Answer:
The correct answer is D
Explanation:
Feasibility analysis is the analysis which is used in order to determine or state the viability of the project like ensure the project is legal and economically justifiable and technically feasible.
In short, it states that the project is worth or not the investment. So, when the studies indicate the low incidence, then the firm is concerned regarding the feasibility of the project, that it would probably determine or state whether or not the questions could be answered.
The SoundBoy was a portable radio targeted toward children in the 1970s. It came in different colors and shapes and was one of the most popular products in its time. Portable radios have slowly been replaced by smartphones, tablets and other gadgets. From the above scenario, it can be stated that the SoundBoy is currently in the _____ stage of the product life cycle.
Answer:
decline
Explanation:
Based on the information provided within the question it can be said that in this scenario the SoundBoy seems to currently be in the decline stage of the product life cycle. This stage is characterized by as being the "dying off" stage where sales begin to drop and production of the product is ultimately stopped. Revenue will continue to fall to the point that the product is completely discontinued.
Answer:
Explanation:
The decline stage of the product life cycle is the one where the product ultimately becomes obsolete or dies due to the low or negative growth rate in sales .
Decline Stage: The decline stage of the product life cycle is the terminal stage where sales drop and production is ultimately halted.
As a number of companies start to dominate the market, it becomes increasingly difficult for the company in question to maintain its level. As new technologies emerge making the product become ultimately obsolete as in the case of(The SoundBoy) portable radios and now smart phones, tablets and other gadgets.
Tyler is a finance manager at an automobile manufacturing company. He collects internship reports from summer interns at the company to study the finance strategies suggested by them in their reports. He uses the relevant information from this study to suggest new strategies to the chief financial officer of the company. In the context of managerial roles, which of the following roles does Tyler illustrate in this scenario?
A) Leader role
B) Liaison role
C) Disseminator role
D) Monitor role
Option C
Disseminator role roles Tyler illustrates in this scenario
Explanation:
Disseminator is one of the several managerial roles recognized by the organizational researcher. Before managers can propagate data, it must initially be collected from inside as fine as from outside the company. A disseminator role is where you interact with probably valuable information to your co-workers and your crew.
On getting any relevant information from inside or external experts, the likewise needs to be distributed or communicated within the organization. The disseminator role includes partaking information down and beyond the organization, not up the authority; this is commonly reflected reporting.
Gammy Corporation provides services with a normal price of $800,000 and a trade discount of $100,000. Terms are 2/10, n/30 and the customers pay within 10 days. The net service revenue is:______.
Answer:
$686,000
Explanation:
net service revenue = gross revenue - discount for early payment
gross revenue = total sales price - trade discount
gross revenue = $800,000 - $100,000 = $700,000
net service revenue = $700,000 - 2%($700,000) = $700,000 - $14,000 = $686,000
Stephen is preparing his pitch for a bank representative that will be considering him for a business loan. He lists the resumes and credentials of chefs who are working in the restaurant’s kitchen. This is an example of what marketing principle (from the 7 Ps)?
Answer:
People
Explanation:
Probably the most important P of the services marketing mix is people. Services rely on the customer experience and the company's employees are the ones that make the difference. E.g. a restaurant can provide the most delicious food, but if the waiter is rude and treats customers very badly, the whole experience will be negative. Until artificial intelligence replaces us, people will be the cornerstone of the service industry.
Stephen is demonstrating the 'People' aspect of the 7 P's of marketing by showcasing the credentials of his chefs to obtain a business loan.
Explanation:Stephen is engaging in a principle that falls under the '7 P's of marketing', which include Product, Price, Place, Promotion, People, Process, and Physical evidence. In this case, by listing the resumes and credentials of chefs working in the kitchen, Stephen is focusing on 'People'. This element emphasizes the importance of the staff and their expertise in delivering an excellent service. The bank representative will consider this information relevant as it highlights the capability and professionalism of the restaurant's team, thus enhancing the business's credibility and improving the chances of securing the loan.
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You are a manager who has run into some conflict between two of your departments. Both departments are overworked and complaining that the other department has it easier. You need these departments to work together to come up with a solution and remain on good terms. Which conflict management strategy would be most effective?
Answer:
Collaboration.
Explanation:
Collaboration is the process by which two or more people or group's come together to achieve a particular goal. It usually needs leadership to guide it's activities, and is similar to cooperation.
The departments are complaining and saying the other one has it easy. Bother departments are functioning independently.of one another and so cannot understand the unique challenges faced by the other team.
