familiarize with the resources available pertaining to MROs, as well as broaden your knowledge of the industry. After conducting research of the article below, write a synopsis of your findings.
WASHINGTON—The FAA has released long-awaited policy on using video links and other “remote technology” to conduct inspections and help validate regulatory compliance, adding to a growing set of procedural changes meant to accommodate social distancing during the coronavirus pandemic. The March 31 policy statement covers using real-time and recorded video “to perform prototype conformity inspections, engineering and ground tests, engineering compliance inspections, production conformity inspections, and inspections” for issuing 8130-3s, or airworthiness approval tags. “Remote technology may have limitations that could render it unsuitable for some applications,” the FAA said. “Accordingly, careful consideration and risk management should be applied when making a determination when to use it.” Among the considerations: the “complexity, novelty, and safety criticality of the product, article, or system being inspected or tested,” the policy said. The agency also noted that using video for “engineering compliance inspections of complex interiors” has been “challenging and often unacceptable” in the past, so Aircraft Certification Offices (ACOs) “should take extra precaution” when using video for such checks. Applicants that want to use remote technology should work with their local ACO and incorporate specific details in certification, engineering test, or conformity inspection plans. Production-approval holders that use remote technology for 8180-3 inspections must have the procedures in their quality systems. Organization Designation Authorization holders also can incorporate remote inspections into their programs. “The bottom line is that the agency can allow the use of any technology that achieves the purpose of the regulation and will be part of an application or showing of compliance,” said the Aeronautical Repair Station Association, part of a group of industry stakeholders that has been urging the FAA to expand inspectors’ use of remote-technology for several years. “This policy is a step in the direction industry needs the government to go.” The policy is part of an expanding set of guidance that the FAA has issued to help ensure it can maintain oversight, and industry can comply with regulations, while it waits out the COVID-19 crisis. Other changes have granted exemptions to training normally done in person, or extensions to expiring licenses, such as pilot medical certificates that require non-emergency check-ups to renew. The FAA also has relaxed its requirement for annual in-person surveillance of agency-certificated repair stations outside of the U.S. The change grants certificate-expiration extensions to shops that have been approved for at least a year, even if the FAA’s required surveillance is not done. Newly certificated shops still will be inspected within their first year and will not get extensions, the agency added.
In: Operations Management
Factory Closing Decision
The Dough Knot Corporation bakes breads, pastries, cookies and every other baked good imaginable. The company has a number of factories around the world, including the LACC Cookie Factory, which makes... cookies.
Michael Schrute is the factory manager of the LACC Cookie Factory but also serves as the regional production manager for the company. His budget as the regional manager is charged to the LACC Cookie Factory.
Schrute has just heard that The Dough Knot has received a bid from an outside vendor to supply the equivalent of the entire annual output of the LACC Cookie Factory for $34 million. Schrute was astonished at the low outside bid because the budget for the LACC Cookie Factory’s operating costs for the upcoming year was set at $50.3 million. If this bid is accepted, the LACC Cookie Factory will be closed down.
The budget for LACC Cover’s operating costs for the coming year is presented below.
| LACC Cookie Factory Annual Budget for Operating Costs |
| Baking flour | 2,500,000 |
| Butter | 3,700,000 |
| Chocolate | 2,400,000 |
| Sugar | 6,000,000 |
| Baking Employees | 12,000,000 |
| Cleaning Employees | 1,500,000 |
| Security Employees | 3,000,000 |
| Supervisors | 1,000,000 |
| Factory Manager and Staff | 900,000 |
| Pension Expense | 4,000,000 |
| Corporate Expense | 3,800,000 |
| Depreciation-Building | 6,000,000 |
| Depreciation-Equipment | 3,500,000 |
| Total Budgeted Costs | 50,300,000 |
*Fixed corporate expenses allocated to factories and other operating units based on total budgeted wage and salary costs.
Additional facts regarding the factory’s operations are as follows:
A. Due to LACC Cookie’s commitment to use high-quality ingredients in all of its products, the Purchasing Department was instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders are canceled as a consequence of the factory closing, termination charges would amount to 25% of the cost of direct materials.
