1. In both perfect competition and monopolistic competition, in the long run typical firms earn zero economic profit. Which of the market characteristics is most responsible for this zero economic profit?

There are many buyers and sellers in these markets.

There is no government control of price in these market.

Identical (homogeneous) products are sold in these markets.

Differentiated products are sold in these markets.

There are no significant barriers to entry to these markets.

2.

If a firm in a perfectly competitive market shuts down in the short run, it will

have total revenue greater than its fixed costs.

have to do this because the price is more than the AVC.

lose money equal to its total fixed costs.

have no losses.

still be following the MC=MR rule.

3. Which of the following is true of the cost of production under the rule of “ceteris paribus?”

I.a firm produces goods by combining land, labor, natural resources and entrepreneurship.
II. In the short run at least one factor of production is fixed.
III. When one factor of production is fixed, the firm will experience marginal diminishing returns.
IV. With good management, all costs of production can be controlled and the firm will always experience long run profits.

IV only

I only

II and III

II and IV

I, II and IV

I, II and III

4. The widget industry has the following characteristics: over 600 producers with no one producer furnishing more than 0.5% of the industry’s total output; widgets produced by different firms are identical and there are no brands or labels on the product; there are no significant barriers to entry to the widget market; there is no economic profit in the long run. The widget market is best described as what type of market?

Perfect competition

Monopolistic competition

Differentiated oligopoly

Undifferentiated oligopoly

Pure monopoly

A perfect competitive firm has marginal revenue of $45 per unit. Which of the following is true if the firm can produce 650 units for a total cost of $2585, 651 units for a cost of $2630 and 652 units for a cost of 2685?

the firm should produce at 650 units

the firm should produce at 651 units

the firm should produce at 652 unit

s the firm should shut down because its losing money at any unit

the firm should increase its price at 651 units

The daily demand for hotel rooms on Miami in Florida is given by the equation Qd= 150,000 – 275P. The daily supply of hotel rooms on Miami is given by the equation Qs= 25,000 +312.5P. Diagram these demand and supply curves in the price. What is the equilibrium price and quantity of hotel rooms on Miami?

● The Faculty & Staff parking permit allows a car to park in YELLOW and GREEN slots. User

can purchase multiple Faculty & Staffparking permit.

● The Student parking permit allows a car to park in GREEN slots. User can purchase multiple

student parking permit.

● The Resident parking permit allows a car to park in ORANGE and GREEN slots. User can add

a premium package to this kind of permit that allows one of user’s friend to share this permit, but

each user can only purchase one Resident parking permit.

● The Visitor parking permit allows a car to park in ORANGE, YELLOW and GREEN slots.

The permit is only valid for one day and user can only purchase one Visitor parking permit.

User can purchase more than one type of ticket at a time, as many Faculty & Staff and student as

they choose.

Your goal is to write a program that sells the permits and using the existing functions in

hw4a.cpp.

//---------------------------------------------------------------------------
//      This is the main program that you need to write
//---------------------------------------------------------------------------
int main ()
{
   // Variable Declarations
   char Choice = '\0';   // what the user enters
   int NumPermits = 0;   // how many permits they want to buy
   int TotalPermits = 0; // total number of permit sold so far
   float Price = 0.0;    // the price of one set of permit
   float TotalPrice = 0.0;    // the total price of all permits
   char ExitChoice = 'N'; //whether or not the user wants to exit


   // Print your name and ID
   cout << "Name: \n"
        <<"ID: \n\n";
                
   // Loop until the user is done
   
      // Print the main menu describing the tickets offered

           
      // Ask the user type what permit they want to purchase next
  
           
      // If the user selects Faculty&Staff parking permit calculate the price of tickets
     
           
      // If the user selects Student parking permit be sure to note the reference parameters
   

      // If the user selects Resident parking permit, ask if they want the premium package
     
           
      // If the user selected visitor parking permit, make sure they decided to order them

           
      // Add the permit price to a running total 
          
          
          //Add the number of permits to a running total  
  
  
          // Ask if they want to continue (Y or N)

          
      // When the loop is done
      // Print out the total number of permits sold, and the amount of all the permits, with a $.

   
   return 0;
}

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Basic Dominator Total

Units produced 1,000 450 1,450

Machine-hours 3,000 2,800 5,800

Direct labor-hours 2,900 2,300 5,200

Direct materials costs $ 8,200 $ 3,350 $ 11,550

Direct labor costs 58,700 31,300 90,000

Manufacturing overhead costs 183,560

Total costs $ 285,110

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.