When they collaborate they pool their resources together to achieve more. They also get to understand the pain points of the other department and this helps foster a good work environment.
True or False
1. There is no overlap between financial and managerial accounting.
2. Managerial accounting sometimes relies on past information.
3. Managerial accounting does not need to conform to GAAP
4. Financial accounting must conform to GAAP.
Answer:
1. There is no overlap between financial and managerial accounting. FALSE, for example, sales revenue and cogs are important to both.
2. Managerial accounting sometimes relies on past information. TRUE
3. Managerial accounting does not need to conform to GAAP TRUE
4. Financial accounting must conform to GAAP. TRUE
Explanation:
Managerial accounting is designed to meet the needs of internal users, i.e. management, and help them to plan or make decisions regarding the firm. Financial accounting is designed for external users, e.g. shareholders, IRS, SEC, banks, etc.
Lisa’s Custom Print Services produces and sells custom seashore prints. The manager reported $5,400 in fixed expenses, operating income of $0 at the breakeven point, and a contribution margin per unit of $50. What is the firm’s breakeven point in units using the shortcut approach?
Answer:
108 units
Explanation:
break even point in units = total fixed costs / contribution margin per unit = $5,400 / $50 = 108 units
There are three methods to obtaining a break even point and they all should result in the same answer: equation method, the formula method (or shortcut), and in dollar sales and sales units.
The formula method is also called the shortcut because it's the simplest way.
Factor income __________.a. consists largely of interest, dividends, and other income on foreign investments. b. is a theoretical construct of the factors of production, land, labor, capital, and entrepreneurial ability. c. is generally a very minor part of national income accounting, smaller than the statistical discrepancy. d. none of the options
Answer:
a) Consists largely of interest, dividends, and other income on foreign investments.
Explanation:
Factor income is all the income that we receive from selling at least one of the factors of production.
Factor income received from land ⇒ rentFactor income received from labor ⇒ wages and salariesFactor income received from capital ⇒ profitWhen we are calculating the balance of payments of a country, the factor income that we must include comes from capital invested in foreign countries and the income generated from capital is called profit and it consists mainly of interests and dividends.
Quality that measures usefulness vs. price paid is which definition of quality? A. Conformance to specifications B. Fitness for use C. Value for price paid D. Support services E. Psychological
Answer:
C. Value for price paid
Explanation:
The quality of goods are measured with the usefullness of the goods to the consumer and how much he is willing is pay for the product is etermined by the utility of goods to the consumer. Higher amount is paid for the goods, which has higher utility to the consumer and it also define quality to the consumer. Price and utility of product remain the main determinant for the quality.
Value of price paid is determined by utility or usefulness of the product for each dollar paid to buy it.
Andrew initially worked with a travel website for few months and then became self-employed by starting a martial arts school, where he taught karate to teenagers. After an year, he closed the school and joined an advertising firm. After two years, he quit the advertising firm and became self-employed as a freelance music composer. Which of the following terms indicates the changes in Andrew's employment structure?A. Volatility.
B. Adverse possession.
C. Bootstrapping.
D. Easement.
E. None of the above.
Answer:
A. Volatility
Explanation:
Volatility refers to high level of fluctuations with little or no consistency. It also refers to the variation in an activity with no constancy.
In the given case, Andrew keeps on swapping jobs within a short duration of time, and in varied fields of little similarity. This conveys a high degree of volatility in Andrew's work habits since he is unable to stick to one job or a field of job.
The changes in his employment structure reveal a pattern of high level of deviations, fluctuations referred to as Volatility.
An increase in capital stock would: cause a movement to the left along a stationary production function. cause a movement to the right along a stationary production function. shift the production function upward. shift the production function downward.
Answer:
shift the production function upward
Explanation:
The production function refers to the input and output relations i.e means if the number of inputs are used so the maximum output could be produced
The production function is
Q = f(L, K)
where,
Q represents the quantity
f represents the factors
L represents the labor
K represents the Capital
If there is an increase in capital stock, the production function is also increases i.e the movement is upward keeping other things constant
"Privacy is a basic human right enshrined in law. Regardless of risk, the majority cannot strip a person of their constitutionally protected freedoms. We are therefore morally obligated to preserve privacy." What kind of ethical reasoning is being employed in this argument
Answer:
Rule Based argument which is also referred to as universal rules
Explanation:
The deontology argues that an action is right when it is according to universal rules which means giving a push to an old man is according to consequences we can not harm a person so it is not ethically right because the consequence is harm and damage caused to the old man. But deontology says that consequence are not important because what if we don't push the man to pedestrian line to safe his life because the car will hit him hard and the old man will die instantly. Though he was injured due to high force of push but he didn't loosed his life and this is according to universal rules correct action. So protecting the people is universal rule and Kant says that freedom to a man is to an extent that he doesn't harm the other being because not harming is a universal rule, which is also used in the law.
