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Exercise 6-4A Calculate inventory amounts when costs are rising (LO6-3)

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During the year, TRC Corporation has the following inventory transactions.

For the entire year, the company sells 432 units of inventory for $62 each.

Exercise 6-4A Part 3

3. Using weighted-average cost, calculate ending inventory, cost of goods sold, sales revenue, and gross profit. (Round "Average Cost per unit" to 4 decimal places and all other answers to the nearest whole number.)

My topic is Netflix

II. Explore the supply and demand conditions for your firm’s product.

a) Evaluate trends in demand over time and explain their impact on the industry and the firm. You should consider including annual sales figures for the product your firm sells.

b) Analyze information and data related to the demand and supply for your firm’s product(s) to support your recommendation for the firm’s actions. Remember to include a graphical representation of the data and information used in your analysis.

III. Examine the price elasticity of demand for the product(s) your firm sells.

a) Analyze the available data and information, such as pricing and the availability of substitutes, and justify how you determine the price elasticity of demand for your firm’s product.

b) Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price elasticity of demand as your guide.

c) Assess how the price elasticity of demand impacts the firm’s pricing decisions and revenue growth

References:

DATAMONITOR: Netflix, Inc. (2010). Netflix Inc. SWOT Analysis, 1–9

Lev-Ram, M. (2019). ONCE UPON A TIME AT NETFLIX. (cover story). Fortune, 180(4), 74–83.

Nobody Knows What Television Is Anymore. (2019). Reason, 51(7), 58.

Case - 20.1. Malcolm as Tax Czar

Malcolm Middle has just been appointed the Tax Czar and is convinced that the leasing business is just a way for companies to avoid paying taxes. He has hired the Higher Consulting Firm to evaluate the cash flow effects to both the lessee and the lessor in financial leases. Mr. Middle wants to determine if there is any loss of tax revenue to the government.

The Higher Consulting Firm is using an example to analyze the taxes associated with a lease decision. The example has the following:

1. The cost of the asset is $1.25 million. The lessor will have to buy the asset to lease it to the lessee.

2. The cost of capital for both companies is 10 percent.

3. The annual cash flows (before tax) generated by the asset is $500,000, regardless of who uses the asset.

4. To acquire the asset, the company will make annual interest payments at the end of each year and

repay the principal of $1.25 million at the end of the 5th year (just like a bond).

5. Maintenance and insurance costs = $0.

6. The economic life of the asset, which is equal to the term of the lease, is 5 years.

7. Depreciation of $250,000 is claimed at the end of each year (for convenience we are assuming straight line).

8. Annual lease payments made at the end of the year are $300,000.

9. The tax rate of both lessee and lessor is 40 percent, and both companies make sufficient income to claim any tax benefits.

A. Complete the following table assuming the company buys the asset instead of leasing it.

Company Buys Asset Instead of Leasing

Year 1   Year 2   Year 3   Year 4   Year 5 Principal Repayment

Cash flow from asset

Interest payments

Lease payments

Depreciation

Tax payment

After-tax cash flows

B. Complete the following table assuming the company uses a financial lease instead of buying the asset. For simplicity, assume that the entire lease payment is treated as a financing charge (like interest).

Company Uses Financial Lease Instead of Buying (Lessee)

Year 1   Year 2   Year 3   Year 4   Year 5 Principal Repayment

Cash flow from asset

Interest payments

Lease payments

Depreciation

Tax payment

After-tax cash flows

C. Complete the following table for the lessor in the financial lease. For simplicity, assume that the entire lease payment is treated as a financing charge (like interest).

Lessor in Financial Lease

Year 1 Year 2 Year 3 Year 4 Year 5 Principal Repayment

Cash flow from asset

Interest payments

Lease payments

Depreciation

Tax payment

After-tax cash flow

D. Are Mr. Middle’s suspicions about loss of tax revenue correct?

E. How could companies gain from leasing activities? In other words, why would a lessor lease the asset to the operating company rather than use the asset itself?

Please I posted a question for 3days and haven't receive any response. Please below is the question; The previous solutions provided are incorrect.

Candy producer Jim’s Jellybeans have customers all over the world. To be able to meet demand, the company has been forced to operate 15 separate warehouses across the globe. Lately, however, development in IT and warehouse automation has created new possibilities for Jim’s Jellybeans. The cost of the current operation is (for the whole company):

Transportation: $1 000 000
Stock keeping: $15 000 000
Cost for tied-up capital: $2 000 000
The company is faced with three alternatives:

Alternative 1: Automate picking. This means that each warehouse will be 30% more expensive (stock keeping cost) due to new equipment etc. But it also means that the order to delivery lead-time for each warehouse will decrease by as much as 60%. The reduced lead time lets the company reduce the number of warehouses to 10. As a result of this, transportation cost will double.

Alternative 2: Automate everything. Here, the number of warehouses are reduced to 5. The remaining warehouses are heavily automated and stock keeping cost is increased by 70% for these. Transportation cost increases by 500%.

Alternative 3: Do nothing. Keep the current system intact.

