See Table down below showing financial statement data and st

accounting

Holbrook Corporation has three divisions: pulp, paper, and fibers. Holbrook’s new controller, Paul Weber, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2013:

\begin{array}{lrrr} &\textbf{Pulp} &\textbf{Paper} &\textbf{Fibers}\\\hline \text{Revenues} &\$ 9,800,000 &\$17,100,000 &\$25,500,000\\ \text{Direct manufacturing costs}&3,500,000 &7,800,000 &11,100,000\\ \text{Division administrative costs} &\underline{~~3,300,000}& \underline{~~~~2,000,000} &\underline{~~~~4,700,000}\\ \text{Division margin} &\underline{\underline{\$3,000,000}}& \underline{\underline{\$~~7,300,000}}& \underline{\underline{\$~~9,700,000}}\\ \text{Number of employees }&300& 150 &550\\ \text{Floor space (square feet)}& 53,200 &35,340& 101,460\\ \end{array}

Until now, Holbrook Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins. Weber asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocation bases:

\begin{array}{lrl} \textbf{Fixed Corporate Overhead Costs}&&\textbf{Suggested Allocation Bases}\\\hline \text{Human resource management} & \$~~2,300,000 & \text{Number of employees} \\ \text{Facility} & 3,200,000 & \text{Floor space (square feet)} \\ \text{Corporate administration} & \underline{~~~~4,600,000} & \text{Division administrative costs} \\ \text{Total} & \underline{\underline{\$ 10,100,000}} \end{array}

Allocate 2013 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each division’s operating margin percentage (division margin minus allocated fixed corporate-overhead costs as a percentage of revenues)?
Allocate 2013 fixed costs using the allocation bases suggested by Weber. What is each division’s operating margin percentage under the new allocation scheme?
Compare and discuss the results of requirements 1 and 2. If division performance is linked to operating margin percentage, which division would be most receptive to the new allocation scheme? Which division would be the least receptive? Why?
Which allocation scheme should Holbrook Corporation use? Why? How might Weber overcome any objections that may arise from the divisions?

business

See Table down below showing financial statement data and stock price data for Mydeco Corp.

a. In what year was Mydeco's net income the lowest?

b. In what year did Mydeco need to reduce its cash reserves?

c. Why did Mydeco need to reduce its cash reserves in a year when net income was reasonably high?

2012–2016 Financial Statement Data and Stock Price Data for Mydeco Corp

Mydeco Corp. 2012–2016 $\hspace{30mm}$ (All data as of fiscal year end; in $million)$

