Solution:
PVA = Annuity amount × Annuity factor
Annuity amount = [tex]\frac{PVA}{Annuity factor}[/tex]
Annuity amount =
[tex]\frac{980,000}{7.36009}[/tex]
**Present value of an ordinary annuity of $1:n= 10, i= 6% (from PVA of $1)
Annuity amount = $108,694 = Lease payment
Amy Parker, a 22-year-old and newly hired marine biologist, is quick to admit that she does not plan to keep close tabs on how her 401(k) retirement plan will grow with time. This sort of thing does not really interest her. Amy's contribution, plus that of her employer, amounts to $2 comma 150 per year starting at age 23. Amy expects this amount to increase by 3% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the compounded future value of Amy's 401(k) plan if it earns 5% per year?
Answer:
Final Value= $370,481.13
Explanation:
Giving the following information:
Amy's contribution, plus that of her employer, amounts to $2,150 per year starting at age 23. Amy expects this amount to increase by 3% each year until she retires at the age of 57 (there will be 35 EOY payments). Interest rate= 5%.
First, we will add the growth of the deposits to the interest rate:
Interest rate= 0.03 + 0.05= 0.08
Now, to calculate the final value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 2,150
i= 0.08
n= 35
FV= {2,150*[(1.08^35)-1]}/ 0.08= $370,481.13
Western Markets has 150,000 shares outstanding with a market price per share of $15. Each share is entitled to one right. If the firm sets a rights offer as 5 rights plus $10 for each new share, what will be the ex-rights price per share
Answer: $8.50
Explanation:
Price Outstanding Value
Total Shares 15 150,000.00 $2,250,000.00
Right Price 2 150,000.00 $300,000.00
Total Shares and Value 300,000.00 $2,550,000.00
Ex rights Price = $2,550,000/300,000 = $8.5
Final answer:
The ex-rights price per share is calculated by adding the funds raised from the rights offering to the market value of the company before the offering and then dividing by the new total number of shares. In this case, the ex-rights price per share is approximately $14.17.
Explanation:
The student's question involves calculating the ex-rights price per share after a rights offering by Western Markets. The company currently has 150,000 shares outstanding priced at $15 per share, and the rights offering allows for the purchase of new shares at a discounted price, with 5 rights and an additional $10 payment required for each new share.
To calculate the ex-rights price, we must first determine the number of new shares that will be issued. Since 5 rights are needed for one new share, and there are 150,000 shares outstanding, this results in 30,000 new shares (150,000/5). The total funds raised from the rights offering will be $300,000 (30,000 shares x $10).
The total value of the company after the rights offering will be the sum of the market value before the offering ($2,250,000 which is 150,000 shares x $15) and the funds raised from the offering ($300,000), resulting in $2,550,000. We then divide this total by the new number of shares outstanding (180,000 shares, which is the original 150,000 plus the 30,000 new shares) to get the ex-rights price per share.
Ex-rights price per share = Total value / New total number of shares = $2,550,000 / 180,000 = $14.17 approximately.
Inventory records for Marvin Company revealed the following:
Date Transaction Number of Units Unit Cost
Mar. 1 Beginning inventory 1,090 $ 7.25
Mar. 10 Purchase 510 7.75
Mar. 16 Purchase 397 8.35
Mar. 23 Purchase 510 9.05
Marvin sold 1,880 units of inventory during the month. Ending inventory assuming FIFO would be ____________.
Answer:
Ending inventory= $5,592.45
Explanation:
Giving the following information:
Mar. 1: Beginning inventory= 1,090 units at $7.25
Mar. 10: Purchase: 510 units at $7.75
Mar. 16: Purchase: 397 units at $8.35
Mar. 23: Purchase: 510 units at $9.05
First, we need to calculate the number of units in ending inventory:
Ending inventory in units= total units - units sold
Ending inventory in units= 2,507 - 1,880= 627
Under FIFO (first-in, first-out), the ending inventory is composed of the cost of the last units bought.
Ending inventory= 510*9.05 + 117*8.35= $5,592.45
The greatest amount of foreign exchange trading takes place in the following three cities:
A) New York, London, and Tokyo.
B) New York, Singapore, and Zurich.
C) London, Frankfurt, and Paris.
D) London, Tokyo, and Zurich.
Answer:
The correct answer is letter "A": New York, London, and Tokyo.
Explanation:
New York City is still considered the world center for foreign exchange (forex) trading only followed by London and Tokyo. The main currencies being traded are the U.S. dollar (USD), Euro (EUR) and the Japanese yen (JPY). Some analysts believe soon the Chinese renminbi (CNY) will take an important place among the previously mentioned three currencies.
In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $6 million, patent; $4 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania's income statement for the first year ended December 31 related to these items?
Explanation:
Because trademarks have an unlimited effective life of 4 million dollars, the regulation is not valid.
Goodwill and immaterial properties are not amortized but are checked for damage annually for infinite useful lives.
The copyright worth $6 million for five years is the only inviolable thing you can amortize.
The gross amortization cost in relation to these things in the income statement of Burger Mania for the first year ending December 31 would amount to $800,000.
These financial statement items are for Cullumber Company at year-end, July 31, 2022.
Salaries and wages payable $ 3,900
Salaries and wages expense 59,100
Supplies expense 16,800
Equipment 17,000
Accounts payable 4,100
Service revenue 67,700
Rent revenue 9,700
Notes payable (due in 2025) 3,300
Common stock 16,000
Cash 35,100
Accounts receivable 11,300
Accumulated depreciation—equipment 7,600
Dividends 4,000
Depreciation expense 4,000
Retained earnings (beginning of the year) 35,000
a. Prepare an income statement for the year. Vaughn Manufacturing did not issue any new stock during the year.
