Prem Narayan, a graduate student in engineering, to market a radical new speaker he had designed for automobile sound systems, founded Acoustic Concepts, Inc. Prem established the company’s headquarters into rented quarters in a nearby industrial park. He hired a receptionist, an accountant, a sales manager, and a small sales staff to sell the speakers to retail stores. Prem asked his accountant, Bob Luchinni, to prepare several cost-volume-profit analyses, using the information shown below.

Sales price for one speaker set................................................... $250 Variable manufacturing cost for each speaker set (direct
materials) ................................................................................... $150 Fixed expenses per month (rent, salaries of receptionist, sales

people, accountant, and Prem)................................................... $35,000 Number of speaker sets sold per month..................................... 400

Prem and other management personnel are considering the use of higher-quality components, which would increase variable costs by $10 per speaker. However, the sales manager predicts that the higher overall quality would increase sales to 480 speaker sets per month. Should the higher quality components be used?

The sales manager believes that by reducing the selling price of speakers by $20, and also by increasing the advertising budget by $15,000 per month, that sales will increase to 600 speaker sets per month. Should the changes be made?

The sales manager would like to place the sales staff on a commission basis of $15 per speaker sold, rather than on flat salaries that now total $6,000 per month. The sales manager is confident that the change will increase monthly sales to 460 speaker sets per month. Should the change be made?

Suppose Acoustic Concepts has an opportunity to make a bulk sale of 150 speakers to a wholesaler, if an acceptable price can be worked out. The sale would not disturb the company’s regular sales, nor would if affect fixed operating costs per month. What price should be quoted to the wholesaler if Acoustic Concepts wants to increase its monthly profits by $3,000?

 C.M.=contribution margin, S.P.=sales price, V.C.=variable cost, F.C.=fixed cost

 C.M. per unit = S.P. per unit – V.C. per unit

 The break even point is the point at which the total contribution margin equals fixed costs.

 Break even units sold = F.C. / C.M. Per unit

 Break even sales dollars = F.C. / C.M. Percentage

 C.M. Percentage = C.M. per unit / S.P. per unit, or C.M. (total) / Sales (total)

What changes in the city’s budgeting and accounting structure would overcome these limitations? What additional problems might these changes cause?

Government activities may be less “profitable” than they appear.

A city prepares its budget in traditional format, classifying expenditures by fund and object. In 2010, amid considerable controversy, the city authorized the sale of $20 million in bonds to finance construction of a new sports and special events arena. Critics charged that, contrary to the predictions of arena proponents, the arena could not be fiscally self‐sustaining. Five years later, the arena was completed and began to be used. After its first year of operations, its general managers submitted the following condensed statement of revenues and expenses (in millions):

At the city council meeting, when the report was submitted, the council member who had championed the center glowingly boasted that his prophecy was proving correct; the arena was “profitable.” Assume that the following information came to your attention:

• The arena is accounted for in a separate enterprise fund.

• The arena increased the number of overnight visitors to the city. City administrators and economists calculated that the additional visitors generated approximately $0.1 million in hotel occupancy tax revenues. These taxes are dedicated to promoting tourism in the city. In addition, they estimated that the ticket and concession sales, plus the economic activity generated by the arena, increased general sales tax revenues by $0.4 million.

• The city had to improve roads, highways, and utilities in the area surrounding the arena. These improvements, which cost $6 million, were financed with general obligation debt (not reported in the enterprise fund). Principal and interest on the debt, paid out of general funds, were $0.5 million. The cost of maintaining the facilities was approximately $0.1 million.

• On evenings when events were held in the arena, the city had to increase police protection in the arena’s neighborhood. Whereas the arena compensated the police department for police officers who served within the arena itself, those who patrolled outside were paid out of police department funds. The police department estimated its additional costs at $0.1 million.

• The city provided various administrative services (including legal, accounting, and personnel) to the arena at no charge at an estimated cost of $0.1 million.

• The city estimates the cost of additional sanitation, fire, and medical services due to events at the center to be approximately $0.2 million.

Problem: Sam has requested that you (1) identify all of the cash flows for this project, (2) calculate the project's NPV and IRR, and (3) provide your recommendation regarding whether the project should be accepted or rejected. The details of your cash-flow projections should be clearly presented. Show all work.