\begin{array}{lccccc} \text{Income statement} & 2012 & 2013 & 2014 & 2015 & 2016 \\ \text{Revenue} & 401.9 & 361.6 & 429.6 & 513.6 & 602.6 \\ \underline{\text{Cost of Goods Sold}} & (192.1) & (175.4) & (207.1) & (248.3) & (295.8)\\ \text{Gross Profit} & 209.8 & 186.2 & 222.5 & 265.3 & 306.8\\ \text{Sales and Marketing} & (65.0) & (64.4) & (84.3) & (104.9) & (121.1)\\ \text{Administration} & (61.8) & (57.1) & (59.0) & (66.9) & (79.8)\\ \underline{\text{Depreciation $\And$ Amortization}} & (27.5) & (26.3) & (32.5) & (38.3) & (40.1)\\ \text{EBIT} & 55.5 & 38.4 & 46.7 & 55.2 & 65.8\\ \underline{\text{Interest Income (Expense)}} & (32.4) & (31.8) & (32.0) & (37.0) & (40.9)\\ \text{Pretax Income} & 23.1 & 6.6 & 14.7 & 18.2 & 24.9\\ \underline{\text{Income Tax}} & (8.1) & (2.3) & (5.1) & (6.4) & (8.7)\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Shares outstanding (millions)} & 56.8 & 56.8 & 56.8 & 56.8 & 56.8\\ \text{Earnings per share} & \$0.26 & \$0.08 & \$0.17 & \$0.21 & \$0.29\\ \text{Balance Sheet} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Assets}\\ \text{Cash} & 49.4 & 68.0 & 91.7 & 80.4 & 83.6\\ \text{Accounts Receivable} & 87.6 & 70.6 & 69.3 & 77.4 & 84.2\\ \text{Inventory} & 33.5 & 32.2 & 27.3 & 30.2 & 35.8\\ \text{Total Current Assets} & 170.5 & 170.8 & 188.3 & 188.0 & 203.6\\ \text{Net Property, Plant $\And$ Equip.} & 244.3 & 243.3 & 306.1 & 349.6 & 347.9\\ \text{Goodwill $\And$ Intangibles} & 365.5 & 365.5 & 365.5 & 365.5 & 365.5\\ \text{Total Assets} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Liabilities $\And$ Stockholders’ Equity}\\ \text{Accounts Payable} & 18.8 & 18.8 & 22.4 & 27.1 & 30.3\\ \text{Accrued Compensation} & 7.6 & 6.3 & 7.5 & 7.7 & 9.4\\ \text{Total Current Liabilities} & 26.4 & 25.1 & 29.9 & 34.8 & 39.7\\ \text{Long-term Debt} & 498.9 & 498.9 & 572.2 & 597.5 & 597.5\\ \text{Total Liabilities} & 525.3 & 524 & 602.1 & 632.3 & 637.2\\ \text{Stockholders’ Equity} & 255.0 & 255.6 & 257.8 & 270.8 & 279.8\\ \text{Total Liabilities $\And$ Stockholders’ Equity} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Statement of Cash Flows} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Depreciation $\And$ Amortization} & 27.5 & 26.3 & 32.5 & 38.3 & 40.1\\ \text{Chg. in Accounts Receivable} & 3.9 & 17.0 & 1.3 & (8.1) & (6.8)\\ \text{Chg. in Inventory} & (2.9) & 1.3 & 4.9 & (2.9) & (5.6)\\ \underline{\text{Chg. in Payables $\And$ Accrued Comp.}} & 1.7 & (1.3) & 4.8 & 4.9 & 4.9\\ \text{Cash from Operations} & 45.2 & 47.6 & 53.1 & 44.0 & 48.8\\ \underline{\text{Capital Expenditures}} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Cash from Investing Activities} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Dividends Paid} & (5.2) & (5.2) & (5.2) & (5.2) & (5.6)\\ \text{Sale (or purchase) of stock} & — & — & — & — & —\\ \underline{\text{Debt Issuance (Pay Down)}} & — & — & 73.3 & 25.3 & —\\ \text{Cash from Financing Activities} & (5.2) & (5.2) & 68.1 & 20.1 & (5.6)\\ \text{Change in Cash} & 13.4 & 18.6 & 23.7 & (11.3) & 3.2\\ \text{Mydeco Stock Price} & \$7.02 & \$3.55 & \$5.86 & \$8.33 & \$11.57\\ \end{array}

$

accounting

The Lexington Company produces gas grills. This year’s expected production is 20,000 units. Currently, Lexington makes the side burners for its grills. Each grill includes two side burners. Lexington’s management accountant reports the following costs for making the 40,000 burners:

\begin{array}{lrr} &\textbf { Cost per Unit }&\textbf { Costs for 40,000 Units }\\ \hline \text { Direct materials } & \$ 8.00 & \$ 320,000 \\ \text { Direct manufacturing labor } & 4.00 & 160,000 \\ \text { Variable manufacturing overhead } & 2.00 & 80,000 \\ \text { Inspection, setup, materials handling } & & 8,000 \\ \text { Machine rent } & & 12,000 \\ \text { Allocated fixed costs of plant administration, taxes, and insurance } & & \underline{~~~~80,000} \\ \text { Total costs } & & \underline{\underline{\$ 660,000}} \end{array}

Lexington has received an offer from an outside vendor to supply any number of burners Lexington requires at $14.80 per burner. The following additional information is available:

a. Inspection, setup, and materials-handling costs vary with the number of batches in which the burners are produced. Lexington produces burners in batch sizes of 1,000 units. Lexington will produce the 40,000 units in 40 batches.

b. Lexington rents the machine it uses to make the burners. If Lexington buys all of its burners from the outside vendor, it does not need to pay rent on this machine.

Assume that if Lexington purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Lexington accept the outside vendor’s offer at the anticipated volume of 40,000 burners? Show your calculations.
For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by$48. The variable cost per unit of the upgrade would be $38, and additional tooling costs of$160,000 per year would be incurred. On the basis of financial considerations alone, should Lexington make or buy the burners, assuming that 20,000 grills are produced (and sold)? Show your calculations.
The sales manager at Lexington is concerned that the estimate of 20,000 grills may be high and believes that only 16,000 grills will be sold. Production will be cut back, freeing up work space. This space can be used to add the rotisserie attachments whether Lexington buys the burners or makes them in-house. At this lower output, Lexington will produce the burners in 32 batches of 1,000 units each. On the basis of financial considerations alone, should Lexington purchase the burners from the outside vendor? Show your calculations.

accounting

Sherene Nili manages a company that makes wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the following forecasted income statement for March, which is a busy month:

	Custom Dresses	Standard Dresses	Total
Number of dresses	10	20	30
Sales revenue	$50,000	$30,000	$80,000
Materials	$10,000	$8,000	$18,000
Labor	20,000	9,000	29,000
Machine depreciation	600	300	900
Rent	4,200	2,800	7,000
Heat and light	1,000	600	1,600
Other production costs			2,800
Marketing and administration			7,700
Total costs			67,000
Operating profit			$13,000

Ms. Nili already has orders for the 10 custom dresses refl ected in the March forecasted income statement. The depreciation charges are for machines used in the respective product lines. Machines depreciate at the rate of$1 per hour based on hours used, so these are variable costs. In March, cutting and sewing machines are expected to operate for 900 hours, of which 600 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $7,000 per month. The rent, heat, and light are allocated to the product lines based on the amount of fl oor space occupied.

