Answer:
debit Manufacturing Overhead, $4,000; credit Wages Payable
Explanation:
Remember that indirect labor expenses are added to the Factory Overhead account, therefore Martinez Manufacturing journal entry to record is to debit Manufacturing Overhead $4,000 and then credit Wages Payable since the expenses was not paid.
It is important to note that in any case a manufacturing company is to list the direct labor expense separately from its indirect labor and wages paid to other employees.
Martinez Manufacturing incurred $4,000 for indirect labor in Department III. The journal entry to record indirect labor utilized, but not paid is Debit Manufacturing Overhead; Credit Indirect Labor Payable. Process costing is used. So, the correct answer is c.
Here's an explanation:
Indirect labor refers to labor costs that cannot be traced directly to a specific product but are necessary for the production process.When indirect labor costs are incurred but not paid, they are recorded in the Manufacturing Overhead account.This overhead is considered a liability until paid, hence recorded as Indirect Labor Payable.This ensures proper tracking of expenses and liabilities in manufacturing accounting systems.Complete Question:
Martinez Manufacturing incurred $4,000 for indirect labor in Department III. The journal entry to record indirect labor utilized, but not paid is ________. Process costing is used.
a) Debit Work in Process Inventory; Credit Indirect Labor Payable
b) Debit Indirect Labor Payable; Credit Work in Process Inventory
c) Debit Manufacturing Overhead; Credit Indirect Labor Payable
d) Debit Indirect Labor Payable; Credit Manufacturing Overhead
Debbie keeps a close eye on her company’s internal and external environment to discover possible opportunities for new products and to discern possible threats from the competition. In which activity is Debbie engaged?
Answer:
The activity Debbie is engaged in is Environmental scanning.
Explanation:
The method of collecting data about the peripheral marketing environment to identify and understand marketing trends is known as environmental scanning. This process involves continuous monitoring of the organization to detect the occurrences of opportunities and threats caused by the internal and external environment.
Environmental scanning identifies and prevents the organization from threats so that her present and future plans doesn't get terminated.
Thus, the activity Debbie is engaged in is Environmental scanning.
Answer: Environmental scanning
Explanation: Debbie is engaged in environmental scanning which is defined as a process of collecting data and information about external and internal events that impacts organization's environments. These factors help determine the decisions a business makes; the future direction of the business and they include: competition, economics, technology, legal issues, and social/demographic factors, market research studies etc.
Dan invested $100,000 to start a company and received 1,000,000 shares of Series A common stock. Since then, the company has been through three additional funding rounds of financing:
Round Price Per Share Number of Shares
Series B $0.75 500,000
Series C $1.25 300,000
Series D $3.50 200,000
Let X be the pre-money valuation for the Series D funding round, Y be the post-money valuation for the Series D funding round, and Z be the percentage of the firm that Dan owns after the last funding round.
Determine X, Y, and Z.
Answer:
X = $6,300,000
Y = $7,000,000
Z = 10%
Explanation:
NB: Investment = Price * Number of shares
For Series A:
Number of shares = 1,000,000
Price = Number of shares/Initial Investment
Price = 1,000,000/100,000 = 10
Investment = 1,000,000 * 10 = $10,000,000
For Series B
Price = $0.75
Number of shares = 500,000
Investment = 500,000 * 0.75 = $375,000
For Series C
Price = $1.25
Number of shares = 300,000
Investment = 300,000 * 1.25 = $375,000
For Series D
Price = $3.50
Number of shares = 200, 000
Investment = 3.50 * 200,000 = $700,000
Total shares = 1,000,000 + 500,000 + 300,000 + 200,000 = 2,000,000
Y = Post-money valuation for the series D funding round
Y = Series D investment * (total post investment share)/(Shares issued for series D)
Y = 700,000 * (2,000,000)/(200,000) = $7,000,000
Y = $7,000,000
X = Pre-money valuation for the series D
X = Post-money valuation - New Investment (Series D)
X = $7,000,000 - $700,000
X = $6,300,000
Z = Percentage of the firm that Dan owns after the last funding round
Z = (Number of shares of series D/ Total number of shares)*100%
Z = (200,000/2,000,000)*100%
Z = 10%
On June 5, Jo's Market sold $1,000 of goods on credit with terms of 2/10,n/30. The required journal entry to record Jo's Market customer's payment on July 6 would be:
Answer: debit cash $1000; credit accounts receivable $1000
Explanation:
Answer: Debit cash $980; debit sales discounts $20; and credit accounts receivable $1000
Explanation:
The initial equilibrium price in the market for Web pages is $200 per page and 1 created in a month. Many new Web design firms now enter the market. As a result, leftward and the price falls.
A) the supply curve of Web pages shifts l
B) the supply of Web pages increases and the price falls,
C) the supply of web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward.
D) the demand for Web pages increases and the price rises.
