Answer:
Revised Net operating Profit = $595,000 + $7,500 = $602,500
Thus The net impact of this deal on operating income is increase by $7,500.
Explanation:
Present operating income is as follows:
Sales = $300 X 5,000 = $1,500,000
Less: Variable Costs
Manufacturing = $95 X 5,000 = $475,000
Selling and Administrative = $6 X 5,000 = $30,000
Contribution margin = $995,000
Less: Fixed cost
Manufacturing = $280,000
Selling & Administrative = $120,000
Current Operating Income = $595,000
Provided with new order no selling & administrative cost to be incurred also fixed cost will not change as it is in the capacity fixed.
In case order is considered
Additional Revenue shall be as follows:
Sales = $120 X 300 = $36,000
Less:
Variable Manufacturing cost $95 X 300 = $28,500
Operating Profit = $7,500
Revised Net operating Profit = $595,000 + $7,500 = $602,500
Thus The net impact of this deal on operating income is increase by $7,500.
Explain the vertical integration options and directions for the following providers: (a) a major academic medical center such as the University of Iowa, (b) a five-person general surgery group, and (c) a manufacturer of durable medical equipment.
Answer:
(a) Backward vertical integration (b) Forward vertical integration (c) Backward vertical integration
Explanation:
(a) An academic medical center is an example of backward vertical integration. The specialist and faculties from the university will provide treatment to the patients. Such medical centers have tertiary service with several intermediaries.
(b) Here, there is no intermediary between patients and general surgery group. The general surgery group treat patients directly. So here there is a forward vertical integration system.
(c) A manufacturer of durable medical equipment will supply to retailers who in turn supply these to hospitals where the patients will receive service from these equipment. So, it is an example of backward vertical integration.
Tata Motors assembles cars from their own parts and subassemblies and also controls the mining and fabrication of the materials used to create those parts. When Anand ordered their luxury sedan with the platinum dashboard he knew he wouldn't be taking delivery of his dream car the next week. Rather, he would be waiting a while thanks to: a.a mismatch between supply chain lead time and customer demand. b.a mismatch between overall demand levels and productive capacity. c.a mismatch between demand and the most efficient production volume. d.a mismatch between demand and the most efficient shipment volume.
Answer:
The correct answer would be option A, A mismatch between supply chain lead time and customer demand.
Explanation:
Anand ordered his dream car which is luxury sedan with platinum dashboard. He knows that the delivery of his car will take time to reach him. This is because of the fact that there is a mismatch between supply chain lead time and the customer demand. A lead time is simply the delay or latency between the starting of a process till its execution. The delayed time between the initiation and the execution of a process is called as the lead time. Now Anand has ordered his dream sedan with some customization, which is the demand of the customer. Now the delay in the delivery of the his dream car will be due to the mismatch between his demand and the latency in the initiation and execution/delivery of the car to Anand.
1. What are the benefits of creating a comprehensive crisis response plan before a crisis happens? Please research and share at least 1 example of an organization that created and then used such a plan. What happened?
Answer: the benefits are many but mainly if a company has a comprehensive crisis response plan then it is prepared to deal with unforseeable problems that will always appear in a company life.
One great example of a comprehensive crisis response plan was Ford's Bailout. Although Ford did not receive TARP funds, it did receive government loans. These were critical because banks were not lending during the financial crisis. It requested a $9 billion line-of-credit from the government.
Explanation:
Crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event. A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk.
Most companies are schooled in establishing a crisis management plan in order to react quickly and eliminate the problem. Here is the process: Identify and define the crisis. Establish an overall corporate response.
Suppose that Larimer Company sells a product for $20. Unit costs are as follows: Direct materials $2.10 Direct labor 1.25 Variable factory overhead 2.00 Variable selling and administrative expense 1.05 Total fixed factory overhead is $56,590 per year, and total fixed selling and administrative expense is $38,610. Required: 1. Calculate the variable cost per unit and the contribution margin per unit. 2. Calculate the contribution margin ratio and the variable cost ratio.
Answer:
Contribution Margin 13.6
Contribution Margin Ratio 0.68
Variable Cost ratio 0.32
Explanation:
Sales Price 20
Direct materials 2.10
Direct labor 1.25
Variable factory overhead 2.00
Variable selling and administrative expense 1.05
Total Variable cost 6.4
[tex]Contribution \: per \: unit \times units \: sold = Total \: Contribution \: Margin[/tex]
20 - 6.4 = 13.6 Contribution Margin
[tex]\frac{Contribution \: Margin}{Sales \: Revenue} = $Contribution Margin Ratio[/tex]
13.6/20 = 0.68
[tex]\frac{Variable \: Cost }{Sales \: Revenue} = $Variable Cost Ratio[/tex]
6.4/20 = 0.32
company must decide whether to buy Machine A or Machine B. After 5 years Machine A will be replaced with another A. The initial cost for Machine A is $12,500, annual maintenance is $1,000, and the salvage value at 5 years is $10,000. Machine B has an initial cost of $20,000, 0 maintenance costs, and a salvage value of $10,000 at 10 years. Which machine should be purchased? Use a MARR of 10%. on financial calculator
Answer: The present value of the Machine B ($16140) is less than that of Machine A ($16338) , so we should purchase Machine B.
