risky assets

Question description

You have been assigned to construct the optimal portfolio comprising two risky assets (Portfolios A & B) while considering the client’s risk tolerance. The attached spread sheet shows historical monthly returns of the two portfolios, the S&P 500 and 90-day Treasury Bills. Also shown are the annualized returns for each for the period specified.

1.The first risky asset (Portfolio A) is a US equity strategy that uses publically available valuation, technical and sentiment factors to assess which stocks are over-priced and which are under-priced. Fundamental factors indicate the magnitude and quality of a company’s earnings and the strength of its balance sheet. Examples of such factors include: cash flow growth, cash flow return on invested capital, price to cash flow, and accruals which assess earnings quality (low quality earnings indicate that management may be manipulating earnings by adjusting accruals). Companies with favorable fundamental factors tend to outperform those with less favorable factors.

2.Technical and sentiment factors seek to identify mis-pricings resulting from investor behavior. Examples include: momentum and price reversals where investors tend to over-react to good news by bidding up prices ABOVE fair value and bad news by bidding down prices BELOW fair value; short interest on a stock which can indicate the investor sentiment about the company’s prospects; share buybacks which can indicate a positive signal from management’s optimism regarding a firm’s future prospects; and earnings / revenue surprise. Firms with favorable technical and sentiment factors also tend to outperform. For example, firms whose earnings and revenue exceed analysts’ expectations tend to continue to outperform vs. those firms that experience earnings surprise due to cost cutting.

3.Starting with the market portfolio, the US equity strategy over-weights those stocks with more favorable fundamental, technical and sentiment factors and under-weights or avoids those stocks with less-favorable or un-favorable factors. The strategy seeks to out-perform the market portfolio as represented by the S&P 500. The monthly returns of the US equity strategy are shown in the attached spreadsheet (Portfolio A).

4.The second risky asset (Portfolio B) is a global macro hedge fund. This strategy seeks to benefit from mis-pricings within and across broad asset classes by taking long and short positions in equity markets, bond markets and currencies. For example, if the manager believes that US equities will out-perform Japanese equities, the portfolio will go long S&P 500 futures and short TOPIX futures (TOPIX is a Japanese equity index). This long/short trade is not impacted by the overall direction of global equities, but rather the relative movement between US and Japanese equities. Similarly for bonds, if the manager believes that interest rates in the United Kingdom (UK) will decline more so than interest rates in Australia, then the manager will buy UK gilt futures (gilt is the 10-year UK bond) and short Australian 10-year bond futures. Again, this trade is not impacted by the overall direction of global interest rates, but rather the relative movement between UK and Australian rates. Recall that bond prices rise as interest rates decline. The global macro hedge fund is mostly market neutral meaning that long positions equal short positions thereby dramatically reducing systematic exposure (low beta).

5.Portfolios A & B are much more volatile than the risk free rate. You will find that their correlation is small indicating that there is a diversification benefit to be had from holding both in a portfolio (I don’t show the correlation, but you will need to calculate this using the excel function “=correl(range 1, range2)”.

You will be meeting with a client that is looking for investment advice from you based on your two strategies A & B. In preparation for your upcoming meeting with the client, your boss asks that you respond to the questions below and be ready to discuss. Hint: You will need to determine the correlations and volatilities for each risk premium.

