Answer:
The amount that Beldon should capitalize as the cost of the land is $64,000 and as the cost of the new building is $517,000.
Explanation:
Capitalized cost of land
Purchase price $60,000
Demolition of old building $4,000
Less: Sale of materials $2,000 $2,000
Legal fees for title investigation $2,000
Total cost of land $64,000
Capitalized cost of building :
Construction costs $500,000
Architect's fees $12,000
Interest on construction loan $5,000
Total cost of building $517,000
Therefore, The amount that Beldon should capitalize as the cost of the land is $64,000 and as the cost of the new building is $517,000.
The costs capitalized for the land and new building by Beldon Corporation are $67,000 and $517,000, respectively.
Explanation:Beldon Corporation can capitalize the costs related to the purchase and preparation of land and the construction of the new building. The cost of the land includes the purchase price of $60,000, demolition costs for the existing building ($4,000), legal fees for title investigation ($2,000), and property taxes from the purchase date March 1, 2021 ($3,000). However, the $2000 from the sale of salvaged materials should be deducted from the land cost resulting in a final capitalized land cost of $67,000.
The capitalized cost of the new building includes the construction costs of $500,000, architect's fees ($12,000), and interests on the construction loan ($5,000). This results in a total capitalized building cost of $517,000.
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Super Motors manufactures and sells a wide variety of motors to industrial customers. All motors cost about the same and are assembled on the same line. Switching over from assembling one motor to another requires about two hours. Super assembles motors to be stocked in a distribution center from where they are shipped as orders arrive. HP is the highest-selling motor (in terms of units sold) and LP the lowest selling. Which of the following statements about the average cycle inventory HP motors is TRUE?
A. Higher than the cycle inventory of LP motors.
B. Lower than the cycle inventory of LP motors.
C. Same as the cycle inventory of LP motors.
D. None of the above.
Answer:
A. Higher than the cycle inventory of LP motors.
Explanation:
Given that:
HP is the highest-selling motor (in terms of units sold) and LP the lowest selling.
The average cycle stock is about half-a-period's demand less the target cycle stock. Thus, the average cycle inventory is half of the order size. The order size is directly proportional to the square root of demand,R. This implies that the average cycle inventory is proportional to the square root of the demand, R. Since, R, the demand is high for HP, the order size also becomes more which in turns leads to the average cycle inventory being more. Therefore, the average cycle inventory of HP motors is higher than the cycle inventory of LP motors.
A manager is holding a $1.2 million stock portfolio with a beta of 1.01. She would like to hedge the risk of the portfolio using the S&P 500 stock index futures contract. How many dollars’ worth of the index should she sell in the futures market to minimize the volatility of her position? (Enter your answer in dollar not in millions.)
Answer: $1,212,000 or $1.212 million
Explanation:
To calculate the dollars’ worth of the index the manager should sell in the futures market to minimize the volatility of her position, we can use the following formula,
Dollar worth of index to sell = Value of the Portfolio * Portfolio Beta
Dollar worth of index to sell = 1,200,000 * 1.01
Dollar worth of index to sell = $1,212,000
The manager should sell $1,212,000 worth of the index in the futures market to minimize the volatility of her position.
The value-added method involves taking the cost of intermediate outputs (i.e., outputs that will, in turn, be used in the production of another good) and subtracting that cost from the value of the good being produced. In this way, only the value that is added at each step (the sale value minus the value of the intermediate goods that went into producing it) is summed up. This method gives us the same result as the standard method of only counting the value of final goods and services because: the system of accounting requires that they be the same. the only difference is that the value-added method adds up production in the economy as it is produced, and the standard method of counting only uses the completed value at the end of the production chain. the only difference is that the standard method of counting adds up production in the economy as it is produced, and the value-added method totals the value at the end of the production chain. both methods are used by the same agency, so the totals have to be equal.
Answer:
the only difference is that the value added method adds up production in the economy as it is produced, and the standard method of counting only used the completed value at the end of the production chain.
Explanation:
The value added method in the production process aims to measure the value added at each stage of production considering intermediate products as input.
For example if plastic is produced in a plant and it is in turn used to produce plates. Value added at stage of plate production is the value of plates less cost of producing plastic.
The standard method counts only value of final goods and services.
Both methods give the same result because summation of value in the value added approach will be the same as the value at the end of the production chain (standard method).
Storico Co. just paid a dividend of $3.15 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company’s stock is 12 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
The price of the stock today or the price at which the stock should sell today is $61.30
Explanation:
The price of the stock today can be calculated using the Dividend Discount Model approach which values a stock based on the present value of the expected future dividends from the stock. The price of this stock will be,
P0 = 3.15 * (1+0.2) / (1+0.12) + 3.15 * (1+0.2) * (1+0.15) / (1+0.12)^2 +
3.15 * (1+0.2) * (1+0.15) * (1+0.1) / (1+0.12)^3 +
[(3.15 * (1+0.2) * (1+0.15) * (1+0.1) * (1+0.05) / (0.12 - 0.05)) / (1+0.12)^3]
P0 = $61.296 rounded off to $61.30
On June 1, Parson Assoc. sold equipment to Arleo and agreed to accept a 3-month, $55,000, 10% interest-bearing note in payment at a time when the prevailing rate of interest for similar transactions was 10%. When the note was collected upon maturity, Parson would recognize interest revenue of:
Answer:
Parson would recognize an interest revenue of $1375
Explanation:
The quoted interest rate on bond is the annual rate of interest. The bond is for 3 months which means that the interest revenue will be recorded for the 3 months period from June to August and the bond will mature on 31 August.
