Answer:
B
Explanation:
Beta measures systemic risk
Systemic risk are risk that are inherent in the economy. They cannot be diversified away. They are also known as market risk. examples of this risk include recession, inflation, and high interest rates.
The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors
the beta of a risk free asset is 1
If she wants to decrease the beta of her portfolio, she would want to decrease the riskiness of her portfolio. to do this, she should increase the weight of the risk-free asset and decrease the weight of the risky asset (stock)
Here are selected 2017 transactions of Akron Corporation.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $62,000 and had a useful life of 10 years with no salvage value
June 30 Sold a computer that was purchased on January 1, 2015. The computer cost $36,000 and had a useful life of 3 years with no salvage value. The computer was sold for $5,000 cash
Dec. 31 Sold a delivery truck for $9,000 cash. The truck cost $25,000 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $4,000 salvage value.
Required:
Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Akron Corporation uses straight-line depreciation.
Answer:
Akron Corporation
Journal Entries:
Jan. 1 Debit Assets Disposal $62,000
Credit Equipment $62,000
To transfer the cost of equipment to the Assets Disposal account.
Debit Accumulated Depreciation $62,000
Credit Assets Disposal $62,000
To transfer the accumulated depreciation to the Assets Disposal account.
June 30 Debit Assets Disposal $36,000
Credit Computer $36,000
To transfer the cost of the computer to the Assets Disposal account.
Debit Accumulated Depreciation $30,000
Credit Assets Disposal $30,000
To transfer the accumulated depreciation to the Assets Disposal account.
Debit Cash $5,000
Credit Assets Disposal $5,000
To record the proceeds from the disposal.
Dec. 31 Debit Accumulated Depreciation $12,600
Credit Assets Disposal $12,600
To transfer the accumulated depreciation to the Assets Disposal account.
Debit Assets Disposal $25,000
Credit Delivery Truck $25,000
To transfer the cost of the delivery truck to the Assets Disposal account.
Debit Cash $9,000
Credit Assets Disposal $9,000
To record the proceeds from the disposal.
Dec. 31 Debit Loss on Disposal of Assets $4,400
Credit Assets Disposal $4,400
To record the loss from the disposal of assets.
Explanation:
a) Data and Analysis:
Jan. 1 Accumulated Depreciation $62,000 Assets Disposal $62,000 Assets Disposal $62,000 Equipment $62,000
June 30 Assets Disposal $36,000 Computer $36,000 Accumulated Depreciation $30,000 Assets Disposal $30,000 Cash $5,000 Assets Disposal $5,000
Dec. 31 Accumulated Depreciation $12,600 Assets Disposal $12,600 Assets Disposal $25,000 Delivery Truck $25,000 Cash $9,000 Assets Disposal $9,000
Dec. 31 Loss on Disposal of Assets $4,400 Assets Disposal $4,400
For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) identify the normal balance of the account, and (3) select debit (Dr.) or credit (Cr.) to identify the kind of entry that would increase the account balance
Account Type of Account Normal Balance Increase (Dr. or Cr.)
a. Fees Earned
b. Equipment
c. Notes Payable
d. Owner Capital
e. Cash
f. Legal Expense
g. Prepaid Insurance
h. Land
i. Accounts Receivable
j. Owner Withdrawals
k. License Fee Revenue
l. Unearned Revenue
Answer:
a. Fees Earned REVENUE, CREDIT
b. Equipment ASSET, DEBIT
c. Notes Payable LIABILITY, CREDIT
d. Owner Capital EQUITY, CREDIT
e. Cash ASSET, DEBIT
f. Legal Expense EXPENSE, DEBIT
g. Prepaid Insurance ASSET, DEBIT
h. Land ASSET, DEBIT
i. Accounts Receivable ASSET, DEBIT
j. Owner Withdrawals (CONTRA) EQUITY, DEBIT
k. License Fee Revenue REVENUE, CREDIT
l. Unearned Revenue LIABILITY, CREDIT
FILL IN THE BLANK Please add the appropriate word or words to complete the sentences. 1. Price ceilings are governmental price that are set the market equilibrium price. 2. This kind of policy typically creates a(n) because the quantity demanded the quantity supplied. 3. Price floors are governmental price that are imposed the market equilibrium price. 4. This kind of policy usually generates a(n) in the market because the quantity exceeds the quantity . 5. Shortages and surpluses are reflected in inventories. Inventory is the raw material to goods or the stocks of finished goods that are ready to be sold. g
Answer:
1. Price ceilings are governmental price that are set below the market equilibrium price.
2. This kind of policy typically creates a shortage because the quantity demanded exceeds the quantity supplied.
3. Price floors are governmental price that are imposed above the market equilibrium price.
4. This kind of policy usually generates a surplus in the market because the quantity supplied exceeds the quantity demanded.
