Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA) gives a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks making up the DJIA increased in price (The Wall Street Journal, February 1, 2006). On the basis of this fact, a financial analyst claims we can assume that 30% of the stocks traded on the New York Stock Exchange (NYSE) went up the same day.

A sample of 50 stocks traded on the NYSE that day showed that 5 went up.

You are conducting a study to see if the proportion of stocks that went up is is significantly less than 0.3. You use a significance level of α=0.10α=0.10.

What is the test statistic for this sample? (Report answer accurate to three decimal places.)
test statistic =

What is the p-value for this sample? (Report answer accurate to four decimal places.)
p-value =

The p-value is...

• less than (or equal to) αα
• greater than αα

This test statistic leads to a decision to...

• reject the null
• accept the null
• fail to reject the null

As such, the final conclusion is that...

• There is sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is less than 0.3.
• There is not sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is less than 0.3.
• The sample data support the claim that the proportion of stocks that went up is is less than 0.3.
• There is not sufficient sample evidence to support the claim that the proportion of stocks that went up is less than 0.3.

Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA) gives a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks making up the DJIA increased in price (The Wall Street Journal, February 1, 2006). On the basis of this fact, a financial analyst claims we can assume that 30% of the stocks traded on the New York Stock Exchange (NYSE) went up the same day. A sample of 66 stocks traded on the NYSE that day showed that 10 went up. You are conducting a study to see if the proportion of stocks that went up is is significantly less than 0.3. You use a significance level of α = 0.001 α=0.001 . What is the test statistic for this sample? (Report answer accurate to three decimal places.) test statistic = What is the p-value for this sample? (Report answer accurate to four decimal places.) p-value = The p-value is... less than (or equal to) α α greater than α α This test statistic leads to a decision to... reject the null accept the null fail to reject the null As such, the final conclusion is that... There is sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is is less than 0.3. There is not sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is is less than 0.3. The sample data support the claim that the proportion of stocks that went up is is less than 0.3. There is not sufficient sample evidence to support the claim that the proportion of stocks that went up is is less than 0.3.

Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA) gives a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks making up the DJIA increased in price (The Wall Street Journal, February 1, 2006). On the basis of this fact, a financial analyst claims we can assume that 30% of the stocks traded on the New York Stock Exchange (NYSE) went up the same day. A sample of 69 stocks traded on the NYSE that day showed that 25 went up. You are conducting a study to see if the proportion of stocks that went up is is significantly more than 0.3. You use a significance level of α = 0.05 α = 0.05 .

What is the test statistic for this sample? (Report answer accurate to three decimal places.) test statistic =

What is the p-value for this sample? (Report answer accurate to four decimal places.)

p-value = The p-value is... less than (or equal to) α α greater than α α This test statistic leads to a decision to... reject the null accept the null fail to reject the null As such, the final conclusion is that... There is sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is is more than 0.3. There is not sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is is more than 0.3. The sample data support the claim that the proportion of stocks that went up is is more than 0.3. There is not sufficient sample evidence to support the claim that the proportion of stocks that went up is is more than 0.3.

Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA) gives a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks making up the DJIA increased in price (The Wall Street Journal, February 1, 2006). On the basis of this fact, a financial analyst claims we can assume that 30% of the stocks traded on the New York Stock Exchange (NYSE) went up the same day.

A sample of 79 stocks traded on the NYSE that day showed that 33 went up.

You are conducting a study to see if the proportion of stocks that went up is is significantly more than 0.3. You use a significance level of α=0.002.

What is the test statistic for this sample? (Report answer accurate to three decimal places.)
test statistic =

What is the p-value for this sample? (Report answer accurate to four decimal places.)
p-value =

The p-value is...

• less than (or equal to) αα
• greater than α

This test statistic leads to a decision to...

• reject the null
• accept the null
• do not reject the null

As such, the final conclusion is that...

