Given the following information for Maynor Company in 2011, calculate the company's ending inventory, cost of goods sold and gross profit, using the following inventory costing methods, assuming the company uses a periodic inventory system: (Note: The sum of cost of goods sold and ending inventory might not add up due to rounding.)

1. Here is the demand for coconuts:

P            3          4            5        6         7          8         9          10         11         12          13

Q_D          1100      1000      900      800      700      600      500        400        300        200        100

And here is supply

P            3          4         5        6          7        8           9          10     11      12          13

Q_S           100        200        300        400        500        600        700        800        900        1000       1100

Identify the equilibrium price, quantity, consumer and producer surplus and show them on a graph. The graph should be pretty simple here, the main issue is finding the numbers for consumer and producer surplus. Again, let me reiterate: I WANT NUMBERS FOR CONSUMER AND PRODUCER SURPLUS! Furthermore, I want you to do this the way that I do (in other words, calculate it like it's a bunch of rectangles. Don't do the triangle thing that they do in the videos. Also, when doing this keep in mind that the width of these rectangles will not be 1 so be careful. (What is it? )

2. Which do you think is more elastic: demand for coffee or demand for Starbucks coffee? Show the demand for both. (Make sure to say which one is more elastic, so I know that you know.)

Steven’s Stationery a well-known stationary store in town .The business maintains individual inventory records for each merchandise they are selling. The following information has been extracted from the records of Steven’s Stationery about one of its popular products. There are 50 units at the beginning of October costing $ 30 each. Date Purchase Date Sales October-09 100 units @ 28 October-11 100 units @ 50 October-17 70 units @ 27 October-15 20 units @ 50 October-25 80 units @ 26 October-29 110 units @ 50

Required:

a. Determine the cost of goods sold, ending inventory and gross profit for the month ended October, assume company opts FIFO as a cost flow assumption.

b. Assume Steve has an objective to save taxes, Keeping the price trends of purchases Do you think company has opted the right cost flow assumption? Why or why not.

c.Assume the value of ending inventory is mistakenly overstated by $ 500, how this error effects (over or understates) the following for the period

I.Cost of goods sold

II.Gross profit

d.Equity.Can we apply the idea of inventory shrinkage in this company? If yes record the inventory shrinkage assume a physical count indicates there are 80 units on hand on October 31.

For Absorption Costing, I will calculate the Cost of Goods Sold by multiplying the Sales and (Fixed Manufacturing cost per unit + Variable Manufacturing Cost per unit). The reconciliation should be done using this formula: Net Income (Absorption Costing) - Net Income (Variable Costing) = Fixed Overhead in ending balance - Fixed Overhead in opening balance. Thank you.

Tax Case 4

Goodwill Acquired in an Acquisition – Is it Deductible?

As the CFO of General Dynamo, you are very excited as you have just completed the negotiations related to the purchase of Apex Systems, a complimentary business to General Dynamo. The sole shareholder of Apex has agreed to either of the following purchase offers:

               A: General Dynamo will pay $10,000,000 for 100% of the outstanding stock of Apex

                                                            OR

B: General Dynamo will pay $11,000,000 for 100% of the “net assets” of Apex, which includes all tangible and intangible assets as well as all recorded liabilities.

The fair value of the acquired assets and liabilities is as follows:

Current Assets (Tangible)                             $2,500,000

Long Term Assets (Tangible)                       $4,000,000

Liabilities                                                          $3,500,000

Net Tangible Assets Acquired                      $3,000,000

Based solely on the “net after-tax” cost of the acquisition, which purchase offer should you choose: A or B? Why?

Why does the seller require a higher price to be paid for acquiring “net assets” versus “stock”? What internal revenue service code section addresses how sales of assets versus sales of stock are taxed? What are the significant differences? What period may the goodwill be deducted for tax purposes? Why do you think the Internal Revenue Service treats these two purchase offers differently?

Question-3: Arundel Partners are contemplating an investment in Argentina. They gather data to determine the appropriate return to their equity investors. Their data suggest that Argentine equity market is 2.5 times more volatile than the US equity market; they estimate the project beta as 1.5, and the project has 100% exposure to Argentina country risk. Arundel partners assume that US risk-free rate is 3% and US EMRP is 5.5%. Given the volatility of the Peso and difficulty of hedging peso cash flows, Arundel partners think that a 3% additional currency risk premium (ie. Measure of Currency Risk x Unit Price of Currency Risk) is warranted on top of the Country Risk Premium. A. What is the Estimate CRP for Argentina based in relative equity market volatility? B. What should be the required rate of return Arundel shareholders expect in USD terms assuming 100% country risk exposure. C. What should be the required rate of return if the country risk were scaled the same as the market risk of the asset? D. If the Argentine credit default risk premium is 400 bp and equity market volatility to bond market volatility ratio is 1.4, what should be the Argentina Country Risk Premium?

Hint: Review the Nextel Peru case

4. Poway is a town that has 70 families with a child, and 30 without a child. 30 of the families with a child are willing to pay as much as $6,000 to educate their child, and 40 are willing to pay as much as $4,000 to educate their child. Each educated child creates a positive externality of $30 for each family in Poway but the cost of educating a child in Poway is $5,000.

(a) Without regulation, how many residents educate their child?

b) With regulation, how many residents educate their child?

c) What is the change in social profits by regulating the externality?

Residents of the town of Los Locos (population 100) like to drive noisy off-road vehicles, but they hate the disturbance and dust caused by each others’ vehicles. Each vehicle purchased by a resident causes $10 worth of damage to each of the 100 residents. Forty residents are willing to pay up to $3,500 for an off-road vehicle, 20 residents are willing to pay up to $3,000 for an off-road vehicle, and 40 residents are willing to pay up to $2,500 for an off-road vehicle. The price of an off-road vehicle is $2,200.

(a) Without regulation, how many residents buy an off-road vehicle?

(b) With regulation, how many residents buy an off-road vehicle?

(c) What is the change in social profits by regulating the externality?

. A bike shop is selling a fashionable newly designed folding bike. The shop is now considering how many of them to order for the coming season. The supplier requires that orders for the bikes must be placed in quantities of 25. The cost per bike is $820, $790, $750 and $700 for an order of 25, 50, 75 and 100 respectively. The bikes will be sold for $1,200 each. Since there will be a new design for folding bikes next season and there is no spare storage space in the store, any bikes left over at the end of this season will have to be sold at a low price of $450 each to another bike shop. However, if the shop runs out of bikes during the season, it will suffer a loss of goodwill among its customers. The shop estimates this goodwill loss to $60 per customer who is not able to buy a bike. From past experience, the shop estimates that the demand for folding bikes this coming season will be 25, 50, 75 and 100 bikes with probabilities of 0.4, 0.3, 0.2 and 0.1 respectively.

(a) Construct the payoff table for the above situation.

(b) Which alternative should be chosen using each of the maximax, maximin, minimax regret, Hurwicz (take α = 0.6), equal likelihood, expected value, and expected opportunity loss criteria?

(c) Find the expected value of perfect information.

Kip Bowman is owner and sole employee of KB Corporation. He pays himself a salary of $1,500 each week.

Record the payroll entry and payroll tax entry for the pay of the week ended June 7 (his year-to-date pay is $31,500).

If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.

Corporation has an activity-based costing system with three activity cost pools—Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Distribution of Resource Consumption Across Activity Cost Pools:

In the second stage, Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.

A. How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing first stage of allocation?

B. The activity rate for the Supervising activity cost pool (per batch) under activity-based costing is?

C. What is the overhead cost assigned to Product H3 under activity-based costing?

D. What is the product margin for Product H3 under activity-based costing?