The right entry to record the application of overhead cost is 'C. Work in Process XXX Manufacturing Overhead XXX'. Overhead costs are encompassed in the cost of goods in progress, which is reflected in the 'Work in Process' account. The applied overhead cost lessens the balance in the 'Manufacturing Overhead' account and augments the 'Work in Process' account.
Explanation:The correct entry to record the application of overhead cost in accounting would be: C. Work in Process XXX Manufacturing Overhead XXX. This is because overhead costs are absorbed into the cost of goods that are in production, which is monitored under the Work in Process account. The Manufacturing Overhead is an account where indirect costs associated with manufacturing are accumulated. If we apply an overhead cost, it decreases the balance in the Manufacturing Overhead and increases the amount in Work in Process account, reflecting that overhead costs are being utilized in the production process.
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The correct entry to record the application of overhead cost is D. Manufacturing Overhead XXX to Work in Process XXX, representing the allocation of indirect costs to goods in production within a manufacturing accounting system.
When overhead costs are allocated to production, the Manufacturing Overhead account (which accumulates indirect manufacturing costs) is debited to reflect the actual costs incurred. These costs are then credited to the Work in Process account, increasing the cost of goods being manufactured. This entry does not involve Accounts Payable because the allocation is an internal process rather than an external transaction.
It costs Sheffield Corp. $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2000 scales at $15 each. Sheffield would incur special shipping costs of $1 per scale if the order were accepted. Sheffield has sufficient unused capacity to produce the 2000 scales. If the special order is accepted, what will be the effect on net income?
Answer:
the effect on pre-tax net income will be an increase for 4,000.
Explanation:
This is a case for Relevant cost:
The company has sufficient capacity to produce this scales, without increasing the fixed cost.
we need to check if the offer covers the variable cost and the additional shipping cost.
15$ sales price - $12 variable cost - $1 shipping cost = $2 contribution margin
2000scales *2 CM = 4,000 effect on net income
Which of the following have the potential to increase the net present value of a proposed investment? I. Ability to immediately shut down a project should the project become unprofitable II. Ability to wait until the economy improves before making the investment III. Option to place the investment on hold until a more favorable discount rate becomes available IV. Option to increase production beyond that initially projected
Answer: The following have the potential to increase the net present value of a proposed investment:
I. Ability to immediately shut down a project should the project become unprofitable.
II. Ability to wait until the economy improves before making the investment.
III. Option to place the investment on hold until a more favorable discount rate becomes available.
IV. Option to increase production beyond that initially projected.
Explanation:
Net present value (NPV) in rudimentary terms can be defined as the difference between the present value of cash inflows and the present value of cash outflows proposed over a duration.
NPV is used in capital and investment planning to examine the gain of a projected investment.
Thus the above given factors are thoroughly responsible or have the potential to increase the NPV of a proposed investment.
All the listed options, which include the ability to shut down a project, delay the investment till economic conditions improve, place the investment on hold for a better discount rate, and increase production beyond initial projections, have the potential to increase the Net Present Value of an investment.
Explanation:The potential actions that could increase the net present value (NPV) of a proposed investment are as follows:
Ability to immediately shut down a project should the project become unprofitable. This reduces potential losses and thereby increases NPV.Ability to wait until the economy improves before making the investment. By delaying the investment, a company can take advantage of better economic conditions, resulting in increased profitability and thus a higher NPV. The option to place the investment on hold until a more favorable discount rate becomes available. A lower discount rate increases the NPV of future profits. The option to increase production beyond that initially projected. If the investment gives scope to increase output in response to high demand, profits will increase, leading to a higher NPV.Keep in mind that the Net Present Value is a measure of the profitability of an investment, which is calculated by subtracting the present value of the investment outflow from the present value of the investment inflow. A higher NPV indicates a more profitable investment.
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Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. Refer to Scenario 13-9. Ellie's annual economic costs will equal?A. $75,200. B. $55,200. C. $80,500. D. $135,700.
Answer: Option D
Explanation: Economic cost is the total cost a firm bears in the form of expenses incurred and opportunity cost incurred. Opportunity cost can be defined as the loss of profit for choosing one alternative over other.
In the given case salary and interest on certificate of deposit is the opportunity cost for Ellie.
so,
Economic cost = $80,000 + $15000 + $3000 + $1000 + $1200 + $35,000 + $500
= $135,700
In preparing its cash flow statement for the year ended December 31, 2018, Red Co. gathered the following data: Gain on sale of land $ 12,400 Proceeds from sale of land 24,000 Purchase of Blue, Inc., bonds (face value $210,000) 353,000 Amortization of bond discount 4,300 Cash dividends declared 95,000 Cash dividends paid 75,000 Proceeds from sales of Red Co. common stock 155,000 In its December 31, 2018, statement of cash flows, what amount should Red report as net cash outflows from investing activities?
