Precision Machining Corporation has been growing steadily over the past decade. Demand for the company’s
products continues to rise, so management has decided to expand the production facility; $2 800 000 has been
set aside for this over the next four years.
Management has developed two different plans for expanding over the next four years: Plan A and Plan B. Plan
A would require equal amounts of $750 000, one year from now, two years from now, three years from now,
and four years from now. Plan B would require $300 000 now, $700 000 one year from now, $900 000 two
years from now, and $975 000 four years from now.
The company has decided to fund the expansion with only the $2 800 000 and any interest it can earn on it.
Before deciding which plan to use, the company asks its treasurer to predict the rates of interest it can earn on
the $2 800 000. The treasurer expects that Precision Machining Corporation can invest the $2 800 000 and earn
interest at a rate of 4.5% p.a. compounded semi-annually during Year 1, 5.0% p.a. compounded semi-annually
during Years 2 and 3, and 5.5% p.a. compounded semi-annually during Year 4. The company can withdraw part
of the money from this investment at any time without penalty.
Questions
1.
a. Could Precision Machining Corporation meet the cash requirement of Plan A by investing
the $2 800 000 as described above? (Use “now” as the focal date.)
b. What is the exact difference between the cash required and the cash available from the
investment?
2.
a. Could Precision Machining Corporation meet the cash requirements of Plan B by investing
the $2 800 000 as described above? (Use “now” as the focal date.)
b. What is the difference between the cash required and the cash available from the
investment?
3.
a. Suppose Plan A was changed so that it required equal amounts of $750 000 now, one year
from now, two years from now, and four years from now. Could Precision Machining
Corporation meet the cash requirements of the new Plan A by investing the $2 800 000 as
described above? (Use “now ” as the focal date.)
b. What is the difference between the cash required and the cash available from the
investment?
4. Suppose the treasurer found another way to invest the $2 800 000 that earned interest at a rate of 4.9%
compounded quarterly for the next five years.
a. Could the company meet the cash requirements of the original Plan A with this new
investment? (Show all your calculations.)
b. Could the company meet the cash requirements of Plan B with this new investment? (Show
all your calculations.)
c. If the company could meet the cash requirements of both plans, which plan would the
treasurer recommend? In other words, which plan would have the lower present value?

this is the case study

Precision Machining Corporation has been growing steadily over the past decade. Demand for the company’s products continues to rise, so management has decided to expand the production facility; $2 800 000 has been set aside for this over the next four years.

Management has developed two different plans for expanding over the next four years: Plan A and Plan B. Plan A would require equal amounts of $750 000, one year from now, two years from now, three years from now, and four years from now. Plan B would require $300 000 now, $700 000 one year from now, $900 000 two years from now, and $975 000 four years from now.

The company has decided to fund the expansion with only the $2 800 000 and any interest it can earn on it. Before deciding which plan to use, the company asks its treasurer to predict the rates of interest it can earn on the $2 800 000. The treasurer expects that Precision Machining Corporation can invest the $2 800 000 and earn interest at a rate of 4.5% p.a. compounded semi-annually during Year 1, 5.0% p.a. compounded semi-annually during Years 2 and 3, and 5.5% p.a. compounded semi-annually during Year 4. The company can withdraw part of the money from this investment at any time without penalty.

Questions

1. 1. Could Precision Machining Corporation meet the cash requirement of Plan A by investing the $2 800 000 as described above? (Use “now” as the focal date.)
   2. What is the exact difference between the cash required and the cash available from the investment?
2. 1. Could Precision Machining Corporation meet the cash requirements of Plan B by investing the $2 800 000 as described above? (Use “now” as the focal date.)
   2. What is the difference between the cash required and the cash available from the investment?
3. 1. Suppose Plan A was changed so that it required equal amounts of $750 000 now, one year from now, two years from now, and four years from now. Could Precision Machining Corporation meet the cash requirements of the new Plan A by investing the $2 800 000 as described above? (Use “now ” as the focal date.)
   2. What is the difference between the cash required and the cash available from the investment?
4. Suppose the treasurer found another way to invest the $2 800 000 that earned interest at a rate of 9% compounded quarterly for the next five years.
   1. Could the company meet the cash requirements of the original Plan A with this new investment? (Show all your calculations.)
   2. Could the company meet the cash requirements of Plan B with this new investment? (Show all your calculations.)
   3. If the company could meet the cash requirements of both plans, which plan would the treasurer recommend? In other words, which plan would have the lower present value?

