Answer:
$8,910
Explanation:
Trading Account for the year
Sales $18,200
Less Cost of Sales
Purchases $12,100
Less Purchases Returns ($1,600)
Less Discounts Received ($12,100 x 10%) ($1,210) ($9,290)
Gross Profit $8,910
Conclusion :
thus, the gross margin that results from these four transactions is $8,910.
Diamond Company manufactures two models of cassette recorders: VCH and MTV. Based on the following production data for April, prepare a production budget.
VCH MTV
Estimated inventory (units), April 1 2,900 4,000
Desired inventory (units), April 30 6,900 5,250
Expected sales volume (units):
Eastern zone 12,500 12,960
Midwest zone 19,000 19,800
Western zone 14,500 9,840
Answer and Explanation:
The preparation of the production budget is presented below:
Particulars VCH MTV
Expected Sales:
Eastern zone 12500 12960
Midwest zone 19000 19800
Western zone 14500 9840
Add: Desired inventory 6900 5250
Less: Opening inventory (2900) (4000)
Production in units 50,000 43,850
Based on the readings: match the following business example with its associated product cost term A businessowner pays for rent and equipment at their office An airline considers the costs of serving food and beverages to its passengers A company considers the costs it pays to its employees A clothing manufacturer buys new machines for its factory A. variable costs B. fixed costs C. fixed cost D. variable costs
Answer:
A business owner pays for rent and equipment at their office ⇒ FIXED COSTs since the amount of rent paid should be the same year after year
An airline considers the costs of serving food and beverages to its passengers ⇒ VARIABLE COSTS since the cost of serving food will increase as the number of passengers increase, or will decrease if the number of passengers decrease
A company considers the costs it pays to its employees ⇒ VARIABLE COSTS since the number of employee can vary and the number of hours worked can also vary
A clothing manufacturer buys new machines for its factory ⇒ FIXED COSTS since the machines are depreciated at a predetermined rate that doesn't depend on the factory's output
The following cost behavior patterns describe anticipated manufacturing costs for 2019: raw material, $7.50/unit; direct labor, $10.50/unit; and manufacturing overhead, $297,500 $8.50/unit. Required: If anticipated production for 2019 is 35,000 units, calculate the unit cost using variable costing and absorption costing. (Round your answers to 2 decimal places.)
Answer:
Unit cost
$
Variable costing 18
Absorption costing 26.5
Explanation:
Variable costing values every unit produced at the marginal cost. Marginal cost is the sum of direct material, direct labor and variable overhead.
Marginal cost = 7.50 + 10.50 =$18
Absorption costing values every unit at full cost. Full cost is the sum of marginal and fixed overhead cost per unit,
Fixed overhead cost per unit = $297,500/35,000=8.5
Full cost = 7.50 + 10.50 + 8.50= $26.5
Unit cost
$
Variable costing 18
Absorption costing 26.5
Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $464,000. Of this sum, $58,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $58,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%.
a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense?
b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment?
Answer:
Ideal China
a) The present value of the cost of the kiln if the installation cost is treated as a separate current expense is:
= $318,304.
b) The present value of the cost of the kiln if the installation cost is treated as a part of the capital investment is:
= $363,776.
Explanation:
a) Data and Calculations:
Present value factor for 5 years at 5% = 0.784
Cost of new kiln = $464,000
Installation cost = $58,000
Present value of the cost of the kiln if the installation cost is treated as a separate current expense = $406,000 * 0.784 = $318,304
Present value of the cost of the kiln if the installation cost is treated as a part of the capital investment = $464,000 * 0.784 = $363,776
In 1933, U.S. manufacturers, which used to enjoy steady relationships with their foreign distributors and export nearly 30% of their output, realized that their exports had fallen to only 10% of total output. Which of the following is the most likely reason for this decrease in exports?
a. The low quality of U.S. products
b. Retaliatory tariffs by trading partners
c. War between the United States and Mexico
Answer: b. Retaliatory tariffs by trading partners
Explanation:
In the 20s, the United States instituted a series of tariffs on imports that culminated with the Smoot-Hawley tariff of 1930 as they hoped to protect the local industry and to increase government revenue.