• There is sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is more than 0.3.
• There is not sufficient evidence to warrant rejection of the claim that the proportion of stocks that went up is more than 0.3.
• There is evidence to support the claim that the proportion of stocks that went up is more than 0.3.
• There is not evidence to support the claim that the proportion of stocks that went up is is more than 0.3.

Crindlen Inc sells a variety of computer products and data plans.

Computers are compatible with data and computers do not need to be repaired or serviced by the company.

Customers can pick to buy a computer or data plans separately; however, to there is a bundle they offer with discounts, sales staff encourage customers to bundle their transacitons.

On Aug 27, the company offered a special. Customers who ordered a 2-year data service plan received the latest computer - The Gen4. The Gen4 retails for $800 and the monthly data service plan retails for $50 / month. The company paid $200 to make the computer.

The total price charged to the customer was $1,300 paid in cash when the contract was first signed.

Customers obtained the computer on Aug 1 and their cell phone data services were activated immediately.

What is the adjusting journal entry would be recorded for August 31?

You have the following information regarding AJH Company:

Sales 25,000 units per year at $45 per unit

Production 30,000 units in 2004

At the beginning of 2004 there was no inventory.

Direct Materials are $12.00 per unit

Direct labor is $10.00 per unit

Variable manufacturing overhead costs are $8.00 per unit

Fixed manufacturing overhead costs are $150,000 per year

Marketing costs are all variable at $3.00 per unit

Administrative costs are all fixed at $75,000 per year

Required:

(a.) Prepare an income statement under absorption costing for 2004

(b.) Prepare an income statement under variable costing for 2004

(c.) Prepare an income statement under throughput costing for 2004.

Kayla Company uses the perpetual inventory system and the LIFO method. The following information is available for the month of June:


June 1 Beginning inventory 200 units @ $5
12 Purchase on account 400 units @ $6
15 Sales on account 440 units
23 Purchase on account 300 units @ $7
27 Sales on account 360 units
The selling price (price the company charged the customers) was $10 per unit.

a) Show the calculation of cost of goods sold and ending inventory under LIFO.

b) What is the amount of Sales Revenue?

c) Prepare a journal entry for the sale of inventory on June 15.

d) In which financial statement does the amount of ending inventory appear?

e) In which financial statement do the amount of sales and amount of cost of goods sold appear?

f) What is the amount of gross margin for month June?

g) What is the gross margin percentage?

Consumer Reports (January 2005) indicates that profit margins on extended warranties are much greater than on the purchase of most products. In this exercise we consider a major electronics retailer that wishes to increase the proportion of customers who buy extended warranties on digital cameras. Historically, 20 percent of digital camera customers have purchased the retailer’s extended warranty. To increase this percentage, the retailer has decided to offer a new warranty that is less expensive and more comprehensive. Suppose that three months after starting to offer the new warranty, a random sample of 525 customer sales invoices shows that 130 out of 525 digital camera customers purchased the new warranty. Find a 95 percent confidence interval for the proportion of all digital camera customers who have purchased the new warranty. Are we 95 percent confident that this proportion exceeds .20? (Round your answers to 3 decimal places.)

Question: Is 5-year assurance service a distinct performance obligation in this contract? and How to currently recognise the revenue from Align by amortizing it over the 5-year assurance period.

SS enters into arrangements with customers that can include various combinations of software and services. Among its product portfolios, one arrangement makes significant revenue contribution in 2019 and 2018. Align is a project management software targeted at small and medium businesses. SS’s usual arrangement with customers not only includes the software license, but also includes customizing the software and integrating it into the customers’ information systems. In addition, customers purchasing the software license will receive software assurance service over a 5-year period at no additional cost. The assurance service guarantees proper functioning of the software within the customers’ information system. The company currently recognize the revenue from Align by amortizing it over the 5-year assurance period.

Case:

Pandora is the Internet’s most successful subscription radio service. In May 2014, Pandora had 77 million registered users. Pandora accounts for over 9 percent of total U.S. radio listening hours. The music is delivered to users from a cloud server, and is not stored on user devices.

