Mathews Company manufactures only one product. For the year ended December 31, the contribution margin increased by $16,224 from the planned level of $545,376. The president of Mathews Company has expressed some concern about this increase and has requested a follow-up report.
The following data have been gathered from the accounting records for the year ended December 31:
Actual |
Planned |
Difference—Increase (Decrease) | ||||
| Sales | $1,071,200 | $1,055,184 | $16,016 | |||
| Variable costs: | ||||||
| Variable cost of goods sold | $405,600 | $426,816 | $(21,216) | |||
| Variable selling and administrative expenses | 104,000 | 82,992 | 21,008 | |||
| Total variable costs | $509,600 | $509,808 | $(208) | |||
| Contribution margin | $561,600 | $545,376 | $16,224 | |||
| Number of units sold | 10,400 | 11,856 | ||||
| Per unit: | ||||||
| Sales price | $103 | $89 | ||||
| Variable cost of goods sold | 39 | 36 | ||||
| Variable selling and administrative expenses | 10 | 7 | ||||
Required:
1. Prepare a contribution margin analysis report for the year ended December 31.
| Mathews Company | ||
| Contribution Margin Analysis | ||
| For the Year Ended December 31 | ||
| Planned contribution margin | $ | |
| Effect of changes in sales: | ||
| Sales quantity factor | $ | |
| Unit price factor | ||
| Total effect of changes in sales | ||
| Effect of changes in variable cost of goods sold: | ||
| Variable cost quantity factor | $ | |
| Unit cost factor | ||
| Total effect of changes in variable cost of goods sold | ||
| Effect of changes in selling and administrative expenses | ||
| Variable cost quantity factor | $ | |
| Unit cost factor | ||
| Total effect of changes in selling and administrative expenses | ||
| Actual contribution margin | $ | |
2. At a meeting of the board of directors on January 30, the president, after reviewing the contribution margin analysis report, made the following comment:
It looks as if the price increase of $14 was a favorable tradeoff for decreased sales volume, yet variable cost of goods sold was less than planned and variable selling and administrative expenses were out of control and needed to be investigated. He went on to say that since the favorable tradeoff between higher price and lower sales volume was so successful, the company should consider increasing the sales price to $130.
Do you agree or disagree with the president's proposal and which reason would best explain your decision about the data?
Disagree with the president because the majority of the decrease in the variable cost of goods sold was due to the variable cost quantity factor and the increased variable selling and administrative expenses are probably a result of additional selling efforts needed to be competitive at higher prices.
Agree with the president because the unit cost factor for the variable selling and administrative cost is greater than the unit cost factor for the variable cost of goods sold, making an investigation necessary.
Agree with the president because the total effect of change in sales is greater than the total effect of changes in variable cost of goods sold, making an additional price raise attractive for more profits.
Disagree with the president because the contribution margin as a percentage of sales is greater for the planned sales level than the actual sales level, making his concern about variable selling and administrative expenses unwarranted.
Agree with the president because the majority of the decrease in the variable cost of goods sold was due to the sales price factor, as well as an increase in the variable selling and administrative expenses as a percentage of sales, making an additional price raise attractive for more profits.
The correct answer is:
In: Accounting
CASE STUDY - Western Power
In response to the steady growth in southern California, Western Power decided to build an innovative $ 1 billion power plant near San Diego, as this new plant will not only generate high levels of clean electrical energy using new technology, but rather the energy generated by some cities will suffice. Nearby, enough energy could also be generated to sell to other utility companies in the rest of southern California and parts of neighboring states.
Therefore, the executive management of Western Power was keen to complete the project as soon as possible due to the large returns expected from these additional sales.
Nevertheless, as soon as news of the proposed power plant construction began to spread, the company found great opposition, especially from residents near the construction site of that station. Once construction began, many proceeded to institute several lawsuits in an attempt to halt construction, and the "Western Power" was only adopting an intensive campaign to build public relations through which the local population could be persuaded of the benefits of this project.
After several months of delay, work on the project continued and the marketing department of the company began contacting other public utility companies so that contracts could be signed to sell energy to them. Then it became clear that the returns resulting from electricity sales would not be as large as expected, and therefore the administration asked Rob Hedge, the project manager, to find ways to reduce the construction budget so that the expected level of profitability from that new plant could be maintained.
