Create a supply and demand graph illustrating the scenario, the shock, and the predicted effects on wages and employment:

Scenario #1

Airbnb has housed over 150 million guests in over 65,000 cities since 2008. Do a bit of research on what Airbnb is and how cities and the hotel industry has been responding to it. Using standard supply and demand graphs from the course, model the labor market for hotel workers, pre-Airbnb, and show how Airbnb has likely affected the market.

Scenario #2

We all love to go to little, local ice cream shops. Many of these places hire teenagers over the summer to serve these delicious treats for us. Suppose that a new minimum wage bill comes online this summer, raising the minimum to $10/hour. Create two graphs: 1) model the market for these ice cream shop workers and how shop owners will likely respond to the minimum wage increase immediately after it happens; 2) model what would happen if a company starts using very cheap robot ice cream servers.

Scenario #3

Research and find specific examples of immigrants working as a) substitutes for U.S. workers and b) compliments to U.S. workers. Make sure you put the correct graph with each story.

Scenario #4

Many parts of the U.S. have a shortage of IT workers... not enough people are trained in these fields. Model the market for IT workers. What would happen if a new training program was targeted toward people in Appalachia who have a hard time finding work... the program trains this group to be IT technicians.

Scenario #5

You are looking at the labor market for young, childless males seeking work with low-paying employers (i.e. Wal-Mart). With a supply and demand graph, show the effects of expanding the EITC to these workers. Illustrate an initial equilibrium (before EITC), the shift due to the new EITC expansion, and point out the wage they get paid from the employer and the additional “pay” they get due to the EITC.

Problem

NewTech Medical Devices is a medical devices wholesaler that commenced business on June 1, 2019. NewTech Medical Devices purchases merchandise for cash and on open account. In June 2019, NewTech Medical Devices engaged in the following purchasing and cash payment activities:
DATE TRANSACTIONS
2019
June 1 Issued Check 101 to purchase merchandise, $4,000.
3 Purchased merchandise for $1,450from BioCenter Inc., Invoice 606; terms 2/10, n/30.

5 Purchased merchandise for $5,350, plus a freight charge of $100, from New Concepts Corporation, Invoice 1011, terms 2/10, n/30.
9 Paid amount due to BioCenter Inc. for purchase of June 3, less discount, Check 102.
10 Received Credit Memorandum 227 from New Concepts Corporation for damaged merchandise totaling $250 that was returned; the goods were purchased on Invoice 1011, dated June 5.
11 Purchased merchandise for $1,630 from BioCenter Inc., Invoice 612; terms 2/10, n/30.
14 Paid amount due to New Concepts Corporation for Invoice 1011 of June 5, less the return of June 10 and less the cash discount, Check 103.
15 Purchased merchandise with a list price of $8,700 and trade discounts of 20 percent and 15 percent from Park Research, Invoice 1029, terms n/30.
20 Issued Check 104 to purchase merchandise, $2,500.
25 Returned merchandise purchased on June 20 as defective, receiving a cash refund of $230.
30 Purchased merchandise for $2700, plus a freight charge of $80, from New Concepts Corporation, Invoice 1080; terms 2/10, n/30.
INSTRUCTIONS
Journalize the transactions in a general journal. Use 1 as the journal page number.
Analyze:
What was the amount of trade discounts received on the June 15 purchase from Park Research?

On January 1, 2017, Park Rapids Lumber Company issued $80 million in 20-year, 10% bonds payable.  Interest is payable semiannually on June 30th and December 31st.  Bond discounts and premiums are amortized straight-line at each interest payment date.

a. Record the journal entry when the bonds were issued on January 1, 2017, make the necessary the journal entry to record the payment of bond interest on June 30, 2017, under each of the following assumptions:

1. The bonds were issued at 98. Round your answers to the nearest dollar.

2. The bonds were issued at 101. Round your answers to the nearest dollar.

b. Compute the net bond liability at December 31, 2017, under assumptions 1 and 2 above.  Round to the nearest dollar.

c. Under which of the above assumptions, 1 or 2 would the investor’s effective rate of interest be higher? Explain.

IKEA’s Global Strategy Walk into an IKEA store anywhere in the world, and you would recognize it instantly. Global strategy standardization is rampant! The warehouse-type stores all sell the same broad range of affordable home furnishings, kitchens, accessories, and food. Most of the products are instantly recognizable as IKEA merchandise, with their clean yet tasteful lines and functional design. With a heritage from Sweden (IKEA was founded in 1943 as a mail-order company, and the first store opened in Sweden in 1958), the outside of the store will be wrapped in the blue and yellow colors of the Swedish flag. IKEA has sales of €34.2 billion euros annually (about $37 billion U.S. dollars) and more than 150,000 employees. Interestingly, IKEA is responsible for about 1 percent of the world’s commercial-product wood consumption.

