Question 1
Comprehensive Variance Analysis [LO2, LO3, LO4] Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Budgeted Actual Sales (15,000 pools) . . . . . . . . . . . . . . . . . . . . $450,000 $450,000 Variable expenses: Variable cost of goods sold* . . . . . . . . . . . . 180,000 196,290 Variable selling expenses . . . . . . . . . . . . . . 20,000 20,000 Total variable expenses . . . . . . . . . . . . . . . . . . 200,000 216,290 Contribution margin . . . . . . . . . . . . . . . . . . . . . 250,000 233,710 Fixed expenses: Manufacturing overhead . . . . . . . . . . . . . . . 130,000 130,000 Selling and administrative . . . . . . . . . . . . . . 84,000 84,000 Total fixed expenses . . . . . . . . . . . . . . . . . . . . 214,000 214,000 Net operating income . . . . . . . . . . . . . . . . . . . $ 36,000 $ 19,710 Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to ?get things under control.? Upon reviewing the plant?s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Standard Quantity Standard Standard Price Standard or Hours or Rate Cost Direct materials . . . . . . . . . . . . . . . . . 3.0 pounds $2.00 per pound $ 6.00 Direct labor . . . . . . . . . . . . . . . . . . . . 0.8 hours $6.00 per hour 4.80 Variable manufacturing overhead . . . 0.4 hours* $ 3.00 per hour 1.20 Total standard cost . . . . . . . . . . . . . . $12.00 *Based on machine-hours. During June the plant produced 15,000 pools and incurred the following costs: a. Purchased 60,000 pounds of materials at a cost of $1.95 per pound. b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 11,800 direct labor-hours at a cost of $7.00 per hour. d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours were recorded. It is the company?s policy to close all variances to cost of goods sold on a monthly basis. Required: Compute the following variances for June: a. Direct materials price and quantity variances. b. Direct labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month. What impact did this figure have on the company?s income statement? Show computations. Pick out the two most significant variances that you computed in (1) above. Explain to Ms. Dunn possible causes of these variances.
Question 2
On December 31, 2010, Dow Steel Corporation had 605,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 6% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2011. On February 28, 2011, Dow sold 60,500 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2011, was $2,200,000. The income tax rate is 40%. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted Options Granted Share Price (adjusted for the stock dividend) December 31, 2009 4,000 $ 33 December 31, 2010 9,000 $ 24 December 31, 2011 7,500 $ 31 The market price of the common stock averaged $32 per share during 2011. Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2011. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.),Both answers are coming up incorrect, are there some other responses I should try?
Question 3
Penguin Corporation acquired 80 % of the outstanding voting stock of Snow Company on January 1, 2012, for $420,000 in cash and other consideration. At the acquisition date, Penguin assessed Snow?s identifiable assets and liabilities at a collective net fair value of $525,000 and the fair value of the 20 percent noncontrolling interest was $105,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2013: Penguin Snow Sales $640,000 $360,000 Cost of Goods Sold 290,000 197,000 Operating expenses 150,000 105,000 Retained earnings, 1/1/13 740,000 180,000 Inventory 346,000 110,000 Buildings (net) 358,000 157,000 Investment income not given -0- Each of the following problems is an independent situation: A. Assume the Penguin sells Snow inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $90,000 in 2012 and $110,000 in 2013. Of this inventory, Snow retained and then sold $28,000 of the 2012 transfers in 2013 and held $42,000 of the 2013 transfers until 2014. On consolidated financial statements for 2013, determine the balances that would appear for the following accounts: Cost of Goods Sold Inventory Noncontrolling Interest in Subsidiary?s Net Income B. Assume the Penguin sells Snow inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $50,000 in 2012 and $80,000 in 2013. Of this inventory, $21,000 of the 2012 transfers were retained and then sold by Penguin in 2013, whereas $35,000 of the 2013 transfers was held until 2014. On consolidated financial statements for 2013, determine the balances that would appear for the following accounts: Cost of Goods Sold Inventory Noncontrolling Interest in Subsidiary?s Net Income C. Penguin sells Snow a building on January 1, 2012, for $80,000, although its book value was only $50,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight line method with no salvage value. Determine the balances that would appear on consolidated financial statements for 2013 for the following accounts: Building (net) Operating Expenses Noncontrolling Interest on Subsidiary?s Net Income
Question 4
