5.) All of the following statements concerning variable life insurance are correct EXCEPT

(a)If the variable universal life policy investment experience is weak, the death benefit amount may be reduced to zero.

(b)Variable life has a fixed premium and fluctuating death benefit and cash values.

(c)Variable life policies must be regulated by the Securities and Exchange Commission (SEC).

(d)The owner of a variable universal life policy has the option to invest in a variety of investments.

7.) All of the following statements concerning disability income insurance are correct EXCEPT:

(a)Premiums for disability income insurance coverage are a function of the insured’s health, gender, age, and the level of income benefits provided by the policy.

(b)To qualify for disability income, one must become disabled while the policy is in force and remain so until the elimination (exclusion) period has ended.

(c)A policy that integrates with Social Security will reduce payable benefits by the amount of Social Security the disabled person is eligible to receive.

(d)The Social Security program requires the disabled person to wait 1 month before receiving benefits.

8.) Which of the following statements concerning the characteristics of disability income insurance is correct?

(a)During the elimination period, disability income benefits are paid.

(b)When disability income benefits are being paid the insured still must continue making the policy premium payments.

(c)The residual benefits clause preserves the purchasing power of the insured’s disability income benefits.

(d)In a cost of living rider, an adjustment is made for each year of benefits paid to the insured and is computed by using the same rate of change as, say, the Consumer Price Index.

9.) Which of the following insurance payment benefits would be reported as income and therefore subject to Federal income tax?

(a)The death benefit paid to the spouse after the death of her husband.

(b)When the insured dies and a MEC pays a death benefit.

(c)Disability benefits paid to a disabled worker if premiums for the policy were paid by the employer.

(d)Disability benefits paid to a disabled worker if premiums for the policy were paid by the employee with after tax dollars.

You are the audit manager at Price & Coopers a medium-sized audit firm undertaking the audit for the
year ended 30 June 2018 of Sera Ve Tech Ltd, an electronic component manufacturer located in
Sydney. During the planning stage of the audit you discovered that one of Sera Ve Tech Ltd’s major
suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem,
James Marshall, the husband of the finance director, Norita James, provided electronic components
to Sera Ve Tech Ltd through his private company. There is no formal agreement in place with James
Marshall, however, the goods are being provided at competitive prices. You are concerned about the
electronic components that James Marshall, company is supplying, because his products are new to
the market and you have heard some of Sera Ve Tech Ltd’s staff complaining that they are of poor
quality.

The board has informed you that although sales have been strong this year, Sera Ve Tech Ltd has
suffered significant cash flow problems because a major debtor, Merrinda Ltd, is experiencing financial
difficulties. As a result, Merrinda Ltd is taking well over 120 days to pay outstanding amounts, despite
Merrinda Ltd’s terms of trade being payment within 30 days. Merrinda Ltd makes up 40 per cent of
Sera Ve Tech Ltd’s sales and the board has been reluctant to take any action that might adversely
affect those sales. As a result, Sera Ve Tech Ltd has had to increase its dependency on its line of credit,
and this has caused it to temporarily breach the debt to equity ratio required in its loan covenant with
Commonwealth Bank Ltd.


Required:

(a) Identify two (2) key account balances at risk of material misstatement.
(b) For each account balance identify the key assertion at risk.
(c) Explain why the account balance and assertion are at risk.

(d) Describe one (1) substantive test of detail that you would undertake for each account to address the assertion and risk identified.

Sami sells banana and groundnuts at Dansoman Polyclinic. In view of an impending hospital infrastructure expansion program, she has obtained permission to sell waakye on the hospital compound. She visited L400 Micocredit for a loan. You gathered the following information in your interaction with her.

• She needs to buy a cooking pot valued at $185.00. She owns a pan used for selling the vaakye with the current value of $ 80.00

• Her locally manufactured coal pot uses LPG gas and can prepare food on a relatively larger-scale, is estimated at $80.00.The LPG cylinder costs $ 70.00.

• She has arranged with the carpenter to prepare a table, a hi$ stool, two long benches and a long table which will enable her customers eat at her joint. The total cost of the furniture is $ 420.00. Her husband has been able to raise $200.00 cash for this purpose. The carpenter has agreed to give her two months to settle her bill.

