If the money supply is increased by the same amount in each economy, the high MPC economy will experience b. A larger increase in output and a smaller decrease in the interest rate.
What does a high MPC imply?A high MPC implies increased consumption while a low MPC shows increased savings.
Two factors that increase MPC include:
Readily available credit Lower interest rates.Thus, if the money supply is increased by the same amount in each economy, the high MPC economy will experience b. A larger increase in output and a smaller decrease in the interest rate.
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The American Management Association created a statement of ethics to guide members in the marketing profession
True
False
This question examines the market for mangos. You will use a demand function to construct the demand schedule, calculate the price elasticity of demand at different points along a linear demand curve, and identify the likely effects of price changes on total revenue.
Below, you are provided with the demand function for mangos. If you plug any price into the formula for the demand function, you get the quantity demanded at that price.
Q = 150 – 25P
Task 1. Use the table below to find the quantity of mangos demanded at each price.
Price Quantity of Mangos Demanded
$1
2
3
4
5
Task 2. Calculate the price elasticity of demand when the price falls from $5 to $4.
Task 3. When the price of a mango falls from $5 to $4, does total revenue fall or rise? How do you know?
Task 4. When the price of a mango falls from $3 to $2, does total revenue fall or rise?
Answer:
Task 1. Use the table below to find the quantity of mangos demanded at each price.
For a price of $1, the quantity demanded of mangos is:
Q = 150 - 25 ($1)
Q = 125
For $2:
Q = 150 - 25 ($2)
Q = 150 - 50
Q = 100
For $3
Q = 150 - 25 ($3)
Q = 150 - 75
Q = 75
For $4
Q = 150 - 25 ($4)
Q = 150 - 100
Q = 50
For $5
Q = 150 - 25 ($5)
Q = 150 - 125
Q = 25
Task 2. Calculate the price elasticity of demand when the price falls from $5 to $4.
The formula is
Price Elasiticy of Demand (PED) = ((Q2 - Q1) / (Q2 + Q1) / 2 ) / ((P2 - P1) / ((P2 + P1) / 2)
Now, we plug the amounts into the formula
PED = ((50 - 25) / (50 + 25) / 2) / ((4 - 5) / (4 + 5) / 2)
PED = 0.1666 / -0.0556
PED = -3
We take the absolute value, 3, which is a PED higher than 1, meaning that demand is elastic: the quantity demanded in this case increased more than the price.
Task 3. When the price of a mango falls from $5 to $4, does total revenue fall or rise? How do you know?
Revenue = Price x Quantity
Under the first scenario, revenue = $5 x 25 = $125
Under the second scenario, revenue = $4 x 50 = $200
So revenue increased by $75.
Task 4. When the price of a mango falls from $3 to $2, does total revenue fall or rise?
First scenario = $3 x 75 = $225
Second scenario = $2 x 100 = 200
So revenue actually falls by $25.
Which type of team rarely has the
authority to unilaterally implement
any of their suggestions?
= Problem-Solving Teams
Explanation:
Problem-Solving Teams is the right one hahahahahahahabaha
While managing political
behaviours
in organization, the manager
requires discouraging:
Select one:
a. Dialogue
b. Negotiation
c. Relationships
d. Self interest
= Self interest
Answer:
You are right it is D
Explanation:
Having Self Intrest will cause selfishnes while doing political things.
During 2018, Raines Umbrella Corp. had sales of $810,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $580,000, $90,000, and $135,000, respectively. In addition, the company had an interest expense of $91,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully deductible.) Suppose the company paid out $55,000 in cash dividends. If net capital spending and net working capital was zero, and if no new stock was issued during the year, what is the net new long-term debt
Answer:
$6,000
Explanation:
The computation of the net new long term debt is as follows:
But before that following calculations to be done:
Sales $810,000
Less: COGS ($580,000)
Less: S&A Expenses ($90,000)
Less: Depreciation ($135,000)
EBIT $5,000
Less: Interest ($91,000)
Taxable Income ($86,000)
Less: Taxes(21%) $0
Net Income(loss) ($86,000)
Now
OCF = EBIT + Depreciation - Taxes
= $5,000 + $135,000 - $0
= $140,000
Change in NWC = Net capital spending = Net new equity = 0
Cash flow from assets = OCF - Change in NWC - Net capital spending
= $140,000 - $0 - $0
= $140,000
Cash flow to stockholders = Dividends - Net New Equity
= $55,000 - $0
= $55,000
Cash flow to creditors = Cash flow from assets - Cash flow to stockholders
= $140,000 - $55,000
= $85,000
Cash flow to creditors = Interest - Net new LTD
$85,000 = $91,000 - Net new LTD
So,
Net new LTD is
= $91,000 - $85,000
= $6,000
M.A. was counting on her savings that she invested in Social Security. She doubts that this system will support her because the stock market crashed. She believes that the failure of the stock market, and its lack of recovery is because of poor presidential leadership.
a. True
b. False
Incomplete/unclear question. However, I answered based on what is found in the text.
