Case Study Instructions: Read this case study and answer the questions that follow: Virgin was founded in 1970 by Richard Branson and is classified as a holding company for multiple ventures under the Virgin Group. When it comes to innovation Virgin is one of the top companies in the world. What began as a mail order record company has evolved into one of the most diverse companies in existence. Virgin invests in and builds companies that revolve around delivering fantastic customer experience and change the scope of industries. They do everything from space tourism to air travel, make comic books and video games. The company now holds over 200 companies and operates in 29 countries. They’ve found that the most successful ideas they get are the ones that are marketing, sales, and customer focused, sit under the Virgin brand, have a well-defined and differentiated customer offer and oftentimes are delivered in partnership with experts in their field.
Virgin takes the ideas it gets and boils them down into several categories. Anything that doesn’t quite fit into an existing company gets sent to corporate development for review. They take the time to read and respond to every proposal. They do not disclose how rewards are awarded but there are substantial ones for good ideas that are implemented. Internally Virgin also sources business plans and ideas from employees. Once a flight attendant had an idea. It got presented to the CEO and before long she had a considerable role in starting up Virgin Brides (which beyond being a fantastic idea didn’t quite work out in the market place). It’s incredible that a flight attendant can have an idea that makes it that far in a company. Notice that Virgin has over 200 companies under it. If you stop for a second you’ll realize just how massive that number is. That is a lot of innovation for a company only 40 years old. Financially they do quite well so obviously something has been working out for them. Not a lot of firms innovate this much or support this much innovation but that’s kind of the key – they don’t just source great ideas, they act on them. Sourcing this many fantastic ideas isn’t easy – it’s a lot of hard work for the company and they have to devote time and resources to going through all of them never mind actually taking the time to respond. But it shows that they care and that they’re serious about this. All great innovations come from an idea. Some go so far as to say it’s the most important part of the process (Seth Godin would likely disagree and say that shipping is the most important). Some companies looking at Virgin’s requirements might find them surprisingly strict, others surprisingly loose. No matter how you view it the only thing that remains true at the end of the day is that Virgin’s strategy works – and it works well.

Required:
Business excellence is about strategy. From the case study which strategies has Virgin used to achieve continuous creativity and innovation.

Monsters Inc began operations on January 1, 2017. The company employs 15 monsters whose jobs are to scare little children. They are paid eight-hour days and are paid hourly. Each employee earns 15 paid vacation days and 10 paid sick days annually. Vacation days may be taken immediately. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows:

Actual Hourly                      Vacation Days Used                      Sick Days Used

Wage Rate                            by Each Employee                         by Each Employee

2017   2018                           2017               2018                           2017               2018

$10     $11                             10                 15                             6                       8

Monsters Inc has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when they are earned and to accrue sick pay when it is earned.

1. Prepare journal entry(ies) to record the transactions related to vacation entitlement during 2017 and 2018.
2. Prepare journal entry(ies) to record the transactions related to sick days during 2017 and 2018.
3. Calculate the amounts of any liability for vacation pay and sick days that should be reported on the balance sheet at December 31, 2017 and 2018.

Credit Card Sales Valderi’s Gallery sells quality art work, with prices for individual pieces ranging from $400 to $25,000. Sales are infrequent, typically only three to five pieces per week. The following transactions occurred during the first week of June 2015. Perpetual inventory is used.

On June 1, sold an $800 framed print ($500 cost) to Kerwin Antiques on account, with 2/10, n/30 credit terms.

On June 2, sold three framed etchings totaling $2,400 ($1,500 cost) to Maria Alvado, who used the United Merchants Card to charge the cost of the etchings. Valderi mailed the credit card sales slip to United Merchants the same day. United Merchants will send a check within seven days after deducting a one percent fee.

On June 4, sold a $1,900 oil painting ($1,000 cost) to Shaun Chandler, who paid with a personal check.

On June 5, sold a $2,000 watercolor ($1,500 cost) to Julie and John Malbie, who used their Great American Bank Card to charge the purchase of the painting. Valderi deposited the credit card sales slip the same day and received immediate credit in the company’s checking account. The bank charged a one percent fee.

