The issue of homelessness is relevant to both Microeconomics, Econ 10 B, and Macroeconomics, Econ 10 A. In Micro we discuss at great length the market for rental housing: supply, demand, price and quantity. Many families in America BECOME homeless as a direct result of “free market” forces: their rent rises beyond their ability to pay. In Macro, we discuss the national picture: the millions of jobs involved on a national scale in the construction and sale of residential units: homes, condos, apartments, and ADUs (accessory dwelling units). The San Jose Mercury News reported on June 17 that the city of San Jose is dismantling a temporary homeless site after spending more than $1.3 million repairing dozens of dilapidated state-owned trailers. The article states that “nearly 6,200 people in San Jose don’t have a place to call home and county health officials believe that at least 2,500 of them are at high risk of infection.” Some experts believe the total is much higher than that. San Jose has announced plans to build hundreds of ‘dorm-style’ modular and prefab housing units to serve its homeless population on three locations in the city: A site at Monterey and Bernal roads, a second at Evans Lane, and a third at Rue Ferrari and Highway 101. In EACH AND EVERY CASE, opposition from neighbors has been INTENSE. ‘NOT IN MY BACKYARD!” The city of San Francisco had been spending over $300 million PER YEAR (before March, 2020) to house homeless people and provide other services. Yet, the number of homeless keeps rising. Given the incredible drop in tax revenue---hotel taxes, sales taxes on restaurant meals-----since March, 2020, it is almost impossible to imagine that level of funding staying level. San Francisco has suffered a greater drop in tax revenue than San Jose or Oakland. Obviously, it is not a contest. So, here goes: Question 1. In early March, 2020, our state government announced tentative plans to move homeless people in to college dorm rooms. A. In your opinion, is this idea a good idea? Or a bad idea? Why? B. Would you make this program voluntary for homeless people? Or mandatory? Why? C. How vigorously would you enforce this program? Why? D. What penalties, if any, would you impose on homeless people for non-compliance? Why? E. In theory, what could ‘go wrong’ with the enforcement of this program? What other support services do homeless people require, in addition to housing? F. Moving homeless people into hotel rooms, (combined with support services), which our state has done on an unprecedented level, may be a better idea than moving them into college dorms. Why? G. In your opinion, what more should we be doing as a society to address this issue? Why?
In: Economics
Problem 11-6
|
Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a normal capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 250(00) bolts. Normal output has a cost of $40 per hundred bolts. Workers can be assigned to other jobs if production is less than normal. The beginning inventory is zero bolts. |
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | Total |
| Forecast | 250 | 300 | 250 | 300 | 280 | 275 | 270 | 1,925 |
| a. |
Develop a chase plan that matches the forecast and compute the total cost of your plan. Overtime is $60 per hundred bolts. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) |
| Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | Total |
| Forecast | 250 | 300 | 250 | 300 | 280 | 275 | 270 | 1,925 |
| Output | ||||||||
| Regular | ||||||||
| Overtime | ||||||||
| Subcontract | ||||||||
| Output - Forecast | ||||||||
| Inventory | ||||||||
| Beginning | ||||||||
| Ending | ||||||||
| Average | ||||||||
| Backlog | ||||||||
| Costs: | ||||||||
| Output | ||||||||
| Regular | $ | $ | ||||||
| Overtime | ||||||||
| Subcontract | ||||||||
| Inventory | ||||||||
| Backorder | ||||||||
| Total | $ | $ | ||||||
| b. |
Would the total cost be less with regular production with no overtime, but using a subcontractor to handle the excess above normal capacity at a cost of $50 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $2 per hundred bolts. (Round your Average values to 1 decimal place. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) |
| Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | Total |
