Answer:
Expected value of bond = $986
Explanation:
given data
probability = 40 percent
priced = $950
probability = 60 percent
priced = $1050
Callable price bond = $1010
solution
we get here Expected value of bond in one year that is express as
Expected value of bond = (Probability × Price of bond) + (Probability × Callable price bond) ................1
put here value and we get
Expected value of bond = (0.4 × $950) + (0.60 × $1010)
solve it we get
Expected value of bond = $986
The PGA operates as two divisions: one that governs the club professionals who serve amateur players and another, known today as the PGA Tour, that governs the tour professionals, and schedules events such as the PGA Championship Tour, PGA Tour Canada, and the Web Tour.
a. true
b. false
Answer:
a. true
Explanation:
The PGA, indeed, operates in two distinct divisions: The PGA of America serving amateur players and the PGA Tour catering to tour professionals. It also schedules events like the PGA Championship Tour, PGA Tour Canada, and the Web Tour.
Explanation:The statement saying that the PGA operates as two divisions: one that governs the club professionals who serve amateur players and another, known as the PGA Tour, that governs the tour professionals, and schedules events such as the PGA Championship Tour, PGA Tour Canada, and the Web Tour is true.
The PGA, Professional Golfers' Association, is indeed a divided entity. The PGA of America is committed to promoting the game of golf at the local level and providing support to golf professionals serving amateur players. The PGA Tour, on the other hand, organizes the main professional golf tours played primarily by men in the United States and North America. Events under the PGA Tour include the PGA Championship Tour, PGA Tour Canada, and the Web Tour.
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The market for used cell phones is very popular in Barylia. However, several phones available in this market are of inferior quality and it is often impossible to differentiate between a good-quality phone and a poor-quality phone.
Refer to the scenario above. Based on the given information, we can conclude that the market for used cell phones in Barylia:
is perfectly competitive.
has asymmetric information.
has only one seller.
is monopolistically competitive.
has asymmetric information.
Both the seller’s and buyer’s opening escrow packages have some of the same documents. Which document in the opening package is a one-page form that buyers and sellers complete with their personal information so the title company can differentiate between parties with the same or similar names when searching documents recorded by name?
Answer:
Statement of information
Explanation:
The statement of information must be filled out by both the buyer and the seller. This document is used for requesting title insurance. Title insurance protects the buyer from any problems related to the title of the real estate property. The title is the evidence that the seller is the real owner of the property. Before issuing the policy, the title insurance company checks the property's title and searches for any problems or defects that might exist regarding the property.
A stabilized budget is:
A. budget that forecasts income/expense and can br projected over a short period of time (usually 5 years).
B. budget for annual depreciation and non-cash items
C. budget to plan for financing long-term outlays, such as fixed assets (i.e. facilities and equipment)
D. annual budget which includes income/expense for ongoing operations
Answer:
A. budget that forecasts income/expense and can br projected over a short period of time (usually 5 years).
Explanation:
A stabilized budget is a projection of income and expenses that is made for a period of five years and the expenses are constant during this time. According to this, the answer is that a stabilized budget is a budget that forecasts income/expense and can br projected over a short period of time (usually 5 years).
Instead of having a manager instruct new baristas, Starbucks has employees use a computer training program that tells them about the company, the role of baristas, and the steps of coffee production from the farms to the coffee pot. This is an example of a way to __ productivity.
Answer:
Increase
Explanation:
Productivity refers to the degree in which a producer or an organization is efficient in the production of goods or in the offering of it services. It involves the process of how quickly can inputs be turned into output. There are various ways of improving productivity in an organization depending on what is lacking or causing inefficiency in the production process. One of those ways is the use of computer which hasten the process more efficiently. That is what is been used in this case to increase the productivity level in the starbucks.
Answer:
Increase productivity
Explanation:
To increase productivity means to put out products more quickly or tasks are being completed at a faster rate than they used to be.
The computer training program for new baristas is a better,faster and more efficient way to increase productivity. It can instruct more people tirelessly compared to the manager. It reduces the work load of the manager and still does more work than the manager can do
After making its interest payment, Good Omens Corporation has decided to retire its $48,000 face value bonds December 31. On that day, the unamortized discount is $3,200. The company called the bonds at 101. Determine the gain or loss on the retirement on bonds.
Answer:
The loss is $3,680
Explanation:
In this question, we are asked to calculate if the gain or loss on the retirements of bonds.
