Based on CASE 26.2 Dollars and Cents versus a Sense of Ethics   

Grizzly Community Hospital in central Wyoming provides health care services to families living within a 200-mile radius. The hospital is extremely well equipped for a relatively small, community facility. However, it does not have renal dialysis equipment for kidney patients. Those patients requiring dialysis must travel as far as 300 miles to receive care.

Several of the staff physicians have proposed that the hospital invest in a renal dialysis center. The minimum cost required for this expansion is $4.5 million. The physicians estimate that the center will generate revenue of $1.15 million per year for approximately 20 years. Incremental costs, including the salaries of professional staff and depreciation, will average $850,000 annually. Grizzly is exempt from paying any income taxes. The only difference between annual net income and net cash flows is caused by depreciation expense. The center is not expected to have any salvage value at the end of 20 years.

The administrators of the hospital strongly oppose the proposal for several reasons: (1) They do not believe that it would generate the hospital’s minimum required return of 12 percent on capital investments; (2) they do not believe that kidney patients would use the facility even if they could avoid traveling several hundred miles to receive treatment elsewhere; (3) they do not feel that the hospital has enough depth in its professional staff to operate a dialysis center; and (4) they are certain that $4.5 million could be put to better use, such as expanding the hospital’s emergency services to include air transport by helicopter.

The issue has resulted in several heated debates between the physicians and the hospital administrators. One physician has even threatened to move out of the area if the dialysis center is not built. Another physician was quoted as saying, “All the administrators are concerned about is the almighty dollar. We are a hospital, not a profit-hungry corporation. It is our ethical responsibility to serve the health care needs of central Wyoming’s citizens.”

Instructions

1. Financial factors and measures. To be completed in Excel with formula driven answers so that all answers can be traced for correctness. Compute Payback Period, ROI and NPV - Show all calculations for the supporting calculations.
2. Nonfinancial factors such as (1) ethical responsibility, (2) quality of care issues, (3) opportunity costs associated with alternative uses of $4.5 million, (4) physician morale, and (5) whether a community hospital should be run like a business.
3. Measures that could be taken to check for overly optimistic or pessimistic estimates.

Jazz Mobile phone is a famous multinational brand producing smart phones. The main aim for Jazz is to satisfy its users with user friendly, innovative and elegant devices that simplify the problems of the customers and enable them to enjoy the product. Jazz mobile have different series with amazing features of large display size, amazing battery time, high definition camera quality and large internal storages. Jazz have a comprehensive portfolio of hardware, software and services that enable the digital transformation of networks to address capacity needs, reduce complexity and leverage network intelligence to create and deliver new services. Operational excellence remains a source of competitive advantage for Jazz and this becomes the foundation of their strategy. According to their vision, Jazz Research is actively conducting research and development (R&D) to identify new future growth areas and secure advanced technologies for its products to create new value and improve people’s lives. Jazz has a global network of R&D centers, each with individual technology and competence specialties. Jazz research promises to continue working hard to become a global top research institute that creates new values for the future through ceaseless innovation and intelligence. Recently Jazz has launched a new phone Book 8. It has the biggest screen and battery, the fastest processor and the largest storage. It’s a phone designed and built for the power user who won’t settle for anything less. The Book 8 gives the most advanced features than any other series. After few days of launching the phone, the customers had a complaint that there is some problem with the phone. Jazz management ordered the inquiry and identify the issues arising out of the battery design and manufacturing process. Jazz had to recall about 1.5 million phones after complaints of manufacturing issues. Research and development along with the management is concerned about the incident and their goodwill across the world. R &D is now working to find out the reasons for the failure of their new Book 8. They wanted to ensure that this problem should not exist for the new model coming in the future.

a. Sometimes a minor negligence can cost the company in terms of their repute, money, time and effort. Based on company’s previous experience of Book 8, what steps are required to be followed by Jazz for comprehensive research for their upcoming model. What suggestions would you recommend to Jazz R&D to make their research successful?

b. Write the analysis report for the causes of failure of Book 8. What were the practices not followed before launch of Book 8?

Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $6 million in anticipation of using it as a toxic dumps site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $4.25 million. The company wants to build its new manufacturing plant on this land; the plant will cost $7.2 million to build. The following market data on DEI’s securities are current:

Debt:                           10,000 8% coupon bonds outstanding, 15 years to maturity selling for 94% of par; the bonds have a $1,000 par value each and make semiannual payments.

