--------Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties, and needs some advice from her accountant on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Central Funland, Central Waterworld, and Central Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Each park manager meets with the CEO at least once annually to review their performance, as measured by their park’s ROI. The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the required rate.

Central Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood rollercoaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction.

Central Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same pay rate, which he says he will accept if his performance is not appropriately acknowledged.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Central Adventures has a $86,000 mortgage payment on the land and buildings for Treetops, which would still need to be paid if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a required rate of return of 12 percent (set at the company’s weighted-average cost of capital) and are subject to 18% income taxes.  

Fatima needs to see this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

a.   Create a multilevel income statement for Central Adventures.

b.   Calculate the current annual ROI, residual income and EVA for the three parks.

c.   Did Janet Lieberman (the Funland park manager) make the ‘right’ decision (i.e., was it in Central Adventure’s overall best interest for Funland to reject the new rollercoaster)? Explain your answer. Provide the appropriate financial analysis(es) to support your conclusion.

d.   Is David Copperfield’s (the Waterworld park manager) complaint valid? Or would a different performance metric tell the same story?

e.   Provide a recommendation on whether to close Treetops. Provide the appropriate financial analysis to support your conclusion.

f.    Provide a recommendation on a different allocation base for corporate overhead.  

A movie theater manager believes the average amount of money customers spend on snacks is over $15.

To test the claim, a theater employee tracks the spending of 25 randomly selected customers.

The sample mean is $17.08 with a sample standard deviation of $4.81.

a) What is the Null Hypothesis and the Alternative Hypothesis for the manager’s claim?

b) Assuming the population is normal, should we use the Normal z-test or the Student’s t-test?

(Please answer sub parts: A, B)

The student population at the state college consists of 55% females and 45% males.

A. The college theater department recently staged a production of a modern musical. A researcher
recorded the gender of each student entering the theater and found a total of 385 females and 215 males. Is the gender distribution for theater goers significantly different from the distribution for the general college? (Test at the .05 significance level using CV = 3.84).

B. The same researcher also recorded the gender of each student watching a men’s basketball game in the college gym and found a total of 83 females and 97 males. Is the gender distribution for basketball fans significantly different from the distribution for the general college? (Test at the .05 significance level
using CV = 3.84).

1. Due to the pandemic, the demand for movies in cinemas has fallen. AMC and Cinemark must both close half of their theaters in Lewis and Corinth counties over the next month.

a. Why would it be less profitable for both to close half the theaters in both counties versus one closing Lewis county theaters and the other closing Corinth county theaters?

b. Model a simultaneous game in which AMC and Cinemark choose either Lewis or Corinth to close. What is the equilibrium of this game?

c. What is the equilibrium if AMC was able to make a theater closure decision before Cinemark?

d. You are an economist hired to advise AMC on which theaters to close. Should you ask for time to all the theater traffic data or ask them to announce theater closures today?

ABC Theater runs multiple shows each month. Each of the 5 theaters has 100 seats. The selling price for each ticket is $10, no matter which show or time of day. Adults, Seniors and Children admissions are all $10 each.

Given the following financial data:

• ABC Theaters pays $8,000 rent for the theater equipment each month
• ABC Theaters owns the building and records depreciation of $1,500 each month
• The management has determined that there is a variable cost of $2 per admission that accounts for maintenance and supplies.
• The movie house managers salary is $36,000 per year or $3,000 per month. The manager also receives a $1 bonus for each paid admission to the theater
• Finally, the ABC Theaters wants to achieve a $10,000 profit at the end of each month.

* Compute the number of ticket admissions required to be sold each month to achieve break even, including the profit goal of $10,000 each month.

* If ABC Theater had an exceptional month and sold 4,000 tickets at their normal price, how much extra profit would they earn beyond their monthly goal of $10,000; assuming the same data as above?

Read the following case. Apply your knowledge of the five components of the 2013 COSO IC framework as well as risk, internal controls, and any other Chapter 6 [Parts 1 & 2] topics to speculate whether or not Ron has a chance of carrying out his idea successfully, without being caught, and explain in detail why or why not?

Ron Mitchell is currently working his first day as a ticket seller and cashier at the First Run Movie Theater. When a customer walks up to the ticket booth, Ron collects the required admission charge and issues the movie patron a ticket. To be admitted into the theater, the customer then presents his or her ticket to the theater manager, who is stationed at the entrance. The manager tears the ticket in half, keeping one half for himself and giving the other half to the customer.

While Ron was sitting in the ticket booth waiting for additional customers, he had a "brilliant" idea for stealing some of the cash from ticket sales. He reasoned that if he merely pocketed some of the cash collections from the sale of tickets, no one would ever know. Because approximately 300 customers attend each performance, Ron believed that it would be difficult for the theater manager to keep a running count of the actual customers entering the theater. To further support his reasoning, Ron noticed that the manager often has lengthy conversations with patrons at the door, and appears to make no attempt to count the actual number of people going into the movie house.