E) the demand for Web pages increases and the price falls.
Answer:
B) the supply of Web pages increases and the price falls.
Explanation:
The equillibrum price is where demand intersects supply, that is the price at which consumer is willing to buy is the same as the price seller is willing to sell.
If there was only 1 web page created per month at $200, and now more web design firms enter the market. The supply of web pages will increase from 1, as all the companies will want to present their product.
This results in excess supply and will cause price to fall as is illustrated in the attached diagram. As seen the equillibrum price reduces from P1 to P2.
Answer:
The supply of web pages increase and the price falls, which then increases the demand for web pages and the demand curve shifts rightward ( C )
Explanation:
If the equilibrium price of a web page is $200 when fewer web design firms are producing the web pages. the number of web pages will increase when more web design firms enter the market.
As more design firms go into producing more web pages the supply of web pages will be increase and this will lead to lower equilibrium price for the web pages in the market. based on this market factors the demand will increase because buyers would buy more when prices of goods and services fall. the increase in demand will be represented with the demand curve shifting to the right.
Exercise 5-17 (Algorithmic) (LO. 4, 8) Rover Corporation would like to transfer excess cash to its sole shareholder, Aleshia, who is also an employee. Aleshia is in the 24% tax bracket, and Rover is subject to a 21% rate. Because Aleshia's contribution to the business is substantial, Rover believes that a $114,000 bonus in the current year is reasonable compensation and should be deductible by the corporation. However, Rover is considering paying Aleshia a $114,000 dividend because the tax rate on dividends is lower than the tax rate on compensation. Answer the following questions to determine whether Rover is correct in believing that a dividend is the better choice. a. Regarding taxes, which would benefit Aleshia the most? The $114,000 dividend because after taxes she would have $ from the dividend and $ 86,640 from the bonus. b. Regarding taxes, which would benefit Rover Corporation the most? The $114,000 bonus because it would save Rover $ 23,940 in taxes. c. Considering the two parties together, which alternative would provide the most overall tax savings? The $114,000 bonus because when the overall effect to both the corporatio
Answer:
The correct answer that a dividend is a better choice is . a. Regarding taxes, which would benefit Aleshia the most? The $114,000 dividend because after taxes she would have $ from the dividend and $ 86,640 from the bonus.
Explanation:
A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders.
A tax (from the Latin taxo) is a compulsory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law.
Candy Canes Inc. spends $100,000 to buy sugar and peppermint in April. It produces its candy and sells it to distributors in May for $150,000, but it does not receive payment until June. For each month, find the firm’s sales, net income, and net cash flow.
Answer:
April,
Sales is zero Net income is zeroNet cash flow is an outflow of $100,000 (used in the purchase of raw materials)May,
Sales is $150,000Net income is $500,00Net cash flow is zeroAnd in June;
Sales is zero Net income is zeroNet cash flow is an inflow of $150,000 (amount received from customers)Explanation:
In April, the company purchased raw materials (Sugar and Peppermint) for $100,000. The entries posted are debit to Inventories and Credit to Cash account (both amounting to $100,000 each).
As such in April,
Sales is zero Net income is zeroNet cash flow is an outflow of $100,000 (used in the purchase of raw materials)It produces its candy and sells it to distributors in May for $150,000, but it does not receive payment until June.
When the sale is made in May, the entries required is Debit accounts receivables $150,000 and Credit Sales revenue $150,000. Also, Debit cost of goods sold $100,000 and Credit Inventories $100,000.
Net income is the difference between sales and cost of sales.
As such in May,
Sales is $150,000Net income is $500,00Net cash flow is zeroFor June,
Payment for goods sold in May were received, entries posted are debit to cash account and a credit to accounts receivables (both balance sheet accounts), hence;
Sales is zero Net income is zeroNet cash flow is an inflow of $150,000 (amount received from customers)Candy Canes Inc. incurred expenses in April with no sales, resulting in zero for all values. In May, they made sales but received no money, resulting in positive net income but negative cash flow. In June, they received the payment, resulting in positive cash flow but no change in net income.
Explanation:In April, Candy Canes Inc.'s sales, net income, and net cash flow are all zero because no sales were made, though the company did spend $100,000 on sugar and peppermint.
In May, the firm's sales amounted to $150,000. The net income was $50,000 (which is $150,000 in sales subtracting the $100,000 in expenses). However, the net cash flow was -$100,000 because payment was not received in May, and the company spent $100,000 in April.
In June, there were no new sales or expenditure, but because Candy Canes Inc. received payment for the May sales, its net cash flow was $150,000, while the net income remained zero.
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Variable Costing: Compare and contrast variable costing with absorption costing, highlighting the differences between operating income. Discuss the use of variable costing for decision making in a manufacturing company and a service company.
