Complete the following information about the organization and products and/or services you will focus on as you develop a complete marketing plan throughout the course. You may need to do research to get answers to the questions below. Be sure the organization and offer you select will 1) remain interesting to you for the duration of the course, and 2) have sufficient information available for you to conduct research and make informed recommendations in your marketing plan.

Company Profile

• Company Name: Disney
• Industry:
• Major products and/or services (names, types):
• Products and/or services your marketing plan will focus on:
• Target customers:

• Distribution channel(s):
• Headquarters (city, state, country):
• Year founded:
• Number of employees:
• Annual revenue (estimated)
• Key competitors:
• Link to Web site:
• Link to Yahoo! Finance information page (for public companies):

Market Segmentation and Targeting

• What problem does your product or service solve?
• Describe the total market for your solution: Who are potential customers?
• What are the key segments within this market?
• Identify and briefly describe 1–3 segments that this company serves.
• Which segment does this marketing plan focus on, and why? Why do you believe this segment will offer growth and profit opportunities?

Situation and Company Analysis

Economic Environment

Discuss factors that affect your consumers’ purchasing power and spending patterns. What is the economic environment that you are operating in? Is it growth, recovery or recession? Will it be easy to find staff? What is the current interest rate i.e. is it increasing or decreasing? What is consumer confidence like?

Technical Environment

The technological environment changes rapidly. You need to make sure that you are aware of trends in your industry and other industries could affect your business. New technologies create new markets and can influence you, consumers and competitors. Industry environment What are the trends in your industry? Are there new entrants in the market? Has a substitute product been introduced? Are there changes in industry practices or new benchmarks to use?

Competitive Environment

How many competitors do you have? Who are the key competitors? What are the key selling points or competitive advantages of each one? What is your advantage over competitors? Is the market large enough to support you and competitors?

Political Environment

Consider the political environment for the areas that your business will trade and operate in. Is there a stable political system? Are there any licenses and regulations that you should be aware of? Do you need to win support to be able to operate?

SWOT Analysis

Instruction: Complete the table below with descriptive responses and explanation as you answer the questions below.

Mission, Objectives, and Goals

State the mission or business purpose: what the organization wants to achieve, in market-oriented terms. (Example: Disney’s mission could be, “We create happiness by providing the finest in entertainment for people of all ages.)

List 1–3 objectives that move the organization a step closer to achieving the mission. (Example: A Disney objective could be, “To be the most popular theme park for international visitors.”)

Convert objectives into specific marketing goals that are easy to measure and evaluate. (Example: Our goal is to increase the market share of international theme park visitors by 10% in the next two years.”)

Lack of sleep puts you at higher risk for colds, first experimental study finds By Hanae ArmitageSep. 1, 2015, 11:00 AM Moms and sleep researchers alike have stressed the importance of solid shuteye for years, especially when it comes to fighting off the common cold. Their stance is a sensible one—skimping on sleep weakens the body’s natural defense system, leaving it more vulnerable to viruses. But the connection relied largely on self-reported, subjective surveys—until now. For the first time, a team of scientists reports that they have locked down the link experimentally, showing that sleep-deprived individuals are more than four times more likely to catch a cold than those who are well-rested.

“It’s very nice to see an experiment looking at sleep as an important regulator for specific antiviral immune responses,” says Michael Irwin, a psychoneuroimmunologist at University of California (UC), Los Angeles, who is not involved with the study. “In this particular case, there’s a hard clinical outcome showing [sleep deprivation] and susceptibility to the common cold.”

In a carefully controlled two-part experiment, scientists began by collecting nightly sleep data on 164 healthy individuals for 1 week. Participants were asked to record the times at which they went to bed and woke up. They also wore small watchlike devices that use a technique called wrist actigraphy to monitor movement (much like a Fitbit tracks activity) while they slept. Aric Prather, lead author of the study and a sleep researcher at UC San Francisco, says that he and his colleagues associate the wrist actigraphy data with being awake—if during a reported sleep period, the wrist band records movement, they take that as an indication of wakefulness, and subtract the time spent moving from the hours asleep.