An individual consumer in the neoclassical theory is assumed to be ‘rational,’ ‘isolated,’ and ‘representative.’ (i) Explain the meaning of a rational, isolated, and representative consumer; and (ii) explain why such a hypothetical individual consumer is needed in the neoclassical theory of consumption.

1. Describe how individual learning styles affect the degree to which a learner can understand or perform educational activities. Discuss the importance of an educator identifying individual learning styles and preferences when working with learners.

Problem-Solving Case: Training Call Center Employees

The employees in a call center need to be able to speak to customers politely, but their skill set is more complicated than etiquette. They also need to handle a range of questions and problems about particular products. Whenever their company adds a new line of products or services, the employees have to be prepared to answer a new set of questions. Thus, training is an ongoing con- cern in call centers. The traditional approach is to present new material in a classroom setting and supplement this learning with other training components. For efficiency and flexibility, call center train- ing often uses Web-based components. The most common form of these is called asynchronous Web-based training, a set of modules that each agent completes independently at his or her own computer by viewing the course content and then answering questions at his or her own pace. No live instructor is needed. Sometimes, the modules include a simulation in which the trainee handles calls from actors posing as customers with ques- tions or problems related to the course content. Some organizations can afford to customize their training programs to make them more engag- ing than reading text and answering multiple- choice questions. One such call center hired a training company called Resource Bridge to develop online training with the flavor of a video game. Modules for teaching courtesy and profes- sionalism show animated videos of three agents taking a phone call. One agent has a stiff manner, another speaks in pleasant, conversational tones, and the third is extremely casual, addressing the caller as “hon.” When trainees choose the style they think is most appropriate, the training video shows the customer’s reaction, rather than just indicating whether the choice is correct. For example, the customer responds to being called “hon” by becoming annoyed at the familiarity. Trainees quickly realize that the approach is ineffective. When supervisors monitor agents’ calls, they can use the recordings to identify training oppor- tunities. If the supervisor observes that an employee is having difficulty handling a particu- lar type of problem or customer, the supervisor can send the employee a Web-based training module that addresses the situation. Envision Click2Coach is a software tool that lets the super- visor select video demonstrations of how to handle a type of problem. The supervisor can record a voice-over explanation of how the employee could have handled a problem more effectively. These and other training programs allow supervisors to select graphics, documents, and audio clips (including recordings of the calls the employee handled) for insertion into the training modules. This capability lets the supervisor efficiently coach individual employees while both remain at their desks. Electronic coaching is easy and flexible, so supervisors need to be reminded of the importance of face-to-face communication with employees. Personal communication to offer encouragement is essential as a way to reinforce their use of the desired skills. New employees or employees who have just learned a new set of skills may begin working in a “nesting area.” They are seated together in an area of the call center where one or two supervisors are close at hand to provide assistance and answer questions. Also, experienced agents may be assigned to help employees in the nesting area. Plac- ing them in this coaching role may make employees feel more at ease (it can be more comfortable to seek help from a peer rather than from a supervisor). At the same time, coaching others can reinforce the more experienced employees’ knowledge and develops them to become supervisors in the future. Another popular way to train agents is to assign them to a veteran employee who serves as a mentor. For example, if a supervisor at Georgia Power’s call center determines that new agents have a weakness in a particular skill, the supervi- sor assigns those agents to experienced employees who excel in that skill. The agents and their mentors sit near one another so that the mentors are readily available to help. However, Paula Sacks, a Georgia Power supervisor, notes that mentors must be selected carefully. The mentors must be more than skillful at their jobs; they also must be good communicators who are willing to use part of their time for coaching.