B. Approximately 400 factory employees will lose their jobs if the factory is closed. This includes all of the direct laborers and supervisors as well as the plumbers, electricians, and other skilled workers classified as indirect factory workers. Some would be able to find new jobs while many others would have difficulty. All employees would have difficulty matching LACC Cookie’s base pay of $18.80 per hour, which is the highest in the area. A clause in LACC Cookie’s contract with the union may help some employees; the company must provide employment assistance to its former employees for 12 months after a factory closing. The estimated cost to administer this service would be $1.6 million for the year.
C. Some employees would probably choose early retirement because The Dough Knot has an excellent pension plan. In fact, $2.5 million of the annual pension expense would continue whether LACC Cookie is open or not.
D. Schrute and his staff would not be affected by the closing of LACC Cover. They would still be responsible for administering three other area factories.
E. If the LACC Cookie Factory were closed, the company would realize about $3.3 million salvage value for the equipment and building. If the factory remains open, there are no plans to make any significant investments in new equipment or buildings. The old equipment is adequate and should last indefinitely.
Required:
The Dough Knot Corporation plans to prepare a financial analysis that will be used in deciding whether or not to close the LACC Cookie Factory. Management has asked you to identify:
1. Without regard to costs, identify the advantages to Dough Knot Corporation of continuing to operate LACC Cookie Factory (200 word minimum).
2. The annual budgeted costs that are relevant to the decision regarding closing the factory.
3. The annual budgeted costs that are not relevant to the decision regarding closing the factory.
4. Any nonrecurring costs that would arise due to the closing of the factory. Looking at the data you have prepared above,
5. Calculate the financial advantage (disadvantage) of closing the factory.
6. Should the factory be closed? Explain your calculations and support your argument. It’s your job to convince the CEO of your decision (500 words minimum).
(Part of your score will be based on your ability to argue your strategy. You may come to the correct numerical calculation, but if you cannot convey your message your recommendation will fall flat with the CEO. The word minimums refer to #1 and #6. For questions 2-5, you should show your calculations and support your argument, as if you were making a presentation to management.)
In: Accounting
5. In 2016, over 42,000 people were killed by opioid overdoses. The effects of the issue are not limited to fatalities. An additional issue is the lack of proper development among young adolescent users during a critical phase of brain maturation. One method of reducing opioid abuse is to reduce the availability of prescription opioids. In 2010, 54 percent of students in 12th grade believed that prescription opioids were easily accessible. In a 2017 study, one agency surveyed three high schools in the northeast and found 266 of the 500 12th grade students surveyed believed prescription opioids were easily accessible in their community.
a. Is the above information sufficient for you to be certain that the percentage of all 12th graders who believe prescription opioids are easily accessible has declined? Why or why not?
b. In establishing a statistical hypothesis testing of this situation, give the required null and alternative hypotheses for a test to determine if the percent of 12th graders who believe opioids are easily accessible has declined from 2010.
H0:
H1:
c. Based on your answer in part b, should you use a right-tailed, a left-tailed, or a two-tailed test? Briefly explain how one determines which of the three possibilities is to be used.
d. Describe the possible Type I error for this situation--make sure to state the error in terms of the percent of 12th graders and their beliefs about opioid accessibility.
e. Describe the possible Type II error for this situation--make sure to state the error in terms of the percent of 12th graders and their beliefs about opioid accessibility.
f. Determine the appropriate critical value(s) for this situation given a 0.01 significance level.
g. Determine/calculate the value of the sample's test statistic.
h. Determine the P-value.
i. Based upon your work above, should you "Reject the null hypothesis" or "Fail to reject the null hypothesis?" Explain why.
j. Based upon your work above (and overlooking the flaws in the survey method), is there statistically sufficient evidence in this sample to support the claim that the percent of 12th graders who believe opioids are easily accessible has declined from 2010? Briefly explain your reasoning.
In: Statistics and Probability
Your friend, Liz, loves to shop at Target and is now interested in investing in the company. Tom, another friend, has told her that Target’s debt structure is risky with obligations of nearly 74% of total assets. Liz sees that debt on the balance sheet is 65% of total assets and is confused by Tom’s comment. Write an explanation to Liz discussing the debt structure of Target and why Tom thinks Target is risky. Be sure to explain clearly what information appears on financial statements, as well as what information does not appear directly on the financial statements. Use the information below in your discussion.
