Answer:
false
Explanation:
they would eventually run out of goods either by lack of or stopping production
Knowledge Check 01 Cartier Corporation currently sells its products for $50 per unit. The company’s variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company’s contribution margin ratio?
Answer:
Contribution margin ratio = 0.6 or 60%
Explanation:
The contribution margin per unit is the amount that each unit contributes to covering the total fixed costs. It is the contribution of each unit towards fixed costs after deducting the variable costs per unit from the selling price per unit.
The contribution margin ratio is the unit contribution margin expressed as a percentage of the selling price per unit.
Contribution margin ratio = Contribution margin per unit / Selling price per unit
Where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = 50 - 20 = $30
Contribution margin ratio = 30 / 50 = 0.6 or 60%
Pondside Apartments is a 900-unit apartment complex. When the apartments are 90% occupied, monthly operating costs total $ 226 comma 220. When occupancy dips to 80%, monthly operating costs fall to $ 220 comma 640. The owner of the apartment complex is worried because many of the apartment residents work at a nearby manufacturing plant that has just announced it will close in three months. The apartment owner fears that occupancy of her apartments will drop to 70% if residents lose their jobs and move away. Assuming the same relevant range, what can the owner expect her operating costs to be if occupancy falls to 70%?
Answer:
$215,060
Explanation:
90% occupancy rate (810 apartments) costs = $226,220
80% occupancy rate (720 apartments) costs = $220,640
we can use the high low method to calculate both variable and fixed costs:
variable costs = ($226,220 - $220,640) / (810 - 720) = $62 per apartment
fixed costs = $226,220 - ($62 x 810) = $176,000
if occupancy rate is 70%, then 630 apartments will be occupied:
total cost for 630 apartments = $176,000 + (630 x $62) = $215,060
A shopper infers that a product must be of high quality because the manufacturer has been in business a long time. Which heuristic is this an example of
Answer:
The Compromise effect
Explanation:
Heuristic is a modelling that explains the two fundamental ways of processing information while making up an opinion.
Data and information can be processed diligently in order to form an opinion which is a more accurate way than the other type known as heuristics .This explains that opinions can also be formed based on just a mere perception of issues or based on the opinion of other people or experts , which in most cases may not give a true representation of the situation at hand.
However , it forms a part of human daily activities and can also be useful in forming the required opinions in the course of daily activities.
One of the effect as seen in the question is bias attitudes or the compromise effect.
Sam and Lisa run a catering business in which they have two major tasks: getting new clients and preparing food for events and parties. It takes Sam 12 hours to prepare the food for an event and 3 hours of effort to get each new client. For Lisa, it takes 10 hours to prepare food for an event and 5 hours to get a new client.
In this scenario,_________ advantage in food preparation has an absolute advantage in food preparation, and________has a comparative
Assume that initially, Sam and Lisa are splitting both tasks for a large number of events. Then they decide to start shifting some work according to the principle of comparative advantage. In particular, the person with the comparative advantage in food preparation will take over preparing food for one more event, and the other person will use the freed-up time to get more clients. As a result, the total number of events for which food is prepared will remain unchanged, but the number of new clients will increase by________.
Answer:
In this scenario, LISA has both an absolute advantage in food preparation, and LISA has a comparative advantage in food preparation.
Assume that initially, Sam and Lisa are splitting both tasks for a large number of events. Then they decide to start shifting some work according to the principle of comparative advantage. In particular, the person with the comparative advantage in food preparation will take over preparing food for one more event, and the other person will use the freed-up time to get more clients. As a result, the total number of events for which food is prepared will remain unchanged, but the number of new clients will increase by 1.
Before they were getting 3 new customers since Sam got 2 and Lisa 1, but since Sam will only look for clients, then the total number of clients will be 4 (or 1 more).
Explanation:
It takes Sam 12 hours to prepare the food for an event and 3 hours of effort to get each new client.
