Michael McNamara and Gregory Lau met while in university and always knew they wanted to be in business together. Shortly after university Michael went to work for a large mulinational firm while Gregory pursued an MBA.

After several years of experience the firm Lau McNamara was established on July 1, 1984 and the firm experienced slow but steady growth over time. It is now 2020 and Lau McNamara has grown to total staff of 55 employees and revenues exceeding $13,000,000 a year. They have largely grown in the area of consulting, tax and accounting.

About 5 years ago they hired a rising star Rose Femia. She has exceeded all expectations and has been pushing to expand the services provided by the firm to include assurance services. Mr. McNamara with his extensive contacts has been asked to bid on a contract to perform audits for 3 municipalities within the province of Ontario.

He has assigned this task to Ms. Femia.

At the moment staff are fully scheduled, if Lau McNamara were to be awarded the contract, it must hire one new staff member at an annual remuneration of $60,000 to handle the additional workload.

Ms. Femia is convinced that obtaining the contract will lead to additional new clients from the respective municipalities. Expected new work (excluding the three municipalities) is 830 hours at an average billing rate of $90 per hour. Other information follows about the firm’s current annual revenues and costs:

Should the firm win the contract, the audits of the three municipalities will require 870 hours of expected work.

As a side note, Michael McNamara is adamant that fixed costs should be considered for this short term bid. Gregory Lau argues that they should be disregarded for short-term decision making.

Required:

1. If the Rose Femia’s expectations are correct, what is the lowest bid the firm can submit and still expect to increase annual net income? What would be the hourly billing rate for the county audit jobs just to break even on all the new business? (Round "Average billing rate" answer to 2 decimal places.)

2. If the contract is obtained at a price of $44,800, what is the minimum number of hours of new business in addition to the municipality work that must be obtained for the firm to break even on total new business? What is the margin of safety (MOS) regarding the municipality job audit proposal?

Advanced Electronics Ltd (Advanced) manufactures and sells high-end electronic components. Three major product lines, namely, HW-01, HW-02 and HW-03 are now being reviewed by the CEO. The following is the contribution margin income statement of the three products for year ended 31 December 2019: HW-01 HW-02 HW-03 $ $ $ Sales 250,000 140,000 75,000 Cost of goods sold 87,500 70,000 33,750 Variable costs 12,500 25,000 3,750 Contribution margin 150,000 45,000 37,500 Fixed costs Salaries 30,000 30,000 17,500 Marketing 10,000 7,500 5,000 Depreciation – Property, plant and equipment 15,000 12,500 5,000 Warehouse rent 11,644 6,520 3,493 Insurance 5,000 2,250 1,500 General administration 5,829 3,264 1,749 Allocated corporate-office costs 26,882 15,054 8,064 Total fixed costs 104,355 77,088 42,306 Operating income/(loss) 45,645 (32,088) (4,806) The CEO is concerned about the performances of the HW-02 and HW-03 product lines. The two product lines have been struggling with poor financial results in the past two years. Given that there is no sign of turnaround in 2020, the CEO is considering dropping the two products. The management accountant of Advanced has analyzed the costs incurred for the three product lines in 2019. The following are her findings:

1. Variable costs are distribution and other selling expenses incurred specifically for the sales of each product.

2. Salaries are paid to employees working directly on the product. All of the employees working for the product line would be laid off if the product is dropped.

3. Marketing are advertising and promotion expenses that are specific to each product line.

4. Depreciation – Property, plant and equipment are depreciation on the fixed assets acquired for manufacturing all three products. These fixed assets have a remaining useful life of around two years with zero disposal value. All unused assets will remain idle.

5. Warehouse rent expense is for rental of a warehouse under a two-year lease agreement expiring in 2021. The rental amount is allocated to the product lines on the basis of sales revenue. Advanced will continue to rent the warehouse till the lease expires as early termination will involve a significant penalty.

6. The insurance expense is for insurance carried on inventories within each of the three product lines. The insurance premium is expected to be decreased proportionately if the inventories of certain product lines are eliminated.

7. Advanced allocates general administrative expense to product lines based on sales revenue.

8. Advanced allocates corporate-office costs to product lines on the basis of sales revenue. By dropping the HW-02 product line, the company can reduce overall corporate overhead costs by $10,000 per year.

Required:

(a) Advise the CEO whether it a good decision for Advanced to drop both the HW-02 and HW-03 product lines. Explain with calculations.

(b) Which item of the costs incurred in the HW-02 and HW-03 product lines is irrelevant in the analysis? Why is it irrelevant?

(c) What other factors should the management of Advanced consider before making a decision?

US News awarded the Mediterranean Diet as the best diet for 2019 and 2020.

