From mid-2003 to early 2009, Apple charged $0.99 for every song on its US iTunes website. In April of 2009, Apple revised their pricing strategy: $0.69 for older songs, $0.99 for most new songs and $1.29 for the most popular tracks.

In June 2015, Apple introduced a streaming audio service, Apple Music, for $9.99 per month. This service competes with traditional music download models.

Before Apple changed their pricing, they collected data from a number of focus group consisting of a random sample of music buyers in order to better predict the outcomes of their changes.

Assume the following information was collected from a focus group of 20 (when the price was fixed at $0.99 per song)

The question asked each participant, was ‘how many songs do you download now, and how many songs would you purchase at … (varying prices)’

The focus group responses were:

a) estimate the linear demand function of song downloads on price.

b) interpret your results statistically

c) explain what the price coefficient means.

d) Using these results, determine how revenue varies with price.

e) BONUS: given only this information, can you speculate what price Apple would likely charge and why?

From mid-2003 to early 2009, Apple charged $0.99 for every song on its US iTunes website. In April of 2009, Apple revised their pricing strategy: $0.69 for older songs, $0.99 for most new songs and $1.29 for the most popular tracks.

In June 2015, Apple introduced a streaming audio service, Apple Music, for $9.99 per month. This service competes with traditional music download models.

Before Apple changed their pricing, they collected data from a number of focus group consisting of a random sample of music buyers in order to better predict the outcomes of their changes.

Assume the following information was collected from a focus group of 20 (when the price was fixed at $0.99 per song)

The question asked each participant, was ‘how many songs do you download now, and how many songs would you purchase at … (varying prices)’

The focus group responses were:

a) estimate the linear demand function of song downloads on price.

b) interpret your results statistically

c) explain what the price coefficient means.

d) Using these results, determine how revenue varies with price.

e) BONUS: given only this information, can you speculate what price Apple would likely charge and why?

discussion, let us continue with our observation of our local merchants from Unit 5. How do they account for, protect, and manage their cash?

(local merchant case below)

One of the popular merchant here is Big Bazaar. It is having several outlets of different sizes spread across the city and countrywide also. It stocks several ranges of products from kitchen & home appliances, garments, dry foods, beverages, fruits, consumables etc.

Inventory is classifies by its use. Retailers often have only one category→Merchandise-which includes retail goods that were purchased ready for sale.

Cost of goods sold is basically comprises of the wholesale prices of the goods and its stocking charges like, the cost of storing or warehousing, delivery, packaging etc. For retailers like this, they don’t have much of production activity therefore, cost of production here is little to none. They possess a huge volume of inventory because the inventory are purchased from the wholesalers at the wholesale prices and they sell it to the customers by giving a required mark up on each product.

Costs mostly are of administrative nature. They used to maintain a perpetual inventory system which keeps continuous track of the changes in the inventory accounts. All transactions are recorded as they occur. Retail systems are more accurate as they update records or record inventory changes at the point of sale, updating both the inventory and cost of goods sold. Purchases, Returns, Allowances, Discounts, Freight-in etc. are also updated. The basic system of cost of goods sold is to determine in this way: (Beginning Inventory + Purchase) – Ending Inventory

Let’s taken an example of this. Beginning inventory, January 1 $350000

Ending inventory, December 31 $400000

Purchase $670000

Cost of Goods Sold:

Opening Inventory $350000

Add: Purchase $670000

Cost of Goods available for sale $1020000

Less: Closing inventory $400000

Cost of Goods Sold $620000

Royal Minty of Britain has purchased 20,000 ounces of silver from Silver Products at US$8.30, payable in 180 days. The current spot rate is 1.8127 ($US/£) and the 180-day forward is 1.7863. The CEO at Royal Minty suggests that the spot rate in six months time will be 1.7915. Interest rates in Britain are currently 4.70 percent for 180 days and 1.15 percent in the United States. a-1. Calculate the receipts if Royal Minty takes a chance on the spot rate. (Round the final answer to the nearest whole pound.) Receipts £ a-2. Calculate the receipts if Royal Minty books a forward contract. (Round the final answer to the nearest whole pound.) Receipts £ a-3. Calculate the receipts if Royal Minty buys a money market hedge. (Round intermediate calculations and the final answer to the nearest whole pound.) Receipts £

Almonds R Us (ARU) processes and sells almonds. ARU buys almonds from California and roasts, seasons, and packages them for resale. Currently the firm offers 2 different types of almonds to gourmet shops in one-pound bags. The major cost is direct materials; however, a substantial amount of factory overhead is incurred in the predominantly automated roasting and packing process.