Analytical Assignment

  • Plot in Excel the risky asset opportunity set for Portfolios A & B. Hint: create the following table in excel assuming weights of portfolio A & B in 10 percentage point increments. Then calculate expected return and standard deviation for each allocation to A & B.
  • Find the optimal complete portfolio based on your client’s indifference curve. Hint: Plot an indifference curve on the same graph you just created using the utility function formula from Chapter 6. Use the range of expected return and standard deviations shown in the table below. Assume U = 9% and a risk aversion coefficient (A) of 10 to complete the table below.
  • Use the capital asset pricing model (CAPM) to determine the beta and alpha of Portfolio A & Portfolio B. Show the CAPM relationship graphically for BOTH Portfolio A and Portfolio B (separate graphs). The market portfolio is represented by the S&P 500 and the risk free rate is represented by 90 day Treasury Bill. Determine the beta for portfolio A & B using: i) the slope function in Excel; and ii) the formula for beta – the co-variance between the asset and the market divided by the variance of the market. This is explained in the Modules 6& 7 notes and pages 296 & 297 in the text. Recall the covariance between two assets is the volatility of asset 1 times the volatility of asset 2 times the correlation between them.
    • Your client will notice that the Sharpe ratio of the hedge fund (Portfolio B) is much higher than that of the equity strategy (Portfolio A) and will ask why the optimal risky portfolio wouldn’t be 100% of Portfolio B. How would you respond?
    • Your client vehemently believes in the semi-strong form of market efficiency as it relates to security selection. Is the performance of Portfolio A sufficient justification to convince the client otherwise – that markets are inefficient or at least less efficient? Why or why not?
    • Given your client’s belief regarding market efficiency as it pertains to security selection, what portfolio substitution(s) would you make in your optimal portfolio? No calculations are necessary to answer this.
    • Your client is expected to ask why you are recommending the optimal complete portfolio instead of the optimal portfolio even though the latter has a higher expected return. How will you respond?
    • After meeting with the client, she appears to prefer the risk/return tradeoff of the optimal portfolio rather than that of the optimal complete portfolio. What does that indicate about your initial assumptions regarding the indifference curve?
Weight Port A Weight Port B Return Standard Deviation Sharpe Ratio
0% 100%
10 90
20 80
30 70
40 60
50 50
60 40
70 30
80 20
90 10
100 0

Determine the optimal allocation of A & B and draw in the Capital Allocation Line (CAL). You can arrive at an approximate optimal allocation using a table similar to the one shown above OR you can obtain a more precise optimal allocation using the formula shown in Chapter 7 (equation 7.13). When drawing the CAL on the efficient frontier graph plotted in Excel, you can manually draw a line starting at the risk free rate to the tangent point.

Expected Return Standard Deviation
5%
7.5
10
12.5
15
17.5
20
22.5
25

Calculate the expected alpha for each portfolio A & B using the intercept function in Excel and the index model of CAPM formula (equation 9.9 on page 302 – note that the terms are in excess return form). Ignore the error term and you have all the information to solve for alpha based on the monthly returns. Compare the betas and y-intercepts using the two different methods.

Stockholders’ Equity

Centro-matic Company began the year with stockholders’ equity of $15,000. During the year, Centro-matic issued additional shares of stock in exchange for cash of $21,000, recorded expenses of $60,000, and paid dividends of $4,000. If Centro-matic’s ending stockholders’ equity was $56,000, what was the company’s revenue for the year?

 

$80,000.

$84,000.

$105,000.

$101,000.

 

Barsuk Company began the year with stockholders’ equity of $217,000. During the year, Barsuk issued stock for $294,000, recorded expenses of $840,000, and paid dividends of $56,000. If Barsuk’s ending stockholders’ equity was $581,000, what was the company’s revenue for the year?

 

$966,000.

$1,260,000.

$910,000.

$1,204,000.

 

At December 1, 2014, Cursive Company’s accounts receivable balance was $1,200. During December, Cursive had credit revenues of $4,800 and collected accounts receivable of $4,000. At December 31, 2014, the accounts receivable balance is

 

$400 debit.

$400 credit.

$2,000 debit.

$2,000 credit.

 

At January 31, 2014, the balance in Aislers Inc.’s supplies account was $250. During February, Aislers purchased supplies of $300 and used supplies of $375. At the end of February, the balance in the supplies account should be

 

$175 debit.

$325 credit.

$175 credit.

$325 debit.

 

On October 3, Karl Schickele, a carpenter, received a cash payment for services previously billed to a client. Karl paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a

 

credit to Retained Earnings.

credit to Notes Payable.

debit to Accounts Receivable.

credit to Accounts Payable.

 

A flower shop makes a large sale for $1,200 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,200 considered recognized?

 

December 1.

December 5.

December 10.

November 30.

 

As of March 31, Macon Company owes $500 to Boswell Co. for equipment rented during March. An entry was not previously recorded for this transaction and the equipment will be returned on April 2. If no adjustment is made for this item at March 31, how will Macon’s financial statement be affected?

 

The financial statement will be accurate since the $500 does not have to be paid yet.

Cash will be overstated at March 31.

Net income for March will be overstated.

Stockholders’ equity will be understated.