We start by subtracting the sales value of bond and unamortised discount from face value of bonds
we are given the unamortised discount in the question but we do not know sales value of bonds.
We calculate that as follows;
we assume that the face value of bond is $100 per bond
The number of share issue = 48,000/100 = 480 bonds
The sales value of bond = number of shares sold * sales value per bond. = 480 * 101 = $48,480
Thus, the loss on sales of bond = 48,000-48,480 - 3,200 = -$3,680
Answer:
$3,680
Explanation:
Base on the scenario been described in the question, to determine the loss retirement bonds, we use the following method
One appraisal principle of value is based on the concept that the more a property or its components are in harmony with the surrounding properties or components, the greater the contributory value. In other words, the more the properties are alike, the more they retain value. This is known as:
a.Substitution.
b.Regression and progression.
c.Conformity.
d.Competition.
Answer:
Conformity
Explanation:
Conformity is an appraisal principle which states that the accurate value of a property tends to be created and then prolonged in a situation where the various features of the property meets up with the different demands of the market.
The basic principle of conformity describes how a particular property is suitable to be located in its surrounding. This is the main reason why different houses are built in the same pattern as the other houses situated in the area. This therefore increases the value of the property.
The principle in question is called the Principle of Conformity, which states that real estate value increases when a property's characteristics align with those of its surroundings.
Explanation:The principle of value you're referring to is known as the Principle of Conformity. This principle suggests that real estate property gains more value when its characteristics conform to or are similar to, those of the surrounding properties. In other words, it acknowledges that properties in harmony with each other have the propensity to enhance each other's value. For example, a house with a similar architectural style, size, and condition as those nearby is likely to have a higher perceived value by homebuyers.
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Jose has been offered a new job. The new job will pay more than his current job. Jose is hesitant to take the new job because it will cause his income to exceed the maximum amount in his current tax bracket. He is concerned that the increase in taxes will exceed his increased income from the new job.
a. This is not possible. Only the portion of income that exceeds Jose's current bracket will be taxed at the higher rate, not his total taxable income.
b. This is possible. Jose's entire taxable income will be taxed at the higher rate which could cause his increased taxes to exceed his increased salary.
Final answer:
Jose's concern that an increase in taxes will exceed his increased income due to moving into a higher tax bracket is unfounded, as only the income exceeding his current bracket's maximum is taxed at the higher rate, not his entire income.
Explanation:
The concern that Jose has about the increase in taxes exceeding his increased income from the new job due to moving into a higher tax bracket is based on a misunderstanding of how tax brackets work. Only the portion of income that exceeds the maximum amount of his current bracket will be taxed at the higher rate; the rest of his income will continue to be taxed at the lower rates applicable to those amounts. This design prevents situations where a raise or higher income results in a lower after-tax income, meaning it is not possible for Jose's increase in taxes to exceed his increase in income purely due to changing tax brackets.
For example, if Jose moves from a job paying just under the limit of one bracket into a job paying above that limit, only the income above the previous bracket's limit is taxed at the higher rate. The rest of his income up to that point is taxed at the same rate as before. The tax system is progressive, meaning that higher income levels are taxed at higher rates, but this applies only to the income within those higher brackets. Hence, the correct statement regarding Jose's situation is: 'This is not feasible. Only the portion of income that exceeds Jose's current bracket will be taxed at the higher rate, not his total taxable income.'
Hevron Hrist, a multinational company, finances itself each year by procuring 25 percent of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.
Answer:
B. Leverage ratios
Explanation:
Leverage ratios are ratios used in measuring the amount of debt and the capacity of an organization to meet its financial obligation. It is the proportion of debts owed by a business entity compared to its equity/capital. It is used to indicate the amount of debt a business has incured. There are many form of leverage ratios. We have the debt to equity ratio, debt to capital ratio and so on.
You interview with an athletic footwear manufacturer that has annual advertising expenditures of $32 million and total sales revenue of $100 million, and the firm selects the profit maximizing level of advertising expenditures. If the advertising elasticity of demand is 0.4, then you know that "Rule of Thumb for Advertising" implies that the demand for the firm's products is
Answer:
elastic.
Explanation:
The advertising elasticity of demand measures how sensitive a market and sales are to marketing expenses. Advertising elasticity is calculated by dividing the change in quantity demanded by the percentage change in advertising expenses. Generally products with low advertising elasticity tend to have elastic demands.
