Answer:
1. Is exercising influence.
2. Reward power.
3a. Referent power.
3b. A, B and D.
4a. Make people like you.
4b. Reward the behaviors you want.
5. A. The best managers use a variety of influence tactics.
Explanation:
1. When a manager uses relationships and formal authority to cause other people in the organization to change their behavior, the manager is exercising influence.
2. The homeroom teacher has reward power because she can choose to give the best-behaving students passes to the school library, which students find a more pleasant place to study than the classroom.
3a. Jeffrey has 20 years of management experience, and he can answer any question. Because Jeffrey is one of the most knowledgeable managers in the company, people naturally follow his advice when making complicated decisions. The type of power used by Jeffrey is referent power.
3b. The three (3) common sources of power are;
I. Network of relationships.
II. Personal effort.
III. Information.
4a. A real estate agent gets new clients by being known as a "good guy" whose clients trust and respect him. The type of influence principle here is, make people like you because he is termed a "good guy" meaning he his trustworthy, respectful and nice. Hence, people would like his personality and by extension be his clients.
4b. A parent smiles at a child whenever the child is being quiet. In turn, the child is quiet more often. The type of influence principle used here is, reward the behaviors you want because the parent is happy that the child isn't crying or disturbing. Therefore, to reinforce the child's quietness; the parent smiles at the child.
5. When discussing influence tactics with your managers, you should tell them that: the best managers use a variety of influence tactics. In order to be able to lead your subordinates effectively, efficiently and successfully as a manager, you will have to know how and when to use a variety of influence tactics such as rational persuasion, consultation, ingratiation, legitimating, pressure, personal appeals, coalitions, exchange and inspirational appeals depending on the context or situation.
Hence, the more tactics you have as a manager, the higher your chances of achieving your influence goals.
Peter has opened a retirement investment account and plan to contribute $6,000 at the end of each year to his account for 30 years. He wants to retire when he has $1 million in the account. What expected annual rate of return must earn to have $1 million in his account?
Answer:
1.92
Explanation:
Using the compound interest formula
A= P [ (1-i)^n-1 (where A= 1,000,000, P= 6000, i= ?, n= 30)
1000000 = 6000 [ (1 - i)^30-1
1000000 = 6000 [ (1 - i)^29
1000000 = (6000 - 6000i)^29
1000000/6000 = (6000/6000 -6000i/6000)^29
= 166.66 = i^29
= 29✓166.66 = ✓i^29
= 1.92 = i
Crystal Apple Sales Company began 2014 with cash of $2,000, inventory of $3,600 (200 crystal apples that cost $18 each), $2,500 of common stock, and $3,100 of retained earnings. The following events occurred during 2014.
1. Crystal Apple purchased additional inventory twice during 2018. The first purchase consisted of 800 apples that cost $20 each, and the second consisted of 1,200 apples that cost $24 each. The purchases were on account.
2. The company sold 2,040 apples for cash at a selling price of $40 each.
3. The company paid $44,800 cash on accounts payable for inventory purchases.
4. Crystal Apple paid $26,000 cash for operating expenses.
5. Assume an income tax rate of 30 percent. Crystal Apple paid income tax expense in cash.
Required:
a. Determine the ending inventory and cost of goods sold using the three different cost flow assumptions: FIFO, LIFO, and Weighted Average.
b. Prepare an income statement, a balance sheet, and a statement of cash flows under each of the three cost flow assumptions.