Answer:
First recognize which are expenses and incomes:
Salaries and wages expenses (E)
Supplies Expense (E)
Service revenue (E)
Rent revenue (E)
Depreciation expense (E)
Income statement:
Sales
Service Revenue 67,700
Rent revenue 9,700
Costs
Sales and wages (59,100)
Gross Margin 18,300
Operating expenses
Supplies (16,800)
Depreciation (4,000)
Operating Income (2,500)
Income before Tax (2,500)
Income Tax (875)
The income statement for Cullumber Company for the year ending July 31, 2022, shows a net loss of $2,500. This result is obtained by subtracting the total expenses of $79,900, which includes salaries and wages, supplies, and depreciation, from the total revenue of $77,400, which is the sum of service and rent revenues.
Explanation:To create an income statement, you need to consider the company's revenues and expenses. The primary revenue for Cullumber Company is service revenue, and the secondary one is rent revenue. Expenses include salaries and wages expense, supplies expense, and depreciation expense.
Income Statement for Cullumber Company
Total Revenue: $67,700 (Service Revenue) + $9,700 (Rent Revenue) = $77,400Total Expenses: $59,100 (Salaries and Wages Expense) + $16,800 (Supplies Expense)+ $ 4,000 (Depreciation Expense) = $79,900Net Income (Loss): $77,400 (Total Revenue) - $79,900 (Total Expenses) = -$2,500
This indicates that the company experienced a loss for the year as the expenses exceeded the revenues. Financial statements like these are vital for understanding the company's financial health.
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First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $9,000 in each bank, how much more money would you earn from your Second City Bank account at the end of 12 years?
Answer:
The second bank provides with the higher future value.
Explanation:
Giving the following information:
First City Bank:
pays 6 percent simple interest
Second City Bank:
pays 6 percent interest compounded annually.
You deposited $9,000 in each bank.
The simple interest means that the interest gain each year doesn't accumulate. Compounded interest accumulates the interest to the principal, generation more interest each year.
First City Bank:
To calculate the ending value, we need to use the following formula:
FV= Principal + (principal*interest rate*n)
FV= 9,000 + (9,000*0.06*12)= $15,480
Second City Bank:
FV= Principal*(1+i)^n
FV= 9,000*(1.06^12)= $18,109.77
The second bank provides with the higher future value.
During its most recent fiscal year, Raphael Enterprises sold 250,000 electric screwdrivers at a price of $16.50 each. Fixed costs amounted to $625,000 and pretax income was $875,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?
Answer:
$2,625,000 is reported as variable cost.
Explanation:
As we know pretax income is calculated by deducting variable and fixed cost from thr revenue / slaes.
Pretax Income = Contribution Margin - Fixed cost
Contribution Margin = Pretax Income + Fixed cost
Contribution Margin = $875,000 + $625,000
Contribution Margin = $1,500,000
Contribution Margin = Revenue - variable cost
$1,500,000 = ( 250,000 x 16.50 ) - variable cost
$1,500,000 = $4,125,000 - Variable cost
Variable cost = $4,125,000 - $1,500,000
Variable cost = $2,625,000
You need a 35-year, fixed-rate mortgage to buy a new home for $310,000. Your mortgage bank will lend you the money at an APR of 6.05 percent for this 420-month loan. However, you can afford monthly payments of only $1,500, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $1,500?
Solution and explanation
Present value of the $1,500 monthly payments is
PMT $1,500
Annual Rate 6.05%
Number of period (NPER) 420
Present value Annuity (PVA) (calculated in excel using PV function) $261,528.41
[tex]\mathrm{PVA}=\$ 1,500\left[\left(1-\left\{1 /[1+(.0605 / 12)]^{\wedge} 420\right\}\right) /(.0605 / 12)\right][/tex] $261,528.41
Cost of Home $310,000
Amount of principal still owe = $310,000 - $261,528.41 $48,471.59
Balloon payment in 35 years, which is the FV of the remaining principal =
Present Value $48,471.59
Annual Rate 6.05%
Number of period (NPER) 420
Future Value (calculated in excel using FV function) $400,677.90
Balloon payment = [tex]\mathbf{S} 48,471.59[1+(.0605 / 12)] 420[/tex] $400,677.90
Should a monopolist’s freedom to refuse to deal with its dealers be restricted? In thiscase, suppose that this refusal would drive a dealer out of business. Explain the welfareeffects.
Answer:
Yes
Explanation:
Note that, the term “refusal to deal” with dealers is a situation in which one firm refuses to sell to dealers ans is only willing to sell at a price that is considered “too high”. Also note that restriction of refusal is subject to the jurisdiction of the firm.
However, in a case a Non-monopolistic firms they are free to make these decisions without risk of violating competition laws. The most common welfare effects involves a negative impact on competition, that affects the end-users due rise in prices.
Use the following information to determine this company's cash flows from financing activities.a. Net income was $466,000. b. Issued common stock for $79,000 cash. c. Paid cash dividend of $13,000. Paid $125,000 cash to settle a note payable at its $125,000 maturity value. d. Paid $115,000 cash to acquire its treasury stock. e. Purchased equipment for $87,000 cash.
Answer:
The answer is ($174,000)
Explanation:
Cash flows from financing activities show the inflow and outflow of cash that are used to fund the business's operations.
Cash flow from financing activities:
Issuance of common stock......................................$79,000
Payment of dividend........($13,000)
Settlement of notes payable.................................($125,000)
Payment for treasury stock.........…...........................................($115,000)
Net cash from financing activities...............................($174,000)
In the social class model developed by Gilbert and Kahl, members of the __________ have earned most of their money during their own lifetime. This class includes entrepreneurs, presidents of major corporations, sports or entertainment celebrities, and top-level professionals.
