Gallego Corporation makes a product with the following standard costs:

		Standard Quantity or Hours	Standard Price or Rate
	Direct materials	3.1 pounds	$6.00 per pound
	Direct labor	0.8 hours	$18.00 per hour
	Variable overhead	0.8 hours	$6.00 per hour

In October the company produced 3,000 units using 8,380 pounds of the direct material and 2,610 direct labor-hours. During the month, the company purchased 9,500 pounds of the direct material at a total cost of $55,100. The actual direct labor cost for the month was $48,546 and the actual variable overhead cost was $16,965. The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.

b. Compute the labor rate variance and the labor efficiency variance. Indicate whether each variance is favorable or unfavorable

c. Compute the variable overhead rate variance and the variable overhead efficiency variance. Indicate whether each variance is favorable or unfavorable

d. Briefly explain one possible cause of each variance computed in parts a. and b. above. Do not use the same possible cause more than once. You do not need to provide possible causes for the variances computed in part c

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.

Last year, the company sold 62,000 of these balls, with the following results:

Sales (62,000 balls)	$	1,550,000
Variable expenses		930,000
Contribution margin		620,000
Fixed expenses		426,000
Net operating income	$	194,000

Required:

1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.

2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?

3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $194,000, as last year?

4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?

5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?

6. Refer to the data in (5) above.

a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $194,000, as last year?

b. Assume the new plant is built and that next year the company manufactures and sells 62,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.\

Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls? (Round "CM Ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.)

Show less

	CM Ratio 25.00selected answer incorrect % Unit sales to break even 53,250selected answer correct balls

Assume the new plant is built and that next year the company manufactures and sells 62,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.)

Northwood Company Contribution Income Statement Salesselected answer correct $1,634,375selected answer incorrect Variable expensesselected answer correct 588,375selected answer incorrect Contribution marginselected answer correct 1,046,000 Fixed expensesselected answer correct 852,000selected answer correct Net operating incomeselected answer correct $194,000 Degree of operating leverage not attempted

• R

1. Silicon is the main ingredient of both glass and semiconductor materials. Why are the physical properties of glass different from those of semiconductors?

1. The silicon atoms in semiconductors are bonded with oxygen atoms to form a crystal; in semiconductors the silicon is pure and thus forms the amorphous structure.

2. Silicon has no effect on the properties of glass and semiconductors.

3. The silicon atoms in semiconductors form a crystal; in glass they are bonded with oxygen atoms to form the amorphous silicon dioxide.

4. The silicon in glass does not have elec- trons, while the silicon in semiconductors does.

002 The three main rock types are distinguished on the basis of which of the following charac- teristics?

I) composition

II) texture

III) size and shape of mineral or rock grains

1. I only

2. III only

3. I, II and III

4. I and II only

5. II only

003 Which of the following are all examples of minerals?

1. petroleum, coal, iron, feldspar, basalt

2. water, mercury, metallic hydrogen, lime-stone

3. copper, ice, quartz, topaz, diamond, corundum

4. gold, silver, uranium, lead, silica, iron

5. bronze, steel, glass, aluminium, pencil lead

004 Common examples of sulfide and sulfate minerals, respectively, are

1. galena and pyrite.

2. fluorite and pyrite.

3. galena and gypsum.

4. galena and hematite.

5. gypsum and anhydrite.

005 Cleavage is defined as

1. None of these

2. planes of a fracture resulting from strong bonds.

3. smooth, flat, reflective surfaces.

4. planes of weak bonds along which a mineral splits.

5. surfaces of a smooth, curved fracture.

006 Minerals originate from crystallization of

1. molten magma.

2. All of these

3. chemical alteration of pre-existing minerals.

4. hydrothermal solutions.

5. seawater.

007 Which of the following is an example of a mineral resource?

1. sand

2. salt

3. All of these

4. gold

5. petroleum

008 For minerals classified within any one silicate group, which of the following is true?

1. None of these

2. They have similar physical properties.

3. They have similar chemical compositions.

4. They have similar arrangements of silicate tetrahedra.

5. They have similar bonds.

009 Dolomite belongs to which mineral group?

1. sulfates

2. sulfides

3. halides

4. carbonates

010 For what is chromium commonly used?

1. catalytic converters

2. aluminum ore

3. brake linings and lubricants

4. carbide-cutting tool parts

5. wiring

6. stainless steel

011 When metals react with oxygen they form

1. new elements

2. oxides

3. metalloids

4. halides

012 Limestone structures made of the skeletal structures of living organisms are

1. organic reefs.