Answer:
Differences among Absorption and Variable Costing:
In Absorption costing item cost is higher than the cost determined under factor costing. Variable costing changes just direct cost (material, work, overhead) into cost of an item though Absorption Costing Charges all the assembling costs into cost of item. In factor costing benefit of Closing Inventory is lower than an incentive under Absorption Costing. In factor costing fixed assembling costs are considered as occasional expenses and charged from the Gross Profit though in Absorption it has taken in item cost just as shutting Inventory. In factor costing fixed assembling costs are not charged to Inventory.Contrasts in overall gain happens because of distinction in treatment of fixed overhead under over two costing draws near.
Preferences of variable costing in dynamic:-
Under factor costing commitment edge Income Statement give significant data (s) to the Managers. It is valuable in inward dynamic and increasingly compelling in cost-volume-benefit (CVP) examination. It empowers to distinguish CM Ratio, BEP in units and dollar, target benefit focuses and in affectability examination. It aware and helps the administration in taking choice identified with increment the creation for increment in benefits, use of overabundance limit or to meet stockpile of extra requests. It likewise prompts in purchase or decide.Bloom Company management predicts that it will incur fixed costs of $160,000 and earn pretax income of $164,000 in the next period. Its expected contribution margin ratio is 25%. Required: 1. Compute the amount of total dollar sales. 2. Compute the amount of total variable costs.
Answer:
1. $1,296,000
2. $972,000
Explanation:
Pretax income is the difference between the total sales and the total expenses. The total expense is made up of the fixed cost and variable cost. The variable cost is dependent on the level of activities. Contribution margin is the net of total sales and total variable cost. The ratio is the ratio of contribution margin to sales.
As such, contribution less fixed cost gives the pretax income.
Contribution margin = $164,000 + $160,000
= $324,000
25% = $324,000/total sales
Total sales = $1,296,000
Total variable costs = $1,296,000 - $324,000
= $972,000
Expected return and standard deviation:
a. Johnson & Johnson (JNJ) is trading at 123.64 (5/12/2017 close). JNJ is a large health care conglomerate. It has done well over the last couple of years and you think it will continue to do well. After careful analysis you conclude that in one year the price will be (90, 105, 125, 155, 175) with associated probabilities of (0.1, 0.2, 0.4, 0.2, 0.1). Looking at the company’s past record you project that JNJ will pay a dividend of 3.40 (four quarterly dividends of 0.85).
(i) What is the expected return of JNJ stock?
(ii) Calculate the standard deviation of the return of JNJ stock (remember that you are using probabilities to do this, not historical data).
b. In the second sheet of the Excel file PS4 you will find historical data for IBM and CVX returns. (i) Calculate the sample expected return and sample standard deviation for both. (ii) What is the standard error of the sample average in each case? What is the +/- 2 standard error confidence interval of the sample average?
Answer:
Expected Return:
Expected Price in one year
= (90x 0.10)+ (105x 0.20)+ (125x 0.40)+ (155x 0.20)+ (175x 0.10)
= 128.5 Expected dividends in one year
= 3.40
Expected Return = 123.64 Expected Return=[ (Expected Price + Expected Dividends)] / Current Price= >[ (128.50 + 3.40)–123.64]/123.64= 0.066806859 or 6.68%
Standard Deviation: To measure the volatility, the estimated return must be determined with each price point.
Expected return = = [(Expected Price + Expected dividends) – Current Price] / Current Price
Current Price Expected Price Dividend Expected Return
123.64 90 3.4 -24.46%
123.64 105 3.4 -12.33%
123.64 125 3.4 3.85%
123.64 155 3.4 28.11%
123.64 175 3.4 44.29%
Variance = [(-0.2446 – 0.0668)^2 x 0.10] + [(-0.1233 – 0.0668)^2 x 0.20] + [(0.0385 – 0.0668)^2 x 0.40] + [(0.2811 – 0.0668)^2 x 0.20] + [(0.4429 – 0.0668)^2 x 0.10] = 0.040574089
Standard Deviation = (0.040574089)1/2 = 0.20143011 or 20.14%
Explanation:
A mine is for sale for $800,000. It is believed the mine will produce a profit of $250,000 the first year, but the profit will decline $25,000 a year after that, eventually reaching zero, whereupon the mine will be worthless. What rate of return would be earned on the mine
Answer:
[tex]r=-60.8\%[/tex]
Explanation:
Rate of Return
The rate of return RoR is the net gain or loss on an investment over a time period, expressed as a percentage of the investment's initial cost.
If C1, C2, ..., Cn are the net cash flows at each period of investment, then the actual value of each one of them is
[tex]A_i=C_i(1+r)^{-i}[/tex]
where r is the rate of interest assumed for the investment.
