Leila runs a lawn mowing/maintenance service for busy homeowners. She has six potential customers and each is has a different maximum price they are willing to pay per week. The customers and the maximum price each is willing to pay each week is as follows:

Customer      Price
Lorraine      $40
Gilda            15
Jane            30
John            25
Bill            20
Dan            35

Leila's costs depend on the number of customers she has. Her costs (she has no sunk costs) appear in the following table:

# of customers per week            Total Cost
      1                  $22
      2                  $44
      3                  $66
      4                  $88
      5                  $110
      6                  $132

In Situation 7.3, Leila's optimal number of customers is

Select one:

a. 1

b. 4

c. 3

d. 5

On July 1, 2020, Dynamic Company purchased for cash 40% of the outstanding capital stock of Cart Company. Both Dynamic and Cart have a December 31 year-end. Cart, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Dynamic and also paid cash dividends on November 15, 2020, to Dynamic and its other stockholders.

Required:

a. How should Dynamic report the foregoing facts in its December 31, 2020, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.

b. If Dynamic should elect to report its investment at fair value, how would its balance sheet and income statement differ from your answer to part (a)?

First Cup Ltd., a Canadian coffee retailer and roaster which operates more than 1,000 cafes in Canada, reported the following balances as at December 31, 2020:

7% Par $100 convertible bonds, issued at par $250,000

      3,000 call options, each entitled to purchase 1 common shar

Cumulative Preferred shares, 36,000 convertible shares outstanding    $960,000

Common shares, 112,500 shares issued and outstanding $2,880,000

Contributed surplus on repurchase of common shares $31,200

Retained earnings $1,032,000

First Cup Ltd. applies IFRS. The company also informed you details related to the following transactions during 2020:

a]   On February 1, the company declared and distributed a 20% stock dividend for its common shareholders. The shares were being traded in the market at $30.

b]   On March 1, it acquired 18,000 of its own common shares in the market at $30.00 per share and retired them on the same day.

c]   On April 1, the company issued 17,500 common shares in exchange for plant and equipment assessed at $336,000.

d]   On May 1, 40% of the call option holders exercised their options when the market price of the common share was $31. As these options were issued before stock dividends, options holders receive an increased number of shares considering a 20% stock dividends (i.e. adjust for stock dividend).

e]   On May 15, the company declared a 3:1 stock split on common shares. The common shares were being traded at the adjusted market price of $32.00 per share

f]   On August 1, the company issued share certificates for 3,708 common shares to subscribers who had applied to an earlier share subscription issue. These subscribers had paid for the shares they had subscribed at $34 per share.

g]   On October 1, 20% of the bond holders submitted their bonds to the company for conversion into common shares. As the bonds were issued before stock dividends and stock split, the number of shares given to reward conversion need to be adjusted consequently.

h]   No Dividends have been declared in the previous two years. Dividends for the current year were also not declared.

Additional Information

i]    The cumulative preferred shares had been issued several years ago when the company was incorporated. Cumulative preferred shares carried a dividend rate of $2.10 per share and as at January 1, 2020, one preferred share could be converted into two common shares.

ii] The company reported earnings from operations of $1,847,790 for 2020. There were no discontinued items to report in 2020.

iii] The bonds had been issued at par in 2017. Assume No premium was charged for the conversion rights and debt was credited for the full amount received. Each $100 bond was convertible into 8 common shares.

Required:

Determine the weighted average number of shares for determining the basic earnings per share for 2020 using this template

G R

57 62

46 58

85 81

80 88

95 84

31 54

56 44

40 65

52 37

26 51

93 76

54 43

67 64

42 59

29 51

81 70

35 49

59 61

44 57

84 97

34 55

49 44

73 86

74 89

44 52

41 49

72 61

60 48

48 69

92 87

64 77

52 47

58 66

84 80

60 50

49 38

96 74

20 49

42 19

36 58

69 48

44 56

37 59

57 29

31 62

74 51

85 79

19 52

33 76

48 80

88 84

72 64

45 58

36 42

64 85

77 75

28 22

93 87

45 48

50 40

A private-label bottler of soft drinks asks each of 60 members of a tasting panel (who are regarded as a random sample from millions of potential customers) to rate each of two possible formulations of a cola drink on a 100-point scale; higher scores are desirable. Formulation G is less expensive and will be used unless there is a clear evidence that formulation R is preferred. From the data, the bottler obtains the difference (R-G) in the ratings for each panelist. After calculating and examining the 90% and the 95% confidence intervals for the mean of the difference in the ratings, the management of the private-label bottler concluded that the difference in the ratings is negligible. Consequently, they have decided to use formulation G which is less expensive. The data on the panelist’s ratings they have used is in the Excel data file named ‘Cola Ratings’. Using the same data, please re-calculate the confidence intervals you think the management’s decision must have been based on. Show all the necessary steps and interpret your confidence intervals. Based on your results, do you agree with the management’s conclusion? Please justify your answer.