Explanation:
Present value of the cost incurred on Machine A :
Given:
Initial capital cost = $12500
Capital cost at 6th year ($12500 - salvage of previous machine $10000) = $2500
Present value of capital cost at (10%,5) = $1553
Maintenance cost = $1000
Present value of Maintenance cost at (10%,10) = $6145
Less: Salvage at the end of Year 10 = $10000
Present value of Salvage cost at (10%,10) = $3860
Total present value of cost in Machine A = $16338
Similarly,
Present value of the cost incurred on Machine B :
Given:
Initial capital cost = $20000
Maintenance cost = $0
Present value of Maintenance cost at (10%,10) = $0
Less: Salvage at the end of Year 10 = $10000
Present value of Salvage cost at (10%,10) = $3860
Total present value of cost in Machine B = $16140
As the present value of the Machine B ($16140) is less than that of Machine A ($16338) , so we should purchase Machine B.
It is January 2nd. Senior management of Digby meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 50,000 shares of stock plus a new bond issue. The CFO happily notes this will raise their Leverage (Assets/Equity) to a new target of 2.43. Assume the stock can be issued at yesterday's stock price $23.03. Which of the following statements are true? (Select 2 answers) Digby bond issue will be $47,165 Total Assets will rise to $150,947,421 Digby working capital will be unchanged at $21,092,896 Long term debt will increase from $35,183,502 to $36,334,880 Total investment for Digby will be $2,796,837 Digby will issue stock totaling $1,151,378
Answer:
1. Digby working capital will be unchanged at $21,092,896
2. Digby will issue stock totaling $1,151,378 (50,000*$23.03)
Explanation:
Digby working capital will be unchanged at $21,092,896 this because the fund to be raise is for financing a fixed asset- a plant and equipment.
Working Capital=Current Assets-Current Liabilities
Examples of current assets are Cash & Bank balances, stocks, receivables, etc.
Examples of current liabilities are payables, accrued expenses, etc.
Digby will issue stock totaling $1,151,378 i.e. (50,000*$23.03)
What is the difference between Special warranty deed vs general warranty deed
General warranty deed and Special warranty deed are warranty deeds used for real estate sales where belongings, either residential or commercial, is transferred between organization unacquainted with each other. Possession of a property is transferred from the seller to the buyer with definite assurance against future problems or claims, which will defend the buyer against fraud.
However, the assurance in a General warranty deed will cover the belongings entire previous account, the Special warranty deed will only covers the time period for which the seller owned it. While the seller in a General warranty deed has to protect the title against all other assertion and compensate the buyer for any tentative debts or amends, the seller in Special warranty deed is only responsible for debts and problems accumulated or caused during his possession of the belongings.
A General Warranty Deed offers full protection covering the property's entire history, while a Special Warranty Deed only covers the period of the seller's ownership, offering limited protection.
Explanation:The key difference between a Special Warranty Deed and a General Warranty Deed lies in the level of protection offered to the buyer. A General Warranty Deed offers the highest level of protection as it covers the property's entire history. The seller guarantees that he or she holds a clear title and has the right to sell the property, and there are no encumbrances or liens against it. A Special Warranty Deed, on the other hand, provides limited protection because it only covers the period during which the seller owned the property. Any issues or disputes arising from before the seller's ownership are not covered.
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The demand curve for lawn fertilizer has a _______________ slope because of ________________________. A) negative; the law of supply. B) positive; incentives to earn profit by suppliers. C) negative; the law of demand. D) positive; expectations concerning future prices. E) constant; the impact of changing consumer tastes.
Answer: (C) negative; the law of demand
Explanation: The law of demand states that at a higher price consumers will demand a lower quantity of a good. i.e. The demand is derived from the law of diminishing marginal utility, which states that the marginal utility of a good or service declines as its available supply increases.
Hence the demand curve is downward sloping.
Matthew's Fish Fry has a monthly target operating income of $8,300. Variable expenses are 80% of sales and monthly fixed expenses are $800. What is the monthly margin of safety as a percentage of target sales in dollars?
