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A city in Ohio is considering replacing its fleet of gasoline powered cars with electric cars. The manufacturer of the electric cars claims that this municipality will experience significant cost savings over the life of the fleet if it chooses to pursue this conversion. If the manufacturer is correct, the city will save about $1.5 million. If the new technology employed within the electric cars is faulty as some critics suggest, it will cost the city $675,000. A third possibility is that less serious problems will arise and the city will break even in the conversion. A consultant hired by the city estimates the probabilities of these three outcomes are 0.30, 0.30, and 0.40, respectively. The city has an opportunity to implement a pilot program that would indicate the potential cost or savings resulting from the switch to electric cars. The pilot program involves renting a small number of electric cars for three months and running them under typical conditions. This program would cost the city $75,000. The city’s consultant believes that the results of the pilot program would be significant but not conclusive. She submits the following compilation of probabilities based on the experience of other cities to support her contention.

For example, the first column of her table indicates that given that the conversion to electric cars actually results in a savings, the conditional probabilities that the pilot program will indicate that the city saves money, loses money, and breaks even are 0.6, 0.1, and 0.3. What actions should the city take to maximize its expected savings? When should it run the pilot program, if ever? (Note: If you set up the input section of your spredsheet in the right way, you will be able to perform all of the Bayes' rule calculations with a couple copyable formulas.)

Problem 26-01
Investment Timing Option: Decision-Tree Analysis

Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $16 million. Kim expects the hotel will produce positive cash flows of $2.72 million a year at the end of each of the next 20 years. The project's cost of capital is 12%.

1. What is the project's net present value? A negative value should be entered with a negative sign. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
   $ million
   
2. Kim expects the cash flows to be $2.72 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $1.44 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $4 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $16 million. Assume that all cash flows are discounted at 12%. Use decision-tree analysis to determine whether Kim should proceed with the project today or wait a year before deciding.
   -Select-It makes sense to proceed with the project today.It makes sense to wait a year before deciding.

Perry plc is a large conglomerate company structured on a divisional basis. It seeks to maximise investor wealth. Head office avoids day to day involvement in divisional affairs and only intervenes if performance is considered unsatisfactory. Divisional performance is measured by residual income.

One of Perry’s larger divisions operates a chain of high-class hotels throughout the United Kingdom. The division’s mission statement is ‘To be the hotel of the first choice for business users and tourists’. Although the chain has generally been popular with tourists it is not proving quite so popular with business users and conference organisers. Competition in the top segment of the hotel market is fierce, with customers expecting the highest standards of facilities, service, and catering. Over the last two years, the division has invested a large amount of money in modernising its hotels including the improvement of bedrooms and public rooms, installation of gymnasia and swimming pools and the information technology features required by business travelers. A large amount of money has also been spent on staff training to improve service levels and on a television advertising campaign to promote improved hotels to business users.

Head office is concerned that the performance of the hotel chain appears to have declined over the last few years despite this expenditure.

         The following figures are available

The cost of capital applicable to the hotel division is 20% per annum

Required:

1. Calculate the residual income for the hotel chain for each of the three years.
2. Discuss three advantages and four disadvantages of residual income as a divisional performance measure.                                                                                                     ( 7 marks)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.55 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $351,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job suport consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch—a 60-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $90.20 (400 square feet @ $22.55 per hundred square feet). Calculate the customer margin earned on this job.

Here is an example of T-test down blow (it doesn't have to be exactly) I need to help with my data which it is about phone service survey. Please help and I really appreciate your time.

T-test looked at how far people travel to visit a healthcare clinic compared to how easy it was to understand the information that their physician was explaining to them (Table 2). The sample group was divided into two categories: people who travel less (?5 miles) and people who travel more (?6 miles). Table 2 shows that, on average, people who travel less understood more information that their physician was explaining to them than the people that traveled more (people who travel less = 4.63, people who travel more = 4.10, p = .026). The conclusion that could be drawn from this finding is that physicians who work in clinics close to dense populations are better at explaining information to their patients. This could be due to these physicians seeing more patients with similar conditions, making it easier for them to explain information to their patients with similar conditions.

