If a manager considers one employee at a time and circles a number/word to signify the degree to which that employee demonstrates a particular trait, he/she is using a: Group of answer choices

Answer:

The correct answer is letter "D": subsidies to domestic producers.

Explanation:

Tariffs are levies imposed on imports to promote domestic production and discourage the purchase of goods abroad. Imposing tariffs and quotas usually cause a trade war in which the country affected counterattacks by imposing taxes on the company that started passing tariffs.

Under such a scenario, tariffs could represent indirect subsidies to domestic producers because, at a certain level, the decrease in imports promotes domestic goods consumption.

Answer:

subsidies to domestic consumers

Below is the correct outline of the question:

Eduardo goes to his mentor, Mateo, to get tips for improving his performance.

Type of training:________

While reviewing his goals for the year, Tyrell and his manager discuss what training Tyrell might require to accomplish next year's goals.

Type of training:________

Adriaan and Arie got off on the wrong foot. Arie messed up his first project for Adriaan, and now Adriaan gives him low performance ratings in every category of performance. This is an example of a ________ error.  _______ training will help the manager to evaluate performance more accurately.

Answer:

1. Type of training: Developmental

2. Type of training: Developmental

3. Halo error

4. Frame of Reference (FOR) training

Explanation:

Eduardo goes to his mentor, Mateo, to get tips for improving his performance.

Type of training: Developmental

While reviewing his goals for the year, Tyrell and his manager discuss what training Tyrell might require to accomplish next year's goals.

Type of training: Developmental

Suzy is known for her highly rated employees. Everyone gets a performance rating of "outstanding," regardless of the work they have actually done. This is an example of a leniency error. Frame of Reference training will help the manager to evaluate performance more accurately.

Further Explanation:

For (1) and (2) A development training involves identifying areas employees need to improve on and organizing training programs to strengthen those skills that each employee needs to improve.

For (3),  Leniency error is a rater's bias where the individual who does the rating has the tendency to rate people too positively.

For (4), Frame of Reference (FOR) training is a form of training that teaches how to produce accurate and reliable workplace-based ratings when assessing a performance  It's aim is to improve the accuracy of the ratings of the individual responsible for the evaluation of employees.

Answer:

The market price/value of the share of preferred stock is $74.62

Explanation:

The preferred stock pay 10.2% return on $100 per share which comes out to be 100 * 10.2% = $10.2. This dividend will remain constant no matter what the price in the market is. The price in the market is calculated by dividing the ineterest payment by the current price of the share. The formula for the current return of the preferred stock is:

0.1367 = 10.2 / P

P = 10.2 / 0.1367

P = $74.615 rounded off to $74.62

Answer:

Contribution= $214,800

Explanation:

Contribution margin ratio is the proportion of sales revenue that is earned as contribution.

Unit sold = revenue / selling price = 880,000/55 = 16,000  units

Contribution = Sales revenue - variable cost

Variable  admin = 4% × 880,000= 35200

Variable selling = 5× 16,000 = 80,000

Contribution = Sales revenue - cost of goods sold - admin - selling

= 880,000 - 550,000- 35200 - 80,000=214,800

Contribution= $214,800

The contribution margin for Sam's Bookstore for the first quarter is $0.

The contribution margin for Sam's Bookstore for the first quarter can be calculated by subtracting the total variable expenses from the sales revenue. The variable selling expenses are given as $5 per book, so for the 880,000 books sold in the quarter, the variable selling expenses would be 880,000 x $5 = $4,400,000. The variable administrative expenses are given as 4% of sales, so for the $880,000 sales revenue, the variable administrative expenses would be $880,000 x 0.04 = $35,200. Therefore, the total variable expenses for the quarter would be $4,400,000 + $35,200 = $4,435,200. Finally, the contribution margin can be calculated as the sales revenue minus the total variable expenses: $880,000 - $4,435,200 = -$3,555,200. However, since a contribution margin cannot be negative, the answer is $0.

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Complete question:

Rita placed an order for 300 shares of each of four separate IPOs (Orders A, B, C, and D) with an offer price of $16 each. She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders. At the end of the first day, Order A was overpriced by $2 a share, Order B was underpriced by $4 a share, Order C was correctly priced, and Order D was overpriced by $1 a share. What was combined total profit or loss for the first day on these four orders

Multiple Choice

−$400 $400 $100 −$100 −$300

Answer:

$400 was combined total profit or loss for the first day on these four orders

Solution:

Given,

Rita placed an order for 300 shares of each of four separate

Offer price of $16 each

She received 100 shares of Order B, 200 shares of Order D, and 300 shares of the other orders.

Now ,

Order           No. of shares       Profit/ (loss) per share   Net profit/ (loss)

A                           300                          $ (2)                       $ (600)

B                           100                           $ 4                         $ 400

C                           300                          $ -                              $ -

D                           200                          $ (1)                        $ (200)

Net profit/ (loss)                                                                  $ (400)  

Net loss for first day is $400.  

Answer:

Value of a share = $15

Explanation:

According to the dividend valuation model, the value of a share is the present value of expected dividend discounted at the required rate of return.

This model is expressed in the formula below;

Value of a share = D/Ke

D- dividend payable in year one

Ke- cost of equity

Value of a share = 2.25/0.15

Value of a share = $15

Value of a share = $15

Answer:

$35,200

Explanation:

Given that

Invested amount = $320,000

Rate of interest = 11%

So by considering the above information, the amount of annual scholarship that can be given from this investment is  

= Invested amount × Rate of interest

= $110,000 × 11%

= $35,200

By multiplying the invested amount with the rate of interest we can find out the annual scholarship amount

the annual scholarship that can be given from this investment:

$35,200

Considering that $320,000 is the amount invested.

Interest rate: 11%

Thus, taking into account the data above, the yearly scholarship amount that can be awarded from this investment is  

= Amount invested × Interest rate

$110,000 × 11%

$35,200

The annual scholarship amount can be calculated by multiplying the invested amount by the interest rate.

Answer:

A decline in foreign demand for the US goods will result in a reduction in the real GDP

Explanation:

The AD–AS or aggregate demand–aggregate supply model is a macroeconomic model that analyzes price level and output through the relationship between aggregate demand and aggregate supply.

he European and Japanese economies succumb to a recession and reduce their demand for the US goods for several years, the immediate macroeconomic consequence will be a change in the AD-AS slope reflecting a fall in the amount of goods demanded in the presence of surplus supply that was meant for export.

In the long run, it will escalate to a trade deficit and a decline in dollar value.

Answer:

It is important to note that the demand curve is shifted by both foreign and domestic demand. There will be a shift in the demand curve in the short run and a shift in the supply curve in the long run.

Explanation:

The market starts at equilibrium where the long run aggregate supply (LRAS), the short run aggregate supply (AS) and the aggregate demand are in equilibrium at point A.

The recession in both Japan and Europe causes the two countries to decrease their demand for American goods and therefore the AD curve shifts to the left (AD’) and in the short run there is a decrease in both the price and the output/income represented by point B. Consequence: The Us has to sell at a lower price at a lower output . Now in the long run the America market ( the producers, firms and workers) will adjust their expectations leading to a right shift of the AS curve to AS’ and the long run equilibrium is at point C,  (consequence)where the output/income is the same at a lower price. Note that the LRAS is fixed because of the fixed supply of the factors of production.  

The safety stock they need to carry to meet the 99% service level is 395.

First step is to find dL

dL = √ ( Lσ d2 + d 2σ L2  )

dL= √( 350 + 25600)

dL=√25,950

dL= 161

z-score at 99% SL=2.33

Second step

Safety stock = 2.33× 161

Safety stoc= 375

Inconclusion the safety stock they need to carry to meet the 99% service level is 395.

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Central Perk should keep approximately 285 filters in safety stock to maintain their 99% service level. This computation considers the average demand, the standard deviation of demand, and the lead time of the shipments.

The number of coffee filters Central Perk requires each day is subject to variation, so safety stock is needed to ensure a 99% service level. Safety stock can be calculated using the formula Safety Stock = Z * SQRT(Avg. Lead Time * StdDev^2(Demand) + Avg. Demand^2 * StdDev^2(Lead Time)), where Z is the number of standard deviations corresponding to the desired service level.

In this case, assuming 'fortnight' means 14 days and using Z=2.33 for 99% service level, we plug the figures into the formula: Safety Stock = 2.33 * SQRT(14 * (5^2) + (80^2 * 2^2)), which equates to approximately 285 filters. Therefore, Central Perk should keep approximately 285 filters in safety stock to maintain their 99% service level.

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Answer:

The correct answer is option (B).

Explanation:

According to the scenario, computation of the given data are as follows:

First we calculate for L3 pack.

Setup cost = cost allocated using direct labor-hours  - Setup cost allocated using setup-hours

By putting the value in the formula, we get

Setup cost = $19,250 - $13,400

= $5,850 ( Positive shows over costed)

So, L3 pack is overcosted by $5,850

The L3 pack is overcosted by $5,850 under traditional costing using direct labor-hours compared to setup-hours, which is a more effective cost driver.

Regarding the question on whether the L3 pack is overcosted or undercosted and by how much in Hebar Corp's setup costs under traditional costing, we will analyze the difference in allocated costs when using direct labor-hours versus setup-hours. The allocated setup cost for L3 using direct labor-hours is $19,250 and using setup-hours is $13,400, leading to a difference of $19,250 - $13,400 = $5,850. Since setup-hours is considered a more effective cost driver, and the cost allocated using setup-hours is lower, we can deduce that the L3 pack is overcosted by $5,850 when using direct labor-hours. This corresponds to option B, making it the correct answer.

-Question was incomplete the complete question is

"Extracts from cost information of Hebar Corp.:

Simple L3 Pack Complex L7 Pack Total

​Setup cost allocated using direct labor-hour$19,250​ $5,750​ $25,000​

Setup cost allocated using setup-hours $13,400​ $11,600​ $25,000​

Assuming that setup-hours is considered a more effective cost drive for allocating setup costs than direct labor-hours. Which of the following statements is true of Hebar's setup costs under traditional costing?

A. L7 pack is undercosted by $5,750

B. L3 pack is overcosted by $5,850

C. L3 pack is undercosted by $5,850

D. L7 pack is overcosted by $5,850

Answer: a. Product or service with better features or functions.

d. Rareness factor, meaning that competitors cannot offer the same set of values to this customer

Explanation:

Sustainable Competitive Advantage refers to the quality that a company has of being able to stay ahead of it's competitors in the long term.

The main way to do this is Value creation. The company has to give to the consumer, something that the consumer will value and keep coming back for.

One of those ways is to give consumers a better product with better features and functions. This will enable consumers to associate high quality products with a company leading to them having a better market share.

Another way is the RARENESS FACTOR. Offering a product or something in that product that consumers consider rare will create value for the company because rare things are often sought after.

If a Company's products are considered rare, consumers will value them more.

Final answer:

Sustainable competitive advantage largely depends on differentiated products, rareness factors, and constant innovation to maintain a unique market position and attract customers.

Explanation:

Sustainable competitive advantage is influenced by several factors, key among these being the ability to offer differentiated products or services. When a firm's offerings are distinct in terms of physical aspects, location, intangible attributes, or customer perceptions, they achieve differentiation. This distinctiveness can manifest through better features, functions, or the high value created for customers that justifies a higher price. Moreover, exclusivity or a rareness factor is critical since it ensures competitors cannot readily duplicate the value offered, thus solidifying the firm's market position. A commitment to innovation and converting competitors' customers also plays a significant role in sustaining competitive advantage as it demonstrates a proactive approach to market dominance.

Answer:

The correct answer is letter "C": there still would be an economic problem.

Explanation:

Coordination, in Economics, refers to the set of actions different individuals take to satisfy their needs mutually. Problems arise in case there is not enough coordination of the individuals in an economy bringing lower benefits for them. For coordination to take place there must be a leader driving people's activities the most efficient way possible.

In the case of the example, after taking a pill that made people selfless, those individuals would still lack coordination because it would be difficult to determine which sector of individuals will be the priority for the satisfaction of needs. Therefore, even after the introduction of the pill,  that society would give an economic problem.

The coordination definition of economics states that there would be no economic problem if a pill existed that made people selfless and interested in others. This is because people would coordinate their actions to prioritize the well-being of others, leading to positive social results.

According to the coordination definition of economics, if a pill existed that made people selfless and only interested in others, there would be no economic problem. The coordination definition of economics focuses on how individuals and firms coordinate their economic activities to achieve their goals. In this scenario, if people were selfless and interested in others, they would likely coordinate their actions to prioritize the well-being of others, leading to positive social results. This aligns with the idea that self-interested behavior can lead to positive social outcomes in economics.

If a pill existed that made people selfless and only interested in the wellbeing of others, classical economic theory implies there still would be an economic problem. The coordination definition of economics largely assumes that individuals act in their own self-interest, which in turn benefits society through the invisible hand as described by Adam Smith. However, selflessness does not equate to the absence of economic problems; rather, it may create new challenges in terms of resource allocation and incentives, as the market relies on individual self-interest to signal needs and allocate resources efficiently.

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Answer: Inelastic; decreased; $50

Explanation:

Demand is considered Inelastic when a change in price does not correspond to a substantial change in quantity demanded as was the situation in the scenario.

The total Revenue decreased because originally it was,

= 16 * 200

= $3,200

After the price dropped it became,

= 14* 225

= $3,150

It DECREASED by $50.

Answer:

Given that,

Credit balance of allowance for uncollectible accounts = $2,700

Future uncollectible = $13,500

We need to deduct the credit balance from the amount of future uncollectible.

Bad debt expense:

= Future uncollectible - Credit balance of allowance for uncollectible accounts

= $13,500 - $2,700

= $10,800

Therefore, the journal entry is as follows:

Bad debt expense A/c Dr. $10,800

       To allowance for doubtful debts $10,800

(To record the allowance for uncollectible accounts)

Answer:

The answer is $150 million

Explanation:

A closed economy is also called autarky. A closed economy is an economy that trades only within its economy. There is no import and there is no export also. The economy (country) is self-sufficient.

The formula for GDP in a closed economy equals C + I + G

where C is the household/individual consumption.

I is the business or firm's investment

G is the government spending.

GDP is $600million

C is $ 250 million

G is $ 200 million

I = ($600 - $ 250 - $200) million

I= $150 million

Crystal lets them know how many workers she needs for each day of the week.In the short run, these workers are Variable inputs, and the ovens are Fixed inputs.

Explanation:

Production function of  a product defines the  relationship between the quantity of inputs required to produce a good and the quantity of output produced by the given inputs.

The Commonly  used inputs in production are land, labor, and capital.

Fixed Input: Fixed input are those inputs whose quantity does not change with the quantity of the output produced

Variable Input: Variable input are those type of input whose quantity varies with the quantity  of the output produced.

In the above question we can see that

Crystal's decision regarding how many workers to use can vary from week to week because her workers tend to be students.The workers are the variable inputs.

Crystal's kitchen cannot fit more than four ovens, Crystal cannot change the number of ovens -The  ovens are the fixed Input

Answer: The science of money management methods of raising funds and managing money.

Explanation:

Finance is the art and science of money. It refers to everything that has to do with the process of generating and managing money.

Finance involves various activities such as banking, credit, capital solicitation, investing etc.

Those Aforementioned activities help players in the field of finance to ensure the efficient working of money for example, banking helps in money management whilst investing leads to the generation of money.

The study of Finance is therefore immensely helpful in the Economy because it shows how money flows and how to use it to meet economic objectives.

Answer:

Current Bond Price = $1,114.46

Explanation:

Coupon rate = 8.2/ 2

= 4.1 %

YTM = 6.5 / 2

= 3.25%

Bond is issued one year ago,

Periods = (10 - 1) *2

= 18

Interest = $1,000 * 4.1%

= $41

Current Bond price = Present value of Bond

Present value of bond = $41 * PVIFA(3.25%, 18) + $1,000 * PVIF(3.25%, 18)

= $41 * 13.4673 + $1,000 * 0.5623

= $552.16 + $562.30

= $1,114.46

Current Bond Price = $1,114.46

Final answer:

To find the current price of Wesimann Co.'s bond, discount the semiannual coupon payments and the face value at maturity at the semiannual YTM rate of 3.25% and sum their present values. The bond makes $41 semiannual payments, has a $1,000 face value, and 19 periods remain until maturity. Use the present value formulas for the annuity of coupon payments and the single payment of the face value.

Explanation:

To calculate the current price of Wesimann Co.'s bond, we must discount the future cash flows of the bond (coupon payments and the face value at maturity) to the present value using the current yield to maturity (YTM) of 6.5 percent. As the bonds make semiannual payments, the coupon rate per period is 4.1 percent (half of 8.2 percent), and the YTM per period is 3.25 percent (half of 6.5 percent).

The bond has 19 periods remaining since it was issued a year ago and it is a 10-year bond. For each period, the investor will receive a semiannual coupon payment of $41 (4.1% of $1,000). At the end of the bond's term, the investor will also receive the face value of $1,000. These payments should be discounted at the semiannual YTM rate to calculate the present value, which is the current price of the bond.

Using the present value formula for annuities and a single payment, the bond's current price is the sum of the present value of the annuity of coupon payments and the present value of the face value received at maturity. The formula is expressed as:

Current Price = (C * [1 - (1 + r)^-n]/r) + (F / (1 + r)^n)

Where:

C is the semiannual coupon payment ($41)

r is the semiannual YTM rate (3.25%)

n is the total number of semiannual periods remaining (19)

F is the face value of the bond ($1,000)

By plugging in the numbers:

Current Price = ($41 * [1 - (1 + 0.0325)^-19]/0.0325) + ($1,000 / (1 + 0.0325)^19)

Once you carry out these calculations, you will get the current price of Wesimann Co.'s bonds.

Answer:

$41,623.84

Explanation:

[tex]\text{Present Lump\: Sum}, \:A_0=\dfrac{P[1-(1+i)^{-kt}]}{\frac{r}{k} }[/tex]

C=Payment Per Period

Yearly Interest Rate, =6%=0.06

Therefore, Periodic(Quaterly) Interest Rate, i= 0.06/4=0.015

Total number of Periods, n =4 X 30 =120 Quarters

Therefore, the maximum lump sum that the client will be willing to pay is:

[tex]=\dfrac{750[1-(1+0.015)^{-4X30}]}{0.015}=\$41,623.84[/tex]

Answer:

Bonds are the financial instruments used for the purpose of investing funds for safer returns in the future, along with the fixed rate of return earned each year.

Explanation:

The issue or sale price of the bonds as of January 1 for each of the independent cases is computed with the help of the following formula:

[tex]\begin{aligned}\text{Present Value}&=\text{Future Value}\times\frac{1}{(1+r)^n}\end{aligned}[/tex]

The issue price is computed below as given in the tables.

It can be calculated either by using the calculator or the excel sheet formula.

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The issue price of bonds is calculated based on the market interest rate. If the market interest rate is lower than the coupon rate, the bonds will be sold at a premium, if it matches with the coupon rate, the bonds will be at face value and if it's higher, the bonds will be sold at a discount.

The question is about calculating the issue price of bonds for James Corporation under various market interest rates. The main formula to compute the bond price is the present value (PV) of its future cash flows which consists of semi-annual coupon payments and the face value (principal) repayable at the end of bond term (maturity).

(1) Case A: Market interest rate (annual): 4 percent

: The market interest rate is lower than the coupon rate so the bond will be sold at a premium. The issue price will be calculated as the present value of $15,000 semi-annual interest payments for 10 years plus the present value of the $500,000 face value repaid at the end of 10 years.

(2) Case B: Market interest rate (annual): 6 percent

: The market interest rate matches the coupon rate so the bonds will be sold at par, i.e., face value, which is $500,000. (3) Case C: Market interest rate (annual): 8.5 percent

: The market interest rate is higher than the coupon rate, so the bonds will be sold at a discount. The issue price is the present value of $15,000 interest payment for 10 years plus the present value of the $500,000 face value repaid at the end of 10 years.

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Answer:

$0.1

Explanation:

Data provided

Projected Sales = $37,500

Desired profit = $30,000

Number of units sold = 75,000

The computation of target cost per unit is shown below:-

Targeted total cost = Projected Sales - Desired profit

= $37,500  - $30,000

= $7,500

Target cost per unit = Targeted total cost ÷ Number of units sold

= $7,500 ÷ 75,000

= $0.1

Answer:

Competitive parity

Explanation:

Answer:

Yes, I will sign the contract.

Explanation:

The break-even exchange rate for the currency options contract is $1.46/BP and the exchange rate at the time of the payment will be $1.43/BP which means a reduction of $0.03 as future value. Since the contract was not signed with the inflationary rate, the receiver is at advantage while the lender is at a loss.

Answer:

Complete question

You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of US$.

Information for Forward Contract:

Forward exchange rate (one yr): 1.54 $/BP

Information for Money Market Instruments (MMI):

Current exchange rate: 1.50 $/BP

Investment return at Aerion Fund Management (in UK): 4% annual

Interest rate of borrowing from Bank of America (in USA): 2% annual

Information you need for Currency Options Contract:

Options premium: 0.015 $/BP

Interest rate of borrowing from Bank of America (USA): 2% annual

Allowed to exercise options at 1.54 $/BP

If the break-even exchange rate for the Currency Options Contract is 1.46 $/BP, and you believe the exchange rate at the time of the payment would be 1.43 $/BP, should you sign the contract?

Explanation:

No, I will not sign the contract because the break-even exchange rate itself is 1.46 $/BP and it would mean that exchange rate below this price will give gains to the company and above this price would be a losing proposition. Since on the due date, exchange rate in the market will be lower than the options break-even price, company will buy the BP from the market and pay its obligation instead of exercising option at higher rate.

If the market interest rate rises to 9% from the bond's coupon rate of 6%, the bond would be worth less than its face value. The present value of the final interest payment and principal at the new rate would total $9,724.77. Therefore, one would expect to pay less than $10,000 for this bond.

When considering the purchase of a bond, the market interest rate at the time of purchase relative to the bond's coupon rate will determine whether the bond is bought at a premium, discount, or at par value. For a $10,000 ten-year bond with a 6% interest rate, if interest rates increase to 9% one year before the bond matures, the bond's price will fall because newer issues in the market offer a higher return.

Assuming that the bond has been paying $600 annually (6% of $10,000), and there is one more payment to be received before the bond matures, the present value of the final interest payment and the principal at a discount rate of 9% can be calculated as:

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Answer:

                                      Bracelet A,                 Bracelet B

Total fixed cost =             $15,000                    $12,400

Total variable cost =        $65                           $77

Total Avoidable cost =    $8,829                      $6,941

Explanation:

According to the scenario, the given data are as follows:

For Bracelet A

Cost of material = $29

Cost of labor = 36

Advertising cost = 8,800

Annual depreciation = 6,200

For Bracelet B

Cost of material = $41

Cost of labor = 36

Advertising cost = 6,900

Annual depreciation = 5,500

So, Fixed cost for each products = Advertising cost + Annual depreciation

For Bracelet A,

Fixed Cost = 8,800 + 6,200 = 15,000

For bracelet B,

Fixed cost = 6,900 + 5,500 = 12,400

Now, Variable cost = Cost of material + Cost of labor

For Bracelet A

Variable cost = 29 + 36 =  65

For Bracelet B

Variable cost = 41 + 36 = 77

And Avoidable cost = Cost of material  + Advertising cost

For Bracelet A,

Avoidable cost = 29 + 8,800 = 8,829

For Bracelet B

Avoidable cost = 41 + 6,900 = 6,941

Answer:see attached file

Explanation:

Answer:

Beginning units          8000 Transferred out 20,000

Started intro production 15000   Ending units          3,000

                                       23000                          23000

Equivalent units             Material                    Conversion  

Units transferred          A         20000                20000  

Ending Units                           3,000                  3,000  

Completion                           100%                     70%  

B                                           3000                     2100  

Total units                         23000                    22100

Answer:

Total income tax expense =  $172

Explanation:

solution

we get here first tax Currently Payable that is

tax Currently Payable = $550 million × 40%

tax Currently Payable = $220  million

and Tax credit available =  $80 million

so here Net Tax currently payable will be

Net Tax currently payable = $220 - $80

Net Tax currently payable  = $140 million

and

Additional projected liability is = $80 - $48

Additional projected liability is = $32 million

so here Total income tax expense will be

Total income tax expense = $140 million  + $32

Total income tax expense =  $172

Answer:

a. Traditional Income Statement

Sales ($125 x 140)                            $17,500

Cost of Sales ($60 x 140)               ($8,400)

Gross Profit                                      $9,100

Salaries                                           ($1,300)

Rent                                                 ($1,000)

Sales Commission ($17,500 x 5%) ($875)

Net income                                      $5,925

b. Contribution Margin Income Statement

Sales ($125 x 140)                            $17,500

Less: variable Costs

Cost of Sales ($60 x 140)               ($8,400)

Sales Commission ($17,500 x 5%) ($875)

Contribution Margin                       $8,225

Less: Fixed Costs

Salaries                                           ($1,300)

Rent                                                 ($1,000)

Net income                                      $5,925

Explanation:

a.

Traditional Income statement calculates the gross profit after deducting the cost of goods sold from the revenue. After that it deduct all the operating expenses to calculate the Net Income.

b.

Contribution margin income statement consider all the variable expenses as cost of product cost and calculates the contribution margin, after that the fixed costs are deducted calculate the net income.

Answer:

a. Depreciation expenses in 2014 and 2015 using straight-line method is the same for each year at $2,500

b. Depreciation expenses using double-declining balance method:

+ 2014: $6,400

+ 2015: $5,120

c. Depreciation expenses using units-of-production method:

+ 2014: $1,500

+ 2015: $2,062.5

Explanation:

a. Using straight-line method, the depreciation expenses will be the same for the 10 useful life of the asset which is calculated as: (Historical asset cost - estimated residual value) / useful life = (32,000 - 7,000) /10 = $2,500

b. Using declining balance method:

Depreciation in a year = 2 * Depreciation rate x Asset carrying value = 2 * (1/useful life) x Asset carrying value.

So, depreciation in 2014 = 2 x 1/10 x 32,000 = $6,400

      depreciation in 2015 = 2 x 1/10 x ( 32,000-6,400) = $5,120

c. Using the units-of-production method:

Depreciation expenses for a year will be equal [ (Historical cost - estimated residual value)/ Expected production capacity] x Production level during a year

So, depreciation in 2014 = (32,000-7,000)/20,000 x 1,200 = $1,500

      depreciation in 2015 = (32,000-7,000)/20,000 x 1,650 = $2,062.5

Answer:

ROI = net profit / total investment

1. What is the current return on investment (ROI) being realized by your division

2. What would happen to the near-term ROI of your division after adding the effect of the new investment?

If you carry out the new project the ROI of your division will decrease.

3. As manager of this division, given your incentive compensation plan, would you be motivated to make the new investment?

Final answer:

The current ROI of the division is 15.06%. After considering the new investment, the near-term ROI would decrease to 14.36%. The manager's motivation to invest might be reduced due to the impact on their annual bonus linked to the ROI, despite the investment's acceptability to top management.

Explanation:

To calculate the current return on investment (ROI) for the division before considering the new investment, we use the formula:

ROI = (Operating Income / Asset Base) × 100

So, the current ROI = ($625,000 / $4,150,000) × 100 = 15.06%

Considering the new investment of $550,000 that increases operating income by $50,000, the new operating profit would be $675,000, and the new asset base would be $4,700,000. The new ROI would be ($675,000 / $4,700,000) × 100 = 14.36%. This indicates that the near-term ROI would decrease after making the investment.

Considering the incentive compensation based on ROI, as a manager, you would be less motivated to make the new investment as it would decrease the near-term ROI and potentially your annual bonus, even though the project's return is acceptable to top management.