Answer:
A) Alternative A has the lowest preak-even point at 3,572 units
B) Both alternatives A and B will produce the highest profit of $180,000.
C) 10,000 units between A and B
2,500 units between A and C
4,000 units between B and C
Explanation:
The revenue functions for each of the alternatives are:
[tex]R_A = (\$50-\$22)n - \$100,000\\R_B = (\$50-\$20)n - \$120,000\\R_C = (\$50-\$30)n - \$80,000[/tex]
Where 'n' is the annual output, in units produced.
A) At the break-even point, revenue is equal to zero. The break-even outputs for each alternative are:
[tex]0 = (\$50-\$22)n_A - \$100,000\\n_A = 3,572\\0 = (\$50-\$20)n_B - \$120,000\\n_B = 4,000\\0 = (\$50-\$30)n_C - \$80,000\\n_A = 4,000\\[/tex]
Alternative A has the lowest preak-even point at 3,572 units.
B) The revenues for each alternative at n=10,000 units are:
[tex]R_A = (\$50-\$22)10,000 - \$100,000\\R_A = \$180,000R_B = (\$50-\$20)10,000 - \$120,000\\R_B= \$180,000\\R_C = (\$50-\$30)10,000 - \$80,000\\R_C = \$120,000[/tex]
Both alternatives A and B will produce the highest profit of $180,000.
C) As seen above, for n=10,000 the company would be indifferent between A and B.
Between A and C:
[tex]R_A = R_C\\ (\$50-\$22)n - \$100,000 = (\$50-\$30)n - \$80,000\\n=\frac{100,000-80,000}{28-20} \\n=2,500[/tex]
Between B and C:
[tex]R_B = R_C\\ (\$50-\$20)n - \$120,000 = (\$50-\$30)n - \$80,000\\n=\frac{120,000-80,000}{30-20} \\n=4,000[/tex]
The break-even quantity, highest profits for an annual output of 10,000 units, and volumes of output where the company would be indifferent between each pair of options can be calculated using principles of cost-analysis and revenue. These involve the calculation of break-even points, profits and equality of total costs.
Explanation:In order to calculate the break-even quantities for alternatives A, B, and C, we need to figure out the point at which the total revenue equals the total costs. This can be done using the formula for break-even point: Break-even quantity = Fixed costs / (Price - Variable costs per unit).
To find the highest profits for an annual output of 10,000 units, we need to calculate the total costs for each option and subtract these from the total revenue. This yields the profit for each option: Profit = Total revenue - Total costs.
Lastly, to determine at what volumes of output the company would be indifferent between each pair of choices, we need to set the total costs for each option equal to each other and solve for the quantity: Total costs_A = Total costs_B = Total costs_C.
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Machinery purchased for $50,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 10 years with a salvage value of $5,000 at the end of that time. Depreciation has been entered for 6 years on this basis. In 2016, it is determined that the total estimated life should be 12 years with a salvage value of $2,500 at the end of that time. Assume straight-line depreciation. Determine the depreciation expense for 2016.
Answer:
$3,417
Explanation:
Annual depreciation:
= (Cost of machinery - Salvage value) ÷ Usable life
= ($50,000 - $5,000) ÷ 10 years
= $4,500 per year
Net book value at the beginning of 2016:
= Cost of machinery - (Annual depreciation × basis years)
= $50,000 - ($4,500 × 6)
= $23,000
Depreciation expense for 2016:
= (Net book value at the beginning of 2016 - salvage value at the end of that time) ÷ 6 years
= ($23,000 - $2,500) ÷ 6
= $3,417
Stutz, Inc. designs and builds basketball gymnasiums. Each gymnasium is custom-built to individual customers’ specifications. Stutz uses job-order costing to keep track of its costs. In February it worked on three jobs. Data for these jobs are as follows: Job 175 Job 178 Job 179 Balance 2/1 $13,790 $ 0 $ 0 Direct Materials 16,200 8,500 30,500 Direct Labor Cost 23,300 7,600 45,000 Machine Hours 400 hrs. 300 hrs. 2,000 hrs. Overhead is applied to jobs at the rate of $25 per machine hour. By February 28, Job 178 is the only one unfinished. The balance of Finished Goods on February 1 is $94,000 (consisting of Job 177). Jobs 177 and 179 are sold during February. Stutz sells its product at cost plus 40%. Refer to Figure 5-6. What is sales revenue for February?
Answer:
$307,300
Explanation:
Total cost of Job 179:
= Direct material for Job 179 + Direct labor cost for Job 179 + Overhead cost for Job 179
= $30,500 + $45,000 + (2,000 × $25)
= $30,500 + $45,000 + $50,000
= $125,500
Total cost of Job 177 and Job 179:
= Total cost of Job 179 + cost of Job 177
= $125,500 + $94,000
= $219,500
Sales revenue for February:
= Total cost of Job 177 and Job 179 × Markup percentage
= $219,500 + ($219,500 × 40%)
= $219,500 + $87,800
= $307,300
The sales revenue for February is $70,400.
