Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2018, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,780,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2020. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows:

Required:
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2018 and 2019 as either cost in excess of billings or billings in excess of costs.

QUESTION 3

3.1 What does normal profit mean? Explain the difference between normal profit and economic profit.

3.2 Explain the relationship between average product and marginal product.

3.3 In economics we consider both explicit costs and implicit costs. Differentiate between implicit and explicit

costs.

QUESTION 4

An economist needs a deep understanding of price elasticity concepts and their applicability in today’s economy.

4.1 Define price elasticity of demand and how it is measured.

4.2 Explain the FIVE (5) categories of price elasticity of demand.

4.3 Explain the relationship between the total revenue from the sales of a product and the price elasticity of

the demand for the product. SS

QUESTION 5

5.1 List FIVE (5) requirements for perfect competition to exist.

5.2 Explain why any firm maximises profit, or minimises losses, when marginal cost is equal to marginal

revenue.

5.3 Explain the shape of the marginal revenue curve facing (a) a perfectly competitive firm and (b) a

monopolistic firm.

QUESTION 6

6.1 Briefly discuss the main components of total spending in the economy.

6.2 Identify the THREE (3) main withdrawals (or leakages) from the circular flow of income and spending in

an open economy.

6.3 Explain with examples, the following:

6.3.1 Constant returns to scale.

6.3.2 Increasing returns to scale.

6.3.3 Decreasing returns to scale.

Technology is taking much of the fun out of finding a place to park the car. Now, in cities from New York to Seattle, the door is open to a host of wireless technologies seeking to improve the parking meter even further. Chicago and Sacramento, CA, among others are equipping enforcement vehicles with infrared cameras capable of scanning license plates even at 30 miles an hour. Using a global positioning system, the cameras can tell which individual cars have parked too long in a two-hour parking zone. At a cost of $75,000 a camera, the system is an expensive upgrade of the old method of chalking tires and then coming back two hours later to see if the car has moved.

Parking czars in municipalities across the country are starting to realize parking meters' original goals: generating revenue and creating a continuous turnover of parking spaces on city streets. Clearly, their main questions are "Would there be enough new revenue from installing the expensive parking monitoring devices?" and "How many devices should be installed to maximize the revenue streams?" From the device manufacturing's point of view, the question is "Would there be enough demand for their products to justify the investment required in new facilities and marketing?" If the manufacturing decides to go ahead and market the products, but the actual demand is far less than its forecast or the adoption of the technology is too low, what would be the potential financial risk?

1. A company has employed two workers A and B whose productivities are 20 units and 15 units respectively. The wage for A is K12 whilst B’s is K8. Are these two employees optimally employed?                                                                                              [5 Marks]
2. The average total cost of producing a tomato unit and the average variable cost are K2 and K1 respectively. Further, price is K10 and the firm operates in a competitive market.

1. Calculate the fixed and total costs of producing 1000 units of tomatoes. [4 Marks]
2. Calculate the profit the firm makes from selling 1000 tomatoes.              [2 Marks]
3. What is will happen in the market as a result of your answer in (ii)?           [5 Marks]

3. Briefly describe the condition associated with optimization of utility of an individual. [4 Marks]
4. Show (Derive) the mathematical relationship between marginal revenue and elasticity. [5 Marks]
5. A firm operating under a monopoly faces the following demand and cost functions: P=170 - 5Q and TC = 40 + 50Q + 5Q².

1. What’s the profit maximizing quantity and price?                                       [4 Marks]
2. What is the price elasticity of demand at the profit maximizing level?      [3 Marks]
3. Explain the strategy must the firm adopt to increase its revenue.                 [3 Marks]

6. Graphically show the relationship that exists between total revenue and elasticity for a price decrease along the demand curve.                                                                         [5 Marks]
7. Explain what determines who bears the most burden of a tax.                                 [5 Marks]

Can I get the answers to these with work shown? 2, 3, 4, and 5 only please.

1. The following two linear functions represent a market (thus one is a supply function, the other a demand function). Circle the answer closest to being correct. Approximately what will the quantity demanded be if the government controls the market price to be $1.50 (You must first find the market equilibrium price and quantity in order to see how the $1.50 relates to them)?

