Answer:
Strategic management can be defined as the correct management of the resources of a certain organization, whose objective is to achieve the proposed goals. This means having very clear business objectives, analyzing the competition, internally analyzing the internal organization, having clear strategies and having them carried out by the administration in the business organization.
In order to achieve the established objectives, certain aspects must be taken into account, such as the business culture, the skills of all employees and the organizational structure of the company. Companies that do not conform to these characteristics may have some difficulties and problems to achieve business success.
Lower-level managers or employees can have a significant influence in establishing and implementing business strategies, although in the end, top management is responsible for applying business strategies.
Organizational leaders need to be responsible for learning from past strategies and examining their business environment, in search of other strategies. Excellent strategic management is paramount to have an overall perspective, both internal and external.
Explanation:
Strategic management is essential for organizational success, encompassing planning, execution, and monitoring of strategies to meet goals and missions. It ensures financial and management stability, fosters strategic thinking, and enhances the ability to handle pressure and challenges in the business environment.
Explanation:What is Strategic Management and Its Importance?Strategic management is a comprehensive approach to planning, implementing, monitoring, and analyzing an organization's strategies to achieve its goals and fulfill its mission. It serves as a fundament for decision-making processes, directing organizations towards sustainable growth and competitive advantage.
The importance of strategic management lies in its capacity to guide companies through a constantly changing business environment. By analyzing the organization's overall financial position and comparing it to peer organizations, strategic management provides insights into how operations and policies can be adjusted to strengthen financial positions and manage liabilities effectively.
Moreover, strategic management emphasizes the importance of keeping management issues in perspective. It provides strategies to prevent or remedy problems, ensuring that management challenges do not derail the organization's objectives. The integration of management and organization, along with a detailed financial plan, further illustrates how strategic decisions underpin the structural and financial stability of a company.
Key Components of Strategic ManagementAnalysis of the financial and competitive landscape.Development of a strategic vision aligned with the organization's mission.Implementation of strategies through effective organization and management structures.Monitoring and adjusting strategies based on performance and external changes.In conclusion, strategic management is critical to the success of any organization as it encompasses planning, executing, and monitoring strategies essential for meeting goals and fulfilling the mission. This structured approach not only addresses financial and managerial aspects but also emphasizes strategic thinking and the ability to work under pressure, making it indispensable for surviving and thriving in today's complex business world.
Rose, who is obese, files a product liability suit against Burger Meal Corporation (BMC), alleging that BMC’s food is unhealthy because, as Rose knows, it contains high levels of cholesterol and saturated fat. BMC can most successfully assert the defense of preemption. assumption of risk. comparative negligence. knowledgeable user.
A. preemption.
B. assumption of risk.
C. comparative negligence.
D. knowledgeable user.
Answer:d
Explanation:
A company is analyzing the replacement of a color copier. The old machine was purchased 3 years ago for $30,000; it falls into the MACRS 5-year class; and it has 2 years of remaining life and an $8,000 salvage value 2 years from now. The current market value of the old machine is $17,000. The new machine has a price of $40,000, plus an additional $2,000 for installation and modification and an additional $2,000 for transportation. The new machine falls into the MACRS 5-year class, has a 2-year economic life, and can be salvaged for $23,000. The new machine will require a $7,000 increase in inventory, and accounts payable is expected to increase by $4,000. The new machine is expected to increase revenue by $8,000 per year and decrease costs by $3,000 per year. The firm has an 11 percent cost of capital and a marginal tax rate of 25 percent. The MACRS 5-year class uses the following percentages: 20%, 32%, 19%, 12%, 11%, and 6% (in that order). (Round all CFs to the nearest dollar.) What is the total net cash outflow at Year 0
Answer:
E. Outflow of $32,075
Explanation:
At Year 0, the cash outflow is calculated as under:Year 1 Outflow = Investment in the New asset (Step1) + Net working capital required (Step2) - Sale Proceeds from the old machine (Step3) - Tax On the sale of old Machinery (Step4)
Year 1 Outflow = $44,000 + $3,000 - $17,000 + $2,075 = $32,075
Step 1: Investment in the New assetNow here:
Investment in the New Asset = New machine cost + Transportation of asset + Installation of asset
By putting values, we have:
Investment in the New Asset = 40000 + 2000 + 2000 = $44,000
Step 2: Net working capital requiredNow
Net working capital required = $7,000 Investment in Inventory - $4,000 Increase in payables = $3,000
Step 3: Sale Proceeds from the old machineFair Value of the Old Machine is $17000 which means this would be the sales proceeds on the old machinery's sales.
Step 4: Tax On the sale of old MachineryOld machine purchased 3 year ago at = $30,000
Depreciation schedule and book value of old machine are as follows:
Year 1 2 3 4 5 6
MACRS Rate 20% 32% 19% 12% 11% 6%
Depreciation 6000 9600 5700 3600 3300 1800
Acc. depre. 6000 15600 21300 24900 28200 30000
Book value 24000 14400 8700 5100 1800 0
Now
From the table we can see that the Book value of the asset at the end of the year 3 is $8,700.
