The TEMKO Company encountered the problem of defects in some of its pur- chased tractor short-block castings. The short-block castings are used to build the R-208 tractor engines. TEMKO installs the heads, manifold, carburetor, and other engine parts, which consist of approximately 13 percent of the short-block casting purchase price. When the defects are discovered, the short blocks have to be disas- sembled and repaired. It takes approximately eight hours per repair. Even with this process, almost 4 percent of the incoming short blocks end up as scrap. In other words, approximately 10 out of every 100 units are repaired and 40 percent of the repaired short blocks are scrapped. Each short-block casting costs between $1,550 and $1,700 depending on the supplier. There is also a cost of downtime as- sociated with interruptions on the shop floor.
The internal labor cost of assembling each incoming short-block casting and repair as necessary is approximately $878 per short block. The estimated overhead, which is 150 percent of direct labor, consists of 33 percent variable and 67 percent fixed costs; the shop floor disruption cost is estimated to be $500 per disruption.
Recently, James Sun, the purchasing manager, released a request for quote (RFQ) for the short blocks to three prequalified suppliers of assembled tractor en- gines. However, only one supplier, ACE Manufacturing, Inc., showed an interest. ACE was a small startup company that was looking for work. In order to produce assembled R-208 engines, an investment in precision machinery of more than $1,500,000 would need to be made. ACE was willing to both invest in the neces- sary machine and guarantee at least 100 engines per month—provided TEMKO would contract with it as a sole source for the engines for the next three years. The price per engine would be $3,500 the first year, with an annual increase of 3 per- cent. TEMKO anticipated that they would need at least 1,000 finished engine as- semblies per year for the next five years. As the purchasing manager for TEMKO, how would you analyze this outsourcing decision? (Make sure your analysis is complete.)

1. Develop a unit cost breakdown for R-208 tractor engines utilizing both available current

data and assumptions in the process of calculations. State all assumptions

2. What would the estimated probable cost resulting from poor quality of incoming shortblocks

castings? Suggest probable solutions to this quality problem.

5. According to ACE Manufacturing, what would the resulting cost reduction from

outsourcing to ACE Manufacturing be? Discuss the probable sources of this cost reduction.

What would be the consequence of exploiting these sources to TEMKO and ACE

Manufacturing?

Case History:

On Monday, February 26, 2001, Los Angeles County Sheriff's Department Lost Hills Station responded to a 911 emergency call at the residence of Mr. and Mrs. Patrick Valentini near the end of Wagon Road in Agoura Hills at 23:15. When police arrived on scene they found Mrs. Christine Valentini face down in the backyard swimming pool of the Valentini’s home. First responders noted that a few bubbles were coming from Mrs. Valentini’s mouth. CPR was performed and Mrs. Valentini was transported to Los Robles and Medical Center located in Thousand Oaks Hospital.

Christine Valentini was pronounced DOA at 01:32 on February 27, 2001. The police initially treated this as an accidental death pending autopsy report.

Upon further investigation, the police learned that the victim had four life insurance policies, two of which previously named Patrick Valentini as the beneficiary. The policies totaled $1 million dollars. The other two policies previously named Joshua Rojas as the beneficiary which totaled $1.5 million. On February 26, 2001 at 21:00 the beneficiaries of all the policies had been changed Mrs. Grace Stevenson. All of the policies had a suicide clause and paid no money in the event of a suicide.

Interview with Patrick Valentini, male, 32 years old:

Mr. Valentini reported returning home from work at 21:45. He stated that he had talked to his wife about the Koi fish in the pond that the family had built in the backyard. He then fed the cat and went upstairs to take a shower. Mr. Valentini stated that their marriage of two years was extremely stable, and that his wife enjoyed her job as a personal nutritionist and fitness expert. He stated that his wife had been injured at work several weeks ago. He also noted she had several well-known celebrity clients and was an avid world traveler.

Mr. Valeniti admitted that his wife had been in an abusive relationship a few years prior to their marriage. He also shared that he was suspicious that his wife had started seeing her ex-boyfriend again. He stated that her behavior and mental health seemed to decline in the weeks prior to her death. Mr. Valentini disclosed that he did have two life insurance policies on his wife that totaled $200,000 in the event of her death. Mr. Valentini was adamant that his wife had been alive when he returned home from work and that their relationship was secure.

