Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities of $193,000 on its statement of cash flows for the year ended December 31. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $3,700 Decrease in inventories 9,300 Depreciation 14,300 Gain on sale of investments 6,400 Increase in accounts payable 2,600 Increase in prepaid expenses 1,600 Increase in accounts receivable 7,000 a. Determine the net income reported by Curwen Inc. for the year ended December 31. $ b. Curwen’s net income is different than net cash flow from operating activities. Which of the following could possibly be the reason for such difference? Because depreciation expense which has no effect on cash flows from operating activities. Changes in current operating assets and liabilities that are added or deducted. Changes in fixed assets and liabilities that are added or deducted. Gain from sales of investment is included in net income while the sales proceeds are added in operating activities of cash flow statements. Pick two.

Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials $ 8 Direct labor 6 Overhead (2/3 of which is variable) 9 Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $5 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the increase in selling price? b-1. Assume that Mazeppa is currently operating at full capacity. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $60,000 more than it would be without accepting the special order? b-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor?

McEquity Corporation

EQUITY CASE

As a new staff accountant joining McEquity Corporation, an Irish company using IFRS, you have been asked by the senior accountant of financial reporting to assemble the statement of changes in equity for 2012 that will be used in the annual report.

After getting various amounts and figures from the prior year financial statements, general ledger and subsidiary ledger, you are able to ascertain the following:

Ending balances as of December 31, 2011, were as follows:

The summarized transactions for 2012 are as follows:

REQUIRED:

Based on the above information,

Prepare a statement of changes in equity for 2012 using IFRS.

We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 45,000 units per year. Price per unit is $60, variable cost per unit is $20, and fixed costs are $740,000 per year. The tax rate is 35 percent, and we require a return of 18 percent on this project. a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Break-even point units b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.) Cash flow $ NPV $ b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) ΔNPV/ΔQ $ c. What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) ΔOCF/ΔVC $

UNIT 1 Classify the following as microeconomics or macroeconomics and provide a justification for your choice. (i) The effect of changes in household saving rates on the growth rate of national income. (ii) The effect of rising oil prices on employment in the airline industry. (iii) A comparison of alternative tax policies and their respective impacts on the rate of the nation’s economic growth. (iv)Changes in the nation’s unemployment rate over short periods of time. UNIT 2 (a) Your marginal benefit from eating hotdogs is shown in the table below: # Hotdogs Marginal Benefit (MB) 0 0 1 7 2 4 3 2 4 1 If the price of a hotdog is $3 how many should you buy? Provide a justification for your choice. (b) The number of toys produced per day are shown in the table below: Workers Toys produced 1 48 2 88 3 112 4 168 5 176 6 192 7 224 8 216 9 224 10 208 (i) What is the marginal product of the 5th worker? the 9th worker? (ii) What is the maximum number of toys that should be produced? What is the maximum number of workers that should be hired? Explain.

Question:

part 1:

What happens to the demand for sony color television sets when each of the following changes occurs?

a) The Price of Zenith color television sets rises. _______________.

b) The Price of sony rises. ____________.

c) Personal income falls (color television are normal goods)._______________.

d) Technological advances result in dramatic Price reductions for Video tape recorders. ________________.

e) Congress is persuaded to impose tariffs on Japanese television sets starting next year.

part 2:

What happens to the supply of random access memory (RAM) chips, a component in the manufacture of personal computers, when each of the following changes occurs?

a) Two huge manufacturing plants begin operation in South Korea? ___________________

b) Scientists discover a new production technology that will lower the cost of making RAM chips? _________________________.

c) The price of silicon, a key ingredient in RAM chip production, rises sharply.? _________________.

d) The Price of RAM increases. __________________.

e) The Market for personal computers turns sour and RAM chip makers now expect RAM chip Prices to fall by 25 percent next quarter, ___________________.

part 3

Question:

"the salaries of chief executive officers (CEOs) are unreasonably high" Critically evaluate this statement.

An Initial Public Offering (IPO) is a major milestone for a company. This is a very expensive and time-consuming process. It does not come without a lot of forethought and judicial weighing of the pros and cons. We will start this conversation by looking at some of the reasons why a company would decide to take the steps to become a publicly traded corporation. What pros and cons have to be weighed?

Instructions - Use the numbers in the instructions to organize your post and ensure that you meet all requirements.

1. The #1 benefit of an IPO is the capital that is raised. List one additional way a company would benefit from an IPO. Explain in one paragraph.

2. List one use of additional capital. Explain the benefit in one paragraph.

3. Many changes in reporting standards have been enacted as a result of financial scandals. Identify one specific change in reporting standards or requirements for publicly traded companies and explain why this is important. Identify the change by the title of the act or section number.

NOTE: The Sarbanes-Oxley Act is the most frequently mentioned changed. It contains many individual provisions. Break it down to one provision that has not been mentioned by a classmate. There are a number of more recent changes to select from as well.

Part A

Tank Corporation manufactures and sells 300,000 electrical meters using a capacity of 110,000 machine hours, enough to make 330,000 units each year, which usually includes 30,000 units that have to be reworked. Contribution margin –CM - per saleable unit is $8. Additional costs per reworked unit are:

      $7

Company engineers have devised a new process that would completely eliminate defects and therefore avoid the need for rework, and would actually increase capacity, however, this will add $315,000 in fixed manufacturing overhead each year.

Required:

1.      Determine the impact of the new process if Tank were to produce the same quantity of units as in the past. Clearly show any cost savings and extra costs.

Part B     

       Assume that Tank has proceeded with the anticipated changes, and is exploring new markets as a result of the engineering changes referred to above aswell as the increase in capacity, and has accepted a proposal to make 20,000 units of a modified version of the meter which will generate $10 of contribution margin per unit.

Required:

2.      Should Tank go ahead with this new job? Explain with proof.

3.      What other nonfinancial and qualitative factors should be considered in making this decision?

Two examples are the Scientific and Industrial Revolutions. Burke says, "together with the Industrial Revolution came the modern expectation of progress and a better standard of living made possible by men's skills and the machines they invented..." He goes on to credit the Industrial Revolution with promoting both capitalism and giving birth to socialism among other things and claims that it changed society, making "modern urban society dependent on mass-production techniques without which we cannot now survive" (1985/1995, page 193). Of the Scientific Revolution, McClellan and Dorn (2006, page 247) say, “The status of the old ideas that natural philosophy was for natural philosophers or subservient to theology diminished. Evidently, the new notions were more consistent with the interests of the new centralized states and the development of merchant capitalism in Europe.”

How do science and technology play a part in changing worldviews? Is the existence and spread of new scientific knowledge/theories alone sufficient, or does the knowledge have to be applied in practical ways? Is the existence of technology alone a part of the change or, if not, how widespread must its use be? Are these changes in worldviews goals in and of themselves or are they a consequence of other activities? What markers (social factors, events, and/or trends) signify that there have been changes in worldviews?

Problem 4-12
Future Value of an Annuity

Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. Round your answers to the nearest cent. (Notes: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press FV, and find the FV of the annuity due.)

1. $400 per year for 10 years at 12%.
   $   
   
2. $200 per year for 5 years at 6%.
   $   
   
3. $400 per year for 5 years at 0%.
   $  

Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.

4. $400 per year for 10 years at 12%.
   $   
   
5. $200 per year for 5 years at 6%.
   $   
   
6. $400 per year for 5 years at 0%.
   $