MBA 6300 Case Study No. 2

There are numerous variables that are believed to be predictors of housing prices, including living area (square feet), number of bedrooms, and number of bathrooms. The data in the Case Study No. 2.xlsx file pertains to a random sample of houses located in a particular geographic area.

1. Develop the following simple linear regression models to predict the sale price of a house based upon a 90% level of confidence. Write the regression equation for each model.
   1. Sale price based upon square feet of living area.
   2. Sale price based upon number of bedrooms.
   3. Sale price based upon number of bathrooms.
2. Develop the following multiple linear regression models to predict the sale price of a house based upon a 90% level of confidence. Write the regression equation for each model.
   1. Sale price based upon square feet of living area and number of bedrooms.
   2. Sale price based upon square feet of living area and number of bathrooms.
   3. Sale price based upon number of bedrooms and number of bathrooms.
   4. Sale price based upon square feet of living area, number of bedrooms, and number of bathrooms.
3. Discuss the joint statistical significance of each of the preceding simple and multiple linear regression models at a 90% level of confidence and 95% level of confidence.
4. Discuss the individual statistical significance of the coefficient for each independent variable for each of the preceding simple and multiple linear regression models at a 90% level of confidence and 95% level of confidence.
5. Compare any of the preceding simple and multiple linear regression models that were found to be jointly and individually statistically significant at a 90% level of confidence and select the preferred regression model. Explain your selection using the appropriate regression statistics.
6. Interpret the coefficient for each independent variable (or variables) associated with your selected preferred regression model.
7. Using the preferred regression model, predict the sale price of a house with the following values for the independent variables: 3,000 square feet of living area, 3 bedrooms, and 2.5 bathrooms. (Hint: You should only use the values for those independent variables that are specifically associated with your selected preferred regression model.)

Prepare a single Microsoft Excel file using a separate worksheet for each question and upload your Excel file.

The system will not let me post all of the data needed to answer the question... it says that it is too long . could you save this information so i can add the data ?

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners.

4. The owner of the restaurant is thinking of increasing sales through additional advertising, which she will incur as an administrative expense. The proposed additional advertising campaign will cost $25,000. She anticipates that the additional advertising expense will result in an additional 6 lunches and 3 dinners on average, per day. Illustrate the impact on NOI assuming the changes above (hint: show a revised CM statement). Hint: for this type of ‘whatif’, compare the additional contribution margin impact on NOI given the change in units and change in fixed costs.

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners.

5. In order to increase NOI, the owner of the restaurant is considering adjustments to the quality of food ingredients currently used. Rather than using premium ingredients, use of average quality ingredients would reduce the cost of food by 15%. The owner proposes to not change the current meal pricing. As the consultant, prepare a memo to the owner that presents the pros and cons of this change in operations. What are the potential impacts on revenue, costs, and net operating income may result from this change? The owner does not want to see a decrease in net operating income. Could the owner make this change and absorb a decrease in customers, and how would you demonstrate numerically to support your analysis? What other factors or consequences of this decision should the owner consider besides the financial impact of the change?

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners. As the MBA intern you are to prepare a managerial accounting focused report to the owners of Al Dente's Italian Restaurant, to include the following:

2. Compute the break-even volume of the number of lunches and dinners. Assume that the CM% for each meal category is the same as the average CM% as calculated in #1. Hint: To solve a break even sales mix, use the horizontal formula:

Net operating income = ($Sales – $Variable costs) – $fixed costs

Net operating income = $CM – $fixed costs

At Breakeven, NOI = $0

Therefore, $CM = $ Fixed costs

Now solve for the unit $CM for each item. Let X be the number of dinners, 2X the number of lunches. $CM is the combined total of the $CM for dinners, and the $CM for lunches.

Please answer the following questions based on the Columbia Sportswear Company 2017 10-K.