Answer: Lower -Upper Class
Explanation:
The lower‐upper class are those who acquired money from investments or business. They are also professionals who went to the highest level of school and by perseverance and hard work are living good lives.. They clude entrepreneurs, presidents of major corporations, sports entertainment celebrities, and top-level professionals also are doctors, accountants, engineers, lawyers.
They are part of the Upper class system who have money that they can spend although they are lower than the Upper-Upper Class who were born into extreme wealth. These people live in great neighborhoods, mingle with like minds and send their children to the finest schools.
. January 1, 2002 you bought a coupon bond for $1102. You received a coupon of $50 on December 30 . On January 1, 2003, you sold the bond for $989. What was your total rate of return? Show your work.
Answer:
-5.72%
Explanation:
Total rate of return = (Total return/net loss ÷ Purchase Price) × 100 ......... (1)
Loss on sales = Purchase price - Sales price = $1102 - $989 = $113.
Net loss = Coupon received - loss on sales = $50 - $113 = -$63
Substituting the values into equation (1), we have:
Total rate of return = ((-63) ÷ 1,102) × 100 = -5.72%
Therefore, the total rate of return is -5.72%. It is negative because the coupon bond led into net loss.
Answer:
The rate of return is found to be -5.72%. The negative sign indicate that the bond resulted in a loss.
Explanation:
The total rate of return r is given as
[tex]r=\dfrac{Net \,Return/Loss}{Purchase\, Price}\times 100\%[/tex]
Here the value of the net return or loss is given as
[tex]Loss \,on\, sales = Purchase\, price - Sales \,price = \$1102 - \$989 = \$113.[/tex]
[tex]Net\, loss = Coupon\, received - loss\, on\, sales = \$50 - \$113 = -\$63[/tex]
So the rate of return is as
[tex]r=\dfrac{Net \,Return/Loss}{Purchase\, Price}\times 100\%\\r=\dfrac{63}{1102}\times 100\%\\r=-5.72\%[/tex]
As the rate of return is found to be 5.72%. The negative sign indicate that the bond resulted in a loss.
1. A company reports $11.2 million in goodwill and decides to quantitatively test it for impairment at the end of 2020. The following information is collected: Division 1 Division 2 Division 3 Book value of goodwill $ 7,000,000 $ 200,000 $ 4,000,000 Fair value of division 40,000,000 6,000,000 20,000,000 Book value of division 45,000,000 6,500,000 21,000,000 2. What is the amount of goodwill impairment loss for 2020, following U.S. GAAP? A. $ 6,200,000 B. $ 6,500,000 C. $11,200,000 D. $ 6,000,000
Answer:
B. $ 6,500,000
Explanation:
The goodwill impairment loss for the year 2020 shall be determined through the following mentioned equation:
Goodwill impairment loss=Book value of all the divisions-Fair Value of all the divisions
Book value of all the divisions=$45,000,000+$6,500,000+$21,000,000
=$72,500,000
Fair value of all the divisions= $40,000,000+$6,000,000+$20,000,000
=$66,000,000
Goodwill impairment loss=$72,500,000-$66,000,000
=$6,500,000
So based on the above discussion, the answer is B. $ 6,500,000
Clearly establishing property rights for water ownership would result in which of the following? Choose one or more: A. incentive to maintain the property B. the tragedy of the commons C. incentive to conserve the property D. incentive to trade with others E. incentive to protect the property
Answer:
The options chosen are:
B. the tragedy of the commons;
C. incentive to conserve the property;
E. incentive to protect the property.
Explanation:
B. The tragedy of the commons- Open-access regimes can be exploited on a first-come, first-served basis, because no individual or group has the legal power to restrict access. The consequences of open access have become popularly known as what Hardin (1968) misleadingly called ‘the Tragedy of the Commons.’
C. incentive to conserve the property: In addition, clearly defining and assigning property rights should resolve environmental problems by internalising externalities and relying on incentives for private owners to conserve resources for the future.
E. The Incentive to protect the property - The incentives associated with private property rights can help conserve scarce resources: Private ownership entails penalties for premature harvesting or over-harvesting of resources. Private ownership rewards community and individual cooperation. Private ownership rewards conservation and stewardship behaviour.
Suppose that a 5-year Treasury bond pays an annual rate of return of 1.3%, and a 5-year bond of the fictional company Risky Investment Inc. pays an annual rate of return of 7.1%. The risk premium on the Risky Investment bond is __________ percentage points.
Consider a decrease in the annual rate of return on the Risky Investment bond from 7.1 percent to 5.5 percent. Such a change would _________ the interest rate spread on the Risky Investment bond over Treasuries to ___________ .
Which of the following explains the decrease in the annual rate of return on the Risky Investment bond?
1. The expected default rate on the Risky Investment bond has decreased.
2. The expected default rate on the Treasury bond has increased.
3. The expected default rate on the Treasury bond has decreased.
4. The expected default rate on the Risky Investment bond has increased.
Answer:
a. The risk premium on Risky Investment bond = 5.8
b. Such a change would decrease/reduce 4.2%
c. The expected default rate on the Risky Investment bond has decreased (1).
Explanation:
a. The risk premium on a risky investment is equal to the total return on a risky investment less the return on the risk free asset. The risky asset here gives an annual return of 7.1% while the risk free rate is 1.3%. So, the risk premium on the risky asset for additional risk is,
7.1 - 1.3 = 5.8%b. A reduction in the annual return on the risky asset will decrease/reduce the interest rate spread which is equal to the difference between the return of the risky and risk free asset. The new spread will be equal to,
5.5 - 1.3 = 4.2%c. The risk free rate is expected to be the same as no information is provided. Besides, a fall in annual rate of risky investment means that there is a reduction in the riskiness of such an investment and that would mean that there is a reduction in the default risk in turn leading to a reduction in compensation for default and the default rate.
The risk is made up of risk free + maturity risk + liquidity risk and default risk.
