Answer:
75,000 shares
Explanation:
earnings per share (EPS) = (net income - preferred dividends) / weighted average shares outstanding
net income = ???preferred dividends = $10 x 6% x 12,000 = $7,200weighted average shares outstanding = [60,000 + (120,000 x 9/12)] / 2 = (60,000 + 90,000) / 2 = 75,000 sharesSince the shares split to 120,000 on April, their relative weight at the end of the year is 9/12 x 120,000 = 90,000. That is why the average shares = (beginning number of outstanding shares + ending number of outstanding shares) / 2 = 75,000
Answer:
120,000 shares
Explanation:
We will use weighted average numbers of outstanding shares.
Outstanding numbers of shares are those share which are issued in the market by the company and still being traded in the market. Treasury stock is excluded from the total issued share to calculate the total outstanding numbers of share.
Stock split increase the numbers of shares with a specific given ratio but the common equity value remains same that's why the par value of the share decreases with respective ratio.
4/1/2021
Shares after stock split
Outstanding numbers of shares = 60,000 shares x 2 / 1 = 120,000
7/1/2021
Shares after issuance
Outstanding numbers of shares = 120,000 shares + 30,000 shares = 150,000 shares
Now calculate the weighted average numbers of shares
1/1/2021-3/31/2021 60,000 x 3/12 = 15,000
4/1/2021-6/30/2021 120,000 x 3/12 = 30,000
7/1/2021-12/31/2021 150,000 x 6/12 = 75,000
Weighted average outstanding shares 120,000
Which of the following statements about dividend is NOT true? Bird-in-the-hand theory says that investors think dividends are less risky than potential future capital gains, so they like dividends. Tax preference theory indicates that low dividend payments mean higher capital gains. Capital gains taxes are lower than dividend taxes, and they can be deferred. So investors prefer low-dividend-payments or non-dividend-payments firms. Based on the Bird-in-the-hand theory, a firm should set low dividend payout ratio to increase firm value. Based on the Tax preference theory, a firm should pay less dividends to increase firm value.
Answer:
The statement that is not true about dividends is:
Capital gains taxes are lower than dividend taxes, and they can be deferred
Explanation:
Dividends is the money paid to investors and shareholders from the profit the company they invested in has made within a period of time.
Dividends can be earned from investing in stocks, mutual funds or exchange-traded funds and it is a taxable income.
Capital gains on the other hand are the incremental amount of value appreciation an asset accrues when it is purchased and after it is sold. This accrued earnings is also a taxable income.
The tax information is included in Schedule B, Form 1040.
Capital gains taxes are not lower than dividend taxes because the U.S. tax code gives treats dividends and capital gains the same.
The management of Jeremynt Inc., a public relations firm, gives each of its teams the responsibility of increasing their productivity through measures developed by the team members and approved by the respective team managers. The company then measures the team-level productivity, and the cost savings resulting from the improvements in productivity are split among its employees. In this scenario, Jeremynt Inc. is most likely using a group incentive system called _____.
Answer:
gainsharing incentive
Explanation:
In simple words, A gainsharing system on a theoretical level is essentially a group reward program-a productivity pay pro- gram-in which workers as a collective receive incentives to collaborate to boost plant efficiency. In comparison to something like a profit-sharing system, incentives are much more directly related to the success of individual workers or teams of workers in a gain-sharing opportunity.
Colassard Industries has the following data available for preparation of its statement of cash flows: Sales revenue $385,800 Cost of goods sold 203,100 Wages expense 62,400 Insurance expense 13,780 Interest expense 15,150 Income taxes expense 27,400 Accounts receivable, decrease 15,600 Inventory, increase 8,710 Prepaid insurance, increase 1,550 Accounts payable, increase 3,680 Notes payable, increase 40,000 Interest payable, increase 1,240 Wages payable, decrease 6,700 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. Use a minus sign to indicate any decreases in cash or cash outflows.
Answer:
Cash flows from operating activities section
Net Income before tax (385,800-203,100- 62,400-13,780-15,150) 91,370
Adjustment of Working Capital items :
Decrease in Accounts Receivable 15,600
Increase in Inventory (8,710)
Increase in Prepaid insurance (1,550)
Increase in Accounts payable 3,680
Increase in Notes payable 40,000
Increase in Interest payable 1,240
Decrease in Wages payable (6,700)
Net Cash flow from operating activities 134,940
Explanation:
The Indirect method of determining cash flows from operating activities adjust the net income against non-cash items included i income statement and working capital adjustments.
Beach Runner makes running shoes and they are anticipating the incurrence of the following manufacturing overhead costs during the upcoming year: Cost Indirect materials...........$4,000 Indirect Labor .......................$70,000 Utilities...................................$42,000 Insurance.................................$7,000 Taxes.........................................$9,000 Depreciation on equipment $20,000 What will Beach Runner budget for cash disbursements related to manufacturing overhead? (1 Point)
Answer:
Beach Runner
Manufacturing Overhead Budget for Cash Disbursements:
Indirect materials = $4,000
Indirect labor = $70,000
Utilities = $42,000
Insurance = $7,000
Taxes = $9,000
Total = $132,000
Explanation:
Cash disbursement will not be incurred in respect of Depreciation on equipment. This is why depreciation is excluded.