Answer:
Margin of Safety as percent of sales 91.21%
Explanation:
[tex]Sales \: Revenue - Variable \: Cost = Contribution \: Margin[/tex]
If variable = 80% of sales then
sales - 80% sales = .20 sales = Contribution margin ratio
Next will be calcualte the BEP
[tex]\frac{Fixed\:Cost}{Contribution \:Margin \:Ratio} = Break\: Even\: Point_{dollars}[/tex]
800/0.2 = 4,000
Sales to achieve target income of 8,300
[tex]\frac{Fixed\:Cost + taget \: profit}{Contribution \:Margin \:Ratio} = Sales\: to\: Profit{dollars}[/tex]
(800+8,300)/.2 = 45,500
Margin of safety:
[tex]\frac{current \:sales - BEP_{USD}}{current \:sales} \times 100 = margin \: of \: safety[/tex]
[tex]\frac{45,500 - 4,000}{45,500} \times 100 = 91.21%[/tex]
Super Clinics offers one service that has the following annual cost and utilization estimates: Variable cost per visit $10; Annual direct fixed costs $50,000; Allocation of overhead costs $20,000; Expected utilization 1,000 visits. What price per visit must be set if the clinic wants to make an annual profit of $10,000 on the service?
Answer:
Price to be charged per visit = $90 per visit
Explanation:
We need to calculate the price per visit.
Desired profit = $10,000
Total costs for 1,000 visits = Variable Costs + Fixed Costs + Allocated Costs
Variable cost = $10 X 1,000 visits = $10,000
Fixed costs = $50,000
Allocated Overhead costs = $20,000
Total costs = $10,000 + $50,000 + $20,000 = $80,000
Total amount to be recovered = Total costs + desired profit
= $80,000 + $10,000 = $90,000
Total no of visits = 1,000
Price to be charged per visit = $90,000/1,000 = $90 per visit
Super Clinics must set a price of $90 per visit to reach a desired profit of $10,000, given their costs and estimated number of visits.
To calculate the price per visit that Super Clinics must set to achieve an annual profit of $10,000, we need to consider the total costs and the desired profit. The total costs include both variable costs and fixed costs. Variable costs per visit are given as $10, and with expected utilization of 1,000 visits, the total variable costs would be $10,000. We also have annual direct fixed costs of $50,000 and an allocation of overhead costs of $20,000. Adding these figures together results in total annual costs of $80,000 ($10,000 variable + $50,000 fixed + $20,000 overhead).
To achieve a profit of $10,000, the clinic must earn total revenue that is $10,000 more than the total costs. Therefore, the target total revenue is $90,000 ($80,000 total costs + $10,000 profit). To find the price per visit, we divide the target total revenue by the expected number of visits. This gives us $90,000 / 1,000 visits = $90 per visit.
Beck Company has inventory of $725,000 in its stores as of December 31. It also has two shipments in transit that left the suppliers' warehouses by December 28. Both shipments are expected to arrive on January 5. The first shipment of $210,000 was sold f.o.b. destination and the second shipment of $102,000 was sold f.o.b. shipping point. Beck Company also has consigned goods of $72,000 awaiting sale with Meyer Company. What amount of inventory should Beck Company report on its balance sheet as of December 31?
Answer:
Total Inventory $899,000
Explanation:
Inventory at hand $725,000
Inventory in transit $102,000
Inventory in consignation $72,000
Total Inventory $899,000
Notice:
The first cargo is under term FOB destination, which means the goods are still property of the seller, so are not part of Beck company's yet.
While the second cargo is fob shipping point, Beck assume possesion of the gods as soon as they enter the dock.
Hemisphere Corp. is considering a Build-Operator-Transfer (BOT) contract to construct and operate a large dam with a hydroelectric power generation facility in a developing nation in the southern hemisphere. The initial cost of the dam is expected to be $30 million, and it is expected to cost $100,000 per year to operate and maintain. Benefits from flood control, agricultural development, tourism, etc., are expected to be $2.8 million per year. At an interest rate of 8% per year, should the dam be constructed on the basis of its conventional B/C ratio? The dam is assumed to be a permanent asset for the country.
Answer:
The dam should be constructed. The investment discounted payback is 25 years.
Explanation:
We have to make a cash flow for this case with the given data. See the document attached.
We consider an Initial cost of 30 millions in period 0, then we have every periods benefit of 2.800.000 and 100000 direct cost.
With those, is obtained net cash flow for each year (period), if we consider the given rate of interest, can be calculated the discounted cash flow
To know when this project covers all the investment, we have to consider the cumulative discounted cash flow. We have to see in the cash flow chart when the cumulative discounted cash flow break the 0 (became higher than 0).
In this case , that will be at period 25. So we have to wait 25 years to recover the initial cost. Considering that the dam usually has a lifetime higher than that time, the project at this scenario, should be done.
The conventional B/C ratio for the given dam is more than 1 if the company's rate of return is 8% per year. The conventional B/C ratio is 1.12. Hence, the dam should be constructed.
