In recent years, public universities have experienced major budget cuts due to reduced funding from their state governments. These budget cuts usually occur at the most inopportune time—during the school year when contractual commitments with faculty and staff had been signed, programs had been planned, and students were enrolled and taking classes.

Required:

1. Should the administration be “fair” to all affected and institute across-the-board cuts whenever the state announces a reduction in funding?
2. If not across-the-board cutbacks in programs, then would you recommend more focused reductions, and if so, what priorities would you establish for bringing spending in line with revenues?
3. Since these usually are not one-time-only cutbacks, how would you manage continuous, long-term reductions in budgets extending over a period of years?
4. Should the decision-making process be top-down (centralized with top administrators) or bottom-up (participative)? Why?
5. How should issues such as protect-your-turf mentality, resistance to change, and consensus building be dealt with?

Recent research indicates that the effectiveness of antidepressant medication is directly related to the severity of the depression (Khan, Brodhead, Kolts & Brown, 2005). Based on pretreatment depression scores, patients were divided into four groups based on their level of depression. After receiving the antidepressant medication, depression scores were measured again and the amount of improvement was recorded for each patient. The following data are similar to the results of the study.

This is the summary table for the ANOVA test:

From this table, you obtain the necessary statistics for the ANOVA:
F-ratio: 4.4034689424001
p-value: 0.00489
η2=η2= 0.052171658316617

What is your final conclusion? Use a significance level of α=0.02α=0.02.

• There is a significant difference between treatments
• These data do not provide evidence of a difference between the treatments

Explain what this tells us about the equality of mean?

Let's look at the boxplot for each treatment:

012345Depression ScoresLow ModerateHigh ModerateModerately SevereSevere

How could boxplots refine our conclusion in an ANOVA test? Your answer should address this specific problem.

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Recent research indicates that the effectiveness of antidepressant medication is directly related to the severity of the depression (Khan, Brodhead, Kolts & Brown, 2005). Based on pretreatment depression scores, patients were divided into four groups based on their level of depression. After receiving the antidepressant medication, depression scores were measured again and the amount of improvement was recorded for each patient. The following data are similar to the results of the study.

This is the summary table for the ANOVA test:

From this table, you obtain the necessary statistics for the ANOVA:
F-ratio: 4.4034689424001
p-value: 0.00489
η2=η2= 0.052171658316617

What is your final conclusion? Use a significance level of α=0.02α=0.02.

• There is a significant difference between treatments
• These data do not provide evidence of a difference between the treatments

Explain what this tells us about the equality of mean?

Let's look at the boxplot for each treatment:

012345Depression ScoresLow ModerateHigh ModerateModerately SevereSevere

How could boxplots refine our conclusion in an ANOVA test? Your answer should address this specific problem.

Edit

Insert

Formats

Pioneer Castings, Inc. is realizing it's employee turn-over is rather high. Furthermore, the management is also wondering if the rates are the same between Men and Women. To find out the details, it randomly picked a sample of men and women and recorded the number of years each stayed with the company. Given this dataset, can we conclude that the men and women have the same tenure at the company? Use level of significance = 4% everywhere.                  
                                      
                  
Run the appropriate T-test (using Excel and Explain the steps). Output to Cell D33.                              
Q5   What is the P-value?              
Q6   What is the Level of Significance?              
Q7   If you compare the T-stat with T-critical, you would conclude that               
Q8   If you compare the P-value with Alpha, you would conclude that               

Men       Women
3.2       0.7
15.7   0.9
1.3       0.8
0.7       0.3
8.6       5.8
10.4   2.3
3.2       1.4
1.3       9.3
23.9   5.7
0.2       12.1
0.8       2.8
11.1   0.4
1.5       1.4
3.7       1
14.9   0.8
3       11.9
2.3       4.8
18.2   1.3
12.9   2.6
2.5       1.8
3.8       6.3
3.4       20.7
5.5       1.8
3.8       16.4
17.3   4.1
3.7       2.7
9.7       1.4
10.3   2.9
4.3       4.5
9       4
15.8   0.6
16.8   3
4.1       1.1
5.6       7
1.4       1.4
20.1   2.3
1.2       17
5.1       6
5.8       3.7
6.8       6.8
13.7   6.1
6.1       0.4
6.4       4.9
2.5       3.3
22.2   10.6
4.4       4.9
18.1   0.3
0.4       4.7
2.8       3.7
13.9   1.4
7.9       2.8
5.4       1.3
6.2       1.6
2.5       4
11.3   7.1
10       2.5
2       3.8
1.5       5.8
4.3       8.9
1.3       7.6
5.8       11.2
2.8       3.2
1.5       9.4
0.6       5.6
5.8       8.2
4.8       0.1
2.7       2.5
5.7       11.1
17       2.8
11.3   1.1
9.6       3.5
1.9       2.2
15.8   2.9
2.4       1.6
5.6       6.6
0.9       1.9
20.6   1.3
11.2   1.7
10.6   7.8
1.2       5.3
10.7   3.1
3.1       5.2
0.2       7.6
0.5       0.6
3.7       5.6
7.1       2.2
1.6       10.5
20.1   2.8
3.8       8.5
3.6       6.2
1.8       1.5
1.4       3.4
11.3   8.9
10.2   20.2
11.6   0.6
15.9   2.5
15.3   3
10.1   0.7
3.4       10.7
3.7       0.3
6.4       4.1
14.2   35.9
2.2       7.1
2.6       4.2
18.9   3.2
6.4       1.4
12       2
16.6   2
7.3       20.9
5.3       25.2
10.3   1.4
16.7   5.2
12.6   2.9
1.9       3
7.1       2.5
6.6       6.1
1.6       12.4
3.2       3
1.6       8.4
0.9       0.8
0.5       13
1.5       1.5
1.9       1.1
4.8       5.9
18       8.4
1       10.6
0.8       4.2
16.5   0.6
1.6       17.6
3.1       1.4
0.6       4.7
10.8   15.4
1.2       8.6
3.1       2.6
3.3       0.6
3.1       8.8
3.7       5.6
0.7       10.3
2.5       6.5
2.3       1.6
5       0.6
0.3       0.8
4.1       7.9
3.4       3.5
6.2       7.5
8       6.5
7.8       3.3
1.8       3.2
0.3       2.4
0.7       3.3
14.1   3.6
5.1       8.1
2.5       3.9
3.3       1
1.5       2
19.5   27.9
3       15.4
1.8       0.5
3       0.5

