Consider the Solow model, presented in chapter 7. Suppose that the economy is initially in a steady state and that some of the nation’s capital stock is destroyed because of a natural disaster or a war. (a) Determine the long-run effects of this on the quantity of capital per worker and on output per worker.

Answers

Answer 1

Answer:

Output per Worker will fall. Then, Net Investment will increase & steady state will be resumed.

Explanation:

As per Solows model : Output or income per worker depends on capital stock per worker.

Output per worker is directly related to capital per worker : more capital per worker implies more output per worker & vice versa. So, output per worker curve is upward sloping, dependent on capital per worker. However, output per worker rises at a diminishing rate with capital per worker. So, it is a swamp shaped curve.

Solow model steady state is where : constant proportion of this 'income per worker' saved & invested = constant depreciation of the existing capital stock.

Disaster or war reducing capital per worker : reduces the output per worker also [as they are directly related]. This denotes the state before the steady state. Here, saving (gross investment) per worker is more than depreciation of the existing capital stock. So, there will be net addition to capital stock. Capital stock & output per worker would increase, proceeding towards steady rate.


Related Questions

The credit that is created when a supplier sells goods and services on an account with extended payment terms is called . Garcia Assemblers Corporation is a manufacturing company. Garcia’s financial managers use many sources of financing for the company’s annual borrowings, which exceed $100 million. Garcia’s credit rating is excellent. At the moment, the managers are looking to fund a $5 million payroll by issuing a note with a 30-day maturity. What type of financing is this? Trade credit Accrual Commercial paper Bank loans

Answers

Answer:

1. The credit that is created when a supplier sells goods and services on an account with extended payment terms is called Trade credit.  

2. The type of financing practiced by Garcia Assemblers Corporation is called Commercial paper.

Explanation:

Trade credit is the type of credit wherein a supplier sells goods and services with extended payment term. There is no immediate exchange of money.

Commercial paper is a short-term debt instrument mostly used by large corporations to finance payrolls and other short-term liabilities. It is unsecured as it is mostly issued without collateral. This method of financing is used by firms with good debt ratings. The denominations of the commercial paper is also usually high. Garcia Assemblers Corporation fit the description of a firm with high debt ratings using commercial paper to finance a high payroll.

Answer:

The correct answers are :

1.Trade credit

2. Commercial paper

Explanation:

In a bid to grow business and entice customers ,suppliers sell merchandise their customers with an agreement to receive payment at a later date,this is effectively funding the customers' business since a financial institution would have charged interest on such finance.This is done most times in order to boost revenue and retain customers by offering a trade credit.

Commercial paper is a short  term  note issued by corporate bodies with good credit rating in order to fund short term expenditure like payment of staff cost.

Its maturity can be 270 days or less.The practice is that it is issued at a discount ,that is the  issuer receives a discounted value in return for full face value at maturity.

A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below. Complete the schedule of the company’s total and unit costs. (Round the per unit variable cost and fixed cost to 2 decimal places.)

Answers

Answer:

The below is missing from the question:

                    Units Produced & Sold

                              30,000   40,000  50,000

Total Costs    

Variable Costs   $153700      ?            ?

Fixed Costs      370000      ?            ?

Total Costs      $523700        ?            ?

Cost per Unit    

Variable Cost            ?              ?          ?

Fixed Cost            ?               ? ?

Total Unit per Cost   ?                ? ?

2.  

Assume that the company produces and sells 43,000 units during the year at a selling price of $8.97 per unit. Prepare a contribution format income statement for the year.

                           Harris Company

Contribution Format Income Statement

Sales                                   ?

Variable Expenses                 ?

Contribution Margin         ?

Fixed Expense                 ?

Net Operating Income         ?

This question is better answered using excel file.hence find attached.

Explanation:

Points to note:

Variable cost per unit $5.12

Hence total variable cost at each level of output, is that level of output multiplied by $5.12

Total fixed costs remain the same over the different level of output,however the higher the level of output the lower the fixed cost per unit as the same total fixed cost is absorbed by more output

In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.

Answers

Answer:

The change in disposable income from Year 1 to Year 2 is $5,714

Explanation:

We use “Rule of Three” to solve this calculation:

It has been observed that each time consumption changes by $70, disposable income changes in this country by $100.

Now the change in comsumtion in $4,000 (= $60,000 - $56,000), then the change in disposable income =  $4,000 * $100/ $70 = $5,714

Use the following information from separate companies a through d: Net Income (Loss) Interest Expense Income Taxes a. $ 136,000 $ 55,760 $ 34,000 b. 130,600 50,934 47,016 c. 115,600 45,084 48,552 d. 139,100 6,955 66,768 Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?

Answers

Answer:

Company a. 4.05  

Company b. 4.49  

Company c. 4.64  

Company d. 30.60  

From the above, Company d. has the strongest ability to pay interest expense as it comes due with 30 times.

