Question 1
8.1 Consider the following 2011 data for Newark General Hospital (in millions of dollars): Static Flexible Actual Budget Budget Results Revenues $4.7 $4.8 $4.5 Costs 4.1 4.1 4.2 Profits 0.6 0.7 0.3 a. Calculate and interpret the profit variance. b. Calculate and interpret the revenue variance. c. Calculate and interpret the cost variance. d. Calculate and interpret the volume and price variances on the revenue side. e. Calculate and interpret the volume and management variances on the cost side. f. How are the variances calculated above related? 8.4 Refer to Carroll Clinic's 2011 operating budget contained in Exhibit 8.3, Instead of the actual results reported in Exhibit 8.4, assume the results reported below: Carroll Clinic: New 2011 Results /. Volume: A. FFS 34,000 visits B. Capitated lives 30,000 members Number of member-months 360,000 Actual utilization per member-month 0.12 Number of visits 43,200 visits C. Total actual visits 77,200 visits II. Revenues: A.FFS $28 per visit X 34,000 actual visits $ 952,000 B. Capitated lives $ 2.75 PMPM X 360,000 actual member-months $ 990,000 C.Total actual revenues $1,942,000 III. Costs: A. Variable Costs: Labor $1,242,000 (46,000 hours at $27/hour) Supplies 126,000 (90,000 units at $1.40/unit) Total variable costs $ 17.72 ($1,368,000 / 77,200) B. Fixed Costs Overhead, plant, and equipment $525,000 C. Total actual costs $1,893,000 IV. Profit & Loss Statement: Revenues: FFS $952,000 Capitated $990,000 Total $1,942,000 Costs: Variable: FFS $602,487 Capitated 765,513 Total $1,368,000 Contribution Margin $574,000 Fixed Costs 525,000 Actual profit $49,000 a. Construct Carroll?s flexible budget for 2011. b. What are the profit variance, revenue variance, and cost variance? c. Consider the revenue variance. What is the component volume variance? The price variance? d. Break down the cost variance into volume and management components. e. Break down the management variance into labor, supplies, and fixed cost variances. f. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.
Question 2
Robbins Petroleum Company is four years in arrears on cumulative preferred stock dividends. There are 850,000 preferred shares outstanding, and the annual dividend is $6.50 per share. The vice-president of finance sees no real hope of paying the dividends in arrears. She is devising a plan to compensate the preferred stockholders for 90 percent of the dividends in arrears. a. How much should the compensation be? b. Robbins will compensate the preferred stockholders in the form of bonds paying 12 percent interest in a market environment in which the going rate of interest is 14 percent for similar bonds. The bonds will have a 15-year maturity. Using the bond valuation table in Chapter 16 (Table 16?3 on page 500), indicate the market value of a $1,000 par value bond. c. Based on market value, how many bonds must be issued to provide the compensation determined in part a? (Round to the nearest whole number.) Solution Problem 17-20 Instructions Enter formulas and functions to calculate the requirements of this problem. Information Dividend per share $6.50 Shares outstanding 850,000 Years in arrears 4 Compensation percentage 90% a. How much should the compensation be? FORMULA b. Robbins will compensate the preferred stockholders in the form of bonds paying 12 percent interest in a market environment in which the going rate of interest is 14 percent for similar bonds. The bonds will have a 15-year maturity. Using the bond valuation table in Chapter 16 (Table 16?3 on page 500), indicate the market value of a $1,000 par value bond. Bond value FORMULA c. Based on market value, how many bonds must be issued to provide the compensation determined in part a? (Round to the nearest whole number.) FORMULA
Question 3
A. Review the FASB Codification and determine the specific codification citation that a company would reference for: 1. Initial measurement of stock options. 2. How stock dividends/splits in the current year affect the presentation of EPS in the income statement. 3. Disclosure requirements for a change in accounting principle. 4. Reporting interest and income taxes separately in the statement of cash flows under the indirect method. To obtain access to the FASB Codification, please go to this website http://aaahq.org/ascLogin.cfm and use the following access criteria: User Name: AAA52847 Password: sUvzds9 B. Access EDGAR at www.sec.gov. Select any public company and obtain the 10-K Filing for the most recent fiscal year (I have attached the 10-K for Kellogg's which you may use if you choose. Attach the information in the Statement of Cash Flows and related footnotes to this completed assignment. Use the Statement of Cash Flows and footnotes to answer the following questions. 1. What is the most significant Investing Activity? Financing Activity? 2. Does the company have any noncash investing/financing activities? 3. What does operating cash flow mean? Is the company?s operating cash flow positive or negative? If it is negative, how is the company financing the shortage? THE PRICE AND DEADLINE ARE NOT NEGOTIABLE.
