Explanation: For firm to produce commodity they require inputs which are thus provided by households.Labor is supplied by the household sector which is an important input for the production of goods and services. In return the households are provided with wages or salary. Further the households demands goods and service which they pay for using their wages or salary.
Answer: B. A household demands goods and services from the market and supplies factor inputs
Explanation: The economy entails effective management of a system, or especially its resources. As a system of production and distribution and consumption, it requires several level of organization between firms and households. While firms are engaged in marketing of goods and services, the household are engaged in placing demands for these products and services which they consume. They are also involved in the supply of factor inputs such as capital to fund production, human resources in form of labour, management etc. This interplay of roles is the driving force behind successful economies.
You want to borrow $97,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $2,050, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 60-month APR loan?
Answer:
9,7699353%
Explanation:
We need to calculate the Rate of return for the loan with 60 payment of 2050 every month of a loan for 97,000
[tex]2050* \frac{1-(1+rate)^{60} }{rate} = 97,000[/tex]
This is formula is completed using lineal interpolation, or a financial calculator, or a computer software like Excel among others.
This will give us a monthly rate of 0,81416%
Now to convert to Annual Percentage rate we multply by 12
and get 9,7699353%
In early July, Damon Rutton purchased a $70 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was expected to cost approximately $22, and Rutton would probably spend another $15 for a souvenir program and food. It is now December 14. The Shippers were having a miserable season and the temperature was expected to peak at 5 ˚ on game day. Damon is thinking about skipping the game and taking his wife to the movies and dinner, at a cost of $50. The amount of sunk cost that should influence Damon’s decision to spend some time with his wife is
Answer:
Sunk cost will be = $70
Explanation:
Sunk Cost refers to the cost for which the amount has been already spent, and cannot be recovered. These are generally incurred and then not regarded for decision making as irrespective of decision being viable or not this cost cannot be avoided.
In the given instance, Damon Rutton Purchased the ticket of $70
This is the only cost which has already been incurred, else other costs of parking and food will only be incurred if he visits the game of Sarasota Shippers.
When he spend some time with his wife sunk cost will be = $70
Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company’s activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Activity Measure Activity Rate Supporting direct labor Number of direct labor-hours $ 5.55 per direct labor-hour Batch processing Number of batches $ 107.00 per batch Order processing Number of orders $ 275.00 per order Customer service Number of customers $ 2,463.00 per customer The company just completed a single order from Interstate Trucking for 1,000 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.25 direct labor-hours. The selling price was $20 per unit, the direct materials cost was $8.50 per unit, and the direct labor cost was $6.00 per unit. This was Interstate Trucking’s only order during the year. Required: Prepare a report showing the customer margin on sales to Interstate Trucking for the year.
Answer:
Report Showing Customer Margin
Interstate Trucking
Sales value for 1,000 custom seat cushion = $20 X 1,000 $20,000
Less: Direct material = $8.5 X 1,000 units ($8,500)
Less: Direct labor = $6 X 1,000 units ($6,000)
Less: Batch processing $107 X 2 batches ($214)
Less: Direct labor hours = 1 hour/0.25 = 4 units in an hour
Total = ($1,000/4) X $5.55 per labor hour ($1,387.5)
Less: Order processing, cost per order ($275)
Less: Customer service, per customer ($2,463)
Profit on this customer $1,160.5
Customer margin = ( $1,160.5/$20,000 )* 100 = 5.80%
The calculate the customer margin on sales is 5.80%.
How to calculate the customer margin on sales?From the information given, the following can be deduced:
Sales value for 1,000 custom seat cushion = $20 × 1,000 = $20,000
Less: Direct material = $8.5 × 1,000 units = $8500
Less: Direct labor = $6 × 1,000 = $6000
Less: Batch processing = $107 × 2 = ($214)
Less: Direct labor hours = 1 hour/0.25 = 4 units in an hour
Total = ($1,387.5)
Less: Order processing cost = ($275)
Less: Customer services = ($2,463)
Therefore, the profit on this customer will be $1,160.5. Then, the customer margin will be:
= $1,160.5/$20,000 × 100
= 5.80%
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A number macroeconomic variables decline during recessions. One of these variables is the GDP. a) What other variables, besides real GDP, tend to decline during recessions? Given the definition of real GDP and its components, explain the declines in these economic variables which are to be expected. b) Empirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend in spite of the cycles?
Answer:
(a )Besides real GDP, consumption spending and investment spending decline during recessions.
(b) GDP grows in long run because of continuous increase in production because of population growth.
Explanation:
(a) During recessions, there is a general slow down in the economic activities. People stop spending on the things that are not necessary. There is a decline in consumption spending. Investment spending also falls. There is a fall in employment.
(b) In the long run though, the real GDP shows an upward trend as population is continuously increasing and so is the need for goods and services. To fulfill these needs, the production of goods and services is rising continuously. This contributes in the growth of GDP in the long run, despite business cycles and fluctuations.
Final answer:
Macroeconomic variables that decline during recessions include real income, employment, industrial production, and wholesale-retail sales, due to reduced consumer and business spending. Real GDP in the United States shows a long-term upward trend despite business cycles, thanks to technological advancements, productivity improvements, population growth, and capital investments.
