Answer:
$8,220
Explanation:
The computation of the total annual operating cost is shown below:
= Fixed cost + variable cost
where,
Fixed cost = Annual depreciation + Annual loan interest + insurance + license and registration fees
= $3,000 + $710 + $860 + $125
= $4,695
And, the variable cost
= Gasoline expense + Parking or tolls + Oil changes or repairs
where,
Gasoline expense is
= (Annual mileage ÷ miles per gallon) × average price per gallon
= ($14,640 ÷ 24) × $3.50 per gallon
= $2,135
Parking or tolls = $660
And, the Oil changes or repairs is $730
So, the variable cost is
= $2,135 + $660 + $730
= $3,525
So, the total annual operating cost is
= $4,695 + $3,525
= $8,220
Therefore, The total annual operating cost is a mix of fixed cost and the variable cost
Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. Because current market rates for similar bonds are just under 12%, Warren can sell its bonds for $1 comma 050 each; Warren will incur flotation costs of $20 per bond. The firm is in the 22% tax bracket.A. CalCulate the bond's yield to maturity (YTM) to estimate the before-tax and after- tax cost of debt.
B. Use the approximation formula to estimate the before-tax and after-tax costs of debt.
Answer:
11.57% and 9.02%
Explanation:
For computing the before-tax and after- tax cost of debt we use the RATE formula i.e to be shown in the attachment below:
Given that,
Present value = $1,050 - $20 = $1,030
Future value or Face value = $1,000
PMT = 1,000 × 12% = $120
NPER = 15 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 11.57%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 11.57% × ( 1 - 0.22)
= 9.02%
You are considering buying common stock in Grow On, Inc. You have projected that the next dividend the company will pay will equal $3.90 and that dividends will grow at a rate of 6.0% per year thereafter. If you would want an annual return of 25.0% to invest in this stock, what is the most you should pay for the stock now?
Answer:
$20.52
Explanation:
Given that
Estimated dividends for next period = $3.90
Required rate of return = 25%
Growth rate = 6%
The computation of Price of stock is given below:-
Price of stock = Estimated dividends for next period ÷ (Required rate of return - Growth rate)
= $3.90 ÷ (0.25 - 0.06)
= $3.90 ÷ 0.19
= $20.52
Therefore for computing the price of stock we simply applied the above formula.
A bakery makes a limited number of croissants each day for sale in its coffee shop. The croissants cost $1.00 each to produce and sell for $2.00 each. Leftover croissants are sold in the bakery the following day for $0.60 each, and all of those are sold
The excess cost is:
The shortage cost is:
The optimal service level is
Answer:
$0.40 ; $1 and $71.43%
Explanation:
The computation is shown below:
Excess cost is
= Unit cost - Salvage Value
= $1 - $0.60
= $0.40
The shortage cost is
= Selling value - unit cost
= $2 - $1
= $1
And, the optimal service level is
= Shortage cost ÷ (Shortage cost + excess cost)
= $1 ÷ $1.60
= 71.43%
Basically we applied the above formulas
Consider Boeing (a producer of jet aircraft), General Mills (a producer of breakfast cereals), and Wacky Jack's (which claims to be the largest U.S. provider of singing telegrams). For which of these firms is the long run the longest period of time? For which is the long run the shortest? Explain. The long run is longest for 0 A Boeing because aircraft production is relatively expensive and shortest or acky Jack's because providing singing te egrams is relatively cheap. O B. Boeing because aircraft production is labor-intensive and shortest for Wacky Jack's because providing singing telegrams is capital-intensive. O C. Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's because providing singing telegrams requires primarily labor O D. Boeing because aircraft production is most profitable and shortest for Wacky Jack's because providing singing telegrams is least profitable. E. Boeing because it is the largest provider of aircraft and shortest for General Mills because it is a relatively small cereal producer
Answer:
Option C - The firm, in the long run, is the longest for Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's, is the correct answer choice.
Explanation:
Given that Boeing (a producer of jet aircraft), General Mills (a producer of breakfast cereals), and Wacky Jack's (which claims to be the largest U.S. provider of singing telegrams).
The firm, in the long run, is the longest for Boeing because aircraft production requires large, specialized machines and shortest for Wacky Jack's. The reason is that the provision of singing telegrams requires primarily labor.
Therefore, option C is the correct answer choice.
A corporation has issued $100 par, 6 1/2% cumulative convertible preferred stock, callable at par. The preferred is convertible into 2 shares of common stock. Currently, the preferred stock is trading at $100 while the common stock is trading at $50. If a customer buys 100 preferred shares, converts, and then sells the common stock in the market, the profit or loss is (ignoring commissions):
Answer:
$0
Explanation:
Amount paid by the customer for 100 preferred stock = 100 * $100 = $10,000
Number of preferred stock when converted to common stock = 100 * 2 = 200 shares
Revenue from selling the 200 shares = 200 * $50 = $10,000
Profit or loss to customer = Revenue from selling the 200 shares - Amount paid by the customer for 100 preferred stock = $10,000 - $10,000 = $0
Therefore, the customer made no profit nor loss.