Some countries replied with their own tariffs on American exports such that American exports to these countries fell significantly and world trade reached a new low as well.
In January of the current year, Dora made a gift of stock to her granddaughter. At the time of the gift, the stock was worth $15,000. Several months later in the same year after the gift, a $500 dividend was declared on the stock and paid to Dora's granddaughter. What amount must Dora's granddaughter include in her gross income for the current year
Answer:
$500
Explanation:
Based on the information given we were told that the DIVIDEND of the amount of $500 which was declared on the stock was paid to Dora's granddaughter Several months later, which means that the amount that Dora's granddaughter must include in her GROSS INCOME for the current year will be the dividend amount of $500 that was paid to Dora's granddaughter.
Therefore the amount that Dora's granddaughter must include in her gross income for the current year is $500
The following data pertain to Frontier Enterprises:
Variable manufacturing cost $ 70
Variable selling and administrative cost 20
Applied fixed manufacturing cost 40
Allocated fixed selling and administrative cost 15
What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 110%?
A. $84.
B. $147
C. $210.
D. $231
E. Some other amount.
Answer:
D. $231.
Explanation:
With regards to the above, first we need to compute the total manufacturing cost.
Total manufacturing cost = Variable manufacturing cost + Applied fixed manufacturing cost
= $70 + $40
= $110
Then,
= $110 + ($110 × 1.1)
= $110 + $121
= $231
Therefore , the company will charge $231 if cost- plus pricing based is used.
A company issues $90,000 of 9%, 10-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If bonds are sold at par value, the issuer records the payment of principal at maturity with a (debit/credit) ________ to bond payable in the amount of _______. Multiple choice question. debit; $171,000 credit; $171,000 debit; $90,000 credit; $90,000 Need help
Answer:
Debit; $90,000
Explanation:
Based on the information given in a situation where the company issues the amount of $90,000 on January 1 which means that assuming the bonds are sold at par value, the issuer of the bonds will records the payment of principal at maturity with a DEBIT to bond payable in the amount of $90,000.
Select the statement that best describes money's function as a standard of deferred payment.
a. The purchasing power of a currency is relatively stable over time
b. A currency is widely accepted in exchange for goods and services and therefore makes economic transactions easier.
c. A currency can be used to express the value goods and services that are both relatively expensive and goods and services that are relatively cheap.
d. People are willing to accept a currency in the future as compensation for debts accrued earlier
Answer:
d. People are willing to accept a currency in the future as compensation for debts accrued earlier
Explanation:
Money can be used to pay your current debts at a later date since $100 will still be $100 in the future. They might lose some of its value due to inflation, but they do not spoil or rot, and will probably be accepted in the future. imagine trying to pay an old debt with rotten tomatoes or an old cow.
Assume that last year, Cliff Consulting, a firm in Berkeley, CA, had the following contribution income statement:
CLIFF CONSULTING
Contribution Income Statement
For the Year Ended September 30
Sales revenue $ 1,200,000
Variable costs
Cost of services $ 480,000
Selling and administrative 60,000 540,000
Contribution margin 660,000
Fixed Costs -selling and administrative 440,000
Before-tax profit 220,000
Income taxes (21%) 46,200
After-tax profit $ 173,800
(a) Determine the annual break-even point in sales revenue.
(b) Determine the annual margin of safety in sales revenue.
(c) What is the break-even point in sales revenue if management makes a decision that increases fixed costs by $80,000?
(d) With the current cost structure, including fixed costs of $440,000, what dollar sales revenue is required to provide an after-tax net income of $250,000?
(e) Prepare an abbreviated contribution income statement to verify that the solution to requirement (d) will provide the desired after-tax income.