Answer:
a. True
Explanation:
Based on the text, as part of her plans for old age, M.A was counting on her savings in social security.
And it is also possible for poor presidential leadership to negatively affect stock prices since the executive arm of government (the president) can draft out fiscal policies that could influence the amount of spending in an economy; thereby leading to a lack of recovery in stock prices.
. Based on the Empirical Rule, what percent of the observations will lie between plus or minus two standard deviations from the mean?
Answer:
Empirical Rule or 68-95-99.7% Rule
Approximately 95% of the data fall within two standard deviations of the mean.
The situation in which expansionary fiscal policy does not lead to a rise in aggregate output is referred to as
Select one:
a. Fiscal neutrality.
b. Inflation.
c. Complete crowding out
d. A recession.
= Complete crowding out
Answer: The situation in which expansionary fiscal policy does not lead to a rise in aggregate output is referred to as
Select one:
a. Fiscal neutrality.
b. Inflation.
c. Complete crowding out
d. A recession.
Explanation:
The situation in which expansionary fiscal policy does not lead to a rise in aggregate output is referred to as complete crowding out.
What is fiscal policy?A fiscal policy refers to the use of government spending and policies for influencing economic conditions.
The situation in which expansionary fiscal policies do not lead to a rise in aggregate output is referred to as complete crowding out.
Therefore, C is the correct option.
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Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to 13.4 cents per kilometer.(The Singapore dollar is the currency used in Singapore.)
Requirement 1:
Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Round the variable cost per kilometer to 3 decimal places. Omit the "$" sign in your response.)
Variable cost per kilometer $
Fixed cost per year $
Requirement 2:
Express the variable and fixed costs in the form Y = a + bX. (Round the variable cost per kilometer to 3 decimal places. Omit the "$" sign in your response.)
Y = $ + $ X
Requirement 3:
If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred? (Omit the "$" sign in your response.)
Total annual cost $
Work done so far:
HIGH :11.4 * 105,000 = 1,197,000
LOW: 13.4 * 70,000 = 938,000
Total Variable cost = 105,000 * 7.4 = 777,000
Fixed cost = 1,197,000 - 777,000 = 420,000
Answer:
1. $0.074 km
2. Total cost = $4,200 + 0.074x
3. $10,120
Explanation:
The computation of the fixed cost and the variable cost per hour using high and low method is seen below
Variable cost per hour = (High operating cost - Low operating cost) ÷ (High driven in kilometers - Low driven in kilometers),
Where,
High operating cost = 105,000 km × 11.4%
= $11,970
Low operating cost = 70,000 km × 13.4%
= $9,380
Hence,
= ($11,970 - $9,380) ÷ (105,000 km - 70,000 km)
= $2,590 ÷ 35,000 km
= $0.074 per km
Now, the fixed cost equal to
= High operating cost - (High driven in kilometers × Variable cost per km)
= $11,970 - (105,000 km × $0.074 )
= $11,970 - $7,770
= $4,200
2. The equation is as seen below;
Y = a + bx
Therefore,
Total cost = $4,200 + 0.074x
3. Y = a + bx
= $4,200 + 0.074 × 80,000
= $4,200 + $5,920
= $10,120
He's a cat in boots and he don't wear socks but he does his little business in a litter box yes his little business in a litterrrr boxxxxx his business that I will not dicuss (might not know where this is from )
Answer:
what the heck is this?? lol
Explanation:
Which professional has helped Jennifer in this example?
Jennifer bought a new smart phone from a local store that sells electronic products. After a week, she started experiencing problems with the
phone's display screen. She went back to the store and spoke to its ___
representative, who replaced the product and
apologized for the inconvenience.