The interest revenue to be be recorded on this note is,
Interest Revenue = 55000 * 0.1 * 3/12 = $1375
The entry to record the receipt of interest and face value will be,
Cash 56375
Interest revenue 1375
Bonds Receivable 55000
ncome Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials $1,218,000 Direct labor 522,000 Variable factory overhead 87,000 Fixed factory overhead 130,500 1,957,500 Selling and administrative expenses: Variable selling and administrative expenses $60,000 Fixed selling and administrative expenses 25,000 85,000 a. Prepare an income statement according to the absorption costing conce
Answer:
Income statement according to the absorption costing
Sales 2,600,000
Less Cost of Goods Sold
Opening Stock 0
Add Cost of Goods Manufactured
Direct materials 1,218,000
Direct labor 522,000
Variable factory overhead 87,000
Fixed factory overhead 130,500
Less Closing Stock (1,957,500/4,350)×350 (157,500) 1,800,000
Gross Profit 800,000
Less Period Costs :
Selling and administrative expenses:
Variable selling and administrative expenses (60,000)
Fixed selling and administrative expenses (25,000)
Net Income 715,000
Explanation:
Product/Manufacturing Cost - Absorption Costing = Direct Materials + Direct Labor + Variable Overheads + Fixed Overheads
Period Cost - Absorption Costing = All Non - Manufacturing Costs
Final answer:
The student's question is about preparing an income statement using absorption costing for a company's operations over the month of July. The provided financial data allows for the calculation of sales, cost of goods sold, and selling and administrative expenses to derive the operating income.
Explanation:
The student is asking for an income statement prepared under the absorption costing method for Gallatin County Motors Inc. for the month of July. Absorption costing includes all manufacturing costs in the cost of a product, meaning both variable and fixed manufacturing overhead are absorbed by the produced units. The income statement should reflect the cost of goods sold based on the number of units sold and should also account for the inventory at the end of the period. The student provided the necessary financial data to calculate this.
Here is a simplified representation of the income statement:
Sales (4,000 units x selling price)
Less: Cost of Goods Sold (costs assigned to units sold)
Gross Margin (Sales - Cost of Goods Sold)
Less: Selling and Administrative Expenses (both variable and fixed)
Operating Income (Gross Margin - Selling and Administrative Expenses)
A project is expected to generate annual revenues of $124,100, with variable costs of $77,200, and fixed costs of $17,700. The annual depreciation is $4,250 and the tax rate is 34 percent. What is the annual operating cash flow?
Answer:
$20,717
Explanation:
The calculation of annual operating cash flow is given below:-
Annual Operating cash flow = (Revenue - Variable cost - Fixed cost) × (1 - Tax rate) + Annual depreciation × Tax rate
= ($124,100 - $77,200 - $17,700) × (1 - 34%) + $4,250 × 34%
= $29,200 × 0.66 + $1,445
= $19,272 + $1,445
= $20,717
So, for computing the operating cash flow we simply applied the above formula.
Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,000,000 units. Quarterly sales are 18%, 23%, 23%, and 36%, respectively. The sales price is expected to be $38 per unit for the first three quarters and $43 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020. Production. Management desires to maintain the ending finished goods inventories at 20% of the next quarter’s budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $10 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements. Assume the production requirements for first quarter of 2021 are 490,000 pounds. Prepare the sales, production, and direct materials budgets by quarters for 2020.
Answer:
Sales Budget = 6840,000 + 8740,000 + 8740,000 + 15480,00 = $ 39800,000
Production Budget, = 490,000+ 230,000 + 256,000 +327,600= 1303600
Purchases Cost Budget = $ 475,0000 + 462, 6000 + 519,1000 + 649,5000 = $2106,2000
Explanation:
Pargo Company
Sales Budget
For the year 2020
QUARTERS
1 2 3 4 TOTAL
18%, 23%, 23%, 36%,
Sales, 180,000 230,000 230,000 360,000
Sale Price $38 $ 38 $ 38 $ 43
Sales Budget 6840,000 8740,000 8740,000 15480,00 $ 39800,000
Pargo Company
Production Budget
For the year 2020
QUARTERS
1 2 3 4 TOTAL
Sales 180,000 230,000 230,000 360,000
+Ending Inventory 46,000 46000 72000 39,600*
-Opening Inventory 264,000* 46000 46000 72000
Production, 490,000 230,000 256,000 327,600 1303600
Working:
The opening inventory is calculated as the production ius already given. 264,000
Sales of 1st quarter 2020 = 180,000
Sales of 1st quarter 2021 = 180,000 + 18,000= 198,000
Ending inventory of 4th quarter of 2020 = 198,000* 20%= 39,600
Pargo Company
Direct Materials Budget
For the year 2020
QUARTERS
1 2 3 4
Units Produced 490,000 230,000 256,000 327,600
Direct materials
Per Unit 2 pounds 2 pounds 2 pounds 2 Pounds
D. Mat Used 980,000 460,000 512,000 655,200
Add Desired
Ending Inv 23,000 25,600 32,700 27,000
Less Beginning
Inventory 528,000* 23,000 25,600 32,700
D. Materials
Purchases 475,000 462, 600 519,100 649,500
Cost per pounds $ 10 $ 10 $ 10 $ 10
Purchases Cost $ 475,0000 462, 6000 519,1000 649,5000 TOTAL $2106,2000
The beginning inventory is calculated from the production budget opening inventory.
