Answer:
A function
Explanation:
A function is defined as a set of activities carried out by a particular department that involves process initiation, transform information, and follow procedures to give an output.
Business functions encourage specialisation, examples include cash management, invoicing, loan disbursement,customer care and so on.
On August 31, 2018, the general ledger of The Dean Acting Academy shows a balance for cash of $7,944. Cash receipts yet to be deposited into the checking account total $3,338, and checks written by the academy but not yet processed by the bank total $1,425. The company’s balance of cash does not reflect a bank service fee of $35 and interest earned on the checking account of $46. These amounts are included in the balance of cash of $6,042 reported by the bank as of the end of August. 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2018 2. Record the necessary entry(ies) to adjust the balance for cash.
Explanation:
The Dean Acting Academy
Bank reconciliation statement
August 31, 2018
Particulars Amount Particulars Amount
Bank cash balance $6,042 Company cash balance $7,944
Deposits in transit $3,338 Interest earned $46
Less: Outstanding Less: service fee -$35
Check - $1,425
Bank balance Company balance
After reconciliation $7,955 After reconciliation $7,955
2. The adjusting entries are
Cash A/c Dr $46
To Interest revenue $46
(Being the interest revenue is recorded)
Bank service fee expense A/c Dr $35
To Cash A/c $35
(Being the service fee expense of bank is recorded)
The bank reconciliation starting from the company's book balance to the corrected cash balance involves adding deposits in transit, subtracting outstanding checks and netting out bank-generated fees and credits. The ending balance is $9,868. The necessary entries to adjust the cash balance are a debit to Bank Charges Expense and a credit to Interest Income.
Explanation:The student is attempting to reconcile the Dean Acting Academy's book balance and bank accounting balance as of August 31, 2018. A bank reconciliation helps align the bank’s records with the company's accounting records and it is important when managing an entity's finance. Here are the steps:
Start with the balance according to your records, which is $7,944 Add any deposits in transit (i.e., receipts yet to be deposited into the checking account), which totals $3,338Subtract any outstanding checks (i.e., checks written but not yet processed by the bank), which total to $1,425Subtract any charges by the bank not yet accounted for in your books (bank service fee), which is $35Add any credit by the bank not yet accounted for in your books (interest earned on the checking account), which is $46
After these adjustments, the reconciled cash balance should be $7,944+$3,338-$1,425-$35+$46 = $9,868 which should match with the company's accounting records.
Having done the bank reconciliation, the necessary entries to adjust the balance for cash are: a debit of $35 to Bank Charges Expense (or a similar account), a credit of $46 to Interest Income, and both of these amounts need to be adjusted in the Cash account as well.
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Find the flaws in reasoning in the following statements, paying particular attention to the distinction between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate what actually happens in each situation.a. A technological innovation that lowers the cost of producing a good might seem at first to result in a reduction in the price of the good to consumers. But a fall in price will increase demand for the good,and higher demand will send the price up again. It is not certain, therefore, that an innovation will really reduce price in the end.b. A study shows that eating a clove of garlic a day can help prevent heart disease, causing many consumers to demand more garlic. This increase in demand results in a rise in the price of garlic. Consumers, seeing that the price of garlic has gone up, reduce their demand for garlic. This causes the demand for garlic to decrease and the price of garlic to fall. Therefore, the ultimate effect of the study on the price of garlic is uncertain.
Answer:
As there is a movement down the demand curve.A decrease in price does increase the quantity demanded and there is an increase in the equilibrium quantity But it does not lead to an upward movement in demand—a rightward shift of the demand curve—so prices does not increase in this instance
Explanation:
a. This statement makes a flaw attesting to a shift of a curve with a movement along a curve. A technological innovation lowers the cost of producing the good, which makes the producers to offer more goods at lower price. This is shown by a rightward shift of the supply curve from S1 to S2. the equilibrium price drops as a result of this, and the equilibrium quantity rises, as shown by the change from F1 to F2.
The statement "but a fall in price will increase demand for the good, and higher demand will send the price up again" is a flaw in the statement above for the following reasons.
As there is a movement down the demand curve.A decrease in price does increase the quantity demanded and there is an increase in the equilibrium quantity But it does not lead to an upward movement in demand—a rightward shift of the demand curve—so prices does not increase in this instance.
The reasoning flaws in both statements stem from confusion between shifts in the supply or demand curves, which represent changes in supply or demand, and movements along these curves, representing changes due to price variations.
Explanation:In the first statement, the flaw in reasoning lies in the failure to distinguish between movements along the supply and demand curves and shifts of these curves. Initially, a technological innovation that lowers production costs is likely to shift the supply curve rightward, indicating more supply at each price, which might lower the goods' price. However, a fall in price doesn't increase demand (shift the demand curve), but causes a movement along the demand curve. Therefore, it's wrong to assume that a price drop causes demand to increase that then leads to a price increase.