The percentage-of-completion method is used primarily for short-term contracts. A.recognizes revenue and gross profit each period based upon progress. B.accumulates construction costs in the Billings on Construction in Progress account. C.recognizes revenue and gross profits only when contract is completed.
Answer:
A.recognizes revenue and gross profit each period based upon progress.
Explanation:
The percentage of completion approach is an accounting technique used to recognize revenue in ongoing projects. Revenue from long term contracts is calculated based on the percentage of work completed in a period. This method is applied when payments are assured, and the percentage of work done can be estimated with some degree of accuracy.
The percentage of completion is mostly used in construction industries, but the concept can be used in many projects. The method compares the revenues and expenses of a project against the percentage of work completed in the financial period. The percentage of completion method contrasts with the completed contract method that recognizes income upon completion of a project.
After Hayworth Publishers realized that it was incurring losses, it set new objectives. These objectives were to increase revenues by at least 5 percent and reduce net losses by at least 80 percent. Which management function is used to set these goals and help the company meet them?
Answer:
PLANNING
Explanation:
Planning is the management function and process of thinking about the activities required to achieve a desired goal.
It is the first and foremost activity to achieve desired organizational results.
It involves the creation and maintenance of a plan, such that if the plan is followed, organizations can achieve their goals
Planning is also a management process, concerned with goal definition for a company's future direction and determines the resources to achieve such goals. To achieve goals, managers may develop plans, such as a business plan, sales plan or a marketing plan
Timini Inc., a beverage company, wants to produce a new health drink. It borrows money from Maverk Bank to finance the development. The bank mandates Timini Inc. to return the amount with interest in a regular schedule of fixed payments. Which of the following sources of long-term funds is being used by Timini Inc. in the given scenario?
a. Commercial paper
b. A term loan
c. A line of credit
d. Trade credit
Answer:
b. A term loan
Explanation:
A term loan is a type of loan that has a series of fixed payments with an interest rate, which can also be fixed, or unfixed.
The word fixed payment means that the payments have a specific date in which to be made.
In this case, Timini Inc is using a term loan to finance its operation because the bank mandates Timini Inc to return the borrowed amount with a regular schedule of fixed payments.
Timini Inc. is using a term loan as its source of long-term funding for the new drink production.
Explanation:In the mentioned scenario, Timini Inc. is using a term loan as its source of long-term funds. A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. Maverk Bank provides the loan to Timini Inc. which it has to repay with interest in a regular schedule. The company is sourcing its funds for producing the new health drink from a term loan. This is different from other funding options like commercial paper, line of credit, or trade credit.
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Match the vocabulary term with the correct definition.1. Economies of Scale:_______.2. Financial Capital:______.3. Franchise:______.4. Grant:______.5. Depository Institution:______.6. Not-for-profit organizations are:_______.
Answer:
1. Economies of Scale:
This is a proportionate saving in costs gained by an increased level of production.
2. Financial capital:
This is any economic resource measured used by entrepreneurs and businesses to buy what they need to make their products or to provide their services.
3. ·franchise:
This is a type of license that a party (franchisee) acquires to allow them to have access to a business's proprietary knowledge, processes in order to allow the party to sell a product or provide a service under the business's name.
4. Grant:
This is finance which may be given externally
5. A depository institution:
This is a financial institution in the United States that is legally allowed to accept monetary deposits from consumers usually banks
6. Not-for-profit organizations :
These are organizations that are set up to provide public services for the benefit of the society not to make profit
In a results oriented organization that focuses on quality and teamwork, which level of organizational structure should assume primary responsibility?
In a results-oriented organization that focuses on quality and teamwork, followers should assume primary responsibility.
Explanation:The thing that `guides the activities to be carried out for achieving the objectives and goals of an organisation refers to the organisational structure.The activities can include things like role,rules and responsibilities. The organisational structure plays a major roil;e in the determination of how well an organisation can achieve its goals.
The structure that an organisation must follow is dictated by the top management. The organisational structure decides the flow of information into various levels of an organisation. When an organisation focuses mainly on the outcome that is achieved finally without focusing on the way the outcome is reached refers to result oriented organisation. Thus, in such organisation, the followers should assume primary responsibility.
