Amy Cola is considering launching a new soft drink product. The beverage will be sold in a variety of different flavors and will be marketed to young children. In evaluating the proposed project, the company has the following information:

• The company estimates that the project will last for 4 years.

• The company will need to purchase new machinery that has an up-front cost of $40 million (incurred at Year 0). The machinery will be fully depreciated on a 4-year straight-line basis with no salvage value.

• To gain more insight, Indiana had spent $1 million on marketing research costs.

• Production of the new product will take place in a recently vacated facility that the company owns. It is currently empty and Indiana does not intend to lease the facility.

• The project will require a $2 million increase in net operating working capital (NOWC) at Year 0. After Year 0, there will be no changes in NOWC, until Year 4 when the project is completed, and the NOWC is fully recovered.

• The company estimates that sales of the new drink will be $27 million each of the next four years.

• Operating costs (excluding depreciation) are expected to be $11 million each year.

• The company’s tax rate is 20%.

• The owners expect a return of 18% per year but the market interest rate charged by commercial banks are 5% per year.

Based on the information above, the company has estimated the project’s free cash flows as shown in the table below and concluded that it should pursue this business opportunity as it is expected to generate a positive net present value (NPV).

Discuss whether the company has conducted the analysis correctly and what the flaws are. Revise the cash flow estimation, re-calculate the net present value (NPV), the internal rate of return (IRR), payback period and provide your recommendations.

For e-textbooks, B&N uses the agency model. How much revenue would it record for each sale? The full price of the textbook, or the commission earned on the sale? (Review the Revenue Recognition footnote below.)

Revenue Recognition

Revenue from sales of the Company’s products is recognized at the time of sale or shipment, other than those with multiple elements and Free On Board (FOB) destination point shipping terms. The Company accrues for estimated sales returns in the period in which the related revenue is recognized based on historical experience. ECommerce revenue from sales of products ordered through the Company’s websites is recognized upon estimated delivery and receipt of the shipment by its customers. Freight costs are included within the Company’s cost of sales and occupancy. Sales taxes collected from retail customers are excluded from reported revenues. All of the Company’s sales are recognized as revenue on a “net” basis, including sales in connection with any periodic promotions offered to customers. The Company does not treat any promotional offers as expenses In accordance with ASC 605-25, Revenue Recognition, Multiple-Element Arrangements, and Accounting Standards Updates (ASU) 2009-13 and 2009-14, for multiple-element arrangements that involve tangible products that contain software that is essential to the tangible product’s functionality, undelivered software elements that relate to the tangible product’s essential software and other separable elements, the Company allocates revenue to all deliverables using the relative selling-price method. Under this method, revenue is allocated at the time of sale to all deliverables based on their relative selling price using a specific hierarchy. The hierarchy is as follows: vendor specific objective evidence, third-party evidence of selling price, or best estimate of selling price. NOOK® device revenue is recognized at the segment point of sale. The Company includes post-service customer support (PCS) in the form of software updates and potential increased functionality on a when-and-if-available basis with the purchase of a NOOK® from the Company. Using the relative selling-price method described above, the Company allocates revenue based on the best estimate of selling price for the deliverables as no vendor-specific objective evidence or third-party evidence exists for any of the elements. Revenue allocated to NOOK® and the software essential to its functionality is recognized at the time of sale, provided all other conditions for revenue recognition are met. Revenue allocated to the PCS is deferred and recognized on a straight-line basis over the 2-year estimated life of a NOOK® device. The average percentage of a NOOK®’s sales price that is deferred for undelivered items and recognized over its 2-year estimated life ranges between 0% and 5%, depending on the type of device sold. The amount of NOOK®-related deferred revenue as of April 29, 2017 and April 30, 2016 was $226 and $160, respectively. These amounts are classified on the Company’s balance sheet in accrued liabilities for the portion that is subject to deferral for one year or less and other long-term liabilities for the portion that is subject to deferral for more than one year. The Company also pays certain vendors who distributed NOOK® a commission on the content sales sold through that device. The Company accounted for these transactions as a reduction in the sales price of the NOOK® based on historical trends of content sales and a liability was established for the estimated commission expected to be paid over the life of the product. The Company recognizes revenue of the content at the point of sale of the content. The Company records revenue from sales of digital content, sales of third-party extended warranties, service contracts and other products, for which the Company is not obligated to perform, and for which the Company does not meet the criteria for gross revenue recognition under ASC 605-45-45, Reporting Revenue Gross as a Principal versus Net as an Agent, on a net basis. All other revenue is recognized on a gross basis. The Company rents physical textbooks. Revenue from the rental of physical textbooks is deferred and recognized over the rental period commencing at point of sale. The Company offers a buyout option to allow the purchase of a rented book at the end of the semester. The Company records the buyout purchase when the customer exercises and pays the buyout option price. In these instances, the Company would accelerate any remaining deferred rental revenue at the point of sale. NOOK acquires the rights to distribute digital content from publishers and distributes the content on www.barnesandnoble.com, NOOK® devices and other eBookstore platforms. Certain digital content is distributed under an agency pricing model, in which the publishers set prices for eBooks and NOOK receives a commission on content sold through the eBookstore. The majority of the Company’s eBooks are sold under the agency model. The Barnes & Noble Member Program offers members greater discounts and other benefits for products and services, as well as exclusive offers and promotions via e-mail or direct mail, for an annual fee of $25.00, which is nonrefundable after the first 30 days. Revenue is recognized over the 12-month period based upon historical spending patterns for Barnes & Noble Members.