Na. What is the cost for tied-up capital for alternative 1?
Nb. What is the cost for tied-up capital for alternative 2?
Nc. What is the total cost for alternative 1?
Nd. What is the total cost for alternative 2?
Ne. What is the total cost for alternative 3?

Caesars​ Palace® Las Vegas made headlines when it undertook a​ $75 million renovation.

In​ mid-September 2015, the hotel closed its​ then-named Roman​ Tower, which was last updated in​ 2001, and started a major renovation of the 567 rooms housed in that tower. On January​ 1, 2016, the newly renamed Julius Tower​ reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman​ Tower, 20 guest rooms were added to the Roman Tower. With the renovation​ completed, Caesars expects the Julius Tower room rate to average around $149 per night. This​ increase, a $25 or​ 20.2% increase,​ reflects, in​ part, the room improvements. Assume that the annual fixed operating costs for the Julius Tower in Caesars​ Palace® Las Vegas will be $5,000,000. This amount represents an increase of​ $200,000 per year compared to​ pre-renovation. Also assume that the variable cost per hotel room night after the renovation is $27​; before the​renovation, the variable cost per room night was $20. The contribution margin per room night after the renovation is $122​; before the​ renovation, the contribution margin per room night was $129. The average hotel occupancy​ rate, in​ 2014, for Caesars Entertainment Corporation was​ 91.2%, according to its 2014 Form​ 10-K. By​ comparison, the average hotel occupancy rate in Las Vegas​ overall, for that same time​ period, was​ 86.8%, according to Stastia.com.

1. if Caesars has a target profit of $15,000,000​, how much sales revenue does the company need to make to achieve its target​ profit? ​(Round interim calculations to the nearest whole percent​ and/or dollar. Round your final answer to the nearest whole​ dollar.)

A. $42,153,444

B. $29,845,345

C. $24,390,244

D. $15,852,843

2. If Caesars has a target profit of $15,000,000​, how many rooms must the company occupy throughout the year in order to reach its target​ profit? ​(Round your answer up to the nearest whole​ room.)

A. $240,385

B. $134,229

C. $1122,951

D. $163,935

3. What is each​ room's contribution margin after the​ renovations?

A. $104

B. $122

C. $97

D. $129

Skyblue Pty Ltd is a large private company that manufactures special reinforced concrete and other products used in the construction of airport runways and heavy use motor vehicle freeways. During the course of the audit for the year ended 30 June 2020, the government announced that it intends to scrap its proposed third runway project. You know that Skyblue Pty Ltd’s projections include a major share of the work expected to flow from this project.

The company has been experiencing some cash flow difficulties, although this is not unusual in the industry. Management has recently fully extended their overdraft facility in order to pay day-to-day expenses such as wages and salaries. The audit partner is concerned that the company may be facing going concern problems, but the managing director maintains that future capital expenditure can be cut back to alleviate the going concern issue. In addition, surplus assets can be sold to the growing Asian market and long-term debt can be rescheduled if necessary.

Required:

(a) Give examples of three other possible mitigating factors that have not yet been mentioned.

(b) What evidence should you obtain with respect to management’s representation about the various mitigating factors presented in question 6 and identified in part (a) above? (

(c) The engagement partner has decided to qualify the financial report on the basis of uncertainty as to going concern. However, the managing director argues that, as the company is privately held and all the shareholders are involved in the business, going concern problems should not be viewed as seriously as if the company was publicly listed and, therefore, an unqualified report should be signed. How would you respond to the managing director’s comments?

(d) What would be the impact on the audit of a comfort letter from a related company promising to provide financial support in the event that Skyblue Pty Ltd was unable to meet its debts?

Question 4: Separate legal identity

1. Harry was managing director of Grantham Plumbers Limited (Grantham). A restraint of trade clause in his contract of employment prevented him from soliciting Grantham’s customers after he left its employment. Harry left and set up a company called Right As Limited (Right As), which successfully marketed its services to Grantham’s customers. Grantham wishes to sue Harry, who claims he has not breached his contract. Explain the legal basis on which Grantham might sue Harry as the owner of the separate legal entity, Right As. Refer to relevant provisions in the Companies Act 1993, and case law to support your answer. (Ignore any application of s145 Companies Act 1993).

2. Ricardo is a director and shareholder of Dodge Limited (Dodge), a company formed to take over Peel Limited (Peel), a company that is no longer trading. One of Peel’s assets transferred to Dodge is a lease of a BMW car. The motor vehicle dealer was unaware that Peel was no longer trading and prepared a new lease in Peel’s name. Ricardo signed the lease agreement on behalf of Peel. Dodge subsequently runs into difficulties and becomes insolvent. Can the motor vehicle dealer hold Ricardo personally liable for the unpaid lease on the car? Refer to any relevant provisions (including subsections) in the Companies Act 1993 to support your answer.

3. Comprehende Ltd (Comprehende) controls the composition of the board of Pharoah Developments Ltd (Pharoah). Pharoah owns 80% of the shares in Piety Ltd (Piety). Piety becomes insolvent after engaging in highly risky behaviour. Refer to provisions (including subsections) in the Companies Act 1993 to support your answers.

(a) Explain if Piety is a subsidiary of Comprehende.

(b) Explain if Pharoah might become liable for the debts of Piety.