Better Corp. (BC) began operations on January 1, Year 1. During Year 1, BC experienced the following accounting events: 1. Acquired $7,000 cash from the issue of common stock. 2. Borrowed $12,000 cash from the State Bank. 3. Collected $47000 cash as a result of providing services to customers. 4. Pald $30,000 for operating expenses 5. Paid an $8,000 cash dividend to the stockholders. 6. Paid $20,000 cash to purchase land. Required a. Record the events in an accounting equation like the one shown next. Record the ined Earnings column. Provide the appropriate titles for these accounts in the last column of the table. The first event is shown amounts of revenue, expense, and dividends in as an example. (Enter any decreases to account balances with a minus sign. Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings") BETTER CORP. Accounting Equation for Year 1 Assets Stockholders Equity Event Cash Land Notes Payable + Common Stock : + : Retained Account Tities for = Earnings R Beg. Bai. O NA 1. Issued stock 2. Borrowed Loan 3. Provided Service 4. Paid operating expenses 5. Paid dividend 6. Land purchase < Prev 80f 8 Next
Answer:
Better corp
Cash balance is $8,000
+
Land balance is $20,000
=
Notes payable is $12,000
+
Common stocks is $7,000
+
Retained Earnings is $9,000
Explanation:
Refer to the attached file for proper presentation
Better Corp. (BC)
a. Accounting EquationAssets = Liabilities + Equity
1. Cash $7,000 Common stock $7,000
2. Cash $12,000 Bank loan payable $12,000
3. Cash $47,000 Service Revenue $47,000
4. Cash ($30,000) Op. expenses ($30,000)
5. Cash ($8,000) Cash dividend ($8,000)
6. Land $20,000 Cash ($20,000)
Assets $28,000 = Liabilities $12,000 + Equity $16,000
b. December 31, Year 1 Balances:Total assets = $28,000
Total liabilities = $12,000
Stockholders' equity = $16,000
Balance Sheet as of December 31, Year 1
Assets:
Cash $8,000
Land $20,000
Total assets $28,000
Liabilities:
Bank loan $12,000
Equity:
Common stock $7,000
R/Earnings 9,000
Total equity $16,000
Liabilities and
Equity $28,000
c. January 1, Year 2 Balances:Total assets = $28,000
Total liabilities = $12,000
Total equity = $16,000
d. When The Land will be shown on the December 31, Year balance sheet at $20,000. The reason is that this is the acquisition cost and the land is not held for trading (no information provided).
Explanation:
a) Data and Analysis based on the Accounting Equation:
1. Cash $7,000 Common stock $7,000
2. Cash $12,000 Bank loan payable $12,000
3. Cash $47,000 Service Revenue $47,000
4. Cash ($30,000) Operating expenses ($30,000)
5. Cash ($8,000) Cash dividend ($8,000)
6. Land $20,000 Cash ($20,000)
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A firm is considering whether to introduce a new product. No other firms are considering producing the product. The product costs F to introduce and can be produced at zero marginal cost once the firm has spent F. If the firm introduces the product, it must charge the same per-unit price to all customers. The demand for the product is D(p) = 10 - p where p is price.
a.(10 pts) Are there values of F such that the firm would not introduce the product even though it would be socially optimal to have the product produced? If not, explain. If so, what are the values of F such that the firm does not introduce the product when a social planner would?
b.(10 pts) Consider the following extension of the problem. Suppose that the buyer is a single customer, e.g., a big downstream producer that earns surplus by selling in a final market (although you do not need to analyze activities in the final market to answer this question). Suppose the seller can charge the buyer a fixed fee K in addition to a per unit price p. In this case, are there values of the fixed cost F such that the seller will fail to introduce the product when it would be socially optimal to do so? Explain your answer with reference to the concepts of "business stealing" and "incomplete appropriation."
Answer:
Explanation:
a. Should in case the firm decides to introduce the new product, the total cost sum of variable and fixed cost if F, the variable cost is zero.
The firm could get a total revenue expressed as TR=P*Q=(10-Q)*Q=10Q-Q^2. The marginal revenue is 10-2Q. The marginal cost is 0. Thus, social optimal quantity can be calculated by equating marginal revenue to marginal cost.
MR=MC
10-2Q=0
2Q=10
Q*=5
Hence, the socially optimal quantity is 5.
However, if fixed cost is high enough such that the total profit for the firm is less than zero, the firm will not introduce the product in the market.
Total Profit=Total Revenue-Total cost
=(10-5)*5-F
=25-F
if F>25 then the firm will earn a negative profit, therefore, it will not introduce the product in the market.
B)
The negative effect created on the demand of competitor's goods when the firm changes its price strategy is referred to as business stealing.
If the firm chooses to introduce the new product the total cost sum of variable and fixed cost if F as variable cost is zero. The Total revenue the firm could get is TR=P*Q+K=(10-Q)*Q+K=10Q-Q^2+K. The marginal revenue is 10-2Q. The marginal cost is 0. Therefore socially optimal quantity can be calculated by equating marginal revenue to marginal cost.
MR=MC
10-2Q=0
2Q=10
Q*=5
Therefore, the socially optimal quantity is 5.
However, if fixed cost is high enough such that the total profit for the firm is less than zero, the firm will not introduce the product in the market.
