Answer:
$4,000
Explanation:
Calculation of Dividend distributed to Preferred Shareholder
= $8,000 * 5% * $10 Preferred shares
= $4,000
Thus, $4,000 is the amount of dividend which was distributed to preferred shareholders
A contact center manager is looking for ways to overall cost per case.
What Salesforce metrics should the contact center manager evaluate? (Choose 2)
A. Average number of activities per case
B. Average number of articles attached to a case
C. Total number of cases by origin
D. Average customer satisfaction score by case
An average number of activities per case and a Total number of cases by origin Salesforce metrics should the contact center manager evaluate. Therefore option A and C is correct.
A cost is a sum of money that was used during the production or delivery of a service or item that is therefore no longer accessible for use. In the case of an asset value, the money spent on the acquisition is considered the cost. In this instance,
Money is the input used to obtain the item. This acquisition cost may include both additional transaction expenses incurred by the acquirer over and beyond the price given to the producer, as well as the manufacturing costs as borne by the original producer. Typically, there is a profit margin added to the price over the cost of manufacturing.
Cost is a measure that adds up as a result of a procedure or as a difference in the outcome of a decision, to put it more broadly in the context of economics. Cost is hence the metric employed in the common modeling paradigm for economic processes.
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Sunland Company is a merchandising firm. Last year the company reported sales of $676000 and cost of goods sold of $404600. The company's total variable selling and administrative expense was $60800, and fixed selling and administrative expense was $54020. The total fixed costs for the firm are
Answer:
$54,020
Explanation:
Total fixed costs = Fixed selling and administrative expenses
Total fixed costs = $54,020
Thus, the total fixed costs for the firm is $54,020
Kim, Chris, and Beth are all partners in a cosmetics firm. Kim is leaving the partnership and wants to sell her shares of the business, including the property owned by the partnership, to Chris and Beth. The remaining partners are not interested in buying Kim’s interests. Kim has been unable to find a buyer for her share of the partnership. She has now resorted to asking the court to either sell her shares or sell the entire property. What form of concurrent ownership applies?a. Partition Law Suitb. Tenants in Commonc. Joint Tenancyd. Separate Ownership
Answer: Joint Tenancy
Explanation:
Based on the information that is given in the question, the form of concurrent ownership that applies is the joint tenancy.
Joint tenancy occurs when two or more individuals own thesame property. As a result, the joint tenants that is, the individuals who own the property share an equal ownership and also have equal right on the property.
You should use a(n) _____________ to track the mean diameter of the pipe for a manufacturing process producing copper pipes.
Answer: String
Explanation:
How the measurement is done with a string;
•Wrap a string around the pipe.
•Mark the point where the string touches together.
•Use a ruler or measuring tape to find the length between the tip of the string and the mark you made (circumference)
•Divide the circumference by 3.14159.
When a company prepares financial statements using standard costing, which items are reported at standard cost
Answer: Inventories and cost of goods sold.
Explanation:
Standard costing is used in accounting and it simply has to do with the substitution of the cost that's expected for a product with an actual cost when preparing financial statements.
The difference that's then between the actual costs and expected costs are then recorded as variance. It should also be noted that when a company prepares financial statements using standard costing, the items that are reported at standard cost will be Inventories and the cost of goods sold.
Consumers use ____________ while trying to judge the value of a product bundle (like a computer, printer, and a digital camera sold together). Specifically, the perceived value of the most important item in the bundle forms the initial assessment, which is then shifted upward/downward, based on the perceived value of the remaining items.
Select one:
a. availability heuristic
b. mood
c. ongoing search
d. anchoring and adjustment
e. imagery
Answer: anchoring and adjustment
Explanation:
Anchoring and adjustment has to do with the adjustment in the idea that a person has based on some initial occurence.
