Answer:
Gulliver Corp. and Sea-Gull Corp.
Amount of Inventory in the consolidated Balance Sheet, immediately after the business combination:
b. $135,000
Explanation:
Inventory:
Gulliver Corp. = $90,000
Sea-Gull Corp. = 45,000
Total = $135,000
In consolidated financial statements, assets and liabilities are recognized based on their fair values. The procedure is to add such assets and liabilities together, line item by line item, in the consolidated financial statements. It is mainly equity interests and investments in the subsidiary by the investor entity that are eliminated.
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. $ 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest
Answer and Explanation:
1 . The journal entries are shown below;
Cash Dr $42,309,236
Discount on bond payable $3,690,764
To Bond payable $46,000,000
(Being the issuance of the bond is recorded)
2. a.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
b.
Interest expense Dr $2,392,269
To Discount on bond payable ($3,690,764 ÷ 20 years × 2) $92,269.10
To Cash $23,000,000 ($46,000,000 ÷ 2 years)
(Being the interest expense is recorded)
3. Total interest expense is $2,392,269
4. Yes, bond payments will always be lower than the face value of bonds, if the contract rate is lower than the interest rate on the market.
Galaxy Corp. is considering opening a new division to make iToys that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of producing each iToy to be $6,700 in the first year; however, it expects the selling price and cost per iToy to increase by 3.00% each year.
Based on the preceding information and rounding dollar amounts to the nearest whole dollars, the company expects the selling price in the fourth year of the project to be_______ , and it expects the cost per unit in the fourth year of the project to be _______.
Answer:
Selling price= $17,164
Unitary variable cost= $7,541
Explanation:
Giving the following information:
Selling price in the first year= $15,250
Unitary variable cost on the first year= $6,700
Increase rate= 3%
To calculate the selling price and variable cost per unit in the fourth year, we need to use the following formula:
FV= PV*(1+i)^n
PV= current value
i= increase rate
n= number of years
Selling price= 15,250*(1.03^4)= $17,164
Unitary variable cost= 6,700*(1.03^4)= $7,541
From 1991 to 2000, the U.S. economy had an annual inflation rate of around 2.76%. The historical annual nominal risk-free rate for this same period was around 5.71%. Using the approximate nominal interest rate equation and the true nominal interest rate equation, compute the real interest rate for that decade. What is the estimated real interest rate using the approximate nominal interest rate equation for that decade?
Answer:
2.95% and 2.87%
Explanation:
The computation of the approximate real rate and the estimated real interest rate is shown below:
The Approximate real rate is
= Historic annual nominal risk free rate - Annual inflation rate
= 5.71% - 2.76%
= 2.95%
And, the estimated real interest rate is
= (1 + historical annual nominal risk free rate) ÷ (1 + annual inflation rate) - 1
= (1 + 0.0571) ÷ (1 + 0.0276) - 1
= 2.87%
We simply applied the above formulas so that each one could be determined
On April 29, Welllington Co. paid $1,760 to repair the transmission on one of its delivery vans. In addition, Welllington paid $52 to install a GPS system in its van.
Journalize the entries for the transmission and GPS system expenditures. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSGarcia Associates Co.General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Van
124 Accumulated Depreciation-Delivery Van
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Van
621 Gain on Sale of Equipment
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Van
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Van
721 Loss on Sale of Equipment
Answer:
April 29,
DR Accumulated Depreciation - Delivery Van $1,760
CR Cash $1,760
(To record repair of van)
April 29,
DR Delivery Van $52
CR Cash $52
(To record installation of GPS system in Van)
Explanation:
The transmission being faulty in the Van is part of the depreciation of the van and so when it is fixed, it reduces the depreciation of the van. The amount needs to be debited to the Accumulated Depreciation Account to signal that it is a reduction.
Installing a new GPS in a Van is an additional benefit to the van that will last for a period of more than a year hence it should be capitalised and added to the cost of the Delivery Van.
Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.
Accounts Payable $34,304
Accounts Receivable 22,016
Accumulated Depreciation's Equipment 87,040
Cash 10,240
Common Stock 44,800
Cost of Goods Sold 786,304
Freight-Out 7,936
Equipment 200,960
Depreciation Expense 17,280
Dividends 15,360
Gain on Disposal of Plant Assets 2,560
Income Tax Expense 12,800
Insurance Expense 11,520
Interest Expense 6,400
Inventoryv 33,536
Notes Payable 55,680
Prepaid Insurance 7,680
Advertising Expense 42,880
Rent Expense 43,520
Retained Earnings 18,176
Salaries and Wages Expense 149,760
Sales Revenue 1,157,120
Salaries and Wages Payable 7,680
Sales Returns and Allowances 25,600
Utilities Expense 13,568
Additional data: Notes payable are due in 2021.