Depreciation of a capital asset is not a cash flow item. Depreciation is an accounting technique or measure used to spread the cost of a capital asset over its useful life in accordance with the matching principle.
A loom operator in a textiles factory earns $16.00 per hour. By contract, the employee earns $24.00 (time and a half) for overtime hours. The operator worked 44 hours during the first week of May, and overtime is paid after the usual 40 hours.1) Compute the loom operator's compensation for the week.2) Calculate the employee's total overtime premium for the week.3) How much of the employee's total compensation for the week is direct-labor cost? How much is overhead?
Answer:
1) $736
2) $24
3) Total compensation for direct labor = $736 -$24 = $712
Overhead = $24
Explanation:
(1) Normal wages for the week = Normal hours * normal hourly rates
= 40 hours * $16 per hour = $640
Overtime hours = Total time - Normal hours = 44 - 40
= 4 hours
overtime wages = overtime hours * overtime hourly rates
= 4 hours * $24 = $96
Operators compensation for the week = $640 + $96
= $ 736
(2) Employee's total overtime premium
= (overtime rate - normal time rate) * (Total hours - normal hours)
= ($24 - $16) *(44 - 40)
= ($8) * (4)
=$24
(3) Total compensation for direct labor = $736 -$24 = $712
Overhead = $24
1. The computation of the loom operator's compensation for the week is $736 ($16 x 40 + $24 x 4).
2. The calculation of the employee's total overtime premium for the week is $32 ($8 x 4).
3. The amount of the employee's total compensation for the week that is direct-labor cost is $704 ($16 x 44).
4) The amount of the employee's total compensation for the week that is overhead is $32 ($8 x 4).
Data and Calculations:
Earnings per hour = $16
Overtime rate = $24
Overtime premium = $8 ($24 - $16)
Number of hours worked = 44 hours
Normal work hours = 40 hours
Thus, loom operator earns a total of $736 per week with an overtime premium of $32.
Learn more about overtime premium and overhead costs here: https://brainly.com/question/25656547
What is a common workflow error that can cause duplicate expenses in QuickBooks Online?
Answer:
A common workflow error that can cause duplicate expenses in QuickBooks Online is:
Duplicating any transaction.
Explanation:
The reason behind this is that duplicating transactions is very common because it might originate before the accounting process is made. It can be executed by any manager or someone in the resources acquisitions department. That is why the books have to be reviewed at two different moments from two different departments. Accounting first and then finance. To check that everything is correct.
Answer:
Create a bill to record a vendor expense, and create a check to the vendor for the same expense
Explanation:
The bonds have a par value of $2,000 and semiannual coupons.
Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s)
Xenon, Inc. (XIC) 6.500 Jan 15, 2034 94.293 ? 57,373
Kenny Corp. (KCC) 7.230 Jan 15, 2033 ? 5.36 48,952
Williams Co. (WICO) ? Jan 15, 2040 94.845 7.06 43,813
What price would you expect to pay for the Kenny Corp. bond?
Answer:
$2,365.02
Explanation:
For computing the price we have to applied the Present value formula i.e to be shown in the attachment
Given that,
Future value = 2,000
Rate of interest = 5.36% ÷ 2 = 2.68%
NPER = 14 years × 2 = 28 years
PMT = $2,000 × 7.230% ÷ 2 = $72.3
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the price of the bond is $2,365.02
The 14 years is taken from
= Year 2033 - year 2019
= 14 years
Nelson Industries makes widgets using a two-step process that involves machining first and assembly second. In the Machining Department, all materials are issued at the beginning of the process and conversion costs are incurred uniformly throughout the process. During the period, the Machining Department transferred out 8,600 widgets and had an ending inventory of 4,000 widgets that were 85% complete. Beginning inventory consisted of 6,000 units that were 35% complete. What are the equivalent units of production for materials in the Machining Department
Answer:
12,600
Explanation:
Concept of Equivalent units of production measures the number of units in terms of percentage completion in input elements of the process.
The equivalent units of production for materials
Note : all materials are issued at the beginning of the process, therefore materials are 100% complete in both Widgets transferred out and Ending widgets.
Calculation :
transferred out (8,600 × 100%) = 8,600
ending inventory (4,000 × 100%) = 4,000
total = 12,600
Therefore, the equivalent units of production for materials in the Machining Department is 12,600.
Brief Exercise 23-1 Lopez Company uses both standards and budgets. For the year, estimated production of Product X is 534,000 units. Total estimated cost for materials and labor are $1,441,800 and $1,762,200. Compute the estimates for (a) a standard cost and (b) a budgeted cost. (Round standard costs to 2 decimal places, e.g. 1.25.) Materials Labor (a) Standard cost $ $ (b) Budgeted cost $ $
Answer:
a. $6
b. $3204000
Explanation:
Given:
Product X is 534,000 unitscost for materials $1,441,800cost for labour: $1,762,200(a) a standard cost
As we know standard cost is the cost of producing 1 unit and is recorded in a standard cost card. However, the cost of labor, materials and overhead are used to make a single unit, so
standard cost = unit variable cost = the total cost / the total number of unit.