4. Suppose that a perfectly competitive firm has the following total variable costs (TVC):

Quantity: 0 1 2 3 4 5 6 7 8

TVC: $0 $20 $58 $74 $88 $106 $128 $152 $178

It also has total fixed costs (TFC) of $50. If the market price is $18 per unit: a. Find the firm’s profit-maximizing quantity using the marginal revenue and marginal cost approach. b. Is the firm earning a positive profit, suffering a loss, or breaking even?

• On January 1, 2006 the Excel Delivery Company purchased a delivery van for $65,000.
• Useful life is 5 years and it has a salvage value of $15,000
• The company expects to drive the van 125,000 miles
• The following is the actual miles driven
  • 2006 – 40,000 miles
  • 2007 – 35,000 miles
  • 2008 – 25,000 miles
  • 2009 – 21,000 miles
  • 2010 – 11,000 miles

Required – Calculate annual depreciation for the five year life of the van using each of the following methods – (round to nearest dollar):

• Straight line
• Sum of the years digits
• Double declining method
• Units of production using miles driven

How do you interpret the price indices in Exhibit 3? How do economists construct them? Use Excel regression to analyze the relationship between the adjusted price index (dependent variable and year (independent variable). Interpret your regression findings by discussing the coefficient of determination (R-squared), the regression coefficient, the regression equation, and the p value.   Can you use the regression equation to predict the price indices? Take into account statistical, macroeconomic, and other considerations.

