PLEASE PLEASE SOLVE BOTH QUESTIONS !!!!!!!!!!!!

Question 2.

The Preston Opera Company is putting on a production of “the Mikado”. The production will run for 12 performances. The performers and production staff do this on an amateur basis and are not paid for their work.

The production will be held in the Darebin Arts Centre, and the cost of hiring the venue is $250 per performance plus $2.50 for each ticket sold. Royalties are payable to the copyright owner at a cost of $7.50 per ticket sold. In addition, the sets and costumes will be hired at a cost of $1000 per performance or a total of $12,000 for 12 performances. Other miscellaneous production costs will be about $2,000.

After considering your advice, the Preston Opera Company tells you it can sell only 700 tickets. To reduce costs, the Company considers having only 10 performances.

Required

1) At a selling price of $30 per ticket, how many tickets will need to be sold for the production to break even if there are 12 performances?

2) Calculate the new number of ticket to be sold to reach break-even point for 10 performances.

3) Can Preston Opera Company put on the production of the Mikado without making a loss?

5+5+1 = 11 marks

Question 3

Hullabaloo produces plastic chairs in its Preston plant, which currently sell for $15 per chair. Hullabaloo has two sales staff, who are paid only on sales commission. They earn 10% of the sales they generate. Fixed costs at the Preston plant are $180,000 and variable costs (manufacturing and administrative together) amount to $9 per unit.

Profits have been down, and the CEO proposes to spend $15,000 to advertise the chairs, which should increase sales to a total of 60,000 units. The sales price will be increased to $18 to cover the cost of advertising.

Zizzy Furniture approaches Hullabaloo’s CEO and offers to purchase 10,000 chairs at a reduced price. The factory has enough spare capacity to produce these chairs without affecting normal sales. As sales staff do not make the sale, there will be no sales commission on the extra 10,000 chairs.

Required

1) Calculate the profit if the advertising is increased. Ignore the proposed Zizzy sale.

2) Calculate the minimum price Hullabaloo will need to charge for the special order sales to Zizzy to generate a profit of $30,000 on the sale

3) What other factors would Hullabaloo need to take into account before making the special sale?

answer the following questions

1-Leaders who use conceptual skills use a variety of approaches including creating a vision or strategic plan to make a company better. How did Howard Schultz use a variety of skills and also show that he was a conceptual leader?

2-How does creating a constructive climate contribute to employee productivity? How did Schultz encourage this at Starbucks?

3-What do you find appealing about Schultz’s leadership in terms of his traits?

Chapter two focuses on important leadership traits. One of those traits, integrity, is a very principle based (Northouse, 2015) trait. Howard Schultz, in addition to being the current executive chairman and former CEO of Starbucks, is also somewhat an activist who stands strongly for his principles and leads by them. Howard has actively driven for societal change in many problematic areas that our country faces, including the student debt crisis (Foroohar, 2015). Howard also puts his money where his mouth is. Through a partnership with Arizona State University, Starbucks offers full tuition coverage toward a bachelor’s degree for all of its eligible full and part time employees. This offering shows that Howard Schultz both lives and leads by his principles.

Schultz also has the confidence to take on controversial social and political topics, the sociability to meet with groups of people to discuss the issues, and the charismatic leadership traits that have some media outlets suggesting he may someday be a presidential candidate (MLA 8^th Edition).

Chapter 5

            This chapter focuses on two major elements of the behavior of leaders – attending to tasks and attending to relationships. Howard had his focus on meeting goals in life, making him a more vibrant leader who wanted tasks accomplished through his will. This was evident when he suggested changes to Starbucks with the aim of transforming the company’s economic value. As much as his directors were not in support of his moves, Howard never minded their take and moved on with his plans. The move prompted him to come up with II Giornale and later bought Starbucks (Biography.com, 2018). This is an example of Howard attending to tasks as discussed in chapter 5.

            Additionally, Howard must exhibit the second leadership behavior from the text: attending to relationships. An example of this is when Howard attended a job fair and interviewed young job seekers, getting to know them and hiring many without ever revealing that he was the CEO (Stein, 2017).    

Chapter 6

Chapter 6 discusses development of conceptual, interpersonal, and administrative core leadership skills. In the late 1980’s, Schultz was able to get Starbucks and multiple locations, as one of the first steps in his ambitious expansion of the company, (Business Insider 2017). Since Schultz has taken over, he has executed his strategic business plan and expanded to over 27,000 Starbucks locations in 75 countries. This is an example of Howard using his conceptual skills to set a vision for the future, and then bring that vision to life.

Schultz also demonstrates this chapter’s interpersonal skills to both interact on level with his many managers at town hall meetings while graciously fielding their questions (Meyers, 2005), and sit down and interact with prospective baristas without revealing his identity (Stein, 2017). Additionally, the ability to successfully interact and direct his managers as well as interview and hire baristas shows the administrative leadership skills of this chapter.