The total value of the cash flows is
[tex]A=\sum C_i(1+r)^{-i}[/tex]
We have the final value of the investment at the present time
[tex]A=800,000\ ;\ C_1=250,000\ ;\ C_2=25,000[/tex]
We can find the r as the RoR of the investment by setting the equation
[tex]800,000=250,000(1+r)^{-1}+25,000(1+r)^{-2}[/tex]
Simplifying by 25,000 and rearranging
[tex](1+r)^{-2}+10(1+r)^{-1}-32=0[/tex]
This is a second-degree equation for [tex](1+r)^{-1}[/tex]. Solving the equation we get only one positive value:
[tex](1+r)^{-1}=2.5498[/tex]
Or, equivalently
[tex]r=-0.608[/tex]
[tex]r=-60.8\%[/tex]
We get a negative RoR
"The premium on a pound put option is $.04 per unit. The exercise price is $1.60. The break-even point is ____ for the buyer of the put, and ____ for the seller of the put. (Assume zero transaction costs and that the buyer and seller of the put option are speculators." g
Answer:
$1.56, $1.56
Explanation:
Break-even point on a Put option is the Net of premium cost. Your exercise price is $1.60, it includes the premium price paid to the seller. The break-even point for the will be $1.56 ( $1.60 - $0.04 ) and for the seller it will also be $1.56 because there is no transaction cost is involved and the premium received is an income for him.
Final answer:
The break-even point is $1.56 for both the buyer and the seller of a pound put option with a premium of $.04 and an exercise price of $1.60. This point is reached by subtracting the premium from the exercise price. Speculative trading carries risks and potential rewards, depending on market movements.
Explanation:
The break-even point for the buyer of a pound put option with a premium of $.04 per unit and an exercise price of $1.60 is $1.56. This is because the buyer of the put will pay the premium and needs the market price to be low enough to cover the cost of the premium when they exercise the option. To calculate the break-even point for the buyer, you subtract the premium from the exercise price ($1.60 - $.04 = $1.56).
For the seller of the put option, the break-even point is also $1.56 because this is where the seller does not gain or lose money from the premium received after considering the potential obligation to buy the underlying asset at the exercise price if the buyer exercises the option.
It is important to remember that in options trading, speculators can make a profit if their predictions about the market movement are correct, but there are no guarantees, and they can also suffer losses if the market does not move as anticipated.
Bradley's Copiers sells and repairs photocopy machines. The manager needs weekly forecasts of service calls so that he can schedule service personnel. Use the actual demand in the first period for the forecast for the first week so error measurement begins in the second week. The manager uses exponential smoothing with alpha = 0.5. Forecast the number of calls for week 6, which is next week. Week Actual Service Calls 1 26 2 32 3 40 4 27 5 30
Answer:
Explanation:
exponential smoothing alpha = 0.5
formula = Previous demand x Alpha + previous forecast x (1 - alpha)
26 32 40 27 30
26 26 29 34.5 30.75
week 2 forecast
26x0.5 + 26x0.5 = 26.
week 3 forecast
32x0.5 + 26x0.5 = 29
use the same procedure for week 4 and week 5
week 6
30x0.5 + 30.75x0.5 = 30.375
Demand Forecast for week 6 = 30.38
One evening while watching TV, your stomach growls. You see an ad for Subway. You walk to the Subway shop and buy a sandwich, which tastes great. In terms of behavioral learning, your hunger is a __________.
a.reinforcement
b.cue
c.response
d.prompt
e.drive
Answer:
The correct answer is letter "E": drive.
Explanation:
Following the ideas of Sigmund Freud (1856-1939), the father of Psychoanalysis, a drive is a motivation caused by the pressure of satisfying an urgent need. Some use the term "need" to describe the situation above but there is a differentiation made with "drive" describing the latter as the psychological manifestation and the first as the state of not having something vital.
Between 1994 and 2006, Fort Myers home prices have increased Faster than the rate of inflation. Using your knowledge of markets, in 25 words or more explain why.
Answer: The market for homes will be higher when there is increase in the amount of homes being built. In addition, the location of a house determines the cost of the house. For instance, a house located in an urban environment will cost more than the one located in a rural area. Irrespective of having the same components or features, the price will always vary.
Explanation:
Fort Myers is a commercial centre of Lee County, Florida. It is a major tourist destination in Florida. It is a metro city with job markets and a nice quality of live. Between 1994 and 2006, the prices of Fort Myers homes increased more than the rate of inflation. This is due to the quality of life and location of Fort Myers. An increase in the number of houses built increaseD the market for homes. This raised the price of houses higher than the inflation rate.
Final answer:
The rise in Fort Myers home prices between 1994 and 2006 was due to the housing bubble, characterized by speculation, rising homeownership rates, and unsustainable mortgage practices.
