Answer:
Unitary cost= $131.02
Explanation:
Giving the following information:
L19B:
Annual unit production and sales 590
Annual machine-hours 1,150
Annual number of orders 230
Annual inspection hours 180
Direct materials cost $ 53.74 per unit
Direct labor cost $ 26.45 per unit
First, we need to calculate the predetermined overhead rate for each activity:
Assembly= 514,520/52,000= $9.9 per machine-hour
Processing orders= 62,263/1,900= $32.77 per order
Inspection= 85,589/1,910= $44.81per inspection-hour
Now, we can calculate the total allocated overhead cost for product L19B:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Assembly= 9.9*1,150= 11,385
Processing orders= 32.77*230= 7,537.1
Inspection= 44.81*180= 8,065.8
Total= 29,987.9
Finally, the cost per unit:
Unitary overhead= 29,987.9/590= 50.83
Unitary cost= 53.74 + 26.45 + 50.83
Unitary cost= $131.02
Automobile bumpers590 810 Valve covers310 570 Wheels350 620 1,250 2,000 Plating Department Automobile bumpers195 1,150 Valve covers200 700 Wheels195 750 590 2,600 Total1,840 4,600 Required: 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. Direct labor hour overhead rate$ 130 per direct labor hour Machine hour overhead rate$ per machine hour 2. Determine the product factory overhead costs, using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate. Automobile BumpersValve CoversWheels Direct labor hours$ $ $ Machine hours$ $ $
Answer:
OVERHEAD APPLIED USING DIRECT LABOR
Stamping // Labor Hours // Applied Overhead
bumpers 590 $ 76,700
Valve 310 $ 40,300
Wheels 350 $ 45,500
1250 $ 162,500
Planting // Labor Hours // Applied Overhead
bumpers 195 $25,350
Valve 200 $26,000
Wheels 195 $25,350
590 $76,700
OVERHEAD APPLIED USING MACHINE HOURS
Stamping // Machine Hours // Applied Overhead
bumpers 810 $42,120
Valve 570 $29,640
Wheels 620 $32,240
2000 $104,000
Planting // Machine Hours // Applied Overhead
bumpers 1150 $59,800
Valve 700 $36,400
Wheels 750 $39,000
2600 $135,200
Explanation:
As the overhead rate using labor hours is $130 Then:
Total expected overhead: $130 x 1,840 labor hours = $239,200
Machine Hours overhead rate:
$ 239,200 / 4,600 hours = $52
To get the amount of overhead applied on each product we multiply their use of the cost drive by the overhead rate.
The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves determining whether the proposed diversification move Group of answer choices provides the company with additional resource strengths. provides additional ways to build the entrepreneurial skills of the company's senior managers. spreads stockholders' risks across a greater number of lines of business. has competitively valuable value chain match-ups with the company's present businesses such that its businesses can perform better together than apart. has good potential for increasing the company's rate of return on invested capital.
Answer: Has competitively valuable value chain match-ups with the company's present businesses such that its businesses can perform better together than apart.
Explanation:
The better-off test of diversification is that the company must gain a return that is higher than incremental growth. Incremental growth is usually defined a 1 + 1 = 2 formula and this test argues that Diversification must provide more than this such that the company achieves synergistic growth ( 1 + 1 = 3) which is what happens when different entities work better together than alone.
Diversification should therefore be into an area that will be able to match-up with the company's present businesses such that its businesses can perform better together than apart and produce even greater returns.
Paulo owns a few shares of stock in a large and diversified firm. He realizes that the CEO of the company is responsible for a multi-billion dollar business, but is upset with what he feels is excessive compensation for the chief executive officer, particularly since the firm has reported losses for the past two years. Paulo's concerns are:
Answer: likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly
Explanation:
The options to the question are:
A. unfounded, since laws in the United States prevent firms from paying large salaries or bonuses to executives when a firm reports a loss.
B. based on an erroneous conclusion, because CEO pay is always based on a formula tied to the company's profits and losses.
C.likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly.
D. not entirely unfounded, but he needs to realize that the pay received by most chief executives must be reinvested in the company if it's unprofitable for three years in a row.
From the question, we are informed that Paulo owns a few shares of stock in a large and diversified firm na that he noticed that the CEO of the company is responsible for a multi-billion dollar business, but is upset with what he feels is excessive compensation for the CEO particularly since the firm has reported losses for the past two years.
