The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: [pic]

.:.
For the following requirements, round the fixed cost to the nearest dollar and round the variable rates to the nearest cent. Required:
1. Prepare a scattergraph by plotting power costs against machine hours. Does the scattergraph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression, and drop the point (20,000, $26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?

SOLUTION:

1.

[pic]

The overall relationship looks reasonably linear—although the data point for the first quarter may be an outlier.

...more consistent and reliable.
The Cpk – 0.333 however, is still a much smaller number compared to the Cp. This illustrates that the process is not working at its highest potential. For the production line to be creating the best and most amount of soap bars, it is important that the Cpk comes closer to the Cp. In conclusion, this table presents useful information that the changes made has improved in centering of the process.
d) The last part of information that the company would like to see, is the results if the process was centered at 166. Table 3 shows the findings;
Parameter Value Results Value
Upper tolerance limit 170 Process capability index 1.3333 The actual process capability is Cpk = 1.333
Lower tolerance limit 162 Upper one sided index 1.3333 The potential process capability is Cp = 1.333
Mean (optional) 166 Lower one sided index 1.3333
Standard deviation 1
Table 3 illustrates an almost ideal situation. The CP (1.333) is the same as the Cpk (1.333). Since Cpk=Cp, this process has; achieved its potential, is centered, and ideal. This demonstrates that the process is working to full capacity, and fully capable. For the 150-gram soap bar to be producing at its most effective and reliable rate, it is concluded that it should be centered at 166.
Final Word
In conclusion, the above results have given Beaver Brothers Inc, a good understanding of their 150-gram soap production line....

...Week 3 individual assignment
Comprehensive problem 67
Ken is 63 years old and unmarried. He retired at age 55 when he sold his business, understock.com. Though Ken is retired, he is still very active. Ken reported the following financial information this year. Assume Ken’s modified adjusted gross income for purposes of the bond interest exclusion and for determining the taxability of his Social Security benefits is $70,000 and that Ken files as a single taxpayer. Determine Ken’s 2009 gross income.
a. Ken won $1,200 in an illegal game of poker (the game was played in Utah, where gambling is illegal).
b. Ken sold 1,000 shares of stock for $32 a share. He inherited the stock two years ago. His tax basis (or investment) in the stock was $31 per share.
c. Ken received $25,000 from an annuity he purchased eight years ago. He purchased the annuity, to be paid annually for 20 years, for $210,000.
d. Ken received $13,000 in Social Security benefits for the year.
e. Ken resided in Ireland from July 1, 2008, through June 30, 2009, visiting relatives. While he was there he earned $35,000 working in his cousin’s pub. He was paid $17,000 for his services in 2008 and $18,000 for his services in 2009. Assume Ken elects to use the foreign-earned income exclusion to the extent he is eligible.
f. Ken decided to go back to school to learn about European history. He received a $500 cash scholarship to attend. He used $300 to pay...

...Review Problems#3
Question-1
Mark Goldsmith's broker has shown him two bonds. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6% paid annually. Bond B has a coupon interest rate of 14% paid annually.
a. Calculate the selling price for each of the bonds.
ANSWER:
b. Mark has $20,000 to invest. Judging on the basis of the price of the bonds, how many of either one could Mark purchase if he were to choose it over the other? (Mark cannot really purchase a fraction of a bond, but for purposes of this question, pretend that he can.)
ANSWER:
Mark can buy 20,000/783.71=25.52 Bond A and 20,000/1072.10=18.66 Bond B
c. Calculate the yearly interest income of each bond on the basis of its coupon rate and the number of bonds that Mark could buy with his $20,000.
ANSWER:
Annul Interest Income from Investment in Bond A: 25.52 x 60 =$1,531.17
Annul Interest Income from Investment in Bond B: 18.66 x 140 =$2,611.71
d. Assume that Mark will reinvest the interest payments as they are paid (at the end of each year) and that his rate of return on the reinvestment is only 10%. For each bond, calculate the value of the principal payment plus the value of Mark's reinvestment account at the end of the 5 years.
T
Reinvestment Account
Bond-A
Reinvestment Account
1
60.00
87.85
2
60.00
79.86
3
60.00
72.60
4
60.00
66.00
5
60.00
60.00
FV...

