A certain market has both an express checkout line and a superexpress checkout line. Let X₁ denote the number of customers in line at the express checkout at a particular time of day, and let X₂ denote the number of customers in line at the superexpress checkout at the same time. Suppose the joint pmf of X₁ and X₂ is as given in the accompanying table.

(a) What is P(X₁ = 1, X₂ = 1), that is, the probability that there is exactly one customer in each line?
P(X₁ = 1, X₂ = 1) =

(b) What is P(X₁ = X₂), that is, the probability that the numbers of customers in the two lines are identical?
P(X₁ = X₂) =

(c) Let A denote the event that there are at least two more customers in one line than in the other line. Express A in terms of X₁ and X₂.

A = {X₁ ≤ 2 + X₂ ∪ X₂ ≤ 2 + X₁}

A = {X₁ ≥ 2 + X₂ ∪ X₂ ≥ 2 + X₁}

A = {X₁ ≥ 2 + X₂ ∪ X₂ ≤ 2 + X₁}

A = {X₁ ≤ 2 + X₂ ∪ X₂ ≥ 2 + X₁}

Calculate the probability of this event.
P(A) =

(d) What is the probability that the total number of customers in the two lines is exactly four? At least four?

alculating Gross Profit and Inventory Turnover
The following table presents sales revenue, cost of goods sold, and inventory amounts for three computer/electronics companies, Dell Inc., Hewlett-Packard Company, and Apple Inc.

Required:
a. Compute the gross profit margin (GPM) for each of these companies for all three fiscal years.
(Round your answers to one decimal place.)

b. Compute the inventory turnover ratio and the average inventory days outstanding for each company for the last two fiscal years. (All three firms use FIFO inventory costing.)
(Round your answers to one decimal place.)

Review Question

1. What is sales revenue forecasting?

2. What types of data are needed to forecast sales or revenues?

3. What is cost estimation?

4. What is the first step managers need to complete when estimating costs?

20. How does technology affect costs?

22. Identify three environmental factors that affect business decisions related to costs.

25. How does technological innovation generally affect a firm' s costs?

27. What is meant by the learning curve?

28. What are controllable costs?

Exercise and Problems

6. Mega Profits Company estimated its annual total cost function to be: Y = $150,000 + $.57 x Assuming that Y represents total cost and x equals the number of units sold, use this equation to answer the following questions:

a. What is the firm' s total fixed cost?

b. What is the firm' s variable cost per unit?

c. Compute total costs if the firm sells 100,000 units.

d. Compute total costs if the firm sells 200,000 units.

e.  If the firm' s product sells for $1.00, how many units does the firm need to sell to break even?

f.  If the firm' s product sells for $1.50, how many units does the firm need to sell to break even?

7. Morrison Hotel uses its banquet room to host parties, dinner dances, and business meetings. The hotel serves meals and provides a variety of services for each event. A local consultant analyzed recent cost data and estimated the total cost function per event to be as follows: Y = $1,000 + $9.00 x Assuming that Y represents total cost and x equals the number of guests, use this equation to answer the following questions:

a. What is the firm' s total fixed cost per event?

b. What is the firm' s variable cost per guest?

c. Compute total costs if 50 guests attend the event.

d.  Compute total costs if 100 guests attend an event.

e.  If the hotel charges $25.00 per guest, how many guests must attend for the hotel to break even at each event?

f.  If the hotel charges $28.00 per guest, how many guests must attend for the hotel to break even at each event?

g.  If the hotel charges $28.00 per guest, would you advise this hotel to host events for 50 or fewer guests? Why or why not?

3. Durango Mountain Bike Company wants to open a bicycle repair shop in a suburb of a major metropolitan area. The industry association estimates that 20 percent of bicycles are repaired by similar service companies and that the average owner spends $100 per bicycle on maintenance each year. The census and local chamber of commerce data indicate that there are 10,000 bicycles in the county. Three other competitors exist within a twenty-five-mile radius of the proposed business location. Based on a consumer survey, the owners believe that they can capture 30 percent of the market in the first year of operation. Based on these data, address the following requirements:

a.  What is the potential number of bicycles likely to be commercially repaired?

b. What is the total potential bicycle repair revenue available in the market?

c. How much revenue can Durango Mountain Bike expect to generate?

1. The Fed kept the Federal Funds rate target unchanged at 5.25% from June 2006 to September 2007. However, the effective Federal Funds rate dropped from 5.41% on August 9th 2007 to 4.54% on August 14th 2007. If the Fed did not take any monetary measures from August 9th 2007 to August 14th 2007, graphically show what could have caused the decrease in the Federal Funds rate. If you were the Fed’s chairman, what measures would you take to achieve the 5.25% target. Use the diagram of the reserve market to support your answer.

