CompXM Final From Capsim Simulator

/in /by

Crimp’s product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Crimp product manager do in order to improve upon the buying criteria, and thus potentially increase demand?
Select: 1
Increase MTBF by 2000
Reposition Crimp to make it even smaller and higher performing
Lower the selling price since it is the second most important buying criteria
Increase the promotion budget to gain greater awareness

Assuming no direct factory overhead costs (i.e., inventory carry costs) and $3 million dollars in combined promotion and sales budget, the Cake product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at $35.00, what would they need to limit the material and labor costs to?
Select: 1
$21.00
$22.75
$24.50
$23.00

According to information found on the production analysis page of the Inquirer, Digby sold 1126 units of Dome in the current year. Assuming that Dome maintains a constant market share, all the units of Dome are sold in the Nano market segment and the growth rate remains constant, how many years will it be before Dome will not be able to meet future demand unless the company adds production capacity? Exclude any existing inventory.
Select: 1
3 year(s)
2 year(s)
1 year(s)
4 year(s)

Which description best fits Baldwin? For clarity:

– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.

Which of these four statements best describes this competitor?
Select: 1
Baldwin is a broad differentiator
Baldwin is a niche cost leader
Baldwin is a broad cost leader
Baldwin is a niche differentiator

 
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Advanced Auditing Project

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1

 

 

 

ACC 645 Milestone Two Guidelines and Rubric

Overview: For the final project, you will work through components of a case study in which you will assume the role of a lead auditor at Willis & Adams. Your firm has been approached by EarthWear Clothiers to perform an audit. In your role as lead auditor, you will evaluate internal and external factors to determine client engagement, develop an audit plan, determine recommendations for improving internal controls, and communicate the audit opinion. For this milestone, you will develop the audit plan.

Prompt: Your organization has decided to move forward with the audit of EarthWear Clothiers. As lead auditor, you will select one of EarthWear Clothiers’ business objectives and create an audit plan of their financial statements. The business objectives are:

ď‚· Expand further into the global market by launching internet sites into South American countries

ď‚· Increase customer base by introducing a new extreme sports product line to attract younger consumers

ď‚· Reduce pricing to be more competitive in the marketplace by seeking out additional vendor relationships to lower costs of goods sold

ď‚· Implement an employee stock purchase plan to increase productivity and employee morale

ď‚· Reduce delivery and distribution time of products and services by adding additional warehouse locations

Use the information from your preliminary review and auditing standards to support your plan. Using your selected business objective, create an audit plan of the organization’s financial statements that addresses the following: business risks, management assertions, audit risk, internal controls, and the effect on audit procedures. Support your plan with the appropriate auditing standards. Also, determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination. You can obtain the ICFR and materiality guidelines on the Willis & Adams website. (Clicking the link initiates an automatic download of a ZIP file. You will need a utility to unzip the archive before you can use it as intended.)

Specifically, the following critical elements must be addressed:

II. Planning the Audit: Select one of the organization’s business objectives and create an audit plan of the organization’s financial statements. Use the

information from your preliminary review and auditing standards to support your plan. A. Using your selected business objective, create an audit plan of the organization’s financial statements that addresses the following, and support

each with the appropriate auditing standards: 1. Business risks 2. Management assertions 3. Audit risk 4. Internal controls 5. Effect on audit procedures

B. Determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination.

 

 

2

 

 

 

Rubric Guidelines for Submission: Your audit plan must be 2 to 3 pages in length (plus a cover page and references), with double spacing, 12-point Times New Roman font, and one-inch margins. You should use current APA style guidelines for your citations and reference list.

Critical Elements Proficient (100%) Needs Improvement (70%) Not Evident (0%) Value

Planning the Audit: Business Risks

Creates an audit plan of the organization’s financial statements that addresses business risks, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses business risks and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses business risks

15

Planning the Audit: Management

Assertions

Creates an audit plan of the organization’s financial statements that addresses management assertions, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses management assertions and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses management assertions

15

Planning the Audit: Audit Risk

Creates an audit plan of the organization’s financial statements that addresses audit risk, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses audit risk and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses audit risk

15

Planning the Audit: Internal Controls

Creates an audit plan of the organization’s financial statements that addresses internal controls, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses internal controls and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses internal controls

15

 

 

3

 

 

Planning the Audit: Audit Procedures

Creates an audit plan of the organization’s financial statements that addresses the effect on audit procedures, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses the effect on audit procedures and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses the effect on audit procedures

15

Planning the Audit: Materiality

Determines materiality by conducting a preliminary risk assessment and explains which factors were used in making this determination

Determines materiality by conducting a preliminary risk assessment and explains which factors were used in making this determination, but explanation is cursory or contains inaccuracies

Does not determine materiality by conducting a preliminary risk assessment

15

Articulation of Response

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

10

Total 100%

 
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Advanced Auditing Project

/in /by

1

 

 

 

ACC 645 Milestone Two Guidelines and Rubric

Overview: For the final project, you will work through components of a case study in which you will assume the role of a lead auditor at Willis & Adams. Your firm has been approached by EarthWear Clothiers to perform an audit. In your role as lead auditor, you will evaluate internal and external factors to determine client engagement, develop an audit plan, determine recommendations for improving internal controls, and communicate the audit opinion. For this milestone, you will develop the audit plan.

