Answer:
Fixed Cost Function = Average Cost - Average Variable cost
Explanation:
A fixed cost is the one which does not changes with the level of production. These cost are irrelevant to number of units production. It is not affected by the units produced and sold. The change in fixed cost does not affect the marginal cost. The marginal cost is the variable cost that is incurred by producing one more unit. These costs are affected by the level of production.
"The technique which identifies the time period required to recover the cost of the investment is called the" ________________ method.
Answer:
Cash payback method
Explanation:
Cash payback technique is a method used by financial experts to analyse capital projects to see which ones they can invest in and which one to avoid.
This method is used to estimate the time it will take for a project to recoup the original cost of investment. It estimated when a business will payoff initial cost and start giving the investor profit.
Cash payback is easy to calculate
Cash payback = (Initial investment) ÷ (Estimated cash inflows each year)
Shorter cash payback is favourable as the investor gets back initial cost in a shorter period.
Which of the following is not one of the benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house? A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities. B. Streamlining company operations in ways that improve organizational flexibility and cut the time it takes to get new products into the marketplace. C. Allowing a company to concentrate on its core business, leverage its key resources, and do even better what it already does best. D. Helping a company assemble diverse kinds of expertise easily and efficiently. E. Improving a company’s ability to innovate.
Answer: A. Preventing a company from hollowing out its technical know-how, competencies, or capabilities.
Explanation:
Outsourcing is the practice whereby organizations hire an outside party to help do certain functions wguvg could have been done by the workers in the organization but outsourced in order to focus on other production areas.
Out of the options given in the question, the one which is not a benefits of outsourcing, whether domestically or internationally, value chain activities presently performed in-house is that "preventing a company from hollowing out its technical know-how, competencies, or capabilities".
Preventing a company from hollowing out its technical know-how, competencies, or capabilities is not benefits of outsourcing, hence option A is correct.
Outsourcing is the process of hiring an outside party to assist with some duties that might have been performed by employees within the firm but were outsourced in order to focus on other areas of production.
"Preventing a company from hollowing out its technical know-how, competencies, or capabilities" is not a benefit of outsourcing, whether domestically or internationally, value chain tasks now conducted in-house.
Thus, the option A is correct.
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The maximum tax rate on estates and gifts: Question 7 options: is gradually increasing. has remained constant. is gradually declining. has increased sharply.
Is gradually declining.
Skyline Corp. will invest $210,000 in a project that will not begin to produce returns until the end of the 3rd year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $46,000. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value if the cost of capital is 12 percent.
Answer:
$-2,801.13
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-210,000
Cash flow each year from year 1 to 2 = 0
Cash flow each year from year 3 to 12 = $46,000.
I = 12%
NPV = $-2,801.13
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2017 were as follows.
Budget Actual
Indirect materials $14,200 $13,700
Indirect labor 19,100 19,900
Utilities 11,400 12,100
Supervision 4,600 4,600
All costs are controllable by the department manager.
Prepare a responsibility report for April for the cost center.
Answer:
HANNON COMPANY
Assembly Department
Manufacturing Overhead Cost Responsibility Report
For the Month Ended April 30,2017
Controllable Cost Budget$ Actual$ Difference$ Remark
Indirect materials 14,200 13,700 500 Favourable
Indirect Labor 19,100 19,900 -800 Unfavourable
Utilities 11,400 12,100 -700 Unfavourable
Supervision 4,600 4,600 0 None
Total 49,300 50,300 -1,000 Unfavourable
A list of financial statement items for Splish Brothers Inc. includes the following: accounts receivable $30,100, prepaid insurance $5,590, cash $22,360, supplies $8,170, and debt investments (short-term) $17,630.
Prepare the current assets section of the balance sheet listing the items in the proper sequence.
(List current assets in order of liquidity.)
Answer: Please find answers below
Explanation:
The Order of liquidity shows how assets of a company are presented in a balance sheet in an order that shows the faster the time taken for an asset to be converted to Cash.
The order in which Current accounts are represented as as follows
--- Cash (including currency, checking accounts, and petty cash),
----Short-term investments ,
----Accounts receivable,
---- Inventory,
-----Supplies,
----- Pre-paid expenses.
Current Assets of Splish Brothers Inc. in order of liquidity
Current Assets Amount
Cash $22,360
Debt investments(short term) $17,630
Accounts receivables $30,100
Supplies $8,170
Prepaid Insurance $5,590
Total Current Accounts $83,850
The "TAO" approach to digital marketing analytics stands for.
