QUESTION 5

Cameron Industries Ltd purchased a new photocopier on 1 July 2010 at a cost of $16,500. The machine has an estimated residual value of $1,500 and an estimated useful life of 5 years or 30,000 copies.

Expected production for each year is 5,000, 4,000, 8,000, 7,000 and 6,000 copies respectively.

The Reducing Balance rate is 35%.

Required:

(a)     Complete the following table for the five years of the machine’s life for each of the depreciation methods indicated.          

You are required to round your calculations to the nearest whole dollar.

SPACE FOR WORKINGS (IF NEEDED):

(Total marks for Question 5 = 8 marks)

1. Judge and Cable (2010) report the results of a study demonstrating a negative relationship between weight and income for a group of women professionals. Following are data similar to those obtained in the study. Income figures are rounded to the nearest $1,000.

1. Conduct a Pearson’s r hypothesis test to determine if there is a statistically significant correlation between weight and income. Use a two-tailed test with α = .05.
   1. Step 1 (û or ü)
   2. Step 2 (û or ü)
   3. Step 3
      1. Numerator (û, ü, or üü)
      2. Denominator (û, ü, or üü)
      3. r (û, ü, or üü)
   4. Step 4 (û or ü)
   5. Step 5 (û, ü, or üü)
   6. Interpretation (û, ü, or üü)

The home team won 1359 out of 2430 games in 2010. Is there any noticeable “home

field advantage” in MLB at α = .01? (Slide #9-24)

1. a) What is n and success rate ̂? n= 2430, ̂=1359/2430 = 0.559

2. b) Set up H0 and H1. H0: p = 0.5(=p0) vs. H1: p > 0.5

3. c) Which conditions should you check before applying CLT? Success/Failure, Independence condition

4. d) Decide an appropriate distribution from H0. N(0.5, √( p0q0/n) = 0.010) by CLT

5. e) Set the decision rule at α = 0.01. z.01 = 2.33If z > 2.33, we can reject H0.

6. f) Compute a test statistic and make a decision. z = ( ̂ –p0) / SE = 5.9 > z.01 We can reject H0.

7. g) Express the decision in terms of the problem.
   There is sufficient evidence to conclude that there is a home field advantage in MLB at α=.01

h) Find the SE (standard error), ME (Margin of error) and the 99% confidence interval. SE = . . =0.010; ME = z∙SE = 2.33 * 0.010 = 0.0233;

CI = .559 ± .0233 = [0.5357, 0.5823]
i) What would you say about home field advantage using the above CI?

The Internal Revenue Service reports that the mean federal income tax paid in the year 2010 was $8040. Assume that the standard deviation is $4800. The IRS plans to draw a sample of 1000 tax returns to study the effect of a new tax law.

What is the probability that the sample mean tax is less than $1800?

What is the probability that the sample mean tax between $7400 and $8000?

40th percentile of the sample mean is ?

X company manufacture toasters. For the first 8 months of 2010, the company reported the following operating results while operating at 75% of plant capacity:

Sales (350,000 units) $4,375,000

Cost of goods sold $2,600,000

Gross Profit $1,775,000

Operating expenses $840,000

Net Income $935,000

Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed. In september, X company receives a special order for 15,000 toasters at $7.6. Acceptance of the order would result in additional $3000 of shipping costs but no increase in fixed operating expenses.

a) prepare an incremental analysis for the special order

b) should x company accept the order? why or why not?

The difference between IFRS and GAAP are well documented and in the 2000's and early 2010's several convergence projects were undertakem by IASB and FASB in the effort to align the two. One of the projects relate to revenue recongnition and specifically that of construction contracts. You are to critically reflect on the cponvergence projects taking into account the following:

(a) the differences in revenue recognition (of construction contracts) between IFRS and GAAP?

(b) Why it is importatant to consider the differences in IFRS and GAAP in general?

(c) Potential for lobbying to take place in final outcome of convergence projects.