Tax on the gain of the asset = ($17,000 - 8,700) * 25% = $2,075
Suppose an inventor is interested in the proportion of local consumers who would be interested in purchasing her new product. If she samples local residents at random and tests hypotheses regarding p, the population proportion, what should she do to reduce her risk of making a Type II error?
a. Increase the number of local consumers she will sample
b. Decrease the number of local consumers she will sample
c. Make sure her sample of local consumers is exactly 10
d. Decrease the significance level
Answer:
The answer is option A) To reduce her risk of making a Type II error, she should Increase the number of local consumers she will sample
Explanation:
A type II error is sometimes called a beta error because it confirms an idea that should have been rejected, claiming the two observances are the same, even though they are different. A type II error is essentially a false positive.
A type II error can be reduced by making more stringent criteria for rejecting a null hypothesis such as:
Increasing the the sample size used in the Test: this is a strategy used to increase the power of the test and reduce the error to a considerable amount.Increasing the significance level: choosing a higher level of significance is important for double checking and which increases accuracy.The correct option to reduce the risk of making a Type II error is a. Increase the number of local consumers she will sample.
To understand why increasing the sample size reduces the risk of a Type II error, one must consider the factors that influence the probability of committing a Type II error (denoted by β). These factors include:
1. The sample size (n): A larger sample size provides more information about the population, which reduces the variability of the sample statistic. This, in turn, increases the power of the test (1 - β), thereby reducing the probability of a Type II error.
2. The significance level (α): A lower significance level means that the test requires stronger evidence to reject the null hypothesis, which can increase the probability of a Type II error. Conversely, increasing the significance level decreases the probability of a Type II error but at the cost of increasing the probability of a Type I error.
3. The effect size (the difference between the null hypothesis and the alternative hypothesis): A larger effect size makes it easier to detect a difference, thus reducing the probability of a Type II error.
4. The variability in the population (Iƒ): Less variability in the population makes it easier to detect a difference, thus reducing the probability of a Type II error.
Given these factors, the inventor can control the sample size and the significance level. Decreasing the significance level (option d) would actually increase the risk of a Type II error, which is the opposite of what the inventor wants. Making sure her sample size is exactly 10 (option c) does not necessarily reduce the risk of a Type II error; it could be too small to detect a meaningful difference. Decreasing the number of local consumers she will sample (option b) would definitely increase the risk of a Type II error.
Therefore, the best course of action for the inventor to reduce the risk of making a Type II error is to increase the number of local consumers she samples (option a). This will increase the power of the test, making it more likely to detect a true effect if one exists.
Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $1,200,000 of 10-year, 12% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions for the current year. Refer to the Chart of Accounts for exact wording of account titles. May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. Dec. 31 Recorded accrued interest for two months.
When Thomson Co. issued $1,200,000 of bonds, they made a journal entry debiting Cash and crediting Bonds Payable. Interest payments are recorded by debiting Interest Expense and crediting Cash, and accrued interest is recorded by debiting Interest Expense and crediting Interest Payable.
A company like Thomson Co. can raise funds for operations or expansion by issuing bonds, which are debt securities. On May 1, Thomson Co. issued $1,200,000 of 10-year, 12% bonds at face value, meaning the bonds were sold for exactly what they are worth, and not at a premium or discount. To Journalize the issuance of the bonds, the entry on May 1 would be to debit Cash for $1,200,000 and credit Bonds Payable for $1,200,000, reflecting the receipt of cash in exchange for the obligation to pay back the bondholders in the future.
On November 1, when the first interest payment is due, Thomson Co. will make a payment of 12% annual interest on $1,200,000 for six months (from May to November), which equals $72,000 in interest (1,200,000 x 0.12 x 6/12). The entry to record this interest payment would be to debit Interest Expense for $72,000 and credit Cash for $72,000.
Finally, on December 31, Thomson Co. needs to record the accrued interest for two months (November and December), which amounts to $24,000 (1,200,000 x 0.12 x 2/12). The journal entry for the accrued interest would be to debit Interest Expense for $24,000 and credit Interest Payable for $24,000. This ensures that the financial statements reflect the expense incurred during the current year, even though the payment will be made the next year.
The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises, A. the demand curve shifts leftward. B. there is a movement up along the demand curve to a smaller quantity demanded. C. there is a movement down along the demand curve to a larger quantity demanded. D. the demand curve shifts rightward.
Answer:
B. there is a movement up along the demand curve to a smaller quantity demanded.
Explanation:
Based on the laws of demand, if the price of the good rises the quantity demanded of that good would be reduced keeping other things constant and if the price of the good declines the quantity demanded of that good would be raised keeping other things constant.
It represents the inverse relation between the price and the quantity demanded of the good
Therefore the quantity demanded get decreased with the price
The law of demand states that when the price of a good rises, the quantity demanded decreases. Option B is the correct answer as it describes the movement along the demand curve to a smaller quantity demanded.
Explanation:The law of demand states that when the price of a good rises, the quantity demanded decreases. This means that as the price increases, people are less willing and able to purchase the good.
Option B is the correct answer. When the price of a good rises, there is a movement up along the demand curve to a smaller quantity demanded. This is because the higher price reduces the quantity that consumers are willing to buy.