Explanation:
Macroeconomic Variables During Recessions-
During recessions, several macroeconomic variables tend to decline besides real GDP. According to the National Bureau of Economic Research (NBER), key indicators include real income, employment, industrial production, and wholesale-retail sales. During a recession, consumer and business spending often decrease, leading to a reduction in real income. In turn, businesses reduce production and cut down on labor, causing unemployment rates to rise and industrial production to fall. Likewise, with lower consumer confidence and reduced incomes, spending on both wholesale and retail goods diminishes.
Real GDP Trend in the United States-
Describing the long-term increase in U.S. GDP requires understanding of the business cycle. Despite periods of expansion and contraction, technological advancements, productivity improvements, population growth, and capital investments have driven the long-term upward trend in real GDP. These factors contribute to the economy's expansion over time, even though it experiences short-term fluctuations due to the business cycle.
Price ceilings and price floors: a)shift demand and supply curves and therefore have no effect upon the rationing function of prices. b)interfere with the rationing function of prices. c)make the rationing function of free markets more efficient. d)cause surpluses and shortages, respectively.
The correct answer is B.
A price floor is a policy established by economic authorities that consists on setting a threshold so that the price of a certain product or service cannot decrease under that. It distorts the market outcome when it is larger than the equilibrium price, because the amount supplied at the price floor level would the larger than the amount demanded by consumers and, hence, there is an excess of supply or surplus. Therefore, the market does not clear because the rationing function of prices has been externally influenced.
A price ceiling is a similar policy established by economic authorities. A threshold is set so that the price of a certain product or service cannot increase over it. It distorts the market outcome when it is smaller than the equilibrium price, because the amount supplied at the price ceiling level would the smaller than the amount demanded by consumers and, hence, there is an excess of demand of shortage. Again, the market does not clear because the rationing function of prices has been externally distorted.
A market clears when the equilibrium is reached and the amount supplied equals the amount demanded, so that the desires of both producers and consumers meet.
Price ceilings and price floors interfere with the rationing function of prices.
Explanation:Price ceilings and price floors interfere with the rationing function of prices.
A price ceiling sets a maximum price that can be charged for a good or service, leading to a shortage as suppliers are not able to charge the equilibrium price. This interferes with the rationing function of prices as it creates excess demand and can lead to inefficient allocation of resources.
A price floor sets a minimum price that must be paid for a good or service, leading to a surplus as suppliers are willing to supply more than the equilibrium quantity. This also interferes with the rationing function of prices as it creates excess supply.
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A C corporation earns $ 8.80 per share before taxes. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the total amount of taxes paid if the company pays a $ 6 dividend?
Answer:
The dividends taxes are $0.90
Explanation:
For the dividend, it will apply the dividend tax rate.
The other tax rates are irrelevant.
[tex]dividends \times (1-tax \:rate) = after-tax \: dividends[/tex]
[tex]6\times (1-.15) = 6 \times 0.85 = 5.10[/tex]
[tex]dividends \times tax \:rate = dividends \: tax[/tex]
[tex]6\times 0.15 = 0.90[/tex]
An independent trucker has to choose one of the four possible combinations of inputs listed below. The two inputs are drivers and machinery. If he buys expensive machinery, then he can hire fewer drivers to deliver the same output. The input combinations are Method 1: 20 drivers, 10 machines; Method 2: 50 drivers, 2 machines; Method 3: 100 drivers, 0 machines; Method 4: 10 drivers, 12 machines. Hiring a driver costs $10. Each machine costs $100. Which method should he use?
Answer:
Method 2: 50 drivers, 2 machines; Minimun cost of $700
Explanation:
[tex]\left[\begin{array}{ccccc}Machine&Machine Cost&Driver&Driver Cost&Total Cost&12&1200&10&100&1300\\10&1000&20&200&1200&2&200&50&500&700&0&0&100&1000&1000\end{array}\right][/tex]
Upon reviewing the total costs of all methods, Method 2 is the most cost-effective choice for the independent trucker with a total cost of $700.
To determine this, we need to calculate the total cost for each method by multiplying the number of drivers by their cost ($10 each) and the number of machines by their cost ($100 each). We then compare these totals to see which is the least.
Method 1: (20 drivers times $10) + (10 machines times $100) = $200 + $1000 = $1200Method 2: (50 drivers times $10) + (2 machines times $100) = $500 + $200 = $700Method 3: (100 drivers times $10) + (0 machines times $100) = $1000 + $0 = $1000Method 4: (10 drivers times $10) + (12 machines times $100) = $100 + $1200 = $1300If imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is
Answer:
$1900 million
Explanation:
The formula for GDP :
Y(GDP)= Investment spending + Consumer expenditure + Government expenditure + Imports - Exports
if we input the numbers from our example we can find out the calculation of GDP as so:
GDP = $500 million + $1000 million + $500 million - $100 million
∴ GDP = $1900 million
A coin sold at auction in 2017 for $9,786,000. The coin had a face value of $15 when it was issued in 1794 and had previously been sold for $140,000 in 1973. a. At what annual rate did the coin appreciate from its first minting to the 1973 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What annual rate did the 1973 buyer earn on his purchase? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. At what annual rate did the coin appreciate from its first minting to the 2017 sale? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
(A) 5.24%
(B) 10.13%
Explanation:
To solve this we are going to use the the formula for compound interest
[tex]$$Principal * (1 + rate)^{time} =$ Ammount[/tex]
We are going to post the know values to get the rate
time = 1,973-1,794 = 179
[tex]15 * (1 + rate)^{223} =$ 140,000 = 1.052395485[/tex]
rate = 5.2395%
and for the second period we are going to do the same
time = 2017 - 1973 = 44
[tex]140,000 * (1 + rate)^{44} =$ 9,786,000 = 1.101336254[/tex]
rate = 10.1336%
The annual rate of appreciation for the coin from its minting in 1794 to the 1973 sale, from 1973 to the 2017 sale, and from 1794 to the 2017 sale, can be calculated using the compound interest formula with the respective values for initial price, final price, and the number of years.