Answer:
The $329,000 is the amount which should Red report as net cash outflows from investing activities.
Explanation:
Investing Activities : The investing activities is that activities in which the purchase of fixed assets and intangible assets is to be recorded. Other expenses will not be considered.
So,
The net cash outflow from investing activities = Purchase of Blue, Inc., bonds - Proceeds from sale of land
= $353,000 - $24,000
= $329,000
The Gain on sale of land is an operating activity.
The amortization of bond discount is also an operating activity.
Cash dividends declared is an financing activity.
Cash dividends paid is also an financing activity.
Proceeds from sales of Red Co. common stock is also an financing activity.
So, these costs is not considered.
Thus, the $329,000 is the amount which should Red report as net cash outflows from investing activities.
Final answer:
Red Co. should report a net cash outflow from investing activities of $329,000 in its statement of cash flows for the year ended December 31, 2018. This is calculated by subtracting the cash inflows from the sale of land ($24,000) from the cash outflows for the purchase of bonds ($353,000).
Explanation:
When preparing a statement of cash flows, Red Co. should report a net cash outflow from investing activities by considering the following items:
Proceeds from the sale of land are cash inflows from investing activities.Purchase of Blue, Inc., bonds is a cash outflow for investing activities.Amortization of bond discount is not considered in the cash flow statement as it is a non-cash expense reflected in the operating section via adjustments.To calculate net cash outflows from investing activities:
Add up all cash outflows related to investing activities: Purchasing bonds ($353,000)Subtract any cash inflows related to investing activities: Sale of land ($24,000)Therefore, the net cash outflows from investing activities is calculated as $353,000 (cash out) - $24,000 (cash in) = $329,000.
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units × $42.60 per unit) $ 1,704,000 Cost of goods sold (40,000 units × $21 per unit) 840,000 Gross margin 864,000 Selling and administrative expenses 460,000 Net operating income $ 404,000 The company’s selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $21 unit product cost given above is computed as follows: Direct materials $ 11 Direct labor 3 Variable manufacturing overhead 3 Fixed manufacturing overhead ($196,000 ÷ 49,000 units) 4 Absorption costing unit product cost $ 21 Required: 1. Redo the company’s income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Answer:
1. Preparing Contribution Income statement
Sales = 40,000 units X $42.60 = $1,704,000
Less: Variable Costs
Direct Material = $11 X 40,000 = $440,000
Direct Labor = $3 X 40,000 = $120,000
Variable Manufacturing Overhead = $3 X 40,000 = $120,000
Variable Selling Expenses = $4 X 40,000 = $160,000
Total Variable Costs = ($840,000)
Contribution Margin = $864,000
Less: Fixed Costs
Selling & Administrative = $300,000
Manufacturing Overheads = $196,000
Total Fixed Cost = ($496,000)
Net Operating Income = $368,000
2. Now we have net income as per Contribution statement = $368,000 and net income as per Absorption Costing = $404,000
This difference is because of Fixed Manufacturing Overheads
Under Absorption costing Fixed Manufacturing Overheads charged = $196,000 ÷ 49,000 units = $4 per unit X 40,000 units = $160,000 whereas in contribution statement it is charged fully.
Under absorption costing even fixed costs are charged based on the number of units produced, whereas in income statement is it charged completely irrespective of the units produced as that value is fixed and cannot be avoided on per unit basis.
Difference = $404,000 - $368,000 = $36,000
Manufacturing cost for 9,000 units (49,000 - 40,000) = at the rate of $4 = $36,000
In case cost of fixed manufacturing overhead is reduced by $36,000 then profit will be increased to $368,000 + $36,000 = $404,000 same as of absorption costing.
Using variable costing, we compute the variable costs and subtract from sales to get the contribution margin. Fixed costs are then subtracted to get the net operating income. The difference between absorption costing and variable costing net operating income is due to the treatment of fixed manufacturing overhead.
Explanation:Variable costing distinguishes between fixed and variable costs, and treats only variable costs as product costs. Accordingly, the per-unit product cost under variable costing would be $17 (Direct materials $11 + Direct labor $3 + Variable manufacturing overhead $3).