Answer and Explanation:
a. The computation of ending inventory and cost of goods sold using the three different cost flow assumptions: FIFO, LIFO, and Weighted Average is shown below:-
Cost of goods sold = (200 × $18) + (800 × $20) + (1,040 × (2,040-200-800)
= (200 × $18) + (800 × $20) + (1,040 × $24)
= $3,600 + $16,000 + $24,960
= $44,560
Ending Inventory Under FIFO = (1,200 - 1,040) × (2,040-200-800)
= 160 × $24
= $3,840
Under LIFO method
Cost of goods sold is
= (1,200 × $24) + (800 × $20) + (40 × $18)
= $28,800 + $16,000 + $720
= $45,520
Ending Inventory Under LIFO is
= (200 - 40) × $18
= 160 × $18
= $2,880
Weighted Average cost flow Assumption
Weighted Average cost per apple = Cost of Beginning inventory and purchase ÷ Total apple available
Cost of Beginning inventory and purchases is
= (200 × $18) + (800 × $20) + (1,200 × $24)
= $3,600 + $16,000 + $28,800
= $48,400
Total apples available is
= 200 + 800 + 1,200
= 2,200
Weighted Average cost per apple is
= $48,400 ÷ 2,200
= $22
Cost of goods sold is
= 2,040 × $22
= $44,880
Ending Inventory is
= 160 × $22
= $3,520
b. The Preparation of income statement, a balance sheet, and a statement of cash flows under each of the three cost flow assumptions is prepared below:-
Income Statement Amount
Sales (2,040 × $40) $81,600
Less: Cost of goods sold ($44,560)
Gross Profit $37,040
Less: Operating Expenses ($26,000)
Income before income taxes $11,040
Less: Income tax (30% × $11,280) ($3,312)
Net Income $7,728
Balance Sheet
Assets
Cash $9,488
Inventory $3,840
Total Assets $13,328
Liabilities and Stockholder's Equity
Common Stock $2,500
Retained Earnings $10,828
Total Liabilities and Equity $13,328
Working note
cash = (opening + Sales - Purchases - Operating expenses - Income tax expenses )
= $2,000 + $81,600 - $44,800 - $26,000 - $3,312
= $9,488
Retained earning = (Opening + Net Income)
= $3,100 + $7,728
= $10,828
Statement of Cash Flow
Cash Flow from Operating Activities
Cash Sales $81,600
Payment to Accounts Payable ($44,800)
Operating Expenses ($26,000)
Income tax paid ($3,312)
Net Increase in cash and
cash equivalents $7,488
Add: Opening Cash and
cash equivalents $2,000
Closing Cash and cash equivalents $9,488
LIFO cost flow Assumption
Income Statement
Sales (2,040 × $40) $81,600
Less: Cost of goods sold ($45,520)
Gross Profit $36,080
Less: Operating Expenses ($26,000)
Income before income taxes $10,080
Less: Income tax (30% × $10,080) ($3,024)
Net Income $7,056
Balance Sheet
Assets
Cash $9,776
Inventory $2,880
Total Assets $12,656
Liabilities and Stockholder's Equity
Common Stock $2,500
Retained Earnings $10,156
Total Liabilities and Equity $12,656
Working note:-
Cash = (opening + Sales - Purchases payment - Operating expenses -Income tax expenses)
= $2,000 + $81,600 - $44,800 - $26,000 - $3,024
= $9,776
Retained earning = (Opening + Net Income)
= $3,100 + $7,056
= $10,156
Statement of Cash Flows
Cash Flow from Operating Activities
Cash Sales $81,600
Payment to Accounts Payable ($44,800)
Operating Expenses ($26,000)
Income tax paid ($3,024)
Net Increase in cash and
cash equivalents $7,776
Add: Opening Cash and
cash equivalents $2,000
Closing Cash and cash equivalents $9,776
Weighted Average cost flow Assumption
Income Statement
Sales (2,040 × $40) $81,600
Less: Cost of goods sold ($44,880)
Gross Profit $36,720
Less: Operating Expenses ($26,000)
Income before income taxes $10,720
Less: Income tax (30% × $10,720) ($3,216)
Net Income $7,504
Balance Sheet
Assets
Cash $9,584
Inventory $3,520
Total Assets $13,104
Liabilities and Stockholder's Equity
Common Stock $2,500
Retained Earnings $10,604
Total Liabilities and Equity $13,104
Working note
Cash = opening + Sales - Purchases payment - Operating expenses - Income tax expenses )
= $2,000 + $81,600 - $44,800 - $26,000 - $3,126
= $9,584
Retained earning = (Opening + Net Income)
= $3,100 + $7,504
= $10,604
Statement of Cash Flows
Cash Flow from Operating Activities
Cash Sales $81,600
Payment to Accounts Payable ($44,800)
Operating Expenses ($26,000)
