Answer:
The correct answer is (C)
Explanation:
If a firm in a monopolistic market is earning an economic profit, it allows other new firms producing the same product to enter the market. So, in long-run new firms will enter the market and create a competitive environment. The firms will keep on entering until every firm achieves normal profits, and till the economic profit is zero.
To have a monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalites create or remove barriers to entry? Explain. Network externalities ______.
(A) create barriers to entry because a firm efficiently offers products that satisfy consumer preferences.
(B) remove barriers to entry because such externalities require multiple firms to provide the goods and services in the network.
(C) create barriers to entry because consumption of a firm's product decreases the value of goods and services produced by other firms.
(D) create barriers to entry because if a firm can attract enough customers initially, it can attract additional customers as its product's value increases by more people using it, which attracts even more customers.
(E) create barriers to entry because economies of scale are so large that one firm can supply the entire market at lower average total cost than can two or more firms.
Answer: Option D
Explanation: Network externalities are indeed an economic principle that defines the conditions in which a product or service's value increases or decreases as the number of customers increases or declines.
As the availability of an item raises the price of the product falls it becomes less valuable, according to the traditional economic theory. This is termed "positive externalities of the network" or "network influence."
Thus, somehow it creates barriers for other firms by prepairng a strong customer base for an experienced firm.
Assume that you starting a new retail shop business of selling premium and basic T-shirts in DeKalb. Name the various parts of your supply chain you will need (Drawing your supply chain flowchart can be your answer here) Describe the key strategies you will use in supplier selection and transportation/ logistics choices. (You can make any assumptions about your business as you feel. Show any numerical values to any parameter you feel will describe your thoughts better.) 2) Problem: What will be your measures of O
Answer:
Consider the following explanation
Explanation:
Key strategies to select the supplier:
Set your criteria- A list is to be created of the suppliers which can provide the needed products. They must fulfill the conditions applied by the firm, like the optimum quality, payment policies, return policies, etc. Define your process- The process which company want to follow to get the supply from the supplier must be define prior. Call for bids- Now the suppliers are invited for the bids. This is known as Request for Proposal. The full details of the products which are needed by the company are told to them. Now record their replies. Evaluate the bid submissions- Now there is the comparison of the bids of different suppliers. Through the correct analysis and evaluation, the supplier is chosen. Monitor the supplier- The selected supplier’s performance is monitored closely. They should conduct the regulate performance review. The company got satisfied with the performance and start giving them orders.
Key strategies for selecting the logistics:
Cultural alignment- The logistics selected must be operated both culturally and operationally. It affects the carrying cost, obsolescence cost, customer service cost, etc. When the 2 parties are not agreed an these points, then rest are ignored. Company infrastructure- The logistic company must have the good infrastructure. It should have those capabilities to provide proper supply chain visibility. IT capabilities- The company must have the optimum technology to be used in the business. The IT capabilities is essential for providing the global logistic services. Cost- The cost is always a important factor to select any logistics. It should not be too expensive. If company can afford that then only it will get selected. Before setting any benchmarks, the cost should be decided early. Intangible services- it should also provide extra value added services. It gives benefits to both the firms. They jointly invest in their common success.
Final answer:
The various parts of the supply chain in a retail shop business selling T-shirts and the key strategies for supplier selection and transportation/logistics choices.
Explanation:
In a retail shop business selling premium and basic T-shirts in DeKalb, the supply chain includes various parts such as suppliers, manufacturers, distributors, and retailers. Here is a flowchart representing the supply chain:
For supplier selection, key strategies can include considering the supplier's reliability, quality of products, pricing, and responsiveness to changes in demand. In terms of transportation and logistics choices, the business can choose between various modes of transportation (such as road, air, or sea) based on factors like cost, speed, and reliability.
Alternative explanations of wage disparities
Suppose that a labor economist finds that one of her research subjects has earned significantly higher wages throughout his lifetime than would be predicted by standard measured variables. The economist also notes that each of the subject's positions was found through connections at his family's exclusive country club.
Which one of the following most likely explains this person's unusually high earnings?
A. Effort
B. Efficiency wages
C. Chance
D. Compensating differentials
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Final answer:
The unusually high earnings of the subject can likely be explained by the power of networking and personal connections, revealing the influence of social capital on wage disparities.