Answer:
Cliff Consulting
a) Annual Break-even point in sales revenue is:
= $800,000
b) Annual margin of safety is:
= $400,000
c) If fixed costs increases by $80,000, the break-even point in sales revenue
= $945,455
d) Dollar Sales Revenue required to provide an after-tax net income of $250,000 is:
= $1,375,375
e) Abbreviated Contribution Income Statement
Sales revenue $1,375,375
Variable costs = 618,919
Contribution = $756,456
Fixed costs 440,000
Before tax income 316,456
Income tax (21%) 66,458
After-tax income $249,998
equivalent to $250,000
Explanation:
a) Data and Calculations:
CLIFF CONSULTING
Contribution Income Statement
For the Year Ended September 30
Sales revenue $ 1,200,000
Variable costs
Cost of services $ 480,000
Selling and administrative 60,000 540,000
Contribution margin 660,000
Fixed Costs -selling and administrative 440,000
Before-tax profit 220,000
Income taxes (21%) 46,200
After-tax profit $ 173,800
Break-even point in sales revenue = Fixed costs/Contribution margin ratio
= $440,000/0.55
= $800,000
Annual margin of safety = normal sales revenue minus break-even sales revenue
= $1,200,000 - $800,000
= $400,000
Contribution margin ratio = contribution margin/sales revenue * 100
= $660,000/$1,200,000 * 100 = 55%
If fixed costs increases by $80,000, the break-even point in sales revenue
= ($440,000 + $80,000)/0.55 = $520,000/0.55 = $945,455
To achieve after-tax net income of $250,000, the required dollar sales revenue:
Net income after-tax = $250,000
Tax rate = 21%
Net income before tax = $250,000/1-21%
= $250,000/0.79 = $316,456
Sales dollars to achieve target profit = (Fixed costs + Target Profit/1 - 0.21)/Contribution margin
= ($440,000 + ($250,000/0.79))/0-55
= ($440,000 + $316,456)/0.55
= $756,456/0.55
= $1,375,375
Abbreviated Contribution Income Statement
Sales revenue $1,375,375
Variable costs = 618,919
Contribution = $756,456
Fixed costs 440,000
Before tax income 316,456
Income tax (21%) 66,458
After-tax income $249,998
After-tax income is equivalent to $250,000
Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2021, the company granted 20 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $7 per share on the grant date. Required: 1. Determine the total compensation cost pertaining to the restricted shares. 2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2022.
Answer:
See below
Explanation:
1. Total compensation pertaining to the restricted shares
= Fair value per share × Shares granted
= $7 × 20,000,000
= $140,000,000
Therefore, the total compensation cost pertaining to the restricted shares is $140,000,000
2. Journal entries as at December 31, 2021 (in million dollars)
Dr Compensation expense ($140,000,000 ÷ 2 years) $70
Cr Paid- in capital - restricted stock $70
Journal entries as at December 31, 2022 (in million dollars)
Dr Compensation expense ($140,000,000 ÷ 2 years) $70
Cr Paid in capital - restricted stock $70
Dr Paid in capital restricted stock $140
Cr Common stock (20 million shares × $1 par) $20
Cr Paid in capital in excess of par (remainder) $120
What is true of a good at a market clearing price?
A)
There is no competitive market for the good.
B)
Quantity supplied is greater than quantity demanded.
C)
Producers must lower inventory in order to increase demand.
D)
The quantity of a good demanded is equal to the quantity supplied.
Answer:
D. The quantity of a good demanded is equal to the quantity supplied.
Explanation:
Deman will not change, but supply decrease. Demand will decrease.
Suppose your salary in 2016 is $30,000. Assuming an annual inflation rate of 3%, what salary do you need to earn in 2022 in order to have the same purchasing power
Answer:
$35821.5
Explanation:
Using compound formula
A= P( 1+ r/ n)^ nt
A= amount
t= time period
n=Number of years
2016----2022= 6years
Substitute for the values we have
A= $30,000[ 1+ (3/100)/1]^ (6)
A= $35821.5
Hence, salary you need to earn in 2022 in order to have the same purchasing power is $35821.5
A wedding party hired a sole proprietorship to cater their wedding, and the sole proprietorship had an employee handle the entire job. If the entire wedding party gets food poisoning, the principal is liable. The employee of the sole proprietorship is also liable because he handled the entire job.
Explanation:
well I will say yes meaning true because he or she was put in charge of the entire job
You are considering a project in Honduras that would generate 1.5 million dollars in cash flows per year going forever. The cost of the project is 8 million dollars. The discount rate for the project is 12%. You believe that there is some probability of expropriation prior to the 4th year (after the 3rd cash flow). Which of the following fully describes when this is a good project?
a. This is a good project if the probability of expropriation is larger than 0.33
b. This is a good project if the probability of expropriation is smaller than 0.33
c. This is a good project if the probability of expropriation is smaller than 0.5
d. This is a good project if the probability of expropriation is smaller than 0.66 7.