Anchoring and adjustment can be used
in sales when a consumer's subsequent negotiations is based on the previous negotiation or purchases. Therefore, consumers use anchoring and adjustment while trying to judge the value of a product
If the dividend yield for year 1 is expected to be 5% based on a stock price of $25, what will the year 4 dividend be if dividends grow annually at a constant rate of 6%
Answer:
$1.33
Explanation:
Calculation for what will the year 4 dividend be
Using this formula
Year 4 dividend=[(Expected dividend yield×Stock price)×(1+Constant rate )]
Let plug in the formula
Year 4 dividend = [(.05 × $25) × (1+0.06)]
Year 4 dividend=(.05 × $25) × 1.06
Year 4 dividend=1.25×1.06
Year 4 dividend= $1.33
Therefore what will the year 4 dividend be if dividends grow annually at a constant rate of 6% is $1.33
If the value of risk-sensitive assets exceeded that of its liabilities, the bank's profit from the interest rate will:_____
a. Increase
b. Decrease
Answer:
Increase
Explanation:
The rate of a bank work or performance is mostly acted upon or influenced by the interest payments earned on its assets (loans and investments) relative to the interest paid on its liabilities (deposits). Bank will get profit from increasing interest rates only if the said assets have floating (adjustable) rates.
When the value of risk-sensitive assets is beyond that of its liabilities, the bank would profit from increase in interest rates.
Howrley-David, Inc., manufactures two models of motorcycles: the Fatboy and the Screamer. Both models are assembled in the same plant and require the same assembling operations. The difference between the models is the cost of materials. The following data are available for August:
Fatboy Screamer Total
Number of units assembled 2,000 4,000 6,000
Materials cost per unit $ 2,000 $ 3,000
Other costs:
Direct labor $ 6,000,000
Indirect materials 1,800,000
Other overhead 4,200,000
Required:
Howrled-David uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in August.
fatboy screamer total
operation cost
materials cost
total cost
number of units
unit cost
Answer:
Fatboy Screamer Total
Direct labor . $ 2,000,000 $ 4,000,000 $ 6,000,000
Indirect materials . $600,000 $1,200,000 $1,800,000
Other overhead . $1,400,000 $2,800,000 $4,200,000
Materials cost . $4,000,000 $12,000,000 $16,000,000
Total cost . $8,000,000 $20,000,000 $28,000,000
Number of units . 2,000 4,000 6,000
Unit cost . $4,000 $5,000 $4,667
Explanation:
Assign the Material Cost to the Products appropriately. The conversion costs musts be allocated based on the number of units assembled. Conversion costs is the sum of Direct Labor and Manufacturing Overheads (Indirect Costs).
Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
Activity Cost Pool Cost Drivers Estimated Overhead Expected Use of Cost
Driver per Activity
Loading and unloading Number of pieces $97,000 91,500
Travel Miles driven 467,000 585,000
Logistics Hours 62,000 3,150
Compute the activity-based overhead rates for each pool. (Round answers to 2 decimal places, e.g. 12.75.)
Determine the overhead allocated to Job XZ3275 which has 150 pieces, requires 200 miles of driving, and 0.75 hours of logistics. (Round answer to 2 decimal places, e.g. 12.75.)
Answer:
Part 1
Calculation of activity-based overhead rates
Cost of Each Activity = Cost of Activity ÷ Number of times that Activity is performed
Loading and unloading = $97,000 ÷ 91,500
= $1.06 per piece
Travel = $467,000 ÷ 585,000
= $0.80 per mile
Logistics = $62,000 ÷ 3,150
= $19,68
Part 2
Overhead allocation to Job XZ3275
Loading and unloading (150 × $1.06) = $159.00
Travel ($0.80 × 200) = $160.00
Logistics ($19,68 × 0.75) = $14.76
Total Overheads = $333.76
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Answer:
seriously what is this?
A small co ffee company roasts coff ee beans in its shop. The unroasted beans cost the com- pany 200 cents per pound. The MARGINAL cost of roasting coff ee beans is 150 - 10q + q^2 cents per pound when q pounds are roasted. The smell of roasting beans imposes costs on the company's neighbors. The total amount that neighbors would be willing to pay to have the shop stop roasting altogether is 5q^2; where q is the number of pounds being roasted. The company sells its output in a competitive market at 450 cents per pound. What is the socially efficient amount of co ffee for the company to roast?
Answer:
q = 10 pounds = socially efficient amount of coffee for the company to roast.
Explanation:
Data Given:
Cost of Unroasted beans = 200 cents/pound.
Marginal Cost of roasting coffee beans = [tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 150
Cost neighbors willing to pay to stop shop operations = 5[tex]q^{2}[/tex]
Output selling price = 450 cents/pound
Required:
Amount of coffee to roast = ?
Solution:
As we know from the problem statement that it costs the company 200 cents/pound for the procurement of raw beans which are here termed as unroasted beans. Let's say it is the marginal cost of procuring.