Final answer:
There is no profit or loss when a customer buys 100 preferred shares at $100 each, converts them into 200 common shares, and sells the common stock at the market price of $50 per share, as the total amount received from selling the common stock equals the initial investment.
Explanation:
To determine the profit or loss when a customer buys 100 preferred shares, converts them, and then sells the common stock in the market, we need to follow these steps:
Firstly, the customer buys 100 preferred shares at $100 each. Since they are convertible into 2 shares of common stock per preferred share, after conversion, the customer would have 200 shares of common stock.
Next, the common stock is currently trading at $50 per share. If the customer sells all 200 shares of common stock at this market price, they would receive $10,000 (200 shares x $50/share).
The initial investment for the preferred shares was $10,000 (100 shares x $100/share). As the selling price of the common stock is also $10,000, once converted and sold, there is no profit or loss from this transaction (ignoring commissions and other possible fees).
On April 30, 2017, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2017 and 2018 will be:
Answer:
$6,666.67 and $10,000
Explanation:
The computation of the depreciation expense for the year 2017 and 2018 is shown below:
= (Original cost - residual value) ÷ (useful life)
= ($88,000 - $8,000) ÷ (8 years)
= ($80,000) ÷ (8 years)
= $10,000
Since the machinery is purchased on April 30 and we assume the books are closed on December 31 so the number of months calculated is 8 months
Therefore for the year 2017 the depreciation expense is
= $10,000 × 8 months ÷ 12 months
= $6,666.67
And, for the year 2018 the depreciation expense is same i.e $10,000
The Depreciation expense recognized on this machinery in 2017 and 2018 will be: $6,667 ;$10,000.
Tilton Products Depreciation expense
2017 Depreciation expense=[($88,000 − $8,000)/8 ]×8/12
2017 Depreciation expense=($80,000/8)×8/12
2017 Depreciation expense= $10,000×8/12
2017 Depreciation expense= $6,667
2018 Depreciation expense=[($88,000 − $8,000)/8 ]
2018 Depreciation expense=($80,000/8)
2018 Depreciation expense= $10,000
Inconclusion the depreciation expense recognized on this machinery in 2017 and 2018 will be:$6,667 ; $10,000.
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There is a 2 percent defect rate at a specific point in a production process. If an inspector is placed at this point, all the defects can be detected and eliminated. The inspector would cost $11 per hour and could inspect units in the process at the current production rate of 53 per hour. If no inspector is hired and defects are allowed to pass this point, there is a cost of $10 per defective unit to correct the defects later on. Assume that the line will operate at the same rate (i.e., the current production rate) regardless of whether the inspector is hired or not.
a. If an inspector is hired, what will be the inspection cost per unit? (Round your answer to 3 decimal places.)
b. If an inspector is not hired, what will be the defective cost per unit? (Round your answer to 3 decimal places.)
c. Should an inspector be hired based on costs alone?
Final answer:
After calculating the costs, hiring an inspector results in a slightly higher per unit cost ($0.208) compared to allowing defects and correcting them later ($0.20 per unit). Nevertheless, the benefits of ensuring quality might outweigh these costs.
Explanation:
The questions deal with analyzing the cost-effectiveness of hiring an inspector in a production process with a 2% defect rate. To answer these, we consider the given defect rate, costs associated with hiring an inspector and correcting defects, and the production rate.
a. Inspection Cost Per Unit
The inspector costs $11 per hour and inspects 53 units per hour. Therefore, the inspection cost per unit is calculated as $11 divided by 53 units, resulting in approximately $0.208 per unit (rounded to three decimal places).
b. Defective Cost Per Unit
With a 2% defect rate and a $10 cost to correct each defect later, for every 100 units produced, we expect 2 defects. So, the cost per unit due to defects is (2 units * $10) / 100 units, which equals $0.20 per unit (rounded to three decimal places).
c. Should an Inspector be Hired Based on Costs Alone?
Comparing the two costs, the inspection cost per unit ($0.208) is slightly higher than the defective cost per unit ($0.20). However, the difference is minimal, and hiring an inspector might be beneficial considering potential savings in rework time and preservation of product quality and brand reputation, which are not captured in the immediate cost comparison.
Estimate the value of a share of Intel common stock using the residual operating income (ROPI) model as of December 25, 2010; assume a discount rate (WACC) of 11%, common shares outstanding of 5,511 million, and net nonoperating obligations (NNO) of $(20,778) million (NNO is negative which means that Intel has net nonoperating investments).