Prompt: Your organization has decided to move forward with the audit of EarthWear Clothiers. As lead auditor, you will select one of EarthWear Clothiers’ business objectives and create an audit plan of their financial statements. The business objectives are:

ď‚· Expand further into the global market by launching internet sites into South American countries

ď‚· Increase customer base by introducing a new extreme sports product line to attract younger consumers

ď‚· Reduce pricing to be more competitive in the marketplace by seeking out additional vendor relationships to lower costs of goods sold

ď‚· Implement an employee stock purchase plan to increase productivity and employee morale

ď‚· Reduce delivery and distribution time of products and services by adding additional warehouse locations

Use the information from your preliminary review and auditing standards to support your plan. Using your selected business objective, create an audit plan of the organization’s financial statements that addresses the following: business risks, management assertions, audit risk, internal controls, and the effect on audit procedures. Support your plan with the appropriate auditing standards. Also, determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination. You can obtain the ICFR and materiality guidelines on the Willis & Adams website. (Clicking the link initiates an automatic download of a ZIP file. You will need a utility to unzip the archive before you can use it as intended.)

Specifically, the following critical elements must be addressed:

II. Planning the Audit: Select one of the organization’s business objectives and create an audit plan of the organization’s financial statements. Use the

information from your preliminary review and auditing standards to support your plan. A. Using your selected business objective, create an audit plan of the organization’s financial statements that addresses the following, and support

each with the appropriate auditing standards: 1. Business risks 2. Management assertions 3. Audit risk 4. Internal controls 5. Effect on audit procedures

B. Determine materiality by conducting a preliminary risk assessment, and explain which factors were used in making this determination.

 

 

2

 

 

 

Rubric Guidelines for Submission: Your audit plan must be 2 to 3 pages in length (plus a cover page and references), with double spacing, 12-point Times New Roman font, and one-inch margins. You should use current APA style guidelines for your citations and reference list.

Critical Elements Proficient (100%) Needs Improvement (70%) Not Evident (0%) Value

Planning the Audit: Business Risks

Creates an audit plan of the organization’s financial statements that addresses business risks, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses business risks and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses business risks

15

Planning the Audit: Management

Assertions

Creates an audit plan of the organization’s financial statements that addresses management assertions, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses management assertions and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses management assertions

15

Planning the Audit: Audit Risk

Creates an audit plan of the organization’s financial statements that addresses audit risk, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses audit risk and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses audit risk

15

Planning the Audit: Internal Controls

Creates an audit plan of the organization’s financial statements that addresses internal controls, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses internal controls and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses internal controls

15

 

 

3

 

 

Planning the Audit: Audit Procedures

Creates an audit plan of the organization’s financial statements that addresses the effect on audit procedures, and supports it with the appropriate auditing standards

Creates an audit plan of the organization’s financial statements that addresses the effect on audit procedures and supports it with auditing standards, but the auditing standards are inappropriate or irrelevant

Does not create an audit plan of the organization’s financial statements that addresses the effect on audit procedures

15

Planning the Audit: Materiality

Determines materiality by conducting a preliminary risk assessment and explains which factors were used in making this determination

Determines materiality by conducting a preliminary risk assessment and explains which factors were used in making this determination, but explanation is cursory or contains inaccuracies

Does not determine materiality by conducting a preliminary risk assessment

15

Articulation of Response

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

10

Total 100%

 
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Finance Masters

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Constructing and Assessing Income Statements Using Percentage-of Completion
On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collection and contract costs follow ($ millions):

Year Cash Collections Cost Incurred
2012 $ 30 $ 25
2013 50 20
2014 40

 40
Total $ 120 $ 85

(a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the percentage-of-completion revenue recognition method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number.

Percentage of Completion Method
Year Costs incurredQuestion 2

 

Compute NOPAT Using Tax Rates from Tax Footnote  The income statement for The TJX Companies, Inc., follows.

