Question 1
The paper is 1,400 to 2,100 words in length. The paper provides sufficient background on the topic and previews major points To include the following: ? A recommendation for Ongko?s problems of foreign competition and labor cost with a justification for why they chose that recommendation? ? A discussion on the international capital structure and the cost of capital of Ongko when going global ALSO SEE ATTACHED EXCEL FILE with Financial Budget INFO. Ongko?s Furniture Scenario While many people know that Bali, Indonesia is a beautiful vacation spot, it is also a large furniture manufacturing location in Southeast Asia. Jaya Ongko made furniture for years near his Bali home. The area had an effective supply of timber for the variety of tables and chairs produced by his company. Labor was also relatively inexpensive. In addition, he priced his handcrafted products at a slight premium for the quality they represented. Ongko not only supplied the surrounding countries in Southeast Asia, but also exported his hand-crafted premium products to more than 20 countries worldwide. Overall, life was good for Mr. Ongko. In the late 1990s, two forces combined to cause a large dent in his business. First, a new competitor from overseas entered the furniture market. Using a high-tech approach, the new foreign company provided furniture to exact specifications and did so with rock-bottom prices. Second, the sleepy communities in Bali woke up. One of the largest retailers in the nation?s headquarters was just a few miles down the road, and its influence had expanded considerably. With inexpensive housing, mild weather, beautiful scenery, uncongested roads, a new international airport, and plenty of development, an increase in the population and the number of jobs raised the cost of labor substantially. Ongko watched his profit margins shrink as prices fell and costs rose. After researching his competition to see how they were handling these changes, Ongko saw that many of them were consolidating into larger organizations by merger or acquisition. Being independent, Ongko did not relish the idea of being acquired by a larger competitor and then forced out as the new company squeezed every rupiah it could out of the overhead costs. Initially, Ongko was not a big fan of forming a joint venture, as it would affect time spent with his family in ways that he would not enjoy. When one of his former suppliers in Brazil approached him for a possible acquisition deal, Ongko became interested in the option of expanding his management responsibilities by acquiring this supplier, who had been underperforming in the Brazilian market. One factor that concerned him was the political unrest in Brazil, accompanied by hyperinflation. Prices of goods fluctuated wildly on a daily basis. At the same time, the government kept issuing more paper currency in higher denominations. Banks would restrict the amount of money people could withdraw. The effects on businesses were also devastating. Companies did not want to buy any goods, because they were not sure what price they would pay, and salaries did not keep up with inflation. Alternatively, Ongko observed the foreign competition and their high-tech solution. Essentially, their production utilized a computer-controlled laser lathe to produce exact cuts in the wood. Highly automated, the plant in Norway used very little labor as robots even performed the precise movement and assembly functions. The cost of the technology was immense, as was the reduction in the labor needed for production. In addition, the production, running on a 24-hour basis, could move between products quickly, as the shift-differentials were more than offset by the reduction in labor. Converting his production to this model would be expensive, but he saw how he could also dramatically decrease his production costs. When talking to some of his distributors about their wants, he had another appealing idea. A second competitor, operating only in Denmark, was looking for channels to distribute in Asia. This second potential rival, however, did not operate furniture outlets, favoring instead to rely on chain distributors. Ongko could coordinate his existing distributor network and essentially become a representative for this other manufacturer. While he would retain some of the high-end custom work, he could move his company from primarily manufacturing to primarily distributing. Ongko also had a patented process for creating a coating for his furniture. During production, the process first created a common flame retardant, and upon further processing, the coating is complete and stain-resistant. There was a market for the flame retardant, but not as much of a market for the finished coating. There was another product that Ongko could buy to apply to his furniture that would add the same amount of value to the furniture. ",Hello and thank you. Are you still able to acess the excel file of the budget.,Hello, I am unable to open the word doc. can you please repoest Thank you
Question 2
