A newly issued bond pays its coupons once a year. Its coupon rate is 6%, its maturity is 15 years, and its yield to maturity is 9%.

a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 8% by the end of the year.

b. If you sell the bond after one year when its yield is 8%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. What is the after-tax holding-period return on the bond?

d. Find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield is 8% at the end of the second year, and (iii) the coupon can be reinvested for one year at a 4% interest rate.

e. Use the tax rates in part (b) to compute the after-tax two-year realized compound yield. Remember to take account of OID tax rules.

1. A 7130-kg car is travelling at 24.8 m/s when the driver decides to exit the freeway by going up a ramp. After coasting 418 m along the exit ramp the car\'s speed is 12.4 m/s, and it is h = 12.5 m above the freeway. What is the magnitude of the average drag force exerted on the car?

2. The superheroine Xanaxa, with a mass of 66.3 kg, is in a hair-raising chase after the 74.3-kg arch-villain Lexlax. She leaps from the ground to the top of a 195-m-high building, then dives off and comes to rest at the bottom of a 16.7-m-deep excavation, where she finds Lexlax and neutralizes him. Does all this bring about a net gain or a net loss of gravitational potential energy? Loss or Gain

By how much? Answer with a positive number. Take g = 9.81 m/s2.

3.Tom has built a large slingshot, but it is not working quite right. He thinks he can model the slingshot like an ideal spring, with a spring constant of 75.0 N/m. When he pulls the slingshot back 0.305 m from a non-stretched position, it just doesn\'t launch its payload as far as he wants. His physics professor \"helps\" by telling him to aim for an elastic potential energy of 14.5 Joules. Tom decides he just needs elastic bands with a higher spring constant. By what factor does Tom need to increase the spring constant to hit his potential energy goal?

During a followup conversation, Tom\'s physics professor suggests that he should leave the slingshot alone and try pulling the slingshot back further without changing the spring constant. How many times further than before must Tom pull the slingshot back to hit the potential energy goal with the original spring constant?

4. An adult dolphin weighs around 1610 N. How fast must he be moving as he leaves the water vertically in order to jump to a height of 3.50 m? Ignore air resistance.

5. Nate the Skate was an avid physics student whose main non-physics interest in life was high-speed skateboarding. In particular, Nate would often don a protective suit of Bounce-Tex, which he invented, and after working up a high speed on his skateboard, would collide with some object. In this way, he got a gut feel for the physical properties of collisions and succeeded in combining his two passions.* On one occasion, the Skate, with a mass of 119 kg, including his armor, hurled himself against a 801-kg stationary statue of Isaac Newton in a perfectly elastic linear collision. As a result, Isaac started moving at 1.37 m/s and Nate bounced backward. What were Nate\'s speeds immediately before and after the collision? (Enter positive numbers.) Ignore friction with the ground. Before:_______m/s, After:_______m/s

*By the way, this brief bio of Nate the Skate is written in the past tense, because not long ago he forgot to put on his Bounce-Tex before colliding with the Washington Monument in a perfectly inelastic collision. We will miss him.

Mary Sue Timmons, RN, was working the 3 to 11 PM shift in the medical-surgical unit at Memorial Hospital when one of her patients began complaining of a headache. The patient also appeared to be very anxious and his blood pressure was 184/110. Mary Sue immediately called the physician and reported the patient's symptoms and vital signs. The physician ordered Valium 5 mg IV and said he would be there to see the patient very soon. Mary Sue repeated the verbal medication order and received confirmation from the physician before hanging up the phone. She then immediately wrote the verbal order in the chart and ordered the medication from the pharmacy. Mary Sue also requested a package insert for the Valium because she had never given that medication IV before. Just as Mary Sue received the medication from the pharmacy and began to read the package insert, the physician arrived and asked if the medication had been given. When Mary Sue began to explain that she had just received the medication and had to read the package insert, the physician exploded and said, "I am the doctor and I am the only one who needs to know anything about the medication. You are here to follow my orders!"

