III.Indicate which of the following is Building cost (B) , Land cost (L) , Machinery and Equpment ( M and E) or simply an Expense (E) cost by designating the appropriate letter. (total 30 points)

a. Engineer’s fees of $100,000 for the building_____

b Assembly cost of $10, 000 for the new copier _____

c. Vandalism cost of $1,000 on the building during construction ______

d. Title fees of $20,000 to close the sale on the Land __________

e. Broker’s commission on the Land purchase ___________

f. Interest incurred on financing the construction __________

g,Fines paid to City of Austin for not obtaining the proper permits _____

h. Testing cost of $500 for the new copier _____________

i. Purchase price of Land $1,000,000______________

j Mistakes made in installation costing $5,000 ________

(Recognition of Profit on Long-Term Contract
—Overall Loss) Assume the facts given in E6.37 except that
Vaughn's non-cancellable fixed price contract with Atlantis is for $9.5
million. Billings and collections are lower in 2022 by $500,000 each.

2020 2021 2022
Costs for the year $3,825 $4,675 $1,200
Estimated costs to complete 4,675 1,270 –0–
Progress billings for the year (non-refundable) 3,500 4,100 1,900
Cash collected for the year 3,100 4,150 2,250
Instructions
a. Using the percentage-of-completion method, calculate the
percent complete for 2020 and 2021. Round the percent complete
to the nearest whole percentage point.

b. Calculate the amount of revenue to be recognized in 2020 and
2021.

c. Calculate the construction costs to be expensed in 2021.

d. Prepare the journal entry at December 31, 2021, to record longterm
contract revenues, expenses, and losses for 2021.

e. What is the balance in the Contract Asset/Liability account at
December 31, 2020 and 2021?

f. Show how the construction contract would be reported on the
SFP and the income statement for the year ended December 31,
2021.

g. Assume that Vaughn uses the zero-profit or completed-contract
method. What would be the journal entry recorded on December 31, 2021?

Ivanka Trump after moving to Pakisatan and has purchase PC hotel Karachi in November 2020 and renamed it Ivayana. The hotel is a 5 star luxury hotel consisting of 100 single rooms 70 double rooms and 40 Suites. The average night stay in a single room costs Rs 8000. Double bed cost Rs 19000 and suite costs Rs 35000. On average 70 single rooms, 60 double rooms and 35 suites are occupied. Besides, there are 4 ball rooms. The ball rooms are always available for booking but they only get booked on Saturdays and Sundays. Each ball room has capacity of 300 people and rental charged for each booking is RS 130,000. 10 Rooms in each category are paid by credit card. The payment is received a week later. 50% amount related to ball room are received in same month and 50% in next month. The rental charge for ball rooms was Rs 100,000 in 2020. The charge for rooms has not changes since last year and have remained same. The hotel is charged local tax of Rs 5000 each week which is paid in the same month. The hotel has a staff of 150 people. 30 kitchen staff which receive 18% of the amount received againts the bill charged for the meals. On average the kitchen staff receive 90 orders for meal with the average billing of Rs 8000 per meal. the amount of meals billed is immediately collected and the kitchen staff is paid in the 1^st week of next month. The room service and the janitorial satff are 40 which are paid Rs 18000/month at last day of same month. 10 is the num of other lower staff for misc services and they are paid 15000/month at last day of same month. The remainig 20 are the senior executive staff, their remuniration details are not shared. The hotel is powered by solar panels and the, its maintenance is outsourced to a company solarex, they charge Rs 200,000 quarterly, which is paid in 2 installments. 50% is paid in the 1^st month of quarter and the rest is paid in the last month of quarter. The opening cash in hand was Rs 100,000.

Prepare Cash budget for the 1^st quarter of 2021.                (PLO 2.1, CLO 1)                                13 marks

Hint: Consider reviewing the actual calendar for 2021.

Ivanka Trump after moving to Pakisatan and has purchase PC hotel Karachi in November 2020 and renamed it Ivayana. The hotel is a 5 star luxury hotel consisting of 100 single rooms 70 double rooms and 40 Suites. The average night stay in a single room costs Rs 8000. Double bed cost Rs 19000 and suite costs Rs 35000. On average 70 single rooms, 60 double rooms and 35 suites are occupied. Besides, there are 4 ball rooms. The ball rooms are always available for booking but they only get booked on Saturdays and Sundays. Each ball room has capacity of 300 people and rental charged for each booking is RS 130,000. 10 Rooms in each category are paid by credit card. The payment is received a week later. 50% amount related to ball room are received in same month and 50% in next month. The rental charge for ball rooms was Rs 100,000 in 2020. The charge for rooms has not changes since last year and have remained same. The hotel is charged local tax of Rs 5000 each week which is paid in the same month. The hotel has a staff of 150 people. 30 kitchen staff which receive 18% of the amount received againts the bill charged for the meals. On average the kitchen staff receive 90 orders for meal with the average billing of Rs 8000 per meal. the amount of meals billed is immediately collected and the kitchen staff is paid in the 1^st week of next month. The room service and the janitorial staff are 40 which are paid Rs 18000/month at last day of same month. 10 is the number of other lower staff for misc services and they are paid 15000/month at last day of same month. The remainig 20 are the senior executive staff, their remuniration details are not shared. The hotel is powered by solar panels and the, its maintenance is outsourced to a company solarex, they charge Rs 200,000 quarterly, which is paid in 2 installments. 50% is paid in the 1^st month of quarter and the rest is paid in the last month of quarter. The opening cash in hand was Rs 100,000.