#4 PART 8

a meteorologist who sampled 16 thunderstorms found that the average speed at which they traveled across a certain states was 14 miles per hour. The standard deviation of the sample was 1.3 miles per hour.

find the 92% confidence interval of the mean

the number of unhealthy days based on the AQI (Air Quality Index) for a. random sample of metropolitan areas is shown. Construct an 87% confidence interval based on data. Assume variable is normally distributed.

61 40 5 14 21 23 3 15 6 50. ____ < u < _____

__________________________________________________

a random sample of 345 college students were asked if they believed that places could be haunted, and 35 responded yes. Estimate the true proportion of college students who believe in the possibility of haunted places with 90% confidence. According toTime magazine, 37% of Americans believe that places can be haunted. Round to five decimal places

____ < p < _____

in a study, 68% of 905 randomly selected adults said they believe in the republicans favor the rich. If the margin of error was 4 percentage points, what is the confidence level used for the proportion?

a federal report indicated that 26% of children under age 6 live in poverty in alabama, an increase over previous years. how large a sample is needed to estimate the true proportion of children under age 6 living in poverty in alabama within 5% with 99% confidence

n= _____

Obesity is defined as a body mass index (BMI) of 30 kg/m^2 or more. A 99% confidence interval for the percentage of U.S. men aged 70 years and over who were obese were found to be 20.0% to 21.0

n= ____ (it is NOT 43, 259)

it is believed that 25% of u.s. homes have direct satellite television receiver. 90% confidence within 2 percentage points?

n= _____

a recent study indicated that 23% of the 160 women over age 55 in the study were widows. how large a sample must you take to be 90% confident that the estimate is within 0.05 of the true proportion of women over age 55

n=_____

in a recent year, a study found that 78% of adults ages 18-29 had internet access at home. Did research on 182 undergraduates total and found that 166 had access. Estimate the true proportion with 90% confidence.

_____ < p < ____

Download the Gas Consumption Data into Excel:

Gas tax (cents per gallon),Average income (dollars),Paved Highways (miles),Proportion of population with driver's licenses,Consumption of gas (millions of gallons)
9,3571,1976,0.525,541
9,4092,1250,0.572,524
9,3865,1586,0.58,561
7.5,4870,2351,0.529,414
8,4399,431,0.544,410
10,5342,1333,0.571,457
8,5319,11868,0.451,344
8,5126,2138,0.553,467
8,4447,8577,0.529,464
7,4512,8507,0.552,498
8,4391,5939,0.53,580
7.5,5126,14186,0.525,471
7,4817,6930,0.574,525
7,4207,6580,0.545,508
7,4332,8159,0.608,566
7,4318,10340,0.586,635
7,4206,8508,0.572,603
7,3718,4725,0.54,714
7,4716,5915,0.724,865
8.5,4341,6010,0.677,640
7,4593,7834,0.663,649
8,4983,602,0.602,540
9,4897,2449,0.511,464
9,4258,4686,0.517,547
8.5,4574,2619,0.551,460
9,3721,4746,0.544,566
8,3448,5399,0.548,577
7.5,3846,9061,0.579,631
8,4188,5975,0.563,574
9,3601,4650,0.493,534
7,3640,6905,0.518,571
7,3333,6594,0.513,554
8,3063,6524,0.578,577
7.5,3357,4121,0.547,628
8,3528,3495,0.487,487
6.58,3802,7834,0.629,644
5,4045,17782,0.566,640
7,3897,6385,0.586,704
8.5,3635,3274,0.663,648
7,4345,3905,0.672,968
7,4449,4639,0.626,587
7,3656,3985,0.563,699
7,4300,3635,0.603,632
7,3745,2611,0.508,591
6,5215,2302,0.672,782
9,4476,3942,0.571,510
7,4296,4083,0.623,610
7,5002,9794,0.593,524

1) Looking at the variables, which ones do you think will affect gasoline consumption? Of the variables you think are important, which direction do you think the effect will be (i.e., what sign will its coefficient take)? 2) Now run a regression with gas consumption as the dependent variable and use the independent variables that you think are important. Discuss your results.

Some manufacturers claim that non-hybrid sedan cars have a lower mean miles-per-gallon (mpg) than hybrid ones. Suppose that consumers test 21 hybrid sedans and get a mean of 32 mpg with a standard deviation of 7 mpg. Thirty-one non-hybrid sedans get a mean of 21 mpg with a standard deviation of four mpg. Suppose that the population standard deviations are known to be six and three, respectively. Conduct a hypothesis test at the 5% level to evaluate the manufacturers claim.

NOTE: If you are using a Student's t-distribution for the problem, including for paired data, you may assume that the underlying population is normally distributed. (In general, you must first prove that assumption, though.)

1) State the distribution to use for the test. (Round your answers to two decimal places.)

X_hybrid − X_non−hybrid ~ _______ (___________ , ____________)

2) What is the test statistic? (If using the z distribution round your answer to two decimal places, and if using the t distribution round your answer to three decimal places.)   

3) What is the p-value? (Round your answer to four decimal places.)

4) Sketch a picture of this situation. Label and scale the horizontal axis and shade the region(s) corresponding to the p-value.

5)  Alpha (Enter an exact number as an integer, fraction, or decimal.)
α =