In the 2004 baseball season, Ichiro Suzuki of the Seattle Mariners set the record for most hits in a season with a total of 262 hits. In the following probability distribution, the random variable X represents the number of hits Ichiro obtained in a game.

1. What is the probability that in a randomly selected game, Ichiro got at least 3 hits? =.2112
2. Compute the mean of the random variable X. (round to two decimal places) =1.63
3. Compute the standard variation of the random variable X. (round to two decimal places) =1.18

4) What would be the upper limit of range that would include the number of hits Ichiro obtained in 75% of the games?

In 2019, what is the earned income credit allowed Don Andersen, a head of household taxpayer, assuming he has adjusted gross income of $9,500 and earned income of $5,000? He maintains his household with his daughter.

1) $2004
2) $2049
3) $2094
4) $0

5) None of the above answers are within $20 (plus or minus) of the correct answer.

In 2019, what is the earned income credit allowed Don Andersen, a head of household taxpayer, assuming he has adjusted gross income of $20,500 (consisting of interest income of $3,700 and earned income of $16,800)? He maintains his household with his daughter.

1) 3,447
2) 3,474
3) 3,287
4) $0

5) None of the above answers are within $20 (plus or minus) of the correct answer.

Exercise 11A-2 Transfer Pricing from the Viewpoint of the Entire Company [LO11-5]

Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:

  
Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $270 in additional variable cost per instrument and then sold the instruments for $620 each.

Required:

1. Prepare income statements for Division A, Division B, and the company as a whole.

2. Assume Division A’s manufacturing capacity is 20,100 circuit boards. Next year, Division B wants to purchase 6,600 circuit boards from Division A rather than 5,600. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the additional 1,000 circuit boards to Division B or continue to sell them to outside customers?

Exercise 11A-2 Transfer Pricing from the Viewpoint of the Entire Company [LO11-5]

Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:

  
Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $290 in additional variable cost per instrument and then sold the instruments for $660 each.

Required:

1. Prepare income statements for Division A, Division B, and the company as a whole.

2. Assume Division A’s manufacturing capacity is 20,900 circuit boards. Next year, Division B wants to purchase 7,800 circuit boards from Division A rather than 6,800. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the additional 1,000 circuit boards to Division B or continue to sell them to outside customers?

Alfahome Plc is a company making a range of popular household liquid cleaning products. It has a loyal customer base as customers tend to use the same products for many years. Alfahome Plc’s target return on investment is 15% per annum. The company replaces assets regularly to keep them up to date.

The company regularly produces a 6 year plan. The plan for the six years is shown below:

Alfahome Plc has a range of products in regular demand and a few more fashionable products with life cycles. One of its products is expected to peak in 2019 and then begin to decline, so a new, fashionable product ‘Mega Wash’ with a potentially short life is being developed.

Although production of ‘Mega Wash’ will mostly use current available capacity, new machinery costing £72 million will be needed. This will be bought in at the beginning of 2019 and depreciated straight line over four years. The products are sold in cartons of 10 bottles.

In addition to the new machine, the table below shows the forecast cost and revenue cashflows (note 1) for Alfahome:

Notes

1. The cashflows shown in this table can also be regarded as accrual based costs and revenues for each year.

2. Research and development cost are written off in the year incurred.

3. It is expected that variable production, variable marketing, and product fixed costs will increase by 4% each year.

Price, marketing cost and market demand are the amounts estimated by the marketing department.

Required:

(a) Calculate the residual income of the company for each year of the forecast, before consideration of the new product.

(b) Calculate and present on a year by year basis, the ‘Mega Wash’ lifecycle and calculate the residual income of the ‘Mega Wash’ for each year of its life and the total residual income for the company as a whole for each year of the six year forecast.

(c) Calculate the Net Present Value of the ‘Mega Wash’ Lifecycle. Using 15% cost of capital:

(d) Comment on the viability of proceeding with the ‘Mega Wash’ and its effect on the yearly residual income target.

(e) Discuss how the information provided by the calculations in parts a–c can be used in the future strategic decisions of the company.

You will submit a proposed company/business for your project for approval. This can be any organization that would benefit from a marketing plan. Your team will assume the role that you have been hired to create a marketing plan for this organization. This organization is now your client. The first group assignment will be a written document, not to exceed two pages (single-spaced), providing the following information:

 Group Members  Business Name  Product/Service Description  Information Resources (i.e., identify your personal contacts with the business or the sources of the publicly available information)  Marketing Objective (S.M.A.R.T)  The Focus of the Plan (e.g., will your plan focus on improving a specific product or bringing an existing product to a new target market?)

Tokyo AFM immediately expensed incremental insurance contract acquisition costs related directly to the signing of the contract. The company’s accountants argued that this treatment was required in order to be consistent with the company’s premium revenue recognition policy. For example, on June 30, 2001, a policyholder paid an up-front ¥210,000 premium for a two-year property insurance contract for her Tokyo apartment. The contract was based on a product called “Home Umbrella.” It covered a variety of casualty losses, and the company sold it exclusively to individual residential customers.

The principal incremental contract acquisition costs were:
a. A ¥50,000 commission fee paid to the agent who had worked directly with the policyholder.  The fee was due to the agent when the policyholder signed the contract and was paid immediately upon signing.
b. A ¥20,000 cost of marketing efforts incurred over the past six months to promote Home Umbrella through broad-based advertising (50%) and targeted phone calls (50%) to existing Tokyo AFM customers as part of a cross-selling strategy. The policyholder, who had just bought her apartment, was already using Tokyo AFM for her car liability insurance.

Question Would you capitalize any of the above acquisition costs, or would you expense them immediately? If you were to capitalize the costs, over what period would you amortize them?

Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:

1. Rebuilt and delivered five pianos in January to customers who paid $19,000 in cash.
2. Received a $600 deposit from a customer who wanted her piano rebuilt.
3. Rented a part of the building to a bicycle repair shop; received $850 for rent in January.
4. Received $7,200 from customers as payment on their accounts.
5. Received an electric and gas utility bill for $400 to be paid in February.
6. Ordered $960 in supplies.
7. Paid $2,300 on account in January.
8. Received from the home of Stacey Eddy, the major shareholder, a $920 tool (equipment) to use in the business in exchange for 100 shares of $1 par value stock.
9. Paid $16,500 in wages to employees who worked in January.
10. Declared and paid a $2,200 dividend (reduce Retained Earnings and Cash).
11. Received and paid cash for the supplies in (f).

. Enter the following transactions for January of the second year into the T-accounts, using the letter of each transaction as the reference:

2014 I 31 2017 I 69 II 24 II 54 III 23 III 46 IV 16 IV 32 2015 I 42 2018 I 82 II 35 II 66 III 30 III 51 IV 23 IV 38 2016 I 53 2019 I 91 II 45 II 72 III 39 III 59 IV 27 IV 41 Create a multiple regression equation incorporating both a trend (t=0 in 2013: IV) and dummy variables for the quarters. Let the first quarter represent the reference (or base) group. Complete (e) thru (h) using your results. This is a computer deliverable. (e) Test to see if there is an upward trend in new customers. Use alpha = 0.01. (f) Test to see if the model has explanatory power. Use alpha = 0.05. (g) Forecast the number of new customers in the first and second quarters of 2020. (h) Test for the existence of first order autocorrelation, use alpha = 0.05. The calculated dw = 1.19.

Val’s Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2018, follows, along with information about selected accounts.