Income tax paid ($3,216)
Net Increase in cash and
cash equivalents $7,584
Add: Opening Cash and
cash equivalents $2,000
Closing Cash and
cash equivalents $9,584
At a price of $200, a cell phone company manufactures 300,000 phones. At a price of $150, the company produces 200,000 phones. What is the price elasticity of supply
Answer:
1.33
Explanation:
At a price of $200, a cell phone company manufactures 300,000 phones
At a price of $150, the company produced 200,000 phones
P1= $200 , Q1= 300,000 units
P2= $150 , Q2= 200,000 units
Price elasticity = change in quantity / change in price
Change in quantity= Q2-Q1/(Q2+Q1/2)
= 200,000-300,000/(200,000+300,000/2)
= -100,000/500,000/2
= -100,000/250,000
= -0.4
Change in price= P2-P1/(P2+P1/2)
= 150-200/(150+200/2)
= -50/(350/2)
= -50/175
= -0.3
Price elasticity= -0.4/-0.3
= 1.33
Hence the price elasticity is 1.33
The price elasticity of supply when the firm produces 200,000 at a price of $150 per cell phone will be 1.33. The price elasticity of supply is a concept of economics useful in calculation of efficiency in the organization.
The price elasticity refers to the price undergone with the comparison of two different prices and two different rates of production at given price and predetermined period.
The price elasticity of supply however relates to the change in response by the cost and production by a change in cost of production per unit and the supply that is effected at such price being offered.The calculation of price elasticity in this case can be easily calculated with the information provided in the query above. [tex]\rm Quantity\ at\ price\ of\ 200\ per\ unit=\ 300000[/tex][tex]\rm Quantity\ Produced\ at\ 150\ per\ unit=\ 200000[/tex]We know the formula that the price elasticity of supply is obtained by dividing the difference of change in price divided by change in quantity produced.[tex]\rm Price\ Elasticity\ of\ Supply= \dfrac{Change\ in\ Quantity}{Change\ in\ Price}[/tex]Putting the values in the equation we get, [tex]\rm Change\ in\ price= \dfrac{150-200}{\dfrac {150+200}{2}}[/tex][tex]\rm Change\ in\ Price= -0.3[/tex]Now calculating Change in quantity[tex]\rm Change\ in\ Quantity= \dfrac{200000-300000}{\dfrac {200000+300000}{2}}[/tex]We get,
[tex]\rm Change\ in\ Quantity= -0.4[/tex]Putting the values obtained in the formula we can calculate as ,[tex]\rm Price\ Elasticity\ of\ Supply= \dfrac{-0.4}{-0.3}[/tex]So now we finally get the price elasticity of supply as [tex]\rm Price\ Elasticity\ of\ Supply= 1.33[/tex]Hence, the value obtained for Price Elasticity of Supply for cell phones produced in two different quantities at two different prices is 1.33.
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The may be pay life insurance co. is trying to sell you an investment policy that will pay you and your heirs $33000 per year forever. Suppose a sales associate told you the policy costs $478,000. At what interest rate would this be a fair deal?
Answer:
6.9%
Explanation:
The May be life insurance corporation is trying to sell an investment policy
This policy will pay $33,000 per year forever
A sales associate mention that the policy would cost $478,000
Therefore, the interest rate at which it will be a fair deal can be calculated as follows
Interest rate= Annual inflows/present value
= 33,000/478,000
= 0.0690×100
= 6.9%
Hence the interest rate at which it would be a fair deal is 6.9%
Consider a product with a daily demand of 600 units, a setup cost per production run of $200, a monthly holding cost per unit of $5.00, and an annual production rate of 300,000 units. The firm operates and experiences demand 300 days per year.
Required:
a. What is the optimum size of the production run?
b. What is the average holding cost per year?
c. What is the setup cost per year?
d. What is the total cost per year if cost of each unit is 10 dollars?
e. Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model. How much money per year has that mistake cost the company?
