Answer:
The correct answer is c.
Explanation:
If 1,500 units were sold this year less (15% of 10,000)
This means that by producing 1500 units less fewer direct materials, less direct labor, less commissions to sellers, less direct taxes and variable storage costs and any other expenses that are modified to produce 1 less unit or one more unit were acquired . in the production of 1500 units, therefore the variable costs decrease.
On the other hand, regardless of the quantity of units produced, the fixed costs will not be affected, since these must be canceled regardless of the level of activity, such as the rental of the business, administration salaries, fixed taxes, among others)
Jane's aunt wants a cashmere blanket to put over her legs when she watches television from her favorite chair. Jane could drive 50 miles and pay $90 for the blanket, or she could order one off the Internet for $168. Because Jane works fifty hours a week, cares for three children, and tries to help her aunt, she opts to buy the blanket on the Internet. This is an example of how ________ influences the consumer decision-making process.
Answer:
Situational Factor
Explanation:
The factor has to do with Jane's involvement in the task of buying the blanket. Jane cannot afford to drive 50 miles to buy the blanket at a cheaper price because she works a full time job and takes care of her three children. although it is cheaper she cannot afford the time it takes to drive 50 miles on her busy schedule and finds it easier to order it online as it will be delivered to her door step.
In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this idea was thought of, other people used it. This illustrates that knowledge is generally a ___
(A) societal good
(B) private good
(C) normal good
(D) public good
Answer:
(D) public good
Explanation:
A public good refers to goods in common use of the people or Public Domain are goods that are intended for general use by the community. That is, public goods are goods for the common use of the people are goods of wide accessibility that can be used interchangeably by all citizens.
For this reason, the padded horse collar for plowing is considered a public good because there is no restriction for any citizen to wear. Everyone who needed to use the padded horse collar for plowing was free to wear this good.
Braizen, Inc. produces a product with a $30 per-unit variable cost and an $80 per-unit sales price. Fixed manufacturing overhead costs are $100,000. The firm has a one-time opportunity to sell an additional 1,000 units at $60 each that would not affect its current sales. Assuming the company has sufficient capacity to produce the additional units, how would the acceptance of the special order affect net income?
Answer:
Net income will increase by $30,000
Explanation:
In this case the company has already made its regular sales and charged the entire fixed cost, also provided that the additional units can be produced, as the company has sufficient capacity, which means no additional fixed cost will be incurred. In that case, entire contribution margin from this sale will be added to increase the net income from regular sales.
Special order quantity = 1,000 units
Contribution= $60 - $30 = $30 per unit.
Total contribution from special order = 1,000 X $30 = $30,000
Now by this amount of $30,000 net income will increase.
What are the 5 determinants of supply?
Which of the following is not a question addressed by macroeconomists? a. Why is average income high in some nations but low in others? b. What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? c. What is the impact of foreign competition on the U.S. auto industry? d. Why do production and employment expand in some years and contract in others?
Answer:
c. What is the impact of foreign competition on the U.S. auto industry?
Explanation:
Economic theory is divided into two broad areas: macroeconomics and microeconomics.
Macroeconomics discusses large economic aggregates, such as income, inflation, and employment variations. It is an approach that aims to discuss these factors and bring about improvements through economic policies.
In turn, microeconomics deals with micro factors, such as the behavior of consumers and companies, including in relation to competitive structures. Therefore, item (D) deals with microeconomics and not macroeconomics.
The following listed questions are mostly related to macroeconomics but option c, concerning the impact of foreign competition on US auto industry, relates more specifically to microeconomics.
Explanation:The subject in focus is Macroeconomics and all of the options listed above correspond with considerations in the scope of Macroeconomics. However, option c. 'What is the impact of foreign competition on the U.S. auto industry?' aligns more closely with the field of Microeconomics. Macroeconomics often addresses questions about the economy as a whole, whereas Microeconomics would look more specifically at individual industries or businesses, such as the U.S. auto industry in relation to foreign competition. Thus, while it does have economic implications that could be considered in a macroeconomic context, it's more appropriately classed under Microeconomics. So, option c is the least-related to macroeconomics compared to the other choices.
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The term "response" as used in the National Response Framework includes: A. Actions of private sector entities responsible for critical infrastructure but not actions of public service agencies. B. Actions that relate to only to the emergency responders. C. Actions to save lives, protect property and the environment, stabilize communities, and meet basic human needs prior to an incident. D. Actions to save lives, protect property and the environment, stabilize communities, and meet basic human needs following an incident.