1. How should Mary Sue respond to this physician? Select all that apply.
   1. Maintain eye contact (conveys confidence)
   2. Refuse to give the medication
   3. State that the primary goal is the patient’s safety
   4. Tell him to give it himself

2. What positive, assertive communication techniques should Mary Sue use in responding to this physician?
   1. Be defensive
   2. Use “I” messages
   3. Maintain closed body stance
   4. Speak loudly so he can hear you

3. What negative techniques must Mary Sue avoid when responding to the physician? Select all that apply.
   1. Be assertive
   2. Apologize
   3. Give the medication
   4. Stay calm

Barnes & Noble Education Provides COVID-19 Update Mar 17, 2020 Update on Full-Year 2020 Outlook BASKING RIDGE, N.J.--(BUSINESS WIRE)-- Barnes & Noble Education, Inc. (NYSE: BNED), a leading solutions provider for the education industry, today announced various steps it is taking to help address some of the challenges that the schools and students it serves are facing due to the disruptions caused by the COVID-19 virus. Yesterday, the Company announced that it has joined VitalSource® and other leading publishers in providing free access to eTextbooks for students at BNED campuses that have closed due to COVID-19 through the remainder of the Spring 2020 term. Given the continued transition to online and distance learning programs by colleges and universities nationwide, to help students, BNED is also offering targeted free self-tutoring and writing services through its bartleby® suite of services, which will continue to provide students with 24/7 on-demand access to academic assistance. Michael P. Huseby, Chief Executive Officer and Chairman, BNED, said, “Our top priority remains providing schools and students with solutions during this time of unprecedented disruption, while simultaneously protecting the health and safety of our employees and customers. As an organization, we are closely monitoring the continuing developments and following the guidance of the World Health Organization, Center for Disease Control (CDC) and local health authorities. While we cannot predict how long this situation will last, BNED remains committed to actively supporting our students, faculty and the educational institutions we serve during this time. Given the economic uncertainty associated with the ongoing COVID-19 outbreak, including the continued closures of educational institutions nationwide, we are limited in our ability to accurately predict what the negative financial impact to BNED will be in fiscal 2020, and therefore believe it is appropriate to withdraw financial guidance for fiscal 2020.” BNED’s fiscal fourth quarter is historically a lower revenue quarter for the company because it does not include the fall and spring back-to-school rush periods; nonetheless, due to the uncertainty regarding the duration and extent of the disruptions caused by COVID-19, BNED is withdrawing its fiscal 2020 outlook. The Company does not intend to provide further updates to its fiscal year 2020 outlook unless deemed appropriate. ABOUT BARNES & NOBLE EDUCATION, INC. Barnes & Noble Education, Inc. (NYSE: BNED) is a leading solutions provider for the education industry, driving affordability, access and achievement at hundreds of academic institutions nationwide and ensuring millions of students are equipped for success in the classroom and beyond. Through its family of brands, BNED offers campus retail services and academic solutions, a digital direct-to-student learning ecosystem, wholesale capabilities and more. BNED is a company serving all who work to elevate their lives through education, supporting students, faculty and institutions as they make tomorrow a better, more inclusive and smarter world. For more information, visit www.bned.com. Forward-Looking Statements This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, among others: general competitive conditions, including actions our competitors and content providers may take to grow their businesses; a decline in college enrollment or decreased funding available for students; decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores; implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability; risk that digital sales growth does not exceed the rate of investment spend; the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings; the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin; the general economic environment and consumer spending patterns; decreased consumer demand for our products, low growth or declining sales; the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions may not be fully realized or may take longer than expected; the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective; changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers; our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments; risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers; technological changes; risks associated with counterfeit and piracy of digital and print materials; our international operations could result in additional risks; our ability to attract and retain employees; risks associated with data privacy, information security and intellectual property; trends and challenges to our business and in the locations in which we have stores; non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings; disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations; disruption of or interference with third party web service providers and our own proprietary technology; work stoppages or increases in labor costs; possible increases in shipping rates or interruptions in shipping service; product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ digital offerings and direct to student textbook consignment rental programs, as well as the risks associated with the impacts that public health crises may have on the ability of our suppliers to manufacture or source products, particularly from outside of the United States; changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance; enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities; the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing; our ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; adverse results from litigation, governmental investigations, tax-related proceedings, or audits; changes in accounting standards; and the other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A in our Annual Report on Form 10-K for the year ended April 27, 2019. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.