Interview with Consuela Suarez, female, 56 years old:

Ms. Suarez is the Valentini’s housekeeper. She had just returned to the Valentini home the day before, and therefore was in Mexico when Mrs. Valentini died.

She is very nervous talking to the police. She finally states that Mr. Valentini often had women over to the house when Mrs. Valentini was out. When asked if she had ever seen Mr. Valentini act in a violent way, she states Mr. Valentini once hit Mrs. Valentini and sometimes kicked the family’s black cat, Sooty. She states Mr. Valentini was a good boss though and gave her the time off to go visit her family in Mexico.

Interview with Grace Stevenson, female, 57 years old:

Mrs. Grace Stevenson, victim’s mother, reported that her daughter was attempting to leave her husband, Patrick Valentini. Mrs. Stevenson phoned the victim’s home at 22:04 and hung up when the answering machine picked up the call. Mrs. Stevenson indicated that her daughter had left twice due to the physical abuse she was sustaining at the hands of Mr. Valentini. However, the victim was determined to make her marriage work because she was in love with her husband and returned home both times at the encouragement of her brother-in-law Peter Valentini. Mrs. Stevenson revealed that her daughter was officially leaving her husband and had planned on returning to her parent’s home on February 27, 2001. Mrs. Stevenson stated that Mr. Valentini was fully aware of his wife’s plan to divorce him. Mrs. Stevenson also stated that her daughter was independently wealthy and had a net worth of $2.5 million. She informed police that her daughter’s husband struggled with money and had lost his family business. Due to strains in the marriage Christine Valentini did not share any of her income with her husband and put it into a separate account to which only Christine and her parents had access.

Interview with Rose Stevenson, female, 24 years old:

Miss Rose Stevenson, victim’s younger sister, revealed that she and her sister were extremely close. Rose divulged that her sister had recently been in contact with her ex-boyfriend and was planning on getting back together with him once she divorced her husband. Rose also stated that Christine had discovered that Patrick had been cheating on her with various women, one of which was stalking Christine and had threatened to kill her. The last time she had lunch with Christine, she said she seemed paranoid and kept looking around. Unfortunately, Christine never told Rose the woman’s name - only that she was a dog walker.    

Interview with Joshua Rojas, male, 29 years old:

Mr. Joshua Rojas, victim’s ex-boyfriend, indicated that he had last talked to the victim at 20:02 on February 26, 2001. He indicated that he and the victim were in the process of reconciling their relationship. He indicated that Christine was terribly regretful for marrying Patrick. He stated that Christine had told him of how Patrick had physically abused her while trying to get money out of her. He also indicated that Christine ’s mental state was perfectly normal in the weeks prior to her death, however she was seeing a psychologist to help deal with the stress of her failing marriage.

Interview with Sam Kang, male, 42 years old:

Mr. Kang was the Valentini’s closest neighbor. On the night of her death, he reports that he let his dog out and it began barking along the Valentini’s fence insistently at about 2200. He had hard time getting the dog back in and heard loud music coming from the Valentini’s. He stated this was not normal and he was about to call the Valentini’s to complain when the ambulance arrived. He also complained that a lot of cars seemed to come and go from the Valentini’s home, sometimes at speed and it was dangerous for pedestrians. He also reported that he had seen Mrs. Valentini in a verbal altercation with another woman in a white BMW near the end the Valentini’s driveway about two weeks prior to her death. He was unable to remember what the woman looked like, only that she wore sunglasses and had a large dog in her backseat.

Interview with Sandra Amaya, female, 31 years old:

Ms. Amaya is an avid triathlete and the sole owner and employee of a pet sitting and dog walking service. She has several clients in the neighborhood of the Valentini’s and in August of 2000 had pet sit for the Valentini’s while they vacationed in Aruba. She denied having an affair or relationship at all with Patrick Valentini. She stated that she had offered to walk the Valentini’s dog for free while Mrs. Valentini was recovering from her foot injury, but Mrs. Valentini declined her offer. Several neighbors mentioned that they often saw Ms. Amaya walking dogs in the neighborhood.

