Answer:
Relationship Marketing
Explanation:
Relationship marketing is a form of marketing that involves building a strong relationship with the customers, It is focuses mainly on long term goals which helps to strengthen the brand loyalty.
Relationship marketing helps to create a positive awareness of the product to the customers, this form of marketing also enables the marketer to understand the customers better.
Customers that have a strong relationship with the brand can help in the expansion of the business by introducing the products to other people e.g. friends and family members.
Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand. Suppose that the beginning inventory is 300, the production requirement in units of product is 1,350, demand forecast is 1,500, what is the ending inventory and percent safety stock?
Answer: a) Ending inventory is 150 units
b) Percent Safety Stock is 10%
Explanation:
a) The Ending Inventory can as well be calculated using the following,
Ending inventory = Production Requirement + Beginning Inventory - Demand forecast
Plugging in the figures gives us,
= 1350+300-1500
= 150 units
Ending Inventory is 150 units.
b) To calculate the percent safety stock, the following formula can be used,
Safety stock % = Production Requirement - Demand forecast + Beginning Inventory
Safety stock should be a percentage of Demand as the question says. Denoting it as 's' we have,
1500*(s/100) = 1350-1500+300
15s = 150
s = 10%
The percent safety stock is therefore 10%.
Final answer:
The ending inventory is 150 units and the percent safety stock is 10% of the forecast demand.
Explanation:
The cut-and-try method for aggregate operations planning is an iterative approach to balance demand with production capacity by adjusting production rates, workforce levels, and inventory holdings. When solving for the ending inventory, we begin with the beginning inventory, add the production requirement, and subtract the forecasted demand. In the given scenario, the beginning inventory is 300 units, the production requirement is 1,350 units, and the forecast demand is 1,500 units.
The calculation for the ending inventory would be:
Beginning Inventory + Production Requirement - Forecast Demand = Ending Inventory
300 + 1,350 - 1,500 = 150 units
To calculate the percent safety stock, you would take the ending inventory as a percentage of the forecast demand. This calculation would be:
(Ending Inventory / Forecast Demand) x 100 = Percent Safety Stock
(150 / 1,500) x 100 = 10%
Therefore, the ending inventory is 150 units, and the safety stock is 10% of the forecast demand.
The following information is provided for Slickers, Inc. for year 2016: • Preferred stock, 5%, $20 par value, 1,500 shares issued and outstanding • Common stock, $50 par value, 3,000 shares issued and outstanding • Dividends in arrears for 2013, 2014, 2015 • Total dividends declared and paid during 2016 totaled $10,000 How much of the dividend is paid to the common stockholders during 2016 assuming the preferred stock is cumulative?
Answer:
The amount of dividends paid to common stockholders in 2016 is $4000
Explanation:
The cumulative preferred shares are the shares that accumulate dividends in case the dividends on these shares are not paid or paid partially in a year. The accumulated dividends will need to be paid first whenever the company declares dividends.
The amounts of dividends on preferred share for one year is,
Dividends - Preferred shares = 20 * 0.05 * 1500 = $1500
Thus, the accumulated dividends on these preferred shares at start of 2016 is,
Accumulated dividends - Preferred shares = 1500 * 3 = $4500
The common shares holders are paid after the preferred share holders have been paid. This means that we will deduct the amount of accumulated dividends on preferred shares and the dividends for this year on preferred shares from the total dividends to calculate the amount to be paid to common share holders as dividends.
Common stock dividends = 10000 - (4500 + 1500) = $4000
You are a landlord for an office building. You just received a claim letter from a tenant asking for a refund of $2,000 for extra rent that was paid in June. You check your records and find out that the June rent was deducted twice from the tenant’s bank account. You think this must have been a bank error, but the double amount was transferred to your bank account. Write an adjustment letter to the tenant, and enclose a refund check.
Answer:
See the explanation below.
Explanation:
The Accounting Officer,
ABC Co.,
12, Ogbere Road,
Ibadan, Nigeria.
28 July 2019
Dear Mr. James,
Re: Refund of $2,000 Excess Receipt and Rent Adjustment
Kindly take this as response to your request for a refund of $2,00 for extra rent that was paid in June.
After a careful examination of my bank statement, I discovered that my account was credited twice with the sum of $2,000 for the rent due to a bank error.
The adjustment is hereby made as follow:
Details $
Amount received 4,000
Refund of excess payment (2,000)
Actual rent paid 2,000
Kindly find enclosed in this letter an amount of $2,000 as the refund of the excess payment.
I look forward to receiving your response and acknowledgment of the receipt of the refund.
Yours sincerely,
Amcool.
Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000. What amount should Cornett report on its statement of cash flows as net cash flows provided/used by investing activities
Answer:
The correct option is B,-$5,200 as found in the attached.