Similarly, in the second scenario, there's a confusion between movement along the demand curve and shifts of the curve. Here, an increase in consumers' demand for garlic due to its health benefits would shift the demand curve rightward, potentially raising the price. Yet, a price increase would not reduce demand (cause a leftward shift in the demand curve), only cause a movement along the curve. Hence, the assumption that a price rise reduces garlic demand and therefore lowers the price is false.
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Suppose the following items were taken from the balance sheet of Nike, Inc. (All dollars are in millions.)
1. Cash $2,367.7
2. Accounts receivable 2,959.6
3. Common stock 2,943.1
4. Notes payable 332.0
5. Buildings 3,847.5
6. Mortgage payable 1,020.9
7. Inventory $2,357.8
8. Income taxes payable 80.3
9. Equipment 1,610.4
10. Retained earnings 6,346.1
11. Accounts payable 2,420.6
Perform each of the following. (All dollars are in millions.)
(a) Classify each of these items as an asset, liability, or stockholders’ equity and determine the total dollar amount for each classification.
Assets
Cash
Accounts receivable
Inventory
Equipment
Buildings
Total assets
Liabilities
Notes payable
Accounts payable
Mortgage payable
Income taxes payable
Total liabilities
Stockholders' Equity
Common stock
Retained earnings
Total stockholders' equity
(b) Determine Nike’s accounting equation by calculating the value of total assets, total liabilities, and total stockholders’ equity. (Enter amounts in millions up to 1 decimal place, e.g. 45.5 million.)
Answer:
Explanation:
The categorization is shown below:
1. Cash $ = Assets
2. Accounts receivable = Assets
3. Common stock = stockholders’ equity
4. Notes payable = liability
5. Buildings = Assets
6. Mortgage payable = liability
7. Inventory = Asset
8. Income taxes payable = Liability
9. Equipment = Asset
10. Retained earnings = Stockholder equity
11. Accounts payable = Liability
Now the amount for each classification is
Assets
Cash $2,366.7
Accounts receivable $2,959.6
Inventory $2,357.80
Equipment $1,610.4
Buildings $3,847.50
Total assets $13,142
Liabilities
Notes payable $332
Accounts payable $2,420.60
Mortgage payable $1,020.90
Income taxes payable $80.3
Total liabilities $3,853.8
Stockholders' Equity
Common stock $2,943.1
Retained earnings $6,346.1
Total stockholders' equity $9,289.20
b. Total assets = Total liabilities + Shareholder equity
$13,142 = $3853.8 + $9,289.2
The correct way to classify the items will be as under:-
(A)
Assets - Cash, accounts receivable, buildings, inventory, equipment.
Liabilities - Notes payable, mortgages payable, accounts payable, Income Taxes payable.
Stockholder's equity - Common Stock and retained earnings.
(B)
Total assets = $13,142.
Total liabilities= $3853.8
Stockholder's equity= $9289.20
Classification of ClassesThe correct computation of the Assets can be done using simple summation, as under,[tex]\rm Total\ Assets= Cash\ +Accounts\ Receivable\ +Buildings\ + Inventory\ + Equipment\\\\\\\\\\\rm Total\ Assets(in\ \$)\ = 2366.7 + 2959.6\ + 3847.5\ + 2357.8\ + 1610.4\\\\\\\rm Total\ Assets= \$\ 13142[/tex]Similarly, the liabilities can be calculated as,[tex]\rm Total\ Liabilities= 332\ + 1020.9\ + 80.3\ + 2420.6\\\\\\\rm Total\ Liabilities= \$ 3853.8[/tex]And the Stockholder's Equities as, [tex]\rm Stockholder's\ Equities= 2943.1\ + 6346.1\\\\\\\rm Stockholder's\ Equities= \$ 9289.2[/tex]Hence, the classification of items are computed as above into total assets, total liabilities and stockholder's equities.
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a. How does inflation distort ratio analysis comparisons for one company over time (trend analysis) and for different companies that are being compared?
b. Are only balance sheet items or both balance sheet and income statement items affected?
Answer (a):
The inflation distorts the ratio as their are number of things that inflate their prices differently. The prices of the rice is increasing by 1%, wheat prices are growing by 2% and salaries expenses are increasing by 5%. This means there is no consistant increase in all the commodity prices. And this issue becomes very prominent after 3 years. Trend analysis becomes meaningless when we make technological advancements which gives us edge to control the costs of the operations and inflation does the same thing but in opposite direction. It increases the cost of different operations with different percentages.
Answer (b):
Both balance sheet and income statement items would be affected because these are monetary values that would be inflated over time which will blurr the image of the entity.
In autarky, when a country maximizes its utility, its consumption point is(a)below the production possibility frontier.(b)on the production possibility frontier.(c)above the production possibility frontier.(d)cannot tell without more information.
Answer:
(d)cannot tell without more information.