A valued customer, who is a wedding consultant, has asked Ms. Nili for a special favor. This customer has a client who wants to get married in early April. Ms. Nili’s company is working at capacity and would have to give up some other business to make this dress. She can’t renege on custom orders already agreed to, but she can reduce the number of standard dresses produced in March to 10. Ms. Nili would lose permanently the opportunity to make up the lost production of standard dresses because she has no unused capacity for the foreseeable future. The customer is willing to pay$24,000 for the special order. Materials and labor for the order will cost $6,000 and$10,000, respectively. The special order would require 140 hours of machine time. Ms. Nili’s company would save 150 hours of machine time from the standard dress business given up. Rent, heat and light, and other production costs would not be affected by the special order.

Required
What is the minimum price Ms. Nili should accept to take the special order?

business

See Table down below showing financial statement data and stock price data for Mydeco Corp.

a. How did Mydeco's accounts receivable days change over this period?

b. How did Mydeco's inventory days change over this period?

c. Based on your analysis, has Mydeco improved its management of its working capital during this time period?

2012–2016 Financial Statement Data and Stock Price Data for Mydeco Corp

Mydeco Corp. 2012–2016 $\hspace{30mm}$ (All data as of fiscal year end; in $million)$

\begin{array}{lccccc} \text{Income statement} & 2012 & 2013 & 2014 & 2015 & 2016 \\ \text{Revenue} & 401.9 & 361.6 & 429.6 & 513.6 & 602.6 \\ \underline{\text{Cost of Goods Sold}} & (192.1) & (175.4) & (207.1) & (248.3) & (295.8)\\ \text{Gross Profit} & 209.8 & 186.2 & 222.5 & 265.3 & 306.8\\ \text{Sales and Marketing} & (65.0) & (64.4) & (84.3) & (104.9) & (121.1)\\ \text{Administration} & (61.8) & (57.1) & (59.0) & (66.9) & (79.8)\\ \underline{\text{Depreciation $\And$ Amortization}} & (27.5) & (26.3) & (32.5) & (38.3) & (40.1)\\ \text{EBIT} & 55.5 & 38.4 & 46.7 & 55.2 & 65.8\\ \underline{\text{Interest Income (Expense)}} & (32.4) & (31.8) & (32.0) & (37.0) & (40.9)\\ \text{Pretax Income} & 23.1 & 6.6 & 14.7 & 18.2 & 24.9\\ \underline{\text{Income Tax}} & (8.1) & (2.3) & (5.1) & (6.4) & (8.7)\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Shares outstanding (millions)} & 56.8 & 56.8 & 56.8 & 56.8 & 56.8\\ \text{Earnings per share} & \$0.26 & \$0.08 & \$0.17 & \$0.21 & \$0.29\\ \text{Balance Sheet} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Assets}\\ \text{Cash} & 49.4 & 68.0 & 91.7 & 80.4 & 83.6\\ \text{Accounts Receivable} & 87.6 & 70.6 & 69.3 & 77.4 & 84.2\\ \text{Inventory} & 33.5 & 32.2 & 27.3 & 30.2 & 35.8\\ \text{Total Current Assets} & 170.5 & 170.8 & 188.3 & 188.0 & 203.6\\ \text{Net Property, Plant $\And$ Equip.} & 244.3 & 243.3 & 306.1 & 349.6 & 347.9\\ \text{Goodwill $\And$ Intangibles} & 365.5 & 365.5 & 365.5 & 365.5 & 365.5\\ \text{Total Assets} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Liabilities $\And$ Stockholders’ Equity}\\ \text{Accounts Payable} & 18.8 & 18.8 & 22.4 & 27.1 & 30.3\\ \text{Accrued Compensation} & 7.6 & 6.3 & 7.5 & 7.7 & 9.4\\ \text{Total Current Liabilities} & 26.4 & 25.1 & 29.9 & 34.8 & 39.7\\ \text{Long-term Debt} & 498.9 & 498.9 & 572.2 & 597.5 & 597.5\\ \text{Total Liabilities} & 525.3 & 524 & 602.1 & 632.3 & 637.2\\ \text{Stockholders’ Equity} & 255.0 & 255.6 & 257.8 & 270.8 & 279.8\\ \text{Total Liabilities $\And$ Stockholders’ Equity} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Statement of Cash Flows} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Depreciation $\And$ Amortization} & 27.5 & 26.3 & 32.5 & 38.3 & 40.1\\ \text{Chg. in Accounts Receivable} & 3.9 & 17.0 & 1.3 & (8.1) & (6.8)\\ \text{Chg. in Inventory} & (2.9) & 1.3 & 4.9 & (2.9) & (5.6)\\ \underline{\text{Chg. in Payables $\And$ Accrued Comp.}} & 1.7 & (1.3) & 4.8 & 4.9 & 4.9\\ \text{Cash from Operations} & 45.2 & 47.6 & 53.1 & 44.0 & 48.8\\ \underline{\text{Capital Expenditures}} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Cash from Investing Activities} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Dividends Paid} & (5.2) & (5.2) & (5.2) & (5.2) & (5.6)\\ \text{Sale (or purchase) of stock} & — & — & — & — & —\\ \underline{\text{Debt Issuance (Pay Down)}} & — & — & 73.3 & 25.3 & —\\ \text{Cash from Financing Activities} & (5.2) & (5.2) & 68.1 & 20.1 & (5.6)\\ \text{Change in Cash} & 13.4 & 18.6 & 23.7 & (11.3) & 3.2\\ \text{Mydeco Stock Price} & \$7.02 & \$3.55 & \$5.86 & \$8.33 & \$11.57\\ \end{array}