Answer:
would it be sales representative since they were only able to replace the device and apologize
Answer:
customer service
Explanation:
I'm smart and got it right on my test
Stevenson Corporation acquires a one-year old building at a cost of $500,000 at the beginning of Year 2. The building has an estimated useful life of 50 years. However, based on reliable historical data, the company believes the carpeting will need to be replaced in 5 years, the roof will need to be replaced in 15 years, and the HVAC system will need to be replaced in 10 years. On the date of acquisition, the cost to replace these items would have been carpeting, $10,000; roof, $15,000; HVAC system, $30,000. Assume no residual value.
Required:
Determine the amount to be recognized as depreciation expense in Year 2 related to this building.
Answer:
$14,900
Explanation:
The computation of the amount recognized as a depreciation expense for the year 2 is shown below;
= Carpenting + roof + hvac system + building
= ($10,000 ÷ 5 years) + ($15,000 ÷ 15 years) + ($30,000 ÷ 10 years) + ($500,000 - $10,000 - $15,000 - $30,000) ÷ (50 years)
= $2,000 + $1,000 + $3,000 + $8,900
= $14,900
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
Division
Osaka Yokohama
Sales $3,000,000 $9,000,000
Net operating expenses $210,000 $720,000
Average operating assets $1,000,000 $4,000,000
Required:
a. For each divisions, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations.)
b. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.
Answer:
1. Rate of Interest = Net operating expenses/Average operating assets
Osaka = $210000/$1000000 = 0.21 = 21%
Yokohama = $720000 / $4000000 = 0.18 = 18%
2. Osaka Yokohama
Average operating assets $1,000,000 $4,000,000
M. required return at 15% $150,000 $600,000
Net operating income $210,000 $720,000
Minimum required return $150,000 $600,000
Residual income $60,000 $120,000
Universal Foods issued 12% bonds, dated January 1, with a face amount of $175 million on January 1, 2018. The bonds mature on December 31, 2032 (15 years). The market rate of interest for similar issues was 14%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method.
Required:
a. Determine the price of the bonds at January 1, 2018.
b. Prepare the journal entry to record their issuance by Universal Foods on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2025.
Answer:
Price of bond issued = $20,305,000 + $115,403,700 = $135,708,700
Explanation:
January 1 2018 ,
Investment in Bond issued by Universal Food (Dr.) $155,000,000
Discount on investment in Bonds issued by Universal Foods (Cr.) $19,291,300
Cash (Cr.) $135,708,700
June 30, 2018,
Cash (Dr.) $9,300,000
Discount in Investment in Bonds by Universal Foods (Dr.) $643,043
Interest Revenue (Cr.) $9,943,043
Dec 31, 2025,
Cash (Dr.) $9,300,000
Discount in Investment in Bonds by Universal Foods (Dr.) $643,043
Interest Revenue (Cr.) $9,943,043
How do financial intermediaries impact the market efficiency?
Answer:
help create efficient markets and lower the cost of doing business. Intermediaries can provide leasing or factoring
Explanation:
These intermediaries help create efficient markets and lower the cost of doing business . Intermediaries can provide leasing or factoring services , but do not accept deposits from the public . Financial intermediaries offer the benefit of pooling risk , reducing cost , and providing economies of scale , among others .
Plss follow me!!!
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output: 7.8 hours
Standard variable overhead rate: $12.55 per hour
Actual hours: 2,900 hours
Actual total variable manufacturing overhead cost: $36,975
Actual output: 200 units
What is the variable overhead efficiency variance for the month?
a. $17,397 U
b. $16,817 U
c. $312 F
d. $17,085 U
Answer:
b. $16,817 U
Explanation:
Calculation for What is the variable overhead efficiency variance for the month
Using this formula
Variable overhead Efficiency Variance= Standard Rate(Actual Hours - Budgeted Hours)
Let plug in the formula
Variable overhead Efficiency Variance= $12.55 per hour[2,900 hours-(7.8 hours*200 units)]
Variable overhead Efficiency Variance= $12.55 per hour*(2,900 hours-1,560 hours)
Variable overhead Efficiency Variance= $12.55 per hour*1,340 hours
Variable overhead Efficiency Variance=$16,817U
Therefore the variable overhead efficiency variance for the month will be $16,817U
13.) An investor is in a 30% combined federal plus state tax bracket. If corporate bonds offer 6% yields, what yield must municipals offer for the investor to prefer them to corporate bonds
Answer:
the yield that must offer for the investor in order to prefer them is 4.2%
Explanation:
The computation is shown below:
The after tax yield is
= Corporate bond yield × (1 - tax rate)
= 6% × (1 - 0.30)
= 6% × 0.70
= 4.2%
hence, the yield that must offer for the investor in order to prefer them is 4.2%
The same is relevant
There are four resources and four jobs to be done. Assume there must be one-to-one matching between jobs and resources. The time required for each resource to do each job is as follows:
Job (Hours)
Resource A B C D
1 5 8 7 7
2 4 9 5 9
3 6 9 8 7
4 7 6 6 9
What is the optimal assignment of resources to jobs?
