The Economist collects data each year on the price of a Big Mac in various countries around the world. A sample of McDonald's restaurants in Europe in July 2016 resulted in the following Big Mac prices (after conversion to U.S. dollars).

The mean price of a Big Mac in the U.S. in July 2016 was $5.04. For purposes of this exercise, you can assume it is reasonable to regard the sample as representative of European McDonald's restaurants. Does the sample provide convincing evidence that the mean July 2016 price of a Big Mac in Europe is less than the reported U.S. price? Test the relevant hypotheses using

α = 0.05.

(Hint: See Example 12.12.)

Find the test statistic and P-value. (Use a table or technology. Round your test statistic to one decimal place and your P-value to three decimal places.)

t=  

P-value = 0.000

State the conclusion in the problem context.

We reject H₀. We have convincing evidence that the mean July 2016 price of a Big Mac in Europe is less than the reported U.S. price.

Periodic Inventory by Three Methods

The units of an item available for sale during the year were as follows:

There are 11 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to the nearest cent and final answers to the nearest whole dollar, if required.

a. Determine the inventory cost by the first-in, first-out method.
$

b. Determine the inventory cost by the last-in, first-out method.
$

c. Determine the inventory cost by the weighted average cost method.
$

1. Indicate how the following items are recorded in the accounting records in the current year of Coronet Co. (a) Impairment of goodwill. (b) A change in depreciating plant assets from acceler- ated to the straight-line method. (c) Large write-off of inventories because of obsolescence. (d) Change from the cash basis to accrual basis of accounting. (e) Change from LIFO to FIFO method for inventory valuation purposes. (f) Change in the estimate of service lives for plant assets.

Jupiter Corporation had $8,500 balance in accounts receivable at the beginning of the current year. The beginning balance of allowance for doubtful accounts was $2,000. Early in January, $500 worth of receivable were written off as uncollectible. What is the net realizable value of accounts receivable, after the write off?

Select one:

a. $7,000

b. $1,500

c. $8,000

d. $6,500

e. $6,000

1. What is the internal rate of return (IRR) of a project costing $3,000 (at year 0); having after-tax cash flows of $1,500 in each of the two years of its two-year life; and a salvage value of $600 at the end of the second year in addition to the $1,500 cash flow?

   		13.21%
   		17.23%
   		16.06%
   		12.32%

Inventory by Three Methods

The units of an item available for sale during the year were as follows:

There are 47 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost under each of the following methods.

a. Determine the inventory cost by the first-in, first-out method.
$

b. Determine the inventory cost by the last-in, first-out method.
$

c. Determine the inventory cost by the average cost method. Do not round intermediate calculation and round final answer to the nearest whole value.
$

A recent survey reported that 57% to 18 to 29 year olds in a certain country own tablets. Using the binomial distribution , complete parts a through e below.

a. What is the probability that in the next six​ 18- to​ 29-year-olds surveyed, four will own a​ tablet?

b. What is the probability that in the next six? 18- to? 29-year-olds surveyed, all six will own a? tablet?

c. What is the probability that in the next six? 18- to? 29-year-olds surveyed, at least four will own a? tablet?

d. What are the mean and standard deviation of the number of? 18- to? 29-year-olds who will own a tablet in a survey of? six?

e. What assumptions do you need to make in? (a) through? (c)? Select all that apply.

-The outcome of any observation is independent of the outcome of any other observation.

-The probability of an observation being classified as the event of? interest,

pi??, is constant from observation to observation.

-The outcome of any observation is dependent of the outcome of any other observation.

-Each observation is classified into one of two mutually exclusive and collectively exhaustive categories.

Vixor Co. is a U.S. firm conducting a financial plan for the next year. It has no foreign subsidiaries, but more than half of its sales are from exports. Its foreign cash inflows to be received from exporting and cash outflows to be paid for imported supplies over the next year are shown in the following table:

The spot rates and one-year forward rates as of today are shown below:

1. Given the forecast of the Canadian dollar along with the forward rate of the Canadian dollar, what is the expected increase or decrease in dollar cash flows that would result from hedging the net cash flows in Canadian dollars? Would you hedge the Canadian dollar position?

2. Assume that the Canadian dollar net inflows may range from C$20,000,000 to C$40,000,000 over the next year. Explain the risk of hedging C$30,000,000 in net flows. How can Vixor Co. avoid such a risk? Is there any tradeoff resulting from your strategy to avoid that risk?

An extract from the income statement of PoMA Ltd for the previous year is given below:                                                                                                            

                                                                                Rs.                         

Sales (50,000 units)                                         1,000,000

Direct materials                                                350,000                

Direct labor cost (50,000 hours)                 200,000                

Fixed manufacturing overhead                  190,000

Variable manufacturing overhead            50,000

Administration overheads                           180,000                

Selling and distribution overhead             120,000                

The directors are keen to improve revenue and productivity and are considering various options.             You are the management accountant and are requested to compute the following:                                

a. If salesmen are paid commission of 10% of sales, how many units must be sold to achieve breakeven point.   

b. By how much does profit change (increase or decrease) if the selling price is reduced by 10% resulting in an estimated increase in sales volume (in number of units) by 30%.                                                           

c. By how much does profit change (increase or decrease) if the direct labor rate is increased from Rs.4 to Rs.5 per hour. This increase is expected to increase production and sales by 20% without affecting the hours worked. However, advertising costs will increase by Rs.50,000.   

d. How many units must be sold in order to achieve a target profit margin of 10% on sales (profit/salesx100) assuming that advertising costs will increase by Rs.300,000 and selling price will increase by 20%   

e. What is the Margin of Safety at the sales volume derived in part d above (express as percentage of sales)

Stock A has an earnings of $5 per share at year 1. The interest rate is 20%, and the return on equity is 25%. If there is no plow-back and you like to buy stock A now and hold it for two years, what is the expected return for your investment ?

Stock A has an earnings of $5 per share at year 1. The interest rate is 20%, and the return on equity is 25%. If there is a plow-back of 40%, what is the earnings per share at year two (EPS2) ?

Stock A pays a dividend of $3 per share every year. The discount rate is 10% and the return on equity is 25%. If you want to buy stock A at year 1 and hold it for 5 years, what is the price you have to pay at year 1 (P1)?