Questions –

1. Imagine that you are a supervisor in a call center, where you oversee 20 employees who handle questions and problems from people who buy your client’s products—furniture that must be assembled using basic hand tools. Your client is preparing the launch of new products: rugs and other accessories. Now your agents must be prepared for a new set of issues, such as questions related to fabrics and colors. Which of the methods described in this case will you use to prepare the agents for these changes? Why?



2. Prepare a training plan for your agents. Will you train them all at once or in groups? Which method will you use first? Will you start the training before or during the product launch?



3. What, if anything, will you need to learn to prepare yourself for these changes? How will you develop your own skills?

Karla Tanner opens a Web consulting business called Linkworks and completes the following transactions in its first month of operations.
  

April 1 Tanner invested $130,000 cash along with office equipment valued at $31,200 in the company.

  2 The company prepaid $7,200 cash for twelve months’ rent for office space. (Hint: Debit Prepaid Rent for $7,200.)

  3 The company made credit purchases for $15,600 in office equipment and $3,120 in office supplies. Payment is due within 10 days.

  6 The company completed services for a client and immediately received $2,000 cash.

  9 The company completed a $10,400 project for a client, who must pay within 30 days.

  13 The company paid $18,720 cash to settle the account payable created on April 3.

  19 The company paid $6,000 cash for the premium on a 12-month insurance policy.

  22 The company received $8,320 cash as partial payment for the work completed on April 9.

  25 The company completed work for another client for $2,640 on credit.

   28 Tanner withdrew $6,200 cash from the company for personal use.

   29 The company purchased $1,040 of additional office supplies on credit.

   30 The company paid $700 cash for this month’s utility bill.

8.         A variable cost

            a.   decreases in total with increases in volume

            b.   increases on a per-unit basis with increases in volume

            c.   increases in total with increases in volume

            d.   decreases on a per-unit basis with increases in volume

            e.   None of the above

9.   In standard costing, the upper and lower control limits are used to determine

            a.   the direction of the variance

            b.   the dollar amount of the variance

            c.   whether or not to investigate a variance

            d.   All of the above

            e.   None of the above

10. The direct materials usage variance is part of the performance evaluation of the

            a.   production manager

            b.   sales manager

            c.   purchasing agent

            d.   controller’s office

            e.   None of the above

11. Volume variances are generally the responsibility of the

            a.   purchasing agent

            b.   production manager

            c.   sales manager

            d.   controller’s office

            e.   None of the above

12. When using variable costing,

            a.   all fixed costs are deducted on the variable costing income statement

            b.   the total cost of goods sold is deducted on the variable costing income statement

            c.   the cost allocated to ending inventory consists of both fixed and variable costs

            d.   the total contribution margin on the variable costing income statement is based on units produced

            e.   None of the above

13. According to GAAP, if the ending balance in the overhead control account is considered immaterial,

            a.   it is closed to direct materials, work-in-process, and finished goods

            b.   it is closed to work-in-process, finished goods, and cost of goods sold

            c.   it is closed to finished goods and cost of goods sold

            d.   the total is closed to cost of goods sold

            e.   None of the above

14. According to the IMA’s Statement of Ethical Professional Practice, an accountant must “Disclose all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations.” This falls under the category of

            a.   Competence

            b.   Confidentiality

            c.   Integrity

            d.   Credibility

            e.   None of the above

15. The margin of safety is

            a.   the amount of revenue earned (or expected to be earned) above the break-even point

            b.   the amount of revenue earned (or expected to be earned) above total fixed costs

            c.   the amount of revenue earned (or expected to be earned) above total costs

            d.   the amount of revenue earned (or expected to be earned) above total variable costs

            e.   None of the above

Unit 2 Assignment: Management Tools Application For the past several years, Dustin Larkin has operated a part-time consulting business from his home. As of June 1, 2013, Dustin decided to move to rented quarters and to operate the business, which was to be known as Quixote Consulting, on a full-time basis. Quixote Consulting entered into the following transactions during June:

June 1. The following assets were received from Dustin Larkin: cash, $10,000; accounts receivable, $1,500; supplies, $1,250; and office equipment, $7,500. There were no liabilities received.

