Answer:
C. A business plan is a business’s roadmap for the future.
Explanation:
We are given 4 statements and we have to chose the correct statement. Let's analyze these statement one by one.
A. Businesses do not need to document a business plan.
Every business whether small or large must create a business plan. In fact, one of the most important thing for a business to be successful is its detailed business plan which must cover all the important aspects of the business e.g. pricing, revenue model, customer demographics etc. Therefore, option A is NOT a correct statement
B. Established businesses do not create a business plan.
It is equally important for an established business to have a business plan as it is for a startup. Business plan is a vision of the future. If a established business has a well defined business plan, chances of their success and chances of them achieving their goals will be significantly more. Therefore, option B is NOT a correct statement
C. A business plan is a business’s roadmap for the future.
This a true statement. Business plan is termed as a blueprint of success for the business. This means, a business plan lists all the ways, methods by which a business will sale its services/products and achieve its goals set for the future. Therefore, option C is a correct statement.
D. A business plan guarantees a business’s success.
It is true that a well formulated business plan increases chances of success, but it does not guarantee success. This is because there are many other factors for determining the success, one of which is execution of the business plan and ideas. If the business plan is not properly executed, it will be of no use. Therefore, option D is NOT a correct statement.
Answer:
C
Explanation:
A.) The first step is documenting a plan for your business when you decide to start a business.
B.) All established business started with a business plan.
C.) A business plan is literally supposed to be a road map for the future so you know what to do in the future with your business.
D.) All businesses had a business plan and some businesses fail. Nothing guarantees success except for good sales.
Bia garden store makes two types of gazebo. Making a wooden gazebo requires 4 hours of labor while making a metal gazebo requires 10 hours of labor. During the most recent accounting period the company made 2,000 wooden gazebos and 500 metal gazebos. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information: OA. $4 of overhead cost should be allocated to each gazebo regardless of the type. OB. $20.80 of overhead cost should be allocated to each gazebo regardless of the type. O C.$16 of overhead cost should be assigned to each wooden gazebo and $40 of overhead cost should be assigned to each metal gazebo. None of the answers are correct.
Answer:
C.$16 of overhead cost should be assigned to each wooden gazebo and
$40 of overhead cost should be assigned to each metal gazebo
Explanation:
2,000 wooden x 4 hours = 8,000 labor hours
500 metal x 10 = 5,000 labor hours
total hours 13,000
single manufacturing overhead: 52,000 / 13,000 = $4 per labor hours
wooden gazebos: 4hours x $4 = $ 16
metal gazebos: 10 hours x $4 = $40
When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"? Discounted present value. Net realizable value. Net realizable value less a normal profit margin. Replacement cost, Net realizable value, or Net realizable value less a normal profit margin.
Answer:
Replacement Cost
Explanation:
Replacement cost can be described as to the amount of money a business must currently spend to replace an essential asset like a real estate property, an investment security, a lien, or another item, with one of the same or higher value.
In other words, replacement cost definition is the current market price a company would have to pay to replace an existing asset.
"Alpha Corporation has one-hundred full-time non-union employees. What is the minimum number of employees that must be allowed to participate in the company’s defined benefit plan?
Answer:
The minimum number of employees that must be allowed to participate in Alpha Corporation’s defined benefit plan is 40. This is based on the 40% rule explained below.
Explanation:
A traditional form of a defined benefit plan is the final salary plan, under which the pension paid is equal to the number of years worked, multiplied by the member's salary at retirement, multiplied by a factor known as the accrual rate. The final accrued amount is available as a monthly pension or a lump sum.
It is usually offered to all employees who are at least 21 years of age and who worked at least 1,000 hours for the employer in a previous year. Two years of service may be required for participation as long as the employee will be 100 percent vested immediately when he or she enters the plan.
Minimum Participation in a Defined Benefit Plan is 40% of qualifying employees. Since Alpha Corporation has 100 full time non union employees, at least 40 of them must be allowed to participate in the company's defined benefit plan.
Suppose that instead of funding the $100 million investment in 12 percent British loans with CDs issued in the United Kingdom, the FI manager in problem 20 hedges the foreign exchange risk on the British loans by immediately selling its expected one-year pound loan proceeds in the forward FX market. The current forward one-year exchange rate between dollars and pounds is $1.53/£1. a. Calculate the return on the FI’s investment portfolio (including the hedge) and the net return for the FI over the year. b. Will the net return be affected by changes in the dollar for pound spot foreign exchange rate at the end of the year?
