PART A. The following data apply to questions 1-4

Billy Stone, Inc., budgets the following amounts for its Buildings & Grounds and Computer Services Departments in servicing each other and the two manufacturing divisions of Signs and Mailers:

Actual cost data for each department are:

Total fixed costs allocated from Buildings & Grounds to the Signs Department, using the preferred allocation basis, by the direct allocation method are

a.   $37,500.                     

b.   $33,333.                                       

c.   $30,000.                     

d.   $25,000.

e.     none of the above

Total variable costs allocated from Computer Services and Building & Grounds to Mailers Department, using the preferred allocation basis, by the step-down allocation method (begin with Building & Grounds) are

a.   $8,400.                                         

b.   $12,000.                                       

c.   $16,000.                     

d.   $25,235.

e.     none of the above

The equation to determine the total variable costs of Computer Services using the preferred allocation basis, for the reciprocal allocation method is

CS = $21,000 + 0.25 B&G.                                        

CS = $21,000 + 0.20 B&G.    

CS = $21,000 + 0.15 B&G.

CS = $21,000 + 0.10 B&G.

Based on the reciprocal allocation method, determine the total variable costs allocated to SIGNS using the preferred allocation basis.

PLEASE SHOW WORK

Your company has sent you on business to the Los Angeles (LA) metropolitan area. Upon your arrival at LAX, you make your way to the Klunker Car Rental counter. As usual, the line at the counter is long, so you enter and begin your wait. While waiting you notice that Klunker is offering a special deal on gas. They are selling gas for $1.579 per gallon. However, you must purchase a full tank when you rent the car. Klunker also says that the average price per gallon of gas in the LA area is $1.60. You are uncertain of several necessary pieces of information to determine whether you should take advantage of this deal. These are: · the total miles you will drive on the trip; · rental car gas mileage; · how much gas the rental car's tank holds; · the true cost of gas in the LA area. First, you expect to drive between 150 and 250 miles on this trip. You believe there is an equal chance that you will drive either of these extreme amounts. However, you may have to make a side trip to Edwards AFB that will increase the total miles to 500. You believe there is a 1 in 5 chance that this will happen. Normally, Klunker rents you a mid-size car. You believe most cars in this class have either a 15 gallon gas tank with 60% confidence or a 18 gallon gas tank with 40% confidence. You've heard that cars in this class get as much as 25 mpg on the highway but may get as little as 18 mpg city driving. You decide there is an 70% chance most of your driving will be on the freeways and the rest in the city. Finally, you don't believe Klunker's posted average price of $1.60 per gallon in the LA area. You guess that there is 40% chance that the gas will be $1.259, 20% chance it will be $1.479 and a 40% chance it will be $1.659. Assume you must decide whether to pre-purchase the tank of gas prior to talking to a Klunker clerk.

a. Draw the decision tree for this problem using Decision Tree in Excel.

b. What is the optimal decision?

c. Now suppose you can delay your decision until you speak to a clerk and find out exactly how much gas your rental car holds. The clerk says the car you will rent holds 18 gallons of gas. What is your optimal decision now? What is the value of this additional information?

