Copy and paste the following data into Excel:

a.   Run OLS to determine the demand function as P = f(Q); how much confidence do you have in this estimated equation? Use algebra to invert the demand function to Q = f(P).

b.   Using calculus to determine dQ/dP, construct a column which calculates the point-price elasticity for each (P,Q) combination.

c.   What is the point price elasticity of demand when P=$87.50? What is the point price elasticity of demand when P=$77.50?

d.   To maximize total revenue, what would you recommend if the company was currently charging P=$82.25? If it was charging P=$77.50?

e.   Use your first demand function to determine an equation for TR and MR as a function of Q, and create a graph of P and MR on the vertical and Q on the horizontal axis.

f.    What is the total-revenue maximizing price and quantity, and how much revenue is earned there? Compare that to the TR when P = $87.50 and P = $77.50.

2.     a) Using the following information for Campbell Enterprises, prepare an annual:

                   Multiple-step income statement

                   Retained earnings statement

                   Classified balance sheet (7 points)

b) Using the above information, compute Campbell’s gross profit rate. Please show the details of

            your computation: (1 point)

Gross profit rate            ____________________________________________

Campbell Enterprises, Inc.

Adjusted Trial Balance

December 31, 2019

                                                                                         Debit                    Credit

Cash                                                                   4,000

Accounts Receivable                                       15,000

Inventory                                                         30,000

Prepaid Insurance                                              4,000

Supplies                                                             3,000

Long-term Investment in Stock                         6,000

Land                                                                 20,000

Buildings                                                       120,000

Accumulated Depreciation—

Buildings                                                                                     20,000

Patents                                                             10,000

Accounts Payable                                                                          10,000

Unearned Revenue                                                                          2,000

Bonds Payable (due in 2023)                                                         20,000

Common Stock                                                                              80,000

Retained Earnings                                                                          44,000

Dividends                                                         30,000

Sales Revenue                                                                              305,000

Interest Revenue                                                                              5,000

Sales Discounts                                                  6,000

Sales Returns & Allowances                             8,000

Cost of Goods Sold                                        188,000

Salaries and Wages Expense                           21,000

Depreciation Expense                                      10,000

Utilities Expense                                                5,000

Insurance Expense                                             3,000

Supplies Expense                                               2,000

Interest Expense                                               1,000                                    

                                                                       486,000                 486,000

Preparing a Trial Balance, Closing Journal Entry, and Post-Closing Trial Balance. The following information applies to the questions displayed below.] Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

Accounts Payable $ 602

Accounts Receivable 302

Accumulated Depreciation 902

Cash 302

Common Stock 202

Deferred Revenue 202

Depreciation Expense 302

Equipment 3,202

Income Tax Expense 302

Interest Revenue 102

Notes Payable (long-term) 202

Notes Payable (short-term) 502

Prepaid Rent 102

Rent Expense 402

Retained Earnings 1,502

Salaries and Wages Expense 2,202

Service Revenue 6,206

Supplies 502

Supplies Expense 202

Travel Expense 2,602

How to prepare an adjusted trial balance at September 30, 2018?

Is the Retained Earnings balance of $1,502 the amount that would be reported on the balance sheet as of September 30, 2018? Yes or No??

2. If marginal benefit from a particular activity is greater than its marginal cost, a rational choice involves

a. More of the activity

b. Less of the activity

c. No more of the activity

d. More or less, depending on the benefits of other activities

.

3. Which of the following is an example of an implicit cost

a. Dividends paid out to stockholders

b. The uncompensated services of the spouse of a firm's owner

c. Payments made to audit companies

d. Payments made to workers who are unproductive

.

4. Suppose, a measure of total output of an American economy takes into account the production of any American or American-owned entity, regardless of where in the world the actual production process is taking place. Then this estimate of total output is

a. Gross Domestic Product

b. Gross National product

c. Net Domestic Product

d. None of a, b and c

.