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Mike Samson is a college football coach making a base salary of $650,400 a year ($54,200 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the FICA base amount is $128,400. 1. Compute how much will be withheld during the year for Coach Samson’s Social Security and Medicare.
Answer:
The amount that will be withheld during the year for Coach Samson’s is $7,960.80 for Social Security and $9,430.80 Medicare.
Explanation:
In order to calculate how much will be withheld during the year for Coach Samson’s Social Security and Medicare, we would have to make the following calculations:
Accoring to the given data we have that the FICA base amount is $128,400
Therefore, Ammount to be withheld for Social Security= $128,400× 6.2%
Ammount to be withheld for Social Security=$7,960.80
Ammount to be withheld for Medicare= $650,400× 1.45%
Ammount to be withheld for Medicare= $9,430.80
The amount that will be withheld during the year for Coach Samson’s is $7,960.80 for Social Security and $9,430.80 Medicare.
When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's investment cash flows as: Group of answer choices a simple average of the capital components costs a sum of the capital components costs they apply to each asset as they are purchased with their respective forms of debt or equity a weighted average of the capital components costs
Answer:
A Weighted average of the capital components costs.
Explanation:
The weighted average cost of capital (WACC) is, in simple language, the amount a corporation is required to reimburse on aggregate for all its security investors to fund its capital. The WACC is normally applied to by the cost of debt for the company. Crucially, it is determined by the outside market rather than by administrators.
Companies borrow capital from a variety of sources:: preferred stock, common stock, regular debt, contingent debt, transferable debt, options, shares, pension obligations, employee stock options, government grants, etc. Various securities, representing various sources of capital, are supposed to yield various returns.
Earned $16,200 of cash revenue. Borrowed $12,000 cash from the bank. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, 2018, had a one-year term and an 8 percent annual interest rate.
Required
A.What is the amount of interest expense to record for 2018?
B.What amount of cash was paid for interest in 2018?
C.Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I), decreases (D), or does not affect (NA) each element of the financial statements. In the Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example.
Answer:
A. The amount of interest expense to record for 2018 is $320, calculated as follows: $12,000 x 8% x 4/12 = $320.
B. No amount of cash was paid for interest in 2018; i.e. = $0.00
C. Effect of each transaction on balance sheet, income statement, and statement of cash flows:
1. Cash Revenue of $16,200
Balance Sheet - Cash and Retained Earnings are increased by $16,200.
Income Statement - Revenue is increased by $16,200.
Statement of Cash Flows: Cash inflows are increased by $16,200. It is an operating activity (OA)
2. Bank Note Payable of $12,000 with accrued interest of $320 for 2018:
Balance Sheet - Cash and Notes Payable are increased with $12,000; Interest on Notes Payable is increased by $320 and Retained Earnings decreased by $320.
Income Statement: Net Income is decreased by $320.
Statement of Cash Flows: Cash inflows are increased by $12,000. It is a financing activity (FA).
Explanation:
1. Cash revenue increases net income and Cash Account balance, and reflects positively on the cash flows for operating activities.
2. Notes Payable increases Cash Account balance (an asset) and Notes Payable (a liability). It also increases the cash inflow for financing activities.
3. Accrued Interest on Notes Payable increases liability and decreases the net income, which reflects negatively on the Retained Earnings (Equity). It does not affect the statement of cash flows as no disposal had been made yet.
Suppose the marginal propensity to consume is 0.75 and the government spending multiplier is 4. If the government decreases its purchases by $100 million, the aggregate demand curve will shift to the by $ million. If the government increases income taxes by $100 million, the aggregate demand curve will shift to the by $ million.
Final answer:
The aggregate demand curve will shift to the left by $400 million if government purchases decrease by $100 million, and it will shift to the right by $300 million if income taxes increase by $100 million.
Explanation:
The government spending multiplier is a number that indicates how much change in aggregate demand would result from a given change in government spending. If the government decreases its purchases by $100 million, the aggregate demand curve will shift to the left by $400 million. This is because the initial decrease in government spending will lead to a decrease in income, which in turn decreases consumption. The opposite is true for an increase in income taxes by $100 million. The aggregate demand curve will shift to the left by $300 million.
Rent for the month $ 1,650
Monthly take-home salary $ 3,185
Spending for food $ 845
Cash in checking account $ 650
Savings account balance $ 2,090
Balance of educational loan $ 3,360
Current value of automobile $ 9,300
Telephone bill paid for month $ 165
Credit card balance $ 335
Loan payment $ 280
Auto insurance $ 430
Household possessions $ 5,400
Video equipment $ 2,850
for electricity $ 190
Lunches/parking at work $ 280
Donations $ 360
Calculate the total assets and total liabilities
Answer:
Personal assets are basically the valuable things that a person possesses. They include both physical assets (e.g. car) or financial assets (e.g. checking account).
