Saba enterprises had 250 units in beginning WIP which were 80% complete with regard to conversion costs. 9,250 units were added during the period. 8,000 units were completed.   Ending WIP was 100% complete with regard to material and 60% complete with regard to conversion. Beginning WIP amounted to $3,500 of which $1,000 was for conversion. Costs added amounted to $132,280 of which $94,870 was for materials.

Required:

1. Compute cost of goods completed and cost of WIP ending using weighted average price method.

2. Compute cost of goods completed and cost of WIP ending using FIFO method.

3. Determine cost per unit of completed goods for last period and this period under both FIFO and weighted average price methods.

Project financing Suppose an unlevered firm has a perpetual cash flow and market value of

EBIT = 100

E = 1000

The number of outstanding shares is,

N0 = 500

The firm considers investing in a project that costs $300 and returns a perpetual cash flow of $40.

Cost, C0 = 300

Cash flow, X = 40

Should the company invest in this project?

Now suppose the company will invest in this project. If the company issues equity to fund the project, what would be the project's impact on:

- Earning per share?

- Number of shares?

- Share price?

- P/E ratio?

If the company issues debt to fund the project, what would be the project's impact on:

- Earning per share?

- Number of shares?

- Share price?

- P/E ratio?

- Cost of equity capital?

Assume the debt is risk-free,

Rf = 5%

On January 1, Lorain Corporation had 2,000 shares of $5 par common stock authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares of $50 par preferred stock were outstanding. These were issued at a price of $75 per share. During the year, the following stock transactions occurred:

1. March 3: Lorain reacquired 100 shares of its own common stock at a cost of $24 per share.

2. April 27: It sold 25 shares of the common stock acquired on March 3 for $33 per share.

3. July 10: It sold 25 shares of the common stock acquired on March 3 for $22 per share.

4. October 12: It retired the remaining shares acquired on March 3.

2. The owner and manager of a duplicating service near a major university, is contemplating keeping his shop open in the evening until midnight. In order to do so, he would have to hire additional workers. He estimates that the additional workers would generate the following total output (where each unit of output refers to 100 pages duplicated). If the price of each worker hired must be paid $95 and the price of each unit of output duplicated is $6, how many workers should he hire? (10 points)

Workers Hired   0              1              2              3              4              5              6

Total Product     0              21           40           59 75 85           92                                                                          

                To work this problem you will need to compare MRP to MRC

Bell-land is a small country that currently practices autarky. In the market for transporters the supply and demand equations are given below

                                   Demand:   P = 400 – 4Q

                                   Supply:      P = 4Q

What is the equilibrium price and quantity.

Calculate consumer and producer surplus   

Now Bell-land decides to open trade. The world price for transporters is $100. Determine if Bell-land will import or export transporters. With trade what will be the new domestic quantity demanded? With trade what will be the new domestic quantity supplied? How much will Bell-land export or import?  

Calculate the new consumer and producer surplus. Who gains and who loses and by how much does each group gain or lose?

What type of trade barriers could a government put on to protect the losers?

Consider the following inventory information and relationships for the F. M. Beaner Corporation:
1. Orders can be placed only in multiples of 100 units.
2. Annual unit usage is 300,000.
3. The carrying cost is 30% of the purchase price of the goods.
4. The purchase price is $10 per unit.
5. The ordering cost is $50 per order.
6. The desired safety stock is 1000 units. (This does not include delivery- time stock.)
7. Delivery time is 2 weeks.   

a. What is the optimal EOQ level?
b. How many orders will be placed annually?
c. At what inventory level should a reorder be made?
d. What is the total cost of EOQ based system? Don’t forget Safety stock.   
e. What happens to EOQ if the carrying cost rises? Explain.

"Jon consumes chicken (C) and rice (R) for his meals. The price of a unit of chicken is $6, and the price of a unit of rice is $2.

Jon's utility function is: U = (3C)*(2R)

Jon has $132 to spend on chicken and rice."

a) For U = 100, which of the following (C,R) points are on the indifference curve?

1. (30,20)

2. (10.35)

3.(4,54)

4. (0,50)

b) Is the indifference curve linear or non-linear?

c) Determine Jon's optimal bundle of chicken and rice to consume, given his budget and utility function.

d) Now rice goes on sale for $1 per unit of rice. Now determine Jon's optimal bundle of chicken and rice to consume.

e)  If there is a supply disruption and there is no chicken to purchase, what happens to Jon's utility? (Budget is still $132.)

Please refer to the following incomplete data describing costs and revenues for a monopolistic firm. Assuming that this firm wants to maximize profits, which of the following most accurately describes the price should it charge for this good? Output Price Total Revenue Marginal Revenue Total Cost Marginal Cost Average Total Cost 0 $100 $0 na $50 na na 1 $90 $90 $90 $65 $15 ? 2 $80 $160 ? $75 ? $38 3 $70 $210 ? $95 $20 $32 4 $60 $240 $30 $125 ? $31 5 $50 $250 $10 $175 ? ? 6 $40 $240 -$10 $265 $90 $44 7 $30 $210 ? $415 $150 $59 $30 $50 Less than $30 more than $50

Two different products that have the following price and cost characteristics.

Selling price per unit: Bicycle: 100 Tricycle: 400

Variable cost per unit: Bicycle: 40 Tricycle: 240

Management believes that pushing sales of the Bicycle product would maximize company profits because of the high contribution margin per unit for this product. However, only 50,000 labor hours are available each year, and the Bicycle product requires 4 labor hours per unit while the Tricycle model requires 2 labor hours per unit. The company sells everything it produces.

Required:

a. Calculate the contribution margin per unit of constrained resource for each model.

b. Which model would CyclePath prefer to sell to maximize overall company profit? Explain.

please show your work.

A candy bar manufacturer is interested in trying to estimate how sales are influenced by

the price of their product. To do this, the company randomly chooses 6 small cities and

offers the candy bar at different prices. Using candy bar sales as the dependent variable,

the company will conduct a simple linear regression on the data below: [20 points]

City Price ($) Sales

River Falls 1.30 100

Hudson 1.60 90

Ellsworth 1.80 90

Prescott 2.00 40

Rock Elm 2.40 38

Stillwater 2.90 32

   (a) Set up a scatter diagram.

   (b) Assuming a linear relationship, use the least-squares method to find the regression

coefficients bo and b1.

(c) Interpret the meaning of the slope b1 in this problem.

(d) Predict the sales when the prices are $1.50 and $2.70.