$

accounting

Diamond Industries, Inc., began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:

\begin{array}{lccc} \text { Employee } & \begin{array}{c} \text { Date First } \\ \text { Employed } \end{array} & \begin{array}{c} \text { Monthly } \\ \text { Salary } \end{array} & \begin{array}{c} \text { Monthly } \\ \text { Income Tax } \\ \text { Withheld } \end{array} \\ \hline \text { Beltran } & \text { Jan. 1 } & \$ 4,300 & \$ 681 \\ \text { Jeter } & \text { Apr. } 16 & 11,000 & 2,508 \\ \text { Lee } & \text { Aug. 1 } & 7,800 & 1,612 \\ \text { Rodriguez } & \text { Nov. } 16 & 3,000 & 356 \\ \text { Santana } & \text { Mar. } 1 & 6,120 & 1,145 \\ \text { Ramirez } & \text { May } 16 & 3,840 & 566 \\ \text { Ordonez } & \text { Dec. } 1 & 4,000 & 606 \end{array}

Instructions

Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2011.
Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.4% on the first $9,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first$9,000 of each employee’s earnings; (e) total.

business

Almost all U.S. light-rail systems use electric cars that run on tracks built at street level. The Federal Transit Administration claims light-rail is one of the safest modes of travel, with an accident rate of .99 accidents per million passenger miles as compared to 2.29 for buses. The following data show the miles of track and the weekday ridership in thousands of passengers for six light-rail systems (USA Today, January 7, 2003).

City	Miles of Track	Ridership (1000s)
Cleveland	15	15
Denver	17	35
Portland	38	81
Sacramento	21	31
San Diego	47	75
San Jose	31	30
St. Louis	34	42

a. Use these data to develop an estimated regression equation that could be used to predict the ridership given the miles of track.

b. Did the estimated regression equation provide a good fit? Explain.

c. Develop a 95% confidence interval for the mean weekday ridership for all light-rail systems with 30 miles of track.

d. Suppose that Charlotte is considering construction of a light-rail system with 30 miles of track. Develop a 95% prediction interval for the weekday ridership for the Charlotte system. Do you think that the prediction interval you developed would be of value to Charlotte planners in anticipating the number of weekday riders for their new lightrail system? Explain.

business

See Table down below showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $\$ 12.3$ million at the end of $2013$ , and this equipment was depreciated by $\$ 4.1$ million per year in $2014$ , $2015$ , and $2016$ . Given Mydeco's tax rate of $35 \%$ , what impact would this additional purchase have had on Mydeco's net income in years $2013-2016$ ? (Assume the equipment is paid for out of cash and that Mydeco earns no Vind interest on its cash balances.)

