Study Guide #2

Thirty-three small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5 reported cases of larceny per year. Assume that ? is known to be 42.9 cases per year.

(a) Find a 90% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(b) Find a 95% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(c) Find a 99% confidence interval for the population mean annual number of reported larceny cases in such communities. What is the margin of error? (Round your answers to one decimal place.)

(d) Compare the margins of error for parts (a) through (c).

As the confidence levels increase, do the margins of error increase?

As the confidence level increases, the margin of error increases.

As the confidence level increases, the margin of error remains the same.  

As the confidence level increases, the margin of error decreases.

(e) Compare the lengths of the confidence intervals for parts (a) through (c).

As the confidence levels increase, do the confidence intervals increase in length?

As the confidence level increases, the confidence interval increases in length.

As the confidence level increases, the confidence interval decreases in length.    

As the confidence level increases, the confidence interval remains the same length.

Account Analysis Method

Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts:

Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning visits and that electricity would vary with the number of tanning minutes.

Required:

1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations.

2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded answers in all subsequent computations.

Express the results in the form of an equation for total cost. (Round to the nearest cent.)

3. In April, Penny predicts there will be 342 visits for a total of 3,720 minutes. What is the total cost for April? If required, round your answer to the nearest dollar.
$

4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $9,552. The tanning bed is expected to last four years and will have no salvage value at the end of that time.

What will be the new equation for total cost? If required, round your answers to the nearest cent.

Cost = $ + $ (visit) + $ (minute)

What is the new expected cost in April based on the prediction provided in Requirement 3 (above)? When required, round your answer to the nearest dollar.
$

The Prairie Island nuclear power plant near Red Wing, Minnesota, produces about 2×10⁹watts. A watt is one Joule per second.

b. Calculate the Joules of energy produced by the Prairie Island plant in one day.

c. Recall that E = m c². Use E from part b. Calculate m, the minimum mass that was converted to energy in one day. (Because of inefficiency, the actual mass converted must be larger.)

d. During fission of U-235, 0.1% of uranium's mass is converted to energy.  What mass of U-235 is required for the mass loss you calculated in part c?

e.  Combustion of bituminous coal produces 30 kJ/g (Chemistry in Context Table 5.2). That is heat, not electrical power, but ignore inefficiency and suppose that all the heat is converted to electrical energy. What mass of coal will produce the daily energy calculated in part b?

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Read the following scenario below:

Leighton Beridon owns "Jeemp Farms", located near Weimar, TX. The farm produces pecan trees and sod. He has so many orders from the Houston metropolitan area that he is able to sell all his inventory each year, but he is not netting as much as he has in past years. His daughter, Liesl Beridon, came home from college over Thanksgiving and mentioned ABC costing, which she learned about in her cost accounting class. Mr. Beridon does not really know what ABC costing is and is skeptical as to whether it would be right for his business. He has hired your company to educate him about ABC and whether or not he should use an ABC system. Over the next few weeks, you will work towards helping Mr. Beridon decide what is the best route for his company to take.

Shortly after you get started, Mr. Beridon sends you an email stating that he feels he needs to discontinue the sod portion of his business and focus on his tree sector, as he can charge more per tree than he can charge for a foot of sod. He sends you an email stating, "I can charge so much more for a tree than a foot of grass. Therefore, I am planning on discontinuing the sod portion of the business immediately as I make so much more on the trees! I am going to plant all my sod acres with trees".

Questions:

• Project potential benefits Mr. Beridon could gain from using an ABC system.
• Describe any factors that could skew your results. In other words, explain if there is one method of costing that could make a product look more favorable than it really is
• Explain ABC costing and how it is different than traditional costing.
• Explain the advantages/disadvantages of using ABC costing.

Q.1. Ms. Moonmoon is going to start a new coffee shop near Sylhet Osmani International Airport. Suggest a Brand name for her coffee shop. Why do you think that your proposed brand
name is perfect for her business? 4

Q.2. Do you consider BRAND when you are going to purchase something? Why or why not? 3

Q.3. Suppose, you have started an online business recently. Your business is Sylhet metropolitan area based and you sell imported Laptops, Tabs, Mobile phones, smartwatches, and headphones. Which pricing strategy will you follow; Market penetration pricing or market skimming pricing? Why?

