BestBuy plans to have an end of the season sale on videogames and High Definition TVs. After a focus group study, their marketing team found that they have four different types of customers, each with their own respective reservation price. The reservation prices are as listed below:
|
Customer |
TV |
Videogame |
|
A |
$1000 |
$500 |
|
B |
$800 |
$450 |
|
C |
$600 |
$375 |
|
D |
$500 |
$300 |
For simplicity, assume that the marginal cost for producing any of these products is $0, and there is only one representative customer of each type.
(a) If BestBuy were to sell TV and videogames separately, what price should it set for each product in order to maximize its profit?
(b) BestBuy paid an outside consulting firm about its marketing strategy. The consultant recommended that BestBuy bundle TV and videogame as a package rather than selling them separately. Is the consultant correct? Why or why not? What is the profit of pure bundling? Is it higher or lower compared with the separate selling scenario in (A)? Are customers’ reservation prices of TV and videogames negatively or positively correlated?
(c) Suppose BestBuy has perfect information about the reservation price of each customer. It adopts a first-degree (perfect) price discrimination policy. What prices should it charge to maximize profit? What is the profit under this strategy? Is this higher than the profit in (a) or (b)?
please help Thank you
In: Economics
Describe impacts on the 3 financial statements (balance sheet, income statement and cash flow statement) of:
a. An increase of accounts receivables by $100 b. An increase of
accrued expenses by $100
c. A decrease of prepaid expenses by $100
d. An increase in inventory by $100 (paid in cash)
e. An increase in depreciation by $100
f. A sale of equipment for $200 (value on the balance sheet: $170)
Remark: consider all above questions as independent of each other.
In: Finance
Break-Even Point and Target Profit Measured in Sales Dollars (Multiple Products). Hi-Tech Incorporated produces two different products with the following monthly data (these data are the same as the previous exercise).
| Cell | GPS | Total | |
| Selling price per unit | $100 | $400 | |
| Variable cost per unit | $ 40 | $240 | |
| Expected unit sales | 21,000 | 9,000 | 30,000 |
| Sales mix | 70 percent | 30 percent | 100 percent |
| Fixed costs | $1,800,000 |
Assume the sales mix remains the same at all levels of sales.
Required:
Round your answers to the nearest hundredth of a percent and nearest dollar where appropriate. (An example for percentage calculations is 0.434532 = 0.4345 = 43.45 percent; an example for dollar calculations is $378.9787 = $379.)
Using the information provided, prepare a contribution margin income statement for the month similar to the one in Figure 6.5 "Income Statement for Amy’s Accounting Service".
Calculate the weighted average contribution margin ratio.
Find the break-even point in sales dollars.
What amount of sales dollars is required to earn a monthly profit of $540,000?
Assume the contribution margin income statement prepared in requirement a is the company’s base case. What is the margin of safety in sales dollars?
In: Accounting
As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo. The sole shareholder of Apex has agreed to either of the following purchase offers:
A: General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex
OR
B: General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.
The fair value of the acquired assets and liabilities is as follows:
Current Assets (Tangible) $2,500,000
Long Term Assets (Tangible) $4,000,000
Liabilities $3,500,000
Net Tangible Assets Acquired $3,000,000
Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B? Why?
Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”? What internal revenue service code section addresses how sales of assets versus sales of stock are taxed? What are the significant differences? What period may the goodwill be deducted for tax purposes? Why do you think the Internal Revenue Service treats these two purchase offers differently?
In: Accounting
As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo. The sole shareholder of Apex has agreed to either of the following purchase offers:
A: General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex
OR
B: General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.
The fair value of the acquired assets and liabilities is as follows:
Current Assets (Tangible) $2,500,000
Long Term Assets (Tangible) $4,000,000
Liabilities $3,500,000
Net Tangible Assets Acquired $3,000,000
Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B? Why?
Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”? What internal revenue service code section addresses how sales of assets versus sales of stock are taxed? What are the significant differences? What period may the goodwill be deducted for tax purposes? Why do you think the Internal Revenue Service treats these two purchase offers differently?
In: Accounting
Overall Problem (Must be coded in a beginners level python code)
You are playing the game of Monopoly and you decide you wish to construct houses on one of your property groups. The rules of the game require that the number of houses on the properties within each group may not differ by more than one.
You will be given an amount of money to spend, the cost per house, and the number of properties in the group. The goal is to determine how many houses will go on each. And to appear more conversational, the last line of output will use words to represent numbers instead of digits.
To make the program simple, you may assume that you will not have enough money to build past four houses per property (twelve total). You do not need to convert the price of a house to a word (although that can be done rather simply).