Explanation:

Times interest earned = Income before interest and tax ÷ Interest expenses

Company a. Times interest earned = ($136,000 + $55,760 + $34,000) ÷ $55,760 = 4.05 times

Company b. Times interest earned = ($130,600 + $50,934 + $47,016) ÷ $50,934 = 4.49 times

Company c. Times interest earned = ($115,600 + $45,084 + $48,552) ÷ $45,084 = 4.64 times

Company d. Times interest earned = ($139,100 + $6,955 + $66,768) ÷ $6,955 = 30.60 times

From the above, Company d. has the strongest ability to pay interest expense as it comes due with 30 times.

Prock Petroleum's stock has a required return of 15%, and the stock sells for $60 per share. The firm just paid a dividend of $1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D 4 = $1.00(1.30) 4 = $2.8561. After Year 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after Year 4, i.e., what is X? Pick the closest answer.

Answers

Answer:

Price =[PVF15%,1*D1]+[PVF15%,2*D2]+[PVF15%,3*D3]+[PVF15%,4*D4]+[PVF15%,4*Terminal value at year4 ]

60 = [.86957* 1.3]+[.75614*1.69]+[.65752*2.197]+[.57175*2.8561]+[.57175*TV]

     = 1.1304+ 1.2779+ 1.4446+ 1.6330+ .57175TV

60 = 5.4859+.57175TV

Terminal value = [60-5.4859]/.57175

         = 54.5141/.57175

       = $ 95.3460

Terminal value=D4(1+g)/(Rs-g)

95.3460 =2.8561(1+g)/(.15-g)

95.3460(.15-g)= 2.8561-2.8561g

  14.3019- 95.3460g = 2.8561-2.8561g

   95.3460g-2.8561g = 14.3019-2.8561

     92.4899 g = 11.4458

   g = 11.4458/92.4899

        = .1238 or 12.38%

Growth after year4 = 12.38%

**D1 =1(1+.30)=1.3

D2 =1.3(1+.3)=1.69

D3 = 1.69(1+.3)= 2.197

D4= 2.197(1+.3)= 2.8561

Answer:

g = 0,116559243

Explanation:

First we solve for the present value of the know dividends:

[tex]\left[\begin{array}{ccc}#&Cashflow&Discounted\\Zero&1&\\1&1.3&1.13\\2&1.69&1.28\\3&2.197&1.44\\4&2.8561&1.63\\\end{array}\right][/tex]

We add them and get: 5.48

as the stock sells for 60 dollar the 54.52 represent the horizon value discounted:

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]

[tex]\frac{Maturity}{(1 + .15)^{4} } = 54.52[/tex]

Horizon value = 95.36281912

Now, we solve for grow:

[tex]\frac{D_{n+1}}{r-g} = PV\\\frac{D_0(1+g)}{r-g} = PV\\[/tex]

[tex]\frac{2.8561(1+g)}{0.15-g} = 95.36281912\\[/tex]

[tex] 2.8561 + 2.8561g = 0.15 x 95.36281912 - 95.36281912g [/tex]

[tex]95.36281912g + 2.8561g = 14,304422868‬ - 2.8561[/tex]

[tex] g =  11,448322868‬ / 98,21891912[/tex]

g = 0,116559243

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-market (LCM) basis in valuing inventories:

Product Cost Market
A $110,000 $120,000
B 80,000 76,000
C 155,000 162,000
If Alfalfa applies the LCM basis, the value of the inventory reported on the balance sheet would be:

a. $341,000.

b. $345,000.

c. $358,000.

d. $362,000.

Answers

Answer:

a. $341,000.

Explanation:

As we know that the inventory should be valued at cost or market value whichever is lower and the same is shown below:

Product                  Cost                Market             Lower value of cost or market

A                           $110,000           $120,000       $110,000

B                            $80,000           $76,000         $76,000

C                            $155,000          $162,000      $155,000

Value of the inventory                                          $341,000

Which one of the following statements about the carbon, phosphorus, and nitrogen cycles is true? Soil bacteria drive the phosphorus cycle. The major source of nitrogen used by plants in photosynthesis is the atmosphere. The major source of carbon used by plants is the carbonate rocks and soil. Phosphorus has no atmospheric component.

Answers

Answer:

Phosphorus has no atmospheric component.

Explanation:

The phosphorus cycle is a biochemical cycle that states the movement if the phosphorus from the lithos and hydros and the biosphere. Unlike other cycles, the atmosphere does not play any role in the movement due to the phosphorus is a found in usually sold forms. Through the phosphoric gas occurs is specific locations only, phosphorus is found only in small quantities as limited nutrient from the aquatic system.Does enter the atmosphere when the dust is dissolved in the rainwater like the sea spray but mostly on land, soil and rocks.

Final answer:

The true statement about the cycles is that phosphorus has no atmospheric component. Soil bacteria mineralize phosphorus for plant use. Plants obtain nitrogen as nitrates or ammonium ions from soil, fixed by bacteria, and use atmospheric carbon dioxide in photosynthesis.

Explanation:

The correct statement about the carbon, phosphorus, and nitrogen cycles is that phosphorus has no atmospheric component. Contrary to other biogeochemical cycles, the phosphorus cycle does not include a gas phase and operates mainly through lithosphere, hydrosphere, and biosphere.

