Answer:
Spain has a comparative advantage in the production of olives and;
Austria has a comparative advantage in the production of fish
9 pounds of fish per crate of olives (being more favorable to Spain)
6 pounds of fish per crate of olives (being more favorable to Austria)
Explanation:
Spain renounce to 5 pounds of fish to produce olives while Austria to 10
threfore is much better in competitive term for Spain as the opportunity cost is lower
The opposite is true for Autria regarding fish production. is better producing that as renounce to less olives than Spain
Austria will sale above purchase olive for less than 10
while Spain will sale for more than 5
Given this requirement there are two options which allow for trade and generate gain for both countries.
In international trade involving Spain and Austria, the best price of trade, or 'exchange rate', that benefits both countries is '6 pounds of fish per crate of olives'. This accounts for both nations' opportunity costs while ensuring mutual benefits.
Explanation:Based on the given opportunity costs, Spain has a comparative advantage in producing olives and Austria has a comparative advantage in producing fish. The opportunity cost for Spain to produce one crate of olives is 5 pounds of fish while for Austria it is 10 pounds of fish.
For the trade to be beneficial to both countries, Spain needs to receive more than 5 pounds of fish for each crate of olives it exports to Austria. Similarly, Austria needs to receive more than 1/5 crate of olives for each pound of fish it exports to Spain. So, analyzing the four options, the price of trade that would benefit both countries is '6 pounds of fish per crate of olives'.
This is more than Spain’s opportunity cost of 5 pounds of fish but less than Austria’s opportunity cost of 10 pounds of fish, making it a beneficial trade scenario for both countries.
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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
The Jackson State Bank is worried because many of the loans it has made are home mortgages which can be paid off early by the homeowner. What type of risk would this be an example of?a. Default risk b. Inflation risk c. Liquidity risk d. Call risk e. Basis risk
Answer:
The correct answer is letter "D": Call risk.
Explanation:
The term call risk is usually related to bonds. It refers to the option bonds have to be redeemed before maturity. Bond issuers take advantage of call risks when interest rates drop in the market to redeem the bonds already issued to issue new bonds at a lower rate.
A free enterprise system refers to: a. Economic assets that are privately owned and exchanged in an open market. b. Property ownership by a centralized government. c. A mix of privately owned and government controlled economic assets. d. An index of economic freedom.
Answer:
a. Economic assets that are privately owned and exchanged in an open market.
Explanation:
A free enterprise is an economy where where economic factors like price, product, and services are determined by market forces and not by the government.
It is also called capitalism, economic assets are privately owned and competition is the yardstick for market success.
The opposite of this is communism where economic factors are controlled by the government.
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.
Data concerning Bedwell Enterprises Corporation's single product appear below:
Selling price per unit $ 240.00
Variable expenses per unit $ 99.50
Fixed expense per month $ 454,290
The unit sales to attain the company's monthly target profit of $35,000 is closest to $_____. (Do not round intermediate calculations.)
Answer:
unit sales = $3482.49
Explanation:
given data
Selling price per unit = $240.00
Variable expenses per unit = $99.50
Fixed expense per month = $454,290
monthly target profit = $35,000
solution
we get here contribution margin that is express as
contribution margin = Sales - Variable cost ..................1
put here value
contribution margin = $240 - $99.50
contribution margin = $140.50
so here Target Contribution margin will be
Target Contribution margin = Fixed cost + Target profits ...............2
put here value
Target Contribution margin = $454,290 + $35,000
Target Contribution margin = $489290
so here unit sales will be as
unit sales = [tex]\frac{489290}{140.5}[/tex]
unit sales = $3482.49
Suppose a new process was developed that could be used to make oil out of seawater. The equipment required is quite expensive, but it would in time lead to low prices for gasoline, electricity, and other types of energy. What effect would this have on interest rates? Why?
Answer:
Interest rates will rise
Explanation:
The reason is that the new process will lead to an appreciable rise in productivity in the energy sector. This rise in productivity positively affect the the rate of return on the investments of producers which indicates an increase in income. As people have more money to spend due to increase in income, demand will therefore rise. Increase in income would make the amount of savings and investment rise in the economy. The rise in investment will eventually lead to a rise all interest rates.
I wish you the best.
