1 a) List at least one (1) substitute for your product. Briefly (1 – 3 sentences) describe how the benefits of the substitute product are similar but not exactly the same as your product. What is the relative power of substitutes in the market?  In other words, is it relatively easy or hard for customers to migrate to a substitute market including going without or making the product oneself?

b) What does the market demand curve look like?  How would you describe the elasticity of demand? What is the relative power of customers in the market?

4. [5 marks] Suppose that Best Buy sells 4 TVs per day on average.

a) [1 marks] What is the probability that 8 TVs will be sold in a day?

b) [2 marks] What is the probability that fewer than 3 TVs (inclusive) will be sold in a day?

c) [2 marks] Suppose 5 customers enter Best Buy independently. The probability that a single customer will buy a TV is 0.1. What is the probability that at least one of these 5 customers buys a TV? Do not round your answer.

Consider this situation. Julie is the owner of an airport shuttle. The shuttle transports passengers between Bowling Green and the Nashville Airport. Most customers pay with cash because there is a big discount. Since she is old and spends most of the time in Florida, she hired Mark, as the only employee and driver. Julie is far away from Bowling Green, therefore she has to believe Mark unless there is an unambiguously clear evidence against Mark’s claim/report. Assume that Mark is rational (in economics, rational is synonymous with selfish) and he will always cheat on Julie if doing so is beneficial (increasing his monetary benefits).

     Julie is considering the following five possible compensation methods:

            I)           Pay Mark a flat salary (e.g., $3,500 each month)

            II)         Pay Mark an amount equal to reported revenue less fixed amount

             (e.g., reported revenue less $3,000; negative pay if reported revenue < $3,000)

            III)       Pay Mark a certain percent of sales (e.g., 30% of reported fares from passengers)

4. Pay Mark on an hourly basis (e.g., $25 per hour * Reported work hours)
5. Pay Mark based on the mileage (e.g., $0.30 for each mile added in the mileage gauge)
6. Pay Mark based on his efforts (how hard he works)

Julie is trying to find the best method in avoiding potential cheating by Mark.

Required:

A. Which of the following methods is the best one as far as the owner Julie is concerned? And why?

B. For each of the other 5 methods (the ones you did not choose in A), explain why it is not good for Julie.

Jan 1, Abi started a photography business. During January, the following transactions occurred and were recorded in the company's books:

Abi invested $13,700 cash in the business in exchange for common stock.

Abi contributed $22,000 of photography equipment to the business.

The company paid $2,300 cash for an insurance policy covering the next 24 months.

The company received $5,900 cash for services provided during January.

The company purchased $6,400 of office equipment on credit.

The company provided $2,950 of services to customers on account.

The company paid cash of $1,700 for monthly rent.

The company paid $3,300 on the office equipment purchased in transaction #5 above.

Paid $295 cash for January utilities.

Based on this information, the balance in the cash account at the end of January would be:

$44,050

$14,955

$19,300

$12,005

$15,650.

The Australian Competition and Consumer Commission (ACCC) has released a report stating that across all supermarkets in Australia, the percentage increase in prices approximately follows a normal distribution with a mean increase of 4.2% and standard deviation of 0.9%.

If 16 supermarkets are randomly chosen, what is the probability that the average percentage increase is between 4% and 5%.

Show all your calculations

Question 1 (4 points)

Calculate a 95% confidence interval of the mean expenditure of all male customers given that there were n = 131 males in the sample of 400, sample mean x = 50.1 and standard deviation s= 52.0.

Show all your calculations.

Question 2 (6 points)

Goodbuys is interested in determining the true proportion of all customers who rank the length of time they have to spend in queues as ‘excellent’. Given that 16.25% of the 400 customers who were surveyed gave a rating of ‘excellent’, calculate a 90% confidence interval for the true proportion.

Show all your calculations.

Interpret this confidence interval.

Question 3 (2 points)

State the assumptions you need to check before calculating the confidence interval in question 12.

Question 4 (4 points)

Suppose Goodbuy’s management want to know the true proportion of customers who rank the length of time they have to spend in queues as ‘excellent’ to within 3% with 95% confidence. How large a sample would need to be taken to achieve these requirements?

Show all your calculations.

A company that produces and markets continuing education programs on DVDs for the educational testing industry has traditionally mailed advertising to prospective customers .A market research study was undertaken to compare two approaches: mailing a sample DVD upon request that contain highlights of the full DVD and sending an email containing a link for a website from which sample material could be downloaded. Of those who responded to either the mailing or the e-mail, the results were as follows in terms of purchase of the complete DVD .