To calculate the annual rate of appreciation for the coin from 1794 to 1973, we apply the formula for compound interest: V = P(1 + r)^n, where V is the final value, P is the initial value, r is the annual interest rate, and n is the number of years. We rearrange the formula to solve for r, giving us r = (V/P)^(1/n) - 1. By plugging in the values: P = $15, V = $140,000, and n = 1973 - 1794 = 179 years, we can calculate the annual rate.
To find the annual rate of appreciation from 1973 to 2017, we use the same formula with different values: P = $140,000, V = $9,786,000, and n = 2017 - 1973 = 44 years.
Finally, to calculate the rate from 1794 to 2017, we use the initial value of $15 and the final value of $9,786,000 over 223 years (2017 - 1794).
he University Health Center receives 500 flu vaccinations at the beginning of each flu season. Suppose they offer these vaccines for $20.00 each. Assume that college students have varying budgets, some have some money to spare, some are on a very tight budget. Some students have pre‑existing conditions, such as asthma and diabetes, that place them at high risk for the flu. Who will receive the vaccines if the University Health Center sells them for this price? the students who will pay for them at that price the students who most need them the students with asthma and diabetes the students who most want them Suppose the school sells all of the vaccines at this price. What has it managed to achieve? Choose the best answer.
Answer: 1. STATEMENT 1
2. It has achieved efficiency.
Explanation:
1. The students who will pay for them at that price will receive the vaccines if the university health center sell them for this price. In this case the theory of free market comes into play, those who have the money will get the resources.
2. The free market theory helps to establish efficiency. If the resources were to be distributed for free the demand will exceed supply resulting in inefficient use of resources.
The flu vaccines offered at $20 each will be bought by those willing to pay that price, which may not align with those who most need them. The school has allocated the vaccines by market demand but hasn't necessarily achieved an efficient distribution for maximizing social value.
Explanation:When the University Health Center offers flu vaccinations at $20.00 each, it will likely result in the vaccines being sold to the students who are willing to pay for them at that price. This may not necessarily be the students who most need them, such as those with asthma and diabetes or those who are on a very tight budget. In selling all of the vaccines at this price, the school has managed to allocate the vaccines to those who value them enough to pay the set price, but this does not guarantee vaccination of those who could potentially benefit the most or contribute most to the greater social value of flu shots.
Flu vaccinations carry a higher social value than the sum of their individual valuations because they not only protect the vaccinated individual but also help in reducing the spread of the flu to others. This creates external benefits and contributes to a healthier community. In offering the vaccines at a fixed price, the school has managed an allocation based on market demand but may not have reached an efficient distribution based on social need and benefit.
Hugh has the choice between investing in a City of Heflin bond at 6 percent or investing in a Surething bond at 9 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Inc., need to offer to make Hugh indifferent between investing in the two bonds?
Hugh would be indifferent in investing in the City of Heflin bond or Surething bond if Surething offers an interest rate of 10%. This is because the after-tax return for Surething at 10% would be equal to the return from the tax-exempt City of Heflin bond at 6%.
Explanation:The key to solving this problem is understanding the concept of after-tax returns. Hugh, being in the 40% tax bracket, must consider how much he will actually keep after tax. For the City of Heflin bond at 6%, if this is a tax-free bond, the after-tax yield is 6%. If Hugh were considering a taxable bond like the Surething bond, the yield would be reduced by his tax rate. This can be calculated using the formula: Before-tax Yield * (1 - Tax Rate).
Using this formula, the equivalent interest rate Surething Inc. needs to offer is: 0.06 / (1 - 0.4) = 0.1 or 10%. Hugh would be indifferent to investing in the two bonds if Surething offers a 10% rate as this would give him the same after-tax return as the 6% tax-free bond.
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A cruise ship with a mass of 1.00×107kg strikes a pier at a speed of 0.750 m/s. It comes to rest 6.00 m later, damaging the ship, the pier, and the tugboat captain’s finances. Calculate the average force exerted on the pier using the concept of impulse. (Hint: First calculate the time it took to bring the ship to rest.)