Required:
Prepare a multiple-step income statement. (List other revenues before other expenses.)
Answer:
Wolford Department Store
Income Statement
For the year ended November 30. 2017
Sales Revenue
Total sales $1,157,120
Less Sales return $25,600
Net Sales Revenue $1,131,520
Less : Cost of goods sold $786,304
Gross Profit $345,216
Operating Expenses
Selling Expenses
Freight out $7,936
Advertising expenses $42,880
Administrative expenses
Depreciation Expenses $17,280
Salaries and wages Expenses $149,760
Rent Expenses $43,520
Utilities Expenses $13,568
Insurance Expenses $11,520
Total Operating Expenses $286,464
$58,752
Other Income and Expenses
Gain on disposal of equipment $2,560
Less: Interest Expenses $11,520
Net Other Income and Expenses -$8,960
Less: Income Tax Expenses $12,800
Net Income $36,992
Bonita Industries applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of $5100. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is 45000?
Answer:
Direct Materials $ 33525
Explanation:
Bonita Industries
Job No. 130,
Manufacturing overhead $5100.
Direct Labor = $ 6375
5100 80
x 100
Using cross product direct labor = 5100 *100/80= 6375.
We have
Work in Process inventory $ 45000
Less
Manufacturing overhead $5100.
Direct Labor $ 6375
Direct Materials $ 33525
The Work in Process is debited with Direct Materials, Direct Labor and Manufacturing Overheads.
As we know the Direct Labor and Manufacturing Overheads we can find out the Direct Materials by subtracting the Direct Labor and Manufacturing Overheads from the Work In Process Inventory balance.
Assume that ExxonMobil uses a standard cost system for each of its refineries. For the Houston refinery, the monthly fixed overhead budget is $8,000,000 for a planned outputs of 5,000,000 barrels. For September, the actual fixed cost was $8,750,000 for 5,100,000 barrels.
Required
a. Determine the fixed overhead budget variance.
b. If fixed overhead is applied on a per-barrel basis, determine the volume variance.
c. Provide formulas and an explanation.
Answer:
a. Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead
= $8,000,000 - $8,750,000
= $750,000 Unfavorable
b. Predetermined overhead rate per barrel = $8,000,000 / 5,000,000
= $1.60 per barrel
Fixed overhead applied = 5,100,000 * $1.60
= $8,160,000
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
= $8,160,000 - $8,000,000
= $160,000 Favorable
c. Fixed overhead budget variance = Budgeted fixed overhead - Actual fixed overhead
Predetermined overhead rate per barrel = Budgeted fixed overhead / Planned outputs
Fixed overhead volume variance = Fixed overhead applied - Budgeted fixed overhead
The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1 comma 000 per km to build the trail and $340 per km per year to maintain it over its 22-year life. If the city's MARR is 11% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 22 years.
Answer:
equivalent uniform annual cost = $1,849.25
Explanation:
Initial cost $4,000
then 22 cash outflows of $1,360
discount rate 11%
using a financial calculator, we determine the NPV = -$15,119.01
EAC = (NPV x r) / [1 - (1 + r)⁻ⁿ]
EAC = (-$15,119.01 x 11%) / [1 - (1 + 11%)⁻²²] = -$1,663.09 / 0.89933 = -$1,849.25
Builtrite bonds have the following: 5 ½% coupon, 11 years until maturity, $1000 par and are currently selling at $1054. If you want to make an 5% return, what would you be willing to pay for the bond?
Answer:
$1,041.53
Explanation:
The price that a rational investor would pay for the bond yearning for 5% rate of return can be determined using excel pv function below:
=-pv(rate,nper,pmt,fv)
rate is the yield expected by the investor
nper is the number of annual coupons remaining i.e 11
pmt is the amount of annual coupon=face value*coupon rate=$1000*5.5%=$55
fv is the face value of $1000
=-pv(5%,11,55,1000)=$1,041.53
A proposed project has fixed costs of $47,000 per year. The operating cash flow at 11,000 units is $69,000. a. Ignoring the effect of taxes, what is the degree of operating leverage
Answer: 1.68
Explanation:
From the question, we are informed that a proposed project has fixed costs of $47,000 per year and that the operating cash flow at 11,000 units is $69,000.