2012–2016 Financial Statement Data and Stock Price Data for Mydeco Corp

Mydeco Corp. 2012–2016 $\hspace{30mm}$ (All data as of fiscal year end; in $million)$

\begin{array}{lccccc} \text{Income statement} & 2012 & 2013 & 2014 & 2015 & 2016 \\ \text{Revenue} & 401.9 & 361.6 & 429.6 & 513.6 & 602.6 \\ \underline{\text{Cost of Goods Sold}} & (192.1) & (175.4) & (207.1) & (248.3) & (295.8)\\ \text{Gross Profit} & 209.8 & 186.2 & 222.5 & 265.3 & 306.8\\ \text{Sales and Marketing} & (65.0) & (64.4) & (84.3) & (104.9) & (121.1)\\ \text{Administration} & (61.8) & (57.1) & (59.0) & (66.9) & (79.8)\\ \underline{\text{Depreciation $\And$ Amortization}} & (27.5) & (26.3) & (32.5) & (38.3) & (40.1)\\ \text{EBIT} & 55.5 & 38.4 & 46.7 & 55.2 & 65.8\\ \underline{\text{Interest Income (Expense)}} & (32.4) & (31.8) & (32.0) & (37.0) & (40.9)\\ \text{Pretax Income} & 23.1 & 6.6 & 14.7 & 18.2 & 24.9\\ \underline{\text{Income Tax}} & (8.1) & (2.3) & (5.1) & (6.4) & (8.7)\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Shares outstanding (millions)} & 56.8 & 56.8 & 56.8 & 56.8 & 56.8\\ \text{Earnings per share} & \$0.26 & \$0.08 & \$0.17 & \$0.21 & \$0.29\\ \text{Balance Sheet} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Assets}\\ \text{Cash} & 49.4 & 68.0 & 91.7 & 80.4 & 83.6\\ \text{Accounts Receivable} & 87.6 & 70.6 & 69.3 & 77.4 & 84.2\\ \text{Inventory} & 33.5 & 32.2 & 27.3 & 30.2 & 35.8\\ \text{Total Current Assets} & 170.5 & 170.8 & 188.3 & 188.0 & 203.6\\ \text{Net Property, Plant $\And$ Equip.} & 244.3 & 243.3 & 306.1 & 349.6 & 347.9\\ \text{Goodwill $\And$ Intangibles} & 365.5 & 365.5 & 365.5 & 365.5 & 365.5\\ \text{Total Assets} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Liabilities $\And$ Stockholders’ Equity}\\ \text{Accounts Payable} & 18.8 & 18.8 & 22.4 & 27.1 & 30.3\\ \text{Accrued Compensation} & 7.6 & 6.3 & 7.5 & 7.7 & 9.4\\ \text{Total Current Liabilities} & 26.4 & 25.1 & 29.9 & 34.8 & 39.7\\ \text{Long-term Debt} & 498.9 & 498.9 & 572.2 & 597.5 & 597.5\\ \text{Total Liabilities} & 525.3 & 524 & 602.1 & 632.3 & 637.2\\ \text{Stockholders’ Equity} & 255.0 & 255.6 & 257.8 & 270.8 & 279.8\\ \text{Total Liabilities $\And$ Stockholders’ Equity} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Statement of Cash Flows} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Depreciation $\And$ Amortization} & 27.5 & 26.3 & 32.5 & 38.3 & 40.1\\ \text{Chg. in Accounts Receivable} & 3.9 & 17.0 & 1.3 & (8.1) & (6.8)\\ \text{Chg. in Inventory} & (2.9) & 1.3 & 4.9 & (2.9) & (5.6)\\ \underline{\text{Chg. in Payables $\And$ Accrued Comp.}} & 1.7 & (1.3) & 4.8 & 4.9 & 4.9\\ \text{Cash from Operations} & 45.2 & 47.6 & 53.1 & 44.0 & 48.8\\ \underline{\text{Capital Expenditures}} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Cash from Investing Activities} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Dividends Paid} & (5.2) & (5.2) & (5.2) & (5.2) & (5.6)\\ \text{Sale (or purchase) of stock} & — & — & — & — & —\\ \underline{\text{Debt Issuance (Pay Down)}} & — & — & 73.3 & 25.3 & —\\ \text{Cash from Financing Activities} & (5.2) & (5.2) & 68.1 & 20.1 & (5.6)\\ \text{Change in Cash} & 13.4 & 18.6 & 23.7 & (11.3) & 3.2\\ \text{Mydeco Stock Price} & \$7.02 & \$3.55 & \$5.86 & \$8.33 & \$11.57\\ \end{array}