E7-1 (Determining Cash Balance) The controller for Weinstein Co. is attempting to determine the amount of cash and cash equivalents to be reported on its December 31, 2010, balance sheet. The following information is provided. * 1. Commercial savings account of $600,000 and a commercial checking account balance of $800,000 are held at First National Bank of Olathe. * 2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Weinstein to write checks on this balance, $5,000,000. * 3. Travel advances of $180,000 for executive travel for the first quarter of next year (employee to reimburse through salary reduction). * 4. A separate cash fund in the amount of $1,500,000 is restricted for the retirement of long-term debt. * 5. Petty cash fund of $1,000. * 6. An I.O.U. from Marianne Koch, a company customer, in the amount of $150,000. * 7. A bank overdraft of $110,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank. * 8. The company has two certificates of deposit, each totaling $500,000. These CDs have a maturity of 120 days. * 9. Weinstein has received a check that is dated January 12, 2011, in the amount of $125,000. * 10. Weinstein has agreed to maintain a cash balance of $500,000 at all times at First National Bank of Olathe to ensure future credit availability. * 11. Weinstein has purchased $2,100,000 of commercial paper of Sergio Leone Co. which is due in 60 days. * 12. Currency and coin on hand amounted to $7,700. Instructions * (a) Compute the amount of cash to be reported on Weinstein Co.'s balance sheet at December 31, 2010. * (b) Indicate the proper reporting for items that are not reported as cash on the December 31, 2010, balance sheet.
Question 5
Analysis and Application of Marketing Concepts There are 15 multiple choice questions worth 8 points each designed to test your ability to analyze and apply the marketing concepts you have learned in this couse. Take your time and consider your answers carefully. 1. (TCO 1) Cole works for a company that requested all of its staff to purchase new toys and bring them into the office during the month of December for holiday distribution to families in need. Cole was excited about choosing some toys for this event, purchased several and brought them to work. After Cole dropped the toys off, he felt very happy and satisfied that he had helped others with his donation. Was this a marketing exchange? (Points : 8) No, because this request was tax-deductable Yes, because the toys were going to families in need No, because Cole bought the toys Yes, because Cole's donation of the toys was accompanied by his satisfaction and happiness No, because Cole spent money for toys but then gave them away. 2. (TCO 6) Which of the following would be the BEST the target market for tickets to the home games of the Indianapolis Colts professional football team? (Points : 8) All people in the Indianapolis area All people in the U.S All men in the U.S People in the Indianapolis area with an interest in professional football All people in the U.S. with an interest in professional football 3. (TCO 3) The owners of Old School Brand Authentic Antique Foods researched Civil War records to come up with recipes used in the old-fashioned cookies the company produces and markets. This statement deals with which part of the marketing mix? (Points : 8) Product Process Price Place Promotion 4. (TCO 5) Google's myspace.com is a social network that is targeted primarily to people under the age of 25. Increasing use of myspace.com as a networking tool for this target market is an example of how __________ forces impact the marketing (Points : 8) Economic Competitive Social Regulatory 5. (TCO 7) Recently a federal appeals court rendered a unanimous decision that Microsoft Corp. does not have an automatic right to put whatever features it wants into its Windows operating system; rather each new feature needs to be evaluated separately. Many of these features are also made by much smaller companies. This ruling grew out of the power that Microsoft holds in the software market because it owns a major share of the marketplace. What purpose did this ruling have? (Points : 8) Protecting companies from one another Protecting consumers from unfair trade practices Protecting the future interests of society from dangerous business practices Protecting consumers from one another Protecting businesses from unfair consumer practices 6. (TCO 6) Graham-Field Health Products makes hospital beds and wheelchairs from component parts and materials it buys. It sells its products to hospitals, nursing homes and retailers of health care products. Graham-Field Health Products operates in a(n) __________ market. (Points : 8) Consumer Government Industrial Reseller Demographic 7. (TCO 1) Several years ago, SwissAir made some unwise investments to pay for a planned expansion. As a result, the company had to make some cost-cutting moves that alienated its customers. Eventually the company declared bankruptcy, regrouped and found itself able to resume business. Its board of directors recently announced that the company would resume flying if it could prove that the airlines could regain at least 75 percent of its lost customers. It decided to allot $50,000 to determine the probability