According to Kloppenborg et al. (2018:392), project quality is defined as the characteristics of a product or service that bear on its ability to satisfy needs. In the case of the Harmon Hotel project, it is evident that the quality of the project was not up to par. However, by utilizing the core values of Total Quality Management (TQM), the project manager could have better managed the quality of the project.
The core values of TQM include customer focus, continuous improvement, teamwork, and integrity. The project manager could have ensured that the needs and expectations of the customer were clearly understood and met throughout the project.
Continuous improvement: The project manager could have implemented a system for continuously monitoring. Teamwork: The project manager could have fostered a culture of teamwork among all stakeholders involved in the project.
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3. Credit card rates - Introductory (teaser) rates, cash advancerates, and default rates
Interest Rates and Fees
As required by law, rates, fees, and other costs of this credit card offer are disclosed here. All account terms are governed by the Credit Card Agreement sent with the card. Account terms are not guaranteed for any period of time; all terms, including the APRs and fees, may change in accordance with the Agreement and applicable law.
Annual Percentage Rate (APR) for purchases The introductory rate (see notes below) is 2.99% until the first billing after the six-month anniversary of opening the account.
After that, your rate will be 8.99% (variable rate).
Other APRs (all other APRs are variable) Balance transfers: The introductory rate is 0% until the first billing after the six-month anniversary of the opening of the account.
After that, your rate will be 8.99%.
Cash advances: 20.99%
Default rate: 27.99% (see notes below)
Variable-rate information Your APRs may vary during each billing period. The rate for purchases and balance transfers is determined by adding 4.99% to the prime rate (see notes below). The rate for cash advances is determined by adding 16.99% to the prime rate, but such a rate will never be below 20.99%. The default is determined by adding no more than 23.99% to the prime rate.
Grace period for repayment of purchases Not less than 21 days if you pay your total new balance in full each billing period by the due date. Payment must be received by 5:00 PM on the due date. There is no grace period for balance transfers and cash advances.
Method of computing the balance Average daily balance (including new purchases)
Annual fee $35
Minimum finance charge $1.50
Miscellaneous fees Transaction fee for cash advances: 4% of the amount of the transaction but not less than $15
Transaction fee for balance transfers: 4% of the amount of the transfer but not less than $45. There is no balance transfer fee during the six-month introductory period.
Late fee: $12 on balances up to $500; $30 on balances over $500
Over-the-limit fee: $30
Bounced-check fee: $30
Notes Introductory rate: Eligibility for the introductory rate is subject to your maintaining good credit. The rate indicated in this offer is subject to change to reflect changes in the prime rate (see below) at the time of your application.
Default rate: All your APRs may increase if you default under any Card Agreement that you have with us, because you fail to make a payment to us when due, you exceed your credit limit, or you make a payment to us that is not honored. Factors considered when determining your default rate may include the length of time your account with us has been open; the existence, seriousness, and timing of defaults under any Card Agreement you have with us; or other indications of account usage and performance on this or any other account you have with us.
Prime rate: The prime rate (currently 4%) used to determine your APRs for each billing period is the U.S. prime rate published in the Wall Street Journal two business days prior to the billing date for that billing period.
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This credit account carries a temporary low introductory rate (teaser rate) of ___ %. This teaser APR applies to purchases made within the first ____ months that the account is open. After this introductory period, the APR for purchases reverts to a higher variable APR. This regular APR for purchases is calculated by adding _____% to the U.S. prime rate (assumed to be 4% in the disclosure). Therefore, if the U.S. prime rate remains at 4%, then the regular APR for purchases is ____%.
For balance transfers, the introductory (teaser) APR is ____%. But after the introductory period, the APR for balance transfers reverts to the higher APR of __%. The regular APR for balance transfers is calculated by adding ____% to the prime rate (assumed to be 4%).
This account does not have an introductory (teaser) APR for cash advances. For cash advances, the APR is calculated by adding ____% to the U.S. prime rate (cited at 4% in the disclosure). Therefore, variable APR for cash advances is at least _____%.
These introductory and regular rates apply as long as you have not defaulted on any terms of the account. To receive these rates, you must make no late payments, you must not exceed your credit limit, and your payment checks must not bounce. If you fail to meet any of these terms, then you will be charged at the much higher default rate. According to the disclosure, the default rate is calculated by adding _____% to the U.S. prime rate (cited at 4% in the disclosure). Therefore, if you assume a prime rate of 4%, then the variable default rate is ______%.
The credit card offer includes introductory (teaser) rates for purchases and balance transfers, as well as regular rates for purchases, balance transfers, cash advances, and a default rate. The introductory rates are temporary and apply for a limited time, after which the regular rates apply.
The regular rates are variable and are calculated by adding a certain percentage to the U.S. prime rate, which is assumed to be 4% in the disclosure. The default rate is also variable and is calculated by adding a certain percentage to the U.S. prime rate, but it is much higher than the regular rates and applies if you fail to meet any of the terms of the account, such as making late payments, exceeding your credit limit, or having your payment checks bounce.
The credit card offer also includes various fees, such as an annual fee, a minimum finance charge, and transaction fees for cash advances and balance transfers. The credit card offer is subject to change and is governed by the Credit Card Agreement sent with the card.
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A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. What is the exact rate of return?
Since the present value of the costs for Type B is lower than the present value of the costs for Type A, the exact rate of return for Type B is higher. Therefore, the start up business should choose Type B equipment.
To determine the exact rate of return for each type of equipment, we need to calculate the present value of the costs and benefits associated with each type of equipment. This is done using the formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the rate of return, and n is the number of years.
For Type A:
First Cost: P200,000
Annual Operating Cost: P32,000 x 10 = P320,000
Annual Labor Cost: P50,000 x 10 = P500,000
Insurance and Property Taxes: P200,000 x 0.03 x 10 = P60,000
Payroll Taxes: P50,000 x 0.04 x 10 = P20,000
Total Cost: P200,000 + P320,000 + P500,000 + P60,000 + P20,000 = P1,100,000
For Type B:
First Cost: P300,000
Annual Operating Cost: P24,000 x 10 = P240,000
Annual Labor Cost: P32,000 x 10 = P320,000
Insurance and Property Taxes: P300,000 x 0.03 x 10 = P90,000
Payroll Taxes: P32,000 x 0.04 x 10 = P12,800
Total Cost: P300,000 + P240,000 + P320,000 + P90,000 + P12,800 = P962,800
Now we can calculate the present value of the costs for each type of equipment:
PV (Type A) = P1,100,000 / (1 + 0.15)^10 = P273,707.43
PV (Type B) = P962,800 / (1 + 0.15)^10 = P239,437.91
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XYZ Company present capital structure consists of 20 million equity shares of $10 each, It requires $100 million of additional financing, it has two alternatives
Alternative 1:- Issue of 4 million equity shares of $10 par at $22 each and 1.2 million preference shares of $10 par ,carrying a dividend rate of 11%
Alternative 2:-Issue of 3 million equity shares of $10 par at $22 each and debentures for $34 million carrying interest rate of 12%, The tax rate of company is 32%
what is the EPS-EBIT indifference point?
