On January 2, 2019, Royal Class Air Conditioning and Heating sold and installed an HVAC system to Peak Co. for $2,750. The selling price is allocated as follows: (1) 90% for the HVAC unit and (2) 10% for an ongoing 4-year service contract for the HVAC unit.

a. Determine each of the following related to this sale:

1. Identify the contract between the company and the customer.

2. Identify the performance obligations of Royal Class.

3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations.

b. What amount of revenue should Royal Class recognize for the year ended December 31, 2019?

Example 4:

Suppose that the monopolist faces a demand curve for its widgets as q = 9 - 0.2p. The firm’s marginal revenue and cost functions are: MR(q) = 45 – 10q and MC(q) = 15 + 5q. The firm’s total cost function is C(q) = 2.5q² + 15q + 3.

1. How many widgets should the firm produce and sell so that the monopolist can maximize its profits?
2. How much should the firm charge to each of its customers so that the firm can maximize its profits?
3. How much will the firm earn in total sales (or total revenues)?
4. How much will the firm earn in total profits?

Stargazer Services Co. is organized in three segments: Sky Mountain, Diamond View, and Star Party. Data for the company and for these segments follow

What are Diamond View’s controllable profit margin and segment profit margin?

3.. The labour market has several special features that distinguish it from other markets. List three of these features stated in the textbook. Select one feature and explain in detail the implication it has for the hiring organization.

4.. Assume you are a sales manager who has to decide whether an additional salesperson should ether to be hired and if so in which of the company's twelve sales districts should that person be employed. Recall that Profit = Revenue - Costs. What economic concept would you use to make your decision? Explain how you would justify your decision to your boss using this concept.

Taki Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.

Merchandise with a selling price of $30,500 remained undamaged after the fire, and damaged merchandise has a net realizable value of $7,700. The company does not carry fire insurance on its inventory.

Compute the amount of inventory fire loss. (Do not use the retail inventory method.)

1. Mercy Sports Shop started operations on 1^st January, 2020. The firm sells sports shoes in shopping malls. The company expects a 20 per cent increase in sales per month for November and December 2020. Mercy has budgeted sales as indicated in the following table:

Required:-

1. Using excel complete the sales budget by filling in the missing amounts.   
2. Determine the amount of sales revenue that will appear on the pro-forma income statement for the company’s fourth quarter 2020.

Sales price per unit for product X is $90. The variable costs per unit and total fixed costs are as follows:

         Variable costs per unit:                                  Fixed costs:

               Machining                                  $25               Depreciation                   $ 40,000

               Packaging                                    15               Maintenance                       31,000

               Total variable                             $40               Cleaning                              9,000

Real estate tax                     5,000

Total fixed                   $85,000

• Using Contribution Margin technique, calculate Sales Revenue and Sales Units at Break-Even point.

(b)   If the current level of sales is 2,300 units, by what percentage can sales decrease before the company has to worry about having a net loss?

Swift plc acquired 75% of equity shares in Wren plc on January 20X6, when Wren's retained earnings were 124,000$. An extract from the statements of income of both companies for the year ended 31 December 20X8 was as follows:

During the year ended 31 December 20X8, Swift sold goods invoiced at 400,000$ to Wren at cost plus a third. 80,000$ of these goods remain with Wren at the year end.

What is the consolidated gross profit?

Allen Company had the following accounts and balances on December 31, 2019:
Estimated Liabilities $51,250 Discount on Notes Payable $150
Cash $20,000 Notes Receivable, maturity 2/1/22 $5,000
Notes Payable, due June 2, 2020 $1,000 Current Maturities of Long-Term

Debt

$6,900
Accounts Receivable $267,500 Unearned Revenue $4,320
Equipment $950,000 Interest Payable $1,010
Accounts Payable $104,400 Wages Payable $6,000
Inventory $85,000 Marketable Equity Securities $40,000
Land $600,000 Common Stock $900,000
Allowance for Doubtful Accounts $12,000
What is Allen Company’s current ratio?

Marigold Corp. and its divisions are engaged solely in manufacturing operations. The following data pertain to the segments in which operations were conducted for the year ended December 31, 2018.

In its segment information for 2018, how many reportable segments does Marigold have?