that its former customers would fly on the airline again and what methods requiring little or no money could be used to increase that probability. This description represents which stage in the marketing research approach? (Points : 8) Define the problem Develop the research plan Collect relevant information Develop findings Take marketing actions 8. (TCO 3) The Belsen interview is a means of pretesting media surveys. It gathers facts and figures by asking people about their attitudes, beliefs and awareness of various media. With this technique, the respondent is interviewed twice?first by an interviewer using the proposed survey and then by a different interviewer, who asks questions about the survey itself. The Belsen interview uses __________ data. (Points : 8) Observational Secondary Intercept Questionnaire Synergistic 9. (TCO 4) Sara Burns is the owner of a company called Spice and was looking for a new-product to go with her company's line of food condiments when a customer suggested combining spices with tea. This is an example of (Points : 8) Accidental invention Idea generation Bootlegging ideas Serendipitous management Serendipitous innovation 10. (TCO 4) A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in several decades. The marketing for the show was intent on making television viewers aware of its existence and excited enough about the show that we would watch the first episode. Based on this description, in which stage of the product life cycle would this show be? (Points : 8) Introduction Growth Maturity Decline Harvest 11. (TCO 8) In an episode of the Andy Griffith television series, two local farmers were selling the produce they grew on their farms from the back of their pickup trucks to local people that drove by on the road. The farmers selling their products without wholesalers or retailers were an example of a (Points : 8) Roadside channel of distribution Traveling channel of distribution Intermediate channel of distribution Informal channel of distribution Direct channel of distribution 12. (TCO 2) Disney is using an integrated marketing communications program (IMC) to promote group travel to its theme parks because (Points : 8) Its strategy includes using all types of promotional activities that deliver a consistent message It does not want to reach any member of its target audience more than once IMC is less expensive than other forms of promotion such as public service announcements If it didn't, Disney would have to use indirect personal selling It is more concerned about frequency than reach 13. (TCO 2) When a news story covers a terrible disaster and viewers are asked to send donations to the American Red Cross, the American Red Cross is receiving (Points : 8) Publicity Advertising Direct marketing Personal selling A public service announcement 14. (TCO 8) For several years, advertisements for Arm & Hammer baking soda have prompted consumers to place an opened box of the product in the refrigerator to lessen food odor and to replace that box monthly. The same ads advise customers to pour the used box down their kitchen sinks to freshen drains. Arm & Hammer employed a __________ strategy in its attempt to sell more baking soda. (Points : 8) Market penetration Market development Product development Diversification Product penetration 15. (TCO 5) Microsoft, Intuit and, Yahoo are building new facilities in Quincy, WA, a town that previously had a population of 3,500. Along with these new neighbors, the residents of Quincy are also going to get more traffic lights, a strip mall, higher housing prices and, new jobs. This example best illustrates a(n) ___________ change with which the people and businesses of Quincy will be faced. (Points : 8) Economic Regulatory Competitive Psychographic Legal/regulatory Page: 1 2 3 Time Remaining: Page: 1 2 3 Evaluation and Synthesis In this section of the exam, you will answer 3 essay questions worth 30 points each. Take time to think through your answer and organize your response. Remember to save your work before preceeding to the next question. 1. (TCO 3) Imagine you are creating a marketing plan for a company that will sell motor scooters . As you consider the marketing program, what types of strategy should you consider including in the plan? Propose one specific example of each type of strategy that you are considering and present your rationale (reasoning) for your strategy selections. (Points : 30) 2. (TCO 1) Imagine you are the marketing manager responsible for developing marketing strategy for a bicycle company. Propose the strategic marketing process you will use being sure the name the stages, the activities included in the stages and stage specific examples related to marketing bicycles. (Points : 30) 3. (TCO 4) Managing the product through successive stages of the product life cycle is an important role for a product manager. Assess the three ways to manage a product through its life cycle including examples to help clarify your assessment. Indicate the reasoning why you would prefer one method over another in a given situation. You can use any product in your examples. (Points : 30)