• Eating plates, spoons and other cooking utensils will cost her $ 350.00. Her savings balance at L400 Finance is $ 250.00. The woman selling these items has agreed on a one-month trade credit. However, she must make an initial payment of $ 100.00 before she will be allowed to take the items.

• She will stock-up the rice and beans for at least a month in order to avoid unplanned price changes. It takes 3 days to finish using a mini bag of rice valued at $ 180.00 and twice that period to fully use up a mini bag of beans valued at $ 250.00. She has negotiated for a month’s trade credit with her supplier.

• She requires about $ 250.00 to finance fish, meat and all the other ingredients for preparing he pepper and stew. She requires about $ 100.00 to provide for any unexpected change in prices of the ingredients.

• She will be able to raise about $ 250.00 from selling the remaining stock of banana and groundnuts

a. Prepare a Statement of Affairs schedule for Sami at the beginning of the business in order to determine the amount of loan she may requires for the business.

Suppose Rina is an avid reader and buys only mystery novels. Rina deposits $4,000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a mystery novel is priced at $20.00.

Initially, the purchasing power of Rina's $4,000 deposit is.......... mystery novels. ???????

For each of the annual inflation rates given in the following table, first determine the new price of a mystery novel, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Rina's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates.

Hint: Round your answers in the first row down to the nearest mystery novel. For example, if you find that the deposit will cover 20.7 mystery novels, you would round the purchasing power down to 20 mystery novels under the assumption that Rina will not buy seven-tenths of a mystery novel.

When the rate of inflation is equal to the interest rate on Rina's deposit, the purchasing power of her deposit ............... over the course of the year.??????

RS p.1.c. manufactures domestic food mixers. It is investigating whether or not to accept a three-year contract to make a new model for sale through a supermarket chain. The contract uses skilled labour which cannot be increased above that currently available and RS p.1.c. will receive a fixed price of £42 per mixer for all the mixers it can produce in the three-year period. The following estimates have been made:

Capital investment £50000 payable now, with nil scrap value.

Additional overhead £25000 per annum.

Materials £30 per mixer Labour £6 per hour.

The factory manager knows from experience of similar machines that there will be a learning effect for labour. He estimates that this will take the form:

y = ax^-0.3

where y = average labour hours per unit

a = labour hours for first unit

x = cumulative production

He estimates that the first mixer will take 10 hours to produce and that the fixed amount of labour available will enable 5000 mixers to be produced in the first year. Apart from the capital investment, all cash flows can be assumed to arise at year ends. The company has a cost of capital of 15%.

Conduct a sensitivity analysis to support the decision-making process.

16.

a. Keenan Industries has a bond outstanding with an 8.25% coupon, payable semiannually, and a $1,000 par value. The bond's dollar price is $1,066.00 and the bond is callable at 104. The bond's yield to call is 7.41 percent. When can the bond be called (round to the nearest whole year)?

b. You turn 35 today, and you plan to save $2,000 each month for retirement, with the first deposit made at the end of this month. You plan to retire 30 years from today, when you turn 65, but you're not sure how long you can expect to live after retirement, so you want the payments to go on forever. Under these assumptions, how much can you spend each month after you retire? Your first withdrawal will be made at the end of the first month of retirement.

c. You agree to make 36 deposits of $750 at the end of each month into a bank account. At the end of the 36th month, you will have $30,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning?

You will invest in a mutual fund that's expected to provide a return of 4.5% per year, compounded monthly throughout your life.

Production Budget

Flashkick Company Manufactures and sells soccer balls for teams of children in elementary and high school. Flashkick's best selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the first four months of next year, Flashkick expects to sell the following:

___________Practice Balls_______________________Match Balls

_________Units_________selling price________units________selling price

January ___50,000_________$8.75__________7000___________$16.00

February___58000_________$8.75__________8000___________$16.00

March _____70000_________$8.75_________12000___________$16.00

April______100000_________$8.75_________18000___________$16.00

Flashkick requires ending inventory of product to equal 20 percent of the next month's unit sales. Beginning inventory in January was 3,300 practice soccer balls and 400 match soccer balls.

Required

Construct a production budget for each of the two product lines for Flashkick Company for the first three months of the coming year.