We discovered that 650 GSS respondents in 2006 watched television for an average of 2.98 hrs/day, with a standard deviation of 2.4 hours. Answer the following questions, assuming the distribution of the number of television hours is normal. What is the Z score for a person who watches more than 8 hrs/day. What proportion of people watch 5 hrs/day or more television? How many does this correspond to in the sample? What number of television hours per day corresponds to a Z +1. What is the percentage of people who watch between 1 and 6 hours of television per day? Please round to a whole numbe

As reported in College Teaching, in a 2006 article entitled “Humor in Pedagogy: How Ha-Ha Can Lead to Aha” (Vol. 54, Issue 1), R. L. Garner randomly assigned 117 undergraduates to “review lecture videos” on statistics research methods. The videos either did or did not have short bits of humor inserted. Students who viewed the humor-added version of the video gave significantly higher ratings in their opinion of the lesson, how well the lesson communicated information, and the quality of the instructor. Even more importantly, that same group of students also recalled and retained significantly more information on the topic.

Determine whether each variable is an explanatory variable or a response variable.

Enter the number of the term that corresponds to each choice:

1. Students' opinion of lesson
2. Students' rating of the quality of instructor
3. Humor condition of the video (i.e., with or without short bits of humor)
4. Students' ratings of how well lesson communicated information

Is this an experiment? y/n

A CBS News poll conducted June 10 and 11, 2006, among a nationwide random sample of 651 adults, asked those adults about their party affiliation (Democrat, Republican or none) and their opinion of how the US economy was changing ("getting better," "getting worse" or "about the same"). The results are shown in the table below.

Express each of your first five answers as a decimal and round to the nearest 0.001 (in other words, type 0.123, not 12.3% or 0.123456).

What fraction of survey respondents identified themselves as Republicans?

What fraction of survey respondents thought the economy was getting better?

What fraction of Republicans thought the economy was getting better?

Among survey respondents who thought the economy was getting better, what fraction were Republicans?

What fraction of survey respondents were Republicans who thought the economy was getting better?

The three pie charts below show the opinions about the economy for each of party:

Democrats
36.9%58.1%gettingbetter5.1%about thesame36.9%gettingworse58.1%

Republicans
20.4%23.7%55.9%gettingbetter20.4%about thesame55.9%gettingworse23.7%

none
39.3%51.5%gettingbetter9.2%about thesame39.3%gettingworse51.5%

Based on these pie charts, is there evidence that opinion about the economy is independent of party affiliation? Choose the statement below that best answers this question.

• There is evidence that opinion about the economy depends on party affiliation.
• There is evidence that party affiliation and opinion about the economy are dependent.
• There is evidence that opinion about the economy is not independent of party affiliation.
• There is evidence that party affiliation depends on opinion about the economy.
• There is evidence that opinion about the economy is independent of party affiliation.

Ball (2006, p.17) makes the following comment: “In sum, even a cursory review of the political and economic diversity amongst IFRS adopting nations, and of their past and present financial reporting practices, makes the notion that uniform standards alone will produce uniform financial reporting seem naïve.” Critically assess the validity of Ball’s comments and discuss five factors which lead to national differences in accounting (Hint: treat different cultural dimensions as one factor).

A CBS News poll conducted June 10 and 11, 2006, among a nationwide random sample of 651 adults, asked those adults about their party affiliation (Democrat, Republican or none) and their opinion of how the US economy was changing ("getting better," "getting worse" or "about the same"). The results are shown in the table below.

Express each of your first five answers as a decimal and round to the nearest 0.001 (in other words, type 0.123, not 12.3% or 0.123456).

What proportion of survey respondents identified themselves as Republicans?

What proportion of survey respondents thought the economy was getting worse?

What proportion of Republicans thought the economy was getting worse?

Among survey respondents who thought the economy was getting worse, what proportion were Republicans?

What proportion of survey respondents were Republicans who thought the economy was getting worse?

The three pie charts below show the opinions about the economy for each of party:

Democrats
36.9%58.1%gettingbetter5.1%about thesame36.9%gettingworse58.1%

Republicans
20.4%23.7%55.9%gettingbetter20.4%about thesame55.9%gettingworse23.7%

none
39.3%51.5%gettingbetter9.2%about thesame39.3%gettingworse51.5%

Based on these pie charts, is there evidence that opinion about the economy is independent of party affiliation? Choose the statement below that best answers this question.

• There is evidence that opinion about the economy is independent of party affiliation.
• There is evidence that party affiliation depends on opinion about the economy.
• There is evidence that opinion about the economy is not independent of party affiliation.
• There is evidence that opinion about the economy depends on party affiliation.
• There is evidence that party affiliation and opinion about the economy are dependent.

On May 1, 2006, Baxter Corporation sold a $500 million bond issue to finance the purchase of a new distribution facility.  These bonds were issued in $1,000 denominations with a maturity date of May 1, 2026. The bonds have a coupon rate of 10.00% with interest paid semiannually.

Required:

Determinethe value today, May 1, 2018 of one of these bonds to an investor who requires an 8 percent return on these bonds. Why is the value today different from the par value?

Assume that the bonds are selling for $1,352. Determine the current yield and the yield-to-maturity. Explainwhat these terms mean.

Explainwhat layers or textures of risk play a role in the determination of the required rate of return on Baxter’s bonds.