2. organic colonies.

3. inorganic reefs.

4. inorganic colonies.

5. None of these

013 The rock cycle is an illustration of three different rock types and

1. their potential change over time.

2. their relation to internal and external processes.

3. All of these

4. their environments of formation.

014 Which of the following best describes sedimentary rocks?

1. deposition of ash and larger particles produced by volcanism

2. compaction and cementation of rock fragments, precipitates, and organic matter

3. weathering, transport, and deposition of sediment from pre-existing rock

4. alteration of sediment by heat, pressure,and chemical activity of water

015 Precipitation from solution is a characteristic of which type of rock?

1. sedimentary

2. igneous

3. metamorphic

016 Plutonic rocks form

I) below the surface of the ground.

II) above the surface of the ground.

III) by crystallization of magmas intruded into surrounding rocks.

1. II only

2. I only

3. I and III only

4. I, II and III

5. III only

017 A sill is a

1. concordant, tabular body of intrusive igneous rocks that warps rocks upward.

2. concordant, tabular body of intrusive igneous rocks.

3. discordant, tabular body of intrusive igneous rocks.

4. discordant, massive body of intrusive igneous rocks.

5. concordant, tabular body of extrusive igneous rocks.

018 An example of a shield volcano is

1. Mount St. Helens.

2. Mount Shasta.

3. Mount Mazama.

4. Fujiyama.

5. Kilauea.

019 An example of a composite volcano is

1. Nevado del Ruiz, Columbia.

2. Mount Vesuvius, Italy.

3. All of these

4. Fujiyama, Japan.

5. Mount St. Helens, Washinton.

020 Weathering is classified into which of the following categories?

1. mechanistic and compositional

2. mechanical and physical

3. physical and chemical

4. organic and inorganic

5. chemical and mechanical

021 The rounding and sorting of detrital sediment is a function of

I) the transport process or mechanism.

II) the transport distance.

III) depositional environment.

1. I only

2. II only

3. II and III only

4. I, II and III

5. III only

022 Sedimentary rocks include

1. any layered rock consisting of grains.

2. rocks which have been altered by compression.

3. any material which has settled from water.

4. rocks which have been weathered.

5. organic, rock and mineral fragments, and precipitated minerals.

023 10.0 During the process of lithification, sedimentary rocks experience which of the following?

I) cementation

II) compaction

III) dereased void space

1. II only

2. I only

3. III only

4. I and II only

5. I, II and III

024 Metamorphism is physical and chemical change that occurs in such a way that

1. the rock reaches equilibrium with its new environment.

2. a dynamic equilibrium is reached.

3. equilibrium with the new environment is disturbed.

4. disequilibrium is reached with the new physical and chemical environment.

5. the rock�s chemistry and texture become increasingly unstable.

025 Contact metamorphism is found along the boundaries between country rock and

1. dikes.

2. sills.

3. laccoliths.

4. All of these

5. bathoiths.

026 What is the parent rock type for Greenstone?

1. SIX

2. shale/mudrocks

3. mafic igneous rocks

4. lowgrade coal

5. quartz sandstone

6. feldspar and quartz sandstone (arkose)

027 Among the mineral resources NOT found in deep sea sediments are

1. reef rock.

2. sand and gravel.

3. iron, copper, and zinc.

4. silver and gold.

5. manganese nodules.

028 Volcanic rocks can usually be distinguished from plutonic rocks by

1. composition.

2. color.

3. the size of their mineral grains.

4. iron-magnesium content.

5. weight.

029 The process whereby dissolved mineral matter precipitates in the pore spaces of sediment and binds it together is

1. arkose.

2. compaction.

3. ionic bonding.

4. cementation.

5. weathering.

030 Which of the following metamorphic rocks displays a foliated texture?

1. marble

2. greenstone

3. schist

4. hornfels

5. quartzite

031 The principle of the rock cycle is that

1. any rock can be transformed into a new rock of the same or a different class.

2. rocks progress from sedimentary to metamorphic to igneous and back to sedimentary.

