Section 8.1 Expanded: Constructing the nonlinear profit contribution expression Let PSand PDrepresent the prices charged for each standard golf bag and deluxe golf bag respectively. Assume that “S” and “D” are demands for standard and deluxe bags respectively. S = 2250 – 15PS (8.1) D = 1500 – 5PD (8.2) Revenue generated from the sale of S number of standard bags is PS*S. Cost per unit production is $70 and the cost for producing S number of standard bags is 70*S. So the profit for producing and selling S number of standard bags = revenue – cost = PSS – 70S (8.3) By rearranging 8.1 we get 15PS= 2250 – S or PS= 2250/15 – S/15 or PS= 150 – S/15 (8.3a) Substituting the value of PSfrom 8.3a in 8.3 we get the profit contribution of the standard bag: (150 –S/15)S – 70S = 150S – S2/15 – 70S = 80S – S2/15 (8.4) Revenue generated from the sale of D number of deluxe bags is PD*D. Cost per unit production is $150 and the cost for producing D number of deluxe bags is 150*D. So the profit for producing and selling D number of deluxe bags = revenue – cost = PDD – 150D (8.4a) By rearranging 8.2 we get 5PD= 1500 – D or PD= 1500/5 – D/5 or PD= 300 – D/5 (8.4b) Substituting the value of PDfrom 8.4b in 8.4a we get the profit contribution of the deluxe bags: (300 -D/5)D – 150D = 300D – D2/5 – 150D = 150D – D2/5 (8.4c) By adding 8.4 and 8.4c we get the total profit contribution for selling S standard bags and D deluxe bags. Total profit contribution = 80S –S2/15 + 150D – D2/5 (8.5) Reconstruct new objective function for 8.5 by changing “15PS” to “8PS” in 8.1, “5PD” to “10PD” in 8.2, cost per unit standard bagfrom 70 to “last two digits of your UTEP student ID” and cost per unit deluxe bagfrom 150 to 125. Keep other parameter values unchanged. Use up to 2 decimal points accuracy. Substitute the new expression for 8.5 in the excel solver workbook as explained in the class and solve for the optimal combination values for S and D. Student ID last two numbers 52, I NEED THE EXAMPLE IN EXCEL SHEET FORMAT.

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.25 per case, has not had the market success that managers expected, and the company is considering dropping Bubs.

The product-line income statement for the past 12 months follows:

Table 1

All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most recent year's corporate cost as a percentage of revenue. Data on corporate costs and revenues for the past two years follow:

Table 2

  Assume the fixed corporate overhead is $1,454,000 in each year. None of these fixed costs are specifically traceable to Bubbs.

Roy O. Andre, the product manager for Bubbs, is concerned about whether the product will be dropped by the company and has employed you as a financial consultant to help with some analysis. In addition to the information given above, Mr. Andre provides you with the following data on product costs for Bubs:

Table 3

Table 4 - Regression Analysis of Table 3 Data

Adjusted R-squared               0.957

QUESTION: Assume the variable allocated corporate costs are $0.192 per case of Bubbs. Given methods used to compile Table 1, what would the price per case of Bubbs have to be for the product line margin to break-even. Assume no change in the number of units sold. You should apply allocated corporate overhead at the rate used by Lukes. Round to the nearest 0.001 per case.

The Balance Sheet of the Street and Highway Fund of the City of Monroe as of December 31, 2019, follow.

3-C. This portion of the continuous problem continues the special revenue fund example by requiring the recording and posting of the budgetary entries. To reduce clerical effort required for the solution use control accounts for the budgetary accounts, revenues, expenditures and encumbrances. Subsidiary accounts are not required. Budget information for the City includes:

(1) Also as of January 1, 2020, the City Council approved and the mayor signed a budget for the Street and Highway Fund that provided for estimated revenues from the state government in the amount of $1,068,000 and appropriations of $1,057,000. Record the budget and post to the ledger.

4–C. Part 2. Special Revenue Fund Transactions

Required:
a. Record journal entries for the following transactions for FY 2020 and post to the general ledger. As there are relatively few revenues and expenditures, the use of control accounts is not necessary. (Make entries directly to individual revenue and expenditure accounts).

1. (2) The state government notified the City that $1,067,500 will be available for street and highway maintenance during 2020 (i.e. the City has met eligibility requirements). The funds are not considered reimbursement-type as defined by GASB standards.
2. (3) Cash in the total amount of $997,000 was received from the state government.
3. (4) Contracts, all eligible for payment from the Street and Highway Fund, were signed in the amount of $1,062,000.
4. (5) Contractual services (see transaction 3) were received; the related contracts amounted to $1,042,000. Invoices amounting to $1,040,500 for these items were approved for payment. The goods and services all were for street and highway maintenance.
5. (6) Investment revenue of $1,900 was earned and received.
6. (7) Accounts payable were paid in the amount of $987,000.
7. (8) All required legal steps were accomplished to increase appropriations in the amount of $4,500.

b. Prepare and post the necessary closing entries for the Street and Highway Fund.
c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances for the Street and Highway Fund for the fiscal year ended December 31, 2020.
d. Prepare a Balance Sheet for the Street and Highway Fund as of December 31, 2020. Assume any unexpended net resources are classified as Restricted Fund Balance.