Answer: Option D
Explanation: The National response framework is a guide that provides of framework for the nation on how to respond while facing a calamity or disaster.
A. National response framework includes both private sector and public sector agencies.
B. Actions relating to calamities and disasters are also included.
C. As per the guidelines in the framework the actions suggested are to be taken after the incident.
D. The response in the guidelines relates to stabilizing the situations after the disaster.
Roundel Inc. is a company that sells automobile tires. The company is projecting an increase in sales in the next twelve months, and is looking to fill the senior positions through internal recruiting to meet this demand. The company is evaluating the individual performances and seeking to develop some ranking of the individuals within a work group to identify the best performer. Which of the following approaches is the company using? (A) The Result approach (B) The Attribute Approach (C) The Comparative approach (D) The consequential approach (E) The Behavioral approach
Answer: The company is using the comparative approach to evaluate the individual performances and thus seeking to develop some ranking of the individuals within a work group to identify the best performer.
Comparative approach concern with ranking an worker/individual performance with respect to that of others individual.
Roundel Inc. is using the Comparative approach to rank the individuals within a work group and identify the best performer for senior positions through internal recruiting.
Explanation:The company is using the Comparative approach to evaluate the individual performances and rank the individuals within a work group. The comparative approach involves comparing the performance of individuals to determine the best performer.
For example, Roundel Inc. may compare the sales figures, customer feedback, and other relevant metrics of the employees in the work group to identify the top performer.
The ranking can then help the company make decisions for internal recruiting and promotion, ensuring that the best performers are rewarded and positioned for senior positions.
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What is the effect on the equilibrium price and equilibrium quantity of magazinesmagazines if the price of a newspapera newspaper decreasesdecreases and the wage rate paid to magazine production workersmagazine production workers decreasesdecreases? The equilibrium price of a magazinea magazine ______ and the equilibrium quantity ______.
Answer: The equilibrium price of a magazine decreases and equilibrium quantity remains the same.
Explanation:
The magazine and newspaper are substitute goods. So, if the price of a newspaper decreases as a result the demand for magazine decreases.
This shifts the demand curve of magazine leftwards from DD to D'D' in the diagram.
And, if the wage rate paid to the magazine production workers decreases as a result the cost of magazine production decreases.
This will increase the supply of magazine and shift the supply curve towards right from SS to S'S' in the diagram.
Hence, the equilibrium price of a magazine decreases from P to P' and equilibrium quantity remains the same at Q0 = Q1.
Final answer:
The equilibrium price of magazines is expected to decrease due to simultaneous leftward shift in demand and rightward shift in supply. The equilibrium quantity may increase or decrease depending on the relative shifts in the curves.
Explanation:
When analyzing market equilibrium, changes in external factors can lead to shifts in supply and demand curves, affecting the equilibrium price and quantity. In the case of a decrease in the price of newspapers, which can be seen as a substitute good for magazines, the demand for magazines might decrease accordingly. This would result in a leftward shift in the demand curve for magazines, leading to a lower equilibrium price and quantity for magazines. However, the decrease in the wage rate paid to magazine production workers may increase the supply of magazines, shifting the supply curve to the right, as production costs decrease. With a higher supply, the equilibrium quantity of magazines increases, but the equilibrium price could potentially decrease if the shift in supply exceeds the shift in demand. If both of these events occur simultaneously: a decrease in the price of newspapers and a decrease in the wage rate of magazine workers, the equilibrium quantity of magazines may either increase or decrease depending on the magnitude of the shifts in demand and supply curves. The equilibrium price of magazines is expected to decrease because both effects (a decrease in demand and an increase in supply) both exert downward pressure on the price.
A turn-key project is best defined as:
a. a form of direct foreign investment in which the investing entrepreneur holds a minority ownership position in the foreign venture
b. a method in which an entrepreneur contracts his or her management techniques and skills to a (foreign) purchasing company
c. a method of doing business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners
d. giving a foreign manufacturer the right to use a patent in return for the payment of a royalty
Answer:
b. a method in which an entrepreneur contracts his or her management techniques and skills to a (foreign) purchasing company.