For example, if the price of a pizza increases, people might choose to buy less pizza or substitute it with a different food item.
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Big Cure and Little Cure are both pharmaceutical companies. Big Cure presently has a potential "blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval. If approved, Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure. Little Cure has ten separate, less important drugs before the FDA waiting for approval. If approved, each of Little Cure's drugs would produce $50 million in net income. The probability of the FDA approving a drug is 50%. What is the expected payoff for Little Cure's ten drugs? (2 points)
A) $250 million
B) $50 million
C) $1 billion
D) $0
Answer:
Correct option is A.
$250 million
Explanation:
Probability of approval for each drug=50% and if approved, net income from each for Little Cure=$50 million.
So, expected payoff from ten drugs of Little Cure=50*0.5*10=$250 million
Gerry bought 100 shares of stock for $30.00 per share on 70% margin. Assume Gerry holds the stock for one year and that his interest costs will be $45 over the holding period. Gerry also received dividends amounting to $0.30 per share. Ignoring commissions, what is his percentage return on invested capital if he sells the stock for $34 a share?
THE RETURN ON INVESTMENT FOR GERRY WILL BE
Explanation:
TO CALCULATE RETURN ON INVESTMENT :
PURCHASE VALUE WILL BE TAKEN AS $30×100= 3000
DIVIDEND =$0.30×100
= $30
INTEREST PAID = $ 45
SALE PRICE = $34*100
= $3400
TOTALRETURN WILL BE CALCULATED AS SALES MINUS PURCHASE AND ADDING DIVIDEND AND SUBTRACTING INTEREST PAID WHICH IS = $3400-$3000+$30-$45= $385
NOW WE WILL CALCULATE CAPITAL INVESTMENT WHICH IS =[tex]\frac{TOTAL RETURN}{CAPITAL INVESTMENT}[/tex] = [tex]\frac{385}{2100}[/tex] × 100=18.33%
OUR ACTUAL CAPITAL INVESTMENT IS 70%×3000 = $2100.
The percentage return is 18.33%.
The calculation is as follows:Amount invested is
= 30 × 100 × 70%
= $2,100
Now
Total return is
= (100 × 0.3) + 100 × (34 - 30) - 45
= 385
Now finally
Return on invested capital is
= 385 ÷ 2100
= 18.33%
Therefore we can conclude that the percentage return is 18.33%.
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(Defining capital structure weights) In August 2015 the capital structure of the Emerson Electric Corporation (EMR) (measured in book and market values) was as follows: ($ Millions) Book Value Market Value Short-term debt $2 comma 600 $2 comma 600 Long-term debt 4 comma 246 4 comma 246 Common equity Modifying 8 comma 051 with underline Modifying 35 comma 711 with underline Total capital Modifying $ 14 comma 897 with double underline Modifying $ 42 comma 557 with double underline What weights should Emerson use when computing the firm's weighted average cost of capital?
Answer:
0.1609 and 0.8391
Explanation:
The computation of the weight required to compute the firm's weighted average cost of capital is shown below:
For Weight of debt
= (Short-term debt + Long-term debt) ÷ (Total Capital )
= ($2,600 + $4,246) ÷ ($42,557)
= 0.1609
For weight of equity
= Common Equity ÷ Total Capital
= $35,711 ÷ $42,557
= 0.8391
We simply divide the debt with its total capital so that the weight of capital structure could arrive
Each business day, on average, a company writes checks totaling $12,900 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $23,900. The cash from the payments is available to the firm after two days.
Calculate the company’s disbursement float, collection float, and net float
Answer:
A.Disbursement float: $51,600
Collection float:–$47,800
Net float $27,700
B.New collection float -23,900
New net float $27,700
Explanation:
A. The disbursement float can be defined as the average monthly checks written times the average number of days for the checks to clear.
Disbursement float = 4($12,900)
Disbursement float = $51,600
The collection float can be seen as the average monthly checks received times the average number of days for the checks to clear.
Collection float = 2(–$23,900)
Collection float = –$47,800
The net float can be defined as the disbursement float plus the collection float, so:
Net float = $51,600 – $47,800
Net float = $3,800
B. New collection float will be:
Collection float = 1(–$23,900)
Collection float = –$23,900
And the new net float will be:
Net float = $51,600 – 23,900
Net float = $27,700
Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $21,500, whereas the gas-powered truck will cost $17,960. The cost of capital that applies to both investments is 13%. The life for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,860 per year and those for the gas-powered truck will be $4,600 per year. Annual net cash flows include depreciation expenses.
Calculate the NPV andIRR for each type of truck, and decide which to recommend.
Answer:
The fact that electric-powered forklift truck has a higher NPV and IRR means that it is more profitable and more value-adding, hence, the electric-powered forklift truck is highly recommended
Explanation:
The net present value of a project is the present value of its future cash flows discounted at the required rate of return of 13%.