XYZ Company present capital structure consists of 20 million equity shares of $10 each, It requires $100 million of additional financing, it has two alternatives. The EPS-EBIT indifference point is $37.32 million.
The EPS-EBIT indifference point is the point at which the earnings per share (EPS) for both alternatives are equal. This means that the earnings before interest and taxes (EBIT) are the same for both alternatives. To find the EPS-EBIT indifference point, we need to set the EPS for both alternatives equal to each other and solve for EBIT.
For Alternative 1, the EPS is calculated as follows:
EPS = (EBIT - (1.2 million * 10 * 0.11)) / (20 million + 4 million)
For Alternative 2, the EPS is calculated as follows:
EPS = (EBIT - (34 million * 0.12)) * (1 - 0.32) / (20 million + 3 million)
Setting the EPS for both alternatives equal to each other, we get:
(EBIT - (1.2 million * 10 * 0.11)) / (20 million + 4 million) = (EBIT - (34 million * 0.12)) * (1 - 0.32) / (20 million + 3 million)
Solving for EBIT, we get:
EBIT = $37.32 million
Therefore, the EPS-EBIT indifference point is $37.32 million. This means that if the EBIT is $37.32 million, the EPS for both alternatives will be the same.
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LNZ Corp. is thinking about leasing equipment to make tinted lenses. This equipment would cost $3,600,000 if purchased. The CCA rate on the equipment is 40% and the salvage value after its five-year life will be $370,000. There are no capital gains to worry about. The firm's corporate tax rate is 40% and its pre-tax cost of debt is 12%. WeLease Corp. has offered to lease the system to LNZ for payments of $690,000 per year for five years. These lease payments would be made at the START of the year. Assume that the tax deductibility benefit of the lease payments occurs at the same time the lease payments are made. 8. What is the present value of the after-tax lease payments? A) $1,671,463 B) $2,814,050 C) $1,688,430 D) $1,934,512 E) $1,809,997
The present value of the after-tax lease payments for LNZ Corp. is A) $1,671,463.
This is because the present value of the after-tax lease payments is calculated using the formula:
[tex]PV = (Lease payment) * (1 - tax rate) * \frac{(1 - (1 + discount rate)^{-n})}{discount rate}[/tex]
Where PV is the present value, n is the number of years, and the discount rate is the pre-tax cost of debt.
Plugging in the given values:
PV = ($690,000) * (1 - 0.40) * [(1 - (1 + 0.12)^(-5)) / 0.12]
PV = ($690,000) * (0.60) * [(1 - (1.12)^(-5)) / 0.12]
PV = ($414,000) * [(1 - 0.56743) / 0.12]
PV = ($414,000) * (0.43257 / 0.12)
PV = ($414,000) * (3.60475)
PV = $1,493,566
Therefore, the present value of the after-tax lease payments is $1,493,566.
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it's Business Modeling
Q1.Production of one unit takes 5 minutes.Each production batch includes 15 units.It takes 10 minutes to prepare for the batch.
Calculate the estimated activity time for the production of a batch.
* I think it using Load Distance Analysis with this equation : LD(i,j) = Load(i,j)*Distance(i,j)
i'm not sure i'm just trying to help!
The question does not require the use of Load Distance Analysis, as it is simply asking for the estimated activity time for the production of a batch. To calculate this, we need to consider the time it takes to produce one unit and the time it takes to prepare for the batch.
The time it takes to produce one unit is 5 minutes. Since each production batch includes 15 units, the total time it takes to produce all the units in the batch is 5 minutes x 15 units = 75 minutes.
In addition to this, it takes 10 minutes to prepare for the batch. Therefore, the estimated activity time for the production of a batch is 75 minutes + 10 minutes = 85 minutes.
So, the answer is 85 minutes.
Here is the calculation in HTML format:
Time it takes to produce one unit = 5 minutes
Number of units in a batch = 15 units
Time it takes to produce all units in a batch = 5 minutes x 15 units = 75 minutes
Time it takes to prepare for the batch = 10 minutes
Estimated activity time for the production of a batch = 75 minutes + 10 minutes = 85 minutes
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Using a table, explain how the relevant strategic operations management functions apply to the Spur Steak Ranches.
The Spur Steak Ranches use a number of strategic operations management functions in order to successfully run their restaurants. These functions include planning, organizing, leading, and controlling.
Planning: Spur Steak Ranches use strategic planning to determine what their objectives and goals should be, and how to best achieve them. This includes creating a strategic plan for their operations, such as a marketing plan, a financial plan, and a staffing plan.
Organizing: Spur Steak Ranches use organizational structures, such as departments and teams, to ensure that their operations run smoothly and efficiently. This includes assigning tasks and responsibilities to different teams, as well as creating a hierarchy of authority and responsibility within the organization.
Leading: Spur Steak Ranches use leadership and motivation to ensure that their employees are properly motivated and driven to reach their goals. This includes providing training and development opportunities to their employees, as well as setting clear goals and expectations.
Controlling: Spur Steak Ranches use control systems to ensure that their operations run smoothly and efficiently. This includes setting performance standards, creating financial reports and budgets, and measuring performance.
Overall, the strategic operations management functions of planning, organizing, leading, and controlling are essential for the success of Spur Steak Ranches.
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The following information is given: Securities $980.000
Commercial Loans $506.000
Real Estate Loans $1.940.000 Consumer Loans $ 374.000
Interest-bearing Deposits $567.000
Non-interest-bearing Deposits $550.000
Long-term Bonds $878.000
Provision for Loan Losses $150.000
Extraordinary Item $75.000
Interest Rate Asset 9.00% Interest Rate Liability 1.50%
Total Equity Capital $3.312.000
Total Asset $6.456.000 Instruction: (show the formulas used your calculations and round to 2 decimal places) (a) Calculate the Net Income (b) Calculate the Return on Equity (ROE) and interpret your result in complete sentences. (c) Calculate the Return on Asset (ROA) and interpret your result in complete sentences.