MALAYSIA AIRLINES: THE MARKETING CHALLENGE AFTER MH370 AND MH17

MAS was the national carrier of Malaysia. The company started as Malayan Airways Limited and had its first commercial flight in 1947. After the separation of Singapore from Malaysia, the former partners formed separate entities in 1972, and were independently branded as Singapore Airlines and MAS. The larger part of MAS’s shareholdings (69.4 per cent) was retained by the Malaysian government’s sovereign wealth fund, Khazanah Nasional Berhad.8 MAS’s two subsidiary airlines, Firefly and MASwings, operated on different routes; Firefly operated only between tertiary cities in Malaysia and its two home bases, while MASwings operated inter-Borneo flights.9 Committed to customer service, MAS has received many awards, including a five-star rating from Skytrax and the title of “world’s leading airline to Asia” at the World Travel Awards.10 MASkargo and MASCharter, the other subsidiaries, operated cargo and charter flights, respectively. The airline’s non-aeronautical services included maintenance, repair and overhaul (MRO) (see Exhibit 1).

First Phase of Loss

In 1997, the Asian financial crisis brought the expansion of MAS to a halt. Reports revealed that much of the company’s growth had been ego-driven and without efficient management.14 During this turbulent phase, the organization suffered a loss of RM260 million. The airline reduced its losses by 63 per cent in FY1998/99, but the trend turned downwards again. There were subsequent losses of RM417 million in FY2000/01, and RM836 million in FY2001/02.15

Second Phase of Loss

The second phase of loss occurred in 2005. Although the business saw an increase in passenger traffic (10.2 per cent) and passenger revenues (10.3 per cent) as compared to 2004, MAS still incurred a loss of RM1.3 billion. The main reasons for this decline included a decrease in cargo revenues in comparison to the previous year (4.2 per cent) and an increase in the various cost overheads, which primarily consisted of increased fuel prices (40.4 per cent), handling and landing, MRO, and widespread assets unbundling (WAU) charges and leases.16

Turnaround Phase (2005 to 2007)

Management realized that a business turnaround was needed to sustain MAS. Starting in 2005, the senior management team decided to draft a new blueprint to drastically improve the situation. At the end of 2005, Idris Jala was inducted as managing director to implement the business turnaround plan. While publicizing the restructuring plan, Jala was quoted as saying,

We are dedicated to the creation of a company that will be a source of pride and admiration for its employees and indeed all its stakeholders. The Malaysia airline of tomorrow will maintain its fivestar product, have a competitive cost structure in the region, be renowned as being one of the best places to work in Malaysia, have closed much of the revenue performance gap to our peers, and will return to profitability in 2007. We can do this, and we will.17

After the plan was put into practice, MAS announced a profit of RM851 million by the end of 200718 — far beyond the expected target of RM300 million. The restructuring exercise emphasized the key areas of pricing, revenue management, route rationalizing, rescheduling of flights and tweaking the operating model (from point-to-point services to hub and spoke).

Third Phase of Loss

MAS recorded a massive loss of RM2.52 billion in 2011, due to an increase in fuel (25 per cent) and nonfuel expenses (50 per cent).19 Although revenues improved marginally from RM13.5 billion in 2010, to RM13.9 billion in 2011, the higher fuel and non-fuel expenditures — namely, the redelivery of aircrafts (RM602 million), impairment of freighters (RM314 million) and stock obsolescence (RM179 million) — pushed the organization towards another loss.20 As part of a major restructuring of the leadership team, Yahya was appointed managing director and group CEO in September 2011.21

Subsequent Turnaround Phase

Led by its new CEO, MAS implemented various initiatives in response to its losses, such as route rationalization. The rerouting exercise enabled the airline to reduce available seat kilometres, one of the key performance indicators (KPIs) in the aviation industry, by 6 per cent. The company posted a net profit of RM51.4 million for the fourth quarter of 2012, a turnaround from the year before when the company was running at a net loss of RM1.3 billion.22 Yahya stated, “We continue to gain traction in multiple initiatives that focus on increasing revenue and managing costs. The results are very encouraging for our teams who have worked hard throughout the year.”23

Although aggressive pricing improved the seat capacity and protected the market share of MAS, the weakening of the national currency increased the operating cost of its expanding fleet. The airline recorded a loss of RM375.4 million in the first half of 2013.24 Yahya expressed his concerns: “We are extremely disappointed with these results, which emphasize the need to maintain our focus on cost control and drive improved efficiency and performance across all divisions.”