ABC Company is examining a new capital-investment proposal that would greatly increase the production of diapers. The proposal involves an investment in some machines that would increase the firm's efficiency at producing and preparing for export the top-quality diapers for which the region has become well-known. The purchase price of this machinery is $840,000 and installation costs would total $60,000. The equipment would have a useful life of 5 years and, for tax purposes, depreciation charges would be according to the 7-year-asset MACRS schedule. The machinery cost and the installation costs should be capitalized at t=0 and fully depreciated using the MACRS schedule. Management expects the machinery to be sold for a scrap value of $210,790 at the end of year 5. Ramon Rodriguez, the firm's accountant, pointed out that the portion of the factory that would house this new equipment machinery underwent a major 'renovation' 15 months ago with a total cost of $105,200. Because the project would not have been feasible without the renovation, Ramon suggests that the costs of the renovation should be allocated to the project as one of its initial expenses. Interest charges associated with this investment’s financing have been estimated at approximately $70,000 per year, for each year of the project's estimated useful life. The incremental sales (revenues) projections for this investment are shown near the end of this problem statement. Variable operating costs, excluding depreciation, are projected to be 40% of same-year sales. Incremental fixed costs (for maintenance, etc.) are projected to be $25,000 in the first year. For each of the remaining years of operation, this fixed-cost component is projected to increase by 2% per year. If the new machinery is purchased, some of ABC Company’s Net Working Capital (NWC) accounts will be affected. The schedule near the end of the problem statement shows balances for Accounts Receivable, Inventory, and Accounts Payable across the project’s life. Of course, you’ll need to use this information to build the NWC Tracker, which in turn feeds into the ΔNet Working Capital term in the cash-flow worksheet. The Chief Financial Officer of ABC Company, Sam Sand, requests your assistance in preparing an analysis of the net cash flow projections for the proposed investment. Sam believes that the systematic risk of this project is similar to the average systematic risk of other ABC projects. The firm-level required return (also called “hurdle rate” in business lingo) is 10%/year. Sam also indicates that 30% is the appropriate tax rate for this entire analysis. You also have the following information: Sales projections are these for years 1-5: $300,000, $420,000, $510,000, $600,000, and $480,000. The MACRS depreciation schedule for a 7-year asset is as follows: year 1: 14.29%; year 2: 24.49%; year 3: 17.49%; year 4: 12.49%; year 5: 8.93%; year 6: 8.92%; year 7: 8.93%; and year 8: 4.46%. Next, here is the schedule for the various working-capital accounts that will be affected if the project is undertaken:

With the given information below, how to find the interest cost in year 1,2 and 3?

An investment company is planning to invest by buying over an existing hotel.

Some information concerning their project:

• Land will be purchased for a value of 7.5 millions ;

• A building will be constructed for a total value of 42 millions, estimated value after 10 years : 12 millions ;

• Equipment will be purchased for a value of 12 millions and will be completely depreciated over a period of 8 years ,

• Other investments are estimated to be 4,5 millions and will be completely depreciated after 5 years. This investment includes the purchase of the basic inventories, opening costs, etc…

• Revenues of the first year (365 days in a year) of operations are estimated as follow :

o Rooms division : 198 rooms per day at 500 francs per night

o Restaurant : 260 covers per day at averagely 100 francs per cover

o Breakfast : 150 covers per day at 20 francs each

o Banquet and convention centre : 4 millions

• An annual increase of 2% is expected ;

• The F&B costs are forecasted at 35% of F&B revenue ;

• Salaries and wages, including social charges, are forecasted at 40% of the total revenues ;

• Other operating costs, excepted depreciation costs and interest costs, are forecasted to be 16,000,000, increasing by 2% per year ;

• The income tax rate is of 35%

• The investment expenses are as follow :

o Year -1 : 85%

o Opening : 15%

• This project is financed as follow : 65% by contracting a mortgage, 35% with owner’s capital stock

• The mortgage contracted determines a interest rate of 5% and a fixed reimbursement of 3,5 millions, 1st payment at the end of year 1

• A dividend of 5% will be distributed to the shareholders starting from year 1

Walt Disney Company is famed for its creativity, strong global brand, and uncanny ability to take service and experience businesses to higher levels. In the early 1990s, then-CEO Michael Eisner looked to the fast-food industry as a way to draw additional attention to the Disney presence outside of its theme parks—its retail chain was highly successful and growing rapidly. A fast-food restaurant made sense from Eisner's perspective since Disney's theme parks had already mastered rapid, high-volume food preparation, and, despite somewhat undistinguished food and high prices (or perhaps because of), all its in-park restaurants were extremely profitable. From this inspiration, Mickey's Kitchen was launched. The first two locations were opened in California and in a suburb of Chicago, adjacent to existing Disney stores. Menu items included healthy, child-oriented fare like Jumbo Dumbo burgers and even a meatless Mickey Burger. Eisner thought that locating each restaurant next to existing Disney stores was sure to increase foot traffic through both venues. Less than 2 years later Disney closed down the California and Chicago stores and shuttered further expansion plans. Eisner cited overwhelming competition from McDonalds and general oversaturation in the fast-food industry as the primary reasons for closing down the failing Mickey's Kitchen.

-Based on your own knowledge of Disney and the information provided in the scenario, does Disney appear to create value in its businesses primarily through a cost leadership or through a differentiation strategy?

-Why do you think that Mickey's Kitchen failed? Support your answer with a logical argument, using information learned in chapter 4.

pendix E: Kytrina Casio Information

For your fifth client, your boss wants you to prepare Form 1040, Schedule A, B, and

supporting forms (e.g., 4684) for Kytrina Casio for the most recent tax year.

