Question: CC4 It is the end of November and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if her business has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations' income, she must first make adjustments.

I have this information as well:

a) Prepare journal entries to record the December transactions. I know there are no December JEs, that is what the question is asking for. Is it unanswerable?  

Firm A uses a process-costing system. For September 2020, the company had the following activities:

Direct materials are placed into production at the beginning of the process. Beginning WIP is 100% complete as to direct materials and 30% complete as to conversion. All spoilage is detected at the end of the process. Normally, spoiled units are 10% of good units completed. Ending WIP is 60% completed as to conversion and 100% complete as to direct materials. The company decides to use the first-in, first-out (FIFO) method.

(26-1) Compute the physical units of normal spoilage and started and completed during current period. Then compute equivalent units for direct materials and conversion costs. (12 points)

(26-2) Summarize costs to account for and calculate cost per equivalent-unit for direct materials and conversion costs (Round cost per equivalent-unit calculations to the nearest hundredth). (4 points)

(26-3) Assign total costs (7 points)

(26-4) Calculate cost per good unit completed and normal spoilage rate. (4 points)

(26-5) Please briefly describe how does the job-costing system account for spoilage. (3 points)

(26-6) Please briefly explain why do we split completed units into completed units from beginning WIP and completed units from started and completed in current period under FIFO? (3 points)

2. Identify the type of sampling used: self-response, random, systematic, convenience,

stratified, or cluster.

a. DTE survey 20 households in every city in

the County to learn about the costumer

satisfying level.

b. A sample consists of students with even

number Student’s ID.

c. A market researcher selects 100 people

from each state in the USA.

d. A pollster uses a computer to generate 500

random numbers, then interviews the voters

corresponding to those numbers.

e. To check the alcohol level of drivers,

police officers stopped every seventh car

passing through a side street near a

famous bar.

f. A University committee wants to know the

percentage of students who drive and text.

They survey all students majoring in History

and English.

g. A restaurant decided to give free

dessert for every 50th costumer dining

there.

h. A reporter writes the name of each US

senator on a separate card, shuffles the

cards, and then draws five names.

i. There are 4 bags of M&M in a box. One

consists of blue M&M, another bag has

red only M&M, the other two consists of

chocolate and yellow M&M respectively.

Lisa takes out 5 M&M from each bag to

create a sample of M&M.

j. A researcher conducts a survey by asking

100 randomly selected workers from each

category: no high school degree, high school

degree, more than high school degree.

k. A researcher wants to determine the

percentage of first grader still believe in

Santa Claus. He uses the first graders in

his son’s school as his sample.

l. A polling on Twitter asks its follower to rank

the work ethic of the congress from 1 to 5,

with 1 as the lowest and 5 as the highest

Valuing Inventory and Recording Entries Using Relative Sales Value Method Arizona Developers purchased for cash and subdivided a tract of land that cost $837,000. The subdivisions were divided on the following basis.

10% used for streets, alleys, and parks

50% divided into 100 lots selling at $4,000 each

30% divided into 200 lots selling at $3,000 each

10% divided into 100 lots selling at $2,000 each

a. Prepare the entry for the purchase of the lots. Use the relative sales value method to allocate the total cost of $837,000 to the three categories of lots. Assume a perpetual inventory system.

b. During the final month of the year, the paving was completed (included in the $837,000 cost) and several sales occurred. Inventory remaining at the first year-end was: 18 of the $4,000 lots; 20 of the $3,000 lots; and 6 of the $2,000 lots.

1) Compute the valuation of inventory at the first year-end. Inventory

2) Prepare the entry for sales and cost of goods sold for each category of lots 1, 2 and 3 separately. Assume cash sales.

In which of the following cases would you be able to predict with certainty the change in the equilibrium price? There is more than one answer to this question. You must mark all of the correct answers to receive full credit for this question.

There is a decrease in demand.

There is a decrease in demand and an increase in supply.

There is an increase in demand and an increase in supply.

There is an increase in supply.

There is a decrease in demand and a decrease in supply.

