1. Last Chance Mine (LC) purchased a coal deposit for $750,000 on January 1, 2017. LC is a calendar year-end company. The company estimated it would extract 12,000 tons of coal from the deposit.  LC mined the coal and sold it reporting gross receipts of $1 million, $3 million, and $2 million for years 2017 through 2019, respectively.  During years 2017 – 2019, LC reported net income (loss) from the coal deposit activity in the amount of ($20,000), $500,000, and $450,000, respectively.  In years 2017 – 2019, LC actually extracted 13,000 tons of coal as follows:

Assume for each tax year that the cost and percentage depletion methods follow the methods discussed in the text (and my notes):

1. What is Last Chance’s cost depletion for 2017, 2018, and 2019?
   
   
   
   
2. What is Last Chance’s percentage depletion for each year (the applicable percentage for coal is 10 percent)?
   
   
   
   
3. Using the cost and percentage depletion computations from the previous parts, what is Last Chance’s actual depletion expense for each year? HINT: FILL OUT THE TABLE BELOW. Note that you will not be given this table to fill out on the midterm.
   

All logs are to base e

Size is in cubic centimeters, Age is in years, Weight is in pounds, Temperature is in degrees Fahrenheit, Height is in inches, Cost is in dollars, and Distance is in miles

The regression equation is
Log(Size) = 28.6 + 0.0292 Age - 1.124 Weight - 1.69 log(Temperature) + 1.02 log(Height) + 2.24 log(Cost) - 0.334 log(Distance)

S = 64.1788   R-Sq = 86.1%   R-Sq(adj) = 72.1%

Answer the following question using three decimals.
If the effect is not statistically significant put in NA
Put in percentages without the percent sign, so put in 10 instead of 10%

1-

As age increases by 1 year the size increases by the percentage

2 -

As weight increases by one pound the size decreases by the percentage

3-

As temperature increases by 7% the size will decrease by the percentage

4-

As Height increases by 3% the size increases by the percentage

5- As cost increases by 5% the size increases by the percentage

SCENARIO-2

You are an audit supervisor of Star & Co, planning the final audit of a new client, Franker Construction Co, for the year ending 31 December 2019. The company specializes in property construction and providing ongoing annual maintenance services for properties previously constructed. Forecast profit before tax is RO 46 millon and total assets are expected to be RO 53 million which is much higher than the balance of previous years. The company has recently upgraded their website during the year at a cost of RO 1·1 million. Franker Construction Co’s Finance director has provided you with the following notes regarding the company -- A full year-end inventory count will be undertaken on 30 September at all the 15 building sites where construction is in progress. There is not sufficient audit team resource to attend all inventory counts. Franker Construction Co has also insisted on completing the inventory count as well as the audit work as early as possible so that they can release their audit report well before time. In the month of October, the company had installed a new software and had migrated the entire pay roll from the old system to new one. In line with industry practice, Franker Construction Co. offers its customers a fiveyear building warranty, which covers any construction defects. Customers are not required to pay any additional fees to obtain the warranty. The finance director anticipates this provision will be lower than last year as the company has improved its building practices and therefore the quality of the finished properties. Franker Construction had few warranty complaints with customers whose cases come for hearing in the next week. Franker is confident that they would win the case if the audit partner represents as the audit team had earlier helped in few compliance and internal control implementation and was well familiar with the case details. Star & Co is put in a dilemma as the audit fees and other consultation fees for the last 2 years is overdue.

The finance director has informed you that although an allowance for receivables has historically been maintained, it is anticipated that this can be significantly reduced this month. Information from last year’s management accounts of Franker Construction Co’s shows a material overdraft balance. The finance director has confirmed that there are minimum profit and net assets covenants attached to the overdraft. A review of the management accounts shows the payables period was 49 days for November 2019, compared to 92 days in December 2019. The finance director anticipates that things will improve, and the number of days will become less.

Question 3: - (based on Scenario 2) As an audit supervisor of Star & Co, Identify the ethical threats and risk associated with the client Franker Construction & Co. and suggest appropriate responses / safeguards

An individual is nearsighted; his near point is 12.0 cm and his far point is 51.0 cm.

(a) What lens power is needed to correct his nearsightedness?

[answer] diopters

(b) When the lenses are in use, what is this person's near point?

[answer] cm

Hickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

Activity Cost Pool   Activity Measure   Estimated Overhead Cost   Expected Activity
Machining   Machine-hours   $   200,000   10,000   MHs
Machine setups   Number of setups   $   100,000   200   setups
Production design   Number of products   $   84,000   2   products
General factory   Direct labor-hours   $   300,000   12,000   DLHs

Activity Measure   Product Y   Product Z
Machine-hours   7,000   3,000
Number of setups   50   150
Number of products   1   1
Direct labor-hours   8,000   4,000

1. What is the company’s plantwide overhead rate?

2.Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z?

3. What is the activity rate for the Machining activity cost pool?

4. What is the activity rate for the Machine Setups activity cost pool?

5. What is the activity rate for the Product Design activity cost pool?

6. What is the activity rate for the General Factory activity cost pool?

7. Which of the four activities is a batch-level activity?

   General factory activity
   Product design activity
   Machine setups activity
   Machining activity

8. Which of the four activities is a product-level activity?

Machining activity
   Product design activity
   Machine setups activity
   General factory activity

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Do not round intermediate calculations.)

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z? (Do not round intermediate calculations.)

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 1 decimal place. (i.e. .1234 should be entered as 12.3))

12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your "Percentage" answers to 1 decimal place. (i.e. .1234 should be entered as 12.3))

At a price of $7.75 per ticket, a musical theater group can fill every seat in their 1800 seat performance hall. For every additional dollar charged for admission, the number of tickets sold drops by 100.

a) What ticket price maximizes revenue? Round your answer to the nearest cent.
price = $

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b) How many seats are sold at that price? Round your answer to the nearest whole number.
number of seats sold =

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Student pricing at the movie theater is a common example of third-degree price discrimination. What is it about students, as compared to everyone else, that makes movie theaters want or need to charge them a lower price? Why is it important for movie theaters to make students show their IDs? Additionally, suppose a student could buy as many tickets as they wanted with their ID. How might that limit the theater’s ability to charge two drastically different prices for students and non-students?

1. When a firm’s ATC of production increases as it increases production, this firm is said to be experiencing:

A) diseconomies of scale. B) economic profit. C) economies of scale. D) a barrier to entry.

2. Suppose you represent the student government on campus. What sort of profitable price discrimination

practices can you engage in on the following services? Be specific and use different techniques for each

part.

A) Parking spaces

B) Theater productions

C) Sports events

Program this scenario in C.

Scenario:

I am in highschool and i want to go see a movie. I have a certain amount of money to spend. Matinees are $8.50 and Evening Showings are $11.75. There is a G, PG, PG-13, and R movie at the theater. Ask the highschooler their age and how much money they have. With this info determine what showtime they can go see and what movies they are not allowed to see. Make it fun by assigning movie titles instead of ratings.