QUESTION 5

1. Part V:
   
   Background       
   On January 15, KH sold a mixer it purchased from MU for $80 cash and delivered it to a customer. As part of this purchase, KH issued a coupon to the customer for 8% off the $25 selling price for MU’s new titanium replacement mixer blades (assume the 8% discount constitutes a material right provided to the customer). It is valid for 90 days. KH has not previously sold replacement mixer blades. KH’s management estimates that 50% of the coupons will be redeemed.
   Requirements
   ►      Prepare a detailed explanation of each of the five steps of revenue recognition. Record all accounting entries for this transaction for KH for January 15 based on guidance on revenue recognition in ASC 606. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.

A firm sells in two separate markets, A and B. The demand functions in the two Markets are:

Qa=4,000-50Pa and Qb=3,200-160pB.

The total Marginal revenue function is:

1. MRT=_____________________

2. If the firm wants to produce 3,200 units of output, in order to maximize revenue from this output it should produce_____units in plant A and_____units in B.

3. The firm wishes to practice price price discrimination. The firm's marginal cost functions is MC=12.58+0.004Qt

a. To Maximize profit the firm would produce a total of_____units of output.______units would be sold in market A and_____ units in B.

b.The firm would charge a price of_____in market A and a price of _____in B.

c. In quilibrium the demand elasticity is______ in A and ______in B. (Hint: use the E=P/(P-a) formula). This relation would be expected because ______ if greater than_____.

Please show steps. Thank you!

1. Assume that you are the economist for a coal mining company and have estimated the

demand curve facing your firm to be

?????

? = ?, ??? − ?????? + ????+. ???

where Png is the price of natural gas, which is assume to be $3/MMBtu and Pw is the price

of wind power, which is assumed to be $70/MWh.

A. What is the own price elasticity of demand when Pc = $80/ton? Is demand elastic or

inelastic at this price? What would happen to the firm's revenue if it decided to charge a

price below $80?

B. What is the own price elasticity of demand when Pcoal = $160. Is demand elastic or

inelastic at this price? What would happen to your firm’s revenue if it decided to charge a

price above $160?

C. What is the cross-price elasticity of demand between coal and natural gas at the original

prices in part a? Are coal and natural gas complements or substitutes? Answer the same

questions for wind, as well.

2.

Message_Rate   Revenue_($millions)
1363.3   148
1214.8   74
575.9   64
311.3   36
458.1   35
293.2   34
248.3   25
679.5   18
151.7   17
169.6   17
109.7   16
144.3   16
410.2   15
93.4   15
104.2   15
121.8   14
70.7   13
81.3   12
127.6   6
52.2   6
149.6   5
36.3   3
4.2   2

to study how social media may influence the products consumers​ buy, researchers collected the opening weekend box office revenue​ (in millions of​ dollars) for 23 recent movies and the social media message rate​ (average number of messages referring to the movie per​ hour). The data are available below. Conduct a complete simple linear regression analysis of the relationship between revenue​ (y) and message rate​ (x).

Determine the estimate of the standard deviation.?

Basic Cost-Volume-Profit Concepts

Klamath Company produces a single product. The projected income statement for the coming year is as follows:

Required:

1. Compute the unit contribution margin and the units that must be sold to break even.

2. Suppose 10,000 units are sold above breakeven. What is the operating income?
$

3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue.

Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
$

To study how social media may influence the products consumers​ buy, researchers collected the opening weekend box office revenue​ (in millions of​ dollars) for 23

recent movies and the social media message rate​ (average number of messages referring to the movie per​ hour). The data are available below. Conduct a complete simple linear regression analysis of the relationship between revenue​ (y) and message rate​ (x).

Message_Rate   Revenue_($millions)
1363.3 148
1214.8 74
575.9 64
311.3 36
458.1 35
293.2 34
248.3 25
679.5 18
151.7 17
169.6 17
109.7 16
144.3 16
410.2 15
93.4 15
104.2 15
121.8 14
70.7 13
81.3 12
127.6 6
52.2 6
149.6 5
36.3 3
4.2 2

After-Tax Cash Flows

Using the data that is shown below - (a) calculate the individual after-tax cash flow effect of each relevant item in each independent situation, and (b) sum the individual after-tax cash flows in each situation to determine the overall net after-tax cash flow.

Do not use negative signs with any of your answers below.

Lebbo Ltd is considering investment in a new plant costing $5 million. The plant is expected to generate sales of $4 million per year for its estimated life of eight years. Sale revenue increases 5% each year. Costs of sales are expected to be 40% of sales. For depreciation purposes the plant will be written down, on a straight line basis, to 20% of its original cost by the end of the project. The company evaluates projects on the basis of after-tax cash flows, and the relevant tax rate is 30%. At the end of the project's life, the plant is expected to have a resale value of $2 million.

While the new machine requires an initial net working capital of $70,000, The current level of net working capital is 50,000. The subsequent net working capital requirement will be 10% of sales revenue.

If the required rate of return is 24%, what is the NPV of this project? Should it be accepted?

Look at the Data Below then answer/calculate the totals in the questions that follow. (Show Workings)

Entrepreneur's potential earnings as a salaried worker = $50,000

Annual lease on building = $22,000

Annual revenue from operations = $380,000

Payments to workers = $120,000

Utilities (electricity, water, disposal) costs = $8,000

Entrepreneur's potential economic profit from the next best entrepreneurial activity = $80,000

Entrepreneur's forgone interest on personal funds used to finance the business = $6,000

Answer these questions directly:

a) Creamy Crisp's explicit costs are:

b) Creamy Crisp's implicit costs (total) are :

c) Creamy Crisp's total economic costs (explicit + implicit costs) are:

d) Creamy Crisp's accounting profit is: e)

Creamy Crisp's economic profit is: f)

If Creamy Crisp's revenue fell to $286,000, what is the new accounting profit and the new economic profits?

1) The adjusted trial balance of Williams Landscaping at December 31, 2019 is as follows:

There were no new capital contributions during the year. Using the information above, prepare a post-closing trial balance for Williams Landscaping (dated December 31, 2019).