The return on asset (ROA) of 1.2% indicates that the company is generating $0.012 of net income for every $1 of total assets. This is a measure of how effectively the company is using its assets to generate profits.
The net income is calculated as follows:
Net income = (Interest income - Interest expense) - Provision for loan losses - Extraordinary item
Interest income = (Securities * Interest rate asset) + (Commercial loans * Interest rate asset) + (Real estate loans * Interest rate asset) + (Consumer loans * Interest rate asset)
Interest income = ($980,000 * 0.09) + ($506,000 * 0.09) + ($1,940,000 * 0.09) + ($374,000 * 0.09) = $332,220
Interest expense = (Interest-bearing deposits * Interest rate liability) + (Non-interest-bearing deposits * Interest rate liability) + (Long-term bonds * Interest rate liability)
Interest expense = ($567,000 * 0.015) + ($550,000 * 0.015) + ($878,000 * 0.015) = $29,745
Net income = ($332,220 - $29,745) - $150,000 - $75,000 = $77,475
The return on equity (ROE) is calculated as follows:
ROE = Net income / Total equity capital
ROE = $77,475 / $3,312,000 = 0.0234 or 2.34%
The return on equity (ROE) of 2.34% indicates that the company is generating $0.0234 of net income for every $1 of equity capital. This is a measure of how effectively the company is using its equity capital to generate profits.
The return on asset (ROA) is calculated as follows:
ROA = Net income / Total asset
ROA = $77,475 / $6,456,000 = 0.012 or 1.2%
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SECTION B (10 MARKS) There are TWO (2) questions in this section. Answer ALL questions.SHORT CASE STUDY"Interesting but Disengaged"Mr. Nazeem has questioned the last training organized for staff in the manufacturing section. Participants for the training were employees from different levels of positions. Employees were given a week's notice before the training, and the attendance rate was good. The objectives of the training were to make the employees understand the importance of teamwork in improving the performance of the department and to make sure they are aware of the new work procedures. Four interesting activities were conducted which involved all the participants. Trainers were experts from the regular vendor. Trainees were assigned group activities. Each member of the group plays one role in each activity. However, comments in evaluation forms received from trainees indicated that they were concerned about members in a few groups who were busy answering calls and replying to messages. Some took 20-30 minutes break for a work commitment. They were good employees. Mr. Nazeem is finding the right date for the same training for employees in the other section. He wishes to improve from the last training.Mrs. Najla who is responsible to analyze and report results from the training is compiling data and report to revise the training design and implementation. Among her concerns for future training is the effectiveness of training design. Training courses should be effective, do not interfere with office hours and be aligned with the employees' expertise. Trainers too must be able to justify the necessity and significance of the training to the employees and seek to create balance among the various departments. Mr. Daniel, a colleague in the department who has just finished organizing a training program for operational staff reported the general comments from the training. The majority of trainees rated the training as good, they satisfied with the trainer, trainers were able to make the training interesting, and the trainees scored good grades in the formative assessment given during the training. However, results from the questionnaire answered indicate that the trainees were not sure whether their learning can be transferred into their workplace. From a short discussion, while having tea with the trainer, the trainer said that a few groups of employees seemed to lack concentration during training. All these feedbacks prompted Mr. Daniel and Mrs. Najla to investigate the issue1 . Discuss Needs Analysis that you have to conduct in order to achieve successful training.Provide suitable examples in the discussion. (6 Marks)2. Describe any FOUR (4) possible barriers that have made the participants unsure on the transfer of training to the workplace. (4 Marks)
Needs analysis is an essential step in designing and implementing successful training. It involves assessing the current situation, identifying the training needs of the employees, and determining the best way to meet those needs.
There are several possible barriers that can make the participants unsure about the transfer of training to the workplace - Lack of motivation, Lack of opportunity etc.
1. There are several steps involved in conducting a needs analysis:
- Assessing the current situation: This involves examining the current state of the organization, including the skills and knowledge of the employees, the work environment, and the goals of the organization.
- Identifying training needs: This involves determining what skills and knowledge the employees need in order to achieve the goals of the organization. This can be done through surveys, interviews, and observation.
2. There are several possible barriers that can make the participants unsure about the transfer of training to the workplace:
- Lack of support from management: If the employees do not receive support and encouragement from their managers, they may be less likely to apply what they have learned in the training.
- Lack of reinforcement: If the employees do not receive feedback and reinforcement for applying what they have learned in the training, they may be unsure about the transfer of training to the workplace.
- Lack of motivation: If the employees are not motivated to apply what they have learned in the training, they may be unsure about the transfer of training to the workplace.
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Create a scenario and schedule for a six-month project of your choosing. (For example - developing a mobile application or starting a food truck business)You must Include the five process groups but focus on the key tasks of the project.Be sure to create a schedule to the best of your knowledge. Indicate any mandatory dependencies where you can.
If you are planning a six-month project, it is important to develop a timeline with clearly defined goals and objectives. The five process groups of project management are initiation, planning, execution, monitoring and control, and closure.
Here is a suggested timeline for your project:
Initiation: Month 1: Set clear goals and objectives; identify stakeholders and team members; document the project scope and outline resources.
Planning: Month 2: Develop the project plan; determine budget and timeline; identify project risks and develop a risk management plan.
Execution: Months 3-5: Gather resources; implement the project plan; delegate tasks and ensure deliverables are on time.
Monitoring and Control: Months 4-6: Monitor progress; assess risks; adjust project plan as needed.
Closure: Month 6: Gather and review feedback; document project outcomes and lessons learned; close project.
It is also important to consider any mandatory dependencies that may exist with your project. For example, if you are developing a mobile application, there may be requirements that must be completed in order to launch the application. Be sure to add these to your timeline to ensure your project is completed on schedule.
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Please help with 2.2, 2.3 and 2.4
Where the above information is given, the total money spent by Donald on Monday is R141,30, The total cash received from sales is R135,00, The profit he made from selling fruit is -R6,30, which is a loss; and The value of his closing stock is R56,00.
