1. John and Mary work for a direct marketing firm. They make calls to cus- tomers for a local carpet cleaning service. In a typical hour, John completes 50 calls and gets 2 sales; Mary completes 50 calls and gets 1 sale. Compare John and Mary from the viewpoint of effectiveness and efficiency. 2. Joan purchases a 30-year federal government bond for $10,000 that pays 4 percent annual interest. Jim purchases $20,000 worth of 30-year corpo- rate bonds that pay 7 percent annual interest. Joan's goal is to earn $400 per year on her investment, and Jim's goal is to earn $1,400 per year on his investment. a. Is Joan or Jim more efficient? Why? b. Is Joan or Jim more effective? Why? 3. Sam quit a $30,000-a-year job with a local heating and air condition- ing firm to go into business for himself. After his first year in business, his had a profit of $40,000. During this year, Sam drew a salary of $20,000. a. What were Sam's accounting profit and entrepreneurial profit? b. Explain the difference between accounting profit and entrepreneurial profit. 4. Maury quit his job as an accountant with We Keep Books Accurately to open his own accounting firm. He earned $40,000 with the accounting firm We Keep Books Accurately. During the current year, Maury had revenues of $150,000 and total expenses of $110,000; he did not draw a salary. a. What was Maury's accounting profit? b. What was Maury's entrepreneurial profit? 5. James builds brick walls for custom homes. His annual sales are approxi- mately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150,000 invested in his business. a. Compute the net profit margin for both James and Tom. b. Compute the asset turnover for both James and Tom. c. Compare the profitability of these two firms, and discuss the similarities and differences. 6. The Faster Modem Corporation was founded by two engineers who managed to capitalize their firm with $150,000. They were able to raise this money because their test model performed much faster than current modems on the market, and they received an initial commitment from a national firm to market their modem. However, a national modem manu- facturer beat them to the market, and they found that they had invested $150,000 in obsolete technology. They now find that they have no sales, $500 in cash, and a $2,000 payment due to their creditor on the first of next month. What are the owners' options? 7. You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinetmaker approximately 45 minutes to make one cabinet. Each cabinetmaker works an 8-hour day earning $18 per hour. Each cabinet uses $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinetmakers. You estimate that your fixed costs are $5,000 per month. a. What is your contribution margin? b. How many cabinets must you make each month to break even? c. What is your total monthly revenue if you want to earn a $2,000 profit? d. Construct a break-even chart for the custom cabinet firm