The IKEA name comes from its founder—the acronym consists of the founder’s initials from his first and last names (Ingvar Kamprad) along with the first initials of the farm where he grew up (Elmtaryd) and his hometown in Sweden (Agunnaryd). Overall, Sweden has 20 IKEA stores, which are only fewer than in Germany (49 IKEA stores), the United States (42), France (32), and Italy (21). Spain also has 20 stores. With 351 stores in 46 countries, IKEA is the largest furniture retailer in the world. Basically, the furniture market is one of the least global markets, with local tastes, needs, and interests much different than for many other products across industries. The largest IKEA store is in Gwangmyeong, South Korea, at some 640,000 square feet.

The IKEA store itself will be laid out like a maze that requires customers to walk through every department before they reach the checkout stations. The stores are often structured as a one-way layout, leading customers counterclockwise along what IKEA calls “the long natural way.” This “way” is designed to encourage customers to see the store in its entirety. Cut-off points and shortcuts exist but are not easy to figure out. It is even difficult to get back out after having a meal in the famous IKEA restaurant with its Swedish food (meatballs anyone?).

Immediately before the checkout, there is an in-store warehouse where customers can pick up the items they purchased. The furniture is all packed flat for ease of transportation and requires assembly by the customer. Value is stressed to a great extent (the price customers pay for the quality furniture they get). If you look at customers in the store, you will see that many of them are in there 20s and 30s. IKEA sells to the same basic customers worldwide: young, upwardly mobile people who are looking for tasteful yet inexpensive “disposable” furniture of a certain quality standard for the price they are willing to pay.

A global network of more than 1,000 suppliers based in more than 50 countries manufactures most of the 12,000 or so products that IKEA sells. IKEA itself focuses on the design of products and works closely with suppliers to bring down manufacturing costs. Developing a new product line can be a painstaking process that takes years. IKEA’s designers will develop a prototype design (e.g., a small couch), look at the price that rivals charge for a similar piece, and then work with suppliers to figure out a way to cut prices by 40 percent without compromising on quality. IKEA also manufactures about 10 percent of what it sells in-house and uses the knowledge gained to help its suppliers improve their productivity, thereby lowering costs across the entire supply chain.

Look a little closer, however, and you will see subtle differences among the IKEA offerings in North America, Europe, and China. In North America, sizes are different to reflect the American demand for bigger beds, furnishings, and kitchenware. This adaptation to local tastes and preferences was the result of a painful learning experience for IKEA. When the company first entered the United States in the late 1980s, it thought that consumers would flock to its stores the same way that they had in western Europe. At first, they did, but they didn’t buy as much, and sales fell short of expectations. IKEA discovered that its Europeanstyle sofas were not big enough, wardrobe drawers were not deep enough, glasses were too small, and kitchens didn’t fit U.S. appliances. So the company set about redesigning its offerings to better match American tastes and was rewarded with accelerating sales growth.

Lesson learned. When IKEA entered China in the 2000s, it made adaptations to the local market. The store layout reflects the layout of many Chinese apartments, where most people live, and because many Chinese apartments have balconies, IKEA’s Chinese stores include a balcony section. IKEA has also had to shift its locations in China, where car ownership lags behind that in Europe and North America. In the West, IKEA stores are located in suburban areas and have lots of parking space. In China, stores are located near public transportation, and IKEA offers a delivery service so that Chinese customers can get their purchases home.

2. IKEA has narrowed down its market entry mode (into Vietnam) to three options i.e. franchising; a joint venture with a host-country firm or setting up a new wholly owned subsidiary in Vietnam. Critically evaluate these options. Which one would you recommend? (1000 words)

Derby Company produces baseball gloves and cricket gloves. It has two departments that process all products. During July, the beginning Work-in-Process in the Cutting department was half completed as to conversion, and fully complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 for conversion costs. Ending work-in-process inventory in the Cutting department was 40% complete. Direct materials are added at the beginning of the process.