Which of the following would not interfere with market equilibria? a. a minimum wage b. a rent control c. a non-binding price floor d. a binding price ceiling
Answer:
The correct answer is C. a non-binding price floor.
Explanation:
If a market is defined by the following demand and supply functions. The balance or price that reflects the coincidence in valuation of the good of consumers and producers, would occur at the intersection between both functions.
When the State intends to supplant the activity of the market in the allocation of goods and services, it can do so through a policy of maximum and minimum prices.
If it is considered appropriate that a certain price is less accessible than that which would take place in the market, it will establish a maximum price, above which no company can sell. When this occurs, we can graphically appreciate how at that price the quantity demanded is greater than that offered, thus generating an excess of demand that leads to the shortage of the good. In this context, some mechanism will be developed that allows the supply to be rationed (long lines, different criteria such as age, economic level, etc.) This being, land paid for the appearance of the “black market”.
A manufacturing firm finds that 8080% of its new hires turn out to be good workers and 20 %20% become poor workers. All current workers are given a reasoning test. Of the good workers, 9090% pass it; 4040% of the poor workers pass it. Assume that these figures will hold true in the future. If the company makes the test part of its hiring procedure and only hires people who meet the previous requirements and also pass the test, what percent of the new hires will turn out to be good workers?
Answer:
90%
Explanation:
Given that,
Percent of new hires turn out to be good workers = 80%
Percent of new hires turn out to be poor workers = 20%
Percent of good workers passed the reasoning test = 90%
Percent of bad workers passed the reasoning test = 40%
Probability of good workers who are passed:
= 0.8 × 0.9
= 0.72
Probability of poor workers who are passed:
= 0.2 × 0.4
= 0.08
Total probability:
= Probability of good workers who are passed + Probability of poor workers who are passed
= 0.72 + 0.08
= 0.80
Percent of the new hires will turn out to be good workers:
= Probability of good workers who are passed ÷ Total probability
= 0.72 ÷ 0.80
= 0.9 or 90%
A(n) ____ might be represented with a single-valued attribute. Group of answer choices person’s phone number(s) person's driver's license number employee’s educational background car's color
Answer:
person's driver's license number
Explanation:
A single valued attribute means that a person or a thing can only have a single value for that attribute, for example, you can have only one social security number since having more than one is illegal.
Following the same logic, you could only have one driver's license number, since you can only have one license.
But you can have more than one cellphone, you can also have more than one car, and finally you may have attended more than one college.
Which of the following is directly included in the calculation of GDP? Multiple Choice The final sale of a brand new Cadillac. The appreciation in value of shares of stock. The sales of sand to a glassmaker. The sales of land to a builder.
Answer:
Final sale of a brand new Cadillac
Explanation:
Gross Domestic Product (GDP) , is the economic term which is defined as the one that evaluated the economic activity value within the country. It is the sum or aggregate of the market prices of all the final or finished goods as well as services which are produced or manufactured in the economy during a time period.
In short, it states the output worth of the country in the local or country currency.
Therefore, the one which is straightly included in GDP are the final goods, not the intermediate or financial goods. So, the final sale of the Cadillac is included in GDP.
I'MAStart-UP Corp. issued and sold 2,500,000 common voting shares during its first public stock sale. What is the minimum number of shares needed to be able to elect a new director to the Board
Answer:
1.25 million
Explanation:
For I'MAStart-UP Corp. To be able to elect a new director, there needs to be a minimum of 50% of the companie's voting shares.
That is 0.5* 2,500,000= 1,250,000 shares.
Assuming that there are no other voting shares issued there must be a vote for the new candidate of at least 1,250,000 shares to appoint a new director to the board.
________ refers to how people make decisions in a lottery or with uncertainty. People do not generally make expected value decisions. They tend to overweight unlikely outcomes and underweight more likely events.a. Heuristicsb. Rational decision makingc. Prospect theory
Answer: prospect theory
Explanation: Prospect theory an be defined as a behavioral model that shows how people decide between alternatives that involve risk and uncertainty and it also demonstrates that people think in terms of expected utility relative to a reference point (e.g. current wealth) rather than absolute outcomes.
Which of the following procedures is TRUE regarding the construction of a decision tree for product​ design?A.Payoffs are entered at the beginning of the appropriate branch.B.The possible alternatives include an alternative of​ "doing nothing.".C.Be sure that all possible alternatives and states of nature​ (beginning on the right and moving​ left) are included in the tree.D.To determine the expected value of each course of​ action, we need to start at the beginning of the tree and work toward the end of the tree.The possible alternatives include an alternative of​ "doing nothing."
