(Cash management​) As CFO of Portobello Scuba Diving​ Inc., you are asked to look into the possibility of implementing a system to expedite cash receipts from clients. Portobello receives check remittances totaling ​$28 million in a year. The firm records and processes 15, 000 checks in the same period. The National Bank of Brazil has informed you that it could provide the service of expediting checks and associated documents for a unit cost of $ 0.30 per check. After conducting an​ analysis, you project that the cash freed up by the adoption of the system can be invested in a portfolio of​ near-cash assets that will yield an annual​ before-tax return of 9 percent. The company usually uses a​ 365-day year in its financial calculations.

a. What reduction in check collection time is necessary for Portobello to be neither better nor worse off for having adopted the proposed​ system?

b. How would your solution to part a be affected if Portobello could invest the​ freed-up balances at an expected annual return of only 5 ​percent?

c. What is the logical explanation for the differences in your answers to part a and part b​?

Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing promotions and thinks that CLV analysis will help her decide the best course of action. An average specialty coffee drink sells for $4.20 and has a margin of 76%. One promotion is providing loyalty cards to her regular customers that would give them one free specialty coffee drink after 10 regular purchases. Alicia estimates that this will increase the frequency of their purchases by 18%. Currently, her customers average buying 2 specialty drinks per week.

The second promotion is targeted at new customers. She would offer a free specialty drink to incoming college freshmen by providing a coupon with their orientation packages. Because of her location near the college, she expects that 470 students will come to Cool Beans for a free trial. Of those, she anticipates that 13% will become regular customers who will purchase at least one specialty drink each week. The cost of printing and distributing the coupons is $142.

What is the dollar margin per specialty drink served?

a) A telecommunications company enters into a contract with a customer. Under the contract, the company promises to provide to the customer 4 GB data, 300 minutes of talk time, and 500 texts for $36.

Required:

Briefly explain how the telecommunications company should account for the contract under NZ IFRS 15. You need to refer to the relevant requirements but not to any specific paragraph of NZ IFRS 15.

b) A company sells mobile phone sets for $99 each. The company’s cost of each phone set is $70. The phone set became very popular with its customers. Near

the end of the financial year, 5000 customers purchased the phone set from the company. The company allows its customers to return the phone set within 14

days if they have not unpacked the set. The return period has not expired for any phone set sold by the end of the year. The company expects, based on its

past experience, that 1% of its customers will return the phone set.

Required:

i) Prepare the journal entries in the books of the company to record the transaction.

ii) Explain why the transaction is recorded in this manner using NZ IFRS 15 requirements.

Suppose the following events occur in a particular market. Explain which shifter variable is affected, which curve shifts, and determine the effect upon equilibrium price and quantity sold. a. The price of a substitute good (in consumption) decreases. b. Consumers’ income increases and the good is inferior. c. Government regulators decide to outlaw a cost-reducing technological process in order to protect the environment. d. The price of a complement good (in production) increases. e. The price of inputs used to produce the good decrease. f. Consumers expect that the price of the good will fall in the near future. g. It is widely publicized that consumption of the good is helpful in preventing cancer.

THIS IS THE ONLY PART I NEED ANSWERED BUT YOU WILL NEED THE TOP QUESTION TO ANSWER: Suppose that a pair of events from problem 15 occur simultaneously. For each of the pairs of events indicated below, perform a qualitative analysis to predict the direction of change in either the equilibrium price or the equilibrium quantity. Explain why the change in one of these two variables is indeterminate. a. Both d and g in problem 15 occur simultaneously. b. Both b and e in problem 15 occur simultaneously. Draw the graphs.

1)

One reason that technological ideas do not seem to run into diminishing returns is because ______________.

Select the correct answer below:

technology advances more quickly than other factors of production

technology increases levels of employment throughout the economy

many workers across the economy can use a new technology or invention at very low marginal cost

all of the above

2)

A(n) _____________ production function describes a firm's, or perhaps an industry's, inputs and outputs.

Select the correct answer below:

macroeconomic

microeconomic

relative

minor

3)

Compared to several decades ago, the U.S. economy now has _______________.

Select the two correct answers below.

Select all that apply:

• near zero percent unemployment

• better-educated workers

• greater employment opportunities for individuals

• workers with access to better technologies

• 4)

• In the pattern of recessions and expansions in the economy, we call the highest point of the economy, before the recession begins, the ________.

  Select the correct answer below:

  maximum

  minimum

  peak

  trough

• 5)

• Suppose that nominal GDP increases to $30,000, and the GDP deflator increases to 108. What is real GDP? Round your answer to the nearest cent.