Explanation:
A turn-key project is best defined as a method in which an entrepreneur contracts his or her management techniques and skills to a (foreign) purchasing company. Thus the correct option is B.
What is the turn-key project?A turnkey project is a method of task execution in which a single organization collaborates with the contract administrator to finish every stage of the project under a single contract.
The necessity for the project manager to monitor and manage the entire project is reduced with turnkey projects. It decreases the number of pointing fingers and assigning blame present during the completion.
The project owner's belief in the contractor is crucial to the turnkey approach as Budgets for projects are frequently offered prior to the conclusion of the design.
Therefore, option B is appropriate.
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Oliver Industries is evaluating the manufacturing process for one of their products. Oliver has determined that the process has yearly maintenance costs of $29,000, yearly operating costs of $22,000, and yearly revenues of $97,000. Two years ago, the firm spent $6,000 upgrading the equipment used to make this product, and it expects to spend $5,000 on additional upgrades three years from now. In this scenario, Olive
A has sunk costs of $51,000.
B does not have any sunk costs.
C has sunk costs of $5,000.
D has sunk costs of $6,000.
Answer:
D) has sunk costs of $6,000
Explanation:
Sunk cost is a cost which does not effect the financial decision, as this cost has already been incurred, and now it cannot be revoked.
Here maintenance cost is a regular expense which has to be incurred, and its not the cost which has already been incurred, same applies for operating cost.
Two years ago firm had spent $6,000 upgrading the equipment which was incurred earlier and now that cost cannot be revoked, further it will not lay any impact on any of the decisions made by the financial management.
Further amount to be spend of $5,000 has yet to be incurred and the decision to incur such cost can also be avoided, therefore it is not a sunk cost.
In this scenario D) has sunk sunk cost of $6,000
Collection of a $3500 Accounts Receivable decreases a liability $3500; increases stockholders' equity $3500. decreases an asset $3500; decreases a liability $3500. increases an asset $3500; decreases an asset $3500. increases an asset $3500; decreases a liability $3500.
Answer:
Correct option is C. increases an asset $3500; decreases an asset $3500
Explanation:
Before collection from accounts receivable there is an asset of $3,500 in accounts receivable.
When it is received then there is collection of $3,500 either in cash or at bank, with that the effect on accounts receivable asset is that it is reduced, by $3,500; and with the same thing cash or bank balance which is also an asset is increased.
Therefore correct option is C.
increases an asset $3500; decreases an asset $3500
Increase in Cash/Bank
Decrease in Accounts Receivable
A collection of accounts receivable increases an asset and decreases a liability, which affects stockholders' equity.
Explanation:A collection of a $3500 Accounts Receivable would increase an asset by $3500 and decrease a liability by $3500.
Since a liability is decreasing, it would also decrease stockholders' equity by $3500.
Therefore, the correct option is: Increases an asset $3500; decreases a liability $3500.
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On January 1, the Kings Corporation issued 10% bonds with a face value of $96,000. The bonds are sold for $94,080. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Kings records straight-line amortization of the bond discount. Determine the bond interest expense for the year ended December 31 of the first year is.
Answer:
9,792 total interest expense
Explanation:
face value 96,000
issued at 94,080
discount 1,920
amortization of the bond:
discount/total payment
10 years atsemiannual payment = 20 payment
1,920/20 = 96
cash proceed:
96,000x 10%/2 = 4,800
discount 96
interest expense 4,896 per payment
2 payment per year 9,792 total interest expense
In periods of rising prices, the inventory method which gives the lowest possible ending inventory cost is the (A) FIFO method. (B) LIFO method. (C) weighted-average method. (D) lower of cost or market inventory method.
Answer: The answer is (B) LIFO method.
Explanation: The LIFO (last in, first out) method of inventory costs states that the most recent units are the first to leave. Therefore the oldest units are left in inventory.
In periods of rising prices the oldest units are the lowest cost units.
Which nims command and coordination structures are offsite locations where staff from multiple agencies come together?
Answer: The correct answer is : Emergency Operations Centers (EOCs)
Explanation: MAC groups is the NIMS structure that makes cooperative decisions of multiple agencies.
The three NIMS guiding principles are: Flexibility, standardization, unity of effort. Standardization allows interoperability between multiple organizations.
Emergency Operations Centers are the National Incident Management System NIMS command and coordination structures are offsite locations where staff from multiple agencies come together. EOCs are frequently off-site locations created and outfitted particularly to support incident management operations.