...ECON 213
PROBLEM SET 3
Name: ___Krystal Logsdon_____________________________________
Problem Set 3 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 6.
1. Data for the market for graham crackers is shown below. Calculate the elasticity of
demand between the following prices.
Price of
crackers
Quantity Demanded (per month)
$3
80
$2.5
120
$2
160
$1.5
200
$1
240
$1.00 - $1.50: __*_-0.333__________________________
$1.50 - $2.00: __*__-0.6___________________________
$2.00 - $2.50: ___*_-1_____________________________
$2.50 - $3.00: __*___-1.66_________________________
If the price of graham crackers is $2.50 should firms raise or lower their prices if they
want to increase revenue? Explain this in terms of elasticity.
*The firm should lower their prices. The elasticity of demand increases.
Page !1 of !4
ECON 213
2. Assume the competitive market shown below faces a short run price of $10. Using
the graph below, identify the following:
Profit maximizing output:
*_MC=MR___Q=110________
Approximate mark up over cost ___*__There would be no mark up over cost___
In the long run, the price falls to $7.50. Why does this happen?
*The business operates at the minimum average total cost (ATC), which at $7.50 is equal
to the marginal cost.
Price, Cost
What is the new profit maximizing output? _*_Minimum Average Total Cost
(ATC)____Q=90_________________
$12.50
MC
$10.00
ATC
P=MR...

...Problem Set 3
Name: Lauren Hensley
Problem Set 3 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 6.
1. Data for the market for graham crackers is shown below. Calculate the elasticity of demand between the following prices.
Price of crackers
Quantity Demanded (per month)
$3
80
$2.5
120
$2
160
$1.5
200
$1
240
$1.00 - $1.50: -0.333
$1.50 - $2.00: -0.6
$2.00 - $2.50: -1
$2.50 - $3.00: -1.66
If the price of graham crackers is $2.50 should firms raise or lower their prices if they want to increase revenue? Explain this in terms of elasticity.
The firm should lower the price as we see the elasticity increases
2. Assume the competitive market shown below faces a short run price of $10. Using the graph below, identify the following:
Profit maximizing output: MC=MR, Q=110
Approximate mark up over cost There is no mark up
In the long run, the price falls to $7.50. Why does this happen? Ther are no fixed costs and the firm operates at minimum ATC which is equal to marginal cost
What is the new profit maximizing output? Min ATC, Q=90
3. A local hardware store is trying to decide whether to stay open. They have found that their industry is extremely competitive and profits have shrunk considerably. Knowing that you have taken an economics course the owners have asked for your opinion. Draw a completely labeled graph to...

...ECON112 Macroeconomics Problem Set 3 *Solution* Fall 2010 (Instructor: Li, Yao; TA: Fok Pik Lin, Astor)
-----------------------------------------------------------------------------------------------------------------------------------Posted: Monday, November 1, 2010 Due: 5:30 PM Monday, November 8, 2010 40 marks total
Part I: True/False/Uncertain Please justify your answer with a short argument for each question and
draw a diagram if necessary. (15 marks, 3 marks each: 1 mark for correct judgment and 2 marks for correct argument)
1. Suppose that workers in the Republic of Communia are highly unionized, while workers in the Republic of Individuela are not. In all other respects, the two countries are exactly the same. Then Communia is likely to have a higher natural level of output than Individuela. False. In our model of the labor market, the level of unionization is captured by the
Communia is likely to have a higher natural rate of unemployment than Individuela. Hence Communia is likely to have a lower natural level of output than Individuela.
1
2. Suppose there is a decrease in the price level from P to P’. Given the stock of nominal money, M, this leads to an increase in the real money stock, M/P, which shifts the LM curve down. This implies that the AD curve shifts to the right.
3. When output is below the natural level of output, the actual price level is lower than the...

...Exercise 8-3 Direct Materials Budget
Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:
Year 2
Year 3
First
Second
Third
Fourth
First
Budgeted production, in bottles
60,000
90,000
150,000
100,000
70,000
Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases for each quarter and for the year in total.
Quarter—Year 2
First
Second
Third
Fourth
Year
Required production in units of finished goods
60,000
90,000
150,000
100,000
400,000
Units of raw materials needed per unit of finished goods
× 3
× 3
× 3
× 3
× 3
Units of raw materials needed to meet production
180,000
270,000
450,000
300,000
1,200,000
Add desired units of ending raw materials...

...with an understanding of how to create a network diagram, and how to do a forward and backward pass to determine the ES, LS, EF, LF and slack (float). You will also learn how to determine the duration of the project, and the critical path.
In this homework assignment, you will be working through four Activity In Box (AIB) problems. Using the activity, duration, and predecessor information given in this document, you should first construct a network for each "project." [Each problem will have its own network.]
Once you have constructed the network, please answer the corresponding questions. Once you answer the questions, please post your responses to the Drop Box. You do not have to submit your network diagrams, the answers to the questions are sufficient.
Once the homework assignment has been graded, the solution key will be made available. The network diagrams will be provided, along with the answers to the questions.
Good Luck!
Problem 1
The following data were obtained from a project to create a new portable electronic.
Activity Duration Predecessors
A 5 Days ---
B 6 Days ---
C 8 Days ---
D 4 Days A, B
E 3 Days C
F 5 Days D
G 5 Days E, F
H 9 Days D
I 12 Days G
Step 1: Construct a network diagram for the project.
Step 2: Answer the following questions: (15 points total)
a) What is the Scheduled Completion of the Project? (5 points)
32 Days
b)...