The risk premium on the Risky Investment bond is initially 5.8 percentage points. A decrease in its rate of return from 7.1% to 5.5% narrows the interest rate spread over Treasuries to 4.2 percentage points, likely due to a decrease in the expected default rate of Risky Investment Inc that is option A.
The risk premium on the Risky Investment bond is calculated by subtracting the Treasury bond's rate of return from the Risky Investment bond's rate of return. So the risk premium would be 7.1% - 1.3% = 5.8 percentage points.
When the annual rate of return on the Risky Investment bond decreases from 7.1% to 5.5%, this would narrow the interest rate spread on the Risky Investment bond over Treasuries to 5.5% - 1.3% = 4.2 percentage points.
The decrease in the annual rate of return on the Risky Investment bond could potentially be explained by option 1, which states that the expected default rate on the Risky Investment bond has decreased. This implies that the bond is seen as less risky than before, which can justify a lower rate of return required by investors.
An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a positive externality.The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good.Shift one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should shift the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should shift the demand curve to reflect the social value of consuming the good.With this type of externality, in the absence of government intervention, the market equilibrium quantity produced will be (greater, less) than the socially optimal quantity.Which of the following generate the type of externality previously described? Check all that apply.1.The city where you live has turned the publicly owned land next to your house into a park, causing trash dropped by park visitors to pile up in your backyard.2.Your roommate, Valerie, has bought a puppy that barks all day while you are trying to study economics.3.Manuel has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.4. A leading electronics manufacturer has discovered a new technology that dramatically improves the picture quality of plasma televisions. Firms of all brands have free access to this technology.
Answer:
(A) It is a Positive externality if the effect on third parties is beneficial.
(B) With positive externality, the social interest exceeds private interest, hence the demand curve shifts as seen attached.
(C) In the absence of interference, the quantity of market equilibrium would be less than the quantity which is socially optimal.
(D) Examples follow:
Leading software corporation agrees to raise the budget for open-source development research. Nick planted numerous trees.A. It is a Positive externality and third parties are beneficial
B. The demand curve shifts as seen attached.
What is the Demand Curve?
(A) It is a Positive externality if the consequence on third parties is beneficial.
(B) With positive externality, When the social interest exceeds private interest, therefore, the demand curve shifts as seen attached.
(C) In the scarcity of interference, the quantity of market equilibrium would be less than the socially optimal quantity.
(D) Examples observe:
Leading software corporation decides to raise the budget for open-source development research. Then Nick planted numerous trees.
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Neighborhood Insurance sells fire insurance policies to local homeowners. The premium is $270, the probability of a fire is 0.1%, and in the event of a fire, the insured damages (the payout on the policy) will be $260,000.
a. Make a table of the two possible payouts on each policy with the probability of each.
b. Suppose you own the entire firm, and the company issues only one policy. What are the expected value, variance and standard deviation of your profit?
c. Now suppose your company issues two policies. The risk of fire is independent across the two policies. Make a table of the three possible payouts along with their associated probabilities. (Round your "Probability" answers to 4 decimal places.)
d. What are the expected value, variance and standard deviation of your profit?
e. Compare your answers to (b) and (d). Did risk pooling increase or decrease the variance of your profit?
f. Continue to assume the company has issued two policies, but now assume you take on a partner, so that you each own one-half of the firm. Make a table of your share of the possible payouts the company may have to make on the two policies, along with their associated probabilities. (Round your "Probability" answers to 4 decimal places.)
g. What are the expected value and variance of your profit?
The question involves calculating the expected value, variance, and standard deviation for different scenarios for an insurance company. It covers the situation of having one policy, two policies, and having a partner. The calculations involve probability and statistics to determine the possible outcome for the insurance company.
Explanation:To answer these questions, it's important to understand the concepts of expected value, variance, and standard deviation, which all are foundational concepts in probability and statistics. The expected value (or mean) of a random variable is a measure of the center of the distribution of the variable. Variance tells you the degree of spread in your data set. The standard deviation is a measure of how spread out numbers in the data set are.
Let's first solve part a and b. We can start this by creating a table of possible outcomes and their probabilities. We find that the profit would be either $270 (premium is collected, no fire) or -$259,730 (fire occurs, payout happens)
With the probability of a fire being 0.1%, we can then calculate the expected value, variance, and standard deviation of the profit. The expected value is a weighted average of the possible outcomes, with the weights being the probabilities of the outcomes. The variance is a measure of the dispersion of the profit amounts around their expected value, and the standard deviation is the square root of the variance.
For part c and d
If the company issues two policies, the possible outcomes would be Both fires ($270*2 - $260,000*2), One fire ($270*2 - $260,000), No fire ($270*2). We just again calculate the probabilities and find out the expected value, variance and standard deviation.
Finally, with risk pooling and partnership you have different outcomes depending on whether 0, 1, or 2 fires occur and if the profits are shared between partners. The calculations are similar to the ones before.
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a. Insurance make a table of the two possible payouts on each policy with the probability of each. b. Calculate the expected value, variance, and standard deviation of your profit. c. Make a table of the three possible payouts along with their associated probabilities.
a. Table of Payouts and Probabilities
PayoutProbability$099.9%$260,0000.1%
b. Expected Value, Variance, and Standard Deviation
To calculate the expected value, we multiply each payout by its corresponding probability and sum the results. In this case, the expected value is $260,000 x 0.001 + $0 x 0.999 = $260.
The variance is calculated by subtracting the expected value from each payout, squaring the result, multiplying it by its corresponding probability, and summing the results. The variance for this scenario is ($0 - $260)^2 x 0.999 + ($260,000 - $260)^2 x 0.001 = $67,400.