EVENTS IN 2014 The MH370 Disaster

MAS flight 370 was an international passenger flight departing from Kuala Lumpur and bound for Beijing. The airplane vanished on March 8, 2014, after losing contact with air traffic control within an hour of taking off. The plane carried 227 passengers of 15 different nationalities and 12 crew members.25 The search operation, supported by numerous nations, started in the Gulf of Thailand and expanded to the South China Sea, the Strait of Malacca and the Andaman Sea.26 A week-long investigation concluded that the airplane had diverged from its original route plan.27 Thus, the search area was expanded to the Southern Indian Ocean (West Australia).28 The internationally supported investigation teams used various tools, such as satellite communication, hydroacoustic data and ping detections, and considered possible in-flight happenings, such as a power failure, an unresponsive crew and passenger/crew involvement, to rule out various explanations. After an extensive search of all likely locations, no debris was retrieved. None of the locations could be declared the crash site. Although the lack of information gave rise to many wild speculations about the disappearance of the aircraft, flight MH370 was eventually declared as having fallen into the Southern Indian Ocean.29 The hunt for MH370 was the most expensive search ever undertaken, with costs reaching as high as US$100 million.30 Unsurprisingly, the tragic disappearance had an enormous impact on MAS’s post-performance figures. The company’s stock prices declined, booking rates plummeted, cancellations increased31 and there were even boycotts by travel agents in China.32

The MH17 Tragedy

Just 131 days after the MH370 disaster, MAS suffered yet another blow. On July 17, 2014, flight MH17, en route to Kuala Lumpur from Amsterdam, was hit by a surface-to-air missile while flying over Eastern Ukraine near the Russian border.33 The conjecture was that the aircraft was brought down by pro-Russian separatists with weapons provided by Russia.34 The killing of 298 passengers, 66 per cent of whom were citizens of the Netherlands, was announced as the deadliest air incident35 and the worst civilian airline shootdown in aviation history.36 In light of this catastrophe, various airlines, including Aeroflot, Transaero, Air France, Turkish Airlines, Virgin Atlantic, Lufthansa and S7 Airlines decided to detour around Ukrainian airspace.37

The two unforgettable tragedies, along with other competitive and operational difficulties, left MAS in a vortex of challenges. What immediate strategy could the leadership team use to counter such obstacles?

THE IMPACT OF TWO DISASTERS

The 2014 catastrophes had deeply impacted each member of the business value chain. MAS employees were in a state of emotional shock. The president of the flight attendants union reported, “Some of our members cannot fly because they have been affected mentally.”

MAS stock prices dropped drastically (13 per cent)39 after the MH17 tragedy, and the impact of the crisis was felt throughout the world. The markets in the United States and Europe witnessed a decline. Chris Weston, an IG market analyst, noted, “Today is going to be a pretty ugly day.”

Apart from MAS, the stock process of other global airlines also recorded a downturn. Some of these losses included the stocks of Delta Air Lines (by 3.4 per cent), United Continental (3.9 per cent), China Eastern (2.2 per cent) and American Airlines (3.3 per cent).41 Overall, MAS lost US$148 million in the first quarter of 2014. The loss included the cancellations or delays of more than 30,000 bookings after the first disaster.

Further impacts of the MH370 and MH17 tragedies included increases in insurance premiums, particularly for flying over conflict zones such as Syria, Iraq and Afghanistan. Bypassing conflict areas and taking longer routes to reach destinations would substantially increase the fuel and other costs. As per the clauses of the international treaty, MAS was legally responsible for disbursing US$175,000 per person impacted by the tragedies, for a total of more than US$40 million.44 Beyond these costs, employee salaries, union pacts and catering agreements would have to be renegotiated to help overcome this challenge. How could MAS regain its position as one of the finest airlines in the world in order to retain and attract customers?

MALAYSIA: THE HUB Tourist Destination

Malaysia was known for its plethora of tourist attractions. Its rich history, culture and natural attractiveness made it an ideal vacation destination. In 2012, the United Nations World Tourism Organization listed Malaysia as the 10th-most visited country,46 and it had been witnessing a consistent increase in the number of tourist arrivals since 1998.

Tourism had been cited as a recession-proof industry, as both domestic and international travelers commuted throughout the year. Offers of affordable airfares by low-cost carriers emerged as an important enabler in promoting Malaysia as a popular tourist destination. The rising demand for medical tourism, ecological tourism, luxury tourism and business tourism had propelled Malaysia’s acceptance as a preferred tourist destination across the globe. Tourism had been designated a national key economic area by the Malaysian government. The government started the “Entry Point Project,” which included the removal of import duties, to help in eventually positioning Malaysia as a popular and duty-free shopping country. Its geographical proximity to China and India also helped in increasing the flow of tourists.

