Solvethefollowingproblems.
Song Meister is a popular music store. During the current year, the company's cost of goods available for sale amounted to $330,000. The retail sales value of this merchandise amounted to $600,000. Sales for the year were $520,000.
a. Using the retail method, estimate 1. the cost of goods sold during the year and 2. the inventory at the end of the year.
b. At the year-end, Song Meister takes a physical inventory. The general manager walks through the store counting each type of product and reading its retail price into a tape recorder. From the recorded information, another employee prepares a schedule listing the entire ending inventory at retail sales prices. The schedule prepared for the current year reports ending inventory of $75,000 at retail sales prices.
1. Use the cost ratio computed in part a to reduce the inventory counted by the general manager from its retail value to an estimate of its cost.
2. Determine the estimated shrinkage losses incurred by Sing Along during the year.
3. Compute Song Meister's gross profit for the year.
c. What controls might Song Mesiter implement to reduce inventory shrinkage?
5 Consider the case of pure exchange with two consumers where the initial endowments of good x and y for person A and B are, respectively, ell = (w, 8) and el = (8, 2). Both consumers have Cobb-Douglas preferences, but with different parameters. Consumer A has utility function us (XA. YA) = XA"yAl-. Consumer B has utility function u (x5. YB) = *ByB , where a, B > 0. The price of good x is p, while the price of good y is normalized to 1 without loss of generality. a) (1/2 points) Assume w = 2. (that is, total endowment of each good is 10) and assume further a = 2/3. P = 1/3. Find and draw the contract curve for this economy in an Edgeworth box. Does it pass through the endowment point? Is it convex or concave? What is the set of points that could be the outcome under barter in this economy? b) (1/2 points) Now drop the assumption of w = 2, a = 2/3, p =1/3. For each consumer, compute the utility maximization problem. Solve for the Marshallian demand functions for x and y for each person as a function of a, B, w, and the price p. c) (1 point) Assume again w = 2, a = 2/3, and B = 1/3. Do a qualitative plot of the offer curve for consumer A. [Trick to do this is to compute the values of the Marhsallian demand function as you increase p from 0] What happens to the consumption of good x and good y as the price p increases? Plot also the offer curve of consumer B. Graphically, find the intersection, the general equilibrium point. (Use a separate diagram.) d) (1 point) Now drop the assumption of w = 2, a = 2/3, and B = 1/3 and let w, a, 1- a, B and 1-p be positive parameters. We now solve analytically for the general equilibrium. Require that the total sum of the demands for good x equals the total sum of the endowments, that is, that x4* + Xe* = w+ 8, where * denotes the Marshallian demands. Solve for the general equilibrium price p* in terms of the parameters. e) (1 point) What is the comparative statics of p* with respect to the endowment of good x, that is, with respect to w? Does this make sense? What is the comparative statics of p* with respect to the taste for good x, that is, with respect to a and B? Does this make sense? f) (1 point) Now require the same general equilibrium condition in market y. Solve for p* again, and check that this solution is the same as the one you found in the point above. In other words, you found a property that is called Walras' Law. In an economy with n markets, if n - 1 markets are in equilibrium. the nth market will be in equilibrium as wellThe president of Luna Sea Corporation is concerned that the year-end inventory of the 1. Retail inventory method company is less than it should be. A physical count was made at year-end and the costing was accurately calculated using FIFO. The president asks you to estimae the year-end At retail At cost, should be Inventory from the following Information: Sales Less: Sales returns At retail At cost Net sales Sales $200,000 Cost of goods sold Sales returns and allowances 5,000 Opening Inventory Purchases 214,500 $102,224 Purchases Purchases returns and Less: Purchases returns 1,000 526 allowances Transportation-in Transportation-in 4,000 Cost of goods available for sale Opening Inventory 40,000 21,053 Ending inventory Cost of goods sold Required: Gross profit 1 Calculate the estimated ending Inventory at cost using the retail Inventory method assuming: Mark-up rate 190% 2 Estimated inventory lost Estimated ending Inventory 2 Calculate the amount of Inventory discrepancy at cost assuming: Actual inventory on hand (given) Actual ending inventory, at cost, is $28,634 Estimated inventory lost$450.000 Sales 1.600,000 Accounts Receivable 550,090 Purchases 850,000 Inventory $50,000 Purchases Returns and Allowances 7.DOO Estimated Returns Inventory 15,000 Purchases Discounts 3,500 Office Supplies 8/000 Freight In 16,000 Prepaid Insurance 8,500 Sales Salaries Expense 210,000 Office Equipment 100,000 Advertising Expense 100,000 Socura- ReposOffice Equip. 600,000 Depreciation Expense-Store Equip. 48,000 Store Equipment 600,000 Delivery Expense 22,000 Accum. Depo- Store Equip. 280,000 Office Salaries Expense 130.000 Accounts Payable 86,000 Rent Expense 60,090 Salaries Payable 45:000 Depreciation Expense Office [quip. 40.000 Customer Refunds Payable 4,000 Insurance Expense 11,000 Notes Payable (long-term) 100,000 Office Supplies Expense 9.000 Common Stock 600,000 Miscellaneous Administrative Exp. 12,000 Retained Earrings 1,704,000 Interest Expense 15,000 Dividends 25,000 A physical inventory at the end of June was $982,000. Estimated Returns Inventory is expected to increase to $16,500. What Is Cecelit, Co.'s income from operations for the year? a.$121,500 6.$180,000 C $105,000 d.$136,600