At fiscal year-end February 2, 2008, Target Corporation had the following assets and liabilities on its balance sheet (in millions):
| Current liabilities | $11,782 |
| Long-term debt | 15,126 |
| Other liabilities | 2,345 |
| Total assets | 44,560 |
Target reported the following information on leases in the notes to the financial statements:
Total rent expense was $165 million in 2007, $158 million in 2006, and $154 million in 2005, including percentage rent expense of $5 million in 2007, 2006, and 2005. Most long-term leases include one or more options to renew, with renewal terms that can extend the lease term to more than 50 years. Certain leases also include options to purchase the leased property.
Future minimum lease payments required under non-cancellable lease agreements existing at February 2, 2008, were:
| Future Minimum Lease Payments (in Millions) | Operating Leases | Capital Leases |
| 2008 | $ 239 | $ 12 |
| 2009 | 187 | 16 |
| 2010 | 173 | 16 |
| 2011 | 129 | 16 |
| 2010 | 123 | 17 |
| After 2010 | 2, 843 | 155 |
| Total future minimum lease payments | $3694 (a) | $232 |
| Less: Interest (b) | (105) | |
| Present value of minimum capital lease payments | $127 (c) |
(a) Total contractual lease payments include $1,721 million
related to options to extend lease terms that are reasonably
assured of being exercised, and also include $98 million of legally
binding minimum lease payments for stores that will open in 2008 or
later.
(b) Calculated using the interest rate at inception of each
lease.
(c) Includes current portion of $4 million.
In: Finance
Reporting and Analyzing Derivatives
Assume Johnson & Johnson reports the following schedule of
other comprehensive income in its 2011 10-K report ($
millions):
($ in millions) |
Foreign currency translation |
Gains/(Losses) on Securities |
Employee Benefit Plans |
Gains/(Losses) on Derivatives & Hedges |
Total Accumulated Other Comprehensive Income/(Loss) |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| January 3, 2010 | $(409) | $(10) | (1,335) | $125 | $(1,629) | |||||
| 2010 changes | ||||||||||
| Unrealized gain (loss) | -- | 89 | -- | (250) | ||||||
| Net amount reclassed to net earnings | -- | (45) | -- | 188 | ||||||
| Net 2010 changes | (232) | 44 | (21) | (62) | (271) | |||||
| January 2, 2011 | $(641) | $34 | $(1,356) | $63 | $(1,900) |
b. How does Johnson & Johnson report its derivatives as cash-flow hedges on its balance sheet?
Cash-flow hedges are reported at Answerfair valuecost on the balance sheet.
Changes in value are recognized on the Answerbalance sheet in AOCIincome statement as earningsnot applicable
c. By what amount have the unrealized gains/losses on the cash flow hedges affected current income?
Current income AnswerincreaseddecreasedN/A by $Answer million.
d. What does the $188 million classified as "Net amount reclassed to net earnings" relate to? How has this affected Johnson & Johnson's profit?
a) The unrealized gain has been reclassified from AOCI and recognized in current earnings relating to derivatives for which the underlying transaction concluded in the current year. This increase in AOCI is offset by a decrease in net income (and in retained earnings).
b) The unrealized loss has been reclassified from AOCI and recognized in current earnings relating to derivatives for which the underlying transaction concluded in the current year. This increase in AOCI is offset by a decrease in net income (and in retained earnings).
c) The unrealized gain has been reclassified from AOCI and recognized in current earnings relating to derivatives for which the underlying transaction concluded in the current year. This increase in AOCI is offset by an increase in net income (and in retained earnings).
d) The unrealized loss has been reclassified from AOCI and recognized in current earnings relating to derivatives for which the underlying transaction concluded in the current year. This increase in AOCI is offset by an increase in net income (and in retained earnings).