Explanation:
The unusually high earnings of the labor economist's research subject can most likely be explained by the influence of networking and the access to exclusive job opportunities through connections. This highlights the role that social capital and networking play in wage disparities, which is not explicitly listed in the options provided (A. Effort, B. Efficiency Wages, C. Chance, D. Compensating Differentials). While efficiency wage theory explains how pay can impact productivity and motivate employees, it does not account for the sociological factors at play where personal connections can lead to higher wages, regardless of productivity or effort. Employment discrimination, discussed by economist William A. Darity Jr., also offers insights into how systemic factors contribute to wage disparities beyond individual qualifications or market forces.
A review of Plunkett Corporation's accounting records for last year disclosed the following selected information. Variable Costs Direct materials used $ 56,000 Direct labor $179,000 Manufacturing overhead $154,000 Selling costs $108,400 Fixed costs Manufacturing overhead $267,000 Selling costs $121,000 Administrative costs $235,900 What were Plunkett's product costs and period costs for last year?
Answer:
$656,000 and $465,300
Explanation:
The computation of the product cost is shown below:
= Direct materials used + Direct labor + variable manufacturing overhead + fixed manufacturing overhead
= $56,000 + $179.000 + $154,000 + $267,000
= $656,000
The computation of the period cost is shown below:
= Variable selling cost + fixed selling cost + Administrative costs
= $108,400 + $121,000 + $235,900
= $465,300
Yerke Company makes jungle gyms and tree houses for children. For jungle gyms, the price is $120 and variable expenses are $90 per unit. For tree houses, the price is $200 and variable expenses are $100.
Total fixed expenses are $253,750. Last year, Yerke sold 12,000 gyms and 4,000 tree houses.
Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units.
What is the new (combined, overall or package) contribution margin ratio (rounded to two decimal places)?
a. 60%
b. 62%
c. 50%
d. 40%
e. 38%
Answer:
Option (e) is correct.
Explanation:
Jungle gyms:
Contribution margin per unit:
= Selling price - variable expenses
= $120 - $90
= $30
No. of units sold = 12,000
Tree houses:
Contribution margin per unit:
= Selling price - variable expenses
= $200 - $100
= $100
No. of units sold = 8,000
New sales mix ration = 12,000:8,000
= 3:2
Contribution margin ratio:
= (Contribution ÷ Sales) × 100
= [($30 × 3) + ($100 × 2) ÷ ($120 × 3) + ($200 × 2)] × 100
= $290 ÷ $760
= 38%
HighGrowth Company has a stock price of $ 23. The firm will pay a dividend next year of $ 1.19, and its dividend is expected to grow at a rate of 3.7 % per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is nothing%
Answer:
Cost of equity = 8.87%
Explanation:
Given that,
Stock price = $23
Firm will pay a dividend next year = $1.19
Dividend is expected to grow at a rate = 3.7 % per year thereafter
cost of equity = (Dividend next year ÷ Stock price) ÷ Dividend growth rate
cost of equity = ($1.19 ÷ $23) + 3.7%
cost of equity = 5.17% + 3.7%
cost of equity = 8.87%
Final answer:
To estimate HighGrowth's cost of equity capital, you can use the Dividend Discount Model. Given a stock price of $23, a dividend of $1.19 next year, and a growth rate of 3.7%, the estimated cost of equity would be approximately 8.87%.
Explanation:
The student is asking how to estimate the cost of equity capital for HighGrowth Company using the dividend discount model (DDM).
According to the DDM, if a company is expected to pay a dividend of $1.19 next year and that dividend is expected to grow at a rate of 3.7% per year, with the current stock price at $23, the cost of equity can be estimated using the formula:
Cost of Equity = (Dividend_Year1/Current Stock Price) + Growth Rate
In this case:
Cost of Equity = ($1.19 / $23) + 3.7%
Calculating this, we would have:
Cost of Equity = 0.0517 + 0.037 = 0.0887 or 8.87%
Therefore, your estimate of HighGrowth's cost of equity capital would be approximately 8.87%.
What is National Bank’s role in the interest rate swap and how much will they be compensated for their involvement in this transaction?
Solution:
The role of the National Bank is an interest rate swap trader. This works for LC Inc. and Halogen as an agent. Through earning 10 percentage points over a study number, or $200,000 per year, National Bank will be paid for their participation.
National Bank Compensation:
Receives 3.1% Fixed Pays 3% Fixed Receives 6-Month LIBOR Pays 6-Month LIBOR Net Compensation 0.1%
Your grandmother has invested $9000 in a mutual fund each year on your birthday (she made her first payment when you turned 1 year old). The mutual fund has grown at an annual interest rate of 6.8%. How much is your account worth on the day of your 21st birthday immediately after your grandmother’s deposit?
