1. ) Prepare a depreciation schedule for the assets in the following transactions using the straight line method of depreciation:

A. Flash Enterprises purchased 3 new delivery trucks at a cost of $45,000 each. Each truck has an estimated useful life of 5 years.

B. Flash needed a new forklift to be used in warehouse operations at a cost of $12,500. The old forklift was traded in for $1,500. The new forklift has an estimated useful life of 4 years.

2.) Analyze the results of the below:

A. Flash has an opportunity to sell one of the trucks from (1A) above after 3 years for a price of $19,000. Should they accept the offer? Why or why not?

B. The used forklift from (1B) above had an original cost of $10,000 and a book value of $500 at the time of trade in. Calculate any gain or loss and show the appropriate journal entry.

3. Inventory Evaluation:

Units Units Cost Total Cost

Beginning Inventory 160,000 $2.00 $320,000

Purchase #1 60,000 $2.50 $150,000

Purchase #2 60,000 $3.50 $210,000

Ending Inventory 30,000

A. Calculate the value/cost of ending inventory & cogs using the following methods:

LIFO

FIFO

AVG COST (round unit cost to nearest cent)

B. Assuming the company has NOT determined which inventory method to use, Which method should they use for income tax purposes? Why?

C. The sold units had an average price of $5.00. Calculate gross profit and gross profit % using the method you chose in (B).

1. Kirkland Company provided the following information for the month ended July 31, 2015, based on selling 1,000 units of its bottled water.

What is Kirkland's margin of safety?

2. Chutes Company sells slides for $400 each. If their fixed costs total $300,000, how many slides must Chutes sell to breakeven if variable costs are $100 each?

3. Chutes Company sells slides for $400 each. If their fixed costs total $300,000, how much in sales revenue must Chutes achieve to breakeven if variable costs are $100 each?

4. Chutes Company sells slides for $400 each. If their fixed costs total $300,000, how many slides must Chutes sell to reach a target net income of $800,000 if variable costs are $100 each?

5. Chutes Company sells slides for $400 each. If their fixed costs total $300,000, how much in sales revenue must Chutes achieve to reach a target net income of $800,00 if variable costs are $100 each?

6. Chutes Company sells slides for $400 each. If their fixed costs total $300,000, what is the margin of safety ratio if chutes expects to achieve a net income of $800,000 when variable cost are $100 each?

7. A company sells a product which has a unit sales price of $10, unit variable cost of $2 and total fixed costs of $135,000. How many units must the company must sell to break even?

8. For Clifford Company, sales are $2,000,000 for the one product they sell. Fixed expenses are $700,000 and the contribution margin ratio is 40%. What are required sales in dollars to earn a target net income of $400,000?

9. Madden Company produces dongles for computers, which it sells for $20 each. Each dongle cost $4 of variable costs to make. During June, 4,000 dongles were sold. Fixed costs for May were $5 per unit for a total of $20,000 for the month. How much is the contribution margin ratio?

10. Based on the chart below, classify each of the costs ar variable, fixed or mixed. State how you came to your conclusion.

a. Drilling Costs

b. Smoothing Costs

c. Mining Costs

Godcare, an insurance firm based in California, had difficulties expanding their operations to Asian markets as most of their target countries had strict regulations on transferring the details of the customers among the different branches of the firm. The company had to obtain an approval from its customers before sharing their personal information with its branches in other countries. Which of the following barriers is most likely to have affected the services of Godcare in the given scenario?

23.)

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What interest rate is the company required by law to report to potential customers?

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What is the effective annual rate it charges its customers?

Curtis Builders is borrowing $150,000 today for 5 years. The loan is an interest-only loan with an APR of 9.5 percent. Payments are to be made annually. What is the amount of the first annual payment?

Footnotes

Overview: CoffeeBrewers, Inc., the company that you work for, has developed an app it plans to release to customers to help promote its sales. Customers enter the type of pastry or sandwich they are going to have, and the app provides suggestions for the kind of coffee that is best suited to pair with their meal. In an email to the software development team, identify what type of research method is likely to produce the best results for testing the app: a survey, focus group, interview, observation, or field trial, explain how the research method can be applied in this matter and why it will be effective in yielding useful results.

For each of the three organizations below,

• Recommend whether the organization should build or buy/outsource the system in question. Explain your answer.
• What additional information would be useful in making your recommendation?