Answer:
a. 3,795 units
b. $1,897.50
c. $2,845.80
d. $42,693.80
Explanation:
Optimum size for the Production ran is the size that minimizes Set-up costs and Holding costs.
Optimum size for the Production = √ (2 × Annual Production × Set-up cost) / Holding Cost per unit
Optimum size for the Production = √ (2 × 600 × 300 × $200) / $5.00
= 3,794.73 or 3,795 units
Average Holding Cost = Optimum size for the Production / 2
= 3,795 units / 2
= $1,897.50
Set - up Cost = Total Annual Production / Optimum size for the Production × Set - up cost per unit
= ((600 × 300) / 3,795)× $5.00
= $237.15
Annual cost = $237.15 × 12
= $2,845.80
Total Cost Calculation
Purchase Price (3,795 × $10) = $37,950.50
Holding Cost = $1,897.50
Set - up Cost = $2,845.80
Total Cost = $42,693.80
POQ = Optimum size for the Production / Annual Demand
= 3,795 units / (300 × 600)
= 0.021
g Hudson Co. If the company raises its selling price to $300 per unit. 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co.'s contribution margin ratio. 3. Compute Hudson Co.'s break-even point in units. 4. Compute Hudson Co.'s break-even point in sales dollars.
Answer:
Instructions are below.
Explanation:
Giving the following information:
We weren't provided with enough information to solve the requirements. But, I will provide an example and formulas to guide an answer.
Example:
Selling price= $300
Unitary variable cost= $170
Fixed costs= 125,000
First, we need to calculate the contribution margin and contribution margin ratio:
Contribution margin= selling price - unitary variable cost
Contribution margin= 300 - 170= 130
Contribution margin ratio= contribution margin/selling price
Contribution margin ratio= 130/300= 0.43
Now, we can determine the break-even point in units and dollars:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 125,000/130
Break-even point in units= 962
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 125,000/0.43
Break-even point (dollars)= $290,698
What is the current yield for a Bond with a $1,000 par value bond, a 3% annual coupon rate that matures in 5 years, if the opportunity cost is 7%
Answer:
$836
Explanation:
market interest rate = 7%
in order to determine the current price of the bond we must add the present value of face value + coupon payments:
PV of face value = $1,000 / (1 + 7%)⁵ = $712.99
PV of coupon payments = $30 x 4.1002 (PV annuity factor, 7%, 5 periods) = $123.01
current market price = $712.99 + $123.01 = $836
The Sisyphean Company has a bond outstanding with a face value of $ 1 comma 000$1,000 that reaches maturity in 1515 years. The bond certificate indicates that the stated coupon rate for this bond is 8.98.9% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 7.67.6%, then the price that this bond trades for will be closest to:
Answer:
$1,108.51
Explanation:
For computing the price of the bond we need to apply the present value formula i.e to be shown in the attachment below:
Given that,
Future value = $1,000
Rate of interest = 7.67% ÷ 2 = 3.835%
NPER = 15 years × 2 = 30 years
PMT = $1,000 × 8.9% ÷ 2 = $44.5
The formula is shown below:
= -PV(Rate,NPER,PMT,FV,type)
So, after applying the above formula, the price of the bond is $1,108.51
Bellucci Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.40 Direct labor $ 3.65 Variable manufacturing overhead $ 1.45 Fixed manufacturing overhead $ 117,900 Sales commissions $ 1.20 Variable administrative expense $ 0.75 Fixed selling and administrative expense $ 44,100 The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to (assume that the increase is within the relevant range):
Answer:
When one more unit is produced, the manufacturing cost increases by $12.5
Explanation:
Giving the following information:
Direct materials $ 7.40
Direct labor $ 3.65
Variable manufacturing overhead $ 1.45
The manufacturing cost is the sum of direct material, direct labor, and manufacturing overhead. Because we need to calculate the incremental cost, we will not take into account the fixed overhead.
Variable manufacturing cost per unit= 7.4 + 3.65 + 1.45= $12.5
When one more unit is produced, the manufacturing cost increases by $12.5
both capital and labor double, given the production function, output will double . If output doubles when inputs double, the production function will be characterized by ________.