Explanation:
The net cash flows provided/used by investing activities are cash flows(both inflows and outflows) on assets that are capable of generating earnings directly or indirectly for the business.
By direct ,I mean assets that are used directly in the business to enhance the business earnings while indirect relates those that are not used in core business operations.
Cash flow from investing activities is computed:
Cash received from sale of equipment $14,800
cash paid to purchase investment ($20,000)
Cash flow used in investing activities ($5,200)
The correct option is B as found in the attached .
Calla Company produces skateboards that sell for $69 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 80,100 skateboards per year. Annual costs for 80,100 skateboards follow. Direct materials $ 937,170 Direct labor 680,850 Overhead 959,000 Selling expenses 549,000 Administrative expenses 475,000 Total costs and expenses $ 3,601,020 A new retail store has offered to buy 14,900 of its skateboards for $64 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: Direct materials and direct labor are 100% variable. 40 percent of overhead is fixed at any production level from 80,100 units to 95,000 units; the remaining 60% of annual overhead costs are variable with respect to volume. Selling expenses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed. There will be an additional $2.90 per unit selling expense for this order. Administrative expenses would increase by a $810 fixed amount. Required: 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order?
Answer:
I do not have the necessary space to prepare the three column analysis, but the answers to the questions are:
since the special order does not affect current normal sales, its analysis should only consider relevant expenses, not regular expenses:
A) Income statement without the special order
total revenue = $69 x 80,100 = $5,526,900
- COGS = ($2,577,020)
Direct materials $937,170Direct labor $680,850Overhead $959,000gross profit = $2,949,880
- SG&A = ($1,024,000)
Selling exp. $549,000
Administrative exp. $475,000
net income = $1,925,880
B) relevant revenue from special order = 14,900 x $64 = $953,600
- relevant costs:
direct materials = ($937,170 / 80,100 units) x 14,900 = $174,330direct labor = ($680,850 / 80,100 units) x 14,900 = $126,650overhead = ($575,400 / 80,100 units) x 14,900 = $107,034selling expenses = [($329,400 / 80,100 units) x 14,900] + ($2.90 x 14,900) = $74,952 + $48,330 = $104,484administrative expenses = $810total relevant costs = $513,308gain from special order = $953,600 - $513,308 = $440,292
C) Income statement with the special order
total revenue = $6,480,500
- COGS = ($2,985,034)
Direct materials $1,111,500Direct labor $807,500Overhead $1,066,034gross profit = $3,495,466
- SG&A = ($1,129,294)
Selling exp. $653,484Administrative exp. $475,810net income = $2,366,172
Answer:
Calla Company:
1. Comparative Income Statement:
This is attached.
a) Sales:
i) Normal = $69 * 80,100 = $5,526,900
ii) Special order = $64 * 14,900 = $953,600
iii) Combined = $6,480,500
b) Direct Materials Cost:
i) Normal = $937,170
ii) Special order = $174,330 ($937170/80,100 x 14,900)
iii) Combined = $1,111,500
c) Direct Labour Cost:
i) Normal = $680,850
ii) Special = $126,650 ($680,850/80,100 x 14,900)
iii) Combined = $807,500
d) Overhead Costs:
i) Normal - $959,000
ii) Special = $107,034 ((60% of $959,000)/80,100 x 14,900)
iii) Combined = $1,066,034
e) Selling Expenses:
i) Normal = $549,000
ii) Special = $61,274 (60% of $549,000)/80,100 x 14,900)
iii) Combined = $610,274
f) Administrative:
i) Normal = $475,000
ii) Special = $810
iii) Combined = $475,810
2. Advise:
Calla should accept this order. Income would increase by more than $400,000.
Explanation:
This is "an accept or reject" special order type of decision. To compute costs, only relevant costs, which will vary with the special order, are considered. Sunk costs, which do not make a difference, are not taken into account in arriving at the income for the special order.
This analysis is also called Incremental Analysis or Differential Analysis. It helps management to make a decision of whether to accept the special order or not. It is an important technique in managerial accounting.
Runaround Corporation sells running shoes and during January they ran production machines for 29 comma 000 hours total and incurred $ 10 comma 500 in maintenance costs. During July they ran production machines for 15 comma 000 hours total and incurred $ 8 comma 600 in maintenance costs. Based on this data, what will total maintenance costs be if the machines are run for 18 comma 500 hours? (Round intermediary calculations to the nearest cent.)
