Answer:
Actual reserve ratio = Money that bank holds per deposit
= 10 / 100
= 10%
Desired reserve ratio = Money banks wants to hold per deposit
= 9 / 100
= 9%
Excess reserves = Actual reserves - desired reserves
= 12,000 - 7,000
= $5,000
Consider public policy aimed at smoking.
a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the government wants to reduce smoking by 20 percent, by how much should it increase the price?
b. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now?
c. Studies also find that teenagers have a higher price elasticity of demand than do adults. Why might this be true?
Answer:
1. government shoud increase price by 50%. so it would be $3
2. larger effect 5 years from now
3. this is true due to their limited finance compared to adults
Explanation:
1. prices elasticity = % change in quantity demanded ÷ % change in price
price elasticity = 0.4
% change in dmd = 20%
% change in price = ?
[tex]0.4=\frac{0.20}{?}[/tex]
we cross multiply
? = 0.20/0.4
= 0.5
= 50%
so if the government wants to reduce smoking by 20%, it has to increase the price of cigarettes by half of its price= $2 + $1 = $3
2. goods usually have more elastic demand as time goes on. So if cigarette price is permanently raised, it would have a bigger effect five years from now. This is based on the fact that the people may not feel short run effect of the increase as they would in the long run. But gradually given this increase, people may start to gradually reduce their smoking.
3. The effect of the change in price would be more felt on the teenagers. this is due to the fact that they have limited financial strength compared to adults. Also they are new to smoking compared to the adults and are more likely to be less involved in the habit.
What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19? Answer in percentage terms to 2 decimals and without the % sign.
Answer:
5.00
Explanation:
The rate of return for the investor can be determined using a holding period rate of return bearing in mind that the investor would incur a cash outflow of $1,054.47 whereas the investor would receive $1,037.19 and an annual coupon of 7% of the face value
holding period return=(selling price+annual coupon-purchase price)/purchase price
annual coupon=7%*$1000
annual coupon=$70.00
holding period return=($1,037.19+$70.00-$1,054.47)/$1,054.47
holding period return=5.00%
Given the following information, determine the activity rate for setups.
Activity Pool Activity Base Budgeted Amount
Setups 10,000 $180,000
Inspections 24,000 $120,000
Assembly (DLH) 80,000 $400,000
a. $58.00
b. $0.75
c. $5.09
d. $18
Answer:
Set up= $18 per set up
Explanation:
Giving the following information:
Activity Pool Activity Base Budgeted Amount
Setups 10,000 $180,000
To calculate the activity rate, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Set up= 180,000 / 10,000
Set up= $18 per set up
Shawn Incorporated planned to produce 3,000 units of its single product, Megatron, during November. The standard specifications for one unit of Megatron include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Megatron. The accountant computed a favorable materials price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:_________
Answer: The actual cost of materials was less than the standard cost
Explanation:
Net materials cost variance = Favorable materials price variance + Favorable materials quantity variance
= 380 + (-120 unfavorable)
= 380 - 120
= $260 favorable
As the materials cost variance is favorable, it means that the actual cost of materials was less than what was budgeted for it or rather its standard cost.
During its first year of operations, Mario Lupo formed Lupo Company as a corporation and personally invested $15,000 in the business in exchange for common stock. Lupo Company also paid dividends of $2,000. The company earned $35,000 of revenues and incurred $23,000 of expenses. At the end of the year, the company's equity totaled:_____.
a. $13,000.
b. $15,000.
c. $25,000.
d. $75,000.
Answer:
c. $25,000
Explanation:
Calculation to determine At the end of the year, the company's equity totaled:
First step is to calculate the Net income using this formula
Net income= Revenues- Expense
Let plug in the formula
Net income= 35000-23000
Net income=12000
Second step is to calculate Net income added to capital using this formula
Net income added to capital = Net income-Cash dividend
Let plug in the formula
Net income added to capital=12000-2000
Net income added to capital=10000
Now let determine the Ending company total equity using this formula
Ending company total equity= Opening invested capital + Net income added to capital
Let plug in the formula
Ending company total equity=15000+10000
Ending company total equity=$25000
Therefore At the end of the year, the company's equity totaled:$25,000
Identify the following is structural, frictional, cyclical and seasonal employment.
a. Andrew recently lost his job as an accountant for a large firm because he only knows how to perform the job using a general ledger (paper and pencil), and has been unwilling to learn how to use newly invented accounting software provided by the company.
b. Sam recently lost his job as an accountant for a large firm because he only knows how to perform the job a using a general ledger and has been unwilling to learn how to use newly invented accounting software provided by the company.
c. Teresa just graduated from college and is looking for a full time position with an investment banking firm.
d. A recent recession has reduced the number visitors to a local theme park. The park has had to lay off many of its employee, including Beth.