Answer:
Using
F=P(1+i)^n equation
we will have
n=5 years
i=11%=0.11
P=5511 million
F=23424 million
Knowledge Check 01 During the current year, Armstrong Corporation reported net income of $18 million and EPS of $5.00 per share. The average number of common shares outstanding during the year was 3.6 million. The price of a share of its common stock was $2.50 at the beginning of the year and $5.00 at the end of the year. What is the company’s price/earnings (P/E) ratio at the end of the year?
Answer:
PE ratio is 1
Explanation:
Price earning ratio determines the ratio of price of a share by the earning per share . It measures the times value which a investor pays for each $1 earning of the shares.
To calculate the price earning ratio at the end of the year, we will use the price of the share at the end of the year.
Price Earning Ratio = Market Price / Earning Per share
Price Earning Ratio = $5 / $5
Price Earning Ratio = 1 times
Answer:
P/E = 1
Explanation:
The price earnings (P/E ) can be used to determine the value of a stock , The ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.
The price earning ratio is computed as follows:
P/E = price per share/EPS
P/E = 5/5 = 1
Kei, a senior marketing manager of a pizzeria in North Florida, is currently researching electronic collections of consumer information within the company network to arrive at crucial marketing decisions. In this instance, Kei is using ________. A. data warehouses B. descriptive research C. ethnographic research D. causal research E. internal databases
Answer: Internal databases
Explanation:
Internal databases are electronic collections of the consumers and market information which are obtained from data sources that are within the company's network.
Marketing managers access and work with the information in the database in order to identify marketing opportunities and challenges, evaluate performance and plan programs.
The U.S. government auctioning off oil leases at two sites: 1 and 2. At each site, 100,000 acres of land are to be auctioned. Cliff Ewing, Blake Barnes, and Alexis Pickens are bidding for the oil. Government rules state that no bidder can receive more than 40% of the land being auctioned. Cliff has bid $1,000/acre for site 1 land and $2,000/acre for site 2 land. Blake has bid $900/acre for site 1 land and $2,200/acre for site 2 land. Alexis has bid $1,100/acre for site 1 land and $1,900/acre for site 2 land. Formulate a balanced Consider the following network. (a) Formulate a balanced transportation model to maximize the government's revenue. (b) Find an initial solution by using northwest corner method. (c) Use the transportation simplex method to find an optimal solution using the bfs found in part (b).
The can now solve this linear programming problem using optimization software or the transportation simplex method to find the optimal allocation of acres to maximize revenue while satisfying the constraints. The initial solution can be found using the northwest corner method.
To formulate a balanced transportation model to maximize the government's revenue for the oil lease auction scenario, we need to set up a transportation problem with supply, demand, and cost coefficients.
Let's define the variables:
- Xij represents the number of acres awarded to bidder i at site j.
- i can be Cliff (C), Blake (B), or Alexis (A).
- j can be Site 1 (S1) or Site 2 (S2).
We have the following information:
1. Site 1 has 100,000 acres of land, and Site 2 has 100,000 acres of land.
2. No bidder can receive more than 40% of the land being auctioned at each site.
3. Cliff, Blake, and Alexis have their respective bids per acre for each site.
Now, let's set up the objective function to maximize revenue:
Maximize Z = 1000(CS1 + CS2) + 2000(CS2 + BS2) + 900(BS1 + AS1) + 2200(AS2) + 1100(AS1) + 1900(AS2)
Subject to the following constraints:
1. Supply constraints (total land available at each site):
- CS1 + BS1 + AS1 = 100,000 acres at Site 1
- CS2 + BS2 + AS2 = 100,000 acres at Site 2
2. Demand constraints (bidders can't receive more than 40% of each site):
- CS1 + CS2 ≤ 0.4 * 100,000 acres at Site 1
- BS1 + BS2 ≤ 0.4 * 100,000 acres at Site 1
- AS1 + AS2 ≤ 0.4 * 100,000 acres at Site 1
- CS1 + CS2 ≤ 0.4 * 100,000 acres at Site 2
- BS1 + BS2 ≤ 0.4 * 100,000 acres at Site 2
- AS1 + AS2 ≤ 0.4 * 100,000 acres at Site 2
3. Non-negativity constraints:
- Xij ≥ 0 for all Xij
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The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $5,400,000 $30,000,000 Commercial Division 6,250,000 25,000,000 Internet Division 1,800,000 12,000,000 Assume that management has established a 9% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $5,400,000 $6,250,000 $1,800,000 Minimum acceptable of income from operations Residual income $ $ $ b. Which division has the most residual income?