Further explanation:
Conventional Benefit-Cost Ratio: The Benefit-Cost ratio refers to the ratio, which represents the relationship between the benefits arising out of the project and the cost incurred on the project. This ratio is used for making a financial analysis of various projects. It is helpful in the evaluation of both public and private projects. The project can be chosen when its benefits are exceeding its cost. Conventional B/C ratio is computed by dividing the net benefits arriving out of the project with the net cost of the project. The net value of benefits is computed by subtracting the value of losses from the benefits. The net cost includes the initial and operating cost after subtracting the salvage value.
Compute the conventional B/C ratio:
[tex]\text{Conventional B/C ratio}=\dfrac{\text{Present value of benefits}}{\text{Initial cost + Present value of operating and maintenance cost}}\\=\dfrac{\$35,000,000}{\$30,000,000+\$1,250,000}\\=\dfrac{\$35,000,000}{\$31,250,000}\\=1.12[/tex]
Therefore, the conventional B/C ratio for the given dam is more than 1 if the company's rate of return is 8% per year. The conventional B/C ratio is 1.12. Hence, the dam should be constructed.
Working note 1:
Compute the present value of benefits:
[tex]\text{Present value of benefits}=\dfrac{\text{Annual benefits}}{\text{Interest rate}}\\=\dfrac{\$2,800,000}{0.08}\\=\$35,000,000[/tex]
Hence, the present value of the benefits from dam is $35,000,000.
Working note 2:
Compute the present value of operating and maintenance cost:
[tex]\text{Present value of operating and maintenance cost}=\dfrac{\text{Annual operating cost}}{\text{Interest rate}}\\=\dfrac{\$1,000,000}{0.08}\\=\$1,250,000[/tex]
Hence, the present value of the annual operating cost of dam is $1,250,000.
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Answer details
Grade: Senior School
Subject: Financial Accounting
Chapter: Time value of money
Keywords: Hemisphere Corp., Build-operator-transfer (BOT), contract to construct, hydroelectricity power generation station, developing nation, $30 million, expected to cost, benefits from flood control, agricultural development, tourism, dam be constructed, conventional B/C ratio, dam is assumed to be constructed, permanent asset, for the country, southern hemisphere, large dam, time value of money, present value of money, contract to construct, developing nation, cost ratio, expected to be $2.8 million, operate and maintain.
Now suppose that households in this economy allocate each additional dollar of income in the following way. Households continue to save $0.20 of each additional dollar income; however, they now pay $0.05 in taxes on each additional dollar of income, and they now spend $0.15 of each additional dollar on imported goods. The remaining fraction of each additional dollar goes toward consumption of domestically produced output. In this case, the fraction of an additional dollar of income that is not spent on domestic output is equal to . Taking the impact of taxes and imports into consideration, the multiplier for this economy is .
Answer:
Multiplier= 1.666667
Explanation:
This is an open economy:
So the households can either save the income, or adquire imported goods.
also their income is reduced by taxes, so we must discount the three factors to get the multiplier.
marginal propensity to withdraw (mpw)
saving + tax rate + import
0.2 s + 0.05 t + 0.15 import = .4
Multiplier
1 / (1-mpw) = 1/0.6 = 1.66667
______________ are people who invest very small amounts of personal resources early in a new business's life in the hopes of eventually selling a percentage of the company for a profit.A.Angel investorsB.CrowdfundersC.Advisory boardsD.MicrolendersE.Venture capitalists
Answer: the correct answer is A. Angel investors.
Explanation:
Angel investors are people who invest very small amounts of personal resources early in a new business's life in the hopes of eventually selling a percentage of the company for a profit.
Grace examines two different size bottles of the same laundry detergent. The price for the 100-ounce bottle is $9.99and the price for the 150-ounce bottle is $12.99. How much money will Grace save per 100 ounces of she purchased the larger bottle
Answer:
It will save $1.33 per 100 ounces
Explanation:
we have to compare the cost of 100 ounces purchasing the larger bottle with the cost of the normal bottle of 100 ounces:
12.99/150ounces x 100ounces = price of 100 ounces
cost of 100 ounces in the larger bottle 8.66
cost of 100 ounces 9.99
cost saving 1.33
Final answer:
Grace will save approximately $1.33 per 100 ounces of laundry detergent by purchasing the larger 150-ounce bottle. Estimated costs are $3.46 for a 40 oz. size and $7.79 for a 90 oz. size, based on the unit price of the 150-ounce bottle.
Explanation:
To calculate the estimated cost per 100 ounces if Grace purchased the larger bottle of laundry detergent, we need to determine the unit price for each size. We then compare the unit price of the larger bottle with that of the smaller to find the savings per 100 ounces.
The unit price for the 100-ounce bottle is $9.99 / 100 ounces, which equals $0.0999 per ounce. For the 150-ounce bottle, it is $12.99 / 150 ounces, which equals approximately $0.0866 per ounce. To find out how much Grace would save per 100 ounces by purchasing the larger bottle, we multiply the difference in unit price by 100:
Savings = (0.0999 - 0.0866) x 100 ounces = $1.33 per 100 ounces.