Sam's opportunity cost of preparing food = 12/3 = 4 new clientsSam's opportunity cost of getting new clients = 3/12 = 0.25 of food preparationFor Lisa, it takes 10 hours to prepare food for an event and 5 hours to get a new client.
Lisa's opportunity cost of preparing food = 10/5 = 2 new clientsLisa's opportunity cost of getting new clients = 5/10 = 0.5 of food preparation​A restaurant, which operates in a perfectly competitive market, is evaluating whether it should serve breakfast on a daily basis. It would choose to do this when its revenues cover its variable costs. True or False
Answer:
TRUE
Explanation:
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
In the short run, the firm would continue to operate if its revenue covers variable cost. if it doesn't it would shut down.
which 2 statements regarding intuit approved quickbooks online apps are true? Select all that apply 1. It is recommended that the master administrator of the quickbooks company complete the setup. 2.You can sign up for quickbooks payments fro the dashboard in quickbooks online. 3. You can connect an existing qucibooks payments,Go payment or intiut merchant services account 4.it is a best practice for the proadvisor to complete and sign the quickbooks paymment agreement on behalf of client 5. you mus record the receive payment for each invoice paid using the pay on button.
Answer:
1. It is recommended that the master administrator of the quick-books company complete the setup.
3. You can connect an existing quick-books payments, Go payment or intuit merchant services account.
Explanation:
Quickbook is an accounting software which help in recording and processing a financial transaction. This software is best suited for small to medium sized organisations. Master administrator has all the access rights of a company administrator. Master administrator is the one who initially creates the quick book company file and he is then assigned as Master administrator.
The Quickbook is accounting software that helps in recording and processing financial transactions that are in monetary terms. This software is easy to access and therefore best for small and medium-sized business firms.
The 2 statements that are true about the intuit approach in the app are as follows:
1. It is recommended that the master administrator of the quick-books company complete the setup.
3. You can connect an existing quick-books payment, Go payment, or intuit merchant services account.
Under the Quickbook online apps, there is a Master administrator that gives access to all the rights of the business to the operating administrator. The master administrator is known for making or creating the initial book in the Quickbooks company file.
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how much time will be needed for 35,000 to grow to 44,622.09 if deposited at 7% compounded quarterly
Answer:
It will take 14 quarters (3.5 years) to reach $44,622.09 from $35,000 at an interest rate of 7% compounded quarterly.
Explanation:
Giving the following information:
PV= 35,000
FV= 44,622.09
i= 0.07/4= 0.0175
We need to calculate the number of quarters required to reach the objective. We will use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(44,622.09/35,000) / ln(1.0175)
n= 14
It will take 14 quarters (3.5 years) to reach $44,622.09 from $35,000 at an interest rate of 7% compounded quarterly.
The value of the goods and services Australia purchases from the U.S. are less than the value of goods and services the U.S. purchases from Australia. The U.S. has
Answer:
The answer is The U.S has a negative net exports with Australia and trade deficit with Australia
Explanation:
Net exports is the difference between the total value of a nation's exports and the nation's imports.
Net exports are positive when exports are greater(Australia)than imports and negative when exports are less than imports(The U.S). Also, positive net export number indicates a trade surplus, while a negative number means a trade deficit.
At the beginning of the year, paid-in capital was $164 and retained earnings was $94. During the year, the stockholders invested $48 and dividends of $12 were declared and paid. Retained earnings at the end of the year were $104.
Net income for the year was:_______
Answer:
$22
Explanation:
From the question above, the paid in capital at the beginning of a year was $164
Retained earnings was $94
During the year the amount invested by stockholders was $48 and a dividend of $12 was declared and paid.
At the end of the year the retained earnings was $104
Therefore, the net income for the year can be calculated as follows
Net income= Retained earnings at the end of the year-retained earnings at the beginning of the year+dividend
Net income= $104-$94+$12
= $22
Hence the net income for the year was $22
Suppose Portugal has 700 workers and 26,000 units of capital, and France has 18,000 workers and 700 units of capital. Technology is identical in both countries. Assume that wine is the capital-intensive good and cloth is the labor-intensive good.
a. Given the information above, which country is labor abundant? Which country is capital abundant? Explain
b. According to the Heckscher- Ohlin theorem, which country should export wine and import cloth? Which country should export cloth and import wine? Explain.