Explanation:
Autarkic economy is a self reliant economy, consuming entirely from its own production.
An autarkic economy maximises its utility when : Its PPF & Social Indifference Curve are tangent to each other.
PPF is sort of a budget constraint to economy, because it denotes maximum production potential with given resources & technology. Social Indifference Curve is the curve denoting product combinations yielding same level of social satisfaction.Their tangency gives utility maximising point with the available resources & technology.
Other options are inapt because: Production on PPF is a necessary but not sufficient condition for social utility maximisation (tangency also needed). Production under PPF reflects under utilisation of resources, cant be utility maximising. Production above PPF is unattainable.
If Professor Laurie Macdonald takes 15 minutes to grade the first exam and follows an 80% learning curve, how long will it take her:
a) to grade the 25th exam?
b) to grade the first 10 exams?
Answer:
T(25) = 5.325 min
T (10) = 94.72 min
Explanation:
given data
time taken = 15 min
learning curve = 80%
solution
we use here formula for this task that is
T(n) = T × [tex](No)^{b}[/tex] .............1
here T(n) is time taken for n unit and T is time for 1st hour and No is no of time and b is slope leaning
put here value for 25 we get
T(n) = 15 × [tex]25^{b}[/tex]
b(25) = 0.355
as leaning curve coefficient table
as here with 80% leaning curve
unit timer coefficient = 0.355
so T(25) = 15 × 0.355
T(25) = 5.325 min
and
for 10 exam
leaning curve 80% co efficient is 6.315 from table
so T (10) = 15 × 6.315
T (10) = 94.72 min
Professor Laurie Macdonald will take approximately 44.9 minutes to grade the 25th exam and approximately 26.6 minutes to grade the first 10 exams.
Explanation:To determine how long it will take Professor Laurie Macdonald to grade the exams, we can use the concept of a learning curve. An 80% learning curve means that each time the number of exams doubles, the time required to grade them reduces by 20%.
a) To find out how long it will take to grade the 25th exam, we can use the formula: time = initial time x (number of exams/initial number of exams)^(log of learning curve % / log of 2). Plugging in the values, we get time = 15 x (25/1)^(log(0.8) / log(2)) which equals approximately 44.9 minutes.
b) To find out how long it will take to grade the first 10 exams, we can use the same formula but with a different number of exams. Plugging in the values, we get time = 15 x (10/1)^(log(0.8) / log(2)) which equals approximately 26.6 minutes.
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On May 1, 2017, ABC Company signed a contract to provide 1 year of marketing research services to Anderson Company starting on May 1. Anderson Company paid the full year's price of $12,000 in cash on May 1. Prepare the entry that Anderson Company should make on May 1" to record this event.
Answer:
Debit Cash Account $12,000
Credit Unearned Revenues Account $12,000
Being advance payment for marketing research services by Anderson
Explanation:
Revenue received before it is earned are reported as liability until it is earned, this is consistent with accrual basis of accounting. when payment for service not yet performed or goods not yet delivered is received, such a payment must not recognized in the period of payment but in the period when that service is preformed or when the goods are delivered.
The treatment for advance payment of income is a debit to cash or bank and a credit to unearned revenues account or income received in advance account.
Which job title would be given to someone responsible for planning and controlling production in a manufacturing setting?
Answer:
Production manager
Explanation:
Production manager -
It refers to the person , responsible to organise the business , employment problems , finances , and production is the task assigned to a product manager .
The production manager is responsible for the planning the budget , so that finances are taken care of properly .
Hence , from the given information of the question,
The correct answer is production manager .
Answer:
The correct answer is letter "B": Production manager.
Explanation:
Production managers are responsible for conducting business practices to create the highest possible level of efficiency within an organization, in an attempt to increase profit. Managers use their decision-making authority to acquire inputs from resources, and then use them to produce goods and services that meet the needs of customers.
Carmela’s Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Carmela’s Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Carmela’s Churros’ economic profits are:_______a. $40,000.b. $15,000.c. $80,000.d. $25,000.e. $0.
Answer:
e. $0
Explanation:
The economic profits of Carmela’s Churros can be determined through following mentioned equation.
Economic profit=Revenues-(explicit costs+implicit costs)
In the given question
Revenues= $40,000
explicit costs=$15,000
implicit costs=$25,000
Economic profits=$40,000-($15,000+$25,000)
=$0
So based on the above calculation, the answer is e. $0
Which of the following are included in current liabilities? I. Note payable to a supplier in 13 months. II. Amount due from a customer last week. III. Account payable to a supplier that is due next week. IV. Loan payable to the bank in 10 months.
Answer:
The correct answers are numbers (III) and (IV): Account payable to a supplier that is due next week; Loan payable to the bank in 10 months.
