Sosa Company has provided the following budget information for the first quarter of 2016 Total sales $297,500 Budgeted purchases of direct materials 39,450 Budgeted direct labor cost 38,880 Budgeted manufacturing overhead costs: Variable manufacturing overhead 3,645 Depreciation 600 Insurance and property taxes 9,120 Budgeted selling and administrative expenses: Salaries expense 5,000 Rent expense 3,000 Insurance expense 1,200 Depreciation expense 100 Supplies expense 2,975 Additional data related to the first quarter of 2016 for Sosa Company: a. Capital expenditures include $36,000 for new manufacturing equipment to be purchased and paid in the first quarter. b. Cash receipts are 60% of sales in the quarter of the sale and 40% in the quarter following the sale. c. Direct materials purchases are paid 70% in the quarter purchased and 30% in the next quarter. d. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. e. Income tax expense for the first quarter is projected at $42,000 and is paid in the quarter incurred. f. Sosa Company expects to have adequate cash funds and does not anticipate borrowing in the first quarter. g.The December 31,2015,balance in Cash is $14,000, in Accounts Receivable is $23,200, and in Accounts Payable is $10,500. 1.Prepare Sosa Company's schedule of cash receipts from customers and schedule of cash payments for the first quarter of 2016. 2.Prepare Sosa Company's cash budget for the first quarter of 2016.

1. (25 points) The following is a simplified duopoly model of competition between two firms. Each firm is restricted to producing 25, 35, 50 or 100 units of output. The details of how the payoffs are derived are unimportant because payoffs are all given in the table below.

                                                                                  FIRM 2

1. (5 points) Firms simultaneously choose the quantity of outputs to produce, and then profits are realized. Find if there are any dominant strategies for the firms or not. In your response, make sure that you define what a dominant strategy is. Also describe the entire process that helped you in making that determination.

2. (5 points) Find the Nash equilibrium(s) in the game. Justify whether it is a Nash equilibrium or not. Describe in words.

3. (7.5 points) Now assume that FIRM 1 is the Stackelberg leader in this market. And FIRM 2 is the follower. Being the leader, FIRM 1 makes the first move in choosing the quantity of output, followed by FIRM 2. Draw the extensive form or the game tree for this sequential form game.

(7.5 points) Using the game tree, now determine the sub-game perfect Nash equilibrium(s). Describe the process that helps you in determining it

Job Order Costing

The ABC Company builds residential housing. The company started operations on June 1^st, 2018. Below are transactions that occurred in the first month of operations (June 2018)

Journal Entries:

June 1) ABC Company sold common stock for $1,500,000 in cash. The company issued 15,000 shares of $100 Par stock.

June 2) ABC Company purchased $300,000 of building materials. Paying $100,000 cash and the rest on account due in 45 days. No credit terms were given.

June 3) ABC Company purchased construction equipment for $240,000 cash. The company uses the straight line method of depreciation. The equipment has a useful life of 9 years and a residual value of $24,000.

June 4) ABC Company started construction on 3 homes (Job 100, 101, 102) by requisitioning the following materials: The materials were delivered to the job sites.

June 14) The following direct labor was used and paid for during the period ($30/hour):

Predetermined overhead rate calculated May 8, 2018

(Estimated Total Overhead Costs) / (Estimated Direct Labor Hours)

($24,000) / (3000 hours) = $7 per direct labor used

June 21) Job 100 is completed and ready for sale.

<Requirement>

Prepare Financial Statements and Worksheets (Three Trial Balances)

1 Suppose that the price of outpatient healthcare is $1, and we go on 10 inpatient visits. When the price of outpatient healthcare increases to $2, we go on 15 inpatient visits. What is the elasticity of inpatient care with respect to the price of outpatient care?

2 Suppose that the price of inpatient healthcare is $5, and we go on 10 outpatient doctor's visits. The price of inpatient healthcare increases to $7.50, and we go on 8 outpatient doctor's visits. What is the elasticity of outpatient healthcare with respect to the price of inpatient healthcare?

3 Suppose that for the first 3 months, you have the flu, where the utility from your health is 0.5. The next 6 months, you are in perfect health, and the utility from your health is 1. The last 3 months, you have allergies, where the utility from your health is 0.8. What is the value of the QALY? Answer to THREE decimal points.