Common Stock:           250,000 shares outstanding, selling for $65 per share; the beta is 1.3.

Preferred stock:           10,000 shares of 7% preferred stock outstanding, selling for $81 per share.

Market:                       8% expected market risk premium; 5.65% risk-free rate

DEI’s tax rate is 34%. The project requires $750,000 in initial net working capital investment to get operational.

Calculate the project’s Time 0 cash flow, taking into account all side effects.

The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has told you to use an adjusted factor of +2% to account for this increased riskiness. Calculate the appropriate discount rate to use when evaluating DEI’s project.

The manufacturing plant has an eight-year tax life, and DEI uses straight line depreciation. At the end of the project (i.e., the end of Year 5), the plant can be scrapped for $2 million. What is the after-tax salvage value of this manufacturing plant?

The company will incur $900,000 in annual fixed costs. The plan is to manufacture 10,000 RDSs per year and sell them at $10,000 per machine; the variable production costs are $9,100 per RDS. What is the annual operating cash flow, OCF, from this project?

Finally, DEI’s president wants you to throw all your calculations, all your assumptions, and everything else into a report for the chief financial officer; all he wants to know is what the RDS project’s internal rate of return, IRR, and net present value, NPV are. What will you report?

QUESTION 21

1. Which of these factors is the most likely cause for a favorable direct materials price variance?

   		The purchasing agent was highly effective in negotiating a lower price
   		Producing at 50% of capacity instead of 60%
   		Higher quality materials were purchased than required
   		New production techniques led to more efficient use of materials

2 points   

QUESTION 22

1. Jane's Juices, which makes smoothies on university campuses across Michigan, is making an annual budget for this coming financial year. Last year, 26,000 units were sold, and sales are expected to increase 20% next year, and the sales price is expected to remain at $8 each. Finished goods inventory at the end of the year was 1125 units, and management likes to have enough inventory at the end of the year for 2% of next year's sales. What is the sales budget (in dollars) for next year?

   		$260,400
   		$208,000
   		$238,800
   		$249,600

2 points   

QUESTION 23

1. At Jamal's Juices, each smoothie requires 16 oz of juice, which costs $0.15/oz. It takes 0.10 hrs of direct labor to make smoothies, at $9.35 per DLH. Variable overhead costs $1.25/smoothie, and fixed costs total $98,000 per year. They expect to produce 102,000 smoothies next year.

   Calculate the manufacturing overhead budget for next year.

   		$117,300
   		$95,370
   		$225,500
   		$408,000

2 points   

QUESTION 24

1. Dex, Inc. installs pre-built decks on mobile homes. The expect to make 300 decks next year, where each deck requires 500 ft of lumber, at $1.75 per foot.

   Calculate the standard cost of direct materials (per deck).

   		$262,500
   		$875
   		$525
   		$1,400

2 points   

QUESTION 25

1. Dreidell Corporation expected to use 1.1 direct labor hours to produce one unit of their product, at a rate of $12/DLH. Actual results for last year indicate that they sold 420,000 units, where their direct labor workforce actually worked 500,000 hours at a rate of $13.25/DLH. What is the Direct Labor Rate Variance?

   		$503,500 unfavorable
   		$625,000 unfavorable
   		$577,500 favorable
   		$ 503,500favorable

2 points   

QUESTION 26

1. Copper Burgers sells burgers with 0.5 lb meat on each burger. They expected to buy meat at $2.30/lb, but actually ended up paying $3.35/lb. They made 100 burgers this week, and actually used 55 lbs of meat. Calculate the Direct Materials Quantity Variance.

   		$11.50 unfavorable
   		$69.25 unfavorable
   		$16.75 favorable
   		$150.75 favorable

This Question has 6 parts a) to f): Answer all of them below:

Penn State Marketing and Branding Office is interested in understanding more about alumni’s donation behavior, and the director Tom invited you to analyze a data set of 1,000 donors in the year 2016. There are several variables in the data

Y_i Amount of donations in dollars donor i made in the year 2016.

MC_i: The cost of all marketing communications in dollars donor i received in the year 2016.

