Case Scenario Mr Park is a heart patient who had a heart bypass recently. He has been the sole breadwinner in the family but ever since his heart bypass, he is not able to continue working. His wife is a homemaker and also his main caregiver. The couple has three children. Eldest son Ethan (aged 32), has recently gotten married and moved out. His relationship with his parents is amicable. However, he still relies heavily on his parents for financial support, as his employment is not stable. This creates a huge amount of stress on both Mr and Mrs Park as they themselves are worried about their financial situation, especially after Mr Park's heart bypass. Youngest son Mark (aged 18) is closest to the mother. He suffers from social phobia and does not attend school. His symptoms started around the time of Mr Park's discharge from hospital. He is of age to be enlisted for National Service (NS), but he might not be able to go through military training due to his psychological condition. Mindful of his condition, the parents give him a lot of space and make no demands of him. He plays computer games at home most of the time. Their second daughter Jill (aged 26) is currently the sole breadwinner of the family. She works as an administrative assistant and contributes some money to her parents. When she was 19, she quit university after her first semester and decided to start working because she felt that her eldest brother was continuing to rely on parents for financial support. She often will feel very angry that her parents depend on her so much and do not seem to insist that her eldest brother contribute. She also feels that her parents are over protective of her younger brother. There are constant quarrels between both patient and his wife over the issues of the children and also over care for him, at times escalating into shouting marathons. Two weeks ago, tired of all the fighting, they decided to stop talking altogether. Now, they are no longer quarrelling or shouting at each other, but instead are locked in a "cold war”. Soo words Guiding Questions Read the case scenario above. For the purpose of the reflection, imagine that this is your family, and that you are another son/daughter in this family. • 1. What, in your opinion, is contributing to the family situation? 2. How would you respond as a member of this family? 3. Why would you respond in the way(s) stated for Question 2 above? Explain. (500 words)

In the early 20th century, the French Canadian microbiologist Félix d’Hérelle used a virus called a bacteriophage (“phage”) to successfully treat some diseases caused by bacteria, such as dysentery and cholera. Subsequent experiments with “phage therapy” yielded mixed results; however, and enthusiasm quickly waned—especially once antibiotics became available in the 1940s. The therapy is not currently approved in the United States.

Phage therapy involves obtaining a pure culture of a disease-causing bacterium and exposing samples of the culture to different phages to see which ones kill the bacterium. The successful phage is then administered to a patient. For skin infections, the phage is applied directly to the infected area. For systemic diseases, the phage may be given orally or delivered intravenously.

Imagine you are part of a hospital medical team conveyed to treat Jerry, a 71-year-old diabetic patient, who has been suffering from a persistent infection on his foot. His doctor has tried multiple topical antibiotics, but the infection continues to worsen, so the doctor admitted him to your hospital for a new intravenous antibiotic treatment. To Jerry’s relief, the infection cleared up; however, two weeks later, the infection returned—worse than ever. Jerry’s doctor explains that the bacterium causing the infection is a multidrug resistant strain and that Jerry’s foot will need to be amputated.

Jerry’s sister, a nurse, mentions that she studied bacteriophages and asks the doctor whether phage therapy is a treatment option.

As a member of Jerry’s medical team, answer these questions:

• How would you respond to Jerry’s sister?

• Which type of phage would be used for phage therapy: a lytic or a lysogenic phage?

• What are the drawbacks of phage therapy? What are the advantages?

Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses

Naper Inc. manufactures power equipment. Naper has two primary products—generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31:

Generators Air Compressors Total
Revenue $1,796,440 $2,752,720 $4,549,160
Cost of goods sold 1,347,330 2,064,540 3,411,870
Gross profit $449,110 $688,180 $1,137,290
Selling and administrative expenses 246,690
Income from operations $890,600

The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing.

The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the A measure of activity that is related to changes in cost. Used in analyzing and classifying cost behavior. Activity bases are also used in the denominator in calculating the predetermined factory overhead rate to assign overhead costs to cost objects.activity base and The cost of an activity per unit of activity base, determined by dividing the activity cost pool by the activity base.activity rate for each activity, as shown below.