Answer:
The "TAO" approach to digital marketing stands for the way through which digital marketers can make themselves heard in the digital world in the midst of all the digital noise. He believed that, apprenticeships is the best way.
This offers the person a great way to gain both knowledge and experience while getting paid at the same time. For example,there are more and more apprenticeship bodies someone can engage with like The Juice Academy and Arch Apprentices.
Explanation:
Suppose the 2020 adidas financial statements contain the following selected data (in millions). Current assets $4,575 Interest expense $200 Total assets 9,000 Income taxes 178 Current liabilities 3,050 Net income 236 Total liabilities 5,670 Cash 800 Compute the following values. (a) Working capital. $ millions (b) Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) :1 (c) Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) % (d) Times interest earned.
Answer:
a. $1,525 million
b. 1.50 times
c. 29 %
Explanation:
Working capital = Current Assets - Current Liabilities
= $4,575 million - $3,050 million
= $1,525 million
Current Ratio = Current Assets ÷ Current Liabilities
= $4,575 million ÷ $3,050 million
= 1.50 times
Debt to Asset ratio = Interest bearing Debt / Total Assets × 100
= ($ 5,670 - $3,050) / $9,000 × 100
= 29 %
Suppose that the risk-free rates in the United States and in the United Kingdom are 6% and 4%, respectively. The spot exchange rate between the dollar and the pound is $1.60/BP. What should the futures price of the pound for a one-year contract be to prevent arbitrage opportunities, ignoring transactions costs. Group of answer choices $1.63/BP $1.57/BP $1.60/BP $1.66/BP $1.70/BP
Answer:
$1.57/BP
Explanation:
Calculation for the futures price of the pound for a one-year contract.
Using this formula
Futures price =Spot exchange rate×(1+Risk-free rates in United States/1+Risk-free rates in United Kingdom
Let plug in the formula
Futures price=$1.60×(1.04/1.06)
Futures price= $1.60×(0.9811)
Futures price=$1.57/BP
Therefore the futures price of the pound for a one-year contract to prevent arbitrage opportunities will be $1.57/BP.
A stock has had returns of 12 percent, 19 percent, 21 percent, −12 percent, 26 percent, and −5 percent over the last six years. What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Average rate of return= 10.17 %
Geometric return = 9.23%
Explanation:
Geometric average return
This is compounded annual rate of return which is used to measure the performance of an asset over a certain number of years. It helps to measure the return generated by an investment taking into account the volatility .
Unlike the arithmetic average the geometric average gives an idea of the real rate taking into account of volatility
The formula below
Geometric Return =(1+r1) (1+r2) ...... (1+rn)^1/n
Geometric Average return =
(1.12× 1.19× 1.21× 0.88× 1.26× 0.95)^(1/6) - 1 =0.09233168
Geometric return =0.0923 × 100= 9.23%
Geometric return = 9.23%
Average rate of return
The average return is the sum of the returns over the years dividend by the Numbers of returns
Average return = sum of return / No of returns
(12% + 19% + 21% + (12%) + 26% + (5%))/6 =10.17 %
Average rate of return= 10.17 %
Geometric return = 9.23%
Suppose Real GDP is $700 billion and Natural Real GDP is $620 billion. To eliminate this ________________gap, Keynesian theory indicates that government should ______________________.
Answer: d. inflationary; decrease government purchases or increase taxes
Explanation:
Suppose Real GDP is $700 billion and Natural Real GDP is $620 billion. To eliminate this inflationary gap, Keynesian theory indicates that government should decrease government purchases or increase taxes.
The Real GDP is greater than the Natural real GDP which is the potential GDP. When that happens the Economy is said to be overheated and producing above its limits as Aggregate Demand is above Aggregate Supply.
To combat this the Government according to Keynes should embark on policy that will reduce economic activity. The Government can use Contractionary Fiscal Policy that will see it reduce its spending and/or increase taxes. Both of these will have the effect of reducing the amount of money in the economy left for both investment and consumption and cause a fall in the Aggregate Demand.