R_i: How recent (in years) has donor i made a donation? e.g. RC_i = 5 means donor i’s last donation is five years ago (Recency).

F_i: How frequently does donor i make donations in the past 10 years? e.g. FQ_i = 0.5 means donor i makes five donations in the past 10 years.

M_i: How much donations ($) does donor i make on average in the past 10 years?

Tom built the following regression model

Y_i=β_0+β_1 MC_i+β_2 R_i+β_3 F_i+β_4 M_i+ϵ_i,

and Table below summarizes the estimated regression model from SPSS,

a) What does the coefficient estimate 1.702 mean (in the MC row)?

b) Based on the output, is the impact of marketing communications statistically significant?

Tom added a new variable “State_i” into the regression model

Y_i=β_0+β_1 MC_i+β_2 R_i+β_3 F_i+β_4 M_i+β_5 State_i+ϵ_i,

and Table below summarizes the estimated regression model from SPSS. State_i = 1 when the donor is from Pennsylvania and State_i = 0 when the donor is not from Pennsylvania.

c) What does the coefficient estimate -11.636 mean (in the State row)?

d) Tom said

“Since Penn State is located in Pennsylvania, we should spend more resources targeting those donors who are from Pennsylvania.”

Do you agree or disagree with Tom’s decision? Use evidence from the output to support your claim.

Tom added a variable “GradYear_i” into the regression model

Y_i=β_0+β_1 MC_i+β_2 R_i+β_3 F_i+β_4 M_i+β_5 State_i+β_6 GradYear_(1999_i )+β_7 GradYear_20〖00〗_i+ϵ_i

and Table below summarizes the estimated regression model from SPSS. Here, all donors graduated either from year 1998, 1999 or 2000 and GradYear 1998 is used as the baseline.

e) What does the coefficient estimate -13.862 mean (in the GradYear_1999 row)?

f) What does the coefficient estimate 19.433 mean? (in the Constant row)

Case Study on Walmart using IT

A major reason for Wal-Mart’s success over the year was its constant emphasis on installing the most modern IT systems, which helped it achieve better economy of scale, distribution efficiency and pass on the benefits of the same to the customers. By offering low price to customers, Wal-Mart was able to generate more sales and minimize the promotional expenditure of the company.

By using IT, Wal-Mart was able to establish proper communication links with its suppliers, distribution centers and individual stores. Wal-Mart employed Electronic Data Interchange (EDI) that linked the computers at the stores, its distribution center and even key suppliers like P&G. In order to make its distribution system more efficient and to establish stronger links with its suppliers, Wal-Mart installed the satellite communication system at an estimated cost of $700 million. The system connected all the operating units of company and the general office with two way voice, data and video communication. Wal-Mart could keep a constant track of the movement of inventory from the manufacturing to the distribution centers and finally, to the stores. Its thousands of suppliers could obtain daily sales reports. The system also helped Wal-Mart to automate the inventory replenishment process.

Wal-Mart also used IT to improve its supply chain efficiency. Wal-Mart installed “Retail link” system that connected EDI networks to an extranet accessed and used by Wal-Mart’s business customers and its thousands of suppliers to obtain data relating to sales and stock levels at every Wal-Mart stores. The data enabled Wal-Mart’s suppliers to analyze market trends, undertake the necessary stock replenishment and plan out their production schedules to cater to Wal-Mart’s needs.

Apart from investing in building advance IT system Wal-Mart simultaneously built massive database of point of sales data at each of its stores. Using data mining Wal-Mart was able to determine the needs and preferences of its customers up to an individual store level and customize its merchandise according.

Q1. What are the benefits Wal-Mart obtained by using modern IT systems for its business and customers?

Q2. Briefly explain the benefit of using EDI over manual systems. Also explain all the benefits discussed in this case that is obtained by Wal-Mart by using EDI and satellites.

Q3. How can Wal-Mart customize merchandise for each store?                           

Q4. How Retail-link system helped the suppliers of Wal-Mart?   

ACTG 4650

Assignment 7

Due April 16

Answer the questions associated with each of the following scenarios.  The companies in each scenario are publicly traded, have a calendar year and entered into the agreements in 2018.