Answer: The required force = 4.7 x 105 N
Explanation:
Mass of the ship m = 1.00 x 107 Kg
Initial speed u = 0.750 m/s
Final speed v = 0 m/s
Average speed s =( 0.750 + 0) / 2 = 0.375 m/s
Time taken to bring the ship to rest t = [tex]\frac{distance}{speed}[/tex]
= [tex]\frac{6}{0.375}[/tex]
= 16 s
Average force exerted on the pier F =[tex]\frac{m(v - u )}{t}[/tex]
F = [tex]\frac{1.00 x 107 ( 0 - 0.750 )}{16}[/tex]
F = - 4.7 x 105 N
Hence the required force = 4.7 x 105 N
To calculate the average force exerted on the pier by the cruise ship, use the concept of impulse. Calculate the change in velocity of the ship and the time taken to come to rest. Use the equation for impulse to determine the average force.
Explanation:To calculate the average force exerted on the pier, we can use the concept of impulse. Impulse is defined as the change in momentum of an object. We can calculate the change in momentum of the cruise ship by using the equation:
Impulse = Change in momentum = mass × change in velocity
First, we need to calculate the change in velocity of the ship. Since the ship comes to rest, its final velocity is 0. Therefore, the change in velocity is:
Change in velocity = final velocity - initial velocity = 0 - 0.750 m/s = -0.750 m/s
Next, we need to calculate the time it took for the cruise ship to come to rest. We can use the equation of motion:
Final velocity = initial velocity + acceleration × time
Since the final velocity is 0 and the initial velocity is 0.750 m/s, we have:
0 = 0.750 m/s + acceleration × time
Plugging in the values, we get:
0 = 0.750 m/s + acceleration × time
Using the formula for average acceleration:
Average acceleration = change in velocity/time
we can substitute the values and solve for time:
-0.750 m/s = acceleration × time
So the time taken to bring the ship to rest is:
time = change in velocity / acceleration = -0.750 m/s / acceleration
Using the equation for impulse, we can determine the average force exerted on the pier:
Average force = Impulse/time
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Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?a. $-56,000 b. $-6,000 c. $4,000 d. $19,000
Answer: $4,000
Explanation: Economic profit can be defined as the difference between the total revenues generated from operations and cost incurred plus any opportunity cost taken.
Opportunity cost is the cost of next best alternative foregone, that is loss of profits that occurred due to choosing one alternative over other. In the given case loss of interest and loss of highest salary are opportunity cost for Jacqui .
Hence,
economic profit = revenues - (interest + salary)
= $50,000 - ($1000 + $45,000)
= $4,000
Jacqui's economic profit is calculated by subtracting all her explicit and implicit costs from her accounting profits. The economic profit is $4,000.
Explanation:To calculate Jacqui's economic profit, we need to consider both her explicit and implicit costs. Her explicit costs are direct out-of-pocket costs for running her business, whereas her implicit costs involve the opportunity costs associated with the business.
Firstly, Jacqui's accounting profit is $50,000. Secondly, her implicit costs consist of the interest she could have earned on her savings ($20,000 * 0.05 = $1,000) and the highest salary she forgoes, which is $45,000 after turning down three separate job offers. So, her total implicit cost is $1,000 + $45,000 = $46,000. Now, to calculate her economic profit, we subtract her implicit cost from her accounting profit: $50,000 - $46,000 = $4,000.
Therefore, the answer is (C) $4,000.
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The next dividend payment by Savitz, Inc., will be $1.84 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. The stock currently sells for $36 per share. a. What is the dividend yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the expected capital gains yield? (Enter your answer as a percent.)
Answer:
Dividend Yield 5.11%
Cost of Capital or expected return 10.11%
Explanation:
1.84/36 = 0.0511111 = 5.11%
we use the gordon model to calculate the return.
[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]
[tex]\frac{1.84}{return-0.05} = 36[/tex]
1.84/36 + 0.05 = 0.1011111 = 10.1111%
The dividend yield is 5.11% and the capital gains yield can be calculated using the total return.
Explanation:To calculate the dividend yield, we divide the annual dividend payment by the current stock price. In this case, the dividend is $1.84 per share and the stock price is $36. Dividing $1.84 by $36 gives us 0.0511. Multiply this by 100 to get the dividend yield as a percentage: 5.11%.
The expected capital gains yield can be calculated by subtracting the dividend yield from the total return. Since the question does not provide the total return, we cannot calculate the exact capital gains yield. However, we know that the total return includes both dividends and capital gains, so the capital gains yield would be the remaining percentage after subtracting the dividend yield from the total return.
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Accounts payable $ 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000
Based on the above data, what is the quick ratio, rounded to one decimal point?
Answer:
Quick ratio: 1.701298
Explanation:
quick ratio
(The quick ratio is current assets - inventory)/currnet liabilities
In this case we have the complete list, so we have to calculate each term.
[tex]\frac{cash + account \: receivable + marketable \: securities}{account \: payable + accrued \: liabilities + short.term \: notes \: payable}[/tex]
[tex]\frac{30,000 + 65,000 + 36,000}{40,000 + 7,000 + 30,000}[/tex]
Quick ratio: 1.701298
Final answer:
The quick ratio, which measures a company's ability to meet its short-term obligations with its most liquid assets, is approximately 1.7 when rounded to one decimal point. It is calculated using accounts receivable, cash, and marketable securities as liquid assets, and accounts payable, accrued liabilities, and notes payable (short-term) as current liabilities.