Answer:
c. This is a good project if the probability of expropriation is smaller than 0.5
Explanation:
initial outlay = $8,000,000
if no expropriation, NPV = -$8,000,000 + $1,500,000/0.12 = $4,500,000
if the risk of expropriation is 0.33:
NPV = $925,211
if the risk of expropriation is 0.5:
NPV = -$425,265
the breakeven risk = 44.6%
Wings Co. budgeted $570,000 manufacturing direct wages, 3,000 direct labor hours, and had the following manufacturing overhead:
Overhead Cost Budgeted Budgeted Level for Overhead
Pool Overhead Cost Driver Cost Driver
Cost
Materials handling $188,000 4,700 pounds Weight of materials
Machine setup 21,600 540 setups Number of setups
Machine repair 1,260 31,500 machine
hours Machine hours
Inspections 12,400 310 inspections Number of inspections
Requirements for Job 971 which manufactured 4 units of product:
Direct labor 20 hours
Direct materials 130 pounds
Machine setup 30 setups
Machine hours $15.000 machine hours
Inspections 15 inspections
1. Using ABC, overhead cost assigned to Job #971 for machine setup is:____.
a. $2,300.
b. $990.
c. $6,500.
d. $690.
e. $1,020 .
2. Using ABC, overhead cost assigned to Job #971 for machine repair is:____.
a. $2,300.
b. $990.
c. $6,500.
d. $690.
e. $1,020.
Answer:
Results are below.
Explanation:
First, we need to calculate the allocation rates:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine setup= 21,600/540= $40 per setup
Machine repair= 1,260/31,500= $0.04 per machine hour
Now, we can allocate costs to Job 971:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Machine setup= 40*30= $1,200
Machine repair= 0.04*15,000= $600
Brent is a full-time exempt employee in Clark County, Indiana. He earns an annual salary of $39,360 and is paid semimonthly. He is married with 3 withholding allowances. His state income tax is $52.97, and Clark County income tax is $29.52 per pay period. What is the total of FICA, Federal, state, and local deductions per pay period, assuming no Pre-Tax Deductions
Answer:
Federal Income tax ⇒ $80FICA ⇒ $125.46 State income tax ⇒ $52.97Local deduction - Clark County Income tax ⇒ $29.52Explanation:
Brent gets paid semi-monthly so his pay per period is:
= 39,360 / (12 months *2)
= $1,640
Based on the table therefore, his federal tax is:
= $80
This figure is based on the intersection between income of $1,640 and 3 withholding allowances.
FICA tax rate is 7.65% so his FICA tax is:
= 1,640 * 7.65%
= $125.46
State income tax = $52.97
Local deduction - Clark County Income tax = $29.52
Total deductions:
= Federal tax + FICA + State income tax + Clark County income tax
= 80 + 125.46 + 52.97 + 29.52
= $287.95
The major benefits to a S.W.O.T Analysis are: a. Simple to use. b. Reduces the costs of strategic planning. c. Flexible. d. Integrates and synthesizes diverse information. e. Fosters collaboration among managers of different functional areas. f. ALL OF THE ABOVE. g. NONE OF THE ABOVE.
Answer:
f. ALL OF THE ABOVE
Explanation:
SWOT analysis can be regarded as
strategic planning technique that is been utilized to identify opportunities,
strengths as well as weaknesses, and threats associated with business competition as well as project planning of individuals or organization.
The major benefits to a S.W.O.T Analysis includes
✓Reduces the costs of strategic planning.
✓Simple to use.
✓Flexible
✓Fosters collaboration among managers of different functional areas.
✓Integrates and synthesizes diverse information.
YZ Company is rethinking the way it ships to its 62 customers in another city 220 miles away.
Current Shipping/Delivery Method
They currently hire an LTL (less-than-truckload) carrier to pick up and deliver these shipments. Each customer order shipped via LTL carrier costs $147.