Next, let's compute the sales, variable costs, and contribution margin:
Sales: $1,704,000Variable Costs (Unit costs of $17 x 40,000 units sold + Variable selling and administrative expenses of $4 x 40,000 units): $840,000Contribution Margin (Sales – Variable Costs): $864,000Subtract fixed costs (Fixed manufacturing overhead of $196,000 and fixed selling/administrative costs of $300,000) from the contribution margin to get the net operating income under variable costing: $368,000.
So, the difference between the net operating income under absorption costing ($404,000) and variable costing ($368,000) is $36,000. The reason for the higher net operating income under absorption costing is because some fixed manufacturing overhead was included in the cost of goods sold, reducing reported cost of goods sold and thereby increasing net operating income.
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Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March Material purchases $12,040 $14,150 $10,970 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,500. The budgeted cash payments for materials in January are:
The budgeted cash payments for materials in January are $12,520.
To calculate the budgeted cash payments for materials in January for Fortune Company, we need to consider both the payments made in January for purchases made in December and the payments made in January for purchases made in January itself.
1. Payments for December Purchases:
- December Accounts Payable: $6,500
- Since payments are made 50% in the month of purchase and 50% in the following month, we assume that the $6,500 is the amount to be paid in January for purchases made in December.
2. Payments for January Purchases:
- January Material Purchases: $12,040
- 50% of January purchases will be paid in January: [tex]\( 0.50 \times 12,040 = 6,020 \)[/tex]
Now, sum these amounts to get the total budgeted cash payments for materials in January:
[tex]\[\text{Total January Payments} = 6,500 + 6,020 = 12,520\][/tex]
Accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $407,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is: a) $407,000 b) $512,000, c) $422,000, d) $392,000
Answer:
The answer is 422,000.
Explanation:
The cash flow from operating activities is equal to Net income minus changes in working capital. Working capital (WC) is defined as Current assets minus Current Liabilities. Changes in working capital is defined as WC at end of the year minus WC at the beginnig of the year.
If the only change in Current assets is the disminution of accounts receivable, then the WC also decreases in that amount. So, the changes in WC is $105,000 - $120,000 = $(15,000).
The the cash flow from operating activities is[tex]$ 407,000 - $ (15,000) = 407,000 + 15,000 = 422,000[/tex]
Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.15 per share at the end of 2013. The dividend is expected to grow at 18% per year for 3 years, after which time it is expected to grow at a constant rate of 6% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations. $ per share
Answer:
Intrinsic Value $43.69
Explanation:
[tex]\left[\begin{array}{ccc}Year&Dividends&Present Value\\1&1.357&1.23926940639269\\2&1.60126&1.33546840140948\\3&53.9853371428571&41.1181399520726\\Intrinsic&Value&43.6928777598748\\\end{array}\right][/tex]
The first Step is calculate the dividends:
[tex]dividends \times growth \: rate = next\: perdiod \: dividends[/tex]
We multiply 1.15 today dividends by the growth rate of 18% to get year 1
then year 1 by this growth rate to get year 2 and finally
year 2 times growth rate to get year 3 Dividends
Then on year 3 we apply the Dividends growth model
[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]
[tex]\frac{Year3 }{0.095-0.06} = Intrinsic \: Value[/tex]
Third, we need to bring this values to present
[tex]\frac{Nominal}{(1+rate)^{time} } = PV[/tex]
Year 1 /1.095
Year 2 /1.095^2
Year 2 /1.095^3
Final step, we add them to get the intrinsic value of the bond today.
Horse Country Living publishes a monthly magazine for which a 12-month subscription costs $30. All subscriptions require payment of the full $30 in advance. On August 1, the balance in the Subscriptions Received in Advance account was $40,500. During the month of August, the company sold 900 yearly subscriptions. After the adjusting entry at the end of August, the balance in the Subscriptions Received in Advance account is $60,000.
Required
1)Identify and analyze the transaction to record the sale of the 900 yearly subscriptions during the month of August
2)Identify and adjust the sale on August 31
3)Assume that the accountant made the correct entry during August to record the sale of the 900 subscriptions but forgot to make the adjustments on August 31. Would net income for August be overstated or understated? Explain your answer
Answer:
(1)
Cash 27,000
Subscriptions Received in Advance 27,000
(2)
Subscriptions Received in Advance 7,500
Subscriptions Received 7,500
(3)
It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.
Explanation:
(1)
At the beginning of the year the subscription represent an obligation to the business, it must deliver their magazines, the revenue is not earned.
total amount900 x 0 = 27,000
(2)
beginning + new subcription - ending = earned revenue
40,500 + 27,000 - 60,000 = 7,500
(3)
It woulbe be understated. Because the August adjustment recognize revenues. If it wasn't done, then revenues are less than it should be. So net income is understated.