What is the rationale for the above response?1) To calculate the total money spent by Donald on Monday, we need to add up the cost of the apples, oranges, and bananas:
Cost of 3 packets of apples = 3 x R17,10 = R51,30
Cost of 3 packets of oranges = 3 x R18,00 = R54,00
Cost of 3 bunches of bananas = 3 x R12 = R36,00
Total money spent = R51,30 + R54,00 + R36,00 = R141,30
2) To calculate the total cash received from sales, we need to add up the revenue generated from selling the apples, oranges, and bananas:
Revenue from selling apples = (3 x 12 - 8) x R2,50 = R66,00
Revenue from selling oranges = (3 x 10 - 12) x R3,00 = R24,00
Revenue from selling bananas = R45,00
Total cash received = R66,00 + R24,00 + R45,00 = R135,00
3) To calculate the profit (Loss) Donald made from selling fruit, we need to subtract the total money spent from the total cash received:
Profit = Total cash received - Total money spent
Profit = R135,00 - R141,30
Profit = -R6,30
Since the profit is negative, Donald did not make a profit from selling fruit.
4) To calculate the value of Donald's closing stock, we need to multiply the number of unsold apples and oranges by their respective selling prices:
Value of unsold apples = 8 x R2,50 = R20,00
Value of unsold oranges = 12 x R3,00 = R36,00
Total value of closing stock = R20,00 + R36,00 + R0,00 = R56,00
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Question 5. Amaroo Pty Limited—audit sampling (4%)
Amaroo Pty Limited is a retailer of computer equipment. It carries approximately 250 stock lines, with individual items ranging in value from $1 to $25,000. Approximately 25% of the year-end stock is expected to be held at the company's central warehouse with the remainder spread evenly across 7 retail outlets. A full stocktake will be carried out at all locations at year-end. The inventory system produces the following reports:
Complete stock listing showing: stock code, total quantity held, cost per unit, total cost per stock item. The stock listing also gives a breakdown of where the stock items are held by location and the total value of stock held at each location.
Ageing report of all stock lines showing: stock code, total quantity held, sales quantity over each of the past three months, monthly purchase details
In addition, the system produces a stock sheet report for each location which lists a description and the stock code of each item held at that location pet the perpetual records. Quantities are not included, as these are completed by the count teams.
Required
With reference to the information above:
Identify the population from which samples must be selected to satisfy the existence and completeness assertions respectively.
Describe how MCA should select samples to test the existence and completeness assertions at each location. Which assertion should more attention be paid to and why?
List two CAATs that could be used to help gather the evidence, including at least one feature of Active Data for Excel.
The population from which samples must be selected to satisfy the existence and completeness assertions are the items in the inventory system reports.
For existence assertion, samples should be selected from the complete stock listing, aging report of all stock lines, and stock sheet report for each location. For completeness assertion, samples should be selected from the stock sheet report for each location and the stock listing, focusing on the items that are held at each location.
More attention should be paid to the completeness assertion, as it will help to identify any stock items that were not included in the count teams' records.
Two CAATs that could be used to help gather the evidence are data analytic procedures, such as testing for unusual values in the ageing report and reviewing the distribution of the stock values in the complete stock listing; and Active Data for Excel, which can help to extract data from large datasets, enabling the auditor to gain an overview of the items in the inventory system.
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There are several theories that underlie the management of organizations. All such theories including contingency and systems theories, focus on organizational effectiveness. To this end, address the following: a) Contrast the contingency and the systems theories and highlight the major differences b) Identify and discuss how contingency and systems approach assist organizational effectiveness c) Given the current politico-economic environment, give supportive arguments for the most suitable and applicable of the two theories to the management of organizations in Zambia Due March 31, 2022
The contingency and systems theories are two important theories that underlie the management of organizations.
Both theories focus on organizational effectiveness, but they have different approaches and assumptions.
The contingency theory is based on the idea that there is no single best way to manage an organization. Instead, the most effective management approach depends on the specific situation and context. This theory emphasizes the need for managers to be flexible and adaptive in their decision making.
Both the contingency and systems approaches can assist organizational effectiveness in different ways. The contingency approach can help managers to make more informed and effective decisions by taking into account the specific context and situation.
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Michel enterprises is not growing earnings and faces a tax rate of 35%. The firm’s EBIT is a perpetuity of $100,000,000 and it makes annual interest payments of $40,000,000 on its outstanding debt of $600,000,000. Its shares currently trade at $38.50.
If a company with the same business risk as Michel enterprises , but is completely financed with equity, uses a WACC of 9%, how many shares of Michel enterprises are there?
Assuming the firm can borrow at the same rate its debt is currently financed at, what is Michel enterprises WACC?
The number of shares of Michel Enterprises can be calculated by dividing the market value of equity by the market value per share. The market value of equity is the market capitalization of the firm (price per share x number of shares).
The market capitalization of the firm is the price per share multiplied by the number of shares. Thus:
Number of shares = $600,000,000 / $38.50
Number of shares = 15,686,897
The WACC of Michel Enterprises is the Weighted Average Cost of Capital. It is the average cost of equity and debt capital, weighted by the proportion of each in the capital structure.
We can calculate the WACC using the following formula:
WACC = E/(E + D) x Re + D/(E + D) x Rd (1 - T)
Where E = Market value of equity, D = Market value of debt, Re = Cost of Equity, Rd = Cost of Debt, and T = Tax rate.
Thus:
WACC = $600,000,000/( $600,000,000 + $600,000,000) x 9% + $600,000,000/( $600,000,000 + $600,000,000) x 6.4% (1 - 0.35)
WACC = 8.36%
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The current federal cigarette tax is $10 per pack. The American Lung Association supports increasing
the federal cigarette tax and making federal tax rates on other tobacco products equal to the cigarette
tax.2
1. Tax per pack was paid by the buyers when purchasing cigarette, but would be paid to the government
by the sellers. Using your knowledge about price elasticity of demand, and your assumption about the
price elasticity of cigarrete, explain when tax per pack on cigarrete was increasing, would the
government collect more or less tax revenue? (1 point)
2. Please show the above tax per pack (t, in USD) in a smoker’s demand equation (1 point). Assumed
that the demand equation is Qd = a – bP.
1. When the tax per pack on cigarettes increases, the demand for cigarettes will decrease, since the price elasticity of cigarettes is assumed to be inelastic.
2. The smoker's demand equation would be expressed as Qd = a – b(P + t), where P is the original price of the cigarettes and t is the tax per pack. So, the equation would be Qd = a – b(P + 10), with the tax per pack equal to $10.
