MSI is considering eliminating a product from its ToddleTown Tours collection. This collection is aimed at children one to three years of age and includes “tours” of a hypothetical town. Two products, The Pet Store Parade and The Grocery Getaway, have impressive sales. However, sales for the third CD in the collection, The Post Office Polka, have lagged the others. Several other CDs are planned for this collection, but none is ready for production.  

MSI’s information related to the ToddleTown Tours collection follows:  

*Allocated based on total sales revenue.      

MSI has determined that elimination of the Post Office Polka (POP) program would not impact sales of the other two items. The remaining fixed overhead currently allocated to the POP product would be redistributed to the remaining two products.  

Required:
1. Calculate the incremental effect on profit if the POP product is eliminated.

   

2. Should MSI drop the POP product?

   

3-a. Calculate the incremental effect on profit if the POP product is eliminated. Suppose that $3,700 of the common fixed costs could be avoided if the POP product line were eliminated.

   

3-b. Should MSI drop the POP product?

You are a financial adviser and the following information is an extract of data you gathered as part of fact finding during an initial client consultation for married couple Janet and Steven Blake. Janet works as a Teacher and Steven works as town planner at the local government. The have two children who are aged 12 and 14.

The Blake’s have diversified their investments by investing equally in a bank savings account, a fund and some Macquarie Group Ltd Shares. Their risk profile is equivalent to that of a growth investor. They have come to you understand how they should invest in the future.

Income for year ended 30^th June 2018:

Current Assets and Liabilities

Required:

Review the Blake’s investment portfolio and explain whether they are diversified adequately. Consider both investments across different asset classes and investments within classes. Make two recommendations on how they should change their portfolio for future investments and justify these recommendations.

A. Please read the following situation statement and answer the questions that follow:

While traveling on business with a co-worker, you spend quite a few evenings having dinner and cocktails with your co-worker’s extended family that lives in town. After each of these meals your co-worker charges the entire meal to his corporate credit card, which he then submits as a business expense as part of his travel expense report. As these meals were not overly extravagant, the total value is small enough to get “lost” in the overall expense report, thus considered to be insignificant from the perspective of your co-worker.

Would the inclusion of these meals on his corporate expense report be considered fraudulent?

Does the low dollar value of these transactions impact your opinion?

If you consider this activity potentially fraudulent, do you have a responsibility to report the activity? If so, to whom?

If you confronted your co-worker and his response was, “You are correct, that was a mistake on my part. I did not realize that I was improperly handling these expenses. I will be sure to pay them with my own personal funds once the bill is received,” would you take further action and report the incident or consider it settled based on the conversation?

B. Please answer each of the following questions in paragraph form providing examples and support from the chapter readings and other sources:

What is the difference between fraud and error?

Is there evidence to support the notion that instances of fraud have increased at a rapid rate? Provide insight into the driver(s) of this issue.

Please provide the description and at least one example of each type of fraud:

Employee embezzlement

Management fraud

Investment scam

Vendor fraud

Customer fraud

Miscellaneous fraud

5) The police think that the true murderer is extremely smart. Examine the information below concerning test scores. You can safely eliminate any suspect who did not score in the 98^th percentile. For each suspect, sketch a graph of the distribution and the approximate location of the score to help you compute the percentile.

(a) The crazy mom scored a 168 on the quantitative portion of the GRE. GRE scores are normally distributed with a mean quantitative score of 151.3 and a standard deviation of 7.7.

(b) The neighbor with a stockpile of toilet paper scored a 770 on the GMAT. GMAT scores are normally distributed with a mean score of 563 and a standard deviation of 94.

(c) The self-proclaimed social media influencer scored 125 on a free online IQ test that was advertised on Facebook. IQ test scores are normally distributed with a mean score of 100 and a standard deviation of 15.

d) The police believe that the murder, which took place Tuesday afternoon, must have occurred in a location with very few visitors since no one has come forward as a witness. You can eliminate a location if the mean number of visitors on a Tuesday afternoon is greater than 15. Perform a hypothesis test for each possible murder location with α = 0.05. For simplicity, assume that all assumptions are satisfied.

The statistics collected from 10 Monday afternoons at each of the possible murder locations are recorded below.