In this situation, the overheading cost is not gven, so the total cost:
= The cost of labor + materials
= $1,441,800 + $1,762,200
= $3204000
=> standard cost = $3204000 / 534,000 = $6
(b) a budgeted cost represents the total costs
The total number of units * standard cost
= 534,000 * 6
= $3204000
Trio Company reports the following information for the current year, which is its first year of operations.
Direct materials $ 11 per unit
Direct labor $ 16 per unit
Overhead costs for the year
Variable overhead $ 2 per unit
Fixed overhead $ 100,000 per year
Units produced this year 25,000 units
Units sold this year 19,000 units
Ending finished goods inventory in units 6,000 units
Requried:
1. Compute the product cost per unit using absorption costing.
Answer:
Unitary product cost= $33
Explanation:
Giving the following information:
Direct materials $ 11 per unit
Direct labor $ 16 per unit
Overhead costs for the year
Variable overhead $ 2 per unit
Fixed overhead $ 100,000 per year
Units produced this year 25,000 units
Under the absorption costing cost method, the unitary product cost is calculated using the direct material, direct labor, and total unitary overhead.
First, we need to calculate the unitary fixed overhead:
Unitary fixed overhead= 100,000/25,000= $4
Unitary product cost= 11 + 16 + (2 + 4)= $33
Your firm is a U.K.-based importer of bicycles. You have placed an order with an Italian firm for €1,000,000 worth of bicycles. Payment (in euro) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a pound-denominated receivable with a one-year maturity.
Contract Size Country U.S. $ equiv. Currency per U.S. $
£ 10,000 Britain (pound) $ 1.9600 £ 0.5102 interest APR
12 months forward $ 2.0000 £ 0.5000 rates
€ 10,000 Euro $ 1.5600 € 0.6410 i$ = 1 %
12 months forward $ 1.6000 € 0.6250 i€ = 2 %
SFr. 10,000 Swiss franc $ 0.9200 SFr. 1.0870 i£ = 3 %
12 months forward $ 1.0000 SFr. 1.0000 iSFr. = 4 % The following were computed without rounding. Select the answer closest to yours.
A. £803,721.49
B. €800,000
C. £780,312.13
D. £72,352.94
Answer:
( A) £803,721.49
Explanation
==> Present value of €1,000,000 = 1000000/1.02 = €980,392.16
===> Converting Euro into US Dollar using spot exchange rate
€980,392.16×1.56 = $1,529,411.77
===>Converting US Dollar into Pounds using spot exchange rate
$1,529,411.77/1.96 = £780,312.13
===> investing this amount in UK
==>the amount of €1,000,000 is collected from French firm and it is used to repay the Euro loan
Step – 5 maturity value of pounds investment is received
£780,312.13 × 1.03 = £803,721.49
Therefore the answer is £803,721.49
Cooperton Mining just announced it will cut its dividend from $4 to $2.50 per share and use the extra funds to expand. Prior to the announcement, Cooperton’s dividends were expected to grow at a 3% rate, and its share price was $50. With the planned expansion, Cooperton’s dividends are expected to grow at a 5% rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton’s risk.) Is the expansion a good investment?
Answer: Share price after announcement is $41.67.
The Expansion is not a good investment.
Explanation:
To solve this we would need to first calculate the cost of equity. Given the Initial stock price as well as the dividend and growth rate, we are able to calculate the cost of equity using the Gordon Growth Formula which is,
Sp = D1/ (r - g)
Where,
Sp is stock price
D1 is the next dividend
r is cost of equity
g is growth rate.
Inserting the figures we have,
50 = 4 / ( r - 3%)
50 ( r - 3%) = 4
r = 4/50 + 3%
r = 11%
Given that we now know r, we can calculate the new stock price using the same formula,
Sp = D1/ ( r - g)
Sp = 2.5 ( 11% - 5%)
Sp = $41.67
The stock price after the announcement became $41.67.
The Expansion is NOT a good investment as it leads to a reduction in Stock Price.
Rachel's Designs has 1,800 shares of 5%, $50 par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The company plans to pay total dividends of $15,000 in 2021. How much of the $15,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders?