Garage Magic, Inc, contracts for the sale of a certain number of garage door openers to Home & Yard Hardware stores. Ian buys one of openers. The applicable statute of limitations prescribes a period of four years. To bring a product liability claim against Garage Magic, Ian must file a suit within four years of______________.a. Ian's discovery of an injury caused by the opener.b. Garage Magic's sale of the opener to Home & Yard.c. Garage Magic's design of the opener.d. Home & Yard's sale of the opener to Ian.
Khandi gives a presentation to advocate that her employer, Let-Us, Ltd., which offers services such as personal shopping and event planning to assist busy professionals, expand its offerings to include dog walking. Which of the following sentences is a call to action that Khandi might use at the end of her presentation? Multiple Choice Did you know that the number of households with pets is increasing? For all these reasons, I propose we hire three dog walkers and begin offering this service by year's end. Most dogs need 30 to 60 minutes of exercise a day, but the average dog gets much less than that. Studies show that most pet owners feel guilty for leaving the animals alone too long while they are at work. Many people view their pets as substitute children who have equal status to other family members.
Answer:
For all these reasons, I propose we hire three dog walkers and begin offering this service by year's end.
Explanation:
If Khandi says, for all these reasons, I propose we hire three dog walkers and begin offering this service by year's end, this is a call to action that she used at the end of her presentation as an advocacy for Let-Us Ltd to expand its services to include dog walking.
A company had the following treasury-stock related account balances: Treasury Stock - $250,000Paid-in Capital from Treasury Stock Transactions - $25,000If the company resells Treasury Stock that originally cost $60,000 for $40,000, then __________.
Answer:
the paid-in capital from treasury stock transactions would be reduced by $20000
Explanation:
Treasury stock is the stock that is bought by the stakeholders of the issuing company.The treasury stock does not receive dividends. Paid in capital are money being paid by investors in exchange for shares.
If the company resells Treasury Stock that originally cost $60,000 for $40,000.
The paid-in capital from treasury stock transactions to be reduced = $60,000 - $40,000 = $20000
Ginger's hotel ran an occupancy rate of 85% and her competitive set had 150,00room nights included within it there were available for sale during that month. That month the total sold was 115,000 rooms. What was the approximate occupancy rate index last month?
Answer:
The approximate occupancy rate index last month was 112%.
Explanation:
According to the data, we have the following:
Ginger’s occupancy = 85%
Its competitive set has 150,000 rooms. The total sold was 115,000 rooms in the month.
So, to calculate the the approximate occupancy rate index last month, we calculate first occupancy rate of the competitive set = 115,000/150,000 = 0.7667 = 76.67%
Hence competitive set occupancy = 76%
Therefore, occupancy rate INDEX = ginger’s occupancy/competitive set occupancy
= 85%/76 %
= 1.1184 =112%
The approximate occupancy rate index last month was 112%.
Marissa, a product manager, thinks her company's InstaCup coffee maker is currently in the growth stage of the product life cycle. If so, the profits for the InstaCup coffee maker ___ and the number of competitors ____.
Louis, an employee at Yoko Inc., had been notified of his termination from the company without sufficient justification. During the termination process, Louis’s manager took into consideration his dignity, concerns, and feelings. Which of the following determinants of interactional justice did Louis not receive from his manager? Social sensitivity Consideration Ethicality Explanation Empathy
Answer: Explanation
Explanation:
According to the given question, the explanation is one of the type of determinant of the interactional justice that the Louis not received from his manager as Louis is one of an employee at the Yoko Inc., and without any sufficient explanation he receive a notification for termination.
The explanation is one of the type of interactional justice determinant that emphasizing the main aspects of the given decision and justify the reasons for their specific decisions.
The interactional justice is one of the type of concept that helps in explain the positive workplace or environment and it is the main responsibility of the manager to make the effective decisions with justified explanation.
Therefore, Explanation is the correct answer.
Precision Company estimates its machine-hour requirements for the four quarters to be 35,000 hours, 20,000 hours, 15,000 hours, and 30,000 hours respectively. The variable manufacturing overhead rate is $4 per machine-hour. The fixed manufacturing overhead is $50,000 per quarter, which includes $20,000 of depreciation expense.
