To test whether the mean time needed to mix a batch of material is the same for machines produced by three manufacturers, the Jacobs Chemical Company obtained the following data on the time (in minutes) needed to mix the material.

a. Compute the values below (to 2 decimals, if necessary).

b. Use Fisher's LSD procedure to develop a 95% confidence interval estimate of the difference between the means for manufacturer 1 and manufacturer 2. Round to two decimal places. Enter negative values as negative numbers.

The Terminator

Trans Ocean Shipping (“Trans Ocean”) provides domestic and international transportation and logistics services to customers. The company contracts shipping vessels, trucks, and aircraft to provide regional, long-haul, and international shipments of customer goods. Trans Ocean has entered into the following contracts:

In March 2019, Trans Ocean entered into a revenue contract with a customer, Asia Manufacturing (“Asia”), in which Trans Ocean would be the exclusive shipper of Asia’s products between Shanghai and Los Angeles. Trans Ocean’s contract with Asia is effective on July 1, 2019. Before signing the contract with Asia, Trans Ocean did not operate the Shanghai Los Angeles route, and to satisfy the contract with Asia, in April 2019, Trans Ocean leases a cargo ship from Heavy Vessel Manufacturing (“Heavy”), which commences on July 1, 2019.

Because the shipping route is new, on July 1, 2019, (1) Trans Ocean has no other customers to deliver goods on the Shanghai-Los Angeles route and (2) because of operational costs, Trans Ocean does not have alternative uses for the leased cargo ship.

Trans Ocean adopted ASC 842, Leases, on January 1, 2019.

The following are relevant facts about Trans Ocean’s revenue contract with Asia, and Trans Ocean’s lease with Heavy.

Trans Ocean’s Revenue Contract With Asia

• The revenue contract’s stated term with Asia is for one year.

• Asia can renew the contract annually for up to four additional years. Therefore, the revenue contract can extend to five full years.

• Asia pays a significant up-front nonrefundable fee for the initial one-year term; the same amount is due at the beginning of every renewal period.

• Asia can cancel at any time without incurring a penalty outside of forfeiting any up-front nonrefundable fees already paid or owed at the beginning of the initial contract term and any and each renewed period.

• Although the contract is new, Trans Ocean and Asia have entered into similar arrangements with similar terms and historically, Asia has renewed for one or more years.

• Trans Ocean appropriately concludes that (1) the revenue contract meets the scope of, and criteria in, ASC 606, Revenue From Contracts With Customers, and (2) the contract term for its revenue contract with Asia is one year.

Trans Ocean’s Lease With Heavy

• The contract between Trans Ocean and Heavy contains a lease under ASC 842.

• Rental payments are at market and fixed each year.

• To mitigate risks, Trans Ocean negotiated the lease period and renewal options to mirror those of Trans Ocean’s revenue contract with Asia. As a result, the fixed, noncancelable term of the lease is one year, and Trans Ocean can renew annually for four additional years (i.e., up to five full years).

Trans Ocean believes that since Asia can terminate the revenue contract after one year (even though Asia may need to ship products for longer than a year and has historically renewed under other similarly structured contracts), it is uncertain whether Asia will renew the revenue contract. Because of this uncertainty, Trans Ocean believes that the renewal options related to the lease are not reasonably certain at the commencement date of the lease.

As a result, Trans Ocean concludes that the lease term for its lease contract with Heavy is also one year.  

1. Under US GAAP, do you agree with Trans Ocean’s conclusion that the lease term for the cargo vessel is one year because the revenue contract is for one year?

2. According to US GAAP, what factors should Trans Ocean consider in supporting its conclusion related to the lease term?