The estimated cost for other sizes is determined by the same method. For a 40 oz. size: 0.0866 x 40 ounces equals approximately $3.46. And for a 90 oz. size: 0.0866 x 90 ounces equals approximately $7.79.
An investment firm has a job opening with a salary of $41,000 for the first year. During the next 29 years, there is a 4% raise each year. Find the total compensation over the 30-year period.
Final answer:
To calculate the total compensation over the 30-year period, calculate the salary for each year using a 4% raise, and then sum them up.
Explanation:
To calculate the total compensation over the 30-year period, we need to find the salary for each year and sum them up.
The salary for the first year is $41,000. For the next 29 years, the salary increases by 4% each year. To calculate the salary for each subsequent year, we can use the formula: Salary = Previous Year's Salary + (Previous Year's Salary * 0.04).
Using this formula, we can calculate the salaries for each year and then sum them up to find the total compensation. Here is an example of how to calculate the salaries for the first few years:
Year 1: $41,000Year 2: $41,000 + ($41,000 * 0.04) = $42,640Year 3: $42,640 + ($42,640 * 0.04) = $44,385.60Year 4: $44,385.60 + ($44,385.60 * 0.04) = $46,239.42To find the total compensation, you would continue this calculation for all 30 years and sum up the salaries.
An attendant at a car wash is paid according to the number of cars that pass through. Suppose the probabilities are 1/12, 1/12, 1/4, 1/4, 1/6, and 1/6, respectively, that the attendant receives $7, $9, $11, $13, $15, or $17 between 4:00 P.M . and 5:00 P.M . on any sunny Friday. Find the attendant’s expected earn- ings for this particular period.
Answer: The attendant’s expected earn- ings for the period between 4:00 P.M and 5:00 P.M is $12,67.
Explanation: The discrete random variable X represent attendant’s earnings.
The expected value of the discrete random variable X is
= E (x) = ∑× f(x)= 7 × 1/12 + 9 × 1/12 + 11 × 1/4 + 13 × 1/4 + 15 × 1/6 + 17 × 1/6 = 12,67.The expected earnings for the attendant at a car wash between 4:00 P.M. and 5:00 P.M. on a sunny Friday is calculated using probabilities of different earnings outcomes, resulting in $12.67.
The expected value is calculated by multiplying each outcome by its probability and then summing all those products. The earnings and the corresponding probabilities are $7 (1/12), $9 (1/12), $11 (1/4), $13 (1/4), $15 (1/6), and $17 (1/6). Using these values, we can compute the expected earnings as follows:
(1/12) times $7(1/12) times $9(1/4) times $11(1/4) times $13(1/6) times $15(1/6) times $17
Expected Earnings = (1/12) times 7 + (1/12) times 9 + (1/4) times 11 + (1/4)times 13 + (1/6)times 15 + (1/6)times 17
Expected Earnings = 0.5833 + 0.75 + 2.75 + 3.25 + 2.5 + 2.8333
Expected Earnings = $12.6666 (rounded to $12.67)
Therefore, the expected earnings for the attendant between 4:00 P.M. and 5:00 P.M. on a sunny Friday is $12.67.
Morgan Company's budgeted income statement reflects the following amounts: Sales Purchases Expenses January $ 112,000 $ 70,000 $ 23,200 February 102,000 58,000 23,400 March 117,000 73,250 26,200 April 122,000 76,500 27,800 Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year. Morgan pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1: Cash $ 80,000 Accounts receivable* 50,000 Accounts payable 64,000 *Of this balance, $30,000 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $4,200 of depreciation. The expenses are paid in the month incurred. Morgan’s budgeted cash receipts in February are:
Answer:
Net cash Receipts in February = $21,500
Explanation:
Closing balance of January
Opening balance + (Sales X 50%) + Accounts Receivable provided - Cash paid for purchases of previous month X 97% - (Expenses - Depreciation)
= $80,000 + $112,000 X 50% + $30,000 - $64,000 X 97% - ($23,200 - $4,200 (Depreciation)) = $80,000 + $56,000 + $30,000 - $62,080 - $19,000
= $84,920
Closing Balance of February
= Opening balance + Sales X 50% + Previous month sale X 30% + December sale X 19% - Payment for purchase in month of January X 97% - (Expenses of the month - Depreciation)
= $84,920 + $102,000 X 50% + $112,000 X 30% + $20,000/20% X 19% - $70,000 X 97% - ($23,400 - $4,200)
= $84,920 + $56,000 + $33,600 + $19,000 - $67,900 - $19,200
=$106,420
Notes
Opening receivables were $50,000 which is 50% of sale of December, i.e. 20% = $20,000 out of which 1% is bad debt and not received.Purchases are paid next month with a discount of 3% i.e. 100- 3 = 97% of the purchase amount. Depreciation is not paid in cash and thus not included in cash payments of expense.Thus Net cash Receipts in February = Closing - Opening = $106,420 - $84,920 = $21,500
Robert only consumes X and Y, and his indifference curves have the usual convex shape. Consider the consumption bundles (3, 9), (6, 6), and (9, 3) (Hint: The consumption bundles completely exhaust Robert's income). If Robert is indifferent between (3, 9) and (9, 3), then:
Answer: Then consumption bundle (3,9) and (9,3) will lie on the same indifference curve.