Chapter 8

Workplace environment contributes to the employees’ productivity since individuals are motivated by the level of interaction in their line of duty. Performance is determined by the kind of leadership in place, making it necessary to evaluate different styles implemented by different leaders. This paper focuses on how Howard Schultz implemented his leadership approach and the kind of impact he created for the Starbucks Company in relation to what chapter eight demonstrates towards climate construction. These discussions aim to help the reader in making crucial decisions when determining the future of an organization.

            Creating a conducive climate at the workplace demands proper analysis of various factors. Companies that are pro diversity encourage employees and motivate them to increase productivity. Howard communicated the structures of the company to other stakeholders with the aim of clarifying his moves. The norms were clear to any person who could observe the operations and the kind of decisions that he made to help in the success of the company. The practice could be visualized through the rate at which the company opened stores on a daily basis. As much as his approach yielded good returns, it is also vital to note that his support to gay marriage played a significant role in the challenges that faced the organization. When put to task to explain his motive he was arrogant and directed those uncomfortable with his belief to sell their shares and seek a better option. According to chapter 8 of the book, climate construction plays a crucial role in determining the future of the company where norms are defined, and different structures explained to employees (Northouse, 2015).

Chapter 12

            Chapter 12 is about overcoming obstacles. One strategy is known as path-goal strategy which dictates how leaders can help others to overcome these roadblocks. Path-goal leadership lays out seven major obstacles: (1) unclear goals, (2) unclear directions, (3) low motivation, (4) complex tasks, (5) simple tasks, (6) low involvement, and (7) lack of challenge (Northouse, 2015). Howard Schultz has created a culture at Starbucks that helps to minimize, if not remove, these obstacles from occurring in the first place.

            One of the ways that Howard Schultz ensures his employees avoid the issue of low involvement is by letting his managers know that they can act as leaders. He also encourages pushback, according to Susan Tardanico who is the CEO of the Authentic Leadership Alliance (Lebowitz, 2016).

Howard once closed his stores for 3.5 hours one day to retrain all of its baristas (Starbucks lingo for employee) to ensure quality products were being delivered to customers despite the fact that this move cost the company $6 million because of those closures. This is an example of both clarifying goals, quality of the end product, and overcoming low motivation by making sure his baristas were adequately trained and feeling competent in what they were doing.

            Starbucks has created a culture that allows its employees to feel like they’re making a difference in their everyday lives. They have a culture of inclusion, prompting their employees to want to be involved and challenged. They have clear directions and follow specific guidelines for how to act and they are all expected to behave according to those guidelines. This culture created by Schultz helps overcome low motivation as described in the chapter.

Should Firms That Go Public Engage in International Offerings?

POINT: Yes. When a U.S. firm issues stock to the public for the first time in an initial public offering (IPO), it is naturally concerned about whether it can place all of its shares at a reasonable price. It will be able to issue its stock at a higher price by attracting more investors. It will increase its demand by spreading the stock across countries. The higher the price at which it can issue stock, the lower is its cost of using equity capital. It can also establish a global name by spreading stock across countries.

COUNTER-POINT: No. If a U.S. firm spreads its stock across different countries at the time of the IPO, there will be less publicly-traded stock in the U.S. Thus, it will not have as much liquidity in the secondary market. Investors desire stocks that they can easily sell in the secondary market, which means that they require that the stocks have liquidity. To the extent that a firm reduces its liquidity in the U.S. by spreading its stock across countries, it may not attract sufficient U.S. demand for the stock in the U.S. Thus, its efforts to create global name recognition may reduce its name recognition in the U.S.

WHO IS CORRECT? Use the Internet to learn more about this issue. Which argument do you support? Offer your own opinion on this issue.

Suppose the U.S. Congress passes a budget which increases individual income

     taxes by $120 billion and increases infrastructure spending (airports, roads,

     bridges, etc.) by $50 billion. The increase in income taxes is concentrated at the top,

     so the tax increase causes personal consumption expenditures to fall by only $30

     billion. Use this information to answer the questions below. (20 pts)

            a. At constant interest rates (“other things equal”), what would these policy

                 changes do to national saving and domestic investment spending?

                        Change in S =

                        Change in I =

            b. Closed economy analysis: Assuming the U.S. financial system is closed to

                  international financial flows, draw an S/I diagram to illustrate the effect of

                  these policy changes on (1) U.S. interest rates and (2) the quantity of domestic

                  investment spending. Incorporate your numerical answers from part (a) into

                  your diagram.

-3-

            c. Open economy analysis: Now assume that the U.S. financial system is open

                 and that the U.S. is small enough in the global financial system that you can

                 ignore the effect of these policy changes on global interest rates. Draw an S/I

                 diagram to illustrate the effect of the policy changes on (1) U.S. net capital

                 flows and (2) domestic investment spending. When drawing your diagram,

                 assume that the U.S. would have had net capital inflow without the policy

                 changes.