Emergency Operations Centers EOCs are command and coordination organizations that are a part of the National Incident Management System (NIMS). They are generally set up in reaction to catastrophes or emergencies to act as focal points where representatives from various agencies and organizations can gather to coordinate response and recovery operations.
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Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible on the option for the speculator based on the information above is:a.$1,562 b. -$1,562 c. -$1,250 d. -$1,250 e. None of the above
Answer:
b) -$1,562
Explanation:
The speculator has the chance for sale at 1.50 because the price rises instead of decrease, it is losing money.
The speculator does not use their right to sale at 1.50
It will simply lose the value on which purchase the put option
0.05$ per unit x 31250 units = 1562.5
Final answer:
The speculator's put option on the British pound becomes worthless as the spot rate rises above the strike price. The speculator incurs a loss equal to the cost of buying the option, which is -$1,562. As such, the highest net profit is $0, and the actual loss is -$1,562.
Explanation:
The question pertains to options trading, specifically a put option on the British pound. Given that the speculator purchased a put option with a strike price of $1.50 for $.05 per unit, and each option represents 31,250 units, the initial cost for the option is 31,250 units * $.05 = $1,562.50. However, as the spot rate of the pound increases from $1.51 to $1.62 by the option's expiration date, the option will expire worthless, since the speculator would not exercise the option to sell pounds at $1.50 when the market rate is $1.62. Therefore, the highest net profit possible on the option for the speculator, in this case, would be $0, and the speculator would incur a loss equal to the cost of the option, which is -$1,562.50 (approximated to -$1,562 for the answer choices).
The correct answer to the question is: b. -$1,562, representing the loss of the initial investment with no additional profit since the option is not exercised.
Staples has a discount on flash drives and boxes of computer paper. It offers flash drives for $6 each and boxes of computer paper for $40 each box. If total sales on these discount items is $4200 for the week, and customers bought 5 times as many flash drives as boxes of computer paper, how many boxes of computer paper were sold?
60 boxes of computer paper would have been sold.
Explain the equations ?You need an equation in order to solve this problem. The 6D procedure or an equation is more effective and takes less time than the 5D approach, which you might also utilize . This would be the equation:
4200= (x•40) + (x•5)•6)
But because there are so many parenthesis in the equation, I'll try to determine X using the 5D technique. In essence, you pick a random number and try to replace X with it. Then, you check to see if the value is too high or low. After some time of assuming, I discovered that X = 60.
A mathematical equation is a formula that uses the equals sign to represent the equality of two expressions. The meanings of the word equation and its translations into various languages can vary slightly.
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Astrid, a customer service representative with NorthTel Wireless Services, was asked by one of her customers if NorthTel would be interested in joining the chamber of commerce to meet potential customers and increase its contacts in the local business community. Astrid believes this is a very good idea and approached her manager, DeShawn, about becoming a chamber member. DeShawn said to Astrid, "Because the cost of membership is over $500 and you will have to leave the office to attend meetings, I will have to get approval from management above me." NorthTel is an example of an organization with
Answer:
The answer is centralized authority.
Explanation:
Centralized authority, in the context of organizational types, refer to an organization where the ability to make any decisions – strategic or operational – is on the hands of the organizational leaders only. This type of organization might be commonly found in companies that are highly bureaucratic. Employees in these types of companies are not empowered – thus, ideas from the lower rungs of the organizations, rarely make it to the top of the organization.
Cedar Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $6.00 per square foot from the supplier. Delivery costs are $0.25 per square foot. Carpenters' wages are $30.00 per hour. Payroll costs are $3.60 per hour, and benefits are $6.00 per hour. How much is the direct labor standard cost per hour
Answer: the correct answer is $39.60 per hour.
Explanation: since the question is about labor standard costs per hour, we have to set aside the material costs and focus on the labor costs. We have to add all the labor costs which means we have to add Carpenters's wage plus Payroll costs plus benefits that is $ 30.00 plus $3.60 plus $6.00 equals $39.60 per hour.
$39.60 per hour is the direct labor standard cost per hour. We must disregard the cost of the materials and concentrate on the labor costs
What is labor?The effort that people put forth to produce goods and services is referred to as labor. Both the engineer who created the bus that delivers you to school and the waiter who brings your food to a nearby restaurant are examples of labor resources.