*Please show steps in excel *

CardioGood Fitness is a developer of high-quality cardiovascular exercise equipment. The company looks to increase the sales of its treadmill products and has hired The AdRight Agency, a small advertising firm, to create and implement an advertising program. CardioGood Fitness sells three different lines of treadmills: a. The TM195 is an entry-level treadmill with fewer programs and features. It is suitable for individuals who thrive on minimal programming and the desire for simplicity. The TM195 sells for $1,500. b. The middle-line TM498 adds to the features of the entry-level model two user programs and up to 15% elevation upgrade. The TM498 is suitable for individuals who are walkers at a transitional stage from walking to running or midlevel runners. The TM498 sells for $1,750. c. The top-of-the-line TM798 has more features than the other models. This model is designed to handle rigorous, frequent running; the TM798 is therefore appealing to someone who is a power walker or a runner. The selling price is $2,500. As a first step, the market research team at AdRight is assigned the task of identifying the profile of the typical customer for each treadmill product offered by CardioGood Fitness. The team decides to collect data on individuals who purchased a treadmill at a CardioGood Fitness retail store during the prior three months. The team identifies the following customer variables to study: product purchased—TM195, TM498, or TM798; gender; age, in years; education, in years; marital status, single or partnered; annual household income ($); usage, number of times the customer plans to use the treadmill each week; miles, mean number of miles the customer expects to walk/run each week; and Fitness, self-rated fitness on a 1-to-5 scale (where 1 is poor shape and 5 is excellent shape). a. For each of the following variables in the dataset, determine whether the variable is categorical or numerical. If the variable is categorical, determine whether the variable is nominal or ordinal. If the variable is numerical, determine whether the variable is discrete or continuous. i. Education ii. Usage iii. Miles iv. Fitness b. Build three (3) contingency tables based on total percentages for gender, marital status and fitness level: i. One for the model TM195 ii. One for the model TM498 iii. One for the model TM798 c. Build three (3) contingency tables showing the average of annual household income by gender, marital status and fitness level i. One for the model TM195 ii. One for the model TM498 iii. One for the model TM798 d. Based on parts b) and c), describe the features of the typical customer for each treadmill product i. Features typical customer TM195 ii. Features typical customer TM498 iii. Features typical customer TM798.

Some car tires can develop what is known as "heel and toe" wear if not rotated after a certain mileage. To assess this issue, a consumer group investigated the tire wear on two brands of tire, A and B, say. Fifteen cars were fitted with new brand A tires and thirteen with brand B tires, the cars assigned to brand at random. (Two cars initially assigned to brand B suffered serious tire faults other than heel and toe wear, and were excluded from the study.) The cars were driven in regular driving conditions, and the mileage at which heal and toe wear could be observed was recorded on each car. For the cars with brand A tires, the mean mileage observed was 24.99 24.99 (in 103 10 3 miles ) and the variance was 7.75 7.75 (in 106 10 6 miles2 2 ). For the cars with brand B, the corresponding statistics were 32.92 32.92 (in 103 10 3 miles) and 6.47 6.47 (in 106 10 6 miles2 2 ) respectively. The mileage before heal and toe wear is detectable is assumed to be Normally distributed for both brands. Part a) Calculate the pooled variance s2 s 2 to 3 decimal places. During intermediate steps to arrive at the answer, make sure you keep as many decimal places as possible so that you can achieve the precision required in this question. ×106 × 10 6 miles 2 2 Part b) Determine a 95% confidence interval for μA−μB μ A − μ B , the difference in the mean 103 10 3 mileages before heal and toe wear for the two brands of tire. Leave your answer to 2 decimal places. ( ,) Part c) Based on the 95% confidence interval constructed in the previous part, which of the following conclusions can be drawn when we test H0:μA=μB H 0 : μ A = μ B vs. Ha:μA≠μB H a : μ A ≠ μ B with α=0.05 α = 0.05 . A. Do not reject H0 H 0 since 0 is not in the interval found in part (b). B. Reject H0 H 0 since 0 is not within the interval found in part (b). C. Do not reject H0 H 0 since −7.93 − 7.93 is within the interval found in part (b). D. Do not reject H0 H 0 since 0 is within the interval found in part (b). E. Reject H0 H 0 since 0 is in the interval found in part (b)

Bardi Trucking Co., located in Cleveland, Ohio, makes deliveries in the Great Lakes region, the Southeast, and the Northeast. Jim Bardi, the president, is studying the relationship between the distance a shipment must travel and the length of time, in days, it takes the shipment to arrive at its destination. To investigate, Mr. Bardi selected a random sample of 20 shipments made last month. Shipping distance is the independent variable and shipping time is the dependent variable. The results are as follows:

Click here for the Excel Data File

1. Draw a scatter diagram. Based on these data, does it appear that there is a relationship between how many miles a shipment has to go and the time it takes to arrive at its destination?