Unfortunately, Rob was unable to find different ways in which to reduce construction costs due to the presence of strict regulations from environmental protection organizations and many other government agencies regarding the foundations of building power plants, so he was only asked by architects and designers to suggest some changes in designs Through which construction costs can be reduced, the designers made a number of suggestions that would reduce costs significantly, but unfortunately construction engineers were unable to make the proposed changes due to the advanced technology used to generate power at that plant. In spite of this, they finally agreed to make some changes, which were implemented immediately. Rob called on architects and construction engineers to be present on the construction site permanently so that other ways to adjust design can be sought to reduce costs.
After one year of a five-year project, the head of the construction company requested an urgent meeting with the head of the "Western Power" company, where he complained about the numerous design changes that caused severe confusion to the workers as well as overtime. He explained that the building engineers make changes during construction on the site without informing the design engineers so that they can update the plans. Also, construction managers are often unaware of these changes, which means that some tasks were sometimes done in error. In addition, design engineers have made some inappropriate design changes without consulting construction engineers, causing them to be re-worked more than once.
Also, after extensive investigations, the Western Power administration received notifications from government oversight agencies that two essential parts of the first phase of the project did not meet government standards and had to be rebuilt. When the administration also learned that the project was six months behind schedule, and there was an additional 10% cost to the budget, it fired the project manager.
If you are appointed as a new project manager. What actions will you take to better address problems and control this project?
In: Operations Management
Central University of Illinois has a newly appointed president, Catherine Husker. This has been a challenging budget year due to the difficulties of getting a state budget passed in the State Legislature. It appears from all reports that the budget that may get passed will be only 90% of last year’s state appropriations for the University. This means the University will have to cut their own operating budget for next year because of the State’s expected reduction in appropriations to higher education.
Husker just had a meeting with the athletic director of the university, Gareth Connor, to discuss the budget for the athletic department. Central University has been a men’s football and basketball powerhouse for the last several decades. However, the women’s athletic program has had less success. Last year, though, the women’s basketball team was one of the team’s selected to participate in the NCAA Women’s Basketball Competition through an “at-large bid” due to their outstanding season.
Connor and Husker discussed the 2018 Athletic Department budget, which Connor believed was the final draft. The meeting did not go well. In fact, it went terribly. Husker discussed four grave concerns she had about the Athletic Department budget and requested Connor to review and revise the budget in light of her concerns below. Draft II of the budget is due in two weeks time.
Concern 1: The Athletic Department is budgeting a loss of over $3 million. Given the tight fiscal position of the university, this outcome is unacceptable to Husker. A budgeted loss of $1 million is the most she will tolerate for 2018. By 2019 the Athletic Department has to operate with a balanced budget. She tells Connor this is nonnegotiable.
Concern 2: The low allocation of money to the women’s athletic program. Fox Valley News, a tabloid television show, recently ran a program titled “It’s a Man’s World at Central University Athletics’ Program.” Husker said Connor is treating woman athletes as “third-class citizens.”
Concern 3: The low academic performance of the men’s football athletes, many of whom have full scholarships. She notes that the local TV news recently ran an interview with three football-team students, only one of which “exemplified the high academic credentials she wants Central to showcase to the world.” As for the other two students, she calls one student “incoherent” and another “incapable of stringing sentences together.”
Concern 4: The outrageous salary paid to “Bull” Mason, the football coach. She notes it is twice that of the highest paid academic person on campus, a Nobel Prize winner. Moreover, Mason receives other payments from his “Football the Central Way” summer program for high school students.