We must disregard the cost of the materials and concentrate on the labor costs because the inquiry is about labor standard costs per hour. The total labor cost, which includes the pay for the carpenters as well as payroll expenses and benefits, comes to $39.60 per hour ($30.00 plus $3.60 plus $6.00).
Therefore, The direct labor standard cost per hour is $39.60. We must ignore material costs and pay attention to labor expenditures.
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Trull Company uses a standard cost system. Variable overhead costs are allocated based on direct labor hours. In the first quarter, Trull had a favorable cost variance for variable overhead costs. Which of the following scenarios is a reasonable explanation for this variance?
A The actual number of direct labor hours was lower than the budgeted hours.B The actual variable overhead costs were higher than the budgeted costs.C The actual variable overhead costs were lower than the budgeted costs.D The actual number of direct labor hours was higher than the budgeted hours.
Answer:
C. The actual variable overhead costs were lower than the budgeted costs.
Explanation:
Variable Overhead Cost variance =Budgeted cost - Actual Cost
where this value is positive, this is favorable, where this is negative it is unfavorable.
Actual cost = Actual hours X Actual rate per hour
Budgeted Cost = Budgeted hours for actual level of production X Budgeted rate per hour
Even if actual hours are lower than budgeted it will not lead to favorable overhead as actual rate per hour might be less.
Total variable overhead will only be favorable when net actual variable overhead cost is less than budgeted variable overhead costs.
C. The actual variable overhead costs were lower than the budgeted costs.
In a standard cost system, a favorable cost variance for variable overhead costs indicates that the actual variable overhead costs were lower than the budgeted costs.
Explanation:In a standard cost system where variable overhead costs are allocated based on direct labor hours, a favorable cost variance for variable overhead costs means that the actual variable overhead costs were lower than the budgeted costs.
Therefore, the reasonable explanation for this variance would be option C: The actual variable overhead costs were lower than the budgeted costs.
This could happen if the actual number of direct labor hours was lower than the budgeted hours, resulting in lower variable overhead costs due to less labor being used.
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Would it be easier to form a cartel in a market with many producers or one with few producers?
Answer:
it would be easier to form a cartel with few producers
Explanation:
since a cartel is a monopolistic type of org. few producer will earn and generate more profit
It is easier to form a cartel in an oligopoly with few producers because they can coordinate to act like a monopolist, controlling prices and output. However, cartels face legal barriers, the risk of members cheating for their own benefit, and the challenge of equitably distributing profits, all of which threaten their stability.
It would generally be easier to form a cartel in a market with few producers rather than many. In markets with fewer producers, known as an oligopoly, each firm holds a significant portion of market sales and can have an effect on market prices when they alter their output volume. Forming a cartel in such a market structure allows these companies to coordinate their activities, behave as a single enterprise, and potentially gain the same market power as a monopolist.
However, while creating a cartel may seem appealing due to the potential for higher prices and restricted output, there are numerous challenges. Cartels are often illegal, as they are designed to reduce competition and raise prices, which is anti-competitive. Moreover, individual members of a cartel have incentives to cheat by undercutting the agreed prices to increase their market share, which can lead to the cartel's breakdown. Also, the distribution of profits among the members can be contentious, particularly if some firms are more efficient than others, ultimately threatening the stability of the cartel arrangement.
A warehouse located in an urban area had been vacant for several years. Although the warehouse was not being used, the owner of the warehouse maintained the building in conformity with all state and local laws and regulations. One evening, thieves entered the warehouse and stripped the copper wiring from the building. In the process, the thieves damaged a stone cornice above the warehouse’s main entryway. Shortly thereafter, the cornice collapsed and injured a pedestrian. The pedestrian initiated a negligence suit against the warehouse owner, and the warehouse owner filed a motion to dismiss the case.
Which of the following findings would be sufficient to support the warehouse owner’s motion to dismiss?
A. The theft of the copper wiring was an unforeseeable intervening cause of the cornice collapse.
B. The copper wire theft and the cornice collapse were unforeseeable.
C. The pedestrian was more than half at fault for the injuries sustained.
D. The warehouse owner had maintained the building in conformity with state and local laws and regulations.
Answer:
The correct answer would be option A, The theft of the copper wiring was an unforeseeable intervening cause of the cornice collapse.