Answer:
394,549
Explanation:
this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the future value of future payments affected by an interest rate.by definition the future value of an annuity is given by:
[tex]s_{n} =P*\frac{(1+i)^{n}-1 }{i}[/tex]
where [tex]s_{n}[/tex] is the future value of the annuity, [tex]i[/tex] is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid. so applying to this particular problem, we have:
[tex]s_{21} =9,000*\frac{(1+0.068)^{21}-1 }{0.068}[/tex]
[tex]s_{21} =394,549[/tex]
The marketing manager for an automobile manufacturer is interested in determining the proportion of new compact-car owners who would have purchased a passengerside inflatable air bag if it had been available for an additional cost of $300. The manager believes from previous information that the proportion is 0.30. Suppose that a survey of 200 new compact-car owners is selected and 79 indicate that they would have purchased the inflatable air bags. If you were to conduct a test to determine whether there is evidence that the proportion is different from 0.30 and decided not to reject the null hypothesis, what conclusion could you draw? Group of answer choices
A)There is not sufficient evidence that the proportion is not 0.30.
B)There is sufficient evidence that the proportion is 0.30.
C)There is sufficient evidence that the proportion is 0.30.
D)There is not sufficient evidence that the proportion is 0.30.
Answer:
A)There is not sufficient evidence that the proportion is not 0.30.
Explanation:
When carrying out a statistical test, we always have two types of hypothesis which include null hypothesis and alternative hypothesis. The two hypotheses are opposite of each other, if one rejects one, he/she must accept the other. If the null hypothesis is accepted, it means that there is no statistical significance of the claim. In this case, the null hypothesis is accepted meaning that there is not sufficient evidence that the proportion is not 0.30. Hence, the correct answer is A
Farmers are sometimes paid by the government to grow ________, which can reduce production of less commonly grown fruits and vegetables.
Answer:
Commodity crops.
Explanation:
Commodity crops are crops that are grown for the purpose of sale. They have a lot of uses as they cannot easily spoil and easy to store for a long period of time. They provide a source of food for man around the world and also serve some industrial purposes. Examples are cotton, wheat, corn, barley, meat, diary, etc.
They can reduce production of less commonly grown fruits and vegetables.
One reason channels of distribution often pose longevity problems is that most middlemen
Multiple Choice
a. do not have sufficient knowledge of the target market.
b. lack product knowledge resulting in low sales volume.
c. do not maintain sufficient inventory to serve customers.
d. have little loyalty to their vendors.
e. tend to slow down distribution to extract higher commissions.
Answer:
d. have little loyalty to their vendors.
Explanation:
Brands are handled well by them in good times but as soon as the production fails or not able to meet demand, they start rejecting such products.
NCH Corporation, which markets cleaning chemicals, insecticides and other products, paid dividends of $2.00 per share in 1993 on earnings of $4.00 per share. The book value of equity per share was $40.00, and earnings are expected to grow 6% a year in the long term. The stock has a beta of 0.85, and sells for $60 per share. (The treasury bond rate is 7%.). How much would the return on equity have to increase to justify the price/book value ratio at which NCH sells for currently?
Answer:
The reutrn on equity should be of 9.53%
Explanation:
We can solve the return on equity by considering the gordon model of dividend growth:
[tex]\frac{divends_1}{return_{equity}-growth} = Intrinsic \: Value[/tex]
current dividends 2 dollars
next year dividends: current x (1 + g) = 2 x (1 + 0.06) = 2.12
[tex]\frac{2.12}{return_{equity}-0.06} = 60[/tex]
[tex]\frac{2.12}{60} +0.06= Ke[/tex]
Ke = 0.09533 = 9.53%
Hitzu Co. sold a copier costing $6,500 with a two-year parts warranty to a customer on August 16, 2017, for $13,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2018, the copier requires on-site repairs that are completed the same day. The repairs cost $104 for materials taken from the repair parts inventory. These are the only repairs required in 2018 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 3% of dollar sales. It records warranty expense with an adjusting entry at the end of each year.How much warranty expense does the company report in 2017 for this copier? Varranty expense 2. How much is the estimated warranty liability for this copier as of December 31, 2017? ted warranty liability 3. How much warranty expense does the company report in 2018 for this copier? Warranty expense
Answer:
1) 390 warranty expense
2) 390 warranty liability
3) zero as the amount is deducted from the liability
Explanation:
the warranty expense was determinated using an allowance of 3% of the sale:
$ 13,000 x 3% = $ 390
the warranty liability will be created for the same amount
On 2018 it will decrease the liability against inventory It will not recognize a warranty expense.
ou expect to receive $10,000 at graduation in two years. You plan on investing it at 9 percent until you have $60,000. How long will you wait from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
22.79 years(Approx).