Answer:
Out of $15,000, the $13500 will be paid to preference stockholders and the remaining $1500 will be paid to equity stockholders
Explanation:
Given the information:
Rachel's Designs has 1,800 shares of 5%, $50 par value
The company plans to pay total dividends of $15,000 in 2021
For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:
= Number of shares × par value per share × dividend rate
= 1,800*$50*5%
= $4,500
Since in 2019 and 2020 the dividend is not paid
The dividend arrears for 2019 and 2020 would be:
= $4,500 + $4,500
= $9000
=> The total dividend is:
= $4,500 + $9000
= $13,500
So, for the common stockholder, it is
= $15,000 - $13,500
= $1500
Hence, out of $15,000, the $13500 will be paid to preference stockholders and the remaining $1500 will be paid to equity stockholders
Department S had no work in process at the beginning of the period. It added 12,200 units of direct materials during the period at a cost of $97,600. During the period, 9,200 units were completed, and 3,000 units were 25% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $73,630, and factory overhead was $17,910. The total cost of units completed during the period was
Answer:
Cost of completed units = $158,240
Explanation:
Cost of completed units = Cost per equivalent unit × no of units
Equivalent unit = Degree of completion × units of work
Equivalent units of material
( 9200× 100%) + (3000×100%) = 12,200 unit
Cost per equivalent unit of material = $97,600/12,200 units= $8
Equivalent units of labour and overhead
(9200× 100%) + (3000× 25%) = 750
Cost per equivalent unit of labour and overhead
=( 73,630+17910)/9950 =$9.2
Cost of completed units
= $(9.2+8)× 9,200 = 158,240
Cost of completed units = $158,240
Minneapolis Federal Reserve Bank economist Edward Prescott estimates the elasticity of the U.S. labor supply to be 3. Given this elasticity, what would be the impact of funding the Social Security program with tax increases on the number of hours worked and on the amount of taxes collected to fund Social Security? Because labor supply is elastic, raising the tax rate will the percent of hours worked by than the percent decrease in wages paid. That is, total income will and total revenue collected by taxes will . Social Security be financed by increasing tax rates.
Answer:
The impact of funding the Social Security program with tax increases on the number of hours worked and on the amount of taxes collected to fund Social Security would be:
Because labor supply is elastic, raising the tax rate will reduce the percent of hours worked by more than the percent decrease in wages paid.
Explanation:
The reason behind this answer is that in the first place labor supply is elastic in other words it has no strict guidelines. Therefore, it can be executed in many different ways even after following the federal law of employment. Also, the tax rate replacement will be bigger than the percent decreased in wages aid because the company can find different turns to distribute it even when executing the funding of the program without exceeding it. Because social security can't be increase by raising taxes. The income will fall and the income from taxes will increase.
With a labor supply elasticity of 3, funding Social Security with tax increases would likely decrease the number of hours worked more so than the percentage decrease in wages, leading to a decrease in total income and possibly lower tax revenues for Social Security.
Given an estimated labor supply elasticity of 3, if the U.S. government were to fund Social Security through tax increases, the impact on the labor market may have several implications. First, the labor supply curve is responsive to wage changes. With a higher elasticity value, like 3, a percentage decrease in after-tax wages, from an increased tax burden, would lead to a more substantial percentage decrease in the hours worked. In other words, workers would reduce their labor supply more significantly due to the higher cost of working.
Based on this elastic labor supply, raising taxes to finance Social Security will decrease the percent of hours worked by more than the percent decrease in wages paid to workers. As a result, total income will decrease as workers choose more leisure over labor due to reduced after-tax wages. Consequently, total revenue collected from these taxes for Social Security might also decrease rather than increase because the reduced hours worked will lead to less taxable income overall.
This situation relates to the concept of tax incidence, which considers that regardless of who is legally responsible for paying a tax, the economic burden is distributed according to the relative elasticities of supply and demand. If labor supply is relatively elastic while labor demand is inelastic, workers suffer more from the tax burden. This is also linked to the concept of distortionary effects which suggests that taxes can alter individuals' behavior, possibly leading them to work less.
While proponents of supply-side economics may argue that lowering taxes could incent workers to work more, leading to increased tax revenues, this argument seems inapplicable in the scenario with high labor supply elasticity and increased taxes. Instead, any tax increase might result in the opposite effect, with reduced labor supply leading to lower total tax revenues.
Consider a Caribbean cruise route served by two cruise lines, Carnival and Royal Caribbean. Both lines must choose whether to charge a high price ($320) or a low price ($300) to vacationers. These price strategies with corresponding profits are illustrated in the payoff matrix to the right. Carnival's profits are in red and Royal Caribbean's are in blue. Suppose the cruise lines decide to collude. At which outcome are joint profits maximized?
Answer:
Consider a Caribbean cruise route served by two cruise lines, Carnival and Royal Caribbean. Both lines must choose whether to charge a high price ($320) or a low price ($300) to vacationers. These price strategies with corresponding profits are illustrated in the payoff matrix to the right. Carnival's profits are in red and Royal Caribbean's are in blue. Suppose the cruise lines decide to collude. At which outcome are joint profits maximized?
Joint profits are maximized when Carnival picks $320 and Royal Caribbean picks $320.
Explanation:
When Carnival picks $320 and Royal Caribbean picks $320, then joint profits are maximized.
Nash equilibrium would exist only when Royal chooses $300 and the carnival chooses $300.
However, if both Carnival and Royal Caribbean charge a lower price, both of them can earn a higher profit.