Answer:
If output doubles when inputs double, the production function will be characterized by a constant returns to scale.
Explanation:
In economics, returns to scale refers to a long run situation that reveals to the proportionate change in output when capital and labor inputs become variable or change.
The three possible types of returns to scale are as follows:
1. Increasing returns to scale: This occurs when the proportionate change in output is greater than the proportionate change in capital and labor inputs.
2. Decreasing returns to scale: This occurs when the proportionate change in output is less than the proportionate change in capital and labor inputs.
3. Constant returns to scale: This occurs when the proportionate change in output is the same as the proportionate change in capital and labor inputs.
Based on the above explanation therefore, if output doubles when inputs double, the production function will be characterized by a constant returns to scale. This is because the the proportionate change (double) in output is the sames as the proportionate change (double) in inputs.
Consider the following limit-order book for a share of stock. The last trade in the stock occurred at a price of $50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares $ 49.75 500 $ 50.25 100 49.50 800 51.50 100 49.25 500 54.75 300 49.00 200 58.25 100 48.50 600 a. If a market buy order for 100 shares comes in, at what price will it be filled?
Answer:
$50.25
Explanation:
The below data given in the question will help to determine the price will it be filled, if the market buy order for 100 shares comes in
Limit Buy Orders Limit Sell Orders
Price Shares Price Shares
$ 49.75 500 $ 50.25 100
49.50 800 51.50 100
49.25 500 54.75 300
49.00 200 58.25 100
48.50 600
Therefore in a situation where a market buy order for 100 shares comes in, it will be filled at the amount of $50.25 which will be the best price reason been that the amount of $50.25 is the lowest amount for the limit sell order when compared with other price listed under the limits sell order.
Android Products, Inc., agreed to accept a $1,000, one-year, 10 percent note from C. Mate. On its maturity date of December 16, Mate honors the note by making a payment of $1,100. That payment consisted of the principal of $1,000 plus interest in the amount of $100 (computed as $1,000 × 10%).
Prepare the necessary December 16 entry for Android by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Date General Journal Debt Credit
Dec. 16
Answer:
Android Products, Inc.
Journal Entries
Date General Journal Debit Credit
Dec. 16 Cash $1,100
Notes Receivable $1,000
Interest Revenue $100
Choice Creations, Inc. sells hand sewn shirts at $ 44.00 per shirt. It incurs monthly fixed costs of $ 6 comma 000. The contribution margin ratio is calculated to be 30%. What is the variable cost per shirt? (Round any intermediate calculations and your final answer to two decimal places.)
Answer:
$30.80
Explanation:
According to the situation, the solution is as follows:
The variable cost per shirt is
Since the selling price per shirt is $44
And, the contribution margin ratio is 30%
So, the variable cost margin ratio is 70%
Now the variable cost per shirt is
= Selling price per shirt × variable cost margin ratio
= $44 × 70%
= $30.80
Hence, the variable cost per shirt is $30.80
The net cash flow provided by operating activities is an inflow of $37,042, the net cash flow used in investing activities is $16,831, and the net cash flow used in financing activities is $26,397. If the beginning cash account balance is $11,283, what is the ending cash account balance
Answer:
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Explanation:
If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would Group of answer choices
Answer: shift to the left
Explanation:
When a small electric automobile manufacturer is able to gain the social return generated by its electric motor, then its demand for financial capital will shift to the left.
This means that since the financial capital shift to the left, there will be a reduction in the demand for financial capital.
Casper Energy Exploration reports that the corporation’s assets are valued at $185,000,000, its liabilities are $80,000,000, and it has issued 6,000,000 shares of stock. What is the book value for a share of Casper stock? (Round your answer to 2 decimal places.)