Final answer:
The sale of 900 subscriptions is recorded by debiting Cash and crediting Subscriptions Received in Advance. An adjusting entry for one month's worth of earned revenue is made by debiting Subscriptions Received in Advance and crediting Subscription Revenue. Forgetting this adjustment would lead to an understatement of net income for August.
Explanation:
Recording and Adjusting Subscription Revenue and Its Impact on Net Income
1) To record the sale of the 900 yearly subscriptions during the month of August, we would perform the following journal entry: Debit Cash for $27,000 (900 subscriptions × $30 each) and Credit Subscriptions Received in Advance for $27,000. This transaction increases both the company's cash and its liability for deferred subscription revenue.
2) At the end of August, an adjusting entry must be made to recognize the subscription revenue that has been earned during the month. Since the subscriptions are for a 12-month period, and one month has passed, 1/12th of the revenue received in advance should be recognized as earned. Therefore, we Debit Subscriptions Received in Advance for the portion earned ($40,500 for the initial balance plus $27,000 from new subscriptions equals $67,500 in total, divided by 12 gives $5,625) and Credit Subscription Revenue for $5,625.
3) If the accountant recorded the sale of the subscriptions but forgot to adjust for revenue recognition on August 31, the net income for August would be understated. This is because the earned revenue for August hasn't been accounted for, leading to a lower net income than should be reported.
Xenon Tech acquired a patent on January 1st, 2013, for $26,400. The patent was estimated to have a useful life of 12 years. On July 1st, 2017, the company incurred legal fees of $6,000 to successfully defend the patent in an infringement suit. How much amortization expense will Xenon Tech recognize on the Income Statement for the year ended December 31st, 2017?
Answer:
The amount that will recognize under amortization expenses is $2600.
Explanation:
The first step here would be to calculate the amortization expenses for the first 4 years of the patent, here will use straight line depreciation method,
Formula - original value of asset / useful life in years
- $26,400 / 12
- $2200
Now for the 4 years this amount would become $2200 x 4 = $8800
The amount of amortization for the first half of 2017 ( up to 30 June ) would be-
= half of full year expenses
= $2200 / 2
= $1100
So up to 30 June 2017, the expenses are $9900 ( $8800+$1100), So the new book value would be = $26,400 - $9900
= $16,500
In this $16,500 we will add the amount of legal fees, so the total would be -
$16,500 + $6000
= $22,500
The next step is to divide this value by remaining useful; years which is 7.5,
$22,500 / 7.5
= $3000
Now we will divide this amount by 2 because we have to take out expense for remaining last 6 months of 2017
$3000 / 2
= $1500
Adding the expenses for first and second half of 2017 to take out total amortization expense of 2017 -
$1100 + $1500
= $2600
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. utility opportunity cost benefit analysis marginal analysis
Answer:
marginal analysis
Explanation:
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve marginal analysis, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve marginal analysis, which involves comparing the benefits and costs of choosing a little more or a little less of a good. Hence, option D is correct.
What is marginal analysis?Marginal analysis involves dividing a choice into a number of "yes or no" options. More particularly, it contrasts the higher costs that the same activity incurs with the increased benefits that it provides.
For instance, a marginal analysis reveals that hiring a second worker for manufacturing would result in a net marginal advantage if the company has the funds to do so. Or, to put it another way, the potential for producing more things balances out the increase in labour costs.
Thus, option D is correct.
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Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should A. decrease the price charged to vacationers and increase the price charged to business travelers. B. decrease the price to both groups of customers. C. increase the price charged to vacationers and decrease the price charged to business travelers. D. increase the price for both groups of customers.
Answer: If the airline's objective is to increase total revenue, it should decrease the price charged to vacationers and increase the price charged to business travelers.
Explanation:
Here the objective of the airline is to increase total revenue, therefore airline should practice price discrimination i.e. charge different prices to vacation travelers and business travelers.
Since customers traveling for vacations have elastic demand i.e. ε > 1 , so if airline reduces the price of air ticket for them, then there will be a percentage decrease in the price that will be less then the percentage increase in the number of vacation travelers.
Therefore, total revenue will increase with decreasing price charged to vacationers.
Whereas;
The demand of business travelers is inelastic i.e. ε < 1, so if airline increases the price of air ticket for business travelers, then there will be a percentage increase in the price that will be more then the percentage decrease in the number of vacation travelers
Therefore, total revenue will increase with increasing price charged to business travelers.
GDP per person tells us the income and expenditure of theA. richest person in the economy. B. poorest person in the economy. C. entire economy. D. average person in the economy.