Explanation:
The quick ratio is a measure of a company's short-term liquidity and its ability to meet its obligations with its most liquid assets. The quick ratio is calculated by dividing liquid assets, which are assets that can quickly be converted to cash, by current liabilities. In the calculation of the quick ratio, inventory and prepaid expenses are excluded from the liquid assets as they are not as readily convertible to cash.
In this scenario, the liquid assets are the sum of accounts receivable, cash, and marketable securities. This can be calculated as $65,000 (Accounts Receivable) + $30,000 (Cash) + $36,000 (Marketable Securities) = $131,000. The current liabilities include accounts payable, accrued liabilities, and notes payable (short-term), which total $40,000 + $7,000 + $30,000 = $77,000.
Thus, the quick ratio is calculated as $131,000 / $77,000, which equals approximately 1.7 when rounded to one decimal point.
Answer the given two questions relating to demand and the law of demand.
A shift in the demand curve can be caused by: (a) a change in the price of a good. (b) a change in the technology used by firms. (c) a change in one of the determinants of demand. (d) a change in the cost of production.
Which of the choices illustrates the law of demand? (a) Kathy offers for sale more candy bars at $2 than at $1. (b) Joe wants to buy more candy bars at $2 than at $1. (c) None of the choices. (d) Sue wants to buy more candy bars at $1 than at $2.
Answer: First question: The correct answer is (c) a change in one of the determinants of demand.
Second question: The correct answer is (d) Sue wants to buy more candy bars at $1 than at $2.
Explanation:
1) Some of the determining factors of the demand are the price of the product, the income of the consumer, the price of complementary goods or services, the price of substitute products or the taste of the consumer, among others . A change in these determinants produces a shift in the demand curve.
2) The law of demand reflects the relationship between the demand that exists of a good in the market and the quantity of the same that is offered based on the price that is established. At a lower price the demand increases and at a higher price the demand decreases.
A shift in the demand curve is caused by a change in one of the demand determinants, not by a change in the price of the good itself. The law of demand is shown when consumers want to buy more of a good at a lower price than at a higher price, as with Sue wanting more candy bars at $1 than at $2.
Explanation:To answer the questions relating to demand and the law of demand, it's important to understand the concepts involved clearly. First, a shift in the demand curve is caused by: (c) a change in one of the determinants of demand. This includes factors such as changes in consumer tastes, income, price of related goods (complements or substitutes), and expectations about future prices. It does not occur because of a change in the price of the good itself, which instead causes a movement along the demand curve.
The choice that illustrates the law of demand is (d) Sue wants to buy more candy bars at $1 than at $2. This is because the law of demand states that, ceteris paribus, when the price of a good falls, the quantity demanded will increase, and vice versa. Therefore, Sue wanting to buy more at a lower price and less at a higher price exemplifies this economic principle.
According to the research literature on strategy and structure, the relationship between strategy and structure most strongly imply that _____________.
strategy can effectively be formulated without considering structural elements
structure follows strategy strategy follows structure
structure typically has a very small influence on the strategy of a firm
Answer: Option B
Explanation: An organization and arrangement of interrelated elements can be defined as the structure of the primary subject. In simple words it can be described as many party of an element put together.
Strategy can be defined as the method or plan made to achieve future goals or objectives.
a. Strategy formulation cannot be done with out taking into consideration the structure. for example- a company with debt in its financial structure cannot take same risks as company with equity in its financial structure.
b. wrong strategy formulation can effect structure severely similarly structure of the organisation must be taken into consideration before
making strategy.
c. Structure of organisation is the primary consideration in making strategy thus its influence will be high.
Therefore right answer is statement B .
Gomez runs a small pottery firm. He hires one helper at $15,500 per year, pays annual rent of $5,500 for his shop, and spends $21,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $6,500 per year if alternatively invested. He has been offered $20,500 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $7,000 per year. Total annual revenue from pottery sales is $87,000. Calculate the accounting profit and the economic profit for Gomez.
Answer:
The accounting profit is $45,000 and economic profit is $11,000
Explanation:
Accounting profit is nothing but the owner's profit or you can say business profit. This profit can be taken out by calculating all the revenue generated from business and subtract the revenue by the explicit cost. The explicit cost here means the cost which is incurred in the process of running the business which includes rent paid, wages of labor and material purchased etc.
ACCOUNTING PROFIT ( FOR GOMEZ) =
= TOTAL REVENUE EARNED FROM POTTERY - HELPER SALARY - RENT ON SHOP - AMOUNT SPENT ON MATERIALS
= $87,000 - $15,500 - $5,500 - $21,000
= $45,000
Economic profit is not that much different from the accounting profit with only difference being that in the economic profit , implicit cost will also be included with the explicit cost. Implicit cost can be said as the opportunity cost which in this case Gomez is missing by running his own business.
Implicit cost in this question will include -
1) $6,500 which Gomez could have gotten if he would had invested $40,000 in equipment
2) he could have earn $20,500 if he had work as potter for his competitor
3) his entrepreneurial talents are worth $7,000
So therefore the total implicit cost is equal to $34,000
ECONOMIC PROFIT = TOTAL REVENUE - EXPLICIT COST - IMPLICIT COST
= $87,000 - $42,000 - $34,000
= $11,000
Consider the following production and cost data for two products, X and Y:Product X ProductYContribution margin per unit............................. $24 $18Machine-hours needed per unit........................ 3 hours 2 hoursThe company has 15,000 machine hours available each period, and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?a. $120,000b. $125,000c. $135,000d. $150,000
Answer:
c. $135,000
Explanation:
We will compare the contribution per machine hour as machine hours are limited.