Answer:
$17.5
Explanation:
Book value per share
= (Assets - Liabilities) / Number of shares outstanding
= ($185,000,000 - $80,000,000) / 6,000,000
= $17.5
What is the value of a zero-coupon bond with a yield to maturity of 9 percent, a par value of $1,000, and 10 years to maturity? (Assume semi-annual compounding)
Answer:
$414.64
Explanation:
For computing the value of zero-coupon bond we need to apply the present value formula i.e to be shown in the attachment
Given that,
Future value = $1,000
Rate of interest = 9% ÷ 2 = 4.5%
NPER = 10 years × 2 = 20 years
PMT = $0
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $414.64
LSM subcontracted with Henry Isaacs Home Remodeling and Repair (Isaacs) to perform the roofing work on the project. Isaacs in turn subcontracted with Hal Brewster Home Improvements (Brewster), to conduct the roofing work on Isaacs' behalf. When Brewster performed work on the roof, he "botched the job" and caused extensive leaking inside the house. LSM and Issacs attempted to correct the problems, but eventually abandoned the project, leaving Logan-Baldwin to hire others to complete the renovations. Logan-Baldwin sued LSM, Isaacs, and Baldwin for breach of contract. Isaacs sought to dismiss Logan-Baldwin's claim against it, arguing no privity of contract existed between themselves and Logan-Baldwin, and therefore Isaacs should not be liable for any damages.
Required:
Does Logan-Baldwin have contract rights over Isaacs as an intended third-party beneficiary?
1. Because Henry Isaacs delegated its duty to repair the roof to Brewster, Henry Isaacs remains responsible for Brewster's failure to install the new roof on the residence properly.
a. True
b. False
2. Logan-Baldwin is entitled to compensatory damages (covering the cost of hiring other contractors to fix the roof) caused by the breach of contract by LSM and Henry Isaacs.
a. True
b. False
3. Logan-Baldwin qualified as a third party creditor beneficiary of the contract between LSM and Henry Isaacs and the contract between Henry Isaacs and Brewster, even if Logan-Baldwin is not named in those contracts.
a. True
b. False
4. Palisades Plaza is not entitled to damages for breach contract by LSM, Henry Isaacs, and Brewster unless Palisades Plaza has clean hands and has tendered performance under the contract.
a. True
b. False
5. If the agreement between Henry Isaacs and Brewster to install a new roof is a novation, Henry Isaacs is not liable for breach of contract for the failure to install the new roof properly.
a. True
b. False
Answer:
1. true
2. true
3. false
4. true
5. false
On September 1, 2021, Middleton Corp. lends cash and accepts a $1,700 note receivable that offers 7% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021
Answer:
The interest revenue in 2021 is $39.44.
Explanation:
The amount of lending cash and accepting = $1700
Interest rate = 7% per annum
Therefore the interest rate per month = 7% / 12 = 0.58%
Now find the interest revenue by multiplying 1700 with per month interest rate and the number of months. Since the lending and accepting date is 1st September. So only 4 months remain in 2021.
The interest revenue in 2021 = 1700 × 0.58 ×4 = $39.44
Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of five years. Determine the second-year depreciation using the straight-line method.
Answer:
$9,600
Explanation:
When you use the straight line depreciation method, the depreciation expense is the same for every year. The only difference can result if the asset was purchased during the year, and the depreciation for year 1 would only be partial and proportionate to the number of months of use.
In this case, the depreciation expense per year = (purchase price - residual value) / useful life = ($57,000 - $9,000) / 5 = $48,000 / 5 = $9,600 per year (the depreciation expense is the same for all the five years).
A perfectly competitive industry is initially in a short-run equilibrium in which all firms are earning zero economic profits but in which firms are operating below their minimum efficient scale. All of the following statements are true as the industry and the firms make their long-run adjustments except that:____________.
A. individual firms expand their output level to their minimum efficient scale.
B. new firms enter the market, causing the industry output to expand.
C. firms begin to make adjustments along their long-run average cost curves.
D some firms leave the industry and the existing firms slowly adjust their production to reach their minimum efficient scale.
Answer:
D some firms leave the industry and the existing firms slowly adjust their production to reach their minimum efficient scale.