Answer:
The answer is (C) entire economy.
Explanation:
Gross domestic product (GDP) is the total sum of goods and services that a country produces within a certain amount of time. It is a general estimate of what a country produces as a whole – not just the poorest, the average, or the richest person. To calculate GDP, you need to measure the output, expenditure, and income of a country’s economy – and adding them up to get the total. This total is the GDP.
Suppose you know that a company’s stock currently sells for $56 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Answer:
$2.8 divdends per share
Explanation:
$56 market price
Rate of return 10%
The gain for an investment in stocks is:
[tex]\frac{DividendsYield+SharePriceVariation}{Investment} = $Return on Investemnt[/tex]
In this case we are told that this is distribute evenly, this means:
dividends paid = market price gain
So dividends yield 5% and market price yields another 5% to achieve the 10%
So currently $56 market price x 0.05% = $2.8 divdends per share
If both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged, which of the following statements is true? A. Breakeven point in units could increase, decrease, or remain the same. B. Breakeven point in units remains unchanged. C. Breakeven point in units decreases. D. Breakeven point in units increases.
Answer:
A
Explanation:
the sales price increase and because the variable cost are the same the contribution margin will increase, which lead to think the BEP is lower.
But, because the fixed cost also increase we cannot determinate where the new BEP Will be higher or lower. The fixed cost could increase so much that nulifies the increase in the contribution margin or even be higher enought that the BEP goes higher.
So Option A is the only true statment.
The breakeven point in units increases when both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged. The breakeven point is determined by covering all fixed and variable costs with the revenue generated from sales; thus, more units must be sold to cover higher fixed costs.
Explanation:If both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged, the correct statement is that the breakeven point in units increases. The breakeven point is where total revenue equals total costs, and fixed expenses make up part of the total costs. When the selling price per unit increases, the revenue per unit also increases, offsetting some of the impact of the increased fixed expenses. However, if the increase in the selling price does not proportionately match the increase in fixed expenses, the number of units needed to break even will still rise. This is because the additional revenue generated by the higher selling price per unit must now cover a higher fixed cost before reaching profitability.
Let us consider an example where the fixed cost is $40,000, the variable cost per unit is $0.30, and the initial selling price is $1.50, leading to a unit contribution margin of $1.20. If the fixed expenses increase, the breakeven in units would be calculated by dividing the new fixed cost by the unit contribution margin. A small price increase would likely result in the breakeven point in units being roughly the same or only slightly adjusted, but a more significant increase in fixed expenses without a proportionate increase in the selling price would mean a higher number of units need to be sold to break even. Hence, the answer is breakeven point in units increases (Option D).
As a result of a thorough physical inventory, Horace Company determined that it had inventory worth $320,000 at December 31, 2015. This count did not take into consideration the following facts: Herschel Consignment currently has goods worth $47,000 on its sales floor that belong to Horace but are being sold on consignment by Herschel. The selling price of these goods is $75,000. Horace purchased $22,000 of goods that were shipped on December 27, FOB destination, that will be received by Horace on January 3. Determine the correct amount of inventory that Horace should report.a. $320,000.b. $367,000.c. $387,000.d. $340,000.
Answer:
The correct answer is option b) $367,000
Explanation:
Here for calculating the correct amount of inventory that Horace should report can be calculated through, by adding the inventory worth $320,000 at 31 December, 2015 with consignment given to Herschel worth $47,000, SO
Correct amount of inventory =
Amount of inventory on 31 December
+
Consignment given to Herschel
= $320,000 + $47,000
= $367,000
Here we are taking Herschel consignment in to account and that too at the historical purchase cost because Horace company has give the Herschel to sell the goods on his behalf but the transfer of ownership has not taken place here , the right to ownership here remains with the Horace and the amount at which they should be recorded is at purchase cost not selling cost.
We will also not include goods worth $ 22,000 in to the calculation because the Horace company has not received the goods physically yet, we will include those goods in to inventory on January 3 not before that.
The correct inventory amount for Horace to report is $367,000, taking into account goods on consignment and goods not yet received.
Explanation:The correct amount of inventory that Horace should report is $367,000.
In order to determine the correct amount of inventory, we need to consider the goods on consignment and the goods that were purchased but have not yet been received by Horace.
The goods on consignment with Herschel Consignment should be included as part of Horace's inventory, as they still belong to Horace. Therefore, we need to add the selling price of $75,000 to the inventory count. Additionally, the goods that were purchased but have not yet been received should also be included, so we need to add the purchase amount of $22,000 to the inventory count. Adding these amounts to the initial count of $320,000 gives us a correct inventory amount of $367,000.