Total Profit=Total Revenue - Total cost
= (10-5)*5+K-F
Total Profit = 25 + K - F
The firm will earn a negative profit if F > 25 + K, thus, it will not introduce the product in the market.
Now if the Fixed cost lies between 25 and 25+K, it will be beneficial for the firm to introduce the product. But the amount the per-unit price buyer has to pay will be P + K/Q.
Eaton Company issued $600,000 of eight percent, 20‑year bonds at 106 on January 1, 2013. Interest is payable semiannually on July 1 and January 1. Through January 1, 2019, Eaton amortized $5,000 of the bond premium. On January 1, 2019, Eaton retired the bonds at 103 (after making the interest payment on that date). Prepare the journal entry to record the bond retirement on January 1, 2019.
Answer:
Bonds payable $600,000
Premium on bonds payable $31,000
Gain on bonds retirement $13,000
To Cash $618,000
(Being the redemption of bonds is recorded)
Explanation:
The journal entry is shown below:
On Jan 1, 2019
Bonds payable $600,000
Premium on bonds payable $31,000
Gain on bonds retirement $13,000
To Cash $618,000
(Being the redemption of bonds is recorded)
The computation is shown below:
Issue price of bonds (600000 ÷ 100 × 106) $636,000
Less: Face value $600,000
Premium on bonds $36,000
Less: Premium amortized till 2019 $5,000
Amortized premium $31,000
Now
Redemption price ($600,000 ÷ 100 × 103) $618,000
For recording this we debited the bond payable , premium and gains on bonds retirement and credited the cash as it reduced the liabilities plus the issued amount exceeded than the face value after considering the amortized same so the same is transferred to premium and the remaining amount is debited to gains on bond retirement.
Eaton Company recorded the retirement of their bonds by debiting Bonds Payable for $600,000, debiting Bond Premium for $1,000, debiting Loss on Bond Retirement for $17,000, and crediting Cash for $618,000.
Explanation:To record the retirement of the bonds on January 1, 2019, you will first need to understand the bond's carrying amount. The carrying amount is the bond's face value plus the unamortized bond premium. In this case, the face value of the bonds is $600,000 and the unamortized premium is $6,000- $5,000 = $1,000, making the carrying amount $601,000. In retiring the bonds, Eaton paid 103% of the bond's face value, or $618,000. The loss on retirement is the difference between these amounts, or $17,000. So the company's journal entry to record this transaction would be to debit (increase) Bonds Payable for $600,000, debit Bond Premium for $1,000, debit Loss on Bond Retirement for $17,000, and credit (decrease) Cash for $618,000.
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"Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $ 1 comma 100, variable costs are $ 500, and fixed costs are $ 120 comma 000. How many dresses must the Bridal Shoppe sell to yield afterminustax net income of $ 21 comma 000, assuming the tax rate is 30%?"
Answer:
250 dresses
Explanation:
The first task would be to compute before tax net income when after tax net income is $21,000 at the tax rate of 30%
After tax net income=before tax net income*(1-t)
t is the tax rate of 30% or 0.30
after tax net income is $21,000
$21000=before tax net income*(1-0.3)
$21,000=0.7*before net income
before tax net income=$21,000/0.7=$30,000
Target units for before tax net income of $30,000 is computed thus:
target number of dresses=fixed cost+target profit/contribution per unit
fixed cost is $120,000
contribution per unit=sales price-variable cost
=$1,100-$500=$600
target number of dresses=($120,000+$30,000)/$600=250 dresses
Final answer:
Stephanie's Bridal Shoppe needs to sell 250 dresses to achieve an after-tax net income of $21,000, considering a 30% tax rate.
Explanation:
To determine how many dresses Stephanie's Bridal Shoppe needs to sell to achieve an after-tax net income of $21,000, we first calculate the required pre-tax profit. With a tax rate of 30%, the pre-tax profit needs to be:
Pre-tax profit = After-tax income / (1 - Tax rate) = $21,000 / (1 - 0.30) = $21,000 / 0.70 = $30,000
Next, we need to find out the total revenue required to achieve this pre-tax profit, considering the fixed costs and variable costs per unit.
The formula for total profit is given by Total Revenue - Total Costs (fixed costs + variable costs).
We rearrange this formula to find Total Revenue:
Pre-tax profit = Total Revenue - (Fixed Costs + Variable Costs * Quantity)
Total Revenue = Pre-tax profit + Fixed Costs + (Variable Cost * Quantity)
Given that Fixed Costs are $120,000, Variable Cost per dress is $500, and Pre-tax profit needed is $30,000, we calculate Total Revenue needed.
To find the number of dresses needed to be sold, we divide the Total Revenue by the average selling price per dress:
Number of Dresses = (Pre-tax profit + Fixed Costs) / (Selling Price - Variable Cost)
Number of Dresses = ($30,000 + $120,000) / ($1,100 - $500) = $150,000 / $600 = 250 dresses
Therefore, Stephanie’s Bridal Shoppe must sell 250 dresses to achieve an after-tax net income of $21,000.
Seven years ago, Halle (currently age 41) contributed $4,000 to a Roth IRA account. The current value of the Roth IRA is $9,000. In the current year Halle withdraws $8,000 of the account balance to use as a down payment on her first home. Assuming Halle's marginal tax rate is 24 percent, how much of the $8,000 withdrawal will she retain after taxes to fund the down payment on her house
Answer:
$7,040 is the amount to be retained after taxes to fund the house down payment
Explanation:
In this question, we are asked to calculate the amount of withdrawal that will be retained after taxes to fund the house payment.
