The financial department of a company that produces memory chips for microcomputers arrived at the following price-demand function and the corresponding revenue function:

p(x) = 75 – 3x price-demand

R(x) = x ? p(x) = x(75 – 3x) revenue function

Where p(x) is the wholesale price in dollars at which x million chips can be sold and R(x) is in millions of dollars. Both functions have domain 0 ? x ? 20. They also found the cost function to be C(x) = 125 + 16x for manufacturing and selling x million chips. Find the profit function and determine the number of chips that should be sold for maximum profit. Find the maximum profit. Find the maximum revenue and the number of chips that need to be sold to reach that maximum. Graph the cost, revenue, and profit functions in the same window on your calculator. (Use window x = 0 to 20, and y = 0 to 600). Round your answers to the nearest whole number. Round the numbers of chips up to the next whole number.

a.) Profit function is simplified form __________

b.) Number of chips for maximum profit _________

c.) Number of chips for maximum revenue _______

d.) Maximum profit ______

e.) Maximum revenue _______

f.) What is the profit when the revenue is at its maximum? _______

g.) Explain why the maximum revenue is different from the maximum profits_____________

**Please show ALL work!

Superior Real Estate Agency has opened an office in Collins Street Melbourne. The average monthly property sales is $900,000 and the Estate agent generates its revenue via charging a commission (agency revenue) of 6.0% of the gross property sales. Fixed monthly costs are office rent ($4,000), depreciation of office furniture ($500), electricity ($700), a multi-line telephone system ($600), computer cabling connection ($400) and salary of the office manager ($8500). Variable costs include commissions for the sales staff (55% of agency revenue), supplies and printing (12% of agency revenue), and usage costs for phone and computers (9% of agency revenue).

REQUIRED

Calculate the estate agency’s monthly break even commission / agency revenue in dollars.

Calculate the commission / agency revenue needed to earn monthly net profit of $15,000.

From your answer in (b) above, what is the gross property sales required to generate commission / agency revenue to make a $15,000 profit above breakeven.

When the managing partner of Superior Estate Agency is shown your Cost Volume Profit calculations, he is quite dismissive. He says it is largely useless information because the reality of the real estate business is much more complex and dynamic with the model based on unrealistic assumption.   Prepare a detailed response to the managing partner, identifying model assumptions and potential use of the model. (100 words limit)

Pearl Asian Restaurant operates in the Hong Kong International Airport passenger terminal. It is about time for the restaurant to negotiation for a new lease for the coming year. The landlord offers the owner of the restaurant two options. The first option is a fixed lease with a rent of $97,500 per month. The second option is a variable lease with monthly rent to be paid at 18% of the revenue of the restaurant. The restaurant owner expects that the annual revenue would be $8,000,000 for the coming year.

To expand his business, the restaurant owner also considers of acquiring one of the following catering outlets in the airport. One is a bistro and the other is a cafe. The annual revenue of the bistro or the cafe is the same, i.e. $500,000 for the current year. The variable cost of the bistro is 40% of its revenue and its annual fixed cost is $200,000. The cafe has a variable cost of 35% of its revenue and an annual fixed cost of $225,000.

The restaurant owner thinks that if he purchases the bistro, he could reduce its variable cost to 32% of its revenue. If he purchases the cafe, he could save $30,000 a year on its fixed cost. In either case, he thinks he could raise the revenue by 40% in the coming year.

For the proposed new lease for the restaurant, answer the following questions:

(i)Calculate the ‘indifferent revenue level’ of the restaurant for the coming year.

(ii)Explain, with reasons, which lease option that the restaurant owner should take.

CA2-5 (Revenue Recognition Principle) After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company’s magazine. She feels that the “crucial event” in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be “recognized” in the period of the cash sale.

Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Company’s accounts with:

(a) The cash sale of the magazine subscription.
(b) The publication of the magazine every month.
(c) Over time, as the magazines are published and delivered to customers.

Revenue 80,000

Variable Costs 45,000

Contribution Margin 35,000

Fixed Cost 15,000

Pre-tax Income 20,000

Income Taxes (25%) 5,000

After-Tax Income 15,000

1. What is the Breakeven level of revenue?

2. What is the Margin of Safety of revenues?

3. If Fixed Cost were reduced by 10%, what would be the new breakeven revenue?

4. Given the current cost structure (ie. unchanged Fixed and Variable costs), how much revenue would be required to generate 50% more after-tax income?

5. Provide a revised Contribution Income Statement assuming this company achieves the higher level of after-tax revenue described in question 4.

Please show formulas. Thank you!

Presented below are certain account balances of Metlock Products Co.

From the foregoing, compute the following: (a) total net revenue, (b) net income, (c) income attributable to controlling stockholders, if Metlock has allocation to noncontrolling interest of $18,440.

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,050,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below:

20182019

Costs incurred during the year$304,000 $1,595,000

Estimated costs to complete as of 12/31 1,216,000  0

Billings during the year 385,000  1,630,000

Cash collections during the year 252,000  1,755,000

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.

• Required 1
• Required 2
• Required 3
• Required 4

Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. (Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the table below to arrive at your final answer.)

When the monopoly firm sells two units of its product, it earns total revenue of $260 and it incurs a total cost of $210. If its marginal revenue for the second unit was $110, what was the marginal revenue of the first unit?

Group Choice Answers:

$100

$150

$133

$220

There is not enough information to answer the question.

Question) One of the determinants of beta, the cyclicality of revenues, refers to...

Multiple choice answers) Please answer and Explain!

a) the correlation of a firm's revenue with the capital structure.

b) the correlation of the firm's revenue with the business cycle.

c) the cycle of revenues during an initial public offering.

d) the volatility in a firms revenue during a given period.

Consider FASB's 2018 guidelines for accounting for contributions and answer the following:

a. Identify the characteristics of exchange transactions and describe when revenue should be recognized.

b. Identify the characteristics of donor-imposed conditions and describe when revenue should be recognized.

c. Identify the characteristics of donor-imposed restrictions and describe when revenue should be recognized.