Answer:
a. Residual income $2,700,000 $4,000,000 $720,000
b. Commercial division
Explanation:
The computation is shown below:
As we know that
Residual income = Income from operations - Minimum income from operations
And, the same is applied below
a. Particulars Retail Commercial Internet
Income from operations $5,400,000 $6,250,000 $1,800,000
Minimum amount of income from operations
$2,700,000 $2,250,000 $1,080,000
($30,000,000 × 9%) ($25,000,000 × 9%) ($12,000,000 × 9%)
Residual income $2,700,000 $4,000,000 $720,000
b. As we can see that the commercial has highest residual income than retail and internet division
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $68,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials $ 10,400
Work in process $ 4,900
Finished goods $ 8,900
During the year, the following transactions were completed:
a. Raw materials purchased on account, $ 169,000.
b. Raw materials used in production, $147,000 (materials costing $126,000 were charged directly to jobs; the remaining materials were indirect).
c. Costs for employee services were incurred as follows:
Direct labor $ 156,000
Indirect labor $ 182,000
Sales commissions $ 25,000
Administrative salaries $ 45,000
d. Rent for the year was $18,900 ($13,900 of this amount related to factory operations, and the remainder related to selling and administrative activities).
e. Utility costs incurred in the factory, $20,000.
f. Advertising costs incurred, $15,000.
g. Depreciation recorded on equipment, $21,000.($15,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.)
h. Record the manufacturing overhead cost applied to jobs.
i. Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.
j. Sales for the year (all paid in cash) totaled $509,000. The total cost to manufacture these goods according to their job cost sheets was $218,000.
Required:
1. Prepare journal entries to record the transactions for the year.
2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts).
3A. Is Manufacturing Overhead underapplied or overapplied for the year?
3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.
Answer:
Goldnest company
A. Journal entries
1.Raw Materials Purchased.
Debit Direct Raw materials Account with $ 169,000
Credit Accounts Payable Account with $ 169,000
2.Labour Costs incurred
Debit Direct labor with $ 156,000
Debit Indirect labor with $ 182,000
Debit Sales commissions with $ 25,000
Debit Administrative salaries with $ 45,000
Credit Cash with $ 408,000
3.Rentals Costs for the year
Debit Factory Rent for the year with $13,900
Debit Office Rent for the year with $5,900
Credit Cash Account with $18,900
4. Utility costs incurred in the factory
Debit Factory Utility Account with $20,000
Credit Cash Account with $20,000
5.Advertising Expense Incurred
Debit Advertising Expense Account with $15,000
Credit Cash Account with $15,000
6. Depreciation recorded on equipment
Debit Depreciation on Factory equipment with $15,000
Debit Depreciation on Office equipment with $6,000
Credit Accumulated depreciation with $21,000
7.Sales in the Year
Debit Cash Account with $509,000
Credit Sales with $509,000
B. T Accounts are included in the attached for your understanding
C. Manufacturing overhead has been over applied by $34,300. Workings of this has been attached for your understanding
D.income statement closes with a net profit of $195,000. Refer to attached for detailed breakdown
Explanation:
The preparation of a bank reconciliation is an important cash control procedure. If a company deposits cash receipts daily and makes all cash disbursements by check, explain why the cash balance per books might not agree with the cash balance shown on the bank statement. Identify specific ex
Answer & Explanation :
Bank Reconciliation Statement is prepared to reconcile (match) the differences between bank balance as per cash book & bank balance as per pass book, at end of an accounting period.
The differences may arise because of following reasons :
Errors committed by firm or bank Cheques paid but not collected, upto the last date (added in cash book, but not in bank balance) Cheques issued but not yet presented for payment, upto last date (subtracted in cash book, but not in bank balance) Direct expenses & direct incomes settled by bank (done in bank balance, but not in cash book)BRS involves starting with balance as per any book - cash book or passbook. Then, the adjustments for mismatch are done, to arrive at correct balance as per the other book.
On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accumulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van. Complete the necessary journal entry to record the sale by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
On disposal, the carrying amount of the asset is derecognized by
Debit Other income/disposal account (p/l) $20,000
Credit Asset account $20,000
Being entries to derecognize the cost of the delivery van
Debit Accumulated depreciation account $18,000
Credit Other income/disposal account (p/l) $18,000
Being entries to derecognize the accumulated depreciation of the asset at the date of disposal,
Furthermore,
Debit Cash account $2,000
Credit Other income/disposal account (p/l) $2,000
Being entries to record cash collected on disposal of the asset
Explanation:
When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal. The proceed from the disposal of an asset may be recorded in the disposal or other income account.