5. Shortages and surpluses are reflected in inventories. Inventory is the raw material which is processed to goods or the stocks of finished goods that are ready to be sold.
Explanation:
Price ceilings, as a part of the price control mechanisms, seem to benefit the consumers, while price floors are attempts to support suppliers and producers. While they roll back the excesses of market forces in determining the prices of goods and services, some unintended consequences, including allocative inefficiencies, usually arise from price ceilings and price floors. Therefore, they should be applied sparingly.
On July 15, Piper Co. sold $16,000 of merchandise (costing $8,000) for cash. The sales tax rate is 4%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions. On November 3, the Milwaukee Bucks sold a six game pack of advance tickets for $480 cash. On November 20, the Bucks played the first game of the six game pack (this represented one-sixth of the advance ticket sales). Record the entries for the November 3 and November 20 transactions.
Required:
Record the entry for cash sales and its sales taxes.
Answer:
Date Account titles Debit Credit
Jul-15 Cash $16,640
Sales revenue $16,000
Sales tax payable $640
($16,000*4%)
Jul-15 Cost of goods sold $8,000
Inventory $8,000
Aug-01 Sales tax payable $640
Cash $640
Nov-03 Cash $480
Unearned ticket revenue $480
Nov-20 Unearned ticket revenue $80
($480*1/6)
Ticket revenue $80
What would cause an economy to be producing at a point inside its production possibilities curve?
Answer:
The correct answer is: the lack of effectivization in the use of their resources inside the economy to obtain the best outcomes possibles.
Explanation:
To begin with, in the economic theory the term known as production possibilities curve refers to a strategic tool, a graphic that can be used by the professionals of the area in order to understand how the economy is working with its resources, if the economy is producing well enough then the economy should be getting great development results and the point inside the graphic should be in the limit of the curve, but if the point is in the inside of the curve then that means that the resources inside that particulary economy are not being fully use to their best in order to obtain the best outcome so that will explain that there is still possibility to expand the production according to the theory of the tool itself.
Angle Company started business on January 1. During the year, the company purchased merchandise with an invoice price of $500,000. Angle also paid $20,000 freight on the merchandise. During the year, Angle also returned $80,000 of the merchandise to its suppliers. All purchases were paid for in a timely manner, and a $10,000 cash discount was taken. $418,000 of the merchandise was sold for $627,000. What is the December 31 balance in the Inventory account
Answer:
$12,000
Explanation:
Given the above information, the ending balance in inventory account is computed as seen below
= Merchandise purchased - merchandise withdrawn - Merchandise returned to suppliers + Cash discount taken
= $500,000 - $418,000 - $80,000 + $10,000
= $12,000
Therefore, the balance on the inventory account as at December 31 is $12,000
Galaxy Corp. is considering opening a new division to make iToys that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of producing each iToy to be $6,700 in the first year; however, it expects the selling price and cost per iToy to increase by 3.00% each year.
Based on the preceding information and rounding dollar amounts to the nearest whole dollars, the company expects the selling price in the fourth year of the project to be_______ , and it expects the cost per unit in the fourth year of the project to be _______.
Which of the following statements about inflation’s effect on net present value (NPV) is correct?
A. When the selling price and cost per unit are expected to increase at the same rate, forgetting to take inflation into account in a capital budgeting analysis will typically cause the estimated NPV to be lower than the true NPV.
B. When the selling price and cost per unit are expected to increase at the same rate, you do not need to take inflation into account when performing a capital budgeting analysis.