Please summarize this to one or two paragraph.

Complete the following problems: 1. For this problem, use the following randomly generated list of accounts, placing them in appropriate order to prepare an income statement. Accounts ($000,000) Depreciation 25 General and administrative expenses 22 Sales 345 Sales expenses 18 Cost of goods sold 255 Lease expense 4 Interest expense 3 The following randomly constructed table requires that as part of your Critical Thinking Assignment you arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profit, operating profit, and net profit before taxes. Using a 35% tax rate, calculate taxes paid and net profit after taxes. Assuming a dividend of $1.10 per share with 4.25 million shares outstanding, calculate EPS and additions to retained earnings. 2. Explain why the income statement can also be called a “profit-and-loss statement.” What exactly does the word balance mean in the title of the balance sheet? Why do we balance the two halves? 3. CS Industries, Inc. began 2016 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred stockholders, holding 500,000 shares, were paid two semiannual dividends of $0.75 per share. The firm had a net profit after taxes of $5.15 million. Prepare the statement of retained earnings for the year ended December 31, 2016. 4. Sky Metals, Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm’s motto is “If you need it, we can make it.” The CEO of Sky Metals recently held a board meeting during which he extolled the virtues of the corporation. The company, he stated confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be profitable, claimed the CEO, because the company used state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press reporter, you have calculated some ratios to analyze the financial health of the firm. Sky Metals' current ratios and quick ratios for the past 6 years are shown in the following table: 2010 2011 2012 2013 2014 2015 2015 Current ratio 1.2 1.4 1.3 1.6 1.8 2.2 2.2 Quick ratio 1.1 1.3 1.2 0.8 0.6 0.4 0.4 What do you think of the CEO’s claim that the firm is lean and soon to be profitable? 5. If we know that a firm has a net profit margin of 4.5%, total asset turnover of 0.72, and a financial leverage multiplier of 1.43, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

1. For this problem, use the following randomly generated list of accounts, placing them in appropriate order to prepare an income statement.

1. The following randomly constructed table requires that as part of your Critical Thinking Assignment you arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profit, operating profit, and net profit before taxes.
2. Using a 35% tax rate, calculate taxes paid and net profit after taxes.
3. Assuming a dividend of $1.10 per share with 4.25 million shares outstanding, calculate EPS and additions to retained earnings.

2. Explain why the income statement can also be called a “profit-and-loss statement.” What exactly does the word balance mean in the title of the balance sheet? Why do we balance the two halves?

3. CS Industries, Inc. began 2016 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred stockholders, holding 500,000 shares, were paid two semiannual dividends of $0.75 per share. The firm had a net profit after taxes of $5.15 million. Prepare the statement of retained earnings for the year ended December 31, 2016.

4. Sky Metals, Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm’s motto is “If you need it, we can make it.” The CEO of Sky Metals recently held a board meeting during which he extolled the virtues of the corporation. The company, he stated confidently, had the capability to build any product and could do so using a lean manufacturing model. The firm would soon be profitable, claimed the CEO, because the company used state-of-the-art technology to build a variety of products while keeping inventory levels low. As a business press reporter, you have calculated some ratios to analyze the financial health of the firm. Sky Metals' current ratios and quick ratios for the past 6 years are shown in the following table:

What do you think of the CEO’s claim that the firm is lean and soon to be profitable?

