Blossom Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,240,000 on March 1, $2,160,000 on June 1, and $5,400,000 on December 31. Blossom Company borrowed $1,800,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $3,600,000 note payable and an 11%, 4-year, $6,300,000 note payable. Compute avoidable interest for Blossom Company. Use the weighted-average interest rate for interest capitalization purposes. Calculate  Avoidable interest?

In chapter six, the authors showed how the ABC application was used in the construction industry, comparing three types of rebar used for specific construction projects. It was shown that the company had undercosted two of the types of rebar, while the third type of rebar was overcosted. With this example in mind, consider the following issues. Why is the ABC described in the reading this week, unacceptable for external financial reports? In what fundamental ways does ABC differ from traditional costing methods, such as those described in Chapter 4? Why are top management support and cross-functional involvement crucial when attempting to implement an ABC system?

. Critical Accounting Estimates: Select any industry, such as construction, retail, drug manufacturers, financials, capital goods, energy, utilities, services, computer software, computer hardware, Internet, and so forth. What do you think would be the critical accounting estimates of companies in this industry and why?. Critical Accounting Estimates: Select any industry, such as construction, retail, drug manufacturers, financials, capital goods, energy, utilities, services, computer software, computer hardware, Internet, and so forth. What do you think would be the critical accounting estimates of companies in this industry and why?

5. (10) Fatal Worksite Accident Damage Award (Chapter 9)

Jim was a construction worker who died in a worksite accident through the negligence of his employer. At the time of his death at 40, he was earning $85,000 a year. The average worker in his occupation and at his age works to the age of 60. In his occupation, earnings after the age of 40 stay constant in nominal terms (since older construction workers though more experienced are less energetic than younger construction workers). The (nominal) discount rate, r, is 5%. The courts have awarded John's wife and children the present (at the time of his death) value of his future earnings as damages, to be paid by the construction company.

a) (4)   Set up an expression for the present value of John's future earnings.

b) (3)   Calculate the dollar amount of the award.

(The calculations are easier if you use continuous discounting. If you work with discrete discounting, make use of the following hints: i) The value of $Y received at the end of every year forever is $Y/r; and ii) the value of $Y received at the end of every year for twenty years equals the value today of $Y received at the end of every year forever minus the value today of $Y received every year forever, discounted by twenty periods.)

c) (3)   Should the courts have awarded additional damages for the emotional suffering John's wife and children have experienced as a result of John's death? Briefly give one argument for the additional damages and one reason against.

Magi Chen is the managing director of Sun Construction Pty Ltd, a family owned business that provides construction services. As Magi is interested in purchasing some new construction equipment’s for her business, she has approached her local bank for finance. The bank has asked that Magi provide an audited financial statement to assist them in considering her loan application. Magi has approached your audit firm for this service and you have been allocated the task of auditing Sun Construction for the year ended 30 June 2019. You have undertaken a preliminary review of the business and determined that a substantive testing approach would be suitable and appropriate. You are currently preparing an audit program for the revenue cycle. The following information has been obtained from your review: • Magi usually works 120 hours a fortnight. Part of this time is spent travelling between different clients and is not charged to the clients. The remaining time is charged at $60 per hour, regardless of the task undertaken. • Customers typically pay Magi in cash for the work undertaken, except for a small number of regular small-business customers. Magi allows these customers to pay on account by bank transfer on a monthly basis. • Magi supplies each cash customer with a written receipt, prepared manually from a receipt book purchased at the local news-agency. The book contains pre-numbered blank receipts, which are completed in duplicate. Required: For each of the assertions of occurrence, completeness and accuracy, identify a procedure(s) you could use to audit Sun Construction's revenue.

1. A insurance office keeps track of the number of car insurance claims filed each day. Based on the data collected, it determines that the following probability distribution applies:
Number of Claims Probability 0 .05 1 .15 2 .25 3 .45 4 .10 a. What is the expected number of new claims filed each day?
b. If a claim pays out on average $5000, what is the average cost per day?
c. If the ofice is open 250 days a year, what is the total cost of claims in a year?
d. If there are 10,000 policy holders, what does each policy holder need to pay each year for the compayn to break even?

2.  Assume that a set of test scores in an Introduction to Finance class is normally distributed with a mean of 75 and a standard deviation of 8. Use the Standard Normal Tables to find the percentage of scores less than 86.
Use the Standard Normal Tables to find the percentage of scores between 64 and 86.
What score would be needed to be in the top 10%?

A Gallup poll conducted in November of 2011 asked the following question, “What would you say is the most urgent health problem facing this country at the present time?” The choices were access, cost, obesity, cancer, government interference, or the flu. The responses were access (27%), cost (20%), obesity (14%), cancer (13%), government interference (3%), or the flu (less than 0.5%).

The following is an excerpt from the Survey Methods section. “Results for this Gallup poll are based on telephone interviews conducted Nov. 3-6, 2011, with a random sample of 1,012 adults ages 18 and older, living in all 50 U.S. states and the District of Columbia. For results based on a total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.”

Prompt

If we accept the maximum margin of sampling error provided above, find a 95% confidence interval to estimate the percentage of U.S. adults who feel that access to healthcare is the most urgent health problem facing this country. Interpret your interval in context.

A Gallup poll conducted in November of 2011 asked the following question, “What would you say is the most urgent health problem facing this country at the present time?” The choices were access, cost, obesity, cancer, government interference, or the flu. The responses were access (27%), cost (20%), obesity (14%), cancer (13%), government interference (3%), or the flu (less than 0.5%).

The following is an excerpt from the Survey Methods section. “Results for this Gallup poll are based on telephone interviews conducted Nov. 3-6, 2011, with a random sample of 1,012 adults ages 18 and older, living in all 50 U.S. states and the District of Columbia. For results based on a total sample of national adults, one can say with 99.7% confidence that the maximum margin of sampling error is ±4 percentage points.”

Prompt

Based on this poll, find a 95% confidence interval to estimate the percentage of U.S. adults who feel that access to healthcare is the most urgent health problem facing this country. Interpret your interval in context. PLEASE TYPE!!

Franklin Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients’ offices on the clients’ equipment. The only major expense FTS incurs is instructor salaries; it pays instructors $6,000 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $700 per student. Novak estimated that 20 students would attend the course.

a. Relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost?

b. Determine the profit, assuming that 20 students attend the course.

c. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability?

d. Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students). What is the percentage change in profitability?

e. Explain why a 10 percent shift in enrollment produces more than a 10 percent shift in profitability. Use the term that identifies this phenomenon.

You are advising the management at company ABC regarding their pricing decisions in relation to a new product. Existing information is as follows:

Direct materials $11 per unit; direct labor $3 per unit; variable manufacturing overhead $4 per unit; variable selling and administrative expenses $3 per unit; fixed manufacturing overhead expenses $60,000; and fixed selling and administrative expenses $80,000.

There is an expectation that company will sell 30,000 units.

1. Determine the unit product cost if the company uses an absorption costing approach in its cost-plus pricing.
2. Determine the target selling price given that company uses a 15 percent markup percentage.
3. It has been brought to your attention that company is making an investment of $200,000 in the making, marketing, and distribution of the 30,000 units of their new product. The management require a 20 percent return on this investment. Calculate the markup percentage on absorption costing given this information.
4. If the company only sells 25,000 units at $23 per unit what would be the return on investment?
5. Describe a limitation of the absorption costing approach to costing.