We proceed as follows;
Withdrawal amount = $8000
The Non taxable amount is $4000 (this is because the amount deposited is not taxed)
The amount subject to tax is $4000(contributed to the IRA)
Tax rate = 24%
Penalty rate is zero as the purpose is to buy a house
After tax withdrawal retained= 4000+ 4000*(1-24%) = $7,040
A shoe store is for sale for $2,000,000. It is estimated that the restaurant will earn $200,000 a year for the next 11 years. At the end of 11 years, it is estimated that the restaurant will sell for $3,500,000. What would be most likely to occur if the investor's required rate of return is 15%?
Answer:
The NPV is -$200956.3508. Thus, the shop will not be purchased as the NPV from this investment is negative.
Explanation:
To take the decision to buy or not buy the shoe store, we need to calculate the Net Present Value of the investment in the shoe shop. The net present value (NPV) is the present value of future expected cash inflows from the investment less the initial outlay/cost.
If the NPV is positive, the investment will be done and shop will be purchased and vice versa.
As the cash in flows consist of an annuity of 200000 for 11 years along with a principal sale value, the NPV will be,
NPV = PV of Annuity + PV of Principal - Initial cost
NPV = 200000 * [ (1 - (1+0.15)^-11) / 0.15 ] + 3500000 / 1.15^11 - 2000000
NPV = -$200956.3508
The shop will not be purchased as the NPV from this investment is negative.
Mark owns a stamp collection that he is considering getting insured. Over the course of a year it will cost him $500 to keep his collection insured, but if he his collection is damaged they will pay him $1000. If he estimates there’s a 10% chance of his collection being damaged, what is the expected value of buying the insurance policy?: *
Answer:
EV = -$400
The expected value of buying the insurance policy is -$400
Explanation:
Expected value of buying the insurance policy;
EV = expected benefits - insurance cost
EV = xE - C
chances of collection being damaged x = 10% = 0.1
Insurance cost C = $500
Benefit E = $1000
Substituting the values;
EV = 0.1 × 1000 - 500 = 100 - 500
EV = -$400
The expected value of buying the insurance policy is -$400
Keynes' law is
Select all that apply:
a. the opposite of Say's law
b. the same as Say's law
c. consistent with the statement that supply creates demand
d. described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produce
Answer: A; D
Explanation: The Keynesian perspective emphasizes the importance of aggregate demand for the short run and states that demand creates its own supply. Say's law emphasizes the importance of aggregate supply, for the long run and holds holds that supply creates its own demand. As a result, Keynes' law is the direct opposite of Say's law.
Keynes argued that economy often produced less than its full potential due to a lack of demand in the economy. This lack of demand as a whole leads to inadequate incentives for firms to increase production, that is, total demand determines the level of GDP.
Keynes' law is the opposite of Say's law and is best described by the notion that a lack of demand can lead to inadequate production incentives for firms. Therefore, options a and d are correct.
Keynes' law is a key concept in macroeconomics and can be summarized as: "Demand creates its own supply." This is in contrast to Say's law, which emphasizes the idea that supply creates demand. Therefore, the statements that apply to Keynes' law are:
a. the opposite of Say's lawd. described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produceKeynes' theory posits that during economic downturns, a lack of aggregate demand can result in underutilized resources and unemployment, thus a focus on stimulating demand is essential to encourage production and economic growth
The credit that is created when a supplier sells goods and services on an account with extended payment terms is called . Garcia Assemblers Corporation is a manufacturing company. Garcia’s financial managers use many sources of financing for the company’s annual borrowings, which exceed $100 million. Garcia’s credit rating is excellent. At the moment, the managers are looking to fund a $5 million payroll by issuing a note with a 30-day maturity. What type of financing is this? Trade credit Accrual Commercial paper Bank loans
Answer:
1. The credit that is created when a supplier sells goods and services on an account with extended payment terms is called Trade credit.
2. The type of financing practiced by Garcia Assemblers Corporation is called Commercial paper.
Explanation:
Trade credit is the type of credit wherein a supplier sells goods and services with extended payment term. There is no immediate exchange of money.
Commercial paper is a short-term debt instrument mostly used by large corporations to finance payrolls and other short-term liabilities. It is unsecured as it is mostly issued without collateral. This method of financing is used by firms with good debt ratings. The denominations of the commercial paper is also usually high. Garcia Assemblers Corporation fit the description of a firm with high debt ratings using commercial paper to finance a high payroll.
Answer:
The correct answers are :
1.Trade credit
2. Commercial paper
Explanation:
In a bid to grow business and entice customers ,suppliers sell merchandise their customers with an agreement to receive payment at a later date,this is effectively funding the customers' business since a financial institution would have charged interest on such finance.This is done most times in order to boost revenue and retain customers by offering a trade credit.
Commercial paper is a short term note issued by corporate bodies with good credit rating in order to fund short term expenditure like payment of staff cost.
Its maturity can be 270 days or less.The practice is that it is issued at a discount ,that is the issuer receives a discounted value in return for full face value at maturity.
Which one of the following statements about the carbon, phosphorus, and nitrogen cycles is true? Soil bacteria drive the phosphorus cycle. The major source of nitrogen used by plants in photosynthesis is the atmosphere. The major source of carbon used by plants is the carbonate rocks and soil. Phosphorus has no atmospheric component.
Answer:
Phosphorus has no atmospheric component.