Explanation:
In a perfectly competitive industry at starting there is a short-run equilibrium in which all the firm is earning zero economic profit but these firm operated below the minimum efficient scale or we can say minimum requirement i.e lowering the average cost for the long run
By going through the options the option is correct as few firms leave the industry and other existing firms try to adjust the production in a slowly way so that they could reach their minimum efficient scale
Hence, the option d is correct
Suppose a Roasted Olive restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $.52 of ingredients, $.24 of variable overhead (electricity to run the oven), and $.70 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor assigns $.96 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.75 per loaf.
a. What is the unit cost of making the bread in-house (use absorption costing)?
b. Should Roasted Olive bake the bread in-house or buy from the local bakery? Why?
Answer:
Roasted Olive should bake the bread in-house.
Because, It is cheaper to bake the bread in-house than to purchase as this saves $0.29 per loaf of bread.
Explanation:
Cost of Making
Unit Cost (Absorption Costing) = All Manufacturing Cost (Fixed and Variable)
= $0.52 + $0.24 + $0.70 + $0.96
= $2.42
Cost of Buying from Local Bakery
Note that the fixed costs are note avoidable, meaning that they would be incurred whether or not the bread is made internally or purchased from local Bakery
Cost of Purchase Option per unit :
Purchase Price $1.75
Add Fixed Overhead per loaf $0.96
Total unit cost $2.71
Conclusion :
It is cheaper to bake the bread in-house than to purchase as this saves ( $2.71 - $2.42) $0.29 per loaf of bread.
Therefore, Roasted Olive should bake the bread in-house.
All of the following items should be considered when setting an export price except A. The tariff rate and value-added tax. B. Transportation costs. C. Prices of substitutes in foreign markets. D. Repatriation restrictions
Answer: C.
Explanation:
Prices of substitutes in foreign markets is not important when setting export prices because it does not involve exporting products, money, etc.
Goodwin Technologies has been wildly successful but has yet to pay a dividend.
An analyst forecasts that Goodwin is likely to pay its first dividend three years from now.
She expects Goodwin to pay a $2.2500 dividend at that time and believes that the dividend will grow by 11.70% for the following two years. However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 3.60% per year. Good win's required return is 12.00%.
To determine Goodwin's horizon value at the horizon date-when constant growth begins-and the current intrinsic value. To increase the accuracy of your calculations, carry the dividend value to four decimal places.
Horizon value:
Current Intrinsic value:
Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is _, and Goodwin's capital gains yield is _.
Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:
Goodwin's investment opportunities are poor. Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
No or yes
Answer and Explanation:
The computation is shown below:
Year Cash flow PVF at 12% PV at 12%
D0 0 0 1 0
D1 0 0 0.89286 0
D2 0 0 0.79719 0
D3 2.25 2.25 0.71178 1.601505 (A)
D4 2.25 × 1.117^1 = 2.51325 0.63552 1.597221 (B)
D5 2.25 × 1.117^2 = 2.80730 0.56743 1.592946 (C)
Now
Horizon Value at D5 is
= Next Year Dividend ÷ (Required Rate -Growth rate)
= (2.25 × 1.117^2 × 1.036) ÷ (0.12 - 0.036)
34.6234 34.6234 0.56743 19.64634 (D)
Current Value 24.43801 (A + B + C + D)
Horizon Value = 34.62
Intrinsic Value = 24.43
Now
Current expected dividend yield is
= Dividend ÷ Market Price
= 0 ÷ 24 ÷ 43
= 0 %
And, the minimum expected capital yield should be equivalent to the required rate of return i.e 12%
The company should not paying the dividend because it involves various reasons lime expansion plans, seasonal & cyclical sales, buy back shares
Dave Krug finances a new automobile by paying $6,500 cash and agreeing to make 20 monthly payments of $580 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round PVA factor to 4 decimal places.)
Answer:
$16,966.68
Explanation:
the cost of the car = down payment + present value of the monthly installment payments
down payment = $6,500PV of monthly installment payments = $580 x 18.046 (PV annuity factor, 1%, 20 periods) = $10,466.68the cost of the car = $6,500 + $10,466.68 = $16,966.68
eco 203 In the __________ view, there are ample loanable funds available at the current interest rate. When G increases, no crowding out occurs, interest rates do not rise, and aggregate expenditures rise by the full amount of G.