There is an increase in demand and a decrease in supply.

Assume the following in the market for coffee. A new study comes out showing that increased coffee consumption improves cardiovascular health. There is an expectation among consumers of a higher price. Firms that produce coffee are facing higher labor costs. Which of the following statements is correct?

The equilibrium quantity will definitely increase.

The equilibrium quantity will definitely decrease.

The equilibrium price will definitely increase.

The equilibrium price will definitely decrease.

Which of the following is not a problem typically associated with a price floor?

None of the other choices correctly answers this question.

A persistent surplus develops.

Actual consumption of the good or service in the market decreases.

Firms in the industry waste resources in an attempt to offer disguised discounts.

There is overinvestment in the industry.

A pizza shop sells pizza by the slice. On day when it charged $4.50 per slice it sold 380 slices. On the next day it charged $5.00 per slice and sold 340 slices. What is the price elasticity of demand?

0.50

0.95

1.24

1.06

0.80

When a furniture store increased its selling price by 5%, the quantity demanded decreased by 8%. The store’s price elasticity of demand was _______ and the demand was _______.

1.60, elastic

0.63, inelastic

0.63, elastic

1.60, inelastic

A firm sells a product that has a price elasticity of demand of 0.73. If the firm raises the selling price, it can expect its total revenue will _______.

increase

remain the same

decrease

There is no way of being able to predict what will happen to total revenue without additional information.

A market is in equilibrium. The government then comes along and imposes a price restriction. Due to this restriction the quantity demanded goes from 200 to 300 units, while the quantity supplied goes from 200 to 100 units. The government price restriction is imposed _______the equilibrium price and it is a price _______.

There is no way to answer this question without more information.

below, floor

above, floor

below, ceiling

above, ceiling

In one of the following cases it is impossible for the equilibrium price to increase. Which is it?

There is a decrease in supply.

There is a decrease in demand and an increase in supply.

There is a decrease in demand and a decrease in supply.

There is an increase in demand.

There is an increase in demand and an increase in supply.

There is an increase in demand and a decrease in supply.

When the percentage change in price (in absolute value) is larger than the percentage change in quantity demanded (in absolute value), the demand is inelastic.

True

False

Sorry I know this is a lot but I am desperate haha. Will definitely give a like to whoever answers thanks!

1. Suppose the industry of all farms planting beans is now in a perfectly competitive longrun equilibrium, and all farms have zero fixed cost for planting. Recent regulation in the market of fertilizers raises the price of bean fertilizer and therefore the marginal and average costs of all the farms in this industry. Note that marginal and average cost curves both experience a parallel shift up by the same amount. Please use a graphic tool to analyze the following changes to each individual farm and to the entire industry:

(a) (8 points) Set up a diagram, for both individual firms and the industry, to show the longrun equilibrium before the fertilizer shortage. Clearly mark the market price (p), individual supply (q), and the industry supply (Q).

(b) (12 points) Suppose the fertilizer shortage takes place but the price for beans has not yet adjusted accordingly (no entry or exit either). How much will each existing farm produce (mark your answer as q1 on the same graph) and how much profit or loss are they getting (make with a shaded area on your graph)?

(c) (16 points) As time goes by, will this industry experience any entry or exit? How will the price start to adjust? Explain your answer. Mark on your graph the new long-run industry supply, the new equilibrium market price (p’), the new individual supply (q’), and the new industry supply (Q’).

2. Suppose one Japanese firm and one American firm dominate the US market of widgets. They share the same cost structure: TC = 250 + 40q. The only demand for widgets is in the US and is p = 100 – Q.

(a) (16 points) If these two firms compete in quantity at the same time, what is the Cournot equilibrium output, price, profit level by each firm?

(b) (12 points) Suppose the American firm acquires the Japanese firm and therefore becomes a monopoly in this market. Calculate the monopoly’s output, price, and Lerner Index. How much is the deadweight loss due to monopoly behavior?