Moreover, we know that marginal cost of roasted beans = [tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 150.
which is in the form of quadratic equation and will be solved for q to know the required answer.
Let's suppose X = marginal cost of unroasted beans.
Y = marginal cost of roasted beans.
MPC = Marginal Private cost
In order to calculate the marginal private cost, we need to add X+Y.
MPC = 200 + [tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 150
MPC = [tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 350
Now,
The total social cost which the neighbors are willing to pay = 5[tex]q^{2}[/tex]
In order to calculate marginal social cost, we need to differentiate the above equation.
MSC = d/dq5[tex]q^{2}[/tex] = 10q
Finally,
Marginal Benefit = 450 cents/pound
For socially efficient amount = q =
MPC + MSC = Marginal Benefit
[tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 350 + 10[tex]q^{}[/tex] = 450
[tex]q^{2}[/tex]-10[tex]q^{}[/tex] + 10[tex]q^{}[/tex] = 450-350
Solving for q,
[tex]q^{2}[/tex] = 100
taking square root on both sides,
q = +/-10.
Hence,
q = 10 pounds = socially efficient amount of coffee for the company to roast.
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either product requires 0.4 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $1,632,000.
Required: 1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product?
Product H Product L
Overhead cost per unit
1-b. Compute the total amount of overhead cost that would be applied to each product
Product H Product L Total
Total overhead cost
Answer:
1a. Product H Overhead cost per unit = [$85 * 0.4] = $34.00
Product L Overhead cost per unit = [$85 * 0.4] = $34.00
Predetermined overhead application rate = Estimated total manufacturing overheads / Total direct Labor hours
Predetermined overhead application rate = $1632000 / {[40000 units * 0.4]+[8000 units * 0.4]}
Predetermined overhead application rate = $1632000 / 19200 direct labor hours
Predetermined overhead application rate = $85 per direct labor hour
1b. Product H Product L
Overhead cost $816,000 $816,000
/No.of units 40000 8000
Overhead cost per unit $20.40 $102.00
Product H Product L Total
Total Overhead cost $1,360,000 $272,000 $1,632,000
Note:
Total Overhead cost = No.of units * Overhead cost per unit
For bonds issued 2019, the taxpayer must amortize bond premium using which of the following methods?
a. Straight-Line Method
b. Constant Yield Method
c. Activity Depreciation Method
d. Double Declining Balance
Answer:
For bonds issued 2019, the taxpayer must amortize bond premium using the following method:
a. Straight-Line Method.
Explanation:
The premium paid by the taxpayer for a bond represents part of the cost basis of the bond. The bond premium can be tax-deductible at a rate spread out (amortized) over the bond's lifespan. The straight-line method for bond premium amortization is considered to be a simpler method than the effective interest amortization method. While the straight-line amortization divides the bond's total premium over the remaining payment periods, the effective interest, which is more complicated, computes some unique values at all points during the amortization process.
Which of the following statements is false regarding Form 8949 - Sales and Other Dispositions of Capital Assets?
A. The taxpayer uses Form 8949 to report sales and exchanges of capital assets
B. Form 8949 allows the taxpayer and the IRS to reconcile amounts that were reported to him or her and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts he or she reports on his or her income tax return
C. If all Forms 1099-B the taxpayer received (and all substitute statements) show basis was reported to the IRS and if no correction or adjustment is needed, the taxpayer must always file Form 8949 and attach a statement of these transactions
D. Corporations and partnerships use Form 8949 to report undistributed long-term capital gains from Form 2439
Answer: C. . If all Forms 1099-B the taxpayer received (and all substitute statements) show basis was reported to the IRS and if no correction or adjustment is needed, the taxpayer must always file Form 8949 and attach a statement of these transactions.
Explanation:
IRS Form 8949: Sales and Other Dispositions of Capital Assets is basically utilized by individuals or organizations to report the capital gains and the losses that are incurred from investments.
When filling the IRS Form 8949, it should be noted that Form 1099-B and Schedule D are also required. The IRS Form 8949 is also used by individuals to report the worthlessness of s particular security and to also report bad debts.
From the options given above, the statement that is false regarding Form 8949 - Sales and Other Dispositions of Capital Assets is option C.