Ignoring the effect of taxes, the degree of operating leverage will be:
= 1 + ($47,000/$69,000)
= 1 + 0.68
= 1.68
Alpaca Corporation had revenues of $260,000 in its first year of operations. The company has not collected on $19,300 of its sales and still owes $26,300 on $90,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,000 in salaries. Owners invested $10,000 in the business and $10,000 was borrowed on a five-year note. The company paid $4,900 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. Compute net income for the first year for Alpaca Corporation.
Answer:
$89,460
Explanation:
The computation of the net income is shown below:
Sales $260,000
Less: Cost of goods sold -$90,000
Gross margin $170,000
Less:
Salaries -$13,000
Insurance payment -$3,000 ($6,000 ÷ 2 years)
Interest -$4,900
profit before tax $149,100
Less: tax expense -$59,640
Net income $89,460
We simply deducted all expenses from the revenues so that the net income could arrive and the same is to be considered
rojects A and B are mutually exclusive and have an initial cost of $78,000 each. Project A provides cash inflows of $32,000 a year for three years while Project B produces a cash inflow of $44,400 a year for two years. Which project(s) should be accepted if the discount rate is 10 percent
Answer:
Project A should be accepted.
Explanation:
The initial investment of project A = $78000
The initial investment of project B = $78000
The cash inflows of project A = $32000
The time period for project A = 3 years
The cash inflow of project B = $44400
The time period for project B = 2 years.
Interest rate (r ) = 10%
Now find the net present value of both project and then decide which one has to accept.
The net present value of project A:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{32000(1-(1+0.1)^{-3})}{0.1} - 78000 \\= 79579.26 – 78000 \\= $1579.26[/tex]
The net present value of project B:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{44400(1-(1+0.1)^{-2})}{0.1} - 78000 \\= - 942.14[/tex]
Project A should be accepted because project B has a negative net present value.
Suppose a stock has an expected return of 12% and a standard deviation of 6%. What is the likelihood that this stock returns between 12% and 18%
Answer: 34.13%.
Explanation:
Given : Expected return : [tex]\mu=12\%=0.12[/tex]
Standard deviation: [tex]\sigma=6\%=0.06[/tex]
Let x be the stock returns.
Then, the probability that stock returns between 12% and 18%:
[tex]P(0.12<x<0.18)=P(\dfrac{0.12-0.12}{0.06}<\dfrac{x-\mu}{\sigma}<\dfrac{0.18-0.12}{0.06})\\\\=P(0<Z<1)\ \ \ [\because z=\dfrac{x-\mu}{\sigma}]\\\\=P(Z<1)-P(Z<0)\\\\=0.8413-0.5\ \ \ \text{[By z-table]}\\\\=0.3413[/tex]
Hence, the likelihood that this stock returns between 12% and 18% is 34.13%.
The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.
a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
Complete question is given at the end of the question.
Answer with Explanation:
Requirement 1:
Net Income is an accounting profits which includes both cash flow items and non cash flow items. It can be calculated as under:
Net Income = (Sales - Cost - Depreciation) - (Income Before Tax * Tax Rate)
The computation is given in the Second excel sheet attached.
Requirement 2:
According to relevant costing principles if the cost is relevant then it must satisfy following conditions:
Must be cash flow in nature.Must be Future related (no past commitments).Differential or must be incrementalSo this means that the depreciation would not be taken into account as it is not a relevant cost and thus must not be included as an incremental cost.
Incremental Cash flow can be calculated using the following formula:
Incremental Cash Flow = Net Income + Depreciation (Removing its impact) - Working Capital Injection + Working Capital Withdrawal
The calculation for each year is shown in the second attachment.
Requirement 3:
The NPV can be calculated by discounting each year cash flow by the rate of return which in this case is 12%.
The formula for calculating the NPV is as under:
NPV = Investment in year zero - Net Cash Flow of Y1 / (1 + r)^1 - Net Cash Flow of Y2 / (1 + r)^2 - Net Cash Flow of Y3 / (1 + r)^3 - Net Cash Flow of Y4 / (1 + r)^4
The computation of NPV is given in the second attachment given below:
Consider the corporate valuation model, if the WACC increases what happens to the present value of the firm. Group of answer choices It is indeterminant the present value will stay the the present value will decrease The corporate valuation model doesn't depend the WACC The present value will increase
Answer:
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Many Western European countries are giving monetary incentives to employees who have multiple children. Why would they do this? How would a baby boom change Japan's demographics?
