Ciena & Associates

The following customer segmented quarterly income statement is for Ciena and

Associates, a firm that performs legal services

Customers                       Koontz                             Davis                   Nello                   Total

Sales revenue                  $150,000                        $750,000              $100,000          $1,000,000

Variable costs                 125,000                           600,000               80,000                805,000

Contribution margin       $ 25,000                          $150,000              $ 20,000            $ 195,000

Direct fixed costs            7,500                                  157,500               5,000                  170,000

Allocated fixed costs      3,000                                15,000               2,000                 20,000

Profit (loss)                      $ 14,500                          $ (22,500)              $ 13,000            $ 5,000

Management is concerned about the significant losses associated with the Davis

account and would like to drop this customer. Allocated fixed costs are assigned to

customers based on sales revenue.

If Davis is dropped, total allocated fixed costs are assigned to the remaining

customers, and all variable and direct fixed costs for the Davis account will be

eliminated.

Required

a. Perform differential analysis. Assume keeping all customers is Alternative

1, and dropping the Davis account is Alternative 2.

b. Which alternative is best? Explain.

c. Summarize the result of dropping the Davis account.

d. Explain what happened to the profitability of the other two customers as a

result of dropping the Davis account.

e. Assume all the facts of this problem remain the same with one exception. As

a result of dropping the Davis account, Ciena and Associates is only able to

reduce the direct fixed costs associated with the Davis account by 90 percent.

The remaining 10 percent will not be eliminated for several more years. Does

this change Ciena's decision as to whether to drop the Davis customer?

A. In 2016 were foreign-born workers a bigger share of the U.S. labor force than in 2006? Explain, presenting and interpreting the relevant statistical evidence.

B. In 2016 who exhibited a higher labor force participation rate in the U.S., native- or foreign-born women? How does the evidence for 2016 compare with 2006, before the Great Recession? Present all relevant statistical evidence and interpret.

C. In 2016 who exhibited greater joblessness in the U.S., native- or foreign-born men? How does the evidence for 2016 compare with 2006, before the Great Recession? Present all relevant statistical evidence and interpret.

D. In 2016 who was more likely to have earned a bachelor’s degree or higher in the U.S., foreign- or native-born workers? Present and interpret relevant statistical evidence. Should you be “surprised” by your findings? Explain, using appropriate economic analysis.

Homework 2 Statement of Cash flows

Construct a cash flow statement for XYZ Company using the following information

                             XYZ COMPANY

                            BALANCE SHEET

                      DECEMBER 31, 2006, 2007

                   Assets                Liab + equity

                  2006  2007                           2006 2007

Cash              120   150         Acc. payable      200  150

Mkt. Sec          80   100          Notes payable     300 250  

Acc. Rec          360  200          other liab.       100 150

Inventory         340  600

current assets    900  1050         Current liab.     600 550

Gross FA          2200 2400         Long term debt    1000 1200

Acc. Dep          500  600          Common stock      400 250

Net fixed asset   1700 1800         Retained earnings 600  850

Total assets      2600 2850        Total liab.+equity 2600 2850

The firm’s EAT for 2007 was 400

11. In SPC, the distribution of “sample means”

1) Cannot be approximated by normal distribution.

2) Will have greater variability than the process distribution.

3) Will have a mean greater than the process distribution as a function of the sample size.

4) Is exactly like the original distribution under all circumstances.

5) None of the above is true.

15. Which of the following statements is true?

1. Training of Service Personnel is a criterion for evaluating the explicit servicesfeature of the service package.
2. The fact that services are labor intensive ensures that the service is fair and equal for all customers.
3. From a marketing perspective, services, unlike goods, involve transfer of ownership.
4. Little or no interaction between customer and service provider is required when the service is customized.
5. None of the above is true.

16. Which of the following is not an advantage of reducing the divergence of a service process?

1. Improved productivity.
2. Uniformity.
3. Greater flexibility.
4. Reduced costs.
5. Permits a production-line approach to service design.

22.  According to customers, __________ is the most important dimension of service quality?

1. Prompt service
2. Courtesy of employees
3. The attractiveness of the service facility
4. The dependability and accuracy of the service.

e. Assurance that prompt attention will be given to the customer

23.  Companies often “manage the evidence”. For example, a motel will place a plastic liner on the toilet seat to show that it has been cleaned. Which 'GAP' is this activity attempting to close?

1. GAP 5: difference between what customers expect and what they perceive.
2. GAP 4: difference between what is provided and what customers think is provided.
3. GAP 3: difference between what management wants to provide and what is actually provided.
4. GAP 1: difference between what customers want and what management thinks they want.
5. GAP 2: difference between design the customers wanted and what management was able to develop.

How does Zynga recognize revenue from virtual goods?

Zynga was founded in July 2007 and is headquartered in San Francisco, California. Around 80% of Zynga’s revenue comes from Facebook users. Facebook provides a social networking platform used by over 1 billion people, and Zynga is a video game developer with many products (e.g. FarmVille, MafiaWars) that interface with social technology sites like Facebook. Zynga has been publicly traded since December 16, 2011.