Answer and Explanation:
The computation is shown below:
1
The calculation of the Expected selling price in the fourth year is
Expected Selling Price in year 1 $15,250
Expected Annual Growth rate is 3%
So,
Expected Selling Price in year 4 = 15250 × (1+3%)^3
= $16,664
2
The Calculation of Expected Cost per unit in the fourth year is
Expected Selling Price in year 1 = $6,700
Expected Annual Growth rate = 3%
So,
Expected Selling Price in year 4 = 6700 × (1+3%)^3
= $7,321
3
Inflation’s effect on net present value (NPV):
In the case when the selling price and the cost per unit rises at the similar rate so it is forgot to considered the inflation this will result in NPV that should be lower than the true NPV
For each situation below, show quantitatively and explain what is happening in the capital (financial) market.
S I X G T
a 200 300 -200 400 300
b 700 600 100 400 400
c -300 300 -400 100 300
d 100 300 -400 500 300
e 500 300 100 400 300
Answer:
Capital market is at equilibrium and no change in interest rate
Explanation:
In the capital market
National savings = " S + T - G "
At equilibrium position ; National savings = " I + X "
When National savings > "1 + X " Interest rate decrease because there is an excess of supply while
When National savings > "1 + X" interest rate will increase to balance out the capital market because there is excess of demand.
From the attached table of solution below all values of the National savings = "I + X" this shows that the capital ( financial ) market is at equilibrium position
Answer:
The financial market is going down
Explanation:
The numbers are moving around which means 360 degrees which you add to all of the numbers on the chart cousin a new pattern to develop developmentally
After Jim has gotten two different quotes for repairing his brakes, one from the dealership and one from a small, private mechanic, he choses to go with the small mechanic who has agreed to do his brakes for $200.00 less than the dealership. Jim takes his car to the mechanic who begins working on his brakes. After a week passes, the mechanic calls him and tells him he is in over his head and cannot fix his brakes. Jim goes over to pick up his car and finds his car in the mechanic's garage with the brakes disassembled around the mechanic's garage. What legal recourse does Jim have?
Answer:
Primary estoppel
Explanation:
Primary estoppel is defined as the principle that a promise made by a promisor is enforceable most especially when a promisee believes the promise and this leads to a subsequent detriment.
In the given scenario Jim used a small mechanic to repair his brakes and was assured he could do the job.
However the mechanic calls him and tells him he is in over his head and cannot fix his brakes, and finds his car in the mechanic's garage with the brakes disassembled around the mechanic's garage.
He can resort to primary estoppel as a legal recourse.
Mcdormand inc reported a 3400 unfavorable price variance for variable overhead and a $34,000 nfavorable price variance for fixed overhead. The flexible budget had variable overhead based on 36,100 direct labor-hours; only 34,100 hours were worked. Total actual overhead was $1,810,400. The number of estimated hours for computing the fixed overhead application rate totaled 37,500 hours.
Required:
a. Prepare a variable overhead analysis.
b. Prepare a fixed overhead analysis.
Answer:
A. Variable overhead price variance 3400 U
Variable overhead efficiency variance 60000 F
Variable overhead cost variance 56600 F
B. Fixed overhead price variance 34000 U
Production volume variance 28000 U
Fixed overhead cost variance 62000 U
Explanation:
a. Preparation of a variable overhead analysis.
Variable overhead price variance = 3400 U
Calculation for Variable overhead efficiency variance
First step is to calculate the Actual input at standard rate
Actual input at standard rate = (34100*30)
Actual input at standard rate= 1023000
Second step is to calculate the Standard rate
Standard rate = 1083000/36100
Standard rate=30
Now let calculate Variable overhead efficiency variance
Variable overhead efficiency variance = (1083000-1023000)
Variable overhead efficiency variance = 60000 F
Calculation for Variable overhead cost variance
Variable overhead cost variance = (60000-3400)
Variable overhead cost variance= 56600 F
Therefore the variable overhead analysis will be:
Variable overhead price variance 3400 U
Variable overhead efficiency variance 60000 F
Variable overhead cost variance 56600 F
b. Preparation of a fixed overhead analysis.