TOTAL ASSETS
Checking account $650
Savings account $2,090
Automobile $9,300
Household possessions $5,400
Video equipment $2,850
Total $20,290
Personal liabilities are all the loans (e.g. student loans), debts, unpaid service, or unpaid taxes that a person might have.
TOTAL LIABILITIES
Educational loan $3,360
Credit card $335
Total $3,695
This person's net worth = assets - liabilities = $20,290 - $3,695 = $16,595
Many economists believe that the market for wheat in the United States is an almost perfectly competitive market. If one firm discovers a technology that makes its wheat taste better and have fewer calories than all other wheat offered in the market, the wheat market would become less competitive becausea. there would no longer be many buyers and many sellers of wheat.
b. it would no longer be easy to enter and exit the existing wheat market.
c. the products would no longer be similar in the wheat market.
d. the government would want to intervene.
e. individuals would not want to switch products.
Answer:
Many economists believe that the market for wheat in the United States is an almost perfectly competitive market. If one firm discovers a technology that makes its wheat taste better and have fewer calories than all other wheat offered in the market, the wheat market would become less competitive because the products would no longer be similar in the wheat market- Option c.
Explanation:
Option c is the correct answer- the products would no longer be similar in the wheat market, the reason being that people with different taste preferences would prefer either of the two kinds of wheat available in the market, therefore making them less concentrated.
The US wheat market would become less competitive if one firm's product becomes superior to others as it disrupts the uniformity of products demanded by a perfectly competitive market. This corresponds to the multiple-choice option 'c'.
Explanation:In general, economists consider the US wheat market to be highly competitive. Since the question posits a hypothetical situation where one firm devises a new technology that makes its wheat better tasting and lower in calories, the wheat market may become less competitive. This is because the products within the wheat market would no longer be similar. According to the principles of perfect competition, for a market to be perfectly competitive, all products offered must be similar or identical. This option aligns with choice c, as that firm's wheat becomes distinctively superior, disrupting the uniformity that characterizes a perfectly competitive market.
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Keck Co. had 300 units of product A on hand at January 1, 2017, costing $21 each. Purchases of product A during January were as follows:Date Units Unit CostJan. 10 400 $2218 500 2328 200 24A physical count on January 31, 2017 shows 400 units of product A on hand. The cost of the inventory at January 31, 2017 under the LIFO method isa. $9,400.b. $8,900.c. $8,500.d. $8,200.
Answer:
c. $8,500
Explanation:
The computation of the ending inventory using the LIFO method is shown below:
Since it is given that 400 units of product A are on hand which reflects the ending inventory units
So
= 300 units × $21 + 100 units × $22
= $6,300 + $2,200
= $8,500
The 100 units depicts the remaining units i.e
= 400 units - 300 units
= 100 units
First we take the Jan 1 units than the remaining units would take from Jan 10
Dexter Metals, paid its first annual dividend yesterday in the amount of $0.18 a share. The company plans to double each annual dividend payment for the next 3 years. After that time, it plans to pay $1.25 a share for 2 years than then pay a constant dividend of $1.60 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 10.24 percent
Answer:
The price per share of this stock is $13.20
Explanation:
Using the dividend discount model, we can calculate the price per share today of this stock. The DDM values a stock based on the present value of the expected future dividends of the stock discounted using the required rate of return on the stock. The price o=per share today for this stock is,
P0 = 0.18 * (1+1) / (1+0.1024) + 0.18 * (1+1)^2 / (1+0.1024)^2 +
0.18 * (1+1)^3 / (1+0.1024)^3 + 1.25 / (1+0.1024)^4 + 1.25 / (1+0.1024)^5 +
(1.60 / 0.1024) / (1+0.1024)^5
P0 = $13.20
Both Bond Bill and Bond Ted have 9.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000.
Answer:
Bond Bill : -10.94 %Bond Ted: -22.47%Explanation:
I think your question is missed of key information, allow me to add in and hope it will fit the original one.
Both Bond Bill and Bond Ted have 9.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds?