$

statistics

There was one more question of interest to the researchers. If people in cars with air bags are more likely to be wearing seat belts, then how much of the improvement in fatality rates with air bags is really due to seat belt usage? The harmful event fatalities were then classified according to both availability of air bags and seat belt usage. The data are given here. a. Use the information in the previous table and the data to compute the fatality rates for the four air bag and seat belt combinations. b. Describe the confounding effect of seat belt usage on the effect of air bags on reducing fatalities. REFERENCE: To obtain a more accurate picture of the impact of air bags on preventing deaths, it is necessary to account for the effect of occupants using both seatbelts and air bags. If the occupants of the vehicles in which air bags are installed are more likely to be also wearing seat belts, then it is possible that some of the apparent effectiveness of the air bags is in fact due to the increased usage of seat belts. Thus, one more 2 2 table is necessary, the table displaying a comparison of proper seat belt usage for occupants with air bags available with those for occupants without air bags available. That data are given here. a. Is there significant evidence of an association between air bag installation and the proper usage of seat belts? Use $\alpha$ = .05 b. Provide justification for your results in part (a). The authors also collected information about accidents concerning seat belt usage. The article compared fatality rates for occupants using seat belts properly with those for occupants not using seat belts. The data are given here. a. Calculate the odds of being killed in a harmful event car accident for a vehicle in which occupants were using seat belts and those who were not using seat belts. Interpret the two odds. b. Calculate the odds ratio of being killed in a harmful event car accident with and without seat belts being used properly. What does this ratio tell you about the importance of using seat belts? c. Is there significant evidence of a difference between vehicles with and without proper seat belt usage relative to the proportion of persons killed in a harmful event vehicle accident? Use $\alpha$ = .05. d. Place a 95% confidence interval on the odds ratio. Interpret this interval. 10.54 : The article “Who Wants Airbags” in Chance 18 (2005): 3–16 discusses whether air bags should be mandatory equipment in all new automobiles. Using data from the National Highway Traffic Safety Administration (NHTSA), they obtain the following information about fatalities and the usage of air bags and seat belts. All passenger cars sold in the U.S. starting in 1998 are required to have air bags. NHTSA estimates that air bags have saved 10,000 lives as of January 2004. The authors examined accidents in which there was a harmful event (personal or property), and from which at least one vehicle was towed. After some screening of the data, they obtained the following results. (The authors detail in their article the types of screening of the data that was done.) a. Calculate the odds of being killed in a harmful event car accident for a vehicle with and without air bags. Interpret the two odds. b. Calculate the odds ratio of being killed in a harmful event car accident with and without air bags. What does this ratio tell you about the importance of having air bags in a vehicle? c. Is there significant evidence of a difference between vehicles with and without air bags relative to the proportion of persons killed in a harmful event vehicle accident? Use $\alpha$ = .05. d. Place a 95% confidence interval on the odds ratio. Interpret this interval.

\begin{matrix} \text{ } & \text{Air Bag Installed Yes} & \text{Air Bag Installed No} & \text{Total}\\ \text{Killed} & \text{19,276} & \text{27,924} & \text{47,200}\\ \text{Survived} & \text{5,723,539} & \text{4,826,982} & \text{10,550,521}\\ \text{Total} & \text{5,742,815} & \text{4,854,906} & \text{10,597,721}\\ \end{matrix}

\begin{matrix} \text{ } & \text{Seat Belt Usage (Sealt Belt)} & \text{Seat Belt Usage (No Sealt Belt)} & \text{Total}\\ \text{Killed} & \text{16,001} & \text{31,199} & \text{47,200}\\ \text{Survived} & \text{7,758,634} & \text{2,791,887} & \text{10,550,521}\\ \text{Total} & \text{7,774,635} & \text{2,823,086} & \text{10,597,721}\\ \end{matrix}

\begin{matrix} \text{Air Bags} & \text{Seat Belt Usage (Sealt Belt)} & \text{Seat Belt Usage (No Sealt Belt)} & \text{Total}\\ \text{Yes} & \text{4,871,940} & \text{870,875} & \text{5,742,815}\\ \text{No} & \text{2,902,694} & \text{1,952,211} & \text{4,854,905}\\ \text{Total} & \text{7,774,634} & \text{2,823,086} & \text{10,597,720}\\ \end{matrix}

\begin{matrix} \text{Air Bags} & \text{Seat Belt Usage (Sealt Belt)} & \text{Seat Belt Usage (No Sealt Belt)} & \text{Total}\\ \text{Yes} & \text{8,626} & \text{10,650} & \text{19,276}\\ \text{No} & \text{7,374} & \text{20,550} & \text{27,924}\\ \text{Total} & \text{16,000} & \text{31,200} & \text{47,200}\\ \end{matrix}

accounting

Sherene Nili manages a company that makes wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the following forecasted income statement for March, which is a busy month:

	Custom Dresses	Standard Dresses	Total
Number of dresses	10	20	30
Sales revenue	$50,000	$30,000	$80,000
Materials	$10,000	$8,000	$18,000
Labor	20,000	9,000	29,000
Machine depreciation	600	300	900
Rent	4,200	2,800	7,000
Heat and light	1,000	600	1,600
Other production costs			2,800
Marketing and administration			7,700
Total costs			67,000
Operating profit			$13,000

Ms. Nili already has orders for the 10 custom dresses refl ected in the March forecasted income statement. The depreciation charges are for machines used in the respective product lines. Machines depreciate at the rate of$1 per hour based on hours used, so these are variable costs. In March, cutting and sewing machines are expected to operate for 900 hours, of which 600 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $7,000 per month. The rent, heat, and light are allocated to the product lines based on the amount of fl oor space occupied.