Alan's employer maintains a long-term disability income plan on which it pays all premiums. Last year, Alan received $40,000 in benefits under the plan during his period of disability. How much of the benefits received, if any, must Alan include in his income
Answer:
$40,000
Explanation:
If Alan had paid the disability insurance himself, then disability income would not be taxable. But since Alan's employer paid the disability insurance premiums, then any disability payments that Alan received must be included in his gross income and are taxable.
The amount of the benefit received if any must Alan include in his income should be $40,000.
The following information should be considered:
In the case when Alan had paid the disability insurance himself, then disability income would not be taxable. But since Alan's employer paid the disability insurance premiums, then any disability payments that Alan received must be included in his gross income and are taxable.Learn more: brainly.com/question/16911495
The discount rate is the: multiple choice 1 interest rate at which banks can borrow reserves from other banks. lowest interest rate that banks can charge for loans to their most creditworthy customers. lowest interest rate that banks can charge for lending reserves to other banks or financial institutions. interest rate at which banks can borrow reserves from the Federal Reserve. b. If the Fed were to decrease the discount rate, banks will borrow: multiple choice 2 fewer reserves, causing an increase in lending and the money supply. more reserves, causing an increase in lending and the money supply. more reserves, causing a decrease in lending and the money supply. fewer reserves, causing a decrease in lending and the money supply.
Answer:
a. The discount rate is the
interest rate at which banks can borrow reserves from the Federal Reserve.The discount rate is the interest rate that the FED charges commercial banks, credit unions, or other financial institutions for lending them money.
b. If the Fed were to decrease the discount rate, banks will borrow
more reserves, causing an increase in lending and the money supply.Lowering the discount rate is considered part of an expansionary monetary policy since banks will borrow more money and lend more money to the public, increasing the money supply.
Which of the following situations does NOT describe a material participant?
A. Arabella participated in Activity X for 612 hours.
B. Anthony participated in Activity Y for 210 hours, more than any other individual.
C. Abbie participated in Activity A for 20 hours, Activity B for 80 hours and Activity C for 75 hours
D. Raj was a full-time employee at the law firm, Activity Q. from 2008 to 2018.
Answer:
C. Abbie participated in Activity A for 20 hours, Activity B for 80 hours and Activity C for 75 hours
Explanation:
To prove material participation, one of the following situation should be satisfied:
1. Work 500 hours or more during the year (Part A)
2. Participate in the activity for more than 100 hours during the year, with no one else working more than the individual (Part B)
3. Materially participate in the activity for any five taxable years during the 10 tax years immediately preceding the taxable year (Part D)
Hence, it can be concluded that none of the conditions are satisfied in Part C.
The correct answer is C.
To prove material participation, one of the below situations should be fulfilled:
Work 500 hours or more during the year (Part A) .Participate in the activity for more than 100 hours during the year, with no one else working more than the individual (Part B) Materially participate in the activity for any five taxable years during the 10 tax years immediately preceding the taxable year (Part D)
Hence, it can be concluded that none of the conditions are satisified in Part C.
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Wilma Robles is a District Operations Coordinator. When she visits one of her offices she finds that the office has three open boxes of Emerald Cards. Each of the three Tax Pros has a complete box and log sheet at their desk. Two of the three open boxes do not reconcile when she tries to count cards and entries on the log sheets. What should Wilma do to bring the office in compliance with policies and procedures
The options are:
A.) Wilma should ignore the findings and let the practice continue.
B.) Wilma should report the findings to Incident Management for follow-up on the missing cards.
C.) Wilma should train the associates in the office on the proper distribution policy for Emerald Cards.
D.) Both B. and C.
Answer:
D.) Both B. and C.
Explanation:
Incidence management is defined as the process by which an organisation identifies, analysis and rectifies events that leads to disruption not their business processes.
These adverse effects that prevent a business from working efficiently or being productive are called incidence events.
Most organisations have a department that specialise in analysing and preventing occurrence of these events.
In the given scenario Wilma observed two of the three open boxes do not reconcile when she tries to count cards and entries on the log sheets. This is an incidence event.
First she has to report the event to the incidence management team so they can follow up on the missing cards and also set up a process to prevent future occurrence.
Since this event could also be as a result of inadequate training on process, Wilma should also train the associates in the office on the proper distribution policy for Emerald Cards.
This will reduce such events in the department going forward
Larry comes to your office to file his 2020 tax return and tells you that he never received an Economic Impact Payment (EIP) during 2020. It appears that he should have qualified. You assist Larry in checking the Get My Payment tool at www.irs.gov, where it says that a payment was deposited to a bank account that Larry states is not his. Larry will need to:
Incomplete question. The options:
a. File his 2020 tax return, including the EIP on Form 1040, line 30, and wait for the IRS to fix the mistake.
b. File Form 14039, Identity Theft Affidavit, with the IRS.
c. Contact the Farm Housing Administration.
d. Contact the bank that received the deposit and ask them to redirect the funds to him.
Answer:
a. File his 2020 tax return, including the EIP on Form 1040, line 30, and wait for the IRS to fix the mistake.
Explanation:
True. According to the information found on the IRS website concerning those who were eligible but didn't receive the Economic Impact Payment (EIP) during 2020, they are to fill the 2020 Form 1040 alongside submitting their tax returns for the year 2020.
Hence, Larry simply needs to file his 2020 tax return, including the EIP on Form 1040, line 30, and wait for the IRS to fix the mistake.
What is one way investment consultants protect their clients’ money during periodic performance reviews?
Answer:
Investment consultants check that the portfolio manager's performance was based on skill investing in the agreed-upon stocks or sectors
Explanation:
because it is
In a bid to ensure that money is adequately channeled and client's finances are safe, investment consultant analyses the stocks and portfolio's in other to ensure they are based on the advise offered and agreed upon.
The investment consultant offers expert advise on profitable stocks and portfolio's which could be invested in. The portfolio manager handles and monitors client's investment and finances. Hence, the investment consultant and portfolio manager work hand in hand in other to ensure that the right stock is chosen and invested in.Therefore, investment consultant ensures that portfolio managers do not deviate from the agreement made.
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If the yen is selling at a premium relative to the euro in the forward market, is the forward price of EUR per JPY larger or smaller than the spot price of EUR per JPY?
Answer:
The forward price of EUR per JPY will be LARGER
Explanation:
Based on the information in a situation where yen is selling at a premium which is an additional amount charged in the forward market, it means that forward price of EUR per JPY which is the price that has been negotiated and agreed upon will be LARGER than the spot price of EUR/JPY which is the market current price to be traded on the spot.
Therefore The forward price of EUR per JPY will be LARGER.
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $105,000. The equipment will have an initial cost of $473,000 and have a 10 year life. If the salvage value of the equipment is estimated to be $84,000, what is the payback period?A. 10.00 yearsB. 5.25 yearsC. 4.50 yearsD. 3.29 years
Answer:
D. 3.29 years
Explanation:
Payback period = Initial cost / (An annual increase in net income after tax + Depreciation per year )
Payback period = $473,000 / [$105,000 + ($473,000-$84,000)/10]
Payback period = $473,000 / [$105,000+$38,900
Payback period = $473,000 / $143,900
Payback period = 3.28700
Payback period = 3.29 years
Milhouse is a franchisee of Krusty Burger, LLC Their contract gives Krusty Burger the right to control virtually all aspects of Milhouse’s operation, including the hiring of employees. One of the employees, Nelson commits a tort against Ralph, one of Milhouse’s customers. Ralph files a suit against Krusty Burger. Krusty Burger is most likely
Answer:
risks liability under the doctrine of respondeat superior.
Explanation:
A franchise is a seperate business that uses the parent business brand.
The parent company can give in addition to the brand support in training, provision of some inventory, hiring, and so on.
According to the contract signed between them Krusty burger controls all aspects of the Milhouse operations, so they are a respondeat superior.
This means they are responsible for the actions of Milhouse because of their level of involvement in the franchise operations.
In the given scenario Nelson commits a tort against Ralph, one of Milhouse’s customers. Ralph files a suit against Krusty Burger.
Krusty burger will be liable because they are a respondeat superior
A collaborative selling environment makes the sales pitch more challenging for salespeople.
O True
O False
Answer:
O True
Explanation:
In the case when the selling environment is collaborative so it would make the sales pitch more challenging for the sales people
Here collaborative selling means the collaboration that does not between the sales team members but it would be done between the sales people and the customers
So the given statement is true
Hence, it is not false
You own Bond B and are concerned about interest rates increasing soon. You have chosen Bond H to hedge your B risk. The greater H's dv01:__________.a) the more of it you need to buyb) the more of it you need to sell shortc) the less of it you need to buyd) the less of it you need to sell short
Answer:
The greater H's dv01:__________
c) the less of it you need to buy.