An investor has a $1,000,000 portfolio that is split evenly between "blue chip" stocks and Treasury securities. The current economic environment is characterized by low interest rates and flat stock prices - and this is expected to remain unchanged for a number of years. However, the residential and commercial real estate market is expected to be strong. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. Which of the following investment purchase recommendations would help achieve this objective?A. Mortgage REITsB. Mortgage BondsC. Equity REITsD. Fannie Mae Pass-Through Certificates
Answer:
Correct Answer:
B. Mortgage Bonds
Explanation:
Since residential and commercial real estate market is expected to be strong for a number of years, the best investment would be a mortage bond.
A mortgage bond is a bond in which holders have a claim on the real estate assets put up as its collateral. The lender might sell a collection of mortgage bonds to an investor, who then collects the interest payments on each mortgage until it's paid off. If the mortgage owner defaults, the bondholder gets her house.
Suppose Hyperpolis’s GDP increases by 15% and its inflation rate is 12%, while Superpolis’s GDP increases by 6% and its inflation rate is 3%. Assuming the population in both countries remained constant, which economy grew faster?
Answer: c) Both economies grew at the same rate
Explanation:
The faster growing economy would be the one that saw a greater increase in Real GDP than the other.
Real GDP growth = Nominal GDP growth - Inflation growth.
Hyperpolis Real GDP growth = 15% - 12%
Hyperpolis Real GDP growth = 3%
Superpolis Real GDP growth = 6% - 3%
Superpolis Real GDP growth = 3%
Both countries grew at the same rate of 3%.
Suspect Corp. issued a bond with a maturity of 30 years and a semiannual coupon rate of 6 percent 4 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $45 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $50 million and the bonds sell for 54 percent of par. The company’s tax rate is 40 percent.Required:a. What is the company’s total book value of debt?b. What is the company’s total market value of debt? c. What is your best estimate of the aftertax cost of debt?
Answer and Explanation:
The computation of each point is shown below:-
But before that we need to do the following calculations
First Issue of Bonds:
Face Value = $45,000,000
Market Value = 95% × $45,000,000
= $42,750,000
Annual Coupon Rate = 6%
Semiannual Coupon Rate = 3%
= 3% × $45,000,000
= $1,350,000
Time to Maturity = 26 years
Semiannual Period to Maturity = 52
Let semiannual YTM be i%
$42,750,000 = $1,350,000 × PVIFA(i%, 52) + $45,000,000 × PVIF(i%, 52)
N = 52
PV = -42750000
PMT = 1350000
FV = 45000000
I = 3.20%
Semiannual YTM = 3.20%
Annual YTM = 2 × 3.20%
Annual YTM = 6.40%
Before-tax Cost of Debt = 6.40%
After-tax Cost of Debt = 6.40% × (1 - 0.40)
= 3.84%
Second Issue of Bonds:
Face Value = $50,000,000
Market Value = 54% × $50,000,000
= $27,000,000
Time to Maturity = 15 years
Semiannual Period to Maturity = 30
Let semiannual YTM be i%
$27,000,000 = $50,000,000 × PVIF(i%, 30)
Using a financial calculator:
N = 30
PV = -27000000
PMT = 0
FV = 50000000
I = 2.075%
Semiannual YTM = 2.075%
Annual YTM = 2 × 2.075%
= 4.15%
Before-tax Cost of Debt = 4.15%
After-tax Cost of Debt = 4.15% × (1 - 0.40)
= 2.49%
a. The total book value of debt is
Total Book Value of Debt = $45,000,000 + $50,000,000
= $95,000,000
b. The total market value of debt is
Total Market Value of Debt = $42,750,000 + $27,000,000
= $69,750,000
c. The estimate of the aftertax cost of debt is
Weight of first Issue of Debt is
= $42,750,000 ÷ $69,750,000
= 0.6129
Weight of second issue of Debt
= $27,000,000 ÷ $69,750,000
= 0.3871
So,
Estimated After-tax Cost of Debt is
= 0.6129 × 3.84% + 0.3871 × 2.49%
= 3.32%
If network externalities exist in an industry, the ________ firm to enter the market is often the one that succeeds in dominating the industry.
Answer: first
Explanation:
Network externality simply has to with how the demand for a product by other consumers influences ones decision to buy that particular product or service.
When network externalities exist in an industry, it should be noted that the first firm to enter the market is often the one that succeeds in dominating the industry. This is because it is from this particular firm that the consumers will make purchases from .
Why must corporate managers use multiple techniques of project evaluation? Which technique is most commonly used and why? Describe several ways you may be able to use the techniques above as you progress in your professional career.