Answer:
A. Be sure that all possible alternatives and states of nature (beginning on the right and moving left) are included in the tree.
Explanation:
Decision tree is a simple data mining approach used to establish the hidden knowledge in the data to enable classification and prediction.
Decision tree is a tree structure, where internal nodes denote a test on an attribute, each branch represents the outcomes of the test and the leaf node represents the class labels.
Decision Trees are excellent tools for helping management to choose between several courses of action and simplify management decision making.
If the above is true then we must be sure that possible alternatives are included in the tree.
Final answer:
True, the 'doing nothing' alternative is included in a decision tree for product design, serving as a baseline for comparing all other potential product design alternatives.
Explanation:
When constructing a decision tree for product design, it is TRUE that the possible alternatives include an alternative of 'doing nothing'. This option must be considered because it represents the choice to maintain the status quo without pursuing any new product designs or changes. Including 'doing nothing' as an option ensures a comprehensive evaluation of all possible decisions. The construction of a decision tree generally involves detailing alternatives and potential outcomes, including the states of nature, payoffs, and the calculation of expected values. It's important to ensure that all potential outcomes and alternatives are reflected in the decision tree to facilitate effective decision-making.
The process of evaluating alternatives often includes a cost/benefit analysis, where you weigh the marginal costs against marginal benefits. The same logic applies to decision trees, where the benefits and costs of each path are considered to optimize the decision based on expected outcomes.
A stockbroker placed the following order for a customer: 50 shares of Kaiser Aluminum at $104 a share 100 shares of GTE at $25.25 a share 20 shares of Boston Edison at $9.125 a share What is the weighted arithmetic mean price per share
Answer:
neta me lo jura
Explanation:
[tex]vele man[/tex]
The price per share is $46.51, according to the weighted arithmetic mean.
What is ‘weighted arithmetic mean?'The weighted arithmetic mean is identical to a normal arithmetic mean (the most popular kind of average), with the exception that certain data points contribute more to the final average than others, as opposed to all of the data points contributing equally. In addition to its use in descriptive statistics, the concept of weighted mean also appears in various other mathematical disciplines in a more generalized form.
The weighted mean is equivalent to the arithmetic mean if all of the weights are identical. Although weighted means typically behave similarly to arithmetic means, they do have certain unexpected characteristics, as illustrated by Simpson's dilemma, example.
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Suppose a pizza parlor has the following production costs: $3.00 in labor per pizza, $1.oo in ingredients per pizza, $0.20 in electricity per pizza, $2000 in restaurant rent per month, and $450 in insurance per month.Assume the pizza parlor produces 5,000 pizzas per month.What is the variable cost of production(per month)?What is the fixed cost of production(per month)?
Answer:
Variable cost: $21,000
Fixed cost: $2,450
Explanation:
The variable costs are the costs that change depending on the quantity of output like labor.
Variable cost of production per month= ($3*5,000)+($1*5,000)+($0.20*5,000)
Variable cost of production per month= $15,000+$5,000+$1,000
Variable cost of production per month= $21,000
The fixed costs are the costs that are constant despite the amount of output like rent.
Fixed cost of production per month= $2,000+$450
Fixed cost of production per month= $2,450
The monthly variable cost for producing 5,000 pizzas is $21,000, and the monthly fixed cost is $2,450.
The variable cost of production for the pizza parlor is calculated by adding all costs that vary with the level of production. For 5,000 pizzas per month, the variable costs would include $3.00 in labor, $1.00 in ingredients, and $0.20 in electricity per pizza. Thus, the monthly variable cost is:
$3.00 (labor per pizza) × 5,000 pizzas = $15,000
$1.00 (ingredients per pizza) × 5,000 pizzas = $5,000
$0.20 (electricity per pizza) × 5,000 pizzas = $1,000
Adding these together, the total monthly variable cost is $15,000 + $5,000 + $1,000 = $21,000.
On the other hand, the fixed cost of production comprises costs that do not change with the level of production.
For the pizza parlor, fixed costs would be the rent and insurance, which are $2,000 and $450 per month, respectively.