 

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

 

debit Salaries and Wages Expense, $20,000; credit Salaries and Wages Payable, $20,000.

debit Salaries and Wages Payable, $20,000; credit Cash, $20,000.

debit Salaries and Wages Expense, $20,000; credit Cash, $20,000.

debit Salaries and Wages Expense, $5,000; credit Salaries and Wages Payable, $5,000.

 

Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2013 for $50,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2013 is

 

Insurance Expense2,500

Prepaid Insurance2,500

 

Prepaid Insurance7,500

Insurance Expense7,500

 

Insurance Expense10,000

Prepaid Insurance10,000

 

Insurance Expense7,500

Prepaid Insurance7,500

 

 

The following information is for Bright Eyes Auto Supplies:

Bright Eyes Auto Supplies

Balance Sheet

December 31, 2013

 

Cash$ 20,000Accounts Payable$ 65,000

Prepaid Insurance40,000Salaries and Wages Payable25,000

Accounts Receivable50,000Mortgage Payable75,000

Inventory70,000Total Liabilities$165,000

Land Held for Investment90,000

Land125,000

Building$100,000Common Stock$120,000

Less AccumulatedRetained Earnings250,000370,000

Depreciation(30,000)70,000

Trademark70,000Total Liabilities and

Total Assets$535,000Stockholders’ Equity$535,000

 

The total dollar amount of assets to be classified as investments is

 

$90,000.

$125,000.

$0.

$70,000.

 

On May 25, Yellow House Company received a $650 check from Grizzly Bean for services to be performed in the future. The bookkeeper for Yellow House Company incorrectly debited Cash for $650 and credited Accounts Receivable for $650. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should:

 

debit Accounts Receivable $650 and credit Unearned Service Revenue $650.

debit Accounts Receivable $650 and credit Cash $650.

debit Cash $650 and credit Unearned Service Revenue $650.

debit Accounts Receivable $650 and credit Service Revenue $650.

 

The following information is available for Baker Industries.

Baker Industies Inc.

Trial Balance

12/31/13

DebitCredit

Cash16

Accounts Receivable26

Supplies4

Equipment191

Accumulated Depreciation13

Accounts Payable21

Common Stock106

Retained Earnings56

Dividends11

Service Revenue189

Salaries and Wages Expense86

Depreciation Expense39

Supplies Expense12

385385

 

What is the balance in Retained Earnings after posting closing entries at December 31 for Baker Industries?

 

$97

$108

$237

$4

 

Which of the following companies would be least likely to use a worksheet to facilitate the adjustment process?

 

Small company with numerous accounts.

All companies, since worksheets are required under generally accepted accounting principles.

Large company with numerous accounts.

Small company with few accounts.

 

A lawyer collected $720 of legal fees in advance. He erroneously debited Cash for $270 and credited Accounts Receivable for $270. The correcting entry is

 

Cash…………………………………………450

Accounts Receivable……………..450

 

Cash…………………………………………450

Accounts Receivable……………………..270

Unearned Service Revenue…….720

 

Cash…………………………………………270

Accounts Receivable……………………..450

Unearned Service Revenue…….720

 

Cash…………………………………………720

Service Revenue………………….               720

 

 

The following information is available for Baker Industries.

Baker Industies Inc.

Trial Balance

12/31/13

DebitCredit

Cash16

Accounts Receivable26

Supplies4

Equipment191

Accumulated Depreciation13

Accounts Payable21

Common Stock106

Retained Earnings56

Dividends11

Service Revenue189

Salaries and Wages Expense86

Depreciation Expense39

Supplies Expense12

385385

 

What is the amount of total debits on the post-closing trial balance for Baker Industries?

 

$224

$237

$289

$248

 

On September 23, Sebagoh Company received a $350 check from Surfer Rosa Inc. for services to be performed in the future. The bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should

 

debit Accounts Receivable $350 and credit Cash $350.

debit Cash $350 and credit Unearned Service Revenue $350.

debit Accounts Receivable $350 and credit Service Revenue $350.

debit Accounts Receivable $350 and credit Unearned Service Revenue $350.

Planning As A Management Function

Week Four: Planning as a Management Function Cont.
  Details Due Points
Objectives 4.1   Analyze various factors that influence strategic, tactical, operational, and contingency planning.