Alternate Shipping/Delivery Method
A 3PL (third-party logistics provider) has approached XYZ Company and suggested that they make full truckload (TL) shipments from their facility to the 3PL's warehouse in the customers' city. The 3PL would then break the bulk shipment (TL or truckload shipment) into individual customer orders to be shipped locally by an LTL carrier. The relative data for this alternate shipping method are as follows:
Full TL shipment cost (220 miles) = $675
Average order weight = 750 lbs.
Warehouse break-bulk fee (per 100 lbs., a.k.a. per "hundred weight") = $13
Local LTL delivery fee = $36
1. What is the total cost of delivering to all customers via LTL carrier (current method
R=_______.
2. How much money would XYZ company save by using the alternate shipping/delivery method?
R=______.
3. At what number of customers would the cost of these two methods be the same?
R=______.
Answer:
1. Total cost of customer order shipped via LTL carrier is $9,114.
2. XYZ company would save $162 by using the alternate shipping/delivery method.
3. The cost of these two methods would be the same when the number of customers is approximately 6.
Explanation:
To ease answering the question, let us first the define as follows:
N = Number of customers = Number of Order
A = Each customer order shipped via LTL carrier costs = $147
B = Average order weight = 750
C = Warehouse break-bulk fee per hundred weight = 13
D = Total cost of weight = ((N * B) / 100) * C
E = Local LTL delivery fee = $36
F = Total Local LTL delivery fee = N * E
G = Full TL shipment cost (220 miles) = 675
H = Total cost of shipping using 3PL = D + F + G
I = Total cost of customer order shipped via LTL carrier = N * A
J = Difference between the cost of the two methods = I - H
1. What is the total cost of delivering to all customers via LTL carrier (current method
This can be calculated using E above as follows:
Total cost of customer order shipped via LTL carrier = E = N * A = 62 * $147 = $9,114
2. How much money would XYZ company save by using the alternate shipping/delivery method?
From the definitions above, we have:
N = Number of orders = 62
D = Total cost of weight = ((N * B) / 100) * C = ((62 * 750) / 100) * 13 = $6,045
F = Total Local LTL delivery fee = N * E = 62 * 36 = $2,232
G = Full TL shipment cost (220 miles) = $675
H = Total cost of shipping using 3PL = D + F + G = $6,045 + $2,232 + $675 = $8,952
I = Total cost of customer order shipped via LTL carrier = $9,114
J = Difference between the cost of the two methods = I - H = $9,114 - $8,952 = $162
Therefore, XYZ company would save $162 by using the alternate shipping/delivery method.
3. At what number of customers would the cost of these two methods be the same?
H = Total cost of shipping using 3PL = D + F + G = (((N * B) / 100) * C) + (N * E) + G ............ (1)
Substituting all the relevant value into equation (1), we have:
H = (((N * 750) / 100) * 13) + (N * 36) + 675
I = N * 147
Equating H and I and solve for N, we have:
(((N * 750) / 100) * 13) + (N * 36) + 675 = N * 147
((N0.01 * 7.50) * 13) + 675 = N147 - N36
(N0.075* 13) + 675 = N111
N0.975 + 675 = N111
675 = N111 - N0.975
N110.025 = 675
N = 675 / 110.025
N = 6.13496932515337.
By approximating to a whole number since we are talking about human being, we have:
N = 6
At what number of customers would
Therefore, the cost of these two methods would be the same when the number of customers is approximately 6.
The Maryville Construction Company occupies 105,800 square feet for construction of mobile homes. There are two manufacturing departments, finishing and assembly, and four service departments labeled S1, S2, S3, and S4. Information relevant to Maryville is as follows: Allocation Department Area used S1 S2 S3 S4 Finishing Assembly S1 18,600 --- 0.20 0.10 --- 0.10 0.60 S2 5,050 --- --- 0.40 0.40 --- 0.20 S3 10,100 0.20 0.20 --- 0.30 0.20 0.10 S4 5,050 0.20 0.10 0.20 --- 0.30 0.20 Finishing 30,150 --- --- --- --- --- --- Assembly 36,850 --- --- --- --- --- --- Rent paid for the area used is $736,000. How much rent is allocable to the assembly department using the direct method of allocation
Answer:
$404,800
Explanation:
Calculation to determine How much rent is allocable to the assembly department using the direct method of allocation
Using this formula
Rent =Area used by Assembly department / Total Area used by Manufacturing Departments x Total Rent paid
Let plug in the formula
Rent =36,850/ (36,850+30,150) x $736,000
Rent=36,850/67,000*$738,000
Rent=0.55*$736,000
Rent= $404,800
Therefore How much rent is allocable to the assembly department using the direct method of allocation is $404,800
Corruptco is a large machine shop that fabricates metals. Corruptco maximizes profits and shareholder value by polluting the local river, where fish are often killed off due to the pollution, rather than installing a pollution abatement device. While this is not specifically in violation of the law, it does put burdens on the local community. Which theory of corporate social responsibility is Corruptco exhibiting
Answer: a. the narrow view, or invisible hand theory
Explanation:
When it comes to the narrow view theory of corporate social responsibility, companies put one thing above all else, the maximisation of shareholder wealth.