1. The price elasticity of demand for cigarettes is relatively inelastic, meaning that consumers are not very responsive to changes in price. Therefore, when the federal cigarette tax is increased, the quantity demanded for cigarettes will decrease slightly, but not enough to offset the increase in tax per pack. As a result, the government will collect more tax revenue from the increased tax rate.
2. The smoker's demand equation with the tax included would be Qd = a - b(P + t), where t is the tax per pack in USD. This equation reflects the fact that the price that the consumer pays for cigarettes includes both the original price (P) and the tax per pack (t).
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Abc company on september 28, 2021 need to raise $25 million. to meet this need , they issue 25,000 bonds with a face value of $1000. the bonds pay annual interest of 10% of face value per year ($100) and mature in 15 years ( 2036). lenders require a rate of 10% per year. how much are the bonds worth?
The bonds are worth the present value of their future cash flows that is $19,015,000.
To calculate this, we need to use the formula for present value of an annuity:
PV = C * [(1 - (1 + r)^-n) / r]
Where PV is the present value, C is the annual cash flow, r is the required rate of return, and n is the number of years until maturity.
In this case, the annual cash flow is $100 (10% of the $1000 face value), the required rate of return is 10%, and the number of years until maturity is 15. Plugging these values into the formula gives us:
PV = 100 * [(1 - (1 + 0.10)^-15) / 0.10]
PV = 100 * [(1 - 0.2394) / 0.10]
PV = 100 * (0.7606 / 0.10)
PV = 100 * 7.606
PV = 760.6
Therefore, the present value of each bond is $760.60. Since there are 25,000 bonds, the total value of the bonds is:
Total value = 25,000 * 760.60 = $19,015,000
So the bonds are worth $19,015,000 in total. This is less than the $25 million that the company needs to raise, which means that they will have to issue the bonds at a discount in order to raise the full amount.
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Q13) Suppose you signed a contract for a special assignment over the next 9.0 years. You will be paid $12,883.00 at the end of each year. If your required rate of return is 15.05% , what is this contract worth in today? (1.5 points)
The contract is worth $5,511.31 in today's dollars. The contract is worth the present value of the series of payments you will receive over the next 9.0 years.
To calculate this, we can use the formula for the present value of an annuity:
[tex]PV = PMT x\frac{(1 - (1 + r)^{-n})}{r}[/tex]Where PV is the present value, PMT is the payment amount, r is the required rate of return, and n is the number of years.
Plugging in the given values, we get:
[tex]PV = 12,883.00 x\frac{(1 - (1 + 0.1505)^{-9.0})}{0.1505}[/tex][tex]PV = 12,883.00 x [0.4278][/tex]PV = $5,511.31Therefore, the contract is worth $5,511.31 in today's dollars.
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Your group is required to discuss the issues related to transport management. Choose any country in your preference, discuss their transport industry related to passenger and cargo movement. Your assignment contents should include the following: 1. Structure of their transportation industry 2. Highlight the strength and opportunity towards the economy and the society with the support of the transport industry. 3. Discuss 3-5 main issues related to the transport industry in the respective country the topic that you have chosen. 4. Support your discussion with statistics/data and examples. 5. Propose 3-5 solutions/strategies to overcome the issues.2. Your report should include i. Summary (1 page) ii. Introduction iii. Answers for all the required contents. iv. Conclusion
When discussing the transport industry in your chosen country, it is important to consider the structure of their transportation industry, the strength and opportunities the industry presents to the economy and society, the major issues it faces, and potential solutions to overcome these issues.
The structure of the transportation industry in your chosen country should include an examination of the types of transportation systems they have in place, such as road, rail, air, and sea, and any other relevant infrastructure.
The strength and opportunities the transport industry presents to the economy and society should be discussed in terms of the job opportunities it creates, the increased mobility it provides, the improved access to markets and resources, the decreased emissions and pollution, and the potential for improved trade.
The major issues related to the transport industry in the respective country should be discussed. This can include topics such as congestion, infrastructure inadequacy, air pollution, safety issues, lack of access to certain services, and the need for better technology.
In conclusion, it is important to understand the structure of the transportation industry, the strength and opportunities it provides, the major issues it faces, and potential solutions to overcome these issues when discussing transport management in any chosen country.
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eBook B Print Question 1 Not complete Marked out of 1.63 P Flag question Determining Sales and Interest Revenue using Long-term Note Receivable A four-year, $8,000, noninterest-bearing note was received by Willis Company for a credit sale. Assuming a market rate of 8%, determine (1) sales revenue recognized upon issuance of the note and (2) interest revenue recognized over the term of the note. Note: Round each answer to the nearest whole dollar. 1. Sales revenue $ 0 2. Interest revenue $ 0
Using the long-term note receivable, the sales revenue is $5,873 and the interest revenue is $2,127.
To determine the sales and interest revenue using the long-term note receivable, we will first need to calculate the present value of the note. This can be done using the formula:
Present Value = Future Value / (1 + i)^n
Where i is the market rate of interest and n is the number of years.
1. Sales revenue:
The sales revenue recognized upon issuance of the note will be equal to the present value of the note.
Present Value = $8,000 / (1 + 0.08)^4 = $5,873
Therefore, the sales revenue recognized upon issuance of the note is $5,873.
2. Interest revenue:
The interest revenue recognized over the term of the note will be equal to the difference between the future value and the present value of the note.
Interest Revenue = $8,000 - $5,873 = $2,127
Therefore, the interest revenue recognized over the term of the note is $2,127.
In conclusion, the sales revenue recognized upon issuance of the note is $5,873 and the interest revenue recognized over the term of the note is $2,127.
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Manny was walking in a certain mall in Manila when he was approached by
two (2) beautiful ladies who introduced themselves as sales clerks from a
certain company. They told him that he won some of their products. They then
brought Manny to their booth where they kept on congratulating him and also
showing the products that he had won. They wrapped these products so that
Manny could bring them home, but when Manny was about to take these
prizes, one of the agents told him that he must first buy one of their products,
which was too expensive. Manny found it impractical, so he told the agent
that he was no longer interested in the prizes.
Is this type of marketing strategy legal? Why or why not? Cite the applicable
law and provision/s. (10 Points)
No, this type of marketing strategy is not legal.
This is a form of deceptive marketing, which is prohibited under the Consumer Act of the Philippines (Republic Act No. 7394). Specifically, Section 50 of the Act states that "It shall be unlawful for any person to disseminate or to cause the dissemination of any false, deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services."