4.2   Analyze the effect that legal issues, ethics, and corporate social responsibility have on management planning.

   
Individual

Management Planning Presentation

Imagine you are an executive for BP, and you are preparing a presentation for the board of directors about the organization’s direction.

 

Create a 10- to 15-slide Microsoft® PowerPoint® presentation, with speaker notes, in which you address the following:

 

·         Evaluate the planning function of management as it relates to the organization’s goals and strategies. Use steps in the planning process outlined in the text.

 

·         Analyze the influence that legal issues, ethics, and corporate social responsibility have had on management planning at BP. Provide at least one example for each.

 

·         Analyze at least three factors that influence the company’s strategic, tactical, operational, and contingency planning.

 

Format your paper consistent with APA guidelines.

   

 

Business and Finance Homework Help

True-False

1.  T  F  A job order costing system is typically used in production settings that are characterized by a continuous flow of similar or identical products.

2.  T  F  In manufacturing companies, managers use unit cost information to develop budgets, establish product prices, and determine human resource needs.

3.  T  F  Predetermined overhead rates are not used with a job order costing system.

4.  T  F  Service organizations can use job order costing to trace costs to the services they render.

5.  T  F  When a manufacturer receives a sales order, the purchasing process begins with a request for specific quantities of direct or indirect materials that are needed for the order but not currently available in the storeroom.

6.  T  F  When a manufactured item is sold during the period, the cost is transferred from the Work in Process Inventory to the Finished Goods Inventory.

7.  T  F  Both job order and process costing systems supply information that managers can use to evaluate an organization’s operating performance.

 

Multiple Choice

8.  Which of the following organizations would use a job order costing system?

 

a.  Custom-furniture manufacturer

b.  Oil refinery

c.  Cereal manufacturer

d.  Paint manufacturer

e.  None of the above

 

9.  RBW Company’s job order costing system shows the following information:

 

Job #Balance, January 1January’s Production Costs

100$5,800

101  2,400$3,600

102  4,900

Jobs 100 and 102 were sold to customers in January. Job 101 was completed in January. What was RBW Company’s cost of goods sold for January?

 

a.  $4,900

b.  $5,800

c.  $8,500

d.  $10,700

e.  None of the above

 

10.  Based on the information given in question 11, the amount in RBW Company’s Work in Process Inventory on January 31 would be

 

a.  $0.

b.  $3,600.

c.  $4,900.

d.  $6,000.

e.  none of the above.

 

11.  The Work in Process Inventory account decreases as products are completed when a company uses

a.  job order costing only.

b.  both job order and process costing.

c.  neither job order nor process costing.

d.  process costing only.

e.  none of the above.

 

12.  In a job order costing system, the basic document used to accumulate the cost of each order is the

a.  purchase request.

b.  job order cost card.

c.  time card.

d.  process cost report.

e.  none of the above.

 

13.  A new advertising agency serves a wide variety of clients, including large manufacturing companies, small restaurants, service businesses, and shopping malls. The accounting system best suited to the advertising agency is

 

a.  job order costing.

b.  process costing.

c.  average costing.

d.  relevant costing.

e.  none of the above.

 

14.  Command Performances, Inc., specializes in planning special events. Which of following items of cost information is not likely to be available in the company’s product costing system?

 

a.  Cost of paper and envelopes

b.  Food costs for an event

c.  Labor costs for an event

d.  President’s salary

e.  All of the above

 

Part  II

True-False

1.  T  F  A process costing system is typically used in production settings that are characterized by a continuous flow of similar or identical products.

2.  T  F  A job order costing system traces costs to a process, department, or work cell.

3.  T  F  Predetermined overhead rates are not used with a process costing system.

4.  T  F  Service organizations can use process costing to trace costs to the services they render.

5.  T  F  All organizations use either a job order costing system or a process costing system without modification.

6.  T  F  Equivalent production is a measure of the number of equivalent whole units worked on during an accounting period.

7.  T  F  A process costing systems supplies managers with information they can use to determine if goals for product costs are being achieved.

 

Multiple Choice

8.  Which of the following organizations would use a process costing system?

 

a.  Custom-home builder

b.  Law firm

c.  Automotive repair shop

d.  Chemical manufacturer

e.  None of the above

 

9.  The concept of equivalent units is necessary in

 

a.  process costing.

b.  job order costing.

c.  both process costing and job order costing.

d.  neither process costing nor job order costing.

e.  none of the above.