3. the first rocks on Earth were igneous and now all rocks are sedimentary.

4. all rocks can become sediments but only metamorphic rocks can become sedimentary

rocks.

5. rocks progress from igneous to metamorphic and sedimentary to metamorphic over

time.

032 Sedimentary rocks composed of broken shells or particles of pre-existing rocks are said to

have a

1. porphyritic texture.

2. crystalline texture.

3. biogenic texture.

4. microcrystalline texture.

5. clastic texture.

033 Graded bedding forms when

1. sediment is deposited on a steep slope or grade.

2. erosion planes off a portion of the sea bottom.

3. turbidity currents deposit first fine sediment followed by coarse sediment.

4. cross-bedding is truncated.

5. turbidity currents deposit first coarse sediment then fine sediment.

034 The three major structural parts of the Earth are

1. lithosphere, hydrosphere and atmosphere.

2. core, mantle and crust.

3. lithosphere, atmosphere and crust.

4. mantle, crust and atmosphere.

035 If no one has ever visited the core of the Earth, how do we know that it is composed of metals?

1. Circulating liquid metals in the core set up a large (measurable) magnetic field.

2. Spectroscopy allows us to tell what the core is made of by analyzing the light we see

from it.

3. There is NO evidence that the Earth�s core has metals.

4. Core material seeps up through volcanoes in the crust.

5. The amount of radioactivity shows metals must be present; only metals are radioac-

tive.

036 Earthquake-producing faults are much more likely to be found

1. in smooth continental desert areas.

2. where the Earth�s magnetic field touches the planet�s surface.

3. Such faults are equally likely to be anywhere on the Earth�s crust.

4. on the boundaries of continental plates, where they meet other plates.

5. in the southern hemisphere of the Earth, where there is more water.

037 About how many kilometers (miles) is it from the Earth�s center to the outer edge of the

outer core?

1. 35 ? 72 kilometers (22 ? 45 miles)

2. 2,880 kilometers (1,800 miles)

3. 12,523 kilometers (7,827 miles)

4. 1,264 kilometers (790 miles)

5. 3,456 kilometers (2,160 miles)

038 Consider the following elements. Which lists represents the main components of the Earth�s crust?

1. oxygen, uranium, thorium

2. oxygen, silicon, aluminium

3. iron, aluminium, carbon

4. iron, hydrogen, oxygen

5. oxygen, silicon, uranium

039 As you know, Earth is layered inside. The layers have different thicknesses and densities. How do geologists know this?

1. from drilling and digging down into the various layers

2. from comparisons with drill cores taken by robot spacecraft on Mars and Venus

3. from observing the characteristics of lava and gas issuing from volcanic vents

4. None of these

5. from observing the transit times through the Earth of waves generated by large earthquakes

040 Tsunami or seismic sea waves are generated by

1. breaking internal waves.

2. storms at sea.

3. tidal currents in the open sea.

4. coastal or submarine earthquakes.

041 Earth is considered dynamic because

1. surface landscapes are constantly changing due to erosion and deposition.

2. the impact of human activity is continuous.

3. the lithosphere and asthenosphere are constantly changing.

4. rocks are susceptible to weathering.

042 Seismology has produced a great amount of information about

I) the mechanisms of plate tectonics.

II) the physical and chemical state of Earth�s interior.

III) the causes of mountain building.

1. III only

2. All of these

3. II only

4. I only

5. I and II only

043 An example of one of the strongest earthquakes of intraplate origin known in North America in historical times is

1. the 1984 Mount St. Helens, Washington, earthquake.

2. the 1811 New Madrid, Missouri, earthquake.

3. the 1964 Anchorage, Alaska, earthquake.

4. the 1906 San Francisco earthquake.

5. the 1886 Charleston, Carolina, earthquake.

044 Any one type of seismic wave will vary in its actual velocity depending on

I) the length of the route it has taken.

II) the material through which it has traveled.

III) whether it has traveled through Earth or along its surface.

IV) the depth of the hypocenter.

1. IV only

2. I only

3. II only

4. III only

5. I and II only

045 At a boundary between materials of different density and elasticity, P- and S-waves are

1. reflected.

2. not affected.

3. reflected and refracted.

4. refracted.