Explanation:
Between 1994 and 2006, Fort Myers home prices increased faster than inflation due to several factors. During the early 2000s, there was widespread enthusiasm and speculation in the housing market, which led to what is known as the "housing bubble." At that time, home ownership rates were rising, and housing was considered a safe financial investment, which helped to drive up the market. Furthermore, mortgage values tripled, making housing more accessible even though this accessibility was often driven by unsustainable mortgage practices.
This period saw a significant change in home values with the average U.S. home price rising over 10% per year. No serious analyst believed this rate of growth was sustainable. The homeownership rate also increased, reaching a high of over 69% between 2004 and 2005. This rise in home values ultimately led to a market correction, which, when housing prices fell in 2007 and 2008, contributed to a severe recession.
Analysts attribute the steep rise in home prices to a combination of low-interest rates, lax lending standards, and a belief that housing prices would continue to rise indefinitely. The increase in housing prices during the bubble period was clearly out of step with historical trends and was also much faster than the rate of inflation.
If TOMS decided to enter the tea business and they purchased part of a foreign tea company to join with them to found TOMS Teas, this would be an example of __________
If TOMS decided to enter the tea business and they purchased part of a foreign tea company to join with them to found TOMS Teas, this would be an example of __________.
a. direct foreign investment
b. contract manufacturing
c. a joint venture
Answer:
This would be an example of a joint venture.
Explanation:
A joint venture (JV) is a corporate agreement in which two or more organisations agree to share money to carry out a specific mission. This role can be a new project or a new enterprise.
Each of the partners shall be liable in a joint venture (JV) for benefit, loss and related costs. The corporation is therefore its own organisation, independent from other corporate interests of the members.
These are alliances, which can carry on some formal system in a conversational context.
The common usage of JVs is to join a global industry partner with such a local company.
This is an example of a joint venture, where TOMS and a foreign tea company are pooling resources to create and distribute TOMS Teas.
Explanation:If the shoe company TOMS decided to enter the tea business and purchased part of a foreign tea company to join with them to launch TOMS Teas, this would be an example of a joint venture. A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or project. In this case, the specific task would be creating and distributing TOMS Teas. This concept is common in international business and allows for risk sharing, access to local market knowledge, and shared resources and technology.
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You are planning for your retirement and want to have $1,500,000 by the time you retire 45 years from today. You also want to have $250,000 in 20 years to help fund your children's college education. What annual end of the year deposit would you have to make for 45 years into an account paying 8% compounded annually to meet your future goals?
A. 4,528
B. $3,881
C. $6,906
D. $8,311
Answer:
The correct option is D. $8,311
Explanation:
The steps to reach the deposit ammount of $8,311 are the following:
1) Calculate Future Value of cash flow= 250,000×(1+0.08)∧25=1,712,118.80
2) Calculate the total ammunt to be accumulated by the end of year 45
=1,712,118.80+1,500,000=3,212,118,80
3) Finally you have to calculate the annual deposit to achieve the 3,212,118,80 in 45 years
FV= 3,212,118,80
r=8%
n=45
3,212,118.80= P( (1+0.08)∧45-1 )
0.08
= 8,311. Annual end of the year deposit
Indifference curve analysis Select one: A. presumes only that the consumer can say one combination of two goods yields more or less utility than some other combination. B. is in conflict with the idea of a downsloping demand curve. C. presumes, unlike utility analysis, that satisfaction is numerically measurable. D. presumes, as does utility analysis, that satisfaction is numerically measurable
Answer:
A. presumes only that the consumer can say one combination of two goods yields more or less utility than some other combination
Explanation:
An indifference curve is a curve is a graph that shows the combination of two goods that have been given a consumer equilibrium. Along utility and thus they make a consumer difference and are said to be a heuristic device that is used in the contemporary microeconomics to demonstrates the your preferences and the limitations of a budget.common stock for $12,900 (Coronado does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. Assume the stock is nonmarketable.Prepare Coronado’s journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)
Answer:
Detailed solution is given below:
Journal entries are the entries that record the transaction of the company that depicts the inflow and outflow of the cash in the firm. The transactions that come in the firm are termed as the debit and which goes out is credit.
A journal entry is an act of reporting or tracking the progress of any monetary or quasi activity. An accounting journal method utilizes & displays a company's debit and credit amounts. Every recording in the journal entry can be either a deduction or addition.
The Journal entries have been attached below.
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Ford Motor Company has issued 8% convertible debentures, convertible at a 25:1 ratio. Currently the debenture is trading at 110. The stock is trading at 38. What is the conversion price of the stock?