 

10.  Which of the following is excluded from conversion costs?

 

a.  Indirect materials costs

b.  Indirect labor costs

c.  Direct materials costs

d.  Direct labor

e.  None of the above

 

11.  The Work in Process Inventory account decreases as products are completed when a company uses

 

a.  job order costing only.

b.  both job order and process costing.

c.  neither job order nor process costing.

d.  process costing only.

e.  none of the above.

 

12.  In a process costing system, the account used to accumulate costs within each department is the

 

a.  finished goods inventory account.

b.  work in process inventory account.

c.  direct labor account.

d.  process cost report.

e.  none of the above.

 

13.  A pharmaceutical company produces large quantities of generic drugs. The accounting system best suited to the pharmaceutical company is

 

a.  job order costing.

b.  process costing.

c.  average costing.

d.  relevant costing.

e.  none of the above.

 

14.  River Dale Vineyards produces boxed table wines. Which of following items of cost information is not likely to be available in the company’s product costing system?

 

a.  Cost of boxes

b.  Costs of unprocessed grapes

c.  Labor costs

d.  President’s salary

e.  All of the above

 

Mood Disorders And Life Stages

Review the two cases. Based on the information you learned from your assigned weekly readings from your textbook, respond to the following:

 

  • Which of the persons may be more prone to a mood disorder? Apply DSM-IV-TR criteria.
  • What else would you need to know to diagnose a mood disorder? Apply DSM-IV-TR criteria.
  • What are the primary causal factors of mood disorders?
  • If either of the persons were to be treated for a disorder, what are some of the treatment strategy risks or consequences?
  • Does the given life stage (childhood, adolescence, adulthood, old age) of the person impact your understanding of the causal factors or treatment strategy?

 

Write your initial response in 1–2 paragraphs. If you refer to research information, cite sources applying APA standards.

Marks Case 1

 

Jeff is a 16-year old Hispanic boy.  He typically sleeps until noon on days when he does not have school.  On school days, it often takes his mother 20 minutes to wake him.  He recently moved from another school district and has few friends at the new school when awake; he typically keeps to himself in his room.  Jeff is not interested in school and has few hobbies.  His response to most questions is “I don’t care:” He is overweight and keeps food in his room and eats it when he gets hungry at night.

 

Mark’s Case 2

 

Mark is a 52-year old Caucasian man.  He spends much of his time in bed.  He recently lost his job due to his continued tardiness and poor performance.  He is receiving unemployment benefits and has not started to look for a new job, as he feels no one will hire him.  Mark is divorced and has not dated since his divorce was finalized 6 years ago.  He often feels as if nothing matters and there is really “no point in going on.”  Mark has lost 15 pound over the last several months as he often “forgets “to eat.

 

Human Resource Management Help

Skip navigation links MGT 132. HUMAN RESOURCES MANAGEMENT (MGT132) > TAKE ASSESSMENT: EXAM 4

End navigation links

Take Assessment: Exam 4

Assistive Technology Tips [opens in new window]

Name Exam 4

Instructions

This exam consists of 50 equally weighed questions. Always pick the single best answer. Questions that are skipped or are submitted with multiple answers will be scored as incorrect.

Multiple Attempts This Test allows 2 attempts. This is attempt number 1.

Force Completion This Test can be saved and resumed later.

Show Question Completion Status:

Question 1 text   Question 12 points  Save

According to Maslow’s hierarchy of needs theory, when does a need stop motivating?

Question 1 answers

when it is satisfied

it never stops motivating

when one moves higher up the hierarchy

all of these

none of these

Question 2 text   Question 22 points  Save

Rebecca’s manager wants to acknowledge her outstanding service record for the past quarter. Her manager decides to give Rebecca a bonus of $1000 as a reward. This is an example of using ________ to reinforce behavior.

Question 2 answers

intrinsic motivation

extrinsic motivation

physiological needs

extinction

recognition

Question 3 text   Question 32 points  Save

________ award shares of stock for the achievement of predetermined financial targets such as profit or growth in earnings per share.

Question 3 answers

Nonqualified stock options

Stock appreciation rights

Performance achievement plans

Phantom stock plans

Restricted stock plans

Question 4 text   Question 42 points  Save

The Hygiene-Motivator theory is also called the ________.

