Question 1
1. Arrow Co. makes two products, A and B, with the following information. Price/unit DM/unit DL/unit Annual production and sales Product A $20 0.6 pound 0.3 hour 3,000 units Product B $40 0.8 pound 0.5 hour 200 units DM costs $5 per pound and DL rate is $10 per hour for both products. Arrow started to implement activity-based costing in 2011 with additional data below: Activity Cost Pool Assigned MOH cost Practical Capacity Actual Activity A: Actual Activity B: Machining $16,000 2,000 machine hours 1,500 machine hours 100 machine hours Setup $8,000 250 setups 120 setups 80 setups Packaging $6,000 150 packages 80 packages 40 packages Questions: (1) Arrow used a traditional costing system that allocates budgeted total MOH of $30,000 to products based on direct labor hours. How much MOH cost was allocated to Product B? (2) Under the traditional costing system, how much MOH cost was allocated to each unit of Product A? (3) Under activity-based costing, how much MOH cost will be allocated to each unit of Product A in 2011? (4) Under activity-based costing, what is the product margin for Product B in 2011? (5) Under activity-based costing, what is the total cost of unused capacity in 2011?
Question 2
Directions: Use may use either the P-value method or the Traditional Method to solve the following problems. You can find video tutorials using your calculator utilizing the P-value method in the chapter 8 lecture folder. At the end of this document (taken from your textbook) are the steps for each method and also how to construct the final conclusion. Please number each of these steps as shown below. Please skip step 6 as this asks you to draw a graph. Please skip 2 spaces between each step and each question. It is not necessary to submit the original questions. There will not be a grade sheet for this project. 1. In a clinical study of an allergy drug, 108 of the 203 subjects reported experiencing significant relief from their symptoms. Using a significance level of .01, test the claim that more than half of all those using the drug experienced relief. 2. According to a recent poll, 53% of Americans would vote for an incumbent president. If a sample of 100 people results in 45% who would vote for the incumbent, test the claim that the percentage is 53%. Use a .10 significance level. 3. A public bus company official claims that the mean waiting time for bus number 14 during peak hours is less than 10 minutes. Karen took bus 14 during peak hours on 18 different occasions. Her mean waiting time was 7.4 minutes. Assume that the standard deviation has been historically known to be 2.2 minutes. At the .05 significance level, test the claim that the mean waiting time is less than 10 minutes. 4. The world?s smallest mammal is the bumblebee bat. Such bats are roughly the same size of a large bumblebee. Listed below are the weights (in grams) from a sample of these bats. Assuming that all such bats have a standard deviation of .3 grams, use a significance level of .05 to test the claim that these bats are from the same population with a known mean of 1.8 grams. Do the bats appear to be from the same population ? You may assume the sample data comes from a population that follows a normal distribution. 2.13 1.31 1.91 1.92 1.77 1.64 2.29 1.99 2.33 2.49 2.22 5. A manufacturer makes steel rods that are supposed to have a mean length of 50 centimeters. A retailer suspects that the bars are being produced too short. A sample of 46 bars is taken and their mean length is determined to be 51 centimeters with a standard deviation of 3.6 centimeters. Using a .01 significance level, test the retailers claim that the population mean is less than 50 centimeters. 6. A cereal company claims that the mean weight of the cereal in its packets is more than 14 oz. The weights (in ounces) of the cereal in a random sample of 8 cereal packets are listed below. You may assume the sample data comes from a population that follows a normal distribution. Using a .05 level of significance test the company?s claim. 14.6 13.8 14.1 13.7 14.0 14.4 13.6 14.2 7. An article in a journal reports that 34% of American fathers take no responsibility for child care. A researcher claims that the figure is higher for fathers in the town of Littleton. A random sample of 225 fathers from Littleton, yielded 97 who did not help with child care. Using a .05 level of significance test the claim that the proportion is at least 34%. 8. The average time it takes for a person to experience relief from aspirin is 25 minutes. A new ingredient is added to help speed up relief. A study was conducted with 35 people that resulted in a mean of 22.1 minutes with a standard deviation of 1.9 minutes. Using a .05 significance level, test the claim that the mean amount of time relief will be felt is less than 25 minutes. 9. A Patent Medicine Company supervisor assumes that the bottling machine is operating properly if only 5 percent of the processed bottles are not full. A random sample of 100 bottles had 7 bottles that weren?t full. Using a significance level of .01, conduct a test to see if the machine is operating properly. 10. According to Management Accounting, salary figures for certified management accountants (CMAs) who are in the field less than 1 year are normally distributed with a mean of $31,129. A random sample of 15 first-year CMAs in Denver produces a mean salary of $32,279, with a standard deviation of $1,797. Test the hypothesis that the mean for all Denver first-year CMAs is not equal to $31,129. Use the .05 level of significance.
