BUSINESS AND SOCIETY
1 PAGE ESSAY QUESTION
(I'll give you thumbs up.)
In your opinion, should the same person be both CEO and Chair of the Board of Directors?
In: Operations Management
Suppose you are the CEO of Nike and the world is coping with an economic recession. Would you change the corporate strategy? If so, what changes would you make and why? If not, why not?
In: Operations Management
Mobile Oil Company
The Mobile Oil company owns land in Alaska that might contain natural oil. The current value of the land is worth $90,000. However, if natural oil is present at the site, the oil will be worth $800,000. If the company decides to extract the oil from the land, the company will have to pay $100,000 in drilling costs.
Before drilling, the company has an option to carry out a seismic survey at the proposed drilling site. If they do not choose to carry out the survey, the company believes that there is a 0.25 probability that the proposed drilling site actually contains natural oil. However, if the company chooses to carry out the survey, the company will have to pay $30,000 for the test to be completed.
If the seismic survey is conducted, there are two possible outcomes. In other words, the survey will show either favorable or unfavorable result that natural oil is present. Based on historic records, if the results are favorable, the probability of hitting oil increases to 0.50. Even if the survey is unfavorable, there is still a chance that natural oil is present. However, if this is the case, the probability of hitting oil reduces to 0.14285.
If Mobile Oil decides not to drill, the company will sell their land at its current value. However, the land is considered worthless if the land is drilled. In addition, if the land has value (i.e. not drilled on), assume that the current value of the land does not change based on the results of the survey.
A summary of the financial parameters is shown below in Table 1, where costs are in terms of thousands of dollars.
Table 1: Financial parameters ($000)
Survey cost
-$30
Drilling cost
-$100
Current value
$90
Oil value
$800
Land value if drilled
$0
1. Develop a decision tree for this problem so that the expected monetary value can be evaluated.
a. HINT: Be sure to reference the tables that have been provided.
b. HINT: You will use the probabilities listed in Table 2 only once in order to develop a decision tree for this problem correctly.
2. Develop a formula that determines the highest expected monetary value that Mobil Oil can anticipate. In addition, develop a formula that will determine the course of action that Mobil Oil will take (i.e. Survey Do not Survey).
Please list out the excel formula's for each. I was not able to include the table for the data when I copied over.
Comments and Hints
Several probabilities are needed in order to construct a decision tree correctly. These probabilities are listed below in Table 2. However, to understand the probabilities that are given to you, please consider the following notation. For example, P(OP) is the probability of oil being present and P(OP|F) is the
probability of oil being present given (i.e. “|” ) that a favorable survey result was obtained. A
description of the abbreviations used in this problem is shown in the list below.
• OP Oil is Present
• ONP Oil is Not Present
• F Favorable Survey
• U Unfavorable Survey
The probabilities that are necessary to fill out the decision tree correctly are shown in the table below.
Table 2: Decision Tree Probabilities
P(OP) 0.25000%
P(ONP) 0.75000%
P(FS) 0.30000%
P(US) 0.70000%
P(OP|FS) 0.50000%
P(OP|US) 0.14285%
P(ONP|FS) 0.50000%
P(ONP|US) 0.85715%
In: Finance
Hector Company has developed the following standard costs for
its product for 2019:
| HECTOR COMPANY Standard Cost Card |
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| Product A | |||||||||||||||
| Cost Element | Standard Quantity | × | Standard Price | = | Standard Cost | ||||||||||
| Direct materials | 4 pounds | $3 | $12 | ||||||||||||
| Direct labor | 3 hours | 8 | 24 | ||||||||||||
| Manufacturing overhead | 3 hours | 4 | 12 | ||||||||||||
| $48 | |||||||||||||||
The company expected to produce 30,000 units of Product A in 2020
and work 90,000 direct labor hours.
| Actual results for 2020 are as follows: | |||
| • | 31,000 units of Product A were produced. | ||
| • | Actual direct labor costs were $746,200 for 91,000 direct labor hours worked. | ||
| • | Actual direct materials purchased and used during the year cost $346,500 for 126,000 pounds. | ||
| • | Actual variable overhead incurred was $155,000 and actual fixed overhead incurred was $205,000. | ||
Compute the following variances showing all computations to support
your answers. Indicate whether the variance are favorable or
unfavorable?
| (a) | Materials Quantity Variance | $ | UnfavorableNot ApplicableFavorable | |||
| (b) | Total Direct Labor Variance | $ | FavorableNot ApplicableUnfavorable | |||
| (c) | Direct Labor Quantity Variance | $ | UnfavorableFavorableNot Applicable | |||
| (d) | Direct Materials Price Variance | $ | UnfavorableNot ApplicableFavorable | |||
| (e) | Total Overhead Variance | $ | Not ApplicableFavorableUnfavorable |
In: Accounting
Marvelly company manufactures and sells dolls. The company plans to manufacture and sell 80,000 units of the dolls for $4,000,000 in 2020 with the following information: The cost for each doll consists of direct material $15, direct labour $10, and variable manufacturing overhead $5. The salaries of the factory manager and supervisors are estimated at $300,000 per annum, depreciation of machinery, factory equipment, and buildings is budgeted at $250,000 per year, and the rental of factory building is $200,000 per year.