Explanation:To calculate the sales revenue for February, we need to determine the cost of Job 178, the unfinished job. From the given data, we know that Job 178 had direct materials cost of $8,500, direct labor cost of $7,600, and machine hours of 300. The overhead is applied at a rate of $25 per machine hour. Therefore, the overhead cost for Job 178 is $25 x 300 = $7,500.
Adding up the direct materials, direct labor, and overhead costs, the total cost of Job 178 is $8,500 + $7,600 + $7,500 = $23,600.
Since Job 178 is the only unfinished job and the finished goods balance on February 1 is $94,000, the sales revenue for February would be $94,000 - $23,600 = $70,400.
Bark Company is considering buying a machine for $240,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $6,000 each year. The cash payback period on this investment is:
a. 20 years
b. 10 years
c. 8 years
d. 4 years
Answer:
option (c) 8 years
Explanation:
Data provided in the question:
Cost of the machine = $240,000
Useful life = 10 years
Salvage value = 0
Net income = $6,000 each year
Now,
Using the straight-line method of depreciation
Annual depreciation = [ Cost - Salvage value ] ÷ Useful life
= [ $240,000 - 0 ] ÷ 10
= $24,000
Thus,
Cash flow = $6,000 + $24,000
= $30,000
Therefore,
The payback period = ( Cost ) ÷ ( Cash flow )
= $240,000 ÷ $30,000
= 8 years
Hence,
the correct answer is option (c) 8 years
Which of the following statements is true about skill-based pay?A. Skill-based pay provides a way to ensure that employees can use their new skills.B. Gathering market data about skill-based pay is easy.C. Skill-based pay ensures that the employer pays the employee for learning skills that benefit the employer.D. Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures.E. Skill-based pay does not require records related to skills, training, and knowledge acquired.
Skill-based pay provides a way to ensure that employees can use their new skills, while the other statements are false.
Explanation:The correct statement about skill-based pay is A. Skill-based pay provides a way to ensure that employees can use their new skills. Skill-based pay is a compensation system that rewards employees for acquiring and applying new skills that benefit the employer. Simply learning new skills without actually using them would not be rewarded.
The other statements are false. Gathering market data about skill-based pay can be challenging as it requires research and analysis of industry standards and trends. Skill-based pay does not necessarily provide an alternative to bureaucracy and paperwork as setting up and managing a skill-based pay system requires proper documentation and evaluation. Records related to skills, training, and knowledge acquired are essential for implementing and administering skill-based pay.
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A portfolio is invested 18 percent in Stock G, 58 percent in Stock J, and 24 percent in Stock K. The expected returns on these stocks are 7 percent, 13 percent, and 17 percent, respectively. What is the portfolio's expected return?
Answer:
The portfolio´s expected return is 12.88%
Explanation:
Hi, in order to find the expected return of this portfolio, we need to use the wheighted average formula with the information given. That is as follows.
[tex]E(r)=G(percentage)*G(return)+J(percentage)*J(return)+K(percentage)*K(return)[/tex]
It should look like this.
[tex]E(r)=0.18*0.07+0.58*0.13+0.24*0.17=0.1288[/tex]
Therefore, the expected return of this portfolio is 12.88%
Best of luck
You just won the lottery and have two choices for how you will collect your money. You can collect $100,000 today or receive $20,000 per year for the next seven years. A financial analyst has told you that you can earn 10% on your investments. Which alternative should you select?
Answer:
Please see attachment
Explanation:
Please see attachment
You are the auditor of South Face, a public company. South Face ("the Company") manufactures and distributes ski and snowboard equipment worldwide through a network of independent distributors. You are conducting the audit for the year ended December 31, 2019. The following unrelated events occur and/or come to your attention after the balance sheet date but before the date of your opinion on the financial statements (February 28, 2020):
South Face’s largest customer, Ratagonia, filed bankruptcy (due to deteriorating financial condition) in January 2020. South Face has a material accounts receivable balance due from Ratagonia as of December 31, 2019.
The Company was so caught up in its own success that it forgot to accrue for bonuses earned by senior management during 2019 but payable in February 2020. The aggregate bonus amount was $920,000.
There was an avalanche in Park City, Utah resulting in serious damage to the Company’s main manufacturing plant on February 14, 2020. Even after insurance reimbursements, the Company expects to have material losses as a result of the avalanche. (Note: you do not need to discuss the adequacy of their insurance policy).
An elderly long-time user of South Face equipment was paralyzed in a skiing accident on December 28, 2019. Her family files a lawsuit against the Company on February 21, 2020 alleging that her accident was related to an issue with her ski bindings. Ms. P Street, the Company’s attorney, believes that a significant settlement is probable but the actual amount cannot yet be estimated. The financial statements for the year ended December 31, 2019 do not include an accrual for the pending settlement.