Multiple Choice
1 to A; 2 to C; 3 to B; 4 to D
1 to B; 2 to D; 3 to C; 4 to A
1 to C; 2 to B; 3 to A; 4 to D
1 to D; 2 to B; 3 to C; 4 to A
1 to A; 2 to C; 3 to D; 4 to B
Answer:
1 → A ; 2 → C ; 3 → D ; 4 → B
Explanation:
From the given information, the table can be better structured as follows:
Job (Hours)
Resource A B C D
1 5 8 7 7
2 4 9 5 9
3 6 9 8 7
4 7 6 6 9
From the table, the allocation of resources is based on the minimum number of jobs i.e. time(hours) required to do all four tasks appropriately.
These are 1 → A ; 2 → C ; 3 → D ; 4 → B
Then, the time taken by this process is = (5 + 5 + 7 + 6)
= 23 hours
Can someone plz and answer this, I’m giving 100 points and brainliest!!
1.) What benefits are created when a business exports and sells products globally?
2.) Name the condition created when a nation has more exports than imports.
3.) What are some factors that can influence the exchange rate of currency?
4.) Identify three types of trade barriers used by governments.
5.) What is NAFTA?
Explanation:
5)The North American Free Trade Agreement was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. Th6e agreement came into force on January 1, 1994, and superseded the 1988 Canada–United States Free Trade Agreement between the United States and Canada...
4)Trade barriers are restrictions on international trade imposed by the government. They either impose additional costs or limits on imports and/or exports in order to protect local industries. There are three types of trade barriers: Tariffs, Non-Tariffs, and Quotas.......
3)Inflation Rates. Changes in market inflation cause changes in currency exchange rates. ...
Interest Rates. Changes in interest rate affect currency value and dollar exchange rate. ...
Country's Current Account / Balance of Payments. ...
Government Debt. ...
Terms of Trade. ...
Political Stability & Performance. ...
Recession. ...
Speculation.
2)A country that imports more goods and services than it exports in terms of value has a trade deficit or a negative trade balance. Conversely, a country that exports more goods and services than it imports has a trade surplus or a positive trade balance..
1)Increasing your sales potential
While importing products can help businesses reduce costs, exporting products can ensure increasing sales and sales potential in general. Businesses that focus on exporting expand their vision and markets regionally, internationally or even globally...
dont forget your promis....I’m giving 100 points and brainliest!!
Answer:
Inflation rates, is the 3rd one I think.
Explanation: I did this is class so I know.
Which of the following is/are inconsistent with the semi-strong form of the efficient market hypothesis? [I] Significant non-random price movements [II] Price overreaction to the public release of new information [III] Superior performance of professional traders [IV] Abnormal profits from illegal insider trading
A. I and III
B. II and IV
C. I and II
D. All are inconsistent with the semi-strong form of the EMH
Answer:
C. I and II
Explanation:
Semi strong form of efficient market hypothesis is a situation where stock prices adjust quickly to any new public information that circulates in the market. It assumes that stock prices incorporates the effect of all information which is publicly available in the market.
Communication may account for as much as. Of a hiring decision
a 25%
b. 40%
C65%
d. 80%
Answer:
A) 25%
Explanation:
Just got it right on edge
Identify the importance of accounting by selecting the statement that is correct below. Multiple choice question. Accounting information helps users make business and financial decisions. Accounting is a system that identifies, records and communicates an organization's business activities. Accounting information is primarily used only at the end of a year when tax returns and financial statements are prepared.
Answer:
Accounting information helps users make business and financial decisions.
Explanation:
Users of accounting information are divided into :
Internal users External usersInternal users include : owners, managers, employees
External users include : shareholders, tax authority, regulatory bodies
Based on the information contained in the financial information a shareholder can decide if to invest in a company or not to.
Also, mangers can decide to invest in new ventures based on the information on profitability contained in the financial statements.
The importance of accounting from the statements is A. Accounting information helps users make business and financial decisions.