Answer:
$9,075
Explanation:
As we know that:
Variable cost per hour = Cost Difference / Units Difference
Variable cost per hour = ($10,500- $8,600) / (29,000 - 15,000)
= $00.1357142857142857 per hour
Which means:
Fixed Cost = $10,500 - (29,000 * $0.0.1357142857142857 per hour)
= $6,564
The total variable cost for 18,500 hours is calculated as under:
Total Variable Cost = 18,500 Unit * $0.1357142857142857 per hour
= $2,511
Total Maintenance Costs = $6,564 + $2,511 = $9,075
Oceanic Company has 15,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends: 20Y1 $67,500 20Y2 22,500 20Y3 135,000 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
Final answer:
The dividends per share for the preferred and common stock for each year are as follows: Preferred stock: 20Y1 - $4.50, 20Y2 - $1.50, 20Y3 - $9.00. Common stock: 20Y1 - $1.35, 20Y2 - $0.45, 20Y3 - $2.70.
Explanation:
To determine the dividends per share for the preferred and common stock for each year, we first need to calculate the total dividends distributed for each year. The formula to calculate the dividends per share is: Dividends per share = Dividends distributed / Total number of shares.
For the preferred stock:
20Y1: Dividends per share = $67,500 / 15,000 = $4.5020Y2: Dividends per share = $22,500 / 15,000 = $1.5020Y3: Dividends per share = $135,000 / 15,000 = $9.00For the common stock:
20Y1: Dividends per share = $67,500 / 50,000 = $1.3520Y2: Dividends per share = $22,500 / 50,000 = $0.4520Y3: Dividends per share = $135,000 / 50,000 = $2.70The dividends per share for each year are as follows:
Preferred stock: 20Y1 - $4.50, 20Y2 - $1.50, 20Y3 - $9.00Common stock: 20Y1 - $1.35, 20Y2 - $0.45, 20Y3 - $2.70Mills Corporation acquired as an investment $300 million of 7% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 5% for bonds of similar risk and maturity. Mills paid $340 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $325 million.Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
Answer and Explanation:
As per the data given in the question,
Journal entries on July 1 and Dec. 31,2021
July-01 Investment in bonds A/C Dr. $300 million
Premium on bonds A/c Dr. $40 million
To Cash A/c $340 million
Dec-31 Cash A/c Dr. $10.5 million
($300 × 3.5%)
To Premium on bonds A/c $2.00 million
To Interest Revenue A/c $8.5 million
($340 × 2.5%)
The following data is given for the Harry Company:
Budgeted production 26,000 units
Actual production 27,500 units
Materials:
Standard price per ounce $6.50
Standard ounces per completed unit 8
Actual ounces purchased and used in production 228,000
Actual price paid for materials $1,504,800
Labor:
Standard hourly labor rate $22 per hour
Standard hours allowed per completed unit 6.6
Actual labor hours worked 183,000
Actual total labor costs $4,020,000
Overhead:
Actual and budgeted fixed overhead $1,029,600
Standard variable overhead rate $24.50 per standard labor hour
Actual variable overhead costs $4,520,000
Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.)
The direct labor rate variance is:a. 6,000Ub. 6,000Fc. 33,000Fd. 33,000U
Answer:
Option (b) : $6,000 F
Explanation:
As per the data given in the question, computation are as follows:
Standard rate = $22.00
Actual labor hours = 183,000
Actual rate = Actual labor cost ÷ actual labor hour
= $4,020,000 ÷ 183,000 hours = $21.9672
Variance = (standard rate - actual rate) × actual labor hour
= ($22.00 - $21.9672) × 183,000
= $6,000 F
The aprroximated direct labor rate variance for Harry Company is $6,000 F.
What is a direct labor rate variance?This means the difference between the total cost of direct labor at standard cost and the actual direct labor cost.
Given data
Standard rate = $22.00
Actual labor hours = 183,000
Actual rate = Actual labor cost / actual labor hour
Actual rate = $4,020,000 / 183,000 hours
Actual rate = $21.9672
Variance = (Standard rate - Actual rate) × Actual labor hour
Variance = ($22.00 - $21.9672) × 183,000
Variance = $6,000 F
Therefore, the Option B is correct.
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Bonita Industries estimates its sales at 160000 units in the first quarter and that sales will increase by 27000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at
a.$2981500.
b.$4387000.
c.$5228500.
d.$6613938.
Skydiver Question. Several of your friends have offered to take you on a tandem skydiving adventure: Strapped together with a single set of parachutes (main and emergency), you will all jump out of an airplane and then either float to earth or crash. All your skydiving friends are equally skillful, and none of them has the thrill-seeker gene. You can ask each of them a single question.
a. Whats your question?
b. Provide the answer you re looking for in a skydiving mate.
Answer:
a. My question will be to ask them "do you have life insurance?"
Life insurance is defined as a form of indemnity against a future occurrence on the life of an individual . In any case of death, the insurance policy pays a sum of money to the beneficiary.
b. The answer i will be looking for in a skydiving mate will be an individual that has life insurance. This is because an individual with life insurance will be more careful.