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How has the Internet dramatically reduced search costs?a. by making the shopping experience more funb. by eliminating the need to travel to stores to shopc. by reducing the benefit of competitiond. by offering products for sale at prices below those in stores
Answer: Option (b) is correct.
Explanation:
Correct : by eliminating the need to travel to stores to shop.
Internet literally reduced the search cost by saving the travel time of the consumers to the shopping stores. Now days, almost all the consumers prefer to buy products online instead of travelling here and there for the products.
Buying products from the stores involves certain costs such as travelling cost, waste of time, miscellaneous,etc.
Hence, internet facility helps in reducing these kind of costs, that's why in today's world mostly people rely more on internet for shopping and all instead travelling to the stores.
The Internet has reduced search costs through eliminating physical shopping trips, enhancing global shopping experience, improving 'business-to-business' transactions, and streamlining the job search process.
Explanation:The internet has dramatically reduced search costs in several significant ways. Firstly, it has eliminated the need to physically travel to stores to shop, thereby reducing transport costs and time. This is made possible due to technological advancements and the rise of global e-commerce platforms. Consumers can now order goods from anywhere in the world, increasing competition among retailers and setting the stage for lower prices.
Secondly, technology has also facilitated the development of 'business-to-business' websites. Such platforms have streamlined the procurement process by enabling buyers and suppliers to find each other with ease.
Lastly, the internet has simplified the job search process. Convenient tools such as LinkedIn and other online job portals have made it easier for job seekers to find opportunities and make contact with potential employers.
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Consider each of these business activities. For which do you think supply would be most elastic in the short term?a. producing feature moviesb. building skyscrapersc. providing health cared. baking cupcakes
Final answer:
Among the given options, the supply of baking cupcakes has the most elasticity in the short term due to the quick production process and the ease of increasing quantity supplied.
Explanation:
In evaluating the elasticity of supply in the short term for different industries, we must consider how quickly producers can respond to a price increase with a higher quantity supplied. When it comes to producing feature movies, building skyscrapers, and providing health care, these require significant time investments, whether for production, construction, or training medical staff, resulting in relatively inelastic supply curves. Conversely, the process of baking cupcakes can be quickly adjusted to changes in demand. Ingredients are readily available, and the production time is short. Therefore, in the short term, the supply for cupcakes would be the most elastic among the listed activities due to its quick reaction to cost changes and the ability to increase quantity supplied (Qs) without significant delays.
Suppose that the MC Software Corporation earns a profit of $10 per share. If the prevailing interest rate is 12 percent and the stock is currently selling for $100 per share, what is the current price/earnings ratio
Answer:
Price Earning Ratio = Price/Earnings = we use the general formula.
[tex]\frac{100}{10}[/tex]
$100/$10 = 10 times
Explanation:
Price Earning ratio is calculated using the current market price of share and earnings per share of the company. In the given question there is no relevance of interest rate as this is not the cost of equity.
Price Earning Ratio tells how much earnings are required to meet the cost of 1 share.
Another formula for P/E ratio = 1/Cost of Equity. Since 12% is not cost of equity this formula cannot be used.
Also earnings per share is given assumed it is after interest cost if any.
Economic theory suggests countries benefit from international trade by producing more of those good and services for which they have a comparative advantage (and less of that for which a country does not have a comparative advantage). However, countries rarely specialize completely. Why? Even with international trade, countries rarely specialize completely because
Answer: Increasing opportunity cost
Explanation:
Yes, economic theory suggest that countries producing more of those goods in which they have a comparative advantage then they must have benefit from international trade. But countries rarely specialized in the production of one good and that is because of increasing opportunity cost.
Countries with a constant opportunity cost are completely specialized in the production of one good.
In case of increasing opportunity cost, when a country shift their resources from the production of one good to another, this will lead to an increase in the opportunity cost of producing that good.
This is because of the productivity of the resources. This means that resources that are reallocate from the production of one good to another were better suited for the good whose production decreases.
Jewelry Company has a sales budget for next month of $450,000. Cost of goods sold is expected to be 45 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $20,000, and an ending inventory of $24,000 is desired. Beginning accounts payable is $206,500. The cost of goods sold for next month is expected to be:
$160,000
$202,500
$360,000
$406,000
Answer:
The cost of goods sold for next month is expected to be $202,500
Explanation:
Given that,
Sales budget = $450,000
Cost of Good sold = 45% of sales
Opening inventory = $20,000
Ending inventory = $24,000
Beginning accounts payable = $206,500
Since, in the given question, it is mentioned that the cost of good sold is 45% of sales.