Below is Draft I of the Athletic Department budget:
Central University 2017 Athletic Department Budget ($ millions)
Revenues:
Men’s athletic programs $10.350
Women’s athletic programs 0.780
Other (endowment income, gifts) 3.400 $14.530
Costs:
Men’s athletic programs $11.040
Women’s athletic programs 2.800
Other (non-assigned to programs)* 3.700 17.540
Operating Income $( 3.010)
*Other non-assigned programs include rugby, soccer and volleyball
Men’s Athletic Programs:
Football Basketball Swimming Other Total
Revenues $8.600 $1.500 $0.100 $0.150 $10.350
Costs 7.400 2.700 0.300 0.640 11.040
Full Scholarships 37 21 6 4 68
Women’s Athletic Programs:
Basketball Swimming Other Total
Revenues $0.600 $0.080 $0.100 $ 0.780
Costs 1.800 0.200 0.800 2.800
Full Scholarships 11 4 2 17
REQUIRED:
Connor will be holding a half-day meeting with key officials of the Athletic Department (of which your team are some of these key officials) to discuss the university president’s concerns. In order for your team of officials to be prepared to discuss the concerns of the president at this meeting, please answer the following questions prior to the meeting.
Questions:
Who are the stakeholders? (Worth 4 pts.)
The Athletic Department is operating at a loss. What are some of the ways the Department can increase revenues? Are there any potential pitfalls or problems with any of your ideas? (Worth 6 pts.)
In: Finance
Central University of Illinois has a newly appointed president, Catherine Husker. This has been a challenging budget year due to the difficulties of getting a state budget passed in the State Legislature. It appears from all reports that the budget that may get passed will be only 90% of last year’s state appropriations for the University. This means the University will have to cut their own operating budget for next year because of the State’s expected reduction in appropriations to higher education.
Husker just had a meeting with the athletic director of the university, Gareth Connor, to discuss the budget for the athletic department. Central University has been a men’s football and basketball powerhouse for the last several decades. However, the women’s athletic program has had less success. Last year, though, the women’s basketball team was one of the team’s selected to participate in the NCAA Women’s Basketball Competition through an “at-large bid” due to their outstanding season.
Connor and Husker discussed the 2020 Athletic Department budget, which Connor believed was the final draft. The meeting did not go well. In fact, it went terribly. Husker discussed four grave concerns she had about the Athletic Department budget and requested Connor to review and revise the budget in light of her concerns below. Draft II of the budget is due in two weeks time.
Concern 1: The Athletic Department is budgeting a loss of over $3 million. Given the tight fiscal position of the university, this outcome is unacceptable to Husker. A budgeted loss of $1 million is the most she will tolerate for 2020. By 2021 the Athletic Department has to operate with a balanced budget. She tells Connor this is nonnegotiable.
Concern 2: The low allocation of money to the women’s athletic program. Fox Valley News, a tabloid television show, recently ran a program titled “It’s a Man’s World at Central University Athletics’ Program.” Husker said Connor is treating woman athletes as “third-class citizens.”
Concern 3: The low academic performance of the men’s football athletes, many of whom have full scholarships. She notes that the local TV news recently ran an interview with three football-team students, only one of which “exemplified the high academic credentials she wants Central to showcase to the world.” As for the other two students, she calls one student “incoherent” and another “incapable of stringing sentences together.”
Concern 4: The outrageous salary paid to “Bull” Mason, the football coach. She notes it is twice that of the highest paid academic person on campus, a Nobel Prize winner. Moreover, Mason receives other payments from his “Football the Central Way” summer program for high school students.
Below is Draft I of the Athletic Department Budget:
Central University 2020 Athletic Department Budget ($ millions)
Revenues:
Men’s athletic programs $10.350
Women’s athletic programs 0.780
Other (endowment income, gifts) 3.400 $14.530
Costs:
Men’s athletic programs $11.040
Women’s athletic programs 2.800
Other (non-assigned to programs)* 3.700 17.540
Operating Income $( 3.010)
*Other non-assigned programs include rugby, soccer and volleyball
Men’s Athletic Programs:
Football Basketball Swimming Other Total
Revenues $8.600 $1.500 $0.100 $0.150 $10.350
Costs 7.400 2.700 0.300 0.640 11.040
Full Scholarships 37 21 6 4 68
Women’s Athletic Programs:
Basketball Swimming Other Total
Revenues $0.600 $0.080 $0.100 $ 0.780
Costs 1.800 0.200 0.800 2.800
Full Scholarships 11 4 2 17
REQUIRED:
Connor will be holding a half-day meeting with key officials of the Athletic Department (of which your team are some of these key officials) to discuss the university president’s concerns. In order for your team of officials to be prepared to discuss the concerns of the president at this meeting, please answer the following questions prior to the meeting.
