1. Which variable should be the dependent variable and which should be the independent variable? Why?
2. Plot the points on the scatterplot graph. NOTE: In a scatterplot the x axis will always reflect 1, 2, 3… not the Quarters specifically.

Label both axes with words.

In order to analyze the data we will use the line of best fit.

1. Answer with 1-3 complete sentences. Does the line seem to fit the data? Why?

2. Calculate the following use excel trendline:

1. y-intercept to two decimal places a=
2. slope to 3 decimal places     b=

5. correlation coefficient (to 4 decimal places) =
6. n =
7. correlation of determination (to 3 decimal places) =
8. line of best fit equation
9. What does the correlation imply about the relationship between the time and the number of users?

10. Is the correlation significant? Why or why not? (Answer in 1-2 complete sentences.) (Use the Pearson calculator).

11. Interpret the coefficient of determination in this real world context:

12) Can the regression line be used for prediction?

13. Predict the following:

1. For the First quarter of 2008, predict the total monthly users.
2. For the First quarter of 2020, predict the total monthly users.

1. a) What is Multiplier? Explain how it works in an economy. 4
b) Explain the paradox of thrift. Why do you think it is a paradox? 3
c) Suppose the consumption function is given by C=300+0.75Y while
investment spending is 900 with no govt. expenditure. 3
i. Determine the equilibrium level of national income and consumption
expenditure.
ii. If investment spending increases to 1100, what will be the effect on
equilibrium income?
iii. If the government desires to increase the national income level by
$1200 billion from its equilibrium value, what should be the change in
investment spending?

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.

Data on before-tax income, taxes paid, and consumption spending for the Simpson family in various years are given below.

a. Graph the Simpsons’ consumption function and find their household’s marginal propensity to consume.

Instructions: On the graph below, use the line tool provided. Click and drag your mouse to draw a diagonal, straight line by using the precise coordinates for the first and last values given in the table.

Instruction: Enter your response rounded to one decimal place.

The Marginal propensity to consume: .


b. How much would you expect the Simpsons to consume if their income was $32,000 and they paid taxes of $5,000?

Consumption: $.


c. Homer Simpson wins a lottery prize. As a result, the Simpson family increases its consumption by $1,000 at each level of after-tax income. (“Income” does not include the prize money.) How does this change affect the graph of their consumption function?

Their consumption function (Click to select)shifts upwardremains unchangedshifts downward.

How does it affect their marginal propensity to consume?

Their marginal propensity to consume (Click to select)does not changeincreasesdecreases.

Use the classical model for determining the long-run outcome of the economy to answer the following question. Suppose a government in debt crisis (such as Greece) moves to reduce its budget deficit by reducing the annual funding for tertiary education and healthcare drastically.

(a) Graphically illustrate the impact of such a reduction in the government's budget deficit:

i. First, by assuming that the total factor productivity (TFP) does not depend on the government spending on health and education.

ii. Second, by assuming that the TFP increases with government spending on health and education but by a limited amount. [Be sure to label: the axes; the curves; the initial equilibrium values; the direction curves shift; and the terminal equilibrium values.]

(b) State and explain in words what happens to the real interest rate, national saving, investment, consumption, and output.

(c) Discuss the likely impact of such policy on the inequality of income between the educated and uneducated labour. Support your answer with graphical illustrations.

(d) Suppose the above policy causes a sudden emigration of workers with no education to neighbouring countries for easier access to education and health facilities. Assume TFP does not decrease following the government policy shock, as in part a (i), and following the labour migration. How would your answer to (b) and (c) change?

A random sample of 36 households was selected as part of a study on electricity usage, and the number of kilowatt-hours (kWh) was recorded for each household in the sample for the March quarter of 2019. The average usage was found to be 375kWh. In a very large study (a population) in the March quarter of the previous year it was found that the standard deviation of the usage was 72kWh. Assuming the standard deviation is unchanged and that the usage is normally distributed, provide an expression for calculating a 97% confidence interval for the mean usage in the March quarter of 2019.

A small business owner contributes $3000 at the end of each quarter to a retirement account that earns 8% compounded quarterly.

(a) How long will it be until the account is worth $150,000? (Round your answer UP to the nearest quarter.)

quarters

(b) Suppose when the account reaches $150,000, the business owner increases the contributions to $7000 at the end of each quarter. What will the total value of the account be after 15 more years? (Round your answer to the nearest dollar.)

