Majestic Enterprises manufactures microchips for computers. A market survey shows that a 10% reduction in price will result in a 30% increase in sales with variable costs per unit remaining unchanged. On the other hand, an investment of $30,000 in machinery would reduce variable costs by $3 a unit. a) Determine the sales volume and break-even point for each option given Majestic currently sells 10,000 units @ $20 each, has variable costs of $80,000 and fixed costs of $40,000. Ensure you have checked all calculations for accuracy prior to submission. b) Using the current information provided in a) as the budget for month 1 and the additional information below, complete the 12 month budget for Majestic Enterprises. Ensure you have checked all calculations for accuracy prior to submission. Sales expected to rise monthly by 10% Variable costs to increase by 5% per month to the 6th month and then stabilize. Fixed costs to remain stable for the first 9 months then record an increase of $10,000. Admin expenses of $5,000 to be incurred in the first month with a 2% increase per month.

4.      Create a memo in Word. Comment on the trend shown in question 1 above.  During the first 5 days, was the euro rising or falling? And during those 10 days?                

5.    Most of your exports to the US belong to the model 600 RTM. The experience shows that, if the price of this product rises over 78000 dollars, the exported units will be reduced.  If this product is priced in euros, and assuming the trend shown in question 1 continues, what would be the consequences for your company’s exports?           

Q1.    In the table below are the euro-dollar exchange rates for the first ten days of November 2019. The data shows dollar per euro. Draw a line chart that shows the evolution of the euro relative to the dollar. Add a trendline.

                                    USD

            10/11/2019      1,0385

            09/11/2019      1,0443

            08/11/2019      1,0262

            07/11/2019      1,0481

            06/11/2019      1,0385

            05/11/2019      1,0566

            04/11/2019      1,0384

            03/11/2019      1,0301

            02/11/2019      1,0139

            01/11/2019      1,0019

Tom's Truckers purchased a new truck for $160,000. The company expected the truck to last 5 years or 100,000 miles, with an estimated salvage value of 120,000 at the end of that time. In the first year, the truck was driven 24,000 miles.

* As the account for Tom, you can depreciate this truck using the

a.) Double declining balance or the

b.) Units of production method.

* Which method of depreciation will allow the largest write-off in the first year ( show work)?

* How much greater would the depreciation expense be using this method?

2. A cargo van purchased by Tiger's Transport should last 5 years. The purchase price was $120,000. The trade-in value is $10,000.

* Using the double declining balance method, calculate the accumulated depreciation at the end of year 2. Round the declining balance rate to 4 decimal places, and all dollar amounts to the nearest cent.

3. Barb is a 47 year old female and wants to purchase $209,000 in straight life insurance. If the rate per thousand from the chart shows rate per thousand of $18.29, how much would the life insurance cost her?

A professional football team is preparing its budget for the next year. One component of the budget is the revenue that they can expect from ticket sales. The home venue, Dylan Stadium, has five different seating zones with different prices. Key information is given below. The demands are all assumed to be normally distributed. Seating Zone Seats Available Ticket Price Mean Demand Standard Deviation First Level Sideline 15,000 $1000.00 14,500 750 Second Level 5,000 $90.00 4,750 500 First Level End Zone 10,000 $80.00 9,000 1,250 Third Level Sideline 21,000 $70.00 17,000 2,500 Third Level End Zone 14,000 $60.00 8,000 3,000 Determine the distribution of total revenue under these assumptions using 250 trials. Summarize the statistical results. The question is from following book and from Chapter 12 question 17 Textbook: James Evans, Business Analytics, 3nd edition, 2019, Pearson Education, Pearson. ISBN: 13:978-0-13-523167-8

Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:

During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company’s product is $51 per unit.

Required:

1. Assume the company uses variable costing:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

2. Assume the company uses absorption costing:

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2.

QUESTION THREE

Treble Plc is planning to commence production of a new product – the Dom. It is expected that demand for the Dom will last for 6 years and that they will sell 1,000 units in the first year; 3,000 units in the second year and 6,000 units per year thereafter. The selling price will be ZMW15 per unit and the company wishes to achieve a mark-up of 50% on cost.

The following costs have been estimated:

Design and development               ZMW 40,000

Variable production Cost:              ZMW 7 per unit

Additional fixed production cost ZMW 4000 per year

End of life cost                                  ZMW 10,000

Required

1. Calculate the target cost per unit for the production of Doms.     
2. Calculate the actual full production cost per unit for the first year and comment as to whether or not there is a cost gap.                                              
3. Calculate the lifecycle cost per unit and comment as to whether or not there is a cost gap.                                                                                                   
4. State and explain three measures a company could take to close a cost gap.

5. Explain how target costing can be beneficial to modern day business managers.                                                                                                          

Vedder, Inc., has 5 million shares of common stock outstanding. The current share price is $73, and the book value per share is $9. Vedder also has two bond issues outstanding. The first bond issue has a face value of $60 million, a coupon rate of 7 percent, and sells for 98 percent of par. The second issue has a face value of $40 million, a coupon rate of 6.5 percent, and sells for 97 percent of par. The first issue matures in 20 years, the second in 12 years. Required: (a) What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Book value weight of equity Book value weight of debt (b) What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Market value weight of equity Market value weight of debt

Masterson, Inc., has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million, has a coupon rate of 7 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, has a coupon rate of 6 percent, and sells for 107 percent of par. The first issue matures in 25 years, the second in 8 years. Both bonds make semiannual coupon payments.

a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

b. What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

c. Which are more relevant, the book or market value weights?