Questions:
In: Accounting
Item 7
In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.
|
Original Source Material |
Student Version |
|
There is a design methodology called rapid prototyping, which has been used successfully in software engineering. Given similarities between software design and instructional design, we argue that rapid prototyping is a viable method for instructional design, especially for computer-based instruction. References: |
Rapid prototyping could be an advantageous methodology for developing innovative computer-based instruction (Tripp & Bichelmeyer, 1990). References: |
Which of the following is true for the Student Version above?
Word-for-Word plagiarism
Paraphrasing plagiarism
This is not plagiarism
Hints
Item 8
In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.
|
Original Source Material |
Student Version |
|
The philosophical position known as constructivism views knowledge as a human construction. The various perspectives within constructivism are based on the premise that knowledge is not part of an objective, external reality that is separate from the individual. Instead, human knowledge, whether the bodies of content in public disciplines (such as mathematics or sociology) or knowledge of the individual learner, is a human construction. References: |
The philosophical position known as constructivism views knowledge as a human construction. The various perspectives within constructivism are based on the premise that knowledge is not part of an objective, external reality that is separate from the individual. Instead, human knowledge is a human construction. |
Which of the following is true for the Student Version above?
Word-for-Word plagiarism
Paraphrasing plagiarism
This is not plagiarism
Hints
Item 9
In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.
|
Original Source Material |
Student Version |
|
Merck, in fact, epitomizes the ideological nature--the pragmatic idealism--of highly visionary companies. Our research showed that a fundamental element in the "ticking clock" of a visionary company is a core ideology--core values and a sense of purpose beyond just making money--that guides and inspires people throughout the organization and remains relatively fixed for long periods of time. References: |
While some have identified Merck as a visionary company dedicated to a "core values and a sense of purpose beyond just making money" (Collins & Porras, 2002, p. 48), others point out corporate misdeeds perpetrated by Merck (e.g., its role in establishing a dubious medical journal that republished articles favorable to Merck products) as contradictory evidence. References: |
Which of the following is true for the Student Version above?
Word-for-Word plagiarism
Paraphrasing plagiarism
This is not plagiarism
Hints
Item 10
In the case below, the original source material is given along with a sample of student work. Determine the type of plagiarism by clicking the appropriate radio button.
|
Original Source Material |
Student Version |
|
The philosophical position known as constructivism views knowledge as a human construction. The various perspectives within constructivism are based on the premise that knowledge is not part of an objective, external reality that is separate from the individual. Instead, human knowledge, whether the bodies of content in public disciplines (such as mathematics or sociology) or knowledge of the individual learner; is a human construction. References: |
"The philosophical position known as constructivism views knowledge as a human construction. The various perspectives within constructivism are based on the premise that knowledge is not part of an objective, external reality that is separate from the individual. Instead, human knowledge is a human construction" (p. 29). |
Which of the following is true for the Student Version above?
Word-for-Word plagiarism
Paraphrasing plagiarism
This is not plagiarism
In: Psychology
1. For answering the question below, you can use your own home, your parents’ or a friend’s home, or just imagine your dream first home and location.
Your homeowners policy is about to be renewed. It is written to cover your dwelling for its original construction cost. The policy is a Homeowners form HO-3 and is standard in all respects. The coverages are all standard percentages, and there are no endorsements or modifications to the policy. What changes to this basic contract should you consider?
2. You might be able to answer this one using your own dwelling, apartment, dorm room, etc. If not, refer to #1 above. Go to the www.rateyourrisk.org (Links to an external site.)Links to an external site. web site and take the "Risk of Burglary Test." What changes can you make to decrease the likelihood of this type of crime?
3. As the CEO of a property-casualty insurance company, how would another downturn in the economy, such as what happened from 2007-2010, especially in the housing market, affect your homeowners insurance business? What about insurers in areas at risk for natural disasters such as the Houston area or Florida?
4. How might changes in technology such as Smart Homes and the Internet of Things, Solar Panels, etc. affect the structure of homeowners insurance with respect to coverages and risk exposures?