South Face declared a cash dividend of $2.00/common share outstanding on December 27, 2019. The dividend is payable on February 3, 2020 to the common shareholders of record on the declaration date. No entries have been made in the accounting records in relation to this declaration. There were 425,210 common shares outstanding on December 27, 2019.
The price of the Company stock increased from $35 per share on December 31, 2019 to $60 per share on March 1, 2020. It’s a volatile market!
II. For each of the above six items, state the appropriate action for the situation:
A. Adjust the December 31, 2019 financial statements
B. Disclose the information in a footnote to the December 31, 2019 financial statements but
do not adjust the 2019 financial statements
C. No action is required
Answer:1. A adjust the December 31 2019 financial statement. This item was available as at year end and may affect going concern.
2. A. adjust the December 31 2019 financial statement, since the bonus was earned in 2019.
3.B. this will only be disclose as it's not related to 2019
4.B. since it's only probably and not certain
5A . since the declaration is for 2019 financial year
6 C this is just a market information.
Explanation:
issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2018. Interest is paid on June 30 and December 31. The proceeds from the bonds are $9,802,072. Using effective-interest amortization, how much interest expense will be recognized in 2018?
A. $780,000
B. $784,249
C. $784,166
D. $390,000
Answer:
B. $784,249
Explanation:
The effective interest amortization is an accounting practice used for discounting a bond. This method isused for bonds sold at a discount; the amount of the bond discount is amortised as interest expense over the bond's life
Interest expenses for 6 months from Jan 1st to Jun 30th is $392,083 = $9,802,072* 8%/2
Amortization of Discount is $2,083= $9,802,072* 8%/2 - 10,000,000*7.8%,/2
Carry Amount of Bond on June 30 $9,804,155= bond proceed of $9,802,072 + Amortization of Discount is $2,083
Interest expenses for 6 months from Jul 1st to Dec 31st is $392,166 = Carry amount of Bond $9,804,155 x effective rate 8%/2
Total interest expense will be recognized in 2018 is $784,249 = $392,083 + $392,166
The interest expense recognized in 2018 would be $784,166.
Explanation:To calculate the interest expense recognized in 2018, we need to determine the bond interest payable for the year. The bond interest payable is calculated by multiplying the carrying value of the bonds (proceeds from the bonds minus any initial discount or plus any initial premium) by the effective interest rate. In this case, the carrying value of the bonds on January 1, 2018, is $9,802,072, and the effective interest rate is 8%. Therefore, the interest expense recognized in 2018 would be $784,166 (rounded to the nearest dollar), option C.
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In previous years, Cox Transport reacquired 2 million treasury shares at $22 per share and, later, 1 million treasury shares at $28 per share. By what amount will Cox’s paid-in capital—share repurchase increase if it now sells 2 million treasury shares at $32 per share and determines cost as the weighted-average cost of treasury shares?
Answer:
24 million shares ; $16 million
Explanation:
The computation of the weightage number of treasury shares are shown below:
Number of shares Price Total
2 $22 $44 million
1 $28 $28 million
Total 3 $72 million
So, the weighted average number of shares would be
= $72 ÷ 3 = 24 million shares
Now the journal entry would be
Cash A/c Dr $64 million (2 million treasury shares × $32)
To Paid in capital - share repurchase A/c $16 million
To Treasury stock $48 million (24 million treasury shares × $2)
(Being the treasury shares are sold)
Route Canal Shipping Company has the following schedule for aging of accounts receivable:Age of Receivables April 30, 20X1 (1) (2) (3) (4) Month of Sales Age of Account Amounts Percent of Amount Due April 0–30 $ 156,240 _______ March 31–60 78,120 _______ February 61–90 117,180 _______ January 91–120 39,060 _______ Total receivables $ 390,600 100% Calculate the percentage of amount due for each month.
a. The percentage of amount due for April is approximately 34.95%, March is 20%, February is 30%, and January is 15%.
b. The average collection period is approximately 17.49 days.
**a. Calculate the percentage of amount due for each month:**
To calculate the percentage of amount due for each month, divide the amount for each month by the total receivables and multiply by 100:
[tex]\[ \text{Percent of Amount Due} = \left( \frac{\text{Amount for the Month}}{\text{Total Receivables}} \right) \times 100. \][/tex]
For each month:
- April: [tex]\(\left( \frac{159250}{455000} \right) \times 100 \approx 34.95%\)[/tex]
- March: [tex]\(\left( \frac{91000}{455000} \right) \times 100 \approx 20%\)[/tex]
- February: [tex]\(\left( \frac{136500}{455000} \right) \times 100 \approx 30%\)[/tex]
- January: [tex]\(\left( \frac{68250}{455000} \right) \times 100 \approx 15%\)[/tex]
**b. Compute the average collection period:**
The average collection period is calculated by dividing the number of days in the period by the accounts receivable turnover ratio. The turnover ratio is the ratio of credit sales to average accounts receivable. The formula is:
[tex]\[ \text{Average Collection Period} = \frac{\text{Number of Days in Period}}{\text{Accounts Receivable Turnover Ratio}}. \][/tex]
Given credit sales of $1,560,000 over four months, the average accounts receivable is [tex]\( \frac{455000}{2} = 227500 \)[/tex].