Zynga’s FarmVille players can use Facebook to purchase in-game currency they can use to acquire resources, such as hay and animals, in pursuit of a more productive virtual farm. Revenue from conversion of real dollars into in-game currency is big business: Zynga estimates that such sales, from FarmVille hay to Mafia Wars guns, accounted for nearly all of Zynga’s $1.1 billion in 2011 revenues and 12% of revenue for Facebook.

Revenue recognition in firms that earn money through socially-based use of virtual items is challenging. Zynga’s customers convert real dollars into FarmVille currency in order to purchase virtual goods. Customers’ real dollars become Farm Cash which the customers can use in the future to purchase virtual items in the Farmville application. When the customer uses Farm Cash to buy a tractor, for example, Facebook reduces the player’s Farm Cash, keeps 30% of the real dollar equivalent as a processing fee, and sends 70% to Zynga.

Starting in 2009, Zynga classified the game items it sells to players as either “consumable” or “durable” goods. The former category is for goods that players can immediately use, like energy in the game CityVille; the latter is for goods that players buy and keep for the duration of the game, such as tractors in FarmVille. Until 2010 Zynga estimated the average player life (the number of months a player on average continues to play the game) to be 19 months. In early 2011 it changed that estimate to 15 months. The shorter player life increased revenue for the six months by $27.3 million, turning a loss for the six months ended June 30, 2011 into a net profit of $18.1 million.

Required:
Discuss the revenue recognition at Zynga.

Revenue recognition – accrual basis vs. cash basis: Ring The Bells, Inc. provides doorbell repair services to customers and began operations in February 2018. On March 4^th, 2018, Ring The Bells, Inc. collected $2,400 in cash from customers for services performed in February 2018. On March 11^th, Ring The Bells, Inc. provided $690 worth of services to customers, all of whom paid in cash. On March 25^th, 2018 Ring the Bells provided additional services worth $3,470 on account to customers, which will not be collected until April.

(1pt) Using accrual-basis accounting, how much revenue would Ring the Bells record for March 2018? Briefly explain or show how you got your answer.

(1pt) Using cash-basis accounting, how much revenue would Ring the Bells record for March 2018? Briefly explain or show how you got your answer.

Expense recognition – accrual basis vs. cash basis: Ring The Bells, Inc. provides doorbell repair services to customers and began operations in February 2018. On March 2^nd, 2018, Ring The Bells, Inc. paid $800 in cash to creditors for supplies purchased on account on February 1^st and used in February 2018. On March 15^th, Ring The Bells, Inc. paid $1,850 in cash to employees for work done March 1^st-15^th. On March 29^th, 2018 Ring the Bells received a bill of $720 from the utility company for March utilities used which will not be paid until April.

(1pt) Using accrual-basis accounting, how much in expenses would Ring the Bells record for March 2018? Briefly explain or show how you got your answer.

(1pt) Using cash-basis accounting, how much in expenses would Ring the Bells record for March 2018? Briefly explain or show how you got your answer.

In 2006, the Sigma Chi fraternity at Johns Hopkins University in Baltimore put on a weekend "Halloween in the Hood" party. One of the decorations was a skeleton hanging from a rope noose. On the invitation, which was posted on Facebook, Baltimore was referred to as an "HIV pit" and suggested that party-goers should wear rap style clothing and bling-bling. An image of an internationally prominent African-American appeared in the posting. The Black Student Union members protested to university administration, saying that Sigma Chi was being racially insensitive. A student protest emerged urging the banning of the fraternity. Individual African-American students were deeply disturbed by the noose imagery. The fraternity said it did not mean to offend anyone, and it was only a regular Halloween party. Hostility grew between student groups. The university administration suspended the fraternity, worried about its already tension-filled relations with the surrounding community and other manifestations of intolerance in the student body. Analyze the facts of this scenario critically using the following approach: a. explicitly use three (3) concepts in your analysis; b. identify and very briefly describe each concept you use and link it to specific evidence from the scenario; c. within your group of three concepts include at least one (1) concept from (Group Influences) and at least one (1) concept (Prejudice: Disliking Others) in your analysis.

A government agency counselling customers (citizens) subjected to domestic violence employs four lawyers. The agency manages complaints from three types of customers. The time a lawyer spends with each type of customers is exponentially distributed, with a mean of 15 minutes. Inter-arrival times for each customer type are exponential, with the average number of arrivals per hour for each customer type being observed as follows: type 1, 3 customers per hour; type 2, 5 customers per hour; and type 3, 3 customers per hour. Assume that type 1 customers have the highest priority, and type 3 customers have the lowest priority. Preemption is not allowed. a) What is the average length of time that each type of customers must wait before seeing a lawyer?

Three modifiable health behaviors that contribute to heart disease include:

Which of the following help(s) to protect against cancer?

The Healthy Hunger Free Kids Act passed in 2010 was designed to improve the nutritional quality of school lunches. This includes:

Essential amino acids _____.