Explanation:
Current Liabilities are company debts due within one year or one operating cycle, whichever is greater. An operating cycle is a time it takes the company to purchase inventory and convert it into cash from sales. Current liabilities include items such as account payable, short-term debt, and taxes payable. They are handled separately from long-term liabilities, which include long-term borrowing, bonds payable, and long term lease obligations.
Current liabilities include account payables and loans due within one year.
Explanation:The current liabilities are obligations that are expected to be settled within one year or the operating cycle of a business, whichever is longer. From the given options,
The note payable to a supplier in 13 months is not a current liability as it is due after one year. The amount due from a customer last week should actually be recorded as a receivable, not a liability. The account payable to a supplier that is due next week is a current liability as it is due within one year. The loan payable to the bank in 10 months is also a current liability as it is due within one year.Therefore, options III and IV, the account payable to a supplier that is due next week and the loan payable to the bank in 10 months, are included in current liabilities.
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On January 1, 2016, Bella Donna leased an office building. Terms of the lease require Bella Donna to make 10 annual lease payments of $21,097 beginning on January 1, 2017. A 10% interest rate is implicit in the lease agreement. At what amount should Bella Donna record the lease liability on January 1, 2016, before any lease payments are made?
Answer:
$129,632.62
Explanation:
The computation of the lease liability amount is shown below:
= Annual lease payment × PVIFA factor for 10% interest rate at 10 annual lease payments
= $21,097 × 6.1446
= $129,632.62
Refer to the PVIFA table
Basically we multiplied the annual lease payment with the PVIFA factor so that the approximate amount could come
At the beginning of 2010, Stevens Co. had a balance of $100,000 in Retained Earnings. During 2010 the company paid a dividend of $1,000 and had a net income of $12,000.
What should be the balance in Retained Earnings on 12/31/10?
Answer:
Balance in retained earning will be $111000
Explanation:
We have given at the beginning retained earning is $100000
Dividend paid by the company is $1000
Net income = $12000
We have to find the balance in retained earning at the end
Balance in retained earning at the end will be equal to
Retained earning at the end = Beginning retained earning + net income - dividend = $10000 + $12000 - $1000 = $111000
So balance in retained earning will be $111000
The four main categories of resources are A. labor, money, capital, and inputs B. capital, land, raw materials, and entrepreneurship C. raw materials, money, labor, and capital D. land, capital, labor, and entrepreneurship E. human capital, physical capital, labor, and natural resources
Answer:
D. land, capital, labor, and entrepreneurship
Explanation:
The four main factors of production are Land, Capital, Labour and Entrepreneurship
Land represents all natural resources usually gifted by nature including water, wood, gas, and other natural resources like oil.
Labour refers s to the workforce both skilled and unskilled that turn the natural resources or raw materials into finished goods or finished products. Labour will usually affect areas such as motivation, education and skills among others.
Capital represents to the resources that are obtained or manufactured to assist in the production process. Capital begins from the initial funding and then to the acquisition of tools and implements of work.
Finally, Entrepreneurship represents the individual who has the foresight to put the other factors of production together in order to create a product and solve an identified problem
Answer:
The correct answer is letter "D": land, capital, labor, and entrepreneurship.
Explanation:
Factors of Production is an economic term describing the general sources used to produce goods and services to make a profit. Under the classical view of economics, the factors of production consist of:
Land refers to the land itself as well as to the raw materials that come from the land. It can also mean the physical area on which a factory sits. Capital refers to the buildings, machines, and tools used in the process of production. It also implies talking about intellectual capital and social capital. Labor refers to individuals who do all the things physically and intellectually to keep a business running. Entrepreneurship provides innovation and creativity in the use of the other three factors, which helps create a profitable business.
You inherited a house in San Diego from a rich uncle. You need money now, so you are considering three options: * option A: sell the house for $370,000 * option B: spend $75,000 on improving the house, after that sell it for $440,000. * option C: burn the house for insurance money. The house is insured for $276,000. Not selling the house is not a viable option. If you sell the house (options A and B), you will have to pay realtor's fees and taxes, which amount to 7% of the selling price. (For example, if you sold the house for $100,000, the total cost of fees and taxes will be $100,000*0.07=$7,000). If you burn the house, you'll have to hire a good lawyer to prove it was an accident. The lawyer will cost you $27,000 (you do not have to pay realtor's fees and taxes in this case). Required:a. What is the value of each option?b. Which option should you choose?c. What is the opportunity cost of options A and B?d. Suppose you bought the house for $500,000 in 2007, instead of getting it from a rich uncle for free (the rest of the numbers do not change). Should you choose option A, B or C in this case?e. If you got different answers in (b) and (d), explain why they are different. If you got the same answers in (b) and (d), explain why they should be the same.