Fixed overhead price variance = 34000 U
Calculation for Production volume variances
First step is to calculate Actual input at standard rate
Actual input at standard rate= 34100*30
Actual input at standard rate= 1023000
Second step is to calculate Fixed overhead actual
Fixed overhead actual= 1810400-(1023000+3400)
Fixed overhead actual= 784000
Third step is to calculate Budgeted fixed overhead
Budgeted fixed overhead = (784000-34000)
Budgeted fixed overhead = 750000
Fourth step is to calculate Fixed overhead applied
Fixed overhead applied= (750000/37500)*36100
Fixed overhead applied= 722000
Now let calculate Production volume variance
Production volume variance = (750000-722000) Production volume variance= 28000 U
Calculation to determine Fixed overhead cost variance
Fixed overhead cost variance = (28000+34000) Fixed overhead cost variance= 62000 U
Therefore fixed overhead analysis will be:
Fixed overhead price variance 34000 U
Production volume variance 28000 U
Fixed overhead cost variance 62000 U
The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the: A. cost of the insurance expired during the period B. value of the insurance prepayment that remains to benefit future periods C. cash paid for insurance of current and future periods D. amount owed for insurance at the end of the accounting period
Answer:
B.value of insurance prepayed
Porter Corporation has fixed costs of $660,000, variable costs of $24 per unit, and a contribution
margin ratio of 40 percent.
Compute the following:
a. Unit sales price and unit contribution margin for the above product.
b. The sales volume in units required for Porter Corporation to earn an operating income of
$300,000.
c. The dollar sales volume required for Porter Corporation to earn an operating income of
$300,000
Answer and Explanation:
The computation is shown below:
a. The unit sale price is
But before that the variable cost ratio is
= 100% - 40%
= 60%
Now the unit sale price i
= $24 × 100% ÷ 60%
= $40
Now the contribution margin per unit is
= $40 - $24
= $16
b. the sales volume in units is
= Fixed cost + operating income ÷ contribution margin per unit
= ($660,000 + $300,000) ÷ $16
= 60,000 units
c. Sales volume in dollars is
= Fixed cost + operating income ÷ contribution margin ratio
= ($660,000 + $300,000) ÷ 40%
= $2,400,000
Jeff is a member of Go Big Red, LLC. Jeff decides he does not like the color red, preferring instead the colors black and gold. Jeff leaves the LLC for that reason. Upon dissociation all of the following apply to Jeff except:________.
a. duty of loyalty immediately ceases in all regards.
b. loses the right to manage the LLC.
c. right to have his interests to be bought out.
d. duty of care immediately ceases in all regards.
Answer:
Option "D" is correct.
Explanation:
Option "D" is correct because When a person or member dissociates then the person loses the right to manage, losses the right to act, ceases from their duty of loyalty, ceases from the duty of care immediately if any event occurs after dissociation and the member has the right to find their interest. Therefore, from the given options it can be seen that the duty of care remains intact when only to that event that had occurred before the dissociation.
Married taxpayers Otto and Ruth are both self-employed and file a joint return. Otto earns $435,200 of self-employment income and Ruth has a self-employment loss of $23,100. How much 0.9 percent Medicare tax for high-income taxpayers will Otto and Ruth have to pay with their 2020 income tax return?
Answer: $1,458.90
Explanation:
As they are filing together, the first step would be to find out the taxable income after accounting for Ruth's loss.
Total taxable income = Otto's earnings - Ruth's loss
= 435,200 - 23,100
= $412,100
There is an additional 0.9% Medicare tax on the amount that people file that is above $250,000 when they file jointly and are married..
The additional Medicare will be:
= (412,100 - 250,000) * 0.9%
= $1,458.90
Payment of an above-market wage reduces shirking by employees and reduces worker turnover because it multiple choice 2 decreases worker productivity. raises the opportunity cost of losing a job. lowers the opportunity cost of losing a job. creates more supervisory positions.
Answer:
raises the opportunity cost of losing a job.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
For example, when a business firm makes payment of an above-market wage, it reduces shirking (avoiding responsibilities) by employees and reduces worker turnover because it raises the opportunity cost of losing a job. Thus, employees take their jobs seriously and do not miss work unnecessarily due to the payment of an above-market wage.
Tanouye Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: Hours Wait time 24.9 Process time 2.6 Inspection time 0.5 Move time 2.2 Queue time 11.5 The throughput time was:
Answer: 16.8 hours
Explanation:
The throughput time will be calculated thus:
Inspection time = 0.5
Add: Process time = 2.6
Add: Move time = 2.2
Add: Queue time = 11.5
Throughput time = 16.8 hours
Therefore, the throughput time will be 16.8 hours.