Soil bacteria are indeed crucial for the phosphorus cycle, but primarily through their role in making phosphorus available to plants by breaking down organic matter and mineralizing inorganic phosphorus.

The major source of nitrogen for plants is not directly the atmosphere; instead, plants utilize nitrogen in the form of nitrates and ammonium ions that are available in soil and water.

These forms of nitrogen are the result of nitrogen fixation by bacteria, which convert atmospheric nitrogen (N₂) into a form that plants can use. The statement about plants using nitrogen from the atmosphere in photosynthesis is thus misleading—plants use nitrogen fixed by bacteria into nitrates or ammonium ions.

As for carbon, the major source used by plants is indeed carbon dioxide from the atmosphere, which they convert into organic compounds through the process of photosynthesis, not from carbonate rocks and soil. These rocks can act as carbon reservoirs, but are not the primary carbon source for plant intake.

Eaton Company issued $600,000 of eight percent, 20‑year bonds at 106 on January 1, 2013. Interest is payable semiannually on July 1 and January 1. Through January 1, 2019, Eaton amortized $5,000 of the bond premium. On January 1, 2019, Eaton retired the bonds at 103 (after making the interest payment on that date). Prepare the journal entry to record the bond retirement on January 1, 2019.

Answers

Answer:

Bonds payable $600,000  

Premium on bonds payable $31,000  

Gain on bonds retirement $13,000

                 To Cash  $618,000

(Being the redemption of bonds is recorded)

Explanation:

The journal entry is shown below:

On Jan 1, 2019  

Bonds payable $600,000  

Premium on bonds payable $31,000  

Gain on bonds retirement $13,000

                 To Cash  $618,000

(Being the redemption of bonds is recorded)

The computation is shown below:

Issue price of bonds (600000 ÷ 100 × 106)   $636,000

Less: Face value $600,000

Premium on bonds $36,000

Less: Premium amortized till 2019 $5,000

Amortized premium $31,000

Now

Redemption price ($600,000 ÷ 100 × 103) $618,000

For recording this we debited the bond payable , premium and gains on bonds retirement and credited the cash as it reduced the liabilities plus the issued amount exceeded than the face value after considering the amortized same so the same is transferred to premium and the remaining amount is debited to gains on bond retirement.

Final answer:

Eaton Company recorded the retirement of their bonds by debiting Bonds Payable for $600,000, debiting Bond Premium for $1,000, debiting Loss on Bond Retirement for $17,000, and crediting Cash for $618,000.

Explanation:

To record the retirement of the bonds on January 1, 2019, you will first need to understand the bond's carrying amount. The carrying amount is the bond's face value plus the unamortized bond premium. In this case, the face value of the bonds is $600,000 and the unamortized premium is $6,000- $5,000 = $1,000, making the carrying amount $601,000. In retiring the bonds, Eaton paid 103% of the bond's face value, or $618,000. The loss on retirement is the difference between these amounts, or $17,000. So the company's journal entry to record this transaction would be to debit (increase) Bonds Payable for $600,000, debit Bond Premium for $1,000, debit Loss on Bond Retirement for $17,000, and credit (decrease) Cash for $618,000.

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VelSad is contemplating the acquisition of Po, Inc. The values of the two companies as separate entities are $32 million and $16 million, respectively. VelSad estimates that by combining the two companies, it will reduce marketing and administrative costs by $560,000 per year in perpetuity. VelSad can either pay $20 million cash for Po or offer Po a 44% holding in VelSad. The opportunity cost of capital is 10%.What is the cost of the stock offer?

Answers

Answer:

7.58m

Explanation:

The VelSad is considering to acquire Po, Inc. by offer of 20 million cash or either 44% holding. The cost of acquisition refers to all cost incurred by a company to acquire another company. The benefit VelSad can get after acquiring Po, Inc is that it can save marketing and administrative cost by $560,000 every year. The cost of stock offer is 7.58 million. This is calculated by taking 44% of VelSad value and then discounting it at cost of capital which is 10%.

Is Starbucks bucking the trend of other food-service stores, or is something else going on?

Answers

Answer:

its it's something else

Time horizon and elasticity The time horizon of the demand curve is one determinant of the price elasticity of demand. If the price of gasoline is relatively high for a long time, consumers are more likely to buy fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is ____ elastic in the long run than in the short run.

a. more
b. no more nor less
c. less

Answers

Answer: a. More

Explanation:

The demand for gasoline is more elastic in the long run than in the short run.

Price Elasticity is defined as the degree by which demand changes as a result of a change in price. If gasoline prices were to change today, people would stll buy them because they still need gasoline in their every day lives showing that gasoline is less elastic in the short run.

However, if prices remain high even in the long run, people start buying more efficient cars and taking public transport which means they will demand less gasoline because they need less. This drop in demand in the long run because of a high price shows more elascticity in the long run.

Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,000,000 units. Quarterly sales are 18%, 23%, 23%, and 36%, respectively. The sales price is expected to be $38 per unit for the first three quarters and $43 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020. Production. Management desires to maintain the ending finished goods inventories at 20% of the next quarter’s budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $10 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements. Assume the production requirements for first quarter of 2021 are 490,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2020.