Explanation:
The owner of the warehouse has been taking care of the warehouse despite the fact that the warehouse was not in the use of anyone. Although the warehouse was not being used, the owner has maintained the building in conformity with all state and local laws and regulations. Now the incident happened due to the theft of the copper wire, due to which the cornice collapsed. This was totally unforeseeable and there was not even a little mistake of the owner, also he has been maintaining the warehouse in conformity with the laws of the area, the owner can easily file a motion to dismiss the case.
uppose you are interested in selling your home and would like to clear a net value of $300,000. If you have agreed to pay your broker a commission of 5.5% (no matter who ultimately is responsible for finding the buyer), what price must you sell the home for in order to meet your net profit ?
Answer:
Price to sell the house = $317,460.32
Explanation:
Total net profit required = $300,000
Provided commission to broker = 5.5% on selling value.
Therefore Net profit = 100 - 5.5 = 94.5% as this is net of commission.
Now we have Net Selling Price = $300,000/94.5% = $317,460.32
Note: Let us cross check
Commission on sales = $317,460.32 X 5.5% = $17,460.32
Therefore Net profit in hand = $317,460.32 - Commission $17,460.32 = $300,000
Final Answer
Price to sell the house = $317,460.32
Which of the examples below illustrates the economic principle of a negative externality? a. cost or benefit of a transaction that involves the buyer or seller when both parties lose money b. cost of transportation of goods from the site of production to a market c. cost of rebuilding roads damaged by trucks heavily loaded with goods d. cost of labor to produce a product
Answer:
C) cost of rebuilding roads damaged by trucks heavily loaded with goods
Explanation:
Externality is a microeconomic concept that aims to explain the positive or negative impact that an economic activity has on third parties. If by exercising an economic activity, a company indirectly benefits society or community, the externality is positive. If economic activity negatively impacts the surrounding community, externality is said to be negative.
For example, the pollution that an industry emits in the production process has deleterious effects throughout society, being a negative externality. Likewise, a truck causes potholes in the road, this is a negative externality, since all citizens' taxes, including most non-truckers, will be used to restore potholes in the roadway.
In the labor discipline model, and increase in unemployment will: A. increase workers’ employment rents and increase workers’ effort level. B. decrease workers’ employment rents and increase workers’ effort level. C. increase workers’ employment rents and decrease workers’ effort level. D. decrease workers’ employment rents and decrease workers’ effort level.
Answer: Option (D) is correct.
Explanation:
In the labor discipline model, an increase in unemployment will decrease workers’ employment rents and decrease workers’ effort level.
An increase in the unemployment, will shift the bargaining power towards employers. So, they are taking advantage of this situation by reducing the wage rate because they know that workers don't have much options of employment.
Now, employers giving lower wage to the workers, as a result this will discourage workers for giving their full effort to the work.
In the labor discipline model, an increase in unemployment decreases workers' employment rents and increases their effort level to avoid losing their jobs in a more competitive market. So, option B is correct.
In the labor discipline model, an increase in unemployment will typically decrease workers' employment rents and increase workers' effort level. Employment rents refer to the benefits a worker receives from being employed versus being unemployed, including wages, benefits, and the utility of employment itself. When unemployment rises, workers are more inclined to exert higher effort in their current jobs to avoid the risk of unemployment because finding another job becomes more difficult. Therefore, the correct answer to the student's question is B. decrease workers' employment rents and increase workers' effort level.
Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Management's target rate of return is 20% and the weighted average cost of capital is 30%. Its effective tax rate is 40%.
Sales - $5,000,000
Operating income - 1,250,000
Total assets - 1,000,000
Current liabilities - 750,000
What is the division's Residual Income (RI)?
Answer:
The division's residual income would be $1050,000.
Explanation:
Residual income is a concept which is used by the management to see the internal company performance, where the management will see how much of return generated by the company is in excess of the minimum required rate of return.
Formula for taking out the residual income is =
Net operating income - ( Total assets x target rate of return )
Here net operating income - $1250,000
total assets - $1000,000
target rate of return - 20%
= $1250,000 - ( $1000,000 x 20% )
= $1250,000 - $200,000
= $1050,000.
Final answer:
The division's Residual Income (RI) is calculated by subtracting the Minimum Required Return (20% of total assets) from the division's net operating income after taxes (operating income minus 40% tax). The RI for the Hiking Shoes division of All About Shoes Corporation is $550,000.