In which of the following cases will the size of the central bank's balance sheet change? Case A: The Federal Reserve conducts an open market purchase of $90 million U.S. Treasury securities. Case B: A commercial bank borrows $90 million from the Federal Reserve. Case C: The amount of cash in the vaults of commercial banks falls by $90 million due to withdrawals by the public
Answer:
Case A: The Federal Reserve conducts an open market purchase of $90 million U.S. Treasury securities.
Case B: A commercial bank borrows $90 million from the Federal Reserve.
Explanation:
In the two cases that is A and B there will be an change in the balance sheet.
The balance sheet shows the financial position of a business at a given point in time.
It makes use of the accounting equation.
Asset= Liabilities + Owners Equity
In case A there will be an increase of $100 million on the asset side as a result of rise in reserves, and on the other side a rise in owner equity (securities) by $100 million.
In case B there will be a rise in assets by $100 million as a result of increased reserves. On the other side there will be a rise in loans (liabilities) by $100 million
Grouper Ltd. estimates sales for the second quarter of 2017 will be as follows.
Month Units
April 2,580
May 2,400
June 2,330
The target ending inventory of finished products is as follows.
March 31 2,020
April 30 2,200
May 31 2,130
June 30 2,330
Two units of material are required for each unit of finished product. Production for July is estimated at 2,660 units to start building inventory for the fall sales period. Grouper’s policy is to have an inventory of raw materials at the end of each month equal to 50% of the following month’s production requirements. Raw materials are expected to cost $6 per unit throughout the period.
Required:
Calculate the May raw materials purchases in dollars.
Answer:
July production = 2,660 units
raw materials per unit = $6
ending inventory of raw materials = 50% of next month production
RAW MATERIALS PURCHASESApril May June
units to be produced 2,200 2,130 2,330
+ ending inventory 1,065 1,165 1,330
EU raw materials
- beginning inventory -1,100 -1,065 -1,165
EU raw materials
total direct materials
purchases (in units) 2,165 2,230 2,495
cost of direct materials $6 $6 $6
per unit
total purchases $12,990 $13,380 $14,970
You must evaluate a proposal to buy a new milling machine. The base price is $120,000, and shipping and installation costs would add another $15,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $70,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The machine would require a $6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $46,000 per year. The marginal tax rate is 35%, and the WACC is 12%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine. What is the total year 3 cash flow (year 3 operating cash flow year 3 terminal cash flow) for the proposed milling machine
Answer:
$91,795
Explanation:
The computation of the total year 3 cash flow is shown below:
Total year 3 cash flow = After tax saving in labor cost + depreciation expense × tax rate + working capital recovery + after tax salvage value
where,
After tax salvage value is
= Sale value - tax on capital gain
= $70,000 - {($70,000 - $135,000 × 7%) × 35%}
= $48,807.50
Now total year 3 cash flow is
= $46,000 × 0.65 + ($135,000 × 15%) × 0.35 + $6,000 + $48,807.50
= $91,795
The $135,.000 is come from
= $120,000 + $15,000
We simply applied the above formula
Park Corporation is preparing a bid for a special order that would require 720 liters of material SUN100. The company already has 560 liters of this raw material in stock that originally cost $6.30 per liter. Material SUN100 is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $5.80 per liter. New stocks of the material can be readily purchased for $6.65 per liter. What is the relevant cost of the 720 liters of the raw material when deciding how much to bid on the special order?
Answer:
$4,788
Explanation:
Data provided
Raw material in liters = 720
Purchased readily of new stock material = $6.65
The computation of relevant cost of the raw material is shown below:-
Relevant cost of the raw material = Raw material in liters × Purchased readily of new stock material
= 720 liters x $6.65
= $4,788
Therefore for computing the Relevant cost of the raw material we simply multiply the raw material in liters with purchased readily of new stock material.
The relevant cost of the 720 liters of raw material SUN100 for the special order is $4312, which includes the cost to purchase additional material and the opportunity cost of using the material in stock.
First, we need to determine the amount of additional material that needs to be purchased. Park Corporation already has 560 liters of SUN100 in stock, and the special order requires 720 liters. Therefore, the company needs to purchase an additional:
720 liters (required for the order) - 560 liters (in stock) = 160 liters
The cost to purchase this additional material is:
160 liters * $6.65 per liter = $1064
Next, we calculate the opportunity cost of using the material that is already in stock. The opportunity cost is the benefit that is foregone by not choosing the next best alternative. In this case, the next best alternative is to sell the material at its resale value. The opportunity cost is calculated as:
560 liters (in stock) * $5.80 per liter (resale value) = $3248
Now, we add the cost to purchase additional material to the opportunity cost of using the existing stock:
$1064 (cost of additional material) + $3248 (opportunity cost) = $4312
Therefore, the relevant cost of the 720 liters of raw material SUN100 for the special order is $4312.