Answer:
The most important technique for project evaluation is the net present value (NPV) which compares the present value of discounted cash flows against the initial costs associated with the project. The other two most important techniques used are the payback period (either regular or discounted) and the internal rate of return (IRR).
Depending on the company's needs, sometimes one technique might be used instead of others. E.g. technological firms generally use the payback period because most of their projects have a very short life, 1 or 2 years. Other times, you might have to compare different projects and even if they are not mutually exclusive, no company can dispose of money freely. It only invests in certain projects that have a minimum required rate of return.
But the basic technique, the NPV, is the most relevant in a sense that no project with a negative NPV should be accepted.
g Once supply side effects are taken into account, tax cuts for labor income can change i. the supply of labor ii. potential GDP. iii. the growth rate of potential GDP.
Answer:
i, ii
Explanation:
a Tax is a compulsory sum levied by the government on income, goods or services. A tax cut would increase the supply of labour. As a result, the supply of labour would increase. As a result of the increase in labour, there would be an increase in potential GDP
Denver Company, a calendar year corporation, had the following actual income before income tax expense and estimated effective annual income tax rates for the first two quarters in year x8: quarter income before tax estimated tax rate first $100k 30% second $140k 24% Denver's income tax expense in its interim income statement for the second quarter should be:
Answer:
Denver Company
Income Tax Expense for the second quarter:
Pre-tax quarter income = $140,000
Estimated tax rate = 24%
Tax Expense = $140,000 x 24%
= $33,600
Explanation:
a) Data:
Quarter income before tax estimated tax rate
first $100k 30%
second $140k 24%
b) Denver's quarter second income tax expense is the product of the pretax income for the second quarter and the estimated income tax rate for the quarter. The resulting calculation shows the estimated income tax expense that has to be settled by Denver. If it is not settled in the quarter second period, it has to be carried forward to the next quarter as a liability under the heading, Income Tax Payable.
A 65-year old widow that is in a low tax bracket and that has a low risk tolerance wishes to make an investment that will provide income. Which is the BEST recommendation
Answer:
Bank Certificate of Deposit (CD)
Explanation:
For the 65-year old widow in this scenario, the best recommendation would be a Bank Certificate of Deposit (CD). A traditional Bank CD is a time-bound deposit, in which you enter into an agreement to let the bank use your money for a fixed period of time, and in return, the bank pays you a higher interest rate than it would for a traditional savings account. Thus providing a good income with very low risk.
Webcom. Inc. had the following current assets and current liabilities at the end of two recent years:
Current Year (in millions) Previous Year (in millions)
Cash and cash equivalents $8,297 $4,067
Short-term investments, at cost 422 458
Accounts and notes receivable, net 7,041 6,912
Inventories 3,581 3,827
Prepaid expenses and other current assets 1,479 2,377
Short-term obligations 4,815 6,205
Accounts payable 12,774 11,949
Requried:
a. What is the Current Ratio for the current year?
b. What is the Current Ratio for the preceding year?
c. What is the Quick Ratio for the current year?
d. What is the Quick Ratio for the preceding year?
e. What is the Working Capital for the current year?
f. What is the Working Capital for the preceding year?
Answer:
a. Current Ratio for the current year = 1.18
b. Current Ratio for the preceding year = 0.97
c. Quick Ratio for the current year = 0.98
d. Quick Ratio for the preceding year = 0.76
e. Working Capital for the current year = $3,231
f. Working Capital for the preceding year = –$513
Explanation:
Based on the information provided in the question, we first state the following formula to be used before answering the question:
Current asset = Cash and cash equivalents + Short-term investments, at cost + Accounts and notes receivable, net + Inventories + Prepaid expenses and other current assets ................... (1)
Current liabilities = Short-term obligations + Accounts payable ................. (2)
Current ratio = Current assets / Current liabilities ............................ (3)
Quick Ratio = (Current assets - Inventory) / Current liabilities ............... (4)
Working capital = Current assets - Current Liabilities ........................... (5)
We now calculate the answers as follows:
a. What is the Current Ratio for the current year?
Using equation (1), we have:
Current asset for the current year (in millions) = $8,297 + $422 + $7,041 + $3,581 + $1,479 = $20,820
Using equation (2), we have:
Current liabilities for the current year (in millions) = $4,815 + $12,774 = $17,589
Using equation (3), we have:
Current ratio for the current year = $20,820 / $17,589 = 1.18
b. What is the Current Ratio for the preceding year?