Answer:
Frictional unemployment occurs when people decided to leave their jobs and look for another or people join the labor force for the first time.
Structural unemployment arises from a situation where there is a mismatch between the skills needed in an economy and the skills possessed by people. Happens a lot when employees need to adapt to new technology.
Cyclical unemployment happens as a result of the economy either growing or shrinking.
a. Andrew recently lost his job as an accountant for a large firm because he only knows how to perform the job using a general ledger (paper and pencil), and has been unwilling to learn how to use newly invented accounting software provided by the company. ⇒ STRUCTURAL UNEMPLOYMENT.
b. Sam recently lost his job as an accountant for a large firm because he only knows how to perform the job a using a general ledger and has been unwilling to learn how to use newly invented accounting software provided by the company. ⇒ STRUCTURAL UNEMPLOYMENT.
c. Teresa just graduated from college and is looking for a full time position with an investment banking firm. ⇒ FRICTIONAL UNEMPLOYMENT.
d. A recent recession has reduced the number visitors to a local theme park. The park has had to lay off many of its employee, including Beth. ⇒ CYCLICAL UNEMPLOYMENT.
On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. Using the straight-line method, what is the amount that should be recorded as depreciation on December 31?
a. $135,000
b. $24.900
c. $124,500
d. $27,000
Answer:
Depreciation = $24900
Explanation:
Below is the calculation of depreciation:
Cost of equipment = $135000
Salvage value = $10500
Useful life = 5 years
Depreciation = (Cost of machine - salvage value) / useful life
Depreciation = (135000 - 10500) / 5
Depreciation = $24900
You would like to use the periodic review model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 20. Which of the following is the standard deviation of demand over the review period and lead time (sT L) if the standard deviation of daily demand is 8?
a. 40
b. 200
c. 8
d. 25
e. 100
Answer:
a. 40
Explanation:
The computation of the standard deviation of the demand is shown below:
= 8 × √(5+20)
= 8 × √25
= 8 × 5
= 40
Hence, the standard deviation of the demand is 40
Therefore the first option is correct and the same is to be considered
If the government lowers tax rates and tax revenue falls by $100 million, we can expect consumption spending to ________ and equilibrium output to ________.
Answer: increase; increase by more than $100 million
Explanation:
If the government lowers tax rates and tax revenue falls by $100 million, we can expect consumption spending to increase and equilibrium output to increase by more than $100 million.
It should be noted that when there's reduction in tax rate, this implies that there'll be more money available to the households and the firms and this will then lead to more money which can be spent on goods or services. Also, due to this, the equilibrium output will increase as well by more than $100 million.
Presented below are three revenue recognition situations.
a. Groupo sells goods to MTN for $908,000, payment due at delivery.
b. Groupo sells goods on account to Grifols for $797,000, payment due in 30 days.
c. Groupo sells goods to Magnus for $499,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $462,200.
Required:
Indicate the transaction price for each of these transactions and when revenue will be recognized.
Answer:
Groupo
Transaction Price When to recognize revenue
a. $908,000 Delivery Time
b. $797,000 30 days' time
c. $462,200 18 months and 24 months' time
Explanation:
a) Data and Analysis:
a. $908,000 Delivery Time
b. $797,000 30 days' time
c. $462,200 18 months and 24 months' time
b) For the goods sold on installment sales, the payments are also deferred. Therefore, the seller does not recognize any gain until installments are received. Since installment sales encompass much longer time periods compared to credit sales, there are no discounts offered for early payments. The seller in an installment sales maintains an ownership interest in the goods sold until the buyer pays the balance due in full.
What was the result in Riley v. Iron Gate Self Storage, the case in which Larry Riley rented a self-storage unit from Iron Gate with an agreement limiting the value of stored contents to $5,000 and a corresponding liability limit of $5,000
Answer:
Larry Riley v. Iron Gate Self Storage
The result in the above-mentioned case was that judgment was entered in favor of Iron Gate.
