Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Aquatic uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $ 4 per pound Direct labor: 4 hours per unit; $ 19 per hour During the first quarter, Aquatic produced 5 comma 000 units of this product. Actual direct materials and direct labor costs were $ 66 comma 000 and $ 325 comma 000, respectively. For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5 comma 000 units.
Answers
Answer:
Please see attachment
Explanation:
Please see attachment
Related Questions
Orion Flour Mills purchased a new machine and made the following expenditures: Purchase price $ 63,000 Sales tax 5,400 Shipment of machine 880 Insurance on the machine for the first year 580 Installation of machine 1,760 The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Record the above expenditures for the new machine. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answers
The appropriate journal entry to record the transaction is: Debit Equipment $7,1040; Debit Prepaid insurance $580; Credit Cash $3,220; Credit Accounts payable $68,400.
Journal entryOrion Flour Mills journal entry
Debit Equipment $7,1040
($63,000 + $5,400 + $880 + $1,760)
Debit Prepaid insurance $580
Credit Cash $3,220
($880 + $1,760 + $580)
Credit Accounts payable $68,400
($63,000 + $5,400)
Inconclusion the appropriate journal entry to record the transaction is: Debit Equipment $7,1040; Debit Prepaid insurance $580; Credit Cash $3,220; Credit Accounts payable $68,400.
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The expenditures are recorded by debiting Machinery for the combined amounts of purchase price, sales tax, shipment, insurance, and installation. The machine, including its sales tax, is posted as accounts payable and the other expenditures are paid in cash.
Explanation:The question is about tracking and recording the expenses related to the purchase of a machine by Orion Flour Mills. The relevant expenditures that need to be accounted for, include the purchase price, sales tax, shipment, insurance, and installation costs. It is important to note that the machine, including its sales tax, was purchased on account which means it's not paid for immediately.
Here's how to record the transactions:
Debit Machinery for $63,000 (purchase price) plus $5,400 (sales tax). This transaction is posted as accounts payable as it's due in 30 days. Debit Machinery for $880 (shipment costs), $580 (insurance for the first year) and $1,760 (installation), because these are capitalized as part of the equipment cost. These costs are paid in cash. Learn more about Recording Expenditures here:https://brainly.com/question/31871722
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In 2018, Cindy is married and files a joint return. She operates a sole proprietorship in which she materially participates. Her proprietorship generates a gross income of $225,000 and deductions of $525,000, resulting in a loss of $300,000. What is Cindy’s excess business loss for the year?
a. $-0-.
b. $30,000.
c. $250,000.
d. $280,000.
e. None of the abov
Answers
Answer:
E. None of the above
Explanation:
Aggregate business deductions $52
Less: Aggregate business gross income and gains (225,00 Less: Threshold amount (250,00) Excess business loss $50000
Therefore the excess business loss is $50000 which none of the above given choices. The correct answer for this problem is therefore none of the above.
Commercial bank term loans:
a)are offered to superior credit applicants.
b)usually carry fixed interest rates.
c)are very short-term in nature and are offered to superior credit applicants.
d)are very short-term in nature.
Answers
Answer:
c) are very short-term in nature and are offered to superior credit applicants.
Explanation:
Commercial bank term loans are most often used for short-term funding needs and granted to creditworthy applicants only.
The loan interest may be fixed or floating subject to applicants’ choices.
(a) Is correct but not enough compared to (c)
(b) Is not correct because it can carry floating rate also
(c) Totally correct in term of length and applicant
(d) Is correct but not enough compared to (c)
Compared with a competitive market, a cartel as a whole will produce: more output in order to increase prices. less output in order to increase prices. less output in order to decrease prices. more output in order to decrease prices.
Answers
Answer:
less output in order to increase prices.
Explanation:
A cartel is basically formed by a group of independent market people, who usually supply the same type of goods, in order to dominate the market.
They usually aim to find the point where they can maximize the profit.