Using equation (1), we have:
Current asset for the preceding year (in millions) = $4,067 + $458 + $6,912 + $3,827 + $2,377 = $17,641
Using equation (2), we have:
Current liabilities for the preceding year (in millions) = $6,205 + $11,949 = $18,154
Using equation (3), we have:
Current ratio for the preceding year = $17,641 / 18,154 = 0.97
c. What is the Quick Ratio for the current year?
Using equation (4) and calculations from part a, we have:
Quick Ratio for the current year = ($20,820 - 3,581) / $17,589 = 0.98
d. What is the Quick Ratio for the preceding year?
Using equation (4) and calculations from part b, we have:
Quick Ratio for the preceding year = ($17,641 - 3,827) / $18,154 = 0.76
e. What is the Working Capital for the current year?
Using equation (5) and calculations from part a, we have:
Working Capital for the current year = $20,820 - $17,589 =$3,231
f. What is the Working Capital for the preceding year?
Using equation (5) and calculations from part b, we have:
Working Capital for the preceding year = $17,641 - $18,154 = –$513
The face value is $81,000, the stated rate is 10%, and the term of the bond is eight years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. What is the present value of the bond at the market rate?
Present value of $1:
4% 5% 6% 7% 8%
15 0.555 0.481 0.417 0.362 0.315
16 0.534 0.458 0.394 0.339 0.292
17 0.513 0.436 0.371 0.317 0.270
18 0.494 0.416 0.350 0.296 0.250
19 0.475 0.396 0.331 0.277 0.232
a. $91,561
b. $47,773
c. $43,673
d. $84,788
Answer:
The Present Value of the bond at the market rate = $90,438.36
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 10% × 81000 × 1/2 = 4050
Semi-annual yield = 8%/2= 4 % per six months
Total period to maturity (in months)
= (2 × 8) = 16 periods (Note the bond term is 8 yeras)
PV of interest = 4050 × (1-1.04^(-16))/0.04 = 47,191.79
Step 2
PV of Redemption Value
Assuming a redemption value equals to the nominal value =
PV of RV = 81,000 × 1.04^-16 = 43,246.56
Step 3 :Total Present Value
Total prent value = 43,246.56 + 47,191.79721 = 90,438.36
The Present Value of the bond at the market rate = $90,438.36
The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding.Required:a. What is the NAV of the fund? b. If the fund sells for $36 per share, what is its premium or discount as a percent of NAV?
Answer and Explanation:
The computation is shown below:
a. NAV of the fund is
= (Portfolio amount - liabilities) ÷ (outstanding shares)
= ($200 - $3) ÷ ($5)
= $39.40
b. The premium or discount as a percent of NAV is
= (Price - net asset value) ÷ (net asset value)
= ($36 - $39.40) ÷ ($39.40)
= -0.086
This represents the discount of 8.6%
We applied the above formulas
The infant industry argument says that Question 7 options: tariffs should be imposed to allow a new industry in a country to get established. imports should target new products from other countries to take advantage of the transmission of new ideas. dumping should be allowed in order to establish a presence of an industry that has previously not had a presence in another country. countries should produce and trade goods according to their comparative advantage.
Answer:
The infant industry argument says that Question 7 options:
tariffs should be imposed to allow a new industry in a country to get established.
Explanation:
The argument for the infant industry protectionism suggests that the imposition of tariffs on imports gives a new industry in the country the required breathing space it requires to develop, grow, and be established before it can face competitive forces from outside, which imports imply. Since newly formed industries often do not command the economies of scale and learning experience that their competitors from other countries may have, therefore, they need to be singularly shaded from external competition until they have achieved similar economies of scale and learning curve. But, can they attain any competitive edge without learning from competitors?
Lake Incorporated purchased all of the outstanding stock of Huron Company, paying $1,000,000 cash. Lake assumed all of the liabilities. Book values and fair values of acquired assets and liabilities were: Book Value Fair Value Current assets (net) $ 190,000 $ 125,000 Property, plant, equip. (net) 650,000 765,000 Liabilities 255,000 255,000 Lake would record goodwill of
Answer:
Lake would record goodwill of $365,000
Explanation:
Fair value of net assets = Fair value of current asset + Fair value of property, plant and equipment
Fair value of net assets = $125,000 + $765,000
Fair value of net assets = $890,000
Fair market value = Fair value of net assets - Liabilities assumed
Fair market value = $890,000 - 255,000
Fair market value = $635,000
Goodwill = Consideration - Fair market value
= $1,000,000 - $635,000
= $365,000
Hence, the amount of goodwill is $365,000.
