South Africa: Oil prices drop: What will fuel the energy industry post-COVID-19?

On April 20, 2020, the global petroleum industry witnessed a historic plummeting of benchmark US oil below $0 a barrel. Brent crude oil also has fallen nearly 70% from the beginning of the year. The drop in oil prices raises questions about the future of the global and regional energy industry as well as the role of fossil fuels in the transition towards a more sustainable energy future after the pandemic economic lockdown.

Use the extract above to write an essay in which you discuss the following:

• The name of the shock mentioned in the extract                              (2)
• The effect of the decline in oil prices on economic growth in South Africa (to discuss this point sufficiently, an AD-AS graph and detailed explanation are required.)

E16.10 (LO 3) (Issuance and Exercise of Stock Options) On November 1, 2020, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company's $10 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All of the options were exercised during the year 2023: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 a share.

Moon Inc., a publicly listed company, has a building with an initial cost of $400,000. At December 31, 2020, the date of revaluation, accumulated depreciation amounted to $110,000. The fair value of the building, by comparing it with transactions involving similar assets, is assessed to be $330,000. Prepare the journal entries to revalue the building under the revaluation model using:

the asset adjustment (direct) method

the proportionate method

Use the information from 1 above. On January 5, 2021, Moon sold the building for $325,000 cash. Prepare the journal entries to record the sale of the building after having used

the cost model

the revaluation model using the asset adjustment method

the revaluation model using the proportionate method.

Would a potential investor prefer Moon Inc. use the asset adjustment method or the proportionate method to apply the revaluation model, why?

Consider the retail market for bananas in Australia in 2020. The market is in equilibrium with 20,000 tonnes being bought and sold per year at a price of $4 per kg.

a. Explain why $5 per kg for bananas is not an equilibrium price. Given the current demand and supply, if the price was temporarily $5 per kg, explain how the market would return to equilibrium.

b. Explain why the production/consumption of 20,000 tonnes of bananas is the socially efficient level of production (assuming there are no externalities).

c. Suppose that in 2021 price of diesel increases, increasing the transportation costs for banana farmers in getting their bananas to market. Explain why there would be any movement in the demand or supply curve and any change in the equilibrium price and quantity for bananas after the increase in the price of diesel.

Broussard Skateboard's sales are expected to increase by 25% from $8.0 million in 2019 to $10.00 million in 2020. Its assets totaled $2 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 3%, and the forecasted payout ratio is 55%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.

Broussard Skateboard's sales are expected to increase by 25% from $8.8 million in 2019 to $11.00 million in 2020. Its assets totaled $2 million at the end of 2019.

Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 60%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.

WHICH STORE SHOULD BE CLOSED AND WHY?

Simple Regression Models Case Study: Mystery Shoppers

Chic Sales is a high-end consignment store with several locations in the metro area. The company noticed a decrease in sales over the last fiscal year. Research indicated customer satisfaction had decreased and the owner, Pat Turner, decided to create a mystery shopper program.

The mystery shopper program lasted over a 6-month period, employing several loyal and new customers assigned to each location. Surveys were on a 100-point scale and involved categories such as “Staff Attitude,” “Store Cleanliness,” “Product Availability,” and “Display(s) Appeal.”

After the mystery shopper period concludes, Mrs. Turner sends you the following e-mail:

From: Pat Turner
Sent: Thursday, July 7, 2016 8:57 a.m.
Subject: Mystery Data Shopper Stats and Store Performance?

Good morning! Welcome back from vacation J I hope you had a wonderful Fourth of July.

The last mystery shopper surveys came in and I have the final numbers. I am interested in whether there is a way to predict the final average based on the initial survey score. Also, is there a statistically significant relationship between how stores initially performed and what the overall average is?

The initial survey score and the final average data for all seven store locations is in the table below:

Also, how good is the relationship between Initial Survey Score and the Final Average? Could I use an Initial Survey Score to predict a Final Average? In fact, could I predict a Final Average if I have an Initial Survey Score of 90?

If you could have this to me before the weekend, that would be great.

Thanks so much!