25
38
44
40
Answer:
Conversion price of the stock = 40
so correct option is (d) 40
Explanation:
given data
convertible ratio = 25:1
convertible debentures = 8%
stock is trading = 38
debenture trading = 110
solution
we get here Conversion price of the stock that is express as
Conversion price of the stock = Par value of the bond ÷ Conversion ratio ............1
Conversion price is price paid per equity share to acquire it through conversion
and Conversion ratio is 25 shares per bond if converted
put here value and we get
Conversion price of the stock = [tex]\frac{1000}{25}[/tex]
Conversion price of the stock = 40
so correct option is (d) 40
The Copy Center can purchase a new copier for $15,000. It would last for 3 years and have a salvage value of $3,000. Depreciation cost would be $4,000 per year and cash operating costs would equal $1,000 per year. The same copier could be leased for $6,500 per year. Using a discount rate of 7%, and the tables in Supplement 11A, it is best to (buy/lease) the copier because the difference in cost is___________ $ .
Answer: 4,500
Explanation:
Answer:
buy/1883
Explanation:
Sellers typically ask a higher price for an item than buyers are willing to pay. This is called a(n) Group of answer choices Compensatory model Noncompensatory model Endowment effect Elimination by aspect model Lexicographical model
Answer:
Endowment effect
Explanation:
Endowment effect is the effect which is defined as the when the ownership rises or increases the value of the product or the item.
For example, when it is asked to set a price for an item to be exchanged, the sellers usually ask for a much higher price for the product, than the buyers are willing to pay. This effect is called as the endowment effect because the ownership increase the value linked with the product or item.
A manufacturer estimates that its product can be produced at a total cost of C(x) = 50,000 + 100x + x3 dollars. If the manufacturer's total revenue from the sale of x units is R(x) = 3400x dollars, determine the level of production x that will maximize the profit. (Round your answer to the nearest whole number.)
Answer:
The level of production x that will maximize the profit is: 22,966
Explanation:
C(x) = 50,000 + 100x + x³
R(x) = 3400x
P(x) = R(x) - C(x)
= 3400x - [50,000 + 100x + x³]
= 3400x - 50,000 - 100x - x³
= 3300x - 50,000 - x³ .................... (A)
P'(x) = 3300(1) - 0 - 3x²
= 3300 - 3x²
At a critical point, P'(x) = 0
∴ 0 = 3300 - 3x²
3x² = 3300
x² = 1100
x = ± [tex]\sqrt{1100}[/tex]
P"(x) = -6x
P([tex]\sqrt{1100}[/tex]) = -6 ([tex]\sqrt{1100}[/tex]) < 0
by second derivative, 'P' max at x = [tex]\sqrt{1100}[/tex] = 33.17 (rounds)
since x = [tex]\sqrt{1100}[/tex] ,
recall that P(x) = 3300x - 50,000 - x³ from equation (A)
Therefore, Maximum Profit
P([tex]\sqrt{1100}[/tex]) = 3300[tex]\sqrt{1100}[/tex] - 50000 - [tex]\sqrt{1100} ^{3}[/tex]
= 3300(33.17) - 50,000 - 33.17³
= 109461 -50,000 - 36495.26
= 22,965.74
Maximum profit is 22,966 to the nearest whole number
To find the level of production x that maximizes profit, calculate the profit function by subtracting total cost (C(x)) from total revenue (R(x)). Then, find the value of x that makes marginal revenue equal to marginal cost. This requires knowledge of calculus to differentiate the profit function.
Explanation:To determine the level of production x that will maximize the profit, we first need to calculate the profit function which is the total revenue (R(x)) minus the total cost (C(x)). In this case, the Profit function P(x) is equal to R(x) - C(x) = 3400x - (50,000 + 100x + x3).
Then, to find the level of output that maximizes profit, you would typically differentiate this profit function, set the derivative equal to zero, and then solve for x. This involves calculus, which might not be within the scope of your current studies.
Without using calculus, it is hard to pinpoint the exact value of x that maximizes the profit. However, it is possible to say that the profit-maximizing level of output will occur when marginal revenue (the additional revenue from selling one more unit) equals marginal cost (the additional cost of producing one more unit), which is a fundamental principle in economics. So, you would try to find an x such that the increase in 3400x from increasing x by 1 is equal to the increase in (50,000 + 100x + x3) from increasing x by 1.
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Anthony votes in favor of a bill which would prevent people above a certain level of income from being able to purchase subsidized housing. Which philosophy of ethics is applies here?
(A) Kantianism
(B) Virtue Ethics
(C) Social Justice Theory
(D) Utilitarianism
Answer:
Letter C is correct. Social Justice Theory.
Explanation:
The most suitable alternative for this issue is letter c, Theory of Social Justice.
This theory refers to an ethical and political philosophy that states that there is justice beyond those recognized by the economic law of supply and demand, civil and criminal law, and the social and moral rules and structures of society. According to this theory, social justice refers to relationships that must be fair to all groups in society, that is, all people must have equal access to health, well-being, justice, opportunities, etc., regardless of their conditions. political, economic or other.
Social justice theory can punish or favor individuals regardless of their characteristics, choices or actions.