Explanation:
The known facts are that after missing payments, Iron Gate auctioned Riley's storage unit items off, causing Riley to sue Iron Gate, in which he alleged to have suffered a $1.5 million in damages, whereas the storage unit was only allowed to hold $5,000. In its ruling, the court determined that self-storage facilities are not an essential or necessary public service. Therefore, it dismissed any procedural unconscionability. Thus, judgment was entered in favor of Iron Gate.
The amount due on the maturity date of a $10,900, 60-day 6%, note receivable is: (Use 360 days a year.)
Answer:
$11,009
Explanation:
Calculation to determine The amount due on the maturity date
Amount due =10900 x .06 x 1/6 = $109 + $ 10900
Amount due=$11,009
Therefore The amount due on the maturity date is $11,009
1. Offering a credit customer a discount after the sale has occurred is a way to?
Answer:
hope it helps you:)
Explanation:
god blessed
This year Andrews achieved an ROE of 10.7%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Andrews's ROE
Answer:
Andrews's ROE would decrease
Explanation:
Return on equity is an example of a profitability ratio.
Profitability ratios measure the ability of a firm to generate profits from its asset
Return on equity = net income / average total equity
Using the Dupont formula, ROE can be determined using:
ROE = Net profit margin x asset turnover x financial leverage
ROE = (Net income / Sales) x (Sales/Total Assets) x (total asset / common equity)
If asset turnover decreases and other ratios remain constant, ROE declines
Imagine that the Brazilian aircraft manufacturer Embraer purchases a 10 percent share of a Canadian aircraft distribution company, in order to facilitate the marketing and sales of its aircraft in Canada. This is an example of
Answer: Forward Integration
Explanation:
Forward integration is a process where a company takes over the control of another company that is further along in the value chain so that it might be able to sell or distribute is goods more effectively. For example, an oil company taking over a petroleum products company.
In this scenario, the Brazilian company purchased a huge part of a company further along in distribution in order to facilitate better sales so this is forward integration.
Reliability is how long an item or system will perform its function before it breaks. Good reliability will ______________________. Decrease logistics support requirements Increase life cycle sustainment costs Decrease system readiness Increase manpower waste
Answer:
Decrease logistics support requirements.
Explanation:
Decrease logistics support requirements is the correct answer because the increase in reliability decreases the requirement to correct the commodity or equipment. Therefore, the logistic support decreases which further decreases the manpower waste. Additionally, the good reliability shows that the product's quality is good and it will work efficiently for a longer time period. Thus, a good quality product requires less logistic support.
Reliability is a quality of being trustworthy and in performing constantly well. It result in measurement and calculations and tends to be more accurate.
Thus there is a decrease in logistics support requirements. When the system function before it breaks. Good reliability will always support the system.Hence the option A is correct.
Learn more about the or system will perform its function before.
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Assuming that all entries have been posted, prepare correcting entries for each of the following errors.
a. The following entry was made to record the purchase of $774 in supplies on account:
Supplies 142 774
Cash 101 774
b. The following entry was made to record the payment of $475 in wages:
Rent Expense 521 475
Cash 101 475
c. The following entry was made to record a $396 payment to a supplier on account:
Supplies 142 196
Cash 101 196
Answer and Explanation:
The correcting journal entries are shown below:
a. Cash Dr $774
To account payable $774
(Being purchase of supplies on account is recorded)
b. Wages expense Dr $475
To rent expense $475
(Being wages expense is recorded)
c. Account payable $396
To Supplies $196
To cash $200
(being cash paid is recorded)
These 3 correcting entries should be recorded
The following information is given about two fixed coupon bonds from Company A and Company B, both of which have several years left until maturity. Both bonds have a par value of $1,000. Based on this information, which of the following is most accurate?
Company A Company B
Coupon = 4% Coupon = 8%
Yield = 6% Yield = 6%
A. Company A’s bond is priced higher than Company B’s and Company B’s bond is traded at a premium
B. Company A’s bond is priced lower than Company B’s and Company B’s bond is traded at a premium
C. Company A’s bond is priced higher than Company B’s and Company B’s bond is traded at a discount
D. Company A’s bond is priced lower than Company B’s and Company B’s bond is traded at a discount
Answer: B. Company A’s bond is priced lower than Company B’s and Company B’s bond is traded at a premium
Explanation:
Discount bond ⇒ Bond coupon rate is less than yield which leads to bond having a lower than par price.
Premium bond ⇒ Bond coupon rate is more than yield which leads to bond having higher than par price.
Company A therefore has a discount bond that has a low price compared to Company B which has a premium bond which means that its price is relatively high.
Company B's bond is therefore priced higher than Company A's bond.