June 1. Paid three months' rent on a lease rental contract, $4,500.

June 2. Paid the premiums on property and casualty insurance policies, $1,800.

June 4. Received cash from clients as an advance payment for services to be provided (Record it as unearned fees), $3,000.

June 5. Purchased additional office equipment on account from Crawford Company, $1,800.

June 6. Received cash from clients on account, $800.

June 10. Paid cash for a newspaper advertisement to run during June, $120.

June 12. Paid Crawford Company for part of the debt incurred on June 5, $800.

June 12. Recorded services provided on account for the period June 1 to June 12, $2,250.

June 14. Paid part-time receptionist for 2 weeks' salary, $400. (Note: Ignore any payroll tax or withholdings).

June 17. Recorded cash from cash clients for fees earned during the period June 1-16, $3,175.

June 18. Paid cash for supplies, $750.

June 20. Recorded services provided on account for the period June 13-20, $1,100.

June 24. Recorded cash from cash clients for fees earned for the period June 17-24, $1,850.

June 26. Received cash from clients on account, $1,600.

June 27. Paid part-time receptionist for two weeks' salary, $400. (Note: Ignore any payroll tax or withholdings).

June 29. Paid telephone bill for June, $130. Unit 2 [AC499: Bachelor’s Capstone in Accounting]

June 30. Paid electricity bill for June, $200.

June 30. Recorded cash from cash clients for fees earned for the period June 25-30, $2,050.

June 30. Recorded services provided on account for the remainder of June, $1,000.

June 30. Dustin withdrew $4,500 for personal use.

Instructions-Use the Excel template provided in the class titled “Unit 2 and 3 Management Tools Assignment” to complete the following 3 requirements for Unit 2: 1. Journalize each transaction in the two-column journal tab, referring to the following chart of accounts in selecting the accounts to be debited and credited. 11-Cash 31-Dustin Larkin, Capital 12-Accounts Receivable 32-Dustin Larkin, Drawing 14-Supplies 41-Fees Earned 15-Prepaid Rent 51-Salary Expense 16-Prepaid Insurance 52-Rent Expense 18-Office Equipment 53-Supplies Expense 19-Accumulated Depreciation 54-Depreciation Expense 21-Accounts Payable 55-Insurance Expense 22-Salaries Payable 59-Miscellaneous Expense 23-Unearned Fees 2. Post the journal to a ledger of four-column accounts, see the Excel tab labeled accordingly. 3. Prepare a trial balance as of June 30, 2013 – using the tab in the Excel workbook labeled accordingly. Be sure and save your work, you will complete the accounting cycle in Unit 3 using the same Excel Template and information. Unit 2 [AC499: Bachelor’s Capstone in Accounting] Notes: 1) Proper Journal Entry Formatting is absolutely mandatory. a. Debit Account Descriptions are to be fully left-justified in the line. b. Credit Account Descriptions are to be indented in the cell. c. A short description is required for every journal entry. 2) You will be required to create at least ONE additional general Ledger Account to accommodate a few Journal Entries. 3) You may need to add the “Miscellaneous Expense" account to the GeneralLedger. 4) Or, you may create 2 or 3 new G/L accounts. For example "Utilities." 5) Be sure that you use proper formatting when you create the Financial Statements. For example: a. Add required underlining, b. "$" signs must be properly formatted. 6) The templates are NOT fully “pre-formatted.” You must re-format them for proper presentation in a number of places. Remember, if you have any questions, concerns, or doubts about any of the instructions, please contact your instructor in the Virtual Office as soon as possible.