For this the performers of market, in order to price it more and earn more profit, increase the price, and decrease the quantity to be produced.
This results in no choice left with the buyers or consumers other than buying at higher prices.
This then results in profit for the participants forming the cartel.
Mary Stahley invested $1500 in a 48-month certificate of deposit (CD) that earned 6.5% annual simple interest. When the CD matured, she invested the full amount in a mutual fund that had an annual growth equivalent to 21% compounded annually. How much was the mutual fund worth after 10 years? (Round your answer to the nearest cent.)
Answers
Answer:
$12714.98
Explanation:
Data provided in the question:
Initial amount invested = $1,500
Simple interest rate = 6.5%
Duration for simple interest = 48 months = 4 years
Now,
Simple interest = Amount × Interest rate × Time
= $1,500 × 0.065 × 4
= $390
Therefore,
Total amount = $1500 + $390
= $1890
Now
The amount = $1890 is invested in mutual fund which is compounded annually at 21% for 10 years
thus,
Final amount = Principle × (1 + r)ⁿ
here, r = 21% = 0.21
n = 10 years
Therefore,
Final amount = $1890 × (1 + 0.21)¹⁰
= $12714.98
The Delta Co. owns retail stores that market home building supplies. Largo, Inc. builds single family homes in residential developments. Delta has a beta of 1.22 and Largo has a beta of 1.34. The riskminus free rate of return is 4 percent and the market risk premium is 6.5 percent. What should Delta use as their cost of equity if they decide to purchase some land and create a new residential community?
Answers
Answer:
12.71%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
= 4% + 1.34 × 6.5%
= 4% + 8.71%
= 12.71%
The (Market rate of return - Risk-free rate of return) is also called market risk premium and the same is used in the computation part. We ignored the bets of Delta
Final answer:
The cost of equity for Delta Co., calculated using the Capital Asset Pricing Model (CAPM), should be 11.93% for their new residential community project.
Explanation:
The student is asking about the cost of equity for Delta Co. in case it decides to venture into a new residential community project. To calculate the cost of equity, the Capital Asset Pricing Model (CAPM) is used, which is represented by the formula: Cost of Equity = Risk-Free Rate + (Beta x Market Risk Premium). Given Delta's beta is 1.22, the risk-free rate is 4 percent, and the market risk premium is 6.5 percent, Delta's cost of equity would be calculated as follows:
Cost of Equity = 4% + (1.22 x 6.5%)
Cost of Equity = 4% + 7.93%
Cost of Equity = 11.93%
Therefore, Delta should use 11.93% as their cost of equity for the new residential community project.
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $380,000 and results in 68,000 units of MSB and 98,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $10. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)
Answers
Final answer:
The joint cost allocated to Commercial Building Lumber (CBL) using a physical-units basis is $224,200, which is calculated by finding the proportion of total units that are CBL and then applying that percentage to the total joint costs.
Explanation:
To allocate the joint costs to Commercial Building Lumber (CBL) using the physical-units basis, you first need to find the total number of units produced and then determine what percentage of these units are CBL.
Total units = MSB units + CBL units
= 68,000 MSB + 98,000 CBL
= 166,000 units
The relative proportion of CBL is:
Percentage of CBL = (CBL Units / Total Units) * 100
= (98,000 / 166,000) * 100
= 59%
The amount of joint cost allocated to CBL is then calculated by multiplying the total joint cost by the relative proportion of CBL:
Joint Cost Allocated to CBL = Total Joint Cost * (Percentage of CBL / 100)
= $380,000 * (59% / 100)
= $380,000 * 0.59
= $224,200 (rounded to the nearest dollar)
Instant messaging (IM) enables users to communicate in real time via the Internet.Complete the following sentence about instant messaging.Instant messaging is designed for messages.IM is increasingly used by businesses. Identify the reasons workers find IM useful. Check all that apply.a. Controlb. Conveniencec. Litigationd. Unobtrusivenesse. Presence functionalityf. Speed
Answers
Answer: Instant messaging is designed for messages online real time.
