In: Operations Management
Problem 2: (Revised 6.3) Magazine Advertising: In a study of revenue from advertising, data were collected for 41 magazines list as follows. The variables observed are number of pages of advertising and advertising revenue. The names of the magazines are listed as:
Here is the code help you to paste data into your R:
data6<-'Adv Revenue
25 50
15 49.7
20 34
17 30.7
23 27
17 26.3
14 24.6
22 16.9
12 16.7
15 14.6
8 13.8
7 13.2
9 13.1
12 10.6
1 8.8
6 8.7
12 8.5
9 8.3
7 8.2
9 8.2
7 7.3
1 7
77 6.6
13 6.2
5 5.8
7 5.1
13 4.1
4 3.9
6 3.9
3 3.5
6 3.3
4 3
3 2.5
3 2.3
5 2.3
4 1.8
4 1.5
3 1.3
3 1.3
4 1
2 0.3
'
data6n<-read.table(textConnection(object=data6),
header=TRUE,
sep="",
stringsAsFactors = FALSE)
a. You should not be surprised by the presence of a large number of outliers because the magazines are highly heterogeneous and it is unrealistic to expect a single relationship to connect all of them. Find outliers and high leverage points. Delete the outliers and obtain an acceptable regression equation that relates advertising revenue to advertising pages.
b. For the deleted data, check the homogeneity of the variance. Choose an appropriate transformation of the data and fit the model to the transformed data. Evaluate the fit.
In: Math
3. A firm has the following three projections of revenue estimates:
Current Year1 Year 2 Year 3
Revenue $1,500 $1,650 $1,815 $2,000
EAT $95 $106 $117 $130
The company also receives a royalty net after taxes of $10 million per year. It is expected that the cash flows equal to depreciation will have to be reinvested to keep the firm operating. Further, capital expenditures equal to 60 percent of the net cash flow will need to be invested to keep the firm growing. Other items on the balance sheet remain unchanged. The CFO believes that it will just forecast for the first three years and then simply assume a 6 percent annual growth rate after the third year.
T-bills yield 8 percent and the market return is 13 percent. The company’s beta using Hamada equation is 1.2. What is the value of the company or what would you pay for the firm if you were interested in it.
In: Finance
FUTURE OF REVENUE RECOGNITION
I. Do the new standards increase comparability across industries and capital
markets?
II. Do the new standards provide better disclosure, so investors and other
users of financial statements better understand the economics behind the
numbers?
III. Possibility of Fraud with new FASB standards
In: Accounting
Ivanhoe Co. reports the following information for 2017: sales
revenue $767,200, cost of goods sold $503,000, operating expenses
$87,800, and an unrealized holding loss on available-for-sale
securities for 2017 of $59,600. It declared and paid a cash
dividend of $14,450 in 2017.
Ivanhoe Co. has January 1, 2017, balances in common stock $362,300;
accumulated other comprehensive income $87,600; and retained
earnings $91,850. It issued no stock during 2017.
Prepare a statement of stockholders’ equity.
In: Accounting
In: Operations Management
1. One of the major revenue-producing
items manufactured by Ajou Corporation is a smartphone. Ajou
Corporation currently has one smartphone model on the market, and
sales have been excellent. However, as with any electronic item,
technology changes rapidly, and the current smartphone has limited
features in comparison with new models. Ajou Corporation spent
$750,000 to develop a prototype for a new smartphone that has all
the features of the existing smartphone but adds new features such
as WiFi tethering. The company has spent a further $200,000 for a
marketing study to determine the expected sales figures for the new
smartphone.The new smartphone project has a five-year life. Ajou
Corporation can manufacture the new smartphones for $220 each in
variable costs. Fixed costs for the operation are estimated to run
$6.4 million per year. The estimated sales volume is 155,000,
165,000, 125,000, 95,000, and 75,000 per year for the next five
years, respectively. The unit price of the new smartphone will be
$535. The necessary equipment can be purchased for $45 million. The
equipment has a five-year life and will be depreciated to zero on a
straight-line basis over that period. It is believed the market
value of the equipment in five years will be $6.5 million. As
previously stated, Ajou Corporation currently manufactures a
smartphone. Production of the existing model is expected to be
terminated in two years. If Ajou Corporation does not introduce the
new smartphone, sales will be 95,000 units and 65,000 units for the
next two years, respectively. The price of the existing smartphone
is $385 per unit, with variable costs of $145 each and fixed costs
of $4.3 million per year. If Ajou Corporation does introduce the
new smartphone, sales of the existing smartphone will fall by
$30,000 units per year, and the price of the existing units will
have to be lowered to $215 each. Net working capital for the
smartphones will be 20 percent of sales and will occur with the
timing of the cash flows for the year; for example, there is no
initial outlay for NWC, but changes in NWC will first occur in Year
1 with the first year’s sales. Ajou Corporation has a 21% corporate
tax rate and the required rate of return is 12%. Determine whether
the corporation should accept or reject the new smartphone project,
based on the NPV rule.
In: Finance
Under the completed-contract method:
Select one:
a. Revenue, cost, and gross profit are recognized during the production cycle.
b. Costs are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.
c. Revenue, cost, and gross profit are not recognized until the contract is completed.
d. Gross Profit is recognized during the production cycle, but net losses are delayed until the contract is completed.
In: Accounting
This is a partial adjusted trial balance of Sunland
Company.
| SUNLAND COMPANY Adjusted Trial Balance January 31, 2017 |
||||
| Debit | Credit | |||
| Supplies | $770 | |||
| Prepaid Insurance | 1,470 | |||
| Salaries and Wages Payable | $1,040 | |||
| Unearned Service Revenue | 720 | |||
| Supplies Expense | 800 | |||
| Insurance Expense | 490 | |||
| Salaries and Wages Expense | 1,890 | |||
| Service Revenue | 4,330 | |||
Prepare the closing entries at January 31, 2017.
In: Accounting
Revenues are at the core of a firm’s ability to grow and prosper; thus, they are central to the analysis of a firm’s profitability. Although the time-of-sale is the most common technique employed to recognize revenues, in some instances, a strong argument can be made for recognizing revenue using other methods.
In a comprehensive presentation of the various revenue recognition methods, please discuss different circumstances where methods might be used and the rationale behind your answer.
In: Accounting