Computing contribution per machine hour
Product X Y
Contribution per unit $24 $18
Machine hours per unit 3 2
Contribution per machine
hour [tex]\frac{24}{3}[/tex] [tex]\frac{18}{2}[/tex]
= $8 = $9
Since contribution per machine hour is higher of product Y, thus maximum production of Product Y will be done, in that case total units that can be produced of Y = 15,000 hours/ 2 hours per unit = 7,500 units
Total contribution = 7,500 X $18 per unit = $135,000
Thus correct option is c. $135,000
Gitli Company sells its product for $ 55 and has variable cost of $ 30 per unit. The total fixed costs are $ 25,000. What will be the effect on the breakeven point in units if variable cost increases by $ 5 due to an increase in the cost of direct materials? A.It will increase by 250 units. B.It will decrease by 167 units. C.It will decrease by 250 units. D.It will increase by 167 units.
Answer:
A.It will increase by 250 units.
Gitli will need to sale 250 more units to break even.
Explanation:
First we calculate the CM per unit
[tex]Sales \: Revenue - Variable \: Cost = Contribution \: Margin[/tex]
55 - 30 = 25
Then we calculate the current BEP in untis
[tex]\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]
25,000/25 = 1,000
Next we recalculate the CM for the new escenario
If variable cost increase $5:
CM 25 - 5 = 20
And the New BEP :
25,000/20 = 1,250
Last step will be calculate the cinrease or decrease:
1,250 - 1,000 = Δ250
Final answer:
The breakeven point for Gitli Company will increase by 250 units after the variable cost per unit rises by $5 because the new unit contribution margin will decrease, necessitating the sale of more units to cover the unchanged fixed costs.
Explanation:
The student's question concerns calculating the new breakeven point in units for Gitli Company after an increase in variable cost due to higher direct materials costs. Originally, Gitli Company sold its product for $55 with a variable cost of $30 and had fixed costs of $25,000. The breakeven point occurs when total revenue equals total costs, which includes both variable and fixed costs. Currently, the unit contribution margin (price minus variable cost) is $55 - $30 = $25 per unit.
If the variable cost increases by $5, the new variable cost becomes $30 + $5 = $35, causing the unit contribution margin to decrease to $55 - $35 = $20 per unit. To find the new breakeven point in units, we divide the total fixed costs by the new unit contribution margin: $25,000 / $20 = 1,250 units. The old breakeven point with a $25 margin was $25,000 / $25 = 1,000 units. Hence, as the variable cost per unit increases by $5, it takes more units to cover the same total fixed costs, increasing the breakeven point by 250 units (1,250 new - 1,000 old).
The correct answer to the question of the effect on the breakeven point in units if the variable cost increases by $5 is that it will increase by 250 units.
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $12,500; year 2, $10,000; year 3, $7,500; year 4, $5,000; year 5, $2,500; year 6, $0; and year 7, $12,500. Walt believes that he should earn an annual rate of 8 percent on this investment. How much should he pay for this investment?
Considering an 8% annual rate of return, Walt should not pay more than $39,315 for this investment, which is the sum of the present values of the investment returns over the seven-year period.
Explanation:In order to ascertain how much Walt should pay for an investment that provides varying returns for seven years with an intended annual rate of 8%, we need to calculate the present value of all the future investments. This cash flow is discounted to the present value using the formula: PV = FV / (1 + r)^n where FV is future value, r is the interest rate and n is the number of periods.
Year 1: $12,500 / (1 + 0.08)^1 = $11,574Year 2: $10,000 / (1 + 0.08)^2 = $8,610Year 3: $7,500 / (1 + 0.08)^3 = $5,887Year 4: $5,000 / (1 + 0.08)^4 = $3,675Year 5: $2,500 / (1 + 0.08)^5 = $1,735Year 6: $0Year 7: $12,500 / (1 + 0.08)^7 = $7,834By summing up these calculated values, Walt should not pay more than $39,315 for this investment given his expectation of an 8% return.
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The two main components of the master budget are the ________. A. cash budget and the capital budget B. budgeted income statement and the budgeted balance sheet C. operating budget and the financial budget D. purchases budget and the budgeted income statement
Answer: correct option is(c)
Explanation: The correct option is (C) operating budget and the financial budget.
First of all a budget is a very handy management decision making tool, which is used by every firm. All firms make budget to see what is the expected forecast of expenses and income for a defined period of time.
A master budget includes cluster of lower level budget produced by a firms various functional areas, and with this also includes budgeted financial statements, also giving cash forecast and helps the management of a company to give direction to the activities of corporation and in checking the performance of various functional responsibility centers.
A master budget includes two main components :-
a) Operating budget - It is a budget which includes all the expenses and income that a firm is expecting over a defined period of time. The main components of this budget includes income, expenses and profit, so basically this budget will tell how much profit a firm will earn over a defined period of time, given the condition that information given regarding income and expenses are correct.
b) Financing budget - this budget tells about how a firm would receive receipts and how it would make payments in a defined period of time. So basically it means the the amount of cash inflow a firm would receive and the cash outflows that would happen because of the payment made by the firm. Main focus here is on the cash budget and budgeted balance sheets.