Explanation:
Which the message are received instantly when sent.
B. a Control, b. Convenience c. Litigation f. Speed
The user has control of it, it's convenient for use, can be used as evidence in litigation, however it's obtrusive it could be disturbing to the receiver and it's presence functionality cannot be determined until it's sent and received.
Instant messaging (IM) is increasingly used in business due to its convenience (b), unobtrusiveness (d), presence functionality (e), and speed (f). It enables easy, fast, and effective communication with less disruption.
Explanation:
Several factors contribute to the popularity of instant messaging (IM) in business environments. Among them are convenience, unobtrusiveness, presence functionality, and speed.
IM is convenient as it allows users to communicate quickly and effectively without the need to leave their workstations. In addition, IM is unobtrusive, since it allows users to receive and respond to messages at their own pace, causing less disruption compared to phone calls or face-to-face meetings.
Presence functionality is another significant advantage of IM. This feature shows whether a user is online and available to communicate, which can greatly aid in coordinating tasks and avoiding communication delays. Finally, speed is a critical factor. IM provides real-time communication, enabling instant sharing of information and quick problem-solving.
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Mary, Inc. uses straight-line depreciation for all of its depreciable assets. Mary sold a used piece of machinery on December 31, 2015, that it purchased on January 1, 2014, for $15,000.
The asset had a five-year life, zero residual value, and $3,000 accumulated depreciation as of December 31, 2014.
If the sales price of the used machine was $9,500, the resulting gain or loss upon the sale was which of the following amounts?
A. Loss of $500
B. Gain of $500
C. Loss of $3,000
D. Gain of $3,000
E. No gain or loss upon the sale
Answers
Mary, Inc. had a gain of $500 on the sale of the machinery, calculated by subtracting the book value just before the sale from the sales price. The correct option is B. Gain of $500.
Mary, Inc. purchased machinery for $15,000 on January 1, 2014, with a five-year life and zero residual value. As of December 31, 2014, it had $3,000 accumulated depreciation. To calculate the annual depreciation, we use the formula: (Cost - Residual Value) / Useful Life. In this case, it's ($15,000 - $0) / 5 = $3,000 per year.
By the end of 2015, two years of depreciation have accumulated, which is 2 * $3,000 = $6,000. The book value of the machinery just before the sale is then $15,000 - $6,000 = $9,000. Mary, Inc. sold the machinery for $9,500, resulting in a gain of $9,500 - $9,000 = $500. The correct option is B. Gain of $500.
Suppose you invested $93 in the Ishares High Yield Fund (HYG) a month ago. It paid a
dividend of $0.53 today and then you sold it for $94. What was your dividend yield and capital
gains yield on the investment?
A) 0.54%, 1.13%
B) 0.57%, 1.08%
C) 0.57%, 1.13%
D) 1.08%, 1.18%
Answers
Answer:
B) 0.57%, 1.08%
Explanation:
The computations are shown below:
Dividend yield = (Annual yield) ÷ (market price) × 100
where,
Market price = $94 per share
Annual dividend = $0.53 per share
So, the dividend yield = ($0.53 per share ÷ $94 per share) × 100
= 0.57%
Capital gain yield = (Market price - purchase price) ÷ (purchase price) × 100
= ($94 - $93) ÷ ($93) × 100
= 1.08%
An oligopoly arises when _ have all or most of the sales in an industry. If oligopolists with the same marginal costs and no fixed costs compete against each other in price, it leads to all firms _.
a) A few large firms; making a loss
b) Many small firms; making large profits
c) A few large firms; making zero profit
d) Many small firms; making zero profits
Answers
Answer:
The correct answer is letter "D": Many small firms; making zero profits.
