Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000 per course taught. Denton pays its instructors $250 per student enrolled in the class. Both universities charge executives a $450 tuition fee per course attended.

Required

Prepare income statements for Kenton and Denton, assuming that 20 students attend a course.

Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $240 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 40 students in its course.

Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $240 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.

Problem 11-28

a.      N = Number of units to break-even point

Sales − Variable cost − Fixed cost = Desired Profit

          (Sales price x N) − (Variable cost per unit x N) = Fixed cost + Desired Profit

(Contribution margin per unit x N) = Fixed cost + Desired Profit

N = (Fixed cost + Desired Profit) ÷ Contribution margin per unit

N = ($               + $           ) ÷ [$       - ($     + $       )] =          Units

          Break-even point dollars =        Units x $        selling price per unit = $

b.      N = Number of units to break-even point

          N = (Fixed cost + Desired Profit) ÷ Contribution margin per unit

          N = ($            + $            ) ÷ [$        – ($       + $      )]

          N =          Units

          Break-even point dollars =    Units x $            selling price per unit = $

Bowie State University magazine agency wants to determine the best combination of two possible magazines to print for the month of May.  Star which the University has published in the past with great success is the first choice under consideration. Prime is a new venture and is a promising magazine. The university envisages that by positioning it near Star, it will pick up some spillover demand from the regular readers. The University also hopes that the advertising campaign will bring in a new type of reader from a potentially very lucrative market. The publishing department wants to print at most 500 copies of Star and 300 copies of Prime. The cover price for Star is $3.50, the university is pricing Prime for $4.50 because other magazines doing the same line of business command this type of higher price. The University publishing department has 25 hours of printing time available for the production run. It has 27.5 hours for the collation department, where the magazines are actually assembled. Each copy of Star magazine requires 2.5 minutes to print and 3 minutes to collate. Each Prime requires 1.8 minutes to print and 5 minutes to collate. How many of each magazine should BSU print to maximize revenue? Show all the corner solutions and the value of the objective function.

Hint: You are required to maximize revenue assuming that Star = X and Prime = Y. create a table, specify the LP, draw graph to show feasible region and solve for the corner points. Find the profit for each of the solutions. Also convert hours to minutes in the constraints. The problem has 4 constraints excluding the non-negative constraints.

a. Formulate a linear programming model for this problem.

b. Represent this problem on a graph using the attached graph paper. Show the feasible region.

c. Solve this model by using graphical analysis showing the optimal solution and the rest of the corner points as well as the profits

Three different companies each purchased trucks on January 1, 2018, for $74,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $5,000. All three trucks were driven 80,000 miles in 2018, 60,000 miles in 2019, 45,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $63,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation.

Answer each of the following questions. Ignore the effects of income taxes.

5. Which company will report the lowest amount of cash flow from operating activities on the 2020 statement of cash flows?

United Resources Company obtained a charter from the state in January of this year. The charter authorized 201,000 shares of common stock with a par value of $2. During the year, the company earned $478,000 Also during the year, the following selected transactions occurred in the order given:

a. Sold 97,000 shares of the common stock in an initial public offering at $19 cash per share.

b. Repurchased 25,000 shares of the previously issued shares at $22 cash per share.

c. Resold 5,000 of the shares of the treasury stock at $25 cash per share.

Required:

Prepare the stockholders' equity section of the balance sheet at the end of the year.

On 1 January 2019, Umi Bhd, a company incorporated in Malaysia, acquired 80% interest in Adeq Ltd, a company incorporated in Singapore whose functional and presentation currencies are Singapore Dollar (S$). At this date, Adeq Ltd’s net assets were represented by share capital of S$3,000,000; revaluation reserve of S$1,000,000, and retained profit of S$1,000,000. The functional and presentation currencies of Umi Bhd are Ringgit Malaysia (RM).

Required:

a) Advise the directors of UMI Bhd of how they should consolidate and translate the foreign subsidiary’s statement of comprehensive income for the year ended 31 December 2019 and the statement of financial position as at 31 December 2019 into the presentation currency of parent company.

b) Explain whether or not UMI Bhd (reporting entity) should be allowed to present its financial statements in a currency which is different from its functional currency.

c) Assume that on 1 April 2019, UMI Bhd has spent $10million on acquiring a US trading subsidiary, Zoro Ltd and at the year-end the net assets of the US trading subsidiary are also $10m. On consolidation by UMI Bhd, the $10million net assets of the US subsidiary are translated into RM and any foreign exchange differences are taken to reserves. This means that the group’s consolidated shareholders’ funds will fluctuate up and down as exchange rates move. Advise the directors of UMI Bhd on how to reduce the risk of translation differences. Give an example if necessary.

Who Goes, Who Stays? The consulting firm you have worked for over the last year is having some financial troubles. The large contracts it once had are slowly going away, and as your company struggles to make payroll, it is clear that layoffs must occur. The sales staff has not been meeting the sales goals set for them, resulting in incorrect budgets. It has been decided that at least three people in the sales department should be laid off. You create a spreadsheet with pertinent sales employee data: Name Title Years with the company Last overall rating on performance evaluation (1–5 scale, 5 being highest) Last year’s sales goal met? Deb Waters Sales Manager 1 3 N/A as her position is managerial Jeff Spirits Account Manager 5 3 Yes, 1% over Orlando Chang Account Manager 3 4 Yes, 10% over goal Jake Toolmeyer Account Manager 2 4 No, 2% under goal Audrey Barnes Account Manager 5 5 Yes, 15% over goal Kelly Andrews Account Manager 1 2 No, 20% under goal Amir Saied Account Manager 8 5 Yes, 5% over goal Winfrey Jones Account Manager 4 2 No, 10% under goal Making reasonable assumptions, develop criteria for the layoffs in the sales department. Develop a plan as to how layoffs will be communicated with the individual as well as within the company. Discuss strategies to motivate those sales employees who stay with the organization.

WEST AFRICAN SCIENCE SERVICE CENTRE CLIMATE CHANGE AND ADAPTED LAND USE (WASCAL) IS AN INTERNATIONAL ORGANIZATION IN GHANA FOUNDED BY GERMAN GOVERNMENT AND OPERATE IN 12 WEST AFRICAN COUNTRIES WRITE ACCOUNTING POLICIES FOR WASCAL IN PREPARATION OF FINANCIAL STATEMENT.

On completing his MBA, James sees a possibility to make a profit selling computers. he has the opportunity to buy a job-lot of computers for 50,000 Euros, and he can buy a shop lease with two years to run for 5,000 Euros and pay an annual rent of 6,000 Euros. He happens just to have inherited 60,000 Euros, so he starts a company and puts the money in as a share capital

During the first year he sells 30,000 Euros of computers for 45,000 Euros. During the second year he sells no computers at all, and at the end of the year he sells the remaining inventory for 1000 Euros and liquidates the company.

Tasks

a. Calculate his accounting profit for each of the two years of operations (IFRS)

b. Explain why the assumptions made at the end of the first year led to the wrong profit estimate

c. What are the consequenses of the assumptions that proved to be incorrect.