Answer:
(a)France is labor abundant because it has more workers than capital. Portugal is capital abundant because it has few workers and more capital
(b) Since France is labor abundant it should export cloth and import wine whil Portugal should export wine and import cloth.
Explanation:
Solution
Given that
(a) France as a country is labor abundant as compared to Portugal which is a capital abundant. this is because, France has more number of workers than capital and Portugal possess more capital than workers.
(b) With reference to Heckscher-Ohlin theorem, a capital abundant country should export capital intensive good and the labor abundant country should export labor intensive good.
France should export cloth and import wine since it is abundant. while Portugal should export wine and import cloth.
With this, both the countries will be utilizing their abundant factors of production in an effective way. this will increase the production of both the countries.
Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of demand:
1. The availability of close substitutes
2. Whether the good is a necessity or a luxury
3. How broadly you define the market
4. The time horizon being considered
A good with many close substitutes is likely to have relatively demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises.
A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?
A heart valve for heart attack victims
Diamond necklace
The price elasticity of demand for a good also depends on how you define the good.
Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.
Categories Most Elastic In Between Least Elastic
Red bell peppers
Vegetables
Food
The price elasticity of demand is also affected by the given time horizon.
Other things being equal, the demand for natural gas will tend to be elastic in the short run than in the long run.
Answer:
Elastic
A heart valve for heart attack victims
Red bell peppers - least elastic
Vegetables - in between
Food - most elastic
less elastic
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded.
a good that is considered a necessity usually has a less elasticity of demand.
the more narrowly defined a good is, the less elastic demand is. for example, there are many substitutes for food because it is largely defined, so its elasticity of demand would be more elastic
in the short run, demand is usually less elastic because there is a short time to find suitable substitutes. but in the long run, consumers have enough time to find suitable substitutes so demand is usually more elastic
Which of the following is a disadvantage of mass production particularly in regard to automation
A an enormous increase in productivity
B a decrease in the number of availabile jobs
C lower cost of materials services and capital
D equipment can often be repaired by individual parts
The disadvantage of mass production particularly in regard to automation is a decrease in the number of available jobs. The correct option is (B).
What do you mean by the mass production?Mass production is the process of producing standardized goods in huge quantities, frequently with the aid of automation or assembly lines.
The efficient creation of several identical products is made possible by mass production.
The goal of mass production is to maintain the lowest cost possible throughout the whole manufacturing process while producing the biggest volume achievable.
When goods are produced in large quantities, their individual costs are reduced. Production in large quantities takes the forms of flow production, job production, and batch production.
Therefore, the disadvantage of mass production particularly in regard to automation is a decrease in the number of available jobs.
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You purchased a share of SPCC for $100 and expect to receive a dividend of $5 in one year. If you expect the price after the dividend is paid to be $110, what total return will you have earned over the year
Answer:
The answer is 15%
Explanation:
(P1 - Po) / Po + D
Where P1 is the price of the share at the end of the year
Po is the price of the share at the beginning of the year
D is the Dividend receceived
P1 is $110
Po is $100
And Dividend is 5%
($110 - $100) / $100 + 5 %
$10/100 + 5%
10% + 5%
= 15%
The total return will you have earned over the year for the purchase of a share of SPCC is 15%
The new union president has proposed a couple of ideas that are very unusual: 1. "We should make an effort to help solve problems in the business." 2. "We should encourage our members who have the right experience and training to apply for supervisor jobs." Are these ideas good or not?
Answer:
In simple words, supervisory jobs refers to those jobs in which an individual has to monitor the performance of other individuals working under his or her direction and guidance.
The opinion of the president, therefore, is not bad as an employee with relevant experience gets a certain respect and have adequate level of knowledge for teaching others.