1. On the graph below, use the point tool to plot the point corresponding to the first Distance and its Shipping Time (Distance 1).

2. Repeat the process for the remainder of the sample (Distance 2, Distance 3, … ).

3. To enter exact coordinates, double-click on the point and enter the exact coordinates of x and y.

4. b-1. Fill in the blanks. (Round your answers to 3 decimal places. Negative values should be indicated by minus sign.)

1. b-2. State the decision rule for 0.10 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

2. b-3. Compute the value of the test statistic. (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.)

3. b-4. Can we conclude that there is a positive correlation between distance and time? Use the 0.10 significance level.

4. c-1. Determine the coefficient of determination. (Round your answer to 3 decimal places.)

5. c-2. Fill in the blank below. (Round your answer to 1 decimal place.)

________% of the variation in shipping time is explained by shipping distance.

4. Determine the standard error of estimate. (Round your answer to 3 decimal places.)

5. Would you recommend using the regression equation to predict shipping time?

• Yes

• No

Your company has sent you on business to the Los Angeles (LA) metropolitan area. Upon your arrival at LAX, you make your way to the Klunker Car Rental counter. As usual, the line at the counter is long, so you enter and begin your wait. While waiting you notice that Klunker is offering a special deal on gas. They are selling gas for $1.579 per gallon. However, you must purchase a full tank when you rent the car. Klunker also says that the average price per gallon of gas in the LA area is $1.60. You are uncertain of several necessary pieces of information to determine whether you should take advantage of this deal. These are: · the total miles you will drive on the trip; · rental car gas mileage; · how much gas the rental car's tank holds; · the true cost of gas in the LA area. First, you expect to drive between 150 and 250 miles on this trip. You believe there is an equal chance that you will drive either of these extreme amounts. However, you may have to make a side trip to Edwards AFB that will increase the total miles to 500. You believe there is a 1 in 5 chance that this will happen. Normally, Klunker rents you a mid-size car. You believe most cars in this class have either a 15 gallon gas tank with 60% confidence or a 18 gallon gas tank with 40% confidence. You've heard that cars in this class get as much as 25 mpg on the highway but may get as little as 18 mpg city driving. You decide there is an 70% chance most of your driving will be on the freeways and the rest in the city. Finally, you don't believe Klunker's posted average price of $1.60 per gallon in the LA area. You guess that there is 40% chance that the gas will be $1.259, 20% chance it will be $1.479 and a 40% chance it will be $1.659. Assume you must decide whether to pre-purchase the tank of gas prior to talking to a Klunker clerk.

a. Draw the decision tree for this problem using Decision Tree in Excel.

b. What is the optimal decision?

c. Now suppose you can delay your decision until you speak to a clerk and find out exactly how much gas your rental car holds. The clerk says the car you will rent holds 18 gallons of gas. What is your optimal decision now? What is the value of this additional information? *Please show formulas in excel*

1.

(CO7) A car company claims that the mean gas mileage for its luxury sedan is at least 24 miles per gallon. A random sample of 7 cars has a mean gas mileage of 23 miles per gallon and a standard deviation of 1.2 miles per gallon. At α=0.05, can you support the company’s claim?

Bardi Trucking Co., located in Cleveland, Ohio, makes deliveries in the Great Lakes region, the Southeast, and the Northeast. Jim Bardi, the president, is studying the relationship between the distance a shipment must travel and the length of time, in days, it takes the shipment to arrive at its destination. To investigate, Mr. Bardi selected a random sample of 20 shipments made last month. Shipping distance is the independent variable and shipping time is the dependent variable. The results are as follows:

Click here for the Excel Data File

1. Draw a scatter diagram. Based on these data, does it appear that there is a relationship between how many miles a shipment has to go and the time it takes to arrive at its destination?

1. On the graph below, use the point tool to plot the point corresponding to the first Distance and its Shipping Time (Distance 1).