Carnival and Royal Caribbean can collude to set prices and act like a monopoly, which involves reducing output and raising prices to maximize profits.
Explanation:In the scenario presented, Carnival and Royal Caribbean have the option to collude and set their prices to maximize joint profits. Collusion would involve agreeing to charge the same price to eliminate competition and act like a monopoly.
When firms collude in such a manner, they tend to reduce output and increase prices to maximize profits, just like a monopolist would. In the context of a payoff matrix, colluding to charge a higher price would typically result in higher joint profits when compared to both firms charging a low price.
For a perfectly competitive firm, the goal is to maximize profit by finding the level of output where total revenue exceeds total costs by the greatest amount, as demonstrated by the provided example of a raspberry farm with revenue and costs data.
No variable overhead is incurred or budgeted. The expected cash balance at the end of the current year is $3,500. Disbursements other than for direct materials and direct labor are expected to occur in the quarter incurred. Fixed overhead expenses include $1,000 for depreciation. What is the budgeted excess or (deficiency) in cash flows at the end of the first quarter
Answer:
$23,000
Explanation:
The computation of the budgeted excess or (deficiency) in cash flows is shown below:-
Budgeted excess or (deficiency) in cash flows at the end of the first quarter = Cash Inflows - Cash Outflows
=$60,000 - $25,000 - ($8,000 - $1,000) - $5,000
= $60,000 - $25,000 - $7,000 - $5,000
= $23,000
Therefore for computing the Budgeted excess or (deficiency) in cash flows at the end of the first quarter we simply applied the above formula.
Michael Perez deposited a total of $2000 with two savings institutions. One pays interest at a rate of 5%/year, whereas the other pays interest at a rate of 7%/year. If Michael earned a total of $112 in interest during a single year, how much did he deposit in each institution
Answer:
$1,400
Explanation:
Let us assume the interest rate 5% be 0.05X = X
And, for interest rate 7% be 0.07X = Y
So the first equation is
X + Y = $2,000 ................ (1)
And, the second equation is
0.05X + 0.07Y = $112 .................. (2)
Now multiply the 0.05 in equation 1
0.05X + 0.05Y = 100
0.05X + 0.07Y = $112
Now solving these above equations
0.02Y = 12
Y = 600
Now put the Y values to the first equation
X + 600 = $2,000
Y = $1,400
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. B14 Model F54 Model Investment $ 330 comma 000 $ 230 comma 000 Useful life (years) 10 10 Estimated annual net cash inflows for useful life $ 80 comma 000 $ 33 comma 000 Residual value $ 10 comma 000 $ 18 comma 000 Depreciation method Straightminusline Straightminusline Required rate of return 12% 8% What is the net present value of the B14 Model?
Answer:
NPV = $125,237.6
Explanation:
Net Present Value (NPV) : This is one of the techniques available to evaluate the feasibility of an investment project. The NPV of a project is the difference between the present value of the cash inflows and the cash outflows of the project.
Net Present Value of Model B14
Present Value (PV) of annual cash inflow = A× (1- (1+r)^(-n) )/r
A- annual cash inflow - 80,000, r-12%, n- 10
PV of cash inflow = 80,000× ((1- (1.012)^(-10))/0.12 = 452,017.84
PV of Scrap value = F× (1+r)^(-n)
= 10,000 × (1.12)^(-10)
= 3,219.73
NPV = 452,017.84+ 3,219.73 - 330,000 = 125,237.57
NPV = $125,237.6
Answer:
$125,238
Explanation:
Net present value is the Net value all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.
B14 Model F54 Model
Investment $330,000 $230,000
Useful life (years) 10 10
Estimated annual net cash inflows $80,000 $33,000
Residual value $10,000 $18,000
Required rate of return 12% 8%
B14 Model
First calculate Present value of each cash flow.
PV of Initial investment = $330,000
Present value of cash inflows = $80,000 x [ 1 - ( 1 + 12% )^-10 / 12% ] = $452,018
Present value of Residual value = $10,000 x ( 1 + 12% )^-10 = $3,220
Net present value = PV of Initial investment + Present value of cash inflows + Present value of Residual value
NPV = $(330,000) + $452,018 + $3,220 = $125,238
Explain how the recognition that macroeconomic policymaking is an inexact science affects your recommended policy response to the following situations: a. Your estimate of the natural rate of unemployment is 5 percent, and the actual unemployment rate is 5.5 percent. If you recognize macroeconomic policymaking as an inexact science, you would interpret that the difference is: serious enough to require a policy change. not a measurement error, but not serious enough to warrant a policy change. due to a difference in unemployment expectations. due to a measurement error. b. Your estimate of the natural rate of unemployment is 5 percent, and the actual unemployment rate is 8 percent. Your understanding will be that: it is a measurement error. unemployment has risen above the natural rate. macroeconomics is an inexact science. people's expectations are unemployment are very high.
