See Table down below showing financial statement data and st

accounting

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:


Morrison Company Balance sheet January 1
Assets
Cash		$32,000
Raw materials	$ 9,000
Work in process	4,000
Finished goods	17,000	30,000
Prepaid expenses		2,000
Property, plant and equipment (net)		190,000
Total assets		$254,000
Liabilities and Stockholder's Equity
Accounts payable		$ 7,000
Retained earnings		$247,000
Total liabilities and stockholder's equity		$254,000

During January the company completed the following transactions:

Prepaid insurance expired during the month, $1,200 (80% related to production, and 20% related to selling and administration).

Required:

Calculate the ending balances that would be reported on the company's balance sheet on January 31. You can derive your answers using Microsoft Excel and Exhibit 3A-2 as your guide, or you can use paper, pencil, and a calculator. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.)

What is Morrison Company's net operating income for the month of January?

accounting

The Svenson Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2014 and the expected costs in 2015:

\begin{array}{lcc} &\textbf{Current Costs}&\textbf{Expected }\\ &\textbf{in 2014} &\textbf{Costs in 2015}\\\hline \text{Variable manufacturing costs}\\ \quad\text{Direct material cost per CMCB} &\$~~~~~~180 &\$~~~~~~170\\ \quad\text{Direct manufacturing labor cost per CMCB} &~~~~~~~~~~50 &~~~~~~~~~~45\\ \quad\text{Variable manufacturing cost per batch for setups, materials }\\ \quad\text{handling, and quality control}& ~~~~1,600 &~~~~1,500\\ \text{Fixed manufacturing cost}\\ \quad\text{Fixed manufacturing overhead costs that can be avoided if CMCBs }\\ \quad\text{are not made} &320,000 &320,000\\ \quad\text{Fixed manufacturing overhead costs of plant depreciation,} \\ \quad\text{insurance, and administration that cannot be avoided even if }\\ \quad\text{CMCBs are not made}& 800,000 &800,000 \end{array}

Svenson manufactured 8,000 CMCBs in 2014 in 40 batches of 200 each. In 2015, Svenson anticipates needing 10,000 CMCBs. The CMCBs would be produced in 80 batches of 125 each.

The Minton Corporation has approached Svenson about supplying CMCBs to Svenson in 2015 at $300 per CMCB on whatever delivery schedule Svenson wants.

Calculate the total expected manufacturing cost per unit of making CMCBs in 2015.
Suppose the capacity currently used to make CMCBs will become idle if Svenson purchases CMCBs from Minton. On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations.
Now suppose that if Svenson purchases CMCBs from Minton, its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Essex Corporation. Svenson estimates the following incremental revenues and costs from CB3s:

Particulars	Amount
Total expected incremental future revenues	$2,000,000
Total expected incremental future costs	$2,150,000

On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations.

business

Percents of on-time arrivals for flights in 2006 and 2007 were collected for 11 randomly selected airports. Data for these airports follow (Research and Innovative Technology Administration website, August 29, 2008). Use $\alpha$ = .05 to test the hypothesis that there is no difference between the median percent of on-time arrivals for the two years. What is your conclusion?

	Percent On Time
Airport	2006	2007
Boston Logan	71.78	69.69
Chicago O’Hare	68.23	65.88
Chicago Midway	77.98	78.40
Denver	78.71	75.78
Fort Lauderdale	77.59	73.45
Houston	77.67	78.68
Los Angeles	76.67	76.38
Miami	76.29	70.98
New York (JFK)	69.39	62.84
Orlando	79.91	76.49
Washington (Dulles)	75.55	72.42

business

The following data are the monthly salaries y and the grade point averages x for students who obtained a bachelor’s degree in business administration.

GPA	Monthly Salary ($)
2.6	3600
3.4	3900
3.6	4300
3.2	3800
3.5	4200
2.9	3900

The estimated regression equation for these data is$ $$ \hat {y}$ = 2090.5 + 581.1x and MSE = 21,284. a. Develop a point estimate of the starting salary for a student with a GPA of 3.0. b. Develop a 95% confidence interval for the mean starting salary for all students with a 3.0 GPA. c. Develop a 95% prediction interval for Ryan Dailey, a student with a GPA of 3.0. d. Discuss the differences in your answers to parts (b) and (c ). $$

health

Write questions for a survey about exercise and fitness attitudes and habits. For example, you might ask people how often and for how long they exercise and what they include or exclude in their diet. Organize a table, chart, or diagram to display your findings.

