4. Suppose that investment demand increases by $100. Assume that households have a marginal propensity to consume of 80 percent. Compute the first three rounds of multiplier effects as follows:

a) What are the first cycle changes in spending? Total cumulative change equals?

b) What are the second cycle changes in spending? Total cumulative change equals?

c) What are the third cycle changes in spending? Total cumulative change equals?  

5. If a balanced budget government passes a new fiscal stimulus or restraint, it can lead to a deficit or surplus. In order to avoid an imbalance, how much of a tax hike or tax cut would be required? In the event of an extra $50 Billion of government purchases, $30 Billion of transfer payments, what should be the offsetting tax package?

Contribution Margin Analysis

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $10,864 from the planned level of $464,436. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.

The following data have been gathered from the accounting records for the year ended December 31:

Required:

1. Prepare a contribution margin analysis report for the year ended December 31.

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $41,616 from the planned level of $764,784. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.

The following data have been gathered from the accounting records for the year ended December 31:

Required:

1. Prepare a contribution margin analysis report for the year ended December 31.

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.

The Russell 1000 is a stock market index consisting of the largest U.S. companies. The Dow Jones industrial Average is based on 30 large companies. The data giving the annual percentage returns for each of these stock indexes for 25 years are contained in the Excel Online file below. Construct a spreadsheet to answer the following questions.

a. Which of the following scatter diagrams accurately represents the data set?

_________Scatter diagram #1Scatter diagram #2Scatter diagram #3Scatter diagram #4

b. Compute the sample mean and standard deviation for each index (to 2 decimals).

c. Compute the sample correlation coefficient for these data (to 3 decimals).

d. Discuss similarities and differences in these two indexes.

_________There is a strong positive linear association between DJIA and Russell 1000There is a moderate positive linear association between DJIA and Russell 1000There is neither a positive nor a negative linear association between DJIA and Russell 1000There is a moderate negative linear association between DJIA and Russell 1000There is a strong negative linear association between DJIA and Russell 1000

The variance of the Russell 1000 is slightly _________largersmaller than that of the DJIA.

a. Which of the following scatter diagrams accurately represents the data set?

_________Scatter diagram #1Scatter diagram #2Scatter diagram #3Scatter diagram #4

b. Compute the sample mean and standard deviation for each index (to 2 decimals).

c. Compute the sample correlation coefficient for these data (to 3 decimals).

d. Discuss similarities and differences in these two indexes.

_________There is a strong positive linear association between DJIA and Russell 1000There is a moderate positive linear association between DJIA and Russell 1000There is neither a positive nor a negative linear association between DJIA and Russell 1000There is a moderate negative linear association between DJIA and Russell 1000There is a strong negative linear association between DJIA and Russell 1000

The variance of the Russell 1000 is slightly _________largersmaller than that of the DJIA.

Below is a spreadsheet that has the annual return measured for 12 different stock investments. The spreadsheet shows the average return and standard deviation of the return for the past 15 years. Use this spreadsheet and spreadsheet commands to do the following:

Compute the return for each year on a portfolio that contains an equal investment in all 12 securities.

Compute the 15-year average return and standard deviation of return for the portfolio that consists of all 12 securities with equally weighted investment.

Compute the correlation and covariance between the return on company #12 and the return on the equally-weighted portfolio. Hint: There is a spreadsheet command that does this calculation.

Compute the beta of Company #12 using the information you have collected.

Now using the beta you created for Company #12, compute the required rate of return using the Capital Asset Pricing Model (CAPM), assuming that the average market return is the return of your equally-weighted portfolio and the risk-free rate of return is 2.5%.

If you were told analysts estimate that Company #12 will have a 5% rate of return next year, would you buy the stock? Why or why not?

COMPUTE ALL CALCULATIONS IN AN EXCEL SPREADSHEET AND POST IT HERE, THANK YOU

Background

The Internal Audit Department of a state-supported university was in the process of performing a scheduled audit of a school within the university that had several academic departments. The internal auditor developed an audit program, which included academic auditing departments within the school having potentially higher risk levels, based on factors such as funding levels, number of funding sources, and number of students. Internal Audit performed this type of audit each year rotating between the various schools within the institution. Audit objectives routinely included evaluating compliance with university policies and procedures relating to procurement, payroll, and cash collections and deposits.