Beginning Work-in-Process in the Finishing department was 80% complete as to conversion. Direct materials for Finishing the units are added near the end of the process and conversion costs are added evenly throughout. Beginning inventories included $28,000 for transferred-in costs and $32,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments is in the table below:

Required:

1. Prepare a production cost worksheet, using WEIGHTED AVERAGE for the finishing department. Round to two decimal places in calculations

2. Prepare the journal entry to recognise COGM for the period transferred out of the Finishing Department.

3. Explain the effect on the asset account Finished Goods, in periods of rising prices if using a FIFO method of process costing versus WEIGHTED average method of process costing and there are ending inventories. (1 Mark) What is a benefit that

Western Trading Company is a sole proprietorship engaged in the grain brokerage business. On December 31, 20X0, the entire grain inventory of the company was stored in outside bonded warehouses. The company's procedure of pricing inventories in these warehouses includes comparing the actual cost of each commodity in inventory with the market price as reported for transactions on the commodity exchanges at December 31. A write-down is made on commodities in which cost is in excess of market. During the course of the 20X0 audit, the auditors verified the company's computations. In addition to this, they compared the book value of the inventory with market prices at February 15, 20X1, the last day of fieldwork. The auditors noted that the market prices of several of the commodities had declined sharply subsequent to year-end, until their market price was significantly below the commodities' book values.

The inventory was repriced by the auditors on the basis of the new market prices, and the book value of the inventory was found to be in excess of market value on February 15 by approximately $21,000. The auditors proposed that the inventories be written down by $17,000 to this new market value, net of gains on the subsequent sales. The management protested this suggestion, stating that in their opinion the market decline was only temporary and that prices would recover in the near future. They refused to allow the write-down to be made. Accordingly, the auditors qualified their audit opinion for a departure from generally accepted accounting principles.

Required:

1. Were the auditors justified in issuing a qualified opinion in this situation? Discuss fully, including alternative courses of action.
2. State your opinion as to the course of action that was appropriate in this situation.

Q-02 (MARKS: 15 )

After reviewing the financial statements section of Annual report dated Dec-31, 201 the following points regarding Statement of financial Position against which doubts are presented to you.

Inventory: The following items are included in Inventory

1. Goods held on consignment from another company
2. Short term investments in shares and bonds that will be resold in near future
3. Goods sold f.o.b destination that are in transit at Dec-31
4. Office supplies
5. Goods sent on consignment to another company

Investments:

1. Bonds that will mature in 5 years are purchased; the company has a strategy to hold them to collect the contractual cash flow on bonds for 5 years. (These bonds are reported at fair value).
2. Ordinary shares of a distributor are purchased to meet regulatory requirement for doing business in the distributor’s region, the investment will be held indefinitely. (Classified as trading).

Property Plant and Equipment

1. Interest cost during the construction of a building is not included in the cost of the building.
2. There is a recovery of impairment loss regarding equipment resulting in an amount in excess of the carrying value that would result had impairment would not occurred.
3. Gain on Revaluation of Land is disclosed in Income statement.

Receivables

The company has treated a tax refund as receivable the outcome of which is probable

Liabilities

Including in liabilities is a contingency regarding a litigation the outcome of which is possible but not probable.

           Required: You being Financial Analyst asked to Comment on each Note stated above, also give your suggestions for a right treatment if there is a wrong treatment.

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,400 per month plus $0.08 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.30 per car washed.

The actual operating results for August appear below.

Required:

Calculate the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Suppose there are two suppliers of distilled water, labeled firm A and firm B. Distilled water is considered to be a homogenous good (well, all water tastes the same, anyway). Let p denote the price per gallon, qA quantity sold by firm A, and qB the quantity sold by firm B. Firm A is located nearby a spring and therefore bears a production cost of cA = $1 per one gallon of water. Firm B is not located near a spring, and thus bears a cost of cB = $2 per gallon. The inverse demand function for distilled water is given by p = 120 – 0.5 Q = 120 – 0.5 (qA + qB) ; where Q = qA +qB denotes the aggregate industry supply of distilled water.

Solve the following problems:

(i) Formulate the profit-maximization problem of firm A.

(ii) Solve for firm A's best-response function, qA = RA (qB).

(iii) Formulate the profit-maximization problem of firm B.

(iv) Solve for firm B's best-response function, qB = RB(qA).

(v) Draw the two best-response functions. Denote the vertical axis by qA, and the horizontal axis by qB.

(vi) Solve for the Cournot equilibrium output levels ???? ?? and ???? ?? . State which firm sells more water and why.

(vii) Solve for the aggregate industry supply and the equilibrium price of distilled water.

(viii) Solve for the profit level made by each firm, and for the aggregate industry profit. Which firm earns a higher profit and why?

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,300 per month plus $0.06 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.10 per car washed.

The actual operating results for August appear below.

Required:

Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.