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At the beginning of 2016, Master Corp.'s accounting records had the following general ledger accounts and balances.
Master Corp. completed the following transactions during 2016:
1. Purchased land for $12,000 cash.
2. Acquired$20,000 cash from the issue of common stock.
3. Received $50,000 cash for providing services to customers.
4. Paid cash operating expenses of$42,000.
5. Borrowed $20,000 cash from the bank.
6. Paid a$2,000 cash dividend to the stockholders.
7. Determined that the market value of the land purchased in event 1 is $70,000.
What is the amount of total assets, liabilities, and stockholders' equity as of January 1, 2017?
Carbondale Casting produces cast bronze valves on a 10-person assembly line. On a recent day, 160 valves were produced during an 8-hour shift. John Goodale, the manager at Carbondale, changed the layout and was able to increase production to 180 units per 8-hour shift. What is the new labor productivity per labor-hour?
Mary Smith, a Level II CFA candidate, was recently hired for an analyst position at the Bank of Ireland. Her first assignment is to examine the competitive strategies employed by various French wineries.
Smith’s report identifies four wineries that are the major players in the French wine industry. Key characteristics of each are cited in Table 12.6. In the body of Smith’s report, she includes a discussion of the competitive structure of the French wine industry. She notes that over the past five years, the French wine industry has not responded to changing consumer tastes. Profit margins have declined steadily, and the number of firms representing the industry has decreased from 10 to 4. It appears that participants in the French wine industry must consolidate in order to survive.
Characteristics of four major French wineries
Smith’s report notes that French consumers have strong bargaining power over the industry. She supports this conclusion with five key points, which she labels “Bargaining Power of Buyers”:
- Many consumers are drinking more beer than wine with meals and at social occasions.
- Increasing sales over the Internet have allowed consumers to better research the wines, read opinions from other customers, and identify which producers have the best prices.
- The French wine industry is consolidating and consists of only 4 wineries today compared to 10 wineries five years ago.
- More than 65% of the business for the French wine industry consists of purchases from restaurants. Restaurants typically make purchases in bulk, buying four to five cases of wine at a time.
- Land where the soil is fertile enough to grow grapes necessary for the wine production process is scarce in France.
After completing the first draft of her report, Smith takes it to her boss, RonVanDriesen, to review. VanDriesen tells her that he is a wine connoisseur himself and often makes purchases from the South Winery. Smith tells VanDriesen, “In my report I have classified the South Winery as a stuck-in-the-middle firm. It tries to be a cost leader by selling its wine at a price that is slightly below the other firms, but it also tries to differentiate itself from its competitors by producing wine in bottles with curved necks, which increases its cost structure. The end result is that the South Winery’s profit margin gets squeezed from both sides.” VanDriesen replies, “I have met members of the management team from the South Winery at a couple of the wine conventions I have attended. I believe that the South Winery could succeed at following both a cost leadership and a differentiation strategy if its operations were separated into distinct operating units, with each unit pursuing a different competitive strategy.” Smith makes a note to do more research on generic competitive strategies to verify VanDriesen’s assertions before publishing the final draft of her report.
If the French home currency were to greatly appreciate in value compared to the English currency, what is the likely impact on the competitive position of the East Winery?
a. Make the firm less competitive in the English market.
b. No impact, since the major market for East Winery is England, not France.
c. Make the firm more competitive in the English market.