V & T Faces, Inc., would like to open a retail store in Miami. The initial investment to purchase the building is $420,000, and an additional $50,000 in working capital is required. Since this store will be operating for many years, the working capital will not be returned in the near future.

V & T Faces expects to remodel the store at the end of 3 years at a cost of $100,000. Annual net cash receipts from daily operations (cash receipts minus cash payments) are expected to be as follows:

Year 1	$80,000
Year 2	$115,000
Year 3	$118,000
Year 4	$140,000
Year 5	$155,000
Year 6	$167,000
Year 7	$175,000

The company’s required rate of return is 13 percent. Assume management decided to limit the analysis to 7 years.

1. What is the weakness of using the payback period method to evaluate long-term investments?
2. Assume the manager of the company wanted to live in Miami and intentionally inflated the projected annual cash receipts so that the proposal would be accepted. The proposal would otherwise have been rejected. Explain how the company’s use of a post audit would help to prevent this type of unethical behavior.

(Cash management​) As CFO of Portobello Scuba Diving​ Inc., you are asked to look into the possibility of implementing a system to expedite cash receipts from clients. Portobello receives check remittances totaling ​$24 million in a year. The firm records and processes 15,000 checks in the same period. The National Bank of Brazil has informed you that it could provide the service of expediting checks and associated documents for a unit cost of $ 0.15 per check. After conducting an​ analysis, you project that the cash freed up by the adoption of the system can be invested in a portfolio of​ near-cash assets that will yield an annual​ before-tax return of 11 percent. The company usually uses a​ 365-day year in its financial calculations.

a. What reduction in check collection time is necessary for Portobello to be neither better nor worse off for having adopted the proposed​ system?

b. How would your solution to part a be affected if Portobello could invest the​ freed-up balances at an expected annual return of only 6 ​percent?

c. What is the logical explanation for the differences in your answers to part a and part b​?

Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1 and debits to the account during September were as follows:

Bal., 1,000 units, 30% completed:

Direct materials (1,000 x $5) $ 5,000

Conversion (1,000 x 30% x $2.1) 630

$ 5,630

From Smelting Department, 24,000 units $122,400

Direct labor 34,978

Factory overhead 18,834

During September, 1,000 units in process on September 1 were completed, and of the 24,000 units entering the department, all were completed except 2,400 units that were 90% completed. Charges to Work in Process—Rolling for October were as follows:

From Smelting Department, 27,600 units $146,280

Direct labor 40,840

Factory overhead 21,996

During October, the units in process at the beginning of the month were completed, and of the 27,600 units entering the department, all were completed except 1,300 units that were 60% completed.

Required:

1. Enter the balance as of September 1 in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

ACCOUNT

Work in Process-Rolling Department

ACCOUNT NO.

BALANCE

DATE

ITEM

POST. REF.

DEBIT

CREDIT

DEBIT

CREDIT

Sept. 1 Bal., 1,000 units, 30% completed   

Sept. 30 Smelting Dept., 24,000 units at $5.1

Sept. 30 Direct labor

Sept. 30 Factory overhead   

Sept. 30 Finished goods

Sept. 30 Bal., 2,400 units, 90% completed   

If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.

Pittsburgh Aluminum Company

Cost of Production Report-Rolling Department

For the Month Ended September 30

Whole Units

Equivalent Units

Units

Direct Materials (a)

Conversion (a)

Units charged to production:

Inventory in process, September 1   

Received from Smelting Department   

Total units accounted for by the Rolling Department   

Units to be assigned costs:

Inventory in process, September 1   

Started and completed in September   

Transferred to finished goods in September   

Inventory in process, September 30   

Total units to be assigned costs   

Costs

Costs

Direct Materials

Conversion

Total Costs

Cost per equivalent unit:

Total costs for September in Rolling Department $ $

Total equivalent units

Cost per equivalent unit (b) $ $

Costs assigned to production:

Inventory in process, September 1 $

Costs incurred in September   

Total costs accounted for by the Rolling Department $

Costs allocated to completed and partially completed units:

Inventory in process, September 1 balance (c) $

To complete inventory in process, September 1 (c) $ $   

Cost of completed September 1 work in process $

Started and completed in September (c) $

Transferred to finished goods in September (c) $

Inventory in process, September 30 (d)   

Total costs assigned by the Rolling Department $

2. Provide the same information for October by recording the October transactions in the four-column work in process account. Construct a cost of production report, and present the October computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.

ACCOUNT

Work in Process-Rolling Department

ACCOUNT NO.

Balance

DATE

ITEM

POST. REF.

DEBIT

CREDIT

DEBIT

CREDIT

October 1 Balance

October 31 Smelting Dept., 27,600 units at $5.3

October 31 Direct labor

October 31 Factory overhead   

October 31 Finished goods

October 31 Bal., 1,300 units, 60% completed

If an amount is zero, enter in a zero "0". Round cost per unit answers to the nearest cent.