Explanation:
We use the formula:
[tex]A=P(1+\frac{r}{100})^{n}[/tex]
where
A=future value
P=present value
r=rate of interest
n=time period.
[tex]60,000=10,000(1.09)^{n}[/tex]
[tex]\frac{60,000}{10,000}=(1.09)^{n}[/tex]
[tex]6=(1.09)^{n}[/tex]
Taking log on both sides
log 6 = (n × log 1.09)
n = log 6 ÷ log 1.09
= 20.79 years
Hence,
The time to wait from now:
= 20.79 years + 2 years
= 22.79 years(Approx).
To determine how long it will take for an investment to grow from $10,000 to $60,000 at a 9% interest rate, we can use the compound interest formula and solve for the number of years. Using the given values and simplifying the equation, we find that it will take approximately 10.76 years for the investment to reach $60,000.
Explanation:To determine how long it will take for your investment to grow from $10,000 to $60,000 at a 9% interest rate, we can use the compound interest formula.
The formula is:
A = P(1+r/n)^(nt)
Where:
A is the final amount ($60,000 in this case)P is the initial amount ($10,000 in this case)r is the annual interest rate (9% in this case)n is the number of times the interest is compounded per year (assume 1 for simplicity)t is the number of yearsSubstituting the given values, we can solve for t:
60,000 = 10,000(1+0.09/1)^(1*t)
Dividing both sides by 10,000:
6 = (1.09)^t
Take the natural logarithm of both sides:
ln(6) = ln(1.09^t)
Using the property of logarithms ln(a^b) = b * ln(a):
ln(6) = t * ln(1.09)
Dividing both sides by ln(1.09):
t = ln(6) / ln(1.09)
Calculating this using a calculator, we find that t ≈ 10.76.
Therefore, you will need to wait approximately 10.76 years for your investment to grow from $10,000 to $60,000 at a 9% interest rate.
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The amount of planned consumption spending that would take place if real GDP were zero is called:
O induced planned consumption spending.
O exogenous planned consumption spending.
O autonomous planned consumption spending.
O break even planned consumption spending.
Answer:
autonomous planned consumption spending.
Explanation:
Consumption is utility derived from purchase and use of products and services. There are several types of consumption, which are, induced and autonomous consumption. Induced consumption is determined by the level of real GDP. On the other hand, in the absence of real GDP, there will still be consumption which is referred to as autonomous planned consumption spending.
Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely a. have no impact on the growth rate of real GDP per person. b. decrease the growth of real GDP per person for a few years. c. increase the growth of real GDP per person for several decades. d. permanently increase the growth rate of real GDP per person
Answer:
C) Increase the growth of real GDP per person for several decades.
Explanation:
Currently, the U.S. government is running a deficit of about 4% of GDP. This deficit affects economic growth, it causes tax increases or even more debt, and it leads to the misallocation of resources.
If the U.S. undertook a policy to increase national saving, it could reduce the deficit, or even, run a surplus. Under a surplus budget, the government could reduce taxes, or keep them low, and use most of the tax revenue for investments that produce growth, for example: infraestructure.
Swifty Corporation records purchases at net amounts. On May 5 Swifty purchased merchandise on account, $85000, terms 2/10, n/30. Swifty returned $5400 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. The amount to be recorded as a purchase return is $5400. $5508. $5292. $4860.
Answer:$5400
Explanation:
In sales merchandise a seller can give a trade or a cash discount. A trade discount is giving based on the volume of sales, while a cash discount is giving to encourage prompt cash payment and it will be accorded the buyer once the conditions of payment is met.
The above scenario is a cash discount which means 2% cash discount will be giving if payment is made whithin 10 days and it should be made within 30 days. The amount of cash discount is there after deducted from the income statement as an expenses, though for the trade discount this is deducted directly to the sales journal.
Swift only return goods of $5400 and this is the amount to be recognized as purchase return.
Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $8 per unit of average inventory. Every time an order is placed for more of item X, it costs $16.