Organizations:

1. A medium-sized company that sells roofing materials to contractors needs a system that will allow customers to check product inventory through a website.
2. A large (Fortune 500) retailer with a large, well-skilled IT department needs a system that will track the purchasing habits of its frequent customers.
3. A large (Fortune 500) defense contractor needs a system that will track payments to vendors.

The biggest advantage of the two rules to detect the most profitable output level is that these rules tell us that

1. There are always two output levels at which marginal revenue is equal to marginal cost and we need to identify the correct profit-maximizing level of production by using these two rules.
2. When the two rules are satisfied we know that the maximum total profit cannot be negative.
3. In general, marginal revenue equal to marginal cost does not guarantee profit-maximization.
4. For a company with constant marginal cost, profit-maximization is impossible.
5. The maximization of total revenue or sales is what companies should pursue.

A Day in the Life of a Contracts Analyst at Cargill

Glynis Gallagher works as a contracts analyst at Cargill Risk Management, which is a business unit within Cargill. Based in Wayzata, Minnesota, Cargill celebrated its 150th anniversary in 2015. Cargill is a truly global company: With operations in more than 60 countries, it markets food, agricultural, financial, and industrial products and services to customers worldwide. The company is one of the world’s top grain traders. In addition, it has global beef operations, and it does business in starches and sweeteners as well. Cargill also processes steel and de-icing salt. Its revenues totaled $109,699 billion in 2017, making Cargill the largest privately owned company in the United States.

Cargill is committed to feeding the world in a responsible way, while also reducing its environmental impact and improving the communities where its employees live and work. Writing in the introduction to his 1979 book Merchants of Grain, author Dan Morgan noted:

Grain is the only resource in the world that is even more central to modern civilization than oil. It goes without saying that grain is essential to human lives and health.… As America became the center of the planetary food system, trade routes were transformed, new economic relationships took shape, and grain became one of the foundations of the postwar American Empire.

Today, as the saying goes, “You can’t walk down the grocery aisle without seeing something Cargill has been involved with in one way or another.” A recent article in Forbes described the scope of the company’s operations:

Cargill, the $135 billion (fiscal year 2014 sales) family-owned food behemoth dominates all roads between the world’s farms and your dinner plate.… Since the company was founded in 1865, the core of its business has always been trading commodities—buying, storing, shipping and selling the crops farmers grow around the world.

Commodities processing is a high-volume, low-margin business; Cargill crushes large quantities of soybeans each day. Because the company is privately held, Cargill can pursue long-term investment opportunities in many global markets. For example, it has had a major presence in India and other emerging markets for decades. The company has made large investments in cocoa, sugar, and food innovation.

The career path of Greg Page, former Cargill CEO and current executive chairman, shows the range of job opportunities Cargill offers its employees. After graduating from college, Page took a trainee position in the Feed Division. In subsequent years, he held a number of positions in the United States and Singapore. He was also involved with the startup of a poultry processing facility in Thailand. Today, Cargill exports roughly 100 million metric tons of chicken from Thailand every year.

Gallagher graduated from a large Midwestern university in 2012 with a major in marketing. She spent fall semester of her senior year studying in northern Italy. Many of her business courses helped prepare her for her current role. She recalls, “Although I never took a course focused on derivatives and trading exclusively, my math and finance courses gave me a solid foundation in order to understand portfolio exposures, fee schedules, and financing options we utilize every day. My marketing courses have allowed me to use this data in a more customer-focused approach on a daily basis.”

Cargill Risk Management is part of Financial Services, one of Cargill’s six platforms that comprise 65 business units. Cargill, through Cargill Risk Management, is a registered limited designation swap dealer with the U.S. Commodities Futures Trading Commission (CFTC). Gallagher must make sure that everything she does for customers complies with CFTC swap dealing guidelines. Cargill and other commodities trade houses are industry members of the Commodity Markets Council, a trade group that serves as a liaison between companies and the government.

Gallagher is a contracts analyst. She says, “I have always been interested in law. Becoming a contracts analyst in such a regulated industry allowed me to gain exposure to contractual language, legal requirements, and the regulatory environment. For example, if you do not set up a contract properly, you are opening yourself up to unnecessary risk.” As Gallagher explains, “In today’s highly regulated and changing business environment, it is essential to protect yourself while completing business transactions. Being part of this facet of the business is a daily challenge. It pushes me outside of my comfort zone to understand a basic question—namely, what is the true risk here for Cargill?”

