Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 36,000 of these balls, with the following results: Sales (36,000 balls) $ 900,000 Variable expenses 540,000 Contribution margin 360,000 Fixed expenses 263,000 Net operating income $ 97,000 (5) Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $97,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 36,000 balls (the same number as sold last year). Prepare a contribution format income statement and Compute the degree of operating leverage.

Don Hawk Furnishings sells a variety of decorative pieces including a variety of candle holders. The business began the second quarter (April to June) of 2018 with 15 (Alanea) candle holders at a total cost of $108,750. The following transactions relating to the “Alanea” candle holders were completed during the quarter.

April 7 90 candle holders were purchased at a cost of $6,850 each. In addition the business paid freight charges of $800 cash on each candle holder to have the inventory shipped from the point of purchase to their warehouse.

April 30 The sales for April were 75 candle holders which yielded total sales revenue of $803,250. ( 15 of these units were sold on account to longstanding customers of the business)

May 6 A new batch of 80 candle holders was purchased at a total cost of $654,800

May 9 Upon inspection of the candle holders purchased on May 6, five (5) of the units were found to be defective and were returned to the supplier.

May 31 During the month 62 of the decorative pieces were sold at a price of $11,450 each.

June 5 A customer, to whom 7 of the candle holders were sold during the first business day of May, returned 3 of the candle holders, as they were of another make & model.

June 14 Owing to an increased demand, a further 110 candle holders were purchased at a cost of $9,000 each; the supplier gave a 3% quantity discount on the purchase.

June 30 116 candle holders were sold during June at a unit selling price of $12,250.

June 30 An actual count of inventory was carried out at the close of business which revealed that there were 36 pieces of the Alanea brand of merchandise in the store room. Unless otherwise stated, assume that all purchases were on account and received on the dates stated.

Required:

(A) Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO) method of inventory valuation to determine the company’s cost of goods sold for the quarter and the value of ending.

(B) Given that selling, distribution and administrative costs associated with the Alanea brand of candle holders for the quarter were $27,255, $42,400 and $145,600 respectively, prepare an income statement for Don Hawk Furnishings (Alanea) for the quarter ended June 30, 2018.   

(C) Journalize the transactions for the month of April, assuming the company uses a:

- Periodic inventory system

- Perpetual inventory system

(D) The manager of the business, Don Hawk, has stated that his objective is to cut back on his tax liability as much as possible and is of the view that the FIFO method would be best. Do you agree with Don? Explain your answer clearly distinguishing between the first in, first out (FIFO) and last in, first out (LIFO) methods of inventory valuation.

PERFORMANCE EVALUATION

Julie Miller supervisor of housecleaning for Hotel Minto, was surprised by her summary report for March given below.

Julie was disappointed. She thought she had done a good job controlling housekeeping labor and towel usage, but her performance report revealed an unfavorable variance of $12,111. She had been hoping for a bonus for her good work, but now expected a series of questions from her manager.

The cost budget for housekeeping is based on standard costs. At the beginning of a month, Julie receives a report from Hotel Minto’s Sales Department outlining the planned room activity for the month. Julie then schedules labor and purchases using this information.

The budget for the housekeeping was based on 8,000 room nights. Each room night is budgeted based on the following standards for various materials, labor, and overhead:

With 8,900 room nights sold, actual costs and usage for housekeeping during April were:

Required:

You have been asked to re-evaluate Julie’s performance.

Prepare a report to Julie’s boss demonstrating and explaining your findings; including your suggestions for performance evaluation methods and measures in the future.

One of the key questions decision makers must ask when considering whether to invest in a new technology is “what will the return on investment (ROI) be?” In other words, will this technology pay for itself, and when?

Consider an amusement park called FunTown. Funtown is a popular amusement park but because of long entrance lines to the park, yearly attendance has been flat (no increase or decrease) for the last 3 years. Unless something is done to alleviate the long entrance lines, attendance is not expected to increase for the next 3 years.

Funtown is considering implementing a handheld scanner system that can allow employees to walk around the front gates and accept credit card payment and print tickets on the spot. With the new scanner system, Funtown anticipates selling 2.4 million tickets in the next year (year 1), with a 4% increase (over the previous year) for the 2 years after that (years 2 and 3). Without the handheld scanner, Funtown anticipates selling 2.4 million tickets per year for the next 3 years.

The handheld scanner system is not without cost. Entrance to Funtown costs 35 dollars. For every ticket sold with the online scanner system, there is an expense of 6% of the ticket price.

It will take a while for the new system to catch on. Funtown estimates that 10% of year 1 attendance tickets will be sold using the online scanner. They also estimate that will grow to 20% and 30% in years 2 and 3 respectively.

Your assignment is to do a 3 year analysis of this proposal and determine if and when this scanner system will pay for itself.

Specifically, you are to calculate the net revenue of Funtown for each of the next 3 years, with, and without the new scanner system, and calculate the difference.

QUESTION 11

In the short-run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is

QUESTION 12

Assume that a firm's marginal revenue barely exceeds marginal cost. To maximize profit, teh firm should:

QUESTION 13

In the short run, a perfectly competitive firm will stay in business as long as:

QUESTION 14

Suppose that price is below the minimum average total cost (ATC) but above the minimum average variable cost (AVC), and the market price is expected to rise at least to ATC in the near future. In the short run, a firm that is a price taker would:

QUESTION 15

Where is the "short-run shut down point" for a perfectly competitive firm?

Offer suggestions on how revenue management can be used to actually enhance guest loyalty in the hotel and/or travel industry

Scenario: A local park is being converted into a COVID-19 testing site.

Describe the internal and external stakeholders, and their importance.