• (The Short-Run Firm Supply Curve) Each of the following situations could exist for a perfectly competitive firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to determine what it should do in the short run.

1. The total cost exceeds total revenue at all output levels.
2. The total variable cost exceeds total revenue at all output levels.
3. Total revenue exceeds the total fixed cost at all output levels.
4. Marginal revenue exceeds marginal cost at the current output level.
5. Price exceeds average total cost at all output levels.
6. The average variable cost exceeds the price at all output levels.
7. The average total cost exceeds the price at all output levels.

Suppose demand and supply can be characterized by the following equations:

Q_d = 6 – 2P

Q_s = P

Price is in dollars; quantity is in widgets.

For parts (c) and (d), assume a tax of $1.50 per widget sold is imposed on sellers. Show your work for each step below.

C. Find the equilibrium price buyers pay, price sellers get, and quantity algebraically.

D. Calculate the following:

1. consumer surplus
2. producer surplus
3. total firm revenue
4. production costs
5. total tax revenue collected by the government
6. portion of the total tax revenue paid by the buyer
7. portion of the total tax revenue paid by the seller
8. deadweight loss

(e) Does the “law of demand” hold for the demand curve given in this problem? How do you know?

(f) Does the “law of supply” hold for the supply curve given in this problem? How do you know?

Because each industry typically has a different method for recognizing income, revenue recognition is one of the most difficult tasks for accountants, as it involves a number of ethical dilemmas related to income reporting. To provide an industry-wide approach, Accounting Standards Update No. 2014-09 and other related updates were implemented to clarify revenue recognition rules. The American Institute of Certified Public Accountants (AICPA) announced that these updates would replace U.S. GAAP’s current industry-specific revenue recognition practices with a principle-based approach, potentially affecting both day-to-day business accounting and the execution of business contracts with customers.^{1 (Links to an external site.)}What are the requirements of the AICPA and the International Federation of Accountants (IFAC) for professional accountants in regards to new accounting rules and methods of accounting for different transactions, including revenue recognition.

McHale Company does business in two customer segments, Retail and Wholesale. The following annual revenue information was determined from the accounting system's invoice information:

Prepare a horizontal analysis of the segments. Round percentages to one decimal place. Enter negative values as negative numbers.

Prepare a vertical analysis of the segments. If required, round percentages to one decimal place.

Break-even analysis for a service company

Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of $35,345 million. Costs and expenses for the year were as follows (in millions):

Assume that 70% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place.

a. What is Sprint Nextel's break-even number of accounts, using the data and assumptions given?
million accounts

b. How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant?
$ million per account

A statistical program is recommended.

The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.

a) Predict weekly gross revenue (in dollars) for a week when $3,300 is spent on television advertising and $1,500 is spent on newspaper advertising. (Round your answer to the nearest cent.)

$

b) Predict weekly gross revenue (in dollars) for a week when $3,500 is spent on television advertising and $1,300 is spent on newspaper advertising. (Round your answer to the nearest cent.)

$  

Suppose you are an accountant for a large retail company. At the end of the quarter, the General Manager (GM) tells you: “Our sales are slightly below forecast and we will not make our bonus this quarter. However, I noticed that we got a lot of cash from selling gift cards. I also noticed that this cash is not included in our quarterly sales revenue. Can you include it, so that our reported sales meet the forecast and we get paid our bonus?”

a. How would you explain to the GM why the cash received for gift cards should or should not be included in your reported sales revenue?

b. What would the ethical issues be with reporting the cash received for gift cards as sales revenue?

c. How would you react to the GM’s request? Specifically, would you report the cash received for gift cards as sales revenue or not?

Instructions 1. Column C. should be TYPE: ASSET, LIABILITY, EQUITY, REVENUE OR EXPENSES 2. COLUMN D OR E SHOULD HAVE A YES OR NO.

EXAMPLE CASH IS ON THE BALANCE SHEET. HINT: NONE OF THE ACCOUNTS WILL BE ON BOTH. 4. FILL IN DEBIT OR CREDIT- WHICH IS NORMAL BALANCE OF THE ACCOUNT. (INCREASE SIDE) 5. Fill in which type of account is it? Temporary or permanent.

Chapter 10 Pure Monopoly Assignment

1. What are the major characteristics of pure monopoly?

2. In the following table are demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost.

Answer these three questions:

1. What output will the monopolist produce?

(b) What price will the monopolist charge?

(c) What total profit will the monopolist receive at the profit-maximizing level of output?