046 The S-wave shadow zone exists because

1. S-waves do not travel through liquids.

2. S-waves weaken substantially as they travel through liquids.

3. S-waves only travel to a certain depth.

4. S-waves are reflected off liquids.

047 P-wave velocities in continental crust are (faster than, slower than, the same as) in oceanic crust.

1. faster than

2. slower than

3. the same as

048 Which is the fourth layer of the Earth, ordering from the surface inward to the center of the Earth?

1. asthenosphere

2. inner core

3. crust

4. upper mantle

5. lower mantle

6. outer core

049 A) The S-wave shadow zone is evidence that the outer core is liquid.

B) The mantle�s density is uniform with depth at any given level.

C) P-wave rays are most commonly reflected while S-wave rays are refracted.

Which of the preceding statements is/are true?

1. None is true.

2. Only C is true.

3. A, B, and C are true.

4. Only A is true.

5. Only B and C are true.

6. Only A and C are true.

7. Only A and B are true.

8. Only B is true.

050 Plate movement is thought to be the result of

1. density differences between the mantle and core.

2. gravitational forces.

3. rotation of the mantle around the core.

4. convection cells.

5. the Coriolis effect.

051 Which of the following statements about the asthenosphere is not true?

1. It has the same composition as the lower mantle.

2. It lies beneath the lithosphere.

3. It acts like a lubricating layer allowing plates to move.

4. It is a rigid rock layer.

5. It behaves plastically.

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Tru-Built Construction Inc. for December 31, 2016 and 2015, is as follows:

		Dec. 31, 2016		Dec. 31, 2015
Assets
Cash		$208		$67
Accounts receivable (net)		119		84
Inventories		74		46
Land		170		191
Equipment		96		74
Accumulated depreciation-equipment		(26)		(13)
	Total Assets	$641		$449
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)		$81		$67
Dividends payable		13		-
Common stock, $10 par		42		21
Paid-in capital: Excess of issue price over par—common stock		101		53
Retained earnings		404		308
	Total liabilities and stockholders' equity	$641		$449

The following additional information is taken from the records:

Land was sold for $53.

Equipment was acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $138 credit to Retained Earnings for net income.

There was a $42 debit to Retained Earnings for cash dividends declared.

a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Tru-Built Construction Inc.
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Net income	$
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation
Gain on sale of land
Changes in current operating assets and liabilities:
Increase in accounts receivable
Increase in inventories
Increase in accounts payable
Net cash flow from operating activities		$
Cash flows from investing activities:
Cash received from sale of land	$
Less cash paid for purchase of equipment
Net cash flow provided by investing activities
Cash flows from financing activities:
Cash received from sale of common stock	$
Less cash paid for dividends
Net cash flow provided by financing activities
Increase in cash		$
Cash at the beginning of the year
Cash at the end of the year

• Three types of physical environment (unaltered, altered, built)
• Goal of environmental health
• Love Canal
• Silent Spring
• Differences between a risk assessment and a public health assessment (which measures theoretical risk, which measures actual risk, which is broader in scope, which takes place over a shorter period of time)
• Ecological risk assessment
• What does the FDA regulate (Dr. Miller)
• Dietary supplements regulated as what? (Dr. Miller)
• Reason for items such as toothpaste and dandruff shampoo to be included as drug products (Dr. Miller)
• Food and drug administration’s control over drug prices (Dr. Miller)
• Off-label prescribing (Dr. Miller)
• Health law and the U.S. Constitution
• Interstate Commerce Clause and public health
• Compare and contrast the two philosophies toward the role of government affecting health policies (Market Justice vs. Social Justice)
• No duty principle
• Nuremburg Code
• Tuskegee study
• Belmont Report
• Internal Review Boards
• Systems thinking and reductionist thinking
• Systems analysis and systems diagrams
• One Health – what is it and be able to identify examples
• Climate change implications
• How a bill becomes a law
• Federalism
• Affordable Care Act features
• Policy Windows – 3 streams

QUESTION 15:

Built-Tight is preparing its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow:

	July			August			September
Budgeted sales	$	60,000		$	76,000		$	52,000
Budgeted cash payments for
Direct materials		16,960			14,240			14,560
Direct labor		4,840			4,160			4,240
Factory overhead		21,000			17,600			18,000

Sales are 30% cash and 70% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,800 in accounts receivable; $5,300 in accounts payable; and a $5,800 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,800 per month), and rent ($7,300 per month).