Paulo's concerns are likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly.
In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $7 million, patent; $5 million, trademark considered to have an indefinite useful life; and $9 million, goodwill. Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life.
Required:
What is the total amount of amortization expense that would appear in Burger Mania's income statement for the first year ended December 31 related to these items?
Answer:
$1,400,000 per year
Explanation:
DATA
Patent = 7 million with 5years useful life
Trademark = 5 million with an indefinite life
Goodwill = 9million
Amortization =?
Solution
Amortization of patent = Patent Value/ Useful life
Amortization of patent = $7,000,000/5
Amortization of patent = $1,400,000 per year
NOTE: Trademark and goodwill will not be amortized as they have an indefinite useful life. Both Intangible assets will be tested for impairment instead.
The Edmonton Company is issuing $50,000 face value, 10% bonds with detachable stock warrants. The value of the bonds without the warrants is $40,000 and the value of the warrants is a total of $10,000. The bonds with the warrants sold for $55,000. The journal entry to record the sale will include:
Answer:
Assuming that the warrants are detachable, the journal entry should be:
Dr Cash 55,000
Cr Bonds payable 40,000
Cr Paid-in capital stock warrants 11,000
Cr Premium on bonds payable 4,000
The value of the warrants must be recorded separately under the paid-in capital stock warrants account, and any excess amount will be allocated proportionally between that account and the as a premium on bonds payable account.
Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows.
Sales 80,000 units x 45 per unit $3,600,000
Cost of goods sold
- Beginning inventory $__________0
- Cost of goods manufactured (100,000 units x $25 per unit) $2,500,000
- Cost of good available for sale $2,500,000
Ending inventory (20,000 x 25) $500,000
Cost of goods sold $2,000,000
Gross margin $1,600,000
Selling and administrative expenses $580,000
Net income %1,020,000
a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses.
b. The company's product cost of $25 per unit is computed as follows:
Direct materials $4 per unit
Direct labor $11 per unit
Variable overhead $4 per unit
Fixed overhead ($600,000/ $100,000 units) $6 per unit
Required:
Prepare an income statement for the company under variable costing.
Answer:
Income statement for the company under variable costing
Sales (80,000 units x $45) $3,600,000
Less Cost of Sales
Beginning inventory $0
Cost of goods manufactured (100,000 units x $19) $1,900,000
Cost of good available for sale $1,900,000
Less Ending inventory (20,000 x $19) ($380,000) ($1,520,000)
Contribution $2,080,000
Less Period Costs
Fixed Manufacturing Overhead ($600,000)
Selling and administrative expenses - Fixed ($400,000)
Selling and administrative expenses - Variable ($180,000)
Net Income / (loss) $900,000
Explanation:
Under Variable Costing.
1.Product cost = Variable Manufacturing Costs Only
Therefore, Product cost = $4 + $11 + $ 4
= $19
2.Period Cost = Fixed Manufacturing Overheads + Non - Manufacturing Costs
If the actual budget deficit is $180 billion, the economy is operating $400 billion above its potential, and the marginal tax rate is 13 percent, what are the structural deficit or surplus and the cyclical deficit or surplus
Answer:
Structural Deficit $232 billion
Cyclical Deficit $52 billion
Explanation:
Calculation for the Structual deficit and the cyclical deficit
STRUCTURAL DEFICIT
Using this formula
Structural Deficit =Actual budget +(Economy Operating amount×Marginal tax rate)
Let plug in the formula
Structural Deficit =$180 billion +($400 billion ×0.13)
Structural Deficit =$180 billion +$52 billion
Structural Deficit =$232 billion
CYCLICAL DEFICT
Using this formula
Cyclical Deficit = Economy Operating amount *Marginal tax rate
Let plug in the formula
Cyclical Deficit=$400 billion ×0.13
Cyclical Deficit=$52 billion
Therefore Structural Deficit is $232 billion while Cyclical Deficit is $52 billion.
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Activity Rate Setting up batches $ 59.56 per batch Processing customer orders $ 72.96 per customer order Assembling products $ 4.25 per assembly hour Data concerning two products appear below: Product K91B Product F65O Number of batches 89 60 Number of customer orders 39 53 Number of assembly hours 493 900 How much overhead cost would be assigned to Product K91B using the activity-based costing system?