Answers

Answer:

Sales Budget = 6840,000 +  8740,000 +  8740,000 +  15480,00 =  $ 39800,000  

Production Budget, = 490,000+  230,000 + 256,000 +327,600= 1303600    

Purchases Cost Budget = $  475,0000 +  462, 6000  + 519,1000  +  649,5000 = $2106,2000

Explanation:

Pargo Company

Sales Budget

For the year 2020

                                                         QUARTERS

                                   1                 2                  3             4               TOTAL

                                  18%,          23%,           23%,         36%,

Sales,                   180,000      230,000   230,000   360,000    

Sale Price              $38            $ 38           $ 38          $ 43

Sales Budget  6840,000   8740,000   8740,000   15480,00 $ 39800,000      

Pargo Company

Production Budget

For the year 2020

                                                         QUARTERS

                                    1                 2                  3             4               TOTAL

Sales                          180,000      230,000   230,000   360,000    

+Ending Inventory    46,000       46000      72000       39,600*

-Opening Inventory   264,000*    46000        46000      72000

Production,       490,000        230,000      256,000     327,600    1303600

Working:

The opening inventory is calculated as the production ius already given. 264,000

Sales of 1st quarter 2020 = 180,000

Sales of 1st quarter 2021 = 180,000 + 18,000= 198,000

Ending inventory of 4th quarter of 2020 = 198,000* 20%= 39,600

Pargo Company

Direct Materials Budget

For the year 2020

                                                         QUARTERS

                                    1                 2                  3             4              

Units Produced   490,000        230,000      256,000     327,600

Direct materials

Per Unit                 2 pounds      2 pounds     2 pounds    2 Pounds

D. Mat Used        980,000        460,000      512,000      655,200

Add Desired

Ending Inv           23,000          25,600          32,700          27,000

Less Beginning

Inventory            528,000*          23,000           25,600          32,700

D. Materials

Purchases            475,000         462, 600        519,100        649,500

Cost per pounds     $ 10               $ 10                  $ 10              $ 10

Purchases Cost    $ 475,0000   462, 6000   519,1000    649,5000     TOTAL   $2106,2000

The beginning inventory is calculated from the production budget opening inventory.

The value-added method involves taking the cost of intermediate outputs (i.e., outputs that will, in turn, be used in the production of another good) and subtracting that cost from the value of the good being produced. In this way, only the value that is added at each step (the sale value minus the value of the intermediate goods that went into producing it) is summed up. This method gives us the same result as the standard method of only counting the value of final goods and services because: the system of accounting requires that they be the same. the only difference is that the value-added method adds up production in the economy as it is produced, and the standard method of counting only uses the completed value at the end of the production chain. the only difference is that the standard method of counting adds up production in the economy as it is produced, and the value-added method totals the value at the end of the production chain. both methods are used by the same agency, so the totals have to be equal.

Answers

Answer:

the only difference is that the value added method adds up production in the economy as it is produced, and the standard method of counting only used the completed value at the end of the production chain.

Explanation:

The value added method in the production process aims to measure the value added at each stage of production considering intermediate products as input.

For example if plastic is produced in a plant and it is in turn used to produce plates. Value added at stage of plate production is the value of plates less cost of producing plastic.

The standard method counts only value of final goods and services.

Both methods give the same result because summation of value in the value added approach will be the same as the value at the end of the production chain (standard method).

A manager is holding a $1.2 million stock portfolio with a beta of 1.01. She would like to hedge the risk of the portfolio using the S&P 500 stock index futures contract. How many dollars’ worth of the index should she sell in the futures market to minimize the volatility of her position? (Enter your answer in dollar not in millions.)

Answers

Answer: $1,212,000 or $1.212 million

Explanation:

To calculate the dollars’ worth of the index the manager should sell in the futures market to minimize the volatility of her position, we can use the following formula,

Dollar worth of index to sell = Value of the Portfolio * Portfolio Beta

Dollar worth of index to sell = 1,200,000 * 1.01

Dollar worth of index to sell = $1,212,000

The manager should sell $1,212,000 worth of the index in the futures market to minimize the volatility of her position.

Better Corp. (BC) began operations on January 1, Year 1. During Year 1, BC experienced the following accounting events: 1. Acquired $7,000 cash from the issue of common stock. 2. Borrowed $12,000 cash from the State Bank. 3. Collected $47000 cash as a result of providing services to customers. 4. Pald $30,000 for operating expenses 5. Paid an $8,000 cash dividend to the stockholders. 6. Paid $20,000 cash to purchase land. Required a. Record the events in an accounting equation like the one shown next. Record the ined Earnings column. Provide the appropriate titles for these accounts in the last column of the table. The first event is shown amounts of revenue, expense, and dividends in as an example. (Enter any decreases to account balances with a minus sign. Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings") BETTER CORP. Accounting Equation for Year 1 Assets Stockholders Equity Event Cash Land Notes Payable + Common Stock : + : Retained Account Tities for = Earnings R Beg. Bai. O NA 1. Issued stock 2. Borrowed Loan 3. Provided Service 4. Paid operating expenses 5. Paid dividend 6. Land purchase < Prev 80f 8 Next