Since his consumption bundles completely exhaust his income , therefore the indifference curve will be tangential to the budget constraint.
Explanation:
Given : Robert only consumes X and Y, and his indifference curves have the usual convex shape.
Consumption Bundles (3, 9), (6, 6), and (9, 3).
If Robert is indifferent between (3, 9) and (9, 3), then: consumption bundle (3,9) and (9,3) will lie on the same indifference curve.
Also, since his consumption bundles completely exhaust his income , therefore the indifference curve will be tangential to the budget constraint.
Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $380,000 for January. • Collections are expected to be 75% in the month of sale, 24% in the month following the sale, and 1% uncollectible. • The cost of goods sold is 85% of sales. • The company would like to maintain ending merchandise inventories equal to 75% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $22,000. • Monthly depreciation is $19,200. • Ignore taxes. Balance Sheet October 31 Assets Cash $30,000 Accounts receivable, net of allowance for uncollectible accounts 78,000 Merchandise inventory 229,500 Property, plant and equipment, net of $606,000 accumulated depreciation 1,180,000 Total assets $1,517,500 Liabilities and Stockholders' Equity Accounts payable $302,750 Common stock 860,000 Retained earnings 354,750 Total liabilities and stockholders' equity $1,517,500 Expected cash collections in December are:
Final answer:
The expected cash collections in December are $372,400.
Explanation:
To calculate the expected cash collections in December, we need to determine the amount of sales that will be collected in December, the amount that will be collected in the month following the sale, and the amount that will be uncollectible.
Given that sales for December are budgeted at $380,000 and collections are expected to be 75% in the month of sale, 24% in the month following the sale, and 1% uncollectible, we can calculate the expected cash collections in December as follows:
Amount collected in December = $380,000 x 75% = $285,000Amount collected in the month following the sale = $380,000 x 24% = $91,200Uncollectible amount = $380,000 x 1% = $3,800Therefore, the total expected cash collections in December would be $285,000 + $91,200 - $3,800 = $372,400.
Babble, Inc., buys 405 blank cassette tapes per month for use in producing foreign language courseware. The ordering cost is $11.75. Holding cost is $0.11 per cassette per year. a. How many tapes should Babble order at a time? Babble should order nothing tapes at a time. (Enter your response rounded to the nearest whole number.) b. What is the time between orders? The time between orders is nothing months. (Enter your response rounded to one decimal place.)
Answer:
(A) EOQ = 1019
(B) Time between Order = 2.5 months
Explanation:
Economic Order Quantity
This formula give us the quantity order with the fewer cost.
[tex]eoq = \sqrt{ \frac{2ds}{h} } [/tex]
Where
d = annual demand = 405 X 12 = 4860
s= supply cost or ordering cost = 11.75
h= holding cost= 0.11
[tex] \sqrt{ \frac{2 \times 4860 \times 11.75}{0.11} } = 1018.9566[/tex]
EOQ = 1019
Next, we need to know when to order:
[tex]eoq \div \frac{demand}{12 \: months} = time \: per \: order[/tex]
[tex]1019 \div \frac{4860}{12} = 2.516[/tex]
the ratio give us an idea of the consumption rate per month. we then divide the EOQ by this to know how many time between order we can have.
The number of tapes Babble should order, and the time period between orders can be calculated using the Economic Order Quantity (EOQ) model and the Time Between Orders (TBO) formula. By substituting the given values into these formulas, the desired values can be obtained.
Explanation:To solve this problem, we need to use the Economic Order Quantity (EOQ) model in inventory management. The EOQ is the number of units that a company should add to inventory with each order to minimize the total costs of inventory—such as holding costs, order costs, and shortage costs.
The formula for EOQ is: EOQ = √ [(2 * D * S) / H]. Where D is the demand rate, S is the order cost, and H is the holding cost.
Substituting the given values into the formula, we get: EOQ = √ [(2 * 405 * 11.75) / 0.11]. Solving this equation we get the number of tapes Babble should order at a time.
For the time between orders we need to calculate: TBO = D / EOQ. This will give us the time period between orders in months. It's important to note that TBO is typically in the same time interval as demand rate. Here, D is in months, so TBO will also be in months.