In: Accounting
Show ALL work
Ratio Analysis. The Williams Corporation’s forecasted 2010 financial statements follow, along with some industry average ratios.
|
Forecasted Balance Sheet as of December 31, 2010 |
||||
|
Cash |
$ 72,000 |
|||
|
Accounts receivables |
$ 439,000 |
Accounts and notes payable |
$ 432,000 |
|
|
Inventories |
$ 894,000 |
Accruals |
$ 170,000 |
|
|
Total current assets |
$1,405,000 |
Total current liabilities |
$ 602,000 |
|
|
Land and building |
$ 238,000 |
Long-term debt |
$ 404,290 |
|
|
Machinery |
$ 132,000 |
Common stock |
$ 575,000 |
|
|
Other fixed assets |
$ 61,000 |
Retained earnings |
$ 254,710 |
|
|
Total assets |
$1,836,000 |
Total liabilities and equity |
$1,836,000 |
|
|
Forecasted Income Statement for 2010 |
||||
|
Sales |
$4,290,000 |
|||
|
Cost of goods sold |
$3,580,000 |
Per-Share Data |
||
|
Gross operating profit |
$ 710,000 |
EPS |
$ 4.71 |
|
|
General admin & selling expenses |
$ 236,320 |
DPS |
$ 0.95 |
|
|
Depreciation |
$ 159,000 |
P/E Ratio |
5.00 |
|
|
Misc. |
$ 134,000 |
Market price |
$ 23.57 |
|
|
Earnings before Taxes |
$ 180,680 |
Number of shares outstanding |
23000 |
|
|
Taxes |
$ 72,272 |
|||
|
Net Income |
$ 108,408 |
|||
|
Industry Financial Ratios |
William’s Financial Ratios |
Ratio/Comment |
||
|
Quick Ratio |
1x |
Quick Ratio |
||
|
Current Ratio |
2.7x |
Current Ratio |
||
|
Inventory Turnover |
7x |
Inventory Turnover |
||
|
Days Sales Outstanding |
40 days |
Days Sales Outstanding |
||
|
Fixed Asset Turnover |
13x |
Fixed Asset Turnover |
||
|
Total Asset Turnover |
2.6x |
Total Asset Turnover |
||
|
Return on Assets |
9.10% |
Return on Assets |
||
|
Return on Equity |
18.20% |
Return on Equity |
||
|
Debt Ratio |
55% |
Debt Ratio |
||
|
Profit Margin on Sales |
3.50% |
Profit Margin on Sales |
||
|
P/E Ratio |
6x |
P/E Ratio |
||
a. Calculate the indicated ratios for William’s in the appropriate blanks.
b. Outline William’s strengths and weaknesses as compared to its industry. Be detailed in your ratio analysis.
c. Recommend at least three areas for correction. Be sure to support your recommendations.
d. Why is being trustworthy essential to success in the business world? Use at least two of the following scriptures to answer this question: Psalm 101:7, Proverbs 4:20-27, Proverbs 13:11, and Proverbs 28:12-13.
In: Accounting
Multiple choice questions. No need to explain.
Question 21
Sandstrom Corporation has an extraordinary loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%. At what amount should Sandstrom report each item?
|
Extraordinary loss |
Unusual gain |
|
|
|
|
Question 22
The approach most companies use to provide information related to the components of other comprehensive income is a
| second separate income statement. |
| combined income statement of comprehensive income. |
| separate column in the statement of changes in stockholders' equity. |
| footnote disclosure. |
Question 23
The following information applied to Howe, Inc. for 2010:
|
Merchandise purchased for resale |
$300,000 |
|
Freight-in |
8,000 |
|
Freight-out |
5,000 |
|
Purchase returns |
2,000 |
What is ending inventory?
| $300,000. |
| $303,000. |
| $306,000. |
| $311,000. |
Question 24
The following information was derived from the 2010 accounting records of Perez Co.:
|
Perez's Goods |
|
Perez 's Central Warehouse |
Held by Consigness |
|
Beginning inventory |
$130,000 |
$ 14,000 |
|
|
Purchases |
575,000 |
70,000 |
|
Freight-in |
10,000 |
|
Transportation to consignees |
5,000 |
|
Freight-out |
30,000 |
8,000 |
|
Ending inventory |
145,000 |
20,000 |
What is the cost of sales for 2010?