Barfly Inc. manufactures and markets a line of non-alcoholic mixers sold to restaurants and bars. Barfly’s Creative Bartender has recently experimented with making alcoholic versions with the intention of bottling and marketing these directly to the public through appropriate retail outlets. Prior spending on R&D was $1.5 million and Barfly anticipates spending half of that again during the first year of the project to conclude R&D (for total R&D of $2.25 million). The cost of building the manufacturing line is estimated at $1,175,000. Marketing projects revenues from the new product line will be 800,000 units in the first year, growth in years 2 and 3 at 15%, growth in year 4 at 10%, and 5% for year 5. While Barfly anticipates the product will have a longer life than 5 years, their initial projections are for a 5 year time horizon, fully depreciating the cost of plant and equipment over that time on a straight-line basis. Revenue per unit is projected to be $2.50 in the first year, with prices rising by 3% per year thereafter. COGS are projected to be 68% of revenues, SG&A 7% of revenues, and the company’s marginal tax rate is 32%. Net working capital required for the project is expected to be 2% of revenues annually once the project is fully online in year 1. Barfly’s balance sheet includes $3,000,000 in total capital, of which $980,000 is debt. The market yield to maturity on debt is 3.75%, the risk free rate on a 5-year Treasury is 3%, and the market risk premium is 6.5%. The company’s beta is 1.3 and the CFO uses the CAPM to estimate cost of equity.

Management has been studying the company’s capital structure and is considering using a small secondary offering of stock to pay down debt. The following data is used to determine the cost of debt under varying capital structures.

1. If Barfly issues $180,000 in new equity and uses the proceeds to repurchase (and defease*) existing debt, what would the resulting weighted average cost of capital be?

2)Should management move towards this capital structure? Why or why not?

Absorption and Variable Costing with Over- and Underapplied Overhead

Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:

During the year, the company had the following activity:

Actual fixed overhead was $12,800 less than budgeted fixed overhead. Budgeted variable overhead was $4,400 less than the actual variable overhead. The company used an expected actual activity level of 10,600 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.

Required:

1. Compute the unit cost using (a) absorption costing and (b) variable costing.

2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.

3. Prepare a variable-costing income statement. Round your answers to the nearest cent.

4. Reconcile the difference between the two income statements.
The absorption costing generates an income $ more  than variable costing.

Absorption and Variable Costing with Over- and Underapplied Overhead

Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:

During the year, the company had the following activity:

Actual fixed overhead was $13,600 less than budgeted fixed overhead. Budgeted variable overhead was $4,600 less than the actual variable overhead. The company used an expected actual activity level of 11,000 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.

Required:

1. Compute the unit cost using (a) absorption costing and (b) variable costing.

2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.

3. Prepare a variable-costing income statement. Round your answers to the nearest cent.

4. Reconcile the difference between the two income statements.
The absorption costing generates an income $ more  than variable costing.

Absorption and Variable Costing with Over- and Underapplied Overhead

Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:

During the year, the company had the following activity:

Actual fixed overhead was $13,600 less than budgeted fixed overhead. Budgeted variable overhead was $5,200 less than the actual variable overhead. The company used an expected actual activity level of 10,600 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.

Required:

1. Compute the unit cost using (a) absorption costing and (b) variable costing.

2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.

. Prepare a variable-costing income statement. Round your answers to the nearest cent.

4. Reconcile the difference between the two income statements.
The absorption costing generates an income $more  than variable costing.

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during March.

Required:

1. Prepare a flexible budget for March.

2. Prepare a report showing the spending variances for March.

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March.

Required:

1. Calculate the activity variances for March.

2. Calculate the spending variances for March.

1) Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Utilities

Maintenance

Supplies

Indirect Labor

Depreciation

Total

2) Calculate the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Utilities

Maintenance

Supplies

Indirect Labor

Depreciation

Total