6. Customer lifetime value

a. refers to the projected sum of all transactions over the lifetime of any buyer.

b. is the index increasingly used by innovative firms to more effectively predict annual gross revenues.

c. applies to the intrinsic worth of a product during the ownership period of the original buyer.

d. includes the risk of a single customer defaulting on outstanding credit balances.

e. is the net present value of future cash flows as projected from a customer relationship.

7. According to Gerard Tellis, author of “Beyond the Many Faces of Price,” complementary pricing and price bundling are both pricing strategies to help the firm in

a. managing the product mix.

b. varying prices among market segments.

c. building competitive position.

d. establishing global product-market dominance.

e. all of the above apply.

8. If three-pronged blivets are characterized by inelastic demand, and the producer raises the price,

a. total revenue and demand will increase

b. the relevant range of the demand curve will shift

c. inelasticity of demand will increase

d. total revenue will increase, but demand will decrease

e. total revenue and demand will decrease

9. When using price bundling as a pricing strategy,

a. the seller wants to emphasize the pricing and value of each individual product and service included in the bundle.

b. the seller includes at one low price a group of products or services that are difficult to sell separately.

c. the seller can introduce a new product or service together with a known offer, at one low price.

d. “b” and “c” are correct

e. “a,” “b” and “c” are correct

10. In the Build – Measure – Learn Loop, we

a. expect that all product/service ideas are continuously recycled for consideration.

b. focus on determining and repeatedly validating the target customer's persona.

c. seek to minimize viable product or service alternatives through application of either quantitative or qualitative criteria.

d. recognize outcomes from testing and apply learning to the next iteration of the Loop.

e. develop alternative scenarios for executing a pivot in our product strategy.

tarcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would receive a 30% discount each time they return with the cup to buy a cup of coffee.

Each week Starcups serves 57,000 customers who purchase an average of 2.50 cups of coffee per week (142,500 cups total). Starcups’s contribution margin income statement for a typical week is shown below:

Assume the new cup promotion is expected to impact sales volume, revenue, fixed, and variable costs as follows:

• Starcups estimates that 25% of its current customers (14,250) will participate in the promotion. The remainder of its existing customer base (42,750) will continue to buy an average of 2.50 cups of coffee per week.
• Starcups expected to attract 6,700 new customers to participate in the promotion.
• Customers who participate in the promotion will pay an additional $1.00 for the reusable cup. They will then receive a 30% discount on repeat visits when they bring back their reusable cup.
• The additional variable cost of purchasing the reusable cup is $3.20. The variable cost savings of the paper cup is $.40.
• Starcups expects that customers who participate in the reusable cup promotion will visit an average of 4 times per week, including the first purchase of the reusable cup.
• Starcups will spend a total of $27,000 per week advertising the reusable cup promotion.

Required:

1. Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income.

2. Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating income before and after the promotion.

3. How will this sustainability initiative impact the company’s triple bottom line?

Bulldog accrues salaries and payroll taxes on the last day of each month and pays all employment-related liabilities on the 5th day of the following month. Assume employees are in the 10% income tax bracket. Use the following tax rates: FICA OASDI, 6.2%; Medicare, 1.45%; Federal Unemployment Tax, 0.6%; and State Unemployment Tax, 5.4%.

2. Prepare and print the following financial statements: multi-step income statement for the month ended January 31, statement of retained earnings for the month ended January 31, classified balance sheet at January 31. Post to the ledger. Print a post-closing trial balance.

GENERAL JOURNAL HAVE 14 ENTRIES

The investment manager of 4th National Bank invests some of the bank’s financial resources in trading securities. During the last quarter of 2018, the following transactions occurred in regard to these trading securities:

On December 31, 2018, the market values of the shares were as follows: Morgan, $87 per share; Parker, $61 per share; and Tathem, $37.25 per share. The bank held no trading securities at the beginning of the last quarter of 2018.