Answers

Answer:

Better corp

Cash balance is $8,000

+

Land balance is $20,000

=

Notes payable is $12,000

+

Common stocks is $7,000

+

Retained Earnings is $9,000

Explanation:

Refer to the attached file for proper presentation

                      Better corp. (BC)  When the Cash balance is $8,000  +   Land balance is = $20,000 After that the =   Notes payable is = $12,000 Now +  Common stocks is = $7,000  After that + Retained Earnings is = $9,000  Thus that Affix Refer to the attached file for proper presentation below:

Better Corp. (BC)

                                a. Accounting Equation

Assets                =       Liabilities       +               Equity

1. Cash $7,000                                                   Common stock $7,000

2. Cash $12,000                                            Bank loan payable $12,000

3. Cash $47,000                                                Service Revenue $47,000

4. Cash ($30,000)                                              Op. expenses ($30,000)

5. Cash ($8,000)                                                Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

Assets $28,000   =  Liabilities $12,000  + Equity $16,000

              b. December 31, Year 1 Balances:

Total assets = $28,000

Total liabilities = $12,000

Stockholders' equity = $16,000

Balance Sheet as of December 31, Year 1

Assets:

Cash                     $8,000

Land                  $20,000

Total assets      $28,000

Liabilities:

Bank loan         $12,000

Equity:

Common stock $7,000

R/Earnings          9,000

Total equity    $16,000

Liabilities and

Equity          $28,000      

                 c. January 1, Year 2 Balances:

Total assets = $28,000

Total liabilities = $12,000

Total equity = $16,000

d. When The Land will be shown on the December 31, Year balance sheet at $20,000.  The reason is that this is the acquisition cost and the land is not held for trading (no information provided).

Explanation:

a) Data and Analysis based on the Accounting Equation:  

1. Cash $7,000 Common stock $7,000  

2. Cash $12,000 Bank loan payable $12,000

3. Cash $47,000 Service Revenue $47,000

4. Cash ($30,000) Operating expenses ($30,000)

5. Cash ($8,000) Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

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While Mary Corens was a student at the University of Tennessee, she borrowed $11,000 in student loans at an annual interest rate of 11%. If Mary repays $1,700 per year, then how long (to the nearest year) will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number.

Answers

Answer:

It will take 23 years for Mary Corens to repay the loan.

Explanation:

Mary Corens obtained her loan of $ 11,000 with an interest rate of 11% per year, with which the annual interest that will accrue on her loan will be $ 1,210 (11,000 x 0.11).

If Mary pays 1,700 each year, we must take into account that each payment will decrease the amount of the loan by $ 490, since she will pay the interest of $ 1,210 and a surplus of $ 490 that will cover said part of the value of the loan. Therefore, to find out how long it will take Mary to repay the entire loan, we must divide the initial amount of the loan without interest by 490, which will be the sum of money that will be charged to the principal payment: 11,000 / 490 = 22.4.

Therefore, it will take Mary almost 22 and a half years to repay her loan, making annual payments of $ 1,700. Since the answer requires a whole number, we can affirm that in 23 years Mary Corens will pay off her debt.

On June 1, Parson Assoc. sold equipment to Arleo and agreed to accept a 3-month, $55,000, 10% interest-bearing note in payment at a time when the prevailing rate of interest for similar transactions was 10%. When the note was collected upon maturity, Parson would recognize interest revenue of:

Answers

Answer:

Parson would recognize an interest revenue of $1375

Explanation:

The quoted interest rate on bond is the annual rate of interest. The bond is for 3 months which means that the interest revenue will be recorded for the 3 months period from June to August and the bond will mature on 31 August.

The interest revenue to be be recorded on this note is,

Interest Revenue = 55000 * 0.1 * 3/12   =  $1375

The entry to record the receipt of interest and face value will be,

Cash                              56375

    Interest revenue               1375

    Bonds Receivable            55000

Accrued Vacation Pay A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation pay is $106,800. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay.

Answers

Answer:

On Jan 31

Vacation pay expense Dr $8,900

        To vacation payable $8,900

(Being the vacation expense is recorded)

Explanation:

The journal entry is as follows

On Jan 31

Vacation pay expense Dr $8,900

        To vacation payable $8,900

(Being the vacation expense is recorded)

The computation is shown below:

= Estimated amount of the current year's vacation pay ÷ total number of months in a year

= $106,800 ÷ 12 months

= $8,900

For recording this transaction we debited the vacation expense as it increased the expenses while at the same time it also increased the liabilities so the vacation payable is credited

Daniel believes that a chemical company is responsible for contaminating some land that he owns. He files suit against the chemical company. Rather than have the case go to court, the chemical company’s attorney suggests arbitration to resolve the legal dispute. Explain how arbitration would work in this case.

Answers

Answer:

Arbitration can work instead of the suit filed by Daniel against a chemical company is responsible for contaminating some land that he owns if they give him a worthy compensation.

