Most of the time contractors bear most of the consequences in a project. What are some consequences that clients have to face during projects that contractors do not face?

Glak Love Jewelry Design & Mfg.

Revenues

First Month of Operations: 10,000 units sold at $10 per unit.

Second Month of Operations: 20,000 units sold. The first 10,000 at $10 per unit, and the second 10,000 at $8 per unit.

Third Month of Operations: 40,000 units sold at $6 per unit.

Cash Flow characteristics: Goods are shipped at the end of the month are paid to the Company at the end of the following month by the customer.

Cost of Goods Sold is made up of three components:

            Direct Materials - -$2 per unit

            Direct Labor---$3 per unit, renegotiated to $2 in the third month with new pricing

            Fixed Machinery and Mfg. machinery and space rental costs---$10,000 per month, $15,000 with new labor price in month 3

            Cash flow characteristics: Mfg. is outsourced to a different organization and all costs are paid the next month following the month they are produced – i.e. paid the next month after the month they are received.

Operating Expenses: the remainder of the company’s expenses includes the following:

Salaries for office staff and the Owner are fixed at $120,000 per year or $10,000 per month. $50,000 of the total goes to the owner

Advertising is a fixed rate contract with an internet services firm which provides the company with secure servers, web analytics and Search Engine Optimization services for $3000 per month.

Office Rental is a fixed yearly rental contract for the administrative offices which costs the company $4500 per month.

Insurance is a fixed rate contract for insurance on the plant property and equipment is $1000 per month.

Cash flow characteristics: All operating expenses are paid during the month that they are incurred.

Ownership and Taxation: The Company is owned by a single individual who is paid a salary of $50,000 per year. The following tax rates are in affect for the purposes of calculating tax on taxable income:

Corporate Tax Rate: 30%

Individual Tax Rate: 40%

Dividend Tax Rate: 15%

Appendix Continued:

Calculate Breakeven for the first month at $10 per unit

Calculate for the Third Month:

                  Current Assets

                  Current Liabilities

                  Current Ratio

                  Owners’ Equity

Cost of Goods Sold

Gross Profit Margin

Assume a stock market bubble has just burst in the U.S., reducing consumer wealth:

Graphically illustrate the effects in the: (18 points)

Long-run model with an open economy

IS-LM and AD-AS model with an open economy using classical Real Business Cycle assumptions, distinguish short-run vs. long-run adjustments where appropriate

IS-LM and AD-AS model with an open economy using Keynesian assumptions, distinguish short-run vs. long-run adjustments where appropriate

For all three, do you get the same final long-run results? Explain. Your answer should consider effects on output, employment, unemployment, interest rates, price level, and real wages. (12 points)

NOTE:            As you work through your analysis in each case, if there is ambiguity or uncertainty about the effect, it is most important that you: 1. Identify the ambiguity (i.e. interest rate could rise or fall, depending on which decreases more, savings or investment), 2. Make a decision (interest rate will rise), 3. Justify your decision (because savings changes by the full increase in government spending but investment depends on the effect of the change in the MPK)

Glavine & Co. produces a single product, each unit of which requires three direct labor hours (DLHs). Practical capacity (for setting the factory overhead application rate) is 60,000 DLHs, on an annual basis. The information below pertains to the most recent year:

Required:

1. What was the standard variable overhead rate per DLH during the year?

2. What was the total overhead application rate per direct labor hour (DLH) during the year?

3. What was the total actual overhead cost incurred during the year?

4. What was the Production Volume Variance for the year? Was this variance favorable (F) or unfavorable (U)?

5. What was the total Overhead Spending Variance for the year? Was this variance favorable (F) or unfavorable (U)?

1 Despite spending more money per capita, the U.S. often falls behind other industrialized countries in terms of health outcomes. True or False?

True

False

2 Which U.S. president is responsible for signing in a law that provided healthcare insurance coverage for the elderly and the poor?

Johnson

Truman

Kennedy

Roosevelt

3 The Consumer-Driven Health Plan (CDHP) is one of the most recent innovations in the insurance market. Which statement does NOT correctly reflect the theory related to CDHP? Select all that apply.

Consumers are empowered to make personal decisions about their coverage

Overuse of services is due to consumers not knowing the cost of the services

Consumers are cost conscious due to the risk of being responsible for payment

Internet access makes consumers more cost conscious about healthcare

Patients have a high level of knowledge to discern between cost and quality

4 Which managed care mechanism pays providers a set amount each month for each covered patient?

Capitation

Utilization review

Ambulatory care

Gatekeeping

5 Why is hospital financial planning a big problem?

Nearly all costs are indirect

There has yet to be a formula devised for it

Lack of qualified administrators

It is dependent on the population surrounding the facility

Consider the simple Heckscher-Ohlin model discussed in class, with two countries, two goods, and two factors, and incomplete specialization. The two countries are Turkey and Vietnam, the two factors are capital and labor, and the two goods are chemicals and apparel. You are given the following data on the factor endowments for Turkey and Vietnam. Turkey has a labor force of 75 million workers and a capital stock of 375 thousand machines. Vietnam has a labor force of 80 million workers, and a capital stock of 240 thousand machines. Assume that machines and workers are comparable units.

a) Which country is relatively capital abundant? Which country is relatively labor abundant? Explain.

b) Suppose that the production of chemicals is capital intensive relative to apparel. Which country will have comparative advantage in the production of chemicals? Explain.

c) Explain which factor gains the most in Vietnam from free trade.

d) Which group in Turkey would resist signing a free trade agreement with Vietnam: workers or capital owners?

e) Use a figure to show whether free international trade improves the standard of living in Turkey and Vietnam as a whole, or not.

5. Belville has a comparative advantage in the production of towels, but Russville has an absolute advantage in the production of towels. If these two countries decide to trade,

13. If two counties trade goods and services it's most likely because....

Your company is considering buying back some of its stock. You are assigned the task of correctly assessing the value of the company so that the company can make a rational decision.

Select 4 ratios that you believe would provide the best insight into the condition of the company and provide a rationale as to why you feel that they would be most relevant.

Current Ratio                                                     =                                                  Current assets/current liabilities

Acid-test Ratio    =                             Cash+accounts recieveable/current liabilities

Return on equity    =    Net Income/total common equity

Return on Assets    =    Net income/total assets

Profit Margin    = net income after taxes/sales

Operating return on assets    =    operating profits/total assets

Accounts Receivable Turnover    =    annual credit sales/accounts recievable

Days in Inventory                                               =    inventory/daily cost of goods sold

Inventory Turnover    =    cost of goods sold/inventory

Total Asset Turnover                                       =    sales/total assets

Fixed Asset Turnover    =    sales/net fixed assets

Debt-to-Ratio                                                    = total debt/total assets

Debt-to-Asset                                                    =    liability(debt)/assets

Debt-to-Equity                                                 =    total liabilities(debt)/shareholders equity

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.

Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$19 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $6 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $26,000 in new equipment during May and $60,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $30,000 each quarter, payable in the first month of the following quarter.

A listing of the company’s ledger accounts as of March 31 is given below:

The company maintains a minimum cash balance of $70,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $70,000 in cash.

Required:

1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:

a. A sales budget, by month and in total.

b. A schedule of expected cash collections from sales, by month and in total.

c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost of purchases to 1 decimal place.)

d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

Yes, this is a long and challenging problem. I couldn’t get all of the tables to post, only some would. Thanks for the help!