Answer:
The incentive is to encourage more families to have more children.
A baby boom in Japan will ensure that there is enough workforce to maintain the growing economy in the future.
Explanation:
The western countries, especially Europe is battling with population decline, which is estimated to have an economic impact in the future, due to a potential decline in the labor force in the future. To counter this, many of these western nations have crated policies that encourages childbirth by providing incentive for families with multiple children, reducing tax for such families, and even as far as up to 12 to 16 months paid paternity and maternity leave, when a couple has a new baby. Couples are also given government paychecks when they go on childbirth leave.
Japan is one of the countries that has been experiencing a population decline in recent years. The number of death seem to be more than the number of births. The general effect is the fear of a dwindling work force of the future. This will lead to more people retiring later, and there would be a huge pressure on the pension schemes, and the economy as a whole due to this. A population boom will mean that a future workforce is guaranteed, and the retirement age lowered, and the call for dependency on automation due to a shrinking workforce can be reviewed.
Many of the western and developed nations are now giving incentives to those who produce more than one child or multiple children.
As their economy is getting old and is aging hence in order to company the problem of the aging of population monetary incentives are given. The baby boom is a condition related to the growth of babies. Japan is a greying nation that has a negatively declining trend of population. Due to the larger medical aid population is getting older and the birth rate is low. A baby boom may lead to an increase in youth and the young population. More children and more people.Learn more about the Western European countries that are giving monetary incentives.
brainly.com/question/20414870.
John, Paul, Mark, and Luke have been operating an LLC, and according to the operating agreement, the term of the LLC is set to expire in the near future. What options do the four partners have
Answer with its Explanation:
The partners of Limited Liability partnership are obliged to pass a resolution about the continuing of business or abandoning business. The resolution requires majority vote, which is three fourth majority.
If they want to revisit the terms and conditions for each partners of the business then they will have to form a new agreement on new terms and conditions for business purposes. The new terms might include the new deadline for expiration date of partnership or extension of partnership date.
If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:
This question is incomplete because the options are missing; here are the options:
A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
B. The USA specializes in wheat because of its absolute advantage in producing wheat.
C. The USA specializes in wheat because of its comparative advantage in producing wheat.
D. There can be no mutual gains from trade.
The correct answer to this question is A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
Explanation:
In economics, a country has a comparative advantage, if it can produce a specific good at a lower opportunity cost, which implies the loss of choosing the product over others is low. Also, mutual gains are possible if each country specializes in the product with a comparative advantage. Moreover, to know which country has an opportunity advantage you need to calculate the opportunity cost of 1 unit, or, in this case, 1 ton of the product.
In the case of the U.S. you already know 1 ton of potatoes is equivalent to 0.5 tons of wheat, which is the opportunity cost. Now, let's calculate this factor for the production of 1 ton of potatoes in Ireland
3 tons of potatoes = 2 tons of wheat 1. Use 3 (tons of potatoes) and divide both numbers into three
3 tons of potatoes/ 3 = 2 tons of wheat / 3
1 ton of potatoes = 0.66
This shows the opportunity cost in the USA is lower and this represents a comparative advantage as less is lost when potatoes are chosen over wheat. Thus, to benefit both countries the USA should specialize in potatoes due to the higher comparative advantage or lower opportunity cost.
Ecker Company reports $1,925,000 of net income for 2017 and declares $269,500 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 300,000 weighted-average shares of common stock.
1. What amount of net income is available to common stockholders for 2017?
2. What is the company's basic EPS for 2017?
Answer:
(A) $1,655,500
(B) $5.52 per share
Explanation:
Ecker company announced a net income of $1,925,000
They also declare a cash dividend of $269,500
The company has 300,000 weighted average shares of common stock
(A) The amount of net income available to common stockhloders for 2017 can be calculated as follows
Net income available to common stockhloders= Net income- Preferred Cash dividend
= $1,925,000-$269,500
= $1,655,500
(B) The common basic EPS for 2017 can be calculated as follows
Common basic EPS= Net income available to stockholders/weighted average outstanding shares
= $1,655,500/300,000
= $5.52 per share
The stock in Bowie Enterprises has a beta of .85. The expected return on the market is 11.50 percent and the risk-free rate is 2.85 percent. What is the required return on the company's stock?