Any activity that would help them do so - legally - is considered fair game even if it leads to adverse effects. Corruptco is therefore adhering to this theory because they are polluting the the local river to maximize shareholder value.
The OYB Company is performing an annual evaluation of two of its suppliers: X Company and the Y Company. You have collected the following information: Performance Criteria X Company Score Y Company Score Weight Product Availability 75 80 0.25 Responsive 75 80 0.10 On-time delivery 80 85 0.25 % of Delivery Correct/No Damage 90 95 0.15 Communication of Delays 95 65 0.15 Business (Info Sharing/Attitudes) 85 75 0.10 Total Score 82.5 80.75 Which statements are true? Group of answer choices If OYB designates scores of 70-90 as "Certified: meeting performance standards", both companies are "Certified" suppliers. X Company has a higher evaluation. Y Company moves to the "Preferred" category since the most important parameters, on-time delivery and product availability, are higher with Y Company. b and c only a and b only
Answer:
The OYB Company
The true statements are:
a. If OYB designates scores of 70-90 as "Certified: meeting performance standards", both companies are "Certified" suppliers.
b. X Company has a higher evaluation.
Therefore,
a and b only
Explanation:
a) Data and Calculations:
Performance Criteria X Company Score Y Company Score Weight Product Availability 75 80 0.25
Responsive 75 80 0.10
On-time delivery 80 85 0.25
% of Delivery Correct/
No Damage 90 95 0.15
Communication of Delays 95 65 0.15
Business
(Info Sharing/Attitudes) 85 75 0.10
Total Score 82.5 80.75
For February, sales revenue is $700,000, sales commissions are 5% of sales, the sales manager's salary is $96,000, advertising expenses are $90,000, shipping expenses total 2% of sales, and miscellaneous selling expenses are $2,500 plus 1/2 of 1% of sales. Total selling expenses for the month of February area.$161,000b.$235,000c.$241,000d.$237,500
Answer:
C. $241,000
Explanation:
Sales commission = $35,000 (5% of $ 700,000)
Salary of sales manager = $96,000
Advertising expenses = $90,000
Shipping expenses = $14,000 (2% of $ 700,000)
Miscellaneous selling expenses = $6,000
($ 2,500 add 1/2 * 1% * $ 700,000)
Total = $241,000
A firm is operating in the United States with only two other competitors in the industry. a. It is likely this industry would be characterized as: multiple choice 1 monopolistically competitive. perfectly competitive. oligopoly. pure monopoly. b. Firms in this industry will likely earn: multiple choice 2 a normal profit. an economic profit. an economic loss. c. If foreign firms begin supplying the product, increasing the number of competitors, it is likely that: multiple choice 3 economic profits will fall.
Answer:
a. oligopoly.
b. an economic profit.
c. economic profits will fall.
Explanation:
An oligopoly can be defined as a market structure comprising of a small number of firms (sellers) offering identical or similar products, wherein none can limit the significant influence of others.
Hence, it is a market structure that is distinguished by several characteristics, one of which is either similar or identical products and dominance by few firms.
The characteristics of an oligopolistic market structure are;
I. Mutual interdependence between the firms.
II. Market control by many small firms.
III. Difficult entry to new firms.
Hence, a firm operating in the United States of America with only two other competitors in the industry is likely to be an industry that would be characterized as oligopoly.