Explanation:
An oligopoly is when the market is controlled by a small group of two or more firms. Businesses in an oligopoly can agree in price collusion and create barriers to entry for new commerce. When they compete against each other they act like perfect competitors which generate a price dropdown and causing zero profits for the firms.
Which of the following statements is true of the promotional mix?
a. The promotional mix of a company is the same for all its products.
b. It is designed to meet the needs of the target market and fulfill an organization's goals.
c. All elements of the promotional mix entail direct, two-way communication.
d. All elements of the promotional mix have the same effect on the target audience.
Answers
Answer:B. It's designed to meet the needs of the the target market and fulfill an organization goals.
Explanation:
Promotional mix involves direct and indirect efforts of selling a company products. It evolves round advertising, sales promotion,direct marketing, personal selling and public relations.
The promotional mix varies from products to products, they do not all involves a direct two way communication e.g advertising is a one way communication and they have different effects on the target audience.
A cap-and-trade program 31 1 Multiple Choice eBook 0 assigns a property right to the atmosphere 0 mandates that every firm individually cut its emissions to below a certain level. 0 assigns a property right to polluting the atmosphere. 0 is easy to establish and enforce.
Answers
Answer:
Option 3. Assigns a property right to pollute the atmosphere
Explanation:
It makes a cap on the pollution and the permits are transferable so that it assign how much to pollutes means assigning property rights to the firms to pollute.
Everyone is not required to reduce pollution if the firm can buy permits to pollute.
A county accounts for its debt service payments in the Debt Service Fund. The amount of unmatured, unpaid interest on general long-term liabilities at the beginning of the year was $122,000. The ending balance was $165,000. The Debt Service Fund made principal payments of $600,000 and interest payments of $150,000 during the year. The Debt Service Fund should report expenditures for debt service for the year of
A. $150,000.
B. $722,000
C. $750,000
D.$793,000.
Answers
Answer:
D.$793,000.
Explanation:
Please see attachment
Dmitri manages a grocery store in a country experiencing a high rate of inflation. To keep up with inflation, he spends a lot of time every day updating the prices, printing new price tags, and sending out newspaper inserts advertising the new prices. His employees regularly deal with customer annoyance over the frequent price changes. This is an example of the __________? of inflation.
a. menu costs
b. shoe-leather costs
c. unit-of-account costs
Answers
Answer:
Option (a) is correct.
Explanation:
Menu costs of inflation.
Menu costs refers to the cost that is incurred by the company or firms to change the price lists, price tags on the products or uses the medium of newspaper for updating prices. For instance, we are taking an example of clothes shop. If the owner the shop wants to change the prices of the product then he have to change the price tags of the clothes, change the prices on the price list and if he is selling his product online then the cost incurred for changing prices.
So, the menu cost further increases the price of the product which results in inflation.
Widget Corp. wants to shift its list of inventory to a cloud so that its different branches can access it easily. The company needs a cloud computing option that would provide high flexibility to add or drop resources. The cloud computing option should be cost-effective and should not expose mission-critical applications and data to the outside world. Which cloud computing option would be most suitable for Widget Corp.?
a. A hybrid cloud
b. A private cloud
c. A public cloud
d. A community cloud
Answers
Answer:
A hybrid cloud
Explanation:
Answer:
The correct answer is letter "A": hybrid cloud.
Explanation:
Hybrid clouds are mixtures of public and private clouds that offer great flexibility to companies in terms of cost and data storage. Hybrid clouds require the construction of a public and private cloud and an appropriate wide area network or WAN connectivity between the two of them.
Baker is single and earned $226,400 of salary as an employee in 2019. How much should his employer have withheld from his paycheck for FICA taxes?
Answers
Answer:
$ 11,481
Explanation:
he following information is available for Evans Corporation: 2018 2017 Average common stockholders’ equity $1,500,000 $1,000,000 Average total stockholders’ equity 2,000,000 1,500,000 Common dividends declared and paid 72,000 50,000 Preferred dividends declared and paid 30,000 30,000 Net income 360,000 300,000 Compute the return on common stockholders’ equity for both years.
