Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions):

a. The Investor Services  segment serves the retail customer, you and me. These include brokerage, Internet, and mutual fund services. The Advisor Services  segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators.

b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services”.

1. Commissions to brokers Variable Cost
2. Fees paid to exchanges for executing trades Variable Cost
3. Depreciation on brokerage offices Fixed Cost
4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost
5. Property taxes on brokerage offices Fixed Cost
6. Advertising Variable Cost
7. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost

c. Estimate the contribution margin for each segment, assuming that depreciation represents the majority of fixed costs.

d. If Schwab decided to sell its Advisor Services business to another company, estimate how much operating income would decline under the following assumptions.

Assume the fixed costs that serve the Advisor Services business would not be sold but would be used by the other sector: $ million?
Assume the fixed assets were “sold”: $ million?

Case Study

Dr. Danilo Ocampo is a 74-year-old retired pathologist. He lives in his home with Lydia, his wife of 51 years. Their only child, a son, was killed at age 22 in a motor vehicle crash. Dr. Ocampo was born and raised in the Philippines and came to the United States when he was 23. He has a few nephews and nieces in the Philippines, but no relatives live nearby.

Dr. Ocampo's health has been declining for the past few years. He has a medical history that includes hypertension, myocardial infarction, angina, and class 2 heart failure. Because of these cardiovascular disorders, he takes multiple medications, including metoprolol, lisinopril, spironolactone, furosemide (intermittently as needed), potassium supplements (when taking furosemide), aspirin, isosorbide dinitrate, and nitroglycerin. He is concerned his current treatment plan may not be effective; he experiences a number of side effects from his medications and has been admitted multiple times to the hospital. He usually feels better after a few days in the hospital but typically checks himself out of the hospital before his physicians are ready to discharge him.

Dr. Ocampo's spends most of his time and energy managing the household and caring for his wife, who has dementia.

Question 1

What interventions can you initiate to help Dr. Ocampo minimize the side effects of the multiple medications he is taking?

Question 2

What nutritional assessment would be appropriate for Dr. Ocampo. Why?

Question 3

Should you intervene to help Dr. Ocampo accept help with the care of Lydia to decrease his own stress and improve his health? Explain your answer.

Case Elvis Presley, a rock ‘n’ roll singer, became a musical icon during a career that spanned more than twenty years, until he died at the age of 42. Many companies and individuals own copyrights to Presley’s songs, lyrics, photographs, movies, and appearances on television shows. Millions of dollars of Elvis Presley– related copyrighted materials are sold or licensed annually. Passport Video produced a video documentary titled The Definitive Elvis, comprising sixteen one-hour episodes. The producers interviewed more than 200 people

regarding virtually all aspects of Elvis’s life. Passport sold the videos commercially for a profit. Approximately 5 to 10 percent of the videos were composed of copyrighted music and appearances of Presley on television and in movies owned by copyright holders other than Passport. Passport did not obtain permission to use those copyrighted works. Elvis Presley Enterprises, Inc., and other companies and individuals that owned copyrights to the Presley works used by Passport sued Passport for copyright infringement. Passport defended, arguing that its use of the copyrighted materials was fair use. The U.S. district court held in favor of the plaintiff copyright holders and enjoined Passport from further distribution of its documentary videos. Passport appealed. Elvis Presley Enterprises, Inc. v. Passport Video, 349 F.3d 622, 2003 U.S. App. Lexis 22775 (United States Court of Appeals for the Ninth Circuit)

1. Did Passport act ethically in including the Elvis Presley copyrighted material in its video? 2. Why do you think Passport Video did so? 3. Has there been fair use in this case, or has there been copyright infringement?

PROBLEM SET 7

Question 1

Erika, Ayami and Alison are partners in a fast growing food distribution business in Courtenay. To maximize their profit in the long-run by using the right mix of inputs, what should be their decision when labour or capital varies? (2 lines)

2 Marks

Question 2

You recently replace Antonia, the manager of Division 3, despite Antonia’s strong external sales record. Division 3 produces frozen drinks. Frozen drinks are relatively simple to make. Ignoring the ingredients, it requires only labour and a blender. As you begin reviewing the company’s production information, you learn that labour is paid $8 per hour and the last worker produced 100 drinks per hour. The company rents blenders for $15 per hour and the marginal product of capital is 120 drinks per hour. What do you think Antonia could have done to keep his job? Explain (3 lines)

2 Marks

Question 3

A firm has two plants, one in the United States and one in Canada, and it cannot change the size of the plants or the amount of capital equipment. The wage in Canada is $5. The wage in the U.S. is $20. Given current employment, the marginal product of the last worker in Canada is 100, and the marginal product of the last worker in the U.S. is 500.

a. Is the firm maximizing output relative to its labor cost? Show how you know. (2 lines)

b. If it is not, what should the firm do? (2 lines)

3 Marks

Question 4

Explain why one of diseconomies of scale and diminishing marginal product of the variable factors is a short-run concept and the other a long run concept.

3 Marks

Microbiology question!

"Sharon, the CEO of a start-up company, lives in Westchester County, a wooded community north of New York City. She spends her summer weekends e-mailing her managers from the outdoor deck of her home, shaded by tall oak trees. The acorns attract mice and deer, and the leaf litter is full of ticks (Ixodes scapularis) . One evening Sharon’s husband noticed a red rash on her back, consisting of a ring shape several centimeters across, surrounding another red spot in the middle. Sharon recalled seeing this “bull’s-eye” type of rash on the Internet. The rash was described as the hallmark of Lyme disease, or borreliosis, caused in the United States by the tick-borne bacterium Borrelia burgdorferi (in Europe, by the closely related species Borrelia afzelii ). The distinctive rash, erythema migrans (“migrating redness”), begins at the site of a tick bite and expands concentrically as the bacteria migrate outward. Sharon recalled that a neighbor’s child had suffered crippling arthritis caused by an undetected case of Lyme disease. Another neighbor who contracted Lyme disease had suffered from meningitis (inflammation of the brain lining) and neurological abnormalities, including facial paralysis, ultimately losing his job and his million-dollar home. The next day Sharon went to her doctor and was treated with the antibiotic doxycycline, a tetracycline derivative that targets the bacterial ribosome. Doxycycline is the antibiotic of choice for B. burgdorferi . Sharon was fortunate to make a full recovery before serious symptoms appeared. The bull’s-eye rash that is a hallmark of Sharon’s infection is associated with movement of the bacteria from the initial site of tick bite and infection. Discuss how these bacteria move and the cell structures associated with movement."

In 1985, Juan Caron, Sr established Scooter’s Inc. to provide scooters for tourist destinations in the United States. After his father’s retirement in 2017, Juan, Jr (Junior) assumed control of the company. In 2018, Junior expected the company’s operating income to increase after they stopped paying his dad’s salary of $125,000. Show calculation for Total Sales Mix Variance, Direct Labor Efficiency Variance and Variable Overhead Spending Variance.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

Determine the unit product cost. Assume that the company uses absorption costing.

Prepare an income statement for May. Assume that the company uses absorption costing.

Determine the unit product cost. Assume that the company uses variable costing.

Prepare a contribution format income statement for May. Assume that the company uses variable costing.

Inventory Turnover and days’ sales in inventory

Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information:

a. & b. Determine the inventory turnover and the number of days’ sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place.

c. The inventory turnover ratios and days’ sales in inventory are   for Kracker and Foodstuff. Winston Stores has a   inventory turnover and a   days’ sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are   efficient than Winston Stores in managing inventory.

d. If Kracker had Winston Stores’ days’ sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million.
$fill in the blank 11 million