Problem 9-05 (Algorithmic)

Kilgore’s Deli is a small delicatessen located near a major university. Kilgore’s does a large walk-in carry-out lunch business. The deli offers two luncheon chili specials, Wimpy and Dial 911. At the beginning of the day, Kilgore needs to decide how much of each special to make (he always sells out of whatever he makes). The profit on one serving of Wimpy is $0.51, on one serving of Dial 911, $0.69. Each serving of Wimpy requires 0.21 pound of beef, 0.21 cup of onions, and 5 ounces of Kilgore’s special sauce. Each serving of Dial 911 requires 0.21 pound of beef, 0.38 cup of onions, 2 ounces of Kilgore’s special sauce, and 5 ounces of hot sauce. Today, Kilgore has 25 pounds of beef, 20 cups of onions, 75 ounces of Kilgore’s special sauce, and 53 ounces of hot sauce on hand.

1. Develop a linear programming model that will tell Kilgore how many servings of Wimpy and Dial 911 to make in order to maximize his profit today. If required, round your answers to two decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
   

   Let	W = number of servings of Wimpy to make
   	D = number of servings of Dial 911 to make

   Max	W	+	fill in the blank 2D
   s.t.
   	W	+	D	≤		(Beef)
   	W	+	D	≤		(Onions)
   	W	+	D	≤		(Special Sauce)
   	W	+	D	≤		(Hot Sauce)
   			W, D	≥	0

2. Find an optimal solution. If required, round your answers to two decimal places.
   
   W = , D = , Profit = $
   
3. What is the shadow price for special sauce? If required, round your answers to two decimal places.
   
   
   Interpret the shadow price.
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   
   
   
4. Increase the amount of special sauce available by 1 ounce and re-solve. If required, round your answers to two decimal places.
   
   W = , D =   , Profit = $
   
   Does the solution confirm the answer to part (c)?

You hear someone slurring his words and slobbering all over the people near him. You suspect that the person may have had some alcoholic beverages before you arrived. You hear him saying, "Ah, you don't need an audit. Just get some accountant to prepare a set of financial statements from your own books, photocopy them, and give them to the bank. You'll get that big loan you have been looking for." Your companion is a prospective client who has never used an outside accounting firm before, other than to have tax returns prepared. Your companion wants to know what your accounting firm can do for him and the company he runs. Required: a. What is an audit? How does an audit differ from reviews and compilations? 2 b. What are some of the benefits a company receives from getting an audit by a CPA firm?

Account Analysis Method

Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts:

Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning visits and that electricity would vary with the number of tanning minutes.

Required:

1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations.

2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded answers in all subsequent computations.

Express the results in the form of an equation for total cost. (Round to the nearest cent.)

3. In April, Penny predicts there will be 360 visits for a total of 3,630 minutes. What is the total cost for April? If required, round your answer to the nearest dollar.
$

4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $8,592. The tanning bed is expected to last four years and will have no salvage value at the end of that time.

What will be the new equation for total cost? If required, round your answers to the nearest cent.

Cost = $ + $ (visit) + $ (minute)

What is the new expected cost in April based on the prediction provided in Requirement 3 (above)? When required, round your answer to the nearest dollar.
$

*Please clearly state what answer goes to each part.*

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

During the year, Alexa rented out the condo for 100 days. She did not use the condo at all for personal purposes during the year. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income.

Assuming Alexa receives $20,000 in gross rental receipts, answer the following questions: (Leave no answer blank. Enter zero if applicable.)

a. Assuming that Alexa’s AGI from other sources is $90,000, what effect does the rental activity have on Alexa’s AGI (increase, decrease, or no effect) and state by what amount? Alexa makes all decisions with respect to the property.

b. Assuming that Alexa’s AGI from other sources is $120,000, what effect does the rental activity have on Alexa’s AGI(increase, decrease, or no effect) and state by what amount? Alexa makes all decisions with respect to the property.

c. Assume that Alexa’s AGI from other sources is $200,000. This consists of $150,000 salary, $10,000 of dividends, $25,000 of long-term capital gain, and net rental income from another rental property in the amount of $15,000. What effect does the Cocoa Beach Condo rental activity have on Alexa’s AGI(increase, decrease, or no effect) and state by what amount?