Answers
Answer:
Please see attachment
Explanation:
Please see attachment .
When Nintendo sets a relatively low price on game units to stimulate more demand for its game cartridges, it is using
A) complementary product pricing.
B) product-bundle pricing.
C) price lining.
D) bait pricing.
E) cost-plus pricing.
Answers
Answer:
Letter A is correct. Complementary product pricing.
Explanation:
Organizations use the strategy of adopting a complementary product pricing to increase the total profit of a product group.
This strategy is used when the company sells products that are complementary, ie the use of one is complemented by the use of the other, so the company substantially decreases the price of a product, usually just to cover costs, and guarantees gains from a product with a high price and very high profit margin.
The benefits added to the complementary price of a product are market gain, competitors' entry barriers and retention and attraction of new consumers.
Which of the following is not a strength of sensitivity analysis?
(A) Provides indication of stand-alone risk.
(B) None of these answers.
(C) Idenifies dangerous variables.
(D) Does not reflect diversificiation.
(E) Gives some breakeven information.
Answers
Along a short-run aggregate supply curve, output is related to unexpected movements in the ______. Along a Phillips curve, unemployment is related to unexpected movements in the ______. price level; inflation rate inflation rate; price level unemployment rate; price level price level; level of output
Answers
Answer:
The answer is price level and inflation rate
Explanation:
Because the short run Phillips curve represents a combination of unemployment and inflation that an economy might experience given current expectations about inflation. It is an inverse relationship between inflation and unemployment.
Metlock, Inc. has 5900 shares of 6%, $50 par value, cumulative preferred stock and 118000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $11500 dividend in 2019. In 2020, $57500 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?
Answers
Answer:
$23900
Explanation:
Given: Cumulative Preferred stock is 5900 shares of 6% at $50.
Dividend paid in 2019= $11500
First lets calculate the value of preferred stock.
Preferred stock= [tex]5900 shares\times \$ 50\times \frac{6}{100}[/tex]
∴ Preferred stock= $17700.
Formula:
Dividend received by preferred stockholder= [tex][Preferred\ stock +(Preferred\ stock-Dividend\ paid)][/tex]
⇒Dividend received by preferred stockholder=[tex]17700+(17700-11500)[/tex]
⇒ Dividend received by preferred stockholder= [tex]17700+6200= \$ 23900[/tex]
∴ $23900 dividend received by preferred stockholder in 2020.
5. Percentage of Sales Models. Percentage of sales models usually assume that costs, fixed assets, and working capital all increase at the same rate as sales. When do you think these assumptions do not make sense? Would you feel happier using a percentage of sales model for short-term or long-term planning?
Answers
Answer:
Consider the following analisis.
Explanation:
Short-term planning considers specific and detailed cash needs for short-period only. It cannot get accurate cash needs from the percentage sales model. Therefore, the percentages sales model is not appropiate for short-term planning.
Long term planning can have a bigger picture of the company's details and needs. Therefore, the percentage sales model is appropiate for long term planning.
The percentage of Sales Models' assumptions may not hold for long-term planning due to cost and sales variability, making short-term planning more suitable.
The time horizon is a crucial aspect that affects these relationships. For example, certain costs may be fixed in the short term but variable in the long term. When dealing with the Heckscher-Ohlin Model, assumptions of fixed versus variable proportions similarly affect the applicability of models based on time frame and economic dynamics.
For short-term planning, using a percentage of sales model could be more suitable because many costs are indeed fixed or predictable shortly.
Sunny Day Manufacturing Company is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have to issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $595,000. The rate of return that Sunny Day expects to earn on its project (net of its flotation costs) is _______(rounded to two decimal places).