The smartest thing a firm involved in an oligopoly market could do is to cut their prices and capture more of the market share from their competitors.
a) We learned in class that the best move would be to raise prices.
b) We also learned that cutting prices on an elastic demand curve will be a smart way of getting more revenues.
c) Cutting prices is no gaurantee of success. Indeed if the firm does capture more market share and customers, then their costs will go up and it will be harder for them because they will have lower profit margins - if they can earn any profit at all.
d) Both A and C are correct.
Answer:
Correct Answer:
c) Cutting prices is no gaurantee of success. Indeed if the firm does capture more market share and customers, then their costs will go up and it will be harder for them because they will have lower profit margins - if they can earn any profit at all.
Explanation:
An oligopoly market is a market form wherein a market or industry is dominated by a small group of large sellers. A pure monopoly maximizes profits by producing that quantity where marginal revenue = marginal cost. however, it is much more difficult for an oligopoly to determine at what output it can maximize its profit.
A company purchased property for a building site. The costs associated with the property were: What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
Answer:
The question is incomplete, below is a possible match of the complete question:
a company purchased property for a building site. the costs associated with the property were:
purchase price $175,00
real estate commisions $15,000
legal fees 800
expenses of clearing the land 2,000
expenses to remove old building 1,000
what portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
Answer:
cost allocated to land = $193,800
cost allocated to new building = $0
Explanation:
The expenses associated with the ost of land purchase are all the necessary expenses made in the purchase of the land and in getting the land ready for use. These include legal fees, cost of clearing the land, cost of removing old structures etc. Therefore cost allocated to land is calculated as follows:
cost of land = purchase price + real estate commissions + legal fees + expenses of clearing the land + expenses to remove old building.
cost of land = 175,000 + 15,000 + 800 + 2,000 + 1,000 = $193,800
∴ cost of land = $193,800
cost of new building = $0
There is no transaction associated directly with setting up the new building, all the costs were associated with the acquisition of the land, hence the cost os the new building is $0
A decline in the domestic real interest rate would cause a ________ in net exports and a ________ in the exchange rate.
Answer: fall; rise
Explanation:
The real interest rate is the rate of interest that is received by an investor, lender or after inflation has been taken into consideration.
The real interest rate is when the inflation rate is deducted from the nominal interest rate. A reduction in the domestic real interest rate would cause a fall in net exports and a rise in the exchange rate.
Oligopoly firms will seldom change prices but if one firm increases their price, others may follow if costs have ____________ .
Answer:
decreased
Explanation:
if firms have decreased then it would be likely to follow other firms to increase popularity
Oligopoly firms will seldom change prices but if one firm increases its price, others may follow if costs have Decreased.
What is Oligopoly?A market structure known as an oligopoly has a limited number of enterprises, none of which can prevent the others from having a large impact. The market share of the major companies is calculated using the concentration ratio.
A market with a monopoly has only one producer, a duopoly has two businesses, and an oligopoly has three or more businesses. The maximum number of firms in an oligopoly is unknown, but it must be low enough so that each firm's actions have a significant impact on the others.
In the past, oligopolies have existed in the steel industry, the oil industry, the railroad industry, the tire industry, grocery store chains, and the wireless industry. An oligopoly can prevent new competitors from entering the market, stifle innovation, and raise prices, all of which are detrimental to consumers.
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Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is
Answer and Explanation:
The Journal entry is shown below:-
Bad debts expense Dr, $2,000
To Accounts receivable-Hopkins $2,000
(Being write off is recorded)
Here we debited the bad debt expenses as it increased the expenses and we credited the accounts receivable as it reduced the assets so that the proper posting could be done
The strategic appeal of related diversification is that it Multiple Choice allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities. is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses). involves diversifying into industries having the same kinds of key success factors. is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses. facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.
Answer: allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.
Explanation:
Related diversification is when an organization expands its business by producing products which are similar to what it currently produces. In related diversification, there's identical product lines. An example is a computer manufacturer producing calculators.
Organizations that go into related diversification enjoys lower costs and competitive advantage over their counterparts.