Facts: Kytrina is a 30-year old single person. She is a graphic artist who also works in

an antique store on weekends. For last year, she had the following information:

T

axpayer:

Kytrina Casio

123 Park Avenue

Flowers, TX

75000

Social Security No.

123-45-6789

INCOME

:

W-2 from 1

st

employer

Gross wages income:

$13,164

Federal Withholding

921

W-2 from 2d employer

Gross wages income:

50,000

Federal withholding

9,500

Interest income from bank

132

Interest income from brokerage firm

2,100

Ordinary "qualified" dividends from large U.S. corporation:

3,000

POSSIBLE DEDUCTIONS

:

Mortgage interest paid

6,700

State and local income taxes paid

1,400

Charitable contributions to a 501(c)(3) charity

1,800

Casualty loss, her garage, located in a federally declared

disaster area, was destroyed by the disaster. Cost and fair

market value were:

9,000

Insurance pay out for the garage disaster loss:

3,000

Property taxes on her home

2,600

Using these facts, prepare Form 1040, Schedules A, and B for Kytrina for the most

recent year for which there is a form (this is almost always the year prior to the present

year). Remember to consider both the standard deduction vs. itemized deduction. Also,

you may need other forms, such as the 4684 and instructions

Note : the Answers should be computerized and in your own words please

Case Study

This is from an old story, back in the ’30s, in the days when an ice cream sundae cost much less. A 10 year-old boy entered a hotel coffee shop and sat at a table. A waitress put a glass of water in front of him.

“How much is an ice cream sundae?” the little boy asked. “Fifty cents,” replied the waitress.

The little boy pulled his hand out of his pocket and studied the coins he had. “Well, how much is a plain dish of ice cream?” he inquired. By now, more people were waiting for a table and the waitress was growing very impatient. “Thirty-five cents,” she brusquely replied. The little boy again counted his coins. “I’ll have the plain ice cream,” he said. The waitress brought the ice cream, put the bill on the table and walked away. The boy finished the ice cream, paid the cashier and left. When the waitress came back, she began to cry. As she wiped down the table, there placed neatly beside the empty dish were two nickels and five pennies. You see, he couldn’t have the sundae because he had to have enough money to leave her a tip.

You are required to write a report on the following:

1.      Compare Vroom’s Expectancy theory against Maslow’s need theory. Interpret from the case the situations where Vroom’s expectancy theory of motivation has been used in this story.

2.      Present your case in the class justifying how communication plays a vital role in keeping employees motivated in your organization. Compare the communication styles.

Writing Assignment is to develop marketing mix strategies to ensure a value offering for my the target market "Kids and kids grown up futuristic fantasy Park" service for Walt Disney Need to answer the below questions any input will be appreciate

Offering. Describe your product or service offering as it is currently in terms of features and benefits, price and the total cost of ownership as discussed in the week's readings. Is it more product dominant or service dominant? What are the tangible and intangible aspects?

Type of consumer offering. Based on the four categories of type of offerings discussed in course content, describe the category in which your product or service offering belongs. Based on your new target market, would that category of the offering change and if so, how? How would it change the marketing strategy?

Product line extensions or new product development. Should the current product or service be modified to more fully meet the needs of your new target market? Would the changes constitute a new product line, a product line extension or a new product? If no product changes are needed, how does the same product or service meet the need of your target market differently than current customers? Would the product line extension or new product allow the offering to occupy uncontested space in the perceptual map for the target market as covered in thr previous paper?

Product lifecycle. In which stage of the product lifecycle is your product or service offering now? Would the changes described in number 3 above change the lifecycle stage and if so how? What would this mean to the lifecycle marketing strategy?

Scenario:

       This is from an old story, back in the ’30s, in the days when an ice cream sundae cost much less. A 10 year-old boy entered a hotel coffee shop and sat at a table. A waitress put a glass of water in front of him.

“How much is an ice cream sundae?” the little boy asked. “Fifty cents,” replied the waitress.

The little boy pulled his hand out of his pocket and studied the coins he had. “Well, how much is a plain dish of ice cream?” he inquired. By now, more people were waiting for a table and the waitress was growing very impatient. “Thirty-five cents,” she brusquely replied. The little boy again counted his coins. “I’ll have the plain ice cream,” he said. The waitress brought the ice cream, put the bill on the table and walked away. The boy finished the ice cream, paid the cashier and left. When the waitress came back, she began to cry. As she wiped down the table, there placed neatly beside the empty dish were two nickels and five pennies. You see, he couldn’t have the sundae because he had to have enough money to leave her a tip.

.

You are required to write a report on the following:

Question 01: Compare Vroom’s Expectancy theory against Maslow’s need theory. Interpret from the case the situations where Vroom’s expectancy theory of motivation has been used in this story.

.

Question02: Present your case in the class justifying how communication plays a vital role in keeping employees motivated in your organization. Compare the communication styles.