A valued customer, who is a wedding consultant, has asked Ms. Nili for a special favor. This customer has a client who wants to get married in early April. Ms. Nili’s company is working at capacity and would have to give up some other business to make this dress. She can’t renege on custom orders already agreed to, but she can reduce the number of standard dresses produced in March to 10. Ms. Nili would lose permanently the opportunity to make up the lost production of standard dresses because she has no unused capacity for the foreseeable future. The customer is willing to pay$24,000 for the special order. Materials and labor for the order will cost $6,000 and$10,000, respectively. The special order would require 140 hours of machine time. Ms. Nili’s company would save 150 hours of machine time from the standard dress business given up. Rent, heat and light, and other production costs would not be affected by the special order.

Required
Should Ms. Nili take the order? Explain your answer.

accounting

Pastel Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and than moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:

\begin{matrix} \text{ } & \text{Pastel Bags}\\ \text{ } & \text{Budget for Costs and Activities}\\ \text{ } & \text{For the Year Ended February 28. 2017}\\ \text{Direct materials-purses} & \text{\$ 319.155}\\ \text{Direct materials-backpacks} & \text{454.995}\\ \text{Direct materials labor-purses} & \text{99.000}\\ \text{Direct manufacturing labor-backpacks} & \text{113.000}\\ \text{Setup} & \text{64.000}\\ \text{Shipping} & \text{73.000}\\ \text{Design} & \text{169.000}\\ \text{Plant utilities and administration} & \text{221.000}\\ \end{matrix}

. Other budget information follows:

\begin{matrix} \text{ } & \text{Backpacks} & \text{Purses} & \text{Total}\\ \text{Number of bags} & \text{6.175} & \text{3.075} & \text{9.250}\\ \text{Hours of production} & \text{1.665} & \text{2.585} & \text{4.250}\\ \text{Number of batches} & \text{120} & \text{80} & \text{200}\\ \text{Number of designs} & \text{2} & \text{2} & \text{4}\\ \end{matrix}

. 1. Identify the cost hierarchy level for each cost category. 2. Identify the most appropriate cost driver for each category. Explain briefly your choice of cost driver. 3. Calculate the budgeted cost per unit of cost driver for each cost category. 4. Calculate the budgeted total cost and cost per unit for each product line. 5. Explain how you could use the information in requirement 4 to reduce costs.

business

See Table down below showing financial statement data and stock price data for Mydeco Corp.

Was Mydeco able to improve its ROIC in $2016$ relative to what it was in $2012$ ?

2012–2016 Financial Statement Data and Stock Price Data for Mydeco Corp

Mydeco Corp. 2012–2016 $\hspace{30mm}$ (All data as of fiscal year end; in $million)$