The turnover ratio is [tex]\( \frac{1560000}{227500} \approx 6.86 \)[/tex].
Assuming a 120-day period:
[tex]\[ \text{Average Collection Period} = \frac{120}{6.86} \approx 17.49 \text{ days}. \][/tex]
The question probable maybe:
Route Canal Shipping Company has the following schedule for aging of accounts recieving:
_______________________________________________________
Age of Receivables April 30, 20X1
(1) Month of Sales (2)Age of Account (3) Amounts(4)Percent of Amount Due
_________________________________________________________
April 0-30 $159250 _______
March 31-60 $91000 _________
February 61-90 $136500 ________
January 91-120 $68250 ______
Total recievables $455000 100%
__________________________________________________________
a. Calculate the percentage of amount due for each month.
Months of Sales Percent of Amount Due
_______________________________________
April _______
March _________
February ________
January ______
Total receivables 100%
________________________________________
b. If the firm had $1,560,000 in credit sales over the four-month period, compute The average collection period. Average daily sales should be based on a 120-day period.
Average collection period ____ days
Final answer:
To calculate the receipt percentages for each month, divide each month’s receivable amount by the total receivables and multiply by 100. April is 40%, March is 20%, February is 30%, and January is 10%.
Explanation:
To calculate the percentage of amount due for each month, you need to divide the individual month's receivable amount by the total receivables, and then multiply by 100 to get the percentage. Here are the calculations for the Route Canal Shipping Company's schedule:
April: ($156,240 ÷ $390,600) × 100 = 40%
March: ($78,120 ÷ $390,600) × 100 = 20%
February: ($117,180 ÷ $390,600) × 100 = 30%
January: ($39,060 ÷ $390,600) × 100 = 10%
Thus, the percentage of amount due for April is 40%, for March is 20%, for February is 30%, and for January is 10%.
Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $20.4 million in iTunes gift cards in November, and customers redeem $13.4 million of the gift cards in December. 3. What is the ending balance in the Deferred Revenue account? (Enter your answer in dollars, not in millions. (i.e. 5.5 should be entered as 5,500,000).)
The ending balance in the Deferred Revenue account for Apple Inc. would be $7,000,000 after selling $20.4 million in iTunes gift cards and having $13.4 million redeemed.
Explanation:The student asked about the ending balance in the Deferred Revenue account for Apple Inc. after it sold $20.4 million in iTunes gift cards in November and customers redeemed $13.4 million of the gift cards in December. Deferred revenue, also known as unearned revenue, represents a liability for services or goods which have been sold but not yet delivered or provided.
To calculate the ending balance in the Deferred Revenue account, you subtract the amount redeemed ($13.4 million) from the total amount sold ($20.4 million). Therefore, the ending balance is $20,400,000 (sold) - $13,400,000 (redeemed) = $7,000,000.
E-procurement:
a. works best in long-term contract situations but is not suited for auctions.
b. is purchasing facilitated through the Internet.
c. has many benefits but requires a lot of paperwork.
d. is illegal in all states except Nevada and New Jersey.
e. All of these are true of e-procurement.
Answer:
The correct answer is B.
Explanation:
E-procurement also called as the supplier exchange which involves business to consumer or the business to government or the business to business for the sale or purchase of supplies, services and work through the medium of Internet and networking system.
So, the option which is best describe the term is that it involves buying or purchasing facilitated through Internet.
(Learning Objective 2: Distinguish among operating, financing, and investing activities indirect method) Crater HVAC Systems is preparing its statement of cash flows (indirect method) for the year ended March 31, 2018. To follow, in no particular order, is a list of items that will be used in preparing the company's statement of cash flows. Identify each item as an operating activity addition to net income; an operating activity subtraction from net income; an investing activity; a financing activity; or an activity that is not used to prepare the cash flows statement. a. Increase in inventory b. Issuance of common stock c. Decrease in accrued liabilities d. Net income h. Retained earnings i. Payment of dividends j. Increase in accounts payable k. Decrease in accounts receivable L Gain on sale of a building m. Loss on sale of land n. Depreciation expense Decrease in prepaid expense f. Collection of cash from customers g. Purchase of equipment with cash
Answer:
Explanation:
Basically there are three types of activities:
1. Operating activities: It includes those transactions which affect the working capital, and it records gain or loss on sale of fixed assets
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.