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}

$

statistics

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). REFERENCE: 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}

statistics

A randomly chosen subject arrives for a study of exercise and fitness. Describe a sample space for this case. The subject is either female or male.

business

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

a. By how much did Mydeco increase its debt from $2012$ to $2016$ ?

b. What was Mydeco's EBITDA/Interest coverage ratio in $2012$ and $2016$ ? Did its coverage ratio ever fall below $2$ ?

c. Overall, did Mydeco's ability to meet its interest payments improve or decline oyer this 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}

$

statistics

A randomly chosen subject arrives for a study of exercise and fitness. Describe a sample space for each of the following. In some cases, you have some freedom in your choice of S.

(a) You record the gender of the subject.

(b) After 10 minutes on an exercise bicycle, you ask the subject to rate his or her effort on the Rate of Perceived Exertion (RPE) scale . RPE ranges in whole-number steps from 6 (no exertion at all) to 20 (maximal exertion).

(c) You measure V02, the maximum volume of oxygen consumed per minute during exercise. V02 is generally between 2.5 and 6 liters per minute.

(d) You measure the maximum heart rate (beats per minute).

business

See Table down below showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco's costs and expenses had been the same fraction of revenues in $2013-2016$ as they were in $2012$ . What would Mydeco's EPS have been each year in this case?

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 Svenson Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2017 and the expected costs in 2018:

\begin{matrix} & \text{Current Costs in 2017} & \text{Expected Costs in 2018}\\ \text{Variable manufacturing costs}\\ \text{Direct material cost per CMCB} & \text{\$ 180} & \text{\$ 170}\\ \text{Direct manufacturing labor cost per CMCB} & \text{50} & \text{45}\\ \text{Variable manufacturing cost per batch for setups, materials handling, and quality control} & \text{1,600} & \text{1,500}\\ \text{Fixed manufacturing cost}\\ \text{Fixed manufacturing overhead costs that can be avoided if CMCBs are not made} & \text{320,000} & \text{320,000}\\ \text{Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if CMCBs are not made} & \text{800,000} & \text{800,000}\\ \end{matrix}

Svenson manufactured 8,000 CMCBs in 2017 in 40 batches of 200 each. In 2018, Svenson anticipates needing 10,000 CMCBs. The CMCBs would be produced in 80 batches of 125 each. The Minton Corporation has approached Svenson about supplying CMCBs to Svenson in 2018 at $300 per CMCB on whatever delivery schedule Svenson wants. 1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2018. 2. Suppose the capacity currently used to make CMCBs will become idle if Svenson purchases CMCBs from Minton. On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations. 3. Now suppose that if Svenson purchases CMCBs from Minton ,its best alternative use of the capacity currently used from CMCBs is to make and sell special circuit boards (CB3s) to the Essex Corporation. Svenson estimates the following incremental revenues and costs from CB3s:$

\begin{matrix} \text{Total expected incremental future revenues} & \text{\$2,000,000}\\ \text{Total expected incremental future costs} & \text{\$2,150,000}\\ \end{matrix}

$ On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations.

accounting

Northwest Aircraft Industries (NAI) was founded $45$ years ago by Jay Preston as a small machine shop producing machined parts for the aircraft industry, which is prominent in the Seattle/Tacoma area of Washington. By the end of its first decade, NAI's annual sales had reached $\$ 15$ million, almost exclusively under government contracts. The next $30$ years brought slow but steady growth as cost-reimbursement government contracts continued to be the main source of revenue. Realizing that NAI could not depend on government contracts for long-term growth and stability, Drew Preston, son of the founder and now president of the company, began planning for diversified commercial growth. As a result of these efforts, three years ago NAI had succeeded in reducing the ratio of government contract sales to $50$ percent of total sales.

Traditionally, the costs of the Material-Handling Department have been allocated to direct material as a percentage of direct-material dollar value. This was adequate when the majority of the manufacturing was homogeneous and related to government contracts. Recently, however, government auditors have rejected some proposals, stating that "the amount of Material-Handling Department costs allocated to these proposals is disproportionate to the total effort involved."