Answer:
Explanation:
1. a Option A:
Sell the House at $ 370,000
Realtor's fees and taxes = 370,000 * 7% = 370,000 * 0.07 = 25,900
Value = 370,000 – 25,900 = $ 344,100
Option B:
Spend $75,000 in improving the house
Sell the House at $ 440,000
Realtor's fees and taxes = 440,000 * 7% = 440,000 * 0.07 = 30,800
Value = 440,000 – 30,800 - 75000= $ 334,200
Option C:
Insurance Money = $ 276,000
Lawyers Cost = $27,000
Value 276,000 – 27,000 = $249,000
Choose option A
Opportunity Cost of Option A and B is = 344,100 - 334,200 = 9,900
Bought the house for $ 500,000
Option A:
344,100 – 500,000 = -155900 , you lose
Option B:
Loss is 334,200 - 500,000 = -165800
Option C:
Loss = 249,000 - 500,000 = -251,000
Option A is better because losses are less
According to the traditional view of the production function, which of the following values of the additions to output per worker would be consistent with moving from 5 to 6, and then from 6 to 7, and then from 7 to 8 units of capital per worker in that order?
Answer:
5 and 6
Explanation:
5 and 6 are not value able numbers u must add
Ginger Enterprises began the year with total assets of $500,000 and total liabilities of $250,000.
Using this information and the accounting equation, answer each of the following independent questions.
1. What was the amount of Ginger's owners' equity at the beginning of the year?
2.If Ginger's total assets increased by $100,000 and its total liabilities increased by $77,000 during the year, what was the amount of Ginger's owners' equity at the end of the year?
3.If Ginger's total liabilities increased by $33,000 and its owners' equity decreased by $58,000 during the year, what was the amount of its total assets at the end of the year?
4. If Ginger's total assets doubled to $1,000,000 and its owners' equity remained the same during the year, what was the amount of its total liabilities at the end of the year?
Answer:
1. $250,000
2. $273,000
3. $455,000
4. $750,000
Explanation:
We know that
Accounting equation is
Total assets = Total liabilities + Shareholder equity
1. The equity would be
= $500,000 - $250,000
= $250,000
2. The equity would be
Total assets = $500,000 + $100,000 = $600,000
Total liabilities = $250,000 + $77,000 = $327,000
So, the equity is
= $600,000 - $327,000
= $273,000
3. Total assets
Total liabilities = $250,000 + $33,000 = $263,000
Owner equity = $250,000 - $58,000
= $192,000
So, the total assets is
= $263,000 + $192,000
= $455,000
4. Total liabilities equal to
= $1,000,000 - $250,000
= $750,000
At the ________ level of an organization, functional managers focus on monitoring and controlling operational-level activities and providing information to higher levels of the organization.
A) managerial
B) executive
C) strategic
D) superficial
E) illusive
Answer:
A
Explanation:
Middle-level managers, or middle managers, are those in the levels below top managers. Middle managers' job titles include: General manager, Regional manager, and Divisional manager. etc.
Middle-level managers are responsible for carrying out the goals set by top management. Middle managers may also communicate upward, by offering suggestions and feedback to top managers. However, at the managerial level, of the organization, all functional managers, which are called the midlevel managers, focus on automation of the monitoring and controlling of the operational-level activities and provide information to higher levels of the organization. They in turn, they improve the organizational effectiveness.
E15-9 (L01,3) (Preferred Stock Entries and Dividends) Otis Thorpe Corporation has 10,000 shares of $100 par value, 8%, preferred stock and 50,000 shares of $10 par value common stock outstanding at December 31, 2017. Instructions Answer the questions in each of the following independent situations. (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2014, what are the dividends in arrears that should be reported on the December 31, 2017, balance sheet? How should these dividends be reported? 814 Chapter 15 Stockholders’ Equity (b) If the preferred stock is convertible into seven shares of $10 par value common stock and 4,000 shares are converted, what entry is required for the conversion assuming the preferred stock was issued at par value? (c) If the preferred stock was issued at $107 per share, how should the preferred stock be reported in the stockholders’ equity section?
Answer:
(a)
Preferred stock Dividend = ( 10,000 x 100 ) x 8% = $80,000
Cumulative Dividend
Date Dividend for the year Balance
December 31, 2015 $80,0000 $80,000
December 31, 2016 $80,0000 $160,000
December 31, 2017 $80,0000 $240,000
Payable of $240,000 Dividend will be reported on the Balance Sheet.
(b) Dr. Cr.
Preferred Stock (4,000 x $100) $400,000
Common stock ((4000 x 7) x $10) $280,000
Paid-In Capital in excess of Par - Common share $120,000
(c)
Cash ( 4000 x 107 ) $428,000
Preferred Stock (4000 x $100) $400,000
Paid-In Capital in excess of Par - Preferred share $28,000
It will be reported in balance sheet as follow:
Equity $
Preferred Stock 400,000
Paid-In Capital in excess of Par - Preferred share 28,000
Explanation:
(a) Last dividend was paid on December 31, 2014, the subsequent 3 years are outstanding until December 31, 2017, so the total payable dividend is $240,000 which will be reported on Balance sheet.
