3) Suppose that a price searcher is currently charging a price that leads to an output level where marginal revenue is zero. Assume that marginal costs are always positive.

This price will or will not    maximize the firm’s profit.

4) If a firm goes out of business, what happens to the firm’s assets and workers?

A) The assets and workers become available for use by other firms in potentially more productive ways.

B) The assets and talents of the workers must remain with the firm owners

C) The assets and workers become available for use by other firms, but only for less productive purposes.

D) The assets and talents of the employees are lost permanently.

5) Suppose that families with low income have a highly elastic demand for college, while families with high income may have an inelastic demand for college. Assume there is no “reselling” of a college education.

Which of the following pricing strategies would increase revenue for colleges?

A) Charge students from low-income families a lower-price, and charge students from high-income families a higher price.

B) Charge students from high-income families a lower-price, and charge students from low-income families a higher price.

C) Charge all students the same price, regardless of family income.

As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo.  The sole shareholder of Apex has agreed to either of the following purchase offers:

            A:  General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex

                                                OR

B:  General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.

The fair value of the acquired assets and liabilities is as follows:

Current Assets (Tangible)                      $2,500,000

Long Term Assets (Tangible)                  $4,000,000

Liabilities                                              $3,500,000

Net Tangible Assets Acquired                $3,000,000

Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B?  Why?  

Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”?  What internal revenue service code section addresses how sales of assets versus sales of stock are taxed?  What are the significant differences?  What period may the goodwill be deducted for tax purposes?  Why do you think the Internal Revenue Service treats these two purchase offers differently?

As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo.  The sole shareholder of Apex has agreed to either of the following purchase offers:

            A:  General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex

                                                OR

B:  General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.

The fair value of the acquired assets and liabilities is as follows:

Current Assets (Tangible)                      $2,500,000

Long Term Assets (Tangible)                  $4,000,000

Liabilities                                              $3,500,000

Net Tangible Assets Acquired                $3,000,000

Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B?  Why?  

Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”?  What internal revenue service code section addresses how sales of assets versus sales of stock are taxed?  What are the significant differences?  What period may the goodwill be deducted for tax purposes?  Why do you think the Internal Revenue Service treats these two purchase offers differently?

Part 1: Work the following requirements from P5-13 on page 288 from your book. Part 1 Part 2a Part 2b Part 3a (revenue for the contract from 2018 and 2019) Part 3b (gross profit for the contract from 2018 and 2019) Part 2: Baker, a consulting firm, enters into a contract to help a small family owned business design a marketing strategy to compete with other companies in the region.. The contract spans eight months. Baker’s client promises to pay $93,000 at the beginning of each month. At the end of the contract, Baker either will give their client a refund of $31,000 or will be entitled to an additional $31,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Baker estimates an 80% chance that it will earn the $31,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the end of the contract, Baker receives the additional consideration of $31,000. Required: 1. Prepare the journal entry to record revenue for each of the first four months of the contract. 2. Prepare the journal entry that Baker would record after eight months to record the receipt of the $31,000 bonus.

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 2,070 pizzas at an average selling price of $16 per pizza and for 230 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below: Vulcan Flyovers Operating Data For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Flights (q) 60 60 58 Revenue ($350.00q) $ 16,300 $ 21,000 $ 20,300 Expenses: Wages and salaries ($3,800 + $92.00q) 9,276 9,320 9,136 Fuel ($31.00q) 2,028 1,860 1,798 Airport fees ($800 + $33.00q) 2,660 2,780 2,714 Aircraft depreciation ($10.00q) 600 600 580 Office expenses ($240 + $1.00q) 468 300 298 Total expense 15,032 14,860 14,526 Net operating income $ 1,268 $ 6,140 $ 5,774 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

3. PA11. 6.6 The following is the adjusted trial balance data for Emma’s Alterations as of December 31, 2019. DEBIT CREDIT Cash dr.600,538 Accounts Receivable dr.50,689 Equipment dr.199,430 Merchandise Inventory dr. 169,744 Accounts Payable cr. 234,893 Common Stock cr. 502,200 Sales cr. 393.426 Interest Revenue cr. 100,976 Rent Revenue cr.65,500 Sales Salaries Expense dr. 26,750 Office Supplies Expense dr. 4,903 Sales Discount dr. 61,347 Interest Expense dr. 55,432 Sales Returns and Allowances dr. 55,432 Cost of Goods Sold dr. 90,333 Rent Expense dr. 10,400 Depreciation Expense: Office Equipment dr. 8,560 Insurance Expense dr.3,421 Advertising Expense 11,878 Totals dr. 1,296,995 cr. 1,296,995 A. Use the data provided to compute net sales for 2019. B. Compute the gross margin for 2019. C. Compute the gross profit margin ratio (rounded to nearest hundredth). D. Prepare a simple income statement for the year ended December 31, 2019. E. Prepare a multi-step income statement for the year ended December 31, 2019.

Discuss the possible causes and effects of changes in the ratios that have been calculated below:

P4-4B Allesnik Advertising Agency was founded in January 2017. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2017.

ALLESNIK ADVERTISING AGENCY

Trial Balance

December 31, 2017

Instructions

(a)Journalize the annual adjusting entries that were made.

(b)   Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31.

A) Find the equation of the tangent line to the curve y = 5e^-8x at the point (0, 5).

B) Solve for t.

e^0.09t = 9

C) Rancher Johann wants to build a three-sided rectangular fence near a river, using 280 yards of fencing. Assume that the river runs straight and that Johann need not fence in the side next to the river.

Johann wants to build a fence so that the enclosed area is maximized.

• What should be the length of each side running perpendicular to the river?
  yards
  
• What should be the length of the side running parallel to the river?
  yards
  
• What is the largest total area that can be enclosed?
  square yards

D) Find the absolute maximum and minimum values on the closed interval [-3,3] for the function below. If a maximum or minimum value does not exist, enter NONE.

f(x) = (4x)/(x² + 1)

E) When a baseball park owner charges $5.00 for admission, there is an average attendance of 100 people. For every $0.25 increase in the admission price, there is a loss of 2 customers from the average number.

1. What admission price should be charged in order to maximize revenue
   
2. What is the maximum revenue?

F) Find the derivative.

f(x) = x⁶ · e^2x