Question 3

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A firm shuts down if price is

Select one:

below minimum average variable cost.

above minimum average fixed cost.

below average total cost.

less than marginal cost.

above minimum average variable cost.

Question 4

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A perfectly competitive firm's supply curve includes its marginal cost curve at all prices above minimum

Select one:

average variable cost.

average fixed cost.

total variable cost.

total cost

average total cost.

Question 5

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A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.

Select one:

marginal cost; average variable cost

marginal cost; marginal revenue

total cost; total revenue

marginal cost; average total cost

average total cost; average variable cost

Question 6

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GM will temporarily lay off 1,300 employees as the company stops production of the electric car, Chevy Volt, for five weeks. GM had hoped to sell 10,000 Volts last year, but ended up selling just 7,671. It plans to maintain inventory levels by adjusting production to match demand.

Source: Politico, March 2, 2012

The shutdown decision ________ total fixed cost and ________ total variable cost.

Select one:

does not change; does not change

does not change; increases

does not change; decreases

increases; does not change

decreases; decreases

Question 7

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In the short run, a firm in a perfectly competitive market

Select one:

chooses the price that maximizes its economic profit.

chooses the price that minimizes its marginal cost.

always makes an economic profit.

can make an economic profit, incur an economic loss, or break even.

shuts down if it incurs an economic loss.

Question 8

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Franklin is a fiddlehead farmer. He sold 10 bags of fiddleheads last month, with total fixed cost of $100 and total variable cost of $50.

Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future, and Franklin's production and cost figures are expected to stay the same. His total fixed cost consists entirely of rent on land, and his five-year lease on the land runs out at the end of the month. Should Franklin renew the lease?

Select one:

Insufficient information to answer.

No, because in the long run, zero economic profit is a signal to move factors of production out of fiddlehead farming.

Yes, because total revenue will still cover total fixed cost.

Yes, because total revenue will still cover total variable cost and a portion of total fixed cost.

No, because total revenue must cover all costs for factors of production to remain in fiddlehead farming in the long run.

Question 9

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If firms exit an market, the

Select one:

price of the good falls.

total market output increases.

economic profit of the remaining firms stay the same.

economic profit of the remaining firms decrease.

market supply curve shifts leftward.

Question 10

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If firms in a perfectly competitive market are making an economic profit, new firms will enter. This entry shifts the market

Select one:

demand curve leftward, and the market price falls.

supply curve rightward, and the market price falls

demand curve rightward, and the market price rises.

supply curve leftward, and the market price rises.

Marie and Alex just paid $250,000 for a house. They made a down payment of $50,000 and assumed a 30-year $200,000 mortgage with a fixed annual interest rate of 5.50%. The house will serve as a residence for several years, but Marie and Alex also view it as an investment, as property values in the neighborhood are projected to increase at a rate of 5% per year in the near future. Property taxes on their home will be $4,236 the first year and are expected to increase 3% a year. Homeowners insurance will cost $632 the first year and is expected to increase at a rate of 2% each year. The couple plans to sell the house after eight years. Answer the following questions.

What will the couple pay in property taxes over the 8 years?

What will the couple pay in homeowners insurance over the 8 years?

Senior managers at Criterion Products are evaluated in terms of increase in profit. In fiscal 2013, Criterion Products had net operating profit after taxes of $ 2,000,000 and invested capital of $ 20,000,000. In fiscal 2014, the company had net operating profit after taxes of $ 2,500,000 and invested capital of $ 30,000,000. Senior managers at Valcun Products are evaluated in terms of ROI. In fiscal 2013, the ROI was 18 percent while the cost of capital was only 14 percent. Near the end of fiscal 2013, managers had an opportunity to make an investment that would have yielded a return of 16 percent. However, the senior managers did not support the investment Required:

a. Explain why the senior managers at Criterion Products have an incentive to overinvest.

b. Explain why the senior managers at Valcun Products have an incentive to underinvest.

All inventory items are not counted or tagged.

Extension errors are made on the client's inventory summaries.

Purchase received near the balance sheet date may be included in the physical count but may not be booked.

Obsolete and damaged goods are not noticed in the warehouse.

Inventory stored in a public warehouse may not exist.