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Then came part two: the cold infections. Scientists quarantined participants in a hotel and gave them nose drops containing rhinovirus—the virus responsible for the common cold. They then closed off the hotel floor for 5 days, letting the hosts’ immune system do the rest. To ensure the most accurate results, researchers drew participants’ blood before the viral exposure to test for levels of rhinovirus antibody, a defensive agent in the immune system that recognizes and attacks rhinovirus. If they found high, preexisting levels of the protective protein, they removed the participant from the study so that prior immunity would not bias the infection rates of the group.

In order to officially register as “sick,” participants had to exhibit one “objective sign of illness” and one other immune response. Signs of illness revolved around mucus production. After viral exposure, scientists collected used tissues daily and, essentially, weighed the snot. Ten grams or more counted as a sign of illness. They also looked at congestion. The researchers dripped a harmless dye into participants’ noses and waited to see how long it took to reach the back of their throats; longer than 35 minutes tallied as a sign of illness. Valid immune response required one of two things: A mucus sample flushed from a participant’s nasal passage had to show signs of viral replication or blood work needed to show new levels of the rhinovirus-fighting antibody.

Of the 164 participants, 124 received the actual virus instead of the control, and 48 of them got sick. By checking the sleep duration of the sick participants, researchers report in the current issue of SLEEP that individuals who slept fewer than 5 hours a night were 4.5 times more likely to get sick than those who slept 7 hours or more. Those who slept 5 to 6 hours were 4.2 times more likely to get sick, but those who slept 6 to 7 hours per night were at no greater risk of catching a cold than those who slept 7 hours or more, suggesting that there’s a sleep threshold for potent immune defense.

“Sleep often takes a back seat to other health behaviors like nutrition and exercise,” Prather says. “I think this [experiment] provides some really clear evidence for those people who get less than 5 or 6 hours of sleep—there really is a clear biological cost.”

The question Is as follows:

What broad question is being addressed by the study?

• To what populations(s) does the question apply?

• Is the study experimental or observational?

• For an experimental study, what are the treatments and outcomes?

• What are the relevant variables in the study?

• What is the size of the sample in the study?

• How were the subjects in the sample selected?

• What are the parameters (means or proportions) of interest?

• What values of statistics (means or proportions) are reported?

• What are some interesting strengths or weaknesses of the study?

• What are the conclusions of the study and why?

In April 1997, Bre-X Minerals, a Canadian company, was supposedly one of the most valuable
companies in the world. Bre-X had convinced numerous mining experts that they had rights to one of
the largest gold deposits ever discovered. It was hailed as the mining find of the century. The
gold mine, located on a remote island in the East Kalimantan Province of Indonesia, supposedly had
so much gold that the actual price of gold on the open market dropped significantly due to the
anticipation of an increased gold supply. Within a few months, thousands of Canadians—big-time
investors, pension and mutual fund, managers and many small investors, including factory
workers—got caught up in “Bre-X fever.” The company’s stock price shot from pennies to more than
$250 per share before a 10-for-1 stock split was announced. Thousands of investors believed they
were on the verge of becoming millionaires.
The story took a sudden turn for the worse when Michael de Guzman, Bre-X’s chief geologist and one
of only a handful of company insiders entrusted with the mine’s core samples, apparently committed
suicide by jumping out the back of a helicopter. Guzman’s suicide was reported around the time that
an independent consulting firm reported that samples from the
mine had been tampered with. The firm concluded that the core samples were made to appear to be
rich in gold by adding a relatively small amount of gold to the samples. In essence, the firm
concluded that Bre-X was a scam of epic proportions!