On June 6, received payment from Kerwin Antiques for its June 1 purchase.

On June 7, received a check from United Merchants for the June 2 sale.

Required
Prepare journal entries to record the Valderi Gallery transactions.

An individual derives utility from​ games, g (y−​axis), and toy​ airplanes, a​(x−​axis), described by the utility function​ U(g,a) = g^0.6a^0.4. The price per game is​ $20 and the price of toy airplanes is​ $10. Using the slope of the income consumption curve​ (ICC), determine whether games and toy airplanes are normal or inferior goods when income increases from​ $100 to​ $200.

A. Both goods are normal goods with an ICC slope of 4/3.

B. Both goods are inferior goods with an ICC slope of -4/3.

C. Both goods are inferior goods with an ICC slope of -3/4

D. Both goods are normal goods with an ICC slope of 3/4

An individual performs two drop landings from the exact same height above two different basketball floors. The first landing is onto a suspended basketball floor (hardwood suspended above the concrete/ground). The second landing is onto a traditional basketball floor (hardwood on the concrete/ground). The net vertical force acting on the individual to bring them to a stop would be ____ because the ____.

Group of answer choices

greater during the first landing : displacement along the line of action of the force would be less

the same during both landings : change in mechanical energy would be the same

less during the second landing : displacement along the line of action of the force would be greater

greater during the second landing : displacement along the line of action of the force would be less

less during the first landing : change in mechanical energy would be less

ACCY 415

Individual Assignment #1

Assume you have graduated from college, are earning a steady income and are considering purchasing the condo you are currently renting. You can purchase the condo for $258,000. You have saved $24,000 for the down payment and the bank is willing to loan you $234,000 under a 30-year fixed rate mortgage. The sale will take place at the end of 2020.   Payments will be due monthly beginning January 31, 2021.

Required:

1. Using Microsoft Excel, develop a spreadsheet to amortize the mortgage loan using the following format and using the following interest rates depending on your last name:

Last name begins with:                                   Use an annual interest rate of:

A-G                                                                             4.25%

Loan amount:                                                            Annual interest rate:

Number of payments:                                               Monthly interest rate: (use formula & extend to 5 decimal places)

Loan payment start date:                                         Monthly payment: (use PMT function)     

                                                                                                Additional      Loan

Date                Payment         Interest           Principal         Principal         Balance

Except for the date (which you should calculate using a fill series) there should be no hard-coded numbers in these fields, only formulas and cell references. Use the $ sign in cell references to keep a column or row from incrementing by one when copying formulas from one row to the next.

• Use the Excel "auto fill" function or cell handle to fill in the date column of your schedule. (Be sure to select “month” as the fill series and start with the second date at your fill point, since the first date is cell referenced).
• Use the Excel "PMT" function to determine the amount of your monthly payment. Show the payment as positive.
• Format all cells except the monthly interest rate to two decimal places (xx.xx)
• Initially set the "additional principal" column to zero
• Calculate totals for the interest, principal and additional principal columns after the row which represents your final payment (and later add temporary totals after the first year of payments to answer several of the questions).
• Any computations necessary to get to an answer should be in cells to the right of the amortization schedule.

2. Use your spreadsheet to answer the following questions. Use formulas to calculate your answers and show your computations in the upper right of your amortization schedule:

1. What is the date of your last payment?

2. What is the total amount of interest you will pay over the course of the loan?

3. What is the total amount of principal you will repay?

4. What is the total of the mortgage payments you will make during the first year of the loan?

5. How much of these payments will be applied toward the principal amount of the loan?

6. A friend of yours who just happens to be an accountant has told you that interest on your home loan is deductible for income tax purposes (and that rent payments are not). After one year, how much interest will you be able to deduct on your income tax return?

7. Assume you are in a 20% tax bracket for income tax purposes. What is the average after-tax amount of your monthly mortgage payment in the first year? (HINT: Your interest deduction will be the interest times the tax rate. This is the tax savings which should be deducted from the total of your first year payments. Divide this net amount by 12 to get the monthly average).

8. If you were currently renting your condo for $1,100 per month, would it make better sense financially to rent or buy? Why?

1. If you are currently renting your condo for $900 per month, why might it still be better financially to buy versus rent?