2. Repeat the process for the remainder of the sample (Distance 2, Distance 3, … ).

3. To enter exact coordinates, double-click on the point and enter the exact coordinates of x and y.

1. b-1. Fill in the blanks. (Round your answers to 3 decimal places. Negative values should be indicated by minus sign.)

1. b-2. State the decision rule for 0.02 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

1. b-3. Compute the value of the test statistic. (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.)

1. b-4. Can we conclude that there is a positive correlation between distance and time? Use the 0.02 significance level.

1. c-1. Determine the coefficient of determination. (Round your answer to 3 decimal places.)

1. c-2. Fill in the blank below. (Round your answer to 1 decimal place.)

4. Determine the standard error of estimate. (Round your answer to 3 decimal places.)

5. Would you recommend using the regression equation to predict shipping time?

• Yes

• No

Variable Costing Income Statement for a Service Company

East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs, their cost behavior, and activity rates for April are as follows:

Operating statistics from the management information system reveal the following for April:

a. Prepare a contribution margin by route report for East Coast Railroad Company for the month of April. Calculate the contribution margin ratio, rounded to one decimal place. If required, use the minus sign to indicate a negative contribution margin.

Feedback

a. Calculate:
Revenues = revenue per railcar x number of railcars
Variable costs:
Labor costs for loading = $46 x number of railcars
Fuel costs = $12.40 x number of train-miles
Train crew labor costs = $7.20 x number of train-miles
Switchyard labor = $31 x number of railcars
Then prepare contribution margin analysis as:
Revenues - Variable costs = Contribution Margin
To calculate the contribution margin ratio, divide the contribution margin by revenues.

Learning Objective 4 and Learning Objective 6.

b. Evaluate the route performance of the railroad using the report in (a).

The route performs significantly worse than do the other two routes. A close examination of the operating statistics indicates that this route runs railcars, combined with fairly total mileage. This combination suggests that the railroad is running many trains on the railroad. That is, the railroad’s profitability is sensitive to the size, or length, of the train in railcar terms.

Given the following information, prepare a Schedule C using 2019 rates.

Denise operates her business under the name "Design by Denise." Her office is located at 2359 Dawnridge Drive, Houston, Texas 77025. The federal EIN for her business is 51- 4867579 and the principal business code is 541400. Denise, who materially participates in her business, has operated it profitably for 3 of the last 4 years and is fully "at risk" with respect to her investment. She also has filed all required Forms 1099.

In accounting for her business, Denise uses the cash method. For 2019, her records show the following income and expenses. She participated in James’s health insurance plan and did not have to pay any premiums.

Gross receipts (not reported on Form 1099) . . . . . . . . . . . . . . . . . . . . . . $90,000

Gross receipts (reported on Form 1099; payer was Bernice Ng’s Furnishings, EIN 68-8752318, nonemployee compensation) . . . . 25,000 Expenses:

Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000

Legal services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500

Office expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,300

Equipment and machinery rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800

Office rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000

Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500

Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400

Subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500

In connection with her business, Denise often travels from her business location to the homes and offices of her clients, where she provides advice and expertise on interior design. During 2019, her written auto log shows that she drove her vehicle (a 2018 Mitsubishi Mirage that she purchased and put in service on May 13, 2017) 22,400 miles for business purposes, 3,800 miles for commuting, and 1,800 miles for personal purposes. Denise did not keep track of all her specific expenditures for the car and she wishes to deduct her auto expenses using the standard mileage rate for 2019. She has written evidence to support her mileage. The business car was available for use during off-duty hours, but she and her spouse also have another vehicle available for personal use.

Also in connection with her business, Denise purchased a Mac computer and HP laser color printer. The computer was purchased for $2,200 on November 10, 2019. The printer was purchased for $5,800 on September 30, 2019. Denise used both the computer and printer for business purposes at her office 85 percent of the time, and personal purposes 15 percent of the time, for which she has written evidence. Denise would like to deduct the maximum allowable amount on each of these assets.