Additionally, business firms operating in this industry (oligopolistic market) will likely earn an economic profit. Also, if foreign business firms begin supplying the product, increasing the number of competitors, it is likely that economic profits will fall because the industry is now being competitive and controlled by other business firms.
In economics, market structure refers to how different industries are distinguished depending on the degree and form of product and services rivalry. It's based on the features that influence the outcomes and behaviors of businesses in a given market.
a) An oligopoly is a business that operates in the United States with only two other competitors in the same industry.
Reason:
An oligopoly is a market structure with a small number of enterprises and high entry barriers. A competitive environment in which there are just a few vendors reveals to be Oligopoly because there are only two competitors available in the business.
b) Oligopolistic businesses will almost certainly make an economic profit.
Reason:
In an oligopoly, all firms would have to work together to raise prices and make a bigger profit. The bulk of oligopolies form in industries where goods are essentially homogeneous and give essentially the same advantage to customers.
c) Economic earnings are expected to diminish or fall if international enterprises begin to supply the product, increasing the number of competitors.
Reason:
As the supply curve changes to the right, the market price begins to fall, and as a result, existing and new enterprises' economic earnings fall. Due to the entry of new enterprises, which pulls down the market price, economic profit is zero in the long term.
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iRobot Company is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 14 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $487,000, annual operating costs of $29,000, and a 6-year life. Machine B costs $315,000, has annual operating costs of $51,200, and a 4-year life. The firm currently pays no taxes. Which machine should be purchased and why
Answer:
Machine A should be purchased because it has a lower equivalent annual cost . Hence, it is cheaper.
Explanation:
Equivalent Annual cost is the Present Value of the total cost over the investment period divided by the appropriate annuity factor.
Step 1 : Equivalent Annual cost of Machine A
PV of cash flows
PV of purchase cost = 487,000
PV of annual operating cost of $29,000
= 29,000× (1-(1+0.14)^(-6))/0.14
= 112,771.35
Total PV = 487,000 + 112,771.35= 599,771.35
Equivalent annual cost = 599,771.35 /3.889
Equivalent annual cost = 154,235.70
Step 2: Equivalent Annual cost of Machine B
PV of purchase cost = 315,000
PV of annual operating cost of $51,200
= 51,200× (1-(1+0.14)^(-4))/0.14
= 149,182.07
Total PV = 315,000+ 149,182.07
= 464,182.07
Equivalent annual cost = 464,182.07/2.9137
Equivalent annual cost = 159,309.51
Step 3: Compare equivalent Annual cost
Comparing the two equivalent costs, we conclude that Machine A should be purchased because it has a lower equivalent annual cost and therefore it is cheaper.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,400 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,900 debit.
Question Completion:
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
Answer:
Daley Company
a. The estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method is:
= $11,820.
b. Adjusting Journal Entry:
Debit Bad debts expense $6,420
Credit Allowance for Doubtful Accounts $6,420
To record bad debts expense and bring Allowance balance to $11,820.
c. Adjusting Journal Entry:
Debit Bad debts expense $13,720
Credit Allowance for Doubtful Accounts $13,720
To record bad debts expense and bring Allowance balance to $11,820.
Explanation:
a) Data and Calculations:
Ageing of Accounts Receivable:
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts
receivable $570,000 $396,000 $90,000 $36,000 $18,000 $30,000
Percent uncollectible 1% 2% 5% 7% 10%
Allowance $11,820 $3,960 $1,800 $1,800 $1,260 $3,000
Bad Debts Expense:
Allowance for Doubtful Accounts:
b. c.
Unadjusted balance $5,400 credit $1,900 debit
Adjusted balance 11,820 credit 11,820 credit
Bad debts expense $6,420 $13,720
What exactly allows individuals to consume more if they specialize and trade than if they don't
Answer:
They work within the company that allows them to do so. Vs. others that don't.
Explanation:
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The Allied Corporation analyzes a project that requires an immediate investment of $440. Allied estimates that at the end of the first year the project will generate a cash flow of $660, but that at the end of the second year, when the project ends, it will generate a negative cash flow of $85. The project's required rate of return is estimated to be 7.50%. Calculate the NPV of Allied's project.
