Stoll Co.Ac€?cs long term available-for-sale portfolio at December 31, 2012, consists of the following:

Available-for-Sale Securities

40,000 shares of Company A common Stock… Cost: $535,300 Fair Value: $490,000

7,000 shares of Company B common Stock… Cost: 159,380 Fair Value: 154,000

17,500 shares of Company C common Stock…. Cost: 662,750 Fair Value: 640,938

Stoll enters into the following long term investment transactions during year 2013

January 29 Sold 3,500 shares of Company B common stock for $79,188 less a brokerage fee of $1,500

April 17 Purchased 10,000 shares of Company W common stock for $197,500 plus a brokerage fee of $2,400. The shares represent a 30% ownership in Company W

July 6 Purchased 4,500 shares of Company X common stock for $126,562 plus a brokerage fee of $1,750. The shares represent a 10% ownership in Company X

August 22 Purchased 50,000 shares of Company Y common stock for $375,000 plus a brokerage fee of $1,200. The shares represent a 51% ownership in Company Y

Nov 13 Purchased 8,500 shares of Company Z common stock for $267,900 plus a brokerage fee of $2,450. The shares represent a 5% ownership in Company Z

Dec 9 Sold 40,000 shares of Company A common stock for $515,000 less a brokerage fee of $4,100

The fair values of its investments at December 31, 2013 B: $81,375 C: $610,312 W:$191,250 X: $118,125 Y:$531,250 Z: $278,800

Required

1.What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Stoll report on its December 31, 2013, income statement?

2.Determine the amount Stoll should report on its December 31, 2013, balance sheet for its long-term investments in available-for-sale securities.

3Prepare any necessary December 31, 2013, adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities.

4.What amount of gains or losses on transactions relating to long-term investments in available-for-sale securities should Stoll report on its December 31, 2013, income statement?

Is the contribution margin ratio of a software firm such as Microsoft likely to be higher or lower than the contribution margin ratio of an auto maker such as Ford? What does this imply about the sensitivity of profit to sales?

Eric Johnson was recently promoted to Controller of Research and Development (R&D) for PharmaCor, a Fortune 500 pharmaceutical company, which manufactures prescription drugs and nutritional supplements. The company’s total R&D cost for 2012 was expected (budgeted) to be $5 billion. During the company’s mid-year budget review, Eric realized that current R&D expenditures were already at $3.5 billion, nearly 40% above the mid-year target. At this current rate of expenditure, the R&D division was on track to exceed its total year-end budget by $2 billion!

CVP Relationships The following is taken from a recent media report about Gateway, Inc., which provides products and services in the PC industry.

“Gateway’s loss in the quarter that ended June 30 nearly tripled to $61 million on revenues of

$1 billion. . . . To break even, Gateway would need to boost unit sales a mind-numbing 43%, from 651,000 in the second quarter to 933,000 units.”

Gateway has a mere 5.6 percent of the U.S. market. The media report is projecting a 5 percent rise in unit sales next quarter.

Required

Estimate Gateway’s variable cost per unit and fixed cost per year.

Hint: First determine price from the available information and then develop two breakeven models: one for the quarter ended June 30 in which there was a loss of $61 million and another for breakeven for the third quarter in which sales are expected to be 933,000 units. Using the two models, solve for v.

Determine the required market share Gateway needs to have in order to break even next quarter.

The city of Bloomington has 17 neighborhoods. The number of high school students in each neighborhood and the time required to drive from each neighborhood to each of the city’s two high schools (North and South) are listed in the file P16_09.xlsx. The Bloomington Board of Education needs to determine how to assign students to high schools. All students in a given neighborhood must be assigned to the same high school. The Board has set (in order of priority, from highest to lowest) the following goals:

■ Goal 1: Ensure that the difference in enrollment at the two high schools differs by at most 50.

■ Goal 2: Ensure that average student travel time is at most 13 minutes.

■ Goal 3: Ensure that at most 4% of the students must travel at least 25 minutes to school.

a. Determine an optimal assignment of students to high schools.

b. If the enrollment at the two high schools can differ by at most 100 (a change in goal 1), how does your answer change?