ARU prices its nuts at full product cost, including allocated overhead, plus a markup of 30%.

Data for the current budget include factory overhead of $3,110,000, which has been allocated by its current costing system on the basis of each product’s direct labor cost. The budgeted direct labor cost for the current year totals $600,000. The firm budgeted $6,000,000 for purchases and use of direct materials (mostly raw almonds).

The budgeted direct costs for one-pound bags of two of the company’s almond products are as follows:

Analysis of the current year’s budgeted factory overhead costs is as follows:

Data regarding the current year’s production of two of its lines, Salted and Sugar Roasted, follow. There is no beginning or ending direct materials inventory for either of these nut styles.

1. Using ARU’s current product costing system,
   1. Determine the company’s predetermined overhead rate using direct labor cost as the single cost driver.
   2. Determine the full product costs and selling prices of one pound of Salted almonds and one pound of Sugar Roasted almonds.
2. Using an activity-based costing approach, develop a new product cost for one pound of Salted almonds and one pound of Sugar Roasted almonds. Allocate all overhead costs to the 100,000 pounds of Salted and the 2,000 pounds of Sugar Roasted.

Almonds R Us (ARU) processes and sells almonds. ARU buys almonds from California and roasts, seasons, and packages them for resale. Currently the firm offers 2 different types of almonds to gourmet shops in one-pound bags. The major cost is direct materials; however, a substantial amount of factory overhead is incurred in the predominantly automated roasting and packing process.

ARU prices its nuts at full product cost, including allocated overhead, plus a markup of 35%.

Data for the current budget include factory overhead of $3,110,002, which has been allocated by its current costing system on the basis of each product’s direct labor cost. The budgeted direct labor cost for the current year totals $600,000. The firm budgeted $6,000,000 for purchases and use of direct materials (mostly raw almonds).

The budgeted direct costs for one-pound bags of two of the company’s almond products are as follows

Analysis of the current year’s budgeted factory overhead costs is as follows:

Data regarding the current year’s production of two of its lines, Salted and Sugar Roasted, follow. There is no beginning or ending direct materials inventory for either of these nut styles.

1. Using ARU’s current product costing system,
   1. Determine the company’s predetermined overhead rate using direct labor cost as the single cost driver.
   2. Determine the full product costs and selling prices of one pound of Salted almonds and one pound of Sugar Roasted almonds.
2. Using an activity-based costing approach, develop a new product cost for one pound of Salted almonds and one pound of Sugar Roasted almonds. Allocate all overhead costs to the 100,000 pounds of Salted and the 2,000 pounds of Sugar Roasted

Amazon initially selected two locations for US headquarters-NYC and Northern Virginia. It recently withdrew from NYC due to opposition regarding the incentive costs and impact on the environment. New Jersey is also re-evaluating its incentive grant program.

In general, do you believe that state and local incentive programs are effective in maintaining or attracting corporate business?

Royal Minty of Britain has purchased 20,000 ounces of silver from Silver Products at US$8.30, payable in 180 days. The current spot rate is 1.8127 ($US/£) and the 180-day forward is 1.7863. The CEO at Royal Minty suggests that the spot rate in six months time will be 1.7915.

Interest rates in Britain are currently 4.70 percent for 180 days and 1.15 percent in the United States.

a-1. Calculate the receipts if Royal Minty takes a chance on the spot rate. (Round the final answer to the nearest whole pound.)

Receipts           £

a-2. Calculate the receipts if Royal Minty books a forward contract. (Round the final answer to the nearest whole pound.)

Receipts           £

a-3. Calculate the receipts if Royal Minty buys a money market hedge. (Round intermediate calculations and the final answer to the nearest whole pound.)

Receipts           £   

b. Not available in Connect.

In recent years fewer students have been graduating from education programs across the US, leaving many states with a teacher shortage. K-12 teacher wages, however, have not significantly risen during this same period. How would you explain this market oddity?