In the above question, we can say that social justice is adequate, because in economic terms, it is able to grant opportunities, redistribution of wealth and income to groups considered oppressed by certain oppressors.
Final answer:
Anthony's vote aligns with Social Justice Theory, which seeks a fair allocation of resources in society and particularly relates to Rawls's theory involving the veil of ignorance.
Explanation:
Anthony's vote aligns with the philosophy of Social Justice Theory, which focuses on the equitable distribution of opportunities, resources, and rights within a community. This theory is concerned with creating a society where there is a fair allocation of community assets, making sure that individuals in higher income brackets do not reduce the availability of subsidized housing meant for those in greater need.
The concept of social justice invokes the “veil of ignorance” in Rawls's theory. It is a method of designing a just society by making decisions without knowledge of one's position within the society, ensuring fair and unbiased policies. Lastly, while utilitarian principles, such as those discussed in the theory of Utilitarianism, are important in many aspects of social policy and ethics, the specifics of the housing bill discussed do not directly pertain to this philosophy which aims to maximize the overall happiness or welfare of the society.
Tracy consumes dress shoes (D) and casual Crocs (C). Her marginal utility from consuming casual Crocs is MU Subscript Upper CMUCequals=20DC and her marginal utility from consuming dress shoes is MU Subscript Upper DMUDequals=10Upper C squaredC2. Her annual shoe allowance is $450450, which she spends on only dress shoes and Crocs. If she pays $5050 for a pair of dress shoes and $2525 for a pair of Crocs, what is her optimal consumption bundle?
Answer:
The optimal bundle is 6 pairs of dress shoes and 3 pairs of Crocs.
Explanation:
From the question,
Allowance (M) = $450; Price of dress shoes, Pd = $50; Price of crocs, Pc = $50
Note: MRS-price ratio, MUC- marginal utility from consuming casual Crocs ,MUD- marginal utility from consuming dress shoes
Optimal bundle is determined where MRS = Price ratio
MRS = MUC/MUD = 20DC/10C2 = 2D/C
Price ratio = Pd/Pc = 50/50 = 1
So, 2D/C = 1
Therefore, C = 2D
Budget constraint: M = Pd*D + Pc*C
So, 50D + 50*(2D) = 450
50D + 100D = 150D = 450
So, D = 450/150 = 3
C = 2D = 2*3 = 6
To maximize her utility, Tracy should buy twice as many pairs of casual Crocs as dress shoes. This is found by equalizing the marginal utility per dollar spent on each type of shoe and considering her budget constraint of $450.
Explanation:In economics, consumers aim to maximize their utility given their budget constraints. The optimal consumption bundle is achieved when the marginal utility per dollar spent on each good is equal. Therefore, to find Tracy's optimal consumption bundle, we need to set the marginal utility per dollar spent on dress shoes equal to the marginal utility per dollar spent on casual Crocs.
The marginal utility per dollar spent on dress shoes is MU Subscript Upper D/Price of D = 10Upper C squaredC2/$50. The marginal utility per dollar spent on casual Crocs is MU Subscript Upper C/Price of C = 20DC/$25. Setting these equal to each other, we get (10C2/$50) = (20DC/$25). Simplifying, we find that Tracy should buy twice as many pairs of Crocs as dress shoes to maximize her utility.
However, we also need to take into account her budget constraint of $450. Let D be the number of pairs of dress shoes and C be the number of pairs of casual Crocs. So, we have the equation $50D + $25C = $450. Substituting D = C/2 into this equation, we can solve for the optimal number of dress shoes and Crocs for Tracy.
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Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts for special oc- casions. Since she has just begun this operation, she rents the equipment from a local printing shop when necessary. The cost of using the equipment is $350. The materials used in one shirt cost $8, and Gina can sell these for $15 each. (a) If Gina sells 20 shirts, what will her total rev- enue be
Answer:
The question is not complete, the complete question is written below:
Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts for special occasions. Since she has just begun this operation, she rents the equipment from a local printing shop when necessary. The cost of using the equipment is $350. The materials used in one shirt cost $8, and Gina can sell these for $15 each.
(a) If Gina sells 20 shirts, what will her total revenue be? What will her total variable cost be?
(b) How many shirts must Gina sell to break even?
What is the total revenue for this?
The answers are:
a.) Total Revenue = $300; Total variable cost = $160
b.) Break even number of shirts to be sold = 34 shirts; Total revenue for this = $510
Explanation:
a.) Total revenue is the total amount realized after the sales of 15 shirts. To calculate this, we are told that she sold 20 shirts for $15 each, therefore total revenue = Number of shirts sold × price of one shirt
∴ Total revenue = 20 × 15 = $300.