| Forecast | 250 | 300 | 250 | 300 | 280 | 275 | 270 | 1,925 |
| Output | ||||||||
| Regular | ||||||||
| Overtime | ||||||||
| Subcontract | ||||||||
| Output - Forecast | ||||||||
| Inventory | ||||||||
| Beginning | ||||||||
| Ending | ||||||||
| Average | ||||||||
| Backlog | ||||||||
| Costs: | ||||||||
| Regular | $ | $ | ||||||
| Overtime | ||||||||
| Subcontract | ||||||||
| Inventory | ||||||||
| Backorder | ||||||||
| Total | $ | $ | ||||||
In: Accounting
|
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: |
| Fixed Cost per Month | Cost per Course |
Cost per Student |
||||
| Instructor wages | $ | 2,940 | ||||
| Classroom supplies | $ | 310 | ||||
| Utilities | $ | 1,230 | $ | 75 | ||
| Campus rent | $ | 4,700 | ||||
| Insurance | $ | 2,300 | ||||
| Administrative expenses | $ | 3,700 | $ | 44 | $ | 6 |
|
For example, administrative expenses should be $3,700 per month plus $44 per course plus $6 per student. The company’s sales should average $870 per student. |
| The actual operating results for September appear below: |
| Actual | ||
| Revenue | $ | 51,910 |
| Instructor wages | $ | 11,040 |
| Classroom supplies | $ | 19,380 |
| Utilities | $ | 1,940 |
| Campus rent | $ | 4,700 |
| Insurance | $ | 2,440 |
| Administrative expenses | $ | 3,680 |
| Required: | |
| A. |
The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the company’s planning budget for this level of activity. |
|
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
|
| B. |
The school actually ran four courses with a total of 53 students in September. Complete the company’s flexible budget for this level of activity. |
|
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
| 3. |
Calculate the revenue and spending variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
In: Accounting
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit
|
Number of newspapers per day (Q) |
Total revenue (including advertising revenues) per day (TR) |
Total cost per day (TC) |
|
0 |
0 |
2500 |
|
1000 |
4000 |
2600 |
|
2000 |
5000 |
2700 |
|
3000 |
5500 |
2860 |
|
4000 |
5750 |
3020 |
|
5000 |
5950 |
3200 |
|
6000 |
6125 |
3390 |
|
7000 |
6225 |
3590 |
|
8000 |
6125 |
3810 |
|
9000 |
5975 |
4050 |
What price should the manager of the EI Dorado Star charge? How many papers should be sold daily to maximize profit?
At the price and output level you answered in the previous question, is the EI Dorado Star making the greatest possible amount of total revenue? Is this what you expected? Explain why or why not.
Use the appropriate formulas to create two new columns (7 and 8) for total profit and profit margin, respectively. What is the maximum profit the EI Dorado Star can earn? What is the maximum possible profit margin? Are profit and profit margin maximized at the same point on demand?
What is the total fixed cost for the El Dorado Star? Explain how you arrived at this conclusion.
Create a new spreadsheet in which total fixed cost increases to $5,000. What price should the manager charge? How many papers should be sold in the short run?
In: Economics
Traditional Product Costing versus Activity-Based
Costing
Ridgeland Inc. makes backpacks for large sporting goods chains that
are sold under the customers' store brand names. The Accounting
Department has identified the following overhead costs and cost
drivers for next year:
| Overhead Item | Expected Costs | Cost Driver | Maximum Quantity |
|---|---|---|---|
| Setup costs | $979,200 | Number of setups | 7,200 |
| Ordering costs | 260,000 | Number of orders | 65,000 |
| Maintenance | 1,840,000 | Number of machine hours | 80,000 |
| Power | 176,000 | Number of kilowatt hours | 440,000 |
Total predicted direct labor hours for next year is 52,000. The following data are for two recently completed jobs:
| Job 201 | Job 202 | ||
|---|---|---|---|
| Cost of direct materials | $13,000 | $14,500 | |
| Cost of direct labor | $21,100 | $64,800 | |
| Number of units completed | 1,000 | 850 | |
| Number of direct labor hours | 220 | 270 | |
| Number of setups | 15 | 19 | |
| Number of orders | 21 | 42 | |
| Number of machine hours | 450 | 360 | |
| Number of kilowatt hours | 200 | 300 |
a. Determine the unit cost for each job using a traditional
plantwide overhead rate based on direct labor hours.