The standard deviation is the square root of the variance, which in this case is approximately $259.90.
c. Table of Payouts and Probabilities (Two Policies)
PayoutProbability$099.9% x 99.9% = 99.8001%$260,0000.1% x 99.9% + 99.9% x 0.1% = 0.1998%$520,0000.1% x 0.1% = 0.0001%
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You want to open a savings account. There are five banks located in your area. The rates paid by banks A through E, respectively, are given below. Which bank should you select if your goal is to maximize your interest income?
Complete question:
You have $5,600 that you want to use to open a savings account. There are five banks located in your area. The rates paid by banks A through E, respectively, are given below. Which bank should you select if your goal is to maximize your interest income?
A. 3.26 percent, compounded annually
B. 3.20 percent, compounded monthly
C. 3.25 percent, compounded semi-annually
D. 3.10 percent, compounded continuously (ignore this selection)
E. 3.15 percent, compounded quarterly
Answer:
3.25 percent, compounded semi-annually bank should select if the goal is to maximize your interest income
Explanation:
If value is accumulated annually, then n= 1; if semi-annually, then n= 2; quarterly, then n= 4; monthly, then n= 12; weekly, then n= 52; hourly, then n= 365; and so on, irrespective of the number of years concerned.
The widely used compounding method for bank savings accounts is quarterly, weekly or semi-annual; it is also hourly for money market accounts.
The time span for each account of the interest is one day and for half-year accounts it is six months. Regular blogs earn 1/365 a year, while half-year posts take place two times a year.
The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased on account, $209,000. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials). Accrued direct labor cost of $48,000 and indirect labor cost of $22,000. Depreciation recorded on factory equipment, $104,000. Other manufacturing overhead costs accrued during October, $131,000. The company applies manufacturing overhead cost to production using a predetermined rate of $9 per machine-hour. A total of 76,300 machine-hours were used in October. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 22% above cost.
Answer:
The question is incomplete. Missing Portion is written as bold in explanation.
Explanation:
Required:
1. Prepare journal entries to record the transactions given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $37,000.
Account Dr Cr
1.Raw materials 209000
Account payable-Liability 209000
The Materials are purchased in credit.
2. Work In Process 152000
Manufacturing Overhead 38000
Raw materials 190000
Entry for Materials used in Production.
3. Work In Process 48000
Manufacturing Overhead 22000
Salaries payable 70000
4.Manufacturing Overhead 104000
Depreciation 104000
5. Manufacturing Overhead 131000
Account payable 131000
6.Work In Process 686700 ( 9 x 76300= 686700)
Manufacturing Overhead 686700
7.Finished Goods 512000
Work In Process 512000
8.Cost of goods sold 449000
Finished Goods 449000
Accounts Receivable 547780
Sales Revenue 547780
**Sales - Cost of job * 1.22 (22 % above cost)
2. T-accounts for Manufacturing Overhead and Work in Process.
Manufacturing overhead
Dr Cr
22000 686700
38000
104000
131000
Ending balance 391700 - Favorable
Work In process
Dr Cr
beginning bal. 37000
152000
48000 512000
686700
Ending balance 411700
The Polaris Company uses a job-order costing system, accounting for various cost factors in production and utilizing a predetermined manufacturing overhead rate. This system is essential for tracking product costs and determining the financial performance of the company.
The Polaris Company's job-order costing system handles various transactions that impact the cost of manufactured products. In October, these transactions include raw materials purchase, consumption in production (split into direct and indirect materials), and accrued labor costs, both direct and indirect.
Manufacturing overhead costs, including depreciation of factory equipment and other overheads, are also accounted for. Importantly, manufacturing overhead is applied at a predetermined rate based on machine hours utilized.
This information aids in calculating the cost of goods manufactured and cost of goods sold, vital for determining the company's financial performance for that month.
When the jobs are transferred to Finished Goods and eventually sold to customers at a markup, understanding this costing system helps ascertain profitability and cost efficiency within the company.
You have decided to enter the candy business. You are considering producing two types of candies: Slugger candy and Easy Out candy, both of which consist solely of sugar, nuts, and chocolate. At present you have in stock 10,000 ounces of sugar, 3,000 ounces of nuts, and 3,000 ounces of chocolate. The mixture used to make Easy Out candy must contain at least 20% nuts. The mixture used to make Slugger candy must contain at least 10% nuts and 10% chocolate. Each ounce of East Out can be sold for $0.60 and each ounce of Slugger for $0.40.
What is the maximum revenue you can earn?
To maximize revenue, make 15,000 ounces of Easy Out candies and 30,000 ounces of Slugger candies, for a total revenue of $21,000.
Explanation:To maximize revenue, you need to find the combination of Slugger and Easy Out candies that uses all the available ingredients and yields the highest total revenue. Let's calculate the maximum revenue step by step:
First, calculate the maximum quantity of Easy Out candies that can be made using the available nuts: 3,000 ounces x 100% / 20% = 15,000 ounces. This is the maximum quantity of Easy Out candies you can make.Next, calculate the maximum quantity of Slugger candies that can be made using the available nuts and chocolate: 3,000 ounces (nuts) x 100% / 10% = 30,000 ounces, and 3,000 ounces (chocolate) x 100% / 10% = 30,000 ounces. Since nuts and chocolate are limited by the same quantity, the maximum quantity of Slugger candies is limited by the 30,000 ounces of chocolate.Calculate the revenue for each type of candy and sum them up: Revenue from Easy Out candies = 15,000 ounces x $0.60/ounce = $9,000, and revenue from Slugger candies = 30,000 ounces x $0.40/ounce = $12,000. So the maximum revenue you can earn is $9,000 + $12,000 = $21,000.Learn more about maximizing revenue here:https://brainly.com/question/33891229
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6. Provide a concise statement about the relationship between a developing country’s emphasis on the export of traditional commodities and: (a) export earnings stability; (b) comparative advantage; (c) terms of trade.