The impact of interest rate changes in the PV of $100 due in 20 years compared to the PV of $100 due in one year are:
a. smaller because interest rate changes have a greater impact on the near-term cash flows than distant cash flows.
b. the same because the cash flow is the same.
c. greater because interest rate changes have a greater impact on distant cash flows than near-term cash flows.
d. sometimes less and sometimes more depending on the interest rate.
Answer: c. greater because interest rate changes have a greater impact on distant cash flows than near-term cash flows.
Explanation:
Interest rate changes have a greater impact on distant cashflows because those cashflows will be exposed to the interest rates for longer. This means that they will be subjected to more discounting than a cashflow that is due in one year which would be subject to only a single year of discounting.
For instance, assume the required rate of return for two investments is 10%. One investment yields $10,000 in 20 years and another yields $10,000 in 2 years .
The present value of both are:
= 10,000 / (1 + 10%)²⁰ = 10,000 / ( 1 + 10%)²
= $1,486.43 = $8,264.46
Notice the difference. The longer term investment was more exposed to interest rate effects.
Suppose that the price of a rental car (Prc) is $50 while the price of a flight (Pfl) is $85. Also, suppose that the marginal utility of a rental car (MUrc) is 20 utils while the marginal utility of flying (MUfl) is 30 utils. What is the best advice for this consumer?
Answer:
Consumers should choose to take the flight.
Explanation:
The price of a rental car = $50
Marginal utility from the car = 20 utils
Now find the per dollar utility from car = $50 / 20 = 2.5
The price of a flight = $85
Marginal utility from the flight = 30 utils
Now find the per dollar utility from flight = $85 / 30 = 2.83
Since the per dollar, MU is greater in the case of flight so consumers should choose to take the flight.
Consider the following gasoline sales time series data. Click on the datafile logo to reference the data.
Week Sales (1000s of gallons)
1 16
2 20
3 20
4 23
5 18
6 17
8 19
9 23
10 19
11 14
12 21
a. Using a weight of 1/2 for the most recent observation, 1/3 for the second most recent observation, and 1/6 the most recent observation, compute a three-week weighted moving average for the time series (to 2 decimals). Enter negative values as negative numbers.
Week
Time-Series Value Weighted Moving
Average Forecast Forecast
Error
(Error)2
1
2
3
4
5
6
7
8
9
10
11
12
Total
b. Compute the MSE for the weighted moving average in part (a).
MSE =
Do you prefer this weighted moving average to the unweighted moving average? Remember that the MSE for the unweighted moving average is 8.90.
Prefer the unweighted moving average here; it has a (greater/smaller) MSE.
c. Suppose you are allowed to choose any weights as long as they sum to 1. Could you always find a set of weights that would make the MSE at least as small for a weighted moving average than for an unweighted moving average? (Yes/ No)
Answer:
a) attached below
b) MSE for weighted moving average = 14.5
c) Yes
Explanation:
a) Computing a three-week weighted moving average using
1/2 for most recent , 1/3 for second most recent and 1/6 for third most recent observation
Given data :
Week Sales (1000s of gallons)
1 16
2 20
3 20
4 23
5 18
6 17
7 19
8 23
9 19
10 14
11 21
solution attached below
B) Determine MSE for the weighted moving average
MSE = ∑ (error)^2 / 8
= 116.0289 / 8 = 14.50
The MSE for unweighted moving average ( 8.90 ) is smaller than the MSE for weighted moving average
C) Yes I will find a weight that makes at least the MSE for weighted moving average than unweighted moving average
Suppose that you can sell as much of a product (in integer units) as you like at $68 per unit. Your marginal cost (MC) for producing the qth unit is given by: MC = 9q. This means that each unit costs more to produce than the previous one (e.g., the first unit costs 9*1, the second unit (by itself) costs 9*2, etc.). If fixed costs are $60, what is the optimal output level?
Answer:
8 units
Explanation:
P = $68 per unit
MC = 9q
Fixed cost = $60
It is noted that seller can sell as much as a product at $68 per unit. This means that the firm is price taken, hence, it is case of perfect competition.
For a perfectly competitive firm, the optimal output is at: P = MC
i.e. 68 = 9q
=> q = 68/9
=> q = 7.556
> q = 8
So, the optimal output level is 8 units.
Manner Inc. has incurred the following overhead costs over a 6 week period: Calculate the approximate fixed cost component of Manner's overhead costs using the high-low method. Group of answer choices $408. $470. $258. $250. $542.