1. For a liability to exist, a. a past transaction or event must have occurred. b. the exact amount must be known. c. the identity of the party owed must be known. d. an obligation to pay cash in the future must exist. 2. Which of the following shareholder rights is most commonly enhanced in an issue of preferred stock? a. The right to vote for the board of directors b. The right to maintain one's proportional interest in the corporation c. The right to receive a full cash dividend before dividends are paid to other classes of stock d. The right to vote on major corporate issues 3 . Which of the following is not one of the basic shareholders rights? a. The right to participate in earnings b. The right to maintain one's proportional interest in the corporation c. The right to participate in the proceeds of the sale of corporate assets upon liquidation of the corporation d. The right to inspect the accounting records of the corporation 4. An adjustment to retained earnings as a result of a conversion of preferred stock to common stock most likely would occur when a. par value of the preferred stock is high relative to fair value of the common stock. b. par value of the common stock is less than the book value of the preferred stock. c. par value of the common stock exceeds the book value of the preferred stock. d. par value of the preferred stock is low relative to fair value of the common. 5. The entry to record the issuance of common stock for fully paid stock subscriptions is a. a memorandum entry. b. Common Stock Subscribed, Common Stock Additional Paid-In Capital. c. Common Stock Subscribed, Subscriptions Receivable. d. Common Stock Subscribed, Common Stock. 6. Farnon Company has not declared or paid dividends on its cumulative preferred stock in the last three years. These dividends should be reported a. in a note to the financial statements. b. as a reduction in stockholders' equity. c. as a current liability. d. as a noncurrent liability. 7. For which type of investments would unrealized increases and decreases be recorded directly in an owners' equity account? a. Equity method securities b. Available-for-sale securities c. Trading securities d. Held-to-maturity securities 8. Northwick Company acquired 10,000 shares of the common stock of Shaver Corp. in July 2011. The following January, Shaver announced a $100,000 net income for 2011 and declared a cash dividend of $.50 per share on its 100,000 shares of outstanding common stock. The Northwick Company dividend revenue from Shaver Corp. in January 2011 would be a. $0. b. $2,500. c. $5,000. d. $10,000. 9. Which of the following statements characterizes an operating lease? a. The lessee records depreciation and interest. b. The lessee records the lease obligation related to the leased asset. c. The lessor transfers title of the leased property to the lessee for the duration of the lease term. d. The lessor records depreciation and lease revenue. 10. For a capital lease, the amount recorded initially by the lessee as a liability should a. exceed the present value at the beginning of the lease term of minimum lease payments during the lease term. b. exceed the total of the minimum lease payments during the lease term. c. not exceed the fair value of the leased property at the inception of the lease. d. equal the total of the minimum lease payments during the lease term. 11. What are the three types of period costs that a lessee experiences with capital leases? a. Interest expense, amortization expense, executory costs b. Amortization expense, executory costs, lease expense c. Executory costs, interest expense, lease expense d. Lease expense, executory costs, initial costs 12. Draper Corp. leased a new building and land from Baylor Leasing Inc. for 25 years. At the inception of the lease the building and land have fair market values of $200,000 and $25,000, respectively. The building has an expected economic life of 30 years. Which of the following statements is correct regarding Draper's treatment of the lease? a. Draper should treat the lease as a capital lease even though there is no bargain purchase option and no automatic transfer of ownership at the termination of the lease. b. Draper should treat the lease as a capital lease only if there is either a bargain purchase option or an automatic transfer of ownership at the termination of the lease. c. Draper should treat the lease as a capital lease provided that the land and building are recorded in separate asset accounts and accounted for separately. d. Draper should treat the lease as a capital lease only if Baylor treats the transaction as a leveraged lease. 13. Which of the following creates a permanent difference between financial income and taxable income? a. Interest received on municipal bonds b. Completed contract method of recognizing construction revenue c. Unearned rent revenue d. Accelerated cost recovery on plant and equipment 14. Which of the following creates a temporary difference between financial and taxable income? a. Interest on municipal bonds b. Accelerated cost recovery on plant and equipment c. Fines from violation of law d. Premiums paid for officer's life insurance (company is beneficiary) 15. Which of the following temporary differences ordinarily creates a deferred tax asset? a. Accrued warranty costs b. Depreciation c. Installment sales d. Prepaid insurance 16. Which of the following temporary differences ordinarily results in a deferred tax liability? a. Accrued warranty costs b. Subscription revenue received in advance c. Unrealized losses on marketable securities d. Depreciation 17. When enacted tax rates change, the asset and liability method of interperiod tax allocation recognizes the rate change as a. a cumulative effect adjustment. b. an adjustment to be netted against the current income tax expense. c. a separate charge to the current year's net income. d. a separate charge or benefit to income tax expense. 