The present value of each future cash flow can be determined as the future value multiplied by the discount factor
PV=FV*1/(1+r)^N
which can be rewritten thus:
PV=FV/(1+r)^N
FV=future cash flow
r=discount rate=13%
N=the year of cash flow(1 for year 1 cash flow,2 for year 2 cash flow and so on)
gas-powered forklift truck:
NPV=$4,600/(1+13%)^1+$4,600/(1+13%)^2+$4,600/(1+13%)^3+$4,600/(1+13%)^4+$4,600/(1+13%)^5+$4,600/(1+13%)^6-$17,960
NPV=$428.73
electric-powered forklift truck:
NPV=$6,860/(1+13%)^1+$6,860/(1+13%)^2+$6,860/(1+13%)^3+$6,860/(1+13%)^4+$6,860/(1+13%)^5+$6,860/(1+13%)^6-$21,500
NPV=$5,923.19
The internal rate of return is the discount rate at which the the present value of future cash flows is the same as the initial investment outlay, in essence, at IRR,NPV is zero
The IRR can be determined using excel IRR as shown below:
=IRR(values)
the values are the cash flows beginning with initial investment(negative cash flow) followed by future cash flows in subsequent years
Find attached
The NPV for the electric-powered truck is $12,285.04 with an IRR of 23.55%. The NPV for the gas-powered truck is $3,692.33 with an IRR of 18.20%. Therefore, the electric-powered truck is recommended.
To solve this problem, we need to calculate both the Net Present Value (NPV) and the Internal Rate of Return (IRR) for the electric-powered and gas-powered trucks.
Electric-Powered Truck:
Initial Cost: $21,500Annual Net Cash Flow: $6,860Life: 6 yearsCost of Capital: 13%Using the NPV formula:
NPV = Sum of (Cash Flow / (1 + discount rate)^year) - Initial Investment
NPV (Electric) = [tex]6,860 / (1 + 0.13)^1 + 6,860 / (1 + 0.13)^2 + 6,860 / (1 + 0.13)^3 + 6,860 / (1 + 0.13)^4 + 6,860 / (1 + 0.13)^5 + 6,860 / (1 + 0.13)^6 - 21,500[/tex]
= $12,285.04
Using a financial calculator, the IRR can be found as:
IRR (Electric) = 23.55%
Gas-Powered Truck:
Initial Cost: $17,960Annual Net Cash Flow: $4,600Life: 6 yearsCost of Capital: 13%Using the NPV formula:
NPV (Gas) = [tex]4,600 / (1 + 0.13)^1 + 4,600 / (1 + 0.13)^2 + 4,600 / (1 + 0.13)^3 + 4,600 / (1 + 0.13)^4 + 4,600 / (1 + 0.13)^5 + 4,600 / (1 + 0.13)^6 - 17,960[/tex]
= $3,692.33
Using a financial calculator, the IRR can be found as:
IRR (Gas) = 18.20%
Based on the NPV and IRR calculations, the electric-powered truck is recommended because it has a higher NPV and IRR.
The master budget at Western Company last period called for sales of 235,000 units at $9.40 each. The costs were estimated to be $3.00 variable per unit and $270,000 fixed. During the period, actual production and actual sales were 240,000 units. The selling price was $9.50 per unit. Variable costs were $3.75 per unit. Actual fixed costs were $270,000. Required: Prepare a flexible budget for Western.
Answer:
Profit under flexible budget = $1,266,000 (please budget below)
Explanation:
Flexible budget is that which is that which recognizes the cost behavior and is used for control purpose. It is prepared based on the actual level of activity achieved using the assumptions of the static budget.
So we will prepare a flexible budget for Western Company for 240,000 units using the assumption of the static budget.
Flexible Budget
$
Sales Revenue (240,000× $9.40) = 2,256,000
Variable cost (240,000× $3.00) = ( 720,000 )
Contribution 1,536,000
Fixed cost (270,000)
Profit 1,266,000
A flexible budget adjusts with the volume of activity. For Western Company, based on 240,000 units sold at $9.50 each, factoring in costs, the operating income is $1,110,000.
Explanation:To prepare a flexible budget for Western, we need to remember that a flexible budget adjusts with the volume of activity (sales units in this case). Our budget will be based on the actual level of activity, which is 240,000 units.
Here's the step-by-step process:
First, multiply the actual units (240,000) by the actual selling price per unit ($9.50). This gives us actual revenue of $2,280,000.Second, multiply the actual units by the actual variable cost per unit ($3.75). This results in total variable costs of $900,000.The actual fixed costs need no adjusting; they remain at $270,000.Now, subtract both total variable costs and fixed costs from actual revenue to compute the flexible budget operating income. $2,280,000 - $900,000 - $270,000 equals $1,110,000.So based on these calculations, the flexible budget for Western Company is as follows: Total revenue of $2,280,000, total costs of $1,170,000 (including variable and fixed), and a resulting operating income of $1,110,000.
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Horn Company is considering the purchase of a new machine for $108,000. The machine would replace an old piece of equipment that costs $41,830 per year to operate. The new machine would cost $25,720 per year to operate. The old machine currently in use can be sold for $9,500 if the new machine is purchased. The new machine would have a useful life of ten years with a $6,000 salvage value. Calculate the accounting rate of return on the machine that Horn Company is considering buying. Enter your answer as a number without the % symbol. For example, if your answer is 10%, simply enter 10 as your answer.
