Many freeways have service (or logo) signs that give information on attractions, camping, lodging, food, and gas services prior to off-ramps. These signs typically do not provide information on distances. An article reported that in one investigation, six sites along interstate highways where service signs are posted were selected. For each site, crash data was obtained for a three-year period before distance information was added to the service signs and for a one-year period afterward. The number of crashes per year before and after the sign changes were as follows.

a)The article included the statement "A paired t test was performed to determine whether there was any change in the mean number of crashes before and after the addition of distance information on the signs." Carry out such a test. [Note: The relevant normal probability plot shows a substantial linear pattern.]
State and test the appropriate hypotheses. (Use

α = 0.05.)

Calculate the test statistic and P-value. (Round your test statistic to two decimal places and your P-value to three decimal places.)

b)If a seventh site were to be randomly selected among locations bearing service signs, between what values would you predict the difference in number of crashes to lie? (Use a 95% prediction interval. Round your answers to two decimal places.)

Provide the audit risk calculation?

List and describe four of the nine cycles in The Revenue Cycle?

What is the criteria set forth by the SEC must take place for an organization to recognize revenue?

What are the four types of controls over cash which should be present within an organization?

List three methods of auditing the cash account of an organization?

Using the data in the Federal Funds Rate tab in the data file, perform the following analysese.

a) Create a new column in the data file with the 5 period moving average series of the Federal Funds rate.

b) Create a new column in the data file with the expontential smoothing series with W=0.25.

c) Plot the three columns against the date.

d) Fit an Autoregressive model to this data, assume that the true model has only one lag in it.

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total amount owed to MM is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at midpoint, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approach MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page for total consideration of $1.5M and payment terms noted above. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K (50% of total consideration of $1.5M) pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required

MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue recognition model?

2. How would your conclusions change if:

   a. The app sold to Stone is actually downloaded more than 500K times in the first month? b. MM believed at the outset that there is about a 75 percent chance that the app will be downloaded more than 500K times and it is probable that there will not be a significant reversal of revenue?

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing
offerings to its customers. Specifically:
• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook
page for $250K. These amounts represent MM’s charges for these items when MM sells
them separately to customers. The TV commercial, the app, and the Facebook page are
not interrelated; that is, each functions independently of the other offerings.
• If a customer purchases all aforementioned items together, the total amount owed to MM
is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the
remaining 50 percent due over the rest of the development period (25 percent at mid-
point, 25 percent at completion).
• If the app is downloaded 500K times or more in the first month, there is a one-time bonus
of $250K payable to MM.
Stone, a customer, approaches MM with the hopes of reinventing its image to a younger
customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to
Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page for total
consideration of $1.5M and payment terms noted above. The agreement creates enforceable
rights and obligations pursuant to MM’s customary business practices. None of these items can
be redirected by MM to another customer. MM performed a credit check on Stone and has
determined that Stone has the intention and ability to pay MM for fulfilling its portion of the
contract. Stone is required to pay MM for performance completed to date if Stone cancels the
contract with MM for reasons other than MM’s failure to perform under the contract as
promised.
Stone makes a payment on November 30, 20X5, in the amount of $750K (50% of total
consideration of $1.5M) pursuant to the agreement. From the date of the quote, it takes MM six
months to develop and produce the TV commercial, two weeks to complete the Facebook page,
and three months to complete a fully functioning app. MM does not think that the app will be
downloaded 500K times in the first month because Stone’s customer base does not quickly
accept newly developed technology. On the basis of its experience with similar technology, MM
has determined that it takes over three months for Stone’s users to begin to download its apps.
Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to
explain how MM would account for the above scenario under the new standard.
1. How should MM account for the above offering with Stone under the new revenue
recognition model?
Case 17-7c: Mesmerizing Marketers Page 2
Copyright 2019 Deloitte Development LLC
All Rights Reserved.
2. How would your conclusions change if:
a. The app sold to Stone is actually downloaded more than 500K times in the first
month?
b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

Copyright 2016 Deloitte Development LLC All Rights Reserved.

Case 17-7 Mesmerizing Marketers

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approaches MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required

MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue recognition model?

2. How would your conclusions change if: a. The app sold to Stone is actually downloaded more than 500K times in the first month?

?