Explanation:
The phosphorus cycle is a biochemical cycle that states the movement if the phosphorus from the lithos and hydros and the biosphere. Unlike other cycles, the atmosphere does not play any role in the movement due to the phosphorus is a found in usually sold forms. Through the phosphoric gas occurs is specific locations only, phosphorus is found only in small quantities as limited nutrient from the aquatic system.Does enter the atmosphere when the dust is dissolved in the rainwater like the sea spray but mostly on land, soil and rocks.Final answer:
The true statement about the cycles is that phosphorus has no atmospheric component. Soil bacteria mineralize phosphorus for plant use. Plants obtain nitrogen as nitrates or ammonium ions from soil, fixed by bacteria, and use atmospheric carbon dioxide in photosynthesis.
Explanation:
The correct statement about the carbon, phosphorus, and nitrogen cycles is that phosphorus has no atmospheric component. Contrary to other biogeochemical cycles, the phosphorus cycle does not include a gas phase and operates mainly through lithosphere, hydrosphere, and biosphere.
Soil bacteria are indeed crucial for the phosphorus cycle, but primarily through their role in making phosphorus available to plants by breaking down organic matter and mineralizing inorganic phosphorus.
The major source of nitrogen for plants is not directly the atmosphere; instead, plants utilize nitrogen in the form of nitrates and ammonium ions that are available in soil and water.
These forms of nitrogen are the result of nitrogen fixation by bacteria, which convert atmospheric nitrogen (N₂) into a form that plants can use. The statement about plants using nitrogen from the atmosphere in photosynthesis is thus misleading—plants use nitrogen fixed by bacteria into nitrates or ammonium ions.
As for carbon, the major source used by plants is indeed carbon dioxide from the atmosphere, which they convert into organic compounds through the process of photosynthesis, not from carbonate rocks and soil. These rocks can act as carbon reservoirs, but are not the primary carbon source for plant intake.
Time horizon and elasticity The time horizon of the demand curve is one determinant of the price elasticity of demand. If the price of gasoline is relatively high for a long time, consumers are more likely to buy fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is ____ elastic in the long run than in the short run.
a. more
b. no more nor less
c. less
Answer: a. More
Explanation:
The demand for gasoline is more elastic in the long run than in the short run.
Price Elasticity is defined as the degree by which demand changes as a result of a change in price. If gasoline prices were to change today, people would stll buy them because they still need gasoline in their every day lives showing that gasoline is less elastic in the short run.
However, if prices remain high even in the long run, people start buying more efficient cars and taking public transport which means they will demand less gasoline because they need less. This drop in demand in the long run because of a high price shows more elascticity in the long run.
Let S represent the amount of steel produced (in tons). Steel production is related to the amount of labor used (L) and the amount of capital used (C) by the following function: S = 15 L0.2 C 0.8 In this formula L represents the units of labor input and C the units of capital input. Each unit of labor costs $50, and each unit of capital costs $100. (a) Formulate an optimization problem that will determine how much labor and capital are needed in order to produce 50,000 tons of steel at minimum cost. Min L + C L0.2 C 0.8 L, C (b) Solve the optimization problem you formulated in part a. Hint: When using Excel Solver, start with an initial L > 0 and C > 0. If required, round your answers to two decimal places. L = $ C = $ Cost = $
Solution
S = 15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex]
Total cost, T = wL + rC = 50L + 100C
Total revenue, R = Output price (P) x Quantity = P x 15 x [tex]L^{0.2}[/tex]x [tex]C^{0.8}[/tex]
(a)
Optimization problem will be:
Max R = P x 15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex]
Subject to T = 50L + 100C
(b) When S = 50,000
Cost is minimized when (MPL / MPC) = w / r
MPL = [tex]\partial[/tex]R / [tex]\partial[/tex]L = P x 15 x 0.2 x [tex](C / L)^{0.8}[/tex] = P x 3 x [tex](C / L)^{0.8}[/tex]
MPC = [tex]\partial[/tex]R / [tex]\partial[/tex]C = P x 15 x 0.8 x [tex](L / C)^{0.2}[/tex] = P x 12 x [tex](L / C)^{0.2}[/tex]
MPL / MPC = (3/12) x (C / L) = 50/100
C / 4L = 1/2
4L = 2C
2L = C
Substituting in production function,
15 x [tex]L^{0.2}[/tex] x [tex]C^{0.8}[/tex] = S
15 x[tex]L^{0.2}[/tex] x [tex](2L)^{0.8}[/tex] = 50,000
15 x [tex]2^{0.8}[/tex] x [tex]L^{0.2}[/tex] x [tex]L^{0.8}[/tex] = 50,000
L = 50,000 / (15 x 20.8)
L = 1,914.50
C = 2L = 3,829.00
Total cost ($) = 50 x 1,914.50 + 100 x 3,829.00 = 95,725.00 + 382,900 = 478,625.00
Note: This optimization problem can be solved without using Solver too, as shown here.
Final answer:
To minimize production costs while producing 50,000 tons of steel, formulate an optimization problem with the cost function 50L + 100C and production function S = 15L^0.2C^0.8 as the constraint. Solve using Excel Solver with initial positive values for L and C.
Explanation:
To determine how much labor (L) and capital (C) are needed to produce 50,000 tons of steel at the minimum cost, we need to formulate and solve an optimization problem. Given that each unit of labor costs $50 and each unit of capital costs $100, we aim to minimize the cost function subject to the production function constraint S = 15L0.2C0.8. The cost function is the sum of the costs of labor and capital, which is 50L + 100C. The constraint in this optimization problem is that the production function must equal 50,000 tons.