A. What is the budgeted variable manufacturing overhead for the year?
$200,000
$260,000
$280,000
$400,000
B. What is the predetermined overhead rate for the year?
Answer:
A. $400,000
B. $6 per machine hour
Explanation:
A. The computation of budgeted variable manufacturing overhead is shown below:-
Budgeted variable overhead cost = Four quarters × Variable manufacturing overhead rate
= (35,000 + 20,000 + 15,000 + 30,000) × $4
= 100,000 × $4
= $400,000
B. The computation of predetermined overhead rate is shown below:-
Predetermined rate = Variable manufacturing overhead rate + Fixed manufacturing overhead) ÷ Total machine hours
= $400,000 + ($50,000 × $4) ÷ 100,000
= $6 per machine hour
Zach took $400,000 out of the bank and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000. Zach's accounting profit for the year was:_______.
Assume that he can sell the rights to his business for $400,000 at any time.
a) -$494,000, $3,000
b) -$494,000, -$6,000
c) $6,000, $3,000
d) $6,000, -$6,000
Answer:
d) $6,000, -$6,000
Explanation:
Accounting profit = total revenue - explicit costs
=6000 x 2.5-9000 = $6000
Economic profit = accounting profit - interest on capital invested
=6000 - 400000 x 0.03
=$-6000
The retail marketing strategy includes all of the elements of the traditional marketing mix (product, price, place, and promotion). In delivering the best retail experience through the right place, two additional Ps come into play. What are those two additional Ps
Answer:
The two additional Ps are Presentation and Personnel
Explanation:
The marketing mix refers to the Ps of marketing, and how they can be combined and manipulation by a producer in order to ensure that he/she achieves the maximum profit possible.
The four Ps of Marketing include:
ProductPricePlacePromotionThe two additional Ps Include:
PersonnelPresentationThese Marketing mix can be combined to deliver the best retail experience.
Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin threatened to dilute the Renault ownership stake unless it contributed more money to prop up AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of ________ risk.
Answer:
political risks
Explanation:
There are many sources of risk in any type of investment. Most obviously financial risks. If the general financial situation is not adequately assessed, investment is likely to fall. For example, unfavorable depression may occur in the following months, etc. Currency risk is tied to the state's fiscal policy of using currency. Management risks (CEO changes, etc.) are risks associated with stress. In this case, risk is not related to those conceptsWe have a political nature intervention in the economics of big business. Those risks are known as political risk and can occur very often, especially when the global market is disrupted by barriers and trade barriers. Therefore, many companies are on foreign soil (or there are shares) and local political pressures affect them.An investor knows the total assets and total liabilities of a company, but they are not sure how much of the assets and liabilities are current versus long-term. Based on this, the investor could calculate
Answer:
The investor must find Current Ration and Quick Ratio.
Explanation:
The reason is that the current ratio tells that how much of the current assets are financed from the current liabilities. This gives a better understanding of the financing of the working capital through current liabilities. The quick ratio does the same but the effect of the inventory is eliminated.
By examining relationships between items in the statement of cash flows, investors and creditors can do all of the following except make predictions of the amounts, timing, and uncertainty of future cash flows. determine reasons for the difference between net income and net cash provided by operating activities. determine the entity’s ability to earn future income. determine cash investing and financing transactions made during the period.
Answer:
determine cash investing and financing transactions made during the period.
Explanation:
When you analyze the statement of cash flows, you can determine and predict how will operating cash flows be in the future. E.g. a project is generating high amounts of cash, so you can predict that it will continue to do so for some time. But what you cannot predict or even compare is related to the financial and investing transactions that the company will make in the future. E.g. by analyzing a cash flow you cannot know if the company will decide to invest in other projects or will it decide to issue more stocks.
this question has already been solved
Answer:
whats the answer hurry up
Explanation:
i dont understand what you are asking me
Olessa, single and age 60, sells her home for $540,000 after living there for 20 years. Her adjusted basis in that home was $220,000 and she has an additional $10,000 of selling expenses. What is the maximum gain that Olessa must report in connection with the sale of her principal residence?
Answer:
Net gain = $60,000
Explanation:
Given:
Sale value of house = $540,000
Adjusted value = $220,000
Selling expenses = $10,000
Computation of gross profit on the house:
Gross profit on sale = Sale value of house - Adjusted value - Selling expenses
Gross profit on sale = $540,000 - $220,000 - $10,000
Gross profit on sale = $310,000
Maximum limit on gain from sale of house = $250,000(Form number 1040, Schedule D)
Computation of net gain:
Net gain = $310,000 - $250,000
Net gain = $60,000
The Wei Corporation expects next year’s net income to be $15 million. The firm is currently financed with 40% debt. Wei has $12 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wei’s dividend payout ratio be next year?