So, the classification is shown below:
a. Increase in inventory - deduct from operating activity
b. Issuance of common stock - financing activity
c. Decrease in accrued liabilities - deduct from operating activity
d. Net income - Add to operating activity
e. Decrease in prepaid expense - add to operating activity
f. Collection of cash from customers - an activity that is not used to prepare the cash flows statement through indirect method
g. Purchase of equipment with cash - investing activity
h. Retained earnings - an activity that is not used to prepare the cash flows statement
i. Payment of dividends - deduct from financing activity
j. Increase in accounts payable - add to operating activity
k. Decrease in accounts receivable - add to operating activity
L Gain on sale of a building - deduct from operating activity
m. Loss on sale of land - add to operating activity
n. Depreciation expense
BSW Corporation has a bond issue outstanding with an annual coupon rate of 7 percent paid quarterly and four years remaining until maturity. The par value of the bond is $1,000. Determine the fair present value of the bond if market conditions justify a 14 percent, compounded quarterly, required rate of return. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Final answer:
The fair present value of a BSW Corporation bond with a coupon rate of 7% paid quarterly, four years to maturity, and a required market return of 14% compounded quarterly, is determined by discounting the future coupon payments and the bond's par value using the present value of an annuity formula and the present value of a lump sum formula, respectively. The coupon payments and par value are calculated separately and then summed to find the total present value of the bond.
Explanation:
To calculate the fair present value of the BSW Corporation bond with an annual coupon rate of 7 percent paid quarterly, we must consider the stream of future payments and discount them back to their present value at the market's required rate of return. Since the required rate of return is 14 percent compounded quarterly, we will use this rate for our discounting process.
To find the present value of the bond's coupon payments, we use the present value of an annuity formula: PV = C × [(1 – (1 + r)⁽⁻ⁿ⁾) / r], where PV is the present value, C is the coupon payment per period, r is the discount rate per period, and n is the total number of periods. In this case, the quarterly coupon payment (C) is $17.50 (7% of $1,000 divided by 4), the discount rate per quarter (r) is 3.5% (14% divided by 4), and 16 quarters are remaining (n) since we have four years until maturity. The present value of coupon payments can be calculated using this formula.
Additionally, we must calculate the present value of the bond's par value, which will be received at maturity. This is calculated as P = F / (1 + r)ⁿ, where P is the present value of the par value, F is the face value of the bond, and n is the total number of periods until maturity.
After finding the present values of both the annuity (coupon payments) and the lump sum (par value), we sum them up to arrive at the fair present value of the bond. Be sure to round the final answer to two decimal places.
Fair present value of the bond, with 7% quarterly coupon and 14% required rate, is approximately $702.09.
To determine the fair present value of the bond, we can use the present value formula for a bond's cash flows.
Given:
- Coupon rate: 7% (paid quarterly)
- Time to maturity: 4 years
- Par value of the bond: $1,000
- Required rate of return: 14% compounded quarterly
Step-by-Step Calculation:
1. Calculate the quarterly coupon payment:
- Coupon rate: 7% annual rate, paid quarterly
- Quarterly coupon payment = (Coupon rate / 4) [tex]\times\\[/tex] Par value
- Quarterly coupon payment = (0.07 / 4) [tex]\times\\[/tex] $1,000
- Quarterly coupon payment = $17.50
2. Determine the number of periods:
- Total periods = Number of years until maturity [tex]\times\\[/tex] Number of payments per year
- Total periods = 4 years [tex]\times\\[/tex] 4 payments per year
- Total periods = 16 quarters
3. Calculate the present value of the bond's cash flows:
- Use the present value of an annuity formula to calculate the present value of the coupon payments.
- PV of annuity = Payment [tex]\times\\[/tex] [tex][1 - (1 + r)^-n] / r[/tex]
- PV of annuity = $17.50 [tex]\times\\[/tex] [tex][1 - (1 + 0.14/4)^-16] / (0.14/4)[/tex]
- PV of annuity ≈ $17.50 [tex]\times\\[/tex] [1 - [tex](1 + 0.035)^-16[/tex]] / 0.035
- PV of annuity ≈ $17.50 [tex]\times\\[/tex] [1 - [tex](1.035)^-16[/tex]] / 0.035
- PV of annuity ≈ $17.50 [tex]\times\\[/tex] [1 - 0.6652] / 0.035
- PV of annuity ≈ $17.50 [tex]\times\\[/tex] 0.3348 / 0.035
- PV of annuity ≈ $17.50 [tex]\times\\[/tex] 9.5665
- PV of annuity ≈ $167.4575
4. Calculate the present value of the bond's par value:
- Use the present value formula for a single cash flow.
- PV of par value = Par value / [tex](1 + r)^n[/tex]
- PV of par value = $1,000 / [tex](1 + 0.14/4)^16[/tex]
- PV of par value = $1,000 / [tex](1.035)^16[/tex]
- PV of par value = $1,000 / 1.8691
- PV of par value ≈ $534.63
5. Total present value of the bond:
- Total present value = Present value of annuity + Present value of par value
- Total present value ≈ $167.4575 + $534.63
- Total present value ≈ $702.09
Answer:
The fair present value of the bond, given a 14% compounded quarterly required rate of return, is approximately $702.09.