Round cost per unit answers to two decimal places
when applicable.
| Job 201 | Job 202 | |
|---|---|---|
| Direct materials | ||
| Direct labor | ||
| Overhead | ||
| Total cost | ||
| Units produced | ||
| Cost per unit |
b. Determine the unit cost for each job using ABC. Round cost per
unit answers to two decimal places when
applicable.
| Job 201 | Job 202 | |
|---|---|---|
| Direct materials | ||
| Direct labor | ||
| Setup cost | ||
| Ordering costs | ||
| Maintenance costs | ||
| Power | ||
| Total job costs | ||
| Units produced | ||
| Cost per unit |
In: Accounting
Manufacturing Income Statement, Statement of Cost of Goods Manufactured
Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:
| On Company |
Off Company |
|||
| Materials inventory, December 1 | $86,200 | $110,300 | ||
| Materials inventory, December 31 | (a) | 124,710 | ||
| Materials purchased | 218,900 | (a) | ||
| Cost of direct materials used in production | 254,100 | (b) | ||
| Direct labor | 325,000 | 248,270 | ||
| Factory overhead | 100,860 | 123,590 | ||
| Total manufacturing costs incurred in December | (b) | 713,865 | ||
| Total manufacturing costs | 845,480 | 979,805 | ||
| Work in process inventory, December 1 | 165,520 | 265,940 | ||
| Work in process inventory, December 31 | 139,650 | (c) | ||
| Cost of goods manufactured | (c) | 707,260 | ||
| Finished goods inventory, December 1 | 145,660 | 124,765 | ||
| Finished goods inventory, December 31 | 152,590 | (d) | ||
| Sales | 1,270,720 | 1,103,580 | ||
| Cost of goods sold | (d) | 715,025 | ||
| Gross profit | (e) | (e) | ||
| Operating expenses | 165,540 | (f) | ||
| Net income | (f) | 244,015 | ||
Required:
1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.
| Letter | On Company | Off Company |
| a. | $ | $ |
| b. | $ | $ |
| c. | $ | $ |
| d. | $ | $ |
| e. | $ | $ |
| f. | $ | $ |
2. Prepare On Company's statement of cost of goods manufactured for December.
Note: If an amount should be subtracted, begin entry with a minus (-) sign.
| On Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Month Ended December 31 | |||
| Work in process inventory, December 1 | $ | ||
| Direct materials: | |||
| Materials inventory, December 1 | $ | ||
| Purchases | |||
| Cost of materials available for use | $ | ||
| Materials inventory, December 31 | |||
| Cost of direct materials used in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs incurred during December | |||
| Total manufacturing costs | $ | ||
| Work in process inventory, December 31 | |||
| Cost of goods manufactured | $ | ||
3. Prepare On Company's income statement for December.
Note: If an amount should be subtracted, begin entry with a minus (-) sign.
| On Company | ||
| Income Statement | ||
| For the Month Ended December 31 | ||
| Sales | $ | |
| Cost of goods sold: | ||
| Finished goods inventory, December 1 | $ | |
| Cost of goods manufactured | ||
| Cost of finished goods available for sale | $ | |
| Finished goods inventory, December 31 | ||
| Cost of goods sold | ||
| Gross profit | $ | |
| Operating expenses | ||
| Net income | $ | |
In: Accounting
Question 4-53
Use the information in the table on the previous page to allocate costs to the mission centers using the direct distribution method.
Information in the Table
|
Allocation Statistics |
|||
|
Direct |
Purchasing: |
Administration |
|
|
Cost Centers |
Costs ($) |
Purchase Orders (%) |
Total Salaries (%) |
|
Support |
|||
|
Purchasing |
80,000 |
5 |
|
|
Administration |
40,000 |
15 |
- |
|
Mission |
- |
||
|
Soup Kitchens |
900,000 |
40 |
90 |
|
Counseling |
300,000 |
45 |
5 |
|
Total Cost |
1,320,000 |
100 |
100 |
Direct Distribution Method
|
Soup Kitchen |
Counseling |
Purchasing |
Administration |
|
|
Operating costs |
$900,000 |
$300,000 |
$80,000 |
$40,000 |
|
Purchasing (in ratio of 40-45) |
$37,647 |
$ 42,353 |
$(80,000) |
|
|
Administration (in ratio of 90.5) |
$ 37,895 |
$ 2,105 |
$ (40,000) |
|
|
Total |
$ 975,542 |
$ 344,458 |
$ - |
$ - |
Question 4-54
Using the information from Problem 4-53, allocate the costs using the step-down method. Compare the results with Problem 4-53. Do they differ?