5. If we know that a firm has a net profit margin of 4.5%, total asset turnover of 0.72, and a financial leverage multiplier of 1.43, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

Komiko Tanaka invests $17,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for the long term.

a. How much cash will Komiko retain, after-taxes, if she holds the investment for five years and then she sells it when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar)

Cash Retained=

b. What is Komiko’s after-tax rate of return on her investment in part (a)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=

c. How much cash will Komiko retain, after taxes, if she holds the investment for five years and then sells when the long-term capital gains rate is 25 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Cash Retained=

d. What is Komiko’s after-tax rate of return on her investment in part (c)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=

e. How much cash will Komiko retain, after taxes, if she holds the investment for 15 years and then she sells when the long-term capital gains rate is 15 percent? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Cash Retained=

f. What is Komiko’s after-tax rate of return on her investment in part (e)? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places.)

After tax rate of return=

Bella Groove and Frankie Jay commenced a new business on 1 January 2020. The business will operate a hip-hop dance studio, called ‘Groovy Dancing’ . Bella and Frankie will operate the business as a partnership. The dance studio will offer dance classes to children and adults. People will sign-up for classes for a period of 3 months at a time (with people attending one class each week), and sessions will run from February – April, May – July, August – October each year. The classes
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cost $50 per month (with $150 payable for each 3-month session), and people can pay as follows:
• $150 paid upfront for 3-months of dance classes; or • $50 per month, payable on the last day of each month (for each of the 3 months of dance classes).
During the first six months of operations, the following events and transactions occurred. Note: all payments made by Groovy Dancing were made from the business bank account.
Date Detail 3 Jan Bella Groove and Frankie Jay each contributed $10,000 of personal funds into the business bank account.
5 Jan Groovy Dancing rented a studio for the business, for a period of 12 months (starting on 1 February 2020 – 31 January 2021). Rent is to be paid 3-monthly in advance. Groovy Dancing paid $3,000 to the landlord for rent for February – April 2020.
10 Jan Groovy Dancing contracted Choice Flooring to supply and install a floating dance floor at the studio. The dance floor was installed, and Groovy Dancing received an invoice for $5,000. The due date for payment of the invoice is 8 February 2020.
22 Jan Groovy Dancing purchased and paid for a computer and sound system for the business. The computer cost $2,600 and the sound system cost $1,200.
25 Jan Groovy Dancing purchased and paid for advertising materials (flyers, balloons, fridge magnets) from Swift Promotions Ltd for $900.
26 Jan At the Australia Day celebrations that were held in town, Groovy Dancing held two free outdoor community hip-hop dance classes with the aim of: promoting the new business, and to advertise the new hip-hop dance classes that were going to commence at their studio on 1 February 2020. Bella and Frankie handed out all of the advertising materials on the day. They received lots of positive interest from community members about their new business.
27 Jan Groovy Dancing received a number of telephone calls from people interested in signing up for the new hip-hop dance classes. 32 people signed up for classes for February – April 2020, and each of these people paid the $150 fee for these classes (via direct deposit into Groovy Dancing’s bank account).
28 Jan Groovy Dancing received more telephone calls from people interested in signing up for the new hip-hop dance classes. Another 40 people signed up for classes for February – April 2020. 30 of these people paid the $150 fee for these classes (via direct deposit into Groovy Dancing’s bank account), and the other 10 people agreed to pay $50 on 28 February, 31 March, and 30 April.