Why is accounting important ?Accounting plays a crucial role in providing relevant and reliable information to users for making informed business and financial decisions. It involves the identification, recording, and communication of an organization's business activities, which helps users understand the financial health and performance of the entity.
Accounting information is used not only at the end of the year for tax returns and financial statements but also on an ongoing basis to support decision-making, budgeting, forecasting, strategic planning, and evaluating the financial position and performance of the organization.
In conclusion, option A is correct.
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A car dealer acquires a used car for $12,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include $100 for transportation-in. $170 for shipping insurance. $800 for car import duties. $140 for advertising. $1,400 for sales staff salaries. $150 for trimming shrubs.
Answer:
$13,070Explanation:
The Cost of inventory = all cost of purchase; including costs of conversion and transfer.
Calculation of Inventory Cost FOB ship.
Cost of Purchase $12,000
Transportation-in $100
Shipping insurance $170
Car import duties $800
Total Cost $13,070
if quantity demamded is completely unresponsive to changes in price ,demand is what?
Answer:
If quantity demanded is completely unresponsive to changes in price, demand is Perfectly inelastic.
Explanation:
Perfectly inelastic demand means that quantity demanded remains the same when price increases or decreases. Consumers are completely unresponsive to changes in price.
I hope it's helpful
A firm has provided you with the following information:
Output 30
Variable Cost $1,900
Fixed Cost $120
Marginal Cost $50
Price $50
a. What is the firm's short-run profit if they produce using the MC=MR rule?
b. What is the firm's short-run profit if they produce nothing?
c. What will be the firm's production decision in the short-run?
1. Shutdown
2. Exit
3. Operate
Answer:
(a) Output produced = 30 , Price = $50
Total revenue = Output produced * Price = 30 units * $50 = $1,500
Total Cost= Variable cost + Fixed cost = $1900 + 120 = $2020
At profit maximization or loss minimization point, MR = MC.
Corresponding to an output level of 30, MR=MC =$50
Note: Price is constant at $50. So, the marginal revenue will be $50 at each level of output
Profit = Total revenue - Total Cost.
Profit = $1500 - $2020
Profit = -$520.
The firm's short-run profit is -$520 if they produce using MR=MC.
(b) If a firm produces nothing, then a firm has to bear a fixed cost of $120. It means there is a loss of $120 or a profit of -$120. So, short-run profit is -$120 if they produce nothing.
(c) In the short run, if the firm produces then bear a loss of $520. if a firm produces nothing then bear a loss of $120. So, it is better to shut down the production in the short run in order to minimize the loss of the firm.
An internal study by the Technology Services department at Lahey Electronics revealed company employees receive an average of two emails per hour. Assume the arrival of these emails is approximated by the Poisson distribution.
a. What is the probability Linda Lahey, company president, received exactly 1 email between 4 P.M. and 5 P.M. yesterday?
b. What is the probability she received 5 or more emails during the same period?
c. What is the probability she did not receive any emails during the period?
Answer:
0.2706 ; 0.05265 ; 0.1353
Explanation:
Given that :
λ = 2
According to the poisson distribution formula :
P(x = x) = (λ^x * e^-λ) / x!
P(x = 1) = (2^1 *e^-2) / 1!
P(x = 1) = (2 * 0.1353352) = 0.2706
P(x ≥ 5) = 1 - P(x < 5)
1 - P(x < 5) = 1 - [p(x = 0) + p(x = 1) + p(x = 2) + p(x = 3) + p(x = 4)]
We obtain and add the individual probabilities. To save computation time, we can use a poisson distribution calculator :
1 - P(x < 5) = 1 - (0.13534+0.27067+0.27067+0.18045+0.09022)
1 - P(x < 5) = 1 - 0.94735 = 0.05265
P(x ≥ 5) = 1 - P(x < 5) = 0.05265
Probability that no emails was received :
x = 0
P(x = 0) = (2^0 *e^-2) / 0!
P(x = 0) = (1 * 0.1353352) / 1 = 0.1353
The board of directors of Chestnut Inc. approved a restructuring plan on November 1, Year 1. On December 1, Year 1, Chestnut publicly announced its plan to close a manufacturing division in New Jersey and move it to China, and the company's New Jersey employees were notified that their jobs would be eliminated. Also on December 1, Year 1, to ensure an orderly transition, management promised a termination bonus of $10,000 to any employee who remains with the company until his or her position is terminated in the fourth quarter of Year 2. Chestnut estimates it will pay termination bonuses to 120 employees at the end of Year 2, for a total of $1,200,000. The present value of the estimated termination bonus is $1,000,000.
