An assistant in the district sales office of a national cosmetics firm obtained data on advertising expenditures and sales last year in the district’s 44 territories.

X1: expenditures for point-of-sale displays in beauty salons and department stores (X$1000).

X2: expenditures for local media advertising.

X3: expenditures for prorated share of national media advertising.

Y: Sales (X$1000).

1. Test the regression relation between sales and the three predictor variables. State the hypotheses, test statistic and degrees of freedom, the p-value, the conclusion in words.

2. Determine whether the linear regression model is appropriate by using the “usual” plots (scatterplot, residual plots, histogram/QQ plot). Explain in detail whether or not each assumption appears to be substantially violated.

An assistant in the district sales office of a national cosmetics firm obtained data on advertising expenditures and sales last year in the district’s 44 territories. Data is consmetics.csv. Use R. I don't want answers in Excel or SAS :)

X1: expenditures for point-of-sale displays in beauty salons and department stores (X$1000).

X2: expenditures for local media advertising.

X3: expenditures for prorated share of national media advertising.

Y: Sales (X$1000).

6. (4) Are there any influential points?

7. Is there a serious multicollinearity problem?

(3) Include an appropriate scatterplot and correlation values between the explanatory variables.

(3) Judge by VIF, do you think there is a problem with multicollinearity? (Hint: VIP or tolerance)

(3) Compare your answers in parts i and ii. Are your conclusions the same or different? Please explain your answer.

Data:

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $211,800 and the following divisional results.

Analysis reveals the following percentages of variable costs in each division.

Discontinuance of any division would save 50% of the fixed costs and expenses for that division.

Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Prepare an incremental analysis concerning the possible discontinuance of Division I. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

What course of action do you recommend for each division?

Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Consider a closed economy as represented by the following equations:

C = 100 + .5YD
I = 200 + .1Y – 800i T = 200
G = 200
YD = Y - T

(1) Derive the IS equation from the equilibrium position of goods market. Draw the IS curve on the graph. (10 points)In the money market, assume the real money demand is (M d/P) = Y – 1,000i; and the real money supply is (Ms/P) = 700.
(2) Derive the LM relation and draw the LM curve on the graph in part (1).

(3) Solve for the equilibrium output Y and equilibrium interest rate i when both goods market and money market are at the equilibrium. Identify this equilibrium point on the graph you draw in part (1).

(4) Suppose now the tax decreases from 200 to 100. As a result of this tax cut, how much is the new equilibrium output Y? Calculate the multiplier of tax cut.

(5) Suppose now the tax remains at 200, but the government spending G increases from 200 to 300. Calculate the government spending multiplier.

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

Current assets as of March 31: Cash $ 9,000 Accounts receivable $ 26,000 Inventory $ 48,600 Building and equipment, net $ 109,200 Accounts payable $ 29,175 Common stock $ 150,000 Retained earnings $ 13,625 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual) $ 65,000 April $ 81,000 May $ 86,000 June $ 111,000 July $ 62,000 Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,800 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $819 per month (includes depreciation on new assets). Equipment costing $3,000 will be purchased for cash in April.

Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required 1.

Required 2

Complete the following:

Required 3.

Complete the following cash budget: (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Required 4

Prepare an absorption costing income statement for the quarter ended June 30.

Required 5

Prepare a balance sheet as of June 30.

Thanks for your help!

8. A “laissez-faire” approach to the macroeconomy before the Great Depression influences our government to:

            a) See business downturns as a “serious malady” in a “healthy” system, and therefore take only short-term deficit spending measures to help recovery.

            b) See business downturns as a “serious malady” to an otherwise “healthy system,” and therefore wait for recovery to occur naturally.

            c) See business downturns as a “serious malady” to an otherwise “healthy system,” and therefore work to redesign the system to avoid such failure in the future.

            d) See business downturns as a failure of the type of system Adam Smith envisaged, and thus move toward a modern, more managed economy.

            e) See business downturns as a failure of the current system to be the type that Adam Smith envisaged, and thus move toward less government interference in the macro economy

9. Keynes believed that the Great Depression was caused by:

            a) Unemployment.

            b) Deficit spending by the government.

            c) The tax increases put through by President Herbert Hoover.

            d) The policies of “demand-style” economies.

            e) A fall in aggregate demand.

10. Keynes believed that the best method for ending the Great Depression would be to:

            a) Increase the money supply so that individuals would have more to spend.

            b) Cut government spending and increase taxes to reduce.

            c) Increase government spending and cut taxes so that consumers would spend more.

            d) Cut both government spending and taxes so that government would not be such a large     part of the economy.

            e) Increase both government spending and taxes to increase the role government played     in the economy.

11. Keynes was:

            a) In favor of a federal budget deficit to cure an inflation.

            b) Opposed to a federal budget surplus to cure an inflation.

            c) In favor of a federal budget deficit to cure a recession.

            d) In favor of a federal budget deficit regardless of the state of the economy.

12. Proponents of monetarism:

            a) Feel that fiscal policy of worthless.

            b) View government spending as the most important public policy tool.

            c) View taxation as the most important public policy tool.

            d) Support Keynesian economics.

            e) View the money supply as the most important public policy tool.

13. The word “stagflation” describes a situation in which:

            a) Inflation is stagnated.

            b) Inflation increases with economic growth.

            c) Inflation and unemployment occur at the same time.

            d) Inflation is low enough to grow economic growth.

            e) Inflation is zero.

14. The main difference between economic change before 1970 and after 1970 is that before 1970:

            a) Most macroeconomic instability was caused by simultaneous shifts in aggregate demand and aggregate supply.

            b) Most macroeconomic instability was caused by shifts in aggregate supply.

            c) Most macroeconomic instability was caused by shifts in aggregate demand.

            d) The government assumed no direct responsibility for the level of employment.

            e) The government itself was a much less important player in the macroeconomy.

15. The labor force consists of:

            a) All the people in the economy.

            b) All the people in the economy over 16 years of age.

            c) All the adults in the economy able to work.

            d) All the adults in the economy who hold jobs or are looking for them.

            e) All the adults in the economy qualified to hold a job.

16. Consider an economy with 100 people, 70 of whom hold jobs and 10 of whom are looking. The number of people in the labor force is:

            a) 100

            b) 30

            c) 10

            d) 80

            e) 70

17. Consider an economy with 100 people, 70 of whom hold jobs and 10 of whom are looking. The rate of unemployment is:

            a) 10 percent.

            b) 12.5 percent.

            c) 14.3 percent.

            d) 20 percent.

18. The labor force participation rate for women in the United States has

            a) Stayed the same over the last 30 years      

            b) Increased significantly since the 1950s     

            c) Been influenced by decreasing real wages since 1960     

            d) Trended substantially downward since the 1950s

            e) Increased only very slightly since the 1950s

Ultimate Corporation has assembled their management team to review their current inventory methods. They wish to ensure the optimal reporting figures for the upcoming quarter.

Below is a summary of their Inventory transactions:

Required:

1. Determing the Ending Inventory and Cost of Goods Sold under:
   1. FIFO
   2. LIFO
2. Which inventory method results in the lowest inventory turnover ratio for the quarter?
3. If the company decides to change their inventory reporting method – what would be required?

2. Sportz Corporation is preparing its budget for the second quarter of the calendar year. The following monthly sales data (in units) have been forecasted:

Additional information:
• Desired ending inventory each month—Finished goods: 25% of next month's sales.
• Desired ending inventory each month—Raw materials: 20% of next month's production needs
• Number of raw material units required per unit of finished product: 5 @ $4

Required:

Prepare a production budget, a direct material usage and purchases budget for the second quarter of the calendar year.