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Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate. What change in the Federal funds rate would you recommend? How would your recommended change get accomplished? What impact would the actions have on the lending ability of the banking system, the real interest rate, investment spending, aggregate demand, and inflation?
As a member of the Federal Reserve Board, in an inflationary situation I would suggest a change in the federal funds rate that would be accomplished by raising the base interest rate of the US economy. This would make bonds more attractive and people would stop consuming to invest in public debt securities. In addition, raising interest rates would discourage credit, causing banks to lend less. Since inflation is a monetary phenomenon caused by the excess of currency in circulation, these measures would have a downward effect on inflation, as they reduce the amount of money in circulation in the economy.
In response to inflation, the Federal Reserve may increase the Federal funds rate which is accomplished through open market operations. This limits the banking system's lending ability, can increase the real interest rate, decrease investment spending and aggregate demand, and eventually control inflation.
Explanation:When the economy is experiencing a sharp rise in inflation, the Federal Reserve (Fed), which you are a hypothetical member of, may recommend an increase in the Federal funds rate. Take for instance Episodes 5 and 6, when the Federal Reserve perceived a risk of inflation, the federal funds rate was raised from 3% to 5.8% from 1993 to 1995.
The change in the Federal funds rate is accomplished through open market operations, specifically by selling government securities, which decreases the amount of money in circulation, thereby raising interest rates. The aim is to slow down economic growth and cool off inflation.
The impact of this action on the banking system would be a reduced ability to lend, as higher interest rates make borrowing costs more expensive for banks. This, in turn, could raise the real interest rate, as the increase in the nominal interest rate (the Federal funds rate) would outstrip the rate of inflation, earning savers a higher real return on their investments. Consequently, higher real interest rates may cause a decrease in investment spending, as the costs of borrowing to fund investment become more expensive. This might result in a decrease in aggregate demand, as lower investment spending and potentially lower consumer spending slow economic growth. Eventually, the aim is to mitigate inflation.
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Which of the following is not a necessary condition for price discrimination to hold? The seller must be a price searcher. The seller must be able to distinguish between customers willing to pay different prices. It must cost the seller more to service some customers than others. Reselling the product must be extremely costly or must not be possible
Answer: Option A
Explanation: Price discrimination is a feature of monopoly firms. Monopoly firms are those firms which provides such goods or services in the market for which no close substitutes are available. As there are no other competitors monopoly firms are free from the burden of adjusting its prices according to others.
Thus to make price discrimination in market the firm has to be a price maker and not price searcher.
A Hummer is rated at 13 miles per gallon of gas and gas currently costs approximately $2.85 per gallon. If you drive from Orlando, Florida to San Francisco, CA (2,890 miles), how much money will you spend on gas? Assume it is a one-way trip.
Answer:
If a Hummer is rated at 13 miles per gallon of gas, which costs approximately $2.85 per gallon, and I'm driving 2,890 miles from Orlando, FL, to San Francisco, CA, I will spend $633.55 in gas.
Explanation:
13 miles per gallon --- $2.85
2890 miles in total from Orlando, Florida, to San Francisco, California.
2890/13: total gallons of gas consumed --- 222,3 gallons of gas
222,3 x 2.85: total of money spent in gas --- $633.55
Firm I is convinced that a certain class of technologies holds real economic potential. However, it does not know, for sure, which particular version of this technology is going to dominate the market. There are eight competing versions of this technology currently, but ultimately, only one will dominate the market. Should Firm I invest in all eight of these technologies itself? Should it invest in just one of these technologies? Should it partner with other firms that are investing in these different technologies?
Answer:
Partner with technology investing firms
Explanation:
Disruptive technologies are capable of completely changing the configuration of a market, so that in the face of a perception of technological change, companies must take technological adherence measures, otherwise their own existence may be at risk. Given the uncertainty about which technology will be right, an appropriate strategy would be to partner technology transfer with firms that are investing in these technologies.
The best strategy for Firm I to take is to partner with technology investing firms
What is Partnership?This refers to the coming together of different companies to use their strengths to complement each other and dominate a market.
Hence, we can note that because Firm I is uncertain about the class of technologies that hold real economic potential, it would be wise to partner with technology investing firms and therefore, limit the risk.
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The weighted-average process-costing method calculates the equivalent units by ________.A) considering only the work done during the current period B) the units started during the current period minus the units in ending inventory C) the units started during the current period plus the units in ending inventory D) the equivalent units completed during the current period plus the equivalent units in ending inventory
Answer:
The correct answer is option D) "the equivalent units completed during the current period plus the equivalent units in ending inventory".
Explanation:
The weighted-average process-costing method establishes an average cost per unit using the equivalent units completed during the current period plus the equivalent units in ending inventory. This method is similar to the first-in first-out (FIFO), with the difference that this method keeps the unfinished goods inventory separate to make the calculation.