The firm's efficient scale is the quantity of output that minimizesa. average total cost. b. average fixed cost. c. average variable cost. d. marginal cost.
Answer: Option (a) is correct.
Explanation:
Correct option: Average Total Cost (ATC)
The firm's efficient level is the quantity of output that minimizes the average total cost. Firm's efficiency is attained at a point where price is equal to marginal cost. Hence, there is one more condition where marginal cost is equal to average total cost.
It is also a point where firm can maximize its profit and total quantity of output is also maximized at this point.
∴ At this point of maximization, firm's efficient level of quantity minimizes the average total cost.
The firm's efficient scale is achieved when the firm minimizes its average total cost. This can be achieved by increasing output, thereby benefiting from economies of scale where the cost per unit decreases as production levels rise.
Explanation:The firm's efficient scale is the quantity of output that minimizes average total cost. This concept is central to understanding how firms decide on the optimal level of output. To calculate average variable cost, you divide the variable cost by the total output at each level of production. Average variable costs typically take a U-shaped curve.
In a scenario where a firm's average variable cost of production is lower than the market price, the firm would be recouping a profit, provided fixed costs are not considered. However, a firm should aim for the output quantity that will minimize its average total cost, achieving economies of scale.
Economies of scale refer to the property where as production output increases, the average cost per unit decreases. Essentially, a larger factory can produce at a lower average cost than a smaller one, making the firm's operations more efficient.
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Keaubie Company has the following: Total Sales: $500,000; Contribution Margin Ratio: 20%; Fixed Costs: $80,000; What is the amount of Keaubie Company's net income or net loss for the period? $20,000 net income $100,000 net income $20,000 net loss $100,000 net loss
Answer:
(A) $20,000 net income
Explanation:
[tex]Sales \times $Contribution Margin Ratio = Total Contribution[/tex]
500,000 * 20% = 100,000
[tex]Contribution - Fixed \: Cost = Result \: for \: the \: period[/tex]
100,000 - 80,000 = 20,000 net income
Remember: The contribution margin represent how much contribution bring to the table $1 of sales.
So if CMR equals to 20% each dollar generates $0.20 of contribution
Final answer:
To calculate Keaubie Company's net income, multiply the total sales by the contribution margin ratio to get the contribution margin, and then subtract fixed costs. The calculation shows a $20,000 net income for the period.
Explanation:
Net Income Calculation for Keaubie Company
To determine the net income or net loss for the Keaubie Company, we can use the following financial information:
Total Sales: $500,000Contribution Margin Ratio: 20%Fixed Costs: $80,000The first step is to calculate the contribution margin which is obtained by multiplying the total sales by the contribution margin ratio. The contribution margin amounts to:
Total Sales × Contribution Margin Ratio = $500,000 × 20% = $100,000
Next, we will subtract the fixed costs from the contribution margin to get the net income:
Contribution Margin - Fixed Costs = Net Income
$100,000 - $80,000 = $20,000 net income.
Therefore, Keaubie Company has a net income of $20,000 for the period.
Suppose you are a risk-neutral manager attempting to hire a new sales manager. All of the workers in the market have the same ability to manage and sell, but they differ with respect to the wage at which they are willing to work for your company. The market for sales managers is composed of three types of individuals: 85 percent are willing to work for $75,000 and 15 percent are willing to work for $85,000. The first interviewee is only willing to work for $85,000. If the human resource director spends five hours interviewing each candidate and the opportunity cost of this director's time is $500, then the director should:
Answer: If the human resource director spends five hours interviewing each candidate and the opportunity cost of this director's time is $500, then the director should: Search again since the expected benefit of an additional search exceeds the cost
Explanation:
Expected benefit = (85,000 – 75,000) × 0.15= 10,000 × 0.15 = 1500
Cost = 500
$1,500 > $500
i.e. Expected benefit > Cost.
Therefore, If the human resource director spends five hours interviewing each candidate and the opportunity cost of this director's time is $500, then the director should: Search again since the expected benefit of an additional search exceeds the cost
If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in a(n): black market for a market price that is higher. black market for a market price that is lower. effort to eliminate a surplus of the good. legal market for a market price that is higher. legal market for a market price that is lower.
When a store sells goods at a market price that is lower than the government set minimum price, it is operating in a legal market where market forces like demand and supply are driving down the price. This doesn't indicate a black market operation. The market price can be below the minimum price in situations of surplus or increased competition.
Explanation:If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is conducting a legal market for a market price that is lower. A minimum price, also known as a price floor, is a legal minimum price set by the government. However, the market price can be lower if demand and supply factors drive it down. The market price is determined by the interaction of quantity demanded and quantity supplied. In a situation where supply exceeds demand, the market price can fall below the minimum price.
Consider an example where international companies find there is an excess supply of a product, which drives the market price down below their cost of production. A local store, in order to compete and sell their goods, might also lower their prices, even below the set minimum price. This becomes a function of the shift in demand or supply factors rather than a violation of the minimum price rule.