My answer:
Bond BillNew yield will be = 9.4℅ + 3℅ = 12.4℅
Semi annual yield = 12.4/2 = 6.2℅
Nper: 5*2 =10
Coupon rate: 9.4%/2 = 4.7% semiannual
=> Coupon payment: 4.7%*1,000 = $47
Using present value formula in excel
pv=(rate,nper,pmt,fv)
pv= (6.2%, 10, 47, 1000)
pv= 890.64
=> Therefore, ℅ change =
(890.64 - 1000) / 1000 = -10.94%
Bond TedNew yield will be = 9.4℅ + 3℅ = 12.4℅
Semi annual yield = 12.4/2 = 6.2℅
Nper: 22*2 =44
Coupon rate: 9.4%/2 = 4.7% semiannual
=> Coupon payment: 4.7%*1,000 = $47
Using present value formula in excel
pv=(rate,nper,pmt,fv)
pv= (6.2%, 44, 47, 1000)
pv = $775.21
=> Therefore, ℅ change :
(775.21 - 1000) / 1000 = -22.47%
The January 28, 2017 (fiscal year 2016) financial statements of Caleres, Inc. reported the following information (in thousands): 2016 2015 Cost of sales $1,517,397 $1,529,527 Inventories, net 585,764 546,745 LIFO reserve 4,345 4,094 The 2016 average days inventory outstanding is:
Answer:
136.20 days
Explanation:
Given that,
Opening inventory = 546,745
Closing inventory = 585,764
Cost of goods sold in 2016 = $1,517,397
Average inventory:
= (Opening inventory + Closing inventory) ÷ 2
= (546,745 + 585,764) ÷ 2
= 1,132,509 ÷ 2
= 566,254.5
Therefore, the average days inventory outstanding is calculated by the following formula:
= Average inventory ÷ (COGS/365 days)
= 566,254.5 ÷ ($1,517,397/365)
= 566,254.5 ÷ 4,157.3
= 136.20 days
On January 1, Year 2 Grande Company had a $15,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $66,000 of service on account. The company collected $62,500 cash from accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account. What is the amount of cash flow from operating activities that would appear on the Year 2 statement of cash flows? Multiple Choice $62,500 $61,250 $66,000 $51,300
Answer:
$62,500
Explanation:
As we know that cash flow statement records the cash inflow and cash outflow and ignored all other transactions which are not made in cash
Since in the question it is given that $62,500 is cash collected from account receivable and the same is to be shown in the operating activities in a positive sign that indicates an inflow of cash
For financial reporting purposes, an advance payment for services is NOT recorded as a revenue, but rather recorded as a(n) . It will be recognized as a revenue when it is earned. For tax reporting purposes, an advance payment is taxed immediately because the payment meets the - test. However, there is an exception which allows the prepaid income to be recognized in the following the receipt if certain conditions are met
Answer:
The correct words to fill the gaps are: liabilities,all events,year
Explanation:
The receipt of advance payment for services is not seen as revenue because the beneficiary of such receipt is yet to perform the required services that would enable to recognized such amount as revenue,since revenue is not earned the party receiving the payment has rendered the required services.
However,for tax reporting purposes the advance receipt of cash can be charged to tax without delay if the payment meets all events test.
That means all events which allow an accrual tax payer to report income or expenses have been met.
Final answer:
In financial reporting, advance payments for services are recorded as 'deferred revenue,' a liability, until the services are performed. For tax purposes, they are taxed immediately under the all-events test, with some exceptions.
Explanation:
For financial reporting purposes, an advance payment for services is not recorded as a revenue, but rather recorded as a liability.
This liability is often called deferred revenue or unearned revenue because it represents a claim on the entity's resources for services that have yet to be provided. It is recognized as revenue when the service is performed and the revenue is earned, adhering to the accrual concept and the matching principle of GAAP.
Deferred revenue is distinct from prepaid items like property taxes in government accounting, which are considered non-exchange transactions and recorded differently.
For tax reporting purposes, an advance payment is taxed immediately because the payment meets the all-events test. However, there is an exception which allows the prepaid income to be recognized in the year following the receipt if certain conditions are met.
This reflects differences in the timing of income recognition for accounting and tax purposes.
When considering non-profit organizations, the accrual concept still applies; donations are seen as payments for service in that they enable the non-profit to pursue its mission. Thus, requirements such as donor restrictions and the fulfillment of conditions tied to government grants have to be met before recognition of revenue in financial reports.
Suppose that JPMorgan Chase sells call options on $1.35 million worth of a stock portfolio with beta = 1.70. The option delta is 0.70. It wishes to hedge its resultant exposure to a market advance by buying a market-index portfolio. Suppose it use market index puts to hedge its exposure. The index at current prices represents $1,000 worth of stock. a. How many dollars’ worth of the market-index portfolio should it purchase to hedge its position?
