Question 1
the president of houston electronics was pleased with the company's new product the HE Versatile CVD. The product is portable and can be attached to a computer tp play or record computer programs or sound, attached to an amplifier to play or record music, or attached to a TV to play or record TV programs. IT can even be attached to a camcorder to record videos directly on compact disks rather than on tape. It also can be used with a headset to play or record sound. The proud president announced that this unique an innovative product would be an important factor in reestablishing the North American consumer electronic industry. Based on development costs and prediction os sales volume, manufacturing cost, and distribution cost, the cost-based price of the HE Versatile CVD was determined to be $425. Following a market skimming strategy, management set the initial selling price at $525. The marketing plan was to reduce the selling price by $50 during each of the first two years of the product's life to obtain the highest contribution possible from each market segment. The initial sales of the HE Versatile CVD were strong, and Houston Electronic found itself adding second and third production shifts. Although these shifts were expensive, at a selling price of $525, the product had ample contribution margin to remain highly profitable. The president was talking with the company's major investor about the desirability of obtaining financing for a major plant expansion when the bad news arrived. A foreign company had announced that it would shortly introduce a similar product that would incorporate new design features and sell for only $350. The president was shocked. Required How could the foreign competitors profitably sell a similar product for less than manufacturing costs to Houston Electronic? What advice do you have for the president concerning the HE Versatile CVD? What advice would you have to help the company avoid similar problems in future?
Question 2
1. Presented below is pension information related to Woods, Inc. for the year 2013. Service cost $84,000 Interest on projected benefit obligation $46,000 Interest on vested benefits $30,000 Amortization of prior service cost due to increase in benefits $14,000 Expected return on plan assets $21,000 The amount of pension expense to be reported for 2013 is (Points : 5) $109,000. $153,000. $174,000. $123,000. 2. Kasper, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013. Service cost $260,000 Contributions to the plan $250,000 Actual return on plan assets $240,000 Projected benefit obligation (beginning of year) $2,700,000 Fair value of plan assets (beginning of year) $2,900,000 The expected return on plan assets and the settlement rate were both 9%. The amount of pension expense reported for 2013 is (Points : 5) $503,000.00. $260,000.00. $242,000.00. $263,000.00. 3. A pension liability is reported when (Points : 5) a) the net temporary taxable amounts will result in taxable amounts during the next fiscal year. b) the fair value of the pension plan assets exceeds the accumulated benefit obligation. c) the contributions for the period are less than the pension expense reported for the same period. d) the fair value of the pension plan assets is less than the accumulated other comprehensive income. 4. What statement is true regarding post-retirement healthcare benefits? (Points : 5) a) The benefits can be easily projected and estimated. b) They are generally not prefunded. c) Benefits are paid on a monthly basis. d) The beneficiary is always restricted to the retiree only. 5. Kathy's Kittens, Inc. has provided the following information for their post-retirement benefits plan for 2013. Service cost $860,000 Discount rate 10% APBO, January 1, 2013 $5,200,000 EPBO, January 1, 2013 $5,600,000 Average remaining service to full eligibility 20 years Average remaining service to expected retirement 25 years The amount of post-retirement expense for 2013 is (Points : 5) a) $1,380,000. b) $1,588,000. c) $1,640,000. d) $1,420,000. 6. On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances. Projected benefit obligation $8,800,000 Fair value of plan assets 9,600,000 The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $350,000 are created. Other data related to the pension plan are as follows. 2013 2014 Service costs $145,000 $156,000 Prior service costs amortization $0 $78,000 Contributions (funding) to the plan $180,000 $232,000 Benefits paid $165,000 $203,000 Actual return on plan assets $960,000 $948,000 Expected rate of return on assets 10% 10% Required: (a) Prepare a pension worksheet for the pension plan for 2013 and 2014. (b) For 2014, prepare the journal entry to record pension-related amounts.