Pittsburgh Aluminum Company

Cost of Production Report-Rolling Department

For the Month Ended October 31

Whole Units

Equivalent Units

Units

Direct Materials (a)

Conversion (a)

Units charged to production:

Inventory in process, October 1   

Received from Smelting Department   

Total units accounted for by the Rolling Department   

Units to be assigned costs:

Inventory in process, October 1   

Started and completed in October   

Transferred to finished goods in October   

Inventory in process, October 31   

Total units to be assigned costs   

Costs

Costs

Direct Materials

Conversion

Total Costs

Cost per equivalent unit:

Total costs for October in Rolling Department $ $

Total equivalent units

Cost per equivalent unit (b) $ $

Costs assigned to production:

Inventory in process, October 1 $

Costs incurred in October   

Total costs accounted for by the Rolling Department $

Costs allocated to completed and partially completed units:

Inventory in process, October 1 balance (c) $

To complete inventory in process, October 1 (c) $ $   

Cost of completed October 1 work in process $

Started and completed in October (c)   

Transferred to finished goods in October (c) $

Inventory in process, October 31 (d)   

Total costs assigned by the Rolling Department $

3. The cost per equivalent unit for direct materials  

from August to October. The cost per equivalent unit for conversion costs  

from August to October. These changes  

be investigated for their underlying causes, and any necessary corrective actions should be taken.

Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 6,700 glare filters in inventory on December 31 of the current year, and has a policy of carrying 25 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:

	January	February	March	April
Estimated unit sales	36,800	34,600	39,200	38,200
Sales price per unit	$81	$81	$76	$76
Direct labor hours per unit	2.80	2.80	2.50	2.50
Direct labor hourly rate	$17	$17	$19	$19
Direct materials cost per unit	$10	$10	$10	$10

Required:
Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year.

a. Production budget in units:

Greiner Company
Production Budget (units)
For the First Quarter of the Coming Year
	January	February	March	Total
Unit sales
Desired ending inventory
Total units required
Less: Beginning inventory
Units produced

b. Direct labor budget in hours: Round your answers to two decimal places, if required.

Greiner Company
Direct Labor Budget (hours)
For the First Quarter of the Coming Year
	January	February	March	Total
Units produced
Direct labor hours per unit
Total labor budget (hours)

c. Direct materials cost budget:

Greiner Company
Direct Materials Cost Budget
For the First Quarter of the Coming Year
	January	February	March	Total
Units produced
Cost per unit	$	$	$	$
Total direct materials	$	$	$	$

d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

Greiner Company
Sales Budget (dollars)
For the First Quarter of the Coming Year
	January	February	March	Total
Unit sales
Unit selling price	$	$	$	$
Total sales revenue	$	$	$	$

2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. (CMA adapted)

Greiner Company
Budgeted Contribution Margin
For the First Quarter of the Coming Year
	January	February	March	Total
Sales revenue	$	$	$	$
Direct labor cost
Materials cost
Contribution margin	$	$	$	$

1. Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

   Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 6,900 glare filters in inventory on December 31 of the current year, and has a policy of carrying 35 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:

   	January	February	March	April
   Estimated unit sales	35,600	35,600	40,800	39,200
   Sales price per unit	$83	$83	$76	$76
   Direct labor hours per unit	2.70	2.70	2.40	2.40
   Direct labor hourly rate	$16	$16	$18	$18
   Direct materials cost per unit	$10	$10	$10	$10

   Required:
   Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

   1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year.

   a. Production budget in units:

   Greiner Company
   Production Budget (units)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Unit sales	35,600	35,600	40,800	39,200
   Desired ending inventory
   Total units required
   Less: Beginning inventory
   Units produced

   Feedback

   b. Direct labor budget in hours: Round your answers to two decimal places, if required.

   Greiner Company
   Direct Labor Budget (hours)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Units produced
   Direct labor hours per unit	2.7	2.7	2.4
   Total labor budget (hours)

   Feedback

   c. Direct materials cost budget:

   Greiner Company
   Direct Materials Cost Budget
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Units produced
   Cost per unit	$	$	$	$
   Total direct materials	$	$	$	$

   Feedback

   d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

   Greiner Company
   Sales Budget (dollars)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Unit sales
   Unit selling price	$	$	$	$
   Total sales revenue	$	$	$	$

   Feedback

   2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. (CMA adapted)

   Greiner Company
   Budgeted Contribution Margin
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Sales revenue	$	$	$	$
   Direct labor cost
   Materials cost
   Contribution margin	$	$	$	$