A 2010 survey by a reputable automotive website found that 62​% of vehicle owners avoided automotive maintenance and repairs. Suppose a company would like to perform a hypothesis test to challenge this finding. From a random sample of 150 vehicle​ owners, it was found that 103 avoid maintenance repairs. Using alpha equals 0.05​, complete a-c below,

a.) What is the critical value(s)?

b.) What is the test statistic?

c.) What is the p-value?

During the Great Recession (2008-2010) , “the portfolio of federal bonds amassed [by the FED] during 2009 will swell…about doubling.” This is in contrast to the FED initial action to the 2007-8 crisis when one asset account was reduced and the funds shifted into another asset account of the FED to meet the liquidity needs of the marketplace:

            a. FED expanded the money supply without expanding either the Loan or Security Portfolio on its balance sheet.

            b. FED forced gold prices to record prices to provide the collateral to print additional money.

            c. FED increased its security holdings associated with US Treasuries, repos, acceptances, foreign securities, and foreign currencies.

            d. FED sold US Treasuries from its portfolio and expanded loans to record high amounts.

In a 2008 article, the FED’s intention to “buy the equivalent of most of the new Treasury debt issued” to maintain an open & active market (stabilize) is referred to as ______________ monetary policy:

            a. defensive (action to maintain achievement of current goals)

            b. offensive (action to change the direction of monetary policy)

            c. reactionary (action taken without clear policy intentions stated)

            d. precautionary (action in expectation of some unknown events)

According to a Nov. 5 2019 article, in 2012 the FED set the inflation target at 2% in a “…symmetric (manner), meaning that the FED is equally unhappy if prices run below or above 2%.” This goal statement further restricts (redefines for the immediate situation) most directly which of these more general goals:

            a. fight inflation by keeping inflation within a + 2% range

            b. fight unemployment by targeting a natural level of 4%

            c. provide real growth to the economy of 3%

            d. provide a flexible money supply to achieve stable prices and full employment.

In a Nov. 5 2019 article it is reported that Esther George, President of the Federal Reserve Bank of Kansas City, opposes the recent (and any further) rate cuts. “Easing policy might lift inflation, but at the cost of further tightening an already hot labor market and perhaps fostering financial imbalances.” She stated. Her opinion will have the most direct impact on national Monetary Policy if which of the following is true:

            a. in her position currently, she is a member of the Board of Governors

b. in her position currently, she is a member of the Federal Advisory Council

            c. in her position currently, she is a Federal Reserve Bank President

            d. in her position currently, she is a voting member of the FOMC.

6) Each year since winning control of the House of Representatives in the 2010 election, Conservative wing of Republicans have argued that we need to immediately initiate sharp reductions in government spending and entitlement programs and rapidly move towards a balanced budget, (although they have never actually produced a budget proposal in which tax revenues would match government spending plus entitlement transfers). Many Democrats, while arguing that tax rate increases on high income earners need to be part of the any deficit reduction program, have agreed that we need to initiate budget deficit reduction now. However, under the current Trump Administration, the tax reform implemented in 2018 was just the reverse of what democratic party views on taxes. Citizens for Tax Justice (CTJ) have made an estimate of how much these tax reform approved by by the GOP led Congress would impact the existing budget deficit crisis already. According to their estimate, this reform would yield tax revenues of only $1.1 trillion. The Office of Management and Budget (OMB) estimated that the federal government would raise an estimated $2.5 trillion and spend $5 trillion in 2018. Another estimate by independent research organizations and government agencies predict that the federal budget deficit might increase by $1 trillion in 2018-2019 budget year. Given this reality, would result which of the following outcomes?

A) What is the argument against attempting to balance the Federal Government budget rapidly at the present time via either deep cuts in Federal Government spending or sharp increases in federal income tax rates? 4pts

B) Does this argument imply that budget deficits don’t matter in the long run? If not, why might the impact of large deficits predicted in the long run under current tax and spending programs be different than the impact today? Explain. 4pts