3. Assume that after one year you are earning such a good income that you are able to add an additional $100 to your monthly mortgage payment.   Your financial institution will apply this additional payment directly to your outstanding principal balance. Copy your spreadsheet to a new sheet. Beginning January 31, 2022 set the additional principal column of your worksheet to $100 per month. Erase the rows in the worksheet beyond the point that the loan is paid off.   Set the final payment (and additional principal amount of the final payment, if necessary) equal to what is necessary to just pay off the loan. Prepare totals for principal, additional principal and the interest columns and answer the following questions.

1. How much interest will you save over the course of the loan by paying an additional $100 per month on your mortgage payment?

2. How much principal will you pay (think about this logically)?

3. By how many years (and/or months) will you reduce your 30-year mortgage by paying an additional $100 per month?

4. What is the major lesson of this project?

Deriving the Market Supply Curve from

Individual Supply Schedules (Student Survey)

Discussion: Post and Reply

PART I.

This is the first step of several steps of our economics project. In this first step, we will assess the market for frozen yogurt. You will read about the economic setting and you will post the quantity you would supply to the market at specific hypothetical prices. (Hint: you will want to think on the margin for this one!)

After Thursday, when everyone's posts become visible, we will observe the market supply. I will inform you what the market demand looks like and we will establish the equilibrium price.  

You have moved to a new community and as someone who is always on the look out for a good opportunity, you observe that the new town you live in has no frozen yogurt venues. You have reason to believe that there will be solid demand for your service and you decide to open up a small shop that sells cups of frozen yogurt in this city. The market is big enough to accommodate you.

You have already paid for 1 month's rent ($3000) and your commercial property landlord is allowing you to lease the space on a month- to- month basis. There are 30 days this month.

You own three frozen yogurt machines already and a commercial-grade refrigerator/freezer (they were gifts from your rich uncle who just wants you to succeed).

You observe that the cost of the yogurt mix, cones, cups and sprinkles and the imputed cost of utilities cost you $0.50/cup.

Also, labor can generate the following output(s):

POST (1) The name of your business AND more importantly (2) state the quantities of frozen yogurt you would willingly supply to the market at each of the following (specific) prices given that you can only hire labor for the entire day (ie, 8 hours/day shifts and the daily salary is $80/worker). You have already paid the first month's lease. Today is the start of the month.

Integrative Case 3.6

China Merchants Group’s Acquisition of the Newcastle Port

Hao Tan (University of Newcastle, Australia)

Why was China Merchants Group, a state-owned enterprise, able to successfully close the deal to acquire the Newcastle port of Australia?

On April 30, 2014, the world’s largest coal export port, the Newcastle port of Australia, changed hands. The owner of the Australian port, the new south wales state government, agreed to lease the port for 98 years to a consortium formed by the China Merchants Group (hereafter “Merchants”) and Australia’s Hastings Funds Management, for A$1.7 billion (US$1.57 billion). Over the lease period, the consortium will exercise control over the port, as well as the land, roads, railways, and other infrastructure within the wharf area, and will be entitled to earnings derived from the ports operations.

In the 2012- 2013 financial year, the Newcastle port exported 140 million tons of coal, worth A$15 billion (US$13.8 billion). The spot price of coal at the Newcastle Port is a benchmark for the international coal market. Given the significance of the port, the lease had attracted bidders from all over the world. These included Cheung Kong Infrastructure, owned by the Hong Kong tycoon Li Ka-Shing; China State construction; Deutschland Bank; and Macquarie Bank. The short term and long term financial benefits of this acquisition for Merchants remain to be seen. However, it’s successful bid will certainly create opportunities to further internationalize its infrastructure business, and synergies well with its existing shipping and port operations. Control of the Newcastle port will further help the company- a large state owned enterprise (SOE) from China- to play a more significant part in the global energy transport market.

