Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2020). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Average hourly billing rates are auditing $83, tax $94, and consulting $102.

Prepare the service revenue (sales) budget for 2020 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Box A contains 2 quarters, box B contains 1 quarter and 1 dime. A box is picked at random. From this box a coin is picked at random and it is a quarter. What is the probabilitythat the box picked was box B?

1. Taylor Rule. Suppose the Quarter 1 2020 federal funds rate was 0.25%. If the output gap is -7% and the inflation gap is -5%, according to the Taylor Rule, what is the Fed’s target rate for Quarter 2 of 2020?

Question1

A market researcher wants to study TV viewing habits of residents in a particular area. A random sample 0f 70 respondents is selected. The results are as follows

Viewing time per week Mean=14 hours, S=3.8 hours

50 respondents watch the evening news on at least three week nights

(a)      Construct a 90% confidence interval estimate for the mean amount of TV watched per week.

(b)      Construct a 95% CI estimate of population proportion who watches evening news on at least three week nights.

Question 2

Following data gives the amount that a sample of 10 customers spent for lunch ($) at a fast food restaurant:

$8.50, $7, $5.80,  $9, $5.60,  $7.80,  $6.50, $5.40,  $7.50,  $5.50

Construct a 95% confidence interval estimate for the population mean amount spent on lunch at the fast food restaurant.

Question 3

A cell phone provider has the business objective of wanting to estimate the proportion of subscribers who would upgrade to a new cell phone with improved features if it were made available at a substantially reduced cost. Data are collected from a random sample of 500 subscribers. The results indicated that 135 of the subscribers would upgrade to a new cell phone at a reduced cost. Construct a 95% confidence interval estimate for the population proportion of subscribers that would upgrade to a new cell phone at a reduced cost.

Question 4

You are the manager of a restaurant for a fast food. Last month the mean waiting time at the drive through window for branches in your region was 3.8 minutes. You select a random sample of 49 orders. The sample mean waiting time is 3.57 minutes, with a sample standard deviation of 0.8 minutes. At the .05 level of significance is there evidence that population mean waiting time is different from 3.8 minutes?

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 $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $662,000; 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.)

Prepare an income statement for the year.

Prepare a schedule of cost of goods sold.

Prepare a schedule of cost of goods manufactured.

Sara Wald died, leaving to her husband Benno an insurance policy contract that provides that the beneficiary (Benno) can choose any one of the following options: a) 55,000 immediate cash b) 4,000 every 3 months payable at the end of each quarter for 5 years c) 18,000 immediate cash and 1,800 every 3 months for 10 years, payable at the beginning of each 3-month period d) 4,000 every 3 months for 3 years and 1,500 each quarter for the following 25 quarters, all payments payable at the end of each quarter Using the interest rate of 2.5 per quarter, compounded quarterly, which option would you recommend that Benno exercise? Show your computations!

Consider the following quarterly time series.

a. Construct a time series plot. What type of pattern exists in the data?

b. Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data.

Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise.

c. Compute the quarterly forecasts for next year based on the model developed in part (b).

(that is for all the four quarters next year)

(Analysis of Alternatives) Julia Baker died, leaving to her husband
Brent an insurance policy contract that provides that the beneficiary (Brent) can
choose any one of the following four options
a. €55,000 immediate cash.
b. €4,000 every 3 months payable at the end of each quarter for 5 years.
c. €18,000 immediate cash and $1,800 every 3 months for 10 years, payable at
the beginning of each 3-month period.
d. €4,000 every 3 months for 3 years and $1,500 each quarter for the following 25
quarters, all payments payable at the end of each quarter.

Instructions
If money is worth 2½% per quarter, compounded quarterly, which option would you
recommend that Brent exercise?

4. Consider the following time series:

a. Construct a time-series plot. What type of pattern exists in the data? Is there an indication of a seasonal pattern? (10 points)

b. Use multiple linear regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if quarter 1, 0 else; Qtr2 = 1 if quarter 2, 0 else; Qtr3 = 1 if quarter 3, 0 else. (20 points)

c. Compute the quarterly forecasts for next year. (10 points)

The amounts are listed in the above problem; "Some Company has asked you to prepare a cash budget for the year 2020 using the following information"