Required:

Below is an Unadjusted Trial Balance of Jasa Tading Bhd at 31 December 2019.

Additional information:

1. An unpaid salaries and wages as at 31 December 2019 is RM18,000.
2. A tenant of an office space has not yet pay a rental for December 2019 amounting RM3,000.
3. The company returned defect merchandise bought from supplier and was refunded RM3,500 in cash. The company use perpetual inventory system and this transaction has not yet been recorded.
4. The company received RM35,000 in cash from a customer on 30 December 2019 and recorded as sales revenue. However the company only managed to supply the merchandise on 3 January 2020.
5. Payment for a one-year insurance coverage was made on 1 July 2019.
6. Annual depreciation for building and equipment are based on straight line depreciation basis over a period of 50 years and 10 years respectively with no scrap value.
7. 30% of the notes payable is due next year. The note payable interest rate is 8% per annum.Prepare a Statement of Profit or Loss and Other Comprehensive Income for Jasa Tading Bhd for the year ended 31 December 2019 according to MFRS 101 Presentation of Financial Statement.

A traveling production of Grease performs each year. The average show sells 1,500 tickets at $65 per ticket. There are 100 shows each year. The show has a cast of

35​, each earning an average of $340 per show. The cast is paid only after each show. The other variable expense is program printing costs of $6 per guest. Annual fixed expenses total $1,072,400.

Requirement 1. Compute revenue and variable expenses for each show.

Requirement 2. Use the income statement equation approach to compute the number of shows needed annually to break even.

Begin by determining the basic income statement equation.

Using the basic income statement equation you determined​ above, solve for the number of shows to breakeven.

Requirement 3. Use the shortcut unit contribution margin approach to compute the number of shows needed annually to earn a profit of

$10,111,200 Is this goal​ realistic? Give your reason.

Begin by selecting the formula.

Using the equation you determined​ above, solve for the target number of shows.

The profit goal of $10,111,200 is ▼ (unrealistic, realistic) since Grease currently performs 100 shows a year.

Requirement 4. Prepare Grease​'s contribution margin income statement for 100 shows each year. Report only two categories of​ expenses: variable and fixed.

1. The Bungalow Bill Accounting Service, LLC uses computer technology and data-entry operators to provide accounting services in a competitive market. The price for each statement is $200.  Total fixed costs are $1500/week.

1. How many data entry operators would BBAS, LLC hire at a weekly wage of $250 if it were attempting to maximize profits?

2. Determine the firm’s profits.

3. Suppose a decrease in demand reduces the market price to $150 per statement.   
   1. Determine the firm’s profits
   2. Should Bill stay open in the short run? Explain.
   3. What should Bill do in the long run?  Explain.

2. Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is given in the table below.

Units of Labor   Marginal Revenue Product

0

1. $30

2. $24

3. $18

4. $15

5. $12

6. $10

1. Draw the firm’s labor supply, labor demand and marginal resource cost curves.
2. What will be the competitive equilibrium wage rate and the level of employment?
3. What will be the wage rate and the level of employment under monopsonistic conditions?

3.  The following table shows the hourly output per worker in two industries in the United States and Canada.

            Pretzels                        Beer

United States            8                               6  

Canada                    1                                 2

1. Explain which country has an absolute advantage in the production of beer and which country has the absolute advantage in the production of pretzels. Why?
2. Explain which country has a comparative advantage in the production of pretzels and which country has the comparative advantage in the production of beer. Why?
3. What are the terms of trade from the perspective of the United States