Answer:
(a) Traditional commodities may experience higher price fluctuations.
(b) Developing countries tend to have comparative advantage in traditional commodities.
(c) The terms of trade for traditional commodities may tend to reduce over time in accordance to the Prebisch-Singer.
Explanation:
(a) Traditional commodities tend to experience fluctuations in price which will invariably lead to fluctuations in export earnings. Many developing countries concentrate on the exportation of primary products which are usually affected by shifts in supply and demand and are more price inelastic. The uncertainty caused from commodity price fluctuations can hamper economic growth and may increase poverty.
(b) Comparative advantage is the advantage a country gets by producing a good or service at a lower opportunity cost than other countries. Even though the nation may not be the best at producing that particular thing, the good or service has a low opportunity cost. Many developing countries have a comparative advantage in the production of traditional commodities because of natural endowments and low labour costs.
(c) Terms of trade is the ratio of a country's average export price to the country's average import price. For developing countries, the terms of trade for traditional commodities tends to fall with time. The Prebisch–Singer thesis proposed that the price of primary or traditional commodities reduces relative to the price of manufactured products over the long term, thereby causing deterioration in the developing economies terms of trade.
The pilots of various U.S. airlines are threatening to strike unless they receive wage increases. The pilots belong to a union. Which of the following would most likely negotiate an agreement with airline management?
Answer: The question did not include the options. The answer is Union Representatives
Explanation: The Question with the options should be:
The pilots of various U.S. airlines are threatening to strike unless they receive wage increases. The pilots belong to a union. Which of the following would most likely negotiate an agreement with airline management?
A) union representatives
B) employee supervisors
C) government agencies
D) individual employees
The right answer is A ---- Union representatives
This is because Since the pilots belong to a union then Negotiation with management would be with the Union Representatives rather than individual pilots where the Union would present the concerns of the pilots to the management so as to resolve issues.
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit:
Manufacturing:
Direct materials $ 10
Direct labor $ 4
Variable manufacturing overhead $ 1
Variable selling and administrative $ 1
Fixed costs per year:
Fixed manufacturing overhead $ 231,000
Fixed selling and administrative $ 141,000
During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the company’s product is $40 per unit. Assume that the company uses absorption costing. Compute the unit product cost.
Answer:
Unitary product cost= $26
Explanation:
Giving the following information:
Direct materials $ 10
Direct labor $ 4
Variable manufacturing overhead $ 1
Fixed costs per year:
Fixed manufacturing overhead $ 231,000
During the year, the company produced 21,000 units
Under the absorption costing method, the unit product coast is calculated using direct material, direct labor, and total unitary overhead.
First, we need to calculate the unitary fixed overhead:
Unitary fixed overhead= 231,000/21,000= $11
Now, we can calculate the unit product cost:
Unitary product cost= 10 + 4 + 1 + 11= $26
The unit product cost for the Lynch Company under absorption costing is $26. This is calculated by adding the variable costs per unit ($15) to the allocated fixed manufacturing overhead cost per unit ($11), which is derived from dividing the total fixed costs by the number of units produced.
Explanation:To compute the unit product cost under absorption costing, we need to consider both variable and fixed manufacturing costs. In Lynch Company's case, the variable costs per unit are as follows: direct materials $10, direct labor $4, and variable manufacturing overhead $1. The total variable manufacturing cost per unit then adds up to $15. Furthermore, the fixed manufacturing overhead costs are $231,000 per year.
Since we are using absorption costing, we allocate these fixed costs to the units produced, not the units sold. With 21,000 units produced, we divide the total fixed manufacturing overhead by the number of units. This calculation is $231,000 / 21,000 units, resulting in $11 per unit for fixed manufacturing overhead.
The sum of variable and fixed manufacturing costs per unit gives us the total unit product cost. So, $15 (variable) + $11 (fixed) equals $26 per unit. This $26 is the unit product cost under absorption costing for Lynch Company.
Clarion Corp. invested cash in a 6-month certificate of deposit (CD) on November 1, 2015. If Clarion Corp. has an accounting period that ends on December 31, 2015, when should Clarion recognize interest revenue from the CD?
a. On December 31, 2015 only
b. On May 1, 2016 only
c. Both December 31, 2015 and May 31, 2016
d. On the date when its income tax return is filed
Answer:
A is the correct option
Explanation:
Revenue or income is recognized based on accrual concept of accounting where revenue or income is recognized when earned and expenses when incurred not when received or paid in cash.
As a result,on the 31st December Clarion Corp. has earned two months' interest on the 6-month certificate of deposit as it has invested for two months.
The correct option is A,Clarion recognizes interest revenue on 31st December ,2015 only.
It is also important to note that the since 2015 came to end the fraction of interest revenue relating to year 2015 needs to be recognized by debiting accrued income account and crediting investment on the face of the income statement
Final answer:
Clarion Corp. should recognize interest revenue from the CD both on December 31, 2015, and May 31, 2016, in line with accrual accounting principles, which dictate revenue should be recognized when it is earned.
Explanation:
The question asks, "When should Clarion Corp. recognize interest revenue from a 6-month certificate of deposit (CD) that was invested in on November 1, 2015, given their accounting period ends on December 31, 2015?
According to accrual accounting principles, revenue should be recognized when it is earned regardless of when the cash is received. In this scenario, Clarion Corp. earns interest over the duration of the CD, even though the interest might not be paid until the CD matures. Therefore, the interest revenue that Clarion Corp. earns by the end of its accounting period on December 31, 2015, should be recognized in their financial statements at that time, with the remaining interest revenue to be recognized when it is fully earned by the end of the CD term.
The correct answer is c. Both December 31, 2015 and May 31, 2016. This is because interest revenue is earned over the length of the CD, not just when the CD matures or the interest is paid. Clarion Corp. should recognize the portion of interest earned up to December 31, 2015, in the 2015 fiscal year, and the remainder upon the CD's maturity on May 1, 2016, in the following fiscal period.