THE TJX COMPANIES, INC.  Consolidated Statements of Income
Fiscal Year Ended ($ thousands) January 27, 2007
Net sales $17,404,637
Cost of sales, including buying and occupancy costs 13,213,703
Selling, general and administrative expenses 2,923,560
Provision (credit) for computer intrusion related costs 4,960
Interest expense (revenue), net 15,566

 
Income from continuing operations before provision for income taxes 1,246,848
Provision for income taxes 470,092

 
Income from continuing operations 776,756
Gain/(loss) from discontinued operations, net of income taxes (38,717)

 
Net income $ 738,039
 
U.S. federal statutory income tax rate 35.0%
Effective state income tax rate 4.0%
Impact of foreign operation -0.4%
All other -0.9%

 
Worldwide effective income tax rate 37.7%

Compute TJX’s NOPAT for 2007 using its income tax footnote disclosure. (The Federal and State tax rate for 2007 as reported by TJX’s tax footnote is: 39.0%). Round to the nearest whole number. 2007 NOPAT = $Answer

 

 

Question 3

 

Analysis and Interpretation of Profitability Balance sheets and income statements for Nordstrom, Inc. follow. Refer to these financial statements to answer the requirements.

NORDSTROM, INC. Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions) 2010 2009 2008
Sales $ 8,258 $ 8,272 $ 8,828
Credit card revenues 369

 

 301

 

 252

 
Total revenues 8,627 8,573 9,080
Cost of sales and related buying and occupancy costs (5,328) (5,417) (5,526)
Selling, general and administrative expenses      
Retail (2,109) (2,103) (2,130)
Credit (356)

 

 (274)

 

 (177)

 
Earnings before interest and income taxes 834 779 1,247
Net interest expense (138)

 

 (131)

 

 (74)

 
Earnings before income taxes 696 648 1,173
Income tax expense (255)

 

 (247)

 

 (458)

 
Net earnings $ 441 $ 401 $ 715

 

NORDSTROM, INC. Consolidated Balance Sheets
($ millions) January 30, 2010 January 31, 2009
Assets    
Current Assets    
Cash and cash equivalents $ 795 $ 72
Accounts receivable, net 2,035 1,942
Merchandise inventories 898 900
Current deferred tax assets, net 238 210
Prepaid expenses and other 88

 

 93

 
Total current assets 4,054 3,217
Land, buildings and equipment, net 2,242 2,221
Goodwill 53 53
Other assets 230

 

 170

 
Total assets $ 6,579 $ 5,661
Liabilities and Shareholders’ Equity    
Current liabilities    
Accounts payable $ 726 $ 563
Accrued salaries, wages and related benefits 336 214
Other current liabilities 596 525
Current portion of long-term debt 356

 

 299

 
Total current liabilities 2,014 1,601
Long-term debt, net 2,257 2,214
Deferred property incentives, net 469 435
Other liabilities 267 201
Shareholders’ equity    
Common stock, no par value 1,066 997
Retained earnings 525 223
Accumulated other comprehensive income (loss) (19)

 

 (10)

 
Total shareholders’ equity 1,572

 

 1,210

 
Total liabilities and shareholders’ equity $ 6,579 $ 5,661

 

(a) Compute net operating profit after tax (NOPAT) for 2010. Assume that the combined federal and statutory rate is: 37.0%. (Round your answer to the nearest whole number.)  2010 NOPAT = $Answer

(b) Compute net operating assets (NOA) for 2010 and 2009.  2010 NOA = $Answer

2009 NOA = $Answer

(c) Compute RNOA, net operating profit margin (NOPM), and net operating asset turnover (NOAT) for 2010. Do not use NOPM x NOAT to calculate RNOA. (Do not round until final answers. Round to two decimal places.) 2010 RNOA = Answer

% 2010 NOPM = Answer

%  2010 NOAT = Answer

(d) Compute net operating obligations (NNO) for 2010 and 2009.  2010 NNO = $Answer

2009 NNO = $Answer

(e) Compute return on equity (ROE) for 2010. (Round your answers to two decimal places. Do not round until your final answer.)  2010 ROE = Answer

%

(f) Infer the nonoperating return component of ROE for 2010. (Use answers from above to calculate. Round your answer to two decimal places.) 2010 nonoperating return = Answer

%

(g) Comment on the difference between ROE and RNOA. Which of the following statements best describes the inference from the difference between Nordstrom’s ROE and RNOA?

ROE>RNOA implies that Nordstrom’s equity has grown faster than its NOA. The faster increase of equity compared to NOA allows higher dividends to be paid to Nordstrom’s stockholders.

ROE>RNOA implies that Nordstrom is able to borrow money to fund operating assets that yield a return greater than its cost of debt. The excess accrues to the benefit of Nordstrom’s stockholders.

ROE>RNOA implies that Nordstrom has taken on too much financial leverage. The high financial leverage results in a higher interest rate on Nordstrom’s debt, therefore the cost of debt is greater.