Pat Turner, Owner

Chic Sales Consignment, LLC

1.          What is the amount of Taxpayer’s interest deduction that would be allowable for the current year assuming Taxpayer incurred the following, and assuming that Taxpayer itemizes deductions?

a.             $27,000

b.             $6,000

c.             $27,500

d.             $21,000

2.         On April 10, 2018 Cathy closed on the purchase of a house (her principal residence) that cost $2,000,000, paying $500,000 down and borrowing the other $1,500,000 at 5% interest. If her interest expense for the year is $75,000, what amount may Cathy deduct for interest expense?

a.             $75,000

b.             $50,000

c.             $37,500

d.             $0

3.          Assume the following taxes are paid by the Taxpayer in 2018: real estate taxes on Taxpayer’s home in the amount of $2,000; state income taxes in the amount of $4,500; city sales tax in the amount of $2,800; state sales taxes of $210 paid while on vacation to states other than the state in which Taxpayer resides; state gasoline tax (personal use of automobile) in the amount of $400; dog licenses in the amount of $20; and real estate taxes on the home of and owned by Taxpayer’s mother in the amount of $1,450. Assuming also that Taxpayer itemizes deductions on Taxpayer’s 2018 Federal income tax return, the allowable amount of Taxpayer’s deduction for taxes is which of the following?

a.             $9,960

b.             $6,500

c.             $9,510

d.             $10,380

4.          Taxpayer purchased a personal residence in 2017 for $266,000. The fair market value of the residence was $280,000 when it was damaged by a flood on June 10, 2018 that resulted from not turning off the bath water before leaving for vacation. The fair market value of the residence after the flood was $240,000 and insurance proceeds totaled $15,000. What is the net amount of casualty loss Taxpayer may deduct for 2018 as an itemized deduction if Taxpayer’s adjusted gross income is $120,000?

a.             0

b.             $25,000

c.             $24,900

d.             $8,500

e.             $12,900

Variable Costing, Absorption Costing

During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,600 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 38,600 scoops. Fixed overhead was applied at $0.75 per unit produced. Fixed overhead was underapplied by $2,700. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year’s operations are as follows (on an absorption-costing basis):

Required:

1. Calculate the cost of the firm’s ending inventory under absorption costing. Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$

Feedback

Determine the number of units in ending inventory first. Calculate unit cost after determining unadjusted COGS (before adjustment for underapplied fixed overhead).

What is the cost of the ending inventory under variable costing? Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$

Feedback

Take unit cost under absorption less fixed overhead amount per unit to get variable cost per unit for variable costing.

2. Prepare a variable-costing income statement. Round the unit cost to five decimal places, when required. Round your final answers to the nearest dollar. Use the rounded values in subsequent computations.

Feedback

Use a contribution margin format income statement that groups costs according to behavior (variable and fixed)

What is the difference between the two income figures?
$

1. If we use symbol U_sys to represent the energy (also referred as internal energy) contained in the system, what is a reasonable symbol to represent the energy of the surroundings? Provide an expression relating the total energy of the Universe, U_univ to the energy of the system and energy of the surroundings? Explain your answer

2. Now consider the system undergoes a process, let DU_sys represent the change in system’s energy, DU_univ represents the change in energy of the universe. Provide an expression for DU_univ in terms of energy change of the system and the surrounding. Explain your answer.

3. Consider your answer in (2), what would be the reasonable sign for DU_univ? Explain.

4. Consider your answer in (2), what would be the reasonable sign for DU_sys? Explain

5. Let q and w represent two ways to exchange energy between system and surrounding. What is a reasonable expression that relates the internal energy change DU_sys with q and w?

6. Consider burning of propane gas (propane and oxygen gases are our interested system), is this an exothermic reaction? What is the sign of q? what is the sign of DU_sys ? Describe in your own words what happened to the internal energy of the system?

7. Identify each energy exchange as heat or work and determine the sign of heat or work is positive or negative

(a) An ice cube melts and cools the surrounding beverages (ice cube is the system here)

(b) A metal cylinder is rolled up a ramp (the metal cylinder is the system)

(c) Steam condenses on skin causing a burn (the condensing steam is the system)

8. Consider a closed container that contains some hydrogen gas (H₂) and oxygen gas (O₂). These gases reacted (burned) and formed water vapor.

(a) Write a balanced chemical equation to represent this process (reaction)

(b) Do you expect this is an exothermic or endothermic reaction? What is the sign of q?

(c)What is the sign of internal energy change DU for this reaction?

(d) List the types of energy stored in the system before and after reactions. How do you explain the sign of internal energy DU observed in part (c)?