Ch.8 #5

Consider the following time series data.

1)  Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if Quarter 1, 0 otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise; Qtr3 = 1 if Quarter 3, 0 otherwise.

If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) If the constant is "1" it must be entered in the box. Do not round intermediate calculation.

Value = ________ + __________ Qtr1 + ___________ Qtr2 + ___________ Qtr3

2) Compute the quarterly forecasts for next year based on the model you developed in part (b). If required, round your answers to three decimal places. Do not round intermediate calculation.

Quarter 1 forecast _____________

Quarter 2 forecast_____________

Quarter 3 forecast_____________

Quarter 4 forecast_____________

3) Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects and create a variable t such that t = 1 for Quarter 1 in Year 1, t = 2 for Quarter 2 in Year 1,… t = 12 for Quarter 4 in Year 3.

If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)

Value = __________ + __________ Qtr1 + __________ Qtr2 + ___________ Qtr3 + ________ t

4) Compute the quarterly forecasts for next year based on the model you developed in part (d).

Quarter 1 forecast _____________

Quarter 2 forecast_____________

Quarter 3 forecast_____________

Quarter 4 forecast_____________

5) Is the model you developed in part (b) or the model you developed in part (d) more effective?

Justify your answer.

Assume that a client has a December 31 yearend, and it recorded a January shipment of goods as a December sale. This most directly violates which of the following assertions with regard to sales?

A. CUT OFF

B. COMPLETENESS

C. ACCURACY

D. PRESENTATION AND DISCLOSURE

MCQ

1. Upon retirement, Jason wants to invest his super in a fund where the manager buys only blue chip companies that pay a regular and high dividend. He is happy for the manager to constantly search for the best stocks which fit this profile and is happy for the portfolio composition to be changed to include the best opportunities of this type. Jason does not require liquidity in the investment. Given the following advertisements of funds, which fund is best suited to his investment preferences?

Select one:

a. Fund E: Passively managed, open-ended, Index Fund earning 6%

b. Fund B: Actively managed, close-ended, Income Fund earning 7.5%

c. Fund C: Actively managed, open-ended, Growth Fund earning 8%

d. Fund A: Passively managed, closed-ended, Balanced Fund earning 10%

e. Fund D: Actively managed, closed-ended, Aggressive Growth Fund earning 10%

2. Given that government 5-year bonds have a current yield to maturity of 3.5%, with no other consideration, which of the following investments should you invest in? Select all correct answers only. Assume all percentages given in this question are per annum.

Select one or more:

a. I would invest in all investments here.

b. Telstra shares paying a dividend yield of 3%.

c. NAB bond which has a coupon of 3.5%.

d. Property lease returning 4%.

e. Bank term deposit earning 2%.

3. Which of the following characteristics correctly apply to preference shares? Select all correct answers only.

Select one or more:

a. Receives a dividend before all other shareholders.

b. Has the lowest risk of residual claim among shareholders.

c. Voting rights at the Annual General Meeting.

d. Has the highest risk of residual claim among shareholders.

e. Do not have limited liability

4. Brian is considering investing in a fast food franchise which is forecast to earn Net Cash Flows of $60,000 per annum for the foreseeable future. The price to invest is $1 million. However, the Australian economy is weakening and in recession, which sharply increases the risk of the franchise. Which of the following conclusions reflects an appropriate adjustment to the risk-return relationship? Select all correct answers only.

Select one or more:

a. Decrease the price to $800,000, to increase the return to 7.5%

b. Decrease the price to $900,000, to increase the return to 6.7%

c. Decrease the price to $1 million, to increase the return to 6%

d. Increase the price to $1.1 million, to increase the return to 5.5%

e. Increase the price to $1.2 million, to decrease the return to 5%

5. Paul has a variable rate mortgage with NAB costing 3.5% per annum. If the RBA increases the official cash rate by 25 basis points, what is the most likely shift in cost of Paul’s home loan?

Select one:

a. 3%

b. 4.3%

c. 3.3%

d. 3.8%

e. 3.48%

6. Which of the following currency movements would benefit a Chinese importer of wool from Australia? Select all correct answers only. Wool is priced in AUD.

Select one or more:

a. Depreciation of the AUD compared to the CNY.

b. Appreciation of the AUD compared to the JPY.

c. Appreciation of the AUD compared to the CNY.

d. Depreciation of the AUD compared to the CAD

e. Appreciation of the CNY compared to the AUD.

7. NAB earns 4% on $2 billion of interest earning assets and pays 3% on $1.5 billion of interest liabilities. With total capital of $4 billion. Calculate NAB's Interest Rate Margin.