To solve the optimization problem, one might use Excel Solver starting with initial positive values of L and C. After setting up and solving the problem with Solver, we would get the optimal values of L and C that minimize the cost. However, since specifics such as Solver setup and actual calculations are not provided in the context, the answer to part b cannot be given here. Remember that in a real scenario, it would be crucial to ensure Excel Solver is set to respect the constraint that S equals 50,000.
Helen Martin is looking to invest in a three-year bond that makes semi-annual coupon payments at a rate of 5.775 percent. If these bonds have a market price of $981.68, what yield to maturity can she expect to earn? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)
Answer:
The yield to maturity is 6.46% annually
Explanation:
The yield to maturity on the bond can be computed using the rate formula in excel as given below:
=rate(nper,pmt,-pv,fv)
nper is the number of interest payments the bond would make which is 3*2=6
pmt is the semi-annual interest payment of the bond which is 5.775%/2*$1000=$28.88
pv is the current market price of the bond at $981.68
fv is the face value of the bond at $1000
=rate(6,28.88,-981.68,1000)
rate=3.23% semi-annually
rate=6.46%(3.23%*2) annually
Becky Smith signed a note in the amount of $200,000 in favor of Country Home Loans, Inc., to obtain a loan to buy a house in Marrero, Louisiana. The note was endorsed "Pay to the order of ____________ without recourse Country Home Loans, Inc." Almost five years later Smith defaulted on the payments. The Federal National Mortgage Association (Fannie Mae) wanted to foreclose on the house and sell it to recover the balance due. Smith argued that the words "to the order of ____________" in the endorsement made the note an incomplete order instrument and that Fannie Mae could not enforce it. What is Fannie Mae's best response to this argument?
Fannie Mae can enforce the note and foreclose on the house to recover the balance due.
Explanation:Fannie Mae's best response to Smith's argument is that the note is not an incomplete order instrument. The words "to the order of ____________" in the endorsement indicate that the note is payable to the holder of the instrument, which includes Country Home Loans, Inc. and any subsequent transferees. This means that Fannie Mae, as a transferee of the note, has the right to enforce it and foreclose on the house to recover the balance due.
Learn more about Enforcing a promissory note here:https://brainly.com/question/32179497
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Prock Petroleum's stock has a required return of 15%, and the stock sells for $60 per share. The firm just paid a dividend of $1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D 4 = $1.00(1.30) 4 = $2.8561. After Year 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after Year 4, i.e., what is X? Pick the closest answer.
Answer:
Price =[PVF15%,1*D1]+[PVF15%,2*D2]+[PVF15%,3*D3]+[PVF15%,4*D4]+[PVF15%,4*Terminal value at year4 ]
60 = [.86957* 1.3]+[.75614*1.69]+[.65752*2.197]+[.57175*2.8561]+[.57175*TV]
= 1.1304+ 1.2779+ 1.4446+ 1.6330+ .57175TV
60 = 5.4859+.57175TV
Terminal value = [60-5.4859]/.57175
= 54.5141/.57175
= $ 95.3460
Terminal value=D4(1+g)/(Rs-g)
95.3460 =2.8561(1+g)/(.15-g)
95.3460(.15-g)= 2.8561-2.8561g
14.3019- 95.3460g = 2.8561-2.8561g
95.3460g-2.8561g = 14.3019-2.8561
92.4899 g = 11.4458
g = 11.4458/92.4899
= .1238 or 12.38%
Growth after year4 = 12.38%
**D1 =1(1+.30)=1.3
D2 =1.3(1+.3)=1.69
D3 = 1.69(1+.3)= 2.197
D4= 2.197(1+.3)= 2.8561
Answer:
g = 0,116559243
Explanation:
First we solve for the present value of the know dividends:
[tex]\left[\begin{array}{ccc}#&Cashflow&Discounted\\Zero&1&\\1&1.3&1.13\\2&1.69&1.28\\3&2.197&1.44\\4&2.8561&1.63\\\end{array}\right][/tex]
We add them and get: 5.48
as the stock sells for 60 dollar the 54.52 represent the horizon value discounted:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
[tex]\frac{Maturity}{(1 + .15)^{4} } = 54.52[/tex]
Horizon value = 95.36281912
Now, we solve for grow:
[tex]\frac{D_{n+1}}{r-g} = PV\\\frac{D_0(1+g)}{r-g} = PV\\[/tex]
[tex]\frac{2.8561(1+g)}{0.15-g} = 95.36281912\\[/tex]
[tex] 2.8561 + 2.8561g = 0.15 x 95.36281912 - 95.36281912g [/tex]
[tex]95.36281912g + 2.8561g = 14,304422868 - 2.8561[/tex]
[tex] g = 11,448322868 / 98,21891912[/tex]
g = 0,116559243
In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.
Answer:
The change in disposable income from Year 1 to Year 2 is $5,714
Explanation:
We use “Rule of Three” to solve this calculation:
It has been observed that each time consumption changes by $70, disposable income changes in this country by $100.