In the money creation process, the simple money multiplier assumes that banks hold no excess reserves. What is the consequence of a bank holding excess reserves? Choose one:
A. The simple money multiplier becomes smaller as less money is loaned out.
B. The simple money multiplier becomes smaller as fewer deposits are made.
C. The simple money multiplier becomes larger as more deposits are made.
D. The simple money multiplier initially increases but then decreases as loans are paid off.
E. The simple money multiplier becomes larger as more money is loaned out.
Answer:
The correct answer is B
Explanation:
Money creation process is the procedure of a natural feature having a fractional-reserve banking which happen as banks will act as both financial intermediaries and the safe keepers of deposits for making loans.
Under this process, if banks will hold the excess reserve, then this will lead to less circulation of the money in the market, which will result into the less or smaller money multiplier.
Answer:
A. The simple money multiplier becomes smaller as less money is loaned out.
Explanation:
The multiplier becomes smaller because less money is loaned out, not because fewer deposits are made.
You work in the customer care division at Flannery Electronics. Mr. Gallegos, a longtime customer, is experiencing a problem with his home theater system and has submitted a letter requesting that Flannery Electronics either fix or replace his system at no cost. Unfortunately, Mr. Gallegos’s customer service and factory warranties expired three months ago. You must write to Mr. Gallegos and inform him that Flannery will be unable to honor his request. Should the tone for this message be formal or informal? Formal Informal
Answer:
Formal
Explanation:
The tone of the message should be forma because, first of a it was addressed to the company(Flannery Electronics) making it official.
In the capacity of a representative of Flannery Electronics the letter should be addressed formally
A formal letter is one written in a formal and specific language and follows a certain format. Letters like these are written for official purposes and are addressed to authorities, dignitaries, colleagues, seniors, etc and not to personal contacts, friends or family.
M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. One of the components has an annual demand of 250 units, and this is constant throughout the year. Carrying cost is estimated to be $0.25 per unit per year, and the ordering (setup) cost is $21 per order. To minimize cost, how many units should be ordered each time an order is placed?
Answer:
205 units
Explanation:
In this question, we have to compute the economic order quantity which is shown below:
The formula to calculate the economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
= [tex]\sqrt{\frac{2\times \text{250}\times \text{\$21}}{\text{\$0.25}}}[/tex]
= 205 units
In these units, the ordering cost and the carrying cost are equal so that no wastage of the stock is done and it tells about the minimum inventory the company has to produced.
Cedar Corporation incurs a net capital loss of $20,000 in 20X3 that cannot be deducted on its income tax return but must be carried forward to 20X4. However, Cedar will deduct the net capital loss in the computation of current earnings and profits for 20X3.
A. True
B. False
Answer:True
Explanation:
The computation of profit for accounting purposes differs from profit for tax purposes. An item may be deducted for accounting purposes but not allowed for tax purposes e.g donations and these are referred to as permanent timing differences.
Some items are referred to as temporary timing differences which means they are consider for either tax or accounting in the current year and they are not consider for tax or accounting in the current year. This is called defer tax and it can be an asset if it leads less tax in future or a liability if it leads more tax payment in future.
The above explains why the net capital loss will be deducted in the current year for accounting profit and in the future for tax profit.
a. How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 10 percent rate? Compare this to the 12 percent three-year loan.
Answer:
You didn´t post the complete information of the exercise, I searched the exercise online and tried to ask the most useful question.
Explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
MFG Company experiences the following cost behavior patterns each week: Fixed costs: supervisor’s salary $3,000; factory rent $6,500 Mixed costs: utilities $3,500 + $10.25 per unit Variable costs per unit: manufacturing labor wages $30.00; supplies used in production $13.50; packaging cost $7.25; warranty cost $4 Required: Compute total costs to be incurred for a week with 2,950 units of activity. (Do not round intermediate calculations.)
Answer:
Total cost= $204,750
Explanation:
Giving the following information:
Fixed costs: supervisor’s salary $3,000; factory rent $6,500
Mixed costs: utilities $3,500 + $10.25 per unit
Variable costs per unit:
manufacturing labor wages $30.00
supplies used in production $13.50
packaging cost $7.25
warranty cost $4
Required: Compute total costs to be incurred for a week with 2,950 units of activity.
Fixed costs= 3,000 + 6,500 + 3,500= $13,000
Variable costs= (10.25 + 30 + 13.5 + 7.25 + 4)*2,950= $191,750
Total cost= $204,750
Jason’s Petrochems is a firm that brings in chemical intermediates such as organic fertilizers and organic solvents from different countries and processes them in its labs before selling it in its domestic market. The firm also uses these chemical intermediates in the production of its various fertilizers and solvents. Jason’s Petrochems can be regarded as a(n) _________?
1. EMC contractor
2. licensee
3. franchisee
4. importer
Ecker Company reports $1,850,000 of net income and declares $259,000 of cash dividends on its preferred stock for the year. At year-end, the company had 370,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders?