Answer:
Accounting rate of return is 6%
Explanation:
The new machine would cost $108,000 minus the trade-in value of the old machine i.e $108,000-$9500=$98,500.00
The annual profit =Savings of operational costs on the old machine-costs of operating the new machine-depreciation
Costs of operating the old machine is $41,830
Costs of operating the new machine is $25,720
annual depreciation on the new machine=($108,000-$6,000)/10=$10,200
annual profit=$41,830-$25,720-$10,200=$5,910
Accounting rate of return=annual profit/average operating assets
accounting rate of return=$5,910/$98,500=6%
Alliance Company budgets production of 35,000 units in January and 39,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $3.50 per pound. Each month’s ending raw materials inventory should equal 30% of the following month’s budgeted materials. The January 1 inventory for this material is 42,000 pounds. What is the budgeted materials cost for January?
Answer:
$506,800
Explanation:
The calculation of budgeted materials cost is shown below:-
For computing the budgeted materials cost first we need to find out the total materials for production and materials to be purchased which is here below:-
Total materials for production = Budgeted production × Pounds of raw material per unit
= 35,000 × 4
= 140,000
Materials to be purchased = Total materials for production + Ending raw materials inventory - January 1 inventory
= 140,000 + (39,000 × 4 × 30%) - 42,000
= 140,000 + 46,800 - 42,000
= 186,800 - 42,000
= 144,800
Budgeted materials cost for January = Materials to be purchased × Cost per pound
= 144,800 × $3.50
= $506,800
Answer:
$506,800
Explanation:
Material cost is the cost of raw material used in the production for the period.
First we need to calculate the purchases in the January.
January
+Production (35,000 units x 4 pounds) 140,000 pounds
-Beginning Inventory 42,000 pound
+Ending Inventory 46,800 pounds
(39,000 x 30% x 4 pounds)
Material used 144,800 pounds
Cost of Material = Material used x Rate of material
Cost of Material = 144,800 x $3.50 per pound
Cost of Material = $506,800
Bankone issued $200 million worth of one-year CD liabilities in Brazilian reals at a rate of 6.50 percent. The exchange rate of U.S. dollars for Brazilian reals at the time of the transaction was $0.305/Br 1. (LG 9-5) Is Bankone exposed to an appreciation or depreciation of the U.S. dollar relative to the Brazilian real? What will be the percentage cost to Bankone on this CD if the dollar depreciates relative to the Brazilian real such that the exchange rate of U.S. dollars for Brazilian reals is $0.325/Br 1 at the end of the year? page 308 What will be the percentage cost to Bankone on this CD if the dollar appreciates relative to the Brazilian real such that the exchange rate of U.S. dollars for Brazilian reals is $0.285/Br 1 at the end of the year?
Answer:
A. The depreciation are been issued in reals and the interest as well as the principle are both being paid in reals. Although $ is actually the problem because that is where all the risk lies due to the fact that It will take more dollars to pay back compared to the real
B)
1.Brazilian = $69,225,000
2.Percentage cost -65.4%
C1. Brazilian $60,705,000
2)Percentage cost - 69.6%.
Explanation:
A. The depreciation are been issued in reals and the interest as well as the principle are both being paid in reals. Although $ is actually the problem because that is where all the risk lies due to the fact that It will take more dollars to pay back compared to the real.
B)
1.Brazilian 200M x (1.065) x 0.325
= $69,225,000
2.Percentage cost = ($69,225,000 - $200,000,000) / 200m
=-$130,775,000/$200,000,000
= -65.4%
C
1. Brazilian 200M x (1.065) x 0.285
= $60,705,000
2)Percentage cost = ($60,705,000 - $200,000,000) / $200M
=-$139,295,000/$200,000,000
= -69.6%.
Predict weekly gross revenue (in dollars) for a week when $3,600 is spent on television advertising and $1,800 is spent on newspaper advertising. (Round your answer to the nearest cent.)
Answer:
Weekly gross revenue = $10,669
Explanation:
Regression equation for Showtime Movie Theatre is:
Y = 2.29018X1 + 1.30099X2 + 83.23009
Where
Y= weekly gross revenue
X1= television advertising
X2= newspaper advertising
Put X1 = 3600 and X2= 1800 in avove equation.
Y= (2.29018×3600) +(1.30099×1800) +83.23009
=8,244.648 + 2,341.782 + 83.23009
= 10,669
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct? a. The economy experienced inflation between 2004 and 2005 and between 2005 and 2006. b. The inflation rate was positive between 2004 and 2005, and it was negative between 2005 and 2006. c. The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005. d. All of the above are correct.
Answer:
Option (a) is correct.
Explanation:
Given that,
Price index in the year 2004 = 110
Price index in the year 2005 = 120
Price index in the year 2006 = 125
Inflation rate refers to the rate at which the prices of goods increases from one year to the other.
Consumer price index indicates the inflation in a particular year.
Inflation between 2004 and 2005:
= (Price index in the year 2005 - Price index in the year 2004) ÷ Price index in the year 2004
= (120 - 110) ÷ 110
= 10 ÷ 110
= 0.0909 or 9.09%
Inflation between 2005 and 2006:
= (Price index in the year 2006 - Price index in the year 2005) ÷ Price index in the year 2005
= (125 - 120) ÷ 120
= 5 ÷ 120
= 0.0417 or 4.17%
Therefore, the inflation between 2004 and 2005 is higher than the inflation between 2005 and 2006.