Required:
Determine the provision that should be recognized for Chestnut's restructuring plan. Identify the dates on which journal entries should be made and the amounts to be recorded.
Answer:
Company by informing employees about termination is creating constructive obligation. Company should therefore provide for restructuring costs calculated as PV of estimated termination bonus which is based on number of employees would accept the offers. The provision for expenses should be recognized on December 1 of year 1
Journal entry to record provision for restructuring costs
Date General Journal Debit Credit
01/Dec/Year 1 Restructuring expenses $1,000,000
Provision for termination of benefits $1,000,000
(To record provision for restructuring costs)
Pierce Which of the following statements is therefore necessarily true for Pierce? has a concave utility of wealth function, u(x). Pierce prefers prospect X to prospect Y.
a. CE(X) > CE(Y).
b. U(EV(X)) > U(EV(Y))
c. EU(X) < EU(Y)
d. Y is a mean preserving spread of X.
Answer:
A) CE(X) > CE(Y) is the correct answer.
Explanation:
Solution:
Correct Answer is A) CE(X) > CE(Y)
Because:
1. First of all, we are given that Pierce has a concave utility of wealth function u(x) which means Pierce is a kind of person who does not prefer taking risk.
2. Secondly, we are given that he prefers prospect X to Prospect Y.
3. Thirdly, Pierce will always make sure that Certainty Equivalent should be higher than others as Pierce does not want to take risks.
4. Lastly, he prefers X to Y so, he will make sure CE(X) must be greater than CE(Y) .
Hence,
A) CE(X) > CE(Y) is the correct answer.
Assume an investor purchases the net assets of an investee for the cash purchase price is $75,600. The investor is willing to purchase the investee's business for this amount because the fair value of PPE is $70,560 and the fair value of a (previously unrecognized) customer list is $15,120 (the fair values of all other assets and liabilities are equal to their book values). The investee company reports the following balance sheet on the acquisition date:
Cash $2,800 Accounts payable $5,600
Accounts receivable 5,600 Accrued liabilities 8,400
Inventories 11,200 -
Current assets 19,600 Current liabilities 14,000
Long-term liabilities 11,200
PPE, net 28,000 Stockholdersâ equity 22,400
Total assets $47,600 Total liabilities and equity $47,600
Required:
Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company (assume that the fair value of the assets is equal to their book values).
Answer and Explanation:
The journal entry is given below;
Cash $2,800
Account receivable $5,600
Inventories $11,200
PPE $28,000
To Account payable $5,600
To Accrued liabilities $8,400
To Long term liabilities $11,200
To Cash $22,400
(Being the cash is paid is recorded)
Here all the assets are debited as it increased the assets and credited all the liabilities except cash as it increased the liabilities and the remaining balance left would be credited to cash account
Warner Clothing is considering the introduction of a new baseball cap for sales by local vendors. The company has collected the following price and cost characteristics.
Sales price $15 per unit
Variable costs 5 per unit
Fixed costs 50,000 per month
Required:
a. What number must Warner sell per month to break even?
b. What number must Warner sell per month to make an operating profit of $34,000 and $8,400. Assume that the company plans to sell 9,000 units per month. Consider requirements (b), (c), and (d) independently of each other.
c. What will be the operating profit?
d. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent?
Answer:
a. 5,000 units
b. 8,400 units and 5,840 units
c. $40,000
d. decrease of operating profit by 22.50 % and increase of operating profit by 45.00%
Explanation:
Breakeven point is level at which a firm makes neither profit nor loss
Break even units = Fixed Costs ÷ Contribution per unit
Break even units = 5,000 units
Units to achieve target profit = Target Profit + Fixed Costs ÷ Contribution per unit
Units to achieve profit of $34,000 = 8,400 units
Units to achieve profit of $8,400 = 5,840 units
Operating Profit = Contribution - Fixed Costs
= $40,000
The effect on change of operating profit can be best shown by calculation of the Degree of Operating Leverage (DOL)
DOL = Contribution ÷ Profit
= 2.25
Sales decreases of 10 percent = decrease of operating profit by 22.50 % (10 % × 2.25)
Sales Increases of 20 percent = increase of operating profit by 45.00% (20%× 2.25)