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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A regression line for predicting the selling prices of homes in Chicago is y^ = 168 + 102x, where x is the square footage of the house. Interpret the residual for a house with 1800 square feet that recently sold for $200,000
Answer:
the house was sold for 16,232 more than the expected based on the regression line
Explanation:
First, we determine know that the regression line for prediction of selling prices of homes in Chicago
y^ = 168 + 102x
No we extract the information required for the question as follows
1) The house has a square feet of 1800
2) The house was recently sold for $200,000
Therefore, based on the information and the predicting regression line
y^ = 168 + 102x
= y^ = 168 + 102 (1800)
y^ = 168 + $183,600
y^ = 183,768
Since observed value for 1800 square foot is y=$200,000
Residual is = 183,768 - 200,000
=-16,232
the house was sold for 16,232 more than the expected based on the regression line
Final answer:
The residual for the house in question is $16,232, which represents the difference between the actual selling price of $200,000 and the predicted price of $183,768 based on the provided regression equation for square footage.
Explanation:
The regression equation provided is y^ = 168 + 102x, where y^ is the predicted selling price of homes and x is the square footage. To interpret the residual for a specific house, we need to compare the actual selling price with the predicted price from the model. For a house with 1800 square feet that sold for $200,000, we first calculate the predicted selling price using the regression equation:
Predicted price: y^ = 168 + 102(1800) = 168 + 183,600 = $183,768
The residual is the actual selling price minus the predicted price. Therefore:
Residual = Actual price - Predicted price = $200,000 - $183,768 = $16,232
This positive residual indicates that the house sold for $16,232 more than the predicted selling price based on its square footage.
Research on honesty shows that individuals fall into three groups: (1) those who will almost always be honest, (2) those who are situationally honest, and (3) those who will always be dishonest. Which of these groups is (are) the biggest?
Answer:
The answer is 2) those who are situationally honest.
Explanation:
Research on honesty shows that individuals fall into three groups: (1) those who will almost always be honest, are approximately 30% of the population. (2) those who are situationally honest, are approximately 40% of the population and (3) those who will always be dishonest, are approximately 30% of the population.
Which of the following statements is FALSE?a. Electronic procurement systems can aid a company in saving both time and money.b. More than 50% of each sales dollar typically goes towards covering supply chain costs.c. If a firm lacks the technology to make a required component they will need to consider buying/outsourcing.d. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Answer:
The answer is d. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Explanation:
Centralized purchasing is a purchasing system in which all the departments of a company with a wide geographical distribution can make purchases through a common purchasing organization.
The false statement is that centralized purchasing refers to individual, local purchasing departments making their own decisions. In fact, centralized purchasing means the decisions are made by a single, centralized department.
Explanation:The false statement among the options is: 'Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.' This is incorrect. Centralized purchasing refers to all purchasing decisions and activities being carried out by a single, centralized department within an organization rather than on an individual or local level. For example, in a multinational corporation, the headquarters would make purchasing decisions that affect all branches, ensuring standardized processes and potential volume discounts.
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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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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.
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
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
A country produces apples and wheat. 1.) Using the 3-point curved line drawing tool, draw a representative PPC for this country. Label it PPC 1. 2.) Suppose that a breakthrough in technology makes all agriculture more productive. Using the 3-point curved line drawing tool, draw a new PPC showing the effect of this change. Label it PPC2. Carefully follow the instructions above, and only draw the required objects.
Answer:
The initial PPC is drawn on basis of the supposed values and is labelled as PPC1 in the attached graph. On technological marvel, the production of both the products(apples and wheat) will increase and the PPC will shift towards right as indicated in the graph labelled as PPC2.
Explanation:
1-Using the 3 point curved line tool, the representative PPC is drawn such that a the overall production is in the form of an arc touching both the axes. This is labeled as PPC in the attached graph.
2- When a breakthrough in the technology makes the agriculture productive, the curve will shift towards right. This indicates the production of both apples and wheat will increase. This is labeled as PPC2 in the attached graph.
A Production Possibility Curve (PPC) is depicted as a downward sloping concave line representing trade-offs in the production of two goods, in this case, apples and wheat. A technological breakthrough shifts this curve outward, reflecting increased production capacity.
Explanation:The subject of this question is the Production Possibility Curve (PPC), which is an economic model illustrating trade-offs and efficiency in production. In this case, we're looking at a country that produces only two goods: apples and wheat.