Step-down Method
?????
Question 4-55
Using the information from Problem 4-54, allocate the costs using the step-down method, but change the order of step-down from that used when you solved Problem 4-54. Do your results differ from those you found in Problem 4-54?
|
Allocation Statistics |
|||
|
Direct |
Purchasing: |
Administration |
|
|
Cost Centers |
Costs ($) |
Purchase Orders (%) |
Total Salaries (%) |
|
Support |
|||
|
Purchasing |
80,000 |
5 |
|
|
Administration |
40,000 |
15 |
- |
|
Mission |
- |
||
|
Soup Kitchens |
900,000 |
40 |
90 |
|
Counseling |
300,000 |
45 |
5 |
|
Total Cost |
1,320,000 |
100 |
100 |
In: Accounting
1a. In order to at least break-even, a price must cover total costs (COGS + fixed costs). Calculate total cost and per unit total cost for XYZ eyeglass manufacturer with the following information (show your calculations):
Total units produced and sold: 100,000
Total annual management compensation: $600,000
Annual utilities cost: $120,000
Annual office rent: $240,000
Annual advertising cost: $400,000
Annual shared admin department costs: $600,000
40,000 plastic frames purchased in January for $10 each
20,000 plastic frames purchased in March for $9 each
40,000 plastic frames purchased in August for $11 each
40,000 lenses purchased in January for $5 each
20,000 lenses purchased in March for $6 each
40,000 lenses purchased in August for $7 each
100,000 units of glue purchased in January for $1 per unit
100,000 units of screws purchased in January for $1 per unit
1b. XYZ eyeglasses company has decided to sell the glasses at a set price of $39.99 per pair. Calculate the quantity XYZ must sell to break-even. Then, calculate profit margin per unit assuming XYZ sells all 100,000 eyeglasses. (Show your calculations)
1c. What would be the impact to break-even and profitability for XYZ if it lowered the price by $5 to $34.99?
- What would be the new profit margin per unit? ·
- What would be the new required units sold to break-even? ·
- How much would the profit margin change?
In: Accounting
A retail company receives most of its revenue from credit or debit card transactions or payments by check. Funds received from credit and debit card transactions automatically deposit in interest bearing accounts. However, the company does receive some cash payments from customers each day. These cash receipts total $7,250,000 annually. The company makes no cash payments to its suppliers or creditors. Money held in the cash account earns no interest. The company estimates that the transaction cost of moving funds from the cash account into investments that earn interest are $30.00 regardless of the amount transferred. The company earns on average 1.65% interest on funds held in interest bearing accounts and investments. 1. How much cash should the company allow to accumulate before making a deposit if it wants to minimize the total cost associated with carrying and converting cash? 2. If the company follows the optimal strategy identified in question 1, how frequently (on average) will the company move cash from the cash account into interest bearing investments? 3. If the company transfers funds as frequently as indicated in question 2: a. what will the total annual costs to transfer funds be? b. what will the average balance in the company’s cash account be? c. how much interest will the company forego annually by keeping funds in the cash account? d. what is the total cost to maintain a cash account? 4a. Determine the total cost associated with the cash account if the company transfers funds to interest bearing investments weekly rather than as often as indicated in question 2.
In: Finance
|
For many years Futura Company has purchased the starters that it installs in its standard line of farm tractors. Due to a reduction in output, the company has idle capacity that could be used to produce the starters. The chief engineer has recommended against this move, however, pointing out that the per unit cost to produce the 55,000 starters needed would be greater than the current $11.60 per unit purchase price:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting