If a project's discounted payback period is less than its useful life, _____.

a. the terminal value of its future cash inflows is less than the future value of its initial cost

b. the present value of its future cash inflows is greater that the future value of its initial cost

c. the present value of its future cash flows exceeds its initial cost

d. its future cash inflows are less than its initial cost

e. its cost-recovery time should exceed the maximum cost-recovery time established by the firm

Answer:

For the first 2 we calculate the future value:

(A)856

(B)1,122.04

(C) and (D) thre present value will be 800

Explanation:

[tex]Principal * (1+ r)^{time} = Ammount[/tex]

[tex]800* (1+ 0.07)^{1} = Ammount[/tex]

856

[tex]800* (1+ 0.07)^{5} = Ammount[/tex]

1,122.041358

[tex]\frac{856}{(1 + 0.07)^{1} } = 800[/tex]

[tex]\frac{1,122.04}{(1 + 0.07)^{5} } = 800[/tex]

Answer: The following have the potential to increase the net present value of a proposed investment:

I. Ability to immediately shut down a project should the project become unprofitable.

II. Ability to wait until the economy improves before making the investment.

III. Option to place the investment on hold until a more favorable discount rate becomes available.

IV. Option to increase production beyond that initially projected.

Explanation:

Net present value (NPV) in rudimentary terms can be defined as the difference between the present value of cash inflows and the present value of cash outflows proposed over a duration.

NPV is used in capital and investment planning to examine the gain of a projected investment.

Thus the above given factors are thoroughly responsible or have the potential to increase the NPV of a proposed investment.

All the listed options, which include the ability to shut down a project, delay the investment till economic conditions improve, place the investment on hold for a better discount rate, and increase production beyond initial projections, have the potential to increase the Net Present Value of an investment.

The potential actions that could increase the net present value (NPV) of a proposed investment are as follows:

Keep in mind that the Net Present Value is a measure of the profitability of an investment, which is calculated by subtracting the present value of the investment outflow from the present value of the investment inflow. A higher NPV indicates a more profitable investment.

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Answer:

Price Earning Ratio = Price/Earnings = we use the general formula.

[tex]\frac{100}{10}[/tex]

$100/$10 = 10 times

Explanation:

Price Earning ratio is calculated using the current market price of share and earnings per share of the company. In the given question there is no relevance of interest rate as this is not the cost of equity.

Price Earning Ratio tells how much earnings are required to meet the cost of 1 share.

Another formula for P/E ratio = 1/Cost of Equity. Since 12% is not cost of equity this formula cannot be used.

Also earnings per share is given assumed it is after interest cost if any.

Answer:

The $329,000 is the amount which should Red report as net cash outflows from investing activities.

Explanation:

Investing Activities : The investing activities is that activities in which the purchase of fixed assets and intangible assets is to be recorded. Other expenses will  not be considered.

So,

The net cash outflow from investing activities = Purchase of Blue, Inc., bonds - Proceeds from sale of land

= $353,000 - $24,000

= $329,000

The Gain on sale of land is an operating activity.

The amortization of bond discount is also an operating activity.

Cash dividends declared is an financing activity.

Cash dividends paid is also an financing activity.

Proceeds from sales of Red Co. common stock is also an financing activity.

So, these costs is not considered.

Thus, the $329,000 is the amount which should Red report as net cash outflows from investing activities.

Final answer:

Red Co. should report a net cash outflow from investing activities of $329,000 in its statement of cash flows for the year ended December 31, 2018. This is calculated by subtracting the cash inflows from the sale of land ($24,000) from the cash outflows for the purchase of bonds ($353,000).

Explanation:

When preparing a statement of cash flows, Red Co. should report a net cash outflow from investing activities by considering the following items:

To calculate net cash outflows from investing activities:

Therefore, the net cash outflows from investing activities is calculated as $353,000 (cash out) - $24,000 (cash in) = $329,000.

Answer: Option (b) is correct.

Explanation:

Correct : by eliminating the need to travel to stores to shop.

Internet literally reduced the search cost by saving the travel time of the consumers to the shopping stores. Now days, almost all the consumers prefer to buy products online instead of travelling here and there for the products.

Buying products from the stores involves certain costs such as travelling cost, waste of time, miscellaneous,etc.

Hence, internet facility helps in reducing these kind of costs, that's why in today's world mostly people rely more on internet for shopping and all instead travelling to the stores.

The Internet has reduced search costs through eliminating physical shopping trips, enhancing global shopping experience, improving 'business-to-business' transactions, and streamlining the job search process.

The internet has dramatically reduced search costs in several significant ways. Firstly, it has eliminated the need to physically travel to stores to shop, thereby reducing transport costs and time. This is made possible due to technological advancements and the rise of global e-commerce platforms. Consumers can now order goods from anywhere in the world, increasing competition among retailers and setting the stage for lower prices.

Secondly, technology has also facilitated the development of 'business-to-business' websites. Such platforms have streamlined the procurement process by enabling buyers and suppliers to find each other with ease.

Lastly, the internet has simplified the job search process. Convenient tools such as LinkedIn and other online job portals have made it easier for job seekers to find opportunities and make contact with potential employers.

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Answer:

The incremental profit (loss) for each product  is:

A = $-12,000

B = $49,000

C = $41,000

Explanation:

Split off Point: The split off point is that point in which joint products treated separately and sell them as a unique product.

Incremental Cash flow: The incremental cash flow is that cash flow which show  the difference between the split off sales and normal sales.

Here, incremental means that if split off sales is greater than normal sales than firm is earning profit else the firm will suffer loss.

Steps to compute the incremental cash flows for each products:

Step 1: First write Additional selling price of all three products

Step 2: Than write the Split off selling price of all three products

Step 3: Now take the difference of selling price

Step 4: After that, multiply step 3 with split off sales

Step 5: Than write the additional sales

Step 6: Compare the two sales and analyse whether firm earns profits or suffer a loss, and finally the increment cash flows come.

The calculation is done in attachment sheet.

Thus, the incremental profit (loss) for each product  is:

A = $-12,000

B = $49,000

C = $41,000

Answer:

The sales revenue would be 170,000 if Hammer Time implements the decrease in selling price.

This would generate a decrease of $10,000 in the sales revenue

Explanation:

Understanding the way sales revenue is generated:

[tex]Units Sold * Unit Price = $Sales Revenue[/tex]

If the selling price drops to $10

and units sold increase by 5,000

[tex](12,000 + 5,000) * ( 15 - 5 ) = 17,000 * 10 = 170,000[/tex]

Comparing with the previous year:

[tex]12,000 * 15 = 180,000[/tex]

This policy decrease the sales revenue which makes the business less profitable.

Final answer:

The budgeted sales revenue if the selling price decreases to $10 per hammer is $375,000

Explanation:

The budgeted sales revenue if Hammer Time implements the decrease in selling price is $375,000.

To calculate this, first determine the new estimated sales quantity (12,000 + 5,000 = 17,000 hammers). Then, multiply the new selling price of $10 per hammer by the new estimated sales quantity: $10 x 17,000 = $170,000. Thus, the budgeted sales revenue would be $170,000 x 2 (for both sales transactions per hammer) = $340,000. However, if the original selling price was maintained ($15 x 12,000 = $180,000), the total budgeted sales revenue would have been $180,000 x 2 = $360,000.

Answer:

The correct option here is A) marginal cost exceeds marginal revenue

Explanation:

When a company is producing more goods and services, it becomes a bad move because at this point company's marginal cost starts exceeding the marginal revenue , which means with each additional units a company is producing it is losing profit on that unit, so it is better for a company to produce less and try to find that level of output where its marginal cost and revenue are equal because at that level, company would be able to make optimal profits.

It's generally bad for a company to produce more of a product or service if the marginal cost of making an additional unit surpasses the marginal revenue gained from selling that unit. This is because this would mean the company is using its resources inefficiently, possibly leading to a financial loss.

In economics and business, it's generally not advantageous for a company to produce more of a good or service if certain conditions are present. Specifically, if the marginal cost of producing an additional unit of the product exceeds the marginal revenue gained from selling that unit, the company would lose money on each additional unit produced.

The marginal cost is the increase in total cost that arises from producing one extra unit of a product, while the marginal revenue is the increase in total revenue that results from selling one extra unit. If marginal cost is greater than marginal revenue, the company is not efficiently allocating its resources and may end up with a financial loss.

Therefore, option a. 'marginal cost exceeds marginal revenue' accurately describes a situation where it would be detrimental for a company to produce more of a product or service. The other options, although relevant to different business situations, do not necessarily indicate a bad move in terms of increased production.

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Answer:

(1)

Cash 27,000

   Subscriptions Received in Advance 27,000

(2)

Subscriptions Received in Advance 7,500

                             Subscriptions Received 7,500

(3)

It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.

Explanation:

(1)

At the beginning of the year the subscription represent an obligation to the business, it must deliver their magazines, the revenue is not earned.

total amount900 x 0 = 27,000

(2)

beginning + new subcription - ending = earned revenue

40,500 + 27,000 - 60,000 = 7,500

(3)

It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.

Final answer:

The sale of 900 subscriptions is recorded by debiting Cash and crediting Subscriptions Received in Advance. An adjusting entry for one month's worth of earned revenue is made by debiting Subscriptions Received in Advance and crediting Subscription Revenue. Forgetting this adjustment would lead to an understatement of net income for August.

Explanation:

Recording and Adjusting Subscription Revenue and Its Impact on Net Income

1) To record the sale of the 900 yearly subscriptions during the month of August, we would perform the following journal entry: Debit Cash for $27,000 (900 subscriptions × $30 each) and Credit Subscriptions Received in Advance for $27,000. This transaction increases both the company's cash and its liability for deferred subscription revenue.

2) At the end of August, an adjusting entry must be made to recognize the subscription revenue that has been earned during the month. Since the subscriptions are for a 12-month period, and one month has passed, 1/12th of the revenue received in advance should be recognized as earned. Therefore, we Debit Subscriptions Received in Advance for the portion earned ($40,500 for the initial balance plus $27,000 from new subscriptions equals $67,500 in total, divided by 12 gives $5,625) and Credit Subscription Revenue for $5,625.

3) If the accountant recorded the sale of the subscriptions but forgot to adjust for revenue recognition on August 31, the net income for August would be understated. This is because the earned revenue for August hasn't been accounted for, leading to a lower net income than should be reported.

Answer:

Unit cost of an assembled radio = $215

Explanation:

Cost of direct material for the month = $800,000

Cost of conversion = $705,000

Total units produced = 7,000 units

Cost per unit of manufacturing will be total of both the costs divided by number of units produced.

Total costs = $800,000 + $705,000 = $1,505,000

Cost per unit = [tex]\frac{1,505,000}{7,000} = $215[/tex]

As there was no opening or closing WIP inventory all the costs incurred during the month will be considered.

Unit cost of an assembled radio = $215

Answer:

The correct answer is option b) $367,000

Explanation:

Here for calculating the correct amount of inventory that Horace should report can be calculated through, by adding the inventory worth $320,000 at 31 December, 2015 with consignment given to Herschel worth $47,000, SO

Correct amount of inventory =

                        Amount of inventory on 31 December

                                                     +

                        Consignment given to Herschel

= $320,000 + $47,000

= $367,000

Here we are taking Herschel consignment in to account and that too at the historical purchase cost because Horace company has give the Herschel to sell the goods on his behalf but the transfer of ownership has not taken place here , the right to ownership here remains with the Horace and the amount at which they should be recorded is at purchase cost not selling cost.

We will also not include goods worth $ 22,000 in to the calculation because the Horace company has not received the goods physically yet, we will include those goods in to inventory on January 3 not before that.

The correct inventory amount for Horace to report is $367,000, taking into account goods on consignment and goods not yet received.

The correct amount of inventory that Horace should report is $367,000.

In order to determine the correct amount of inventory, we need to consider the goods on consignment and the goods that were purchased but have not yet been received by Horace.

The goods on consignment with Herschel Consignment should be included as part of Horace's inventory, as they still belong to Horace. Therefore, we need to add the selling price of $75,000 to the inventory count. Additionally, the goods that were purchased but have not yet been received should also be included, so we need to add the purchase amount of $22,000 to the inventory count. Adding these amounts to the initial count of $320,000 gives us a correct inventory amount of $367,000.

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Answer:

1. Preparing Contribution Income statement

Sales = 40,000 units X $42.60 =                                                $1,704,000

Less: Variable Costs

Direct Material = $11 X 40,000 =                                 $440,000

Direct Labor = $3 X 40,000 =                                      $120,000

Variable Manufacturing Overhead = $3 X 40,000 = $120,000

Variable Selling Expenses = $4 X 40,000 =                $160,000

Total Variable Costs =                                                                    ($840,000)

Contribution Margin =                                                                      $864,000

Less: Fixed Costs

Selling & Administrative =                                           $300,000

Manufacturing Overheads =                                       $196,000

Total Fixed Cost =                                                                           ($496,000)

Net Operating Income =                                                                  $368,000

2. Now we have net income as per Contribution statement = $368,000 and net income as per Absorption Costing = $404,000

This difference is because of Fixed Manufacturing Overheads

Under Absorption costing Fixed Manufacturing Overheads charged = $196,000  ÷ 49,000 units = $4 per unit X 40,000 units = $160,000 whereas in contribution statement it is charged fully.

Under absorption costing even fixed costs are charged based on the number of units produced, whereas in income statement is it charged completely irrespective of the units produced as that value is fixed and cannot be avoided on per unit basis.

Difference = $404,000 - $368,000 = $36,000

Manufacturing cost for 9,000 units (49,000 - 40,000) = at the rate of $4 = $36,000

In case cost of fixed manufacturing overhead is reduced by $36,000 then profit will be increased to $368,000 + $36,000 = $404,000 same as of absorption costing.

Using variable costing, we compute the variable costs and subtract from sales to get the contribution margin. Fixed costs are then subtracted to get the net operating income. The difference between absorption costing and variable costing net operating income is due to the treatment of fixed manufacturing overhead.

Variable costing distinguishes between fixed and variable costs, and treats only variable costs as product costs. Accordingly, the per-unit product cost under variable costing would be $17 (Direct materials $11 + Direct labor $3 + Variable manufacturing overhead $3).

Next, let's compute the sales, variable costs, and contribution margin:

Subtract fixed costs (Fixed manufacturing overhead of $196,000 and fixed selling/administrative costs of $300,000) from the contribution margin to get the net operating income under variable costing: $368,000.

So, the difference between the net operating income under absorption costing ($404,000) and variable costing ($368,000) is $36,000. The reason for the higher net operating income under absorption costing is because some fixed manufacturing overhead was included in the cost of goods sold, reducing reported cost of goods sold and thereby increasing net operating income.

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Answer: Increasing opportunity cost

Explanation:

Yes, economic theory suggest that countries producing more of those goods in which they have a comparative advantage then they must have benefit from international trade. But countries rarely specialized in the production of one good and that is because of increasing opportunity cost.

Countries with a constant opportunity cost are completely specialized in the production of one good.

In case of increasing opportunity cost, when a country shift their resources from the production of one good to another, this will lead to an increase in the opportunity cost of producing that good.

This is because of the productivity of the resources. This means that resources that are reallocate from the production of one good to another were better suited for the good whose production decreases.

Answer: the correct answer is 324,000.

Explanation:

The requirement is to determine the number of shares to be used in computing year 2 basic earnings per share (EPS).  For EPS purposes, shares of stock issued as a result of stock dividends or splits should be considered outstanding for the entire period in which they were issued.  Therefore, both the original 300,000 shares and the additional 30,000 shares (10% × 300,000) are treated as outstanding for the entire year.  The 10/1/Y2 purchase of 24,000 treasury shares results in a weighted-average deduction of 6,000 shares (3/12 × 24,000) because the shares were not outstanding for only 3 months during year 2.  Therefore, the number of shares for EPS computations is 324,000.

Answer:

The cost of goods sold for next month is expected to be $202,500

Explanation:

Given that,

Sales budget = $450,000

Cost of Good sold = 45% of sales

Opening inventory = $20,000

Ending inventory = $24,000

Beginning accounts payable = $206,500

Since, in the given question, it is mentioned that the cost of good sold is 45% of sales.

So,

Cost of Goods Sold (COGS) = 0.45 × $450,000

                                              = $202,500

Hence, the cost of goods sold for next month is expected to be $202,500

Note: we don't considered other things which is mentioned in the question.

The budgeted cash payments for materials in January are $12,520.

To calculate the budgeted cash payments for materials in January for Fortune Company, we need to consider both the payments made in January for purchases made in December and the payments made in January for purchases made in January itself.

1. Payments for December Purchases:

  - December Accounts Payable: $6,500

  - Since payments are made 50% in the month of purchase and 50% in the following month, we assume that the $6,500 is the amount to be paid in January for purchases made in December.

2. Payments for January Purchases:

  - January Material Purchases: $12,040

  - 50% of January purchases will be paid in January: [tex]\( 0.50 \times 12,040 = 6,020 \)[/tex]

Now, sum these amounts to get the total budgeted cash payments for materials in January:

[tex]\[\text{Total January Payments} = 6,500 + 6,020 = 12,520\][/tex]

Answer:

Depreciation for second year = $34,875

Explanation:

Total amount of depreciation to be charged in useful life = Cost of machine - Residual Value

= $248,170 - $13,500 = $234,670

Total expected units to be produced during the life of machine = 757,000 bolts

Depreciation per unit bolt = $234,670/757,000 = $0.31

When depreciation is based on units of production method, it will be charged based on units of production.

Depreciation for second year = Units produced in second year X Rate of depreciation per unit of production

= 112,500 X $0.31 = $34,875

$34,875

To calculate the depreciation expense for the second year using the units-of-production method, we can multiply the depreciation per unit by the number of units produced in the second year.

To calculate the depreciation expense using the units-of-production method, we need to determine the depreciation per unit of production.

Depreciation per unit = (Cost - Residual Value) / Total Units of Production

Depreciation Expense for the second year = Depreciation per unit * Number of Units Produced in the second year.

In this case, the depreciation per unit would be (248170 - 13500) / 757000 = $0.318 per bolt of woven fabric. Therefore, the depreciation expense for the second year would be 0.318 * 112500 = $35,925.

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Answer: Option B, D , E

Explanation: In simple words, goods which are not used in the production of other goods rather consumed by the individual to satisfy current wants is called consumer goods.

So, form the above explanation we can conclude that a chocolate bar and a golf ball are consumer goods among all options.

.

B. A ski lift will be used continuously by the owner for its business operation. Hence, not a consumer good.

D. A shopping mall cannot be considered a good. It is a fixed asset to the entity owning it. Hence, not a consumer good.

E. A train will continuously used by the organisation owning it for its business purpose. Hence , not a consumer good.

Answer:

The answer is (C) entire economy.

Explanation:

Gross domestic product (GDP) is the total sum of goods and services that a country produces within a certain amount of time. It is a general estimate of what a country produces as a whole – not just the poorest, the average, or the richest person. To calculate GDP, you need to measure the output, expenditure, and income of a country’s economy – and adding them up to get the total. This total is the GDP.

Answer:

the correct option is c) change in the money wage and other resource prices does not shift the long run aggregate supply

Explanation:

First of all aggregate supply can be defined as the sum total of all the goods and services that are supplied in the economy during a defined period of time.

In the given question the option C is right because it is assumed that in the case of long run aggregate supply , the supply curve tends to remain static because any kind of change in the aggregate demand causes only temporary changes in the total output of the economy and the slope of the curve remains vertical. It is also assumed that the economy is being used at optimal as only factors like labor, capital, and technology can bring in aggregate supply.

Options a) and b) can't be true because if the supply curve is gonna shift , it is first going to shift in short run aggregate supply then long run aggregate supply , not the other way around.

Answer: 0.32 times

Explanation: Return on assets can be defined as the ratio under which companies are evaluated on the basis of total amount of assets investment. It is a ratio that evaluates the profitability of a company, it shows the ability of a company to generate revenue from the assets invested in it.

It can be computed as following :-

[tex]=\:\frac{NET\:INCOME}{AVERAGE\:TOTAL\:ASSETS}[/tex]

[tex]=\:\frac{\$304,300}{\$931,800}[/tex]

      = 0.32 times

Answer:

Intrinsic Value $43.69

Explanation:

[tex]\left[\begin{array}{ccc}Year&Dividends&Present Value\\1&1.357&1.23926940639269\\2&1.60126&1.33546840140948\\3&53.9853371428571&41.1181399520726\\Intrinsic&Value&43.6928777598748\\\end{array}\right][/tex]

The first Step is calculate the dividends:

[tex]dividends \times growth \: rate = next\: perdiod \: dividends[/tex]

We multiply 1.15 today dividends by the growth rate of 18% to get year 1

then year 1 by this growth rate to get year 2 and finally

year 2 times growth rate to get year 3 Dividends

Then on year 3 we apply the Dividends growth model

[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]

[tex]\frac{Year3 }{0.095-0.06} = Intrinsic \: Value[/tex]

Third, we need to bring this values to present

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

Year 1 /1.095

Year 2 /1.095^2

Year 2 /1.095^3

Final step, we add them to get the intrinsic value of the bond today.

Answer:

The answer is 422,000.

Explanation:

The cash flow from operating activities is equal to Net income minus changes in working capital. Working capital (WC) is defined as Current assets minus Current Liabilities. Changes in working capital is defined as WC at end of the year minus WC at the beginnig of the year.

If the only change in Current assets is the disminution of accounts receivable, then the WC also decreases in that amount. So, the changes in WC is $105,000 - $120,000 = $(15,000).

The the cash flow from operating activities is[tex]$ 407,000 - $ (15,000) = 407,000 + 15,000 = 422,000[/tex]

Answer:

Duane owns his own real estate company. The Bureau of Labor Statistics counts Duane as employed and in the labor force.-B.

Duane, who owns his own real estate company, is considered employed and in the labor force (B) according to the classifications used by the Bureau of Labor Statistics for employment status.

According to the U.S. Bureau of Labor Statistics, the adult population is divided into three categories based on employment status: employed, unemployed, and those not in the labor force. An employed person is someone who is currently working for pay. Unemployed persons are those who are out of work but actively looking for a job. Those who are not in the labor force are neither employed nor actively seeking employment.

The student asked where Duane, who owns his own real estate company, is categorized by the Bureau of Labor Statistics. Since Duane is working at his company, he is employed and considered to be in the labor force. Therefore, the correct answer is B. employed and in the labor force.

Final answer:

Among the given options, the supply of baking cupcakes has the most elasticity in the short term due to the quick production process and the ease of increasing quantity supplied.

Explanation:

In evaluating the elasticity of supply in the short term for different industries, we must consider how quickly producers can respond to a price increase with a higher quantity supplied. When it comes to producing feature movies, building skyscrapers, and providing health care, these require significant time investments, whether for production, construction, or training medical staff, resulting in relatively inelastic supply curves. Conversely, the process of baking cupcakes can be quickly adjusted to changes in demand. Ingredients are readily available, and the production time is short. Therefore, in the short term, the supply for cupcakes would be the most elastic among the listed activities due to its quick reaction to cost changes and the ability to increase quantity supplied (Qs) without significant delays.

Answer:

The $384,000 is the amount which will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018

Explanation:

Since in the given question, the Nana company does not have significant influence over Papa company, so the net income, retained earning, paid value would be considered in the calculation part.

The computation of investment reported in the balance sheet of Nana company is shown below:

= Number of shares × fair value per share

= 6,400 shares × $60

= $384,000

Thus, the $384,000 is the amount which will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018

Answer: Option D

Explanation: Economic cost is the total cost a firm bears in the form of expenses incurred and opportunity cost incurred. Opportunity cost can be defined as the loss of profit for choosing one alternative over other.

In the given case salary and interest on certificate of deposit is the opportunity cost for Ellie.

so,

Economic cost = $80,000 + $15000 + $3000 + $1000 + $1200 + $35,000 + $500

                       = $135,700

Answer: If the airline's objective is to increase total revenue, it should decrease the price charged to vacationers and increase the price charged to business travelers.

Explanation:

Here the objective of the airline is to increase total revenue,  therefore airline should practice price discrimination i.e. charge different prices to vacation travelers and business travelers.

Since customers traveling for vacations have elastic demand i.e. ε > 1 , so if airline reduces the price of air ticket for them, then there will be a percentage decrease in the price that will be less then the percentage increase in the number of vacation travelers.

Therefore, total revenue will increase with decreasing price charged to vacationers.

Whereas;

The demand of business travelers is inelastic  i.e. ε < 1, so if airline increases the price of air ticket for business travelers, then there will be a percentage increase in the price that will be more then the percentage decrease in the number of vacation travelers

Therefore, total revenue will increase with increasing price charged to business travelers.

Answer:

marginal analysis

Explanation:

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve marginal analysis, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve marginal analysis, which involves comparing the benefits and costs of choosing a little more or a little less of a good. Hence, option D is correct.

Marginal analysis involves dividing a choice into a number of "yes or no" options. More particularly, it contrasts the higher costs that the same activity incurs with the increased benefits that it provides.

For instance, a marginal analysis reveals that hiring a second worker for manufacturing would result in a net marginal advantage if the company has the funds to do so. Or, to put it another way, the potential for producing more things balances out the increase in labour costs.

Thus, option D is correct.

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Answer:

The amount that will recognize under amortization expenses is $2600.

Explanation:

The first step here would be to calculate the amortization expenses for the first 4 years of the patent, here will use straight line depreciation method,

Formula - original value of asset / useful life in years

              - $26,400 / 12

             - $2200

Now for the 4 years this amount would become $2200 x 4 = $8800

The amount of amortization for the first half of 2017 ( up to 30 June ) would be-

= half of full year expenses

= $2200 / 2

= $1100

So up to 30 June 2017, the expenses are $9900 ( $8800+$1100), So the new book value would be = $26,400 - $9900

            = $16,500

In this $16,500 we will add the amount of legal fees, so the total would be -

$16,500 + $6000

= $22,500

The next step is to divide this value by remaining useful; years which is 7.5,

$22,500 / 7.5

= $3000

Now we will divide this amount by 2 because we have to take out expense for remaining last 6 months of 2017

$3000 / 2

= $1500

Adding the expenses for first and second half of 2017 to take out total amortization expense of 2017 -

$1100 + $1500

= $2600