Answer:
$1,591,000
Explanation:
The computation of the net income is available to common stockholders is shown below:
= Net income reported by Ecker Company - cash dividend declared on its preferred stock
= $1,850,000 - $259,000
= $1,591,000
Simply we deduct the preference dividend from the net income reported by the company so that the remaining balance is available to common stockholders
All other information which is given is not relevant. Hence, ignored it
Westford Corporation has $185 million dollars of interest-bearing debt outstanding at the end of fiscal 2014 year. In addition, the company incurred $26 million dollars of interest expense in 2014.
If the company has a marginal tax rate of 35% calculate Westford's cost of debt capital.
A) 14.1%
B) 9.1%
C) 9.8%
D) 11.1%
Answer:
B) 9.1%
Explanation:
Cost of debt is the interest rate paid by a company due to borrowing money; i.e debt from investors.
$185million in debt is the face value of debt that Westford Corporation had and the $26 million dollars of interest expense is the cost of the debt in dollars;
First, find pretax cost of debt ;
Pretax cost of debt = (Interest expense / Face value of debt )*100
= (26,000,000/ 185,000,000 )*100
=0.1405 *100
= 14.05%
Next, use pretax cost of debt to find after-tax cost of debt;
After-tax cost of debt = Pretax cost of debt (1-tax)
= 14.05% *(1-0.35)
= 9.13%
Therefore, Westford's cost of debt capital is 9.1%
decrease in demand for a product, holding other things constant, will decrease the marginal revenue product of labor. O have an undetermined effect upon the marginal revenue product of labor. increase the marginal revenue product of labor. o not change the marginal revenue product of labor.
Answer:
Decrease in demand for a product, holding other things constant, "will decrease the marginal revenue product of labor".
Explanation:
The extra revenue that a firm earns as a result of a newly hired worker is known as the marginal revenue product of labor.
A new worker is hired to increase the quantity of goods produced and consequently, increase the firm's revenue through sales of the goods.
If however, more goods are produced but the demand for the product decreases, then this will cause a decrease in the marginal revenue product of labor.
In other words, the firm won't earn extra revenue if the products are not being bought.
Final answer:
A decrease in demand for a product leads to a decrease in the marginal revenue product of labor, as each additional unit of labor contributes less to revenues when the product is less in demand.
Explanation:
When there is a decrease in demand for a product, this typically leads to a reduction in the quantity of the product being sold at any given price. Consequently, the marginal revenue product (MRP) of labor will also decrease. The MRP of labor is the additional revenue a firm earns from employing one more unit of labor, which is closely tied to the demand for the product that the labor helps to produce. If the product is less in demand, the additional output from extra labor becomes less valuable, hence the MRP of labor falls.
Factors that can influence the demand curve for labor include changes in technology, the level of education and training of workers, the number of companies in the market, and other government policies. A decrease in the number of companies producing a given product will result in a decreased demand for labor, shifting the labor demand curve to the left. This shift signifies that at each wage rate, companies desire to hire fewer workers.
n 2010, the country of Vesey exported goods worth $312 billion and services worth $198 billion. It imported goods worth $525 billion and services worth $255 billion. It sent $1.2 billion in famine relief to Africa, and received $3 billion to support its first democratic election efforts. What was the current account balance in Vesey for 2010 in US Dollars?
The current account balance of Vesey in 2010 was -$268.2 billion. This figure was obtained by summing the credits (exports and incoming transfers) and subtracting the debits (imports and outgoing transfers).
Explanation:To determine the current account balance of Vesey in 2010, we need to sum the exports of goods and services and the received government support, and subtract the imports of goods and services and the sent famine relief. In other words, the exports (+ received financial support) are credits while the imports (+ sent financial support) are debits on the current account.
Therefore, the current account balance for Vesey is $312 billion (goods exported) + $198 billion (services exported) + $3 billion (received support) - $525 billion (goods imported) - $255 billion (services imported) - $1.2 billion (sent relief) = -$268.2 billion.
This means that Vesey had a current account deficit of $268.2 billion in 2010.
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Metal Smelting, Inc., operates a plant¾a "major source"¾that emits hazardous air pollutants for which the Environmental Protection Agency has set maximum levels of emission. The plant does not use any equipment to reduce its emissions. Under the Clean Air Act, this is most likely_________.
Answer:
A violation.
Explanation:
A violation is basically breaking the law or an act of violence. In this case, Metal Smelting Inc operates a plant that exceeds the maximum level which Environment Protection Agency has set.
In the country of Wiknam, the velocity of money is constant. Real GDP grows by 3 percent per year, the money stock grows by 8 percent per year, and the nominal interest rate is 9 percent. What is
a. the growth rate of nominal GDP?
b. the inflation rate?
c. the real interest rate?
Answer:
(a) 8%
(b) 5%
(c) 4%
Explanation:
According to the classical quantity theory of money,
Money supply × Velocity = Price Level × Real GDP
Money supply denoted by M
Velocity is denoted by V
Price level is denoted by P
Real GDP is denoted by Y
Therefore,
Change in M + Change in V = Change in P + Change in Y
Since, we know that V is constant, so V = 0
∴ Change in M = Change in P + Change in Y
(a) Nominal GDP = Price × Real GDP
Change in P + Change in Y = Change in Nominal GDP = Change in M
Change in M = 8%, it is given in the question.