EXHIBIT 3

Accounting Cycle Review 5 a-b, c1-c2, d, e1-e3 On December 1, 2019, Prosen Distributing Company had the following account balances. Debit Credit Cash $7,400 Accumulated Depreciation—Equipment $2,200 Accounts Receivable 4,700 Accounts Payable 4,500 Inventory 11,900 Salaries and Wages Payable 1,000 Supplies 1,300 Common Stock 29,000 Equipment 22,000 Retained Earnings 10,600 $47,300 $47,300 During December, the company completed the following summary transactions. Dec. 6 Paid $1,600 for salaries and wages due to employees, of which $600 is for December, and $1,000 is for November salaries and wages payable. 8 Received $1,900 cash from customers in payment of account (no discount allowed). 10 Sold merchandise for cash $6,400. The cost of the merchandise sold was $4,100. 13 Purchased merchandise on account from Maglio Co. $9,300, terms 2/10, n/30. 15 Purchased supplies for cash $2,100. 18 Sold merchandise on account $12,100, terms 3/10, n/30. The cost of the merchandise sold was $8,100. 20 Paid salaries and wages $1,900. 23 Paid Maglio Co. in full, less discount. 27 Received collections in full, fewer discounts, from customers billed on December 18. Adjustment data: 1. Accrued salaries and wages payable $800. 2. Depreciation $200 per month. 3. Supplies on hand $1,400. Journalize the December transactions using a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Dec. 6 Salaries and Wages Expense 600 Salaries and Wages Payable 1,000 Cash 1600 Dec. 8 Cash 1900 Accounts Receivable 1900 Dec. 10 Cash 6400 Sales Revenue 6400 (To record sales revenue.) Cost of Goods Sold 4100 Inventory 4100 (To record cost of goods sold.) Dec. 13 Inventory 9300 Accounts Payable 9300 Dec. 15 Supplies 2100 Cash 2100 Dec. 18 Accounts Receivable 12,100 Sales Revenue 12,100 (To record the sales revenue.) Cost of Goods Sold 8,100 Inventory 8,100 (To record cost of goods sold.) Dec. 20 Salaries and Wages Expense 1,900 Cash 1,900 Dec. 23 Accounts Payable 9,300 Inventory Cash Dec. 27 Cash Sales Discounts Accounts Receivable Enter the December 1 balances ledger T-accounts and post the December transactions. Use Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Sales Revenue, Sales Discounts, and Supplies Expense. (Post entries in the order of journal entries presented above. If an answer is zero, please enter 0. Do not leave any fields blank.) Cash 12/1 Bal. 7,400 12/6 1,600 12/8 1,900 12/15 2,100 12/10 6700 12/20 1900 12/27 12028 12/23 9300 12/31 Bal. 13316 Accounts Receivable 12/1 Bal. 5,000 12/8 1800 12/18 12400 12/27 12400 12/31 Bal. 3200 Inventory 12/1 Bal. 12,400 12/10 3900 12/13 9400 12/18 8200 12/23 188 12/31 Bal. 9512 Supplies 12/1 Bal. 1500 12/15 1800 Equipment 12/1 Bal. 22,000 12/31 Bal. 22,000 Accumulated Depreciation—Equipment 12/1 Bal. 2,200 Accounts Payable 12/23 9400 12/1 Bal. 4,800 12/13 9400 12/31 Bal. 4800 Salaries and Wages Payable 12/6 1000 12/1 Bal. 1000 Retained Earnings 