Q = 100 – 4.6P and Q = 75 + 6.2P

Qd=100-4.6P Qs=75+6.2P P=$1.50

Qd=Qs 100-4.6P=75+6.2P = 25=10.8P P=2.31

P=1.50 Qd=100-4.6P =100-4.6(1.5) =100-6.9 =93.1

2. There has been a change in the market (represented in 1 above). The change is represented by the following two equations. Circle the one correct conclusion that describes the market change.

Q = 85 + 6.2P and Q = 100 – 4.6P

3. Circle the function on the answer sheet that represents the marginal revenue (MR) function for this demand function: Q = 100 – 3P

4. Circle the quantity that maximizes total revenue (TR) for the marginal revenue (MR) function selected in number three (3).

5. If supply decreases and demand also increases, we can conclude that the new equilibrium:

Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 90,000 regular models and 18,000 deluxe models. A segmented income statement for the two products is as follows:

Required:

1. Compute the number of regular models and deluxe models that must be sold to break even. Round all intermediate calculations to four decimal places, and round your final answers to the nearest whole unit.

2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar.

Scenario: Soybeans are produced in many countries of the world, including Brazil. Consider the market for soybeans in Brazil. Assume that the world price is below the domestic equilibrium price.

a. In a graph, show how large the amount of imported soybeans is (no numerical answer required). Also, show the area on the graph that represents revenue that Brazil soybean farmers receive.

b. Now let’s consider the effect of drought. On a new graph, show what happens to the total revenue Brazil soybean farmers receive when a drought occurs in Brazil compared to part A

c. Explain your answer to part b) in words

d. Using a new graph, show what happens to the total revenue that soybean farmers receive in case of drought in all soybeans producing countries except Brazil

e. Explain your answer to part D in words

Now the scenario changed: the effect of a change in tastes. Assume that the world price is below the domestic equilibrium price and that soybean-based bread suddenly becomes more popular among Brazilian consumers.

f. Compared to your original graph in part A, show what happens to consumer surplus from this change in tastes

g. Explain your answer into part F in words

h. Compared to your original graph from part A, show what happens to producer surplus and imports from this change in tastes.

i. Explain your answer to part H in words

Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $7 to make each kilogram (kg) of seed. It sells each kg for $46. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 325,000 and a standard deviation of 100,000. Use Table 13.4

A. How many kilograms should Monsanto place in the warehouse before the growing season? use table 13.2 and round up rule.

B. If Monsanto put 375000 kgs in the warehouse, what is the expected revenue (include both domestic revenue and overseas revenue)? Use table 13.4 and round-up rule.

C. How many kilograms should Monsanto place in the warehouse to minimize inventory while ensuring that stockout probability is no greater than 5%? Use table 13.4 and round-up rule.

D. What is maximum profit for this seed?

CVP Analysis of Multiple Products

Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 90,000 regular models and 18,000 deluxe models. A segmented income statement for the two products is as follows:

1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit.

2. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even. Round the contribution margin ratio to four decimal places. Use the rounded value in the subsequent computation. (Express as a decimal-based amount rather than a whole percentage.) Round the amount of revenue to the nearest dollar.

Silver Lake Resort opened for business on July 1 with eight air-conditioned units. Its trial balance before adjustment on December 31 in as follows.

Other data for the adjustments (assuming no monthly adjustments before the fiscal year end):

Prepare adjusting journal entries for the following items.

1. Prepaid insurance of $6,000 was recorded on Sep 1, 2014 and the Insurance expires at the rate of $500 per month

2. A count of supplies on December 31 shows $1,000 on hand.

3. Depreciation for the period is $4,500 on buildings and $2,400 on equipment.

4. Unearned rent revenue of $4,000 out of previous balance $7,400 was now earned for services performed prior to December 31.

5. Salaries of $1,000 were unpaid at December 31.

6. Rentals of $3,000 were due from tenants at December 31 (use Accounts Receivables) [not yet received].

Prepare the adjusted trial balance, income statement, statement of retained earnings, and balance sheet. (you may use a separate sheet)