Answer:
10.203%
Explanation:
The stock in Bowie's enterprises has a beta of 0.85
The expected return on the market is 11.50%
The risk free rate is 2.85%
Therefore, the required return on the company's stock can be calculated as follows
Required return= Risk free rate+beta(market rate-risk free rate)
= 2.85+0.85(11.50-2.85)
= 2.85+ 0.85(8.65)
= 2.85+7.3525
= 10.203%
Hence the required rate in the company's stock is 10.203%
If the marginal propensity to consume (mpc) is 0.9, the spending multiplier is _____, the tax multiplier is ______, and the balanced budget multiplier is _______, respectively.
Answer:
If the marginal propensity to consume (mpc) is 0.9, the spending multiplier is 10, the tax multiplier is -9, and the balanced budget multiplier is 1, respectively.
Explanation:
These can be calculated as follows:
a) Calculation of spending multiplier
To calculate this, we use the formula for calculating the spending multiplier as follows:
Spending multiplier = 1 / (1 - mpc)
Since mpc = 0.9, we have:
Spending multiplier = 1 / (1 - mpc) = 1 / (1 - 0.9) = 1 / 0.1 = 10
b) Calculation of tax multiplier
To calculate this, we use the formula for calculating the tax multiplier as follows:
Tax multiplier = -mpc / mps
Note that the tax multiplier as given above is negative because increase in tax by the government makes the multiplier to work in reverse since the money is leaving the circular flow.
Since what is not consumed is saved, we have:
mps = 1 - mpc = 1 - 0.9 = 0.1
Therefore,
Tax multiplier = -0.9 / 0.1 = -9
c) Calculation of balanced budget multiplier
To calculate this, we use the formula for calculating the balanced budget multiplier as follows:
Balanced budget multiplier = Spending multiplier + Tax multiplier = 10 + (-9) = 10 - 9 = 1
Note that balanced budget multiplier is always equal to 1 as obtained above.
Conclusion
Therefore, if the marginal propensity to consume (mpc) is 0.9, the spending multiplier is 10, the tax multiplier is -9, and the balanced budget multiplier is 1, respectively.
App Holdings is expected to pay dividends of $1.50 every six months for the next three years. If the current price of App Holdings stock is $22.60, and App Holdings' equity cost of capital is 18%, what price would you expect App Holdings' stock to sell for at the end of three years
Answer:
The answer is $34.36
Explanation:
FV = PV x (1 + R x ((1 + r))^T = $22.6 x (1 + {($1.5 / $22.60) x [1 + (18% / 2)]}^6 = $34.36
10. You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
Answer:
A secondary market transaction
Explanation:
Secondary market transaction: In this transaction, the transaction which is already issued to the public are sold by another investors.
In this type market, the investors buy and sell securities which are theirs . It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued.
So in the question, the transfer was made through a broker which implies it deals in the secondary market.
Primary market transaction: In this transaction, the company directly sells the new stocks, bonds, etc to the public for the first time.
Future market transaction: This is the transaction which occurs in the near future to buy some specific quantities at the future price.
Suppose that you take $50 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio is 8%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action?
Answer:
The largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
Explanation:
This is an example of money multiplier.
Money multiplier refers to the maximum amount of money that commercial bank can create or generate with each dollar of reserves.
Reserves or required reserves refer to the amount of money or portion of deposit that the central bank such as the Federal Reserve requires banks to hold and not lend.
In order to determine the largest amount (in dollars) by which the money supply can increase as a result of $50 deposit, money multiplier is used to multiply the $50 deposit.
The formula for the money multiplier is given as follows:
Money multiplier = 1/r
Where;
r = required reserve ratio = 8%, or 0.08.
Therefore, we have:
Money multiplier = 1 / 0.08 = 12.50
Largest amount of increase = Amount of deposit * Money multiplier = $50 * 12.50 = $625.
Therefore, the largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches
Branch Company provided the following information:
Standard fixed overhead rate
(SFOR) per direct labor hour $5.00
Actual fixed overhead $305,000
BFOH $300,000
Actual production in units 16,000
Standard hours allowed for
actual units produced (SH) 64,000
Required
Enter amounts as positive numbers and select Favorable (F) or Unfavorable(U).
Using the columnar approach, calculate the fixed overhead spending and volume variances.
1 2 3
Spending Volume
Answer:
Fixed Overheads Spending Variance = $5,000 Unfavorable(U).
Fixed Overheads Spending Variance = $20,000 Favorable (F).
Explanation:
Fixed Overheads Spending Variance = Actual Fixed Overheads - Budgeted Fixed Overheads
= $305,000 - $300,000
= $5,000 Unfavorable(U).