$

Assume ABC Company has asked you to not only prepare their 2017 year-end Balance Sheet but to also provide pro-forma financial statements for 2018. In addition, they have asked you to evaluate their company based on the pro-forma statements with regard to ratios. They also want you to evaluate 3 projects they are considering. Their information is as follows: End of the year information:

Account 12/31/17

Ending Balance

Cash 50,000

Accounts Receivable 175,000

Inventory 126,000

Equipment 480,000

Accumulated Depreciation 90,000

Accounts Payable 156,000

Short-term Notes Payable 12,000

Long-term Notes Payable 200,000

Common Stock 235,000

Retained Earnings solve

Additional Information: •

Sales for December total 10,000 units.

Each month’s sales are expected to exceed the prior month’s results by 5%.

The product’s selling price is $25 per unit.

Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The December 31 2017 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit.

Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in January and $4,000 per month thereafter.

Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable.

The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of sale).

All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month.  

The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.

Dividends of $100,000 are to be declared and paid in February.

No cash payments for income taxes are to be made during the first calendar quarter. Income taxes will be assessed at 35% in the quarter.

Equipment purchases of $55,000 are scheduled for March. ABC Company’s management is also considering 3 new projects consisting of the purchase of new equipment. The company has limited resources, and may not be able to complete make all 3 purchases. The information is as follows for the purchases below. Project 1 Project 2 Project 3 Purchase Price $80,000 $175,000 $22,700 Required Rate of Return 6% 8% 12% Time Period 3 years 5 years 2 years Cash Flows – Year 1 $48,000 $85,000 $13,000 Cash Flows – Year 2 $36,000 $74,000 $13,000 Cash Flows – Year 3 $22,000 $38,000 N/A Cash Flows – Year 4 N/A $26,800 N/A Cash Flows – Year 5 N/A $19,000 N/A   Required Action:

Part A:

Prepare the year-end balance sheet for 2017. Be sure to use proper headings.

- Prepare budgets such that the pro-forma financial statements for the first quarter of 2018 may be prepared.

- Sales budget, including budgeted sales for April.

- Purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the March 31 budgeted inventory.

- Selling expense budget.

- General and administrative expense budget.

- Expected cash receipts from customers and the expected March 31 balance of accounts receivable.

- Expected cash payments for purchases and the expected March 31 balance of accounts payable.

- Cash budget.

- Budgeted income statement.

- Budgeted statement of retained earnings.

- Budgeted balance sheet.

Part B:

- Calculate using Excel formulas, the NPV of each of the 3 projects.

- It is possible that ABC Company may not be able to complete all 3 projects. Therefore, advise ABC Company as to the order in which they should pursue the projects (i.e., which project should ABC Company attempt to do first, second, and last).

- Provide justification and analysis as to why you chose the order you did. The analysis must also be done in Excel, not in a separate document.

Assume ABC Company has asked you to not only prepare their 2017 year-end Balance Sheet but to also provide pro-forma financial statements for 2018. In addition, they have asked you to evaluate their company based on the pro-forma statements with regard to ratios. They also want you to evaluate 3 projects they are considering. Their information is as follows:

End of the year information:

Additional Information:

• Sales for December total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product’s selling price is $25 per unit.
• Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The December 31 2017 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit.
• Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in January and $4,000 per month thereafter.
• Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable.
• The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of sale).
• All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month.

• The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
• Dividends of $100,000 are to be declared and paid in February.
• No cash payments for income taxes are to be made during the first calendar quarter. Income taxes will be assessed at 35% in the quarter.
• Equipment purchases of $55,000 are scheduled for March.

ABC Company’s management is also considering 3 new projects consisting of the purchase of new equipment. The company has limited resources, and may not be able to complete make all 3 purchases. The information is as follows for the purchases below.

Required Action:

Part A:

• Prepare the year-end balance sheet for 2017. Be sure to use proper headings.
• Prepare budgets such that the pro-forma financial statements for the first quarter of 2018 may be prepared.

• Sales budget, including budgeted sales for April.
• Purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the March 31 budgeted inventory.
• Selling expense budget.
• General and administrative expense budget.
• Expected cash receipts from customers and the expected March 31 balance of accounts receivable.
• Expected cash payments for purchases and the expected March 31 balance of accounts payable.
• Cash budget.
• Budgeted income statement.
• Budgeted statement of retained earnings.
• Budgeted balance sheet.

Part B:

• Calculate using Excel formulas, the NPV of each of the 3 projects.
• It is possible that ABC Company may not be able to complete all 3 projects. Therefore, advise ABC Company as to the order in which they should pursue the projects (i.e., which project should ABC Company attempt to do first, second, and last).

Provide justification and analysis as to why you chose the order you did. The analysis must also be done in Excel, not in a separate document.