---------------------

Autopsy Report - Christina Valentini

Report of Investigation by County Medical Examiner

Decedent: Christine Valentini

Date of Birth: January 11, 1973

Height: 5'11

Weight: 125 lbs

Pronounced Dead at: 01:32, 2/27/2001

External Examination

The victim appeared to be dressed for bed. The clothing included a bathrobe, a night shirt and matching pants, underwear, and a single slipper. The victim was reportedly in a work accident three weeks prior to her death in which her right foot had been broken. There were elevated levels of amylase in the saliva.

The body appeared to have multiple contusions on the torso in various stages of healing. The victim's body showed slight signs of rigor mortis in the fingers and jaw. Liver mortis was present at the time of autopsy examination, however there was evidence of blanching. The x-rays of the victim's right foot showed healing consistent with an injury that occurred two weeks prior to death.

Internal Examination

The victim's body showed multiple rib fractures in various stages of healing. The victim's body showed recent signs of consensual sexual activity. The victim's hyoid bone was fractured and trauma to the throat indicated recent trauma. Fluids were found in the victim's lungs. Samples of the victim's lung contents were collected.

Questions

For this assignment, you will need to refer back to the case file and to the autopsy report above.

1. Draw a character web showing how the victim is related to the individuals interviewed in the case file.
2. Create a timeline of the important events leading up to the victim’s death.
3. Based on the autopsy (you may wish to go back to the Softchalk and/or do some Googling):
   • Were any abnormalities noted in the autopsy? If so, describe them and research what may have caused them.
   • What was the cause of death? What evidence supports this conclusion?
4. Who is your prime suspect at this point? What was his/her motive?

Consider the following data on price ($) and the overall score for six stereo headphones tested by a certain magazine. The overall score is based on sound quality and effectiveness of ambient noise reduction. Scores range from 0 (lowest) to 100 (highest).

(a)

The estimated regression equation for this data is

ŷ = 23.124 + 0.329x,

where x = price ($) and y = overall score. Does the t test indicate a significant relationship between price and the overall score? Use α = 0.05.

State the null and alternative hypotheses.

H₀: β₀ ≠ 0
H_a: β₀ = 0H₀: β₁ = 0
H_a: β₁ ≠ 0    H₀: β₁ ≥ 0
H_a: β₁ < 0H₀: β₁ ≠ 0
H_a: β₁ = 0H₀: β₀ = 0
H_a: β₀ ≠ 0

Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.)

p-value =

What is your conclusion?

Reject H₀. We conclude that the relationship between price ($) and overall score is significant.Reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.     Do not reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.Do not reject H₀. We conclude that the relationship between price ($) and overall score is significant.

(b)

Test for a significant relationship using the F test. Use α = 0.05.

State the null and alternative hypotheses.

H₀: β₁ ≥ 0
H_a: β₁ < 0H₀: β₁ = 0
H_a: β₁ ≠ 0    H₀: β₁ ≠ 0
H_a: β₁ = 0H₀: β₀ = 0
H_a: β₀ ≠ 0H₀: β₀ ≠ 0
H_a: β₀ = 0

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

What is your conclusion?

Do not reject H₀. We conclude that the relationship between price ($) and overall score is significant.Do not reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.     Reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.Reject H₀. We conclude that the relationship between price ($) and overall score is significant.

(c)

Show the ANOVA table for these data. (Round your p-value to three decimal places and all other values to two decimal places.)

Consider the following data on price ($) and the overall score for six stereo headphones tested by a certain magazine. The overall score is based on sound quality and effectiveness of ambient noise reduction. Scores range from 0 (lowest) to 100 (highest).

(a)

The estimated regression equation for this data is

ŷ = 21.926 + 0.321x,

where x = price ($) and y = overall score. Does the t test indicate a significant relationship between price and the overall score? Use α = 0.05.

State the null and alternative hypotheses.

H₀: β₁ = 0
H_a: β₁ ≠ 0H₀: β₁ ≠ 0
H_a: β₁ = 0    H₀: β₀ = 0
H_a: β₀ ≠ 0H₀: β₁ ≥ 0
H_a: β₁ < 0H₀: β₀ ≠ 0
H_a: β₀ = 0

Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.)

p-value =

What is your conclusion?

Reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.Do not reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.     Do not reject H₀. We conclude that the relationship between price ($) and overall score is significant.Reject H₀. We conclude that the relationship between price ($) and overall score is significant.