Selected Department

Departments were selected based on the criteria of the audit objectives and discussions with school management. One of the academic departments selected had approximately 30 faculty members, seven administrative staff members, and a nationally recognized graduate program. In addition to being responsible for the academic programs, the department also conducted several functions that provided contract services to the community on a fee basis. Each fund source was recorded in a separate account, and the department had more than 90 accounts. The fund types included state funding, private donations, state and federal grants and contracts, and industry-sponsored contracts. Fund amounts ranged from a low of $1,500 to several which exceeded $100,000. Each type of fund had different requirements relating to how and for what the funds could be expended.

Participants

Faculty members were paid a salary for providing teaching, research, and performing community service in the name of the university. Their contracts were typically for nine months each year. They were allowed to supplement their salary for the remaining three months of the year through various types of grants and contracts. Faculty members were also allowed to work, usually as consultants, up to one day per week outside of the university and were paid directly by the party with whom they were consulting. The consulting fees were personal income for the faculty member and were not processed through the university in any manner.

The department chair had been at the university for more than ten years and was recognized as a faculty leader through various programs at the university. He had held the chair position for five years and was classified as an instructional faculty member with an administrative appointment. Under the guidelines of the university, he received additional compensation for the extra administrative duties he performed as the chair. He was considered a 12-month employee. Therefore, he was not allowed to supplement his university salary in any manner, including summer school teaching or additional funding through a grant.

The university policy stated that department chairs reported to the Dean of the academic college or school. However, in this case, there had historically been little or no review of the department’s finances by the Dean or his representative.

The core administrative staff had been in the department for a number of years. The staff consisted of the chair’s secretary (three years in the department), a business manager (more than 10 years in the department), and a fiscal tech (more than 20 years in the department). The business manager was responsible for the fiscal management of the department and the fiscal tech prepared the financial transactions at the direction of the chair and the business manager.

The financial transactions of the department were initiated using the university’s on-line financial accounting system. In order to provide the chair and appropriate faculty members with timely management data, the fiscal tech also used a series of spreadsheets to manage each account. These spreadsheets provided up to the minute information regarding each account rather than the reports from the university system, which were usually received about ten days after the end of each month.

The fiscal tech prepared the financial transactions based on direction from the chair, appropriate faculty members, or the business manager. The business manager was responsible for approving all financial transactions. However, the business manager shared her password with the fiscal tech as she believed that she didn’t have time to approve each transaction. The fiscal tech then had the ability to approve and enter transactions, despite the fact that she only had the on-line authority to initiate transactions.

Within the last year, the administrative staff had received salary increases for exemplary performance. The raises were given at the direction of the chair.

Situation

The institution had numerous financial policies and procedures that were fragmented and not well communicated. These procedures were available on-line. Training was available, but it was not required. The department personnel had received the training. Implementation of the financial policies and procedures was delegated to the departmental level with minimal review by central organizations to ensure adherence to these policies and procedures.

The internal auditor performed the review. The major finding resulted in a recommendation that monthly reconciliations of each departmental account be performed and documented and that each account be signed by the business manager, signifying certification that each expenditure was made in accordance with university policy and for university related purposes. The recommendation was fully supported by the Dean, and he ordered all departments to immediately implement the recommendation.

Allegations

When the audit was completed and the above finding was being implemented, university management received an anonymous tip. The caller alleged that a department chair had been paying personal bills from university accounts and that other irregularities had occurred within the chair’s department.

Required. Answer the questions in paragraphs. Refer to any or all Audit regulations, i.e., AU and SAS

1) Upon receiving notification of the anonymous tip, outline the actions that you would take as the university’s auditor.

2) What controls would you look for to determine where the potential weaknesses were located?

3) How would you strengthen controls at the university level to decrease the likelihood of this type of occurrence?

