using excel functions

1. Sunshine Music Shop bought a stereo for $800 and marked it up 30% on selling price. To promote customer interest, Sunshine marked the stereo down 10% for 1 week. Since busi- ness was slow, Sunshine marked the stereo down an additional 5%. After a week, Sunshine marked the stereo up 2%. What is the new selling price of the stereo to the near- est cent? What is the markdown percent based on the original selling price to the nearest hundredth percent?

2. Alvin Rose owns a fruit and vegetable stand. He knows that he cannot sell all his produce at full price. Some of his produce will be markdowns, and he will throw out some produce. Alvin must put a high enough price on the produce to cover markdowns and rotted produce and still make his desired profit. Alvin bought 500 pounds of tomatoes at 16 cents per pound. He expects a 10% spoilage and marks up tomatoes 55% on cost. What price per pound should Alvin charge for the tomatoes?

3. Angel Company produces car radios. Given the following, calculate (1) the contribution margin (CM) and (2) the breakeven point (BE) for Angel Company.

   Fixed cost (FC) $96,000 Selling price (S) per radio $240 Variable cost (VC) per radio $80

Suppose you are considering renting an apartment in a building in which the tenants are required to pay the cost of heating their apartments. The building has several apartments, each occupying an entire floor of the building. The building has a flat roof. You are attracted to the apartment on the top floor because of the view but your friend tells you that the heat bills will be higher for that apartment than for the ones on the lower floors.

a. [3pts] Is your friend likely to be right? Explain why or why not in terms of the expected thermal energy flows in and out of the apartments.

b. [4pts] Defend your answer to a. by calculating the amount of energy required to heat the top and lower apartments for a year in btu. Include the lowest apartment assuming that it is just above the ground (no basement below it). Suppose that the floor area of each apartment is 900 sq ft (30ft x 30ft) and that the height from one floor to the next is 10ft. Use 8500 as the number of ’degree days’ in Minnesota (Figure 5.12 and definition near the top of p. 137) and the R values given in Table 5-1 of the book (1978 values).

c. [3pts] Use the answer you got in b. to calculate the difference in cost (if any) between heating the top apartment for a year ,heating a lower apartment for year, and heating the ground floor apartment for a year, supposing that the cost of gas heating is $0.80 per ’therm’. 1 therm=100,000 btu.

In the short-run, production should be stopped whenever: a. Expected selling price is less than average total cost. b. Expected selling price is less than average variable cost. c. Expected selling price is equal to marginal revenue. d. Expected selling price is greater than average total cost.

Cost of Production Report: Weighted average method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Prepare a cost of production report, using the weighted average method, and identify the missing amounts for Work in Process—Roasting Department. Assume that direct materials are placed in process during production. If required, round your cost per equivalent unit answer to two decimal places

?

1. The demand function for the Baye Firm is: P = 100 – 0.5 Q

The firm’s total cost function is: 1500 – 10 Q + 0.5Q2

(a) Is this a perfectly competitive firm? (5 Points)

(b) Find the output level and price at which the firm’s total revenue is maximized. (10 Points)

(c) Find the output level and price at which the firm’s total profit is maximized. (10 Points)

(d) Is demand elastic, unitary elastic, or inelastic at the output level where total revenue
is maximized? (10 Points)

(e) Is demand elastic, unitary elastic, or inelastic at the output level where total profit
is maximized? (10 Points)

(f) What is the value of the firm’s total fixed cost at the output level where total revenue
is maximized? What about at the output level where total profit is maximized? (10 Points)

(g) What is the value of the firm’s average variable cost at the output level where total
revenue is maximized? What about at the output level where total profit is
maximized? (10 Points)

Exercise 4-3 Cost Per Equivalent Unit-Weighted-Average Method [LO4-3]

Exercise 4-4 Applying Costs to Units-Weighted-Average Method [LO4-4]

Exercise 4-5 Cost Reconciliation Report-Weighted-Average Method [LO4-5]

Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 121.00 $ 85.00 Direct materials per unit $ 64.90 $ 51.00 Direct labor per unit $ 11.20 $ 8.00 Direct labor-hours per unit 1.4 DLHs 1.0 DLHs Estimated annual production and sales 27,000 units 70,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead $ 2,156,000 Estimated total direct labor-hours 107,800 DLHs Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs): Estimated Overhead Cost Expected Activity Activities and Activity Measures Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $ 700,700 37,800 70,000 107,800 Batch setups (setups) 737,000 380 290 670 Product sustaining (number of products) 640,000 1 1 2 Other 78,300 NA NA NA Total manufacturing overhead cost $ 2,156,000

Requirement 1:

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

Requirement 2

Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) .