Therefore, Change in Nominal GDP = 8%
(b) Change in M = Change in P + Change in Y
8% = Change in P + 3%
Change in P = 8% - 3%
= 5%
We know that change in price level is the inflation rate. Hence, the inflation rate is equal to the 5%.
(c) Real interest rate is the difference between the nominal interest rate and the inflation rate.
Real interest rate = Nominal interest rate - Inflation rate
= 9% - 5%
= 4%
a. The growth rate of nominal GDP is 11%.
b. The inflation rate is 8%.
c. The real interest rate is 1%.
To analyze the economic conditions in Wiknam, we can use key concepts from the Quantity Theory of Money and the Fisher Equation.
a. Growth Rate of Nominal GDP
The Quantity Theory of Money states that [tex]\( MV = PY \)[/tex], where:
- [tex]\( M \)[/tex] is the money supply,
- [tex]\( V \)[/tex] is the velocity of money,
- [tex]\( P \)[/tex] is the price level,
- [tex]\( Y \)[/tex] is the real GDP.
Given that the velocity of money (V) is constant, the growth rate of nominal GDP (which is [tex]\( PY \))[/tex] is determined by the growth rates of the money supply (M) and real GDP (Y).
[tex]\[ \text{Growth rate of nominal GDP} = \text{Growth rate of money supply} + \text{Growth rate of real GDP} \][/tex]
[tex]\[ = 8\% + 3\% = 11\% \][/tex]
b. Inflation Rate
Inflation rate can be derived from the growth rate of nominal GDP and the growth rate of real GDP.
[tex]\[ \text{Inflation rate} = \text{Growth rate of nominal GDP} - \text{Growth rate of real GDP} \][/tex]
[tex]\[ = 11\% - 3\% = 8\% \][/tex]
c. Real Interest Rate
Using the Fisher Equation, which relates the nominal interest rate, real interest rate, and inflation rate:
[tex]\[ r = i - \pi \][/tex]
Where:
- [tex]\( r \)[/tex] is the real interest rate,
- [tex]\( i \)[/tex] is the nominal interest rate,
- [tex]\( \pi \)[/tex] is the inflation rate.
Given:
- Nominal interest rate [tex]\( i \)[/tex] = 9%
- Inflation rate [tex]\( \pi \)[/tex] = 8%
[tex]\[ r = 9\% - 8\% = 1\% \][/tex]
For product M, a firm has an annual holding cost percentage of 20%, an ordering cost of $80 per order, and annual demand of 10,000 units. If they order less than 1100 units at a time, the purchase price is $10.00. If they order 1100 or more units, then the purchase price for all units is only $8.00. How much should the firm order at one time? The correct Answer is 1,100. Please show me how to come up with this answer. Show work and give explanation.
Answer:
Comparing Total cost at EOQ = 895 and Q = 1100 . we find that the total cost is minimum at Q =1100. Therefore firm should order 1100 or more.
Explanation:
Annual Demand = 10,000 units
Ordering cost = $80
Holding Cost = 20% = 0.2
less than 1100 price $10
more than 1100 price $8
EOQ when p = $10
EOQ = sqrt((2 * 10,000 * 80) / (0.2*10)) = 894.43 = 895 units
Total Cost at EOQ
TC = (Annual demand * Unit price) +((Annual demand / Quantity) * Ordering cost) + (( Quantity / 2 ) * Holding rate * Unit Price)
TC = (10,000 * 10) + ((10,000 / 895) * 80) + ((895/2) * (0.2 * 10) = $1,01,788.85
Now for ordered quantity 1100 or more
TC at Q = 1100
TC = (10,000 * 8) + ((10,000 / 1100) * 80) + ((1100/2) * (0.2 * 8) = $81607.27
Comparing Total cost at EOQ = 895 and Q = 1100 . we find that the total cost is minimum at Q =1100. Therefore firm should order 1100 or more.
If the rental information provided by the broker or sales associate, for a fee, to a prospective tenant is not current or accurate in any material respect, the full fee shall be repaid to the prospective tenant upon demand. A demand from the prospective tenant for the return of the fee, or any part thereof, shall be made within_____ days following the day on which the real estate broker or sales associate had contracted to perform services to the prospective tenant.
Answer: The correct answer is "Thirty".
Explanation: If the rental information provided by the broker or sales associate, for a fee, to a prospective tenant is not current or accurate in any material respect, the full fee shall be repaid to the prospective tenant upon demand. A demand from the prospective tenant for the return of the fee, or any part thereof, shall be made within thirty days following the day on which the real estate broker or sales associate had contracted to perform services to the prospective tenant.
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 19 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its annual dividend in the amount of $3.30 per share. What is the current value of one share of this stock if the required rate of return is 8.80 percent?
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.