So,
Cost of Goods Sold (COGS) = 0.45 × $450,000
= $202,500
Hence, the cost of goods sold for next month is expected to be $202,500
Note: we don't considered other things which is mentioned in the question.
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Quarterly Output A $ 3 per pound 16,000 pounds B $ 4 per pound 21,000 pounds C $ 8 per gallon 8,000 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Additional Processing Costs Selling Price A $ 44,000 $ 5 per pound B $ 35,000 $ 8 per pound C $ 22,000 $ 11 per gallon Required: a. Compute the incremental profit (loss) for each product.
Answer:
The incremental profit (loss) for each product is:
A = $-12,000
B = $49,000
C = $41,000
Explanation:
Split off Point: The split off point is that point in which joint products treated separately and sell them as a unique product.
Incremental Cash flow: The incremental cash flow is that cash flow which show the difference between the split off sales and normal sales.
Here, incremental means that if split off sales is greater than normal sales than firm is earning profit else the firm will suffer loss.
Steps to compute the incremental cash flows for each products:
Step 1: First write Additional selling price of all three products
Step 2: Than write the Split off selling price of all three products
Step 3: Now take the difference of selling price
Step 4: After that, multiply step 3 with split off sales
Step 5: Than write the additional sales
Step 6: Compare the two sales and analyse whether firm earns profits or suffer a loss, and finally the increment cash flows come.
The calculation is done in attachment sheet.
Thus, the incremental profit (loss) for each product is:
A = $-12,000
B = $49,000
C = $41,000
On January 1, 2018, Nana Company paid $100,000 for 6,400 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net income of $60,000 for the year ended December 31, 2018. The fair value of the Papa stock on that date was $60 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018?
Answer:
The $384,000 is the amount which will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018
Explanation:
Since in the given question, the Nana company does not have significant influence over Papa company, so the net income, retained earning, paid value would be considered in the calculation part.
The computation of investment reported in the balance sheet of Nana company is shown below:
= Number of shares × fair value per share
= 6,400 shares × $60
= $384,000
Thus, the $384,000 is the amount which will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018
On December 31, Year 2, Case, Inc., had 300,000 shares of common stock issued and outstanding. Case issued a 10% stock dividend on July 1, Year 3. On October 1, Year 3, Case purchased 24,000 shares of its common stock for its treasury and recorded the purchase by the cost method. What number of shares should be used in computing basic earnings per share for the year ended December 31, Year 3?
Answer: the correct answer is 324,000.
Explanation:
The requirement is to determine the number of shares to be used in computing year 2 basic earnings per share (EPS). For EPS purposes, shares of stock issued as a result of stock dividends or splits should be considered outstanding for the entire period in which they were issued. Therefore, both the original 300,000 shares and the additional 30,000 shares (10% × 300,000) are treated as outstanding for the entire year. The 10/1/Y2 purchase of 24,000 treasury shares results in a weighted-average deduction of 6,000 shares (3/12 × 24,000) because the shares were not outstanding for only 3 months during year 2. Therefore, the number of shares for EPS computations is 324,000.
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $38; (ii) $40; (iii) $42? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.)
Answer:
a. 5% b. 5% c. 5%
Explanation: Stocks are the securities issued by the companies to raise capital in securities markets. Dividend is the return that investors get for bearing the risk of ownership.
As we know that,
[tex]Return=\:\frac{dividend}{market\:price}[/tex]
[tex]Return=\:\frac{2}{38}=\:5.26\%=\:5\%\:in\:whole[/tex]
[tex]Return=\:\frac{2}{40}=\:5\%=\:5\%\:in\:whole[/tex]
[tex]Return=\:\frac{2}{42}=\:4.76\%=\:5\%\:in\:whole[/tex]
Indicate all items in the following list that are not consumption goods and services and explain why.Item a: A chocolate barItem b: A ski liftItem c: A golf ballItem d: A shopping mallItem e: A trainItem f: A golf course
Answer: Option B, D , E
Explanation: In simple words, goods which are not used in the production of other goods rather consumed by the individual to satisfy current wants is called consumer goods.
So, form the above explanation we can conclude that a chocolate bar and a golf ball are consumer goods among all options.
.