A waiter fills your water glass with ice water (containing many ice cubes) such that the liquid water is perfectly level with the rim of the glass. As the ice melts,
Answer:
As the ice melts and turns into water, the level of the liquid water will lower and it will no longer be perfectly leveled with the rim of the glass. This happens because water has a unique property, its solid state occupies a larger volume than its liquid state, i.e. as waters turns into ice, it expands and occupies more space. Generally, as liquids become solid, they will shrink and occupy less space, but that doesn't happen with water.
Explanation:
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $35,500; net cash used in investing activities was $13,000 and net cash used in financing activities was $16,500. If the beginning cash balance is $6,500, what is the ending cash balance
Answer:
The answer is $38,500
Explanation:
Operating activities: Cash generated or used to run the day-to-day business operations.
Investing activities: Cash used for investing in assets like securities, bonds, equipment, or proceeds from these assets.
Financing activities: Cash generated from loan and/or payments made to reduce loan balances
Ending cash balance = Net Cash from operating activities + net cash from investing activities - net caash from financing activities + Beginning cash balance
Ending cash balance = $35,500 + $13,000 - $16,500 + $6,500
$38,500
On December 31, 2018, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Wintergreen received $139,875 when it issued the bonds (or $150,000 × .9325). After recording the related entry, Bonds Payable had a balance of $150,000 and Discounts on Bonds Payable had a balance of $10,125. Wintergreen uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2019.Complete the necessary journal entry for June 30, 2019 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer: Please see explanation column
Explanation:
Journal entry for June 30
Date Amount Debit Credit
June 30 Bond Interest expense $5,756
Discount on Bonds Payable $506
Cash $5,250
Calculation:
Cash = 150,000 x 7%x 6/12 = $5,250
10-year bonds pay interest semiannually indicates 20 interest periods
Straight line Amortization of the discount =$10,125/20 = $506
Bond interest expense= Interest + amortization on discount
Interest = $150,000 x 7% x 6/12 = $5,250 + 506= $5,756.
You find that the bid and ask prices for a stock are $14.25 and $15.45, respectively. If you purchase or sell the stock, you must pay a flat commission of $30. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars
Answer:
$180
Explanation:
The bid price of a stock is $14.25
The ask-price of a stock is $15.45
A flat commission of $30 must be paid in the stock
100 shares of stock are bought
Therefore, the total implied and actual transaction costs can be calculated as follows
= Commission+(ask price-bid price)×number of shares
= 30×2+($15.45-$14.25)×100
= 60+ 1.2×100
= 60+120
= $180
Hence the total implied and actual transaction cost is $180
Varto company has 11800 units of its sole product in inventory that it produced last yrear at a cost of $24 each. this years model is superior to last year's and the 11800 units cannot be sold at last years regular selling price of $55 each. Varto has two alternatives for these items:
Complete question:
Varto Company has 11,800 units of its sole product in inventory that it produced last year at a cost of $24 each. This year’s model is superior to last year’s and the 11,800 units cannot be sold at last year’s regular selling price of $55 each. Varto has two alternatives for these items:
(1) they can be sold to a wholesaler for $9 each, or
(2) they can be reworked at a cost of $220,000 and then sold for $27 each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them.
Answer:
Varto company should not process further, they should sell it as it is.
Explanation:
Given:
For last year:
Product quantity = 11800
Cost = $24 each
For this year, the model is superior to last year's model and they can't be sold for the same price.
Required:
Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them.
Analysis is prepared below:
INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING
Revenue if processed further: (11800*$27) 318600
Revenue if sold as it is: (11800*$9) 106200
Incremental revenue: (318600-106200) 212400
Further processing cost: 220000
Incremental net income: (220000-212400) 7600 (loss)
From the analysis above, Varto company should not process further, as they will make a loss of $7,600 if they process further.
NB: $24 manufacturing cost is sunk cost which makes it not needed.