| $570,000. |
| $600,000. |
| $634,000. |
| $639,000. |
Question 25
The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as
| consistently primary. |
| consistently secondary. |
| sometimes primary and sometimes secondary. |
| non-existent. |
Question 26
The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its
| invoice price. |
| invoice price plus the purchase discount lost. |
| invoice price less the purchase discount taken. |
| invoice price less the purchase discount allowable whether taken or not. |
Question 27
Trade discounts are
| not recorded in the accounts; rather they are a means of computing a price. |
| used to avoid frequent changes in catalogues. |
| used to quote different prices for different quantities purchased. |
| all of the above. |
Question 28
Under the cash basis of accounting, revenues are recorded
| when they are earned and realized. |
| when they are earned and realizable. |
| when they are earned. |
| when they are realized. |
Question 29
Under which section of the balance sheet is "cash restricted for plant expansion" reported?
| Current assets. |
| Non-current assets. |
| Current liabilities. |
| Stockholders' equity. |
In: Accounting
| In 2016, over 42,000 people were killed by opioid overdoses. The effects of the issue are not limited to fatalities. An additional issue is the lack of proper development among young adolescent users during a critical phase of brain maturation. One method of reducing opioid abuse is to reduce the availability of prescription opioids. In 2010, 54 percent of students in 12th grade believed that prescription opioids were easily accessible. In a 2017 study, one agency surveyed three high schools in the northeast and found 133 of the 270 12th grade students surveyed believed prescription opioids were easily accessible in their community. | ||||||||
| a. | Is the above information sufficient for you to be certain that the percentage of all 12th graders who believe prescription opioids are easily accessible has declined? Why or why not? | |||||||
| b. | In establishing a statistical hypothesis testing of this situation, give the required null and alternative hypotheses for a test to determine if the percent of 12th graders who believe opioids are easily accessible has declined from 2010. | |||||||
| H0: | ||||||||
| H1: | ||||||||
| c. | Based on your answer in part b, should you use a right-tailed, a left-tailed, or a two-tailed test? Briefly explain how one determines which of the three possibilities is to be used. | |||||||
| d. | Describe the possible Type I error for this situation--make sure to state the error in terms of the percent of 12th graders and their beliefs about opioid accessibility. | |||||||
| e. | Describe the possible Type II error for this situation--make sure to state the error in terms of the percent of 12th graders and their beliefs about opioid accessibility. | |||||||
| f. | Determine the appropriate critical value(s) for this situation given a 0.05 significance level. | |||||||
| g. | Determine/calculate the value of the sample's test statistic. | |||||||
| h. | Determine the P-value. | |||||||
| i. | Based upon your work above, should you "Reject the null hypothesis" or "Fail to reject the null hypothesis?" Explain why. | |||||||
| j. | Based upon your work above (and overlooking the flaws in the survey method), is there statistically sufficient evidence in this sample to support the claim that the percent of 12th graders who believe opioids are easily accessible has declined from 2010? Briefly explain your reasoning. | |||||||
In: Math
Suppose that you are part of the Management team at Porsche. Suppose that it is the end of December
2019 and a novel coronavirus that causes a respiratory illness was identified in Wuhan City, Hubei
Province, China. The illness was reported to the World Health Organization and there is heightened
uncertainty around the Globe.
You (as part of the management team) are reviewing Porsche’s hedging strategy for the cash flows it
expects to obtain from vehicle sales in North America during the calendar year 2020. Assume that
Porsche’s management entertains three scenarios:
Scenario 1 (Expected): The expected volume of North American sales in 2020 is 35,000 vehicles.
Scenario 2 (Pandemic): The low-sales scenario is 50% lower than the expected sales volume.
Scenario 3 (High Growth): The high-sales scenario is 20% higher than the expected sales volume.
Assume, in each scenario, that the average sales price per vehicle is $85,000 and that all sales are
realised at the end of December 2020. All variable costs incurred by producing an additional vehicle to
be sold in North America in 2020 are billed in euros (€) and amount to €55,000 per vehicle. Shipping
an additional vehicle to be sold in North America in 2020 are billed in € and amount to €3,000 per
vehicle.
