Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017 DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump (Links to an external site.)Links to an external site. and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist (Links to an external site.)Links to an external site. who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back (Links to an external site.)Links to an external site. overseas manufacturing jobs. But deep (Links to an external site.)Links to an external site.economic (Links to an external site.)Links to an external site. and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses (Links to an external site.)Links to an external site.China of stealing jobs (Links to an external site.)Links to an external site., those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists (Links to an external site.)Links to an external site. at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.”

Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor

By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017

DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back overseas manufacturing jobs. But deep and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses China of stealing jobs those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.

Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for $1,600,000 on January 1, 2017, when Sexton Company's retained earnings were $800,000. On January 1, 2019, Prout Company sold fixed assets to Sexton Company for $360,000. These assets were originally purchased by Prout Company for $400,000 on January 1, 2009, at which time their estimated depreciable life was 25 years. The straight‐line method of depreciation is used.

On December 31, 2020, the trial balances of the two companies were as shown here:

Required:

1. Prepare a consolidated statements workpaper for the year ended December 31, 2020.
2. Assuming that on January 1, 2021, Sexton Company sells the fixed assets purchased from Prout Company to a party outside the affiliated group for $300,000:
   1. Prepare the entry that would have been entered on the books of Sexton Company to record the sale.
   2. Prepare entries for the December 31, 2021, consolidated statements workpaper necessitated by the sale of the assets.
   3. Prepare any workpaper entries that will be needed in the December 31, 2022, consolidated statements workpaper in regard to these fixed assets.

The hospital’s board of directors had hired a consulting firm to review the quality of patient care being delivered. Following a 2-week review, the consultants presented Nathan, the hosital’s CEO and his leadership group, with a verbal report. During the consultant’s exit review, Nathan appeared somewhat agitated by the report as he sat restlessly in his seat. When the written preliminary report listing the hospital’s deficiencies was presented to Nathan following the verbal report, he abruptly stood up and said, “This is not just about the hospital! This is about my job!” His managers then rose up and followed the CEO out of the room, without looking back—no goodbyes, just angry and disgruntled. In this case, the CEO did not accept the consultant’s report.

Discussion

1.Assuming the board became aware of the CEO’s parting comments, discuss what action(s), if any, the board should consider taking.

2.Knowing the board hired the consultants, how would you have reacted to the consultant’s report?

American customer satisfaction index: Starbucks in the U.S. 2006-2016

This statistic shows the American customer satisfaction index scores of Starbucks in the United States from 2006 to 2016. Starbucks had an ACSI score of 75 in 2016. Just over 50 percent (around 7,880) of all Starbucks stores were company-operated stores, from which Starbucks generates around 79 percent of its revenue. Around 5,292 stores are licensed stores. Starbucks, which became a publicly traded company on June 26, 1992, generated around 21.32 billion U.S. dollars in revenue in the 2016 fiscal year. In its company-operated stores Starbucks generates 74 percent of revenue from the sale of beverages, 19 percent from food sales and three percent from the sale of packaged and single serve coffees. Another four percent of retail sales are attributable to coffee-making equipment and other merchandise. The United States is Starbucks’ biggest and most important market. In 2016, revenues from Starbucks Americas segment amounted to more than 14 billion U.S. dollars. The Americas segment comprises over 13,000 stores in the U.S., Canada, Mexico, Puerto Rico, Brazil Chile and other American countries with around 86 percent of those stores located in the United States. 1. Plot this set of data as a scatterplot in excel. 2. Find the correlation coefficient. 3. Is it positive or negative? 4. What does the sign tell us? 5. What does the correlation imply about the relationship between the time and the satisfaction? 6. Is the correlation significant? Why or why not? (Answer in 1-2 complete sentences.) (Use the Pearson calculator). 7. Draw the trendline in excel. Can the regression line be used for prediction? No, it is too weak. Insert excel graph here:

Question 4 Amy Dyken, controller at Marigold Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Marigold’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.

Marigold Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020

Long-term debt Notes payable, 10% $1,020,000

8% convertible bonds payable 5,080,000

10% bonds payable 6,110,000

Total long-term debt $12,210,000

Shareholders’ equity Preferred stock, 6% cumulative, $50 par value, 98,000 shares authorized, 24,500 shares issued and outstanding $1,225,000

Common stock, $1 par, 10,200,000 shares authorized, 1,020,000 shares issued and outstanding 1,020,000

Additional paid-in capital 3,990,000

Retained earnings 5,900,000

Total shareholders’ equity $12,135,000

The following transactions have also occurred at Marigold

. 1. Options were granted on July 1, 2019, to purchase 200,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share.

2. Each bond was issued at face value. The 8% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.

3. The preferred stock was issued in 2019.

4. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.

5. The 1,020,000 shares of common stock were outstanding for the entire 2020 fiscal year.

6. Net income for fiscal year 2020 was $1,530,000, and the average income tax rate is 20%.

For the fiscal year ended June 30, 2020, calculate the following for Marigold Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)

(a) Basic earnings per share.

(b) Diluted earnings per share.

Amy Dyken, controller at Marigold Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Marigold’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.

The following transactions have also occurred at Marigold.

For the fiscal year ended June 30, 2020, calculate the following for Marigold Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)

(a) Basic earnings per share.

(b) Diluted earnings per share.

Amy Dyken, controller at Waterway Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Waterway’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.

Waterway Pharmaceutical Industries
Selected Balance Sheet Information
June 30, 2020
Long-term debt      
Notes payable, 10% $990,000
8% convertible bonds payable       5,030,000
10% bonds payable 5,880,000
Total long-term debt $11,900,000
       
Shareholders’ equity      
Preferred stock, 5% cumulative, $50 par value, 107,000 shares authorized, 26,750 shares issued and outstanding $1,337,500
Common stock, $1 par, 9,800,000 shares authorized, 980,000 shares issued and outstanding 980,000
Additional paid-in capital 3,940,000
Retained earnings 6,110,000
Total shareholders’ equity $12,367,500

The following transactions have also occurred at Waterway.

1.       Options were granted on July 1, 2019, to purchase 190,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share.
2.       Each bond was issued at face value. The 8% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.
3.       The preferred stock was issued in 2019.
4.       There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.
5.       The 980,000 shares of common stock were outstanding for the entire 2020 fiscal year.
6.       Net income for fiscal year 2020 was $1,490,000, and the average income tax rate is 20%.

For the fiscal year ended June 30, 2020, calculate the following for Waterway Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)

(a) Basic earnings per share.

Basic earnings per share      
$ (?)

(b) Diluted earnings per share.

Diluted earnings per share      
$ (?)