After researching the different forms of business organization, Natalie Koebel decides to operate "Cookie Creations" as a corporation. She then starts the process of getting the business running. In November 2015, the following activities take place.
A. Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
B. She opens a bank account under the name "Cookie Creations" and transfers $500 from her personal account to the new account in exchange for common stock.
C. Natalie pays $65 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise.
D. She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
E. Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business in exchange for common stock.
F. Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months. As a result, the notes payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)
G. She buys more baking equipment for $900 cash.
H. She teaches her first class and collects $125 cash.
I. Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2016.
(a) Prepare journal entries to record the November transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(b) Post the journal entries to general ledger accounts.
(c) Prepare a trial balance at November 30.
Answer:
ANatalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
Off-the-shelf accounting software is not adequate to meet the needs of small businesses. True or False True False
Answer:
True
Explanation:
Small Business face different operational and managerial circumstances compared to established business.
Off-the-shelf accounting software may not be consistent with these circumstances rendering it cumbersome or unsuitable.
Thus a customized accounting software is most suitable to meet the needs for small businesses
The following table gives the number of pints of type A blood used at Damascus Hospital in the past 6 weeks:
Week Of Pints Used
31-Aug 350350
7-Sep 389389
14-Sep 408408
21-Sep 383383
28-Sep 368368
5-Oct 378378
Required:
The forecasted demand for the week of October 12 using a3-week moving average is:______
Answer:
The forecasted demand for the week of October 12 using a 3-week moving average is 376,710
Explanation:
a) Data
21-Sep 383,383
28-Sep 368,368
5-Oct 378,378
Total 1,130,129
Average = 1,130,129/3 = 376,710
b) To calculate the moving average, the quantities for three weeks' demand are added and divided by 3. This shows that the average demand for type A blood at the Damascus Hospital will be 376,710, going by the figures provided. If the correct figures should have been 383, 368, and 378, the average would have equal to 376 pints.
If 200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were actually used at an actual rate of $6/machine‐hour, what is the variable overhead efficiency variance?
Answer:
Variable overhead efficiency variance= $100,000 unfavorable
Explanation:
Giving the following information:
200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but 220,000 machine‐hours were used.
To calculate the variable overhead efficiency variance, we need to use the following formula:
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Variable overhead efficiency variance= (200,000 - 220,000)*5
Variable overhead efficiency variance= $100,000 unfavorable
When the Variable overhead efficiency variance is = $100,000 unfavorable
What is the Efficiency variance?
Giving the following information are:
200,000 machine‐hours are budgeted for variable overhead at a standard rate of $5/machine‐hour, but [tex]220,000[/tex] machine‐hours were used. Now we calculate the variable overhead efficiency variance, Then we need to use the following formula are below mention. The variable overhead efficiency variance is= (Standard Quantity - Actual Quantity)*Standard rate. Then Variable overhead efficiency variance= [tex](200,000 - 220,000)*5[/tex]
Thus, Variable overhead efficiency variance= $100,000 unfavorable
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The Maine Media Workshop is similar to____________ because the people who take classes there learn by doing.
1. mentoring,
2. on-the-job training,
3. corporate University
Answer:
On-the-job training
Explanation:
Maine Media Workshop is similar to ON-THE-JOB TRAINING, reason been that the people, employees or workers who take classes there learn by doing.
On the job training can be defined as a training which is provided at the workplace in which the during the training, employees are
familiarized with the working environment which is why On-the-Job Training is tend to be based on the principle of learning by doing because the workers or the empolyees learn the job while performing it within their workplace environment or while the employees are doing the actual job.
Hence ,On-the-job training which is also known as OJT enables or help employees to gain hands on knowledge in their workplace or work environment.
Therefore a Managers who want or desire to keep their employees or workers training costs as low as possible should make use of ON -THE-JOB TRAINING.
