Which of the following would tend to have a contractionary impact on the level of macroeconomic activity?

a) decrease in taxes

b) a rise in the interest rate

c) an increase in government spending

d) an increase in business spending

e) an increase in the money supply

59. In which of the following cases would all of the policies be beneficial to an economy in a recession?

a) increase the money supply; decrease taxes; decrease government spending.

b) increase the money supply; increase government spending; lower taxes.

c) decrease the money supply; decrease government spending; decrease taxes.

d) increase the money supply; increase government spending; increase taxes.

60. The labor force participation rate is the number of people:

a) employed divided by the labor force.

b) employed divided by the population aged 16 years and older.

c) employed and unemployed, divided by the labor force.

d) employed and unemployed, divided by the population aged 16 years and older.

61. The _______ is the rate of increase of all prices except _______.

a) real rate of inflation; energy and food

b) core rate of inflation; energy and food

c) nominal rate of inflation; labor

d) core rate of inflation; interest rates

62. Real GDP is measured in _______ prices; nominal GDP is measured in _______ prices.

a) current; base-year

b) base-year; current

c) current; inflation adjusted

d) base-year; inflation adjusted

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

Barley Hopp had the following actual results last year:

Required:
1. Calculate the direct materials price, quantity, and total spending variances for Barley Hopp.
2. Calculate the direct labor rate, efficiency, and total spending variances for Barley Hopp.
3. Calculate the variable overhead rate, efficiency, and total spending variances for Barley Hopp.

1.

2.

3.

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):

Inventory balances at the beginning and end of the year were as follows:

The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $32,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Schedule of COGS

Income Statement

Ms. Jenny Joy is planning to open her first own business project: a little café close to the university district of the imaginary town of Brightside. She has rented a small, but nice venue for the café. She has worked hard to keep the target opening date of 1 June. There is a very important report missing from her paperwork though; she does not know how much profit she can expect during the first 3 months of operation. She remembers from university finance class that the best way to prepare a profit plan is to consider different scenarios. She has gathered all the relevant information for the profit analysis and for the sake of simplicity estimated two possible outcomes: “good” and “almost good”. Information about costs and revenues:  Average revenue from drinks and food: €22 per person  Cost of drinks and food: €14 per person  Rent fee: €1000 per month  Utilities: €1200 per quarter  She does not plan to hire employees in the first three months.  Renting the coffee machine: €6000 per year  Other costs: €3000 in the first month and 5% less in every upcoming month Probability of scenario Number of guests PER DAY (assume 20 working days per month) Good scenario 55% 40 Almost good scenario 45% 30 Required: 6.1) Prepare a monthly analysis of Ms Joy’s profits based on her revenues and costs for the three months under both scenarios. (Please show all needed calculations and explanations) 6.2) Calculate her expected profit for the quarter [Finance for Managers – FINB101] – Examination, Version [A] Page 4 of 4 6.3) Name what are the variable and fixed costs from the above listed cost elements? Explain your answer. 6.4) Give two examples: one example of semi variable and one example of stepped costs that can be linked to the operation of the cafe?

Each scenario below practices one of the 12 Principles of Economics. Match the principles to the appropriate scenario listed and justify your answer. A principle will only be used once, and not all principles are used.  

The 12 Principles of Economics:

1. People must make choices because resources are scarce.

2. The opportunity cost of an item — what you must give up in order to get it — is its true cost.

3. “How much” decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less.

4. People usually respond to incentives, exploiting opportunities to make themselves better off.

5. There are gains from trade.

6. Because people respond to incentives, markets move toward equilibrium.

7. Resources should be used as efficiently as possible to achieve society’s goals.

8. Because people usually exploit gains from trade, markets usually lead to efficiency.

9. When markets don’t achieve efficiency, government intervention can improve society’s welfare.

10. One person’s spending is another person’s income.  

11. Overall spending sometimes gets out of line with the economy’s productive capacity.

12. Government policies can change spending.

Scenarios

1. Even though generally more expensive, energy efficient appliances and vehicles sell better with a rebate or tax credit.

2. Airlines will charge a fee for each additional suitcase you may want to take with you on a trip.

3. At a restaurant, when ordering an entrée, you get to choose two side dishes from a group of five side dishes.

4. Instead of growing your own food and making other necessities you decide to specialize in a particular profession and purchase things, even things that you would have not been able to make yourself.

5. There is an incredible variety of goods and services available at many different price points even though no single entity or government is deciding or dictating the market what to do.

6. In its effort to limit the effects of rising inflation, the Federal Reserve System reduces the quantity of money in the economy, but sees an increase in unemployment

7. While consuming the same amount of farmers’ labor and capital the newly developed hybrid crops achieve twice the yields of the previous crops.

8. You have noticed that the same amount of money buys you fewer goods and services than it did a year ago.

9. You worked for extra pay on a holiday and therefore missed out on your neighbor's’ barbeque.

10. Two major suppliers of powdered baby food formula are challenged by government on grounds of price fixing.

A Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017.

Jordan asked the various managers to collect the following information for preparing the second-quarter budget.

Based on the experience from the home plant, Jordan has suggested that the B.C. plant keep 10% of the next month’s unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 50% of the accounts receivable is collected in the month of sale, and the balance is collected in the month after sale. This was the same collection pattern from the previous year. The new plant has no bad debts.