(Link to the Columbia's 10K: http://files.shareholder.com/downloads/COLM/6230778634x0x977594/E27E55DB-E7E3-4C4A-BA09-B8BB85FB2893/2018_Combined_Shareholder_Letter_and_10-K.pdf)

1. Assets classified as Property, Plant and Equipment can be either acquired for use in operations, or acquired for resale.

a. True

b. False

2. What is the December 31, 2017 balance (in thousands) of Land and Improvements for Columbia Sportswear Company?

a. $21,065

b. $21,862

c. $21,049

d. $20,862

3. What is the December 31, 2017 balance (in thousands) of Furniture and Fixtures for Columbia Sportswear Company?

a. $79,103

b. $93,782

c. $83,613

d. $75,682

4. What is the December 31, 2017 balance (in thousands) of total Accumulated Depreciation for Property, Plant, and Equipment for Columbia Sportswear Company ?

a. $281,394

b. $279,650

c. $408,676

d. $455,811

5. Which depreciation method does Columbia Sportswear Company use?

a. Straight-line method

b. SYD method

c. DDB method

d. Activity Based method

6. Columbia Sportswear Company uses an estimated useful life for land improvements of:

a. 5 years

b. 7 years

c. 10 years

d. 15 years

7. Columbia Sportswear Company depreciates leasehold improvements over:

a. 5 years

b. 15 years

c. The greater of the estimated useful life of the improvement or the remaining term of the lease.

d. The lesser of the estimated useful life of the improvement or the remaining term of the lease.

8. When should long-lived assets be measured for impairment using the Recoverability test?

a. Quarterly

b. Semi-annually

c. Annually

d. When circumstances change indicating a carrying amount may not be recoverable

e. None of the above

9. To perform a Recoverability test for long-lived assets, the asset’s carrying amount is compared to

a. The sum of the expected future net cash flows (discounted) from the use of that asset and its disposition

b. The sum of the expected future net cash flows (undiscounted) from the use of that asset and its disposition

c. The asset’s original historical cost

d. The asset’s fair market value

10. If the Recoverability test indicates an impairment, the loss for an asset held for use is the amount by which the carrying amount of the asset exceeds

a. The book value of the asset

b. The historical cost of the asset

c. The sum of the expected future cash flows (undiscounted) from the use of the asset and its disposition

d. The fair value of the asset

Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2017, when it was acquired at a cost of $39 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2021 (before adjusting and closing entries). What is the appropriate patent amortization expense in 2021? (Do not round your intermediate calculation.)

$21.67 million.

$5.42 million.

$10.83 million.

$4.33 million.

Which of the following is not a change in estimate?

A change in the useful life of a depreciable asset.

A change in the mortality rate used for pension computations.

A change from the cost to the equity method in accounting for investments.

A change in the warranty expense percentage.

Translation of purchase of inventories on credit terms

Stranded Ltd is an Australian company that purchases inventories from Hammers plc,

which is an English company. The following information is relevant to a recent

acquisition of inventories for £300 000 pursuant to a contract with terms including FOB

shipping.

Required

In accordance with AASB 121/IAS 21, prepare all of the entries of Stranded Ltd that relate to the foreign currency purchase of inventories. How would your answer change if the inventories acquired had a net realisable value of £270 000 at 30 June 2017?

Mikkeli OY acquired a brand name with an indefinite life in 2015 for 40,000 markkas. At December 31, 2017, the brand name could be sold for 35,000 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 42,000 markkas, and the present value of this amount is 34,000 markkas. Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for this brand name for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017 and December 31, 2018 conversion worksheet to convert IFRS balances to U.S. GAAP.

Mikkeli OY acquired a brand name with an indefinite life in 2015 for 43,000 markkas. At December 31, 2017, the brand name could be sold for 37,600 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 45,200 markkas, and the present value of this amount is 36,600 markkas.

Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes.

Required:

1. Prepare journal entries for this brand name for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP.
2. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017 and December 31, 2018 conversion worksheet to convert IFRS balances to U.S. GAAP.

John is looking at several options to fund his son’s 4-year university degree.

The university fees of $45,000 a year will have be paid starting 11 years from today. He is analysing an insurance plan that pays out $45,000 a year for 4 years with the first payout 11 years from today. The insurance plan has several payment options:

Option 1 Pay $60,000 today.

Option 2 Beginning 1 year from today, pay $12,000 a year for the next 8 years.

Option 3 Beginning 1 year from today, make payments each year for the next 8 years. The first payment is $11,000 and the amount increases by 5% each year.

Answer the following questions regarding the options above:

(a) Calculate the present value of each option. Use a 10% discount rate.

(b) Analyse which option John should choose.

(c) If the discount rate is not given to you, what would be an appropriate discount rate to use?