Question 3
P14-9A Condensed financial data of Arma Inc. follow. ARMA INC. Comparative Balance Sheets December 31 Assets 2008 2007 Cash $ 90,800 $ 48,400 Accounts receivable 92,800 33,000 Inventories 112,500 102,850 Prepaid expenses 28,400 26,000 Investments 138,000 114,000 Plant assets 270,000 242,500 Accumulated depreciation (50,000) (52,000) Total $682,500 $514,750 Liabilities and Stockholders' Equity Accounts payable $112,000 $ 67,300 Accrued expenses payable 16,500 17,000 Bonds payable 110,000 150,000 Common stock 220,000 175,000 Retained earnings 224,000 105,450 Total $682,500 $514,750 ARMA INC. Income Statement For the Year Ended December 31, 2008 Sales $392,780 Less: Cost of goods sold $135,460 Operating expenses, excluding depreciation 12,410 Depreciation expense 46,500 Income taxes 27,280 Interest expense 4,730 Loss on sale of plant assets 7,500 233,880 Net income $158,900 Additional information: New plant assets costing $85,000 were purchased for cash during the year. Old plant assets having an original cost of $57,500 were sold for $1,500 cash. Bonds matured and were paid off at face value for cash. A cash dividend of $40,350 was declared and paid during the year. Instructions Complete the statement of cash flows using the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest eg 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).) ARMA INC. Statement of Cash Flows For the Year Ended December 31, 2008 Cash flows from operating activities $ Adjustments to reconcile net income to net cash provided by operating activities $ Net cash by operating activities Cash flows from investing activities Net cash by investing activities Cash flows from financing activities Net cash by financing activities Net in cash Cash at beginning of period Cash at end of period $
Question 4
Project 2: Historical Analysis Project This is the time to apply in practice what you learned about portfolio theory. Choose two stocks from your portfolio (see attached documents) for an historical analysis. Download into a spreadsheet the weekly closing prices for these two stocks for 11/19/2012 ? 11/18/2013 (one year) from Yahoo or Google, along with the dividend amounts and dates. Do the same for the S&P 500 index. Due Date: 12/04/2013. Calculations: Calculate the following for each asset (in Excel, using the statistical functions given in parentheses): 1. Calculate the average return (AVERAGE), standard deviation of returns (STDEV), and variance of returns (VAR) for each stock and the S&P 500 index. 2. Calculate the covariance (COVAR) and correlation (CORREL) between the returns of stock 1 and stock 2. Remember to adjust the COVAR since the Excel functions divides by n rather than n-1. 3. Calculate the return and the standard deviation of a portfolio that held these two stocks in the following weights: (-30)%-130%, ?0%-100%, 10%-90%, 20%-80%, 30%-70%,?, 90%-10%, 100%-0%, ?, 130%-(-30)%. 4. Plot these portfolio returns ? standard deviation combinations (Important: choose a ?scatterplot? and not a ?line?!). 5. Calculate the weights for the minimum variance portfolio, and then solve for the return and standard deviation. Mark this on your plot. 6. Calculate the optimal risky portfolio?s weights in the two stocks, its average return, and its standard deviation. Mark this on your plot as well. 7. Calculate the Sharpe ratio for each combination. 8. Assuming the weekly risk-free rate is 0.1%, on your plot, plot or draw the optimal CAL and mark the optimal risky portfolio. 9. Plot two additional investment opportunity sets ? first assuming the correlation of your stocks was exactly 1, and second, assuming the correlation was ?1. Written Report: Address the following questions in a one-page, single-spaced written report. Note: this should be a short essay that describes your results. Assume that you are preparing a primer on portfolio composition and analysis for the new members of your investment committee. This is an opportunity to practice writing about financial results. You will be graded on the quality of your writing as well as the quality of your analysis. Do not just answer the questions! This is an essay for your investment committee. 1. Looking at the statistics for your two stocks, does the risk-return trade-off hold? Which combinations should you avoid? Why? 2. Look at the amount you invested in stock 1 and stock 2 at the beginning of the semester. Assume, for this assignment, that these stocks are your entire portfolio. a. Which combination would deliver the least amount of risk? b. Which would deliver the maximum return per unit of risk? 3. Looking at the CAL you have drawn and your calculations for the minimum risk and optimal portfolios, what conclusions can you draw about the efficiency of the combination you chose? Deliverables: 1. A hard copy of your plot and your written analysis. 2. E-mail the Excel file you worked with to 12/04/2013. Please name your stock_analysis.xls. Make sure your Excel file is well-organized.