(b)

Test for a significant relationship using the F test. Use α = 0.05.

State the null and alternative hypotheses.

H₀: β₀ ≠ 0
H_a: β₀ = 0H₀: β₁ = 0
H_a: β₁ ≠ 0    H₀: β₀ = 0
H_a: β₀ ≠ 0H₀: β₁ ≠ 0
H_a: β₁ = 0H₀: β₁ ≥ 0
H_a: β₁ < 0

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

What is your conclusion?

Do not reject H₀. We conclude that the relationship between price ($) and overall score is significant.Do not reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.     Reject H₀. We conclude that the relationship between price ($) and overall score is significant.Reject H₀. We cannot conclude that the relationship between price ($) and overall score is significant.

(c)

Show the ANOVA table for these data. (Round your p-value to three decimal places and all other values to two decimal places.)

1. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. What is the equilibrium price of rutabagas?

2. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. What is the equilibrium quantity of rutabagas?

3. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax equilibrium quantity of rutabagas?

4. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax price paid by the consumers of rutabagas

5. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax price received by the sellers of rutabagas?

6.

Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the relative burden of this rutabaga tax between buyers and sellers?

7.

Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the buyers (rather than the sellers) of rutabagas. which of your previous answers would change? Mark any (between 0 and 4) correct answers.

10. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Selling price ........................................................... $100

Units in beginning inventory .......................... 0

Unit produced ...................................................... 5,500

Unit sold ................................................................. 5,400

Unit in ending inventory ................................... 100

Variable costs per unit:

Direct materials .............................................. $23

Direct labor ...................................................... $25

Variable manufacturing overhead ........... $ 2

Variable selling and administrative ......... $ 9

Fixed costs:

Fixed manufacturing overhead .................. $137,500

Fixed selling and administrative ................ $ 70,200

The total contribution margin for the month under variable costing is:

Select one:

a. $270,000

b. $135,000

c. $83,900

d. $221,400

11.

The Institute of Management Accountants' Statement of Ethical Professional Practice states that when faced with significant ethical issues, management accountants should first:

Select one:

a. submit an informative memorandum describing the ethical issue to an appropriate representative of the organization and resign if no action is taken as a result of the memorandum.

b. follow the established policies of the organization bearing on the resolution of such conflict.

c. clarify relevant concepts by confidential discussion with an objective advisor to obtain an understanding of possible courses of action.

d. discuss such problems with the immediate superior except when it appears that the superior is involved.

12.

The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT:

Select one:

a. A CFO must be a CPA or CMA.

b. Both the CEO and CFO must certify in writing that their company's financial statements and accompanying disclosures fairly represent the results of operations.

c. Severe penalties are established for altering or destroying documents that may eventually be used in an official proceeding.

d. The audit committee of the board of directors of a company must hire, compensate, and terminate the public accounting firm that audits the company's financial reports.

13.

A company has provided the following data:

Sales ................................... 3,000 units

Sales ................................... $70 per unit

Variable cost .................... $50 per unit

Fixed cost .......................... $25,000

If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net operating income will:

Select one:

a. increase by $61,000.

b. increase by $11,000.

c. increase by $3,500.

d. increase by $20,000.

17.       Determine the risk-adjusted present value of a biotechnology company after considering the risk factors below.                                                                                                                    (2 marks)

The biotechnology company has developed a new anti-cancer drug for Cancer X.

SECTION 3:

THE QUESTIONS BELOW RELATE TO “ANTISENSE THERAPEUTICS LIMITED”, AN AUSTRALIAN BASED BIOTECHNOLOGY COMPANY:

1. What does the company “Antisense Therapeutics” do?                                                   
2. What is the current market capitalisation of Antisense Therapeutics?                         (1 mark)
3. Who is the CEO of the company?                                                                                                 (1 mark)
4. What is the current share price of Antisense Therapeutics?                                             (1 mark)
5. What was the share price of the Company at 30 June 2015?                                            (1 mark)
6. Does the Company hold intellectual property rights? If so, how many (registered or in the process of being registered)?                                                                                                         
7. Is the company also licensing intellectual property from another company? If so, name the company.                                                                                                                          
8. What is the total equity in the company for the year ended 30 June 2019?                               (1 mark)
9. What amount of cash was received from Government grants for the year ended 30 June 2019?                                                                                                                                                       (1 mark).
10. The Company has highlighted the importance of the compound ATL1102. What is ATL1102 and what disease is it being used to treat? Does the company own the IP rights to this compound?                                                                                                                                                      
11. What is the Company’s plan to move forward with the testing of this drug?           
12. Did the Company’s make a net financial profit or loss for the year ending 30 June 2019? What was the figure?                                                                                                                                  