Production budget for practice balls

Flashkick Company

Production Budget - Practice balls

For the first quarter of next year

_________________January______________February__________________March

unit sales____________?__________________?_______________________?

desired ending inventory__?_______________?________________________?

total needed__________?_________________?________________________?

Less: Beginning inventory____?____________?________________________?

unit produced______________?___________?_________________________?

Production budget for match balls:

Flashkick Company

Production Budget - Match Balls

_______________January___________February_______________March

unit sales________?__________________?_____________________?

desired ending inventory___?___________?_____________________?

Total needed_____?__________________?_____________________?

Less: Beginninng inventory____?________?_____________________?

Units produced________?_____________?______________________?

Lahser Corp. produces component parts for durable medical equipment manufacturers. The controller is building a master budget for the first quarter of the upcoming calendar year. Selected information from the accounting records is presented next:

a. Accounts Receivable as of January 1 are $59,200. Selling price per unit is projected to remain stable at $11 per unit throughout the budget period. Sales for the first six months of the upcoming year are budgeted to be as follows:

b. Sales are 20% cash and 80% credit. All credit sales are collected in the month following the sale.

c. Lahser Corp. has a policy that states that each month’s ending inventory of finished goods should be 10% of the following month’s sales (in units).

d. Three pounds of direct material is needed per unit at $2.30 per pound. Ending inventory of direct materials should be 20% of next month’s production needs.

e. Monthly manufacturing overhead costs are $5,650 for factory rent, $2,900 for other fixed manufacturing costs, and $1.10 per unit produced for variable manufacturing overhead. All costs are paid in the month in which they are incurred.

4. What is the budgeted direct materials cost for the first quarter? (1 point)

ALL COMPONENTS / QUESTIONS MUST BE FULLY ANSWERED -- DO NOT USE THE SIMILAR TEXTBOOK SOLUTIONS ALREADY IN PLACE

IF YOU ARE UNABLE TO ANSWER ALL COMPONENTS, PLEASE DO NOT ANSWER. INCOME STATEMENTS SHOULD BE IN THE MOST BASIC FORM. OPENING AND CLOSING INVENTORY, ETC., ARE NOT TO BE INCLUDED.  

Ciroc Company manufactures and sells one specific product. The following information pertains to each of Ciroc's first three years of operations:

Variable costs per unit:
Manufacturing:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 32
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20
Variable manufacturing overhead . . . . . . . . . . $ 4
Variable selling and administrative . . . . . . . . . $ 3
Fixed costs per year:
Fixed manufacturing overhead . . . . . . . . . . . . $ 660,000
Fixed selling and administrative expenses . . . $ 120,000
During its first year of operations, Ciroc produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, Ciroc produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $ 75 per unit.

Required: (ALL COMPONENTS OF ALL 4 QUESTIONS MUST BE ANSWERED -- DO NOT USE THE TEXTBOOK SOLUTIONS ALREADY FOUND IN THIS BOOK)

1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO meanslast-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO meansfirst-in first-out. In other words, it assumes that the oldest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

Scenario Background:

A marketing company based out of New York City is doing well and is looking to expand internationally. The CEO and VP of Operations decide to enlist the help of a consulting firm that you work for, to help collect data and analyze market trends.  

You work for Mercer Human Resources. The Mercer Human Resource Consulting website (www.mercer.com) lists the prices of certain items in selected cities around the world. They also report an overall cost-of-living index for each city compared to the costs of hundreds of items in New York City (NYC). For example, in London at 88.33 is 11.67% less expensive than NYC.

More specifically, if you choose to explore the website further you will find a lot of fun and interesting data. You can explore the website more on your own after the course concludes.

https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings#rankings

In the Excel document, you will find the 2018 data for 17 cities in the data set Cost of Living. Included are the 2018 cost of living index, cost of a 3-bedroom apartment (per month), price of monthly transportation pass, price of a mid-range bottle of wine, price of a loaf of bread (1 lb.), the price of a gallon of milk and price for a 12 oz. cup of black coffee. All prices are in U.S. dollars.

You use this information to run a Multiple Linear Regression to predict the Cost of living, along with calculating various descriptive statistics. This is given in the Excel output (that is, the MLR has already been calculated. Your task is to interpret the data).  

Based on this information, in which city should you open a second office in? You must justify your answer. If you want to recommend 2 or 3 different cities and rank them based on the data and your findings, this is fine as well.