Research the "Mediterranean Diet" and Summarize the key points of the Mediterranean diet. In your summary, discuss the health benefits of following the Mediterranean lifestyle/diet. How is the Mediterranean lifestyle/diet compared to the American lifestyle/diet.

Answer the questions in complete sentences (1 - 2 paragraphs). Use Standard English and be sure to spell check your work. Cite evidence from the course textbook or another reliable source.

Adjusting Entries – III. Provide the adjusting journal entries at year-end 2019 for the

following independent situations (assume calendar year)

1. On March 1, 2019. Finland Tutorials received P60,000 representing an advance

payment for services to be rendered in November 2019. This was booked using a real

account. At year end, only 70% of the expected service was rendered.

2. The trial balance of Mangolia Café shows Kitchen Supplies and Kitchen Supplies

Expense accounts at balances of P8,400 and P0, respectively. At year-end, there are

P1,480 of supplies on hand.

3. On June 15, 2019, Russia Beauty Shop paid P18,000 to Secure Insurance Company for a three-year insurance policy. This was taken up in the books using a real account.

4. China Chickens received a 90 – day, P18%, P175,000 note from a customer for

catering services rendered. The note matures on February 14, 2020.

5. On May 1, 2019. Indonesia Services mortgaged a piece of real property to a local bank. Proceeds amounted to P499,200, net of 4% services charges. The mortgage requires annual payment of 12% interest starting May 1, 2020.

5. On March 1, 2019, Pakistan Job Placements decided to sublease a portion of its office to a review center for a P8,500 a month. The review center occupied the space on September 1, 2019. Because of a tight budget, the review center requested Pakistan if it could make the first payment on January 15, 2020. Pakistan yielded to this request.

7. The Unearned Subscriptions Revenue account of Iran Events showed a balance of

P268, 500 composed of the following:

a. One-year subscription starting July 1, 2019, P87,000.

b. Two-year subscriptions starting February 1, 2019, P95,700.

c. Eight-month subscription starting April 1, 2019, P85,800.

8. Mexico Skin Care bought a piece of salon equipment for P75,000 on January 15, 2019. It has an estimated useful life of five years. Scrap value has been determined to be 10% of the acquisition cost.

9. Australia Delivery needed four trucks in 2019. Two trucks were purchased on May 1, 2019 at P1,850,000 each and another two trucks were purchased on July 1, 2019 at a total price 15% higher than the May 1, 2019 purchase. For this type ofdepreciable assets, Australia is allocating 8% of the acquisition cost for scrap value and estimating useful lives at eight years.

The Chartered Financial Analyst (CFA) designation is fast becoming a requirement for serious investment professionals. It is an attractive alternative to getting an MBA for students wanting a career in investment. A student of finance is curious to know if a CFA designation is a more lucrative option than an MBA. He collects data on 38 recent CFAs with a mean salary of $138,000 and a standard deviation of $34,000. A sample of 80 MBAs results in a mean salary of $130,000 with a standard deviation of $46,000.

1) Calculate the value of the test statistic. Do not assume that the population variances are equal. (Round all intermediate calculations to at least 4 decimal places and final answer to 3 decimal places.)

2) At the 5% significance level, is a CFA designation more lucrative than an MBA?

B. Suppose a 48-year-old salesperson earning $50,000 a year (after taxes) is considering a career move. Specifically, this person – who plans to retire when (s)he turns 62 regardless of job – is thinking about quitting sales work for 2 years to earn an MBA degree. With MBA degree in hand, suppose this person can become an executive and earn $75,000 per year (after taxes). Suppose MBA tuition is $30,000 per year. Suppose the relevant discount rate is 3.5% per year. Based on this information, demonstrate and explain how one could reckon whether or not this change promises to be a good move. You are expected to show how one would set up and perform the calculation(s).

Murphy’s Brewhouse was a rapidly expanding chain of home-brew bars. The beer was not very good, but hopes were high when the company went public three years ago, because of founder/owner Kevin Murphy’s promotional skills.

At the time the company went public, Murphy’s also issued $50 million of 20-year maturity debentures at a coupon rate of 9 percent. These debentures were sold at par ($1,000 per bond). Shortly after this debenture issue, Murphy’s received some very negative reviews, both in the gourmet beer magazines and on Wall Street. The company is currently struggling. Its stock has plummeted from $40 per share three years ago to less than $5. Earnings remain positive but disappointing at $0.03 per share, and the company is barely breaking even on a cash flow basis.

Murphy’s debentures are currently selling at 40 cents on the dollar. The debentures are callable two years from now at $1,090. If you require a 20 percent rate of return on investments of this perceived risk level, should you buy these debentures?

What role does the setting of the interview play in deciding which style of interview is most appropriate?

What do you mean by Interview? Explain at least three interview methods with advantage and disadvantage.