1.         Company A entered into a two-year contract with a customer to maintain the    customer’s fleet of delivery vehicles.  Company A receives payments from the            customer at regularly scheduled intervals during the contract and provides             monthly maintenance services needed to keep the vehicles in working order.       How should Company A recognize revenue on this contract? What is the         justification for your answer?

2.         Company B enters into a contract to manufacture equipment for a customer.  The equipment is manufactured at Company B’s plant and is under Company B’s control while it is being built.  The customer makes a 20% deposit at the inception of the contract.  Periodic payments from the customer over the life of the contract equal an additional 30% of the contract price.  The remaining 50% of the contract price is due upon   delivery of the equipment. Company B expects the customer to make all required payments. If the customer terminates the contract, Company B is entitled to keep all amounts received but has no claim for further payments.   How should Company B recognize revenue on this contract? What is the justification for your answer?

3.         Company C enters into a contract to build a building for a customer.  The             contract price is $3,000,000 and contains incentive bonuses of $25,000 for    eachweek the building is completed prior to the target date for completion.  There      are also $25,000 penalties for each week work goes on beyond the target date.     The customer is a governmental entity which is required to get all new buildings            inspected prior to taking possession. The contract contains a $50,000 bonus if the             building passes the initial inspection.  Explain how Company C should determine     the transaction price associated with this contract.

4.         Company D enters into a contract with a customer to sell Products W, Z, Y, and Z             for a price of $150,000.  None of these products are sold together in smaller        bundles. Company D regularly sells product W for $40,000 and Product X for          $50,000.  Company D is aware that other companies sell Product Y for $20,000.         Product Z is a new product and there are no other companies selling this          product.  Company D knows that Product Z costs them $40,000 to produce and their normal markup on other similar products is 25% of cost.  How should           Company D allocate the transaction price to the performance obligations of this      contract? What is thejustification for your answer?

Post the journal entries to T accounts

Prepare a post-closing trial balance

Northeast Company

January 1, 2017,

Balance Sheet

Cash 20,000

Accounts receivable 110,000

Less: Allowance for doubtful accounts (2,000)

Inventory (500 units @ $20 each) 10,000

Equipment 9,000

Less: Accumulated depreciation (2,000) -----------------

Total assets 145,000

Accounts payable 20,000

Long-term notes payable (5% interest, due in 2019) 100,000

Capital stock 10,000

Retained earnings 15,000 -------------------

145,000

Transactions or events:

The company collected 98,000 of the accounts receivable in cash.

The company wrote off one $1,000 accounts receivable from J. Jones

On Jan. 1, the company bought a car for $30,000 on notes payable at 6%

The company paid 19,000 of its accounts payable in cash

The company bought 900 units of inventory for $21 each in cash

The company bought a 1 year insurance policy for $2400 on October 1

The company paid rent for the months January through December of $18,000

On July 1, the company bought rights to a patent for $20,000 The patent has ten more years of useful life

On Dec 1, the company paid dividends for $1,000 to it’s shareholders.

On Dec. 1, the company bought another 200 units of inventory for $22 on account

On Dec. 15, the company sold 1,300 units for $30 each. 1000 were sold for cash, and 300 on account. [The company accounts for its inventory on the FIFO basis, so the first items bought are assumed to be the first ones sold.]

The company decided to recorded depreciation on the equipment. The equipment is one year old. It had a cost of $9,000, salvage value of $1,000, and an expected useful life of 4 years. Use straight line to depreciate it

The company recorded depreciation on the car, using the straight line method, assuming it had a five year life, and salvage value of $6,000.

The company made the appropriate adjustment to reflect the fact the insurance policy only had nine more months left of effectiveness.

The company accrued the interest that had been built up on the long-term notes. The money had been borrowed on January 1, 2017. No payments of interest or principal were due until some time in 2018.

The company made the appropriate entry to record amortization on the patent on December 31.

On December 31, the company made an adjustment for the rent for December 2017.

The company recorded bad debt expense of 6% of the accounts receivable.

Case II – Godiva Case

Any of irrelevant information to the question below, you can ignore from the description. This case is updated or continued from the first case study in week 7.

[Personal Info.]

Robinson Godiva is 46 years old, and his wife Geniece is 37 years old. Robinson and Geniece were married 8 years ago; it was Robinson’s second marriage and Geniece’s first marriage. Robinson and Geniece have one child Chaplin, who is 6 years of age. Robinson has two children by his prior marriage: Lorna, who is 14 years of age, and Eva, who is 12. All of children attend public schools.