Table 2. Distanced Normally Traveled vs. How Easy Information was Explained by Physician

Group Statistics

Independent Samples Test

Here is my data down blow and I need help with interpret or explain just like the exmpale. Thank you so much!

1. Nick’s dependent child lives with him. He pays the following expenses for her during 2019: (1) doctor bills. ($8,000); (2) hospital bill ($10,775) which included the doctor’s fee ($10,000), meals ($200), lodging ($400) and lab fees ($175); (3) prescription drugs ($600) and insulin ($925); (4) eyeglasses ($200); (5) aspirin and vitamins ($50); (6) medical insurance premiums ($1,000); (7) transportation to and from the doctor’s office by car (300 total miles); and (8) a face lift ($2,000). Nick’s adjusted gross income in 2019 was $200,000. Nick’s health insurance plan reimbursed him for $4,000 of the hospital bill and $300 of the prescription drugs. What is Nick’s net medical expense deduction in 2019?

2. John is single. He has the following tax information: wages $100,000, vitamins insurance premiums paid $8,000, state income tax $9,000, state sales tax $7,000, mortgage interest $16,000, credit card interest $3,000, $900, unreimbursed travel by car for the Red Cross (100 miles) and reimbursed expenses from his employer $4,100. Determine John’s net itemized deduction total.

3. John purchased a home four years ago for $1,150,000. He paid $200,000 cash and incurred a $950,000 mortgage. On 5/10 of the current year, John took out a mortgage on the home for $125,000 when the fair market value of the home was $2,000,000. He used the proceeds of the loan to pay off credit card bills, medical bills, tuition expenses for his child and purchase a boat.

.

Determine the amount of John’s mortgage indebtedness that qualifies for an interest expense deduction in the current year.

4. Erin lives with her brother and supports him. She had wages of $100,000.

Erin paid the following medical expenses for her brother: insulin $2000, prescription drugs $4,000, doctor’s bills $8,000, hospital bills $18,000, aspirin $16, eyeglasses $200. Erin’s medical insurance reimbursed her $9,300 for the hospital bills and $700 for the prescription drugs.

During the year Erin paid $14,000 interest on her mortgage, $4,700 in real property taxes and state income tax of $3,300.

Erin contributed $5,200 to her church, $800 to St. John’s University and gave $300 to a needy family.

Erin had $2,300 of reimbursed expenses from her employer.

Determine Erin’s filing status, taxable income and tax liability.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.85 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $353,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 53-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $45.70 (200 square feet @ $22.85 per hundred square feet). Calculate the customer margin earned on this job.

Gallatin Carpet Cleaning is a small, family-owned business operating out of, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.70 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Activity Measure Activity for the Year Cleaning carpets Square feet cleaned (00s) 12,000 hundred square feet Travel to jobs Miles driven 199,500 miles Job support Number of jobs 1,900 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $351,000 which includes the following costs: Wages $ 136,000 Cleaning supplies 22,000 Cleaning equipment depreciation 8,000 Vehicle expenses 33,000 Office expenses 69,000 President’s compensation 83,000 Total cost $ 351,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages 80 % 13 % 0 % 7 % 100 % Cleaning supplies 100 % 0 % 0 % 0 % 100 % Cleaning equipment depreciation 73 % 0 % 0 % 27 % 100 % Vehicle expenses 0 % 77 % 0 % 23 % 100 % Office expenses 0 % 0 % 58 % 42 % 100 % President’s compensation 0 % 0 % 30 % 70 % 100 % Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. Required: 1. Prepare the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch—a 51-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. 4. The revenue from the Flying N Ranch was $181.60 (800 square feet @ $22.70 per hundred square feet). Calculate the customer margin earned on this job.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.45 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $363,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 58-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $140.70 (600 square feet @ $23.45 per hundred square feet). Calculate the customer margin earned on this job.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.30 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $335,000 which includes the following costs:

Wages $ 146,000

Cleaning supplies 21,000

Cleaning equipment depreciation 12,000

Vehicle expenses 27,000

Office expenses 58,000

President’s compensation 71,000

Total cost $ 335,000

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 57-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $133.80 (600 square feet @ $22.30 per hundred square feet). Calculate the customer margin earned on this job.