Zachary Manufacturing pays its production managers a bonus based on the company’s profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products.

(Assume that selling and administrative expenses are associated with goods sold.)

Zachary sells its products for $109.90 per unit.

Required

1. Prepare income statements based on absorption costing for Year 2 and Year 3.

2. Since Zachary sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3?

4. Determine the costs of ending inventory for Year 3.

5. Prepare income statements based on variable costing for Year 2 and Year 3.

Swanson Brothers, Inc. is putting together a bid for a multi-year state project. The project will have a lifespan of 10 years. If successful, the state will pay Swanson $124084 at the end of each year, increasing the payment by $34676 each subsequent year. The project will have expenses of $40173 per year. Part way through the project, Swanson will need to rent some special equipment at a cost of $3488 per year, with the cost decreasing by 12% each subsequent year. Swanson will make the first payment on the special equipment at the end of year 4 and will need the equipment through the end of year 10.

If Swanson remains on schedule, the company will receive a bonus of $85023 at the end of year 6. (Swanson plans on remaining on schedule.) Calculate the present worth of the project using an interest rate of 1% compounded yearly.

Notes: The first payment and the first year of expenses will occur at the end of year 1.

Be sure to count the years carefully when calculating the years for the cost of renting the special equipment.

Enter your answer as: 1234

Round your answer. Do not use a dollar sign ("$"), any commas (",") or a decimal point (".").

15. Lego, Inc., issued common stock in Year 1. It issued 10,000 shares of 8%, $100 par value cumulative preferred stock for $110 per share at the beginning of Year 4. It did not pay any dividends during Year 4. In December of Year 5, it declares total dividends of $200,000. How much will the preferred stockholders of Lego receive as dividends in Year 5?

• $200,000

• $160,000

• $80,000

• $40,000

16. Marine Corporation issued common stock in Year 1. It issued 10,000 shares of 10%, $100 par value noncumulative preferred stock for $110 per share at the beginning of Year 3. It did not pay any dividends in Year 3 or Year 4. In December of Year 5, it declares total dividends of $250,000. How much will the common stockholders of Marine Corporation receive as dividends in Year 5?

• $150,000

• $250,000

• $50,000

• $100,000

19. The Common Stock account increases when treasury stock is resold for more than its original cost.

• true

• false

9. Dividends paid are allocated according to the percentage of shares owned by each stockholder.

• true
• false

If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company:

Year 1 Year 2 Year 3 Year 4

High price $ 27.43 $ 26.32 $ 30.42 $ 37.01

Low price 19.86 20.18 26.65 26.41

EPS 1.35 1.58 1.51 1.85

Earnings are projected to grow at 9 percent over the next year.

What is your high target stock price over the next year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

High target stock price $

What is your low target stock price over the next year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Low target stock price $

Reeve Corporation purchased a factory machine on JAN 1st, Year 1, for $40,000, estimated a useful life of 8 years, and estimated Residual Value (Scrap Value) of $4,000.

1. Using the Straight Line Method, calculate Depreciation Expense for Years 1 thru 8. Calculate Book Value for Years Ending 1 thru 8.

2. Using the Double Declining Balance Method, calculate Depreciation Expense for Years 1 thru 8. Calculate Book Value for Years Ending 1 thru 8.

Reeve Corporation estimated the factory machine purchased on JAN 1st, Year 1, for $40,000, has a Residual Value of $4,000, and an estimated useful life of 20,000 operating hours over the 8 year life of the asset. Estimated Operating Hours: Year 1- 2,000, Year 2- 2,000, Year 3- 2,000, Year 4- 2,000, Year 5- 2,000, Year 6- 4,000, Year 7- 4,000, and Year 8- 2,000.

3.. Using the Units of Activity Method, calculate Depreciation Expense for Years 1 thru 8. Calculate Book Value for Years Ending 1-8.

Mr. Brown wants to buy a Tesla Model S car, whose price is $100, 848. The dealer offers a loan plan: $30, 000 down payment, $X at the end of year 1, year 2, year 3, and year 4. Assume the constant annual interest rate is 25%.

(a) What is X? [Hint: you may want to use calculators.]

(b) Suppose Mr. Brown accepts the offer. How much does Mr. Brown finance?

(c) What is the principle payment at the end of year 1?

(d) After taking the auto loan, Mr. Brown gets a refinance opportunity at the end of year 1 (right after he makes the first payment). That is, Mr. Brown can borrow from the bank to pay all remaining principle at the end of year 1. In this refinance plan, Mr. Brown needs to pay the bank $25, 000 at the end of year 2, year 3, year 4, and year 5. Will Mr. Brown choose to refinance? [Hint: the interest rate is still 25%. Mr. Brown will choose to refinance if and only if the NPV of the refinance plan is positive.]

Please focus on (d).

Use Java

(Find the number of days in a month)

Write a program that prompts the user to enter the month and year and displays the number of days in the month.

For example,

If the user entered month 2 and year 2012, the program should display that February 2012 has 29 days.

If the user entered month 3 and year 2015, the program should display that March 2015 has 31 days.

Sample Run 1

Enter a month in the year (e.g., 1 for Jan): 2
Enter a year: 2012
February 2012 has 29 days

Sample Run 2

Enter a month in the year (e.g., 1 for Jan): 4
Enter a year: 2005
April 2005 has 30 days

Sample Run 3

Enter a month in the year (e.g., 1 for Jan): 2
Enter a year: 2006
February 2006 has 28 days

Sample Run 4

Enter a month in the year (e.g., 1 for Jan): 2
Enter a year: 2000
February 2000 has 29 days

Class Name: Exercise03_11

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