Answer:
The answer is "In the classical view, there are ample loanable funds available at the current interest rate. When G increases, no crowding out occurs, interest rates do not rise, and aggregate expenditures rise by the full amount of G."
Explanation:
In the classical view, the capital market will find the balance between the demanded investment quality and the supplied savings one itself. However, in the Keynesian view, for example during a recession, government spending (G) will increase and there will be a competition to acquire available capital supply, that leads to the crowding out occurs and the general interest rate increases.
Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose a sales representative is trying to sell a company a new accounting system that will, with certainty, reduce costs by 10%. However, the customer has heard this claim before and believes there is only a 20% chance of actually realizing that cost reduction and a 80% chance of realizing no cost reduction. Assume the customer has an initial total cost of $600. According to the customer's beliefs, the expected value of the accounting system, or the expected reduction in cost, is $ . Suppose the sales representative initially offers the accounting system to the customer for a price of $36.00. The information asymmetry stems from the fact that the has less information about the efficacy of the accounting system than does the . At this price, the customer purchase the accounting system, since the expected value of the accounting system is than the price. Instead of naming a price, suppose the sales representative offers to give the customer the product in exchange for 50% of the cost savings. If there is no reduction in cost for the customer, then the customer does not have to pay. True or False: This pricing scheme alleviates some of the information asymmetry that is present in this scenario. True False
Answer:
False
Explanation:
Adverse Selection is a situation where seller have better information than the buyer. The information can relate to anything about the product. The information can be related to product features, quality, price, availability, warranty and so on. Adverse situation occurs when asymmetric information is exploited. Here in this scenario the customer is also aware of the value of the product. There is no asymmetry information.
Nichols Company owns 90% of the capital stock of a foreign subsidiary located in Ireland. As a result of translating the subsidiary's accounts, a debit of $160,000 was needed in the translation adjustments account so that the foreign subsidiary's debits and credits were equal in U.S. dollars. How should Nichols report its translation adjustments on its consolidated financial statements?
Answer:
Nichols should report the amount of $144,000 reduction in consolidated comprehensive net income
Explanation:
Based on the information given we were told that Company owns 90% of the capital stock of a foreign subsidiary ln which a Debit of the amount of $160,000 was needed in the translation adjustments account.
Based on the above the next step is to find the 90% of the amount of $160,000 which will give us the amount of $144,000, this means that Nichols should report its translation adjustments on its consolidated financial statements as a $144,000 reduction in consolidated comprehensive net income.
Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150,000150,000 pounds of orange juice in 33 months time. Suppose each orange juice futures contract is for 15,00015,000 pounds of orange juice, and the current futures price is F_0 = 118.65F 0 =118.65 cents-per-pound. Assuming that the farmer has enough cash liquidity to fund any margin calls, what is the risk-free price that she can guarantee herself.
Answer:
Explanation:
The risk-free rate is the interest that an investor will typically expect from an investment over a period of time.
From the question, the risk free price will be the current futures price which has been given as 118.65 cents per pound.
Therefore, since the farmer is ready for harvest and sale as 150,000 pounds of orange juice in 33 months time, he will have a price of:
= 150,000 × $118.65
= $17,797.5
At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to
Answer:
Hence, closing over overhead into Cost of Goods Sold would cause net income to increase by $ 1,700,000
Explanation:
Overheads are charged to units produced by the means of using an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
As a result of this, overhead charged to total units product might be over or under absorbed compared to the actual amount incurred.
Over applied overhead = Applied overhead - Actual overhead
= 42,000,000 - 40,300,00 = 1,700,000
Over applied overhead = $ 1,700,000
The adjustment required is to reduce the cost of gods sold by the amount of over-applied overhead because the cost of goods sold figure is would have over charged.
Hence, closing over overhead into Cost of Goods Sold would cause net income to increase by $ 1,700,000 because net income and cost of Goods Sold are inversely related.