Final answer:
The economy indeed experienced inflation between 2004 and 2005 and between 2005 and 2006, making the correct answer option a.
Explanation:
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. The correct statement regarding this situation is: The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
Inflation denotes the increase in the price level over a period. Comparing the price indexes provided: from 110 in 2004 to 120 in 2005 indicates an increase in the price level, thus inflation. Similarly, the increase from 120 in 2005 to 125 in 2006 also signifies inflation. Therefore, option a is correct.
It is incorrect to assert that inflation was negative between any of the years mentioned, as the price index continuously rose, indicating positive inflation rates throughout the period. Moreover, the statement about the inflation rate being higher in one period compared to the other is not supported without calculating the specific yearly rates of inflation.
Light Me Up Lamps has variable expenses of 40% of sales and monthly fixed expenses of $240,000. The monthly target operating income is $60,000.
What is the monthly margin of safety as a percentage of target sales in dollars?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Light Me Up Lamps has variable expenses of 40% of sales and monthly fixed expenses of $240,000. The monthly target operating income is $60,000.
We weren't provided with the selling price and unitary variable cost. Neither with the actual sales. But, I will provide the formulas and a small example to guide an answer.
Using the percentage of variable cost per sale, we can calculate the contribution margin ratio. The contribution margin ratio is the percentage of sales available to cover for fixed costs.
Contribution margin ratio= (1 -0.4=/1= 0.6
Now, we can calculate the break-even point in dollars with the desired profit:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= (240,000 + 60,000) / 0.6
Break-even point (dollars)= $500,000
Let's suppose actual sales of $750,000.
Margin of safety= (current sales level - break-even point)
Margin of safety= (750,000 - 500,000)
Margin of safety= $250,000
Margin of safety ratio= (current sales level - break-even point)/current sales level
Margin of safety ratio= 250,000/750,000= 0.33= 33%
The monthly margin of safety as a percentage of target sales in dollars for Light Me Up Lamps is 20%. This calculation involves finding the contribution margin ratio, the break-even sales, the target sales and subsequently the margin of safety.
Explanation:To calculate the monthly margin of safety as a percentage of target sales in dollars, we must first find the contribution margin ratio and the break-even sales.
First, since it's given that the company's variable expenses are 40% of sales, its contribution margin ratio becomes 60% (because 100% - 40% = 60%).
Secondly, the company's break-even sales are calculated by dividing its fixed expenses by the contribution margin ratio. Hence, $240,000 / 0.6 = $400,000.
Thirdly, we need to determine the company's target sales which is given by the equation: Fixed costs + target operating income divided by contribution margin ratio. This results in $240,000 + $60,000) / 0.6 = $500,000.
Finally, the margin of safety is calculated by subtracting break-even sales from target sales, then dividing the result by target sales and multiplying by 100% to turn it into a percentage. Hence, ($500,000 - $400,000) / $500,000 * 100% = 20%.
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Larry Nelson holds 1,000 shares of General Electric (GE) common stock. As a stockholder, he has the right to be involved in the election of its directors, who are responsible for managing the company and achieving the company's objectives
True or False: Larry will receive dividends after preferred stockholders.
a. False
b.True
Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $48.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $38.40 per share. Larry worries about the value of his investment. .
If the company issues new shares and Larry makes no ____ Larry's current investment in the company is additional purchase, Larry's investment will be worth
This scenario is an example of ____. Larry could be protected if the firm's corporate charter includes a provision
If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become _____.
Answer:
b.True
Preferred Stock as their name suggest comes first in the dividend distribution.
If it makes no purchase of the new shares then, their investment will decrease to $76,800 as the market value no longer is $48 per share
This is an example of dilution that is, the decrease in both, business participation and also, value of the investment as new shares are issued the older investor will take a hit in their participation if they don't purchase additional shares in the new issuances
Explanation:
2,000 shares x $38.40 = 76,800
Assume that in January 2017, Vivendi announced a €1.2 billion bond issuance. The bonds have a coupon rate of 6.75% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch. Which of the following is not true? A. The yield on these bonds would have been lower if Standard and Poor's, Moody's, and Fitch had assigned higher credit ratings. B. The periodic interest payment will be €40.50 million. C. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings. D. The periodic interest expense will depend on the bond's yield. E. None of the above
Answer:
C. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings
Explanation:
Assume that in January 2017, Vivendi announced a €1.2 billion bond issuance. The bonds have a coupon rate of 6.75% payable semiannually. Assume the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch.
Which of the following is not true? The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings.
The following information relates to Kew Company's Vale Division for last year: sales .................................. $500,000 variable costs ......................... 300,000 fixed costs ............................ 50,000 return on investment ................... 25% minimum required rate of return ........ 6% Calculate the residual income reported by Vale Division last year.