The variable cost of production is the cost that changes with the volume of products produced. In this example, the variable cost is the cost of materials used in making shirts, while the rent on equipment is the fixed cost, because its price remains the same irrespective of the volume of production. To calculate the total variable cost, we will multiply the variable cost of one shirt, with the total number of shirts produced;
cost of 1 shirt = $8
∴ cost of 20 shirts = 8 × 20 = $160
b.) The break even point is the point where the total cost equals total revenue. In order to calculate this, we will first of all calculate the total cost, which includes both the variable and fixed costs.
Total cost: Total fixed cost + Total variable cost
Total fixed cost = $350 (cost of renting equipment)
Total variable cost = 8 × 20 = $160 (calculated above)
∴ Total fixed cost + Total variable cost = 350 + 160 = $510
Therefore, to break even, the total revenue must also equal this cost price of $510. Now to calculate the number of shirts sold that equals this amount;
$15 = 1 shirt
∴ $510 = 1/15 × 510 = [tex]\frac{510}{15} = 34[/tex]
Therefore when 34 shirts are sold, total revenue = total cost.
Total revenue for 34 shirts = $510 (calculated and explained above).
g cost structure is degined on the relative proportion of fixed and variable cost in an organization if the company increase the proportion of variable costs relative to fixed costs
True/False
Answer:
True
Explanation:
Cost structure involves all the expenses that a company will incur while operating business model, which it is typically composed of fixed and variable costs. Fixed costs are static with increases or decreases in units of production capacity, while variable costs are dependent. Cost structure is the relative proportion of fixed and variable costs within a company.
Pro Corp., a U.S.-based MNC, uses purchasing power parity to forecast the value of the Thai baht (THB), which has a current exchange rate of $o.o22. Inflation in the United States is expected to be scenario, Pro Corp. would forecast the value of the baht at the end of the year to be:
a. $0.023.
b. $0.021
c. $0.020.
d. None of the above
Answer:
Option "B" is the correct answer to the following statement.
Explanation:
Given:
Exchange rate of 1 Baht= $0.022
Expected inflation in united states (Assume) = 3% = 0.03
Expected inflation in Thailand (Assume) = 10% = 0.10
Computation:
After 1 year rate of 1 Baht in Dollar
The price in US = 1 × (1+0.03) = $1.03
The price in Thailand = 1 × (1+0.10) = 1.10 baht
1 baht = 1.03×0.022÷1.1 = $0.0206
Therefore, 1 baht = $0.21 (approx)
The variance of an investment's returns is a measure of the:
A. probability of a negative return.
B. historic return over long time periods.
C. average value of the investment.
D. volatility of the rates of return.
Answer:
B. historic return over long time periods.
Explanation:
Variance is a metric applied in statistics to determine the squared deviation of a random variable from its mean value.
The variance of a return of investment is a measure of the historic return over large time periods. The historical return approach is more commonly used in the exercise of investing. It follows the data which is a finite set of historical returns of investment and assumes that each possible result has an equal probability.
16. A price floor represents: a. a maximum price that can be legally charged for a product or service. b. a minimum price that can be legally charged for a good or service. c. a lottery imposed upon producers by the government, d. a first come, first serve mechanism for controlling prices.
Answer:
b. minimum price that can be legally charged for a product or service
Explanation:
A price floor represents a minimum price that can be legally charged for a product or service. A price floor is the lowest legal price that can be paid in markets for goods and services, labor, or financial capital. There are many goods which have price floors imposed by the government; for example agriculture good. In an organizations, unions may also impose price floors which could be the minimum rates for the staff etc.
DellceCon is considering selling its delicious ice-cream cones using stands along Hot Beach, which is 5 miles long. According to its estimates, there are 1,000 sunbathers evenly spread along the beach and the each sunbather will buy one ice-cream cone per day pro- vided that the price plus any transportation (disutility) cost does not exceed $5. Each sunbather incurs a transportation (disutility) cost of leaving the comfort of their chair and umbrealla to get a cone and return to their spot of 25 cents per 0.25 mile. Each cone costs $0.50 to make and DeliceCon incurs a cost of $40 per day to run one of its stands. We would like to know how many stands DellceCon should operate and the price per cone that it should charge at each stand to maximize its profit.
Answer:
The price per charged should be $2.5
Explanation:
Disutility cost per 0.25 mile is 25 cents. Therefore, the cost per mile is 4x25 cents = $1
The disutility for the entire 5 miles is $5. This implies that 1 stand can easily satisfy the
condition of the disutility not being more than $5.
Thus, the seller should operate 1 stand.
Now, the total transportation cost can be minimized if the stand is set up in the middle of
the beach. In that case, the sunbathers at the farthest two ends would face a cost of $2.5
(2.5 miles x $1)
This means that in order to satisfy the disutility condition, the total of the price charged,
and disutility incurred should be less than $5.
Therefore, $2.5 + Price < $5. This means that Price $2.5
In order to maximize the profits, he would charge the maximum possible price.
Thus, the price per charged should be $2.5