1. A monopolist maximizes profits at the output at which

A) total revenue is at its greatest, assuming that the firm has both fixed and variable costs.

B) price equals marginal cost.

C) price exceeds marginal cost by the greatest amount.

D) none of the above

2. Which of the following is true of marginal revenue earned by a monopolist that charges a single price to all its consumers?

A) ​Marginal revenue earned by a monopolist is equal to the average cost incurred by it.

B) ​Marginal revenue earned by a monopolist is more than the price of its product.

C) ​Marginal revenue earned by a monopolist is less than the price of its product.

D) Marginal revenue earned by a monopolist is equal to the average revenue earned by it.

E) ​Marginal revenue earned by a monopolist is equal to price of its product.

3. For a monopolist, if price is above average total cost, the monopolist is

A) earning an economic profit.

B) taking an economic loss.

c) minimizing total fixed costs.

d) minimizing total variable costs.

6.) A food department reported sales revenue of $128,800 and direct costs of $68,200 during March. Determine the following:

a. What is the department’s contributory income?

b. What is contributory income as a percentage of sales revenue?

7.) A department has two operating divisions: Food service with sales revenue of $880,000 and a bar-lounge with sales revenue of $440,840. Calculate the sales revenue of each division as a percentage of total departmental sales revenue.

9.) Indirect, undistributed costs of $14,000 are to be allocated to two departments. Department “1” occupies 54% and department “2” occupies 46% of the total square footage available. Calculate the amount to be allocated to each department based on the square footage method.

10.) A department with three operating divisions reported the sales revenues for each of its divisions. Determine the percentage of sales revenue provided by each division:

Rooms division $1,555,632

Food service division 921,856

Beverage division 403,312

Total sales revenue $2,880,800

A retailer wants to see if a red "Sale" sign brings in more revenue than the same "Sale" sign in blue. The data below shows the revenue in thousands of dollars that was achieved for various days when the retailer decided to put the red "Sale" sign up and days when the retailer decided to put the blue "Sale" sign up. Red: 1, 3.6, 3.6, 3.2, 3.4, 3.8, 3.1, 1.5, 3.6 Blue: 0.5, 1.9, 1.6, 2.9, 2.1, 2.9, 1.2, 2.2, 2.9, 3.8 Assume that both populations follow a normal distribution. What can be concluded at the α = 0.05 level of significance level of significance? For this study, we should use The null and alternative hypotheses would be: H 0 : (please enter a decimal) H 1 : (Please enter a decimal) The test statistic = (please show your answer to 3 decimal places.) The p-value = (Please show your answer to 4 decimal places.) The p-value is α Based on this, we should the null hypothesis. Thus, the final conclusion is that ... The results are statistically insignificant at α = 0.05, so there is insufficient evidence to conclude that the population mean revenue on days with a red "Sale" sign is more than the population mean revenue on days with a blue "Sale" sign. The results are statistically insignificant at α = 0.05, so there is statistically significant evidence to conclude that the population mean revenue on days with a red "Sale" sign is equal to the population mean revenue on days with a blue "Sale" sign. The results are statistically significant at α = 0.05, so there is sufficient evidence to conclude that the mean revenue for the nine days with a red "Sale" sign is more than the mean revenue for the ten days with a blue "Sale" sign. The results are statistically significant at α = 0.05, so there is sufficient evidence to conclude that the population mean revenue on days with a red "Sale" sign is more than the population mean revenue on days with a blue "Sale" sign. Interpret the p-value in the context of the study. If the sample mean revenue for the 9 days with a red "Sale" sign is the same as the sample mean revenue for the 10 days with a blue "Sale" sign and if another 9 days with a red "Sale" sign and 10 days with a blue "Sale" sign are observed then there would be a 5.29% chance of concluding that the mean revenue for the 9 days with a red "Sale" sign is at least 0.8 thousand dollars greater than the mean revenue for the 10 days with a blue "Sale" sign There is a 5.29% chance of a Type I error. There is a 5.29% chance that the mean revenue for the 9 days with a red "Sale" sign is at least 0.8 thousand dollars greater than the mean revenue for the 10 days with a blue "Sale" sign. If the population mean revenue on days with a red "Sale" sign is the same as the population mean revenue on days with a blue "Sale" sign and if another 9 days with a red "Sale" sign and 10 days with a blue "Sale" sign are observed then there would be a 5.29% chance that the mean revenue for the 9 days with a red "Sale" sign would be at least 0.8 thousand dollars greater than the mean revenue for the 10 days with a blue "Sale" sign. Interpret the level of significance in the context of the study. If the population mean revenue on days with a red "Sale" sign is the same as the population mean revenue on days with a blue "Sale" sign and if another 9 days with a red "Sale" sign and 10 days with a blue "Sale" sign are observed, then there would be a 5% chance that we would end up falsely concluding that the sample mean revenue for these 9 days with a red "Sale" sign and 10 days with a blue "Sale" sign differ from each other. There is a 5% chance that green is your favorite color, so why woud you even consider red or blue? There is a 5% chance that there is a difference in the population mean revenue on days with a red "Sale" sign and on days with a blue "Sale" sign. If the population mean revenue on days with a red "Sale" sign is the same as the population mean revenue on days with a blue "Sale" sign and if another 9 days with a red "Sale" sign and 10 days with a blue "Sale" sign are observed then there would be a 5% chance that we would end up falsely concluding that the population mean revenue for the days with a red "Sale" sign is more than the population mean revenue on days with a blue "Sale" sign

