Revenue Recognition and Ethics. The following article was published in Newsday on February
9, 2009:
Call for Probe of Ticket Sales
Bruce Springsteen fans were victims of a “classic bait and switch” scam by the nation’s
largest concert ticket seller, Senator Charles Schumer said yesterday, as he called for a
federal investigation into the company, Ticketmaster. Schumer wants the Federal Trade
Commission to look into whether the Ticketmaster website withheld the best tickets from the
public and then shuttled fans to TicketsNow, a fully owned subsidiary. TicketsNow had the
best seats available immediately—at sky-high prices—after Springsteen tickets went on sales
at 10 A.M. on February 2.
A federal investigation would look into whether Ticketmaster was instantly scalping the tickets,
never giving fans a chance to buy them at face value, Schumer said. Customers who tried to
buy tickets originally priced at $95 on Ticketmaster’s website were directed to TicketsNow
where they were priced at more than $2,000.
Since buying TicketsNow in February, Ticketmaster has faced similar criticism for its handling
of Elton John tickets in Canada and numerous U.S. concert tours, including Radiohead. Law
enforcement agencies in Connecticut and New Jersey have also launched investigations.
Required:
a. During the course of an audit, do you believe that the auditor should look into how revenues
are being generated? Do you think the auditors should have looked at the business
practices of Ticketmaster?
b. Assume that Ticketmaster had properly accounted for the revenue it received from the
Springsteen concert. Should the auditors have asked Ticketmaster to make adjustments or
disclosures regarding its sales practices?
c. Should Ticketmaster disclose the investigations being conducted in Connecticut and New
Jersey?

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Madge is a sole trader who has decided to form a small proprietary company and move her business into a corporate form. Madge’s business is quite small, with some assets and modest revenue. She has paid tax personally in the past. Madge is now curious as to whether there are any requirements on the small company she is about to register. What are the procedures and reporting requirements on a small proprietary company regarding records, accounts and reports required by the Corporations Act and ASIC?

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Tiner Leasing Company purchased specialized equipment from Fred

Company on December 31, 2019 for $800,000. On the same date, it leased this equipment to Tears Company for 6 years, the useful life of the equipment. The lease payments begin January 1, 2020 and are made every 6 months. Tiner Leasing wants to earn 9% annually on its investment.

   (a) Calculate the amount of each rent. $ __________

   (b) How much interest revenue will Tiner earn in 2020? $ __________

The following annual per unit cost data at an activity level of 4,000 units has been provided below. The company produces and sells only one product.:

The relevant range is 2,500 - 5,500 units. You will be given facts for three different options. Using the facts given, calculate amounts as directed below. Take each option independent of the others (start with the original information given for each).  

You must enter your answer in the following format: $x,xxx

At the current level of activity, calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

The company is considering a price reduction approach to increase net income. The company believes that a 10% reduction in sales price will increase volume by 20%. Simultaneously, there will be a change in suppliers for direct material that will result in lowering direct material costs by 15%. Calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

The company is also considering an approach that will not alter sales price. The company believes that by laying off non-productive workers they can reduce direct labor to 4% of sales. Combined with a $4,000 increase in advertising per month, they estimate sales will increase 2% over current sales.  Calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

Forecasting labour costs is a key aspect of hotel revenue management that enables hoteliers to appropriately allocate hotel resources and fix pricing strategies. Mary, the President of Hellenic Hoteliers Federation (HHF) is interested in investigating how labour costs (variable L_COST) relate to the number of rooms in a hotel (variable Total_Rooms). Suppose that HHF has hired you as a business analyst to develop a linear model to predict hotel labour costs based on the total number of rooms per hotel using the data provided. 3.1 Use the least squares method to estimate the regression coefficients b0 and b1 3.2 State the regression equation 3.3 Plot on the same graph, the scatter diagram and the regression line 3.4 Give the interpretation of the regression coefficients b0 and b1 as well as the result of the t-test on the individual variables (assume a significance level of 5%) Determine the correlation coefficient of the two variables and provide an interpretation of its meaning in the context of this problem.Check statistically, at the 0.05 level of significance whether there is any evidence of a linear relationship between labour cost and total number of rooms per hotel