Answer:
$10,241.53
Explanation:
Using the activity-based costing system, Overhead cost for Product K91B would be?
Setting up batches 89 batches x $59.56= $5300.84
Processing customer orders 39 orders x $72.96= $2,845.44
Assembling products 493 hours x $4.25= $2,095.25
Total Overhead cost $10,241.53
work cell at Chris Ellis Commercial Laundry has a workstation with two machines, and each unit produced at the station needs to be processed by both of the machines. (The same unit cannot be worked on by both machines simultaneously.) Each machine has a production capacity of 5 units per hour. The throughput time of the work cell=nothing minutes per unit (enter your response as a whole number).
What is the process time of the work cell in minutes per unit?
Answer:
24 minutes
Explanation:
The computation of the process time of the work cell is shown below:
Throughput time is the time that is needed to produced a finished good product. It involves the manufacturing process time and the time for converting the raw material into a finished product
Therefore
Throughput time = [1 unit × (60 min ÷ 5 units)] × 2
= 24 minutes
All of the following items should be considered when setting an export price
except
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
D. Repatriation restrictions
Answer:
D. Repatriation restrictions should not affect the prices of commoditiesExplanation:
Repatriation has to do with the conversion of foreign currency to home based currency. this is done in a bid to carry out international transaction effectively
while these items affects the prices of export
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
You purchase a bond with an invoice price of $1,410. The bond has a coupon rate of 6.8 percent, and there are 3 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000.
Answer:
clean price = $1,393
Explanation:
The clean price of the bond does not include any accrued interests. The invoice price = clean price + accrued interests
invoice price = $1,410accrued interests = $1,000 x 0.068 x 3/12 = $17clean price = invoice price - accrued interests = $1,410 - $17 = $1,393
Listed below are certain costs (or discounts) incurred in the purchase or construction of new plant assets. Indicate whether the costs should be expensed or capitalized (included in the cost of the plant assets on the balance sheet.) For costs that should be included in plant assets. Indicate in which category of plant assets (Equipment. Building. or Land) the related costs should be recorded on the balance Sheet.
a. Invoice cost to purchase Equipment
b. Sales tax on new equipment purchased
c. Cost to lay foundation for a new building
d. Repair costs to fix new equipment damaged by the crew that unpacked it
e. Charges incurred to train employees to use new equipment
f. Construction costs for a new building to be used in operations
g. Attorney fees incurred to complete the purchase documents for a new plant warehouse
h. Freight costs to ship the equipment From the manufacturer to the warehouse
Answer:
a. Capitalized : Equipment
b. Expensed
c. Capitalized : Building
d. Expensed
e. Capitalized : Equipment
f. Capitalized : Building
g. Capitalized : Building
h. Capitalized : Equipment
Explanation:
The Cost of Property, Plant and Equipment item according to IAS 16 includes, the Purchase Cost and any cost directly incurred in putting the assets in location and condition intended for use by management.
The costs exclude amounts collected in tax on behalf of third parties
Also not Capital expenditures increase the earning ability of the asset whilst revenue expenditure is the maintenance of such asset.
__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.
Answer: Nontariff barriers
Explanation:
Nontariff barriers are trade barriers that are used whereby the import and export of goods and services are restricted. It should be noted that the restriction is not by tariffs but can include include embargoeds, quotas, sanctions, and levies.
The main reason for trade barriers are to generate revenue for the government and also to protect the local industries.
Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $79,000 and at the end of the month was $72,000. The cost of goods manufactured for the month was $361,600. The actual manufacturing overhead cost incurred was $118,400 and the manufacturing overhead cost applied to jobs was $112,000. The adjusted cost of goods sold that would appear on the income statement for July is:
Answer:
$375,000
Explanation:
Unadjusted cost of goods sold = Opening stock of finished goods + Cost of goods sold - Closing stock of finished goods
Unadjusted cost of goods sold = $79,000 + $361,600 - $72,000
Unadjusted cost of goods sold = $368,600
The overhead applied is $112,000 and the actual manufacturing overhead is $118,400. As the actual manufacturing overhead is more than the overhead applied, the overhead is under applied as shown below
Under-applied Overhead = Actual manufacturing overhead - Overhead applied
= $118,400 - $112,000
= $6,400
Now, calculation of the adjusted cost of goods sold is as follow
Adjusted cost of goods sold = Unadjusted cost of goods sold + Under-applied Overhead
= $368,600 + $6,400
= $375,000
Thus, the adjusted cost of goods sold is $375,000
Jackie notices everyone wearing Converse sneakers on the first day of school. Ever the fashionista, this will likely affect: Multiple Choice Jackie's income, as she now needs to buy Converse and will have less to spend on other goods. Jackie's preferences for shoes, since she feels as though she needs them now. Jackie's expectations of future prices, since the price of Converse will likely go up because they're getting so popular. the prices of related goods, since other shoes will be less popular and cost less now.