Additional Facts:

On December 1, 2019, Trans Ocean entered into a shipping contract with Eastern Manufacturing Company (“Eastern”) to ship Eastern’s products between Shanghai and Los Angeles. The contract with Eastern commences on January 1, 2020, and on the basis of Trans Ocean’s evaluation of its enforceable rights and obligations in the contract with Eastern, Trans Ocean concludes that term of the revenue contract with Eastern is for a period of two years. Further, Trans Ocean concludes that (1) because of its contract with Asia and Eastern, it would not be operationally feasible to deploy the leased cargo vessel on other routes; (2) the cargo vessel will have sufficient capacity to service both Asia and Eastern; and (3) the leased asset is needed for Trans Ocean to perform under its revenue contract with Eastern (because of economic reasons that would not allow Trans Ocean to use another vessel).

3. Under US GAAP, should Trans Ocean reassess the lease term of the cargo vessel? If so, why?

4. Please answer questions 1 and 3 under IFRS/IAS.

Ricky's Piano Rebuilding Company has been operating for one year (2016). At the start of 2017, its income statement accounts had zero balances and its balance sheet account balances were as follows:

Required:
2. Prepare journal entries for the following January 2017 transactions, using the letter of each transaction as a reference: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Received a $680 deposit from a customer who wanted her piano rebuilt in February.
2. Rented a part of the building to a bicycle repair shop; $390 rent received for January.
3. Delivered five rebuilt pianos to customers who paid $18,100 in cash.
4. Delivered two rebuilt pianos to customers for $8,800 charged on account.
5. Received $7,800 from customers as payment on their accounts.
6. Received a utility bill for $530 for January services to be paid in February.
7. Ordered $1,160 in supplies.
8. Paid $2,240 to suppliers on account in January.
9. Paid $19,000 in wages to employees in January for work done this month.
10. Received and paid cash for the supplies in (g).

1. & 3. Post the journal entries to the T-accounts which are listed below. Show the unadjusted ending balances in the T-accounts.

Use the balances in the completed T-accounts to prepare an unadjusted trial balance at the end of January 2017.

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Question 1 of 3 Total1 of 3

5. Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 36 $ 24 Direct labor 32 27 Variable manufacturing overhead 19 17 Traceable fixed manufacturing overhead 27 30 Variable selling expenses 24 20 Common fixed expenses 27 22 Total cost per unit $ 165 $ 140 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 5. Assume that Cane expects to produce and sell 107,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 22,000 additional Alphas for a price of $128 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 11,000 units. a. What is the financial advantage (disadvantage) of accepting the new customer’s order? b. Based on your calculations above should the special order be accepted?

6. Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 36 $ 24 Direct labor 32 27 Variable manufacturing overhead 19 17 Traceable fixed manufacturing overhead 27 30 Variable selling expenses 24 20 Common fixed expenses 27 22 Total cost per unit $ 165 $ 140 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 6. Assume that Cane normally produces and sells 102,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 7. Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 36 $ 24 Direct labor 32 27 Variable manufacturing overhead 19 17 Traceable fixed manufacturing overhead 27 30 Variable selling expenses 24 20 Common fixed expenses 27 22 Total cost per unit $ 165 $ 140 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

7. Assume that Cane normally produces and sells 52,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 36 $ 24 Direct labor 32 27 Variable manufacturing overhead 19 17 Traceable fixed manufacturing overhead 27 30 Variable selling expenses 24 20 Common fixed expenses 27 22 Total cost per unit $ 165 $ 140 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

8. Assume that Cane normally produces and sells 72,000 Betas and 92,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

9.  

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

9. Assume that Cane expects to produce and sell 92,000 Alphas during the current year. A supplier has offered to manufacture and deliver 92,000 Alphas to Cane for a price of $128 per unit. What is the financial advantage (disadvantage) of buying 92,000 units from the supplier instead of making those units?

Suppose that you are testing the hypotheses H0​: u=74 vs. HA​: u does not equal 74. A sample of size 51 results in a sample mean of 69 and a sample standard deviation of 1.8. ​

a) What is the standard error of the​ mean? ​

b) What is the critical value of​ t* for a 90​% confidence​ interval?

​c) Construct a 90​% confidence interval for mu. ​

d) Based on the confidence​ interval, at a=0.100 can you reject H0​? Explain.