Answer:
52%
Explanation:
Before diving into the use of residual distribution model, first, let us specify what our Total Investment required, Equity, Next year net income is:
Total Investment Required = 12,000,000
Equity = 12,000,000 × (1 - 40%) = 7,200,000
Next Year Net income = 15,000,000
Using the residual distribution model , we can specify that,
Retention Amount of Net income = Equity required = 7,200,000
and,
Dividend Distribution = Net income - Retention Amount of Net income
==> Dividend Distribution = 15,000,000 - 7,200,000
==> Dividend Distribution = 7,800,000
Therefore,
Payout ratio = Dividend Distribution ÷ Net income
==> Payout ratio = 7800000 ÷ 15000000 = 0.52
Therefore, the Payout ratio for next year will be 52%
To maintain the existing debt ratio while investing in profitable opportunities, Wei Corporation should retain $7.2 million of its net income. The remaining $7.8 million can be distributed as dividends, giving a dividend payout ratio of 52%.
Explanation:To calculate the dividend payout ratio for the Wei Corporation, we must first determine how much of the net income will be used for profitable investments while maintaining the current debt ratio.
The Wei Corporation has $12 million worth of investment opportunities and wants to maintain its structure which is 40% debt financed. This means, of the $12 million investment, 60% ($7.2 million) would come from Wei's equity. This is the portion of net income that Wei must retain.
Wei Corporation's net income for the next year is projected to be $15 million. After investing $7.2 million in profitable investments, it has $7.8 million ($15 million - $7.2 million) left. This is the amount that can be paid out as dividends to the shareholders.
So, to calculate the dividend payout ratio we divide the dividends by the net income. That gives us a dividend payout ratio of 52% ($7.8 million / $15 million).
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Susan purchases goods by telephone from parker, Susan has never met parker, Brenton goes to Susan and pretends to be Parker. Susan draws a check payable to the order of Parker and gives the check to Brenton, believing him to be Parker. Brenton forges Parkers indorsement and indorses the check to his brother, William, with the term "without resourses". William then cashes the check at a liquor store. Under the imposter rule, who is liable on the check?
A) BrentonB) the liquor storeC) SusanD) William
Answer:
C) Susan
Explanation:
The imposter rule (Section 3-405 of the UCC) states that the drawer of a check is liable for the checks that they draw. The logic behind the imposter rule is that the drawer of the check should be responsible for the checks that they draw because they supposedly know who they are drawing and giving a check to. In this case, the check was not stolen from Susan, she gave it voluntarily to Brenton. Susan was in a much better position to know that Brenton was not Parker than her bank.
Under the imposter rule, Susan option (c) is liable for the check because she was induced by Brenton (the imposter) to issue a check meant for Parker, and the liquor store cashed the check from William in good faith.
Explanation:The student has asked which party is liable for a check under the imposter rule when a fraudulent endorsement occurs.
According to the imposter rule, if an imposter induces a maker or drawer to issue an instrument to the imposter, or a person acts in concert with the imposter, by impersonating the payee, the indorsement of the payee is effective as the payee's indorsement.
In this case, Susan was induced by Brenton, the imposter, to issue a check meant for Parker. Brenton, pretending to be Parker, forges Parker's endorsement and further endorses the check to William "without recourse," which means that Brenton avoids liability for the check.
Since the liquor store cashes the check from William, they might have taken it in good faith without being aware of the forgery or Brenton's impersonation.
In this scenario, Susan is the liable party because she made out the check to the order of the imposter, believing him to be the legitimate payee. The imposter rule protects the endorsee (in this case, William) who cashes the check in good faith. Therefore, the correct answer to who is liable for the check is (C) Susan.
Jim, a 23-year-old factory worker, was seriously injured when a hammer fell on his head while he was at his work station. Jim hadn’t worn his safety helmet at the time of the accident even though the safety rules of the company necessitate the use of safety helmets at all times. Which of the following is true? Group of answer choices Jim will receive workers’ compensation even though he is responsible for the injury. Jim will not receive workers’ compensation because he is responsible for the injury. Jim can claim Social Security benefits. Jim will receive a severance payment when he returns to work after his injuries are healed.
