You are a senior manager of a firm in Florida that manufactures a range of toys locally only. Your revenues come from two products- plastic toys with no moving parts, requiring simple assembly, and electric toys with moving parts, requiring precision & skilled assembly. Your CEO has made a recent trip to Asia and has discovered the wonderful world of low labor cost South East Asian countries. She concludes that the company should shift production of part of their products at least to some of these countries, reckoning that the company could cut production costs substantially. After further research, she discovered that labor costs in Pakistan are Rs.100 per hour compared to $9 in Florida. When she learnt that the current exchange rate is Rs.20/$, she was convinced that she should move all production to Pakistan.
You, however, have had the benefit of attending the international business course at Nova, and so investigate further before carrying out the CEO's bidding. You determine that your CEO was right about the labor cost differences being the single most important determinant of your costs. Since you are buying components and only assembling them, the raw material costs did not vary depending on where you manufactured. Therefore, she seemed to be on the right track in arguing that Pakistan would be the cheaper location. Nevertheless, you dig deeper and find the following data (assume no quality differences, zero transportation costs, etc.):
Toys produced /unit of labor
Plastic - Pakistan 3 , USA 6
Electric - Pakistan 2, USA 6
a) What are the opportunity costs of producing each of these goods in each country? (1 point)
b) Based ONLY on the data in the table (i.e. ignoring wage rates), would you move ALL production to Pakistan? If so, why? If not, would you move one product to Pakistan? If so, which one, and why? (1 point)
c) Now include the wage rates in your analysis. What would you recommend to the CEO? If you recommended moving any production to Pakistan, justify your decision. If you recommend not moving any production to Pakistan, justify your decision to the CEO by determining (3 points)
i. The wage level at which it would be optimal to move some production to Pakistan
ii. The wage level at which it would be optimal to move all production to
d) What are the limits to the exchange rate at which it makes sense to produce at least something in both countries? (3 points)
In: Economics
In February 2015, Arctic Cat Inc., acquired the assets and liabilities of MotorFist, LLC, a privately owned company based in Idaho Falls, Idaho, in exchance for $9.118 million in cash and contingent consideration. Referring to Arctic Cats's 2015 annual 10-K report, answer the following questions regarding the MotorFist acquisition. 1. Why did Arctic Cat acquire MotorFist? 2. How was the cosideration transferred allocated between cash paid and the contingent consideration? 3. Provide a schedule showing Arctic Cat's allocations of the consideration transferred to the identifiable assets acquired and liabilities assumed with the remainder going to goodwill.
In: Accounting
6 Rembrandt Artist Supplies Company had 10 easels in inventory on January 1, 2019 that cost $10 per easel. On February 1, 2019 it acquired 20 additional easels valued at $12 per easel and acquired an additional 30 easels at $14 an easel on March 1, 2019. On June 1, 2019 Rembrandt made its only sale of easels for the year amounting to 40 easels.
What was the value of Rembrandt's ending inventory and
cost of goods sold for the easels at the end of 2019 using
the
a. average cost, b. FIFO and c. LIFO methods?
In: Accounting
Part (a) Consider a firm called Health-R-Us that is a monopoly. How does Health-R- Us decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss arises. Part (b) Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer. Part (c) Your answers to parts 2a and 2b illustrated different levels of profit made by an individual firm in both a monopoly market structure and a competitive market structure respectively. In part 2a you also indicated the dead weight loss of a monopoly. Assume now that Health-R-Us has discovered a vaccine for coronavirus. Why might the government be willing to grant (and allow to remain in place) a patent to Health- R-Us, despite the dead weight loss and the ensuring monopoly profits caused by such a patent? Explain your answer. For simplicity assume the vaccine is only relevant for the domestic market (i.e., there is no global market for vaccines). [5+5+5 = 15 marks]
In: Economics
Part (a) Consider a firm called Health-R-Us that is a monopoly. How does Health-R- Us decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss arises. Part (b) Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer. Part (c) Your answers to parts 2a and 2b illustrated different levels of profit made by an individual firm in both a monopoly market structure and a competitive market structure respectively. In part 2a you also indicated the dead weight loss of a monopoly. Assume now that Health-R-Us has discovered a vaccine for coronavirus. Why might the government be willing to grant (and allow to remain in place) a patent to Health- R-Us, despite the dead weight loss and the ensuring monopoly profits caused by such a patent? Explain your answer. For simplicity assume the vaccine is only relevant for the domestic market (i.e., there is no global market for vaccines). [5+5+5 = 15 marks]
In: Economics
Profit Center Responsibility Reporting for a Service Company
Thomas Railroad Company organizes its three divisions, the North (N), South (S), and West (W) regions, as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31:
| Revenues—N Region | $1,095,000 |
| Revenues—S Region | 1,306,900 |
| Revenues—W Region | 2,356,700 |
| Operating Expenses—N Region | 693,900 |
| Operating Expenses—S Region | 777,800 |
| Operating Expenses—W Region | 1,425,200 |
| Corporate Expenses—Dispatching | 561,600 |
| Corporate Expenses—Equipment Management | 254,200 |
| Corporate Expenses—Treasurer’s | 166,500 |
| General Corporate Officers’ Salaries | 367,800 |
The company operates three service departments: the Dispatching Department, the Equipment Management Department, and the Treasurer’s Department. The Dispatching Department manages the scheduling and releasing of completed trains. The Equipment Management Department manages the railroad cars inventories. It makes sure the right freight cars are at the right place at the right time. The Treasurer’s Department conducts a variety of services for the company as a whole. The following additional information has been gathered:
| North | South | West | ||||
| Number of scheduled trains | 5,900 | 7,000 | 10,500 | |||
| Number of railroad cars in inventory | 1,000 | 1,600 | 1,500 | |||
Required:
1. Prepare quarterly income statements showing income from operations for the three regions. Use three column headings: North, South, and West. Do not round your interim calculations.