To determine the order size for item X, use the Economic Order Quantity formula.
a. The order size should be 400 units.
b. The annual ordering cost is $64 and
c. the annual holding cost is $1,600.
a. To determine the order size for item X, we need to use the Economic Order Quantity (EOQ) formula. The formula is given by:
EOQ = √(2DS/H)
Where:
D is the annual demand (1,600 units)S is the setup cost per order ($16)H is the holding cost per unit ($8)Plugging in the values, we get:
EOQ = √(2 * 1,600 * 16 / 8) ≈ 400
Therefore, the order size should be 400 units (rounded to the nearest whole number).
b. To calculate the annual ordering cost, we divide the total annual demand by the order size and multiply by the setup cost per order:
Annual ordering cost = (D / EOQ) * S
Substituting the values, we have:
Annual ordering cost = (1,600 / 400) * 16 = $64
c. Lastly, to calculate the annual holding cost, we multiply the average inventory level (which is half the order size) by the holding cost per unit:
Annual holding cost = (EOQ / 2) * H
Substituting the values:
Annual holding cost = (400 / 2) * 8 = $1,600
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The probable question may be:
Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $8 per unit of average inventory. Every time an order is placed for more of item X, it costs $16.
a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.)
b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places.)
c.What is the annual cost for storing item X? (Round your answer to 2 decimal places.)
a. The order size should be approximately 39 units (EOQ). b. The annual cost for ordering item X is approximately $656.41. c. The annual cost for storing item X is approximately $1,287.00.
To find the Economic Order Quantity (EOQ), we can use the following formula:
EOQ = √((2 * D * S) / H)
Where:
D = Demand (annual usage) = 1,600 units
S = Ordering cost = $16 per order
H = Holding cost per unit = (Storage cost + Item cost) = ($8 + $25) = $33 per unit
a. Calculate the EOQ:
EOQ = √((2 * 1,600 * 16) / 33)
EOQ ≈ √(51,200 / 33)
EOQ ≈ √1,548.48
EOQ ≈ 39.31
So, the order size (EOQ) should be approximately 39 units.
b. To find the annual cost for ordering item X, use the EOQ and divide the annual demand by the order size, then multiply it by the ordering cost:
Annual ordering cost = (D / EOQ) * S
Annual ordering cost = (1,600 / 39) * 16
Annual ordering cost ≈ $656.41 (rounded to 2 decimal places)
c. To find the annual cost for storing item X, use the EOQ and multiply it by the holding cost:
Annual holding cost = EOQ * H
Annual holding cost = 39 * 33
Annual holding cost = $1,287.00
So, the annual cost for storing item X is $1,287.00 (rounded to 2 decimal places).
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The complete question is:
Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $8 per unit of average inventory. Every time an order is placed for more of item X, it costs $16.
a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.)
b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places.)
c. What is the annual cost for storing item X? (Round your answer to 2 decimal places.)
A small monopoly manufacturer of widgets has a constant marginal cost of $20. The demand for this firm's widgets is Q = 115 - 1P.Given the above information, calculate the social cost of this firm's monopoly power.The social cost is $___. (Round answer to the nearest penny)
The social cost of the firm's monopoly power, represented as deadweight loss, can be calculated using demand and marginal cost functions. By comparing monopoly outcomes to competitive market outcomes, the social cost is found to be $475.00.
Explanation:The social cost of monopoly power can be estimated by the deadweight loss, which is the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. In order to calculate this, we need to determine the profit-maximizing quantity and price for the monopolist and then compare with the competitive market outcome where price equals marginal cost (P = MC).
Given the demand function Q = 115 - P and the constant marginal cost MC = $20, a competitive market would set P = MC, so the competitive price would be $20. However, a monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC). To find the MR function, we need to know the inverse demand function, which is P = 115 - Q, because MR is the derivative of total revenue (P*Q) with respect to Q. Total revenue is P*Q = (115 - Q)Q. Taking the derivative gives MR = 115 - 2Q. Setting MR = MC to find the quantity gives 115 - 2Q = 20, thus Q (monopoly quantity) = 47.5 and P (monopoly price) = $67.50.
The social cost is then the triangle formed by the difference between the monopoly price and the competitive price, along with the difference between the competitive quantity and the monopoly quantity. The base of the triangle is the difference in quantity (67.5 - 47.5 = 20) and the height is the difference in price ($67.50 - $20 = $47.50). The social cost or deadweight loss is then 0.5 * base * height = 0.5 * 20 * $47.50 = $475.00.