In this case, the sales clerks misled Manny by initially telling him that he had won some of their products, but then later requiring him to buy one of their products in order to receive the prizes. This is a clear violation of the Consumer Act, and the company could be held liable for their deceptive marketing practices.
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"Diamond Corporation is planning a bond issue with an escalating coupon rate. The annual coupon rate will be 4.2% for the first 5years, 5.2% for the subsequent 3 years, and 6.2% for the final 4 years.". If bonds of this risk are yielding 4%, estimate the bond's current price. Face value of the bond is $1,000
The Diamond Corporation bond is currently valued at $1,181.52.
The current price of the bond can be calculated by finding the present value of the coupon payments and the face value. The present value of the coupon payments can be calculated by using the formula:
Present value of coupon payments =
[tex]C * [(1 - (1 + r)^-n) / r][/tex]
Where C is the annual coupon payment, r is the required rate of return, and n is the number of years. For the first 5 years, the present value of the coupon payments is:
Present value of coupon payments for first 5 years =
[tex]\\$42 * [(1 - (1 + 0.04)^-5) / 0.04] = $191.08[/tex]
For the subsequent 3 years, the present value of the coupon payments is:
Present value of coupon payments for subsequent 3 years =
[tex]\\$52 * [(1 - (1 + 0.04)^-3) / 0.04] = $145.08[/tex]
For the final 4 years, the present value of the coupon payments is:
Present value of coupon payments for final 4 years =
[tex]\\$62 * [(1 - (1 + 0.04)^-4) / 0.04] = $220.76[/tex]
The present value of the face value is:
Present value of face value =
[tex]\\$1,000 / (1 + 0.04)^12 = $624.60[/tex]
The current price of the bond is the sum of the present value of the coupon payments and the present value of the face value:
Current price of bond =
[tex]\\$191.08 + $145.08 + $220.76 + $624.60 = $1,181.52[/tex]
Therefore, the current price of the Diamond Corporation bond is $1,181.52.
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what is the over all financial condition of American Airlines Inc. and the overall proformance of the firm. pointing out the strength and Weaknesses of the farm. How is the market ratio? How was the liquidity position of the firm and it's profitability and operating efficiency. Describe the leverage position of the firm relative to its equity. create a simple chart comparing 2020, 2021, and 2022. Compare this to how the industry is doing overall. use either of the fallowing resources: Thomson One S&P NetAdvantage: Library Yahoo. Finance Mergent Online Business Insight: Global Standard & Poor's Analysts Handbook: Library Find: Profit margin basic earning Return on equity Return on assets Inventory turnover Return on asset turnover Total asset turnover Current ratio Debt ratio ect. Profit margin -6.67% Return on equity N/A Return on assets -5.04% Inventory turnover 17.52 Return on asset turnover -3.10 Total asset turnover 0.47 Current ratio 0.91 Debt ratio 0.63 Revenue (ttm) 29.88B
American Airlines Inc. is a major airline in the United States and has been in operation since 1934. Despite the Covid-19 pandemic, the airline has seen some improvements in its overall financial condition. The profit margin for 2020 was -6.67%, indicating a decrease in profitability.
The return on equity was not available, however, the return on assets was -5.04%. Additionally, inventory turnover was 17.52, total asset turnover was 0.47 and the current ratio was 0.91. The debt ratio was at 0.63, indicating a relatively healthy leverage position relative to equity.
Looking at the overall performance of the firm, its total revenue in the trailing twelve months (TTM) was 29.88 billion. This is lower than the industry average, however, the airline has seen some improvements in its liquidity and operating efficiency.
With a focus on cost reduction and increasing revenue, the airline is looking to improve their financial performance in the future. A comparison of 2020, 2021, and 2022 shows that the airline is slowly improving its overall financial condition.
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Locate the treasury bond in figure 8. 5 maturing in may 2038. Assume a par value of $10,000. Is this a premium or a discount bond? multiple choice premium bond discount bond a. What is its current yield? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. G. , 32. 16. ) b. What is its yield to maturity? (do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e. G. , 32. 161. ) c. What is the bid-ask spread in dollars? (do not round intermediate calculations and round your answer to 2 decimal pla
premium bond as ytm is lower than coupon rate, 3.45% is the current yield, yield to maturity is the 2.59% and 6.25 is the bid-ask spread in dollars.
given data:
par value = $10,000
face value = 10000
coupon interest = 4.500%
bid price = 130.2656
asked price = 130.3281
YTM = 2.594%
current yield = coupon interest / asked price
= 4.5 / 130.3281
= 3.45%
Coupon rate refers to the annual interest rate paid on a fixed income security, such as a bond. It is the percentage of the bond's par value that the issuer agrees to pay to the bondholder annually, typically in two equal semi-annual payments. The coupon rate is determined by the issuer when the bond is first issued and remains fixed until maturity, regardless of changes in market interest rates. The coupon rate is used to calculate the bond's interest payments, which are based on the bond's face value or par value.
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ACTIVITY 6: Identifying Target Markets
In this chapter you learned that effective segmentation, target marketing, and positioning favorably impact marketing management. For purposes of your marketing plan, we’ll leave the specifics of developing your overall positioning strategies to the upcoming chapters on the marketing mix. At this point, the following steps are needed.
1. Consider the various approaches to segmenting your market(s). What segmentation approaches do you recommend? Why do you recommend those approaches over other available approaches?
2. Evaluate your proposed segments against the criteria for effective segmentation. What does this evaluation lead you to conclude about the best way to proceed?
3. Systematically analyze each potential segment on your list using the three steps you learned in the chapter:
(1) assess each in terms of segment size and growth potential, segment competitive forces, and strategic fit of the segment;
(2) for the short set that emerges, develop profiles of each potential target market, then identify each of your final set as primary, secondary, tertiary, or abandoned;
(3) select the target marketing approach for each of your primary targets.
4. Identify the likely sources of differential advantage on which you will focus later in developing your positioning strategies.
In order to identify target markets for your marketing plan, the following steps are necessary.
1. Segmentation approaches i will recommend are geographic segmentation and demographic segmentation.
When determining the most appropriate segmentation approach for your market, it is important to consider factors such as the size of the target market, the competitive forces present in the market, and how well the segmentation approach fits in with the overall strategic goals of your business.