As the scam came to light, it was unclear who was behind the tampering. While fingers were pointed
at senior Bre-X personnel, others blamed geologists in the field. Bre-X’s President, David Walsh,
was shocked at the news of the tampering and vowed to conduct an investigation. As is the case with
many frauds of this type, numerous class-action lawsuits were filed against Walsh and other Bre-X
executives, alleging that they misled shareholders. Walsh and other company officials received
profits of over $50 million from selling some of their Bre-X stock the year before the tampering
came to light. In the end, many people lost money as the gold find of the century turned out to be
a massive hoax.

You’re a fraud examiner working for the law firm Knight, Enshine, Ing & Armour representing investors in a class-action lawsuit against Bre-X and others including the CPA firm Knotluk, Eisschut & Ahsleap that performed the annual financial audits for BreX. The law partner handling the lawsuit wants your opinion, as an anti-fraud professional, about this case. She’s concerned that the defense will want to “blame the victim” saying that investments are always a risk and there are no guaranteed returns. She wants to make the case that investors were duped by BreX either by intentional design or utter irresponsibility.

Your task is to prepare a memo outlining:

1) the key actions that could have been taken, by any party (including the Canadian government), to prevent or detect the alleged Bre-X fraud,

2) why should have those actions been taken (how could that have prevented or detected fraud)

3) who should have been responsible for taking these actions.

You should be fair and honest in your assessment. In addition to the information you have from the law firm (pg. 376 in the textbook),

a recent Canadian government report provides the following information: • A number of senior Bre-X officials had been investigated previously by U.S. law enforcement and Interpol for a variety of questionable business dealings. • The geologists hired by Bre-X worked for firms with close ties to a former Indonesian government official with ties to organized crime. • The Canadian Stock Exchange listed Bre-X after waiving certain requirements and standards. Canadian securities regulators had not reviewed this because of a case backlog. • Bre-X had refused to share any laboratory, geological, metallurgical or other reports with anyone except for the ones performed on the samples held by Guzman. • Bre-X had not entered into any long-term contracts with mining firms. • This was one in a series of mining scandals in Canada during the past 30 years. • Knotluk, Eisschut & Ahsleap only sent two staffers to Indonesia during the financial audit. Due to the location of the mine, they did make a site visit. Instead, they performed the audit at their hotel. Bre-X provided documentation to them at the hotel and arranged for staff interviews via SKYPE. Neither auditor had any experience in the mining industry, with international projects, did not understand of speak Indonesian (some documents were in Indonesian and English was not the first language for some employees) and had no training in fraud examination. Note: Keep in mind the Fraud Exposure Rectangle on pg.361 and the Fraud Triangle. (I know, fraud examiners love describing things in shapes!)

Building the Supply and Demand Model Homework

1. Explain the difference between a change in the quantity demanded (Q_d) and demand (D).

A change in quantity demanded refers to a movement along the demand curve, which is caused only by a chance in price. A change in demand means that the entire demand curve shifts either left or right.

2. Explain the difference between a change in the quantity supplied (Q_s) and supply (S).

A change in quantity supplied will imply a movement along the supply curve, while a change in supply refers to a shift in the supply curve. A change in quantity supplied is usually caused by a change in the unit price while a change in supply is caused by new methods of production.

3.

A. Using the individual demand data in the table above, determine the market demand for broccoli soup – fill in the market demand column of the table.

B. Graph the market demand curve.

C. The broccoli growers industry group launches a successful national marketing campaign highlighting the positive health effects of broccoli consumption. What will likely happen to the market demand for broccoli? Demonstrate your answer in the graph you drew for B.

4. Give 3 real world scenarios that would likely increase the demand for chickpeas.

5. Give 3 real work scenarios that would likely decrease the supply of Atlantic salmon.

6. Draw hypothetical supply and demand curves for coffee. Show how the equilibrium price and quantity will be affected by the following events. Use a separate graph to demonstrate each event. Show the equilibrium price and quantity before, and after, the event.

A. The New England Journal of Medicine publishes an article highlighting a direct correlation between coffee consumption and liver cancer.