\begin{array}{lccccc} \text{Income statement} & 2012 & 2013 & 2014 & 2015 & 2016 \\ \text{Revenue} & 401.9 & 361.6 & 429.6 & 513.6 & 602.6 \\ \underline{\text{Cost of Goods Sold}} & (192.1) & (175.4) & (207.1) & (248.3) & (295.8)\\ \text{Gross Profit} & 209.8 & 186.2 & 222.5 & 265.3 & 306.8\\ \text{Sales and Marketing} & (65.0) & (64.4) & (84.3) & (104.9) & (121.1)\\ \text{Administration} & (61.8) & (57.1) & (59.0) & (66.9) & (79.8)\\ \underline{\text{Depreciation $\And$ Amortization}} & (27.5) & (26.3) & (32.5) & (38.3) & (40.1)\\ \text{EBIT} & 55.5 & 38.4 & 46.7 & 55.2 & 65.8\\ \underline{\text{Interest Income (Expense)}} & (32.4) & (31.8) & (32.0) & (37.0) & (40.9)\\ \text{Pretax Income} & 23.1 & 6.6 & 14.7 & 18.2 & 24.9\\ \underline{\text{Income Tax}} & (8.1) & (2.3) & (5.1) & (6.4) & (8.7)\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Shares outstanding (millions)} & 56.8 & 56.8 & 56.8 & 56.8 & 56.8\\ \text{Earnings per share} & \$0.26 & \$0.08 & \$0.17 & \$0.21 & \$0.29\\ \text{Balance Sheet} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Assets}\\ \text{Cash} & 49.4 & 68.0 & 91.7 & 80.4 & 83.6\\ \text{Accounts Receivable} & 87.6 & 70.6 & 69.3 & 77.4 & 84.2\\ \text{Inventory} & 33.5 & 32.2 & 27.3 & 30.2 & 35.8\\ \text{Total Current Assets} & 170.5 & 170.8 & 188.3 & 188.0 & 203.6\\ \text{Net Property, Plant $\And$ Equip.} & 244.3 & 243.3 & 306.1 & 349.6 & 347.9\\ \text{Goodwill $\And$ Intangibles} & 365.5 & 365.5 & 365.5 & 365.5 & 365.5\\ \text{Total Assets} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Liabilities $\And$ Stockholders’ Equity}\\ \text{Accounts Payable} & 18.8 & 18.8 & 22.4 & 27.1 & 30.3\\ \text{Accrued Compensation} & 7.6 & 6.3 & 7.5 & 7.7 & 9.4\\ \text{Total Current Liabilities} & 26.4 & 25.1 & 29.9 & 34.8 & 39.7\\ \text{Long-term Debt} & 498.9 & 498.9 & 572.2 & 597.5 & 597.5\\ \text{Total Liabilities} & 525.3 & 524 & 602.1 & 632.3 & 637.2\\ \text{Stockholders’ Equity} & 255.0 & 255.6 & 257.8 & 270.8 & 279.8\\ \text{Total Liabilities $\And$ Stockholders’ Equity} & 780.3 & 779.6 & 859.9 & 903.1 & 917.0\\ \text{Statement of Cash Flows} & 2012 & 2013 & 2014 & 2015 & 2016\\ \text{Net Income} & 15.0 & 4.3 & 9.6 & 11.8 & 16.2\\ \text{Depreciation $\And$ Amortization} & 27.5 & 26.3 & 32.5 & 38.3 & 40.1\\ \text{Chg. in Accounts Receivable} & 3.9 & 17.0 & 1.3 & (8.1) & (6.8)\\ \text{Chg. in Inventory} & (2.9) & 1.3 & 4.9 & (2.9) & (5.6)\\ \underline{\text{Chg. in Payables $\And$ Accrued Comp.}} & 1.7 & (1.3) & 4.8 & 4.9 & 4.9\\ \text{Cash from Operations} & 45.2 & 47.6 & 53.1 & 44.0 & 48.8\\ \underline{\text{Capital Expenditures}} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Cash from Investing Activities} & (26.6) & (23.8) & (97.5) & (75.4) & (40.0)\\ \text{Dividends Paid} & (5.2) & (5.2) & (5.2) & (5.2) & (5.6)\\ \text{Sale (or purchase) of stock} & — & — & — & — & —\\ \underline{\text{Debt Issuance (Pay Down)}} & — & — & 73.3 & 25.3 & —\\ \text{Cash from Financing Activities} & (5.2) & (5.2) & 68.1 & 20.1 & (5.6)\\ \text{Change in Cash} & 13.4 & 18.6 & 23.7 & (11.3) & 3.2\\ \text{Mydeco Stock Price} & \$7.02 & \$3.55 & \$5.86 & \$8.33 & \$11.57\\ \end{array}

$

statistics

According to the National Oceanic and Atmospheric Administration's Office of Protected Species, sea turtle nesting rates have declined in all parts of the southeastern United States over the past 10 years. Environmentalists theorize that beach nourishment may improve the nesting rates of these turtles. (Beach nourishment involves replacing the sand on the beach in order to extend the high-water line seaward.) A study was undertaken to investigate the effect of beach nourishment on sea turtle nesting rates in Florida (Aubry Hershorin, unpublished doctoral dissertation, University of Florida, 2010). For one part of the study, eight beach zones were sampled in Jacksonville, Florida. Each beach zone was nourished by the Florida Fish and Wildlife Conservation Commission between 2000 and 2008. Nesting densities (measured as nests per linear meter) were recorded both before and after nourishing at each of the eight beach zones. The data are listed in the following table. Conduct a Wilcoxon signed rank test to compare the sea turtle nesting densities before and after beach nourishing. Use $\alpha=.05$

\begin{matrix} \text{Beach Zone} & \text{Before Nourishing} & \text{After Nourishing}\\ \text{401} & \text{0} & \text{0.003595}\\ \text{402} & \text{0.001456} & \text{0.007278}\\ \text{403} & \text{0} & \text{0.003297}\\ \text{404} & \text{0.002868} & \text{0.003824}\\ \text{405} & \text{0} & \text{0.002198}\\ \text{406} & \text{0} & \text{0.000898}\\ \text{407} & \text{0.000626} & \text{0}\\ \text{408} & \text{0} & \text{0}\\ \end{matrix}

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