Mergers and acquisitions in Western countries by china’s large SOEs have faced considerable political difficulties for a long time, especially for those mergers and acquisitions that concerned “strategic” assets in host countries. In 2009, an acquisition bid by the Aluminium Corporation of China (Chinalco) for Rio Tinto, of the top three global mining companies, failed. This was largely because of strong objections in Australia over concerns related to Chinalco’s state ownership. However, the acquisition of the Newcastle port by merchants appeared to generate much less criticism in Australia. After the announcement of the bidding outcome, the Australian media has been largely positive about the deal. For other Chinese companies that are considering to “go abroad”, there seem to be at least three lessons they can learn from the success of Merchants.

First, the acquisition came at a beneficial time, making it a win-win-win situation for the government, the local community, and the foreign investor. The acquisition came as a result of governmental changes in Australia, both at the state and the federal levels, from labor party control to that of the Liberal party. The new liberal government appealed to the public with plans to invest in new infrastructure. Many of those infrastructure projects had been long overdue in New South Wales and elsewhere in Australia. The Newcastle port acquisition will provide capital for some of those much-needed projects in the local area of Newcastle. Thus it is widely welcome by the government and the community. This is quite different from the bid of Rio Tinto by Chinalco a few years ago, where the Chinese company was perceived by many as a potential monopolist in the Australian resource sector seeking to take advantage of that period’s industry downturn.

Second, it appears that merchants had convinced the owner of the port and the Australian public that the motivation for its acquisition was a commercial rather than a political one. State ownership may be a winning factor for SOEs in China. However, it is often seen as a negative factor in foreign markets. Fully aware of this difference, merchants, and its bid efforts, had highlighted a range of commercial advantages of the company, such as is long experience in the shipping and port industries over the last 140 years; it’s current investments and management portfolio , with a number of large ports across continents; the related businesses of the company enabling operational synergies, including a super tanker fleet and the world’s largest container manufacturing business; and the governance of the company, as a Hong Kong-based and Hong Kong-listed company. As a result, the company’s industry expertise was well received and its state ownership less of a concern.

Finally, the bid of merchants had been greatly helped by its track record in developed countries, especially in Australia. Merchants had been operating in Australia for more than 20 years. It’s track record included acquisitions of Loscam Ltd. in 2010 and the Terminal link in 2013. Majority of the foreign investments made by merchant had proved successful, which had enhanced the positive image of the company as a responsible multinational corporate citizen. In other words, merchants was not a total stranger to Australia, which significantly reduced its liability of foreignness.

Of course, the confidence of the owner and the public in the host country not only relies on the good story the company tells, but also on its fundamentals, including its financial capabilities, as well as the conditions and terms of its bit. However, it is certainly important for the management of a multinational company to be able to frame and communicate effectively to various stakeholders the motivations and the consequences of its international mergers and acquisitions. As the philosopher Terrance McKenna used to say, “ The world is made of words.” The stories we receive affect how we understand and participate in the world. The stories a company can tell also affect whether it can reduce resistance in the host country, gain support from stakeholders, and eventually succeed in its internationalization endeavors.

In 150 words or more answer the follwoing Case Discussion Question:

What are the challenges facing large state-owned enterprises (SOEs) in their efforts to acquire strategic assets in foreign countries in comparison with those by private firms? What can SOEs due to deal with those challenges?

Integrative Case 3.6

China Merchants Group’s Acquisition of the Newcastle Port

Hao Tan (University of Newcastle, Australia)

Why was China Merchants Group, a state-owned enterprise, able to successfully close the deal to acquire the Newcastle port of Australia?

On April 30, 2014, the world’s largest coal export port, the Newcastle port of Australia, changed hands. The owner of the Australian port, the new south wales state government, agreed to lease the port for 98 years to a consortium formed by the China Merchants Group (hereafter “Merchants”) and Australia’s Hastings Funds Management, for A$1.7 billion (US$1.57 billion). Over the lease period, the consortium will exercise control over the port, as well as the land, roads, railways, and other infrastructure within the wharf area, and will be entitled to earnings derived from the ports operations.

In the 2012- 2013 financial year, the Newcastle port exported 140 million tons of coal, worth A$15 billion (US$13.8 billion). The spot price of coal at the Newcastle Port is a benchmark for the international coal market. Given the significance of the port, the lease had attracted bidders from all over the world. These included Cheung Kong Infrastructure, owned by the Hong Kong tycoon Li Ka-Shing; China State construction; Deutschland Bank; and Macquarie Bank. The short term and long term financial benefits of this acquisition for Merchants remain to be seen. However, it’s successful bid will certainly create opportunities to further internationalize its infrastructure business, and synergies well with its existing shipping and port operations. Control of the Newcastle port will further help the company- a large state owned enterprise (SOE) from China- to play a more significant part in the global energy transport market.