Monopoly Property Groups
Here is a small table relating the colors of the monopoly property groups, the number of properties within the group, and the cost of the houses.
| color | size | cost |
| purple | 2 | 50 |
| light blue | 3 | 50 |
| maroon | 3 | 100 |
| orange | 3 | 100 |
| red | 3 | 150 |
| yellow | 3 | 150 |
| green | 3 | 200 |
| dark blue | 2 | 200 |
In: Computer Science
Bieber Inc. is a retailer operating in Calgary, Alberta. Bieber Inc. uses the perpetual inventory method. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Bieber Inc. for the month of January 2017.
|
Date |
Description |
Quantity |
Unit Cost or Selling Price |
|||
| Dec. 31 | Ending inventory | 160 | $20 | |||
| Jan. 2 | Purchase | 100 | 22 | |||
| Jan. 6 | Sale | 180 | 40 | |||
| Jan. 9 | Purchase | 75 | 24 | |||
| Jan. 10 | Sale | 50 | 45 | |||
| Jan. 23 | Purchase | 100 | 25 | |||
| Jan. 30 | Sale | 130 | 48 |
Calculate average cost for each unit. (Round answers to 3 decimal places, e.g. 5.125.)
|
Jan. 1 |
$ |
|
|
Jan. 2 |
$ |
|
|
Jan. 6 |
$ |
|
|
Jan. 9 |
$ |
|
|
Jan. 10 |
$ |
|
|
Jan. 23 |
$ |
|
|
Jan. 30 |
$ |
eTextbook and Media
List of Accounts
For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (Round answers to 0 decimal places, e.g. 125.)
| (1) | LIFO. | |
| (2) | FIFO. | |
| (3) | Moving-average. |
|
LIFO |
FIFO |
Moving-average |
||||
| Cost of goods sold | $ | $ | $ | |||
| Ending inventory | $ | $ | $ | |||
| Gross profit | $ | $ | $ |
In: Accounting
Mr. Agirich of Aggie Farms is considering the purchase of 100 acres of prime ranch land that is adjacent the ranch he now owns. Mr. Agirich can operate the additional 100 acres with present labor, machinery and breeding livestock. The land is selling for $400 per acre. Mr. Agirich believes that the operating receipts per acre of land per year will $450 and operating expenses will be $420 in present dollars. Mr. Agirich expects that the inflation rate will be 3% and operating receipts and expenses per acre will increase at the rate of inflation. The farmer will sell the land in three years and he anticipates that land prices will increase at the rate of inflation (from a base price of $400). A bank will loan him $350 per acre of land and the loan will be fully amortized over 15 years at 10% (annual payments). The outstanding balance of the loan will be paid at the end of the third year (balloon payment). Assume that the marginal tax rate is 30% and that Mr. Agirich requires at least a 6% pre-tax, risk-free return on capital and a 4% risk premium on projects of comparable risk. (Do the analysis on a per acre basis.)
Calculate the net present value. [NPV=$6.12]
In: Accounting
Use the following information to answer the next five questions:
On March 1st, Apple Inc. issued 1,000 shares of $3 par value stock for a selling price of $10 per share.
On May 1st, Apple Inc. reacquired 100 of the 1000 shares issued on March 1st for $15 per share.
On June 1st, Apple reissued 100 shares for $20 per share.
On June 10th, Apple declared a $1 per share dividend
On June 12th, Apple paid the dividend that it declared on June 10th
1. What journal entry did Apple record on March 1st?
Provide answer towards the bottom of the answer sheet
2. What journal entry did Apple record on May 1st?
Provide answer towards the bottom of the answer sheet
3. What journal entry did Apple record on June 1st?
Provide answer towards the bottom of the answer sheet
4. What journal entry did Apple record on June 10th?
Provide answer towards the bottom of the answer sheet
5. What journal entry did Apple record on June 12th?
Provide answer towards the bottom of the answer sheet
In: Accounting
Consider the hallmark question below
A) Use simulation with 1000 replications to determine the distribution of profit for 130 unit order quantity. CHART IT.
B) Use one way data table to determine the expected profit for each of order quantities 100, 110, 120, 130, and 140. Determine the optimal order quantity.
Hallmark sells “personal expression” cards and gifts worldwide through either its own stores or other retailers. Most products are single runs. A typical problem Hallmark faces is as follows: A Barbie stationery gift set—containing 16 notes, envelopes, and foil seals—is to be produced and marketed to celebrate the 60th year of Barbie. The price will be set at $14 per unit. The cost of production to Hallmark will be $7 per unit. The product manager, based on previous sales of Barbie stationery products, estimates that demand (in 1000s) and its probability for this product will be as follows: Demand 100 110 120 130 140 Probability 0.10 0.20 0.40 0.20 0.10 Hallmark will sell any units not sold through regular channels to discount retailers at $2 less than cost (i.e., $5 per unit). There is no penalty cost for being short.
In: Accounting