12/1 Bal. 25,100 12/31 Bal. 25,100 Sales Revenue 12/10 6700 12/18 12400 12/31 Bal. 19100 Sales Discounts 12/27 372 12/31 Bal. 372 Cost of Goods Sold 12/10 3900 12/18 8200 12/31 Bal. 12100 Salaries and Wages Expense 12/6 900 12/20 1600 Journalize the adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Date Account Titles and Explanation Debit Credit 1. Dec. 31 Salaries and Wages Expense 600 Salaries and Wages Payable 600 2. Depreciation Expense 200 Accumulated Depreciation-Equipment 200 3. Supplies Expense 1600 Supplies 1600 Post the adjusting entries. (Post entries in the order of journal entries presented above.) Cash 12/1 Bal. 7,400 12/6 1,600 12/8 1,900 12/15 2,100 12/10 6,400 12/20 1,900 12/27 11,737 12/23 9,114 12/31 Bal. 12,723 Accounts Receivable 12/1 Bal. 4,700 12/8 1,900 12/18 12,100 12/27 12,100 12/31 Bal. 2,800 Inventory 12/1 Bal. 11,900 12/10 4,100 12/13 9,300 12/18 8,100 12/23 186 12/31 Bal. 8,814 Supplies 12/1 Bal. 1,300 1,600 12/15 2,100 12/31 Bal. 1,700 Equipment 12/1 Bal. 22,000 12/31 Bal. 22,000 Accumulated Depreciation—Equipment 12/1 Bal. 2,200 12/1 Bal. 200 12/31 Bal. 2,400 Accounts Payable 12/23 9,300 12/1 Bal. 4,500 12/13 9,300 12/31 Bal. 4,500 Salaries and Wages Payable 12/6 1,000 12/1 Bal. 1,000 12/31 600 12/31 Bal. 600 Retained Earnings 12/1 Bal. 10,600 12/31 Bal. 10,600 Sales Revenue 12/10 6,400 12/18 12,100 12/31 Bal. 18,500 Sales Discounts 12/27 363 12/31 Bal. 363 Cost of Goods Sold 12/10 4,100 12/18 8,100 12/31 Bal. 12,200 Depreciation Expense 12/31 200 12/31 Bal. 200 Salaries and Wages Expense 12/6 600 12/20 1,900 12/31 600 12/31 Bal. 3,100 Supplies Expense 12/31 1,600 12/31 Bal. 1,600 Prepare an adjusted trial balance. PROSEN DISTRIBUTING COMPANY Adjusted Trial Balance December 31, 2019, Debit Credit Cash $ 13316 $ Accounts Receivable 3200 Inventory 9512 Supplies 1700 Equipment 22000 Accumulated Depreciation-Equipment 2400 Accounts Payable 4800 Salaries and Wages Payable 600 Retained Earnings 25100 Sales Revenue 19100 Sales Discounts 372 Cost of Goods Sold 12100 Depreciation Expense 200 Salaries and Wages Expense 3100 Supplies Expense 1600 Income Summary 190 $ 67290 $ 67290 Prepare an income statement for December. PROSEN DISTRIBUTING COMPANY Income Statement For the Year Ending December 31, 2019 Sales Revenue $ 19100 Less: Sales Discounts -372 Net Sales 18728 Less: cost of goods sold -12100 Gross Profit / (Loss) 6628 Operating Expenses Depreciation Expense $ 200 Salaries, and Wages Expense 3100 Supplies Expense 1600 4900 Net Income / (Loss) $ 1538 Prepare a retained earnings statement for December. PROSEN DISTRIBUTING COMPANY Retained Earnings Statement For the Month Ended December 31, 2019, $: $ Prepare a classified balance sheet on December 31. (List Current Assets in order of liquidity.) PROSEN DISTRIBUTING COMPANY Balance Sheet For the Month Ending December 31, 2019 Assets $ $: $ Liabilities and Stockholder’s Equity $ $ $