Human Resources Management

ANSWER ALL QUESTIONS
WHICH ARE BASED ON THE CASELET PROVIDED

Staff retention and staying power: Nissan builds on loyalty at Sunderland plan
Some of carmaker’s earliest recruits are now among its most senior executives.
Since the first Bluebird rolled off the production line in July 1986, the Nissan plant in Sunderland has grown from a £50m assembly operation into the UK’s biggest car production site.
Now a £3.7bn investment employing 6,800 people, it is also north-east England’s biggest private sector employer, offering relatively good pay and secure work in an area with the UK’s highest regional unemployment.
For these reasons, employees tend to stick around. Turnover of production staff is 3.66 per cent a year, against the UK average of 13.6 [per cent], according to the CIPD, the professional association for HR and some of the earliest recruits, identifiable by their low employee number, are among the most senior executives.
Keith Watson, a 55-year-old production supervisor on trim and chassis line 2, joined in 1985 as employee number 179. ‘In the early days we were building four cars a day’, he says. News that Nissan wanted more did not go down well. ‘We were panicking, saying we will never get six a day. Now it’s 2,000 a day’
As it has expanded, some of the biggest changes in the plant have focused on ergonomics and technology to reduce strain on workers and accelerate the pace of production.
Each of the plant’s 300 supervisors, responsible for more than 4,000 production staff, is trained in ergonomic assessment.
Innovations include seat shuttles, developed by the in- house kaizen, or continuous improvement team, to allow operators to sit and be transported as they work on cars on the line, rather than having to duck and twist.
On the line where the Qashqai and electric leaf are made, a height-adjustable skillet, resembling the middle section of an accordion, raises and lowers the vehicle to the height at which the operator needs to work. Robotics have played a part too, with the body shop moving from high levels of manual welding to 93 per cent automation. The new welding facility for the Infiniti, the luxury brand that Sunderland has just begun producing, is completely automated with 141 robots. However, work on the production line remains intense and tiring; stamina is vital.
‘It’s still a hard job’, says Mr Watson. ‘Some operators are so fluent it’s unbelievable; it’s like second nature to them. They’re athletes in a way’. Mr Watson’s contemporaries in 1985 included team leader Trevor Mann (number 127), now Nissan’s chief performance officer and most senior European executive, based in Yokohama.
Mr Mann says the early intake was a tight knit team with a desire ‘to be as good as the Japanese’. Colin Lawther (number 120), a chemist who joined in 1985, is senior vice-president responsible for manufacturing, supply chain management and purchasing in Europe.
‘We came from a fairly deprived area. we had this tremendous fighting spirit’, he says. Kevin Fitzpatrick, a paint shop supervisor back in 1985 (number 63), is the site’s most senior employee as Nissan motor manufacturing’s UK Vice-President. He says a culture of encouraging people to learn and try new things has helped keep him there. ‘In my previous company your only chance to progress was if somebody retired’, he says. of 4,305 production staff, more than a third are over 40 and late 50s is the site’s most common
retirement age. But this is not always the end of the story. Barry Loneragan (employee 102) joined as a team leader in 1985 and retired as technical services manager eight years ago. Now, aged 67, he returns regularly, employed by an outside agency, to do plant tours. So do two other pensioners.
Mr Loneragan is proud of what the early intake achieved. ‘We had to go out and prove ourselves. It was that togetherness; the will to succeed. The legacy lives on’, he says.

QUESTION 1
What are the benefits of Nissan’s approach to employee retention? What factors should other
organisations wanting to adopt a similar approach need to consider?

QUESTION 2
In the context of the caselet, do you think Nissan should focus on career development and career
management? Shed light on the changes in the nature and forms of career.

QUESTION 3
Critically analyse what effects the current economic climate has on rewards, and how this
environment is affecting rewards in your organization.

QUESTION 4
“HR management must support the organisation’s strategy, which flows from its vision, mission and
strategic goals”. Critically analyse the statement with special reference to distinctive features of
Strategic Human Resource Management in light of the above caselet.

The aftertax cost of debt:

• varies inversely to changes in market interest rates.

• will generally exceed the cost of equity if the relevant tax rate is zero.

• will generally equal the cost of preferred if the tax rate is zero.

• is unaffected by changes in the market rate of interest.

• is highly dependent upon a company's tax rate.