Explanation:

Arbitration means to settle out of court.

This method is used in resolving disputes outside of court to avoid certain legal documents that might haunt the company in future.

During Arbitration, parties refer their disputes to an arbitrator who reviews the evidence, listens to the parties, and then makes a decision that is favorable to both parties. More like a win-win.

Arbitration clauses can be mandatory or voluntary, and the arbitrator's decision may be binding or nonbinding but for arbitration to work, the parties must arrive at a mutual compromise.

ncome Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials $1,218,000 Direct labor 522,000 Variable factory overhead 87,000 Fixed factory overhead 130,500 1,957,500 Selling and administrative expenses: Variable selling and administrative expenses $60,000 Fixed selling and administrative expenses 25,000 85,000 a. Prepare an income statement according to the absorption costing conce

Answers

Answer:

Income statement according to the absorption costing

Sales                                                                                         2,600,000

Less Cost of Goods Sold

Opening Stock                                                          0

Add Cost of Goods Manufactured

Direct materials                                                   1,218,000

Direct labor                                                           522,000

Variable factory overhead                                     87,000

Fixed factory overhead                                        130,500

Less Closing Stock (1,957,500/4,350)×350      (157,500)       1,800,000

Gross Profit                                                                                   800,000

Less Period Costs :

Selling and administrative expenses:

Variable selling and administrative expenses                           (60,000)

Fixed selling and administrative expenses                                (25,000)

Net Income                                                                                    715,000

Explanation:

Product/Manufacturing Cost - Absorption Costing = Direct Materials + Direct Labor + Variable Overheads + Fixed Overheads

Period Cost - Absorption Costing  = All Non - Manufacturing Costs

Final answer:

The student's question is about preparing an income statement using absorption costing for a company's operations over the month of July. The provided financial data allows for the calculation of sales, cost of goods sold, and selling and administrative expenses to derive the operating income.

Explanation:

The student is asking for an income statement prepared under the absorption costing method for Gallatin County Motors Inc. for the month of July. Absorption costing includes all manufacturing costs in the cost of a product, meaning both variable and fixed manufacturing overhead are absorbed by the produced units. The income statement should reflect the cost of goods sold based on the number of units sold and should also account for the inventory at the end of the period. The student provided the necessary financial data to calculate this.

Here is a simplified representation of the income statement:

Sales (4,000 units x selling price)

Less: Cost of Goods Sold (costs assigned to units sold)

Gross Margin (Sales - Cost of Goods Sold)

Less: Selling and Administrative Expenses (both variable and fixed)

Operating Income (Gross Margin - Selling and Administrative Expenses)

Gall Manufacturing sells a product for $50 per unit. The fixed costs are $840,000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $200,000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Answers

Answer:

The new break even point in units is 41600 units.

Explanation:

The break even point in units is the number of units that provide enough revenue to meet total costs and there is no profit and no loss as the total revenue equals total cost. The break even point in units is calculated as follows,

Break even in units = Fixed costs / Contribution margin per unit

Where,

Contribution margin per unit = Selling price per unit - Variable cost per unit

The, new total fixed costs will be,

New fixed cost = 840000 + 200000  =  $1040000

The new contribution margin per unit = 50 - (50 * 0.5)  =  $25 per unit

The new break even in units = 1040000 / 25  =  41600 units

The high-low method calculates the total fixed cost as the: Group of answer choices

a. difference between the unit variable cost and the unit total cost
b. change in activity level divided by the change in cost for two points
c. difference between total variable costs and total costs at a particular activity level
d. change in cost divided by the change in activity level for two points

Answers

Answer:

c. difference between total variable costs and total costs at a particular activity level

Explanation:

The high low method consists of calculating costs on the basis of highest & lowest activity & comparing their corresponding total costs.

Variable cost per unit is found by : change in cost divided by the change in activity level for two points

Variable Cost per unit = Highest activity cost - Lowest activity cost

                                      Highest activity units - lowest activity units

Fixed Cost is thereafter calculated by subtracting Total Variable Costs from Total Cost

Fixed Cost = Highest Activity Total Cost - [ (Variable cost per unit) x (highest activity units)

Fixed Cost = Lowest Activity Cost - [ (Variable cost per unit) x (lowest activity units)]

Final answer:

The high-low method calculates total fixed costs by finding the change in cost divided by the change in activity level for two points, helping in separating fixed and variable costs for better financial planning.

Explanation:

The high-low method calculates the total fixed cost as the d. change in cost divided by the change in activity level for two points. This method is used in cost accounting to separate the fixed and variable components of mixed costs. The high-low method involves taking the highest and lowest activity levels and comparing the total costs at each level to determine variable costs per unit. Once the variable cost per unit is found, it can be used to calculate the total fixed costs. Specifically, the total fixed cost is calculated by subtracting the total variable cost at a certain activity level from the total cost at that activity level.

Understanding how to calculate average fixed cost, average variable cost, and average total cost is crucial for businesses to effectively manage and predict costs. These calculations help businesses in pricing strategies, budgeting, and financial planning to ensure profitability.