Answers
Answer:
22.81%
Explanation:
Data provided in the question:
Initial investment = $475,000
Flotation cost = 2.00%
Cash inflow = $595,000
Now,
Amount of Flotation cost = Flotation cost × Initial investment
= 0.02 × $475,000
= $9,500
Thus,
Rate of return = [ Cash inflow ÷ (Initial investment + Flotation cost) ] - 1
or
Rate of return = [ $595,000 ÷ ($475,000 + $9,500) ] - 1
or
Rate of return = 0.2281 or 22.81%
Sunny Day Manufacturing Company will incur a flotation cost of $9,500 when issuing new common stock for its one-year project investment of $475,000. After taking into account the expected cash inflow of $595,000 at the end of the year, the company expects to earn a rate of return of approximately 22.79% on its project, net of its flotation costs.
Explanation:To calculate the rate of return that Sunny Day Manufacturing Company expects to earn on its project, we must first understand that this value shows how much profit the company is expecting based on its investment. Given the initial investment of $475,000 and the cash inflow expected at the year-end of $595,000, we can see an apparent profit. However, we must account for the flotation cost of 2%, which is the cost incurred when issuing new common stock. This cost is $9,500 ($475,000 ×2%). Therefore, the net investment is $484,500 ($475,000 + $9,500).
Now, we can calculate the rate of return, which is the net gain or loss made on an investment per unit of invested capital. Here it is the ratio of profit to net investment: ($595,000 - $484,500) / $484,500. Consequently, the required rate of return, rounded to two decimal places, is approximately 22.79%.
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Which of the following taxes are paid by the employee and the employer?a. FUTAb. SUTAc. FICAd. Federal withholding taxes
Answers
Answer:
The correct answer is letter "C": FICA.
Explanation:
FICA (Federal Insurance Contributions Act) tax is a mandatory deduction taken from employees' payment to cover elder American's Social Security and Medicare. It is a 12,4% deduction financed by two parts: half of that amount is taken from the worker's paycheck and the other half is paid by the employer.
When it is easy for competitors to enter the market, ________ will increase. In the _______ run, as more competitors enter the market, it ________ be possible for existing companies to earn economic profit. This means that the price charged must be equal to _______.
Answers
Answer:
Supply
Long
Will not
Marginal Cost
Explanation:
In a market where there are low barriers to entry, in the long run firms would enter into an industry where existing firms earn an economic profit. This would lead to an increase in supply.
When firms enter into the industry, the economic profit earned by existing firms would fall to zero and firms would set price at price equal to marginal cost
Tsypkin Company's budgeted sales quantity was 80,000 units of product. The company's accountant, using regression analysis, applied the following cost formula to estimate costs at the master budget level for this year: Total cost = $500,000 + ($5.20 × units produced and sold). The product had a budgeted selling price of $15.20 each. During the year, the actual sales were 82,000 units and selling price was $15.15 per unit. The actual variable costs were $418,200 and the fixed costs were $500,000. What was Tsypkin's sales price variance? a. $4,100 favorable b. $6,300 favorable c. $4,100 unfavorable d. None of these.
Answers
Answer:
c. $4,100 unfavorable
Explanation:
The computation of the sales price variance is shown below:
= (Budgeted selling price - actual selling price) × actual quantity
= ($15.20 - $15.15) × 82,000 units
= 4,100 unfavorable
We simply apply the sales price variance formula so the correct amount can come
All other information which is given is not relevant. Hence, ignored it
=
Tang Company accumulates the following data concerning raw materials in making its finished product: (1) Price per pound of raw materials—net purchase price $3.04, freight-in $0.49, and receiving and handling $0.23. (2) Quantity per gallon of finished product—required materials 3.50 pounds, allowance for waste and spoilage 0.80 pounds. Compute the following. (Round answers to 2 decimal places, e.g. 1.25.) (a) Standard direct materials price per pound of raw materials. $ (b) Standard direct materials quantity per gallon. pounds (c) Total standard materials cost per gallon. $ Click if you would like to Show Work for this question: Open Show Work
Answers
Answer:
a) price per pound: 3.76 dollars
b) 4.30 pounds
c) standard cost: std raw material quantity * std price
4.30 * $3.76 = $16.168
Explanation:
Raw material cost: we must include all the necessary cost to get theraw material ready for use:
3.04 raw materials +0.49 fregiht +0.23 handling= 3.76 total cost
Pounds per gallon of finished product: we must inclde the allowance because, iof we input less gallon we aren't ending with a gallon of finished product.