Robinson is a chemistry professor at the university and is a partner in Lion Research Associates, a chemistry firm that Robinson started with three of his associates from the university.

[Asset Info.]

The Godivas own their personal residence in joint tenancy with right of survivorship, and it is valued currently at $250,000. They purchased the home seven years ago for $175,000. They have finished the basement and added a room and bathroom at a cost of $40,000. They have a mortgage balance of $150,000. The Godivas’ household furnishing are valued at $70,000, and Geniece’s jewelry and furs are valued at $30,000. Robinson and Geniece live in a state that follows the common-law forms of property ownership.

Robinson and Geniece have a joint checking account that contains $7,000 and a joint savings account that contains $15,000. Interest income on the savings account last year was $450. The Godivas also have $12,000 in money market mutual funds that paid dividends last year of $515. Robinson owns shares in a growth stock mutual fund that he purchased three years ago for $5,000, is now worth $5,750, and paid dividends last year of $100. Dividends on these shares are expected to grow by 8% per year, and Robinson believes that a 10% rate of return would be appropriate for these shares with their degree of risk. Geniece owns shares in a municipal bond fund purchased for $6,300, currently valued at $7,000, and yielding $400 per year tax-free. The Godivas jointly purchased 500 shares in Roters Power, Inc., a public utility company. These shares were acquired at a cost of $6,250, are currently vluaed at $8,000, and pay annual dividends of $480.

Robinson’s father died two year ago, and his mother died last year, leaving Robinson an inheritance of $150,000 in U.S. Treasury securities, paying 8% interest ($12,000 annually), and a one-half interest in common with his brother in a Florida condominium. The condominium was valued in his mother’s estate at $120,000 and was purchased six years ago for $1250,000. Real estate taxes on the condominium, half of which Robinson includes among his itemized deductions for federal income tax purposes, total $1,000. Both of Geniece’s parents are still living.

The Godivas are also joint owners of a parcel of undeveloped land in the mountains, where they plan to build a vacation home. The parcel of land cost them $75,000 and is currently valued at $70,000. They have a $30,000 mortgage on the property. Interest on the mortgage is $2,700 per year. Real estate taxes are $700.

Robinson owns an apartment building near the university that he rents to students. The apartment building was purchased four years ago for $95,000 and is currently valued at $125,000. The annual gross rental income from the property is $11,000. Robinson has a mortgage balance of $60,000, and his interest payments total $4,950. His real estate taxes and maintenance expenses are $3,000, and depreciation is $2,850.

The Godivas are joint owners of two automobiles. The cars are valued at $25,000 and $17,500. Robinson owns a sailboat which he bought for $35,000 and is valued now at $40,000.

Robinson has a one-fourth interest in the partnership Reptiles Chemicals, which is engaged in research for genetic engineering of various plants. There are no employment contracts for the partners. In addition to the partners, the firm has eight employees, including four research assistants, two secretaries, and two maintenance/hothouse workers. The research assistants are paid $30,000 each, the secretaries are paid $18,000 each, and the other workers are paid $20,000 each.

Robinson and his partners believe that the value of Reptile Chemicals is approximately $1 million. There has been no objective valuation, however. The largest assets of the firm are its building and grounds, where the firm has a laboratory, hothouses, and fields for growing experimental plants. The building and land were purchased for $250,000, and $150,000 was allocated to the building and $100,000 to the land. Additional buildings have been added at a cost of $75,000, and the current value is estimated to be $400,000. The firm has a mortgage balance on the building and land of $150,000. The partnership has been depreciating the building for tax purposes under the original accelerated cost recovery system.

[Income Tax Info.]

Robinson earns $60,000 in annual salary from the university, and he reports another $48,000 of net taxable income from the biotechnology firm. Geniece earns $30,000 working in public relations for a hospital. She also receives $5,000 at the beginning of each year from a trust established by her grandmother, with securities valued currently at $100,000. At Geniece’s death, the trust income will be paid to Charles, or if Charles is over age 25, the corpus will be distributed to him. The Godivas file joint tax returns.