The conducive legislative environment was one of the critical contributing factors in promoting tourism in Malaysia. The increased focus on medical tourism had also furthered economic growth. A government controlled agency called the Malaysia Healthcare Travel Council was introduced to supervise and promote healthcare-related travel. Malaysia attracted 236,836 foreign patients in 2012, generating RM751 million in value sales. To further improve business tourism, the Malaysia Convention and Exhibition Bureau (MyCEB) had been reinforced. To provide potential travelers with holistic entertainment, the Malaysia Mega Biodiversity Hub created many initiatives to develop and promote ecological tourism in Malaysia.48

Travel and Tourism: Future Potential

In 2013, travel and tourism directly contributed RM70.4billion to Malaysia’s gross domestic product (GDP) (7.2 per cent of total GDP) and this figure was anticipated to increase by 7 per cent in 2014. From 2014 to 2024, travel and tourism was expected to increase by 4.4 per cent per annum to eventually reach RM115.4 billion (7.6 per cent of total GDP) in 2024. Similarly, the total contribution of travel and tourism to the country’s GDP was RM158.2 billion (16.1 per cent of GDP) in 2013, and was predicted to increase by 6.8 per cent in 2014; the evaluation would reach RM262.5 billion (17.3 per cent of GDP) in 2024.

Moving in a phased manner, MAS planned to choose countries that may be prioritized as part of its restructuring plan. Data shows forecasted arrivals by country of origin from 2014 to 2017, with Singaporean and Indonesian nationals expected to make up the highest number. Singapore would provide the highest-spending tourists .Table shows that air travel would be the preferred mode of travel in the country. MAS, being the national carrier, could target a maximum share of this expected increase in air travel by incoming tourists.

The situation was equally promising in terms of departures. The number of passengers seeking overseas departures was expected to witness consistent growth. Of the potential tourists, the majority would leave for vacation purposes, and most were expected to travel by air.

FINANCIAL KPIS AND THE FUTURE

After the first tragedy in March 2014, MAS witnessed a decrease in the number of travelers and in revenue passenger kilometres, a criterion which was often used in evaluating aviation performance. In line with the broader trend, the Samoan women’s rugby team switched from MAS to Thai Airways on July 27, 2014, for a World Cup event in France.49 One travel agent who saw a cancellation rate of more than 30 per cent of MAS bookings in her office noted the anxiety of the passengers, saying they were “very, very afraid about anything else happening again.”50 MAS recorded an after-tax loss of RM576 million at the end of November 2014.51

Of all the possible options, could a restructured pricing strategy play a critical role in retaining and attracting customers to MAS? What specific new pricing structures would make customers choose MAS over other airlines? How should the tradeoff of decreasing price and increasing value be managed? After so many tragedies and such a massive backlash, what actions must be taken in order to recover loyalty to the airline and recoup MAS’s losses? Yahya knew that the answers to these questions would decide whether MAS would take off once again or remain grounded.

1. Faced with prospective restructuring options - namely rebranding, a merger, bankruptcy, and privatization - How should each be weighted to save MAS from monetary and non-monetary losses?

2. Of the three likely pricing strategies (i.e. increasing value, decreasing ticket prices or undertaking both), which would you choose if you were the CEO of MAS in order to retain and attract customers?

3. What is value communication? How can value communication strategies be classified? How could such a strategy be leveraged to restore MAS's market share?

4. Could change management bring about the desired transformation of MAS, particularly in terms of customer perception? In what contexts could change occur?

5. Bearing in mind potential of the travel and tourism industry in Malaysia, can diversification into this arena help MAS retain its market share?

The HIM professional is responsible for facilitating the collection of appropriate information needed to properly assign the correct clinical classification codes to the care provided.

Question 1 options:

true or false

2.The HIM professional must have knowledge of the applicable guidelines and an appreciation and understanding of the requisite compliance programs for hospitals, physicians, home health agencies, long-term care facilities, laboratories, and third-party payers.

true or false

3.HIM professionals are responsible for preventing unethical and fraudulent behavior.

true or false

4.Six Essential Elements Required for Implementation of Compliance Programs (OIG, 2005)

true or false

You work as a wholesale person for a plumbing company. One of your customers, a contractor has an open line of credit with your company for $10,000 worth of products He is currently at his limit; however, he is not overdue. He has just received word that he has been awarded a $40,000 plumbing contract at the local airport. The contract requires he supply $9,000 worth of plumbing products. Your customer does not have the cash to pay for the additional products. he tells you that unless you can provide him some type of financing, he may lose the contract. he says that he can pay you when he finishes his next job in 60 days. Explain what you will do?

You work as a wholesale person for a plumbing company. One of your customers, a contractor has an open line of credit with your company for $10,000 worth of products He is currently at his limit; however, he is not overdue. He has just received word that he has been awarded a $40,000 plumbing contract at the local airport. The contract requires he supply $9,000 worth of plumbing products. Your customer does not have the cash to pay for the additional products. he tells you that unless you can provide him some type of financing, he may lose the contract. he says that he can pay you when he finishes his next job in 60 days. Explain what you will do?