Question 4 answers

two-factor theory

learned needs theory

equity theory

theory of extrinsic motivation

hierarchy of needs

Question 5 text   Question 52 points  Save

How often do most firms computer labor productivity measures used in gainsharing plans?

Question 5 answers

weekly

monthly

quarterly

annually

monthly and quarterly

Question 6 text   Question 62 points  Save

Gainsharing is an incentive plan that ________.

Question 6 answers

uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement

engages many or all employees in a common effort to achieve a company’s productivity objectives with any resulting cost-savings gains shared among employees and the company

contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm’s stock for employees

provides tax advantages for employees by deferring income taxes, often until the employee retires

involves the firm simply distributing a percentage of profits as profit shares to employees at regular intervals

Question 7 text   Question 72 points  Save

The first step in implementing a gainsharing plan is to ________.

Question 7 answers

choose specific performance measures

decide on a funding formula

decide how often to pay bonuses

establish general plan objectives

develop an involvement system

Question 8 text   Question 82 points  Save

Vroom’s expectancy theory states that a person’s motivation to exert some level of effort is a function of all of the following except ________.

Question 8 answers

the probability that the effort will lead to performance

the perceived relationship between performance and obtaining the reward

the perceive value of the reward

the amount of intrinsic motivation associated with the behavior

all of these affect a person’s effort

Question 9 text   Question 92 points  Save

Motivator factors affect a continuum that ranges from ________.

Question 9 answers

dissatisfaction to satisfaction

no dissatisfaction to no satisfaction

dissatisfaction to no dissatisfaction

satisfaction to no satisfaction

none of these

Question 10 text   Question 102 points  Save

All of the following are advantages of team incentives except that ________.

Question 10 answers

team planning is reinforced

worker’s pay may not be proportional to his or her efforts

jealousy is reduced

problem solving is encouraged

collaboration is encouraged

Question 11 text   Question 112 points  Save

The Lincoln incentive system is an incentive plan that ________.

Question 11 answers

uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement

engages many or all employees in a common effort to achieve a company’s productivity objectives with any resulting cost-savings gains shared among employees and the company

contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm’s stock for employees

provides tax advantages for employees by deferring income taxes, often until the employee retires

involves the firm distributing total annual profits each year among employees based on their merit rating

Question 12 text   Question 122 points  Save

Under ________, executives receive units instead of shares of company stock. Then at some point in the future, they receive value (usually in cash) equal to the appreciation of the units they own.

Question 12 answers

nonqualified stock options

stock appreciation rights

performance achievement plans

phantom stock plans

restricted stock plans

Question 13 text   Question 132 points  Save

What type of gainsharing plan uses the formula payroll expenses divided by total sales to determine employee bonuses?

Question 13 answers

Lincoln

Rucker

Improshare

Scanlon

all of these

Question 14 text   Question 142 points  Save

According to the Sarbanes-Oxley Act of 2002, if a company must restate financial statements due to material noncompliance with a financial reporting requirement, the act requires that the CEO ________.

Question 14 answers

repay any bonuses received during the 12 months prior to the issuance of the financial statements in question

make a public apology to stock holders

resign from the position of CEO

open his or her private records for investigation by an independent auditor

all of these

Question 15 text   Question 152 points  Save

An employee stock ownership plan is an incentive plan that ________.

Question 15 answers

engages many or all employees in a common effort to achieve a company’s productivity objectives with any resulting cost-savings gains shared among employees and the company

focuses on the sharing of benefits between employer and employees

contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm’s stock for employees

provides tax advantages for employees by deferring income taxes, often until the employee retires

involves the firm distributing total annual profits each year among employees based on their merit rating

Variable Costs

Question 1

If the activity level increases 10%, total variable costs will

 

remain the same.

decrease by less than 10%.

increase 10%.

increase by more than 10%.

 

Question 2

Portman Company’s activity for the first three months of 2013 are as follows:

 

Machine HoursElectrical Cost

January2,100$3,600

February2,600$4,350

March2,900$4,800

 

Using the high-low method, how much is the cost per machine hour?

 

$1.50

$1.69

$2.25

$1.34

 

Question 3

Gribble Company’s high and low level of activity last year was 60,000 units of product produced in May and 20,000 units produced in November. Machine maintenance costs were $104,000 in May and $40,000 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45,000 units.