5. Economic profit is calculated as deviation between

a. Total revenue - total explicit & implicit costs

b. Total revenue - total explicit costs

c. Total revenue - total implicit costs

d. All a, b, and c will give same measure

2. Island Water Sports is a business that provides rental equipment and instruction for a variety of water sports in a resort town. On one particular morning, a decision must be made of how many Wildlife Raft Trips and how many Group Sailing Lessons should be scheduled. Each Wildlife Raft Trip requires one captain and one crew person, and can accommodate six passengers. The revenue per raft trip is $120. Ten rafts are available, and at least 30 people are on the list for reservations this morning. Each Group Sailing Lesson requires one captain and two crew people for instruction. Two boats are needed for each group. Four students form each group. There are 12 sailboats available, and at least 20 people are on the list for sailing instruction this morning. The revenue per group sailing lesson is $160. The company has 12 captains and 18 crew available this morning. Develop the linear programming problem and solve the linear programming model to maximize the number of customers served while generating at most $1800 in revenue and honoring all reservations. (Hint: You need 2 decision variables to develop this LP problem.)

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 pounds of oysters in August. The company’s flexible budget for August appears below:

The actual results for August appear below:

Required:

Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

In the Ponderosa Development Corp. (PDC) example, if the land for each house costs $108,100 and lumber, supplies, and other materials cost another $41,200 per house. The company leases office and manufacturing space for $3,100 per month and their monthly salaries total to $65,250. Assume that total labor costs are approximately $26,800 per house. The cost of supplies, utilities, and leased equipment is $6,650 per month. The one salesperson of PDC is paid a commission of $3,900 on the sale of each house. The selling price of each house is $195,000.
(1) Identify all costs and revenue for each house.

(2) Write the monthly cost function c (x), revenue function r (x), and profit function p (x).

(3) What is the breakeven point (BEP) for monthly sales of the houses based on the cost, revenue and profit functions specified in (2)?

(4) What is the monthly profit if 13 houses per month are built and sold?

(5) What is the monthly profit if the variable cost per house = $160,500 and PDC built and sold 10 houses per month?

(4) What is the monthly profit if 13 houses per month are built and sold?

[The following information applies to the questions displayed below.]

Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

1) If a price that a perfectly competitive firm is able to get is above its average variable cost but below its average total cost then

a. The firm will suffer economic losses and should shut down immediately

b. The firm will be able to earn economic profit as soon as it can increase the size of its factory

c. The firm will suffer economic losses but should continue to operate

d. None of the above

2) In the short run, if price falls, the firm will respond by

a. Shutting down regardless of how high its variable costs are

b. Equating average variable cost to marginal revenue

c. Reducing along its marginal cost curve as long as marginal revenue exceeds average variable cost

d. None of the above

3) Suppose a competitive firm is in equilibrium then the price of one of its inputs falls. What will happen?

a. The firm will hire more of the lower priced input

b. The firm will produce more output

c.The firm cost curves will downward

d. All of the above

4. A competitive industry will be in a long run equilibrium when

a. Each firm in the industry is earning zero economic profit

b. No entry or exit occurs

c.The total quantity produced at the prevailing price equals the total quantity consumers want to purchase

d. All of the above

5. In an increasing cost competitive industry, if prices rises above its long run equilibrium level which of the following will occur as the industry adjusts to a new long equilibrium ?

a. Firms will exit the industry

b. Economic profits will exits

c. Input prices will rise only when firms leave the industry

d. Price will return to its original level

6.The marginal revenue curve of a monopolist lies below the demand curve ( in the absence of price discrimination) becaus

a. The demand curve is unit elastic

b. The monopolist must lower price on all units sold in order to sell additional units

c. The monopolist is a price taker

d. The marginal revenue curve coincides with the average revenue curve

7. The demand curve for a monopolist's slopes downward because

a. Profit per unit declines

b. Demand elasticity is greater than one in the portion of the demand curve where the monopolist operates