As a contemporary manager, your employees will be motivated to provide you with important feedback if:
A. you provide closed-end surveys on a monthly basis.
B. you prepare daily, company-wide passive voicemail messages.
C you institute a respectful rank and file politeness plan, where middle and higherlevel managers are addressed as "Mr.", "Ms", or "Dr.".
D. you solicit open-ended responses from your employees.
Answer:D
D, is the is the answer.
An depreciation of the U.S. dollar yields the average American resident to be relatively less wealthy compared to people living in other countries. It also means that American residents have now less purchasing power compared to other countries. Explain briefly why a depreciating U.S. dollar does not hurt everyone in the U.S.! In other words: who benefits within the united states from a depreciating U.S. Dollar and why? (Max 50 words!)
Answer:
Those who sell their goods and services abroad benefit from devaluation.
Explanation:
The firms and people who sell their goods and service abroad benefit from a US Dollar devaluation. Since their products are sold abroad, a devaluation increases the competitiveness of their offer compared with other countries, making more attractive their offer because they sell the same quality and value at a lower price
1. The following data refers to the Daniels division of Tippett Inc. Daniels sells variablespeed drills. The standard drill sells for $ 40, and Daniels plans to sell 30,000 units in 2017. Tippett treats Daniels as an investment center with a total attributable investment of $ 800,000. Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $ 24. The firm's required rate of return on investment is 15%.
1.1 What is the expected Return on Investment in 2017?
1.2 What is the expected residual income for Daniels in 2017?
1.3 A special order from a unit of the US Government has been received to buy from Daniel 10,000 units every year of the device at the price of $30 each. If the order is accepted, Daniels will have to incur additional annual fixed costs of $30,000 for administration and $150,000 to modify and expand the manufacturing facilities.
Based on the effect on ROI and/or Residual Income for the first year, will the manager accept this order? Why and why not?
Answer:
See below.
Explanation:
For part 1
Expected return can be computed by working out net profits from the production of drills.
Contribution per drill = Selling price - variable costs
Contribution = 40 - 24 = $16/ drill
Total contribution = 16 * 30,000 = $480,000
Profit = Contribution - Fixed costs
Profit = 480,000 - 200,000 = $280,000
Return on investment = Profit / Initial investment
ROI = 280,000 / 800,000 = 35%
Residual income = Net income - Equity charge
RI = 280,000 * (800,000*0.15) = $160,000
For part 2
We assume that this special order of 10,000 drills is in addition to the existing 30,000 drills bringing the total to 40,000 drills sold per year.
We first calculate the income effect of this isolated 10,000 additional drills.
Selling price = 30/drill
Variable cost / drill = 24
Contribution / new drill = 6
Total contribution from the order = 6*10,000 = $60,000
Total profit increment from this order = 60,000 - 30,000 = $30,000
This brings the total profit from 40,000 drills to
= 30,000+280,000 = $310,000
Total investment now has been increased by $150,000 bringing the total to 150,000 + 800,000 = $950,000
ROI has changed to = 310,000 / 950,000 = 32.63%
Residual income has changed to as,
RI = 310,000 - (950,000*0.15) = $167,500
Although the return on investment has fallen by around 2.37% the residual income has increased. Daniels may accept this order to ensure he has a good customer base and their total market share may actually improve thus this order might be strategically important for the future of the business.
Hope that helps.
Digger Enterprises purchased equipment for $64,000. In addition, shipping charges of $800 were incurred to obtain the equipment. The company paid $5,000 to construct a foundation and install the equipment. The equipment is estimated to have a residual value of $6,000 at the end of its 5-year useful life. Using the straight-line method, what is the book value of the equipment at the end of the third full year of use?
a. $22,120
b. $28,400
c. $31,520
d. $25,520
Answer:
Option (C) is correct.
Explanation:
Total cost:
= Purchase cost + shipping charge + Installation charges
= $64,000 + $800 + $5,000
= $69,800
Depreciation expense:
= (Cost - Salvage value) ÷ Estimated Useful life
= ($69,800 - $6,000) ÷ 5
= $12,760 per year
Total depreciation expense up to 3rd year:
= $12,760 per year × 3
= $38,280
Therefore,
Book value of the equipment at the end of the third full year of use:
= Cost of equipment - Total depreciation expense up to 3rd year
= $69,800 - $38,280
= $31,520
The difference between a profit center and an investment center is
Select one:
a. an investment center incurs costs, but does not directly generate revenues.
b. an investment center incurs no costs but does generate revenues.
c. an investment center is responsible for investments made in operating assets.
d. an investment center provides services to profit centers.
e. There is no difference; investment center and profit center are synonymous.