The current spot exchange rate is (bid-ask) $1.11/€ - $1.12/€ and forward bid-ask is $1.18/€ - $1.185/€.
The option premium is 2.5% of US$ strike price, and option strike price is $1.085/€. Your finance team
made the following forecasts about the exchange rates at the end of December 2020:
• bid-ask will be $1.45/€ - $1.465/€ if the investors (and speculators) consider the euro (€) a safe
haven currency during the pandemic.
• bid-ask will be $0.88/€-$0.90/€ if the investors (and speculators) consider the U.S. dollar ($) a
safe haven currency during the pandemic
1. As the CFO, you decided to hedge using option contracts. Assuming expected final sales
volume is 35,000, what are your total revenue and the percentage revenue from hedging
(compared to no hedging) (do not use any variable costs to calculate in this question)
a) if the exchange rate (bid-ask) remains at $1.11/€ - $1.12/€?
b) if the investors consider the U.S. dollar a safe haven currency during the pandemic?
2. Assume that the Scenario 2 (Pandemic) took place in 2020 and the euro became a safe haven
currency during the pandemic. What are your euro cash flows if you did not hedge, hedged
using forward contracts, and hedged using option contracts?
In: Finance
Santana Rey, owner of Business Solutions, decides to prepare a
statement of cash flows for her business using the following
financial data.
| BUSINESS SOLUTIONS | ||||||
| Income Statement | ||||||
| For Three Months Ended March 31, 2020 | ||||||
| Computer services revenue | $ | 25,107 | ||||
| Net sales | 17,793 | |||||
| Total revenue | 42,900 | |||||
| Cost of goods sold | $ | 14,152 | ||||
| Depreciation expense—Office equipment | 330 | |||||
| Depreciation expense—Computer equipment | 1,240 | |||||
| Wages expense | 2,450 | |||||
| Insurance expense | 525 | |||||
| Rent expense | 2,275 | |||||
| Computer supplies expense | 1,235 | |||||
| Advertising expense | 520 | |||||
| Mileage expense | 270 | |||||
| Repairs expense—Computer | 950 | |||||
| Total expenses | 23,947 | |||||
| Net income | $ | 18,953 | ||||
| BUSINESS SOLUTIONS | |||||||||||
| Comparative Balance Sheets | |||||||||||
| December 31, 2019, and March 31, 2020 | |||||||||||
| Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Assets | |||||||||||
| Cash | $ | 71,257 | $ | 51,752 | |||||||
| Accounts receivable | 24,067 | 4,868 | |||||||||
| Inventory | 664 | 0 | |||||||||
| Computer supplies | 2,025 | 510 | |||||||||
| Prepaid insurance | 1,110 | 1,615 | |||||||||
| Prepaid rent | 805 | 805 | |||||||||
| Total current assets | 99,928 | 59,550 | |||||||||
| Office equipment | 7,300 | 7,300 | |||||||||
| Accumulated depreciation—Office equipment | (660 | ) | (330 | ) | |||||||
| Computer equipment | 19,300 | 19,300 | |||||||||
| Accumulated depreciation—Computer equipment | (2,480 | ) | (1,240 | ) | |||||||
| Total assets | $ | 123,388 | $ | 84,580 | |||||||
| Liabilities and Equity | |||||||||||
| Accounts payable | $ | 0 | $ | 1,160 | |||||||
| Wages payable | 975 | 560 | |||||||||
| Unearned computer service revenue | 0 | 1,500 | |||||||||
| Total current liabilities | 975 | 3,220 | |||||||||
| Equity | |||||||||||
| Common stock | 99,000 | 73,000 | |||||||||
| Retained earnings | 23,413 | 8,360 | |||||||||
| Total liabilities and equity | $ | 123,388 | $ | 84,580 | |||||||
Required:
Prepare a statement of cash flows for Business Solutions using the
indirect method for the three months ended March 31, 2020.
Owner Santana Rey contributed $26,000 to the business in exchange
for additional stock in the first quarter of 2020 and has received
$3,900 in cash dividends. (Amounts to be deducted should be
indicated with a minus sign.)
|
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In: Accounting