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let's say that you are self-employed and your business isgrowing more rapidly than expected. It has come time to hire morehelp. Would you have employees or independent contractors? Why orwhy not?

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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Please complete the problems below, and submit your answers tothe Week 7 Dropbox. See the Syllabus section “Due Dates forAssignments & Exams” for due date information. Please useproper spelling and grammar in your response.

Please choose one of the following (1, 2, or 3), and respond tothe questions.

For employees available to participate in a pensionplan

Does your employer offer a retirement plan at work? If so,answer the following.

What type of plan is it? Defined benefit or definedcontribution?*

If defined contribution, what type?

401(k)

403(b)

Employee stock ownership plan

Profit-sharing plan

Does your employer “match” your contribution? If so, what is thematch?

What are the benefits to you (the employee) of participating inthis plan?

Are there limits to how much you can contribute to the plan?

Does it have a Roth feature?

What are the benefits to your employer for offering thisplan?

If you are not contributing, why?

* If you do not know the answer to these questions, then askyour HR or payroll department for the answers. Please do notguess.

For employees without a pension plan atwork

If your employer does not offer a retirement plan at work, thenemployees have some options for accumulating retirement savings ontheir own.

Discuss the nonemployer plan retirement saving opportunitiesavailable to an employee.

Are you currently contributing to a nonemployer plan?

If yes, what type?

What is the benefit to you as an employee for saving for yourretirement?

Are there limits to how much you can contribute to the plan?

If you are not contributing, why?

For the self-employed

Are you self-employed? If yes, address the following.

What retirement savings opportunities are available to theself-employed?

Are there limits to how much you can contribute to the plan?

Do you currently contribute to a self-employed plan?

If so, what kind?

What are the tax benefits to a self-employed person for makingcontributions?

If you are not contributing, why?

For the nonworking taxpayer

If you do not have a job and you are not self-employed, thenchoose one of the following.

Please address questions 1, 2, or 3 above based on an interviewyou have conducted with your spouse, and describe a spousalIRA.

If you are unmarried, please address questions 1, 2, or 3 abovebased on an interview with one of your parents.

If neither of the above options is possible for you, pleaseinterview a friend, and address questions 1, 2, or 3 above.

"Perception"

You have been immersed in the world of managerial accounting(i.e., cost accounting) for seven (7) weeks. At this point in thecourse, what is your assessment of cost/managerial accounting froma provider perspective?

Now imagine that you are the user, not the provider. Explainwhether or not your assessments have changed, and explain why orwhy not. As a user, describe how you would use two (2) of thevariances calculated to make better management decisions.

Hampton Company: The production department has beeninvestigating possible ways to trim total production costs. Onepossibility currently being examined is to make the cans instead ofpurchasing them. The equipment needed would cost $1,000,000, with adisposal value of $200,000, and would be able to produce 27,500,000cans over the life of the machinery. The production departmentestimates that approximately 5,500,000 cans would be needed foreach of the next 5 years.

The company would hire six new employees. These six individualswould be full-time employees working 2,000 hours per year andearning $15.00 per hour. They would also receive the same benefitsas other production employees, 15% of wages in addition to $2,000of health benefits.

It is estimated that the raw materials will cost 30¢ per can andthat other variable costs would be 10¢ per can. Because there iscurrently unused space in the factory, no additional fixed costswould be incurred if this proposal is accepted.

It is expected that cans would cost 50¢ each if purchased fromthe current supplier. The company's minimum rate of return (hurdlerate) has been determined to be 11% for all new projects, and thecurrent tax rate of 35% is anticipated to remain unchanged. Thepricing for the company’s products as well as number of units soldwill not be affected by this decision. The unit-of-productiondepreciation method would be used if the new equipment ispurchased.

Required:

1. Based on the above information and using Excel, calculate thefollowing items for this proposed equipment purchase.

Annual cash flows over the expected life of the equipment

Payback period

Simple rate of return

Net present value

Internal rate of return

The check figure for the total annual after-tax cash flows is$271,150.

2. Would you recommend the acceptance of this proposal? Why orwhy not? Prepare a short, double-spaced paper in MS Wordelaborating on and supporting your answer.

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