A county provides a county-wide van service for senior citizens. The county receives a $100,000 grant each year from the state government in support of the van service. The county expects to spend $2,500 each year for operating the service. Insurance will cost the county $1,750 per year for each of the two vans.

The county employs a supervisor to run the van service. The supervisor’s salary is $56,000 per year. They also need one part-time coordinator for every 500 rides they served to organize the routing of the vans and provide service to the senior community. Each coordinator works an average of 10 hours per week for 50 weeks in the year and is paid $7.50 per hour. Supervisors receive benefits worth an additional 20% of their annual salaries. Coordinators do not receive benefits.

Salary and Wage Schedule

Supervisor $56,000 per year

Coordinator $7.50 per hour

All drivers are volunteers. The costs associated with carrying each passenger are $0.25 per mile. The average ride for each passenger is 10 miles. Seniors are asked to pay $3.50 for each ride but only 90% of the riders are able to afford and will pay the fares.

a) Prepare an accrual-based operating budget for the upcoming year, assuming the county provides 5,000 rides during the year. Since there have been fluctuations in ridership in recent years, the county would also like to see what would happen if there is a 10% increase or decrease in the number of rides they provide. Your budget must be properly formatted. The following template will be helpful but feel free to make changes if necessary.

1. What are the fixed costs and what are the variable costs in this case?

2. What is the contribution margin per ride from each additional rider assuming the county provides 5,000 rides during the year?

Scenario # 7

There has been a car accident and the driver if the car was brought to PRU. She has been stabilized in the emergency department; however, transferring her to another facility 40 miles to ICU away would not be appropriate in her health status for her injuries would not sustain life.

The patient has to be placed in ICU in the next 1-2 hours. The night supervisory gains composure and describes the status of patients occupying the 4 ICU beds.

Patient A- A 59 year old female, comatose, stroke victim who had been in ICU for 33 days; uncertain prognosis; retired, with no family

Patient B- 2- week old premature male, has Down's syndrome and has been in ICU since birth; hospital has brought a legal action to permit surgery to repair a duodenal atresia, a procedure the parents had not permitted; family in adjacent city.

Patient C- 35 year old male who underwent emergency appendectomy, developed severe wound infection and septicemia, source of infection is unknown; because of previous anaphylactic shock in reaction to antibiotics; requires ICU care; bachelor; aged mother in city.

Patient D- 13 year old female undergoing chemotherapy for leukemia with an experimental drug; has been in remission three times in the past; close monitoring of the experimental protocol and potential reaction to drug requires ICU care; family in city.
New Patient- 24 year old patient; college honor student in physics. scholarship winner; pregnant; engaged; no family known.

The supervisor ended the brief description by asking, "What should I do?"

Randall has to make a decision. (continued on next page)

1. What should Randall do? Why is your choice the best answer? Support your thoughts.

2. What steps should be taken in reaching a decision?

3. Describe a means to avoid a similar problem in the future and how to deal with issues as they arise. (Adding additional ICU beds is not a budgetary or space option)

You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible, giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family, and it had sales of $97 million last year. SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. SMI’s growth to date has come from its profits. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Joe has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Joe wants you to use the pure play approach to estimate the cost of capital for SMI, and he has chosen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate.

3. you can use other websites such as marketwatch.com, Bloomberg.com, etc. to find the main competitors of Tesla. Find the beta for each of these competitors, and then calculate the industry average beta. Using the industry average beta, what is the cost of equity? Does it matter if you use the beta for Tesla or the beta for the industry in this case?

Mission verse Margin Reflection Exercise - Family

The Smith family lives in California, riverside. Mr. Smith work in a factory producing widgets that are used and bought by automobile manufacturing. His factory job pays and annual salary of $31,000 per year, with overtime when available, he makes up to an additional $8,000. The mother is a stay at home mother raising five children, ages of 6 months, 2 years, 3 years, 4 years, and 6 years of age.

Mr. Smith was recently laid off. Because of the severance that was paid totaling $20,000 and the salary already received throughout the year, the Smith’s currently do not qualify for Medical Assistance. The children have been able to receive the CHIP program.

The ABC cancer foundation has been engaging in a mass breast cancer awareness campaign indicating the need for women to get checks, risks, and benefits. As part of the project, the ABC cancer foundation has been offering free breast cancer (mammograms) for women with limited or no insurance. Mrs. Smith decides to participate in the program. As a result of the exam, a tumor is found. Labs were taken and the tumor came back malignant.