Question 36

In a corporate structure with shareholders, managers, and a board of directors:

Select one:

a. shareholders are agents

b. directors are agents

c. in principle, the board of directors works on behalf of the shareholders

d. managers are principals

e. shareholders are generally both principals and agents

Question 37

A project costs $525 and has cash flows of $110 for the first three years and $75 in each of the project's last five years. What is the payback period of the project?

Select one:

a. The project never pays back

b. 5.00 years

c. 5.60 years

d. 5.33 years

e. 5.67 years

Question 38

Suppose a project costs $440 and produces cash flows of $100 over each of the following seven years. What is the IRR of the project?

Select one or more:

a. There is not enough information; a discount rate is required

b. 18.6%

c. 13.2%

d. 24.3%

e. 10.0%

Question 39

Your company purchased a piece of land five years ago for $150,000 and subsequently added $175,000 in improvements. The current book value of the property is $225,000. There are two options for future use of the land: 1) the land can be sold today for $375,000 on a net after-tax basis; 2) your company can destroy the past improvements and build a factory on the land. In consideration of the factory project, what amount (if any) should the land be valued at?

Select one:

a. The present book value of $225,000.

b. The property should be valued at zero since it is a sunk cost.

c. The sales price of $375,000 less the book value of the improvements.

d. The original $150,000 purchase price of the land itself.

e. The after-tax sales value of $375,000.

Question 40

A new project will cause accounts payable to increase by $70,000, accounts receivable to increase by $70,000 and inventory to increase by $10,000. Which one of the following statements is true?

Select one:

a. Net working capital will decrease.

b. Net working capital will increase.

c. The project will not affect net working capital.

d. The change in accounts payable is a use of cash.

e. The change in inventory is a use of cash.

HL Construction Co. plans to replace one of its manufacturing equipment for a newer more technology-advance one. The new equipment has a purchase price of $8,000 and will be depreciated as a 7-year class for MACRS. Installation costs for the new equipment are $200. It is estimated that this equipment can be sold in 4 years (end of project) for $5,000. This new equipment is more efficient than the existing one and thus savings before taxes using the new equipment are $4,000 a year. Because of the advance technology of new equipment, there will be a reduction in inventory of $400 today and which will be reverted at the end of the project in year 4. This existing equipment was purchased 2 years ago at a base price of $3,000. Installation costs at the time for this old equipment were $100. The existing equipment is considered also 7-year class for MACRS. The existing equipment can be sold today for $1,000 and for $0 in 4 years. The company's marginal tax rate is 30% and the cost of capital is 10%. MACRS Fixed Annual Expense Percentages by Recovery Class Year    3-Year    5-Year    7-Year    10-Year    15-Year 1    33.33%    20.00%    14.29%    10.00%    5.00% 2    44.45%    32.00%    24.49%    18.00%    9.50% 3    14.81%    19.20%    17.49%    14.40%    8.55% 4    7.41%    11.52%    12.49%    11.52%    7.70% 5        11.52%    8.93%    9.22%    6.93% 6        5.76%    8.93%    7.37%    6.23% 7            8.93%    6.55%    5.90% 8            4.45%    6.55%    5.90% 9                6.56%    5.91% 10                6.55%    5.90% 11                3.28%    5.91% 12                    5.90% 13                    5.91% 14                    5.90% 15                    5.91% 16                    2.95% For your answer, round to the nearest dollar, do not enter the $ sign, use commas to separate thousands, use a negative sign in front of first number is the cash flow is negative (do not use parenthesis to indicate negative cash flows). For example, if your answer is $3,005.87 then enter 3,006; if your answer is -$1,200.25 then enter -1,200

what is the incremental net operating profit (NOPAT) for year 4 of this replacement project?