Answer:
Jackie's income, as she now needs to buy Converse and will have less to spend on other goods.
Explanation:
Jackie is a fashionista and so she would respond to trends. Since everyone around her is wearing converse, she would want to wear converses too. so her income would be affected as it would be reduced as she would buy the converse.
Jamison Company purchased the assets of Booker Company at an auction for $4,200,000. An independent appraisal of the fair value of the assets is listed below:
Land $1,425,000
Building 2,100,000
Equipment 1,575,000
Trucks 2,550,000
Assuming that specific identification costs are impracticable and that Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Trucks?
A. $1,400,000
B. $2,100,000
C. $2,520,000
D. $2,550,000
Answer:
A. $1,400,000
Explanation:
Amount to be allocated = Auction price / Total individual price * Truck price
Auction price = $4,200,000
Total individual price = $1,425,000 + $2,100,000 + 1,575,000 + $2,550,000 = $7,650,000
Truck price = $2,550,000
Amount to be allocated = ($4,200,000 / $7,650,000) * $2,550,000
Amount to be allocated = $1,400,000
Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.
For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown below:
Activity Cost Pool (Activity Measure) Total Cost Total Activity
Customer deliveries (Number of deliveries) $ 500,000 5,000 deliveries
Manual order processing (Number of manual orders) 248,000 4,000 orders
Electronic order processing (Number of electronic orders) 200,000 12,500 orders
Line item picking (Number of line items picked) 450,000 450,000 line items
Other organization-sustaining costs (None) 602,000
Total selling and administrative expenses $ 2,000,000
Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (both hospitals purchased a total quantity of medical supplies that had cost Worley $30,000 to buy from its manufacturers):
Activity
Activity Measure University Memorial
Number of deliveries 10 25
Number of manual orders 0 30
Number of electronic orders 15 0
Number of line items picked 120 250
Required:
Compute the total revenue that Worley would receive from University and Memorial.
Answer is complete and correct
Total Revenue
University $ 31,500
Memorial $ 31,500
Answer:
Worley CompanyComputation of Total Revenue from University and Memorial:
Total Cost = $38,541.00
Mark-up (5%) $1,927.05
Total Revenue $40,468.05
Explanation:
a) Data and Calculations:
Activity Cost Pool (Activity Measure) Total Cost Total Activity
Customer deliveries (Number of deliveries) $ 500,000 5,000 deliveries
Manual order (Number of manual orders) 248,000 4,000 orders
processing
Electronic order (Number of electronic orders) 200,000 12,500 orders
processing
Line item picking (Number of line items picked) 450,000 450,000 line items
Other organization-sustaining costs (None) 602,000
Total selling and administrative expenses $ 2,000,000
Data on University and Memorial Hospitals:
Activity Measure University Memorial
Number of deliveries 10 25
Number of manual orders 0 30
Number of electronic orders 15 0
Number of line items picked 120 250
Activity Rates:
Customer deliveries (Number of deliveries) $ 500,000/5,000 = $100
Manual order (Number of manual orders) 248,000/4,000 = $62
processing
Electronic order (Number of electronic orders) 200,000/12,500 = $16
processing
Line item picking (Number of line items picked) 450,000/450,000 = $1
Other organization-sustaining costs (None) 602,000
Cost of Selling and Administrative Expenses to the two hospitals:
Activity Measure University Memorial Total Total Cost
Number of deliveries 10 25 35 $3,500
Number of manual orders 0 30 30 $1,860
Number of electronic orders 15 0 15 $240
Number of line items picked 120 250 370 $370
Total Selling and Administrative Expenses $5,970
Cost of medical supplies = $30,000
Selling and administrative expenses = $5,970
Fixed costs = $2,571
($5,970/$1,398,000 x $602,000)
Total Cost = $38,541
Mark-up (5%) $1,927.05
Selling price $40,468.05
b) The case stated that both University and Memorial had purchased a total quantity of medical supplies that had cost Worley $30,000 to buy from its manufacturers. This implies that each hospital did not buy supplies that had cost Worley $30,000 for each. Based on this assumed fact from the case, the total revenue that Worley would collect from the two hospitals after keying in the selling and distribution and head office fixed costs, to get a total cost of $38,541.00 and adding the 5% markup, the revenue that Worley would receive would be $40,468.05 ($38,541 x 1.05).
