Which assertion about stocks gamma, Hotel, India, and Juliet is true if PH > PJ > 0 and PI > PG > 0? And:

• All 4 stocks pay annual dividends with the next dividend expected to be paid in 1 year.
• The dividends for each stock are expected to grow at a constant rate of G forever.
• The expected returns for stocks Juliet and Hotel are expected to be different, and the expected returns for stocks India and Gamma are expected to be the same.
• The next expected dividends for stocks India and Gamma are expected to be different and the next expected dividends for stocks Juliet and Hotel are expected to be the same.
• Assume all expected dividends, growth rates, and returns are positive and all expected growth rates are less than all expected returns.

1. On November 1, 2018, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $5,400 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2019. Taylor should recognize revenue in 2018 in the amount of

Multiple Choice

a. $900

b. $2,700

c. $0

d. $5,400

2.

Mary signed up and paid $1,140 for a 6 month ceramics course on June 1^st with Choplet Ceramics. As of August 1^st, Choplet’s accounting records would indicate:

Multiple Choice

a. $380 of revenue, $760 of accounts receivable

b. $380 of revenue, $760 of deferred revenue

c. $1,140 of revenue, $1,140 of cash

d. $760 of revenue, $380 of accounts receivable

3.

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,395,000. JRE2 recognizes revenue upon contract completion.

In 2018, JRE2 would report gross profit (loss) of:

Multiple Choice

a. $0.

b. $(432,000).

c. $(241,000).

d. $(291,000).

4.

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,305,000. JRE2 recognizes revenue upon contract completion.

In 2019, JRE2 would report gross profit (loss) of:

Multiple Choice

a. $(149,000).

b. $108,000.

c. $19,000.

d. $57,000.

5.

Indiana Co. began a construction project in 2018 with a contract price of $161 million to be received when the project is completed in 2020. During 2018, Indiana incurred $40 million of costs and estimates an additional $89 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.

Indiana:

Multiple Choice

a. Recognized $40.00 million loss on the project in 2018.

b. Recognized no gross profit or loss on the project in 2018.

c. Recognized $72.00 million loss on the project in 2018.

d. Recognized $9.92 million gross profit on the project in 2018.

6.

Indiana Co. began a construction project in 2018 with a contract price of $164 million to be received when the project is completed in 2020. During 2018, Indiana incurred $35 million of costs and estimates an additional $88 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.

In 2019, Indiana incurred additional costs of $52 million and estimated an additional $37 million in costs to complete the project. Indiana (Do not round your percentage calculated):

Multiple Choice

a. Recognized $40.00 million gross profit on the project in 2019.

b. Recognized $4.00 million gross profit on the project in 2019.

c. Recognized $16.40 million gross profit on the project in 2019.

d. Recognized $38.50 million gross profit on the project in 2019.

7.

Indiana Co. began a construction project in 2018 with a contract price of $163 million to be received when the project is completed in 2020. During 2018, Indiana incurred $36 million of costs and estimates an additional $87 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.

Suppose that, in 2019, Indiana incurred additional costs of $66 million and estimated an additional $53 million in costs to complete the project. Indiana (Do not round your percentage calculated):

Multiple Choice

a. Recognized $6.44 million gross profit on the project in 2019.

b. Recognized $6.44 million loss on the project in 2019.

c. Recognized $9.44 million gross profit on the project in 2019.

d. Recognized $3.00 million loss on the project in 2019.

November 21, 1980, was the day of a tragic fire in the MGM Grand Hotel in Las Vegas. At the time of the fire, the hotel had only $30 million of liability insurance. One month after the fire, the hotel bought an extra $170 million of liability coverage for a premium of $37.5 million, retroactive to November 1, 1980 (before the fire). Based on your knowledge of present value concepts, why would insurers be willing to issue insurance to MGM under these conditions?

If the equilibrium wage is $9 in the market for hotel workers and $8 in the market for restaurant workers and both markets have similar elasticities of labor supply and demand, then a minimum wage of $10 in both markets will:

Assume you are an SMC Hotel Manager for and an Interview has been conducted for You

Answer the following questions in Brief

4. State and explain any three (3) significant errors you identified during the audit of SMC hotel?

5. Discuss any 2 situations in which the auditor can be sued or liable?

6. State and explain any 3 qualities of an auditor?

7. Explain how you used interviews and listening skills during your audit of SMC hotel?

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year’s planning budget appear below.

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

Required:

1. Prepare a flexible budget for The Little Theatre based on the actual activity of the year.

2. Prepare a report for the year that shows the spending variances for all expense items.

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year’s planning budget appear below.

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

Required:

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year’s planning budget appear below.

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

Required:

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances. The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year’s planning budget are:

Budgeted number of productions: 6

Budgeted number of performances: 108

Actors and Directors wages: $226,800

Stagehands wages $43,200

Ticket booth personnel and ushers wages $27,000

Scenery, costumes and props 108,600

Theater hall rent $64,800

Printed programs $37,800

Publicity $12,600

Administrative expenses $54,000

Total: $574,800

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances. After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

Actual number of productions: 7

Actual number of performances: 168

Actors and Directors wages: $369,100

Stagehands wages $66,200

Ticket booth personnel and ushers wages $43,400

Scenery, costumes and props $131,000

Theater hall rent $93,500

Printed programs $53,800

Publicity $16,100

Administrative expenses $62,500

Total: $835,700

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)