John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering.In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills.John’s course was for 3 months. John had to pay $2,000 as tuition for the 3 months.

After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA.

John’s first year of business can be summarised as follows:

Based on your calculated accounting profit and economic profit, would you advise John to return to his teaching job? Show your work    

February 1^st transaction is completed as an example:  Only include the letter of the account not the account name.

27.            $__________If January 31st cash was $10,000, what is the cash balance at the end of the day on 2/28?

1.) At current output a profit maximizing competitive firm gets $8 per unit produced and has average total costs of $12. When the market price is $8, the firm's marginal cost curve crosses its marginal revenue curve where Q=120 units.

a. Draw two graphs side-by-side: On the left side, sketch a representation of the market equilibrium (i.e. supply, demand, market equilibrium quantity and market equilibrium price). On the right side, sketch a representation of the individual competitive firm's cost curves (I haven't provided much information about the actual shape, but draw something consistent with the given data). Make sure the market equilibrium price determined in your leftmost graph appears in your rightmost graph: Each individual firm takes the market price as given!

b. What is the firm's current level of profit? Do you anticipate entry or exit into the market? Explain your reasoning.

2.) Suppose a competitive firm previously set its price at $15 per unit to maximize its profit, which had been positive. Then the market price falls to $12 and the firm adjusts in order to maximize its profits at the decreased price. After these adjustments what can we conclude about the firm’s quantity of output, average total cost, and marginal revenue in terms of being higher, lower, or the same as before?

Bob’s Adirondack is one of approximately 85 companies worldwide producing 100% natural wood Adirondack chairs. Despite trying to differentiate their product, Bob’s has found that they can only charge the market price for their chairs.

1. a. Add columns to the spreadsheet and make the appropriate calculations for Average Fixed Cost, Average Variable Cost, Average Total Cost and Short-Run Marginal Cost.

b. Assuming the market clearing price is $160, calculate Total Revenue, Marginal Revenue, Profit and Profit Margin for Bob’s Adirondack.

c. If the CEO of Bob’s wants to minimize ATC, what quantity should they produce? What if he wants to maximize profit margin?

d. You become the CEO, after the prior executive is fired, what quantity do you recommend the firm produce? Why?

e. Now, change the total fixed costs to $20,000. How does this change the optimal quantity of chairs to produce? Explain

Q TC TFC TVC

0 $5,000 $10,000 $0

100 $14,900 $10,000 $4,900

200 $23,800 $10,000 $13,800

300 $31,700 $10,000 $21,700

400 $42,600 $10,000 $32,600

500 $54,500 $10,000 $44,500

600 $70,400 $10,000 $60,400

700 $88,300 $10,000 $78,300

800 $108,200 $10,000 $98,200

900 $130,100 $10,000 $120,100

1000 $154,000 $10,000 $144,000

Consider each of the following scenarios:

1. A seller orally agrees with one of its best customers to deliver goods in exchange for $20,000. While the seller’s practice is to obtain a written sales agreement, the seller delivered these goods to the customer without a written agreement due to the customer’s urgent need.

2. A seller agrees to provide accounting services to a customer for the next year in exchange for $40,000. While the two parties are negotiating the terms of the agreement and the specific services to be performed, the seller begins to perform some services as a gesture of good faith.

3. A seller has a written agreement to deliver goods to a customer for $60 per unit. The price will drop to $55 per unit if the customer purchases more than 2,500 units per month.

4. A seller had a written agreement and provided custodial services to a customer for $2,500 per month in a previous year. The contract expired on December 31, 2016. During negotiations for a new contract in January 2017, custodial services were provided at the previous monthly rate and paid for by the buyer. The seller and the customer agree to a new contract on February 1, 2017. The seller is concerned whether a contract existed in January 2017 and whether revenue can be recognized.

Required:

1. Determine if a contract exists for each of the scenarios.

2. If it is determined that a contract exists but the seller believes it is probable that it will not collect the expected consideration, how does this affect the seller’s ability to recognize revenue?

The following table provides incomplete information on the costs of producing diagnostic imaging tests. It uses two inputs to produce its outputs: capital and labour. The fixed capital costs reflect the monthly leasing cost for the diagnostic imaging machine and the variable labour costs reflects the wages and hours worked by staff.

Assume that the firm is operating in a perfectly competitive market. Also assume that its fixed costs are sunk costs (i.e. it cannot recuperate these costs even if it decides to leave the market.

1. Complete all empty cells in the table above

2. Provide a brief explanation of why the marginal costs could exhibit the pattern you observe in part (a).

3. Add three columns to the table above headed: (i) marginal revenue; (ii) total revenue; and (iii) profit. If the market price was $40, complete all new columns in the table over the output range of 0 to 10

4. If the market price was $40, what would be the optimum level of production for the firm? Why?

Suppose many firms are working on a vaccine for a particular virus (as is currently the case). Once a successful vaccine is discovered, assume it can be produced by firms at a flat marginal cost of MC = 1. Suppose the demand for vaccines is given by QD = 5 − P. (a) (5) Draw the MC and demand curves on a clearly marked diagram. (b) (5) If this were a competitive market, what would the equilibrium price and quantity be? (c) (5) As discussed in class, what is a major reason that the government would grant monopoly power to the first firm to discover 2 the vaccine? In other words, what’s the problem with leaving this as a competitive market? (d) (5) Now, suppose one firm has monopoly power in this market. Let us think about this firm’s profit-maximizing choice. The firm can choose any quantity, from 0 to 5. As shown in class, fill out a table that has columns for quantity (Q), the associated price (P), the total revenue (TR), and the marginal revenue (MR). (e) (5) What is the firm’s profit-maximizing price and quantity? (f) (5) On a clearly marked diagram, show the dead weight loss associated with the monopoly outcome. (g) (5) Suppose the government is concerned that consumers are being hurt by this inefficiency. Consider the following response from the monopolist: “If you allow us to price discriminate, the market will be more efficient.” Discuss why the government would not be satisfied by this response to its concerns

he March 31, 2020, adjusted trial balance for Amusement Park Repair is shown below with accounts in alphabetical order.

¹$5,000 of the long-term note payable is due during the year ended March 31, 2021.
²$2,000 of the notes receivable will be collected by March 31, 2021.

Calculate each of the following:

b)property plant and equipment

c)intangible assets

d)non-current liabilities

e) non current investment

f) current liabilities

g total assets

total liabilities

total liabilities and equity

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 60 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,800 per month plus $42 per course plus $5 per student. The company’s sales should average $880 per student.

The company planned to run four courses with a total of 60 students; however, it actually ran four courses with a total of only 56 students. The actual operating results for September appear below:

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.