Moreover, if the market price is lower than the minimum price, it does not signify a black market operation. A black market situation would usually arise when goods are sold illegally, above or below the government set price, usually during times of shortage or rationing.
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The store is selling goods at a market price lower than the set minimum price within an illegal black market. Black markets exist often as a result of pricing controls by the government.
Explanation:If a store is selling a good at market price, despite a set minimum price by the government, it is functioning within a black market for a market price that is lower. A black market refers to an illegal market in which goods or currencies are bought and sold in violation of rationing or government control. Here, the goods are sold below the price mandated by the government. A primary reason for the existence of such markets is the set price controls by the government, which make goods available at official prices lower than their market equilibrium levels, leading to shortages and the emergence of black markets.
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What is a domestic limited liability company
Answer: A domestic limited liability company (LLC) is a limited liability company or corporation that is running its business in the state where it was organized. In many states, there is no specific designation for a domestic LLC.
A domestic limited liability company (LLC) is a type of business structure which provides its owners (or members) protection from personal liability, similar to a corporation. It limits a member's liability to their investment in the company, like in a limited liability partnership. Furthermore, LLC offers diversification and sharing of profits among its members.
Explanation:A domestic limited liability company, often referred to as an LLC, is a type of legal structure that combines elements of partnerships and corporations. Much like a corporation, it offers protection from personal liability, as the company is its own legal entity separate from its owners, also known as members. Meaning, the member's personal assets such as home, car, and personal bank accounts are not at risk if the company suffers financial loss or goes bankrupt.
Similar to a limited liability partnership, it also offers the benefit of limiting the partner's liability to their monetary investment in the company. This means that members of the LLC are only held responsible up to the amount they have invested in the company and nothing more.
Owners of an LLC have the advantage of diversification as they can spread their investments through diverse channels, reducing the level of risk. Moreover, potential profits from the company can be shared among the members resembling the way dividends are distributed to shareholders in a corporation.
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Consider the special case of a monopoly in which MC = 0. Let's find the firm's best choice when more goods can be produced at no extra cost. A great deal of e-commerce is close to this model, where the fixed cost of inventing the product and satisfying government regulators is the only cost that matters. Consider a monopoly facing the following demand curve and fixed costs: P = 120 – 12Q; Fixed costs = 1,000 Should the firm go into business? If so, how much should the firm produce?
Answer: No, because of loss.
Explanation:
Given that it is a case of monopoly where, MC = 0
Demand curve: P = 120 - 12Q
Fixed Cost (FC) = 1,000
profit maximizing condition for a monopolist, MR = MC
Total Revenue(TR) = PQ = 120Q - 12Q²
Marginal Revenue(MR) = [tex]\frac{dTR}{dQ}[/tex]
= 120 - 24Q
Now, MR = MC
120 - 24Q = 0
Q = 5 units
P = 120 - 12 × 5 = $60
Profit/ Loss = TR - FC [ ∴ TR = 300]
= 300 - 1000
= -700
So, there is loss incurred if the firm go into the business.
On June 30, 2011, Weslaco Company’s total current assets were $500,000 and its total current liabilities were $275,000. On July 1, 2011, Weslaco issued a short-term note to a bank for $40,000 cash. Required: a. Compute Weslaco’s working capital before and after issuing the note. (Omit the "$" sign in your response.) b. Compute Weslaco’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)
Answer: the correct answer is a. working capital 225000.00 before issuing the note and 185000.00 after issuing the note. b current ratio 1.82 before the note and 1.59 after the note.
Explanation: Working capital = Current assets - Current liabilities
500000.00 - 275000.00 = 225000.00 before issuing a short term note
the short term note is a current liability.
500000.00 - 315000.00 = 185000.00 after issuing a short term note
Using the Balance Sheet, the current ratio is calculated by dividing current assets by current liabilities: For example, if a company's current assets are $ 5,000 and its current liabilities are $ 2,000, then its current ratio is 2.5.
500000.00 / 275000.00 = 1.82 before issuing the note
500000 / (275000 plus 40000) =
500000 / 315000 = 1.59 after issuing the note.
Because of a chronic water shortage in California, new athletic fields must use artificial turf or xeriscape landscaping. If the value of the water saved each quarter is $3,500, how much can a private developer afford to spend now on artificial turf provided he must recover his investment in 5 years. Use an interest rate of 9% per year, compounded continuously?
To calculate the amount a private developer can spend on artificial turf, we use the concept of present value. Given an interest rate of 9% per year, compounded continuously, we determine the present value of the future cash flows from water savings. The amount a private developer can afford to spend is approximately $1,511.06.
Explanation:To calculate how much a private developer can afford to spend on artificial turf, we will use the concept of present value. Given an interest rate of 9% per year, compounded continuously, we need to determine the present value of the future cash flows generated by the water saved each quarter.
Using the formula for continuous compounding, we can calculate the present value:
Present Value = Future Value / e^(interest rate * time)
where e is Euler's number (approximately 2.71828), and time is the number of quarters (5 years = 20 quarters).
Plugging in the values, the present value of the water saved is:
Present Value = $3,500 / e^(0.09 * 20)
Calculating this value, a private developer can afford to spend approximately $1,511.06 on artificial turf now.