2. The evaluation lead us to conclude about the effective marketing plan.
When evaluating the proposed segments, you should consider the segment’s size and growth potential, the competitive forces present in the segment, and how well the segment fits into your overall strategic goals. Based on this evaluation, you should be able to determine whether or not the segment is an effective one for your marketing plan.
3. This includes assessing each potential segment in terms of its size and growth potential, segment competitive forces, and strategic fit of the segment.
After assessing each potential segment, develop profiles of each potential target market, then identify each of your final set as primary, secondary, tertiary, or abandoned. .
4. Sources of differential advantage may include product features, pricing strategies, distribution channels, branding, customer service, or unique marketing messages.
Differential advantage refers to the features or attributes of your product or service that set it apart from similar offerings in the market. It is important to identify these sources in order to create a positioning strategy that will effectively communicate the value of your product or service to your target market.
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Critical WritingThe purpose of this assignment is to identify and apply Logistics and Supply Chain Management concepts/tools to suggest logistics performance priorities. To this purpose, you should search and review about these companies through secondary available information. Think about how you can apply the concepts/tools that you learned in this course.Suggest logistics performance priorities for any ONE of the following; explain why you have come to your conclusions:A low fare Airline FLYNAS (Service)ORA fast food chain Such as Dominos (Product)The Answer must follow the outline points below:1. Executive summary (1Mark, word count rage 300-500)- Summarize what is logistics performance priorities, what Logistics and Supply Chain Management concepts/tools applied to achieve the company’s objective.2. Background information (1Mark, word count rage 300-500)- Briefly introduce the company background (e.g., name, products, business size, location, internal/external interesting facts, etc).3. Problem Description (1Marks, word count rage 300-500)- Describe the objectives clearly and specifically.- The objective may involve either logistics decision-making or process improvement.4. Results by using application of logistics and SCM concepts/tools that applied (1Mark)- Describe what specific logistics and Supply Chain Management concepts/tools be applied to achieve the objective. This section should make it clear that you understand the concepts/tools you are about to use.5. References (1 Marks)Note: The Answer should be of each point in the range of 300 to- 500 word counts.Each point carrying 1 Mark.Use APA style of referencing
Logistics performance priorities are essential for companies to achieve their objectives and maintain a competitive advantage in the market. In this assignment, we will be discussing the logistics performance priorities of a low fare airline, FLYNAS.
The company's main objective is to provide affordable and efficient air travel services to its customers. To achieve this objective, the company has implemented various Logistics and Supply Chain Management concepts/tools such as supply chain optimization, inventory management, and lean operations.
FLYNAS is a low fare airline based in Saudi Arabia. The company was founded in 2007 and operates domestic and international flights to various destinations in the Middle East, Africa, Asia, and Europe.
The main objective of FLYNAS is to provide affordable and efficient air travel services to its customers. To achieve this objective, the company needs to optimize its supply chain, manage its inventory efficiently, and implement lean operations.
To achieve its objective, FLYNAS has implemented various Logistics and Supply Chain Management concepts/tools. One of the main concepts/tools used by the company is supply chain optimization. By optimizing its supply chain, FLYNAS is able to reduce costs and improve efficiency, which helps the company to provide affordable and efficient air travel services to its customers.
Another concept/tool used by FLYNAS is inventory management. By managing its inventory efficiently, the company is able to reduce costs and improve efficiency, which helps the company to provide affordable and efficient air travel services to its customers.
Lastly, FLYNAS has implemented lean operations to improve efficiency and reduce costs. Lean operations involve eliminating waste and improving processes, which helps the company to provide affordable and efficient air travel services to its customers.
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Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. For December 31, 20Y7, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets Notes payable (6% interest) Common stock Preferred 2. 5% stock, $100 par $5,200,000 2,500,000 250,000 $5,000,000 2,500,000 250,000 54,800,000 2,500,000 250,000 (no change during year) Retained earnings The 20Y7 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. Round percentages to one decimal place. 500,000 500,000 500,000 1,574,000 1,222,000 750,000 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has years, there is Because the return on common stockholders equity ▼ the return on total assets in both leverage from the use of debt
Return on Common Stockholders' Equity for 20Y6 is 675% and for 20Y7 is 572% at Net Income of $462,500.
Return on Total Assets = Net Income / Total Assets
For 20Y6:
Return on Total Assets = $462,500 / $5,000,000 = 9.25%
For 20Y7:
Return on Total Assets = $411,000 / $5,200,000 = 7.90%
To calculate the return on stockholders' equity, we divide the net income by total stockholders' equity:
Return on Stockholders' Equity = Net Income / Stockholders' Equity
For 20Y6:
Return on Stockholders' Equity = $462,500 / ($500,000 + $1,222,000) = 29.3%
For 20Y7:
Return on Stockholders' Equity = $411,000 / ($500,000 + $1,574,000) = 21.2%
To calculate the return on common stockholders' equity, we need to subtract the preferred dividends from the net income and then divide by common stockholders' equity:
Return on Common Stockholders' Equity = (Net Income - Preferred Dividends) / Common Stockholders' Equity
For 20Y6:
Return on Common Stockholders' Equity = ($462,500 - $125,000) / $500,000 = 675%
For 20Y7:
Return on Common Stockholders' Equity = ($411,000 - $125,000) / $500,000 = 572%
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You plan to buy the sailing boat of your dreams in 5 years. It is expected to cost a total of $20 000 at that time. You have deposited $8 000 in a Certificate of Deposit paying 4% interest annually, maturing 5 years from now. Your parents have agreed to pay for all remaining expenses. If you are going to put your parents’ gift in an investment earning 7% over the next 5 years, how much must they deposit today, so you buy your boat 5 years from today?
The Present Value formula is PV = FV / (1 + r) ^ n, where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.
In this case, we know the future value of the boat is $20 000, and we need to find the present value of the remaining amount after subtracting the $8 000 from the Certificate of Deposit. So, the remaining amount is $20 000 - $8 000 = $12 000.
Using the Present Value formula, we can plug in the values and solve for PV:
PV = $12 000 / (1 + 0.07) ^ 5
PV = $12 000 / 1.40255
PV = $8 558.62
Therefore, your parents must deposit $8 558.62 today in an investment earning 7% over the next 5 years in order for you to buy your boat 5 years from today.