Focused strategies keyed either to low cost or differentiation are especially appropriate for situations where: a. The market is composed of distinctly different buyer groups who have different needs or use the product in different ways. b. Most other rival firms are using a best-cost producer strategy. c. Buyers have strong bargaining power and entry barriers are low.
Answer:
c. Buyers have strong bargaining power and entry barriers are low.
Explanation:
In markets where buyers have stron bargaining power because options are abundant, and entry barriers are low (the reason why options are abundant), focused strategies that attempt at attracting customers with lower prices or product differentiation can be very important in maintaining a firm's market share, or improving it.
A lower cost can attract most types of customers because almost everyone is interested in saving as much as possible when they buy goods and services. However, product differentiation is another good strategy because if suppliers are many, people often need something special about the good to finally take the decision to purchase it.
The tool that can be used to depict main causes for an identified quality problem, subdivided into categories represented as machines, materials, methods, and manpower, is called a:____________
Answer:
Fishbone diagram
Explanation:
The fishbone diagram, also known as Ishikawa diagram or the cause and effect diagram is a visualization tool used for grouping the likely causes of a problem to know its root causes. A fishbone diagram blends brainstorming with a mind map template.
A fishbone diagram is used for troubleshooting and product development. After all the likely causes of a problem has been brainstormed by the group, the facilitator rates the possible causes in accordance to their importance. The diagram's design resembles a fish skeleton. Fishbone diagrams are usually made at team meetings.
Answer: Cause and Effect Diagram/Fishbone Diagram
Explanation: The Cause and Effect /Fishbone Diagram is so named because of its similarity to the skeleton of a fish. It is used to visulaize the causes of a quality problem and the interactions between them.
When the possible causes are categorized into manpower, methods, material and machines, it is a 4M Cause and Effect Diagram. This is useful in a manufacturing environment where any of these factors can be the cause of a quality problem. These categories are further divided into subcategories and help identify the cause of quality issues.
Using at least two (2) of the foundational ethical theories studied in Module 2 FOR EACH QUESTION, you should answer the following questions. With each answer, you should discuss the issues and set forth and defend a clear position on whether or not any constraint ought to be placed on the freedom of a business to:
a. export capital (factories, jobs, resources) for production abroad (remember, you will want to concentrate on the ethics of this proposed action, rather than the political or legal implications) on
b. export commodities which have been banned from sale in the United States due to health or safety concerns
c. downsize in the face of economic difficulty
d. break union contracts in the face of economic difficulty
e. Theories to use (two per question): Utilitarian, Kant, Egoism, Libertarianism, Rawlsianism,
Answer:
With moral situation in relationship with sending out capital for creation abroad I would state that organization shouldn't be made to proceed with tasks in the event that they are never again beneficial. As I would see it, one of the primary reasons partnerships would trade capital for creation is expand benefits of their investors. This would be a Libertarian's perspective, which means point of view is that individual prosperity, thriving and social concordance are cultivated by "however much freedom as could be expected" and " as meager government as essential" and accept that when a business is never again gainful officials search for approaches to reduce expenses, and since lower wages can be paid in different nations this can get huge reserve funds for the organization.
Enterprises ought to be permitted to stay serious and on the off chance that that implies trading capital, at that point so be it. In any case, I do feel that companies have an ethical duty to its workers and network that they are forsaking.
Utilitarian hypothesis is to create the best great over awful for an extraordinary number of individuals. Sending out capital for creation abroad has helped colossally in the improvement of different nations. An utilitarian doesn't really imply that the correct activity is the one that profits the best, yet the rule is to augment the best advantage for all.
A moral problem that is related with sending out restricted items is basically the way that the individuals can be harmed or even kick the bucket subsequently in utilizing this prohibited item. Hence, in light of this, I would state that imperatives ought to be set on the exportation of the items banned in U. S. To help my choice, I will utilize the Ethical Theory of German scholar, Immanuel Kant for my defense. Kant's moral hypothesis depends on the hypothesis that ethical issues canine standards be known due to reason alone and not founded on perception. Nonetheless, the contention that the advantages of sending out provisions with the chance of misuses that the great overweight the awful. Therefore, I feel that a few limitations ought to be put on the opportunity to send out wares that have potential for abuse and Utilitarianism, a consequential hypothesis, will bolster my announcement.
As indicated by an article " Any time we're confronted with a choice that can influence the rights or prosperity of others, we're taking a gander at a moral issue. Regardless of how solid the avocation for lessening the working environment are appeared to be, laying off loyal and gainful representatives in an upsetting encounter for all concerned and those on the less than desirable end face monetary as well as mental injury. " (Bruce Weinstein, 2008)
For any practical moral point of view, the appropriate response is constantly a yes. An organization that gives no occupations and no advantages has a total assets of literally nothing, best case scenario, and is destructive even under the least favorable conditions, as individuals have put their lives in the endeavor, and should look for work somewhere else, apparently from a comparable industry, which is likely additionally enduring as a rule.
I don't intend to be hostile or contrarian or basic, yet I figure a superior inquiry would be: " Should a business be permitted to scale back in face of monetary trouble in the event that it could do to something else?" all things considered the appropriate response from a standard Utilitarian point of view turns out to be significantly more troublesome, and relies on various components. In philanthropic capacity feasible for an adequate period of time? Is the potential for venture and development going to give superior to scaling back? I m not certain utilitarianism can even answer this inquiry. I think act utilitarianism would be more qualified, and on account of the subsequent inquiry, my answer would no.
Concerning breaking an association contract, I think that this is an extreme one for rule utilitarianism. From the degree of the agreement, it isn't adequate, as it abuses the guidelines probably set out for the best advantage of all. On the other hand, if breaking the agreement can spare occupations, rule utilitarianism has crushed itself.
