Remo Company and Angelo Inc. are separate companies that operate in the same industry. Following are variable costing income statements for the two companies showing their different cost structures: Remo Co. Angelo Inc. Sales revenue $ 275,000 $ 275,000 Less: Variable cost 200,000 125,000 Contribution margin $ 75,000 $ 150,000 Less: Fixed cost 35,000 110,000 Net operating income $ 40,000 $ 40,000 Required: Calculate the break-even sales revenue for each company. (Round your "Contribution Margin Ratio" percentage to 2 decimal places (i.e. .1524 = 15.24%) and final answers to 2 decimal places.)

Break-Even in Sales Revenue, Variable-Costing Ratio, Contribution Margin Ratio, Margin of Safety

Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows.

Required:

1. What is Hammond’s variable cost ratio? Enter your answer as a decimal value rounded to two decimal places.

What is the contribution margin ratio? Enter your answer as a decimal value rounded to two decimal places. (Express as a decimal-based amount rather than a whole percent.)

2. Suppose Hammond’s actual revenues are $200,000 greater than budgeted. By how much will before-tax profits increase? Calculate the answer without preparing a new income statement.
$

3. How much sales revenue must Hammond earn in order to break even? Round your answer to the nearest dollar.
$

What is the expected margin of safety? Round your answer to the nearest dollar.
$

4. How much sales revenue must Hammond generate to earn a before-tax profit of $130,000? Round your answer to the nearest dollar.
$

How much sales revenue must Hammond generate to earn an after-tax profit of $90,000? Round your answer to the nearest dollar.
$

Prepare a contribution margin income statement to verify the accuracy of your last answer. Round your answers to the nearest dollar.

Multiple-Product Break-even, Break-Even Sales Revenue

Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows:

Total fixed cost is $77,270.

Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $17 and a variable cost per unit of $11. Total fixed cost must be increased by $25,750 (making total fixed cost $103,020). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.

Part 1: Sales Mix Instructions and Part 2: Break-Even

1. What is the sales mix of DVDs, equipment sets, and yoga mats?
3:1:2

2. Compute the break-even quantity of each product.

3b. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to the nearest whole percent; round the break-even sales revenue to the nearest dollar.)

4. Compute the margin of safety for the coming year in sales dollars.
$

Babcock and Marks (2010) reviewed survey data from 2003-2005, and obtained an average of u = 14 hours per week spent studying by full-time students at 4-year colleges in the United States. To determine whether this average has changed in the past 10 years, a researcher selected a sample of n = 64 of today’s college students and obtained an average of M = 12.5 hours. If the standard deviation for the distribution is σ = 4.8 hours per week, does this sample indicate a significant change in the number of hours spent studying? Use a two-tail test with alpha = .05. List, number, state, and clearly show all 4 steps of the hypothesis test. For step 2, state alpha and describe the critical regions of the test statistic distribution. Step 4 must also answer the question posed in the problem. Clearly show all calculations steps to get answers including formulas needed to solve this problem. Answers must be typed or word processed.

1. Suppose you collected data from 1986 to 2005 to estimate the following demand function:

Q_X = b₀ + b₁ P_X + b₂ P_R + b₃ M

Assume R is a substitute and X is a normal good. The estimation results are reported below:

            a   Conduct t tests to see if the coefficients are statistically significant at the 5% level of significance. Disregard the intercept. Use the p-values. A simple yes or no is not enough. Explain

            b.   Conduct an F- test to see if the equation, as a whole, is statistically significant at the 5%. Use the p-value. A simple yes or no is not enough. Explain.

c. Interpret the value of R-square.

Between 2002 and 2005, French wine exports to the United States dropped by nearly 18 percent. Some wine experts blamed part of the decline on what they perceived to be a drop in the quality of French wine. Others blamed a shift in U.S. tastes in favor of domestic wines, and others suggested U.S. residents’ unhappiness with the French government’s foreign policies.

Economists offered a different explanation. During 2003, the dollar depreciated by almost 20 percent relative to the euro. Even if the euro price of a bottle of French wine remained the same, U.S. residents would have seen its dollar price rise by nearly 20 percent. The effective increase in the U.S. price of French wines resulted in a decrease in the quantity of French wine demanded by U.S. residents. Thus, French wine exports to the United States decreased.

What do you predict will happen to French wine exports to the United States, other things being equal, if the dollar appreciates considerably in relation to the euro?

Case 5: Tim bought a house for $500,000 in 2005 in California. When his daughter Mary got married in August 2010, he gave the house to Mary as a wedding gift. The fair market value of the house was $400,000. Mary and her husband Jerry have lived in the house since then.

1. How much is the taxable gift?

2. If later Mary wants to divorce Jerry, they will split the house value 50/50. (True or False)If Mary and Jerry sell the house for $550,000 in April 2011:

3. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?If Mary and Jerry sell the house for $450,000 in April 2011:

4. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?If Mary and Jerry sell the house for $350,000 in April 2011:

5. What is the amount of capital gain (or capital loss)? Is the capital gain/loss long term or short term?

Hurricane damage: In August and September 2005, Hurricanes Katrina and Rita caused extraordinary flooding in New Orleans, Louisiana. Many homes were severely damaged or destroyed, and of those that survived, many required extensive cleaning. It was thought that cleaning of flood–damaged homes might present a health hazard due to the large amounts of mold present in many of the homes. In a sample of 367 residents of Orleans Parish who had participated in cleaning of one or more homes, 81 had experienced symptoms of wheezing, and in a sample of 175 residents who had not participated in cleaning, 21 reported wheezing symptoms (numbers read from a graph). Can you conclude that there is a difference between the proportion of residents with wheezing symptoms who cleaned flood–damaged homes and those who did not participate in the cleaning?

Let p1 denote the proportion of residents with wheezing symptoms who had cleaned flood–damaged homes, and let p2 be the population proportion with wheezing symptoms who did not participate in the cleaning of flood–damaged homes. Use the α=0.01 level of significance and the critical value method.

a.) State H0 and H1

b.) Choose a significance level α and find the critical value.

c.) Compute the test statistic.

d.) Determine whether to reject H0.

e.) State a conclusion.

.

Consider a database containing information about all the car accidents between 1997 and 2005, including the cars involved and their owners. The database has the following tables:

Car (license, year, make, model);

Accident (license, accident date, damage_amount zipcode);

Owner (SSN, license, name, address, zipcode);

// zipcode in Accident is the place where accident took place

// assume that the same car does not get into an accident twice in a day

// assume each owner has only one licensed car

Consider the following query:

SELECT O.name, A.damage_amount

FROM Car C, Accident A, Owner O

WHERE C.license = A.license AND C.licese = O. license AND A.zipcode = O.zipcode AND C.make = ‘Volvo’ AND

A.accident_date < ’07/01/2000’ AND A.damage_amount > 10000;

•Draw the initial tree for this query, and generate a range of query-evaluation plans from the given query by using the equivalence rules, and choose the one with the least cost.