Perpetual Life Corp. has issued consol bonds with coupon payments of $50. (Consols pay interest forever and never mature. They are perpetuities.)a. If the required rate of return on these bonds at the time they were issued was 5.0%, at what price were they sold to the public
Answer: $1,000
Explanation:
The price of a perpetual bond is calculated like a perpetuity and this is calculated by dividing the coupon payment of the bond by the prevailing required rate of return.
Price of this bond is:
= Coupon payment / Required return
= 50 / 5%
= $1,000
PillPack is an example of a startup organization that grew out of the identification of a problem that needed a solution.
a. True
b. False
Answer:
True
Explanation:
Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $20,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is Group of answer choices $40,000 $50,000 $70,000 $60,000
Answer:
$40,000
Explanation:
The computation of the amount of cash for the payment of dividends during the year is shown below:
= Beginning dividends payable + Cash dividends Declared - Ending dividends payable
= $10,000 + $50,000 - $20,000
= $40,000
Hence, the amount of cash for the payment of dividends during the year is $40,000
what kind of life insurance policy issued by mutual insurer provides a return od divisible surplus
Answer:
participating life insurance policy <- A mutual insurer issues life insurance policies that provide a return of divisible surplus.
brainliest would help :)
Wright Machinery Corporation manufactures automobile engines for major automobile producers. The engines sell for $940 per engine. In addition, customers have the option to purchase a service-type warranty for $70 per engine that protects against any defects for a period of 5 years. During 2019, Wright sold 7,000 engines to National Motors. National Motors purchased warranties on all of the engines purchased. During 2019, Wright repaired defective motors at a cost of $93,400. Prepare the necessary journal entries to record:
1. the sale of engines and service warranty on account during 2016 (one entry).
2. the warranty costs paid during 2016
3. the warranty revenue earned in 2016.
Additional Instructions
Model your entries after the Service-Type Warranties example in your textbook.
For grading purposes, use December 31 to record a summary transaction for entries that would have been made during the year.
Answer: See explanation
Explanation:
The journal entry is illustrated below:
Dr Cash $7070000
Cr Sales revenue = $940 × 7000 = $6580000
Cr Unearned warranty revenue = $70 × 7000 = $490000
(To record sale of engines and service warranty on account)
Dr Warranty expense $93,400
Cr Cash $93,400
(To record warranty costs paid)
Dr Unearned warranty revenue = $490000/5 = $98000
Cr Warranty revenue $98000
(To record warranty revenue earned)
Dermody Snow Removal's cost formula for its vehicle operating cost is $3,080 per month plus $338 per snow-day. For the month of December, the company planned for activity of 20 snow-days, but the actual level of activity was 22 snow-days. The actual vehicle operating cost for the month was $10,130. The spending variance for vehicle operating cost in December would be closest to:
Answer:
$386 U
Explanation:
Calculation to determine what The spending variance for vehicle operating cost in December would be closest to:
Actual results $10,130
Less Flexible budget $10,516
($3,080+($338 per*22 snow-days)
Spending variance $386 Unfavorable
Therefore The spending variance for vehicle operating cost in December would be closest to:
$386 Unfavorable
Think of a product that you purchased within the past 6 months
Discuss these questions relative to the purchased product. Your answers should align with how these stages are done based on the consumer decision model in text.
How did you recognize that you needed the product?
Where or how you search for information on alternative products that would satisfy this need (product)?
What alternatives did the search process generate and what variables did you use to make the final decision to buy?
Where did you buy the product and why?
Were you satisfied after using or consuming the product? Explain.
There are 5 categories of influences as outlined by your text:economic, psychological. social, culture and ethnicity, purchase situation. Which one(s) do you think had the greatest effect on your purchasing decision? Please explain.
Answer:
Product purchased: a purse
How did you recognize that you needed the product?
Through a need for more space to carry personal items to work.
Where or how do you look for information about alternative products that meet this need (product)?
Buying online is one of the facilities made possible by new technologies, which allows us to choose the product that meets our desires and needs without having to go to a physical store, in addition to the possibility of comparing prices and getting special discounts.
What alternatives did the research process generate and what variables did you use to make the final purchase decision?
The alternatives found were fast fashion sites that offered a bag of the ideal size, with the expected quality and defined average price.
Where did you buy the product and why?
I bought the product at Zara, which is a top quality fashion department store that would meet all requirements and needs with the purchase.
Were you satisfied after using or consuming the product? Explain.
Yes, because the benefits added to the product met my needs and desires.