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In: Accounting
Company 1:
| Industry Median | 2020 | 2019 | 2018 | 2017 | 2016 | |
| Profitability | ||||||
| Gross Margin | 39.2% | 29.8% | 29.3% | 29.7% | 30.1% | 29.5% |
| EBITDA Margin | 9.5% | 9.3% | 8.9% | 9.3% | 10.3% | 9.7% |
| Operating Margin | 6.1% | 6.0% | 5.5% | 5.6% | 6.3% | 7.5% |
| Pretax Margin | 5.4% | 5.4% | 4.9% | 5.0% | 5.6% | 6.7% |
| Effective Tax Rate | 23.3% | 22.0% | 21.3% | 29.3% | 32.7% | 32.5% |
| Net Margin | 4.2% | 4.2% | 3.8% | 3.5% | 3.8% | 4.5% |
Company 2:
| Industry Median | 2020 | 2019 | 2018 | 2017 | 2016 | |
| Profitability | ||||||
| Gross Margin | 21.3% | 22.1% | 21.7% | 22.0% | 22.4% | 22.2% |
| EBITDA Margin | 4.9% | 4.1% | 4.2% | 4.2% | 5.0% | 5.2% |
| Operating Margin | 3.2% | 2.0% | 3.6% | 2.1% | 3.0% | 3.3% |
| Pretax Margin | 2.4% | 1.6% | 3.3% | 1.2% | 2.5% | 2.8% |
| Effective Tax Rate | 23.6% | 23.7% | 22.6% | 34.8% | 32.8% | 33.8% |
| Net Margin | 1.5% | 1.2% | 2.5% | 0.8% | 1.7% | 1.9% |
Please discuss the profitability aspects for both companies and decide which company do you think perform better. The discussion should include, but not exhaustive to trend, prospect, competitive structure etc.
In: Finance
The balance sheets for Plasma Screens Corporation, along with additional information, are provided below: PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 155,100 $ 171,800 Accounts receivable 74,800 88,000 Inventory 87,000 72,800 Prepaid rent 2,400 1,200 Long-term assets: Land 440,000 440,000 Equipment 732,000 630,000 Accumulated depreciation (406,000 ) (252,000 ) Total assets $ 1,085,300 $ 1,151,800 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 91,000 $ 77,800 Interest payable 6,900 13,800 Income tax payable 6,400 4,200 Long-term liabilities: Notes payable 115,000 230,000 Stockholders' equity: Common stock 660,000 660,000 Retained earnings 206,000 166,000 Total liabilities and stockholders' equity $ 1,085,300 $ 1,151,800 Additional Information for 2021: Net income is $61,000. The company purchases $102,000 in equipment. Depreciation expense is $154,000. The company repays $115,000 in notes payable. The company declares and pays a cash dividend of $21,000. Required: Prepare the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.
In: Accounting
The balance sheets for Plasma Screens Corporation, along with additional information, are provided below:
| PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 |
||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 107,800 | $ | 118,100 | ||||
| Accounts receivable | 80,000 | 94,500 | ||||||
| Inventory | 100,000 | 84,500 | ||||||
| Prepaid rent | 5,000 | 2,500 | ||||||
| Long-term assets: | ||||||||
| Land | 505,000 | 505,000 | ||||||
| Equipment | 810,000 | 695,000 | ||||||
| Accumulated depreciation | (433,000 | ) | (278,000 | ) | ||||
| Total assets | $ | 1,174,800 | $ | 1,221,600 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 104,000 | $ | 89,500 | ||||
| Interest payable | 6,300 | 12,600 | ||||||
| Income tax payable | 9,000 | 5,500 | ||||||
| Long-term liabilities: | ||||||||
| Notes payable | 105,000 | 210,000 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 725,000 | 725,000 | ||||||
| Retained earnings | 225,500 | 179,000 | ||||||
| Total liabilities and stockholders' equity | $ | 1,174,800 | $ | 1,221,600 | ||||
Additional Information for 2021:
Required:
Prepare the statement of cash flows using the indirect method.
(List cash outflows and any decrease in cash as negative
amounts.)
In: Finance
The term clientele effect refers to the tendency of firms to attract investors who like their dividend policies. Three potential investors are described in the table.
Indicate which type of firms they are most likely to be attracted to.
| Potential Investors | Types of Firms |
|---|---|
| Stockholders in their peak earning years | (high dividend payout, low dividend payout) |
| Investors who have a preference for current investment income | (high dividend payout, low dividend payout) |
| Retired individuals, pension funds, and university endowment funds | (high dividend payout, low dividend payout) |
Defense Dynamics Co. is a typical company that is very concerned with meeting investors’ expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Defense Dynamics Co.’s dividend policy?
Defense Dynamics Co. will be willing to increase its dividend only if it believes that it will be able to maintain the dividend increase in future years.
Defense Dynamics Co. will increase its dividends in years when it has high earnings so that it can distribute excess free cash flows to investors, even if it means that the firm will have to reduce its dividend in subsequent years.
In: Finance
According to Rescorla-Wagner, combining two or more conditioned stimuli with a single US:
A. Strengthens the association between both of the CS and the US
B. Blocks the association between both of the CS and the US
C. Blocks the association between one of the CS and the US
D. Weakens the association between both CS and the US
In: Psychology