Answer:
250 dollars
Explanation:
Variable cost = 1190-710/94-46
= 480/48
= 10 dollars
Fixed cost = 1190-(10*94)
= 1190-940
= 250 dollars
Fixed cost = 710-(10*46)
= 710-460
= 250 dollars
Maximum diversification benefit can be achieved if one were to form a portfolio of two stocks whose returns had a correlation coefficient of:
Answer:
-1.0
Explanation:
Diversification in a portfolio can be regarded as spreading of investments by investors so that risk can be minimized. The correlation coefficient "r" that exist between two securities allows us to know how return that's gotten from one security is related to returns from another security. For instance, it is possible for two securities within same sector to move in the same direction, i.e it is possible to be positively correlated, in this sense when price of one goes up , the other price also goes up this might not be with the same margin.
As regards negative correlation, there is movement of security returns in opposite directions, in this sense there is least relationship between the securities. Hence with r= 1 there is movement of the two stocks in opposite direction hence Maximum diversification.
It should be noted that Maximum diversification benefit can be achieved if one were to form a portfolio of two stocks whose returns had a correlation coefficient of -1.0
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 177,000 kilometers during a year, the average operating cost is 12.3 cents per kilometer. If a truck is driven only 118,000 kilometers during a year, the average operating cost increases to 15.5 cents per kilometer.
Required:
a. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation.
b. Express the variable and fixed costs in the form Y = a + bX.
c. If a truck were driven 147,000 kilometers during a year, what total cost would you expect to be incurred?
state any three examples of non-insurable risks??
Answer:
any three examples of non-insurable risks are:
Residential overland water
War.
Acts of a foreign enemy.
Should the firms' overseas operations be judged by the standards (legal, economic, cultural, and moral) of the country in which it is operating or should they be judged by the standards of the U.S. market?
Answer: Standards of the country they operate in
Explanation:
Various countries have differing norms on what is legally, socially, morally and culturally acceptable. In order to be able to operate in those countries, companies would have to adapt to these requirements in order to maximize business operations.
It would therefore be illogical to judge these overseas operations in terms of the U.S. market which would be different from them. They should be judged on their own merit and then a standardizing factor can be used to relate them to the U.S. market to see whether they are performing well given their unique circumstances.
Assume you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means a sole proprietorship:
Answer:
Faces unlimited liability
Explanation:
From the question we are informed about instance, whereby you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. In this case, it means a sole proprietorship Faces unlimited liability. Unlimited liability can be regarded as full legal responsibility that is been assumed for all business debts by business owners as well as partners . This liability cannot be regarded as capped, here there could be paying of obligations through the seizure as well as well as sale of personal assets of the owners, and this quit not the same as that of limited liability business structure.
The tool within the "Assessing Opportunities" step of the Strategic Sourcing Process that graphically orders categories of numerical data in descending order so that the most important categories are easily recognized is called a:
Answer:
Pareto chart
Explanation:
A Pareto chart can be regarded as bar graph, The lengths of the bars are been arranged having longest bars on the left, on the right is the shortest bar, with this arrangement the chart visually gives a depiction about which situations are more significant. The lengths of the bars gives a representation of frequency or representation of cost i.e time or money. It should be noted that Pareto chart is the tool within the "Assessing Opportunities" step of the Strategic Sourcing Process that graphically orders categories of numerical data in descending order so that the most important categories are easily recognized.
The tool within the "Assessing Opportunities" step of the Strategic Sourcing Process that graphically orders categories of numerical data in descending order so that the most important categories are easily recognized is called a Pereto chart
A Pareto chart is simply known to be a type of chart that has bars and a line graph. It is the point where individual values are shown in descending order by bars, and the cumulative total is shown by the line.
It serves mainly to show the most important among a said large amount or set of factors.Pareto charts show the step by step frequency counts of data.Conclusively, the charts are used to show areas to focus on first in process improvement.
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The weekly total cost of baking pies at Tasty Tortes is given by TC = 0.01 Q 1.5. Tasty’s marginal cost of producing 10,000 pies a week is:
Answer: $1.50
Explanation:
TC = 0.01Q⁰.⁵
You get marginal cost when you differentiate the total cost.
MC = dTC / dQ
= 1.5 * 0.01 * Q¹.⁵ ⁻ ¹
= 0.015 * Q⁰.⁵
When Q is 10,000, the marginal cost is:
= 0.015 * 10,000⁰.⁵
= $1.50
