Patriot Co. manufactures and sells three products: red, white, and blue. Their unit selling prices are red, $46; white, $76; and blue, $101. The per unit variable costs to manufacture and sell these products are red, $31; white, $51; and blue, $71. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $141,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $6; white, by $16; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $11,000.

Required:

2. Assume if the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

1. Explain why each of the following groups might want financial accounting information. What type of financial information would each group find most useful?

1. The company’s existing shareholders.
2. Prospective investors.
3. Financial analysts who follow the company.
4. Company managers.
5. Current employees.
6. Commercial lenders who have loaned money to the company.
7. Current suppliers.
8. Debt-rating agencies such as Moody’s or Standard and Poor’s.
9. Regulatory agencies such as the Federal Trade Commission.

2. Identify at least one other group that might want financial accounting information about the company, and describe how it would use the information.

Sue T. is the nurse manager for medical-surgical units at a community hospital. She is currently enrolled in a nursing master's degree program at the local university. As part of the requirements for a Nursing Management course, Sue proposes to conduct a study linking nursing interventions and nursing outcomes. She returns to her place of employment at night for two weeks to audit patient charts and collect the data she needs for her assignment. She makes copies of the patient records that are particularly helpful and takes them home to write the final paper.

As Sue is developing her paper, she realizes that the information she has collected may be helpful in completing her nursing staff performance evaluations due next month.   She decides to collect further patient outcome data for individual nurses to monitor their performance.

Consider the following

1. Has Sue violated ethical principles by collecting data for a college assignment? Why or Why not?
2. Has Sue violated ethical principles by collecting patient data for employee performance evaluations? Why or Why not?
3. What, if anything, should Sue have done differently in completing her college assignment?
4. What, if anything, should Sue have done differently in completing her employee performance evaluations?

A construction company needs enough money to purchase a new tractor-trailer in 6 years at a cost of $450,000.

If the company sets aside $175,000 in year 2, $125,000 in year 3, and $75,000 in year 4, how much will the company have to set aside in year 5 to have the money needed in year 6?

Assume investments earn 8% per year compounded semi-annually.

What is the value of the individual cash flow at year = 1?

What semi-annual interest rate do you use to solve for the unknown cash flow in year 5?

What is the numerical value for the amount of funding the company have to set aside in year 5 to have the money needed in year 6?

Joseph’s Engineering Ltd need to acquire new equipment and it can either take a loan or have a lease option. The loan funds of $100 000 at 8.2% p.a. after tax, compounded semi-annually for 2 years. The company has three directors in the business and they pay individual income tax at an average rate of 35%. Inland Revenue Department (Tax office) allows depreciation at the rate of 50% p.a. on this equipment. Advise the company which is the better deal, the loan or a 2 year lease with four equal payments of $26,674 starting with the first payment at the signing of the contract. Assume that corporate tax rate is 28% for simplicity’s sake the tax benefits from each lease payment and the tax benefits forgone for depreciation are received without time lag in each half-year period. Required: a. Which method of financing would you recommend? Why? (Hint: Show analysis of cash flow) b. List potential benefits associated with leasing?

WG is one of the world’s leading makers of mobile phones, with market share of approximately 20%.Unlike any of its major competitors, it is based in Narnia, a high-cost, developed country. Narnia has very limited natural resources, but has developed significant expertise over the decades in high-end precision engineering and efficient use of materials. WG is quoted on the Narnian stock exchange, where it is the largest company by market capitalisation. It has a wide shareholder base including most Narnian institutional investors and private individuals. Its largest three shareholders are institutions who each own around 2% of the company.WG was founded in the 1960s to make telephone equipment and in the 1990s managers made a strategic decision to focus on the then-tiny mobile phone market. This was partly attributable to the Narnian government being among the first to fully deregulate their telecoms market, which lead to lower call costs. Narnia and its neighbouring countries are also fairly rural, and its populations were enthusiastic early adopters of mobile phones. WG was given a particular boost in 1995 when the transmission standard they had pioneered was adopted as the basis for calls by the government in Narnia and many other governments around the world. Serving a rapidly growing market, WG quickly gained economies of scale that allowed cheaper production than competitors emerging later. WG then exploited these to open up export markets all over the world,enhancing their advantage further. Unlike many of its competitors, who subcontract their manufacturing to others, WG assembles most of its own handsets. Its factories are mostly in Narnia, where it benefits from the highly educated population and the presence of high-quality local suppliers to carry out increasingly high-tech manufacturing processes. Narnia has very good communication links, which helps suppliers to deliver rapidly. Technology is advancing all the time and WG regularly launches new, more sophisticated devices, most recently a suite of smartphones. However, the fastest-growing demand is for cheaper, basic models which just carry out voice calls and text messaging. This demand is driven by users in developing countries, who are concerned to keep costs down, but also want the status of using a well-known brand such as WG. WG has invested significant resources in building up a local sales presence in these markets, which allows it to spot trends and produce phones tailored to local tastes and languages. Competition in the industry is intense, and has become more so due to a recent global economic downturn. The Narnian government has also announced new anti-pollution measures that will result in large-scale manufacturers having to pay more than previously to dispose of their waste products. Shortly afterwards, WG announced that they will increase the proportion of handsets manufactured in lower-cost countries from 15% to 40% over the next three years. Component manufacturers announced plans to follow them to the new locations. This will involve cutting over 1,000 jobs in Narnia. A spokesman for the Narnian government called the decision “disappointing”. A trade union official said, “WG has increasingly been putting pressure on its suppliers to lower costs and respond more quickly to market fluctuations. This has made it unprofitable for them to operate in Narnia and lead to decisions like this”. Required:

(a) Analyse WG’s environment using two appropriate models

(b) Discuss the main stakeholders in WG and how management could try to retain their support as it seeks to reduce costs.

Simulation Individual Tax AICPA Released: U.S. Taxation

Based on the data provided, enter the approriate values in the form 1040 from Line 7 through Line 22..

Information

Trevor and Jordan Riley were married during the year 2017. Following is additional information pertaining to the Riley family for the year 2017:

1. Prior to her marriage to Trevor, Jordan received $5,000 in alimony and $12,600 in child support.
2. The Rileys earned $10,000 in ordinary interest and $8,500 in municipal bond interest.
3. Trevor’s wages were $85,000, and Jordan’s were $62,000.

4. The Rileys received a $2,000 security deposit on the rental property they actively manage. They are required to return the amount to the tenant. In addition, the Rileys received $20,000 in gross receipts from the rental property. The expenses for the residential rental property were:

Bank mortgage interest                                    $5,000
Real estate taxes                                     2,600
Insurance                                               1,700
Depreciation                                           3,200

5. In January, as part of a sweepstakes contest, Jordan won a week’s stay valued at $3,000 at a luxurious hotel in Hawaii. Trevor and Jordan spent their honeymoon at that hotel.
6. The Rileys had no capital loss carryovers from prior years. During the year, the Rileys had the following stock transactions:

       Date Acquired Date Sold    Sales Price    Cost Basis
Buster Co.   2/1/2016         3/17/2017   $15,000          $5,000
Copper lnc. 2/18/2017       4/1/2017        8,000            4,000

Requirement: complete the Rileys’ 2017 Form 1040, Schedule A, Schedule D and Schedule E.

Please complete the line 7 through the line 22 on Form 1040.

Please complete the line 1 through line 16 on Schedule D.

Please complete the line 3 through line 26 on Schedule E.