18. A company would most likely choose the carryforward option for a net operating loss if the company expected a. higher tax rates in the future compared to the past. b. lower tax rates in the future compared to the past. c. lower earnings in the future compared to the past. d. higher earnings in the future compared to the past. 19. Which of the following taxes must be paid by both the employee and the employer? a. Social security tax (FICA) b. State unemployment tax c. State withholding tax d. Federal unemployment tax 20. Which of the following statements characterizes defined contribution plans? a. They are more complex in construction than defined benefit plans. b. The employer's obligation is satisfied by making the appropriate amount of periodic contribution. c. The investment risk is borne by the employer. d. Contributions are made in equal amounts by employer and employees. 21. The vested benefits of an employee in a pension plan represent benefits a. to be paid to the retired employee in the current year. b. to be paid to the retired employee in subsequent years. c. to be paid from funds currently in the hands of an independent trustee. d. that are not contingent on the employee's continuing in the service of the employer. 22. Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes. Income before bonus and income taxes is $400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest dollar)? a. $40,000 b. $30,108 c. $28,000 d. $26,168 23. An enterprise provides for paid vacation periods for many of its employees. It is probable that these vacations will be taken, and there is a definite amount that accrues each year for each employee. Vacation benefits accrue in the amount of one paid vacation day per complete month of service, that is, an employee must work a complete month before receiving the benefits of another paid vacation day. Given the above information, which of the following statements is correct? a. Given only the above information, vacation pay should be accrued monthly, as employees render service. b. Only if the benefits vest should vacation pay be accrued before payment. c. Only if the benefits accumulate should the vacation pay be accrued before payment. d. If the benefits neither vest nor accumulate, then the vacation pay should be recognized as expense only when paid. 24. Which of the following is not a post-employment benefit, according to SFAS No. 112, ?Employers? Accounting for Postemployment Benefits?? a. Salary continuation after severance b. Health insurance paid for a three-month period following a layoff c. Life insurance coverage paid for retirees d. Job training for laid-off workers 25. Alta Corporation has a pension plan that has a provision that employees will receive benefits upon retirement even though the employees are not working for the company at the time of retirement. Such a plan is characterized as a. defined benefit. b. defined contribution. c. noncontributory. d. vested. Part II Problems-25 points total Problem 1-10 points 1. On July 1, 2011, Hawkeye Aviation leased two helicopters from Honnicutt Aircraft for an initial period of 12 months with a provision for a continuation on a month-to-month basis. The lease is properly classified as an operating lease. Lease payments are to be made as follows: First two months ............................... $15,000 per month Second three months ............................ 12,000 per month Third three months ............................. 10,000 per month Last four months ............................... 8,000 per month After the first year, the rent continues at $6,000 per month. Provide the entries required to record the lease payments for the first year on the books of (1) Hawkeye Aviation. (2) Honnicutt Aircraft. Problem 2-15 points 2. The following transactions of the Snyder Company were completed during the fiscal year just ended: (a) Purchased $100,000 of U.S. Treasury 7% bonds, paying 102.5 plus accrued interest of $1,750. In addition, the company paid brokerage fees of $500. Snyder Company uses the revenue approach to record accrued interest. Snyder classified these bonds as a trading security. (b) Purchased 1,000 shares of Ferris Company common stock at $125 per share plus brokerage fees of $950. Snyder classifies this stock as an available-for-sale security. (c) Received semiannual interest on the U.S. Treasury Bonds. (d) Sold 150 shares of Ferris at $132 per share. (e) Sold $16,000 of U.S. Treasury 7% bonds at 102 plus accrued interest of $93. (f) Purchased a $12,000, 6-month certificate of deposit. The certificate is classified as a trading security. Prepare the entries necessary to record the above transactions.