Answer:
NPV = $100.4002 rounded off to $100.40
Explanation:
The NPV or net present value is the present value of a project or business's cash flows which are calculated by deducting the cash outflows from the cash inflows. NPV is a tool or criteria used for investment and project appraisal. The NPV can be calculated as follows,
NPV = CF1 / (1+r) + CF2 / (1+r)^2 + .... + CFn / (1+r)^n - Initial Outlay
Where,
CF1, CF2, ... represents the cash flows in Year 1, Year 2 and so on.r represents the discount rateNPV = 660 / (1+0.075) + [ -85 / (1+0.075)^2] - 440
NPV = $100.4002 rounded off to $100.40
You are the manager of a firm that sells a leading brand of alkaline batteries. Click on the link below to access data on the demand for your product. Specifically, the file contains data on the natural logarithm of your quantity sold, price, and the average income of consumers in various regions around the world. Use the information provided in the excel spreadsheet to perform a log-linear regression. Excel Data File Fill in your estimates below:
Instruction:
Enter a negative number if the coefficient estimate is negative, and round your response to two decimal places.
lnQ=C ____ + _____ InP+ _____ InM
Determine the likely impact of a 3 percent decline in global income on the overall demand of your product.
a. Demand will decline by approximately 0.1%, but since income elasticity isn't significantly different from zero, it likely won't fall at all.
b. Demand will fall by nearly 10%, and income elasticity is significantly less than zero.
c. Demand will fall by nearly 1%, and income elasticity is significantly less than zero.
d. Demand will decline by approximately 3%, but since income elasticity isn't significantly different from zero, it likely won't fall at all.
Answer:
lnQ=C 1.29 + -0.07 lnP + -0.03 lnM
c. Demand will fall by nearly 1% and income elasticity is significantly less than zero.
Explanation:
Income elasticity is a major factor which impact the demand of a product. It measures the change in quantity demanded due to change in income. In the given scenario the demand for product will decline due to change in income. The income elasticity is smaller there will not be major change in demand but there will be some impact observed on the quantity demanded.
Let T1 be the time between a car accident and reporting a claim to the insurance company. Let T2 be the time between the report of the claim and payment of the claim. The joint density function of T1 and T2, f(t1, t2), is constant over the region 0 < t1 < 6, 0 < t2 < 6, t1 t2 < 10, and zero otherwise. Determine E[T1 T2], the expected time between a car accident and payment of the claim.
Answer:
5.7255
Explanation:
From the given information:
[tex]T_1 \to \text{time between car accident \& reporting claim} \\ \\ T_2 \to \text{time between reporting claim and payment of claim}[/tex]
The joint density function of [tex]T_1[/tex] and [tex]T_2[/tex] is:
[tex]f(t_1,t_2) = \left \{ {{c \ \ \ 0<t_1<6, \ \ \ 0<t_2<6, \ \ \ t_1+t_2<10} \atop {0} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ otherwise} \right.[/tex]
Area(A): [tex]= 6\times 6 - \dfrac{1}{2}*2*2[/tex]
= 34
The limits are:
[tex]\text{limits of } \ t_1 \ from \ 0 \ is \ 10 \to t_2 \\ \\ \text{limits of } \ t_2 \ from \ 0 \ is \ 4 \to 6[/tex]
Also;
[tex]\text{limits of } \ t_1 \ is \ 0 \to 6 \\ \\ \text{limits of } \ t_2 \ is \ 0 \to 4[/tex]
∴
[tex]\iint f(t_1,t_2) dt_1dt_2 =1 \\ \\ c \iint 1dt_1dt_2 = 1 \\ \\ cA = 1 \\ \\ \implies c = \dfrac{1}{34}[/tex]
To find;
[tex]E(T_1+T_2) = \iint (t_1+t_2)c \ \ dt_1dt_2 \\ \\ \implies \dfrac{1}{34} \Big[\int \limits^4_0 \int \limits^6_0(t_1+t_2) dt_1 \ dt_2 + \int \limits^6_4 \int \limits^{10-t_2}_0(t_1+t_2) dt_1 dt_2 \Big] \\ \\ \implies \dfrac{1}{34} (120 + \dfrac{224}{3}) \\ \\ = \mathbf{5.7255}[/tex]