As noted previously, Cargill Risk Management is a limited designated swap dealer. What’s a “swap”? Swaps, also known as over-the-counter (OTC) transactions, can be complex financial structures that derive their value from something else—a futures contract, for example. Swaps are traded in direct negotiation between buyer and seller; they represent a $700 trillion market. Who uses swaps? Gallagher’s business unit services a variety of customers, including farmers, major airlines, food companies, investment funds, oil companies, and many others.

Gallagher’s business unit works with its customers to provide commodities hedges through swaps and structured products. The commodities in question are often agricultural commodities such as grains (e.g., corn, wheat, and soybeans), as well as beef and other animal proteins. Cargill also deals in metals and energy. Hedging is a financial strategy that allows a customer to lock in the price for a specific commodity purchase in the future. An important part of Gallagher’s job is to work diligently to understand customers’ business objectives, and to ensure contractual terms are aligned with these strategies. The Cargill team assists customers by creating tailored risk management solutions to reduce risks and uncertainty by having more diversified hedging portfolios.

Consider the following example: When a large restaurant chain purchases cooking oil, it must manage budgets and margins to ensure profitability. When the price of oil seeds—a commodity—increases, the company needs to find a way to offset this increase instead of passing along the cost to its customers in the form of higher prices. Of course, market volatility and cost swings are difficult to predict—so how is the restaurant chain able to do this? Helping customers answer this question is an important part of Gallagher’s team’s job.

Summing up her experience, Gallagher says, “I enjoy working with our customers in more than 60 countries throughout the world. With 16 global offices, I am exposed to different cultures and business practices that challenge me to think globally. Understanding where the customer is coming from allows me to succeed in helping them understand and navigate this complex field. Ultimately, I am part of the process which allows enterprises ranging from huge corporations to small farmers succeed in managing their overall risk.”

Requirements>

1. Overview of the Case Study 5-6 sentences
2. Statement of the Problem 1-2 sentences
3. Alternatives to Solve the Problem - List and provide a separate heading for each alternative - 1 - 2 pages
4. Recommendation on the basis of recommendation - 5-6 sentences
5. Implementation plant for recommended alternative - 6 sentences
6. Current Event - Link the case to current update event

Case Study:
Trump De Tomato Ltd (TDT) is a company in aquacultural industry specialised in farming of aquatic
organisms. TDT is considering opening a new farm in Sandy Bay. This project would involve the purchase
of 13 hectares land at a price of $1,000,000 (Note that: The land is not subject to depreciation for accounting
and tax purposes). In addition to that, the company will need to purchase eight special equiments which cost
$125,000 each. The equipments are expected to be in use for 5 years and after that, they will be scrapped
without any residual value. Each year, each of these equipments will incur $5,000 maintenance cost. It is
assumed that the farm will first be used at the beginning of the next financial year: 1 July 2022.
Before starting this new operation, TDT will need to redevelop and renovate the warehouse at the farm. This
is expected to cost $200,000. Assume that TDT is not able to claim any annual tax deduction for the capital
expenditure to the renovation of the building until the business is sold.
Revenue projections from the farm for the next five years are as follows:
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning 1/7/2022 1/7/2023 1/7/2024 1/7/2025 1/7/2026
Ending 30/6/2023 30/6/2024 30/6/2025 30/6/2026 30/6/2027
Production quantity (tons) 120 140 170 185 185
Price (per tons) $9,000 $9,150 $9,250 $9,300 $9,350
Operating variable costs associated with the new business including material costs and labour costs.
Estimated material costs per ton in year 1 is $2,000 and this cost will increase by 3.5% every year. The farm
will require about 6 workers working for 8 hours a day, 200 days per year. The pay rate is flat at $20/ hour
including superannuation. Annual operating fixed costs associated with production (excluding depreciation)
are $100,000. Existing administrative costs are $550,000 per annum. As a result of the new operation, these
administrative costs will increase by 30%. The company is subject to a tax rate of 30% on its profits.
Meanwhile, TDT Ltd is currently financed by 60% of equity and 40% of debt. Company’s bond is traded at
a price of $980. The bond has 10 year term, 8% coupon rate paid semi-annually and face value of $1,000. In
addition, company’s equity has a beta of 1.2 while the risk-free rate in the market is 3% and market portfolio
return is estimated to be 12%.
P. De Potato, the company CFO would like you to help him examine the viability of the project for the next
five years, taking into account the projections of sales and operations costs prepared by company’s
accountants.

quesstion 1: Using sensitivity analysis, recalculate NPV using the scenario of a. A decrease in project sales by 10% annually. b. An increase of the sale price by 5% annually c. An increase of material costs change from 3.5% to 8% Briefly comment on your results.