Kara Lindley, the newly hired cost-accounting manager, was asked by the manager of the Government Contracts Unit, Paul Anderson, to find a more equitable method of allocating Material-Handling Department costs to the user departments. Her review has revealed the following information.

The majority of the direct-material purchases for government contracts are high-dollar, low-volume purchases, while commercial materials represent low-dollar, high-volume purchases.
Administrative departments such as marketing, finance and administration, human resources, and maintenance also use the services of the Material-Handling Department on a limited basis but have never been charged in the past for material-handling costs.
One purchasing agent with a direct phone line is assigned exclusively to purchasing high-dollar, low-volume material for government contracts at an annual salary of $\$ 36,000$ . Employee benefits are estimated to be $20$ percent of the annual salary. The annual dedicated phone line costs are $\$ 2,800$ .

The components of the Material-Handling Department's budget for $20$ x $1$ , as proposed by Lindley's predecessor, are as follows:

\begin{array}{lr} \text{ Payroll } & \$ \quad 180,000 \\ \text{ Employee benefits } & 36,000 \\ \text{ Telephone } & 38,000 \\ \text{ Other utilities } & 22,000 \\ \text{ Materials and supplies } & 6,000 \\ \text{ Depreciation } & 6,000 \\ \text{ Direct-material budget: } & \\ \text{ Government contracts } & 2,006,000 \\ \text{ Commercial products } & 874,000 \end{array}

Lindley has estimated the number of purchase orders to be processed in $20$ x $1$ to be as follows:

\begin{array}{lr} \text{ Government contracts* } & 80,000 \\ \text{ Commercial products } & 156,000 \\ \text{ Marketing } & 1,800 \\ \text{ Finance and administration } & 2,700 \\ \text{ Human resources } & 500 \\ \text{ Maintenance } & \underline{ 1,000 } \\ \text{ Total } & \underline{ \underline { 242,000 }} \\ \end{array}

$*$ Exclusive of high-dollar, low-volume materials.

Lindley recommended to Anderson that material-handling costs be allocated on a per-purchase order basis. Anderson realizes and accepts that the company has been allocating to government contracts more material-handling costs than can be justified. However, the implication of Lindley's analysis could be a decrease in his unit's earnings and, consequently, a cut in his annual bonus. Anderson told Lindley to "adjust" her numbers and modify her recommendation so that the results will be more favorable to the Government Contracts Unit.

Being new in her position, Lindley is not sure how to proceed. She feels ambivalent about Anderson's instructions and suspects his motivation. To complicate matters for Lindley, Preston has asked her to prepare a three-year forecast of the Government Contracts Unit's results, and she believes that the newly recommended allocation method would provide the most accurate data. However, this would put her in direct opposition to Anderson's directives.

Lindley has assembled the following data to project the material-handling costs.

Total direct-material costs increase $2.5$ percent per year.
Material-handling costs remain the same percentage of direct-material costs.
Direct government costs (payroll, employee benefits, and direct phone line) remain constant.
The number of purchase orders increases $5$ percent per year.
The ratio of government purchase orders to total purchase orders remains at $33$ percent.
In addition, she has assumed that government material in the future will be $70$ percent of total material.

$1.$ Calculate the material-handling rate that would have been used by Kara Lindley's predecessor at Northwest Aircraft Industries.

$2.$ $a.$ Calculate the revised material-handling costs to be allocated on a per-purchase-order basis.

$b.$ Discuss why purchase orders might be a more reliable cost driver than the dollar amount of direct material.

$3.$ Calculate the difference due to the change to the new method of allocating material-handling costs to government contracts.

$4.$ Prepare a forecast of the cumulative dollar impact over a three-year period from $20$ x $1$ through $20$ x $3$ of Kara Lindley's recommended change for allocating Material-Handling Department costs to the Government Contracts Unit. Round all calculations to the nearest whole number.

$5.$ Referring to the standards of ethical conduct for management accountants:

$a.$ Discuss why Kara Lindley has an ethical conflict.

$b.$ Identify several steps that Lindley could take to resolve the ethical conflict.

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