Day Corporation, an S corporation, reported a $73,000 ordinary loss for Year 1 (a non-leap year). Day uses the calendar year as its taxable year, as do all of its shareholders. Individual B owns 25% of the Day stock at all times during Year 1. B’s basis in his Day Corporation stock at the beginning of Year 1 was $10,000. B materially participates in Day’s business. At the end of Year 1, Day is liable for the following:
Third-party creditors $15,000
Individual B 3,000
Other shareholders 9,000
What amount of Day’s losses may be deducted by B in Year 1, and what amount of Day’s losses can be carried over by B to Year 2?
Individual B can deduct a total of $13,000 in losses from Day Corporation in Year 1. The remaining $5,250 of B's loss share can be carried over to Year 2.
Explanation:Individual B's deductible losses from Day Corporation are limited to the amount of B's basis in the stock and the amount of B’s at-risk amount.
At the beginning of Year 1, B’s basis was $10,000. In calculating the at-risk amount, we add to this basis any amount Day Corporation owes to B, which is $3,000, for a total of $13,000.
However, the ordinary loss reported by Day Corporation amounted to $73,000, and B's share of the loss, given that B owns 25% of the Day's stock, would be 25% of $73,000 = $18,250. Since $18,250 exceeds B's basis + at-risk amount of $13,000, B can only deduct up to $13,000 of these losses in Year 1.
The remainder, i.e., $18,250 - $13,000 = $5,250, can be carried over by B to Year 2 to be deducted from his income generated by Day Corporation in that year, provided he has sufficient basis and at-risk amount in Year 2.
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The articles of partnership stipulate that profits and losses be assigned in the following manner: ∙ Each partner is allocated interest equal to 5 percent of the beginning capital balance. ∙ Bernard is allocated compensation of $18,000 per year. ∙ Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. ∙ Each partner is allowed to withdraw up to $5,000 cash per year. Assuming that the net income is $60,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year?
Answer:
$80,700
Explanation:
A partnership begins its first year with the following capital balances:
Alfred, Capital $50,000 Bernard, Capital $60,000 Collins, Capital $70,000the partnership's net profits should be allocated the following way (drawings made by the partners should decrease their basis, but since the company made a profit they can be included in this distribution)
net income $60,000
partners' drawings plus salaries:
Alfred ⇒ $5,000 Bernard ⇒ $18,000 + $5,000 = $23,000Collins ⇒ $5,000interests owed to partners:
Alfred ⇒ $50,000 x 5% = $2,500Bernard ⇒ $60,000 x 5% = $3,000Collins ⇒ $70,000 x 5% = $3,500the remaining $18,000 should be distributed:
Alfred ⇒ $18,000 x 30% = $5,400Bernard ⇒ $18,000 + 30% = $5,400Collins ⇒ $18,000 x 40% = $7,200Collins's basis should increase by $3,500 + $7,200 = $10,700, ending balance = $70,000 + $10,700 = $80,700
On January 1, 2018, M Company granted 99,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2020, and expire on January 1, 2024. Each option can be exercised to acquire one share of $1 par common stock for $11. An option-pricing model estimates the fair value of the options to be $3 on the date of grant.
If unexpected turnover in 2019 caused the company to estimate that 10% of the options would be forfeited, what amount should M recognize as compensation expense for 2019?
Multiple Choice
$99,000
$33,000
$79,200
$49,500
Answer:
$79,200
Explanation:
The computation of the compensation expense for 2019 is shown below:
= Number of stock options × fair value of the options × remaining percentage × basis of share - Number of stock options
= [(99,000 × $3) × 90% × 2 ÷ 3] - 99,000
= $79,200
We simply applied the above formula so that the compensation expense for 2019 could come
Carlos is risk-neutral and has an ancient farmhouse with great character for sale in Slaterville Springs. His reservation price for the house is $130,000. The only possible local buyer is Whitney, whose reservation price for the house is $150,000. The only other houses on the market are modern ranch houses that sell for $125,000, which is exactly equal to each potential buyer’s reservation price for such a house. Suppose that if Carlos does not hire a realtor, Whitney will learn from her neighbor that Carlos’s house is for sale and will buy it for $140,000. However, if Carlos hires a realtor, he knows that the realtor will put him in touch with an enthusiast for old farmhouses who is willing to pay up to $350,000 for the house. Carlos also knows that if he and this person negotiate, they will agree on a price of $300,000.
Answer:
The question is not complete, this part could complete the question:
"If Realtors charge a commission of 5 percent of the selling price and all Realtors have opportunity costs of $2,000 for negotiating a sale, will Carlos hire a Realtor? If so, how will total economic surplus be affected?"