| Thomas Railroad Company | |||
| Divisional Income Statements | |||
| For the Quarter Ended December 31 | |||
| North | South | West | |
| Revenues | $ | $ | $ |
| Operating expenses | |||
| Income from operations before service department charges | $ | $ | $ |
| Service department charges: | |||
| Dispatching | $ | $ | $ |
| Equipment Management | |||
| Total service department charges | $ | $ | $ |
| Income from operations | $ | $ | $ |
Feedback
2. What is the A component of the rate of return on investment, computed as the ratio of income from operations to sales.profit margin of each division? Round to one decimal place.
| Region | Profit Margin |
| North Region | % |
| South Region | % |
| West Region | % |
Identify the most successful region according to the profit
margin.
3. What would you include in a recommendation to the CEO for a better method for evaluating the performance of the divisions?
In: Accounting
Accounts receivable transactions are provided below
for J Crane Co.
Dec. 31, 2020
The company estimated that 3% of its accounts receivable would become uncollectible. The balances in the Accounts Receivable account and Allowance for Doubtful Accounts were $684,000 and $3,000 (debit), respectively.
Mar. 5, 2021
The company determined that R. Mirza’s $3,100 account and D. Wight’s $6,900 account were uncollectible. The company’s accounts receivable were $719,000 before the accounts were written off.
June 6, 2021
Wight paid the amount that had been written off on March 5. The company’s accounts receivable were $674,000prior to recording the cash receipt for Wight.
(a)
Correct answer iconYour answer is correct.
Prepare the journal entries on December 31, 2020,
March 5, 2021, and June 6, 2021. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Record journal entries
in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
[Dec. 31, 2020 \/]
[Bad Debts Expense \/]
[ ]
[ ]
[Bad Debts Expense \/]
[ ]
[ ]
(To record estimate of uncollectible accounts.)
[Dec. 31, 2020 \/]
[Bad Debts Expense \/]
[ ]
[ ]
[Allowance for Doubtful Accounts \/]
[ ]
[ ]
(To record write off of accounts receivable.)
[Dec. 31, 2020 \/]
[Cash \/]
[ ]
[ ]
[No Entry \/]
[ ]
[ ]
(To record write off of accounts receivable.)
[Dec. 31, 2020 \/]
[Allowance for Doubtful Accounts \/]
[ ]
[ ]
[No Entry \/]
[ ]
[ ]
(To reverse write off.)
[Dec. 31, 2020 \/]
[Accounts Receivable - Mirza \/]
[ ]
[ ]
[Accounts Receivable - Wight \/]
[ ]
[ ]
(Collection of account that was previously written off.)
eTextbook and Media
List of Accounts
Attempts: 3 of 5 used
(b)
Your Answer
Correct Answer
Correct answer iconYour answer is correct.
Post the journal entries to Allowance for Doubtful
Accounts and calculate the new balance after each
entry.
Allowance for Doubtful Accounts
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31, 2020
Balance unadjusted Debit
[ ]
Dec. 31, 2020
AJE
[ ]
[ ]
[ ]
Mar. 5, 2021
Write off Mirza
[ ]
[ ]
[ ]
Mar. 5, 2021
Write off Wight
[ ]
[ ]
[ ]
June 6, 2021
Reverse write off
[ ]
[ ]
[ ]
eTextbook and Media
List of Accounts
Attempts: 5 of 5 used
(c)
Incorrect answer iconYour answer is incorrect.
Calculate the carrying amount of the accounts
receivable both before and after recording the cash receipt from
Wight on June 6, 2021.
Carrying amount before recovery
$ [ ]
Carrying amount after recovery
$ [ ]
In: Accounting
14.- A sociologist asserts that only 5% of all seniors in high
school, capable of performing work at the university level,
actually attend university. Find the probabilities that among 180
students capable of performing work at university level:
a) exactly 10 attend college using the binomial
b) Using the normal distribution
c) at least 10 go to university using binomial T.I or excel
d) Using the normal distribution
e) when many eight go to university using binomial or excel
f) Using the normal distribution
In: Math
-What are GAAP? Why do we need to ponder over the levels of GAAP to do accounting work?
-What is the mission of the Financial Accounting Standard Board (FASB)
-What are the main three financial statements? How to link them together reflect the financial position and performance of a company?
-Why do public companies need auditor' report? If the CEO and CFO of a company need to certify the financial statements and internal control system, why do we still need external auditors to give their opinions on these items?
In: Accounting
I want answers in 60 minutes
Design a CV for the job of a Physiotherapist at any hospital supposing an individual has completed DPT with an A grade and have 2 years of professional experience in the related field.
Your answer
Define the terms: Cohesion, Coherence, Skimming, Scanning
Your answer
You are the CEO of a company write a memorandum to your staff explaining the new software the company has purchased.
Your answer
What five major details should a person add while writing minutes of the meeting?
In: Computer Science