Question 3
Allocated Cost and Opportunity Cost Binder Manufacturing produces small electric motors used by appliance manufacturers. In the past year, the company has experienced severe excess capacity due to competition from a foreign company that has entered Binder's market. The company is currently bidding on a potential order from Dacon Appliances for 6,000 Model 350 motors. The estimated cost of each motor is $40, as follows: Direct material $20 Direct labor 5 Overhead 15 Total $40 The predetermined overhead rate is $3 per direct labor dollar. This was estimated by dividing estimated annual overhead ($15,000,000) by estimated annual direct labor ($5,000,000). The $15,000,000 of overhead is composed of $6,000,000 of variable costs and $9,000,000 of fixed costs. The largest fixed cost relates to depreciation of plant and equipment. Required a. With respect to overhead, what is the opportunity cost of producing a Model 350 motor? b. Suppose Binder can win the Dacon business by bidding a price of $37 per motor (but no higher price will result in a winning bid). Should Binder bid $37? c. Discuss how an allocation of overhead based on opportunity cost would facilitate an appropriate bidding decision.,Cost Allocation and Apparent Profitability Diamonds, Etc. manufactures jewelry settings and sells them to retail stores. In the past, most settings were made by hand, and the overhead allocation rate in the prior year was $12 per labor hour ($2,400,000 overhead ? 200,000 labor hours). In the current year, overhead increased by $800,000 due to acquisition of equipment. Labor, however, decreased by 40,000 hours because the equipment allows rapid creation of the settings. One of the company's many customers is a local jewelry store, Jasmine's Fine Jewelry. This store is relatively small and the time to make an order of jewelry pieces is typically less than 10 labor hours. On such jobs (less than 10 labor hours), the new equipment is not used, and thus the jobs are relatively labor intensive. Required a. Assume that in the current year, the company continues to allocate overhead based on labor hours. What would be the overhead cost of an 10-labor-hour job requested by Jasmine's Fine Jewelry? How does this compare to the overhead cost charged to such a job in the prior year? b. Assume that the price charged for small jobs does not change in the current year. Are small jobs less profitable than they were in the past?
Question 4
Note?the attachments are the text book chapters, the following are the questions: Ch8: A6. (Calculating the WACC) Getty?s required return for equity, re , is 18%. Its required return for debt, rd , is 6%; its debt-to-total-value ratio, L, is 45%; and its marginal tax rate, T, is 40%. Calculate Getty?s WACC. A7. (Finding NPVs with differing project risks) Assume the expected return on the market portfolio is 15% and the riskless return is 9%. Also assume that all of the projects listed here are perpetuities with annual cash flows (in $) and betas as indicated. None of the projects requires or precludes any of the other projects, and each project costs $2,000. a. What is the NPV of each project? b. Which projects should the firm undertake? PROJECT A B C D E F Annual cash flow 310 500 435 270 385 450 Beta 1.00 2.25 2.22 0.65 1.37 2.36 Ch9: B3. (NPV) Truman State University is evaluating an investment in new air handling systems for some of its major buildings. The expected outlays and the expected savings, in millions of dollars, are given here: TIME 0 1 2 3 4 THROUGH 10 Outlays 2.0 3.0 4.0 0 0 Savings 0 0.5 1.0 1.5 2.0 B6. (Investment criteria) Consider the cash flows for the two capital budgeting projects given here. The cost of capital is 10%. a. Calculate the NPV for both projects. b. Calculate the IRR for both. c. Calculate the PI for both. d. Calculate the MIRR for both. e. Calculate the payback for both. f. Which is the better project? Why? YEAR 0 1 2 3 4 Project A ?25,000 10,000 10,000 10,000 10,000 Project B ?12,500 5,000 5,000 5,000 5,000 Ch10: B2. (Incremental cash flows and NPV) The Canton Sundae Corporation is considering the replacement of an existing machine. The new machine, called an X-tender, would provide better sundaes, but it costs $120,000. The X-tender requires $20,000 in setup costs that are expensed immediately and $20,000 in additional working capital. The X-tender?s useful life is 10 years, after which it can be sold for a salvage value of $40,000. Canton uses straight-line depreciation, and the machine will be depreciated to a book value of zero on a six-year basis. Canton has a tax rate of 45% and a 16% cost of capital on projects like this one. The X-tender is expected to increase revenues minus expenses by $35,000 per year. What is the NPV of buying the X-tender?"
Question 5
These are the two feedback: Business Ethics-Comment {1} Should there be changes to the Sarbanes-Oxley Act? 2. Technology changes-Comment {2} Is Apple maximizing shareholders wealth? Pick one of the options above and use it for this assignment. Thanks in a million. Based on the feedback you received on the topics submitted during the Week 2 Activity, select one of those topics, and draft a Problem Statement. The draft Problem Statement should be supported by research literature and should have the characteristics identified in Week 3. The documents in the NCU Dissertation Center will be helpful in the actual development of this draft. Use the ?comment? feature of Word to annotate the presence of those characteristics identified in Week 3 within your draft. The length and format of this document should conform to the specifications in the NCU Template Applied Degree CP 2013 document. Continue to accumulate 2 to 4 annotations as part of each assignment. Your paper should demonstrate thoughtful consideration of the ideas and concepts that are presented in the course and provide new thoughts and insights relating directly to this topic. Your paper should reflect scholarly writing and current APA standards. Review APA Form and Style. Be sure to adhere to Northcentral University's Academic Integrity Policy. View the Northcentral Academic Integrity Tutorial to refresh your knowledge of how to achieve academic integrity. Upload your assignment using the Upload Assignment button below.