c.It price discriminates

d. It faces the market demand curve

8. If a monopolist's is operating in the elastic portion of its demand curve then

a. An increase in price will increase total revenue

b. An increase in price will decrease total revenue

c. Marginal revenue is negative

d. An increase in price will leave total revenue unchanged

9. Marginal revenue is negative when

a. The demand curve is downward sloping

b. Demand curve is elastic

c. Demand curve is inelastic

d. Demand is unit elastic

10. The lerner index

a. Measures the monopoly power as the markup of price over average cost

b. Measures the monopoly power as the markup of price over marginal cost

c. Measures the market share of a firm

d. Measures the market capitalization of a firm

11. Compared to a competitive industry, ceteris paribus a standard monopoly firm

a. Sells more units and charges a higher price

b. Sells the same amount of units but at a higher price

c. Does not try to maximize profits as do firms in competitive industry

d. Restricts output and charges a higher price

12. A monopoly will produce the efficient rate of output if it

a. Engages in perfect price discrimination

b. Engages in no price discrimination

c. Engages in third degree price discrimination

d. Is regulates and average cost pricing is enforced

13. Which of the following types of mergers directly reduces the number of competitors in an industry?

a. Congolomerate

b. Horizontal

c. Vertical

d. Bivariate

14. Why do gas stations near airport often charge more for gasoline ?

a. They have higher costs

b. They are inconvenient

c. They face a smaller elasticity of demand

d. They must pay the airport agency for space

15. The deadweight loss due to monopoly restriction of output occurs over units of output

a. For which the willingness to pay would be greater than MC but don't get produces

b. For which the willingness to pay is greater than MC and do not get produced

c. Up until the profit maximizing level of output

d. For which the willingness to pay is less than MC but don't get produced

16. First degree discrimination

a. Is perfect because consumers benefit the most

b. Is called first degree because it does not apply to resale of products

c. Is also known as perfect price discrimination

d. Is the easiest form of price discrimination

1.   Tony signed up and paid $1200 for a 6-month painting course on June 1 with Master Piece Painting (MPP). As of August 1, MPP's accounting records would indicate

    A. $400 of revenue, $800 of deferred revenue

   B. $1,200 of revenue, $1,200 of cash

   C. $400 of revenue, $800 of accounts receivable

   D. $800 of revenue, $400 of accounts receivable

2. On July 15, 2016, Ortiz & Co. signed a contract to provide EverFresh Bakery with an ingredient-weighing system for a price of $90,000. The system included finely tuned scales that fit into EverFresh's automated assembly line, Ortiz's proprietary software modified to allow the weighing system to function in EverFresh's automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz's systems.) If Ortiz was to provide these goods or services separately, it would charge $60,000 for the scales, $10,000 for the software, and $30,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2016, and the calibration service commenced on that date. Assume that the scales, software, and calibration service are all separate performance obligations. How much revenue will Ortiz recognize in 2016 for this contract?

   A. $74,250

   B. $90,000

C. $63,000

   D. $0

3.   On June 1, Lucy & Bros. received an order for 500 cupcakes. Lucy delivered the cupcakes to the client on June 25. A $50 deposit was received on June 5 and the remaining $450 was paid on June 30. Lucy likely would recognize revenue on

  A. June 1.

   B. June 30.

   C. June 5.

   D. June 25.

4.   In 2015, Solid Construction Co. (SCC) began work on a two-year fixed-price contract project. SCC uses the percentage-of-completion method to account for such projects and provides you with the following information (dollars in millions):

Accounts receivable (from construction progress billings)               $37.5

Actual construction costs incurred in 2015            $135

Cash collected on project during 2015     $105

Construction in progress, 12/31/15          $207

Estimated percentage of completion during 2015              60%

What's the amount of gross profit on the project recognized by SCC during 2015?

   A. $160 million

   B. $48 million

   C. The answer can't be determined from the given information.

   D. $72 million

5. On October 1, 2015, Justice Company purchased equipment from Naples Inc. in exchange for a noninterest-bearing note payable in five equal annual payments of $500,000, beginning October 1, 2016. Similar borrowings have carried an 11% interest rate. The equipment would be recorded at

A. $1,847,950.

   B. $2,225,000.

   C. $2,115,270.

   D. $2,500,000.

6.   Gimme Auto Loan Department wishes to know the payment required at the first of each month on a $10,500, 48-month, 11% auto loan. To determine this amount, Gimme would

     A. multiply $10,500 by the present value of an ordinary annuity of 1.

   B. divide $10,500 by the future value of an ordinary annuity of 1.

   C. multiply $10,500 by the present value of 1.

   D. divide $10,500 by the present value of an annuity due of 1.