth of the slow food movement in Europe etc.), but also we have seen global brands coming under threat from emergent local brands which are gaining in currency. We would expect this to continue. This is not to say that there is no room for global brands! Many global brands have successfully tapped into local culture and tastes and recognised the need to either modify the product/ service completely or change different elements of the offer and how it is ultimately marketed. Thus companies expanding into new geographic markets have to ensure that their strategies are based on a real understanding of regional and local markets.

   Globalisation is not making the world a smaller, homogeneous place. While this presents many opportunities for businesses, it also implies a need for a clear understanding of what shapes consumer needs and desires in the different nations. Not surprising perhaps that many businesses found the notion of a ‘globalised’ world compelling, given the significant implications for researching a multitude of different markets in terms of time and money budgets. Similarly, it is easy to under‐ stand the temptation of taking well‐established national stereotypes and assuming that they are representative of the truth.

   Recent attitudinal studies in Europe and the US undertaken by the Henley Centre show the complexity of attempting to categorise consumers on a broad scale. Let’s take an example. At one level, results show that all consumers take pride in their family, so a global advertising campaign using the ‘family’ as a theme may feel like safe territory. To some extent it is. Dig down a bit deeper, however, and you find that different people define ‘family’ in very different ways, so what people take pride in will be subtly different. At a country level, many more differences expose themselves.

   Businesses wanting to broaden their geographic reach have to consider at a strategic level what level of understanding of consumer needs they require. Generalisations are important and are a good place to start, but it is critical to then delve further – national stereotypes are too simplistic. Differences, rather than similarities, have to be considered, and interrogated in terms of how these will impact customer needs.

   Source: The Henley Centre.

   Tutorial Questions - Debate in classes

2. Based on this article and your experiences, debate the statement: ‘Site localisation is essential for each country for an e‐commerce offering to be successful in that country? please answer this question

What is use and purpose of financial analysis?

Colper Grant is the president of Acme Brush of Brazil, the whole owned Braziliain Subsidiary of US based Acme Brush Inc. Cooper Grant's compensation package consists of a combination of salary and bonus. His annual bonus is calculated as a predetermined percentage of the pre-tax annual income earned by Acme Brush of Brazil. A condensed income statement for Acme Brush of Brazil for the most recent year is as follows (amounts in thousands of Brazilian reals (BRL)): BRL Sales 10,000 Expenses 9,500 Pre-tax income 500 After translating the Brazilian real income statement to the US dollars, the condensed income statement for Acme Brush of Brazil appears as follows (amounts in thousand of US Dollars (USD): Sales 3,000 Expenses 3,300 Pre-tax loss -300 A. Explain how Acme Brush of Brazil's pre-tax income in BRL becamea US dollar pretax loss. In order to receive the full credit, you are required to show all steps in calculation. B. Discuss whether Cooper Grant should be paid a bonus or not...... please dont forget to clearly show the steps.. thanks:)

Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company’s cost of capital is 5%. Option A Option B Initial cost $196,000 $291,000 Annual cash inflows $72,500 $82,500 Annual cash outflows $28,000 $25,600 Cost to rebuild (end of year 4) $49,100 $0 Salvage value $0 $8,500 Estimated useful life 7 years 7 years Click here to view PV table. Collapse question part (a) Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option. (Hint: To solve for internal rate of return, experiment with alternative discount rates to arrive at a net present value of zero.) (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answers for present value and IRR to 0 decimal places, e.g. 125 and round profitability index to 2 decimal places, e.g. 12.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net Present Value Profitability Index Internal Rate of Return Option A $ % Option B $ %

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 922,000 $ 266,000 $ 404,000 $ 252,000 Variable manufacturing and selling expenses 473,000 118,000 196,000 159,000 Contribution margin 449,000 148,000 208,000 93,000 Fixed expenses: Advertising, traceable 69,900 8,800 40,400 20,700 Depreciation of special equipment 43,500 20,500 7,800 15,200 Salaries of product-line managers 114,500 40,500 38,700 35,300 Allocated common fixed expenses* 184,400 53,200 80,800 50,400 Total fixed expenses 412,300 123,000 167,700 121,600 Net operating income (loss) $ 36,700 $ 25,000 $ 40,300 $ (28,600) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $43,000. The machine has an estimated life of five years and an estimated salvage value of $6,700.

Required:

a-1. Calculate the depreciation expense for each year of the asset's life using Straight-line depreciation.

a-2. Calculate the depreciation expense for each year of the asset's life using Double-declining-balance depreciation.

b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2016, under each method? (Note: The machine will have been used for one-half of its first year of life.)

c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2017, under each method.

You are interested in establishing a small business. Write a paper between 1,000 and 1,500 words discussing your small-business idea. Include the following:

1. Discuss your business and the product or service your small business provides.

2. Identify which accounting method (i.e. cash versus accrual) you plan to use for your business. Why did you select this choice?

3. List six business transactions you expect to incur with your company. State which accounts (from your chart of accounts) are impacted.

4. Discuss how each business transaction (see point 3) impacts your income statement, balance sheet and statement of cash flow.

5. Select one organization type (sole proprietorship, partnership, C-corporation, and S-corporation) for your company and explain why you selected this option.

Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 27,900 yards of fabric costing $3.05 per yard and incurring direct labor costs of $17,496 for 3,240 hours of direct labor. The standard cost per pillowcase assumes 1.75 yards of fabric at $3.10 per yard, and 0.20 hours of direct labor at $5.95 per hour.

a. Compute both the price variance and quantity variance relating to direct materials used in the manufacture of pillowcases in May.

b. Compute both the rate variance and efficiency variance for direct labor costs incurred in manufacturing pillowcases in May.

(For all requirements, Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

a. Materials price variance     1395.00    Favorable

Materials quantity variance    _______     Unfavorable

b. Labor rate variance           ________ Favorable

Labor efficiency variance      ________ Unfavorable

Pick a Canadian company listed on the Toronto Stock Exchange and find a revenue stream that you can apply the concepts of revenue recognition to the company chosen.

On December 31, year 0, your company issued a 3-year $80,000 bond with 4% coupons payable annually. Proceeds were $78,900. On January 1, year 3, your company repurchased all of the outstanding 4% bonds. Provide the financial statement amounts under each scenario market discount rate applied to the bond at January 1, year 3.

Provide an example of a group that you have worked as part of (in school or work) that you felt succeeded. Why do you feel that was?

Provide an example of a group that you have worked as part of (in school or work) that you felt was not successful, either in its mission or for you personally. Provide details.

Write two well developed paragraphs of 150-200 words in response to these prompts by Wednesday. Respond to at least one other student's response by Sunday.

Exercise 8-10 (Part Level Submission) Inventory information for Part 311 of Tamarisk Corp. discloses the following information for the month of June. June 1 Balance 302 units @ $15 June 10 Sold 197 units @ $36 11 Purchased 795 units @ $18 15 Sold 499 units @ $38 20 Purchased 499 units @ $20 27 Sold 296 units @ $41 Collapse question part (a) Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Problem 7-72BExpenditures After Acquisition

Objective 3Understand the concept of depreciation.

4Compute depreciation expense using various depreciation methods.

5Distinguish between capital and revenue expenditures.

Murray’s Fish Market, a store that specializes in providing fresh fish to the Nashville, Tennessee, area, installed a new refrigeration unit in January 2018 at a cost of $27,500. The refrigeration unit has an expected life of 8 years and a residual value of $500 when installed. As the fish market’s business increased, it became apparent that renovations were necessary so that the capacity of the refrigeration unit could be increased. In January 2020, Murray’s spent $18,785 to install an additional refrigerated display unit (that was connected to the original unit) and replace the refrigeration coils. After this addition and renovation, Murray’s Fish Market estimated that the remaining useful life of the original refrigeration unit was 12 years and that the residual value was now $1,000.

Required:

1. Compute 1 year’s straight-line depreciation expense on the refrigeration unit before the addition and renovations.

2. Assume that 2 full years of straight-line depreciation expense were recorded on the refrigeration unit before the addition and renovations were made. Compute the book value of the refrigeration unit immediately after the renovations were made.

   Answer

3. Compute 1 year’s straight-line depreciation expense on the renovated refrigeration unit. Round your answer to the nearest dollar.

   Answer

Problem 7-74BDisposition of Operating Assets

Objective 7Describe the process of recording the disposal of a fixed asset.

Salva Pest Control disposed of four assets recently. Salva’s accounting records provided the following information about the assets at the time of their disposal:

The truck was sold for $2,450 cash, and the chemical testing apparatus was donated to the local high school. Because the pump was contaminated with pesticides, $500 in cash was paid to a chemical disposal company to decontaminate the pump and dispose of it safely. The furniture was taken to the local landfill.

Required:

1. Prepare a separate journal entry to record the disposition of each of these assets.

   Answer

2. CONCEPTUAL CONNECTION Explain how the disposals of the fixed assets would affect the current period financial statements.

Bruins Inc. has the following items in their current balance sheet:
Common Stock 10,000,000 shares authorized, $1,000,000 issued - $3,000,000
Capital Surplus - $9,000,000
Treasury Stock on Common   100,000 shares - $6,000,000
Cumulative Preferred Stock 500,000 authorized
[2%]  $100 par - $8,000,000
Treasury Stock on Preferred Stock 10000 shares - $6,000,000
Retained Earnings - $60,000,000

1. If Bruins Inc. were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders?
2. Assume in question [6] the market price of the common stock was $15 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend?
3. Using the equity portion of the Bruins Inc. balance sheet above, determine the amount of the total equity in Bruins Inc.  Assume this question ignores the results of questions [1-7] above.
   
   I want the above questions answered: but the following is all of the information:
   Bruins Inc. wishes to announce a total cash dividend of $40,000,000.  How is this dividend to be split between the common and preferred stockholders?
   What is the dividend per share for common and preferred after the dividend distribution from question 1 above?
   Suppose Bruins Inc. was two years in the arrears in paying dividends to the preferred stockholders, then what is the dollar amount of the preferred and common shareholder dividend?
   How many Bruins common stock shares are outstanding?
   If Bruins Inc. announces a 4 for 1 stock split of the cumulative preferred then what is the new total amount of the preferred stock?
   If Bruins Inc. were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders?
   Assume in question [6] the market price of the common stock was $15 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend?
   What is the impact of the 20% common stock dividend on the balance sheet? Assume this question ignores questions [1-9] above.
   Using the equity portion of the Bruins Inc. balance sheet above, determine the amount of the total equity in Bruins Inc.  Assume this question ignores the results of questions [1-7] above.
   What is the impact of the common and preferred cash dividend [$5,000,000 as per question 1 above] on the current balance sheet of Bruins Inc.?