There are 5 categories of influences as described in your text: economic, psychological. social, culture and ethnicity, purchasing situation. Which one(s) do you think had the greatest effect on your purchase decision? Please explain.
The item that had the most effect on the purchase decision was the psychological and economic item, as the choice of the product was made due to a need for work, but whose purchase decision process took into account factors such as brand, quality and the price of the product.
Assume the following data for Cable Corporation and Multi-Media Inc.
Cable Corporation Multi-Media Inc.
Net income $31,200 $140,000
Sales 317,000 2,700,000
Total assets 402,000 965,000
Total debt 163,000 542,000
Stockholders'
equity 239,000 423,000
a1. Compute return on stockholders’ equity for both firms.
a-2. Which firm has the higher return?
A. Multi-Media Inc.
B. Cable Corporation
b. Compute the following additional ratios for both firms.
Answer:
a-1 Cable Corporation 13.05
Multi-media Inc. 33.1%
a-2 Multi-Media Inc.
2. Cable Corporation Multi-Media Inc.
Net income/Sales 9.84% 5.19%
Net income/Total assets 7.76% 14.51%
Sales/Total assets .79 times 2.80 times
Debt/Total assets 40.55% 56.17%
Explanation:
a-1. Computation to determine the return on stockholders’ equity for both firms.
CABLE CORPORATION
Using this formula
Return on Stockholders’ Equity= Net Income / Stockholder’s equity
Let plug in the formula
Return on Stockholders’ Equity=$31,200 / 239,000
Return on Stockholders’ Equity= 0.1305*100
Return on Stockholders’ Equity=13.05%
MULTI-MEDIA INC.
Return on Stockholders’ Equity=$140,000 / 423,000
Return on Stockholders’ Equity= 33.1%
a-2. Based on the above calculation the firm that has the higher return is MULTI-MEDIA INC.
b. Computation for the following additional ratios for both firms.
Cable Corporation Multi-Media Inc.
Net income/Sales 9.84% 5.19%
($31,200/317,000=9.84%)
($140,000/2,700,000=5.19%)
Net income/Total assets 7.76% 14.51%
($31,200/402,000=7.76%)
($140,000/965,000=14.51%)
Sales/Total assets .79 times 2.80 times
(317,000/402,000=.79 times
(2,700,000/965,000=2.80 times)
Debt/Total assets 40.55% 56.17%
(163,000/402,000=40.55%)
( 542,000/965,000=56.17%)
The following discussion focuses on the change in production and selling strategies of Timken Co., the Canton, Ohio, firm that is a major producer of bearings:
To counter the low prices of imports, Timken Co. in 2003 began bundling its bearings with other parts to provide industrial business customers with products specifically designed for their needs. Timken had begun bundling prelubricated, preassembled bearing packages for automobile manufacturers in the early 1990s. Evidence indicated that companies that sold integrated systems rather than discrete parts to the automobile manufacturers increased their sales. Other industrial customers put the same pressure on Timken in the late 1990s to lower prices, customize, or lose their business to lower-priced foreign suppliers. Manufacturers are increasingly combining a standard part with casings, pins, lubrication, and electronic sensors. Installation, maintenance, and engineering services may also be included. Suppliers, such as Timken, saw this as a means of increasing profits and making themselves more indispensable to the manufacturers. The strategy also required suppliers to remain in proximity with their customers, another advantage over foreign imports. This type of bundling does require significant research and development and flexible factories to devise new methods of transforming core parts into smart assemblies. The repackaging is more difficult for industrial than automobile customers because the volumes of production are smaller for the former. Timken also had to educate its customers on the variety of new products available.
Timken has an 11 percent share of the world market for bearings. However, imports into the United States doubled to $1.4 billion in 2002 compared with $660 million in 1997. Timken believes that the uniqueness of its product helps protect it from foreign competition. However, the company still lobbied the Bush administration to stop what it calls the dumping of bearings at low prices by foreign producers in Japan, Romania, and Hungary.
Required:
a. What factors in the economic environment, in addition to foreign imports, contributed to Timken’s new strategy in 2002 and 2003?
b. How does this strategy relate to the discussion of bundling presented in the chapter? What additional factors are presented in this case?