Question 3
Harriston Electronics builds circuit boards for a variety of applications in industrial equipment. The firm was founded in 1983 by two electrical engineers who left their jobs with the General Electric (GE) Corporation. Its balance sheet for year-end 2006 describes a firm with $1,184,841.00 in assets (book values) and invested capital of approximately $2.2 billion (based on market values). December 31, 2006 Balance Sheet (Book Vlaues) Invested Capital (Market Values) Liabilities and Owner?s capital Current Liabilities Account payable 17,550,000 Notes payable 20,000,000 20,000,000 Other current liabilities 22,266,000 Total current liabilities 59,816,000 20,000,000 Long term debt (7.5% interest paid semiannually due in 2012)650,000,000 624,385,826 Total liabilities 709,816,000 644,385,826 Owner?s capital Common stock ($1 par value per share)20,000,000 Paid in capital 200,025,000 Accumulated earnings 255,000,000 Total owner?s capital 475,025,000 1,560,000,000 Total liabilities and owner?s capital 1,184,841,000 2,204,385,826 Harriston?s CFO, Margaret L. Hones is concerned that its new investments e required to meet an appropriate cost of capital hurdle before capital is committed. Consequently, she initiated a cost of capital study by one of her senior financial analysts, Jack Frist. Shortly after receiving the assignment, Jack called the firm?s investment banker to get input on current capital costs. Jack learned that although the firm?s current debt capital required a 7.5% coupon rate of interest (with annual interest payments and no principal repayments until 2012), the current yield to maturity on similar debt has risen to 8.5%, such that the current market value of the firm?s outstanding bonds had fallen to $624,385,826. Moreover, since the firm?s short term notes were issued within the last 30 days, the 9% contract rate on the notes was the same as the current cost of credit for such notes. a. What are Harriston?s total invested capital and capital structure weights for debt and equity? (Hint: The firm has some short term debt (note payable) that is also interest bearing). b. Assuming a long term U.S. Treasury bond yield of 5.42% and an estimated market risk premium of 5%, what is Harriston?s cost of equity based on the CAPM if the firm?s leveraged equity beta is 1.2? c. What is your estimate of Harriston?s WACC? The firm?s tax rate is 35%,I've attched the template problem-3
Question 4
This a assay about strategic cost management topic. Please Read: Capacity Utilization Management.pdf ( see the attached file) [Pages 1-9, Page 26-28 ?Normal Capacity Models?, Page 34 ?Conclusion?] Discuss: In the Normal Capacity Model ? the authors discusses number of hours of machine use as a key driver for Caterpillar (a publicly traded company that manufactures agricultural products): "The key elements of the Normalized Costing Approach are: a. asset depreciation is calculated on hours of machine use; b. abnormal expenses are eliminated from operational cost pools (e.g., plant modernization costs); c. the behavior of costs within a process is determined and defined within a formula that recognizes key elements affecting the cost of capacity within a process; d. the capacity of the process is then determined, using practical capacity baselines set over a three- to five-year period; e. and normalized cost is then determined by combining cost and capacity information to create a cost estimate under a given set of operating conditions." (Capacity Utilization Management) Are there any limitations to defining a machine?s depreciation by number of hours [think about someone selling a car to you ? what other qualities would you look for]. What other variables would you include in building a cost model for machine depreciation?
Question 5
2) The Alcindor Company is similar to and is the same industry as the Walton Company.? ? Both Alcindor Company and Walton Company have a cost of equity of 12%, cost of debt of 8%, and 30% debt.? ? If Walton has revenues(R) of $1000, operating margin (m) of 15%, a tax rate (T) of 40%, investment rate (I) of 8%, growth rate (g) of 18%, and 5 years of supernormal growth (n) and zero growth thereafter, what value would Alcindor Company be willing to pay for Walton Company? 3) Suppose Alcindor Company is instead interested in the Elway Company, a firm in a completely unrelated (and riskier) industry.? ? Elway Company has the same parameters as Walton Company (question 9.8), except Elway has a cost of equity of 15%, cost of debt of 10%, and 20% debt.? ? What value should Alcindor Company be willing to pay for Elway Company?,maybe this will help,i am trying to attach a file but it is not working,are you getting my attached files?,9.8 is question #2...,do you understand? 9.8) The Alcindor Company is similar to and is the same industry as the Walton Company.? ? Both Alcindor Company and Walton Company have a cost of equity of 12%, cost of debt of 8%, and 30% debt.? ? If Walton has revenues(R) of $1000, operating margin (m) of 15%, a tax rate (T) of 40%, investment rate (I) of 8%, growth rate (g) of 18%, and 5 years of supernormal growth (n) and zero growth thereafter, what value would Alcindor Company be willing to pay for Walton Company? 9.9) Suppose Alcindor Company is instead interested in the Elway Company, a firm in a completely unrelated (and riskier) industry.? ? Elway Company has the same parameters as Walton Company (question 9.8), except Elway has a cost of equity of 15%, cost of debt of 10%, and 20% debt.? ? What value should Alcindor Company be willing to pay for Elway Company?"