Predetermined overhead rate __________% per direct labor hour

Linenpress Limited manufactures pillowcases which it supplies to a major hotel chain. It uses a just-in-time system and holds no inventories. The standard cost for the cotton which is used to make the pillowcases is £5 per m2. Each pillowcase uses 0.5m2 of cotton and production levels for November were as follows: Budgeted production Actual production (units) (units) Pillowcases 190,000 180,000 The actual cost of the cotton in November was £5·80 per m2 and 95,000m2 was used to make the pillowcases. The world commodity prices for cotton increased by 20% in the month of November. At the beginning of the month, the hotel chain made an unexpected request for an immediate design change to the pillowcases. The new design required 10% more cotton than previously. It also resulted in production delays and therefore a shortfall in production of 10,000 pillowcases in total that month. The production manager at Linenpress is responsible for all buying and any production issues which occur, although he is not responsible for the setting of standard costs. Part A

Calculate the following variances for the month of November:

Material price planning variance;

Material price operational variance;

Material usage planning variance;

Material usage operational variance.

Part B Discuss the performance of the production manager for the month of November in the context of your findings in Part A.

Part C Explain how the use of planning and operational variances can lead to more effective performance evaluation in an organisation.

Central Adventures

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties, and needs some advice from her accountant on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Central Funland, Central Waterworld, and Central Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Each park manager meets with the CEO at least once annually to review their performance, as measured by their park’s ROI. The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the required rate.

Central Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood rollercoaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction.

Central Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same pay rate, which he says he will accept if his performance is not appropriately acknowledged.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Central Adventures has a $86,000 mortgage payment on the land and buildings for Treetops, which would still need to be paid if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a required rate of return of 12 percent (set at the company’s weighted-average cost of capital) and are subject to 18% income taxes.

Fatima needs to see this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

a. Create a multilevel income statement for Central Adventures.

b.   Calculate the current annual ROI, residual income and EVA for the three parks.

c. Did Janet Lieberman (the Funland park manager) make the ‘right’ decision (i.e., was it in Central Adventure’s overall best interest for Funland to reject the new rollercoaster)? Explain your answer. Provide the appropriate financial analysis(es) to support your conclusion.

d.   Is David Copperfield’s (the Waterworld park manager) complaint valid? Or would a different performance metric tell the same story?

e. Provide a recommendation on whether to close Treetops. Provide the appropriate financial analysis to support your conclusion.

f.    Provide a recommendation on a different allocation base for corporate overhead.

--------Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties, and needs some advice from her accountant on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Central Funland, Central Waterworld, and Central Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Each park manager meets with the CEO at least once annually to review their performance, as measured by their park’s ROI. The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the required rate.

Central Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood rollercoaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction.

Central Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same pay rate, which he says he will accept if his performance is not appropriately acknowledged.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Central Adventures has a $86,000 mortgage payment on the land and buildings for Treetops, which would still need to be paid if the park is closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a required rate of return of 12 percent (set at the company’s weighted-average cost of capital) and are subject to 18% income taxes.  

Fatima needs to see this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

a.   Create a multilevel income statement for Central Adventures.

b.   Calculate the current annual ROI, residual income and EVA for the three parks.

c.   Did Janet Lieberman (the Funland park manager) make the ‘right’ decision (i.e., was it in Central Adventure’s overall best interest for Funland to reject the new rollercoaster)? Explain your answer. Provide the appropriate financial analysis(es) to support your conclusion.

d.   Is David Copperfield’s (the Waterworld park manager) complaint valid? Or would a different performance metric tell the same story?

e.   Provide a recommendation on whether to close Treetops. Provide the appropriate financial analysis to support your conclusion.

f.    Provide a recommendation on a different allocation base for corporate overhead.  

1. Investment Timing Option: Decision-Tree Analysis

Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $23 million. Kim expects the hotel will produce positive cash flows of $3.68 million a year at the end of each of the next 20 years. The project's cost of capital is 13%.

a) What is the project's net present value? Negative value, if any, should be indicated by a minus sign. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places.
$     million

b) Kim expects the cash flows to be $3.68 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $2.3 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $5.06 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $23 million. Assume that all cash flows are discounted at 13%. Use decision-tree analysis to determine whether Kim should proceed with the project today or wait a year before deciding.
-Select-It makes sense to proceed with the project today OR It makes sense to wait a year before deciding.