PART 1:  Prepare a cash receipts budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.)

	BUILT-TIGHT Cash Receipts Budget For July, August, and September July August September Less: ending accounts receivable Cash receipts from: Total cash receipts

PART 2: ) Prepare a cash budget for each of the months of July, August, and September.

. Wal-Mart’s Foreign Expansion Wal-Mart, the world’s largest retailer, has built its success on a strategy of everyday low prices, and highly efficient operations, logistics, and information systems that keeps inventory to a minimum and ensures against both overstocking and understocking. The company employs some 2.1 million people, operates 4,200 stores in the United States and 3,600 in the rest of the world, and generates sales of almost $400 billion (as of fiscal 2008). Approximately $91 billion of these sales were generated in 15 nations outside of the United States. Facing a slowdown in growth in the United States, Wal-Mart began its international expansion in the early 1990s when it entered Mexico, teaming up in a joint venture with Cifra, Mexico’s largest retailer, to open a series of supercenters that sell both groceries and general merchandise. Initially the retailer hit some headwinds in Mexico. It quickly discovered that shopping habits were different. Most people preferred to buy fresh produce at local stores, particularly items like meat, tortillas and pan dulce which didn’t keep well overnight (many Mexicans lacked large refrigerators). Many consumers also lacked cars, and did not buy in large volumes as consumers in the United States did. WalMart adjusted its strategy to meet the local conditions, hiring local managers who understood Mexican culture, letting those managers control merchandising strategy, building smaller stores that people could walk to, and offering more fresh produce. At the same time, the company believed that it could gradually change the shopping culture in Mexico, educating consumers by showing them the benefits of its American merchandising culture. After all, Wal-Mart’s managers reasoned, people once shopped at small stores in the United States, but starting in the 1950s they increasingly gravitated towards large stores like WalMart. As it built up its distribution systems in Mexico, Wal-Mart was able to lower its own costs, and it passed these on to Mexican consumers in the form of lower prices. The customization, persistence, and low prices paid off. Mexicans started to change their shopping habits. Today Wal-Mart is Mexico’s largest retailer and the country is widely considered to be the company’s most successful foreign venture. Next Wal-Mart expanded into a number of developed nations, including Britain, Germany and South Korea. There its experiences have been less successful. In all three countries it found itself going head to head against well-established local rivals who had nicely matched their offerings to local shopping habits and consumer preferences. Moreover, consumers in all three countries seemed to have a preference for higher quality merchandise and were not as attracted to Wal-Mart’s discount strategy as consumers in the United States and Mexico. After years of losses, Wal-Mart pulled out of Germany and South Korea in 2006. At the same time, it continued to look for retailing opportunities elsewhere, particularly in developing nations where it lacked strong local competitors, where it could gradually alter the shopping culture to its advantage, and where its low price strategy was appealing. Recently, the centerpiece of its international expansion efforts has been China. Wal-Mart opened its first store in China in 1996, but initially expanded very slowly, and by 2006 had only 66 stores. What Wal-Mart discovered, however, was that the Chinese were bargain hunters, and open to the low price strategy and wide selection offered at Wal-Mart stores. Indeed, in terms of their shopping habits, the emerging Chinese middle class seemed more like Americans than Europeans. But to succeed in China, Wal-Mart also found it had to adapt its merchandising and operations strategy to mesh with Chinese culture. One of the things that Wal-Mart has learned is that Chinese consumers insist that food must be freshly harvested, or even killed in front of them. Wal-Mart initially offended Chinese consumers by trying to sell them dead fish, as well as meat packed in Styrofoam and cellophane. Shoppers turned their noses up at what they saw as old merchandise. So Wal-Mart began to display the meat uncovered, installed fish tanks into which shoppers could plunge fishing nets to pull out their evening meal, and began selling live turtles for turtle soup. Sales soared. Wal-Mart has also learned that in China, success requires it to embrace unions. Whereas in the United States Wal-Mart has vigorously resisted unionization, it came to the realization that in China unions don’t bargain for labor contracts. Instead, they are an arm of the state, providing funding for the Communist Party and (in the government’s view) securing social order. In mid- 2006 Wal-Mart broke with its long standing antagonism to unions and agreed to allow unions in its Chinese stores. Many believe this set the stage for Wal-Mart’s most recent move, the purchase in December 2006 of a 35 percent stake in the Trust-Mart chain, which has 101 hypermarkets in 34 cities across China. Now Wal-Mart has proclaimed that China lies at the center of its growth strategy. By early 2009 Wal-Mart had some 243 stores in the country, and despite the global economic slowdown, the company insists that it will continue to open new stores in China at a “double digit rate.”