Answer:
Particulars Amount Explanation
Call options 1350000
Beta of stock 1.7
Delta 0.7
Market change 1% Implied stock change is 1.7
Stock changes by 1.7 1.19 Implied exposure on call
options on stock ( ie 1.7*0.7)
Amount of exposure 1606500 Derived by multiplying
1.19*1,350,000
Hence market index portfolio worth $1,606,500 should be bought , however the market index portfolio trade in multiples of 1000 hence $1,607,000 worth should be obtained to hedge the exposure
Explanation:
Classifying events as asset source, use, or exchange Vera Company experienced the following events during its first year of operations.
1. Acquired $16,000 cash from the issue of common stock.
2. Paid $3,500 cash for salary expenses.
3. Borrowed $10,000 cash from New South Bank.
4. Paid $6,000 cash to purchase land.
5. Provided boarding services for $10,500 cash.
6. Acquired an additional $1,000 cash from the issue of common stock.
7. Paid $2,400 cash for utilities expense.
8. Paid a $1,500 cash dividend to the stockholders.
9. Provided additional services for $6,000 cash.
10. Purchased additional land for $2,500 cash.
11. The market value of the land was determined to be $24,000 at the end of the accounting period.
Required
Classify each event as an asset source, use, or exchange transaction.
Answer:
Vera Company
1. Acquired $16,000 cash from the issue of common stock. [ Exchange; Cash balance increases while Owners Equity also increases. The net effect is zero ]
2. Paid $3,500 cash for salary expenses [ Asset Use; because we deplete Cash as an asset to pay for an expense item]
3. Borrowed $10,000 cash from New South Bank. [ Exchange. We got cash (an asset) but created a liability through bank loan, net effect is zero]
4. Paid $6,000 cash to purchase land. [ Exchange; depleted Cash (an Asset) to obtain another Asset (Land) net effect is zero]
5. Provided boarding services for $10,500 cash. [ Asset Source; income is driving up our cash balance (an Asset)]
6. Acquired an additional $1,000 cash from the issue of common stock. [ Exchange; Cash balance increases while Owners Equity also increases. The net effect is zero ]
7. Paid $2,400 cash for utilities expense. [ Asset Use; because we deplete Cash as an asset to pay for an expense item]
8. Paid a $1,500 cash dividend to the stockholders. [ Asset Use; because we deplete Cash as an asset to pay for dividend to shareholders]
9. Provided additional services for $6,000 cash. [ Asset Source; income is driving up our cash balance (an Asset)]
10. Purchased additional land for $2,500 cash. [ Exchange; depleted Cash (an Asset) to obtain another Asset (Land) net effect is zero]
11. The market value of the land was determined to be $24,000 at the end of the accounting period. :[ Asset Source; improvement in fair valuation of Asset]
Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $19, direct labor $7, variable manufacturing overhead $2, fixed manufacturing overhead $4, variable selling and administrative expenses $5, and fixed selling and administrative expenses $7. Using a 30% markup on total per unit cost, compute the target selling price.
Answer:
$57.20
Explanation:
Total unit cost = $19 + $7 + $2 + $4 + $5 + $7 = $44
Target selling price = Total unit cost × (1 + Markup)
Since markup percentage is 30%, or 0.3, we therefore have:
Target selling price = $44 × (1 + 0.3) = $57.20
Therefore, the target selling price is $57.20.
The target selling price for Gundy Corporation's area rugs, using a 30% markup on the total per unit cost of $44, is calculated to be $57.20.
To compute the target selling price for Gundy Corporation's area rugs, we first need to calculate the total per unit cost by adding all the given costs (direct materials, direct labor, variable manufacturing overhead, fixed manufacturing overhead, variable selling and administrative expenses, and fixed selling and administrative expenses). Then we apply a 30% markup on the total per unit cost to find the target selling price.
Direct materials: $19Direct labor: $7Variable manufacturing overhead: $2Fixed manufacturing overhead: $4Variable selling and administrative expenses: $5Fixed selling and administrative expenses: $7The total per unit cost is calculated as $19 + $7 + $2 + $4 + $5 + $7 = $44. The target selling price with a 30% markup is then calculated as $44 * 1.30 = $57.20.
Thus, the target selling price per unit for Gundy Corporation's area rugs is $57.20.
Ultimately, the study of international business is no different from the study of domestic business. Thus, there is no point in having a separate course on international business." Evaluate this statement. Is it true? Why? Why not?
Answer:
Explanation:
Where the culture and the mode of living are completely different, international business is going beyond boundaries.
People of single culture and region are been dealt with in the domestic business, and it is easy to know what the customer needs. Many cultures are been dealt with when it comes to international business, and there is a need for product customization as per the location. This would require a team that manages these issues in each region.
