Macroeconomic Conditions and Company Performance: RE: Walmart, Neighborhood Market

a) Describe the trends of Net Profit And Total Revenue over the past three years. (Generally Macro effects of increased net profit and revenue)

You represent the Executive team for Mountainside Medical Center and have the following operating results for the year ended 12/31/2016.

You are asked to make a quick estimate of income for 2017. You believe that the volume of services will remain the same from 2016 to 2017, but expect the following changes:

Net revenues will increase by 2%;

Bad debts will increase by 1% over the rate seen in 2016 (take bad debt as a % of gross for 2016 and increase it by 101%). Charity will remain at the same rate as in 2016.

Salaries will increase by 3%. Benefits will remain at the same percentage of salaries as in 2016;

Supplies will increase by 4% over the rate seen in 2016 (take supplies as a % of net for 2016 and increase it by 104%) ;

The hospital will add one item of capital equipment that will add $262,775 in depreciation in 2017.

All other items are expected to remain the same as in 2016.

Your task is to create an income projection for the Medical Center for 2017 given the changes described above.

1. If your company has Total Fixed Cost = $800,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $1,335,000, and Number of Units = 25,000, what is the number of units you need to sell to break even?
2. If your company has Total Fixed Cost = $141,000, Selling Price per Unit = $29.00, and Variable Cost per Unit = $7.71, what is the sales revenue you need to generate to break even?
3. If your company has Net Operating Income = $855,000, Total Fixed Cost = $185,000, and Total Sales Revenue = $1,300,000, what is the sales revenue you need to generate to reach your target profit $2,171,700?
4. If your company has Unit Contribution Margin = $29.38, Number of Units = 36,000, and Net Operating Income = $94,500, what is the number of units you need to sell to break even?
5. If your company has Total Variable Cost = $740,000, Total Contribution Margin = $1,110,000, and Total Fixed Cost = $112,000, what is the sales revenue you need to generate to break even?
6. If your company has Total Fixed Cost = $490,000, Unit Contribution Margin = $69.43, and Contribution Margin Ratio = 0.8, what is the number of units you need to sell to reach your target profit of $1,751,500?
7. If your company has Total Fixed Cost = $500,000, Total Sales Revenue = $2,225,000, Total Variable Cost = $667,500, and Unit Contribution Margin = $62.30, what is the sales revenue you need to generate to reach your target profit $2,728,350?

1) Using accrual accounting, expenses are not recorded until the cash for the expense is disbursed.
True
False

2) The adjusting entry for accrued revenue always involves a:

A.debit to an asset account and a credit to a revenue account

B.debit to a revenue account and a credit to an asset account

C.debit to a liability account and a credit to an asset account

D.debit to an asset account and a credit to a liability account

3) A journal entry contains a debit to the Cash account and a credit to the Unearned Service Revenue account. This is an example of a(n):

A.deferred expense

B.deferred revenue

C.accrued revenue

D.accrued expense

4) The adjusting entry for a prepaid expense always involves a(n):

A. liability account and a revenue account

B.expense account and a liability account

C.expense account and an asset account

D.asset account and a liability account

5) On October 25, 2017 Quick Corp. prints a cheque for November's rent payment. Quick Corp. mails the cheque on October 27 to the landlord. The landlord receives the cheque October 31 and cashes the cheque on November 2. When should Quick Corp. record the rent expense associated with this transaction?

A.November 2, 2017

B.November 30, 2017

C.October 25, 2017

D.October 27, 2017

6) Which of the following transactions would be recorded at the time the transaction occurs under the accrual basis, but would not be recorded until sometime in the future under the cash basis?

A.issuance of stock

B.sale of merchandise on account

C.payment of interest expenses

D.payment of employee salaries

A consultant collected 960 $ of consultancy fees in advance. She erroneously debited Cash for 690 $ and credited Accounts Receivable for 690 $. The correcting entry is

a) Debit Cash, 690 $ and Accounts Receivable, 270 $; Credit Unearned Revenue, 960 $.

b) Debit Cash, 960 $; Credit Service Revenue, 960 $.

c) Debit Cash, 270 $ and Accounts Receivable, 690 $; Credit Unearned Revenue, 960 $.

d) Debit Cash, 270 $; Credit Accounts Receivable, 270 $.

A monopolist charges a price of $15 per unit. A the point of intersection of the marginal revenue and marginal cost curves, the output was 10 units and the marginal cost was $7. Average total cost for 10 units of output was $7. What is this monopolist’s profit?

Hint: Profit = Total Revenue - Total Cost

Total Revenue = Price x Quantity

Total Cost = Average Total Cost x Quantity