(b) 4000 preferred shares on par value are converted to 7 common shares each at $10 par value.
(c) Preferred stock issued @ $107 will be reported as Preferred stock of $400,000 and Paid-In Capital in excess of Par - Preferred share of $28,000.
Cazden Motors' stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35. Both options expire in three months. Which of the following best describes the value of these options?
a. The options with the $25 strike price will sell for less than the options with the $35 strike price.
b. The options with the $25 strike price have an exercise value greater than $5.
c. The options with the $35 strike price have an exercise value greater than $0.
d. If Cazden's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.
e. The options with the $25 strike price will sell for $5.
Answer:
d. If Cazden's stock price rose by $5, the exercise value of the options with $25 strike price would also increase by $5.
Explanation:
A call option confers a right, not an obligation upon the call buyer to buy a security at a pre determined price, known as exercise price or strike price at a future date.
A call buyer would exercise his right only in the scenarios wherein the strike price is lesser than the current market price on maturity.
Profit of a call buyer is given by = CMP as on expiry - Exercise/Strike price - Option premium paid
wherein CMP= Current Market Price
A call option is "in the money" when it's strike price is less than it's current market price. In the given case, it means if the CMP today represents CMP upon expiry, call buyer would exercise his right and his gain would be $5 i.e $30 - $25.
Since the $25 exercise option is "in the money", an increase in stock price by $5 will also increase the strike price by $5.
Product innovation is more than a process. At high-leverage innovators, innovation is a cultural priority. a. True b. False
Answer:
That statement is true
Explanation:
High leverage innovators refers to the group of innovators that could create inventions that change the way the market operates. They tend to put really high investment in their research /development but will obtain a really large chunk of profit if they're successful.
These innovators tend to believe that their innovations will change how society generates most of its GDP (cultural priority)
Example of high-leverage innovators are companies like Google or Tesla, whose products could completely disrupt the market and change the life of most people.
Final answer:
The statement is true; innovation requires a supportive culture within an organization where change is championed by leaders and embraced by innovators, early adopters, and an early majority. This cultural embrace of innovation is essential for an organization's competitive advantage and successful evolution.
Explanation:
The statement that product innovation is more than a process and that at high-leverage innovators, innovation is a cultural priority is true. Innovation is deeply embedded in the culture of effective organizations, particularly in the high-tech industry where adaptability and innovativeness can provide a competitive edge. In contrast, a culture resistant to change may result in organizational failure and act as a barrier to risk-taking and transformation.
Innovation within an organization requires a supportive culture. This includes having innovators who bring fresh ideas into the organization, early adopters who support these new concepts, and an early majority that helps to mainstream innovation. Moreover, leaders within the organization must champion the innovations and provide the necessary resources and environment for innovation to flourish.
Effective leaders understand the importance of inspiring cultural change rather than commanding it. They acknowledge the implicit and explicit cultural norms and craft strategies to encourage acceptance and implementation of innovations, understanding the pivotal role employees play in this transformation.
You are purchasing a bond with a face value of $1,000 and a coupon rate of 8.85 percent. The bond pays interest semiannually and has a yield to maturity of 7.23 percent. The bond matures in 6.5 years and pays its next interest payment in four months. What amount of accrued interest must you pay to purchase this bond today?
Answer:
= $14.75
Explanation:
The question is to determine the present value of the accrued interest in order to purchase the bond today.
First, accrued interest usually refers to the interest amount receivable on securities such as bonds that accumulates on the principal amount of the bond. It is called accrued because it is yet to be received by the purchaser of the bond.
The formula for accrued interest
= (Face value of the bond x the coupon rate) x the number of months since the payment of the last interest x 12
= ($1,000 x 8.85%) x 2/12
= $14.75
Which of the following is an assumption of CVP analysis? A. When graphed, total costs curve upward. B. The unitminus−selling price is variable as it is subject to demand and supply. C. Total costs can be divided into inventoriable and period costs with respect to the level of output. D. Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.
Answer:
The answer is D
Explanation
Cost-volume-profit analysis (CVP analysis) helps a business in planning and decision-making.
It provides information regarding changes in profits and costs brought about by changes in volume or level of activity. Assumptions include; costscan be divided into fixed and variable component, inventory level does not change from from period to period, selling price is constant
Costs incurred in customer service are categorized as ________. A. internal failure costs B. appraisal costs C. prevention costs D. external failure costs
Answer:
D. external failure costs
Explanation:
External failure costs -
It refers to the amount of money suffered , because of any defect in the products , after being sold to the customers , is referred to as the external failure costs .
It includes the cost like -
warranty costs , return of product cost , product recalls , etc .
Hence , from the given statement of the question ,
The correct option is D. external failure costs .