Hence, when compared to domestic business, the business will be in a large mode. Thus, there is a separate course for international business which helps us to reach the heights we require to see the whole world.
Based on the explanation above, the statement given in the question is false.
The assertion that the study of international business is no different from the study of domestic business is incorrect. International business involves dealing with different cultural expectations, diverse legal systems, diverse market conditions, multiple economic systems, and logistical challenges that are unique to operating across borders. Therefore, there is a clear need for separate courses on international business.
Explanation:The premise that the study of international business is no different from the study of domestic business implies both disciplines require similar skills and knowledge. However, this is not entirely accurate. While there may be similarities, there are also many distinct elements that differentiate the two.
First, international business often involves dealing with different cultures, legal systems, and market conditions. Understanding these factors is crucial when trying to achieve success in international markets. For instance, successful marketing strategies in one country may not work in another due to cultural differences.
Second, in domestic business, one deals with a single economic, social and political environment. However, in international business, one has to deal with varying economic systems, regulatory structures, and political climates. There's also the issues of dealing with different currencies and complex tax regulations in international business.
Lastly, there are logistical challenges and strategic considerations unique to international businesses such as handling international logistics, managing subsidiaries in different countries, and dealing with geopolitical risks. Given the complexities and differences highlighted, it is clear that there is a need for separate, dedicated courses on international business.
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M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. One of the components has an annual demand of 265 units, and this is constant throughout the year. Carrying cost is estimated to be $1.25 per unit per year, and the ordering cost is $19 per order.
a) To minimize cost, how many units should be ordered each time an order is placed?
b) How many orders per year are needed with the optimal policy?
c) What is the average inventory if costs are minimized?
d) Suppose that the ordering cost is not $19, and Cotteleer has been ordering 125 units each time an order is placed. For this order policy (of Q = 125) to be optimal, determine what the ordering cost would have to be.
Answer and Explanation:
The computation is shown below:
a. The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
[tex]= \sqrt{\frac{2\times \text{265}\times \text{\$19}}{\text{\$1.25}}}[/tex]
= 90 units
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= 265 ÷ 90 units
= 3 orders per year
c. The average inventory is
= Economic order quantity ÷ 2
= 90 units ÷ 2
= 45 units
d. Now in this we have to find out the ordering cost which is shown below by applying the economic order quantity formula
[tex]Economic\ order\ quantity = \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex][tex]125\ units = \sqrt{\frac{2\times \text{265}\times \text{ordering\ cost}}{\text{\$1.25}}}[/tex]
After squaring both the sides, the ordering cost is $36.85
A company produces two products, A and B. It has limited capacity but unlimited demand so it can sell as many of either product as it produces. Product A requires 2 machine hours per unit to produce, and Product B requires 1 machine hour to produce. Product A sells for $6 per unit and has variable costs of $2 per unit; Product B sells for $5 per unit and has variable costs of $2 per unit. What is the most profitable sales mix for the company?
Answer:
The company should use all of its limited machine hour to produce only product B. This will make it maximize profit
Explanation:
Whenever a company is faced with a limiting factor i.e a resource in short supply, the company should allocate the resource to the product with he highest contribution per unit of the scare resource
Product Cont/unit machine hr /unit cont/hr Ranking
A 6-2 = $4 per unit 2 hours $2 per hour 2nd
B 5-2 = $3 per unit 1 hour $3 per hour 1st
The company should use all of its limited machine hour to produce only product B. This will make it maximize profit
You own a farm, you hire labor and capital to produce apples. The marginal product of the last unit of labor input is 15 and the marginal product of the last unit of capital input is 45. The market wage for labor is $8. If you are using the optimal combination of inputs, then the price of capital is _______.
a. $45
b. $3
c. $24
d. $360
Answer:
c. $24
Explanation:
At the optimal combination, the ratio between the marginal product for the last units of capital and labor must equal the ratio between the price of capital and the price of labor.
If Labor costs $8 and has a marginal product of 15, since capital has a marginal product of 45, the price of capital is:
[tex]\frac{45}{15}=\frac{C}{\$8}\\ C=\$24[/tex]
Price of capital is $24.
Answer:
C-$24
Explanation:
At optimal combination of inputs that is at the equilibrium level the ratio of marginal productivity of labor to the marginal productivity of capital is equal to the ratio of price of labor(wage) to the price of capital(rent). That is ,
MPL/MPK = W/R
WHERE , MPL = MARGINAL PRODUCTIVITY OF LABOR
MPK = MARGINAL PRODUCTIVITY OF CAPITAL
W = WAGE
R = RENT
SO , AS GIVEN , 15/45 = 8/R
SO , R = 8*3 = $24.
