Problem 2-21B Effects of operating leverage on profitability

CFEs R Us conducts CFE review courses. Public universities that permit free use of a classroom support the classes. The only major expense incurred by CFEs R Us is the salary of instructors, which is $5,000 per course taught. The company recently planned to offer a review course in Boston for $400 per candidate; it estimated that 50 candidates would attend the course.

Complete these requirements based on the preceding information.

Part 1:

Required

Relative to the number of CFE candidates in a single course, is the cost of instruction a fixed or a variable cost?

Page 103Determine the profit, assuming that 50 candidates attend the course.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 55 students). What is the percentage change in profitability?

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 45 students). What is the percentage change in profitability?

Explain why a 10 percent shift in enrollment produces more than a 10 percent shift in profitability. Use the term that identifies this phenomenon.

Part 2:

The instructor has offered to teach the course for a percentage of tuition fees. Specifically, he wants $100 per candidate attending the class. Assume that the tuition fee remains at $400 per candidate.

Required

Is the cost of instruction a fixed or a variable cost?

Determine the profit, assuming that 50 candidates take the course.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 55 students). What is the percentage change in profitability?

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 45 students). What is the percentage change in profitability?

Explain why a 10 percent shift in enrollment produces a proportional 10 percent shift in ­profitability.

Part 3:

CFEs R Us sells a workbook to each student who attends the course. The workbook contains printed material unique to each course. Workbooks that are not sold must be destroyed. Prior to the first class, CFEs R Us printed 50 copies of the books based on the estimated number of people who would attend the course. Each workbook costs $32 and is sold for $50. This cost includes a royalty fee paid to the author and the cost of duplication.

Problem 2-21B (Continued)

Required

Calculate the total cost and the cost per candidate of the workbooks, assuming that 45, 50, or 55 candidates attempt to attend the course. Round your figures to two decimal points.

Classify the cost of workbooks as fixed or variable relative to the number of candidates attending the course.

Discuss the risk of holding inventory as it applies to the workbooks.

Explain how a just-in-time inventory system can reduce the cost and risk of holding inventory.

Remember that great app you wrote for Yogurt Yummies (Lab 10-2). They want you to enhance the C++ console application that calculates and displays the cost of a customer’s yogurt purchase. Now they need to process multiple sales. Do not change any logic for handling a single sale. Make the following enhancements:

          ● Add "v2" to the application output header and close.

          ● Declare and initialize overall totals including:

                    ü Number of sales.

                    ü Overall number of yogurts sold.

                    ü Overall sale amount after discount.

                    ü Overall tax paid.

                    ü Overall sale total.

          ● Enclose the logic for a single sale with a sentinel loop that continues to process sales until the user enters 'n'.

          ● After calculating sale totals, update overall totals.

          ● When the user enters the sentinel value ('n'), print overall totals using formatted output manipulators (setw, left/right). Run the program with invalid and valid inputs, and at least three sales. The output should look like this:

Welcome to Yogurt Yummies, v2

-----------------------------

Enter another yogurt purchase (y/n)? y

Sale 1

----------------------------------------

Enter the number of yogurts purchased (1-9): 11

Error: '11' is an invalid number of yogurts.

Enter the number of yogurts purchased (1-9): 2

Enter the percentage discount (0-20): 22

Error: '22.00' is an invalid percentage discount.

Enter the percentage discount (0-20): 4

Yogurts:                             2

Yogurt cost ($):                  3.50

Discount (%):                     4.00

Subtotal ($):                     7.00

Total after discount ($):         6.72

Tax ($):                          0.40

Total ($):                        7.12

Enter another yogurt purchase (y/n)? y

Sale 2

----------------------------------------

Enter the number of yogurts purchased (1-9): 5

Enter the percentage discount (0-20): 10

Yogurts:                             5

Yogurt cost ($):                  3.50

Discount (%):                    10.00

Subtotal ($):                    17.50

Total after discount ($):        15.75

Tax ($):                          0.94

Total ($):                       16.70

Enter another yogurt purchase (y/n)? y

Sale 3

----------------------------------------

Enter the number of yogurts purchased (1-9): 7

Enter the percentage discount (0-20): 20

Yogurts:                             7

Yogurt cost ($):                  3.50

Discount (%):                    20.00

Subtotal ($):                    24.50

Total after discount ($):        19.60

Tax ($):                          1.18

Total ($):                       20.78

Enter another yogurt purchase (y/n)? n

Overall totals

========================================

Sales:                               3

Yogurts:                            14

Total after discount ($):        42.07

Tax ($):                          2.52

Total ($):                       44.59

End of Yogurt Yummies, v2

This is from yogurt Yummies V1

Welcome to Yogurt Yummies

-------------------------

Enter the number of yogurts purchased (1-9): 12

Error: '12' is an invalid number of yogurts.