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a Kitchen Helper refrigerator is the “best one ever made.” This is a. fraud if the statement is the truth. b. fraud if Jim believes that this statement is not true. c. fraud if Jim is stating his opinion, not the facts. d. not fraud.
Answer: the correct answer is c. fraud if Jim is stating his opinion, not the facts.
Explanation: There are laws in place to protect you from being misled about the products and or other representation creates a misleading impression in your mind.
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a Kitchen Helper refrigerator is the “best one ever made.” This is a (C) fraud if Jim is stating his opinion, not the facts.
Fraud typically involves making false statements or misrepresentations to manipulate someone for personal gain. In this case, Jim is asserting that a certain model of a refrigerator is the "best one ever made." If he is stating this as his opinion without any facts to support it, and he isn't sure about it being true, then it could be considered a fraud. If Jim genuinely believes the statement is true then it may not be fraud even if others may disagree with his opinion. However, if he knowingly makes the claim without any reason or evidence, it could be considered fraudulent behavior.
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You are scheduled to receive $17,000 in two years. When you receive it, you will invest it for six more years at 9.75 percent per year. How much will you have in eight years?
Answer: $29,708.18 in eight years.
Explanation:
Amount received in two years = $17,000
Interest rate received per year = 9.75%
Amount received in eight years,
here we are using formula for calculating amount received after eight years are as follows:
A = [tex]P(1+ \frac{r}{100}) ^{n}[/tex]
= [tex]17000(1+ \frac{9.75}{100}) ^{6}[/tex]
= [tex]17000(1+ 0.0975) ^{6}[/tex]
= 17000 (1.7475402)
= 29708.18 ⇒ this much a person can earn in eight years.
Final answer:
Compound interest calculation method explanation for investing $17,000 for eight years at 9.75% annually.
Explanation:
Compound interest is calculated using the formula A = P(1 + r/n)^(nt) where A is the future value of the investment, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years the money is invested for.
In this scenario, with an initial investment of $17,000 compounded annually at 9.75% for six years, the future value after eight years can be calculated using the compound interest formula to determine the total amount accrued.
Substitute the given values into the formula, with P = $17,000, r = 9.75%, n = 1 (compounded annually), and t = 8 years to find out how much the investment will grow to after the specified period.
________ is a form of short-term financing. Businesses buy merchandise from their suppliers, but are not required to pay for their purchases until some future date.3
Answer:
TRADE CREDITExplanation:
Trade Credit is the credit extend by the account payable, according terms with the suppliers, which can be free of interest for a certain ammount of time (n/30) and from there they start to generate interest.
Remember:
Short-term financing are financing tools used for period of less than a year
Other short-term financing are:
Short-erm LoansFactoringBusness line of creditInvoice discountingThe right answer to fill in the missing parts of the problem is Trade credit.
Further explanationCredit is the granting of the use of money or goods to another person at a certain time with a guarantee or not with collateral, by providing services of interest, or without interest.
In general, types of loans can be classified based on their use, purpose, period, and business sector.
Type of credit Based on its use
1. Investment Credit
It is a credit given by a bank for business expansion or development purposes.
2. Working Capital Loans
It is a credit given by a bank to increase the production operation capability of a company.
Types of Credit-Based on Purpose
1. Earning Credit
Used to increase business or production or investment
2. Consumer credit
It is a credit given by banks to the public for personal or institutional consumption.
3. Trade Credit
Credit given by banks to buy commodities or goods to be traded or resold. Debt payments are expected from the sale of the merchandise.
Type of Credit-Based on Term
1. Short-term Credit
Loans with maturities of less than one year or a repayment maturity of at most one year.
2. Medium-term Credit
Medium-term loans are loans issued by banks with repayment periods ranging from one year to three years.
3. Long-term Credit
Long-term credit is a loan that has a repayment period of more than 3 years or 5 years.
Business Sector Based Credit
1. Agricultural Credit
Loans disbursed to finance the agricultural sector or smallholder plantations.
2. Farm Credit
Credit issued to finance the livestock business sector with short-term or long-term credit
3. Industrial Credit
Loans disbursed by banks to finance small, medium or large industrial sectors.
4. etc.
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Class: College
Subject: Bussines
Keyword: Type of credit.
Under purchasing power parity, the future spot exchange rate is a function of the initial spot rate in equilibrium and a. the inflation differential. b. the forward discount or premium. c. the income differential. d. none of the above
Answer:
The correct answer is a) the inflation differential.
Explanation:
Inflation differential is the difference we can find between two countries in exchange rates. The inflation differential can produce losses for the company if, in the country you want to buy, there is a big difference in your exchange rate, since this raises the prices of the product. As a result, the company has a loss; it can also happen if It is a case of exports.
If the inflation differential is maintained for an extended period, it can cause loss of competitiveness, since the profit margin of the products would be affected.
I hope this information can help you.