E6.14 (LO 5) (Computation of Pension Liability) Nerwin, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan.

The interest rate to be used is 8%.

Instructions

On the basis of the information above, determine the present value of the pension obligation (liability).

Question 11

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Flounder Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

Scott Corporation (SC) is planning to import hand sanitizers into Trinidad and Tobago because of the increase in demand due to the Bird Flu influencer.

SC hired Trailblazer Corporation (TB) to transport the shipment of hand sanitizers from the Port of Pineapple on Monday 1^st October 2018 to SC’s warehouse in the Bamboo at a cost of TT$10,000. The shipment of hand sanitizers has to be stored at a particular temperature, to prevent it from been damaged during transportation, for which TB was duly informed.

At a meeting on 20^th September 2018 between SC and TB to discuss the transportation arrangement, TB’s CEO Mr. Right, presented SC’s CEO Mr. Wrong with a form containing an agreement to transport, which outlined the date and cost of delivery as stated above. The form also stated inter alia ”please read conditions of contract prior to signing” Mr Wrong signed the form, but failed to read the entire contents of the signed document. The conditions included an exclusion clause exempting TB from all losses however caused during the transportation of the sanitizers.

The shipment of hand sanitizers was subsequently damaged during transportation, because it was stored at the wrong temperature. SC on inspection the shipment thereafter, saw the damaged sanitizers and has indicated that they will seek damages via a legal action against TB. However, TB is seeking to rely on the exclusion clause mentioned above.

SC Corporation is arguing that they are not bound by the clause, because when their CEO signed the document, he was of the view that he was simply signing an agreement for the transport of the shipment of hand sanitizers. They also argued that if such clause is so critical to TB in terms of the exclusion of liability, merely stating ”please read condition of contract prior to signing” was not sufficient; indeed, some express notice of the exclusion clause should have given bearing in mind that the parties never contracted previously.

TB is holding strong to their view that they are protected by the exclusion clause and as such SC cannot sue them. Advise SC Corporation.

You have been hired as a consultant for Wrigley a well-known and loved worldwide manufacturer of chewing gum. Three of these brands - Juicy Fruit®, Wrigley's Spearmint® and Altoids® - have heritages stretching back more than a century. Wrigley sells its products in more than 180 countries around the world. The CEO of Wrigley, William Perez is in charge of a recent acquisition of a manufacturer of organic chewing gum, Natural Mint, Inc. which is located in Portland, Oregon. The company has one main product which is made in five flavors. He has asked you to prepare a preliminary cost-volume-profit analysis to determine whether changes should be made to the cost structure of selling expenditures.

The following information was presented for use in the analysis:

Selling price per unit: $2.00

Questions (each question is independent of the others):

1. What is the current break-even point in units and in dollars? Also compute the margin of safety.

2. Assume the company sold 500,000 packs of gum last year. What is Natural Mint's operating leverage? If sales decreased 10%, by what % will Net Income decrease? Create a contribution margin income statement to prove that your calculations are correct.

3. What is the break-even point in units if variable selling costs are increased to 0.05 per unit? Would you recommend this change to the CEO if the expected sales level is 520,000 packages? Explain - consider the breakeven point and profit.

4. Independent of Question 3, what is the break-even point in dollars if the variable selling is eliminated and replaced with an increase to Fixed Selling costs of $200,000? Would you recommend this change to the CEO if the expected sales level is 550,000 units? Explain - consider the breakeven point margin of safety and profit.

Think of a company you know – whether as a customer, employee, supplier, etc. -- which is earning substantial profits in spite of the 2020 Covid pandemic and resulting economic downfall. How would each of the theories of justice in economic distribution – utilitarian, libertarian, or egalitarian – apply?

Starbucks

select among the nine factors to reduce a labor surplus

what options could the company use to respond to excess staff beginning in March 2020 to reduce its workforce due to the pandemic? Discuss at least five factors through available resources.  

1. In each of the following scenarios, calculate the total increase in US GDP this year caused directly by the given information

   1. An individual purchases an old used car from their friend for $6,000. They buy a new engine for the car for $1,000, replace the brakes for $500, and paint it for $200. They then sell the car for $10,000

   2. A computer manufacturer in the US buys parts for its computer from Japan. The cost of these parts is $500. It produces and sells a computer for $700 using these parts.

   3. A child is running a lemonade stand. They purchase 20 lemons for $3 each and 500 grams of sugar for $0.01 per gram. Using these ingredients, they make and sell 50 cups of lemonade for $2 each and at the end of the day they have 5 lemons and 100 grams of sugar remaining (that they do not sell and eventually consume themselves).

   4. A video game company prints 2 million copies of a game that sells for $60. It sells 1.8 million of these this year and the remainder the following year.

   5. A sandwich shop buys $1000 of ham, $500 of cheese, and $300 of bread. It also buys a new meat slicer for $300. Using these, it produces and sells $2000 of sandwiches. There is no ham or cheese remaining after production, but the meat slicer is still in perfect condition.

Assume that the Moon's orbit around Earth us approximately circular, and use this to calculate the distance to the Moon from Earth.

Outline the advantages and disadvantages of purchasing a CALL at 67pence and writing a PUT at 66 pence for an MNC importing from the US