Assume the role of assistant buyer for a costume jewelry store. You are ordering a shipment of earrings in five styles from a supplier. The cost of the earrings is $\$ 1.50$ per pair. You know that if you set too low a selling price the earrings will not sell well. The buyer (judge) has asked you to prepare a pricing strategy for the earrings. Among the decisions you must make is whether to price all the styles at one price point or to price the different styles at separate price points.

Present your pricing strategy to your supervisor (judge).

You will be evaluated on how well you meet the following performance indicator:

Use psychological pricing to adjust base prices

Refer to this chapter’s opening feature about apple. Assume that the owners decide to open a new company with an innovative mobile app devoted to microblogging for accountants and those learning accounting. This new company will be called AccountApp.

Required

1. AccountApp obtains a $\$500,000$ loan and the two owners contribute $\$250,000$ in total from their own savings in exchange for ownership of the new company.

a. What is the new company’s total amount of liabilities plus equity?

b. What is the new company’s total amount of assets?

2. If the new company earns $\$80,250$ in net income in the first year of operation, compute its return on assets (assume average assets equal $\$750,000$). Assess its performance if competitors average a $10\%$ return.

Performance data for a pump are

$$\begin{matrix} \text{H (ft)} & \text{90} & \text{87} & \text{81} & \text{70} & \text{59} & \text{43} & \text{22}\\ \text{Q (cfm)} & \text{0} & \text{50} & \text{100} & \text{150} & \text{200} & \text{250} & \text{300}\\ \end{matrix}$$

The pump is to be used to move water between two open reservoirs with an elevation increase of 24 ft. The connecting pipe system consists of 1750 ft of commercial steel pipe containing two $90^{\circ}$ elbows and an open gate valve. Find the flow rate if we use (a) 8-in., (b) 10-in., and (c) 12-in. (nominal) pipe.

A vapor-compression refrigeration cycle with Refrigerant 134 as the working fluid operates with an evaporator temperature of $50^{\circ} \mathrm{F}$ and a condenser pressure of $180\ \mathrm{lbf}/ \mathrm{in}^2$ Refrigerant enters the condenser at $140^{\circ} \mathrm{F}$ and exits as sat urated liquid. The cycle has a refrigeration capacity of $5\ \text{tons}$. Determine (a) the refrigerant mass flow rate, in $\mathrm{lb} / \mathrm{min}$. (b) the compressor isentropic efficiency. (c) the compressor power, in horsepower. (d) the coefficient of performance. Plot each of the quantities calculated in parts (b) through (d) for compressor exit temperatures varying from $130^{\circ} \mathrm{F}$ to for compressor exit temperatures varying from $130^{\circ} \mathrm{F}$ to $140^{\circ} \mathrm{F}$.

A square cross-section duct $(0.5 \mathrm{~m} \times 0.5 \mathrm{~m} \times 30 \mathrm{~m})$ is used to convey air $\left(\rho=1.1 \mathrm{~kg} / \mathrm{m}^{3}\right)$ into a clean room in an electronics manufacturing facility. The air is supplied by a fan and passes through a filter installed in the duct. The duct friction factor is $f=0.03$, the filter has a loss coefficient of $K=12$, and the clean room is kept at a positive gage pressure of $50 \mathrm{~Pa}$. The fan performance is given by $\Delta p=1020-25 Q-30 Q^{2}$, where $\Delta p$ $\mathrm{(Pa)}$ is the pressure generated by the fan at flow rate $Q\left(\mathrm{~m}^{3} / \mathrm{s}\right)$. Find the flow rate delivered to the room.

In order to study the relationship between the amount of sleep a student gets and his or her school performance, a researcher collected data from 120 students. The two-way frequency table shows the number of students who passed and failed an exam and the number of students who got more or less than 6 hours of sleep the night before.

To the nearest percent, give the probability that a student who failed the exam got less than 6 hours of sleep.

In 11,105 at-bats in the game after facing Tim Wakefield, hitters had a batting average of $0.265$.

(a) If we assume that these hitters have an ability of $0.274$, explain how to use a spinner to simulate the results of these at-bats.

(b) One hundred trials of a simulation were conducted assuming that the ABILITY of hitters was $0.274$ in 11,105 at-bats. The simulated batting average at the end of each trial was recorded in the dotplot below. Describe what information this dotplot provides.

