Thirty-one small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5 reported cases of larceny per year. Assume that σ is known to be 40.1 cases per year.

(b) Find a 95% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

Question 1

Alex is a young investor with high risk tolerance level and hopes to earn money as fast as he can. Analyse each of the following plans and evaluate which is the most suitable plan for Alex.

(1) Dollar-cost averaging
(2) Constant-dollar plan
(3) Constant-ratio plan
(4) Variable-ratio plan

Question 2

An investor estimates that next year’s net income for Hilary Pullman Hotel would be RM 8 million. The company has 0.5 million shares outstanding and decided to pay RM 0.5 million to the preferred stockholders from its net income. Listed companies similar to Hilary Pullman Hotel have been recently reported to have an average price/earnings ratio of 4 times. Given the information, calculate the expected price of the stock and evaluate the problems in using Price/earnings ratio method of valuing the shares of a company.

Question 3

Two securities – PohKeong Gold and Mama Care are currently being considered by Jason. He is considering either to invest 100% in PohKeong Gold or building a portfolio that consist of both security – 60% in PohKeong Gold and 40% in Mama Care. The probability distribution of expected returns of these assets are shown in the following table.

State of Economy Probability Return on PohKeong Gold Return on Mama Care
Bear 0.30 3% 2%
Bull 0.70 18% 10%

(i) Calculate the expected return for each of the two alternatives.
(ii) Calculate the standard deviation of returns of the two alternatives.
(iii) Evaluate the investors decisions, based on the above calculations

Question 4

Given the following situations, evaluate in each scenario whether the hypothesis of an efficient capital market of semi-strong form is violated.

(i) Through the introduction of an advanced webinar into the analysis of the past share price movements, a brokerage firm is able to predict price movements are able to earn consistent 1% profit more than normal market returns after adjusted for risk.

(ii) On average, investors in the stock market this year are expected to earn a positive return on their investment. Some investors will earn considerably more than others.

(iii) You have discovered that the square root of any given stock price multiplied by the day of the month provides an indication of the direction in price movement of that particular stock with a probability of 20%.

Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Given the information below, What is the total variance in the actual and static budget?

DeFleur manufactures bicycles. The bicycles are manufactured in two divisions. In the framing division, the carbon bicycle frames are manufactured. In the assembly division, the components are assembled to the frame and the bike is ready for sale. There is no market for the unassembled frames and all manufactured frames are transferred to the assembly division. For the purposes of performance evaluation, the framing division transfers the completed frames to the assembly division at the budgeted standard cost of a frame. The budgeted units of production for the framing division is 1,000, all of which will be transferred to the assembly division at the standard full absorption cost.

The budgeted costs for the framing division are as follows:

1.  Standard variable overhead is applied to products on the basis of direct labor hours at a rate of $4/unit produced.

Budgeted Fixed Overhead is $30,000 and the standard fixed cost per unit is based on the budgeted units of production.

Actual data for the period relating to the costs are as follows:

2. The framing division worked 7,500 direct labor hours during the year at a total cost of $93,750.

3.  A total of 9,000 carbon-fiber layers were purchased and used in production during the year at a total cost of $171,000

4. Total Budgeted cost for the framing department was $330,000. The total actual cost was $300,750

(Note that all the questions on variance are with respect to the framing department.)

Problem 21-6A Hamilton Processing Company uses a weighted-average process cost system and manufactures a single product—an industrial carpet shampoo and cleaner used by many universities. The manufacturing activity for the month of October has just been completed. A partially completed production cost report for the month of October for the Mixing and Cooking department is as follows. Prepare a schedule that shows how the equivalent units were computed so that you can complete the “Quantities: Units accounted for” equivalent units section shown in the production cost report, and compute October unit costs. (Round unit costs to 2 decimal places, e.g. 2.25.) HAMILTON PROCESSING COMPANY Mixing and Cooking Department Production Cost Report For the Month Ended October 31 Equivalent Units Quantities Physical Units Materials Conversion Costs Units to be accounted for Work in process, October 1 (all materials, 70% conversion costs) 22,400 Started into production 168,000 Total units 190,400 Units accounted for Transferred out 134,400 134400 134400 Work in process, October 31 (60% materials, 40% conversion costs) 56,000 80640 53760 Total units accounted for 190,400 Costs Materials Conversion Costs Total Unit costs Total Costs $268,800 $117,600 $386,400 Equivalent units Unit costs $ $ $ Costs to be accounted for Work in process, October 1 $33,600 Started into production 352,800 Total costs $386,400 Complete the “Cost Reconciliation Schedule” part of the production cost report below. Cost Reconciliation Schedule Costs accounted for Transferred out $ Work in process, October 31 Materials $ Conversion costs Total costs $

Exercise 22-5 Departmental expense allocations LO P2

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Use this information to allocate each of the three indirect expenses across the four departments.

Prepare a summary table that reports the indirect expenses assigned to each of the four departments

Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Use this information to allocate each of the three indirect expenses across the four departments.

Use the following information for questions #1 - 3:

An accounting student runs a hotdog concession at his college’s football games. After the first three games the following limited information is available to assess performance and make decisions about future operations:

#1.   The student knows that total costs are comprised of a variable component (meat, rolls, toppings, napkins) and a fixed component (afternoon rental of cooking cart, wages paid to self) and would like to better understand those. Calculate the following using the “High-Low Method (show work).

a.) Variable cost per hotdog sold (unit cost).

b.) Total Variable cost for Game #1

c.) Total Fixed cost for a game.

#2. Although sales have declined in the past couple of games, the student estimates that 280 hotdogs can be sold at Game #4 if he adjusts the price that he charges his customers for each hotdog.

       Calculate the following (show all work).

a.) Total Variable Cost for Game #4.

b.) Total Cost for Game #4

c.) What is the   “Contribution Margin” for Game # 4 if the price that customers pay for a hotdog is $3.50 ?

d.) Was the student’s decision to set the price of hotdogs at $3.50 a good one?   Why ?

#3 If the actual number of hotdogs the student sells at Game #4 drops below what was sold in Game #3, then:

            Variable Costs per unit would (select one) -

            a.) Increase                b.) Decrease               c.) Remain the same

            and Fixed Costs per unit would (select one) -

            a.) Increase                b.) Decrease               c.) Remain the same

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Exercise 9-5 Departmental expense allocations LO P2

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.

Departmental data for the company’s recent reporting period follow.

1. Use this information to allocate each of the three indirect expenses across the four departments.
2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

Use this information to allocate each of the three indirect expenses across the four departments.

Prepare a summary table that reports the indirect expenses assigned to each of the four departments.