Company A and Company B are both wholly owned subsidiaries of Parent, Inc. Parent has no other operations, balance sheet items or income statement items other than its ownership of Company 1 (located in China) and Company 2 (located in US). Company 2 periodically sells goods to Company 1 for resale to end customers. Such goods are sold at the same pricing terms that Company 2 sells to all other customers. Prior to January 1, 2018, there had never been any inventory sales from Company 1 to Company 2 or from Company 2 to Company 1. The following is data for each company for 2018 and 2019:

Company 1 Company 2

     Year ended 12/31/18

Sales to all customers $300 million $150 million

Costs of sales $150 million $100 million

All other non production expenses $ 60 million $ 40 million

Pre tax income $ 90 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $15 million

    Year ended 12/31/19

Sales to all customers $280 million $160 million

Costs of sales $140 million $120 million

All other non production expenses $ 60 million $ 30 million

Pretax income $ 80 million $ 10 million

Inventory purchased from Company 1 held

By Company 2 at end of year NONE

Inventory purchased from Company 2 held

By Company 1 at end of year $16 million

What would consolidated pretax income be for Parent for 2018 and 2019

ABC Company is a leading showroom in selling branded Cars. The showroom is displaying automatic and manually operated cars. The automatic model cars are usually purchased by the software engineers and the businessmen. It is observed that the customers who come to purchase the cars would usually come with their family, friends and relatives.

It is identified that some of the customers are interested in purchasing cars through bank loans. The sales will be highest during the year-end and festival season. There is a great influence of the family members in buying these cars. Since the showroom is interested in sales to materialize, rather than pushing any brand, the salesmen are directed to satisfy the customers and to answer the family members’ queries.

The company is having a well-managed Customer Relationship Management Department. Recently the department has received few complaints regarding the product and service from the customers.

Question:

1. Explain five types of customer feedback that can be applied to the above situation.     5 Marks  

2. List and explain four points about "how ABC Company can become World Class Company”?

   Why do companies prefer to become “World-class”?                                                      

Question 4:

AB-25 is a top-selling electronic product. The company divides its customers into two groups: new customers and upgrade customers. Although the same physical product is provided to each customer group, sizeable differences exist in selling prices and variable marketing costs:

The fixed costs of AB-25 are $16,000,000. The planned sales mix in units is 80% new customers and 20% upgrade customers.

Required:

1. What is the break-even point in units for AB-25, assuming that the planned 80%/20% sales mix is attained?
2. If the sales mix is attained, what is the profit when 150 000 units are sold?
3. Show how the break-even point in units changes with the following customer mixes (a and b):

a. new 30%/upgrade 70%                                                                               

b.    new 60%/upgrade 40%

c.    Comparing the break-even points in requirements a and b, is it always better for a company to choose the sales mix that yields the lower break-even point? Explain.

For each of the following independent events, indicate the amounts and direction of effects on the elements of the statement of financial position and statement of earnings. Using the following format, indicate + for increase, and - for decrease, and NE for no effect. Also, included the specific account name affected.

Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $2,500 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $250 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $2,500 per day and any bonus due are paid in one lump payment shortly after the end of each month.

On July 1, based on prior experience, Rocky estimated there is a 40% chance it will earn the bonus for July tours. It guided a total of 10 days from July 1–July 15.

On July 16, based on Rocky’s view that it had provided excellent service during the first part of the month, Rocky revised its estimate to an 90% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16–July 31.

On August 5 Rocky learned it did not receive an average evaluation of “excellent” for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours.

Rocky bases estimates of variable consideration on the most likely amount it expects to receive.

Required:
1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record Rocky's July 15 journal entry to record revenue for tours given from July 1 - July 15.

2. Record Rocky's July 31 journal entry to record revenue for tours given from July 16 - July 31.

3. Record Rocky's August 5 journal entry to record the receipt of payment from Wilderness.

4. Record Rocky's August 5 journal entry to record any necessary adjustments to revenue.

Do a VECM analysis in STATA by using the variables FDI, GDP, Trade openness, and Exchange rate. FDI is chosen as the dependent variable.
Indicate the commands for the stationarity, lag choice, and model stability.
Provide the Impulse Response Functions where FDI is the response function.

The data for the per capita demand for chicken ( pounds per household) in the United States from 1990 to 2013 is given in the table below.

475 = unique initial income number.

AVG = AVERAGE

The data suggests that the per capita demand for chicken (Qd) depends on the following factors:

Pc = Price of chicken ( $ per capita)

I = real disposable income per capita ($)

Ad = Advertising dollars per capita

Pj = price of juice – ( a related product) per capita ($)

Using regression analysis, the attached data and a linear functional form, estimate the demand for CHICKEN.

Include the computation and explanation of the following in your report:

1. Write your regression equation i.e. demand function
2. Enter data provided into excel or statplus as per instructions attached and run your regression / derive your coefficient estimates. Interpret all the coefficients in % ( .i.e if PC = - 0.06768, interpret as: - 6.77%
3. Use the average values for the independent variables and your estimated demand function, compute the demand for CHICKEN in a typical market.
4. Define and interpret the standard error of the estimate AND estimate the range within which actual demand for Chicken is expected to fall with a 95% confidence level.
5. Define the coefficient of determination (R-squared). What percentage of demand variation is explained by this model?
6. Define and explain the usefulness of the F-Statistics
7. Are the coefficient’s statistically significant? i.e. does each of the independent variables have a significant effect on the dependent variable? Explain using t-stats.
8. Calculate and interpret the point price, cross price, point advertising and point income elasticity of demand for CHICKEN.