On disposal, the carrying amount of the asset is derecognized by
Debit Other income/disposal account (p/l)
Credit Asset account
with the cost of the asset, then,
Debit Accumulated depreciation account
Credit Other income/disposal account (p/l)
With the accumulated depreciation of the asset at the date of disposal,
Furthermore,
Debit Cash account
Credit Other income/disposal account (p/l)
with the amount received from the disposal or sale of the asset
Final answer:
To record the sale of Patel Products, Inc.'s delivery van, a journal entry with a debit to 'Accumulated Depreciation' for $18,000 and a debit to 'Cash' for $2,000, along with a credit to 'Delivery Van' for $20,000, is required. There is no gain or loss as the sale proceeds match the book value of the van.
Explanation:
On December 29, 2019, Patel Products, Inc., completed the sale of a delivery van. The journal entry for this transaction involves several accounts. The van had an original cost of $20,000 and after updating for accumulated depreciation, it had a remaining book value of $2,000 ($20,000 cost - $18,000 accumulated depreciation). Patel Products received $2,000 in cash, which equals the remaining book value, indicating that there is no gain or loss on the sale.
The journal entry to record the sale is as follows:
Debit 'Accumulated Depreciation' for $18,000 to remove the accumulated depreciation against the asset.
Debit 'Cash' for $2,000 to record the receipt of cash from the sale.
Credit 'Delivery Van' (vehicle asset account) for $20,000 to remove the van from the company's asset records.
Since the cash received equals the remaining book value of the van, there is no additional debit for loss or credit for gain in this transaction.
You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.35 in dividends and $45 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 10% return.
Answer:
$42.13
Explanation:
HPR = [ Income + Vn - V0 ] / V0
Where
HPR = Holding Period Return = 10%
I = Income / Dividend = $1.35
Vn = Ending value of Investment = $45
V0 = Beginning Value of Investment = ?
Placing Value in the formula
10% = [ $1.34 + $45 - V0 ] / V0
0.1 V0 = $1.34 + $45 - V0
0.1V0 + V0 = $46.34
1.1V0 = $46.34
V0 = $46.34 / 1.1 = $42.13
The maximum price you would pay for a share today is $42.14 if you wanted to earn a 10% return.
Given that you want a 10% return, we need to calculate the present value of the expected future cash flows. You expect to receive $1.35 in dividends and a sale price of $45 at the end of the year.
Calculate the expected total future cash flows:Therefore, the maximum price you would be willing to pay for a share today, to achieve a 10% return, is $42.14.
The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $220,000 in the current year. It also declared and paid dividends on common stock in the amount of $1.80 per share. During the current year, Sneer had 1 million common shares authorized; 420,000 shares had been issued; and 208,000 shares were in treasury stock. The opening balance in Retained Earnings was $780,000 and Net Income for the current year was $280,000.
Required:
a. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock.
Answer:
1) Journal entry
No. Account and explanation debit credit
a Cash dividend 220000
Preferred Dividend payable 220000
(To record dividend declared)
b Preferred dividend payable 220000
Cash 220000
(To record dividend paid)
C Cash dividend (420000-208000)*1.8 381600
Common Dividend payable 381600
(To record dividend declared)
d Common Dividend payable 381600
Cash 381600
(To record dividend paid)
What type of business entity is formed when the owners desire to have thousands of owners, raise capital through the sale of stock, has liability protection for its owner, and does not make a special election?
Answer:
Corporation
Explanation:
Corporation can be defined as a large company that is owned by its shareholders. The shareholders are responsible for electing a board of directors who are in charge of the daily management of the company.
Corporation exists as a separate entity,it can be created by a single shareholder or group of shareholders that join together to achieve a common objective.
Some corporation are formed for the sole aim of making profit, while some are not after making profit.
Characteristics of competitive markets
The model of competitive markets relies on these three core assumptions:
1. There must be many buyers and sellers a few players can't dominate the market.
2. Firms must produce an identical product buyers must regard all sellers' products as equivalent.
3. Firms and resources must be fully mobile, allowing for free entry into and exit from the industry.
The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
A. yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
A.yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.
A.yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
A. yes,meets all assumptions
B.no,no free entry
C.no, not many sellers
D.No, not an identical product
Answer:
Explanation:
First scenario: The answer is No, not many sellers. The drug of the pharmaceutical company has patent right and it is the only firm selling this product. This makes the company a monopolist (single seller)
Second scenario: No, not an identical product. Cable company and phone company produce different products. Cable companies majorly deal with television access.
Third Scenario: no, not many sellers. One firm is dominating the market and customers prefers this. Its product has been differentiated and it can charge its own price.
Fourth scenario: yes,meets all assumptions. The socks are identical and consumers do not care about the seller because the same utility will be derived from the socks.
lue Box Beach Chairs has the following standards to make beach chairs: Standard Quantity Standard Price Direct materials 2.2 pounds of polywood per chair $3.50 per pound Direct labor 0.65 hours per chair $13.00 per hour The static budget was based on the production of 6,200 beach chairs. The company used 13,000 pounds of polywood in order to make 6,000 chairs in April. The company purchased 7,000 pounds of polywood at a total cost of $24,150. It also used 3,840 labor hours at a cost of $12.70 per hour. How much is the direct labor rate variance
Answer:
Direct labor rate variance= $1,152 favorable
Explanation:
Giving the following information:
Standard Direct labor rate= $13.00 per hour
It used 3,840 labor hours for $12.70 per hour.