B. A ski lift will be used continuously by the owner for its business operation. Hence, not a consumer good.
D. A shopping mall cannot be considered a good. It is a fixed asset to the entity owning it. Hence, not a consumer good.
E. A train will continuously used by the organisation owning it for its business purpose. Hence , not a consumer good.
A company that reports segment information had average total assets of $1,530,450 and total net income of $602,700. Segment A had average total assets of $931,800 and segment operating income of $304,300. Segment B had average assets of $598,650 and segment operating income of $298,400. The segment return on assets for Segment A is:
Answer: 0.32 times
Explanation: Return on assets can be defined as the ratio under which companies are evaluated on the basis of total amount of assets investment. It is a ratio that evaluates the profitability of a company, it shows the ability of a company to generate revenue from the assets invested in it.
It can be computed as following :-
[tex]=\:\frac{NET\:INCOME}{AVERAGE\:TOTAL\:ASSETS}[/tex]
[tex]=\:\frac{\$304,300}{\$931,800}[/tex]
= 0.32 times
In general, it is a bad move for a company to produce more of a good or service if, by doing so,a. marginal cost exceeds marginal revenueb. variable costs exceed fixed costsc. demand exceeds supplyd. fixed costs exceed marginal revenue
Answer:
The correct option here is A) marginal cost exceeds marginal revenue
Explanation:
When a company is producing more goods and services, it becomes a bad move because at this point company's marginal cost starts exceeding the marginal revenue , which means with each additional units a company is producing it is losing profit on that unit, so it is better for a company to produce less and try to find that level of output where its marginal cost and revenue are equal because at that level, company would be able to make optimal profits.
It's generally bad for a company to produce more of a product or service if the marginal cost of making an additional unit surpasses the marginal revenue gained from selling that unit. This is because this would mean the company is using its resources inefficiently, possibly leading to a financial loss.
Explanation:In economics and business, it's generally not advantageous for a company to produce more of a good or service if certain conditions are present. Specifically, if the marginal cost of producing an additional unit of the product exceeds the marginal revenue gained from selling that unit, the company would lose money on each additional unit produced.
The marginal cost is the increase in total cost that arises from producing one extra unit of a product, while the marginal revenue is the increase in total revenue that results from selling one extra unit. If marginal cost is greater than marginal revenue, the company is not efficiently allocating its resources and may end up with a financial loss.
Therefore, option a. 'marginal cost exceeds marginal revenue' accurately describes a situation where it would be detrimental for a company to produce more of a product or service. The other options, although relevant to different business situations, do not necessarily indicate a bad move in terms of increased production.
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Which of the following is true?
a.a shift left of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve left as well.
b.a shift right of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve right as well.
c.a change the money wage and other resource prices does not shift the long-run aggregate supply.
d.all of the answers are true.
Answer:
the correct option is c) change in the money wage and other resource prices does not shift the long run aggregate supply
Explanation:
First of all aggregate supply can be defined as the sum total of all the goods and services that are supplied in the economy during a defined period of time.
In the given question the option C is right because it is assumed that in the case of long run aggregate supply , the supply curve tends to remain static because any kind of change in the aggregate demand causes only temporary changes in the total output of the economy and the slope of the curve remains vertical. It is also assumed that the economy is being used at optimal as only factors like labor, capital, and technology can bring in aggregate supply.
Options a) and b) can't be true because if the supply curve is gonna shift , it is first going to shift in short run aggregate supply then long run aggregate supply , not the other way around.
A company purchased a weaving machine for $248,170. The machine has a useful life of 8 years and a residual value of $13,500. It is estimated that the machine could produce 757,000 bolts of woven fabric over its useful life. In the first year, 108,500 bolts were produced. In the second year, production increased to 112,500 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?
Answer:
Depreciation for second year = $34,875
Explanation:
Total amount of depreciation to be charged in useful life = Cost of machine - Residual Value
= $248,170 - $13,500 = $234,670
Total expected units to be produced during the life of machine = 757,000 bolts
Depreciation per unit bolt = $234,670/757,000 = $0.31
When depreciation is based on units of production method, it will be charged based on units of production.
Depreciation for second year = Units produced in second year X Rate of depreciation per unit of production
= 112,500 X $0.31 = $34,875
$34,875
To calculate the depreciation expense for the second year using the units-of-production method, we can multiply the depreciation per unit by the number of units produced in the second year.
Explanation:To calculate the depreciation expense using the units-of-production method, we need to determine the depreciation per unit of production.
Depreciation per unit = (Cost - Residual Value) / Total Units of Production
Depreciation Expense for the second year = Depreciation per unit * Number of Units Produced in the second year.
In this case, the depreciation per unit would be (248170 - 13500) / 757000 = $0.318 per bolt of woven fabric. Therefore, the depreciation expense for the second year would be 0.318 * 112500 = $35,925.
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