Listed below are year-end account balances (in $millions) taken from the records of Symphony Stores. Debit Credit Accounts receivable-trade 694 Building and equipment 924 Cash-checking 38 Interest receivable 40 Inventory 21 Land 166 Notes receivable (long-term) 496 Petty cash fund 8 Prepaid rent 35 Supplies 12 Trademark 45 Accounts payable-trade 642 Accumulated depreciation 77 Additional paid-in capital 468 Allowance for uncollectible accounts 19 Cash dividends payable 24 Common stock, at par 11 Income tax payable 63 Notes payable (long-term) 836 Retained earnings 306 Deferred revenues 33 TOTALS 2,479 2,479 What would Symphony report as total shareholders' equity?
Answer:
Symphony would report $ 785 million as total shareholders' equity
Explanation:
Use the Balance Sheet to find the total shareholders' equity as Follows :
Assets
Non-Current Assets
Building and equipment 924
Land 166
Notes receivable (long-term) 496
Trademark 45
Accumulated depreciation (77)
Total Non-current assets 1,554
Current Assets
Accounts receivable-trade 694
Allowance for uncollectible accounts (19)
Petty cash fund 8
Prepaid rent 35
Supplies 12
Cash-checking 38
Interest receivable 40
Inventory 21
Total Current Assets 829
Total Assets 2,383
Equity and Liabilities
Equity (Balancing figure) 785
Total Equity 785
Non - Current Liabilities
Notes payable (long-term) 836
Total Non - Current Liabilities 836
Current Liabilities
Accounts payable-trade 642
Cash dividends payable 24
Income tax payable 63
Deferred revenues 33
Total Current Liabilities 762
Total Equity and Liabilities 2,383
Conclusion :
Symphony would report $ 785 million as total shareholders' equity
A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:
Answer:
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Explanation:
The Value of the Common Stocks used to settle the land purchase is equivalent to the market value of the land of $70,000.
The Common Stocks have a par value of $10, this means that any amount that is paid in excess of this par value is accounted for in the Share Premium Reserve.
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Hicks Health Clubs, Inc., expects to generate an annual EBIT of $750,000 and needs to obtain financing for $1,200,000 of assets. Its tax bracket is 40%. If the firm uses short-term debt, its rate will be 7.5%, and if it uses long-term debt, its rate will be 9%. By how much will their earnings after taxes change if they choose the more aggressive financing plan instead of the more conservative plan
Answer:
Hicks Health Clubs, Inc. earnings after taxes will change by minus $10,800 if they choose the more aggressive financing plan instead of the more conservative plan.
Explanation:
Note: I experienced a difficulty submitting the explanation here. Kindly find attached the full answer and explanation in the attached Microsoft word document.
A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $240,000, and the following quantities of product and sales revenues were produced.
Product Pounds Price per Pound
Feed 100,000 $0.70
Flour 50,000 2.20
Starch 20,000 1.00
How much of the $240,000 cost should be allocated to feed?
a. $24,500.
b. $84,000.
c. $90,000.
d. $70,000.
e. $200,000.
Answer:
$84,000
Explanation:
A granny allocates the costs of unprocessed wheat to production of feed, flour and starch
The unprocessed wheat was bought at the price of $240,000
The first step is to calculate the total amount of the products(feed, flour and starch)
Feed= 100,000×0.70= 70,000
Flour= 50,000×2.0= 110,000
Starch= 20,000×1.0= 20,000
Total cost= 70,000+110,000+20,000
= $200,000
Therefore, the amount that should be allocated to the feed can be calculated as follows
= $70,000/$200,000×$240,000
= 0.35×$240,000
= $84,000
Hence the cost that should be allocated to the feed is $84,000
Larned Corporation recorded the following transactions for the just completed month.
a. $85,000 in raw materials were purchased on account.
b. $83,000 in raw materials were used in production. Of this amount, $73,000 was for direct materials and the remainder was for indirect materials.
c. Total labor wages of $120,500 were paid in cash. Of this amount, $102,800 was for direct labor and the remainder was for indirect labor.
d. Depreciation of $195,000 was incurred on factory equipment.