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A new café has been set up in addition to new coffee machines in your organization. The
new machines, besides dispensing regular coffee also dispense Cappuccino, Latte, and
clear vegetable soup. This has made the workplace more interesting for the employees. However, it has been observed by the management that the employees are frequently
taking the breaks and are often found relishing snacks at the new café. This has seriously
hampered the productivity of the employees. Most of them are now not able complete the
usual tasks in the stipulated time. Draft a memo to address the situation politely,
requesting the employees to restrict the duration of coffee breaks to a maximum of 10
minutes and to limit the number of breaks to two coffee breaks a day.
To address the situation of employees taking excessive breaks at the new cafe and using the coffee machines, a memo can be drafted to politely request that they restrict the duration of their breaks and limit the number of breaks they take.
The memo should clearly state the issue, provide a solution, and explain the importance of adhering to the request. Below is an example of how the memo can be formatted:
Memo
To: All Employees
From: Management
Subject: Restricting the Duration of Coffee Breaks
Dear Employees,
We are pleased to see that the new cafe and coffee machines have made the workplace more interesting and enjoyable for everyone. However, it has been observed that employees are frequently taking breaks and spending excessive amounts of time at the cafe.
This has seriously hampered the productivity of the employees, and most are now unable to complete their usual tasks in the stipulated time.
We understand the importance of taking breaks and enjoying the new amenities, but we also need to ensure that work is being completed efficiently and effectively. Therefore, we are requesting that all employees restrict the duration of their coffee breaks to a maximum of 10 minutes and limit the number of breaks to two coffee breaks a day.
We appreciate your cooperation and understanding in this matter. By adhering to this request, we can ensure that the workplace remains productive while still allowing employees to enjoy the new cafe and coffee machines.
Thank you,
Management
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The industrial company KLM SA manufactures fitness equipment for playgrounds upon orders from its customers. During september of the fiscal year 20x9, it processed and completed exclusively the order No 200, which concerned 2000 individual swings with backpacks with a sale price of 200 € each.
During the month of September, the following actions were taken:
Purchased raw materials costing 180,000 with credit
Raw materials costing 150.000€ were consumed in the production of raw materials
They were paid to the staff through the sight account for direct labour of September 85000 €. The employer's contributions amounted to 20.000€ and the deductions to 15.000€ respectively.
Order No. 200 was delivered to the customer on September 29th . Payment will be made in 2 months.
KLM S.A. charges general industrial expenses to orders using a predetermined attribution rate that at the beginning of the fiscal year was estimated at 60% of the cost of direct labor. Requested:
1. To carry out the journal entries that were made in September from the purchase of the raw materials until the delivery of the order to the customer.
2. Present business activities that the method of costing personalized production (on-demand costing) could be effectively applied.
1. The journal entries for the actions taken during September are as follows:
Entry 1: Purchase of raw materials costing 180,000 € with credit
Debit: Raw Materials Inventory 180,000 €
Credit: Accounts Payable 180,000 €
Entry 2: Consumption of raw materials costing 150,000 € in the production of order No. 200
Debit: Work in Process Inventory 150,000 €
Credit: Raw Materials Inventory 150,000 €
Entry 3: Payment to staff for direct labor of September 85,000 €, employer's contributions of 20,000 €, and deductions of 15,000 €
Debit: Work in Process Inventory 85,000 €
Debit: Payroll Tax Expense 20,000 €
Credit: Cash 70,000 €
Credit: Employee Withholdings Payable 15,000 €
Credit: Employer Payroll Taxes Payable 20,000 €
Entry 4: Allocation of general industrial expenses using a predetermined attribution rate of 60% of the cost of direct labor
Debit: Work in Process Inventory 51,000 € (60% of 85,000 €)
Credit: Manufacturing Overhead 51,000 €
Entry 5: Delivery of order No. 200 to the customer on September 29th with payment to be made in 2 months
Debit: Accounts Receivable 400,000 € (2000 units x 200 € each)
Credit: Sales Revenue 400,000 €
2. The method of costing personalized production (on-demand costing) could be effectively applied to business activities such as:
- Custom furniture manufacturing
- Custom clothing or fashion design
- Customized software development
- Personalized event planning and coordination
- Customized marketing or branding services
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What benefit of effective interest method amortisation for
financial assets and financial liabilities?
The benefit of effective interest method amortization for financial assets and financial liabilities is that it provides a more accurate and consistent way of calculating the interest income or expense over the life of the financial asset or liability.
The effective interest method (EIM) amortization helps match the timing of the payments for interest expenses and interest income over the life of the asset or liability. This helps ensure that the financial institution accurately reflects the income from the asset or liability in its financial statements.
This method takes into account the fact that the interest rate may change over time, and ensures that the interest income or expense is accurately reflected in each reporting period. This helps companies to better understand their financial position and make more informed decisions. Additionally, using the effective interest method can help companies to comply with accounting standards and regulations, as it is generally considered to be the most appropriate method for calculating interest income or expense.
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Given Malaysia’s dual banking system, discuss how different can profit rates in the Islamic Interbank Money Market (IIMM) be, relative to yields (interest rates) in the conventional money market in respect to both regulations and market practice. Explain. (10 marks)
The profit rates in the Islamic Interbank Money Market (IIMM) in Malaysia's dual banking system can be different from the yields in the conventional money market, due to the differences in regulations and market practices.
The dual banking system in Malaysia refers to the coexistence of both conventional and Islamic banking systems.
One of the key differences between these two systems is the way in which they generate profits. In the conventional money market, profits are generated through interest rates,
while in the Islamic Interbank Money Market (IIMM), profits are generated through profit-sharing agreements.
In terms of regulations, the IIMM operates under the principles of Shariah law, which prohibits the charging of interest (riba).
As a result, profit rates in the IIMM cannot be directly compared to yields in the conventional money market.
Instead, the IIMM uses profit-sharing agreements, where the profits generated from an investment are shared between the investor and the borrower.
This means that the profit rates in the IIMM are generally lower than the yields in the conventional money market, as they are not based on a fixed interest rate.
In terms of market practice, the IIMM tends to be less volatile than the conventional money market, as it is not subject to the same fluctuations in interest rates.
This means that the profit rates in the IIMM are generally more stable than the yields in the conventional money market.
However, the IIMM is also subject to other factors, such as the performance of the underlying assets and the overall economic conditions, which can affect the profit rates.
In conclusion, The IIMM operates under the principles of Shariah law, which prohibits the charging of interest, and uses profit-sharing agreements to generate profits.
The IIMM also tends to be less volatile than the conventional money market, as it is not subject to the same fluctuations in interest rates.
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