Answer:
Timken Co.
a. Factors in the Economic Environment that contributed to Timken;s new strategy in 2002 and 2003 in addition to foreign imports at cheaper prices:
1. The needs of industrial business customers for integrated systems
2. Lowering of prices resulting from bundling
3. Addition of installation, maintenance, and engineering services, leading to increasing profits
b. The relationship of this strategy to bundling
1. Remaining in proximity with customers
2. Significant research and development
3. Flexible factories
4. Education of customers on product variety
c. Additional factors presented in this case are:
1. Customization
2. Means of making entity more indispensable to manufacturers
3. Uniqueness of products
4. Lobbying to stop dumping
Explanation:
a) Data and Calculations:
Share of the world market for bearings = 11%
Value of bearing imports in 2002 = $1.4 billion
Value of bearing imports in 1997 = $660 million
b) Companies engage in bundling by offering their main products together with several others together with services as a single combined unit. This strategy always lowers the bundled price when compared with the prices of the separate products and services. Thus, companies that sell bundled products and services often achieve more sales at the expense of profits.
Irwin Company has budgeted direct labor hours for the coming three months as follows: July, 6,500 hours; August, 8,100 hours; and September, 8,300 hours. Manufacturing overhead is budgeted at $13,300 per month plus $3.30 per direct labor hour. What is the budgeted manufacturing overhead for August
Answer:
the budgeted manufacturing overhead for August is $40,030
Explanation:
The computation of the budgeted manufacturing overhead for August is shown below:
= Budgeted manufacturing overhead + direct labor hour rate × direct labor hours for august
= $13,300 + $3.30 × 8,100 hours
= $13,300 + $26,730
= $40,030
Hence, the budgeted manufacturing overhead for August is $40,030
During 2015, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:
Completed-Contract Percentage-of-Completion
2013 $ 475,000 $ 900,000
2014 625,000 950,000
2015 700,000 1,050,000
$1,800,000 $2,900,000
Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of:____________
Answer:
$450,000
Explanation:
Calculation to determine , the affect of this accounting change on prior periods that should be reported by a credit of:
Using this formula
Accounting change on prior periods=(2013 Percentage-of-Completion+2014 Percentage-of-Completion)-(2013 Completed-Contract+2014 Completed-Contract)*(1-Tax rate)
Let plug in the formula
Accounting change on prior periods=[($900,000+$950,000)-($475,000+$625,000)]*(1-40%)
Accounting change on prior periods=($1,850,000-$1,100,000)*0.60
Accounting change on prior periods=$750,000*.60
Accounting change on prior periods=$450,000
Therefore Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of:$450,000
Case Study
Imagine working in an organization where employee morale is low, turnover is high, and the costs of hiring are astronomical. If that were the case, you'd imagine the employer would go to great lengths to find, attract, and retain quality employees. Couple this goal with the reality of the economic picture -you simply cannot afford to provide expensive benefits for employees who may leave you for a different employer offering an extra $1,000 in salary or benefits. Knowing that 41 percent of all employees have no loyalty to their employers and will move on if a better offer comes adds to the dilemma. These issues clearly are a concern for organizations like Genentech or Zappos. But they don't fret over them. That's because they have found that treating employees with respect, and giving them such things as bonuses, rewards for longevity, onsite child care, lunches, and sending employees home with prepared dinners really works. Genentech is a California company that "develops and produces drugs that cure diseases," according to the company website. The company celebrated its thirteenth year on Fortune's "Best Places to work" list in 2011, also receiving "Best Places to Work" honors from Working Mother, LGBT Equality, and Computerworld. The reasons for this recognition are the important work that they do and the strong company culture that values equality and communication. Any discussion of how great it is to work at Genentech always circles back to the benefits that show a real respect for employees. In addition to traditional benefits like retirement and healthcare, they provide family friendly perks such as unlimited sick leave, personal concierge service, flexible work scheduling, childcare, nursing mother's rooms, onsite nurses, adoption assistance, and company sponsored family events. The list of innovative benefits goes on to include unusual benefits like pet insurance, free snacks, and paid six-week sabbaticals every six years! Zappos, the online shoe retailer, offers perks that match their fun-loving culture like pajama parties, nap rooms, regular happy hours, and a full-time life coach. Have these benefits worked for Genentech and Zappos? Ifyou translate longevity to morale and loyalty, you'd say they have. Both boast low turnover rates and high employee ratings for workplace satisfaction.
Q1) Describe the importance of employee benefits as a strategic component of fulfilling the goals of HRM at Genentech and Zappos?