Question 4
1. Answer all the following three (3) questions. 2. Where and when DETAILED CALCULATIONS are involved, you must use one EXCEL file. Note: your Excel worksheet must be built and populated in such a way that I can follow and trace your formulas and calculations. 3. For any other question you must use WORD (.doc or .docx) only. 4. As a general rule in grading, I am very much interested in seeing the extent to which you utilized your assigned textbooks and/or any other assigned readings in your responses. This means using materials used from non-class sources like the Internet or outside sources will receive distant secondary consideration in grading your work. So please be careful. 5. To further elaborate and emphasize, at submission time: a.You can ONLY submit a maximum of two (2) files for the entire exam- one Excel file (if you use Excel at all for this test) and one Word file. I will ignore extra files if you have more than the two files allowed for this test. 6. Finally, given questions regarding the exam bring even more questions; and this may confuse some students, I have decided to give you the test ?as is?. This means: a. You should trust the info/data given for each question and then come up with the best possible answers for the test. In improbable cases when there are general problems with some questions, like typos, etc, I can always account for them- and if legitimate, give due credit to all at the time of grading. b. I must, and I will, ignore any emails or posts in the classroom from you seeking clarifications on any part of the exam. I must be fair to ALL of my students and that is why I have the ?as is? policy as stated in above. Hope you understand. QUESTION 1. As a business decision maker, and based on what you have learned so far in this class, what have you learned that can help you at the times of making such decisions? Explain in needed details. If you discuss specific strategies and or methods, cite the specific page(s) of your books as reference. In your discussion, make sure to cover all the behavioral phenomena that may affect your decision making processes. Note: Points will be taken off for responses that lack organization and order. Maximum pages: 3 pages, double-space, size 12. No page limit on any supporting reference page, table, graph, or exhibit. Grade: 100 QUESTION 2. By expanding upon Mary Meeker?s work on eBay valuation as discussed in chapter two of your textbook, Shefrin discusses in details how heuristics, framing, and other psychological factors can affect the way managers and analysts value companies. He also discusses how calculation of Free Cash Flows could be manipulated and possibly misused when it comes to arriving at a price for a given stock. In this question, I want to test your understanding of what exactly Shefrin tries to accomplish in chapter two. To do that, consider that you have been invited to present a workshop before a group of analysts and managers; and the topic of your discussion is similar to the discussions presented in chapter two of Shefrin on valuation. I want you to consider and expand upon both the qualitative and quantitative discussions that were used in that chapter. Your job then is to prepare and submit to me the needed lecture notes along with any related calculations that you would use in your presentation. Your submission should then contain a fair amount of conceptual/qualitative materials along with a minimal level of quantitative analysis and/or examples. For such a purpose, feel free to use and build upon the tables and numerical examples that are discussed in chapter 2. Your quantitative analysis would certainly help the attendees to better understand the points that you want to make in your presentation. I encourage you to use Excel for all such calculations. Note: Points will be taken off for responses that lack organization and order. Maximum pages: 4 pages, double-space, size 12 (there is no page limit for using tables or Excel sheets/tabs) Total Grade: 100 (50 points for the qualitative portion and 50 points for the quantitative portion) QUESTION 3. In chapters 1 and 2, Ackert & Deaves take pain to discuss the foundation of traditional finance and economics. They do this knowing that such foundation has already been refuted and mostly rejected by behavioral economists. Explain their rationale for doing what they did in the said chapters. No need at all to do any calculations; this question is mainly conceptual and qualitative. Note: Points will be taken off for responses that lack organization and order. Maximum pages: 2 pages, double-space, size 12. Not page limit on any supporting reference page, table, graph, or exhibit. Grade: 50 END!
Question 5
Dear Tutor, Here is again. I don't need to get all information, I already solved on requirement on number 1 and 2. I need to get only number 3 on requirement. I think if you provide the information on number 3, you need to see on 1 and 2 that's why I just wrote them. Please let me know what you think. Thanks for your help, Ellix Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow: Product Direct labor-hours Annual production Ttl. DL hrs X200 1.8 DLHs per unit 5,000 units 9,000 DLHs X99 0.9 DLHs per unit 30,000 units 27,000 DLHs Additional information about the company follows: A. Model X200 requires $72 in direct materials per unit, and Model X99 requires $50 B. The direct labor rate is $10 per hour C. The company has always used direct labor hours as the base for applying manufacturing overhead costs to products. D. Model X200 is more complex to manufacture than Model X99 and requires the use of special equipment. E. Because of the special work required in (D) above, the company is considering the use of activity-based costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows: Activity Cost Pool Activity Measure Total Cost Machine setups Number of setups $360,000 Special processing Machine hours 180,000 General factory Direct labor-hours 1,260,000 Expected Activity Activity Measure Model X200 Model X99 Total Number of setups 50 100 150 Machine hours 12,000 0 12,000 Direct labor-hours 9,000 27,000 36,000 Required: 1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. A. Compute the predetermined overhead rate B. Compute the unit product cost of each model 2. Assume that the company decides to use activity-based costing to apply overhead costs to products. A. Compute the activity rate for each cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based costing system B. Compute the unit product cost of each model 3. Explain why manufacturing overhead cost shifts from model X99 to Model X200 under activity based costing.