Answer:
a. If you estimated that the natural rate of state is 5%, and therefore the actual proportion is 5.5%, therefore to understand the economic science policy making is associate approximate knowledge which would possibly mean that you might interpret the distinction as existence of an error in the results and thus it is not justify any change in policy.
b. If you estimated that the natural rate of state is 5%, and therefore the actual proportion is 8%, thus it is given the inaccuracy of economic science policy making, you're doubtless to consider that state has up considerably higher than the expected level. Conversely, you'd not acumen extended it'd hold policy to have an effect on a modification within the proportion.
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit $420 Variable costs per unit: Manufacturing $260 Marketing and administrative $40 Total fixed costs: Manufacturing $770,000 Marketing and administrative $200,000 If a special sales order is accepted for 4000 seats at a price of $375 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Answer:
$460,000 increment in the operating income
Explanation:
Production = 75000
Unit sales price = $420
Sales revenue 31,500,000
Cost of sales
Manufacturing (260*75000) 19,500,000
Gross profit 12,000,000
Marketing and admin (40*75000) 3,000,000
Manufacturing 770000
Marketing * Admin 200000
Operating income 8030000
Revenue for special order = 375*4000 = 1,500,000
Manufacturing cost =4000*260 1,040,000
Gross profit 460,000
There will be an increment of $460,000 in the operating income.
Final answer:
The operating income of Sky High Seats would increase by $460,000 if the company accepts the special sales order for 4,000 seats at $375 per unit, as the fixed costs remain unchanged and no variable marketing and administrative costs will be incurred for this order.
Explanation:
To determine how Sky High Seats' operating income will be affected by the special sales order of 4,000 airplane seats at $375 each, we can calculate the incremental profit from the order.
Special Order Revenue = 4,000 seats imes $375 per seat = $1,500,000
Total variable costs for the special order are only from manufacturing since the marketing and administrative costs do not apply. So, the variable cost per unit is $260.
Special Order Variable Costs = 4,000 seats imes $260 per seat = $1,040,000
Incremental profit is then calculated by subtracting the special order variable costs from the special order revenue.
Incremental Profit = Special Order Revenue - Special Order Variable Costs = $1,500,000 - $1,040,000 = $460,000
Since the fixed costs remain unchanged, the incremental profit represents the amount by which the operating income would increase if Sky High Seats accepts the special order.
Consider two products, X and Y, that have identical cost, retail price, and demand parameters and the same short selling season (the summer months from May through August). The newsvendor model is used to manage inventory for both products. Product X is to be discontinued at the end of the season this year and the leftover inventory will be salvaged at 75 percent of the cost. Product Y will be reoffered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each unit left over equal to 20 percent of the product's cost. The quantity of each product is selected to maximize expected profit. How do those quantities compare?
Answer: b. stocking quantity of product B is higher.
Explanation:
We are using the Newsvendor model and are told that the products have identical cost, retail price, and demand parameters and the same short selling season.
Using this model, it is important to understand 2 terminologies for this question, Overage cost and Underage costs.
Overage Costs is the cost of unused inventor and is calculated by subtracting Salvage Value from the cost price.
Underage costs are costs arising from unmet Demand. In this scenario they are the same because both products share the same demand.
The Overage costs for the products are,
Overage cost for Product X =100-75
=25%
Overage cost for Product Y = 20%
When deciding which product to stick more of we look at the one with the higher CRITICAL RATIO.
The formula of which is,
= Cu/(Cu+Co)
Where,
Cu is the Underage cost,
Co is the Overage cost
As earlier mentioned, both have the same Underage cost meaning that B will give a higher CRITICAL ratio as it's Co is smaller.
Product B should therefore be stocked more than Product A.
Answer:
Stocking quantity of product B is higher
Explanation:
Overage cost for Product A(Co)=100-75=25%
Overage cost for Product B (Co)=20%
The underage cost (Cu) for both the products is same hence critical ratio i.e, Cu/(Cu+Co) is lower for product A than Product B which means product B should will be stocked more compare to product A
So the correct answer will be stocking quantity of product B is higher
Suppose you have two types of customers. Type 1 customers typically purchases your firm's product in bundles of 100 units, while type 2 customers typically purchase less than 10 units. The cost of producing one unit is $1 plus packaging costs. Packaging costs $1 per unit for small orders, but only $10 for a bundle of 100 units. Finally, suppose type 1 buyers have a price elasticity of demand equal to -2, while type 2 buyers have an elasticity equal to -1.25. a. What is the marginal cost of selling 100 units to a Type 1 buyer
Answer:
The marginal cost of selling 100 units to a Type 1 buyer is $110
Explanation:
In order to calculate the marginal cost of selling 100 units to a Type 1 buyer we would have to use the following formula:
Marginal Cost of selling 100 units to type 1 buyer=MC1= Marginal Cost of producing 100 units+Packaging cost
Therefore, Marginal Cost of selling 100 units to type 1 buyer=MC1
=1*100+10=$110
The marginal cost of selling 100 units to a Type 1 buyer is $110
What benefits do you see to an organization where there are no job titles, no managers, and no hierarchy?
