Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Beech’s managers have made the following additional assumptions and estimates:

Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, respectively.

All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

Monthly selling and administrative expenses are always $54,000. Each month $7,000 of this total amount is depreciation expense and the remaining $47,000 relates to expenses that are paid in the month they are incurred.

The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

Prepare a balance sheet as of September 30.

Amara Ltd was founded on 1st January 2019. Amara sells bed frames to customers. The company has adopted a periodic inventory system together with the average cost cost-flow assumption (AVCO) to determine the Cost of Goods Sold for the year. The company’s inventory transactions for its first year of operation to December 31st, 2019 are as follows:

Required:

(a) What amount will Amara Ltd report as its Inventory balance in the Current Asset section of its Balance Sheet? What amount will Amara report as Cost of Goods Sold for the year ended 2019 financial year? (Show all workings)

(b) If Amara Ltd had adopted First-In First-Out (FIFO) as its cost flow assumption on 1st January 2019, what Cost of Goods Sold figure would have been reported in its Statement of Financial Performance for the 2019 financial year? (Show all workings)

(c) Management is aware of another cost-flow assumption; Last-In First-Out (LIFO). Which of the three cost-flow assumptions; AVCO, FIFO or LIFO will yield the highest Gross Profit Margin for the 2019 year if 80% of Sales are on credit?

There is no specific methods required.

FIFO Perpetual Inventory

The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account.

3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of June 30.
5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?

Open Economy – Two Large country problem

USA Initial Conditions

C^d = 300 + 0.4(Y-T) – 200r^w
I^d = 120 – 200r^w
Y = 1000
T = 200
G =275

China Initial Conditions

C^d_F = 480 + .4(Y_F – T_F) – 300r^w
I^d_F = 255 – 300r^w
Y_F = 1500
T_F = 300
G_F = 300

a) (5 points) What is the equilibrium real interest rate that clears the international goods market? Show all work.

b) (5 points) Compare the level of absorption in each country to the income generated in each country. Is the US spending beyond its means? Is China the lender? Explain using real numbers! Draw two diagrams side by side, with the USA on the left and China country on right. Locate this initial equilibrium as points A on both diagrams (there are four point A’s, two on each diagram). Be sure to label diagrams completely labeling the trade deficit/surplus on each graph, etc. (10 points for correct and completely labeled diagram)

c) (5 points) Now let the US conduct expansionary fiscal policy so that G rises by 50 to 325. We assume that the government spending multiplier (ΔY/ΔG) is 1.5, consistent with the multiplier estimated by the White House economists. Re-calculate the new equilibrium real interest rate that clears the international goods market and the associated new levels of desired savings and investment for each country and label these new equilibrium points on your existing diagram as point B. Please show all work.

d) (5 points) What has happened to the US’s trade balance and why?

e) (5 points) Are these results consistent with the US going to AA, the proposition put forth by Fareed-Zakaria in the Colbert clip? Why or why not?  

f) (10 points) Explain what would happen to the trade balance for the US if China experiences economic growth (i.e., China's output rises), all else constant. Please be specific as to what would happen to US absorption and why. Note, this discussion is worth 10 points. Feel free to support your answer with a diagram or two

Open Economy – Two Large country problem

USA Initial Conditions

C^d = 310 + 0.4(Y-T) – 200r^w
I^d = 120 – 200r^w
Y = 1000
T = 200
G =275

China Initial Conditions

C^d_F = 480 + .4(Y_F – T_F) – 300r^w
I^d_F = 255 – 300r^w
Y_F = 1500
T_F = 300
G_F = 300

a) (5 points) What is the equilibrium real interest rate that clears the international goods market? Show all work.

b) (5 points) Compare the level of absorption in each country to the income generated in each country. Is the US spending beyond its means? Is China the lender? Explain using real numbers! Draw two diagrams side by side, with the USA on the left and China country on right. Locate this initial equilibrium as points A on both diagrams (there are four point A’s, two on each diagram). Be sure to label diagrams completely labeling the trade deficit/surplus on each graph, etc. (10 points for correct and completely labeled diagram)

c) (5 points) Now let the US conduct expansionary fiscal policy so that G rises by 300 to 575. We assume that the government spending multiplier (ΔY/ΔG) is 1.5, consistent with the multiplier estimated by the White House economists. Re-calculate the new equilibrium real interest rate that clears the international goods market and the associated new levels of desired savings and investment for each country and label these new equilibrium points on your existing diagram as point B. Please show all work.

d) (5 points) What has happened to the US’s trade balance and why?

e) (5 points) Are these results consistent with the US going to AA, the proposition put forth by Fareed-Zakaria in the Colbert clip? Why or why not?  

f) (10 points) Explain what would happen to the trade balance for the US if China experiences a recession (i.e., China's output falls), all else constant. Please be specific as to what would happen to US absorption and why. Note, this discussion is worth 10 points. Feel free to support your answer with a diagram or two.

Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this?

Question 6 options:

Question 7 (1 point)

If a country's saving rate increases, what happens in the long run?

Question 7 options:

Question 8 (1 point)

Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has less capital, and so less real GDP per person. Suppose that both increase their saving rate from 3 percent to 4 percent. What will happen in the long run?

Question 8 options:

Question 9 (1 point)

What would most likely happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Question 9 options:

Question 10 (1 point)

What would an increase in the budget deficit most likely cause?

Question 10 options:

1. Suppose the amount of money UCLA students spend on movies during a one month period observes normal distribution. A sample is taken containing monthly movie spending in dollars for several UCLA students as 66.72, 50.23, 40.57, 45.53, 60.45, 70.85, 57.49, and 53.46. Round your numbers to two decimal places. All the calculation should be preceded with the formula used.

a. Calculate the sample mean, sample standard deviation, and standard error.

b. Estimate the average monthly movie spending by all UCLA students with a 95% confidence interval.

c. From this sample, can we conclude that the average monthly movie spending by SIUE students is lower than 63.45 dollars at the 0.01 level of significance? (Show 7 steps)

d. Suppose the population standard deviation is known with a value of 7.14. Would the conclusions in b and c change? If yes, what would be the new conclusions? ? (Show 7 steps)

1. Suppose the amount of money UCLA students spend on movies during a one month period observes normal distribution. A sample is taken containing monthly movie spending in dollars for several UCLA students as 66.72, 50.23, 40.57, 45.53, 60.45, 70.85, 57.49, and 53.46. Round your numbers to two decimal places. All the calculation should be preceded with the formula used.

a. Calculate the sample mean, sample standard deviation, and standard error.

b. Estimate the average monthly movie spending by all UCLA students with a 95% confidence interval.

c. From this sample, can we conclude that the average monthly movie spending by SIUE students is lower than 63.45 dollars at the 0.01 level of significance? (Show 7 steps)

d. Suppose the population standard deviation is known with a value of 7.14. Would the conclusions in b and c change? If yes, what would be the new conclusions? ? (Show 7 steps)

1. Suppose the amount of money UCLA students spend on movies during a one month period observes normal distribution. A sample is taken containing monthly movie spending in dollars for several UCLA students as 66.72, 50.23, 40.57, 45.53, 60.45, 70.85, 57.49, and 53.46. Round your numbers to two decimal places. All the calculation should be preceded with the formula used.

a. Calculate the sample mean, sample standard deviation, and standard error.

b. Estimate the average monthly movie spending by all UCLA students with a 95% confidence interval.

c. From this sample, can we conclude that the average monthly movie spending by SIUE students is lower than 63.45 dollars at the 0.01 level of significance? (Show 7 steps)

d. Suppose the population standard deviation is known with a value of 7.14. Would the conclusions in b and c change? If yes, what would be the new conclusions? ? (Show 7 steps)

1. Suppose the amount of money UCLA students spend on movies during a one month period observes normal distribution. A sample is taken containing monthly movie spending in dollars for several UCLA students as 66.72, 50.23, 40.57, 45.53, 60.45, 70.85, 57.49, and 53.46. Round your numbers to two decimal places. All the calculation should be preceded with the formula used.

a. Calculate the sample mean, sample standard deviation, and standard error.

b. Estimate the average monthly movie spending by all UCLA students with a 95% confidence interval.

c. From this sample, can we conclude that the average monthly movie spending by UCLA students is lower than 63.45 dollars at the 0.01 level of significance? (Show 7 steps)

d. Suppose the population standard deviation is known with a value of 7.14. Would the conclusions in b and c change? If yes, what would be the new conclusions? ? (Show 7 steps)

The Smith family was one of the first to come to the U.S. They had 9 children. Assuming that the probability of a child being a girl is .5, find the probability that the Smith family had: at least 8 girls? at most 7 girls?

The life, in years, of a certain type of electrical switch has an exponential distribution with an average life 2 years. If 100 of these switches are installed in different systems, what is the probability that at most 2 fail during the first year?

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March.

Required:

1. Prepare a flexible budget for March.

2. Prepare a report showing the spending variances for March.

Prepare a flexible budget for March. (Input all amounts as positive values.)

Prepare a flexible budget for March. (Input all amounts as positive values.)

Prepare a report showing the spending variances for March. (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.)