Enter the number of yogurts purchased (1-9): 4

Enter the percentage discount (0-20): 30

Error: '30.00' is an invalid percentage discount.

Enter the percentage discount (0-20): 10

Yogurts:                             4

Yogurt cost ($):                  3.50

Discount (%):                    10.00

Subtotal ($):                    14.00

Total after discount ($):        12.60

Tax ($):                          0.76

Total ($):                       13.36

End of Yogurt Yummies

use C++

. Compute the total cost of a meal inclusive of GST (Goods and Service Tax) and tipping. Assume that the GST is fixed at 6% but the amount to tip will depend on the customer. Your program should input the cost of the meal (before GST and tipping) and the tip amount (to be input as a percentage). Your program should display: - The total cost of the meal BEFORE GST and tipping - The total cost of the meal AFTER GST - The total cost of the meal AFTER GST and tipping

Match the economic concepts given in COLUMN A with its description in COLUMN B. Write down the question number and the correct letter next to it. E.g. 2.11 A
COLUMN A
COLUMN B
2.1
Production Possibility Frontier (PPF)

   a.All people who live together and who make joint economic decisions or who are subjected to others who make such decision.
2.2
Cross elasticity of demand

b. Monetary payments for the factors of production and other inputs bought or hired by the firm.
2.3
Household

   c.The summation of total fixed cost plus total variable cost.
2.4
Market Supply

   d.This occurs when none of the individual market participants can influence the price of the product.
2.5
Explicit costs

   e.The ability and willingness to buy specific quantities of a good at alternatives prices in a given time period
2.6
Perfect competition

   f.Costs per unit of output fall as the scale of production increases.
2.7
Economies of scope

   g. Shows a combination of two different products that could be produced to their maximum at a given point in time, given the full u    utilization of available resources and technology.
2.8
Returns to scale
  
h Percentage change in price of one product divided by percentage change in the price of a related product.
2.9
Economies of scale

   i.The relationship between the price of the product and the quantities supplied (by all firms) during a particular period.
2.10
Demand

   j.These are cost savings achieved by producing related goods in one firm rather than in two separate firms.

   k.Measured by varying all the inputs by a certain percentage and comparing the resulting percentage change in production with the    percentage change in the inputs.

   l.Best return that the firm’s self-owned, self – employed resources could earn elsewhere.

m.Focuses on the individual participants in the economy: producers, workers, employers and consumers.

   n.Opportunity costs not reflected in monetary payments of factors of production

Hassan Limited uses the FIFO method in its process costing system. The data given relates to the most recent month of operations for one of the processing departments:

The cost of beginning inventory was Rs.10,040 of which Rs.7,120 was for materials and the remainder was for conversion cost. The costs added during the month amounted to Rs.132,730 of which Rs.76,048 was for materials and the remainder was for conversion cost.                                                                        

Required:                                                                            

1. Compute the equivalent units of material and of conversion in the ending inventory. (2 Mark)               

2. Compute the equivalent units of material and of conversion that were required to complete the beginning inventory.                                                                                                                                           (2 Mark)               

3. Determine the number of units started and completed during the month.                      (1 Mark)               

4. Compute the cost per equivalent unit for materials and for conversion and the total cost per equivalent unit.                                                                                                                                                 (1 Mark)

5. Determine the cost of units transferred out.                                                                                               

6. Determine the cost of ending inventory                                                                                          

1. The greenwood hotel invested a single amount of 100,000 at 8% for 10 years. Assume annual compounding. A. How much interest will be earned over the first five years? B. How much interest will be earned over the last five years? C. What will be the total amount of the investment after 10 years?

Needs to document an amusement park ride. For example: Round rotating cylinder where the floor drops out. The information can come from any online website. Needs to know the radius and speed at which the ride needs to rotate so that you don't fall?

Calculate the coefficient of static friction for this ride also

Based on recent data, there are on average 1.3 days per winter where snowfall reaches more than 6 inches in Central Park, New York City. We’ll call these “snow days”.

Assume that there were more than 2 “snow days” this winter. What is the chance that exactly 4 such days occur?

A tourist from the US spends three nights in a hotel in Amsterdam Which statement(s) is (are) true?

a. This increases GDP of the Netherlands and decreases net exports of the US.

b. This increases GDP of the Netherlands and increase consumption of the US.

c. This increases consumption of the US, but decreases net exports of the US.

d. All of the above are correct