Which of the following statements is true? A. The equilibrium price after a specific tax will be the same whether the tax is collected from consumers or producers. B. The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers. C. The tax incidence on consumers will be higher if the tax is collected from consumers. D. The tax incidence on producers will be higher if the tax is collected from producers.
Answer:
The correct answer is A. The equilibrium price after a specific tax will be the same whether the tax is collected from consumers or producers.
Explanation:
Without tax the equilibrium price will be placed in Pe and the equilibrium amount will be Qe.
Once a tax has been applied, the price paid by consumers will be Pc and the price received by producers Pp. The price of consumers will be equal to the price of the producers plus the cost of the tax. Since consumers will buy less at the Pc price and producers will sell less in Pp, the quantity sold goes from Qe to Qt.
The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers.
Explanation:The correct statement is B. The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers.
When a tax is imposed on a good, it affects the supply and demand of that good, leading to changes in the equilibrium price and quantity.
If the tax is collected from consumers, the demand curve shifts downward, resulting in a higher equilibrium price. If the tax is collected from producers, the supply curve shifts upward, resulting in a lower equilibrium price.
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In 2004, the poverty threshold for a family of four was Select one: a. $18,244 b. $19,157 c. $20,125 d. $21,765
Answer:
b. $19,157
Explanation:
Poverty refers to a situation wherein an individual is unable to satisfy even his basic necessities of food and shelter.
Poverty threshold refers to a measure to assess the number of individuals who are below the minimum threshold limit fixed.
Poverty threshold is calculated taking into account, the minimum diet requirements of an individual, and is expressed in monetary terms i.e US Dollars. Those who earn less than the threshold limit shall be termed as poverty ridden or simply poor.
The poverty threshold limit for a family of four was fixed at $19157 in the year 2004.
Your client is 32 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $13,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 11% in the future.
a. If she follows your advice, how much money will she have at 65?
b. How much will she have at 70?
c She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age?
Answer:
A) She will have $3,215,207.108 at 65 Years
B) she will have $5,498,772.38 at 70 years
C)a: If she retires at 65 years and lives for only 20 years she will need to withdraw $403,751.68 every year.
b) If she retires at 70 years and lives for only 15 years, she will need to withdraw $ 764,688.10 every year.
Explanation:
A) To get how much she would have saved with the aid of a financial calculator use the following
N= 65-33= 32.
I = 11
PMT = $13,000
compute FV= and you will get $3,215,207.108.
B) To get how much she would have saved with the aid of a financial calculator use the following
N= 70-33= 37.
I = 11
PMT = $13,000
compute FV= and you will get $5,498,772.38.
C) To get How much she can withdraw if she retires at either 65 years lives for 20 years
with also the aid of a fianacial calculator
N= 20
I =11
PV= 3,215,207.108
Compute PMT = $403,751.68
while if she retires at 70 years and she lives for 15 years
N= 15
I =11
PV= 5,498,772.38
Compute PMT = 764,688.10
Skidmore Music Company had the following transactions in March:a. Sold instruments to customers for $16, 700, received $10, 700 in cash and the rest on account. The cost of the instruments was $7, 100.b. Purchased $4, 900 of new instruments inventory; paid $1, 700 in cash and owed the rest on account.c. Paid $720 in wages for the month.d. Received $3, 100 from customers as deposits on orders of new instruments to be sold to the customers in April.e. Received a $280 bill for March utilities that will be paid in April.Required:Complete the following statements:1. Cash basis Income Statement2. Accrual basis Income Statement
Answer:
Skidmore Music Company
For the month March
Cash basis Income Statement
$
Sales 13,800
Cost of Goods Sold 1,700
Gross Income 12,100
Wages Expense (720)
Operating Income 11,380
Accrual basis Income Statement
$
Sales 16,700
Cost of Goods Sold 4,900
Gross Income 11,800
Wages Expense (720)
Utility Expense (280)
Operating Income 10,800
For the cash basis income statement, Skidmore Music Company's net income is $9,980. On the accrual basis, which includes all revenues earned and expenses incurred, the net income is $8,600. Deposits for future orders are not considered revenue for March.
Explanation:Completing the Income Statements for Skidmore Music CompanyFor the cash basis income statement, we record revenues when cash is received and expenses when cash is paid. Here is the calculation:
Cash Basis Net Income = Revenue - Expenses = $10,700 - $720 = $9,980.
For the accrual basis income statement, revenues are recorded when earned, and expenses are recorded when incurred, regardless of cash flow. Here's the breakdown:
Accrual Basis Net Income = Revenue - Cost of Goods Sold - Expenses = $16,700 - $7,100 - $720 - $280 = $8,600.
The deposit received for future orders (d) is not recognized as revenue in March for either statement, as the service (delivery of instruments) is not yet rendered.
Mandolin produced 70,000 units and sold 50,000 units. Their unit selling price is $20 and they have variable unit production costs of $10, variable selling expenses of $3 and fixed overhead of $10,000. Compute Mandolin's net income under variable costing.