                                    Type of media used

             Purchased                mailing                  E-mail                     total

                   Yes                            26                             11                                 37

                   No                             227                          247                               474

                   Total                         253                          258                               511

a)     at the 0.5 level significance, is there evidence of a difference in the proportion of DVDs purchased in the proportion of DVDs   purchased on the basis of the media used ?

b)     on the basis of the results of (a) which type of media should the company use in the future ? explain the rationale for your decision

The company also wanted to determine which of three sales approaches should be used to generate sales among those who either requested the sample DVD by mail or downloaded the sample DVD but did not purchase the full DVD : 1) targeted e-mail , 2) A DVD that contain additional features or 3) a telephone call to prospective customers. The 474 respondents who did not initially purchase the full DVD were randomly assigned to one of the three sales approaches. The results in terms of purchases of the full program DVD, are as follows:

                                                                                 Sales approach

ACTION                     Targeted            More complete          Telephone calls     Total

                                     Email                       DVD

Purchase                          5                       17                                     18                       40

Do not purchase            153                   141                                   140                      434

Total                                158                    158                                   158 474

c)      at the 0.05 level of significance, is there evidence of a difference in the proportion of DVDs purchased on the basis of the sales strategy used?

d)     On the basis of the results of (c) which sales approach do you think the company should use in the future . Explain the rationale for your decision.

Ahmed and Mohammed want to start their own business. They are thinking to establish a factory to manufacture
sunglass in Oman. The factory needs an investment of OMR 600,000. Mohamed having OMR 150,000 and
Ahmed having OMR 250,000. They have a shortage of OMR 200,000. Ahmed suggests to take loan from Bank
but Mohammed suggests to sell shares to manage the investment shortage. They are confusing regarding the suitable source of finance to manage the investment shortage. This will affect the legal entity of their
organization. There are many forms of organization, but they are confusing between LLC and SAOG.

Furthermore, Ahmed suggest to hire the following employees:
 The Managing Director has the major responsibility for running of the company, including setting
company targets and keeping an eye on all departments.  The Distribution Manager is responsible for controlling the movement of goods in and out of the
warehouse, supervising drivers and overseeing the transport of goods to and from the firm.  The Production Manager is responsible for keeping a continuous supply of work flowing to all production
staff and also for organizing manpower to meet the customers' orders.  The Sales Manager is responsible for making contact with customers and obtaining orders from those
contacts.  The Finance Manager controls all the financial dealings of the company and is responsible for producing
management accounts and financial reports.  The Public Relation Manager is responsible for external communications, media, social media and
complains  The Human Resource Manager is responsible to handle all staff affairs, HRP, recruitment and selection,
etc.  The IT Manager is responsible for maintain the organization ERP and any technology within the
organization  Maintenance manager is responsible to maintain the production line and company assets.   
Also, they are planning to hire 5 distribution officers, 5 accountants, 5 HR officers, 3 Public relation officers, 10 Trade promotors, 5 Mechanical Engineering for production, 5 Mechanical Engineering for maintenance 100 production labours and 10 Labour supervisors.

Explain the main functional areas of a business organization that you have identified from the case study? Support your answer by identifying the responsible manager of each functions

Journalize the following entries :

1. It was determined that a shipment on Dec 30 from Brodie to Dawson Corp was not recorded. Dawson purchased from Brodie 100,000 lbs of biscuits for sales price of $4.00 per LB. Cost of this product was $1.50 per LB. Terms were FOB Shipping Point. Payment terms Net 30. The Company also billed the required 7% sales tax which was added to the receivable from Dawson.

2. Per review of Brodie's AR Aging by the finance team using the Aging of Receivables Method, it was determined that 10% of the ending Accounts Receivable Balance of $4,500,000 need to be reserved for in the Allowance for Doubtful Accounts (i.e. the ending balance). Record the adjustment keeping in mind the Allowance for Doubtful Accounts has a $120,000 balance before this adjustment

3.  Brodie needs to record Warranty Expense for 2018. It offers an up to 2 year freshness and taste warranty, and expects that 3% of the ending net Revenue of $16,000,000 for 2018 will ultimately have warranty claims to be resolved for customers

4. On Jul 1, Brodie issued $4,000,000 of 6% Bonds Payable at 95, with semi-annual interest due next on Jan 1. Bonds have two year maturity and mature on Jul 1, 2020. Accrue the Interest Expense and related liability as of Dec 31, 2018 for the interest due on Jan 1, 2019

5. The Bond Issuance on Jul 1, 2018, had a discount that needs to be amortized over its two year term as additional interest expense. Use the straight-line method to amortize the Bond Discount (thus increasing the Bonds Payable carrying value)

6.The Company needs to accrue its final Payroll of the year Dec 16-31, 2018, which will be paid on Jan 5, 2019. Total Salary and Wage accrual for the period is $200,000, and the payroll tax accrual for Company payroll tax expense is an extra 9% of the $200,000. Record in the separate accounts

7.Based upon the banner year's financial results for 2018, Management asked the Board of Directors for a bonus pool to pay its management & employees of $350,000. After discussion, the Board approved an even bigger bonus pool of $400,000, allowing management discretion in the allocation among the differing employees. Record this accrual

8.A physical inventory of the equipment performed on the last day of the year uncovered that a 10 year old piece of equipment was disposed of earlier in the year and dropped off at the dump. The Equipment has a cost of $60,000, and it was fully depreciated. Remove this asset and its related Accumulated Depreciation from the books