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (13 - 12.7)*3,840= $1,152 favorable
An avant- garde clothing manufacturer runs a series of high- profile, risque ads on a billboard on Highway 101 and regularly collects protest calls from people who are offended by them. The company has no idea how many people in total see the ads, but it has been collecting statistics on the number of phone calls from irate viewers:Type Description Number of ComplaintsR Offensive racially/ ethnically 10M Demeaning to men 4W Demeaning to women 14I Ad is incomprehensible 6O Other 2a) Depict this data with a Pareto chart. Also depict the cumula-tive complaint line.b) What percent of the total complaints can be attributed to the most prevalent complaint?
Final answer:
To create a Pareto chart, arrange the complaints in descending order, calculate the cumulative total, and construct the chart with a cumulative complaint line. Approximately 38.89% of the total complaints can be attributed to ads being demeaning to women.
Explanation:
Pareto Chart Creation and Analysis
The avant-garde clothing manufacturer has collected statistics on the number of protest calls from viewers offended by their billboard ads. Here's how we can depict this data using a Pareto chart and calculate the percentage of the most prevalent complaint:
Firstly, arrange the complaints in descending order of frequency:
W (Demeaning to women) - 14 complaintsR (Offensive racially/ethnically) - 10 complaintsI (Ad is incomprehensible) - 6 complaintsM (Demeaning to men) - 4 complaintsO (Other) - 2 complaintsThen, calculate the cumulative number of complaints for each category as we move down the list.Construct the Pareto chart with the categories on the x-axis and the number of complaints on the y-axis. Bars representing the frequency of each complaint type will be shown in descending order.Add a cumulative complaint line that will show the running total of complaints.To find the percent of total complaints attributed to the most prevalent complaint (demeaning to women), use the following formula:
Percent = (Number of most prevalent complaints / Total number of complaints) x 100
In this case:
Total number of complaints = W + R + I + M + O = 14 + 10 + 6 + 4 + 2 = 36
Percent = (14 / 36) x 100 ≈ 38.89%
Therefore, approximately 38.89% of the total complaints can be attributed to ads being demeaning to women.
Exercise 169 Yates Manufacturing Company incurs the following manufacturing costs and expenses during the month of May. 1. Assembly line wages 2. Raw materials used directly in product 3. Depreciation on office equipment 4. Property taxes on factory building 5. Rent on factory building 6. Sales commissions 7. Depreciation on factory equipment 8. Factory utilities 9. Wages for factory maintenance workers 10. Advertising 11. Indirect materials used in production 12. Factory manager's salary
Answer:
1. Assembly line wages - Direct labor, manufacturing cost
2. Raw material used directly in product - Direct material, manufacturing cost
3. Depreciation on office equipment - In direct, Administrative cost
4. Property tax on factory building - Indirect, Manufacturing cost
6. Sales commission - Selling cost
7. Depreciation on factory equipment - Direct, Manufacturing cost
8. Factory utilities - Administrative cost
9. Wages for factory maintenance workers - Direct, Manufacturing cost
10. Advertising - Selling cost
11. Indirect material used in production - Indirect, Manufacturing cost
12. Factory manager's salary - Administrative cost
Explanation:
The cost which is affected by the production of units is known as variable cost. The cost which does not vary with the units produced is fixed cost.
The costs which are related to selling and storage of the finished goods is selling cost. The cost which is not affected by units produced and is related to office premises and controlling an organization is administrative cost. The cost which varies with the production of units and is incurred to convert raw material into finished goods is manufacturing cost.
Which of the following is NOT a macroeconomic statement? A. The price of cell phones decreased by 18 percent last year. B. Aggregate worker productivity decreased by three percent in 2012. C. Gross domestic product in Peru increased 4 percent from 2011 to 2012. D. The U.S. inflation rate was two percent in 2012.
Answer:
A. The price of cell phones decreased by 18 percent last year
Explanation:
Macro Economics is the study of economy at aggregate level, as a whole. It gives an overview top view of economy. So, Macro Economic statements are about the entire (whole) economy, at an aggregate level.
B] Stating about - aggregate worker productivity ; C] Stating about - Gross domestic product, being a national income estimate (depicting level of economic activity in the economy) ; D] Stating about - US inflation rate (depicting about general price level in the economy). These are all Macro Economic Statements.