Normally, a Production Possibility Curve is drawn as a downward sloping, concave line, indicating the trade-off between the production of apples and wheat. The PPC is labeled as PPC 1.
When a technological breakthrough in agriculture occurs, this increases the productivity of both goods. This change shifts the PPC outward, resulting in a new curve labeled as PPC 2. This reflects the increase in production capability for both apples and wheat.
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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
Jupiter Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2017. The goods have a sales price of $610,000 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,000. Past history indicates that the cash discount will be taken. On January 28, 2017, Danone makes payment to Jupiter for the full sales price.
Instructions:
(a) Prepare the journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2017, and the payment on January 28, 2017. Assume that Jupiter Company records the January 2, 2017, transaction using the net method.
(b) Prepare the journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2017, and the payment on January 28, 2017. Assume that Jupiter Company records the January 2, 2017, transaction using the gross method.
Final answer:
Journal entries for the sale and receipt of payment by Jupiter Company would differ based on whether the net method or the gross method is used. Under the net method, sales are recorded net of the discount, and payments are recorded accordingly. Under the gross method, full sales are initially recorded with discounts applied upon payment.
Explanation:
The student has asked for the journal entries related to the sale of goods by Jupiter Company to Danone Inc., specifically under different accounting methods: the net method and the gross method.
Net Method For the sales transaction on January 2, 2017, Jupiter Company would record the sale with the anticipated cash discount under the net method as follows:
Credit Notes Receivable for $610,000
These entries reflect the recognition of sales revenue and cost of goods sold on the sale date, and the recognition of the cash receipt on the payment date, under each respective method.
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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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.
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.
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.
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.
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.
A delivery van costing $37,000 is expected to have a $2,900 salvage value at the end of its useful life of five years. Assume that the truck was purchased on January 1. Compute the deprecation expense for the first two calendar years under the following deprecation methods. A. Straight Line B. Double-declining- balance
Answer:
A.
Depreciation expense for the first year: $6,820
Depreciation expense for the second year: $6,820
B.
Depreciation expense for the first year: $13,640
Depreciation expense for the second year: $8,184
Explanation:
A. The company uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of delivery van − Salvage Value )/Useful Life = ($37,000 - $2,900)/5 = $6,820
Depreciation expense for the first year: $6,820
Depreciation expense for the second year: $6,820
B. The company uses Double-declining- balance method
Under the straight-line method, useful life is 5 years, so the asset's annual depreciation will be 20% of the Depreciable cost.
Depreciable cost = Total asset cost - salvage value = $37,000 - $2,900 = $34,100
Under the double-declining-balance method the 20% straight line rate is doubled to 40% - multiplied times the Depreciable cost's book value at the beginning of the year.
Depreciation expense for the first year = $34,100 x 40% = $13,640
At the beginning of second year, the Depreciable cost's book value is $34,100-$13,640 = $20,460
Depreciation expense for the second year = $20,460 x 40% = $8,184
The depreciation expense for the first two calendar years is $6,220 under the straight line method and $14,800 and $8,880 under the double-declining balance method.
Explanation:Under the straight-line method, the deprecation expense is calculated by dividing the difference between the initial cost and salvage value by the useful life. For the first two years, the deprecation expense would be:
Year 1: ($37,000 - $2,900)/5 = $6,220Year 2: ($37,000 - $2,900)/5 = $6,220Under the double-declining balance method, the deprecation expense is calculated by applying a fixed rate to the carrying value of the asset. The carrying value is the initial cost minus accumulated deprecation. The deprecation rates for the first two years would be:
Year 1: (2/5) x ($37,000 - $0) = $14,800Year 2: (2/5) x ($37,000 - $14,800) = $8,880Learn more about Deprecation Methods here:https://brainly.com/question/34866982
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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.
true or false An agent may continue to represent the principal even after the agency relationship is terminated.
Answer:
False
Explanation:
Agency refers to a kind of agreement wherein the first party, known as the Principal confers a right on the second party, called an agent, to act on his behalf or as per his directions.
It establishes a fiduciary responsibility i.e that of a legal trust between the parties.
Once the agency agreement is terminated, the relationship between a principal and an agent ceases. Thereafter, the agent cannot continue representing the principal and if he does, he shall be held personally liable for such acts which result into any damage or loss to a third party.
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.
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
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
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