Question 5
DATA: Carewood makes an environmentally friendly artificial fireplace log. You have been asked to prepare the company?s master budget for the first quarter of the year 2013 and have been provided with the following: a. The 12/31/2012 balance sheet data follows: ASSETS Cash $ 4,330 Accounts Receivable 8,450 Direct Materials Inventory (2,178 pounds) 436 Finished Goods Inventory (1,200 logs) 2,808 Plant and Equipment $220,000 Less Accumulated Depreciation (56,000) 164,000 Total Assets $180,024 LIABILITIES AND STOCKHOLDER?S EQUITY Accounts Payable $ 1,109 Note Payable 20,000 Total Liabilities $ 21,109 Common Stock $100,000 Retained Earnings 58,915 158,915 Total Liabilities and Stockholder?s Equity $180,024 b. Each log requires the following standards for direct material and labor: ? 3.3 pounds of material mix at $.20 per lb ? 10 minutes of labor time per unit; direct labor averages $14.40 per hour Each finished log requires three minutes of machine time. Variable overhead is applied at the rate of $12.00 per hour of machine time. Annual fixed production overhead is budgeted at $46,800 (see breakdown below). Salaries $30,000 Insurance 1,800 Fixed portion of utilities 6,000 Depreciation 9,000 Total $46,800 Fixed overhead is incurred evenly throughout the year c. Expected sales in units for the first five months of 2013 are: January 6,000 February 9,000 March 6,500 April 5,900 May 5,100 Carewood grants no discounts, and all sales are on credit at $6.00 per log. The company?s collection pattern is 80 percent in the month of sale, 15 percent in the month following sale, and 5 percent in the second month following the sale. The Accounts Receivable balance in the balance sheet data represents amounts remaining due from November sales of $33,000 and December sales of $34,000. d. Carewood completes all production each day. The desired ending balance of Direct Materials Inventory is 10 percent of the amount needed to satisfy the next month?s production for finished goods. The desired ending balance in Finished Goods Inventory is 20 percent of the next month?s sales. e. Purchases of direct materials are paid 70 percent in the month of purchase and 30 percent in the month following the purchase. No discounts are taken. The note payable has a 12 percent interest rate, and the interest is paid at the end of each month. The $20,000 balance of the principal on the note is due on March 31, 2013. f. CareWood?s minimum cash balance desired is $4,000. The firm may only borrow at the beginning of a month and repay at the end of a month in $500 increments ($500, $1,000, $1,500 etc.). Principal should only be repaid in a month when excess cash exists. Interest on these short-term loans, if any, is payable monthly at a 14% rate. You may have to borrow money to meet your monthly interest obligations on any loans outstanding. g. Selling and Administrative expenses, paid as incurred, run $9,000 per month plus 1 percent of sales. Direct labor and overhead are paid as incurred. h. The company accrues income taxes at a 40 percent rate. A quarterly tax installment will be paid on April 15, 2013. REQUIRED: 1. Prepare a sales budget in units and dollars for the first quarter of 2013 (January, February, March) (5 pts.) Thank you, use the attach Document to answer my quesions. I will upload it.
