Consider the performance of two securities, J and K over the five year period from 2000 to 2004. The annual return earned on each one of them is as provided in the table below:

Required:

Compute the following:

1. The appropriate annual average return for both securities over the 5-year holding period; assuming re-investment of all returns for respective years.

[05 Marks]

2. Assume your organization had K100 million to invest on 01st January, 2000. If 60% was invested in security J, what average return would you have earned from a portfolio comprising the two securities?

[05 Marks]

3. What average volatility would the portfolio be exposed to; assuming the correlation coefficient between returns on securities J and K is -0.852?

[05 Marks]

4. Evaluate the performance of the securities individually and the portfolio. Which investment would you advise management to make? Assume a risk-free rate of 6%.

[05 Marks]

Consider the performance of two securities, J and K over the five year period from 2000 to 2004. The annual return earned on each one of them is as provided in the table below:

Required:

Compute the following:

1. The appropriate annual average return for both securities over the 5-year holding period; assuming re-investment of all returns for respective years.

[05 Marks]

2. Assume your organization had K100 million to invest on 01st January, 2000. If 60% was invested in security J, what average return would you have earned from a portfolio comprising the two securities?

[05 Marks]

3. What average volatility would the portfolio be exposed to; assuming the correlation coefficient between returns on securities J and K is -0.852?

[05 Marks]

4. Evaluate the performance of the securities individually and the portfolio. Which investment would you advise management to make? Assume a risk-free rate of 6%.

[05 Marks]

1. A city can use several different combinations of labor and computers to run its departments. People can fill out information on a paper form or on a computer. Below are three estimates of the mix of labor and computers needed to run a specific department. Computers and software cost $2000 each and must be replaced once a year. In a table below three choices of combinations of labor and computers are listed. Use this set of information to answer the following: (4 points)

1. In a non-unionized labor market, the wage for the workers at this office will be $24,000 per year. Given this wage will choice A, B or C be preferred. Briefly explain.
2. A strong union is started and it manages to raise the wage of workers in this office to $40,000. Given this wage, will choice A, B or C be preferred. Briefly explain.
3. Based on your answer to the first two parts of the question, how has the union affected the number of jobs available?
4. Based on your answer to the first two parts of this question, is there a reason to believe that a union worker will be able to handle more citizens than a nonunion worker was able to handle before the creation of the strong union?

1. A city can use several different combinations of labor and computers to run its departments. People can fill out information on a paper form or on a computer. Below are three estimates of the mix of labor and computers needed to run a specific department. Computers and software cost $2000 each and must be replaced once a year. In a table below three choices of combinations of labor and computers are listed. Use this set of information to answer the following: (4 points)

1. In a non-unionized labor market, the wage for the workers at this office will be $24,000 per year. Given this wage will choice A, B or C be preferred. Briefly explain.
2. A strong union is started and it manages to raise the wage of workers in this office to $40,000. Given this wage, will choice A, B or C be preferred. Briefly explain.
3. Based on your answer to the first two parts of the question, how has the union affected the number of jobs available?
4. Based on your answer to the first two parts of this question, is there a reason to believe that a union worker will be able to handle more citizens than a nonunion worker was able to handle before the creation of the strong union?

There seems to be peace in Colombia. What is the future of tourism in Colombia? Compare figures between 2000 and 2020. What are future challenges?

1. General Electric - 2000: Quality of Earnings, the impact of earnings management and methods such as channel stuffing on an entity’s financial statements.

Synopsis

Camilla has just recently inherited her grandfather’s Ferrari factory. She has no accounting background, and at the young age of only 24 ½ , she has requested your expert help in creating a budget for next year (2018). The following information was obtained through an interview with her and her top management.

-Sales

Expected Sales (units): Management expect to sell 100 cars the first quarter with a 10% increase  each succeeding quarter.

Expected Sales price = $325,000

-Production

Since Ferrari cars are generally pre-ordered, each quarter the company manufactures the number of cars expected to be sold in the following quarter. Ferrari does not maintain any inventory. Production for the fourth quarter will be equal to expected sales in the first quarter 2019 or 140 units.

-Materials

Ferrari maintains an ending inventory of raw materials equal to 10% of the next quarter’s production requirements.

The manufacture of each car requires 2000 pounds of raw materials, and the expected cost per pound is $50/pound.

Assume that the desired ending direct materials amount is 28,000 pounds for the fourth quarter of 2018.

-Labor

Direct labor hours are determined from the production budget. At Ferrari, much is done by robots, however the final touches require twenty hours of direct labor to produce each car. The anticipated hourly wage rate is $25.

-Manufacturing overhead

Ferrari expects variable costs to fluctuate with production volume on the basis of the following rates per direct labor hour:

indirect materials                      $2,500

indirect labor                            $1,000

utilities                                     $500

maintenance                             $250.

-Ferrari expects Fixed Manufacturing Costs to be as follows (quarterly):

Supervisory salaries                   $50,000

Depreciation                             $21,250

Property taxes                          $40,000

Maintenance                            $15,000

Selling and Administrative

Variable expense rates per unit of sales are sales commissions $5,000 and freight-out $2,500.

Ferrari’s fixed selling and administrative costs are as follows (quarterly):

Camilla’s Salary and Bonus        $2,500,000

Advertising                               $1,000,000

Sales salaries                            $500,000

Office salaries                           $600,000

Depreciation                             $1,000,000

Property Taxes and Insurance    $1,500,000

-Other

Interest Expense for 2018          $100,000

Taxes are computed at 40% of pretax income

Question: Complete the 2018 budget as requested. You must create the following budgets:

Sales Budget – Quarterly

Production Budget – Quarterly

Materials Budget – Quarterly

Labor Budget – Quarterly

Manufacturing Overhead Budget – Quarterly

Administrative and Selling Budget – Quarterly

Income Statement – Annual

A leading manufacturing company has 2 main product lines, Traditional and Modern with unit sales prices for $340 and $440 respectively. Manufacturing overhead are applied as $544.025 per direct labor hour.

Material, Labors and overhead are expected to increase by 10% each in 2019

Unit sales prices for both products are expected to increase by $10 each in 2019

Percentage of overhead remains the same in 2019.

The cost drivers units are staying the same in 2019.

There are two clients with special orders for Traditional. The two clients ordered the same number of units.

You tracked their COGS by their extra number of specifications per month in 2018.

Calculate the fixed cost and variable cost components of COGS for the two clients using the lease squares regression method. Show your work and write out the regression model equations for each client.

Discuss the two clients COGS in terms of fixed cost and variable cost according to special specifications.

How to obtain the accumulated depreciate - Training equipment = $34,100?

How to balance the adjusted trail balance?

On 1 October, Hercules Ho sold a treadmill that costs $5,000, with accumulated depreciation of $2,000 as at 31 Dec 2017 for cash of $3,000. Hercules Ho deposited the cash into his personal bank account. Hercules Ho forgot to inform his accountant of this transaction. According to him, the cash taken by him was to be treated as a loan to him.
Both the cost of the treadmill and the accumulated depreciation were included in the amount shown for training equipment at cost and the accumulated depreciation for training equipment in the unadjusted trial balance above. The residual value of the treadmill was originally estimated to be $500.

No depreciation has been charged for the year ended 31 Dec 2018. During the year, no additional non-current assets was purchased. The company depreciates non-current assets held at 31 Dec 2018 as follows:
 Training equipment at cost - straight line over five years. The residual value of the training equipment at cost was estimated to be $15,000.