Modern managers in today's business world have many more issues and concerns
regarding managing business enterprises relative to before the advent of
globalization. In that vein, they must be careful that they fully and completely take
into account the global economy so that they develop and adopt correct and proper
strategies that add value to the firms they are managing. In other words, they must
develop and adopt strategies that will create and sustain positive economic profits
for their firms. These endeavors often involve keeping detailed track of, as well as
precise management of, foreign exchange rate movements and changes.

Consider the following situation. Suppose that a change in tastes occurs in the
United Kingdom (UK) such that residents in the UK are prompted to purchase more
goods and services from the U.S. In other words, UK consumers purchase more
imports from the U.S.

A.     What would be the effect on the U.S. dollar-Uk pound sterling (l.e. U.S. dollar
per pound sterling, or $/£) exchange rate as a result of this situation? Would
this exchange rate rise or fall? Explain carefully and illustrate with an
appropriately drawn diagram.

B.     Which currency has appreciated? Which currency has depreciated? Explain
carefully.

C.     How would this situation affect the sales of a firm that produces in the U.S.
but sells goods and services to UK residents? Explain carefully.

(Hint: What would happen to the price of U.S. goods and services in the
UK? What would happen to U.S. sales in the UK?)

The current dollar−pound exchange rate is $2 per British pound. A U.S. basket that costs $100 would cost $140 in the United Kingdom. For the next year, the U.S. Fed is predicted to keep U.S. inflation at 2% and the Bank of England is predicted to keep U.K. inflation at 3%. The speed of convergence to absolute PPP is 15% per year.

1. (Scenario: Monetary Approach in the Long-run) What is the current U.S. real exchange rate with the United Kingdom? A) 1.4 B) 0.8 C) 0.71 D) 1.2

2. (Scenario: Monetary Approach in the Long-run) What do you predict the U.S. real exchange rate with the United Kingdom will be in one year’s time? A) 1.34 B) 0.86 C) 1.17 D) 1.2

3. (Scenario: Monetary Approach in the Long-run) What is the expected rate of real
depreciation for the U.S. (versus the United Kingdom)?
A) -4.3%.
B) -2.5%
C) -3%
D) -1%.

4. (Scenario: Monetary Approach in the Long-run) What is the expected rate of nominal
depreciation for the U.S. (versus the United Kingdom)?
A) -3.5%
B) -1.3%
C) 0.5%.
D) -5.3%

5. (Scenario: Monetary Approach in the Long-run) What do you predict will be the
dollar price of one British pound a year from now?
A) $1.5
B) $1.89
C) $1.93
D) $2

Question 4

Identify the control weakness, if any, in each of the following individually independent cases

and explain your reasons:

(i)

Gary Wong is the internal audit (“IA”) chief of Golden Limited (“the company”). In

preparing his audit plan for 2020, he has decided to carry out a review of the

effectiveness of the internal controls that are in place in the company’s purchasing

division. The audit programme that Gary has prepared for use in this regard has been

based on the IA’s standard audit programme which has been tailored, as appropriate, in

the circumstances. To ensure that the review can be carried out in a more efficient way,

Tim has sent his draft audit programme to the purchasing division head for comments.

(ii)

Barry Ng is the chief internal auditor of Trendy Limited which is engaged in the

manufacturing and selling of health foods. Trendy Limited has been growing rapidly

over the past few years, in particular with a number of outlets opened in South East

Asia. In this connection, Barry needs to expand his internal audit team to undertake

internal control testing. He has recently recruited externally five new staff who are all,

despite lack of audit and accounting experience, experienced front-line salespersons.

(iii)

Adam Chan is the chief internal auditor of Lewis Limited. He is currently supervising

a team of ten experienced internal audit subordinated staff. Three staff members of the

accounts payable department have recently left that manpower resource is urgently

needed by this department in the short term to help handle daily transactions. The CEO

has requested Adam to send two of his people to the accounts payable department for a

few weeks.

(iv)

Denny Chan has been working for Silver Limited as a salesman for many years. He

has built an established portfolio of long-term customers such that his relationship with

them has been well maintained. Since he knows the customers well, he has been asked

to carry out the annual credit review of his customers and revise the credit limits, where

appropriate, for each of the customers.

(v)

Astar Limited is a large import and export trading company with markets worldwide.

To support its business, it has been using a number of banks, including local, US, Japan

and Europe based financial institutions. The company carries out bank reconciliations

for all bank accounts maintained on a quarterly basis and any significant discrepancies

discovered are investigated and rectified promptly

The following transactions pertain to Year 1, the first-year operations of Baird Company. All inventory was started and completed during Year 1. Assume that all transactions are cash transactions.

1. Acquired $4,000 cash by issuing common stock.

2. Paid $700 for materials used to produce inventory.

3. Paid $1,830 to production workers.

4. Paid $862 rental fee for production equipment.

5. Paid $110 to administrative employees.

6. Paid $120 rental fee for administrative office equipment.

7. Produced 320 units of inventory of which 230 units were sold at a price of $13 each.

Required

Prepare an income statement and a balance sheet in accordance with GAAP