SO ANSWER IS OPTION C.$24
A client in the 33 percent marginal tax bracket is comparing a municipal bond that offers a 5 percent yield to maturity and a similar-risk corporate bond that offers a 6.25 percent yield. Which bond will give the client more profit after taxes
Answer:
The municipal bond
Explanation:
5%/1-.33 = 7.46
1.7.46>6.25, so the client should take the municipal bond
Calculate the value of a bond that matures in 12 years and has a $ 1 comma 000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 11 percent.
Answer:
Price of bond=$ 1,129.847
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
Step 1
PV of interest payments
annul interest payment
= 13% × 1000 = 130
PV = A × ( (1- (1+r)^(-n))/r
Annual yield - r= 11% per annum
Total period to maturity- n = 12 years
PV of interest
=130× (1- 1.11^(-12) )/0.11
= 844.00
Step 2
PV of Redemption Value
= 1,000 × (1.11)^(-12)
= 285.84
Step 3
Total PV = 844.00 + 285.84 = 1129.847123
Price of bond=$ 1,129.8471
Dakota Inc. and Jersey & Company are two large companies that manufacture and sell equipment used in the construction, mining, agricultural, and forestry industries. The companies reported the following data (in millions) for two recent years:
Dakota Jersey
Year 2 Year 1 Year 2 Year 1
Net income $2,182 $3,715 $1,925 $3,187
Average number of common shares outstanding 594 599 334 363
Required:
a. Determine the earnings per share in Year 2 and Year 1 for each company. Round your answers to two decimal places.
Answer and Explanation:
The computation of the earning per share is shown below:
As we know that
Earning per share = Net income ÷ Average number of common shares outstanding
For year 1
Dakota
= $3,715 ÷ 599 shares
= $5.30 per share
Jersey
= $3,187 ÷ 363 shares
= $8.78 per share
For year 2
Dakota
= $2,182 ÷ 594 shares
= $3.67 per share
Jersey
= $1,925 ÷ 334 shares
= $5.76 per share
"When ClubCorp had an attrition problem, they hired a market research company to get to the bottom of things. What two things did they discover were most important to members if they were to remain members?"
Things did they discover were most important to members if they were to remain members are Cost of Membership and Benefits Of being Member.
What is Membership ?The condition or standing of membership; the group of people who make up a sizable organization. Mathematics: the relationship between a set's or class's element and the set or class as a whole.
A membership model is a sort of business strategy in which customers pay a regular charge to use the value a company produces. It offers the layout for various membership tiers, revenue streams, marketing initiatives, events and conferences, and financial arrangements.
The advantages, services, and access that members get as part of their membership are known as member benefits. To put it another way, these are the benefits that members receive in return for joining the organization and, if necessary, paying membership dues.
Here are some common characteristics. Effective communication is a successful membership organization's key component. Focus on the information that members want and need frequently, and then give it to them – a process made easier by modern technology.
Learn more about Membership here
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# SPJ 2
Lambert Company acquired machinery costing $110,000 on January 2, 2016. At that time, Lambert estimated that the useful life of the equipment was 6 years and that the residual value would be $15,000 at the end of its useful life. Compute depreciation expense for this asset for 2016, 2017, and 2018 using the a. Straight-line method b. Double-declining balance method C. Assume that on January 2, 2018, Lambert revised its estimate of the useful life to 7 years and changed its estimate of the residual value to $ 10,000. What effect would this have on depreciation expense in 2018 for each of the above depreciation methods?
Answer:
Depreciation expense for 2016 2017 2018
Method: Straight-line $15,833 $15,833 $15,833
Double-declining $36,663 $24,443 $16,296
The revision of the estimates at the beginning of 2018 would lead to lower yearly depreciation expense.
Explanation:
(a) Under straight-line method, depreciation expense is (cost - residual value) / No of years = ($110,000 - $15,000) / 6 years = $15,833 yearly depreciation expense. This depreciation expense of $15,833 applies to Years 2016, 2017 and 2018. Accumulated depreciation for those years is $15,833 x 3 years $47,499.
(b) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:
Double declining method = 2 X SLDP X BV
SLDP = straight-line depreciation percentage
BV = Book value
SLDP is 100%/6 years = 16.67%, then 16.67% multiplied by 2 to give 33.33%
At Year 2016, 33.33% X $110,000 = $36,663
At Year 2017, 33.33% X $73,337 ($110,000 - $36,663) = $24,443
At Year 2018, 33.33% X $48,894 ($73,337 - $24,443) = $16,296
Accumulated depreciation expense for Years 2016 to 2018, under this method, is $77,402 (addition of all the yearly depreciation).