Mission verse Margin Reflection Exercise – Hospital

XYZ Hospital is a non-profit hospital in the region. It is only hospital in the region. The closest hospital to XYZ is 50 miles away. Over the past five years, XYZ hospital has been experiencing significant declines in cash flow, layoffs, and operating deficiencies. Days cash on hand is at 5 days. The industry average is 85 days cash on hand. The hospital is in jeopardy of going bankrupt.

The Smith family presented in the emergency room with the lab results indicating a malignant tumor. XYZ hospital staff knows that if a surgical procedure was scheduled, additional staff, medical supplies, and resources would be needed.

What does the hospital administration do? In your reflection, place yourself in both the family role and also as the CFO. (Reference the Ignatian and Jesuit articles in the resource section as well as you own values and perspective on hospital survival). What implications to the community, the family, the hospital, etc.?

A realtor studies the relationship between the size of a house (in square feet) and the property taxes (in $) owed by the owner. The table below shows a portion of the data for 20 homes in a suburb 60 miles outside of New York City. [You may find it useful to reference the t table.]

a-1. Calculate the sample correlation coefficient rxy. (Round intermediate calculations to at least 4 decimal places and final answers to 4 decimal places.)

a-2. Interpret rxy.

The correlation coefficient indicates a positive linear relationship.
The correlation coefficient indicates a negative linear relationship.
The correlation coefficient indicates no linear relationship.

b. Specify the competing hypotheses in order to determine whether the population correlation coefficient between the size of a house and property taxes differs from zero.

H0: ρxy = 0; HA: ρxy ≠ 0
H0: ρxy ≥ 0; HA: ρxy < 0
H0: ρxy ≤ 0; HA: ρxy > 0

c-1. Calculate the value of the test statistic. (Round intermediate calculations to at least 4 decimal places and final answer to 3 decimal places.)

c-2. Find the p-value.

p-value < 0.01
p-value 0.10
0.05 p-value < 0.10
0.02 p-value < 0.05
0.01 p-value < 0.02

d. At the 5% significance level, what is the conclusion to the test?

Reject H0; we can state size and property taxes are correlated.
Reject H0; we cannot state size and property taxes are correlated.
Do not reject H0; we can state size and property taxes are correlated.
Do not reject H0; we cannot state size and property taxes are correlated.

A consumer products testing group is evaluating two competing brands of tires, Brand 1 and Brand 2. Tread wear can vary considerably depending on the type of car, and the group is trying to eliminate this effect by installing the two brands on the same random sample of

10

cars. In particular, each car has one tire of each brand on its front wheels, with half of the cars chosen at random to have Brand 1 on the left front wheel, and the rest to have Brand 2 there. After all of the cars are driven over the standard test course for

20,000

miles, the amount of tread wear (in inches) is recorded, as shown in Table 1.

Based on these data, can the consumer group conclude, at the

0.05

level of significance, that the mean tread wears of the brands differ? Answer this question by performing a hypothesis test regarding

μd

(which is

μ

with a letter "d" subscript), the population mean difference in tread wear for the two brands of tires. Assume that this population of differences (Brand 1 minus Brand 2) is normally distributed.

Perform a two-tailed test. Then fill in the table below. Carry your intermediate computations to at least three decimal places and round your answers as specified in the table. (If necessary, consult a list of formulas.)

SCENARIO 1 You are caring for Miss Cassidy, age 50, in her own home. She was diagnosed with colon cancer four weeks ago. She had colon surgery and a permanent colostomy was created in the descending colon. She is very thin and has no appetite. She complains of lower back pain, has little energy and sleeps most of the day. She has a sister who lives several miles away but visits every second day. Miss Cassidy is very embarrassed about her colostomy. She says it smells and she can never predict when it will move. She has been taught to change the bags but requires constant reinforcement, assistance, and support.