Suppose that Michelin is the only producer of tires and Toyota the only producer of cars. The demand function for cars is given by Q = 40 − 4P. Michelin's (constant) cost of production for a set of five tires is 3. The production of one car requires a set of five tires and a bundle of inputs, which Toyota can obtain at a price of 6. Suppose first that Michelin and Toyota are just two departments within the same firm.

(a) What price would the firm charge for cars and how many cars would it produce? Suppose now that Michelin and Toyota are separate firms. Michelin quotes a price w for a set of five tires and Toyota decides how many sets to buy at that price.

(b) What price will Michelin set? How many cars will Toyota sell and at what price?

(c) Are consumers better off when Michelin and Toyota are an integrated firm [Part (a)] or when they are separate firms [Part (b)]?

Suppose that Michelin is the only producer of tires and Toyota the only producer of cars. The demand function for cars is given by Q = 40 − 4P. Michelin's (constant) cost of production for a set of five tires is 3. The production of one car requires a set of five tires and a bundle of inputs, which Toyota can obtain at a price of 6. Suppose first that Michelin and Toyota are just two departments within the same firm.

(a) What price would the firm charge for cars and how many cars would it produce? Suppose now that Michelin and Toyota are separate firms. Michelin quotes a price w for a set of five tires and Toyota decides how many sets to buy at that price.

(b) What price will Michelin set? How many cars will Toyota sell and at what price?

(c) Are consumers better off when Michelin and Toyota are an integrated firm [Part (a)] or when they are separate firms [Part (b)]?

Suppose there are two firms that sell bubble gum: Bazooka Joe and Gatling Gordon. Each firm faces a marginal cost of 1 per unit. There are 100 customers, who will buy one piece of gum each at the lowest price, (provided that price is no more than $1). That is, if Bazooka Joe’s price is greater than Gatling Gordon’s, Bazooka Joe gets no customers, if Bazooka Joe’s price is less than Gatling Gordon’s, Bazooka Joe gets all of the customers (provided Bazooka Joe’s price is less than or equal to $1). If they have the same price less than or equal to $1, they each get 50 customers. Bazooka Joe and Gatling Gordon cannot charge any price they want. They can only charge prices 0 cents, 1 cent, 2 cents, 3 cents, etc. That is, they cannot charge prices with decimals (e.g. they cannot charge 1.3 cents or 2.4 cents). Suppose the two firms set price once and simultaneously. (a) Is it a Nash equilibrium for each firm to set a price equal to marginal cost? Explain. (b) Are there any other Nash equilibria in pure strategies? If so, identify them. If not, explain why not. (c) Now suppose instead that Bazooka Joe has a marginal cost of 1 cent per unit, but Gatling Gordon has a marginal cost of zero per unit. Identify all pure strategy Nash Equilibria, and explain your answer.

Instructions: Work on the following questions/problems. Be sure to answer all questions (and sub questions within a problem).

• USE this as you answer sheet (adjust spacing as necessary). Show solutions.
• This worksheet can be handwritten BUT be sure it is legible
• Upload work to the designated link in Canvas

1. (15 points) Suppose John, the owner-manager of a local hotel projects the following demand for his rooms:

                        Price ($)          Qty. Demanded

                        90                    100

                        110                  90

                        130                  70

1. Calculate the price elasticity of demand between $90 and $110 using the midpoint formula
2. Is the price elasticity of demand elastic, inelastic, or unit elastic at this price range (re: a)? Interpret the actual number you calculated.
3. Is it a good idea for John to raise his price from $90 to $110? Explain in 2 sentences.
4. Calculate John’s total revenue when price is $110 vs. when price is $130.
5. Based on your answers in (d), is demand elastic, unit elastic or inelastic at that price range (re: d)?

2. Consider the two products – laundry soap and Tide washer soap. Which product will have the more inelastic demand? Explain in 2-3 sentences. (5 points)

3. TRUE or FALSE. Suppose the market for crude oil experiences a decrease in demand. Assuming a relatively inelastic supply for crude oil, this market shock leads to a relatively smaller decrease in equilibrium price. Include a graph to illustrate and explain in 2-3 sentences (5 points).