B. The coffee growing regions of South and Central America experience optimal coffee growing weather.

C. A regional war breaks out in the coffee growing countries of East Africa.

D. Widespread media reports highlight major labor abuses in coffee growing regions around the world, including child labor, slave labor, and the widespread sexual assault of coffee plantation workers.

7. President Trump signs a law that imposes a 30% tax on oil exports from the United States.

A. Demonstrate the likely effect on the domestic oil market using supply and demand curves.

B. What we will be the likely effect on oil prices in the US?

8. Assume the individual demand and supply below represent the entire market. Answer the questions based on the following tables.

A. Draw the market demand and market supply curves.

B. Label the market equilibrium price and quantity.

C. What is the excess quantity supplied at a price of $250?

D. What is the excess quantity demanded at a price of $150?

9. Explain the likely affect of the following events on the market equilibrium price and quantity:

A. Global soybean market: An infestation of the Helicoverpa armigera worm in Brazil’s soybean growing regions. Brazil is the world’s largest producer of soybeans.

B. Global toy market: A 105% increase in the minimum wage in China. China is the world’s largest manufacturer of toys.

C. Global pineapple market: Both PepsiCo and the Coca Cola company develop blockbuster pineapple flavored sodas.

D. US energy drink market: Congress imposes a 25% excise tax on energy drinks due to the adverse health effects of excessive caffeine consumption. The excise tax will be paid by the manufacturers of the drinks.

E. Local Sinha Stout (popular Sri Lankan beer) market in Poughkeepsie: Four thousand Sri Lankan immigrants settle in the city of Poughkeepsie.

F. Horn rimmed glasses local market Hyde Park: Hyde Park becomes a popular location for weekend homes for Brooklyn hipsters.

G. Fuji apple market: The price of red delicious apples increases by 67%.

H. Chef’s knife market: The demand for culinary education increases dramatically.

J. Kiwi market: Kiwi sellers raise the price of kiwis by 29%. There are no other changes in the market.

K. Wheat market: A new technology significantly increases planting productivity.

Complete the following information about the organization and products and/or services you will focus on as you develop a complete marketing plan throughout the course. You may need to do research to get answers to the questions below. Be sure the organization and offer you select will 1) remain interesting to you for the duration of the course, and 2) have sufficient information available for you to conduct research and make informed recommendations in your marketing plan.

Company Profile

• Company Name: southwest airlines
• Industry:
• Major products and/or services (names, types):
• Products and/or services your marketing plan will focus on:
• Target customers:
• Distribution channel(s):
• Headquarters (city, state, country):
• Year founded:
• Number of employees:
• Annual revenue (estimated)
• Key competitors:
• Link to Web site:
• Link to Yahoo! Finance information page (for public companies):

Market Segmentation and Targeting

• What problem does your product or service solve?
• Describe the total market for your solution: Who are potential customers?
• What are the key segments within this market?
• Identify and briefly describe 1–3 segments that this company serves.
• Which segment does this marketing plan focus on, and why? Why do you believe this segment will offer growth and profit opportunities?

Situation and Company Analysis

Economic Environment

Discuss factors that affect your consumers’ purchasing power and spending patterns. What is the economic environment that you are operating in? Is it growth, recovery or recession? Will it be easy to find staff? What is the current interest rate i.e. is it increasing or decreasing? What is consumer confidence like?

Technical Environment

The technological environment changes rapidly. You need to make sure that you are aware of trends in your industry and other industries could affect your business. New technologies create new markets and can influence you, consumers and competitors. Industry environment What are the trends in your industry? Are there new entrants in the market? Has a substitute product been introduced? Are there changes in industry practices or new benchmarks to use?

Competitive Environment

How many competitors do you have? Who are the key competitors? What are the key selling points or competitive advantages of each one? What is your advantage over competitors? Is the market large enough to support you and competitors?