Answer:
c
Explanation:
investment center measures the use of capital
The difference between a profit center and an investment center is an investment center is responsible for investments made in operating assets. The correct option is (C).
What do you mean by the profit and investment center?
An extension of the profit center where revenues and costs are calculated is what is referred to as an investment center.
A branch or division of a business that directly contributes to or is anticipated to contribute to the overall bottom line is referred to as a profit center. It is handled as a distinct, stand-alone company that generates its own revenues and profits.
An organizational unit called an investment centre is answerable to top management for its profitability in respect to its own investment base. Assets used are measured in addition to revenues and expenses, as in profit centers.
Therefore, the difference between a profit center and an investment center is an investment center is responsible for investments made in operating assets.
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Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.
Required:
a. Compute the overhead application rate.
b. Compute the amount of overhead applied to production.
c. Determine the amount of over- or underapplied overhead.
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.
A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 375,000/12,500= $30 per machine hour
B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 30*13,150= $394,500
C) Over/under allocation= real MOH - allocated MOH
Over/under allocation= 387,920 - 394,500= 6,580 overallocated
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436. The bank statement indicated a balance of $195,688 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled $19,427.
b. A deposit of $12,300, representing receipts of June 30, had been made too late to appear on the bank statement.
c. The bank collected $26,500 on a $25,000 note, including interest of $1,500.
d. A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.
e. A check drawn for $195 had been erroneously charged by the bank as $915.
f. Bank service charges for June amounted to $55.
1. Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
According to given equation, after the reconciliation amount that needs to reported as cash is equal to $166,436.
What is the term reconciliation about?A monthly reconciliation helps you identify any unusual transactions that might be caused by fraud or accounting errors, and the practice can also help you spot inefficiencies.
1. Pala Medical Co. Bank Reconciliation Statement as on June 30, 20Y1
PARTICULARS $ $
Balance as per cash book 166,436
Add: Cheques issued but not yet presented 19,427
25,000 note collected by Bank 26,500
45,927
212,363
Deduct:-
Checks deposited but not yet collected by the bank 12,300
Overstatement of figure by the bank 720
Returned check wrongly recorded by Pala
Medical Co. 3,600
Bank service charge 55
16,675
Balance as per bank statement as on June 30, 20Y1 195,688
2. DETAIL DR CR
$ $
Cash Account 25,000
Investment 25,000
(Matured Investment ($25,000 Notes)
Cash Account 1,500
Interest Income 1,500
(Being interest on $25,000 Notes received )
Cash Account 400
Creditors - Skyline Supply Co. 400
(Being correction of Payment to Skyline Supply Co. wronfly recorded )
Creditors - Skyline Supply Co. 4,000
Cash Account 4,000
(Being Payment to Skyline Supply Co)
Bank Charges 55
Cash Account 55
(Bank Charges recorded captured in the bank statement)
3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1 the amount to be reported as cask is $166,436
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Final answer:
To prepare a bank reconciliation, start with the balance per the bank statement and make adjustments for any discrepancies. Journalize the necessary entries to reflect the adjustments identified in the bank reconciliation. On the balance sheet, report the adjusted balance per the company's records as the amount of cash.
Explanation:
To prepare a bank reconciliation, we need to compare the balance in the company's cash account with the balance on the bank statement and make adjustments for any discrepancies. Here are the steps to prepare a bank reconciliation:
Start with the balance per the bank statement ($195,688).Add deposits in transit (the $12,300 deposit that was made too late to appear on the bank statement) to the balance.Subtract outstanding checks ($19,427) from the balance.Add or subtract any other reconciling items - in this case, we have two: (a) the bank collection of $26,500 on the note, including the interest of $1,500, which should be added to the balance, and (b) the incorrect recording of the $4,000 check as $400, which should be deducted from the balance.Subtract bank service charges ($55) from the balance to arrive at the adjusted balance per the bank.Compare the adjusted balance per the bank with the balance per the company's records ($166,436). These two should match. If they don't, further investigation is needed to identify the cause of the discrepancy.To journalize the necessary entries, we need to record any adjustments identified in the bank reconciliation. In this case, we would need to make entries to reflect the adjustments related to the outstanding checks, the deposit in transit, the bank collection on the note, and the incorrect recording of the check. The specific accounts affected would depend on the company's chart of accounts.