Option 1

41. In caring for Miss Cassidy’s ostomy for hygiene you would:

a) Provide privacy, change when stool present, use gloves and deodorizers

b) Change once a day, gloves are not necessary unless there is a spill

c) Let her change it when she wants to and don’t worry about it, give her gloves

d) Only change it once a week or when it’s overflowing, use gloves and deodorizers

42. When assisting with ostomy care, you should:

a) Wash and dry the stoma and call the nurse to put on a new appliance

b) Clean the skin around the stoma with mild soap and warm water, rinse and pat dry

c) It’s not necessary to wash the stoma, just change the appliance

d) Wipe with a wet, cool cloth and put on a new appliance

43. Miss Cassidy wonders if her diet is affecting the consistency and frequency of her stools. As her PSW you would suggest that:

a) She should speak with the team care coordinator about her diet

b) She should keep track of how much meat she is eating daily

c) She shouldn’t worry about her diet; just concentrate on gaining some weight

d) Direct her to helpful on-line resources about colostomies and diet

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $32,207.2 and could be used to deliver an additional 50,000 bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $0.38. The delivery truck operating expenses, excluding depreciation, are $0.52 per mile for 17,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $22,777.5. The new machine would require three fewer hours of direct labor per day. Direct labor is $10 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have four-year lives. The minimum rate of return is 11%. However, Munch N’ Crunch has funds to invest in only one of the projects.

a. Compute the internal rate of return for each investment. Use the above table of present value of an annuity of $1. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest percent.

b. The bagging machine rate of return was than the minimum rate of return requirement of 11% while the delivery truck rate of return was than the minimum rate of return requirement of 11%. Therefore the recommendation is to invest in the .

Each of the following are independent situations. For each of the situations, use the 5-step process to determine when revenue can be recognized by indicating for each of the situations:

1. If a contract exists

2. The performance obligations in the contract

3. The transaction price in the contract

4. How the transaction price is allocated to the performance obligations.

5. When revenue is recognized

Situation A:

Freddy Flyer books travel on an airline on June 2, 2027. He pays $500 for a round-trip ticket that departs July 15, 2027 and returns July 20, 2027. In addition, once the round-trip ticket is used, the airline credits Freddy’s frequent flyer account for 500 miles based on a $.01 value for each frequent flyer point.

Situation B:

Dave’s Discount Emporium and Creative Construction, Inc. enter into a contract on May 1, 2027. Creative will build a new warehouse for Dave at a price of $2,000,000. Dave will make four equal payments to Creative over the 1-year construction period with the first payment made on May 1, 2027 and the other payments made every 4 months. Dave can cancel the construction at any time and will own any parts of the construction to date; however, it must pay Creative for work done up to the date of cancellation. The building is completed on April 30, 2018.

Situation C:

Doggone Good Donuts agrees to supply donuts and coffee to Better Brakes, a local business that manufacturers automobile break components, on a daily basis. The contract starts on January 1, 2027, and runs for 1 year. Doggone charges $400 per week for the donuts and coffee.

Situation D:

The Northville Nuggets sell four season tickets to a customer. The Nuggets play 10 regular season games, and the cost of one season ticket is $250.

Situation E:

Lazy Days Inc. enters into a contract with Hyper Hands Co. to sell it $50,000 of goods with delivery on May 10, 2027. Lazy manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2027 and Hyper pays $25,000 at that time Lazy delivers the goods on May 10, 2027, and receives the final payment.

1. Airlines are doing better right now because of lower fuel prices, but it is still a highly competitive industry with narrow margins and low profit per passenger.   Some airlines have extra charges of up to $50 for checked bags, some are charging for meals, and one has considered charging for access to bathrooms. One airline announced a plan to charge by the pound. Is this reasonable? Is it price discrimination?

For those that do not understand how aircraft work I offer the following. The more weight on the plane, the more energy (fuel) it takes to lift it. Also, the amount of weight a plane can lift includes the weight of fuel, so the more weight in the plane (bags and people) the less fuel the plane can take on. Aircraft full of heavy people and heavy bags need more fuel to get the energy, but may not be able to put on the amount of fuel they need because it weighs too much (six pounds a gallon). This limits the range (how far the plane can fly).

Is it price discrimination or just plain discrimination to charge very large people for a second seat? One airline announced a plan to do so. If they do, should we just let them charge by the pound? Let’s say you and your bags get on a scale and get charged $1.00 per pound per 1,000 miles. Would that be fair?

NOTE: Remember, I am asking you a normative question here but you need to back up with some positive analysis and not just an emotional response. Part of the point of these types of questions is to think about who gets to dictate what the definition of fair is?

2. A classic example of monopolistic competition is the restaurant industry. In what ways does this industry show the characteristics of the monopolistic competition market?

3. George says, "If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry." Explain if he is correct and how you would respond to his reasoning.