Therefore, the total monthly fixed cost is:
$2,000 (restaurant rent) + $450 (insurance) = $2,450
An unlevered firm has a cost of capital of 13.6 percent and earnings before interest and taxes of $138,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $520,000 with an annual coupon of 7 percent. The applicable tax rate is 34 percent. What is the value of the levered firm
Answer:
Value of levered firm is $846,506
Explanation:
The value of levered firm will be the sum of value of the future incomes for the shareholder's at the cost of capital of un-levered firm discounted at cost of equity and the tax advantage of debt.
The value of equity = Profit before tax * (1 - Tax) / Cost of capital
The tax advantage = Value of debt * tax rate
Now putting the values in both above equation:
Value of equity = $138,000 (1 - 34%) / 13% = $6,69,706
The tax advantage of Debt = $520,000 * 34% = $176,800
Value of levered firm = $669,706 + $176,800 = $846,506
Final answer:
The value of the levered firm is approximately $1.19 million, calculated by adding the tax shield of debt to the unlevered firm value based on its EBIT and cost of capital.
Explanation:
The value of the levered firm can be calculated by adjusting the value of the unlevered firm with the tax shield benefit of debt.
The earnings before interest and taxes (EBIT) of the firm are $138,000, and the firm has a cost of capital of 13.6%.
The firm has debt of $520,000 at a 7% annual coupon rate.
Given a tax rate of 34%, the tax shield is the debt times the tax rate, which equals $520,000 * 0.34 = $176,800. The tax shield on the debt adds value to the firm.
To find the total value of the levered firm (VL), we start with the value of the unlevered firm (VU) and add the tax shield.
The unlevered firm's value is EBIT divided by the cost of capital, which is $138,000 / 0.136 = $1,014,705.88.
Adding the tax shield of $176,800 gives us VL = VU + Tax Shield = $1,014,705.88 + $176,800 = $1,191,505.88.
Therefore, the value of the levered firm is approximately $1.19 million.
If the sum of your assets is 275,000, what should the other side of your balance sheet add up to?
Answer: The sum of the liabilities would add upto 2,75,000
Explanation: According to the accounting standards, the assets side of a balance sheet should equal the liabilities side of balance sheet to make a balanace in the balance sheet of a company.
Assets are known as the resources that the company owns, whereas liabilities are the financial debts or the amount of money which a company owes.
So, if we sum up all the assets side and deduct the total amount of liabilities what we get is equity or owner's fund ( the amount of funds the owner of the business possess)
Therefore, if assets side of the balance sheet sums upto 2,75,000 then liabilities side of the balance sheet would also add upto 2,75,000
Joint costs are Select one: A. costs incurred prior to the split-off point when producing products that appear simultaneously. B. most often found in companies that further process the final output of other manufacturing firms. C. relevant to decisions to sell joint products or to process them further. D. separately identifiable at the split-off point.
Answer:
A. costs incurred prior to the split-off point when producing products that appear simultaneously.
Explanation:
Joint costs are costs incurred prior to the split-off point when producing products that appear simultaneously.
In cost and manufacturing accounting, a joint cost is a cost incurred in a joint process or during a joint production of more than one output and may include direct material, direct labor, and overhead costs incurred before the split-off point.
The residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2016, they spend a total of $250 for 100 heads of cauliflower, $100 for 50 bunches of broccoli, and $250 for 500 carrots. In 2017, they spend a total of $210 for 60 heads of cauliflower, $180 for 90 bunches of broccoli, and $270 for 450 carrots.Year Cauliflower Broccoli Carrots
2016 2.1 1.4 0.1
2017 2.5 1.4 0.3 Using 2016 as the base year, the CPI for 2016 is______, and the CPI for 2017 is______. The inflation rate in 2017 is_____using the CPI.
Answer:
CPI for 2016 = 100
CPI for 2017 = 110
Inflation rate in 2017 = 10%
Explanation:
Before finding Consumer Price Index (CPI), we have to calculate the market basket cost price for each year
2016 market basket cost price =
Cauliflower = $250
Broccoli = $100
Carrots = $250
Total cost = $600
2017 market basket cost price =
Cauliflower = $210
Broccoli = $180
Carrots = $270
Total cost = $660
We know, CPI = (Cost of market basket in a given year ÷ Cost of market basket in a base year) × 100
As 2016 is the base year, CPI for 2016 = ($600 ÷ $600) × 100 = 100
CPI for 2017 = ($660 ÷ $600) × 100 = 100 = 110
Again, we know, Inflation rate using the CPI = [(CPI for current year - CPI for previous year) ÷ CPI for previous year] × 100
Therefore, Inflation rate using the CPI = [(110 - 100) ÷ 100] × 100 = 10%.