Direct Materials

The combined quantity of direct materials (consisting of metal, plastic and rubber) used in each unit is 1.10 kg. Metal, plastic, and rubber together amount to $1.50 per kg. Inventory of combined direct material on March 31 consisted of 13,145 kg.

This plant likes to keep 10% of the materials needed for the next month in its ending inventory. Fifty percent of the payables is paid in the month of purchase, and 50% is paid in the month after purchase.

Accounts Payable on March 31 will total $124,800.

Direct Labour

Labour requires 15 minutes per unit for completion and is paid at an average rate of $12 per hour.

Other Information

The Cash balance on March 31 will be $115,000, but Waterways has decided it would like to maintain a cash balance of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $1,000 increments at 2% interest. Borrowing is considered to be on the first day of the month and repayments are on the last day of the month. Assume interest is paid at the end of the quarter.

In May, $880,000 of new equipment to update operations will be purchased.

Three months’ insurance is prepaid on the first day of the first month of the quarter.

Question

For the second quarter of 2017, prepare a sales budget.

                                            April     May    June     Total

Sales in Units

Per Unit selling price       ____________________________

Total Expected Sales

Waterways Continuing Problem-10 (Part Level Submission)

Waterways Corporation has recently acquired a small manufacturing operation in British Columbia that produces one of its more popular items. This plant will provide these units for resale in retail hardware stores in British Columbia and Alberta. Because the budget prepared by the plant was incomplete, Jordan Leigh, Waterways’ CFO, was sent to B.C. to oversee the plant’s budgeting process for the second quarter of 2017.

Jordan asked the various managers to collect the following information for preparing the second-quarter budget.

Based on the experience from the home plant, Jordan has suggested that the B.C. plant keep 10% of the next month’s unit sales in ending inventory. The plant has contracts with some of the major home hardware giants, so all sales are on account; 50% of the accounts receivable is collected in the month of sale, and the balance is collected in the month after sale. This was the same collection pattern from the previous year. The new plant has no bad debts.

Direct Materials

The combined quantity of direct materials (consisting of metal, plastic and rubber) used in each unit is 1.10 kg. Metal, plastic, and rubber together amount to $1.50 per kg. Inventory of combined direct material on March 31 consisted of 13,145 kg.

This plant likes to keep 10% of the materials needed for the next month in its ending inventory. Fifty percent of the payables is paid in the month of purchase, and 50% is paid in the month after purchase.

Accounts Payable on March 31 will total $124,800.

Direct Labour

Labour requires 15 minutes per unit for completion and is paid at an average rate of $12 per hour.

Other Information

The Cash balance on March 31 will be $115,000, but Waterways has decided it would like to maintain a cash balance of at least $500,000 beginning on April 30. The company has an open line of credit with its bank. The terms of the agreement require borrowing to be in $1,000 increments at 2% interest. Borrowing is considered to be on the first day of the month and repayments are on the last day of the month. Assume interest is paid at the end of the quarter.

In May, $880,000 of new equipment to update operations will be purchased.

Three months’ insurance is prepaid on the first day of the first month of the quarter.

WATERWAYS CORPORATION

British Columbia Production Plant

Expected DM Cash Disbursements for the 2nd Quarter, 2017

                                             April                    May                    June        total

Disbursements from March $                          $                          $             $

April

April

May

May

June

Total payments

4. Using the terms you have learned in this class, explain what is meant by the following statement: (8 points)

“All viruses mutate.  However, a mutated virus is not necessarily more dangerous.”

Include answers to the following questions:

What is a mutation?

Are most mutations helpful or harmful to a virus?  Why?

What would make a virus “more dangerous” to humans?

5. Based on all the topics you have discussed Biol002 this quarter, what is one way the Corona virus pandemic will end?  Explain using the science terms you learned in class. (8 points)

Topics to include: what is a virus, vaccination, social distancing, SIR model of how diseases spread, mutation

Microsoft historically followed the practice of recognizing 25% of revenue from its Windows software over three or four years as it promises future upgrades and addons. With the launch of Vista in 2008, it changed the policy to record most of the revenue in the period in which the software was sold. In the third quarter for fiscal year 2008, Microsoft reported an increase in earnings of 65%. The increase came from sales of the new Vista program and also from the acceleration in revenue recognition.

Critically evaluate the revenue recognition policy adopted by Microsoft in accordance with AASB15 Revenue from Contracts with Customers.

2) Explain the decision of management to change the revenue recognition policy in terms of the debt hypothesis of Positive Accounting Theory.

500 words max

Exercise 15-25 Lessor; sales-type lease; residual value effect on financial statements [LO15-2, 15-6]

At January 1, 2018, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $30,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2025. The equipment was acquired recently by Crescent at a cost of $225,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $101,495.). Both (a) the present value of the lease payments and (b) the present value of the residual value (i.e., the residual asset) are included in the lease receivable because the two amounts combine to allow the lessor to recover its net investment. Crescent seeks a 12% return on its lease investments. By this arrangement, the lease is deemed to be a finance lease. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
  
Required:
1. What will be the effect of the lease on Crescent’s earnings for the first year (ignore taxes)? (Enter decreases with negative numbers.)
2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Crescent (ignore taxes)?

1.Effect on earnings

2.Lease receivable balance (end of year)