Select one:

a. Not enough information provided

b. 0.68%

c. None of the answers here.

d. 1.08%

e. 0.98%

8. Which home loan attributes would you choose if you wanted to benefit from both falling interest rates and lock in interest rates while paying off the loan in full by the final loan repayment. Select all correct answers only.

Select one or more:

a. Interest-only

b. Fully amortising

c. Fixed rate only

d. Variable rate only

e. Split rate

9. As the CFO of Monash Inc., you decrease the proportion of capital financed through debt. Which of the following impacts upon the cost of equity is the most correct?

Select one:

a. K_e will decrease due to higher risk of residual claim.

b. None of the above.

c. K_e will increase due to lower risk of residual claim.

d. K_e will increase due to higher risk of residual claim.

e. K_e will decrease due to lower risk of residual claim.

10. Property developer Lendlease issues 90 day bank bills that have a yield-to-maturity (YTM) of 3% p.a. that you as a potential buyer value at a price of $95,000.

The latest analyst report comes out showing a growing shortfall in working capital for the remainder of the year. This is due to the inability of lendlease to collect on accounts receivable due to customers inability to pay in the COVID economy.

Which of the following best describes how you would revalue the investment?

Select one:

a. Improving collections on customer debts causes a fall in liquidity risk, which increases the YTM, increasing the value of the bill where you would pay a price lower than $95,000.

b. Falling earnings causes a increase in interest rate risk, which increases the YTM, increasing the value of the bill where you would pay a price higher than $95,000.

c. Falling collections on customer debt causes an increase in liquidity risk, which increases the YTM, reducing the value of the bill where you would pay a price lower than $95,000.

d. Rising earnings causes a fall in credit risk, which reduces the YTM, increasing the value of the bill where you would pay a price higher than $95,000.

e. Falling credit risk causes a rise in earnings, which increases the YTM, reducing the value of the bill where you would pay a price lower than $95,000.

I need this now can you answer please!!

Because they are nonrivalrous and nonexcludable, public goods provide a lot of marginal benefit to a lot of people when they are produced. However, some people really benefit a lot from them. For example, people who drive a lot benefit the most from freeways. Why can’t we just sit back and let those people voluntarily buy the public goods we need? There are two main reasons. In what ways would this lead to an inefficient outcome?

Please explain: What does...

1) Favorable Total Volume Variance in terms of net income?

2) Favorable Sales Price Variance mean?

3) Unfavorable Direct Materials Efficiency Variance mean?

4) Favorable Direct Material Price Variance mean?

5) Unfavorable Direct Labor Rate Variance mean?

6) Favorable Variable Manufacturing Overhead Efficiency Variance mean?

7) Unfavorable Variable Manufacturing Overhead Spending Variance mean?

8) Unfavorable Variable Selling Spending Variance mean?

9) Favorable Fixed Manufacturing Overhead Spending Variance men?

10) Unfavorable Fixed Selling Spending Variance mean?

11) Fixed Administrative Spending Variance mean?

Thank you!

Write a function howManyMonths(start, rate, spending, target) where:

start - the starting balance in your bank account (float)

rate - the monthly interest rate (float) - like 0.001 for 0.1%

spending - the monthly amount that is spent each month (float)

target - the target savings that you’d like to achieve

The function returns how many months it takes to save the target savings amount. The function should return a -1 if the balance goes below 0 because the spending is too high. The function should also return -1 if the target is not reached after 100 months.

Each month you earn the monthly rate of interest, but you also spend the spending amount.

So, next_month_balance = start_balance * (1 + rate) - spending

5. The production manager of Triton Enterprises, Inc. has submitted the following quarterly production forecast for the upcoming fiscal year: 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter Units to be produced 8,000 6,500 7,000 7,500 Each unit requires 0.70 direct labor-hours, and direct laborers are paid $15.00 per hour. A) Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. B) Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 5,200 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 5,200 hours anyway. Any hours worked in excess of 5,400 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. 6. The direct labor budget of Regan LLC for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter Budgeted direct labor-hours 8,000 8,200 8,500 7,800 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $6.50 per direct labor-hour and its total fixed manufacturing overhead is $64,000 per quarter. The only noncash item include in fixed manufacturing overhead is depreciation, which is $20,000 per quarter. A) Prepare the company’s manufacturing overhead budget for the upcoming fiscal year. B) Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent.

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:

Management finds the variation in quarterly unit product costs to be confusing. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.

Required:

1. Assuming the estimated variable manufacturing overhead cost per unit is $0.60, what must be the estimated total fixed manufacturing overhead cost per quarter?

2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter?

3. What is causing the estimated unit product cost to fluctuate from one quarter to the next?

4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.