Answer:
$114,000
Explanation:
The computation of the residual income is shown below:
As we know that
Residual Income = Net operating Income - Average Operating assets × Required rate of return
where,
Net Operating Income is
= Sales Revenue - Variable Costs - Fixed Costs
= $500,000 - $300,000 - $50,000
= $150,000
And,
Average operating Assets is
= Net Operating Income ÷ Return on Investment
= $150,000 ÷ 0.25
= $600,000
So, the residual income is
= $150,000 - $600,000 × 6%
= $150,000 - $36,000
= $114,000
Maria Lorenzi owns an ice cream stand that she operates during the summer months in West Yellowstone, Montana. She is unsure how to price her ice cream cones and has experimented with two prices in successive weeks during the busy August season. The number of people who entered the store was roughly the same each week. During the first week, she priced the cones at $4.80 and 2,185 cones were sold. During the second week, she priced the cones at $5.30 and 1,750 cones were sold. The variable cost of a cone is $1.00 and consists solely of the costs of the ice cream and the cone itself. The fixed expenses of the ice cream stand are $2,030 per week. Required: 1. What profit did Maria earn during the first week when her price was $4.80
Answer:
The correct answer is $6,283 .
Explanation:
As per the data given in the question,
Sales = 2,185 × $4.8
= $10,488
Variable cost = 2,185 × $1.00
= $2,185
Contribution = Sales - Variable cost
= $10,488 - $2,185
= $8,303
Fixed cost = $2,030 per week
We can calculate the profit by using following formula:
Profit = Contribution - Fixed cost
By putting the value in the formula, we get
= $8,303 - $2,020
= $6,283
Sabor Inc. is a medical testing laboratory that performs several tests and analyses for hospitals in the area. Four of the tests that it performs require the use of a specialized machine that can supply 14,000 hours per year. Information on the four lab tests is as follows: Test A Test B Test C Test D Charging rate $65 $51 $48 $32 Variable cost $25 $18 $13 $8 Machine hours 3 2 1 0.5 What is the contribution margin per hour of machine time for Test A
Answer:
$13.33
Explanation:
Test A
Charging rate $65
Variable cost ($25)
Contribution margin $40
Contribution margin per machine hour $40/3=$13.33
The contribution margin per hour of machine time for Test A is $13.33.
The contribution margin per hour of machine time for Test A is calculated by subtracting the variable cost per unit from the charging rate per unit and then dividing by the machine hours required for Test A.
First, calculate the contribution margin for Test A:
Contribution Margin for Test A = Charging Rate for Test A - Variable Cost for Test A
Contribution Margin for Test A = $65 - $25
Contribution Margin for Test A = $40
Now, calculate the contribution margin per machine hour for Test A:
Contribution Margin per Machine Hour for Test A = Contribution Margin for Test A / Machine Hours for Test A
Contribution Margin per Machine Hour for Test A = $40 / 3 hours
Contribution Margin per Machine Hour for Test A = $13.33 per hour
Wood Company makes two types of chairs. One of the chairs is a rocking chair. The other is a straight-back chair. Both chairs are made by hand. Wood Company uses a companywide overhead rate that is based on direct labor hours to assign overhead costs to the two products. If Wood Company automates the production of straight-back chairs and continues to use direct labor hours as a companywide allocation basis:
a. rocking chairs will be undercosted
b. there should be no impact on unit cost
c. straight back chairs will be overcosted
d. rocking chairs will be overcosted.
Answer:
d. rocking chairs will be overcosted.
Explanation:
Since in the given situation, if the company automates the production of straight-back chairs so the direct hours of straight back chairs will be decreased and the rocking chairs would remain constant and we assume that overall overhead remain the same
In addition, Overall Direct working hours would minimize the proportion of Direct rocking chair working hours in total direct working hours. As a result, the overhead allocation to the Rocking chair would also increase on the basis of Direct Labor hours than before. And it would overcoat the rocking chairs.
Hence, the correct option is d.
Automating the production of straight-back chairs at Wood Company and continuing to use direct labor hours as a companywide allocation basis will result in the overcosting of rocking chairs. The correct option is d.
Explanation:If the Wood Company automates the production of straight-back chairs and continues to use direct labor hours as a companywide allocation basis, the most likely impact would be to overcost the rocking chairs.
This is so because by automating the production of straight-back chairs, the direct labor hours for these chairs will decrease drastically, whereas the direct labor hours for the handmade rocking chairs remain the same.
As a result, a larger portion of the overheads based on direct labor hours will be assigned to the rocking chairs, making them appear more costly than they actually are. Hence, option 'd. rocking chairs will be overcosted' is the correct one. The correct option is d.
