1. Make CVP Calculations for the Baseline Case

1. Prepare a contribution margin income statement (also called a variable-costing income statement) for the manufacturing company for the upcoming year. Examples of contribution income statements are on page 79, Exhibit 3-1 of the Datar and Rajan textbook and in the Chapter 3 (Datar and Rajan) course notes. Create this statement below the baseline case parameters in the Excel file you download. Key in proper headings.

Check figure: Operating profit (operating income) of $1,461,307.

2. Compute the company’s contribution margin per unit and contribution margin percentage for the upcoming year. The contribution margin percentage is calculated as contribution margin per unit / selling price per unit or as total contribution margin / total revenue. Make these calculations below your income statement. Clearly label these calculations.
3. Calculate the company’s breakeven point in units for the upcoming year. Make this calculation below your contribution margin calculations. Use Excel’s “round” function to round up to the nearest whole number. To do this, move your curser to the cell beside the decimal number and key in the following formula: =ROUNDUP(cell reference,0). The italicized cell reference means you need to key in the cell where the decimal number is located (e.g., F12). The number 0 means zero decimal places. Clearly label this calculation.
4. Calculate the company’s breakeven point in sales dollars for the upcoming year. Make this calculation below your breakeven calculation in units and use the company’s contribution margin percentage to make this calculation. Clearly label this calculation.

. 2. Complete Four Scenarios (What-if Analyses)

You want to determine whether the following four suggestions (i.e., e, f, g, h) would improve the company’s performance. Determine the effects of each suggestion on operating income, contribution margin per unit, contribution margin percentage, breakeven point in units, and breakeven point in sales dollars. Calculate the effects of each suggestion independently of the other suggestions. In other words, use the original baseline case data and make the first change (e); use the original baseline case data and make the second change (f); and so on. However, do not overwrite the original baseline case.

1. Put all personnel on commission. This action would affect the sales salaries and commissions expense by eliminating the fixed portion and by increasing the variable portion by $8.10 per unit. Sales would increase by 4,500 units.
2. Redesign the package for the product. This would decrease the variable direct materials cost by $0.45 per unit but would increase the fixed factory overhead by $157,500.
3. Launch a new advertising campaign. This would increase fixed advertising expense by $450,000 but would increase sales volume by 4,300 units.
4. Reduce the selling price of the product by $16.20 per unit. This would increase sales volume by 3,500 units.
5. Write a memo, explaining why each suggestion should or should not be accepted. Create your memo in Word, not Excel. Use proper memo format. Word has a memo template (FILE | NEW | type in ‘memo’ in the ‘search for online templates’ box).

Suppose that the USDA expects that 53.3 billion bushels of soybeans will be produced this year at a price of $8.50/bushel. Assume that the elasticity of supply is 0.3 and that the elasticity of demand is -0.2 (both very inelastic).

1. Derive the linear supply and demand curves for this equilibrium.

2. What quota is required to increase the soybean price to $9.25/bushel? And what is the economic cost of this solution (i.e., what is the change in producer surplus and change in consumer surplus, and what is the sum of these changes)?

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages.

Income Statement

Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. Round percentages to one decimal place. Enter all amounts as positive numbers. Percentage sign will appear automatically.

Data from a recent year showed that 69​% of the tens of thousands of applicants to a certain program were accepted. A company that trains applicants claimed that 186 of the 250 students it trained that year were accepted. Assume these trainees were representative of the population of applicants. Has the company demonstrated a real improvement over the​ average? Complete parts a through c below.

​a) What are the​ hypotheses?

Which hypotheses below will test if the company demonstrated improvement over the​ average?

A.

Upper H 0H0​:

pequals=0.690.69

Upper H Subscript Upper AHA​:

pnot equals≠0.690.69

B.

Upper H 0H0​:

pequals=0.690.69

Upper H Subscript Upper AHA​:

pless than<0.690.69

C.

Upper H 0H0​:

pequals=0.74400.7440

Upper H Subscript Upper AHA​:

pless than<0.74400.7440

D.

Upper H 0H0​:

pequals=0.690.69

Upper H Subscript Upper AHA​:

pgreater than>0.690.69

E.

Upper H 0H0​:

pequals=0.74400.7440

Upper H Subscript Upper AHA​:

pgreater than>0.74400.7440

F.

Upper H 0H0​:

pequals=0.74400.7440

Upper H Subscript Upper AHA​:

pnot equals≠0.74400.7440

​b) Verify that the conditions are satisfied and find the​ P-value.

Which assumptions and conditions below are​ met? Select all that apply.

A.

The​ success/failure condition is met.

B.

The independence assumption is met.

C.

The​ 10% condition is met.

D.

The randomization condition is met.

What is the​ P-value?

​P-valueequals=nothing

​(Round to four decimal places as​ needed.)

​c) Would you recommend this company based on what you see​ here?

A.The​ P-value provides

insufficient evidenceinsufficient evidence

that the program is successful.

B.The​ P-value provides

some indicationsome indication

that the program is successful.

C.The​ P-value provides

strong evidencestrong evidence

that the program is successful.

D.

Inference is not possible since the assumptions and conditions are not met.

what is the approximate future value of $100 to be received in one year, $200 in two years, and $300 in three years, a 5% annual interest?

Company sold bonds at the beginning of the year on June 1,2014. The bond has the face value of $2,000 and payment of $50 , each due on December 1 and June 1. The contract or stated rate =5%. The bond sold on the market on June 1.2014 to yield investors a 6% annual rate of return. New bond -5years. 6%yield. Coupon-5%. (Only discount not premium). Prepare an amortization table for the bond.

We suppose that the number of errors Z within the first year for a fabrication is Poisson distributed with waiting value 2.5. We also know that the number of errors Z wont be overrided or a replacement is needed for the fabrication.

a. Find the probabilility that within that year the errors will occur within the probability ?? = ?? (1 ≤ ?? <5).

b. The manufacturer wants to replace a maximum. 10% of all of the products. What is the minimum errors Z when this occurs?

The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow.

The following transactions and events affected its equity during the year.

1a. How many common shares are outstanding on each cash dividend date?

Jan 5: Apr 5: July 5: Oct 5:

1b. What is the total dollar amount for each of the four cash dividends?

Jan 5: Apr 5: July 5: Oct 5:

1c. What is the amount of retained earnings transferred to pain in capital accounts for the stock dividend?

1d. How much net income did the company earn this year?

What is the present value of the following annuity?

$759 every year at the end of the year for the next 6 years, discounted back to the present at 17.51 percent per year, compounded annually?

a. The board of directors of Moon plc decided at present (year 0) to dissolve the company in two years (year 2). The company has 20,000 shares in circulation and the cost of capital is 9 percent. This is an all-equity firm and the Chief Financial Officer knows with certainty the future cash flows. The company expects to receive $10,600 in year 1 and another $108,000 in year 2. All cash flows received by the company will be distributed as dividends.
Calculate the current share price ignoring taxes. Suppose you own 200 shares in Moon plc and your preference is to have equal dividends in year 1 and year 2. Explain how you can achieve this by creating homemade dividends. Show how your desired position can be achieved. Calculate the present value of your cash flow under the original scenario and also the case of equal dividends.

b. Next, assume you desire to receive only $3 dividend per share in year 1. Using the information in part (a), calculate your homemade dividend in year 2 and the present value of your new cash flow. Plot and explain all three options.