2. Investment Timing Option: Option Analysis

Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $20 million. Kim expects the hotel will produce positive cash flows of $3 million a year at the end of each of the next 20 years. The project's cost of capital is 13%.

Kim expects the cash flows to be $3 million a year, but it recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $2.2 million. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be $3.8 million. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $20 million. Assume that all cash flows are discounted at 13%. Use the Black-Scholes model to estimate the value of the option. Assume that the variance of the project's rate of return is 0.0687 and that the risk-free rate is 5%. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places.

Use computer software packages, such as Minitab or Excel, to solve this problem.

$   million

{I tried looking at other similar problems on here and replacing them with my numbers but i keep getting the wrong answer. Please help.}

Create an excel workbook for the following questions. Answer these questions under your Solver work for each respective problem.

1. Devos Inc. is building a hotel. It will have 4 kinds of rooms: suites where customers can smoke, suites that are non-smoking, budget rooms where the customers can smoke, and budget rooms that are non-smoking. When we build the hotel, we need to plan for how many rooms of each type we should have. The following are requirements for the hotel:

1. We want to figure out how many rooms of each type to build based on maximizing revenue if we fill up the hotel. We expect to charge $190 for a suite that is non-smoking and $140 for a budget room that is non-smoking. Smoking room customers for both suites and budget rooms will have to pay an additional $20 per night.
2. We can spend up to $7,500,000 on construction of our hotel. The cost to build a non-smoking budget room is $12,000. The cost to build a non-smoking suite is $15,000. It is $3,000 additional for a smoking room of either type for smoke detectors and sprinklers.
3. We require that the number of budget rooms be at least 1.5 times the number of suites, but no more than 3 the number of suites.
4. There needs to be at least 80 suites, but no more than 200.
5. Industry trends recommend that smoking rooms should be less than 50% of the non-smoking room and in addition, we require our builder gives us at least 4 smoking rooms.

Answer the following using your Solver answers:

1. How many of each room type should be built, and what would the revenue be for a night when our hotel was fully booked?
2. Without re-running Solver, what happens to our revenue if we get an additional $1,500,000 for building? Explain in words how you got this answer without re-running solver. Over what amount of construction costs can you use this procedure?
3. Over what range of room price can our budget non-smoking rooms vary over for us to get the same answer for the quantity of each type of room?

Question: In this case we are asked to explore the appropriate application of Generally Accepted Accounting... In this case we are asked to explore the appropriate application of Generally Accepted Accounting Principles pertaining to Capitalization of Costs vs. the Expensing of Costs....A COST represents the value exchanged for the ASSET or the benefit received from monies disbursed.....now....how do we interpret the benefits received.....are there future benefits??? or Are the benefits concurrently expired upon acquisition???? So this becomes the basis of many issues pertaining to the accurate interpretation of a guideline in concert with the business transaction under analysis.....It is our responsibility to ensure we meet the needs of our clients without undermining the initial intention of the guideline....So then we are faced with issues pertaining to LOOPHOLES....Is it appropriate for us...as ethical accounting professional, to attempt to find creative ways to essentially circumvent the regulatory restriction.....Are we able to meet both the needs of our clients and the integrity of our profession???? So now you are asked to interpret an issue related to Capitalization vs Expensing for the TRUMP International Corp.....Craft your response carefully including all of the resources you investigated as you crafted your response. Trump International Construction Company is building a hotel for speculative purposes. That is, the Company has not yet found a buyer for the hotel, but expects to do so within a few months. Trump International expects to spend about another two years to complete construction of the hotel borrows $25,000,000 at 5.5% on Jan 1, 2017 and commences building the hotel. The land was purchased in 2016 for $5,000,000 and has property taxes of $4,000,000 per year. Trump incurs building and construction costs of $12,000,000 for 2017 and 2018. Trump International seeks advice from you, as their accountant, if the interest on bank loan and property taxes associated with this construction site should be capitalized or expensed. Required: Conduct research on the fundamentals of reporting a Cost as an Asset (Capitalized) vs. an Expense and prepare a memo advising the client of your advice. What should the value of the Hotel be reported on the Financial Statements at Dec 31, 2017? Is it relevant that the hotel is being constructed on speculation rather than for a particular customer? Include the regulatory requirements you researched in order to craft your answer and site your specific GAAP, FASB, IRS and or other Regulatory Pronouncements you consulted.