From the standard point of view, my answer would be "no" as there are no ifs, ands or buts arrangements for exchange that can be utilized to rethink the principles in the event of an emergency. An occupation that pays you less is better than no activity at all under either type of utilitarianism.
The ethics of a business exporting capital and commodities, downsizing, and breaking union contracts are best analyzed using utilitarianism, Kantian ethics, and Rawlsianism.
Explanation:When considering the ethical implications of a business exporting capital for production abroad, two foundational ethical theories that can be applied are utilitarianism and Kantian ethics. Utilitarianism focuses on maximizing overall happiness or well-being, while Kantian ethics emphasizes the importance of treating individuals as ends in themselves and not as means to an end. From a utilitarian perspective, exporting capital may lead to increased economic growth and job opportunities in the host country, benefiting the overall welfare. However, from a Kantian perspective, if exporting capital results in exploitation of workers or violation of labor rights in the host country, it may be deemed unethical.
Similarly, when examining the ethics of exporting commodities banned in the United States due to health or safety concerns, utilitarianism and Kantian ethics can be utilized. From a utilitarian standpoint, exporting such commodities may maximize overall happiness if there is a demand for them in other countries. However, considering Kantian ethics, if exporting banned commodities poses a risk to the health and safety of individuals in the recipient country, it may be seen as ethically wrong.
Regarding downsizing and breaking union contracts in the face of economic difficulty, utilitarianism and Rawlsianism can be relevant ethical theories. Utilitarianism would consider the overall welfare and outcomes for the business and society, whereas Rawlsianism would prioritize fairness and justice. Downsizing and breaking union contracts may be justified from a utilitarian perspective if it helps the business survive and prevents greater economic harm. However, from a Rawlsian perspective, considerations of fairness and maintaining social and economic stability may suggest the need for alternative approaches that minimize the negative impact on employees and uphold contractual obligations.
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Best Buy Part B) At a Best Buy store, the forecast for the annual demand of a Motorola cell phone is 15600. Demand forecasts are updated weekly and the unit time is one week. Motorola takes 2 weeks to supply an order and the setup cost is $400 per order. The holding cost rate is 10% and one cell phone costs $50. The store manager now finds that the weekly demand is highly random and normally distributed with a mean of 300 and a standard deviation of 200. Best Buy is targeting a service level of 97.73%. (Best Buy Part B) (a) What is the cycle inventory (or half of order quantity)? [Answer format: integer] (b) What is the average inventory (or inventory held on average between orders)? [Answer format: integer] Write your answer(s) as 123, 4567
Answer:600
Explanation:
Answer:
Calculation of economic order quantity (EOQ):
The formula to calculate economic order quantity is,
EOQ = [tex]\sqrt{\frac{2DC_{S} }{C_{H} } }[/tex]
Where,
D is the annual demand
Cs is the setup cost
CH is the holding cost
Substitute $15,600 for D, $400 for Cs and $5 for CH in the above formula.
EOQ = [tex]\sqrt{\frac{2 * 15600 * 400}{5} }[/tex]
EOQ = $1580
Hence, the economic order quantity is 1,580.
(a). Calculation of total setup cost:
The formula to calculate total setup cost is,
Total setup cost = (D/EOQ) x [tex]C_{S}[/tex]
Substitute 15600 for D, $400 for [tex]C_{S}[/tex] and 1580 for EOQ in the above formula
Total setup cost = (15600/1580) x $400
Total setup cost = $3,949.36
Hence, the total setup cost is $3,949.36
(b). Calculation of total holding cost:
The formula to calculate total holding cost is,
Total holding cost = (D/2) x [tex]C_{H}[/tex]
Substitute 15600 for D and $5 for [tex]C_{H}[/tex] in the above formula
Total holding cost = (15,600/2) x 5
Total holding cost = $3,900
Hence, total holding cost is $3,900
(c). Calculation of total cost:
The formula to calculate total cost is,
Total cost = D x C + [tex]C_{TS}[/tex] + [tex]C_{TH}[/tex]
Where,
D is the annual demand
C is the cost
[tex]C_{TS}[/tex] is the total setup cost
[tex]C_{TH}[/tex] is the total holding cost
Substitute 15600 for D, $50 for C, 3949.37 for [tex]C_{TS}[/tex] and $3,950 for [tex]C_{TH}[/tex] the above formula,
Total cost = (15,600 x $50) + $3,949.37 + $3,950
Total cost = $787,899.37
Hence, total cost of order is $787,899.37
Millcorp sells wetsuits for deep sea divers. It recently engineered a new material for its wetsuits to better hold in the wearer’s body heat. After a close encounter with a shark, a customer discovers that the new material protects against shark bites. Soon after, Millcorp’s sales explode and it achieves 90% market share in diver wetsuits. Which of the following best describes this situation?a)Millcorp has a lawful natural monopolyb)Millcorp has a lawful innocent acquisition of a monopoly.c)Millcorp does not have a monopoly.d)Millcorp can likely be found guilty of pursuing monopoly power.
Answer:
B) Millcorp has a lawful innocent acquisition of a monopoly.
Answer:
B) Millcorp has a lawful innocent acquisition of a monopoly.
Explanation:
Millcorp has a lawful innocent acquisition of Monopoly because Millcorp isn't aware that the newly acquired material for wet suit protect against shark bite. The motive if acquiring the material was to better hold in the wearer's body heat.
The innocent acquisition of the material and the new discovery has increased the demand for Millcorp product which will increase its profits
Monopoly:This a market structure in which a seller sells a unique product.
The product sold by the seller cannot be easily substituted.
The Monopoly is characterised by
1) Single seller and many buyers
2) Absence of competition
3) No close substitute