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31 Jan Groovy Dancing received more telephone calls from people interested in signing up for the new hip-hop dance classes. Another 25 people signed up for classes for February – April 2020, and each of these people paid the $150 fee for these classes (via direct deposit into Groovy Dancing’s bank account).
1 Feb Groovy Dancing paid $2,400 for business insurance, for the period 1 February 2020 – 31 January 2021.
1 Feb Groovy Dancing paid the local radio station $580 for radio advertising (for advertising provided on 1 February, promoting the grand opening of the dance studio).
5 Feb Groovy Dancing paid the $5,000 owing to Choice Flooring (owing in relation to the floating dance floor supplied and installed in January).
28 Feb Groovy Dancing received $500 from the 10 customers that agreed to pay $50 per month (in February, March and April) for their dance classes.
28 Feb Bella Groove withdrew $1,000 from the bank account for personal expenses, and Frankie Jay withdrew $2,000 from the bank account for personal expenses.
31-Mar Groovy Dancing received $500 from the 10 customers that agreed to pay $50 per month (in February, March and April) for their dance classes.
1 Apr Groovy Dancing received an invoice from Telstra, for telephone and internet used by the business. The amount payable on the invoice is $300, and payment is due by 28 April 2020.
27 Apr Groovy Dancing paid Telstra the $300 that was owing.
28 Apr 60 people signed up for classes for May - July 2020, and each of these people paid the $150 fee for these classes (via direct deposit into Groovy Dancing’s bank account).
29 Apr Another 50 people signed up for classes for May - July 2020. 30 of these people paid the $150 fee for these classes (via direct deposit into Groovy Dancing’s bank account), and the other 20 people agreed to pay $50 on 31 May, 30 June, and 31 July.
30 Apr Groovy Dancing received $500 from the 10 customers that agreed to pay $50 per month (in February, March and April) for their dance classes.
30 Apr Groovy Dance paid $3,000 to the landlord for rent for May - July 2020.
10 May Groovy Dancing received an invoice from Origin Energy, for electricity used at the dance studio. The amount payable on the invoice is $750, and payment is due by 4 June 2020.
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31 May Groovy Dancing received $1,000 from the 20 customers that agreed to pay $50 per month (in May, June and July) for their dance classes.
2 Jun Groovy Dancing paid Origin Energy the $750 that was owing.
30 Jun Groovy Dancing received $1,000 from the 20 customers that agreed to pay $50 per month (in May, June and July) for their dance classes.
30 Jun Groovy Dancing received an invoice from Telstra (for telephone and internet used by the business), with an amount payable of $380. The due date for payment is 28 July 2020.
30 Jun Groovy Dancing needs to recognise an accrued expense for electricity, amounting to $420.
Additional information as at 30 June 2020:
• Depreciation to be recognised in the financial statements up to 30 June 2020 is: $100 for the floating dance floor, $200 for the computer and; $160 for the sound system. • Ignore any GST.
Required:
i. Prepare journal entries for January – June 2020 transactions listed above (including any adjusting entries). In relation to adjusting entries for prepaid expenses, depreciation and unearned revenue, prepare these entries as at 30 June 2020 (rather than at the end of each month). Include dates, references and narrations. (7.5 marks) ii. Prepare T-accounts in an Excel spreadsheet. Post all of the above journal entries to the T-accounts. Include dates and references for each entry. Total all of the T-accounts to determine their balances at the end of June 2020. iii. Prepare the ‘Adjusted Trial Balance’ in an Excel spreadsheet as at 30 June 2020. Use formulas to generate all of the figures in the ‘Adjusted Trial Balance’ from the balances in the T-Accounts. iv. Prepare the income statement, balance sheet, and statement of changes in equity in Excel. Use formulas to generate all of the figures in the financial statement reports from the ‘Adjusted Trial Balance’ .

PLEASE SHOW YOUR WORK WITH FORMULAS.

1.At the end of the year 2017 the assets of the company X were 400 mill EUR and equity was 300 mill EUR. At the end of the year 2018 assets in the same company   were 500 mill EUR and equity was 400 mill. The net profit in 2018 was 100 mill EUR.

a)Calculate ROA and ROE for the year 2018.

b)What was indebtedness in the years 2017 and 2018?

c)What is the change in indebtedness in 2018 compared with 2017 expressed in index and index points (interpretation is required as well).