(c) Would it be surprising for these hitters to have a PERFORMANCE as low as $0.265$ by RANDOM CHANCE? Explain using the results of the simulation.

(d) Is there convincing evidence that batters have a lower ABILITY to hit the day after facing Tim Wakefield? Explain.

A vice president for marketing recruits 20 college graduates for management training. Each of the 20 individuals is randomly assigned to one of two groups (10 in each group). A "traditional" method of training $(T)$ is used in one group, and an "experimental" method $(E)$ is used in the other. After the graduates spend six months on the job, the vice president ranks them on the basis of their performance, from 1 (worst) to 20 (best), with the following results, stored in Training Ranks.

T: $1\; 2\; 3\; 5\; 9\; 10\; 12\; 13\; 14\; 15$

E: $4\; 6\; 7\; 8\; 11\; 16\; 17\; 18\; 19\; 20$

Refer to this chapter's opening feature about Apple. Assume that the owners decide to open a new company with an innovative mobile app devoted to microblogging for accountants and those learning accounting. This new company will be called AccountApp.

Required

1. AccountApp obtains a $500,000 loan and the two owners contribute$250,000 in total from their ownsavings in exchange for ownership of the new company.

a. What is the new company's total amount of liabilities plus equity?

b. What is the new company's total amount of assets?

2. If the new company earns $80,250 in net income in the first year of operation, compute its return on assets (assume average assets equal$750,000). Assess its performance if competitors average a 10% return.

The following list gives a number of measures associated with the Balanced Scorecard:

a. Number of new customers
b. Percentage of customer complaints resolved with one contact
c. Unit product cost
d. Cost per distribution channel
e. Suggestions per employee
f. Warranty repair costs
g. Consumer satisfaction (from surveys)
h. Cycle time for solving a customer problem
i. Strategic job coverage ratio
j. On-time delivery percentage
k. Percentage of revenues from new products

1. Classify each performance measure as belonging to one of the following perspectives: financial, customer, internal business process, or learning and growth.

2. Suggest an additional measure for each of the four perspectives.

Most baseball hitters perform differently against right-handed and left-handed pitching. Consider two players, Joe and Moe, both of whom bat right-handed. The table below records their performance against right-handed and left-handed pitchers.

Make a separate two-way table of player versus outcome for each kind of pitcher. From these tables, find the batting averages of Joe and Moe against right-handed pitching. Who does better? Do the same for left-handed pitching. Who does better?

Mark Washington, CFA, is an analyst with BIC. One year ago, BIC analysts predicted that the U.S. equity market would most likely experience a slight downturn and suggested delta-hedging the BIC portfolio. As predicted, the U.S. equity markets did indeed experience a downturn of approximately 4% over a 12-month period. However, portfolio performance for BIC was disappointing, lagging its peer group by nearly 10%. Washington has been told to review the options strategy to determine why the hedged portfolio did not perform as expected.

Washington considers a put option that has a delta of 2.65. If the price of the underlying asset decreases by $6, then what is the best estimate of the change in option price?

The following observations are on stopping distance (ft) of a particular truck at 20 mph under specified experimental conditions (“Experimental Measurement of the Stopping Performance of a Tractor-Semitrailer from Multiple Speeds,” NHTSA, DOT HS 811 488, June 2011):

$$\begin{matrix} \text{32.1} & \text{30.6} & \text{31.4} & \text{30.4} & \text{31.0} & \text{31.9}\\ \end{matrix}$$

The cited report states that under these conditions, the maximum allowable stopping distance is 30. A normal probability plot validates the assumption that stopping distance is normally distributed. Does the data suggest that true average stopping distance exceeds this maximum value? Test the appropriate hypotheses using $\alpha=.01$.

Performance of stock screeners. Investment companies provide their clients with automated tools-called stock screeners to help them select a portfolio of stocks to invest in. The American Association of Individual Investors (AAII) provides statistics on stock screeners at its Web site, www.aaii.com. The next table lists the annualized percentage return on investment (as compared to the Standard & Poor's 500 Index) for 13 randomly selected stock screeners. (Note: A negative annualized return reflects a stock portfolio that performed worse than the S&P 500.) Compute the median for the data set. Interpret its value.

$$\begin{array}{lllllllllllll}9.0 & -.1 & -1.6 & 14.6 & 16.0 & 7.7 & 19.9 & 9.8 & 3.2 & 24.8 & 17.6 & 10.7 & 9.1\end{array}$$