On November 1, 2017, the following were the account balances of Soho Equipment Repair. Debit Credit Cash $ 2,790 Accumulated Depreciation—Equipment $ 500 Accounts Receivable 2,910 Accounts Payable 2,300 Supplies 1,120 Unearned Service Revenue 400 Equipment 10,000 Salaries and Wages Payable 620 Common Stock 10,000 Retained Earnings 3,000 $16,820 $16,820

During November, the following summary transactions were completed.

Nov. 8 Paid $1,220 for salaries due employees, of which $600 is for November and $620 is for October salaries payable.

10 Received $1,800 cash from customers in payment of account.

12 Received $3,700 cash for services performed in November.

15 Purchased store equipment on account $3,600.

17 Purchased supplies on account $1,300. 20 Paid creditors $2,500 of accounts payable due.

22 Paid November rent $480.

25 Paid salaries $1,000.

27 Performed services on account worth $900 and billed customers.

29 Received $750 from customers for services to be performed in the future.

part 1

Enter the November 1 balances in the ledger accounts.

Problem 4-7A (Part Level Submission) On November 1, 2017, the following were the account balances of Soho Equipment Repair. Debit Credit Cash $ 3,120 Accumulated Depreciation—Equipment $ 500 Accounts Receivable 3,010 Accounts Payable 2,630 Supplies 1,450 Unearned Service Revenue 400 Equipment 10,330 Salaries and Wages Payable 720 Common Stock 10,330 Retained Earnings 3,330 $17,910 $17,910 During November, the following summary transactions were completed. Nov. 8 Paid $1,220 for salaries due employees, of which $500 is for November and $720 is for October salaries payable. 10 Received $1,860 cash from customers in payment of account. 12 Received $3,750 cash for services performed in November. 15 Purchased store equipment on account $3,660. 17 Purchased supplies on account $1,410. 20 Paid creditors $2,510 of accounts payable due. 22 Paid November rent $500. 25 Paid salaries $1,010. 27 Performed services on account worth $950 and billed customers. 29 Received $800 from customers for services to be performed in the future. (d) Prepare a trial balance at November 30.

Case Albert Heijn supermarkets

Introduction

With almost 35% market share, Albert Heijn (AH) is the market leader in the Dutch food retailer market. In 1952, AH opened the first self-service supermarket in the Netherlands. In 2020 the company has 889 stores in the Netherlands and 43 in Belgium. AH is part of the international publicly traded Ahold-Delhaize group with the head office and staff departments in Zaandam.

The company strives for a diverse and inclusive workforce and helped employees to reach their potential so they can thrive. In 2017, AH turned Diversity & Inclusion (D&I) from an HR idea into a tangible business goal. The company created a global framework to serve as a compass for their brands to use locally. This framework includes a few key focus areas:

• Inclusive Workplace: Create a high-performing and inclusive work culture by promoting ownership and accountability for diversity at all levels in the organization.
• Workforce Diversity: Attract, develop, engage and retain a diverse workforce that reflects their customers.
• Diversity Competency: Develop the necessary knowledge, understanding and capabilities to leverage diversity in individuals and teams, so they can better serve their customers.

According to AH, a safe work environment is fundamental, but the workplace should also offer opportunities for development and for a healthy life. AH’s healthy living programs for employees aim to make healthier choices easy: providing free fruit in a number of offices, educational programs on nutrition and weight loss, and smoke-free campuses are only a few of their initiatives. (aholddelhaize.com)

Covid-19 measures

The management of AH has introduced a series of measures to ensure the safety of its employees and customers during the coronavirus epidemic.

The retailer provided visibility vests to employees filling up empty shelves with the message 'We do it together. Keep sufficient distance’. It aims to remind customers to maintain a safe distance of at least 1.5 metres from each other.

The company is also encouraging shoppers to use hand scanners or pay at self-scan checkouts.

Customers paying in cash, put their money and take the balance from the cash registers. AH also introduced an exclusive shopping hour for the elderly from 23 March.

It allows customers above the age of 70 to shop at all AH outlets in the Netherlands between 7:00 and 8:00 on weekdays, before the stores open to other customers. The retailer also added plexiglass screens at checkouts and service desks across all its stores.

Staff employees in supporting roles at the head office are obliged to work from home, unless there is no other way to do their work. Travel needs to be avoided as much as possible.

A new job AH-to-Go

25-year-old Jeanet always dreamed to work for an international triple A company in the food industry. She finished a university degree in food science and marketing and worked already about a year for a Dutch food retailer. When a head-hunter approached her for a category manager job at AH she thought that her dream came true. It was a very interesting job at the outlet formula AH-to-go. Jeanat has to monitor the results of the different products, keep relations with suppliers and come up with ideas for new products and marketing approaches.
A few days before the 1^st of April, the date she actually started the job, her AH manager contacted her and said that she needed to work from home until at least the end of September. She could only come once to the office to get her mobile phone and laptop, but that was it. The briefings about her job and the meetings with colleagues and with her manager Tom are only online.

1. Individuals & Motivation (15 points)
   The policy of AH to keep employees of departments in the head office working at home, will have an impact on the motivation of employees.
   1. Explain which of the needs McClelland identified in his motivation theory, is affected the most by working at home? (3 points)
   2. Describe an intrinsic motivation factor and an extrinsic motivation factor that are affected by working at home? (4 points)

Explain which letter combination of 4, that Myers and Briggs used to describe their personality types, will be best suited for the online working environment