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Answer:
Total Liabilities = Total Assets – (Retained Earnings + Total Common Stock)
$169,875 – ($36,188 + $5,080) = $128,607
2. Last year the Chester Company increased their equity. In 2011 their equity was
$49,954. Last year (2012) it increased to $52,586.
Answer:
Equity = Stocks/Dividends/Profits
3. Review the Inquirer to determine Chester’s current strategy. Where will they seek a
competitive advantage? From the following list, select the top five sources of
competitive advantage that Chester would be most likely to pursue.
Select: 5
Seek high automation levels
Add additional products
Increase demand through TQM initiatives
Seek the lowest price in their target market while maintaining a competitive
contribution margin
Offer attractive credit terms
Seek excellent product designs, high awareness, and high accessibility
Accept lower plant utilization and higher capacities to insure sufficient capacity is
available to meet demand
Seek high plant utilization, even if it risks occasional small stockouts
Reduce cost of goods through TQM initiatives
Reduce labor costs through training and recruitment
4. The Andrews Company has just purchased $56,859,000 of plant and equipment that
has an estimated useful life of 15 years. Suppose at the end of 15 years this plant and
equipment can be salvaged for $5,685,900 (1/10th of its original cost). What will be
the book value of this purchase (excluding all other Plant and Equipment) after its
first year of use? Use generally accepted (FASB) accounting principles.
Select: 1
$53,068,400
$47,761,560
$53,447,460
$51,173,100
5. Rank the following companies from high to low cumulative profit, (in descending
order, 1=highest, 4=lowest).
Rank in order from 1 to 4
Andrews
Baldwin
Chester
Digby
Answer:
Chester ($10,492)
Andrews ($4,626)
Digby ($3,069)
Baldwin ($2, 896)
- 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.
Answer: Working Capital = Total Current Assets – Accounts Payable – Current Debt =
$41,391 - $7,744 - $14,018 = $19,629