If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, the correct amount to report as cash would be the adjusted balance per the company's records ($166,436). This is the balance that reflects the actual cash position of the company after considering the reconciling items.
On Dec. 20, X-Mart received a $100 allowance because the merchandise it purchased on account, earlier in the month, was of poor quality. Demonstrate the required journal entry on X-Mart's books for the allowance assuming the perpetual inventory method.
Answer:
See explanation section
Explanation:
The journal entry to record the $100 received as allowance because of the poor quality product is as follows:
Debit Accounts payable $100
Credit Inventory/Merchandise Inventory $100
Since the X-mart company purchased the inventory on account, the supplier became payable for X-mart. Therefore, he made a journal entry with a payable account as credit. As the X-mart company now returned the defective goods due to poor quality, the supplier will get less amount. Therefore, it (supplier - a payable) becomes a debit. As X-mart returned the product, the inventory becomes a credit.
Final answer:
The allowance received by X-Mart for poor quality merchandise would lead to a journal entry debiting Accounts Payable and crediting Inventory by $100 each under the perpetual inventory system.
Explanation:
When X-Mart received a $100 allowance for poor quality merchandise, it needs to adjust its accounting records under the perpetual inventory system. The journal entry to record the allowance would involve decreasing the inventory account since the goods are defective, and a reduction of accounts payable, assuming the original purchase was on account.
The journal entry would be:
Debit: Accounts Payable $100
Credit: Inventory $100
This entry signifies that the liability to the vendor reduces by $100 because of the allowance and at the same time, it also reflects a reduction in the value of inventory by the corresponding amount.
Accumulating capitala. requires that society sacrifice consumption goods in the present.b. allows society to consume more in the present.c. decreases saving rates.d. involves no tradeoffs.
Answer: A
Explanation: capital accumulation is increasing the capital structure of a society in form of profitable investments. means the gathering of objects of value; the increase in wealth; or the creation of wealth. And this can be enhance by motivating the public to sacrifice some consumer goods for some industrial good or asset.
Answer:
The correct answer is letter "A": requires that society sacrifice consumption goods in the present.
Explanation:
Capital Accumulation refers to the growth of capital by investing or saving. In any case, capital consumption is decreased when individuals plan to accumulate resources to obtain greater returns in the future. Because some become wealthier by accumulating capital and others stay poor, it is seen as negative, primarily because it widens the divide between the two sectors.
billions of dollars Personal consumption expenditures 1,000 Gross private domestic investment 500 Net exports 300 Imports 180 Federal government purchases of goods and 280 services State and local government purchases of goods 200 Transfer Payments 90 What is the value of GDP? $2,280 billion O $2,550 billion O $2,170 billion O $1,820 billion
Final answer:
To find the dollar value of GDP for Country A, add consumption, investment, and government spending, then subtract imports from exports. The calculation yields a GDP of $3,070 billion.
Explanation:
To calculate the dollar value of GDP for Country A, we need to use the formula: Consumption + Investment + Government spending + (Exports – Imports). The given values are
Consumption spending: $2,000 billion
Business investment: $50 billion
Government purchases: $1,000 billion
Exports: $20 billion
Imports: $40 billion
Substituting the given values into the formula, we get:
$2,000 billion + $50 billion + $1,000 billion + ($20 billion - $40 billion) = $3,070 billion.
Therefore, the dollar value of GDP for Country A is $3,070 billion.
IE 9-6 ... AS/AD model – If this economy has an equilibrium in Year 5 with a Price Level of $2.54, then Nominal Income GDP will be __________ but Real Income GDP will be _____________ ..
Answer:
$4387 b but Real Income GDP will be $4500 b ..
Explanation:
This nominal GDP signifies the worth of all those ultimate assets including assistance that economics performed throughout a provided year. The aforementioned is calibrated by implementing the uses that remain contemporary throughout the year while which that output is generated. Meanwhile, in economics, a nominal worth is formulated into monetary sessions.
This is essential to identify amidst the nominal and real value of a nation's internal production including profit. Real GDP estimates a specific amount of production. An expansion in real production signifies that AD has grown quicker than this rate of inflation moreover this prosperity is encountering assertive germination. So according to the above eplaination the answer is mentioned below.
AS/AD model – If an aforementioned administration maintains equanimity into Year 5 including a Value Level concerning $2.54, later Nominal Earnings GDP will remain $4387 b still Real Income GDP will remain $4500 b ..