Pastina Company sells various types of pasta to grocery chains as private label brands. The company’s reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.
  

   
Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $10,000.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,500.
3. On October 1, 2021, Pastina borrowed $50,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2021, the company lent a supplier $20,000, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $6,000 for a one-year fire insurance policy. The entire $6,000 was debited to prepaid insurance.
6. $800 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,000 per month. The entire amount was debited to prepaid rent..

1. & 2. Post the unadjusted balances and adjusting entires into the appropriate t-accounts. (Enter the number of the adjusting entry in the column next to the amount. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
  

1.Companies can experience Economies of Scale and get better at production as they increase output quantity. Which of the following is not a reason for this effect? Group of answer choices: a.Labor Specialization b. Managerial Specialization c. Efficient Capital Implementation d. Bureaucratic Decision Making

2. Smartphone flashlight apps are readily available from a variety of different software companies and they all perform the same function. Which market model would these be an approximate example of? Group of answer choices a .Pure Monopoly b.Perfect Competition c.Oligopoly d.Monopolistic Competition

3.Just six American film production companies account for about 90% of all domestic revenue in the movie industry. The US movie industry could be considered to be: Monopolistic Competition Pure Competition an Oligopoly Market a Pure Monopoly

4.What is a characteristic of a purely competitive market? Free Entry/Exit of Marketplace Companies Set Market Price None of These All of These Limited Number of Firms

5. What is the elasticity of demand for any good being produced by a purely competitive firm? >1 <1 ∞ 0

6.For a purely competitive firm, what decisions should they make when the market price (their marginal revenue) is at the following levels?

Less than ATC and less than AVC : a. Minimize loss b. Shut down c.Minimize profit d.Maximize loss e.Maximize Profit

Less than ATC and greater than AVC: a. Minimize loss b. Shut down c.Minimize profit d. Maximize loss e. Maximize Profit

Greater than ATC and greater than AVC: a. Minimize loss b. Shut down c.Minimize profit d. Maximize loss e. Maximize Profit

7. Price is taken as 'given' by an individual firm selling in a purely competitive market because:

-Each seller supplies a negligible fraction of total market share

-product differentiation is reinforced by extensive advertising

-The firm's demand curve is downward-sloping

-There are no good substitutes for the firm's product

8. In the long run a firm will choose a plant size that has the:

-Maximum level of resource use per unit of the total product of output

-Minimum of average fixed costs

-Minimum average total cost of producing the level of output.

-Capacity to produce the largest quantity of the product

9. Which of the following is true for a purely competitive firm producing at an optimal level?

-Marginal revenue will equal marginal cost

-A decrease in output increases profits.

-The firm makes only normal profits.

-Marginal cost will be greater than marginal revenue

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $10,800.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,150.
3. On October 1, 2021, Pastina borrowed $51,600 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2021, the company lent a supplier $21,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $7,600 for a one-year fire insurance policy. The entire $7,600 was debited to prepaid insurance.
6. $710 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,800 in December for 1,150 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $1,700 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $850 per month. The entire amount was debited to prepaid rent.

6. Prepare a post-closing trial balance. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

The Ivanhoe Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31.

Other data:

A. Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries. (Post entries in the order of journal entries presented in the previous question.)

B. Prepare an income statement for the month of May.

C. Prepare a retained earnings statement for the month of May.

D. Prepare a classified balance sheet at May 31. (List current assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment .)

E. Identify which accounts should be closed on May 31.

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.95 per case, has not had the market success that managers expected and the company is considering dropping Bubbs.

The product-line income statement for the past 12 months follows:

All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most recent year’s corporate cost as a percentage of revenue. Data on corporate costs and revenues for the past two years follow:

Roy O. Andre, the product manager for Bubbs, is concerned about whether the product will be dropped by the company and has employed you as a financial consultant to help with some analysis. In addition to the information given, Mr. Andre provides you with the following data on product costs for Bubbs:

Required:

a. Bunk Stores has requested a quote for a special order of Bubbs. This order would not be subject to any corporate allocation (and would not affect corporate costs). What is the minimum price Mr. Andre can offer Bunk without reducing profit any further?

b. How many cases of Bubbs does Luke have to sell in order to break even on the product?

c. Suppose Luke has a requirement that all products have to earn 5 percent of sales (after tax and corporate allocations) or they will be dropped. How many cases of Bubbs does Mr. Andre need to sell to avoid seeing Bubbs dropped?

d. Assume all costs and prices will be the same in the next year. If Luke drops Bubbs, how much will Luke’s profits increase or decrease? Assume that fixed production costs can be avoided if Bubbs is dropped.

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $11,500.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,550.
3. On October 1, 2021, Pastina borrowed $53,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2021, the company lent a supplier $23,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $9,000 for a one-year fire insurance policy. The entire $9,000 was debited to prepaid insurance.
6. $920 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $3,500 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,500 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,250 per month. The entire amount was debited to prepaid rent.

3. Prepare an adjusted trial balance. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)