Keynes' law is
Select all that apply:
a. the opposite of Say's law
b. the same as Say's law
c. consistent with the statement that supply creates demand
d. described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produce

Answers

Answer: A; D

Explanation: The Keynesian perspective emphasizes the importance of aggregate demand for the short run and states that demand creates its own supply. Say's law emphasizes the importance of aggregate supply, for the long run and holds holds that supply creates its own demand. As a result, Keynes' law is the direct opposite of Say's law.

Keynes argued that economy often produced less than its full potential due to a lack of demand in the economy. This lack of demand as a whole leads to inadequate incentives for firms to increase production, that is, total demand determines the level of GDP.

Keynes' law is the opposite of Say's law and is best described by the notion that a lack of demand can lead to inadequate production incentives for firms. Therefore, options a and d are correct.

Keynes' law is a key concept in macroeconomics and can be summarized as: "Demand creates its own supply." This is in contrast to Say's law, which emphasizes the idea that supply creates demand. Therefore, the statements that apply to Keynes' law are:

a. the opposite of Say's lawd. described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produce

Keynes' theory posits that during economic downturns, a lack of aggregate demand can result in underutilized resources and unemployment, thus a focus on stimulating demand is essential to encourage production and economic growth

g The Berwin Company established a master budget volume of 35,000 units for April. Actual overhead costs incurred amounted to $98,500. Actual production for the month was 34,000 units. The standard variable overhead rate was $1.75 per direct labor hour. The standard fixed overhead rate was $1.50 per direct labor hour. One direct labor hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labor hours. SR1a. A. Compute the total manufacturing overhead cost variance.

Answers

The actual overhead incurred = $98,500

The overhead applied = 34000 * 1 ( $1.75 + $1.50) = 34000*1*3.25  = $110,500

The budgeted overhead = 34000*1*$1.75 + (35000*1*1.50) =  (34000*1*$1.75)+52500 = $112,000

A) The total manufacturing overhead cost variance = Overhead applied - Actual overhead = $110,500 - $98,500 = $12,000 F

Frankenstein Enterprises received two notes from customers for sales that Frankenstein made in 2013. The notes included:Note A: Dated 5/31/2013, principal of $ 132,000and interest due 3/31/2014.Note B: Dated 7/1/2013, principal of $220,000 and interest at 8% annually, due on 4/1/2014.Frankenstein had accrued interest receivable from these notes of $16,000 in its 12/31/2013 balance sheet. What is the annual interest rate on Note A?a) 8.00%b) 9.35%c) 9.95%d) 9.65%

Answers

Answer:

Option B ⇒ The annual interest rate on Note A is  9.35% .

Explanation:

Note B has an accrued interest for six months during 2013: $220,000 x .08 x 6/12 = $8,800.

The remainder of the accrued interest, $7,200 ($16,000 - $8,800) was from Note A, which was held for seven months in 2013.

Therefore, we have the following: $132,000 x annual interest rate x 7/12 = $7,200.

Thus, the annual interest rate on Note A would be ($7,200/132,000) x 12/7 = 9.35%.

Option B ⇒ 9.35% is the correct answer.

On March 1, 2019, Baltimore Company's beginning work in process inventory had 9,500 units. This is its only production department. Beginning WIP units were 50% complete as to conversion costs. Baltimore introduces direct materials at the beginning of the production process. During March, a total of 25,200 units were started and the ending WIP inventory had 8,600 units which were 40% complete as to conversion costs. Baltimore uses the weighted average method. Use this information to determine for March 2019 the equivalent units of production for conversion costs. (Round answer to the nearest whole number of units)

Answers

Answer:

Total Equivalent Units  direct materials     25200  

Total Equivalent Units  conversion costs   20,000

Explanation:

Baltimore Company

Beginning work in process inventory  9,500 units

Units Started 25,200 units

Less Ending WIP inventory 8,600 units

Units Finished   16,600

Particulars         Units           % of Completion         Equivalent Units

                                     Mat. Conversion Costs     Mat. Conversion Costs

Ending W. I.P,    8600         100        (40%)            8,600       3440

Completed        16,600       100         100             16,600        16,600

 Total Equivalent Units                                          25200      20,000

First we find the Completed Units by subtracting the ending work in process from the units started. The Equivalents units can be calculated by either adding the beginning work in process and units started or by adding Ending Wip and completed  units.  By doing the both calculations we get the same number of equivalent units.