Answer:
Holocratic Organization have no structure this is not possible to manage the work if your business is very big(organization)
A boundaryless organization fosters higher job satisfaction, personal growth, and a sense of ownership for employees, but can also lead to role ambiguity, limited advancement opportunities, and potentially less job security.
Advantages of a Boundaryless Organization
One of the advantages of being employed by a boundaryless organization is the promotion of self-managed teams. By reducing hierarchy, team members can complete tasks and solve problems independently, leading to higher job satisfaction, increased self-esteem, and significant opportunities for personal growth. The organizational benefits include increased productivity, flexibility, and lower turnover rates. For lower-level employees, this structure can provide a stronger sense of ownership over their work. Additionally, the absence of hierarchy fosters a collegial environment where even entry-level employees can provide feedback to directors.
Disadvantages of a Boundaryless Organization
However, a boundaryless organization might not be without its drawbacks. Without the traditional structure of a hierarchy, employees might experience role ambiguity and a lack of guidance. Opportunities for advancement may also be limited due to fewer management layers. Although such organizational structures may satisfy an employee's self-actualization needs, they might not provide the same level of job security that comes with working in more traditional, hierarchically structured companies.
Suppose there is a rash of pickpocketing. As a result, people want to keep less cash on hand, decreasing the demand for money. Assume the Fed does not change the money supply. According to the theory of liquidity preference, the interest rate will _______, which causes aggregate demand to ______. If instead the Fed wants to stabilize aggregate demand, it should _______ the money supply by _______ government bonds.
Answer:
Fall;rise.
Decrease;selling.
Explanation:
Suppose there is a rash of pickpocketing. As a result, people want to keep less cash on hand, decreasing the demand for money. Assume the Fed does not change the money supply. According to the theory of liquidity preference, the interest rate will fall, which causes aggregate demand to rise.
If instead the Fed wants to stabilize aggregate demand, it should decrease the money supply by selling government bonds.
Answer:
Fall & rise
decrease & selling
Explanation:
The Liquidity Preference Theory in all stated that the demand for money is not necessary to borrow money but the desire to remain liquid that is there will be money is the interest rate Keynes in his definition of the liquidity preference theory stated the 3 motives behind this theory;they are;
a. transactions motive
b. precautionary motive
c. speculative motive
CarPro is an automobile dealer selling only new cars. CarPro sells three types of vehicles: sedans, SUVs and trucks. CarPro places orders to the car manufacturers only when customers have decided to purchase. The ordering cost (per unit) of sedan, SUV and truck are $18,000, $20,500 and $19,000, respectively. The sales price (per unit) of sedan, SUV and truck are $20,000, $23,000, and $21,500, respectively. The base salary for a sales person is $100/day. In addition, a sales person gets a commission of 5% on the selling price of cars he sells. Each sales person works 8 hours a day. A sales person spends two hours selling a sedan, three hours selling an SUV, and two-and-a-half hours selling a truck. CarPro can spend a maximum of $300,000 per day on ordering cars. How many of each type of car should CarPro sell to maximize profits?
Answer:
14 truck and 1 suv produce 21,800 profit
Explanation:
We have to solve for the contribution margin considering the constraing resourse which, is the ordering cost:
[tex]\left[\begin{array}{cccc}&sedan&SUV&truck&\\$NRV&19000&21850&20425&\\$Cost&-18000&-20500&-19000&\\$CM&1000&1350&1425&\\$Constrain resource&18000&20500&19000&\\$CM per constrain&0.05556&0.0659&0.075&\\\end{array}\right][/tex]
The card models revenue is calcualted using the net realizable value for each card, which is their sales price less the 5% sales commission.
Then we solve for how many truck will it purchase:
300,000 / 19,000 = 15,78
So the company will purchase 15 trucks
giving 15 x 1,425 = 21,375
This will require 2.5 x 15 = 37.5 hours thus 5 sales man (40 labor)
This creates 2.5 hours unsured
and also 300,000 - 15,000 x 19,000 = 15,000 dollar which are not productive
So, we will try to make a better use to purchase the SUV which is the second best option instead of the 15th truck:
giving 14 x 1,425 + 1350 = 21,300
we subtract the 500 dollar of sales man and get a 21,800 profit
with less unproductive dollar. So this will be the answer
Mary traded furniture used in her business to a furniture dealer for some new furniture. Mary originally purchased the furniture for $40,000 and it had an adjusted basis of $20,000 at the time of the exchange. The new furniture had a fair market value of $35,000. Mary also gave $5,000 to the dealer in the transaction. What is Mary's adjusted basis in the new furniture
Answer:
$25,000
Explanation:
In the case of exchange of asset the adjusted basis of new asset will be equals to the the adjusted basis of old assets at the time of exchange and any consideration payment resulted from exchange of assets.
In this question the old furniture has adjusted basis of $20,000 at the time of exchange and Mary paid additional $5,000 for the exchange of furniture.
Adjusted Basis = Adjusted basis of old furniture at the time of exchange + Consideration for the exchange of furniture
Adjusted Basis = $20,000 + $5,000 = $25,000
Mary’s adjusted basis in the new furniture is $25,000, calculated by adding the adjusted basis of the old furniture ($20,000) plus the cash paid ($5,000).