 

$96,000

$80,000

$78,000

$90,000

 

Question 4

The break-even point is where

 

total sales equal total fixed costs.

total variable costs equal total fixed costs.

contribution margin equals total fixed costs.

total sales equal total variable costs.

 

Question 5

Armstrong Industries has a contribution margin of $300,000 and a contribution margin ratio of 30%. How much are total variable costs?

 

$1,000,000

$210,000

$700,000

$90,000

 

Question 6

Farmers’ Industries has fixed costs of $400,000 and variable costs are 60% of sales. How much will Farmers report as sales when its net income equals $40,000?

 

$264,000

$733,333

$1,040,000

$1,100,000

 

Question 7

A cost which remains constant per unit at various levels of activity is a

 

variable cost.

fixed cost.

manufacturing cost.

mixed cost.

 

Question 8

Wendy Industries produces only one product. Monthly fixed expenses are $12,000, monthly unit sales are 2,500, and the unit contribution margin is $10. How much is monthly net income?

 

$13,000

$25,000

$37,000

$0

 

Question 9

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

 

both variable and fixed costs.

variable costs and no change in fixed costs.

fixed costs and a decrease in variable costs.

variable costs and a decrease in fixed costs.

 

Question 10

For an activity base to be useful in cost behavior analysis,

 

the activity level should be constant over a period of time.

the activity should always be stated in dollars.

there should be a correlation between changes in the level of activity and changes in costs.

the activity should always be stated in terms of units

 

Question 11

Which one of the following is not an assumption of CVP analysis?

 

All units produced are sold.

The behavior of costs and revenues are linear within the relevant range.

Sales mix remains constant.

All costs are variable costs.

 

Question 12

How much sales are required to earn a target income of $160,000 if total fixed costs are $200,000 and the contribution margin ratio is 40%?

 

$600,000

$400,000

$900,000

$660,000

 

Question 13

Greg’s Golf Carts produces two models: Model 24 has sales of 500 units with a contribution margin of $40 each; Model 26 has sales of 350 units with a contribution margin of $50 each. If sales of Model 26 increase by 100 units, how much will profit change?

 

$17,500 increase

$22,500 increase

$5,000 increase

$35,000 increase

 

Question 14

At the high level of activity in November, 7,000 machine hours were run and power costs were $16,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $8,000. Using the high-low method, the estimated fixed cost element of power costs is

 

$11,200.

$16,000.

$8,000.

$4,800.

 

Question 15

The CVP income statement

is distributed internally and externally.

discloses contribution margin in the body of the statement.

classifies costs by functions.

will reflect a different net income than the traditional income statement

Corporate Responsibility And Marketing Strategies

Use the Internet to research the Apple Corporation, its current position and reputation regarding ethical and social responsibility, and the strategies that it currently employs to market its products.

Write a six to eight (6-8) page paper in which you:

  1. Examine Apple’s current position on the company’s ethical and social responsibilities, and determine whether or not the company has met these responsibilities. Provide two (2) examples that support your position.
  2. Determine the impact that the publication of ethics and social responsibilities violations made by Apple’s suppliers has had on Apple’s reputation. Support your response with examples of the impact in question.
  3. Suggest two (2) methods that Apple can utilize to ensure that its suppliers adhere to wage and benefits standards going forward. Justify your response.
  4. Determine whether or not you believe that Apple’s customers would be willing to pay more for its products if Apple had to increase selling prices in order to provide better wages and benefits for suppliers’ workers. Provide a rationale for your position.
  5. Analyze Apple’s current overall marketing strategy. Recommend two (2) actions that Apple can take in order to improve its competitive advantage in the global marketplace. Support your response with examples of instances where your recommendations yielded the desired results.
  6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.

 

Your assignment must follow these formatting requirements:

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

Sample Size Determination

The Discussion Board (DB) is part of the core of online learning. Classroom discussion in an online environment requires the active participation of students and the instructor to create robust interaction and dialogue. Every student is expected to create an original response to the open-ended DB question as well as engage in dialogue by responding to posts created by others throughout the week. At the end of each unit, DB participation will be assessed based on both level of engagement and the quality of the contribution to the discussion.