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The following materials standards have been established for a particular product: Standard quantity per unit of output Standard price 9.2 grams $14.70 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased.. Actual cost of materials purchased. Actual materials used in production... Actual output 5,500 grams $76,450 5,100 grams 540 units The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard quantity per unit= 9.2 grams
Standard price= $14.70 per gram
Actual materials purchased= 5,500 grams
The actual cost of materials= $76,450
Actual materials used in production= 5,100 grams
Actual output= 540 units
To calculate the direct material variances, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Actual price= 76,450/5,500= $13.9
Direct material price variance= (14.7 - 13.9)*5,500= $4,400 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 540*9.2= 4,968 grams
Direct material quantity variance= (4,968 - 5,100)*14.7= $1,940.4 unfavorable
Ivanhoe Corporation issued $468,000 of 6% bonds on May 1, 2020. The bonds were dated January 1, 2020, and mature January 1, 2023, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Ivanhoe’s journal entries for (a) the May 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry
Answer:
May 1, 2020
Dr Cash $477,360
Cr Bonds Payable $468,000
Cr Interest Expense $9,360
July 1, 2020
Dr Interest Expense $14,040
Cr Cash $14,040
Dec 31, 2020
Dr Interest Expense $14,040
Cr Interest Payable $14,040
Explanation:
May 1, 2020
Dr Cash $477,360
Cr Bonds Payable $468,000
Cr Interest Expense $9,360
(Accrued Interest = 468,000 x 6% x 4/12)
July 1, 2020
Dr Interest Expense $14,040
Cr Cash $14,040
(Bond interest expense = $468,000 x 6% x 6/12)
Dec 31, 2020
Dr Interest Expense $14,040
Cr Interest Payable $14,040
Milo's Fashions recently paid a $2 annual dividend. The company is projecting that its dividends will grow by 20 percent next year, 12 percent annually for the two years after that, and then at 6 percent annually thereafter. Based on this information, how much should Milo's Fashions common stock sell for today if her required return is 10.5%
Answer:
Today the stock should sell for $59.16
Explanation:
The three stage growth model of Dividend discount model approach will be used to calculate the price of this stock today. The DDM bases the value of the stock today based on the present value of the expected future dividends that the stock will pay. The price per share today of this stock under the DDM model will be,
P0 = 2 * (1+0.2) / (1+0.105) + 2 * (1+0.2) * (1+0.12) / (1+0.105)^2 +
2*(1+0.2)*(1+0.12)^2 / (1+0.105)^3 +
[(2 * (1+0.2) * (1+0.12)^2 * (1+0.06) / (0.105-0.06)) / (1+0.105)^3 ]
P0 = $59.16
At the end of the current year, the accounts receivable account has a debit balance of $1,095,000 and sales for the year total $12,420,000. The allowance account before adjustment has a debit balance of $14,800. Bad debt expense is estimated at 3/4 of 1% of sales. The allowance account before adjustment has a debit balance of $14,800. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,400. The allowance account before adjustment has a credit balance of $5,300. Bad debt expense is estimated at 1/2 of 1% of sales. The allowance account before adjustment has a credit balance of $5,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $44,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.
Answer and Explanation:
The computation is shown below:
a) Bad debt expense is
= $12,420,000 × 3 ÷ 4 of 1%
= $93,150
b) Bad debt expense is
= Estimated doubtful accounts + debit balance of allowance account
= $47,400 + $14,800
= $62,200
c) Bad debt expense is
= $12,420,000 × 1 ÷ 2 of 1%
= $62,100
d) Bad debt expense is
= Estimated doubtful accounts - credit balance of allowance account
= $44,000 - $5,300
= $38,700
We simply applied the above formulas
Avril Company makes collections on sales according to the following schedule: 30% in the month of sale 66% in the month following sale 4% in the second month following sale The following sales have been are expected: Expected Sales January$130,000 February$150,000 March$140,000 Budgeted cash collections in March should be budgeted to be:
Answer:
Budgeted cash collections for March are $146200
Explanation:
Following the terms of the collection schedule, the budgeted cash collections for the month of March is expected to be as follows,
4% amount of January sales that is 0.04 * 130000 = $5200
66% amount of February's sales that is 0.66 * 150000 = $99000
30% amount of March's sales that is 0.3 * 140000 = $42000
Thus, the total budgeted cash collection for March will be,
Budgeted cash collection-March = 5200 + 99000 + 42000
Budgeted cash collections- March = 146200
You are given the following probability distribution of returns for stock IN A probability of 2 that the return will be 12 a probability of 35 that the return will be 18 a probability of 3 that the return will be 10 and a probability of 15 that the return will be 10 What is the expected return of this stock
Correct Question
You are given the following probability distribution of returns for stock IN A probability of 0.2 that the return will be 12 a probability of 0.35 that the return will be 18 a probability of 0.3 that the return will be 10 and a probability of 0.15 that the return will be 10 What is the expected return of this stock
Answer:
expected return of this stock = 13.2%
Explanation:
The expected rate of return is the weighted average of all the possible returns associated with an investment decision. The returns are weighted using the probability associated with their outcomes.
Expected return = WaRa + Wb+Rb + Wn+Rn
W- weight of the outcome, R - return of the outcome
=(0.2× 12%) + (0.35× 18%) + (0.30×10%) + (0.15 × 10%)
= 13.2%
The estimated regression equation for a model involving two independent variables and 10 observations follows. Here SST = 6,724.125, Interpret the regression coefficients in this estimated regression equation Group of answer choices A one-unit increase in x1 will lead to a 0.5906 unit increase in y, when x2 is held constant. A one-unit increase in x2 will lead to a 0.498 unit decrease in y, when x1 is held constant.
Answer:
Given data in the problem statement is
SST=6724.125
incremental in x1=0.5906
Incremental in x2=0.498
no of observations=10
This is the model of clustering in unsupervised machine learning as model will interpret this model as true or false only.