However, A] The price of cell phones decreased by 18 percent last year : is just a statement of particular cell phones market. It is not about entire economy as a whole. So, it is not a macro economic statement
A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: Ch7_Q181 The cash inflow in the month of June is expected to be $282,500. $213,750. $225,000. $270,000.
Answer:
$213,250
Explanation:
The calculation of cash inflow is shown below:-
Expected cash collections
For the month of June
Months Sales Percentage Expected collections
April $282,500 5% $14,125
May $213,750 30% $64,125
June $225,000 60% $135,000
Total collection in the month of June $213,250
Here we assume Sales for April$282,500, May $213,750 and June $225,000.
Please ignore the last value as it is not relevant to the question
The January 28, 2017 (fiscal year 2016) financial statements of Caleres, Inc. reported the following information (in thousands). 2016 2015 Cost of sales $1,517,397 $1,529,527 Inventories, net 585,764 546,745 LIFO reserve 4,345 4,094 If Caleres had used the FIFO method of inventory costing, 2016 COGS would have been: A. $1,517,648 thousand B. $1,551,301 thousand C. $1,553,198 thousand D. $1,517,146 thousand E. None of the above
To convert Caleres, Inc.'s 2016 COGS from LIFO to FIFO, we add the change in the LIFO reserve ($251 thousand) to the LIFO COGS ($1,517,397 thousand). Thus, the FIFO COGS for 2016 would be (A) $1,517,648 thousand.
To determine Caleres, Inc.'s Cost of Goods Sold (COGS) under the FIFO inventory costing method for fiscal year 2016, we must consider the LIFO reserve adjustments. The LIFO reserve is an accounting measure used to adjust the value of inventory from LIFO (Last In, First Out) to FIFO (First In, First Out).
Given the data:
2016 Cost of sales (COGS) = $1,517,397 thousandLIFO reserve at the end of 2016 = $4,345 thousandLIFO reserve at the end of 2015 = $4,094 thousandThe change in LIFO reserve = 2016 LIFO reserve - 2015 LIFO reserve = $4,345 - $4,094 = $251 thousand
To convert from LIFO to FIFO, we add the change in the LIFO reserve to the LIFO cost of sales:
FIFO COGS = LIFO COGS + Change in LIFO reserve = $1,517,397 + $251 = $1,517,648 thousand
Therefore, if Caleres had used the FIFO method of inventory costing, the 2016 COGS would have been $1,517,648 thousand. The correct answer is A. $1,517,648 thousand.
On January 1, 2009, AML company issues bonds maturing in 5 years. The par value of the bonds is $10,000, the annual coupon rate is 4-percent, and the compounding period is semiannually. The market initially prices these bonds using annual market interest rate 6-percent. The market interest rate on June 30, 2010 was 5% and the market interest rate on Dec. 31, 2012 was 8%.1. Were the bonds issued at par, a discount or a premium?2. Calculate the issue price.3. Record journal entry on the date of issuance.4. Will the interest expense increase or decrease over the years?5. Calculate the interest expense on Jun 30, 2010.6. Record journal entry on the interest expense on Jun 30, 2010.
Answer:
Explanation:
Solution is attached below
The multiplier for a futures contract on a stock market index is $50. The maturity of the contract is 1 year, the current level of the index is 1,800, and the risk-free interest rate is 0.5% per month. The dividend yield on the index is 0.2% per month. Suppose that after 1 month, the stock index is at 1,820. a. Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly
Answer:Cash Flow mark to market proceeds = $754.45
Explanation:
given :
stock market index = $50
current stock index= 1800
risk free interest rate= 0.5%
dividend yield=0.2%
Contract=1 year=12 month
Solution
The Current Index value after 12 months ie for future price = Current Stock Index * (1 + Risk Free - Dividend Yield)^12
Current Index value after 12 months = 1800 * (1 + 0.50% - 0.20%)^12
Current Index value after 12 months = 1865.88
Also, Future Index value after 1 month = Future Stock Index * (1 + Risk Free - Dividend Yield)^12-1
Future Index value after 1 month= 1820 * (1 + 0.50% - 0.20%)^11
Future Index value after 1 month = 1880.97
Therefore, Cash Flow mark to market proceeds = (Future Index Future Value - Current Index Future value) * Multiplier which when variables are imputed gives us
Cash Flow mark to market proceeds = (1880.97 - 1865.88) * 50
Cash Flow mark to market proceeds = $754.45
Answer:
$754.5
Explanation:
Given that
S0 = 1800
Interest rate = 5% = 0.05
Dividend yield = 2% = 0.02
Recall that
The initial futures price is:
F0 = S0 (1 + rf - d)
Thus,
= 1800 x (1 + .005 - .002)12
= 1865.88
Again,
In one month, the futures price will be:
F0 = 1820x (1 + .005 - .002)11 = 1880.97
The increase in the futures price is 15.09, that is 1880.97 - 1865.88, so the cash flow will be:
15.0 x $ 50
= $754.5
Joe Levi bought a home in Arlington, Texas, for $147,000. He put down 25% and obtained a mortgage for 30 years at 8.00%. What is the difference in interest cost if he had obtained a mortgage rate of 6.00%
To find the difference in interest cost, calculate the total amount of interest paid for each mortgage rate and subtract the interest paid at 6.00% from the interest paid at 8.00%. The difference in interest cost is $2,355.