Q2) Explain how Genentech and Zappos use employee benefits as a motivating tool?
Q3) Do you believe the incentive benefits such as those offered at Genentech and Zappos can be used in other organizations? Why or why not?
Answer:
1) Through employee benefits, the goals of HRM are achieved in effective ways.
2) Genentech also Zappos, try to make it a fun place to go to work at. Genentech and Zappos offer many benefits to employees that would attract and keep employees within the organization.
3) From a knowledgeable view, I actually believe that the motivation benefits as presented by the Genentech and Zappos Corporations can't be employed by other major or maybe small corporations.
Explanation:
1) The importance of employee benefits as a strategic component fulfilling the goals of HRM at Zippos and Genentech is that it can boost low turnover rates and high employee ratings for fulfillment. With placing benefits, employees will have the sensation of being more of an asset to the corporate instead of just being a worker. Thereupon employees would dedicate and put far more effort and time for better for the corporate which might then increase and generate more productivity and profit. When employees desire they need to be benefited from the organization successively they might become loyal to the organization and can stay rather than likely move to a different organization. Employees will tend to be more motivated to figure. Through employee benefits, the goals of HRM are achieved in effective ways.
2) Genentech also Zappos, struggle to form a fun place to travel to figure at. Genentech and Zappos offer many benefits to employees that might attract and keep employees within the organization. The good thing about benefits it can provide meaning and value to employees which will increase the worker's enthusiasm and morale within the work environment. With this, employees will then become more motivated to extend performance and feel secure within the organization which may cause low turnover rates and highly satisfied employees.
3) From a knowledgeable view, I actually believe that the motivation benefits as presented by the Genentech and Zappos Corporations can't be employed by other major or maybe small corporations. The motivation benefits offered at Genentech and Zappos Corporations are unique to their companies. I think that if other Corporations attempt to mirror the efforts of both Genentech and Zappos that their businesses would simply cease to exist. Companies today just don’t have the sustainability to take care of these lofty incentive packages for a three-year, five years, or even ten-year plan. Most companies simply don’t have the financial capital that the efforts of the Genentech and Zappos Corporations.
While digital marketing has generated exciting opportunities for companies to interact with their customers, digital media are also more consumer-driven than traditional media. Internet users are creating and reading consumer-generated content as never before and having a profound effect on marketing in the process. Two factors have sparked the rise of consumer-generated information. The first is the increased tendency of consumers to publish their own thoughts, opinions, and reviews. The second is product discussions through blogs or digital media and consumers' tendencies to trust other consumers over corporations. Consumers often rely on the recommendations of family, friends, and fellow consumers when making purchasing decisions. Marketers who know where online users are likely to express their thoughts and opinions can use these forums to interact with consumers, address problems, and promote their companies. Types of digital media in which Internet users are likely to participate include blogs, wikis, video sharing sites, podcasts, social networking sites, virtual reality sites, and mobile applications.
Match the correct website to the correct type of digital media.
a. Blogs
b. Video Sharing
c. Virtual Worlds
d. Social Networking
e. Wikis
f. Photo Sharing
g. Podcasting
Answer:
a. Blogs ⇒ Web-based Journals; Tu-mblr
b. Video Sharing ⇒ Video Sites; You-Tube.com
c. Virtual Worlds ⇒ Online Avatars; Second Life
d. Social Networking ⇒ Online Meeting Places; T-witter
e. Wikis ⇒ Edited Web Articles; Wik-ipedia.com
f. Photo Sharing ⇒ Photo Sites; Fl-ickr.com
g. Podcasting ⇒ Subscription Media Files; CBC Radio
If a firm is privately owned, and its stock is not traded in public markets, then we cannot measure its beta for use in the CAPM model, we cannot observe its stock price for use in the dividend growth model, and we don't know what the risk premium is for use in the bond-yield-plus-risk-premium method. All this makes it especially difficult to estimate the cost of equity for a private company. True False
Answer: True
Explanation:
Beta enables us to be able to calculate the risk of a stock in relation to how the market is moving. This is known as the systematic risk. Beta, needs to be calculated on based on the trading data of the stock.
If the stock is not publicly traded, it would not have the trading data required to find the beta. As we cannot get the beta, we would be unable it to calculate the return on stock and therefore the dividend growth model.