Fixed Overheads Spending Variance = Fixed Overheads at Actual Production - Budgeted Fixed Overheads
= ($5.00 × 64,000) - $300,000
= $320,000 - $300,000
= $20,000 Favorable (F)
Talk to a 55-year-old (or older) business professional nearing retirement. This person can be a family member, friend, or mentor. List and describe the savings, investments, and risk management strategies for this phase of life. Describe how financial planning has changed from the earlier phase of life.
Answer:
The financial planning will differ for the person according to their age. A person who is 50 years older would have money only from his savings. The 55 year old person is retired and would only have money available for living from the saving he had made while he was working. He will not have any other source of income.
Explanation:
The risk management officer should consider the investments by considering his available savings. He should also consider the money required for living as there is no other source of income. The risk appetite for such an old aged individual will be low. He must be risk averse in the situation of retirement. The financial planning strategies changes for the person over the different phases of life. When a person is young and starts the job at age of 25 he might take excessive risks for getting extra returns. He is young and energetic, has ability to work part time along with his routine job to earn extra money.
Suppose you run a lawn mowing business. You charge $15 per lawn, you can mow five lawns in an eight hour day, and you work five days a week. You currently have more people asking you to mow their lawns than you can satisfy so you are considering hiring someone to help. Your other option is to rent a riding lawn mower that will enable you to mow seven lawns each day. Your friend Jim, a good worker, will work for $8 per hour and will be able to mow five lawns in an eight hour day also. If you rent a riding mower, it will cost you $100 per week plus $25 for gas and oil.
Required:
What is your best option? Explain why you believe this is your best choice.
Answer:
Option 2
Explanation:
Option 1 If we hire someone to help
Revenue = $15/lawn x 5 lawns per day
Revenue = $75 x 7 days = $525
Total cost = Rate per hour x No. of lawns per day x No, of hours worked
Total cost = $8 x 5 x $8
Total cost = $320 x 7days = 2,240
Profit/Loss = $525- $2,240
Profit/loss = $1,715 loss
Option 2 If we rent a riding mower
Revenue = 7 lawns per day x $15/lawn x 7 days
Revenue = $735
Cost = $100 + $25 for gas and oi
Cost = $125
Profit/loss = $610
The best option would be Option 2 because Firstly it is very much low in cost and provides us a great revenue secondly, it also increases our work efficiency.
A dry cleaner uses exponential smoothing to forecast equipment usage. The August forecast was 88% and the actual was 89.6%. Use a smoothing constant of 0.1.
A. Prepare a forecast for September.
B. Assuming actual September usuage of 92 %, prepare a forecast for October usage
Answer:
1. 88.16%
2. 88.54%
Explanation:
a. Prepare a forecast for September
Smoothing constant (a) is 0.1
Forecast for August (Ft) is 88%
Actual usage for August (At) is 89.6%
Forecast for September(Ft +1) will therefore be;
Using the formulae
= Ft+a (At-Ft)
= 88% + 0.1(89.6% - 88%)
= 88% + 0.16%
= 88.16%
b. Assuming actual September usage of 92% , prepare a forecast for October usage.
Since we have the following,
Smoothing constant(a) 0.1
Then forecast for September(Ft) is 88.16%
Also, actual usage for September (At) is 92%
Therefore, forecast for October (Ft + 1) will be,
Using the formula
= Ft+a(At - Ft)
= 88.16% + 0.1(92% - 88.16%)
= 88.16% + 0.384%
= 88.54%
James is an agreeable and emotionally stable person. A _______ , he inspires his employees to believe in the changes he wants to make to the organization.
a) transformational leader
b) transactional leader
Answer:
transformational leader
Raphael's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Raphael's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Raphael signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Raphael's kitchen cannot fit more than three ovens, Raphael cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Raphael's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Raphael lets them know how many workers he needs for each day of the week. In the short run, these workers are____________ inputs, and the ovens are_____________ inputs.
Answer:
However, Raphael's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Raphael lets them know how many workers he needs for each day of the week. In the short run, these workers are variable inputs, and the ovens are fixed inputs.
Explanation:
In the long run, all inputs are variable because eventually lease contracts expire, or they can move to new facilities. But on the short run, some inputs are fixed due to certain restraints. In this case, the restraints are the size of the kitchen and the lease contract for three ovens.
In the short run, the only input that Raphael can vary is the number of workers that he employs every week.