NEW YORK (CNN/Money) - The Securities and Exchange Commission and Microsoft Corp. have settled a long-running inquiry into the software maker's accounting practices. To conclude the matter, Microsoft said it has agreed to comply with SEC provisions that require companies to make accurate filings and maintain records and controls sufficient to prepare financial statements in conformity with generally accepted accounting principles, or GAAP. The agency said its investigation had determined that Microsoft had misstated its income by material amounts between July 1, 1994, and June 30, 1998. The company did so by maintaining seven reserve accounts in a manner that did not comply with GAAP, the SEC said. During 1995 through 1998, the total balance of these accounts ranged from approximately $200 million to $900 million, the SEC said. Microsoft recorded reserves, accruals, allowances, and liability accounts relating to marketing expenses, sales, depreciation, inventory obsolescence, valuation of financial assets, interest income, and impairment of manufacturing facilities that did not have properly substantiated bases, the SEC said. In its filings with the SEC, Microsoft made reference to these accounts but did not fully document them, therefore overstating its income in some quarters and understating it in others, the SEC said. Under the terms of the settlement, which was leaked to the press last week, Microsoft was ordered to discontinue the practice. The company was not fined, nor was it charged with accounting fraud. "This case emphasizes that the commission will act against a public company that issues financial statements with material inaccuracies, even in the absence of fraud charges," Stephen M. Cutler, director of the SEC's enforcement division, stated. Microsoft said the agreement has no impact on its reported financial results and no restatement of any reported financial results is required. Microsoft (MSFT: down $0.87 to $50.04, Research, Estimates) shares were down 1.8 percent in Nasdaq trading early Monday afternoon

Required:

1. In this case, Microsoft was charged of “overstating its income in some quarters and understating it in others”. What are the possible reasons companies are likely to engage in such kind of activities?

2. What are the possible ways a company may engage in earnings management activities? Please provide an example for each type of earnings management activities, and discuss how to figure out such earnings management activities as a financial analyst.

Use Minitab to answer the questions. Make sure to copy all output from the Minitab:

The U.S. Bureau of Labor Statistics publishes a variety of unemployment statistics, including the number of individuals who are unemployed and the mean length of time the individuals have been unemployed. For November 1998, the Bureau of Labor Statistics reported that the national mean length of time of unemployment was 14.5 weeks.

The mayor of Chicago has requested the study on the status of unemployment in City of Chicago. A sample of 60 unemployed residents shows the sample mean is 15.7 and the sample standard deviation is 9.0. Test whether the length of time in Chicago is long than national average.

1) Let's think about the house price. According to the Case-Shiller Home Price Indices in August 2009, Chicago and San Francisco have following sample mean and population standard deviations (the sample mean was calculated by daily base, so the sample size was 30):

Using hypothesis test, prove if these house price indices are same.  (Setup a hypothesis, show your works to perform the test, and state your verdict)

2)             Some people argue that San Francisco has higher house price than that of Chicago. Prove/disprove the argument using a hypothesis test.

3)             Let’s assume the population standard deviations are unknown, and the sample standard deviation of for Chicago is 9.2 and that of San Francisco is 11.5. Some people argue that San Francisco has higher variability (higher variance) in house prices than that of Chicago. Setup a hypothesis, perform the test and prove/disprove the argument.

4.     Let’s consider a company’s growth rate of sales.

Find the sample mean and sample standard deviation using Minitab using descriptive statistics.

The store manager found that the average growth rate in 80s was 6.00%. Using the data, prove if the average growth rate for the sample period was same as that of 80s.

Prove if the average growth rate was less than 6%.

The following comparative income statement (in thousands of dollars) for two recent fiscal years was adapted from the annual report of Speedway Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.

a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Enter all amounts as positive numbers. (Note: Due to rounding, amounts may not total 100%).

b. Overall revenue __________ some between the two years, accompanied by a slight change in the overall mix of revenue sources. The NASCAR broadcasting revenue _________ by 1.3% of total revenue, while event-related revenue _____________ by 1.2% of total revenue. NASCAR event management fees, ___________ by 0.7% of total revenue. General and administrative expenses, however, _____________ by over 2.9% of total revenue. It appears that _____________ has helped the company significantly improve its income from continuing operations.

On a recent trip to Africa, J.T. Brown, sales manager of Prompt Technology, took his wife along at company expense. Linda White, vice president of sales and Brown's boss, thought his travel and entertainment expenses seemed excessive. But White approved the reimbursement because she owed Brown a favor. White was aware that the company president reviews all expenses recorded in the cash payments journal, so White recorded Brown's wife's expenses in the general journal as follows:

Respond to the following questions and, if appropriate, include personal experience as part of your answers.

• Does recording the transaction in the general journal rather than in the cash payments journal affect the amounts of cash and total expenses reported in the financial statements?
• Why did White record these expenses in the general journal?
• What is the ethical issue in this situation? What role does accounting play in this issue?

You’ve been working as a staff auditor for E&Y for the past couple of years. Your firm decides to put you on the audit of Blizzard Entertainment Inc. While Blizzard is new to you, your firm has been auditing them for a number of years. Before you start working on the audit you learn that your recent romantic partner works for Blizzard in their accounting department (up until that point you had been so hot and heavy you had never asked where they worked).

A – (3 points) What important concept from our discussion on fundamental principles in Chapter 2 applies to this situation? Define the two components of this concept and explain why they’re important.

B – (3 points) Is it still appropriate for you to work on this audit? What could you do? Explain your answer.