Explanation:To find the difference in interest cost, we need to calculate the total amount of interest paid for each mortgage rate.
For the original mortgage at 8.00%, the amount of interest paid over 30 years can be found by subtracting the down payment from the total cost of the home and then calculating the interest on the remaining balance.
This can be done using the formula:
Interest = (Total Cost - Down Payment) * (Interest Rate / 100)
For the new mortgage at 6.00%, we can use the same formula to calculate the interest paid over 30 years.
Once we have the total interest paid for each mortgage rate, we can find the difference by subtracting the interest paid at 6.00% from the interest paid at 8.00%.
Let's calculate the difference in interest cost:
Original Mortgage:
Total Cost = $147,000
Down Payment = 25% of $147,000 = $36,750
Interest Rate = 8.00%
Interest = ($147,000 - $36,750) * (8.00 / 100) = $9,420
New Mortgage:
Total Cost = $147,000
Down Payment = 25% of $147,000 = $36,750
Interest Rate = 6.00%
Interest = ($147,000 - $36,750) * (6.00 / 100) = $7,065
Now, let's find the difference in interest cost:
Difference = $9,420 - $7,065 = $2,355
Therefore, the difference in interest cost is $2,355.
In your opinion, was it "unethical" for researchers to take (and profit from) Henrietta’s cells without her permission? Why? Why not? Should the Lacks family be given financial compensation in return for use of her cells? How would this financial compensation be determined? Who would pay?
Answer: its. Really unethical
Explanation:
Its very unethical for researchers to take and make profit from Henrietta's cell without her permission.
Because this is unwilling of her....and since the researchers has taken her cell sample already, and are already making profit from it
She and her family needs to be compensated, it might as well be said as the infringement of human right. This compensation can be determined by dividing the profits made by the researchers into half and given Henrietta and her family the other half..
Most like the research company or firm will pay the compensation and also the government.
Final answer:
The case of Henrietta Lacks raises ethical concerns about informed consent and financial compensation for the use of her HeLa cells in medical research. The cells, taken without permission, led to significant medical advancements, but her family has not profited financially. Compensation, if arranged, requires complex considerations and might involve multiple responsible entities.
Explanation:
The ethical dilemma posed by the case of Henrietta Lacks centers around the informed consent in medical research and the use of her cells without permission. Henrietta's unique cells, known as HeLa cells, taken during her treatment for cervical cancer, became vital to medical research, contributing to major discoveries, including the polio vaccine and advancements in cancer, AIDS, and COVID-19 research. Despite their wide commercial use, the Lacks family was not informed or compensated, raising issues of ethical responsibility, patient rights, and potential exploitation.
By today's standards, the lack of informed consent in Lacks's case is both unethical and illegal, raising the question of whether continued usage of her cells for research is ethical, particularly when obtained under now-defunct standards. The Lacks family was awarded control over the genetic sequence's publication in 2013, but questions remain, including whether Henrietta should be acknowledged as a contributor to research and if the Lacks family should receive financial compensation for the significant revenues generated from HeLa cells.
Determining the amount of financial compensation would be complex, involving factors such as the impact of HeLa cells on various medical advancements and the revenues earned specifically from their use. The responsibility for payment might involve a combination of institutions, pharmaceutical companies, and perhaps a dedicated fund to address historical ethical breaches in medical research.
Barbara Bright is the purchasing agent for West Value Company. West Valve sells industrial values and fluid control devices. One of the most popular values is the Western, which has an annual demand of 4,000 units. The cost of each value is $90, and the inventory carrying cost is estimated to be 10% of the cost of each value. Barbara has made a study of the costs involved in placing an order for any of the values that West Valve stocks and she has concluded that the average ordering cost is $25 per order. Furthermore, it take about two weeks for an order to arrive from the supplier, and during this time the demand per week for West values is approximately 80.
a) What is the EOQ?
(b) What is the ROP?
Answer:
EOQ = 149.07 units
Re-order Point (ROP) = 160 units
Explanation:
The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.
It is computed using he formulae below
EOQ = √ (2× Co× D)/Ch
EOQ = √ (2× 25× 4000)/(10%× 90)
EOQ = 149.07 units
Re-order Point (ROP)
The level of stock at which are replenishment order will be placed
Maximum consumption × maximum lead time
= 80× 2 = 160 units