Client personnel may incorrectly count the inventory.

The lower of cost or market method may be incorrectly applied.

Empty containers or hollow squares may be included in the inventory.

Goods held on consignment may be included as inventory.

Losses on purchase commitments may not be recognized.

a) Identify the substantive test that should detect each error.

b) For each test, indicate the financial statement assertion(s) to which it pertains.

c) Indicate the type of audit procedures used for each substantive test.

Reynaldo and Sonya, a married couple, had flood damage in their home due to a dam break near their home in 2019, which was declared a Federally Designated Disaster Area. The flood damage ruined the furniture that was stored in their garage. The following items were completely destroyed and not salvageable:

Required:

Their homeowner's insurance policy had a $12,565 deductible for the personal property, which was deducted from their insurance reimbursement of $17,925, resulting in a net payment of $5,360. Their AGI for 2019 was $38,000. What is the amount of casualty loss that Reynaldo and Sonya can claim on their joint return for 2019?

The Al Best Company uses a 7.5-kW motor for 16 hours per day, 5 days per week, 50 weeks per year in its flexible work cell. This motor is 85% efficient, and it is near the end of its useful life. The company is considering buying a new high efficiency motor (91% efficient) to replace the old one instead of buying a standard efficiency motor (86.4% efficient). The high efficiency motor cost €70 more than the standard model, and should have a 15-year life. The company pays €7 per kW per month and €0.06 per kWh. The company has set a discount rate of 10% for their use in comparing projects. Assume the load factor is 60% Determine the SPP, ROI, and BCR for this project:

Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month’s activity in the form of a cost-volume-profit income statement is shown below.

A. Calculate the break-even point in dollars.

B. Calculate the break-even point in number of fares. (Round answer to 0 decimal places, e.g. 5,275.)

C. Without calculations, determine the contribution margin at the break-even point.

1. Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the The manner in which a cost changes in relation to its activity base (driver).cost behavior. After reviewing the data, complete requirements (1) and (2) that follow.

   Units Produced	Total Lumber Cost	Total Utilities Cost	Total Machine Depreciation Cost
   3,000 shelves	$36,000	$4,950	$145,000
   6,000 shelves	72,000	8,400	145,000
   12,000 shelves	144,000	15,300	145,000
   15,000 shelves	180,000	18,750	145,000

   1. Determine whether the costs in the table are Costs that vary in proportion to changes in the activity base.variable, Costs that tend to remain the same in amount, regardless of variations in the level of activity.fixed, Costs with both variable and fixed characteristics, sometimes called semivariable or semifixed costs.mixed, or none of these.

   Lumber	Variable Cost Variable Cost Fixed Cost Mixed Cost None of these
   Utilities	Mixed Cost Variable Cost Fixed Cost Mixed Cost None of these
   Depreciation	Fixed Cost Variable Cost Fixed Cost Mixed Cost None of these

   2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places.

   Cost	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
   Lumber	$	$
   Utilities
   Depreciation

   High-Low

   Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow.

   	Units Produced		Total Cost
   January	4,360	units	$65,600
   February	275		6,250
   March	1,000		15,000
   April	8,775		133,750
   May	1,750		32,500
   June	3,015		48,000

   1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.

   Total Fixed Cost	Variable Cost per Unit
   $ 2,125	$ 15

   2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).

   Number of Units Produced	Total Cost
   3,500	$
   4,360
   8,775

A survey asked 900 adult Americans how much it would bother them to stay in a room on the 13^th floor of a hotel. Interestingly, 15% said yes. Explain the meaning of the result!

a. What is the Standard Error of the estimate of the population proportion?

b. What is the Margin of Error at a C.L. of 95%?

c. What is the Margin of Error at a C.L. of 92%?

d. At a 98% C.L., if the researcher wants to limit the error within one percent range, what size of the sample is needed?

Which of the following statements indicates a possible fraud? I. Fill out this e-mail survey to receive a free gift. II. Be one of the first 30 callers to receive three days and two nights at a famous Las Vegas hotel. III. Your wealthy uncle recently died; send $250 to obtain details about your inheritance. Group of answer choices

III only.

I, II, and III.

II only.

II and III only.