Balance Sheet:  

Suppose you are the Chief Marketing Officer for a retailer that has data on the home addresses of its

1,000,000 most active customers. You hope to determine whether sending out “20% off your entire

purchase” coupons by mail will increase revenues.

You conjecture that customers who have access to this coupon will spend more in the store over the

next year. However, skeptics in your company argue that the coupons will just allow customers to

spend less on items they would have purchased anyway. This is a debate that an experiment can

resolve.

In thinking about how large of an experiment you need to have enough statistical power, you realize

that many of the customers you send the coupons to in the mail will not open the mail and so will not

realize they received the coupon.

1. The CEO argues that to estimate the effects of the coupons on revenue, you should compare

the difference in revenues from a) people you sent the coupons and who used them and b)

people you sent the coupons but who did not use them. Write a response to your CEO:

describe the flaw with this plan in language the CEO will understand, and advocate for your

proposed experiment.

2. To avoid the cost of sending out coupons you do not need to, you ask the data science team

to plan an experiment just large enough (with just enough statistical power) to reliably detect

a treatment effect if the true effect on those who open the mail and realize they have the

coupon is a $2 increase in revenue over the next year. The data science team tells you that

an experiment with 100,000 people in the treatment group (leaving the remaining 900,000 in

the control group) will be well-powered to detect an overall difference between the entire

treatment and control groups of $2 in revenue over the next year. To send out the minimum

number of coupons required while still having enough statistical power to detect a $2 effect of

opening the mail, can you send out fewer, the same number of, or more coupons than

100,000?

Analyze if the statements that are presented below are True or False. You MUST justify your answer to get credit. Answers without justification (even if they are correct) will be given zero marks.

1. (a) In any Pareto-optimal allocation of a two-good economy, each consumer has to consume a positive amount of both goods.

2. (b) A monopolist never produces on the elastic segment of its average revenue curve.

3. (c) If a firm’s production exhibits increasing returns to scale, then the firm’s marginal costs are decreasing and below its average costs.

4. (d) Maroon Theater practices third-degree price discrimination and sells tickets to three groups of customers: students, regular customers and senior citizens. The inverse demand of the three groups is linear. Furthermore, the students’ and senior citizens’ elasticities of demand for tickets are −4 and −3, respectively. Because the price charged to regular customers is greater than the price charged to senior citizens, we know with certainty that the ticket price for students will be lower than the ticket price for regular customers.

COMPREHENSIVE PROBLEM

OJB Company began business in January, 2016. The following transactions occurred in February, 2016:

Feb 1      Purchased supplies on account, $ 400.

         2      Received cash from customers on account, $ 1,750.

3      Paid $ 400 on account.

5      Paid technician $ 750 in salary, including the amount owed at the end of January.

8      Billed customers for services provided on account, $ 3,200.

11     Paid cash for advertising on a local website, $ 300.

12     Received $ 3,875 cash for fees earned for jobs completed.

16     Paid electricity bill for the month, $ 290.

17     Received $ 8,200 cash for fees earned for jobs completed.

19     Paid technician $ 750 in salary.

20     Billed customers for services provided on account, $ 6,100.

22     Received cash from customers on account, $ 9,500.

25     Paid phone bill for the month, $ 120.

26     Received cash from customers as an advance payment for                                       technical support services to be provided in the future, $ 2,500.

27     Billed customers for services provided on account, $ 3,900.

28     Received cash from customers on account, $ 5,100.

28     OJB withdrew $8,000 for personal use.

INSTRUCTIONS:

The chart of accounts and the post-closing trial balance as of January 31, 2016 are given. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of the ledger. Date the balances February 1, 2016, and place a check mark ( ü ) in the Posting Reference column. Journalize each of the February transactions in the journal provided using OJB Company’s chart of accounts. (Do not insert the account numbers in the journal at this time).

Post the journal to the ledger.

Prepare an unadjusted trial balance.