2. In the income statement of the company “Astra, Ltd.” for 2010 you have found that the company had € 40 mill of income before tax (profit before tax) and the net profit (after tax) was € 35 mill. The national income tax rate is 20%. How much was the effective income tax rate and the income tax base for this company in 2010? (4 points)

a) The effective tax rate was 12.5%, the tax base was € 40 mill.

b) The effective tax rate was 20%, the tax base was € 25 mill.

c) The effective tax rate was 12.5%, the tax base was € 35 mill.

d) The effective tax rate was 12.5%, the tax base was € 25mill.

e) The effective tax rate was 20%, the tax base was € 35 mill.

3. A company produced 50,000 products last year, but sold only 30,000 of them. The selling price of a product was € 200 and the cost per unit was € 100. How much were revenues, costs, expenses and profit? (4 points)

a) Revenues were € 6 mill., costs were € 3 mill, expenses were € 5 mill and profit was € 1 mill.

b) Revenues were € 6 mill., costs were € 5 mill., expenses were € 3 mill and profit was € 3 mill.

c) Revenues were € 10 mill., costs were € 5 mill, expenses were € 3 mill and profit was € 5 mill.

d) Revenues were € 10 mill., costs were € 3 mill, expenses were € 5 mill and profit was € 5 mill.

e) Revenues were € 6 mill., costs were 5 mill., expenses were € 5 mill and profit was € 1mill.

4.

Company Z has production capacities that allow production of 20.000 units of product per year. Market analysis showed that 8.000 products could be sold in the domestic market at 50 EUR per piece. Total fixed costs are 80.000 EUR per year, total variable costs increase proportionally up to 10.000 produced units, beyond this production limit they increase progressively. Total variable costs for 8.000 products are 240.000 EUR. Company Z could increase the capacity usage rate by exporting 2.000 products in Croatia. The problem is that the price in Croatia would have to be lower, only 35 EUR per piece.

Which of the following statement is correct?

1. A company should not accept the proposed export deal because the selling price (35 EUR) is lower than the unit cost (40 EUR).
2. A company should not accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are not enough to cover all the variable costs (60,000 EUR) plus corresponding portion of fixed costs (16,000 EUR).
3. A company should not accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are not enough to cover all fixed costs (80,000) and therefore the existing net income will decrease for 10,000 EUR.
4. A company should accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are enough to cover all additional costs related to the deal (60,000 EUR) and therefore the existing net income will increase for 10,000 EUR.
5. A company should accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are enough to cover fixed costs related to the deal (16,000 EUR) and therefore the existing net income will increase for 16,000 EUR

5. a)Derive the equation for the break-even point assuming linear variable costs, draw a corresponding graph, and explain the importance of cost management on the basis of this equation. (7 points)

b)Explain how we determine and use the break-even point in the case of heterogeneous production. (6 points)

Company's management are currently reviewing the performance of its range of ‘super-premium’ wines. The management team have asked you to perform an analysis on one of the wine products and to address some questions. You have gathered the following budgeted information for the 2020/21 year:

• The wine sells for $40 per bottle
• Direct materials are $9 per bottle
• Direct labour is $10 per bottle
• Variable overhead is $3 per bottle
• Budgeted sales volume is 50,000 bottles
• Fixed overheads are $765,000

1. Calculate the following:
   1. the contribution margin per bottle and the number of bottles that must be sold to break-even;
   2. the margin of safety in the number of bottles, revenue and as a percentage;
   3. the contribution margin ratio and the break-even point in revenues
2. Suppose the margin of safety was 5,000 bottles in 2019/20. Are operations more or less risky in 2020 as compared to 2019? Explain.
3. Suppose next year’s revenue estimate is $200,000 higher than originally predicted. What would be the estimated pre-tax profit?
4. Assume a tax rate of 30 per cent. How many bottles must be sold to earn an after-tax profit of $180,000?
5. One of the members of the management team has recently joined the company. His previous experience has been with small, owner-run businesses. he made a comment to one of his new colleagues that in his previous roles he had never heard of, or used, CVP analysis. Briefly explain why CVP analysis might be even more useful to small business owners than to managers of large entities.