(e) The abandoned X-bar Pool Hall: x̄ = 17, s = 3.8

(f) The Two-Tailed Tower: x̄ = 16, s = 1.1

(g) The Chi-Square town square: x̄ = 16, s = 2.2

For this question, the supply and demand equations are the same as initially provided in question 1: w = 10 + 0.2QS for supply and w = 40 – 0.2QD for demand.

a. (4 points) Suppose a wealthy businessman, Jeff Bozos, strategically buys all the local clown firms and becomes the only person in town hiring clowns. Bozos’ firm has a marginal cost of hiring determined by the equation: MC = 10 + 0.4Q. Assume there is no minimum wage in the market. i. Determine the number of clowns hired and the wage in this monopsony market. ii. What is the value of the marginal product of the last worker hired? What is the reservation wage of the next person that is not hired. Explain why this person is not hired. iii. Briefly discuss why we expect market outcomes to differ based on the level of competition in the labor market.

b. (4 points) Draw a graph depicting the labor market situation in part a and label the areas of firm surplus and worker surplus. Solve for the values of firm surplus, worker surplus, and total surplus. Discuss how the outcomes differ in the monopsony and competitive markets. How inefficient is the market power scenario?

c. (4 points) Consider the impacts of the minimum wage from question 1, part c. In that case we looked at how a minimum wage affects a competitive market. Compare the expected changes in wage and quantity of workers hired based on the level of labor market competition. How would firm surplus, worker surplus, and total surplus in the monopsony market change with the implementation of a $28 minimum wage? Discuss why the impacts of the minimum wage differ based on the level of market power.

Your professor is going on vacation. He has narrowed down a list of potential hotels, but he is still overwhelmed by the data. He loves great food and wants to do all the activities at the resort.

1. Develop two unique ways to display the data (two unique types of charts) to show him where he should stay.

2. Recommend the best way to present the data. Write a narrative summary of what hotel you recommend based on the data visualization and the tradeoffs that you observe.

Three farmers (Farms A, B, and C) have offered their land for sale for business development.  Each parcel of land is approximately 1,000 acres and all the farms are located within the same region.  The economic development committee in your small town has asked you to do some research on the farmer’s land before negotiations begin so the committee will know what to expect in advance as far as offering fair compensation.  The farmers have made last year’s financial records available for their farms (they all grew soybeans) and your job is to assess the fertility of each farmer’s land.  Assume each farmer uses current best practices regarding input costs.

1. Use the farm records below to rank the farmers’ land with either a “top”, “medium” or “low” compensation ranking so that each farm receives a ranking.  Note that this approach will follow the Ricardo theory of land value.  (15 Points)

Farm A:

Average market price for the crops: $10.50/bushel

Average Yield: 34 bushel/acre

Average Production Cost per Acre: $162

Rank:

Farm B:

Average market price for the crops: $10.50/bushel

Average Yield: 38 bushel/acre

Average Production Cost per Acre: $132

Rank:

Farm C:

Average market price for the crops: $10.50/bushel

Average Yield: 41 bushel/acre

Average Production Cost per Acre: $157

Rank:

2. Do you think that fertility alone should explain the value of land or are there other factors at play that should go into the compensation offer?  Why or why not?  (10 points)

The govt of bigtown is concerned about its revenues. It has increased it tax rate from 2.2% to 2.8% fr companies with net business income exceeding $2M while at the same time reducing the rate from 2.2% to 1.9% for companies with net business income between $1M and $2M. Companies with less than $1M net business income are not taxed. Requirements: For each of the following 4 situations: a, determine total projected govt revenues before and after the tax increase. b, explain in couple of sentences whether and why you consider this good or bad tax policy. Situation 1: The total amount of net taxable business income for companies with income exceeding $2M remains static at $50M and net taxable income for companies with income between $1M and $2M remains static at $100M for the entire town. Situation 2: total amount for the net taxable business income decreases from $ 50M to $48Mfor companies with income exceeding $2M due to business moving to a different jurisdiction. The net taxable income for companies with income between $1M and $2M remains static at $100M. Situation 3: the total amount of net taxable income for businesses with income exceeding $2Mdecreases from $50M to $45M ue to bsiness moving to different jurisdiction. However, total taxable income for companies with income between $1M and $2M increased from $100M to $110M. Situation 4: total amount of net taxable business income for businesses with income exceeding $2M decreases from $50M to $47M due to business moving in different jurisdiction. However, total taxable income for companies with income between $1M to $2M increased from $100M to $120M.