Explanation:
The dollar (or money) duration or DV01 is the dollar value per 01 (100 basis points) of a bond. It measures a bond’s interest rate risk in nominal or dollar-amount terms. Dollar (money) duration assumes that bonds have fixed rates with fixed interval payments. It is a linear approximation of how a bond's value will change in response to changes in interest rates.
Which of the following parties to an option contract on a company's shares is obligated to buy shares at the option exercise price if the option is exercised? A. Call buyerB. Put sellerC. Put buyerD. Call seller
Answer:
Option B (Put seller) is the appropriate alternative.
Explanation:
Put seller relates to the practice including its opportunity to then be implemented. That whenever a put application is approved, this same writer typically takes the equality of opportunity at either the strike amount from the lengthy put grabber. Writing possibilities seems to be an opportunity for investors. That being said, the earnings from composing the given opportunity would be constrained to either the premium, although the put buyer could keep going to create revenue or gains until another inventory would be zero.Some other three situations do not relate to either the type of situation in question. So there is one that is the appropriate one.
The parties that an option contract on a company's shares is obligated to buy shares at the option exercise price if the option is exercised include option B: Put Seller.
What is the term Put Seller about?Put seller is defined as the seller relates to the practice including the equality of opportunity at either the strike amount from the lengthy put grabber.
Writing possibilities seems to be an opportunity for investors. The earnings from composing the given opportunity would be constrained to either the premium.
Therefore, correct option is B.
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The independent variable in the Contingency school of leadership is: a. Maturity of the followers b. Clarity of the task c. Time horizon d. Organizational support for the leader e. b), c), and d) Only
Answer:
a. Maturity of the followers b. Clarity of the task d. Organizational support for the leader
Explanation:
This approach was birthed by Fred Fiedler in 1958 in his research of leader effectiveness in group situations. According to him a leader need not remain fixed in his skills and styles of leadership given that situations change and require a different style and approach to deal with them. He therefore elucidated that an effective leader based on the contingency theory of leadership approach matches his style and skill to the situation or problem at hand. The factors this leader pays attention may invariably alter his style of leadership hence. Factors include : followers, organizational support, leader, and environment
Given the vast resources available to mutual fund managers, these managers on average have generally: Multiple Choice outperformed the overall market on a risk-adjusted basis. eliminated excess profits for arbitrageurs. beat broad-based indexes. proved the market to be strong form efficient. underperformed the market on a risk-adjusted basis.
Answer: underperformed the market on a risk-adjusted basis.
Explanation:
A mutual fund manager is someone who implements a investment strategy for a fund and helps.in the management of the trading activities as well. They simply help in overseeing the mutual funds and also help in making vital decisions regarding such investments.
Given the vast resources available to mutual fund managers, these managers on average have generally underperformed the market on a risk-adjusted basis. They've not been able to beat the market while some have even run at a loss as they made bad investment decisions.
On January 2, 2005 Garr Company acquired machinery at a cost of $320,000. This machinery was being depreciated by the double-declining-balance method over an estimated useful life of eight years, with no residual value. At the beginning of 2007 it was decided to change to the straight-line method of depreciation. Ignoring income tax considerations, the retrospective effect of this accounting change is:__________.
Answer:
The depreciation charge will be lower in 2007 using straight line method compared to the one produced by double-declining-balance method
Explanation:
Double-declining-balance method
Depreciation Expense = 2 × SLDP × BVSLDP
Therefore,
SLDP = 100 ÷ number of useful life
= 100 ÷ 8
= 12.5 %
Calculation of Depreciation Expenses (DE)
2005
DE = 2 × 12.5 % × $320,000
= $80,000
2006
DE = 2 × 12.5 % × ($320,000 - $80,000)
= $60,000
2007
DE = 2 × 12.5% × ($320,000 - $80,000 - $60,000)
= $45,000
Using Straight line Method for 2007 Depreciation Expense
Accumulated Depreciation (2005 to 2006) = $80,000 + $60,000
= $ 140,000
Depreciable Amount = Cost - Accumulated Depreciation
= $320,000 - $140,000
= $180,000
DE = (Cost - Residual Value) ÷ Remaining Useful Life
= $180,000 ÷ 6
= $30,000
Conclusion :
Comparing 2007 Depreciation Expense using double-declining-balance method against straight-line method of depreciation we can see that straight-line method of depreciation produces lower results.