You are a team of financial analysts of the Gadget Division of The FGM Corporation, the largest

multinational automobile manufacturer in the world. You are asked to evaluate a project

proposal regarding the production of a new voice-activated electronic device – Universal

Direction Assistance (UDA). This upgradeable device, which incorporates the most advanced

computer and satellite wireless technology, provides directions and real time traffic reports that

guide automobile drivers in choosing the preferred route to their destinations. This device can be

used in any country with specialized software that contains local geographical information and

real time traffic report (where technology is available) that are translated into the chosen

language of the driver. UDA will be sold as an option for the FGM cars and trucks. A

comprehensive market analysis on the potential demand for this device was conducted last year

at a cost of $10M.

According to the results of the market analysis, the expected annual sale volumes of UDA are

1.8M units for the first two years, and drop to 1.5M units for the final two years of this 4-year

project. Unit prices are expected to be $600 for the first two years, and then fall to $450, due to

the introduction of similar devices by competitors, afterwards. Unit production costs are

estimated at $500 in the first year of the project. The growth rate for unit production costs are

expected to be 4% per year over the remaining life of the project.

In addition, the implementation of the project demands current assets to be set at 12% of the

annual sale revenues, and current liabilities to be set at 8% of the annual production costs.

Besides, the introduction of UDA will increase the sales volume of cars and trucks that leads to

an increase in the annual after-tax cash flow of FGM by $21M.

The production line for UDA will be set up in a vacant plant that was built by FGM at a cost of

$30M twenty years ago. This fully depreciated plant has a current market value of $20M, and is

expected to be sold at the termination of this project for $12M in four years. The machinery for

producing UDA has an invoice price of $120M, and its modification costs another $15M. The

machinery has an economic life of 4 years, and is classified in the MACR 3-year class for

depreciation purpose. The machinery is expected to have zero salvage value at the termination

of the project.

The cost of capital (or discount rate) for this project is assumed to be 15%. The estimated

marginal tax rate of The FGM Corporation is 30%.

Questions:

A.

In light of the appropriate objective of a firm, what would you recommend on the UDA

Project basing on the (base) scenario described above? Why?

B.

Would your recommendation be changed if the unit price of the UDA only falls to $550

2

upon the entrance of competitive products after two years into this project? What would

be your recommendation if the unit price falls to $350 after two years? Why?

C.

What would be your recommendation on this UDA Project if there is 75% chance that the

base scenario (i.e., unit price falls to $450 after two years) will occur, 20% chance that

the optimistic scenario (i.e., unit price only falls to $550 after two years) will occur, and

5% chance that the pessimistic scenario (i.e., unit price falls to $350 after two years) will

occur? Why?

ZCM manufactures camera drones. The company currently has one existing model (ZC- 1G) on the market. Given the growing interest in aerial photography, the existing model (ZC- 1G) has been a success and the company is currently considering introducing a new model to replace the existing model.
Prior to developing the new model, the company has conducted a survey to determine the features users are looking for in camera drones and try to incorporate these features in the new model. The company spent $200,000 on the survey. The new model will be named ZC-2G. The main selling points for the new model (ZC-2G) are a longer flying time and an advance stability system for steady shot, allowing better picture quality. To achieve a longer flying time, ZCM has developed a new lighter battery which will be fitted onto the new drone (ZC-2G). ZCM has spent $750,000 to develop the new battery.
The project is estimated to last for five years. The estimated sales volume is 2,000, 3,000, 3,000, 4,000 and 3,000 per each of the next five years respectively. The selling price will be set at $1,400 per unit in the first year and is expected to decrease by 10 percent every year due to the competitive nature of the industry. The variable cost will be $700 per unit in the first year and the fixed cost for the project will be $400,000 per year. Both variable cost and fixed cost are expected to remain constant over the five-year period.
Furthermore, the company will need to invest $960,000 to purchase the necessary equipment. This $960,000 will be 100 percent depreciated straight line over 6 years. The equipment can be sold for $220,000 (before tax) at the end of the project.
The project will require ZCM to make an investment in net working capital of $200,000 at the beginning of the project. Subsequently, the net working capital at the end of each year (year 1 to year 4) will increase by 10 percent every year. ZCM has a 35 percent corporate tax rate and a WACC of 19 percent. ZCM believes that the risk of the new project is similar to the risk of the company’s existing operations.
As previously stated, ZCM currently has one model of camera drone (ZC-1G) on the market. The introduction of the new model (ZC-2G) will likely take customers away from the existing model (ZC-1G). Since the company will only cease production of the ZC-1G model in three years’ time, the company estimates that this will result in a decrease in operation cash flows of $300,000 per year in the first three years of the project’s life (year 1 to year 3).
Based on the above information, should the company proceed with the project?