It’s easy to see why Pandora is so popular. Users are able to hear only the music they like. Each user selects a genre of music based on a favorite musician or vocalist, and a computer algorithm puts together a “personal radio station” that plays the music of the selected artist plus closely related music by different artists. The algorithm uses more than 450 factors to classify songs, such as the tempo and number of vocalists. These classifications, in conjunction with other signals from users, help Pandora’s algorithms select the next song to play.

People love Pandora, but the question is whether this popularity can be translated into profits. How can Pandora compete with other online music subscription services and online stations that have been making music available for free, sometimes without advertising? “Free” illegally downloaded music has also been a significant factor, as has been iTunes, charging 99 cents per song with no ad support. At the time of Pandora’s founding (2005), iTunes was already a roaring success.

Pandora’s first model was to give away 10 hours of free music and then ask subscribers to pay $36 per month for a year once they used up their 10 free hours. Result: 100,000 people listened to their 10 hours for free and then refused to pay for the annual service. Facing financial collapse, in November 2005 Pandora introduced an ad-supported option. In 2006, Pandora added a “Buy” button to each song being played and struck deals with Amazon, iTunes, and other online retail sites. Pandora now gets an affiliate fee for directing listeners to sites where users can buy the music. In 2008, Pandora added an iPhone app to allow users to sign up from their smartphones and listen all day if they wanted. Today, 70 percent of Pandora’s advertising revenue comes from mobile.

In late 2009 the company launched Pandora One, a premium service that offered no advertising, higher quality streaming music, a desktop app, and fewer usage limits. The service costs $4.99 per month. A very small percentage of Pandora listeners have opted to pay for music subscriptions, with the vast majority opting for the free service with ads. In fiscal 2013 Pandora’s total revenue was $427.1 million, of which $375.2 million (88 percent) came from advertising.

Pandora has been touted as a leading example of the “freemium” revenue model, in which a business gives away some services for free and relies on a small percentage of customers to pay for premium versions of the same service. If a market is very large, getting just 1 percent of that market to pay could be very lucrative— under certain circumstances. Although freemium is an efficient way of amassing a large group of potential customers, companies, including Pandora, have found that it is challenging to convert people enjoying the free service into customers willing to pay. A freemium model works best when a business incurs very low marginal cost, approaching zero, for each free user of its services, when a business can be supported by the percentage of customers willing to pay, and when there are other revenues like advertising fees that can make up for shortfalls in subscriber revenues.

In Pandora’s case, it appears that revenues will continue to come overwhelmingly from advertising, and management is not worried. For the past few years, management has considered ads as having much more revenue-generating potential than paid subscriptions and is not pushing the ad-free service. By continually refining its algorithms, Pandora is able to increase user listening hours substantially. The more time people spend with Pandora, the more opportunities there are for Pandora to deliver ads and generate ad revenue. The average Pandora user listens to 19 hours of music per month.

Pandora is now intensively mining the data collected about its users for clues about the kinds of ads most likely to engage them. Pandora collects data about listener preferences from direct feedback such as likes and dislikes (indicated by thumbs up or down on the Pandora site) and “skip this song” requests, as well as data about which device people are using to listen to Pandora music, such as mobile phones or desktop computers. Pandora uses these inputs to select songs people will want to stick around for, and listen to. Pandora has honed its algorithms so they can analyze billions more signals from users generated over billions of listening minutes per month.

As impressive as these numbers are, Pandora (along with other streaming subscription services) is still struggling to show a profit. There are infrastructure costs and royalties to pay for content from the music labels. Pandora’s royalty rates are less flexible than those of its competitor Spotify, which signed individual song royalty agreements with each record label. Pandora could be paying even higher rates when its current royalty contracts expire in 2015. About 61 percent of Pandora’s revenue is currently allocated to paying royalties. Advertising can only be leveraged so far, because users who opt for free ad-supported services generally do not tolerate heavy ad loads.

CASE QUESTION:

What e-commerce revenue models are Pandora using? How does Pandora generate money with the revenue models? Explain your answer?