Robinson pays child support for his two daughters in the amount of $400 each per month, and these payments are probably 75% of their support annually. Robinson’s daughters are in the custody of their mother and live with her for approximately nine months of the year. Robinson is required by his divorce degree to maintain a $100,000 life insurance policy to provide child support in the event of his death.

Several years ago, Robinson established custodian account for Lorna and Eva. Lorna’s account generate annual income of $900, and Eva’s account has annual income of $850.

Robinson and Geniece incur home mortgage interest costs of $12,000 per year. Real estate taxes on their home are $2,500. They will pay $4,500 in state income taxes this year and $150 in personal property taxes. Their contributions to charities totaled $2,000.

[Retirement Info.]

Geniece owns IRA accounts totaling $17,000. She is now an active participant in a defined-contribution pension plan through the hospital where she works, and her vested account value is $35,000. Eight percent of Robinson’s gross salary at the university is deducted each year and contributed to a tax-deferred annuity. The university contributes an additional six percent dollar for dollar on a tax-deferred basis. The plan is projected to pay Robinson $2,500 per month when he retires at age 65 or to Geniece at his death.

One of the partners in Reptile Chemicals is age 65 and about two years away from retirement, and two partners are age 55. The partners would like to prepare for the expected retirement of the age-65 partner, as well as the unexpected death or disability of any partner. The partners are also contemplating a retirement program for the firm and would like advice concerning the design.

[Insurance Info.]

The university provides disability income coverage for one-third of Ronbinson’s salary, group medical expense insurance covering Robinson and his family through a health maintenance organization, and group term life insurance for Robinson, with a death benefit of $50,000. Robinson owns a whole life insurance policy that will pay a death benefit of $100,000 and has a cash value of $5,500, and he owns a universal life policy with a face value of $150,000 and a cash value of $3,000. The annual premium on the whole life policy is $2,000, and the annual premium on the universal life policy is $800. Geniece has group term life insurance through her employer in a face amount that is equal to her salary.

Property and liability insurance that insures the Godivas’ house for its replacement cost has an annual premium of $1,200. The Godivas’ cars are insured under a personal auto policy provising limits for bodily injury of $100,000/$300,000, property damage of $25,000, uninsured motorists coverage of $10,000/$20,000, no-fault benefits, and a collision deductible of $250. Robinson’s sailboat is insured under a yacht policy.

[Estate Planning Info.]

Robinson’s will leaves his entire estate to Genice, but if Geniece predeceases Robinson, the estat will be left in trust for Robinson’s three children equally. Geniece’s will leaves her entire estate to Robinson or, if he predeceases her, to Charles.

Question II-1. Which of the following statement concerning the Godivas’ use of other or additional insurance coverages is correct?

1. They could provide all-risks coverage for contents by replacing their HO-03 policy with an HO-04 policy.
2. They could provide coverage for the contents of their condominium in Florida by adding an HO-06 as an endorsement to their HO-03 policy.
3. They could have provided all-risks coverage for both their dwelling and its contents if they had purchased an HO-02 instead of an HO-03.
4. They could have provided contents coverage up to 50% of the dollar amount of the dwelling coverage if they had purchased either an HO-02 or an HO-03.
5. They could reduce the premium cost for their homeowners coverage by insuring their home for its replacement cost under an HO-08.

Question II-2. Which of the following items of personal property would be excluded under the Godiva family’s HO-03 policy?

(1) Animals, birds, and fish

(2) Business property

(3) Loss causes by the negligent use of the dwelling fireplace

(4) Loss of $2,000 of clothing in a hotel fire while the family is vacationing in Paris

1. (1) only
2. (2) and (3) only
3. (1), (2), and (3) only
4. (2), (3), and (4) only
5. (1), (2), (3), and (4)

Question II-3. Which of the following would be excluded from liability coverage under the Godiva family’s personal auto policy (PAP)?

(1) Robinson’s use of a motorcycle recently acquired for weekend recreation purposes

(2) Robinson’s use of one of the family’s cars for business purposes

(3) Robinson’s use of one of the family’s cars in the neighborhood car pool, for which service each passenger pays Robinson $5.00 weekly.

1. (1) only
2. (1) and (2) only
3. (2), and (3) only
4. (1), (2), and (3)
5. Neither (1), (2), nor (3)