Case Discussion Questions

1. Do you think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed? If not, why not?

2. Why do you think Wal-Mart was successful in Mexico?

3. Why do you think Wal-Mart failed in South Korea and Germany? What are the differences between these countries and Mexico?

4. What must Wal-Mart do to succeed in China? Is it on track?

Which Depreciation Method Should We Use?

Atwater Manufacturing Company purchased a new machine especially built to perform one particular function on the assembly line. A difference of opinion has arisen as to the method of depreciation to be used in connection with this machine. Three methods are now being considered:

(a)The straight-line method

(b)The productive-output method

(c)The sum-of-the-years’-digits method

List separately the arguments for and against each of the proposed methods from both the theoretical and practical viewpoints.

Talk-2-Me Corporation produces and markets mobile phones for corporate use. The mobile phones have built in tracking devices and a network enabled shutdown system so that corporate security or the telephone holder can locate and quickly disable a corporation issued cell phone, when necessary.

The cost of producing and installing the shutdown technology is as follow:

	Assuming 10,000 units produced and sold
	per unit	Total
Direct materials	4.50	$45,000
Production wages	2.75	27,500
Production overhead:
Power and utilities	1.50	15,000
Inspection, materials handling, and setup	$0.45	4,500
Plant administration, taxes, and insurance	3.00	30,000
Specialized machine rental costs	0.30	3,000
Installation costs	1.85	18,500
		$143,500

Talk-2-Me receives a bid from an outside vendor to produce the shutdown system for the mobile telephones at a cost of $12.00 per cell phone.

Additional Information:

• Power and utilities costs are directly related to producing the shutdown systems.
• Inspection, materials handling, and setup costs are variable costs. However, those costs vary per “production run” rather than per unit. Each production run produces 10 shutdown systems.
• Specialized machine rental costs are fixed costs, however, they are directly associated with producing shutdown systems. Therefore, if the company discontinues producing the shutdown system, they will not incur the related specialized machine rental costs.
• The vendor will produce and deliver the shutdown systems for Talk-2-Me to install.

Required:

1. If Talk-2-Me accepts the vendor’s bid, they will still use the production facility for existing production related activities. At the $12.00-unit cost, should Talk-2-Me accept the vendor’s offer? (Show your work).
2. Assume that if Talk-2-Me accepts the outside vendor’s offer, they could use the new available production capacity to upgrade their cell phone product. Details associated with the upgrade are:
   • Selling price of upgraded phone will increase by $18
   • Power and utilities costs will decrease to $1.25 per unit
   • Additional other variable cost of the upgrade = $14 per unit
   • Additional fixed cost related to the upgrade = $16,000.

Assuming Talk-2-Me will still produce and sell 10,000 units, re-evaluate the vendor’s offer to produce the shutdown system given this new information

The built-in data set treering provides Annual tree-ring widths in normalized units for years from -6000 to 1979. Assume that the n measurements x=(

x₁, x₂,...,x_n

) are a random sample from a population true mean μ and true unknown variance

σ²

. Using R we can define the vector x by the assignment x<-as.vector(treering).
a) Calculate, n, the number of elements in x.  

b)Calculate the sample standard deviation s, of x.  

c) Estimate true mean μ, using this data by calculating the sample mean.  

d) Calculate an unbiased point estimate of the population variance,

σ²

of tree-ring widths.  

e) Assuming normality of tree ring widths, calculate the maximum likelihood estimate of μ?  
f) Calculate the 60th percentile of x using R.  

g) Calculate a

1

798

trimmed mean for x using R.  

h) Since the sample size is >30 we can create a confidence interval for μ using a normal critical value. If we want the confidence interval to be at the 96% level and we use a normal critical value, then what critical value should we use?

i) Calculate a 96% confidence interval(using a normal critical value) for μ.
(

,

)

j) How long is the 96% confidence interval just created in part i?