At the end of February, the following adjustment data were assembled. Use this data to complete instructions ( 5 ) and ( 6 ):

Supplies on hand were $ 600.

Rent expired during the month was $ 1,600.

Unearned fees at the end of the month were $ 2,000.

Insurance expired during the month was $ 300.

Accrued salaries payable were $ 240.

Depreciation on equipment during the month was $ 330.

Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet/worksheet and complete the worksheet.

Journalize and post the adjusting entries.

Prepare an adjusted trial balance.

Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet.

Record and post the closing entries. Indicate closed accounts in the ledger by inserting a line in both of the Balance columns opposite each closing entry.

10.Prepare a post-closing trial balance.

OJB COMPANY SERVICE CHART OF ACCOUNTS

PROVIDED FOR YOU IN BLACKBOARD THIS ACCOUNT IS

LISTED BUT IS NOT USED—PLEASE IGNORE**

OJB COMPANY

POST-CLOSING TRIAL BALANCE

JANUARY 31, 2016

                                                                           DEBIT        CREDIT

Accounts Receivable3,400

Prepaid Rent3,200

Prepaid Insurance1,500

Office Equipment14,500

Accumulated Depreciation330

Accounts Payable800

Salaries Payable120

Unearned Fees2,500

OJB, Capital                  42,300

                                                                           46,050       46,050

OJB Company began business in January, 2016. The following transactions occurred in February, 2016:

Feb 1      Purchased supplies on account, $ 400.

          2      Received cash from customers on account, $ 1,750.

3      Paid $ 400 on account.

5      Paid technician $ 750 in salary, including the amount owed at the end of January.

8      Billed customers for services provided on account, $ 3,200.

11     Paid cash for advertising on a local website, $ 300.

12     Received $ 3,875 cash for fees earned for jobs completed.

16     Paid electricity bill for the month, $ 290.

17     Received $ 8,200 cash for fees earned for jobs completed.

19     Paid technician $ 750 in salary.

20     Billed customers for services provided on account, $ 6,100.

22     Received cash from customers on account, $ 9,500.

25     Paid phone bill for the month, $ 120.

26     Received cash from customers as an advance payment for                                       technical support services to be provided in the future, $ 2,500.

27     Billed customers for services provided on account, $ 3,900.

28     Received cash from customers on account, $ 5,100.

28     OJB withdrew $8,000 for personal use.

INSTRUCTIONS:

The chart of accounts and the post-closing trial balance as of January 31, 2016 are given. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of the ledger. Date the balances February 1, 2016, and place a check mark ( ü ) in the Posting Reference column. Journalize each of the March transactions in the journal provided using OJB Company’s chart of accounts. (Do not insert the account numbers in the journal at this time).

Post the journal to the ledger.

Prepare an unadjusted trial balance.

At the end of March, the following adjustment data were assembled. Use this data to complete instructions ( 5 ) and ( 6 ):

Supplies on hand were $ 600.

Rent expired during the month was $ 1,600.

Unearned fees at the end of the month were $ 2,000.

Insurance expired during the month was $ 300.

Accrued salaries payable were $ 240.

Depreciation on equipment during the month was $ 330.

Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet/worksheet and complete the worksheet.

Journalize and post the adjusting entries.

Prepare an adjusted trial balance.

Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet.

Record and post the closing entries. Income Summary is account #33 in the chart of accounts. Indicate closed accounts in the ledger by inserting a line in both of the Balance columns opposite each closing entry.

10.Prepare a post-closing trial balance.

OJB COMPANY SERVICE CHART OF ACCOUNTS

OJB COMPANY

POST-CLOSING TRIAL BALANCE

JANUARY 31, 2016

                                                                                DEBIT     CREDIT

Accounts Receivable3,400

Prepaid Rent3,200

Prepaid Insurance1,500

Office Equipment14,500

Accumulated Depreciation330

Accounts Payable800

Salaries Payable120

Unearned Fees2,500

OJB, Capital                    42,300

                                                                                46,050    46,050