ZCM manufactures camera drones. The company currently has one existing model (ZC1G) on the market. Given the growing interest in aerial photography, the existing model (ZC1G) has been a success and the company is currently considering introducing a new model to replace the existing model. Prior to developing the new model, the company has conducted a survey to determine the features users are looking for in camera drones and try to incorporate these features in the new model. The company spent $200,000 on the survey. The new model will be named ZC-2G. The main selling points for the new model (ZC-2G) are a longer flying time and an advance stability system for steady shot, allowing better picture quality. To achieve a longer flying time, ZCM has developed a new lighter battery which will be fitted onto the new drone (ZC-2G). ZCM has spent $750,000 to develop the new battery. The project is estimated to last for five years. The estimated sales volume is 2,000, 3,000, 3,000, 4,000 and 3,000 per each of the next five years respectively. The selling price will be set at $1,400 per unit in the first year and is expected to decrease by 10 percent every year due to the competitive nature of the industry. The variable cost will be $700 per unit in the first year and the fixed cost for the project will be $400,000 per year. Both variable cost and fixed cost are expected to remain constant over the five-year period. Furthermore, the company will need to invest $960,000 to purchase the necessary equipment. This $960,000 will be 100 percent depreciated straight line over 6 years. The equipment can be sold for $220,000 (before tax) at the end of the project. The project will require ZCM to make an investment in net working capital of $200,000 at the beginning of the project. Subsequently, the net working capital at the end of each year (year 1 to year 4) will increase by 10 percent every year. ZCM has a 35 percent corporate tax rate and a WACC of 19 percent. ZCM believes that the risk of the new project is similar to the risk of the company’s existing operations. As previously stated, ZCM currently has one model of camera drone (ZC-1G) on the market. The introduction of the new model (ZC-2G) will likely take customers away from the existing model (ZC-1G). Since the company will only cease production of the ZC-1G model in three years’ time, the company estimates that this will result in a decrease in operation cash flows of $300,000 per year in the first three years of the project’s life (year 1 to year 3). Based on the above information, should the company proceed with the project?

1. If the number of discouraged workers decreases because many of them start to look for work, everything else remaining the same, then the

Select one:

a. labour force participation rate will decrease.

b. non labor force will increase.

c. employment rate will decrease.

d. the labor market population will increase.

e. none of the above.

2.  

Initially, you earn $10 income per hour, and the price level is 100. Your income now increases to $20 per hour and the price level increases to 175. What happens to your purchasing power?

Select one:

a. It doubles in value

b. It increases in value by less than double

c. It increases in value by more than double

3.  

Suppose a trade union and a firm agree to increase the wage rate by the same percentage as the increase in the Consumer Price Index. If the CPI increases by 5 percent, then the real income of workers will

Select one:

a. decrease by 5 percent, accounting for bias in the calculation of the CPI.

b. increase by 5 percent as well.

c. increase by more than 5 percent, accounting for bias in the calculation of the CPI.

d. increase by less than 5 percent, accounting for bias in the calculation of the CPI.

e. remain unchanged, accounting for bias in the calculation of the CPI.

4.  

Refer to the table below, which shows price data for a hypothetical economy, between which two years did the price level increase the most?

Select one:

a. 2000 and 2001

b. 2001 and 2002

c. 2002 and 2003

d. 2003 and 2004

e. 2004 and 2005