"Which of the following is a significant operation interface that distinguishes a service supply chain from a product supply chain?"
a. service performance management
b. customer relationship management
c. supplier relationship management
d. demand management
. Payday loans are very short-term loans that charge very high interest rates. You can borrow $200 today and repay $225 in two weeks. What is the compound annual rate implied by this 12.5 percent rate charged for only two weeks
Answer:
2239%
Explanation:
The compound annual can be determined by converting this 12.5% in two weeks to an effective annual rate as below:
Effective annual rate=(1+12.5%/2)^52-1
By dividing by 2 we are reducing 12.5% to a weekly rate
By raising to the power of 52, we are expressing the weekly rate in annual terms.
Effective annual rate=(1+12.5%/2)^52-1=(1.0625 )^52-1
Effective annual rate=23.39401767 -1=2239%
California Closets is a maker of closet organizers and custom storage solutions. Its products are designed for people who live in small spaces. Assuming the company plans to segment its market based on a single variable, which of the following is most appropriate? Select one: a. Psychographics (lifestyle) b. Geography (urban versus suburban) c. Demographic (age, race) d. Behavioral (usage rate)
Answer:
rfg
Explanation:
The corporation should concentrate on geographic considerations, such as urban or suburban locations when it plans to segment its market based on one variable. As a result, option (B) is the best one.
What are urban and suburban areas?Cities are referred described as being urban. Many individuals reside in cities and work there. Cities are highly populated centers of trade where a fast-paced way of life is frequently the rule. New York City and Atlanta are two examples of urban areas.
People tend to live close to one another in metropolitan settings because the land is expensive and scarce. Although they are a prevalent alternative, multi-tenant properties are not the only choice.
Locations that have sprung up on the edges of cities are known as suburban areas. Although some grow to the point that they become cities in their own right, they are often less densely inhabited than the cities they surround. Subdivisions with solely residential zoning are where the majority of suburban homes are found. Gainesville, Georgia is an Atlanta suburb.
Hence, Option (B) is accurate.
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Intellectual Property in Fashion/ Trademarking color in the Red Sole case was:______.
a. Not allowed as color can’t be trademarked
b. Allowed if the rest of the shoe was of a contrasting color
c. Not allowed as the color had been copyrighted and not trademarked
d. None of the above
Answer:
b. Allowed if the rest of the shoe was of a contrasting color
Explanation:
We have to go through the options
Like in first option it says that it could not allowed plus it cant be trademarked as the color should be trademarked plus it is a brand and it also protected
The third option is incorrect as it is not relevant for the red sole case
Therefore option b is correct as it shows the contrasting color
When asset specificity is very high and there is market uncertainty, then it is best for a firm to:
a. Vertically integrate.
b. Ngage in a strategic alliance.
c. Use a short-term contract.
d. Buy in the open market.
Answer:
a. Vertically integrate.
Explanation:
a. Vertically integrate as this is the only way to reach the standards requirements of the product features at the reasonable amount.
Therefore according to the given situation, If the specificity of the assets is very high and there is market instability so it is appropriate for a company to vertical intergrate.
So, the correct answer is a.
Use the following information . On January 1, 2018, Dennis Company purchased land for an office site by paying $540,000 cash. Dennis began construction on the office building on Jan 1. The following expenditures were incurred for construction: Date Expenditures January 1, 2018 $ 360,000 April 1, 2018 504,000 May 1, 2018 900,000 June 1, 2018 1,440,000 The office was completed and ready for occupancy on July 1st of the following year. To help pay for construction, $720,000 was borrowed on January 1, 2018 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2018 was a $300,000, 12%, 6-year note payable dated January 1, 2016. Assume the weighted-average accumulated expenditures for the construction project are $870,000. The amount of interest cost to be capitalized during 2018 is:___________.
Answer:
$82,800
Explanation:
The computation of the amount of interest cost to be capitalized during 2018 is shown below:-
Amount of interest cost to be capitalized = (Borrowed amount × Rate of interest) + ($300,000 ÷ 2 × Rate of interest)
= ($720,000 × 9%) + ($150,000 × 12%)
= $82,800
Therefore for computing the amount of interest cost to be capitalized during 2018 we simply applied the above formula.