At a minimum, each student will be expected to post an original and thoughtful response to the DB question and contribute to the weekly dialogue by responding to at least two other posts from students. The first contribution must be posted before midnight (Central Time) on Wednesday of each week. Two additional responses are required after Wednesday of each week. Students are highly encouraged to engage on the Discussion Board early and often, as that is the primary way the university tracks class attendance and participation.

The purpose of the Discussion Board is to allow students to learn through sharing ideas and experiences as they relate to course content and the DB question. Because it is not possible to engage in two-way dialogue after a conversation has ended, no posts to the DB will be accepted after the end of each unit.

SAMPLE SIZE DETERMINATION

Determining sample-size is important step when planning a statistical study. It is also quite a difficult task since many variables must be considered.

MAIN DISCUSSION POST: Due by Sunday
In Yahoo! use the search term “Sample Size Determination.” Select a University or Government webpage that discusses the topic. Do not use Wikipedia, eHow or about.com or other resource that is not written or published by a University or the US Government.

  • Paragraph 1: In simple terms explain what researchers must go through to select the right sample size for a study. (Be sure to cite and reference the website)

In Yahoo! use the search term “Sample Size Calculator.” Select two calculators you like best.

  • Paragraph 2: Explain how the calculators work. Test the two calculators using a population, confidence level and confidence interval you select. Discuss the results. (Be sure to cite and reference the website)

Please do not use quotes or copy definitions. You will not receive credit for understanding the materials if you use the words of others. Keep in mind that since you did research and you have citations in the body of the post, you must also place a reference list at the end containing the textbook and the articles cited.

Do not use file attachments. It is NOT necessary to upload this assignment to the Submit Files area. Your 2 paragraph main post must be submitted to the Discussion Thread by Sunday.

INTERACTIVE RESPONSES: Due by Sunday
Interactive Reply 1:
Select one student’s post regarding sample size determination. Asses if it is well-explained. Are there questions left unanswered for you?

Interactive Reply 2:
Read through other interactive replies and select one to critique that did not use the same calculators as you. Try out one of the calculators. Was it easier to use than yours? Discuss the benefits of using a calculator like this vs. doing the calculations yourself.

Each post should be one paragraph in length (75 words) and must be substantive in nature

Use of unoriginal text and excessive quotes indicates a lack of comprehension and shows that you may not have mastered the concepts.

Inventory Data

1. Apple-A-Day Company has the following inventory data:

July 1 Beginning inventory 20 units at $20$   400

7Purchases               70 units at $21  1,470

22 Purchases               10 units at $22    220

$2,090

 

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is

$1,480

$1,470

$1,450.

$1,430.

 

2.  Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct?

Returns of merchandise inventory by Adams Company to a manufacturer are credited to Inventory.

Freight paid to get merchandise inventory to Adams Company’s store is debited to Freight Expense.

A return of merchandise inventory by one of Adams Company’s customers is credited to Inventory.

Discounts taken by Adams Company’s customers are credited to Inventory.

 

3.  In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

Average Cost Method

LIFO method

FIFO method

Need more information to answer

 

4.  In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

FIFO method.

LIFO method.

average cost method.

tax method.

 

5.  Net income will result if gross profit exceeds

cost of goods sold.

operating expenses.

purchases.

cost of goods sold plus operating expenses.

 

6.  Which of the following is not a common cost flow assumption used in costing inventory?

First-in, first-out

Middle-in, first-out

Last-in, first-out

Average cost

 

7.  Delightful Discs has the following inventory data:

Nov. 1 Inventory30 units @ $8.00 each

8Purchase120 units @ $8.60 each

17Purchase60 units @ $8.40 each

25Purchase90 units @ $8.80 each

 

A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under LIFO is

$876

$842

$1,692

$1,726

 

8.  When goods are returned that relate to a prior cash sale

the Sales Returns and Allowances account should not be used.

the Cash account will be credited.

Sales Returns and Allowances will be credited.

Accounts Receivable will be credited.

 

9.  Which sales accounts normally have a debit balance?

Sales discounts

Sales returns and allowances.

both (a) and (b).

Neither (a) nor (b).

 

10.  Financial information is presented below:

Operating Expenses$  45,000

Sales Revenue150,000

Cost of Goods Sold90,000

 

Gross profit would be

$105,000.

$  45,000.

$  60,000.

$  15,000.