In: Operations Management
1. Which of the following statements regarding personality development is TRUE?
A. Personality is determined by heredity and does not change over the course of one's life.
B. The greatest changes in personality development occur in early childhood.
C. Personality development is relatively stable, but great changes occur later in one's life.
D. Personality development is rarely stable and dramatic changes can be seen in all stages of a person's life.
2. Which of the following is the primary vehicle for socializing an individual into a particular culture?
A. immediate family
B. group membership
C. life experiences
D. peers
3. A society in which gender roles overlap is said to be
A. masculine.
B. feminine.
C. gender neutral.
D. gender biased.
4. Job _______ is the extent to which individuals find fulfillment in their work.
A. satisfaction
B. appreciation
C. awareness
D. motivation
5. What does research suggest about the correlation between job satisfaction and job performance?
A. Job satisfaction and job performance are influenced by one's personality.
B. There is a direct link between job satisfaction and job performance.
C. Job performance and job satisfaction are not influenced by one's attitudes or locus of control.
D. There is no link between a satisfied, high-performing workforce and overall organizational effectiveness.
In: Operations Management
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $600 per set and have a variable cost of $300 per set. The company has spent $170,000 for a marketing study that determined the company will sell 63,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 14,000 sets of its high-priced clubs. The high-priced clubs sell at $900 and have variable costs of $600. The company will also increase sales of its cheap clubs by 9,000 sets. The cheap clubs sell for $400 and have variable costs of $200 per set. The fixed costs each year will be $8,484,000. The company has also spent $1,103,000 on research and development for the new clubs. The plant and equipment required will cost $20,200,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,059,000 that will be returned at the end of the project. The tax rate is 21 percent, and the cost of capital is 8 percent. McGilla Golf would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold.
a. What is the sensitivity of the NPV to changes in the price of the new club?
b. What is the sensitivity of the NPV to changes in the quantity sold?
In: Finance
Calculate the elasticity for the following questions
(USING THE MIDPOINT (AVERAGE) FORMULA) and indicate if the goods
are:
1. Inferior,
2. Normal,
3. Complements, or
4. Substitutes
(Please Include The Negative signs in your answers where appropriate)
A. The price of gasoline increases from 12 per barrel to 28 per barrel and as a result, the demand per month for new cars changes from 600 to 200.
Part 1: The elasticity is
Part 2: These goods are (answer using numbers,
1-4)
B. As a result of a change in income from 1,275
to 1,875 per month, the consumption of good X changes from 380 to
200 units.
Part 3: The elasticity is
Part 4: Good X is a(an) (answer using numbers,
1-4)
C. As a result of a decrease in the price of good
Y from 39 to 19 the demand for good X changes from 150 to 350
units.
Part 5: The elasticity is
Part 6: These goods are(answer using numbers,
1-4)
D. As a result of an economic boom in Calgary, the
average income increases from 2,800 to 4,200 per month and as a
result the demand for new houses increases from 160 to 260
units.
Part 7: The elasticity is
Part 8: New houses are a(an) (answer using
numbers, 1-4)
In: Economics
1. A sample of ideal gas at room temperature occupies a volume of 38.0 L at a pressure of 512 torr . If the pressure changes to 2560 torr , with no change in the temperature or moles of gas, what is the new volume, V2?
Express your answer with the appropriate units.
V2 =
2. If the volume of the original sample in Part A (P1 = 512 torr , V1 = 38.0 L ) changes to 51.0 L , without a change in the temperature or moles of gas molecules, what is the new pressure, P2?
Express your answer with the appropriate units.
P2 =
3. A sample of gas in a balloon has an initial temperature of 8.0 ∘C and a volume of 1.38×103 L . If the temperature changes to 73 ∘C , and there is no change of pressure or amount of gas, what is the new volume, V2, of the gas?
Express your answer with the appropriate units.
V2 =
4. What Celsius temperature, T2, is required to change the volume of the gas sample in Part A (T1 = 8.0 ∘C , V1= 1.38×103 L ) to a volume of 2.76×103 L ? Assume no change in pressure or the amount of gas in the balloon.
Express your answer with the appropriate units.
T2 =
5. If the initial volume of the balloon is 2.5 L , what will its volume be after it cools? (Assume constant pressure.)
Express your answer using two significant figures.
V2 =
In: Chemistry