American customer satisfaction index: Starbucks in the U.S. 2006-2016

This statistic shows the American customer satisfaction index scores of Starbucks in the United States from 2006 to 2016. Starbucks had an ACSI score of 75 in 2016. Just over 50 percent (around 7,880) of all Starbucks stores were company-operated stores, from which Starbucks generates around 79 percent of its revenue. Around 5,292 stores are licensed stores. Starbucks, which became a publicly traded company on June 26, 1992, generated around 21.32 billion U.S. dollars in revenue in the 2016 fiscal year. In its company-operated stores Starbucks generates 74 percent of revenue from the sale of beverages, 19 percent from food sales and three percent from the sale of packaged and single serve coffees. Another four percent of retail sales are attributable to coffee-making equipment and other merchandise. The United States is Starbucks’ biggest and most important market. In 2016, revenues from Starbucks Americas segment amounted to more than 14 billion U.S. dollars. The Americas segment comprises over 13,000 stores in the U.S., Canada, Mexico, Puerto Rico, Brazil Chile and other American countries with around 86 percent of those stores located in the United States. 1. Plot this set of data as a scatterplot in excel. 2. Find the correlation coefficient. 3. Is it positive or negative? 4. What does the sign tell us? 5. What does the correlation imply about the relationship between the time and the satisfaction? 6. Is the correlation significant? Why or why not? (Answer in 1-2 complete sentences.) (Use the Pearson calculator). 7. Draw the trendline in excel. Can the regression line be used for prediction? No, it is too weak. Insert excel graph here:

Harper Maize Air Conditioner Company presented the following unadjusted trail for the financial year ended December 31st, 2016. Harper Maize Air Conditioner Company Trial Balance as at December 31, 2016 A/C Name DR $ CR $ Cash 240,000 Accounts Receivable 360,000 Merchandise Inventory 295,000 Store Supplies 120,000 Prepaid Electricity Expense 65,000 Building and Equipment 800,000 Accumulated Depreciation –Building and Equipment 237,000 Accounts Payable 310,000 Interest Expense Payable Traveling Expense Payable Unearned Sales Revenue 102,000 Note Payable-Long Term 210,000 Harper Maize, Capital 1,000,000 Harper Maize, Withdrawal 105,000 Sales Revenue Earned 1,416,600 Sales Discount 15,000 Sales Returns and Allowances 24,500 Cost of Goods Sold 645,000 Salaries Expense 245,000 Telephone Expense 25,000 Depreciation Expense – Building and Equipment Electricity Expense 155,400 Store Supplies Expense Insurance Expense 85,000 Bad Debt Expense 35,300 Travelling Expense 45,000 Interest Expense 15,400 ________ Total 3,275,600 3,275,600 The following additional information was made available at December 31, 2016 a) Unearned sales revenue, still not earned at December 31, 2016 amounted $22,000. b) The prepaid electricity includes $15,000 which expired during the year. c) The Building and Equipment has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $10,000. d) Store supplies consumed during the year amounted to $45,200. e) Interest expenses not paid as at December 31, 2016 amounted to $4,500 f) Accrued travelling expense amounted to $2,300 at December 31, 2016. g) A physical count of inventory at December 31, 2016, reveals $315,000 worth of inventory on hand. Required: 1. Prepare the necessary adjusting entries on December 31, 2016 2. Prepare the company’s multiple-step income statement for the year ended December 31, 2016. 3. Prepare the company’s statement of owner’s equity for the year ended December 31, 2016 4

Problem 3-8 (Algo) Balance sheet; errors; missing amounts [LO3-2, 3-3]

The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet.

Additional information ($ in 000s):

1. Certain records that included the account balances for the patent and shareholders’ equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.2. That is, total liabilities are 120% of total shareholders’ equity. Retained earnings at the beginning of the year was $4,600. Net income for 2021 was $1,600 and $800 in cash dividends were declared and paid to shareholders.
2. Management intends to sell the investments in the next six months.
3. Interest on both the notes and the bonds is payable annually.
4. The notes payable are due in annual installments of $1,150 each.
5. Deferred revenue will be recognized as revenue equally over the next two fiscal years.
6. The common stock represents 300,000 shares of no par stock authorized, 280,000 shares issued and outstanding.
   

Required:
Prepare a complete, corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)