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 a master budget for the upcoming second quarter. 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—$15 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 $4.90 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. 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 $20,500 in new equipment during May and $49,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $21,750 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $59,000. 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 $59,000 in cash. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

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 a master budget for the upcoming second quarter. 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 $6.00 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. 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.

The company’s balance sheet 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:

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

4. A budgeted balance sheet as of June 30.

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 a master budget for the upcoming second quarter. 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 $6.00 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. 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.

The company’s balance sheet 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:

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

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

Buffy the Vampire Slayer is creating her own slaying company. All the trademarks cost her $150,000 today but she’s sure it’ll pick up soon. Best case scenario, next year she’ll be earning $75,000 and then $50,000 in years 2 and 3, followed by $90,000 in years 4 and 5. These numbers are, of course, dependent on vampire slaying needs in the community. There is a worst case scenario where she only earns $35,000 in the first 3 years then $40,000 in the next 2. The most likely outcome though is earning $45,000 in the first year, $50,000 in year 2, $60,000 in year 3, then $50,000 in year 4, and $45,000 in year 5. If the relevant interest rate was 15%, would you recommend the project? Why or why not?

Music and Extra-Musical Forces. The Baroque era saw some of the first works of program music (instrumental music depicting an extramusical idea, character, place, or story) and most famously a series of four concertos by Vivaldi called the Four Seasons. Chapter 4 discussed the first movement of the Spring Concerto.

• Listen to the Winter, Summer, or Autumn movement from this set of concertos.

• Read the English translation of the poems associated with the movement you have chosen.

• Write a description of the music that contains 250-300 words.

o Include three or more elements of music (melody, rhythm, texture, harmony, form).

o Use key terms that were introduced in chapters 1 and 4 of your textbook.

o Describe the music while focusing on how the music represents the season.

1. You invest $20000 in a 7-year certificate of deposit (CD) that pays 5.2% interest, compounded annually. How much money will you have when the CD matures?

a. 29140

b. 27280

c. 23670

d. 28520

2. Which of the following statements is most likely correct?

a. A perpetuity is an infinite stream of payments in varying amounts occurring at regular or irregular time intervals.

b. The cash flows for an annuity do not have to be equal, but they must occur at regular intervals.

c. An ordinary annuity has the first payment occurring one period from now, while an annuity due has the first payment occurring now.

d. Time periods that can be used in the time value of money computations are restricted to months and years.

There is an experiment. Amy wants to find out if reading a book that outlines teaching strategies helps one teach better. She will have all of the subjects read a book and then give a lecture to a class. The independent variable is the type of book read. The book is either a teaching guide or a visitor’s guide to Scotland. The dependent variable is how well the class does on a test given right after the lecture. It is a related samples design. Group A will read the teaching guide first, give a lecture, read the travel guide second, and give another lecture. Group B will read the travel guide first, give a lecture, read the teaching guide second, and give another lecture. Describe what the most likely carry-over effect would be for this experiment. Be precise in describing it and explaining what it would do (its ramifications).

1. Most airlines deliberately double-book a certain number of seats on each flight, to minimize losses from empty seats when some passengers fail to turn up. This raises the problem of how to decide who gets left behind when all the passengers turn up. Over the years a variety of methods have been used, including the following:

i) First-come, first-served

ii) Discretion of the check-in clerk

iii) A free-for-all where passengers jostle each other for seats

iv) Airline buy-back where a cash payment, travel voucher or upgrade is made to those who take a later flight

1. Explain which groups are more likely to be left out using each method.

2. Which method does economic theory support?