The answer is, the total economic surplus increased from $20,000 to $248,000
Explanation:
Firstly it is important to understand what marginal cost, marginal benefit and Asymmetric information is. Marginal cost is the cost added from the spending of one more unit of resource while marginal benefit is considered as the benefit from spending one more unit of resource. Asymmetric information is a situation whereby one part of the transaction possess more information and material facts than other parts.
Carlos reservation price is $130,000. He wishes to sell to sell for $140,000 to Whitney who has a reservation price of $150,000. Therefore the surplus to Carlos is 140,000 - 130,000 = $10,000 and surplus to Whitney is 150,000 - 140,000 = $10,000. Therefore, the total economic surplus is $20,000
If Carlos sells through a realtor who charges 5% if the property is sold for $300,000 to someone with a reservation price of $350,000. The surplus will be:
5% × 300,000 - 2000 = $13,000.
Now, the surplus is 300,000 - 130,000 + 15,000 = $185,000
Therefore, the surplus to the buyer is
350,000 - 300,000 = $50,000
Hence, the total economic surplus increased from $20,000 to $248,000
The actual financial surplus grew from $20,000 to $248,000 in the last year.
To begin, it is necessary to comprehend the concepts of marginal cost, marginal gain, and asymmetric knowledge.
The expense of expending one more unit of material is referred to as marginal cost, and the benefit of expending one more unit of material is referred to as marginal benefit.
Carlos reservation price = $130,000
Wishes sales = $140,000
Whitney reservation price = $150,000
Carlos surplus = $140,000 - $130,000
Carlos surplus = $10,000
Whitney surplus = 150,000 - 140,000
Whitney surplus = $10,000
Total economic surplus = $10,000 + $10,000
Total economic surplus = $20,000
Carlos sells by realtor
New surplus = [5% × $300,000] - $2000
New surplus = $13,000
Total surplus = $300,000 - 130,000 + 15,000 = $185,000
Total new economic surplus = $185,000 + $13,000 + ($350,000 - $300,000)
Total new economic surplus = $248,000
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Create a crows foot erd using a specialization hierarchy if appropriate. Granite sales company keeps information on its employees and the departments in which they work. For each department, the department name,internal mailbox server, and office phone extension are kept. A department can have many assigned employees, and each employee is assigned to only one department. Employees can be salaried, hourly, or work on contract. All employees are assigned an employee number, which is kept along with the employee's name and address. For hourly employees, hourly wages and target weekly work hours are stored; for example , the company may target 40 hours/ wekk for some employees, 32 for others, and 20 for others. Some salaried employees are salespeople who can earn comission percentage on sales and commission percentage on profit are stored in the system. For example, John is a salesperson with a base salary of $50,000 per year plus a 2 percent comission on the sales price for all the sales he makes, plus another 5 percent off the profit on each of those sales. For contract employees, the beginning date and end date of their contracts are stored along with the billing rate for their hours.
Answer:
Check the explanation
Explanation:
From the below attached image Crow Foot Notation, the relationship between Super class and Sub class is shown clearly, i.e
Employee is super class, and the different types of employees are represented by specialization of three types, there are Salary, Hourly and Contract based. Again the Salary based employee is super class of Sales Employee, representing partially participation.
From the below attached image notation, "d" represents distinct i.e distinct employees of type Salary, Hourly and contract.
And "O" represents, Overlapped, means same object is aggregating two specific outcomes which are overlapped.
They are Salary based and Sale wages based employee.
The Granite Sales Company can create a Crow's Foot ERD using a specialization hierarchy. The ERD will include entities for Department, Employee, and Employee Type, with specific attributes for each type of employee.
Explanation:Entity Relationship Diagram (ERD)A specialization hierarchy can be used to represent the different types of employees in the Granite Sales Company. The ERD will have three main entities: Department, Employee, and Employee Type. The Department entity will include attributes such as department name, internal mailbox server, and office phone extension. The Employee entity will include attributes like employee number, name, and address. The Employee Type entity will include attributes specific to each employee type, such as hourly wages and target weekly work hours for hourly employees, commission percentage on sales and profit for salespeople, and beginning and end dates of contracts and billing rate for contract employees.
Example of an ERD:Department(DepartmentID, DepartmentName, MailboxServer, PhoneExtension)
Employee(EmployeeID, Name, Address, DepartmentID, EmployeeType)
EmployeeType(EmployeeTypeID, HourlyWages, TargetWeeklyWorkHours, CommissionPercentageSales, CommissionPercentageProfit, BeginDate, EndDate, BillingRate)
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Oil wells and seasonal resorts will often shut down temporarily because Multiple Choice variable costs for pumping oil and operating resorts fluctuate significantly. fixed costs temporarily rise, making production unprofitable. prices for their output temporarily fall below their average variable costs of production. government regulations require seasonal shutdowns for maintenance purposes.