Case 17-7c: Mesmerizing Marketers Page 2

Copyright 2016 Deloitte Development LLC All Rights Reserved.

b. MM believed at the outset that there is about a 75 percent chance that the app will be downloaded more than 500K times and it is probable that there will not be a significant reversal of revenue?

Case 17-7 Mesmerizing Marketers
Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing offerings to its customers. Specifically:
• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are not interrelated; that is, each functions independently of the other offerings.
• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).
• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.
Stone, a customer, approaches MM with the hopes of reinventing its image to a younger customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.
Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.
Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.
1. How should MM account for the above offering with Stone under the new revenue recognition model?
2. How would your conclusions change if:
a. The app sold to Stone is actually downloaded more than 500K times in the first month?
b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

Mesmerizing Marketers (MM) is a marketing company that offers a variety of marketing
offerings to its customers. Specifically:

• MM will create a TV commercial for $1M, build an app for $500K, and build a Facebook page for $250K. These amounts represent MM’s charges for these items when MM sells them separately to customers. The TV commercial, the app, and the Facebook page are
not interrelated; that is, each functions independently of the other offerings.

• If a customer purchases all aforementioned items together, the total cost is $1.5M. Payment terms are 50 percent consideration due at contract signing, with the remaining 50 percent due over the rest of the development period (25 percent at mid-point, 25 percent at completion).

• If the app is downloaded 500K times or more in the first month, there is a one-time bonus of $250K payable to MM.

Stone, a customer, approaches MM with the hopes of reinventing its image to a younger
customer base. Stone has a verbal agreement with MM that is based on MM’s unsigned quote to Stone on November 30, 20X5, for one TV commercial, one app, and a Facebook page. The agreement creates enforceable rights and obligations pursuant to MM’s customary business practices. None of these items can be redirected by MM to another customer. MM performed a
credit check on Stone and has determined that Stone has the intention and ability to pay MM for fulfilling its portion of the contract. Stone is required to pay MM for performance completed to date if Stone cancels the contract with MM for reasons other than MM’s failure to perform under the contract as promised.

Stone makes a payment on November 30, 20X5, in the amount of $750K pursuant to the agreement. From the date of the quote, it takes MM six months to develop and produce the TV commercial, two weeks to complete the Facebook page, and three months to complete a fully functioning app. MM does not think that the app will be downloaded 500K times in the first month because Stone’s customer base does not quickly accept newly developed technology. On the basis of its experience with similar technology, MM has determined that it takes over three months for Stone’s users to begin to download its apps.

Required
MM’s CFO is trying to understand the new revenue recognition model and has asked you to explain how MM would account for the above scenario under the new standard.

1. How should MM account for the above offering with Stone under the new revenue
recognition model?

2. How would your conclusions change if:

a. The app sold to Stone is actually downloaded more than 500K times in the first
month?

b. MM believed at the outset that there is about a 75 percent chance that the app will
be downloaded more than 500K times and it is probable that there will not be a
significant reversal of revenue?

A ski company in Vail owns two ski shops, one on the west side and one on the east side of Vail. Ski hat sales data (in dollars) for a random sample of 5 Saturdays during the 2004 season showed the following results. Is there a significant difference in sales dollars of hats between the west side and east side stores at the 10 percent level of significance? Saturday Sales Data ($) for Ski Hats Saturday East Side Shop West Side Shop 1 548 523 2 493 721 3 609 695 4 567 510 5 432 532 (b) State the decision rule for 10 percent level of significance. (Round your answers to 3 decimal places.) (c-1) Find the test statistic tcalc. (Round your answer to 2 decimal places. A negative value should be indicated by a minus sign.)

What is crack spread and how is it calculated?

Hint: Difference between the price of jet fuel and other products produced from crude oil and the price of crude oil. Barrel of crude oil produces how much jet fuel

Suppose we consider buying oil and selling gasoline and heating oil in August. On June 2, 2004, the July futures price for oil was $39.96/barrel or $0.9513/gallon (42 gallons in a barrel). The August futures price for unleaded gasoline and heating oil were $1.2427/gallon and $1.0171/gallon. The 3-2-1 crack spread means that we can produce from 3 gallons of crude oil 2 gallons of gasoline and 1 gallon of heating oil.

Therefore the “Crack Spread” is

2 x ($1.2427) + $1.0171 – (3 x $0.9514) = $0.6482 * (42)/3 = $9.0748/barrel