Political Environment

Consider the political environment for the areas that your business will trade and operate in. Is there a stable political system? Are there any licenses and regulations that you should be aware of? Do you need to win support to be able to operate?

SWOT Analysis

Instruction: Complete the table below with descriptive responses and explanation as you answer the questions below.

Mission, Objectives, and Goals

State the mission or business purpose: what the organization wants to achieve, in market-oriented terms. (Example: Disney’s mission could be, “We create happiness by providing the finest in entertainment for people of all ages.)

List 1–3 objectives that move the organization a step closer to achieving the mission. (Example: A Disney objective could be, “To be the most popular theme park for international visitors.”)

Convert objectives into specific marketing goals that are easy to measure and evaluate. (Example: Our goal is to increase the market share of international theme park visitors by 10% in the next two years.”)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.75 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $349,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $136.50 (600 square feet @ $22.75 per hundred square feet). Calculate the customer margin earned on this job.

Complete this question by entering your answers in the tabs below.

• Required 1

Prepare the first-stage allocation of costs to the activity cost pools.

Required 2

Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

• Required 3

The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

Required 4

The revenue from the Flying N Ranch was $136.50 (6 hundred square feet @ $22.75 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.)

Better Blooms is a florist shop which takes orders by internet and phone, prepares the desired floral arrangements, and delivers within a 25-mile radius of the shop. Since the profit margin on the business is small for each arrangement and the competition from other florists in the area is high, the owner is concerned about setting the appropriate costs for each delivery to be profitable while still being competitive. To investigate, the owner has gathered information on a random sample of 50 recent orders and has asked you to analyze the data using statistical methods and to report to her your findings. Factors thought to be related to the cost of delivering a floral arrangement are thought to be: (1) Preparation Time – the time in minutes between when the customer has placed an order and when it is ready for delivery; more expensive arrangements take longer to prepare, (2) Delivery Time – the travel time in minutes from the shop to the recipient of the arrangement, and (3) Mileage – the distance in miles from the shop to the customer (mileage and delivery time are sometimes inversely proportional when the delivery truck can use an interstate instead of traveling through heavy downtown traffic, for instance). Develop a multiple linear regression equation that describes the relationship between the cost of delivery and the other variables. Do these three variables explain a reasonable amount of the variation in the dependent variable? Estimate the delivery cost for an arrangement that takes 20 minutes for preparation, takes 30 minutes to deliver, and must cover a distance of 12 miles. Test to determine that at least one regression coefficient differs from zero. Also test to see whether any of the variables can be dropped, rerun the regression equation until only significant variables are included. Write management report interpreting the final regression equation, show your analysis in charts, tables, graphs so it is easy for the owner to see the analysis and conclusions, and back up your charts with detailed analysis using formulas and explanations of your statistical analysis steps. The owner wants to know your report is credible, but is not a statistician, so make your explanations clear.

Cost   Prep   Delivery   Distance
22.60   20   51   20
23.37   11   33   12
31.49   16   47   19
19.31   22   18   8
28.35   18   88   17
22.63   19   20   11
22.63   29   39   11
11.53   10   23   10
21.16   13   20   8
11.53   20   32   10
28.17   15   35   16
20.42   18   23   9
21.53   19   21   10
27.55   17   37   16
23.37   19   25   12
17.10   15   15   6
27.06   13   34   15
15.99   18   13   4
17.96   12   12   4
25.22   16   41   14
24.29   13   28   13
22.76   24   26   10
28.17   19   54   16
19.68   17   18   8
25.15   16   50   13
20.36   19   19   7
21.16   13   19   8
15.22   10   45   14
18.76   12   12   5
18.76   18   16   5
24.29   17   35   13
19.56   12   12   6
22.63   18   30   11
21.16   15   13   8
21.16   11   20   8
19.68   15   19   8
18.76   17   14   7
17.96   15   11   4
23.37   10   25   12
25.22   16   32   14
27.06   18   44   16
21.96   19   28   9
22.63   18   31   11
19.68   17   19   8
22.76   18   28   10
21.96   13   18   9
26.95   10   32   14
26.14   18   44   15
24.29   20   34   13
24.35   16   33   12

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.05 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $345,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 60-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $44.10 (200 square feet @ $22.05 per hundred square feet). Calculate the customer margin earned on this job.