ROE>RNOA implies that Nordstrom has increased its financial leverage during the period. The increase in financial leverage also increases Nordstrom’s risk, therefore increasing the expected ROE by Nordstrom’s stockholders.

 

 

 

 

Question 4

 

Interpreting Foreign Currency Translation Disclosure  Bristol-Myers Squibb (BMY) reports the following table in its 10-K report relating to the change in sales from 2007 to 2008.

  Analysis of % Change

 
  Total Change Volume Price Foreign Exchange
U.S. net sales 16% 9% 7% —
Foreign net sales 10% 4% 1% 5%
Total net sales 13% 7% 4% 2%

(a) Includes Puerto Rico. (b) Includes Russia and Turkey. (c) Includes Japan, China, Canada, Australia and Brazil, among other countries.

Hint: Do not enter any negative signs with your answers.

(a) By what percentage did U.S. net sales change during the year? How much of this change is attributable to volume versus price change? 2008 change in U.S. net sales: Answer by Answer

% Volume change: Answer by Answer

% Price change: Answer by Answer

% Exchange rate: Answer by Answer

% (b) By what percentage did foreign net sales change during the year? How much of this change is attributable to volume versus price change? 2008 change in foreign net sales: Answer by Answer

% Volume change: Answer by Answer

% Price change: Answer by Answer

% Exchange rate: Answer by Answer

% (c) Is the change in total net sales equal to the average of the changes in U.S. and foreign net sales? What does this imply?

Yes, U.S. sales increase by 16 percent, and foreign sales increase by 10 percent, for an average increase of 13%. This implies that U.S. sales are much larger than foreign sales.

Yes, U.S. sales increase by 16 percent, and foreign sales increase by 10 percent, for an average increase of 13%. This implies that U.S. sales are much smaller than foreign sales.

Yes, U.S. sales increase by 16 percent, and foreign sales increase by 10 percent, for an average increase of 13%. This implies that U.S. sales and foreign sales are fairly close in dollar terms.

No, the change in net sales is not equal to the average of the changes in U.S. and foreign net sales because foreign sales are much larger than U.S. sales.

 

 

 

 

Question 5

 

Constructing and Assessing Income Statements Using Percentage-of Completion On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collection and contract costs follow ($ millions):

Year Cash Collections Cost Incurred
2012 $ 30 $ 25
2013 50 20
2014 40

 

 40

 
Total $ 120 $ 85

(a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the percentage-of-completion revenue recognition method.  Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number.

Percentage of Completion Method
Year Costs incurred Percent of total expected costs Revenue recognized Income
2012 $Answer Answer

%

 $Answer $Answer
2013 Answer Answer

%

 Answer Answer
2014 Answer

 

 Answer

%

 Answer

 

 Answer

 
  $85   $120 $35

(b) Which of the following statements best summarizes our conclusion about the usefulness of the percentage-of-completion method for this company?

The percentage -of-completion method is not useful because it does not provide information about the total revenues over the life of the project.

The percentage-of-completion method is an acceptable method under GAAP.

The percentage-of-completion method does not provide a good estimate of the revenue and income earned in each period.

The percentage -of-completion method is not useful because it is so dependent upon the completion estimate used by the company and can be easily manipulated.

 

 

 

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Question 2

 

 

Compute NOPAT Using Tax Rates from Tax Footnote

 

 

The income statement for The TJX Companies, Inc., follows.

 

THE TJX COMPANIES, INC.

 

 

Consolidated Statements of Income

 

Fiscal Year Ended ($ thousands)

 

January 27, 2007

 

Net sales

 

$17,404,637

 

Cos

t of sales, including buying and occupancy costs

 

13,213,703

 

Selling, general and administrative expenses

 

2,923,560

 

Provision (credit) for computer intrusion related costs

 

4,960

 

Interest expense (revenue), net

 

15,566

 

 

Income from continuing operations

before provision for income taxes

 

1,246,848

 

Provision for income taxes

 

470,092

 

 

Income from continuing operations

 

776,756

 

Gain/(loss) from discontinued operations, net of income taxes

 

(38,717)

 

 

Net income

 

$ 738,039

 

 

U.S. federal statutory income t

ax rate

 

35.0%

 

Effective state income tax rate

 

4.0%

 

Impact of foreign operation

 

–

0.4%

 

All other

 

–

0.9%

 

 

Worldwide effective income tax rate

 

37.7%

 

Compute TJX’s NOPAT for 2007 using its income tax footnote disclosure. (The Federal and

State tax rate for

 

2007 as reported by TJX’s tax footnote is: 39.0%). Round to the nearest whole

number.

 

 

2007 NOPAT = $Answer

 

0

 

Check

 

 

Question 3

 

 

Analysis and Interpretation of Profitability

 

Balance sh

eets and income statements for Nordstrom, Inc. follow. Refer to these financial

statements to answer the requirements.
 
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