This question involves a like-kind exchange, which is common in business when trading assets. To determine Mary's adjusted basis in the new furniture, we use the following calculation:
Initial adjusted basis of old furniture: $20,000Cash paid: $5,000Total adjusted basis for the new furniture: $20,000 + $5,000 = $25,000The new furniture's fair market value does not affect this calculation directly.
You want to buy industrial ethanol and you have $125USD to spend. The domestic price is $0.7USD per liter. You can also buy ethanol with free shipping from Canada and Mexico. The price in Canada is $0.5CD and the price in Mexico is 10 pesos per liter. The spot US-CA exchange rate is $0.85 USD and the CA-MX exchange rate is 16₱. From what country should you buy your ethanol and how much can you afford to buy?
Answer:
Canada.
Explanation:
The exchange rates is given below;
=> Mexican Peso to Canadian dollar = 16.
=> USD to Canda = 0.85.
=> The Cross rate for USD to Mexican Peso = 0.053125.
=> Cross rate for USD to Mexican Peso = 0.85/16.
In the United States of America Available funds in domestic currency =
125.00, 125.00.
In the United States of America the Domestic price per litre = 0.7.
US Litres purchased = 178.57.
For Canada and Mexico, the Available funds in domestic currency,
125/0.85; 147.06(Canada)
125/0.053125; 2,352.94 (Mexico).
For Canada and Mexico, the Domestic price per litre;
0.50(Canada) 10.00(Mexico).
Litres purchased for Canada and Mexico;
294.12(Canada) 235.29(Mexico).
You should buy your ethanol from Canada and you can afford to buy 294 liters."
To determine from which country you should buy the ethanol and how much you can afford, we need to calculate the cost per liter of ethanol in USD for each country and then compare the results.
First, let's calculate the cost per liter in USD for each country:
1. Domestic price: $0.7 USD per liter.
2. Canadian price: $0.5 CD per liter.
To convert to USD, we use the US-CA exchange rate: $0.5 CD * $0.85 USD/CD = $0.425 USD per liter.
3. Mexican price: 10 pesos per liter.
To convert to USD, we first convert pesos to Canadian dollars using the CA-MX exchange rate, and then convert Canadian dollars to USD using the US-CA exchange rate:
10₱ * 1/16 CD/₱ = $0.625 CD per liter.
Then, $0.625 CD * $0.85 USD/CD = $0.53125 USD per liter.
Now that we have the cost per liter in USD for each country, we can compare them:
- Domestic: $0.7 USD/liter
- Canada: $0.425 USD/liter
- Mexico: $0.53125 USD/liter
The Canadian price is the cheapest.
Next, let's calculate how much ethanol you can afford to buy with $125 USD from Canada:
Amount of ethanol you can buy = Total budget / Cost per liter
= $125 USD / $0.425 USD/liter
= 294.11765 liters
Since you cannot buy a fraction of a liter, you can afford to buy 294 liters of ethanol from Canada.
Therefore, the best option is to buy the ethanol from Canada, and you can afford to buy 294 liters with your budget of $125 USD.
The answer is: You should buy your ethanol from Canada and you can afford to buy 294 liters."
You have just won the lottery and you will receive 10 annual beginning-of-year payments of $5 million each. If you expect to earn a 9% compounded semi-annually, what will be the current value of the lottery payments?
Answer:
Current value of lottery=$ 33,983,233.98
Explanation:
The value of the lottery is the Present of the annual cash flow discovered at the discount rate of 9% compounded semi annually.
Semi-annual rate = 9%/2 = 4.5%
PV =A × (1- (1+r)^(-n)/r
A- 5,000,000/2= 2,500,000. r- 4.5%, n- 2 × 10 = 20
The first payment is already in its present value term, hence it is already discounted.
The balance of 19 payments would be discounted as follows
PV = 2,500,000 × (1- (1.045)^(-19)/0.045
= 31,483,233.98
Current value of lottery = 2,500,000 + 31,483,233.98
=$ 33,983,233.98
Marsh Corporation purchased a machine on July 1, 2015, for $1,500,000. The machine was estimated to have a useful life of 10 years with an estimated salvage value of $84,000. During 2018, it became apparent that the machine would become uneconomical after December 31, 2022, and that the machine would have no scrap value. Accumulated depreciation on this machine as of December 31, 2017, was $354,000. What should be the charge for depreciation in 2018 under generally accepted accounting principles
Answer:
$229,200
Explanation:
The carrying value of the machine as of December 31, 2017, was $1,500,000 (purchase cost) - $354,000 (accumulated depreciation) = $1,146,000.
Since the machine's useful remaining life was reduced by 3 years, the depreciation amount should reflect this. The remaining useful life of the machine is 5 years (2018 - 2022), so the company can increase the depreciation expense per year to $1,146,000 / 5 = $229,200.
That way at the end of 2022 the carrying value will be $0, since the machine has no salvage value.