Mandolin's net income under variable costing is computed by subtracting total variable costs and fixed costs from total revenue. The total revenue is $1,000,000, the total variable cost is $910,000 and the fixed costs are $10,000. The net income is $80,000.
Explanation:The subject of this question is variable costing. To compute Mandolin's net income under variable costing, we need to first find out the total revenue, which is the number of units sold multiplied by the unit selling price. In this case, that's 50,000 units * $20/unit = $1,000,000.
Next, we calculate the variable costs which include both production costs and selling expenses. So, the variable unit cost is $10 (production cost) + $3 (selling expense) = $13 per unit.
Therefore, the total variable cost is $13/unit * 70,000 units (produced) = $910,000. Subtracting this variable cost from the total revenue and then subtracting the fixed costs of $10,000 gives us $1,000,000 - $910,000 - $10,000 = $80,000. Thus, Mandolin's net income under variable costing is $80,000.
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Calculate the future value of $5 comma 000, given that it will be held in the bank for 5 years and earn an annual interest rate of 6 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly. c. Recalculate parts (a) and (b) using an annual interest rate of 12 percent. d. Recalculate part (a) using a time horizon of 12 years at an annual interest rate of 6 percent. e. What conclusions can you draw when you compare the answers in parts (c) and (d) with the answers in parts (a) and (b)?
Answer:
A $6,691.13
semiannual Amount $6,719.58
bimonthly Amount $6,739.24
IF bimonthly:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 5,000.00
time 30.00
rate 0.01000
[tex]5000 \: (1+ 0.01)^{30} = Amount[/tex]
Amount 6,739.24
IF rate is 12%
yearly Amount 8,811.71
semiaanual Amount 8,954.24
bimonthly Amount 9,056.81
IF time is 12 years:
yearly Amount 10,060.98
semiannual Amount 10,163.97
bimonthly Amount 10,235.50
As time horizon increase
as subperiord of capitalization increases
or as rate increases
the final future value increases as well.
Explanation:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 5,000.00
time 5.00
rate 0.06000
[tex]5000 \: (1+ 0.06)^{5} = Amount[/tex]
Amount 6,691.13
IF semminannual:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 5,000.00
time 10.00
rate 0.03000
[tex]5000 \: (1+ 0.03)^{10} = Amount[/tex]
Amount 6,719.58
IF bimonthly:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 5,000.00
time 30.00
rate 0.01000
[tex]5000 \: (1+ 0.01)^{30} = Amount[/tex]
Amount 6,739.24
IF rate is 12%
[tex]5000 \: (1+ 0.12)^{5} = Amount[/tex]
Amount 8,811.71
semiaanual:
[tex]5000 \: (1+ 0.06)^{10} = Amount[/tex]
Amount 8,954.24
bimonthly:
[tex]5000 \: (1+ 0.02)^{30} = Amount[/tex]
Amount 9,056.81
IF time is 12 years:
[tex]5000 \: (1+ 0.06)^{12} = Amount[/tex]
Amount 10,060.98
semiannual:
[tex]5000 \: (1+ 0.03)^{24} = Amount[/tex]
Amount 10,163.97
bimonthly:
[tex]5000 \: (1+ 0.01)^{72} = Amount[/tex]
Amount 10,235.50
A property title search firm is contemplating using online software to increase its search productivity. Currently an average of 40 minutes is needed to do a title search. The researcher cost is $2 per minute. Clients are charged a fee of $400. Company C's software would reduce the average search time by 15 minutes, at a cost of $3.5 per search. Company D's software would reduce the average search time by 10 minutes, at a cost of $3.6 per search. Compute the productivity in terms of revenue per dollar of input?
Answer:
Option 1) $5
Option 2) $4.57
Option 3) $3.7
Explanation:
First, since there are 3 options available to the firm, the productivity per dollar input will be calculated for the three options.
1) The first option is to make use of the current software for the title search and the productivity level is calculated as follows
Productivity per dollar input = Fees charge clients/Total cost to the firm
Clients fee= $400
The total cost to firm = Average time x cost to the researcher
=40 minutes x $2 = $80
Therefore, Productivity = $400/$80 = $5
2) The company can use Company C's Software
Productivity per dollar input = Fees charge clients/Total cost to the firm
Fee charged clients= $400
Total cost to firm = (40 minutes - 15 minutes) 25 minutes x $3.5 cost to the researcher
= $400/$87.5 = $4.57
3) The company can decide to use Company D's software
Productivity per dollar input = Fees charge clients/Total cost to the firm
Fee charged clients= $400
Total cost to firm = (40 minutes - 10 minutes) 30 minutes x $3.6 cost to the researcher
= $400/ $108 = $3.7
It can be concluded that using their current software will give the highest productivity in terms of revenue per dollar of input of $5.