Prepare Cash budget for the 1^st quarter of 2021.   

Hint: Consider reviewing the actual calendar for 2021.

Park is always willing to give up 5 tangerines for 1 orange. The price of one orange is $1 and the price of one tangerine is $0.25. Park's spending budget for orange and tangerine is $10.

(1) Park is currently consuming 16 tangerines and 6 oranges. Give a suggestion about the direction of substitution for Park to improve his satisfaction.  Justify your suggestion using the economic meaning of the marginal rate of substitution and the market rate of substitution.

(2) To maximize his satisfaction, how many oranges and tangerines should Park purchase with $10 budget?  

(3) Give a graph in which the optimal consumption point shown. Include both the budget line and an indifference curve related to the optimal consumption. Clearly label the axes and mark the coordinates of the optimal consumption point.  

Park Co. is considering an investment that requires immediate payment of $21,555 and provides expected cash inflows of $6,800 annually for four years. Park Co. requires a 8% return on its investments.

1-a. What is the net present value of this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1)

1-b. Based on NPV alone, should Park Co. invest?

1-c. What is the internal rate of return? (PV of $1, FV of $1, PVA of $1, and FVA of $1)

1-d. Based on its internal rate of return, should Park Co. make the investment?

The Manager at Rainbow Valley II advertises that the typical family visiting the park spends at least one hour in the park during weekends. A sample of 25 visitors during the weekends in the month of July revealed that the mean time spent in the Park was 63 minutes with a standard deviation of 8 minutes.

1. Using the 0.01 significance level and a one-tailed test, is it reasonable to conclude that the mean time in the Park is greater than 60 minutes? Show all steps in your test of hypothesis.

2. Repeat the analysis at the 0.05 significance level. (You may show only the calculations that change).

3. Repeat with a survey mean of 64 minutes at the .01 significance level. (You may show only the calculations that change).

4. What do you conclude from your analysis?

1. When the amount that has been earned (BCWP) is consistently below the actual cost to date (ACWP), it can be concluded that the project is under cost.

True

False

QUESTION 2

16.6       The main purpose of an audit of a construction company’s financial statements is to:

QUESTION 3

16.5       From the project lifecycle, we can learn all of the following except:

QUESTION 4

16.3       Which of the following best describes the challenges in managing demobilization?

QUESTION 5

16.1       When the amount that has been earned (BCWP) is consistently below the amount that was supposed to be earned (BCWS), it can be concluded that the project is behind schedule.

True

False

QUESTION 6

16.7      Cost estimating and the resulting data are used for all purposes except:

1. 16.4       Closeout procedures can also benefit the construction manager’s long-term performance in all ways except:

Mermaid Beach Hotel Ltd (Mermaid Hotel) operates a seaside hotel on the Sunshine Coast, providing
accommodation, bar and restaurant facilities for tourists. Casual and part-time wages are a major
expense item, particularly during summer, when up to an additional 30 staff members are employed.
In order to keep track of casual and part-time wages, Mermaid Hotel’s operations manager prepares
a weekly roster (using Excel) showing:


• employee name
• employment position (e.g. bar staff)
• days and hours rostered for the week
• hourly rate
• any additional amounts to be paid (e.g. meal allowances).


Each employee’s immediate supervisor is required to sign a hard copy of the Excel roster spreadsheet
on a daily basis as evidence that the hours were worked as rostered. Any discrepancies (e.g. additional
hours) are recorded on a separate payroll adjustment form (PAF) and co-signed by the employee. The
Excel roster spreadsheet plus any PAFs are forwarded to the payroll officer at the end of the week and
used as the basis for that week’s casual and part-time employee payroll. Last year, you still placed
reliance on controls over casual and part-time wages, despite finding some breakdowns in controls,
as you were able to obtain sufficient appropriate audit evidence that the controls were operating
effectively. Assume that you have decided it is appropriate to test internal controls over the relevant
payroll transactions.


Required:

Briefly outline how the information provided above would affect the nature, timing and extent of tests of controls.

Glitz hotel, a 500-room hotel, rents hotel rooms for $120/night. At the current sales level of 400 rooms per night, Glitz currently makes a profit of $30/room:

                                        Per room

Sales                                 $120

Costs                                     90

Profit                                    30

It costs Glitz $90/night to maintain a room ($60 in depreciation, $25 in variable maintenance and $5 in fixed booking costs). Glitz has been approached by Conventions2000.com to purchase a block of 300 rooms for $80/room per night. If this special order is accepted, Conventions2000.com would take care of all booking costs for the rooms booked through Conventions2000.com.

Required:

1. Which are the relevant costs?
2. What is the net change in net income if Glitz accepts the special offer from Conventions2000.com?
3. What other issues should Glitz consider before accepting this special offer?