Record the above transactions in journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
a. $85,000 in raw materials were purchased on account.
Dr Raw materials inventory 85,000
Cr Accounts payable 85,000
b. $83,000 in raw materials were used in production. Of this amount, $73,000 was for direct materials and the remainder was for indirect materials.
Dr Work in process 73,000
Dr Manufacturing overhead 10,000
Cr Raw materials inventory 85,000
c. Total labor wages of $120,500 were paid in cash. Of this amount, $102,800 was for direct labor and the remainder was for indirect labor.
Dr Work in process 102,800
Dr Manufacturing overhead 17,700
Cr Cash 120,500
d. Depreciation of $195,000 was incurred on factory equipment.
Dr Manufacturing overhead 195,000
Cr Accumulated depreciation - factory equipment 195,000
Consider Figure 9.2 on page 205 of our textbook. Suppose P0 is $10 and P1 is $11. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate from the graph what the new firm's average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would be supplied to the market by the two firms? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn ?
Answer:
The 10,000 units of output that will be supplied by the two firms to the market.
Profit that each firm would earn will be higher than previous.
Explanation:
The firm selling 4,000 units at the price of $10 per unit. If the output is increased to 6,000 units the price will increase to $11 per unit. If the new 6,000 units are produced along with the previous 4,000 units then the total output supplied by the two firms will be 10,000 units (6,000 + 4,000). The supply of goods in the market will increase so price will fall and the revenue for the firms will decline but they can benefit with sales volume and their profit can increase.
The 10,000 units of output will be supplied by the two firms to the market.
The profit that each firm would earn will be higher than the previous.
Calculation of the number of units and profits:Here the firm sells 4,000 units at the price of $10 per unit. And, in the case when the output is increased to 6,000 units the price will increase to $11 per unit.
And, In the case when the new 6,000 units are produced along with the previous 4,000 units so the total output supplied by the two firms will be 10,000 units.
The supply of goods in the market should increase due to which the price will fall and the revenue for the firms will decline however they can benefit with sales volume and their profit can increase.
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Harpeth Valley Water District has a bond outstanding with a coupon rate of 3.63 percent and semiannual payments. The bond matures in 23 years, with a yield to maturity of 4.17 percent, and a par value of $5,000. What is the market price of the bond
Answer:
Market price of Bond = $4603.116669 rounded off to $4603.12
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 5000 * 0.0363 * 1/2 = $90.75
Total periods (n)= 23 * 2 = 46
r = 4.17% * 1/2 = 2.085% or 0.02085
The formula to calculate the price of the bonds today is attached.
Bond Price = 90.75 * [( 1 - (1+0.02085)^-46) / 0.02085] + 5000 / (1+0.02085)^46
Bond Price = $4603.116669 rounded off to $4603.12
International trade promotes economic growth when it allows any two countries to grow (in their combined production) beyond (above) their pre-trade production possibilities curve (PPC).
a. True
b. False
Answer: True
Explanation:
The Production Possibilities Curve (PPC) is meant to illustrate how a country produces goods and services given the limited resources it has. The curve represents the various amounts that have to be traded off of 2 goods to produce more or less of one good.
The Curve shows that it is best that a country produces those goods that is good at producing so that it can produce more of it and then trade with the rest of the world for the goods it isn't too efficient at producing. If both countries involved in the trade are able to grow beyond (above) their pre-trade production possibilities curve then the trade would have promoted economic growth.
3. Berkshire Hathaway A shares are trading at $120,000. What split ratio would it need to bring its stock price down to $50
Choose an example of a type of new company you could start, and then use this company idea to answer the questions below. You might choose to open a hair salon, a babysitting service, a record store, or many other things. This can be the same type of company you chose in assignment 8, or it can be different.
a. Describe the type of company you chose.
b. If you needed to get funding for your company, would you prefer to get debt funding or equity funding? Explain why you would prefer this type.
Answer:
Find the explanation below.