Activity Activity Base Activity Rate
Sales order processing Sales orders $90 per sales order
Post-sale customer service Service requests $270 per customer service request

The controller determined the following activity-base usage information about each product:

Generators Air Compressors
Number of sales orders 398 840
Number of service requests 67 434

a. Determine the activity cost of each product for sales order processing and post-sale customer service activities.

Sales Order Processing
Activities Cost Post-sale Customer Service
Activities Cost
Generators $ $
Air Compressors
Total $ $

b. Use the information in (a) to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to one decimal place. Enter all amounts as positive numbers.

Naper Inc.
Product Profitability Report
For the Year Ended December 31
Generators Air Compressors Total
Revenues $ $ $
Cost of goods sold
Gross profit $ $ $
Sales order processing $ $ $
Post-sale customer service
Total selling and administrative expense $ $ $
Income from operations $ $ $
Gross profit as a percentage of sales % %
Income from operations as a percentage of sales % %

c. Interpret the product profitability report.

The air compressors have the

higher
lower

income from operations to sales percentage because the product is a

light
heavy

user of Naper’s sales and service activities. Many factors cause the air compressors to have

less
more

income from operations as a percent of sales than generators

Bottoms Up approach
P5.12   A fast food restaurant uses a standard cost approach to aid in controlling its food cost.   The

             Following are the standard costs, selling prices and quantities sold of each of the five items

             Featured on the menu during a particular week:

Item         Cost         Selling Price            Quantity Sold

                  1             1.80                      3.95                               260

                  2             2.10                      4.95                               411

                  3             4.20                      8.95                               174

                  4             3.05                      6.95                              319

                  5             1.40                      3.95                              522

             Total actual cost for the week was $3,804.10 and total actual sales revenue was $8,873.40.

1.   Calculate total standard cost, total standard sales revenue and cost of sales percentages.

Comment on the results.

2.   The following week, with no change in menu or standard costs and selling prices, there was

   a change in the sales mix.   Although quantities sold of Items 2, 3 and 5 were virtually the

   same, many more of Item 4 and many less of Item 1 were sold.   As a result of this, would

   you expect the overall standard cost percentage to increase or decrease?   Explain your

   answer.

D.B. Smith Company produces machine tools. The company conducted a cost-of-quality study and found the following:

What quality cost categories should each of these costs be associated with? What does a Pareto analysis reveal? The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Questions

1. Classifying the D.B. Smith Company cost elements into the appropriate cost-of-quality categories, calculate the total costs in each category and their percentages of the total and cumulative percentages. Round your answers for the total costs to the nearest dollar and round your answers for the percentages to two decimal places.

2. Choose the correct graph for the cost-of-quality categories.

Mercer Inc. needs to raise more capital because its business is booming. The company purchases supplies on terms of 1/10 net 25, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and the firm's owner believes she could delay payment to 45 days without adverse effects. What would be the effective annual percentage cost of funds raised by this action? (Assume a 365-day year.)

In late 2004 and early 2005, the price of raw coffee beans jumped as much as 50% from the previous year. In response, the price of roasted coffee rose about 14%. Similarly, in late 2014 and early 2015, the price of raw beans fell by about 25%, yet the price of roasted coffee fell by only a few percentage points. Why did the roasted coffee price change less than in proportion to the rise in the cost of raw beans?

Himiny's Cricket Farm Issued a 28-year, 13 percent semiannual bond 3 years ago. The bond currently sells for 100 percent of its face value. The company's tax rate is 33 percent. What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)

1. Poutine Cheez Company has yearly sales of $550,000 and an average collection period of 35 days. A factoring company is offering a 35-day receivables loan equal to 85% of the accounts receivable at 9% along with a commission fee of .45% of the receivables. The firm estimates that by taking the offer, it could save $300 in collection costs and a full half of one percent in bad debt costs, as a percentage of sales. What is the annual cost (in percent) of the arrangement to Poutine Cheez?

Himiny's Cricket Farm Issued a 25-year, 16 percent semiannual bond 3 years ago. The bond currently sells for 89 percent of its face value. The company's tax rate is 33 percent. What is the pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)