Let S represent the amount of steel produced (in tons). Steel production is related to the amount of labor used (L) and the amount of capital used (C) by the following function: S = 15 L0.2 C 0.8 In this formula L represents the units of labor input and C the units of capital input. Each unit of labor costs $50, and each unit of capital costs $100. (a) Formulate an optimization problem that will determine how much labor and capital are needed in order to produce 50,000 tons of steel at minimum cost. Min L + C L0.2 C 0.8 L, C (b) Solve the optimization problem you formulated in part a. Hint: When using Excel Solver, start with an initial L > 0 and C > 0. If required, round your answers to two decimal places. L = $ C = $ Cost = $

Answers

Solution

S = 15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex]

Total cost, T = wL + rC = 50L + 100C

Total revenue, R = Output price (P) x Quantity = P x 15 x [tex]L^{0.2}[/tex]x [tex]C^{0.8}[/tex]

(a)

Optimization problem will be:

Max R = P x 15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex]

Subject to T = 50L + 100C

(b) When S = 50,000

Cost is minimized when (MPL / MPC) = w / r

MPL = [tex]\partial[/tex]R / [tex]\partial[/tex]L = P x 15 x 0.2 x [tex](C / L)^{0.8}[/tex] = P x 3 x [tex](C / L)^{0.8}[/tex]

MPC = [tex]\partial[/tex]R / [tex]\partial[/tex]C = P x 15 x 0.8 x [tex](L / C)^{0.2}[/tex] = P x 12 x [tex](L / C)^{0.2}[/tex]

MPL / MPC = (3/12) x (C / L) = 50/100

C / 4L = 1/2

4L = 2C

2L = C

Substituting in production function,

15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex] = S

15 x[tex]L^{0.2}[/tex] x [tex](2L)^{0.8}[/tex] = 50,000

15 x [tex]2^{0.8}[/tex] x [tex]L^{0.2}[/tex] x [tex]L^{0.8}[/tex] = 50,000

L = 50,000 / (15 x 20.8)

L = 1,914.50

C = 2L = 3,829.00

Total cost ($) = 50 x 1,914.50 + 100 x 3,829.00 = 95,725.00 + 382,900 = 478,625.00

Note: This optimization problem can be solved without using Solver too, as shown here.

Final answer:

To minimize production costs while producing 50,000 tons of steel, formulate an optimization problem with the cost function 50L + 100C and production function S = 15L^0.2C^0.8 as the constraint. Solve using Excel Solver with initial positive values for L and C.

Explanation:

To determine how much labor (L) and capital (C) are needed to produce 50,000 tons of steel at the minimum cost, we need to formulate and solve an optimization problem. Given that each unit of labor costs $50 and each unit of capital costs $100, we aim to minimize the cost function subject to the production function constraint S = 15L0.2C0.8. The cost function is the sum of the costs of labor and capital, which is 50L + 100C. The constraint in this optimization problem is that the production function must equal 50,000 tons.

To solve the optimization problem, one might use Excel Solver starting with initial positive values of L and C. After setting up and solving the problem with Solver, we would get the optimal values of L and C that minimize the cost. However, since specifics such as Solver setup and actual calculations are not provided in the context, the answer to part b cannot be given here. Remember that in a real scenario, it would be crucial to ensure Excel Solver is set to respect the constraint that S equals 50,000.

A shoe store is for sale for $2,000,000. It is estimated that the restaurant will earn $200,000 a year for the next 11 years. At the end of 11 years, it is estimated that the restaurant will sell for $3,500,000. What would be most likely to occur if the investor's required rate of return is 15%?

Answers

Answer:

The NPV is -$200956.3508. Thus, the shop will not be purchased as the NPV from this investment is negative.

Explanation:

To take the decision to buy or not buy the shoe store, we need to calculate the Net Present Value of the investment in the shoe shop. The net present value (NPV) is the present value of future expected cash inflows from the investment less the initial outlay/cost.

If the NPV is positive, the investment will be done and shop will be purchased and vice versa.

As the cash in flows consist of an annuity of 200000 for 11 years along with a principal sale value, the NPV will be,

NPV = PV of Annuity + PV of Principal - Initial cost

NPV = 200000 * [ (1 - (1+0.15)^-11)  /  0.15 ]  +  3500000 / 1.15^11  - 2000000

NPV = -$200956.3508

The shop will not be purchased as the NPV from this investment is negative.

Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 31 Reacquired Peridot common stock 57 Proceeds from sale of land 92 Gain from the sale of land 51 Investment revenue received 74 Cash paid to acquire office equipment 87 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:

Answers

Answer:

Peridot should report net cash outflows from investing activities of $26 million

Explanation:

Prepare a Cash flow from Investing Activity Section as follows :

Cash flow from Investing Activity  

                                                                          ($ in millions)

Purchase of Machinery                                             (31)

Proceeds from Sale of land                                       92

Purchase of Office Equipment                                 (87)

Net Cash Flow from Investing Activities                 (26)

The Section only includes Activities relating to Capital Expenditure

Sep.​ 1: Sold a building that cost $ 540 comma 000 ​(accumulated depreciation of $ 275 comma 000 through December 31 of the preceding​ year). Guilda Bell Associates received $ 340 comma 000 cash from the sale of the building. Depreciation is computed on a​ straight-line basis. The building has a​ 40-year useful life and a residual value of $ 75 comma 000. Before we record the sale of the​ building, we must record depreciation on the building through September​ 1, 2018.

Answers

Answer:

$8,718.75

Explanation:

Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.

It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset

Mathematically,  

Depreciation = (Cost - Salvage value)/Estimated useful life

Annual depreciation

= (540,000 - 75,000)/40

= $11,625

Depreciation between 1 January and 1 September 2018 (9 months)

= 9/12 * $11,625

= $8718.75

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