Xtreme Pathfinder Total Product margin $0 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) . Xtreme Pathfinder Total Product margin $0

Requirement 3:

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.) . Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System % % % % % % Total cost assigned to products $0 $0 $0 Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % % % % Indirect costs: % % % % % % Total cost assigned to products $0 $0 $0 Costs not assigned to products: Total cost $0

Q1.        Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not?

Economic profit = Accounting profits minus implicit costs (opportunity costs).

Q3.      Calculate the accounting profit or loss as well as the economic profit or loss in each of the following situations:

1. A firm with total revenues of $150 million, explicit costs of $90 million, and implicit costs of $40 million.
2. A firm with total revenues of $125 million, explicit costs of $100 million, and implicit costs of $30 million.
3. A firm with total revenues of $100 million, explicit costs of $90 million, and implicit costs of $20 million.
4. A firm with total revenues of $250,000, explicit costs of $275,000, and implicit costs of $50,000.

Q5.      What distinguishes a firm’s short-run period from its long-run period?

Q7.      What is the difference between fixed cost and variable cost? Does each type of cost affect short-run marginal cost? If yes, explain how each affects marginal cost. If no, explain why each does or does not affect marginal cost.

Q8.      Explain why the marginal cost of production must increase if the marginal product of the variable resource is decreasing.

Q10.    Identify each of the curves in the following graph.

Q11.    Explain why the marginal cost curve must intersect the average total cost curve and the average variable cost curve at their minimum points. Why do the average total cost and average variable cost curves get closer to one another as output increase?

Q12.    In Exhibit 7 in this chapter, the output level where average total cost is at a minimum is greater than the output level where average variable cost is at a minimum. Why?         

Q14.    Explain the shape of the long-run average cost curve. What does “minimum efficient scale” mea

P19.     Complete the following table, where L is units of labor Q is units of output, and MP is the marginal product of labor.

1. At what level of labor input do the marginal returns to labor begin to diminish?
2. What is the average variable cost when Q = 24?
3. What is this firm’s fixed cost?
4. What is the wage rate per day?

P20.     Assume that labor and capital are the only inputs used by a firm. Capital is fixed at 5 units, which cost $100 each. Workers can be hired for $200 each. Complete the following table to show average variable cost (AVC), average total cost (ATC), and marginal cost (MC).

P21.     Suppose the firm has only three possible scales of production as shown below:

1. Which scale of production is most efficient when Q= 65?
2. Which scale of production is most efficient when Q =75?
3. Trace out the long-run average cost curve on the diagram.

Chapter Appendix  ‘Production and Cost in the Firm’ - Extra Credit

P1.       Suppose that a firm’s cost per unit of labor is $100 per day and its cost per unit of capital is $400 per day.

1. Draw the isocost line for a total cost per day of $2,000. Label the axis.
2. If the firm is producing efficiently, what is the marginal rate of technical substitution between labor and capital?
3. Demonstrate your answer to part (b) using isocost lines and isoquant curves.

Joan Frazier was just hired as an employee by SJR Restaurants, Inc., a Delaware Corporation domiciled in Colorado. Ms. Frazier maintains a residence in Orange County, California, so her children may attend the schools of her choice and so that her husband may be employed there as a leading plastic surgeon.

SJR has just opened three (3) restaurants in Utah, Nevada, and Idaho. SJR requires Ms. Frazier set up the general ledger accounting system at each restaurant. SJR estimates it will take Ms. Frazier 14 months of continuous, full time work (40 hours per week, 4 weeks per month) to set up the systems. SJR requires Ms. Frazier to rotate her time. That is, to spend time at each restaurant at least once a calendar quarter. Each restaurant has an office for the accounting function, although the offices are so small that Ms. Frazier does a majority of her work from hotel rooms near the restaurants.

Ms. Frazier reports back electronically to SJR. Ms. Frazier is never required to go to Colorado. SJR does not reimburse Ms. Frazier for her lodging, travel, or meal expenses.

May Ms. Frazier deduct lodging, travel, and meal expenses?

Note 1: Ignore limitations and phase outs and cut backs and whether the putative deductions might be above the line or below the line. Ignore Alternative Minimum Tax.

Note 2: This is your chance to show the research skills you've learned. You must cite the relevant code section(s), and at least three Supreme Court cases.

The appropriate format for tax briefings is as follows. Also include your name and the date for this class.

Subject

Facts

Taxpayer yada yada yada. Note: This should not be more than one paragraph.

Issue

May taxpayer deduct yada yada yada? Note: This is usually one sentence.

Conclusion

In this situation, yada yada yada. Note: This is usually three sentences or less.

Analysis

Code section xx(a) contains.......It states...... Reg. sec. clarifies......   Rev. Ruling...... Court case XXXX vs. XXX holds that......

PreviousNext