Answer:
Oil wells and seasonal resorts will often shut down temporarily because prices for their output temporarily fall below their average variable costs of production.
Explanation: If the price is below the minimum average variable cost, the firm would lose less money by shutting down. In contrast, in scenario 3 the revenue that the center can earn is high enough that the losses diminish when it remains open, so the center should remain open in the short run.
In economics, firms face the decision to shut down temporarily or continue operations when prices fall below their average variable costs. Shutting down can result in smaller losses compared to staying open and incurring fixed costs. Government regulations may also require seasonal shutdowns for maintenance purposes.
Explanation:In economics, fixed costs refer to the expenses a firm must incur before producing any output, while variable costs are the expenses incurred during the production process. When the price of a firm's output falls below its average variable costs, the firm is unable to generate enough revenue to cover its variable costs. In such cases, shutting down and producing no output would result in smaller losses compared to staying in operation and incurring fixed costs, in addition to some variable costs.
The point at which the average variable cost curve intersects with the marginal cost curve is called the shutdown point. If a perfectly competitive firm faces a market price above this point, it is at least covering its average variable costs. However, if the price falls below this point, the firm is not even covering its variable costs, and staying open would result in larger losses. In the case of oil wells and seasonal resorts, this can lead to temporary shutdowns.
Government regulations may also require seasonal shutdowns for maintenance purposes. By temporarily shutting down, firms can reduce their overall costs and avoid operating at a loss. It is important for firms to closely analyze their costs and prices to make informed decisions about shutting down temporarily or continuing operations.
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Sepulvada Manufacturing Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $4 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $9.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor rate per hour is:
Answer:
$12
Explanation:
The standard direct labor rate is the budgeted direct labor cost per hour incurred in the manufacturing process. It is used to calculate the budgeted production costs:
the current hourly wage is $9.00 and we must add the payroll taxes per hour ($1.00) and the fringe benefits per hour ($2.00) = $9 + $1 + $2 = $12
Even though a pay raise will occur soon, until it does actually happen, it cannot be considered in the calculation of the standard labor rate.
Which is and example of a short-term investment
Answer:
Savings account
Explanation:
Edginuity 2020
High-yielding savings accounts, recurring deposits, debt funds, and government securities are just a few of the short-term investing Examples.
What is short-term investment?A short-term investment is a debt or equity security that will be sold or converted to cash within the next three to twelve months.
It's a stock or boId that management intends to sell in the current accounting period in order to generate a rapid profit. These are the most widely held short-term securities.
Thus, short-term investment is debt funds, government securities and other accounts.
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Your colleague started to calculate the weighted average cost of capital for your company, but suddenly became ill and had to go home. The Vice President of Finance gives you the following information and asks you to complete the calculation of the weighted average cost of capital. The market values and after-tax costs are as follows: Debt, $42,000,000 and 7.65%; Preferred stock, $6,300,000 and 5.00%; Common stock, $50,000,000 and 17.80%. Your company's weighted average cost of capital is:
Answer:
12.64%
Explanation:
WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs. weightage can be calculated by using the market value of the equity and debt.
The formula for WACC is
Weighted average cost of capital = ( Cost of Common Stock x Weightage of equity ) + ( Cost of debt x Weightage of debt ) + ( Cost of Preferred stock x Weightage of Preferred stock )
As per given data
Debt, $42,000,000 7.65%
Preferred stock, $6,300,000 5.00%
Common stock, $50,000,000 17.80%
Total $98,300,000
Placing Value in the formula
Weighted average cost of capital = ( 17.80% x $50,000,000 / $98,300,000 ) + ( 7.65% x $42,000,000 / $98,300,000 ) + ( 5.00% x $6,300,000 / $98,300,000 )
Weighted average cost of capital = 9.05% + 3.27% + 0.32 = 12.64%
Today's settlement price on a Chicago Mercantile Exchange (CME) yen futures contract is $0.8011/¥100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/¥100, $0.7996/¥100, and $0.7985/¥100. (The contractual size of one CME yen contract is ¥12,500,000). If you have a long position in one futures contract, the changes in the margin account from daily marking-to-market, will result in the balance of the margin account after the third day to be?