Explanation:
The student asks about the calculation of the Residual Income (RI) for a division in a corporation. Residual Income is the income earned by a division or an investment after accounting for the cost of capital. Here's how to calculate the RI:
Determine the net operating income after taxes. Since taxes are 40% of the operating income, subtract this from the operating income: Operating income - (Operating income * Tax Rate) = Net Operating Income after taxes.Calculate the Minimum Required Return (MRR) by multiplying the total assets by the target rate of return: Total Assets * Target Rate of Return = MRR.Deduct MRR from the net operating income after taxes to get the RI: Net Operating Income after taxes - MRR = RI.Now let's insert the given figures:
Operating Income = $1,250,000Effective Tax Rate = 40%Total Assets = $1,000,000Target Rate of Return = 20%First, calculate the net operating income after taxes:
$1,250,000 - ($1,250,000 * 0.40) = $750,000
Next, calculate the MRR:
$1,000,000 * 0.20 = $200,000
Finally, subtract the MRR from the net operating income after taxes to find the RI:
$750,000 - $200,000 = $550,000
Therefore, the division's Residual Income is $550,000.
MJ Enterprises stock traditionally provides an average rate of return of 11.6 percent. The firm’s next annual dividend is projected at $2.40 with future increases of 3 percent per year. What price should you pay for this stock is you are satisfied with the firm’s average rate of return?
Answer:
Firm's stock price shall be $27.91
Explanation:
Using dividend growth model we have,
[tex]P{_0} = \frac{D{_1}}{K{_e} - g}[/tex]
Where P[tex]{_0}[/tex] = Current Price of stock
D[tex]{_1}[/tex] = Dividend to be paid at year end = $2.40
K[tex]{_e}[/tex] = Expected return = 11.6%
g = Expected growth = 3%
Thus P[tex]{_0}[/tex] = [tex]\frac{2.40}{11.6 - 3}[/tex] = $27.91
Firm's stock price shall be $27.91
To minimize central tendency bias, a manager should:
a. record examples of positive and negative performance throughout the year
b. be fair and realistic in evaluations
c. define an accurate profile with both high and low points
d. evaluate employees against a predetermined standard
e. provide only negative feedback
Answer:
To minimize central tendency bias, a manager should: define an accurate profile with both high and low points- c.
Some people want healthy cereal that will help them lose weight or possibly prevent certain kinds of cancer. Some want pre-sweetened cereal. Some want fruits and nuts in their cereal. Some people want whole wheat cereal while others want rice cereal. There are some who like hot cereal and others who like to eat their cereal right out of the box. The diversity of consumers for cereal is an example of ________.
Answer:
This is an example of market fragmentation.
Explanation:
Market fragmentation can be defined as the concept that all markets are segmented and divided into different fragments, based on different needs, wants and behavior.
All markets ,over time, break down into different group of consumers or we can say fragments especially as they grow.
Here, the market for cereals is divided on the basis of consumer's needs wants and tastes. So, it is an example of market fragmentation.
When Jason became one of three final candidates for a managerial position with a large pharmaceutical company, the hiring manager scheduled a special meeting with him. The two talked about the stressful deadlines and heavy travel required of the position, as well as the compensation and benefits. Jason appreciated that the hiring manager took the time to provide a(n)
(A) Behavioral description interview
(B) Realistic job review
(C) Unstructured Interview
(D) Situational Interview
(E) Performance Appraisal
Answer: the correct answer is (B) Realistic job review.
Explanation:
Some companies run a realistic job review with candidates to better know about them and to assess them in a better way.
For the year ended December 31, Ion Corp. had cash inflows of $25,000 from the purchases, sales, and maturities of held-to-maturity debt securities and $40,000 from the purchases, sales, and maturities of available-for-sale debt securities. What amount of net cash from investing activities should Ion report in its cash flow statement?
Answer:
The amount of net cash flow from investing activities that ion should report in its cash flow statement is $65,000.
Explanation:
A cash flow statement is one of the financial statements which will tell how changes in income statement and balance sheet accounts will affect the company's cash inflow and outflow. This statement will break down the analysis in to operating , investing and financing activities.
For taking out the net cash flow in investing activities, purchase activities are added and sale activities are subtracted and from the given information in the question , it is clear that both are purchasing activities, therefore
NET CASH FLOW FROM INVESTING = $25,000 + $40,000
= $65,000