3.50 + 0.80 allowance = 4.30 pounds
Answer:
a. 3.76
b.4.30
c.16.168
Explanation:
a. 3.04 raw materials +0.49 freight +0.23 handling= 3.76 total cost
b. 3.50 + 0.80 allowance = 4.30 pounds
c. 4.30 * $3.76 = $16.168
As the price level rises, the cost of borrowing money will , causing the quantity of output demanded to . This phenomenon is known as the effect. Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore , and the number of foreign products purchased by domestic consumers and fir
Answers
Answer:
Increase; decrease; interest rate effect; increase; decline; rise.
Explanation:
As the price level increases, the purchasing power of money declines. People will need more money to make transactions. As a result, the demand for money increases.
This increase in demand for money will cause the interest rate to increase. This implies that the cost of borrowing is rising. They will cause a decrease in investment and thus output level.
This phenomenon of fall in output level because of the rise in the cost of borrowing as a result of inflation is called the interest-rate effect.
The higher interest rate will attract capital from abroad. This inflow of capital will cause the demand for the domestic currency to increase. As a result, the value of the domestic currency in the foreign exchange market will increase.
This appreciation in the value of the domestic currency will make exports expensive and imports cheaper. This will cause the export demand to fall and imports to increase. Consequently, net exports will decrease.
The campus bookstore sells 4,000 sets of graduation regalia each year. Placing an order from their supplier costs $25 regardless of order quantity, so they usually place a large order (a half year's supply) at a time. It costs $5 per year to hold a cap and gown in inventory, primarily insurance costs for the highly flammable material. What is the difference in the total cost if they order at their optimal order quantity compared to their current policy?
Answers
The bookstore should order 283 sets of regalia at a time to minimize total inventory costs. With current order policy, the total costs amount to $5,050 per year. If they adopt an optimal ordering quantity based on the EOQ model, their costs increase to $14,790 per year, a difference of $9,740.
Explanation:The subject is related to inventory management, specifically around the topic of optimal order quantity. In cost minimization problems like this, an economic order quantity (EOQ) model can be used. The EOQ model calculates the ideal order quantity a company needs to purchase in order to reduce its total inventory costs.
Under this model, the total costs of inventory consists of ordering costs and carrying costs. In the given scenario, the ordering cost is $25 per order and the carrying cost is $5 per year for each set of regalia held in inventory. The formula to calculate economic order quantity is: EOQ = sqrt((2 * D * S) / H), where D is the demand, S is the ordering cost, and H is the holding or carrying cost.
Using this formula, we find EOQ = sqrt((2 * 4000 * 25) / 5) = sqrt(400,000 / 5) = sqrt(80,000) = 283 units. So, the bookstore should be ordering 283 sets of regalia at a time to minimize costs. To calculate the difference in cost, we first find the total cost under the current policy of ordering half a year's supply at a time, i.e., 4000/2 = 2000 units per order. Hence, their Total Inventory cost (TIC) = D/Q * S + Q/2 * H = 4000/2000*25 + 2000/2*5 = $50 + $5000 = $5050 per year.
With the EOQ model, their order quantity reduces to 283 units, hence the Total Inventory Cost (TIC) = 4000/283 * 25 + 283/2 * 5 = $14,083 + $707 = $14,790 per year. So, the difference in total cost if they order at their optimal order quantity compared to their current policy is $14,790 - $5,050 = $9,740 more per year.
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