Answer:
$2,325
Explanation:
$2,325 = $2,000 +¥12,500,000 *[(0.008011 - 0.008057) + (0.008057 - 0.007996) + (0.007996 - 0.007985)]
=$2,000 + ¥12,500,000 *)[(0.008011 - 0.007985)]
$0.8011/¥100 = $0.008011/¥
Hence:
$0.8057/¥100 = $0.008057/¥
Eilert Construction Company had a contract starting April 2018, to construct a $42,000,000 building that is expected to be completed in September 2019, at an estimated cost of $38,500,000. At the end of 2018, the costs to date were $17,710,000 and the estimated total costs to complete had not changed. The progress billings during 2018 were $8,400,000 and the cash collected during 2018 was $5,600,000. Eilert uses the percentage-of-completion method. [ What makes-up Construction in Process
Answer:
$20,790,000
Explanation:
Since the estimated total costs to complete had not change, the Construction is Process can be estimated as follows:
Construction in Process = Estimated total completion cost - Total costs of completion to date = $38,500,000 - $17,710,000 = $20,790,000
Jacque decides to open her own business and earns $50,000 in accounting profit for the first year. When deciding to open her own business she withdrew $20,000 from her savings which earned 5% interest. She also turn down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui’s economic profit from running her own business
Jacque's economic profit is calculated by subtracting her opportunity costs from her accounting profit. After turning down the highest paying job offer of $45,000 and forgoing $1,000 in interest from her savings, her economic profit is $4,000.
To calculate Jacque's economic profit, we must consider both explicit costs and implicit (opportunity) costs. Jacque has an accounting profit of $50,000, but to calculate the economic profit, we subtract the opportunity costs she incurred by opening her business.
Firstly, the $20,000 withdrawn from her savings account could have earned her 5% interest, which is $1,000 ($20,000 x 0.05). Secondly, she turned down job offers with salaries of $30,000, $40,000, and $45,000. We consider the highest paying job forgone, which is $45,000. These are her opportunity costs.
Therefore, her total implicit costs amount to $45,000 (highest foregone salary) + $1,000 (interest foregone) = $46,000. Subtracting this from her accounting profit ($50,000 - $46,000) gives us an economic profit of $4,000 for the first year.
Summer Manufacturing Company uses an average of 30 gallons of cleaning fluid a day. Usage tends to be normally distributed with a standard deviation of 3 gallons per day. Lead time is normally distributed averaging 7 days with a standard deviation of 4 days. The company hopes to keep the desired service level is 90 percent. What amount of safety stock is appropriate if a fixed order size of 600 gallons is used?
Answer:
Safety Stock = 153.94 [tex]\approx[/tex] 154 gallons
Solution:
Average Demand =[tex]D_{avg} = 30 gallons/day[/tex]
Standard deviation of demand = [tex]\sigma_{d} = 3 gallons[/tex]
Average Lead Time = [tex]LT_{avg} = 7 days[/tex]
Standard deviation of Lead Time= [tex]\sigma_{LT} = 4 days[/tex]
Service Level = 90%
For Service Level 90%, Z-Score = 1.28
Z-score is called Service Factor
Calculation of Safety Stock:
Safety Stock = [tex]Z \times \sqrt{[(LT_{avg}\times \sigma_{d}^2)+(\sigma_{LT}\times D_{avg})^2]}[/tex]
Safety Stock =[tex]1.28 \times \sqrt{[(7\times 3^2)+(4\times 30)^2]}[/tex]
Safety Stock = [tex]153.94 \approx 154 gallons[/tex]
MC Qu. 99 The following data concerns a proposed equipment... The following data concerns a proposed equipment purchase: Cost $ 158,000 Salvage value $ 5,500 Estimated useful life 4 years Annual net cash flows $ 53,100 Depreciation method Straight-line Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:
Answer:
$14,975
Explanation:
Depreciable amount = $158,000 - $5,500 = $152,500
Annual depreciation = $38,125
Annual net income = $53,100 - $38,125 = $14,975.
Therefore, the annual net income amount used to calculate the accounting rate of return is $14,975.
Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $45 per unit with variable costs of $30 per unit. Plaid models sell for $50 per unit with variable costs of $25 per unit. Total fixed costs for the company are $19,950. Mayfield Company typically sells two Blue models for every three Plaid models. Required: What is the breakeven point in total units
Answer:
Break even point in total units is 950 units
Explanation:
The break even point in total units is the composite break even point considering both the products. This will give us one overall break even point for the company. The break even point in units is the number of units that must be sold in order for the total revenue to be equal to total costs.
To calculate the over all break even in units, we need to divide the fixed costs by the weighted average contribution per unit.
Weighted average contribution per unit = weight of product A in sales mix * contribution of product A + weight of product B in sales mix * contribution of product B
Sales mix = 2 + 3 = 5
Blue = 2 / 5 = 0.4
Plaid = 3 / 5 = 0.6
Weighted average contribution per unit = 2/5 * (45 - 30) + 3/5 * (50 - 25)
Weighted average contribution per unit = $21 per unit
Break even point in units = 19950 / 21 = 950 units