Answer:
Jim will receive workers’ compensation even though he is responsible for the injury. Option A
Explanation:
Workers compensation generally provides coverage for an employees' injuries when they sustain an injury while at work. It provides coverage for the following:
medical care, wage loss, and payment for permanent disability.Workers compensation has nothing to do with the fact that the employee was negligent. This means that there is no differentiation in payments based on who caused the injury.
Therefore, in the scenario above, Jim will be compensated because the payment is not based on who caused his injuries.
Final answer:
Jim is likely still eligible for workers' compensation despite violating safety rules by not wearing a helmet when injured at his workplace. Social Security benefits generally do not cover short-term work injuries, and a severance payment is unrelated to injury-based compensation.
Explanation:
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment. In the scenario provided, Jim, who was injured due to not wearing a safety helmet as mandated by the company's safety rules, may still be eligible for workers' compensation. This system is designed to provide benefits to workers injured on the job regardless of fault, as an expeditious and limited form of compensation.
Although Jim is responsible for not wearing his safety helmet, which is a violation of workplace safety protocols, this typically does not bar him from receiving workers' compensation. However, Social Security benefits are a different program and are generally not available to individuals based solely on temporary work injuries. As for a severance payment, this would typically be associated with the end of employment and not necessarily related to injury-based leave.
After successfully overcoming a potential customer's objection to buying the vacuum cleaner he was selling, Terrence, a salesperson, asked the customer for an order. Terrence is in the ________ stage of the selling process.
A) follow-up
B) approach
C) preapproach
D) closing
E) prospecting
Answer:
The correct answer is letter "D": closing.
Explanation:
The selling process describes the steps salespeople go through at the moment of offering goods or services to prospective consumers. The process includes seven (7) steps: prospecting, pre-approach, approach, presentation, overcoming objections, closing, and follow-up. In the closing stage, clerks aks for the methods of payment, delivery method of the products and offer additional complementary goods or services for what is being acquired. Asking for orders is also part of this stage.
A production line is to be designed to make 500 El-More dolls per day. Each doll requires 11 activities totaling 16 minutes of work. The factory operates 1000 minutes per day. What is the required cycle time for this assembly line?
a. one-half minute.
b. one and one-half minutes.
c. two minutes.
d. 5,500 minutes.
Answer:
The required cycle time for this assembly line is 2 minutes.
Explanation: Given that
The factory operates for 1000 minutes/day
Daily operating time= factory operates 1000 minutes per day
Schedule output = 500 El
Hence, to calculate the required cycle time for the assembly line
Cycle time = daily operating time ÷ the output schedule.
1000 / 500 = 2 minutes
To determine the required cycle time, divide the total work time by the number of units. The correct option is C.
Explanation:To determine the required cycle time for an assembly line, we need to divide the total work time by the number of units to be produced. In this case, we have 500 dolls to be made in 1000 minutes.
So, the required cycle time is:
Cycle Time = Total Work Time / Number of Units
= 1000 minutes / 500 dolls
= 2 minutes per doll
Therefore, the required cycle time for this assembly line is (C) two minutes.
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The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 200 Replacement cost 170 Selling price 190 Disposal costs 10 Normal profit margin 30 Using the lower of cost or market, this item should be valued at:__________.
A. $150
B. $200
C. $170
D. $190
Answer:
Option "C" is the correct answer to the following question.
Explanation:
Given:
Per unit cost = $200
Replacement cost = $170
Selling price = $190
Disposal costs = $10
Normal profit margin = $30
Computation of item valued using lower of cost or market:
Lower of cost or market :
Lower of cost or market = Lower of [Per unit cost or Replacement cost or Market cost]
Lower of cost or market = Lower of [$200 or $170 or {$190-($30-$10)}]
Lower of cost or market = Lower of [$200 or $170 or {$190-($20)}]
Lower of cost or market = Lower of [$200 or $170 or $170]
Item valued using lower of cost or market = $170
Final answer:
Using the lower of cost or market rule, the inventory item should be valued at $170 because it is lower than the cost amount of $200. The correct option is c.
Explanation:
The question asks how to value inventory using the lower of cost or market method, which is a principle in accounting used to adjust the value of a company's inventory. In this case, the cost per unit is $200 and the replacement cost is $170. According to this principle, the lower value between the cost and the market replacement cost is the one to be used for inventory valuation. Here, the replacement cost of $170 is lower than the cost, so per the lower of cost or market rule, the inventory will be valued at $170.