Now the change in comsumtion in $4,000 (= $60,000 - $56,000), then the change in disposable income = $4,000 * $100/ $70 = $5,714
The high-low method calculates the total fixed cost as the: Group of answer choices
a. difference between the unit variable cost and the unit total cost
b. change in activity level divided by the change in cost for two points
c. difference between total variable costs and total costs at a particular activity level
d. change in cost divided by the change in activity level for two points
Answer:
c. difference between total variable costs and total costs at a particular activity level
Explanation:
The high low method consists of calculating costs on the basis of highest & lowest activity & comparing their corresponding total costs.
Variable cost per unit is found by : change in cost divided by the change in activity level for two points
Variable Cost per unit = Highest activity cost - Lowest activity cost
Highest activity units - lowest activity units
Fixed Cost is thereafter calculated by subtracting Total Variable Costs from Total Cost
Fixed Cost = Highest Activity Total Cost - [ (Variable cost per unit) x (highest activity units)
Fixed Cost = Lowest Activity Cost - [ (Variable cost per unit) x (lowest activity units)]
Final answer:
The high-low method calculates total fixed costs by finding the change in cost divided by the change in activity level for two points, helping in separating fixed and variable costs for better financial planning.
Explanation:
The high-low method calculates the total fixed cost as the d. change in cost divided by the change in activity level for two points. This method is used in cost accounting to separate the fixed and variable components of mixed costs. The high-low method involves taking the highest and lowest activity levels and comparing the total costs at each level to determine variable costs per unit. Once the variable cost per unit is found, it can be used to calculate the total fixed costs. Specifically, the total fixed cost is calculated by subtracting the total variable cost at a certain activity level from the total cost at that activity level.
Understanding how to calculate average fixed cost, average variable cost, and average total cost is crucial for businesses to effectively manage and predict costs. These calculations help businesses in pricing strategies, budgeting, and financial planning to ensure profitability.
Sep. 1: Sold a building that cost $ 540 comma 000 (accumulated depreciation of $ 275 comma 000 through December 31 of the preceding year). Guilda Bell Associates received $ 340 comma 000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $ 75 comma 000. Before we record the sale of the building, we must record depreciation on the building through September 1, 2018.
Answer:
$8,718.75
Explanation:
Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.
It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset
Mathematically,
Depreciation = (Cost - Salvage value)/Estimated useful life
Annual depreciation
= (540,000 - 75,000)/40
= $11,625
Depreciation between 1 January and 1 September 2018 (9 months)
= 9/12 * $11,625
= $8718.75
While Mary Corens was a student at the University of Tennessee, she borrowed $11,000 in student loans at an annual interest rate of 11%. If Mary repays $1,700 per year, then how long (to the nearest year) will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number.
Answer:
It will take 23 years for Mary Corens to repay the loan.
Explanation:
Mary Corens obtained her loan of $ 11,000 with an interest rate of 11% per year, with which the annual interest that will accrue on her loan will be $ 1,210 (11,000 x 0.11).
If Mary pays 1,700 each year, we must take into account that each payment will decrease the amount of the loan by $ 490, since she will pay the interest of $ 1,210 and a surplus of $ 490 that will cover said part of the value of the loan. Therefore, to find out how long it will take Mary to repay the entire loan, we must divide the initial amount of the loan without interest by 490, which will be the sum of money that will be charged to the principal payment: 11,000 / 490 = 22.4.
Therefore, it will take Mary almost 22 and a half years to repay her loan, making annual payments of $ 1,700. Since the answer requires a whole number, we can affirm that in 23 years Mary Corens will pay off her debt.
Prepare the journal entries to record these transactions on Blossom Company’s books using a periodic inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) (a) On March 2, Blossom Company purchased $860,500 of merchandise from Kingbird Company, terms 2/10, n/30. (b) On March 6, Blossom C
Answer:
(a) Purchase (Dr.) $860,000
Accounts Payable (Cr.) $860,000
Explanation:
Credit discounts are offered by suppliers to realized receivables early than the credit period by offering customers some discount. The terms of payment are decided at the time of sell. The Blossom Company has purchased from Kingbird Company on terms of 2/10, n/30. This means 2% discount will be offered on invoice price if the payment is made within 10 days. The journal entry at the time of purchase will be recorded as accounts payable for complete invoice amount and discount is not incorporated in the entry because it is not realized.
Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 31 Reacquired Peridot common stock 57 Proceeds from sale of land 92 Gain from the sale of land 51 Investment revenue received 74 Cash paid to acquire office equipment 87 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:
Answer:
Peridot should report net cash outflows from investing activities of $26 million
Explanation:
Prepare a Cash flow from Investing Activity Section as follows :
Cash flow from Investing Activity
($ in millions)
Purchase of Machinery (31)
Proceeds from Sale of land 92
Purchase of Office Equipment (87)
Net Cash Flow from Investing Activities (26)
The Section only includes Activities relating to Capital Expenditure
g The Berwin Company established a master budget volume of 35,000 units for April. Actual overhead costs incurred amounted to $98,500. Actual production for the month was 34,000 units. The standard variable overhead rate was $1.75 per direct labor hour. The standard fixed overhead rate was $1.50 per direct labor hour. One direct labor hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labor hours. SR1a. A. Compute the total manufacturing overhead cost variance.
The actual overhead incurred = $98,500
The overhead applied = 34000 * 1 ( $1.75 + $1.50) = 34000*1*3.25 = $110,500
The budgeted overhead = 34000*1*$1.75 + (35000*1*1.50) = (34000*1*$1.75)+52500 = $112,000
A) The total manufacturing overhead cost variance = Overhead applied - Actual overhead = $110,500 - $98,500 = $12,000 F