Many consumers pay careful attention to stated nutritional contents on packaged foods when making purchases. It is therefore important that the information on packages be accurate. A random sample of n = 12 frozen dinners of a certain type was selected from production during a particular period, and the calorie content of each one was determined. (This determination entails destroying the product, so a census would certainly not be desirable!) Here are the resulting observations, along with a boxplot and normal probability plot. (To obtain the dataset for your analysis software, go to the Book Companion Website.)

A vertical boxplot has a vertical axis labeled "Calories" with values from 223 to 267. The top whisker is approximately at 265.0, the top-most edge of the box is near 253.0, the line inside the box is approximately 244.5, the bottom-most edge of the box is near 236.0, and the bottom whisker is at approximately 225.0.

(c) Carry out a formal test of the hypotheses suggested in part (b). (Use Table 4 in Appendix A. Use α = 0.05. Round your test statistic to two decimal places and your P-value to three decimal places.)

P=  

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

On
CompanyOff
Company

Materials inventory, December 1$75,080 $96,850

Materials inventory, December 31(a) 109,440

Materials purchased190,700 (a)

Cost of direct materials used in production201,210 (b)

Direct labor283,050 217,910

Factory overhead87,840 108,470

Total manufacturing costs incurred in December(b) 626,620

Total manufacturing costs716,250 716,250

Work in process inventory, December 1144,150 233,410

Work in process inventory, December 31121,630 (c)

Cost of goods manufactured(c) 620,810

Finished goods inventory, December 1126,890 108,470

Finished goods inventory, December 31132,890 (d)

Sales1,106,680 968,500

Cost of goods sold(d) 626,620

Gross profit(e) (e)

Operating expenses144,150 (f)

Net income(f) 215,010

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

LetterOn CompanyOff Company

a.$$

b.$$

c.$$

d.$$

e.$$

f.$$

Feedback

1.

a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory.

b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead.

c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process.

d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods.

e. Sales minus cost of goods sold equals gross profit.

f. Gross profit minus operating expenses equals net income.

Use similar relationships from On Company to find the missing amounts for the Off Company items (a) through (f).

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company

Statement of Cost of Goods Manufactured

For the Month Ended December 31

Work in process inventory, December 1 $

Direct materials:

Materials inventory, December 1 $

Purchases

Cost of materials available for use $

Materials inventory, December 31

Cost of direct materials used in production $

Direct labor

Factory overhead

Total manufacturing costs incurred during December

Total manufacturing costs$

Work in process inventory, December 31

Cost of goods manufactured $

Feedback

2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.

3. Prepare On Company's income statement for December.

On Company

Income Statement

For the Month Ended December 31

Sales $

Cost of goods sold:

Finished goods inventory, December 1 $

Cost of goods manufactured

Cost of finished goods available for sale $

Finished goods inventory, December 31

Cost of goods sold

Gross profit $

Operating expenses

Net income $

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Feedback

1.
a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory.
b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead.
c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process.
d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods.
e. Sales minus cost of goods sold equals gross profit.
f. Gross profit minus operating expenses equals net income.

Use similar relationships from On to find the missing amounts for the Off items (a) through (f).

2. Prepare On Company's statement of cost of goods manufactured for December.

Feedback

2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.

3. Prepare On Company's income statement for December.

Consider the following situation as if you were Ian.

Ian was a senior analyst at a major hotel company. Although Ian worked mostly in corporate headquarters, he would occasionally travel to the field where he met with front-line employees and learned what was on their minds.

On a trip to Portland, Ian had the chance to speak with two people working at the front desk about what it was like to work at the hotel. Daniel, the younger of the two had joined the staff recently; Ellen, the other employee (and Daniel’s supervisor), had been with the company for almost 15 years. Both employees seemed particularly interested in talking with Ian because they rarely got a chance to talk directly to anyone from headquarters.

As the three discussed changes in the hospitality industry, Ellen and Daniel complained about their company’s aggressive cost control initiatives, spearheaded by the charismatic but frugal CEO, whose policies were occasionally unpopular. After a few more minutes of conversation, Ellen casually said, “The CEO is so tight with a buck, I wonder if he is Jewish.”

As a Jewish person, Ian did not know how to react. He had never actually experienced anything like this before, especially in a professional setting. Ian’s instinct was not to be combative or hostile, but he felt a bit like a deer caught in the headlights. Daniel looked a little surprised at his supervisor’s remark, but, laughing, he quickly changed the subject. Smiling, Ian made an excuse to end or discussion and walk away.

The next day Ian woke up still bothered by Ellen’s remark. While checking out, he saw Daniel at the front desk. Ian mentioned to him that he may want to tell his supervisor to watch her remarks about other peoples’ ethnicity, to which Daniel replied, “I know what you mean because I am Puerto Rican, but I think that she meant it as a joke.” Ian could see that Daniel just wanted to smooth the issue over.

On the ride to the airport, Ian kept thinking about what he might do. Should he report Ellen to Human Resources? The company had a process in place for such matters, but he was worried. Ian did not know who he was dealing with; maybe Ellen would retaliate if he said something, especially since she would know who filed the complaint. Plus, Ian was not sure what the consequences would be – he didn’t want to get her fired. Ian only wanted Ellen to know how offensive the comments were.

As a team, consider what steps Ian should take.

What are the concerns facing Ian?

A listed industrial company is considering a major investment. The company’s investment projects team needs an appropriate rate at which to discount the estimated after-tax cash flows for the investment. Following the company’s normal practice this is based on the Weighted Average Cost of Capital.

Statement of financial position/long-term financing information:

The loan interest for the current year has just been paid. Interest is payable at the end of each of the next 3 years and the loan is to be redeemed, in cash, at a 5% premium at the end of the three years.

A dividend of 18c per share has just been paid. Dividends have shown an average annual growth rate of 7% over recent years.

The current share price is 210c and the loan has a market value of $97 (per $100 nominal).

The corporation tax rate is expected to be 30% for the near future.

Required:

1. Calculate the company’s Weighted Average Cost of Capital (WACC).

Explain your workings and any assumptions.

Justify the basis of the weightings which you used.

2. Explain any criticisms which could be made of using the figure calculated above as the discount rate for assessing the investment.

Colbert has been a waiter at the Burger Report in Starkville, Mississippi for four years. The Burger Report treats its employees well, allowing them a 60 percent discount for any food that they buy and consume on the premises (e.g., a $10 meal will cost only $4). In 2019, the value of the discount for Colbert amounted to $2,500 for days on which he was working and $1,500 for days when he was not assigned to work but still stopped by during mealtimes. The average profit the Report earns on a meal is 25 percent (i.e., the cost of a $10 meal is about $8.00). There is no requirement that Colbert eat at the Report during his breaks and some days he does and others he does not. Fortunately, there are a number of other eating establishments near the Report that Colbert can walk to and still get back to his fryolator with plenty of time before his shift starts again. The Report is adequately staffed so it’s not as if Colbert needs to stay at the restaurant to be “on call,” after all, there is no such thing as a “burger emergency!” Prepare a tax research memorandum in good form that provides your conclusion on Colbert’s treatment of the meals provided by his employer at a discount in 2019 for federal tax purposes. Do not consider any reporting by the Report on Colbert’s W-2—focus on only Colbert’s responsibility. Therefore prepare a tax research memo

Required: Make sure you show your work or use cell references for all calculations. You will not earn credit if you just type in your answer.                                                                                                                      

1. Determine the markup percentage on total variable costs required to earn the desired profit-46%