Explanation:
1. The company I chose to operate would be Celebrity Hair Salon. The Celebrity Hair Salon is a standard salon with comfortable furnishings and state-of-the-art equipment intended to tend to the needs of celebrities. Clients are expected to make appointments for their services which the salon strictly adheres to.
2. I would prefer to fund this new business through debt financing. Debt funding entails borrowing funds from Creditors with the intention of paying back at a later time with the attached interest. Equity funding entails giving an investor a certain percentage of the company's returns thus making him a co-owner of the company. This affords him the right to make decisions for the business. Detaching the investor from this business is difficult because it requires buying him out.
I would prefer debt financing because I wish to retain sole ownership of the business. I can also go through some government agencies to obtain funds at lower interest rates. Moreso, there is a fixed debt repayment plan that I can set a target to meet until the debt is paid. Finally, I can regain my freedom after the payment is completed, thus regaining my business and not entitling me to anyone.
Scenario: Your direct supervisor is interested in a project you are currently working on, and they have asked to increase the scope to increase the department's goals. How would you respond if your supervisor was not the project sponsor?
Scenario: Your direct supervisor is interested in a project you are currently working on, and they have asked to increase the scope to increase the department's goals. How would you respond if your supervisor was not the project sponsor?
ANSWER:
Take down his/her suggestions. The first thing is to show respect. Accept thoughts and contributions towards that project. Most times a project "sponsor" is not someone who is a professional in the field or discipline that the project is about.
If your direct supervisor has the idea of increasing the scope of the project, take note of his/her reasons and if they will truly bring the achievement of more departmental goals, then relay the idea of expansion to the project sponsor.
Answer:
At this point, the important thing is to remain calm and in control. Your supervisor, like everyone else, is likely to get confused and blame people for things that are not their fault, or even find fault that does not exist.
In that case, you should wait for him to finish speaking, ask for permission to speak and explain how you did your job and show how your supervisor is wrong about the conclusion he made. This must be done calmly and politely, always maintaining respect.
Explanation:
Periodic interest rates. You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.050%, a weekly compounded rate of 0.355%, a monthly compounded rate of 1.15%, a quarterly compounded rater of 4.25%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 18%? What is the effective annual rate (EAR) of a daily compounded rate of 0.050%?
Answer:
Choose an annually compounded rate of 18%
The effective annual rate (EAR) of a daily compounded rate of 0.050% is 0.05001%.
Explanation:
We need to find the effective annual rate of interest for each nominal interest and compare this for the different alternatives.
The effective annual rate of interest is the annual rate that if compounded once a year would give us the same result as the same result as the interest per period compounded a number of times a year.
Conversion of Nominal to Effective Interest Rate.
1. A daily compounded rate of 0.050%
Use a financial calculator to enter the data
P/YR = 365
Nominal interest = 0.050%
Thus Effective Interest rate = ? 0.05001%
2. A weekly compounded rate of 0.355%
Use a financial calculator to enter the data
P/YR = 52
Nominal interest = 0.355%
Thus Effective Interest rate = ? 0.3556 %
3. A monthly compounded rate of 1.15%
Use a financial calculator to enter the data
P/YR = 12
Nominal interest = 1.15%
Thus Effective Interest rate = ? 1.1561%
4. A quarterly compounded rater of 4.25%
Use a financial calculator to enter the data
P/YR = 4
Nominal interest = 4.25%
Thus Effective Interest rate = ? 4,32%
5. A semiannually compounded rate of 7.5%
Use a financial calculator to enter the data
P/YR = 2
Nominal interest = 7.5%
Thus Effective Interest rate = ? 7.64%
6. an annually compounded rate of 18%
Use a financial calculator to enter the data
P/YR = 1
Nominal interest = 18%
Thus Effective Interest rate = ? 18%
Conclusion :
Choose the option giving the HIGHEST effective annual rate.
Thu, I would rather have an annually compounded rate of 18%.
Answer the question on the basis o the amounts of all nonlabor resources are fixed.
No. of workers Units of output
0 0
1 40
2 90
3 126
4 150
5 165
6 180
Assume that Number of Us Out Diminishing marginal returns become evident with the addition of the:________,
A) sixth worker.
B) fourth worker.
C) third worker.
D) second worker
Answer:
B
Explanation:
Dinmishing marginal returns occurs when as more units of labour is added, marginal output declines.
marginal output is change in total output as more units of labour are employed.
Marginal output = total output 2 - total output 1
total output = number of workers x units of output