(c) If after 2 years, the revised estimated useful life becomes 7 years and the residual value is $10,000, depreciation would be calculated as follows:
Under the straight-line method, NBV (net book value) at the end of 2017 is: $110,000 - $15,833 x 2 years = $78,334
Depreciation expense is: ($78,334 - $10,000) / 7 years = $9,762 (decrease in 2018 yearly depreciation charge)
Under the double-declining method, SLDP is 100%/7 years = 14.29%, then multiplied by 2 to give 28.57%.
At Year 2018, 28.57% X $48,894 ($73,337 - $24,443) = $13,969 (decrease in 2018 yearly depreciation charge)
Final answer:
Depreciation expense for Lambert's machinery is calculated using straight-line and double-declining balance methods. In 2018, a revision of estimates affects the straight-line method, resulting in a new rate, while the double-declining method remains based on the original estimation unless materially impacted.
Explanation:
Lambert Company must calculate the depreciation expense for machinery acquired in 2016 using various methods, and understand the impact of revised estimates in 2018.
a. Straight-Line Depreciation Method:
Original cost: $110,000
Residual value: $15,000
Useful life: 6 years
Depreciation expense [(Original cost - Residual value) / Useful life]:
[(110,000 - 15,000) / 6] = $95,000 / 6 = $15,833.33 per year for 2016 and 2017.
b. Double-Declining Balance Method:
2016: 2 x (1/6) x $110,000 = $36,666.672017: 2 x (1/6) x ($110,000 - $36,666.67) = $24,444.44In 2018, with the revised estimate of 7 years total useful life and a residual value of $10,000, the straight-line depreciation would be recalculated over the remaining 5 years as follows:
(Original cost - Accumulated depreciation - New residual value) / New remaining useful life: ($110,000 - $31,666.67 - $10,000) / 5 = $68,333.33 / 5 = $13,666.67 for 2018.
c. The double-declining balance method would not change for 2018 as it is typically recalculated each year based on the book value at the start of the year and the original useful life of the asset, unless there is a significant adjustment due to impairment or change in estimated useful life.
Rick Alexander is a master builder who spent three decades running a successful home-restoration business in Connecticut. When his elderly parents fell ill in 2008, he gave up his business and moved to Florida to look after them. He thought it would be easy to find work-after all, he had a certified trade and more than 30 years' experience. He looked first for jobs as a supervisor at construction sites, but didn't find anything Lowering his sights, he next looked for work at wholesalers and lumberyards, and then he applied for any job at hardware stores. Still he experienced a constant stream of rejections. He tried to start his own business, but couldn't generate enough sales to make it profitable. Tired and frustrated, Rick Alexander gave up looking for work For each of the following situations, is Rick Alexander counted as employed, unemployed, or not in the labor force by the Bureau of Labor Statistics? a. Alexander is self-employed in his old job as a carpenter According to the Bureau of Labor Statistics. he is counted as Kiatosend b. Alexander moves to Florida and begins looking for work According to the Bureau of Labor Statistics, he is counted asick to seleciv According to the Bureau of Labor Statistics, he is counted as CTOsee According to the Bureau of Labor Statistics, he is counted as ec o According to the Bureau of Labor Statistics, he is counted as c. Alexander feels discouraged looking for work and stops anplying for jobs d Alexander starts looking for work again e. Alexander starts work at a new job (e employed unemployed not in the labor force
Answer:
a. Employed
(As he have a job)
b. Unemployed
(As he doesn't have a job but is looking for one)
c. not in labor force
(He neither have a job nor is looking for a job, so he is not a part of labor force)
d. Unemployed
(As he is looking fir a job)
e. Employed
(As he is working)
Crane Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $122$112$97$92$112$92 Cost 778282825137 Cost to complete 313126363131 Selling costs 101810201020 Using the LCNRV rule, determine the proper unit value for balance sheet reporting purposes at December 31, 2020, for each of the inventory items above.
Answer:
D $77
E $63
F $61
G $36
H $51
I $37
Explanation:
LCNRV means use the lower-of-cost-or-net-realizable-value method to value the closing items of inventory which are products D,E,F,G,H and I
Cost implies the original invoice price of the items of inventory
NRV is the estimated selling price less costs to sell and costs to complete as computed in the attached excel file.
Finally I chose as a unit value for each product the lower of cost and NRV