Complete this question by entering your answers in the tabs below.

Prepare the first-stage allocation of costs to the activity cost pools.

Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 60-mile round-trip journey from the company’s offices in Bozeman. Comp

ute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

The revenue from the Flying N Ranch was $44.10 (2 hundred square feet @ $22.05 per hundred square feet). Calculate the customer margin earned on this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Shauna Coleman is single. She is employed as an architectural designer for Streamline Design (SD). Shauna wanted to determine her taxable income for this year. She correctly calculated her AGI. However, she wasn’t sure how to compute the rest of her taxable income. She provided the following information with hopes that you could use it to determine her taxable income.

Shauna paid $4,680 for medical expenses for care from a broken ankle. Also, Shauna’s boyfriend, Blake, drove Shauna (in her car) a total of 115 miles to the doctor’s office so she could receive care for her broken ankle.

Shauna paid a total of $3,400 in health insurance premiums during the year (not through an exchange). SD did not reimburse any of this expense. Besides the health insurance premiums and the medical expenses for her broken ankle, Shauna had Lasik eye surgery last year and she paid $3,000 for the surgery (she received no insurance reimbursement). She also incurred $450 of other medical expenses for the year.

SD withheld $1,800 of state income tax, $7,495 of Social Security tax, and $14,500 of federal income tax from Shauna’s paychecks throughout the year.

In 2016, Shauna was due a refund of $250 for overpaying her 2015 state taxes. On her 2015 state tax return that she filed in April of 2016, she applied the overpayment towards her 2016 state tax liability. She estimated that her state tax liability for 2016 will be $2,300.

Shauna paid $3,200 of property taxes on her personal residence. She also paid $500 to the developer of her subdivision, because he had to replace the sidewalk in certain areas of the subdivision.

Shauna paid a $200 property tax based on the state’s estimate of the value of her car.

Shauna has a home mortgage loan in the amount of $220,000 that she secured when she purchased the home. The home is worth about $400,000. Shauna paid interest of $12,300 in interest on the loan this year.

Shauna made several charitable contributions throughout the year. She contributed stock in ZYX Corp. to the Red Cross. On the date of the contribution, the FMV of the donated shares was $1,000 and her basis in the shares was $400. Shauna originally bought the ZYX Corp. stock in 2008. Shauna also contributed $300 cash to State University and religious artifacts she has held for several years to her church. The artifacts were valued at $500 and Shauna’s basis in the items was $300. Shauna had every reason to believe the church would keep them on display indefinitely. Shauna also drove 200 miles doing church-related errands for her minister. Finally, Shauna contributed $1,200 of services to her church last year.

Shauna’s car was totaled in a wreck in January. The car was worth $14,000 and her cost basis in the car was $16,000. The car was a complete loss. Shauna received $2,000 in insurance reimbursements for the loss.

Shauna paid $300 for architectural design publications, $100 for continuing education courses to keep her up to date on the latest design technology, and $200 for professional dues to maintain her status in a professional designer’s organization.

Shauna paid $250 in investment advisory fees and another $150 to have her tax return prepared (that is, she paid $150 in 2016 to have her 2015 tax return prepared).

Shauna is involved in horse racing as a hobby. During the year, she won $2,500 in prize money and incurred $10,000 in expenses. She has never had a profitable year with her horse racing activities, so she acknowledges that this is a hobby for federal income tax purposes.

Shauna sustained $2,000 in gambling losses over the year (mostly horse-racing bets) and only had $200 in winnings.

Assuming her AGI is $107,000

a. Determine Shauna’s taxable income and complete Form 1040 and Schedule A assuming her AGI is $107,000