8. You are tasked with trying to restore the biodiversity in a national park. How might your understanding of keystone species affect your management plans?

9. Earth can support more people who are vegetarians than people who regularly consume meat. Why do you think this is?

10. If only 10% of the energy available in a plant is turned into body tissue of a cow, what happens to the other 90%?

11. Which do you think would be a more stable ecosystem: one where each species has only one connection to another species, or one where each species has five connections to other species? Explain your answer.

12. Which community would support the greatest diversity of species—a community composed of species with broad ecological niches or a community composed of species with narrow, specialized ecological niches? Explain your answer.

Which of the following statements about the relationship between underlying cost structure and financial risk is most correct?

a. If a provider is primarily capitated, risk is minimized when variable costs are a large part of total costs.

b. If a provider is primarily capitated, risk is minimized when fixed costs are a large part of total costs.

c. If a provider is primarily fee-for-service, risk is minimized when fixed costs are a large part of total costs.

d. If a provider is primarily fee-for-service, risk is minimized when total variable costs are a large part of total costs.

e. Both b. and d. above are correct.

Data: selling price per large Snowie 4$

Ice per snowie (need one per servin)0.2

Spoon straw (need one per serving)0.02

Napking(need two per snowine) 0.01

Serving per gallon of syrup 28

Cost per gallon of syrup (includes concentrate, preservative, and sugar) 4.25

Hourly rate for workers 10

Even registration fee per day 25

Electricity, insurance, maintenance, and permit cost per month 250

Kiosk rental cost per month (12 month) 650

Purchase cost of two ice shavers (5 year life) 3180

Purchase cost of flavor station (5 year life) 1080

Number of days you anticipate opening the kiosk per month 20

Number of hours you will work (no wages required) per day 6

Number of hours you will pay an employee to work in the kiosk per day 8

Questions:

Syrup cost per Snowie (cost gallon/serving per gallon od syrup)

Cost per day (Hourly rate for workers x Number of hours you will pay an employee)

Cost per month( Cost per day above x Number of days kiosk is open per month)

Total variable cost per snowie

Straight-line depreciation- ice shavers($3180/5years/12month)

Straight-line depreciation – flavour station($1080/5/12)

Total fixed cost per month

Pineapples grow in Hawaii all year round and there are many farms and gardens that produce pineapples for the local market. The demand curve for pineapples in Hawaii is given by Q = 240−2P, where Q is in tons of pineapples. The marginal cost of producing an additional ton of pineapples is constant and equal to $50 for all producers in the market.

(a) Given that there are many producers of pineapples in Hawaii and that pineapples are a homogeneous good, let’s assume that the market for pineapples is perfectly competitive. Calculate and show on a graph the equilibrium quantity sold in the market, total sur- plus, and deadweight loss. (Hint: recall the relationship between the supply curve and marginal cost curves of firms.)

(b) Now suppose one of the pineapple producers, Noa, inherits a large sum of money and decides to buy out all of the island’s land on which pineapples can be grown (including all the farms and gardens of his competitors). That is, Noa becomes a monopolist in the market for pineapples in Hawaii. Calculate and show on a graph the new equilibrium quantity and price; consumer, producer, and total surplus; and deadweight loss. [For this problem it will help to recall that when the demand curve is linear, the monopolist’s marginal revenue curve is a line with the same “y-intercept” as the demand curve, but a slope that’s twice as steep as the demand curve.]

(c) If Noa produces Q tons of pineapples, his total cost is 250 + 50Q. Calculate Noa’s profit if he operates at his profit-maximizing quantity and price.

(d) Sketch Noa’s average total cost function on a new graph. Does Noa experience increasing, decreasing, or constant returns to scale?

TJ’s Cheese Cake Factory, Inc. sells original cheese cake for $16 each. The company provided the following units and total cost data concerning its cake sales for each month during 2011:

a. Use the linear regression method to estimate fixed and variable costs. Excel has a function that you can use (I have posted these data in excel on Blackboard for your convenience). Print out the regression output and attach to this test.

b. Interpret and evaluate your regression model and results. Write out the cost formula.

c. Estimate total costs in a month when 6,000 cakes are produced and sold.

d. Estimate total profit in a month when 6,000 cakes are produced and sold.

e. You are working on the budget for October 2012 and expect 10,000 cakes will be produced and sold. Estimate total costs in a month when 10,000 cakes are produced and sold. Will you use the estimated cost in your budget? Why?

f. How does linear regression differ from the high-low method in estimating fixed and variable costs? Discuss the pros and cons of each.

Direct Materials Usage Variances: Direct Materials Mix and Yield Variances

Energy Products Company produces a gasoline additive, Gas Gain. This product increases engine efficiency and improves gasoline mileage by creating a more complete burn in the combustion process.

Careful controls are required during the production process to ensure that the proper mix of input chemicals is achieved and that evaporation is controlled. If the controls are not effective, there can be a loss of output and efficiency.

The standard cost of producing a 500-liter batch of Gas Gain is $135.00. The standard direct materials mix and related standard cost of each chemical used in a 500-liter batch are as follows:

The quantities of chemicals purchased and used during the current production period are shown in the following schedule. A total of 160 batches of Gas Gain were manufactured during the current production period. Energy Products determines its cost and chemical usage variations at the end of each production period.

Required:

Compute the total direct materials usage variance, and then break down this variance into its mix and yield components. Do not round intermediate computations and round final answers to the nearest cent. (CMA adapted)

Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company’s two product lines appear below:

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

*****Determine the unit product costs of the Deluxe and Standard products under the company’s traditional costing system.*****

The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools:  

****Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.*****

Allegro Music sells musical equipment. A detailed list of Allegro Music’s inventory follows:

*NRV = net realizable value
**LCNRV = lower of cost and net realizable value

Required:
Complete the schedule above and prepare the year-end adjusting entry to record the inventory at the lower of cost and net realizable value.