Mergers and acquisitions in Western countries by china’s large SOEs have faced considerable political difficulties for a long time, especially for those mergers and acquisitions that concerned “strategic” assets in host countries. In 2009, an acquisition bid by the Aluminium Corporation of China (Chinalco) for Rio Tinto, of the top three global mining companies, failed. This was largely because of strong objections in Australia over concerns related to Chinalco’s state ownership. However, the acquisition of the Newcastle port by merchants appeared to generate much less criticism in Australia. After the announcement of the bidding outcome, the Australian media has been largely positive about the deal. For other Chinese companies that are considering to “go abroad”, there seem to be at least three lessons they can learn from the success of Merchants.

First, the acquisition came at a beneficial time, making it a win-win-win situation for the government, the local community, and the foreign investor. The acquisition came as a result of governmental changes in Australia, both at the state and the federal levels, from labor party control to that of the Liberal party. The new liberal government appealed to the public with plans to invest in new infrastructure. Many of those infrastructure projects had been long overdue in New South Wales and elsewhere in Australia. The Newcastle port acquisition will provide capital for some of those much-needed projects in the local area of Newcastle. Thus it is widely welcome by the government and the community. This is quite different from the bid of Rio Tinto by Chinalco a few years ago, where the Chinese company was perceived by many as a potential monopolist in the Australian resource sector seeking to take advantage of that period’s industry downturn.

Second, it appears that merchants had convinced the owner of the port and the Australian public that the motivation for its acquisition was a commercial rather than a political one. State ownership may be a winning factor for SOEs in China. However, it is often seen as a negative factor in foreign markets. Fully aware of this difference, merchants, and its bid efforts, had highlighted a range of commercial advantages of the company, such as is long experience in the shipping and port industries over the last 140 years; it’s current investments and management portfolio , with a number of large ports across continents; the related businesses of the company enabling operational synergies, including a super tanker fleet and the world’s largest container manufacturing business; and the governance of the company, as a Hong Kong-based and Hong Kong-listed company. As a result, the company’s industry expertise was well received and its state ownership less of a concern.

Finally, the bid of merchants had been greatly helped by its track record in developed countries, especially in Australia. Merchants had been operating in Australia for more than 20 years. It’s track record included acquisitions of Loscam Ltd. in 2010 and the Terminal link in 2013. Majority of the foreign investments made by merchant had proved successful, which had enhanced the positive image of the company as a responsible multinational corporate citizen. In other words, merchants was not a total stranger to Australia, which significantly reduced its liability of foreignness.

Of course, the confidence of the owner and the public in the host country not only relies on the good story the company tells, but also on its fundamentals, including its financial capabilities, as well as the conditions and terms of its bit. However, it is certainly important for the management of a multinational company to be able to frame and communicate effectively to various stakeholders the motivations and the consequences of its international mergers and acquisitions. As the philosopher Terrance McKenna used to say, “ The world is made of words.” The stories we receive affect how we understand and participate in the world. The stories a company can tell also affect whether it can reduce resistance in the host country, gain support from stakeholders, and eventually succeed in its internationalization endeavors.

In 150 words or more answer the follwing Case discussion question:

What are your recommendations for China Merchants Group to effectively manage and operate the Newcastle port after its acquisition?

The Walk Rite Shoe Company operates a chain of shoe stores. The stores sell ten different styles of inexpensive​ men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Walk Rite is trying to determine the desirability of opening another​ store, which is expected to have the following revenue and cost​ relationships:

Selling price $30.00

Unit variable cost per pair:

Cost of shoes $19.50

Sales commissions 1.50

Total variable costs $21.00

Annual fixed costs:

Rent $60,000

Salaries 200,000

Advertising 80,000

Other fixed costs 20,000

Total fixed costs $360,000

Requirements

​(Consider each question​ independently.)