Answer:
Explanation:
The journal entry is shown below:
1st July Debit Prepaid insurance $13620
Credit Cash $13620
31st December Debit Insurance expenses $2270
Credit Prepaid insurance $2270
Insurance expense was calculated as:
= $13620/3 years × 6months/12months
= $4540 × 1/2
= $2270
Carlsberg beer has an elasticity of -0.5 and the company decided cut prices to increase the total revenues on New Year’s Eve.
itack on Titan sasageyo
The net present value of an investment to purchase a solar PV system that costs $10,000 and saves $2,000 per year for 20 years, and will increase the cost of reroofing by $5,000 in year ten, if your next best investment is 3% per year is about:
Answer:
The net present value of an investment to purchase a solar PV system that costs $10,000 and saves $2,000 per year for 20 years, and will increase the cost of reroofing by $5,000 in year ten, if your next best investment is 3% per year is about:
= $16,040.
Explanation:
a) Data and Calculations:
Investment cost for the purchase of a solar PV system = $10,000
Cost of reroofing in year ten = $5,000
Annual savings = $2,000
Period of investment = 20 years
Discount rate = 3%
Present value of Costs:
Investment at year 1 = $10,000
Re-Roofing cost in year ten = 3,720 ($5,000 * 0.744)
Total PV of costs = $13,720
Present value annuity factor at 3% for 20 years = 14.88
Present value of savings = $29,760 ($2,000 * 14.88)
Net present of the investment = $16,040 ($29,760 - $13,720)
A firm has an equity multiplier of 1.57, an unlevered cost of equity of 14 percent, a levered cost of equity of 15.6 percent, and a tax rate of 21 percent. What is the cost of debt
Answer:
10.45%
Explanation:
Calculation to determine the cost of debt
B/S = 1.57 − 1
B/S = .57
.156 = .14 + .57(1 −.21)(.14 − RB)
.156 = .14 + .57(.79)(.14 − RB)
RB = .1045*100
RB= 10.45%
Therefore the cost of debt is 10.45%
If a firm buys a building so as to have office space for its workers, the monthly opportunity cost of the building is best measured as
Answer:
A. the rent the firm could earn if it rented the building to another firm
Explanation:
O A. the rent the firm could earn if it rented the building to another firm O B. the price the firm paid divided by twelve O C. the monthly mortgage payment the firm must pay O D. zero. Click to select your ans e here to search
There are two types of costs
1. Implicit cost or opportunity cost : Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives. It is used in calculating economic profit
By using the office space for workers, the firm is forgoing the opportunity to rent out the space to another firm. The rent the firm could have earned is the opportunity cost
2. Explicit cost : It includes the amount expended in running the business. It is used in calculating accounting profit
They are : the monthly mortgage payment the firm
total amount expended in building
A college charges a basic fee of $100 per semester plus an additional fee of $50 per credit hour. You take 10 credit hours this semester. The marginal cost to you of the 10th credit hour this semester is:
Answer:
The marginal cost of the 10th credit hour this semester is:
= $50
Explanation:
a) Data and Calculations:
Basic fee (Fixed cost) per semester = $100
Additional fee per credit hour = $50
Taking 10 credit hours will cost = $600 {$100 + ($50 * 10)}
b) Marginal cost is the differential change in the total cost that is incurred when the credit hours are increased by one credit hour by the student for this semester. It is also equal to the $50 that the college charges per credit hour.
The two general approaches to forecasting discussed in the notes are:________
A. judgmental and qualitative
B. historical and associative
C. qualitative and quantitative
D. judgmental and associative
E. mathematical and statistical
Answer:
C. qualitative and quantitative
Explanation:
Qualitative forecasting should be used when the data is insufficient or less. Here the managers applied the subjective that depend upon the opinion and the consumer judgement to forecast the future. The methods like sales force, excuetive opinion represent the qualitative one
On the other hand the quantitative one should be used when the mathematical model to the past and the present are available. Like time series analysis, regression models, etc
hence, the option c is correct
Kohl Co. provides warranties for many of its products. The January 1, 2019, balance of the Estimated Warranty Liability account was $55,726. Based on an analysis of warranty claims during the past several years, this year's warranty provision was established at 0.84% of sales. During 2019, the actual cost of servicing products under warranty was $16,290, and sales were $5,870,500.
Required:
a. What amount of Warranty Expense will appear on Kohl Co.'s income statement for the year ended December 31, 2019? Warranty Expense Actual warranty expense Estimated warranty expense Warranty Expense
b. What amount will be reported in the Estimated Warranty Liability account on the December 31, 2019, balance sheet?
(Amounts to be deducted should be indicated by minus sign.) Estimated Warranty Liability, 1/1/19 balance Estimated Warranty Liability 12/31/19 balance
Answer:
a. Warranty Expense = Sales * Estimated Warranty Percentage
Warranty Expense = $5,870,500 * 0.84%
Warranty Expense = $49,312.20
b. Beg. Bal. of Estimated Warranty Liability Jan. 1, 2019 $55,726
Less: Actual warranty costs in 2019 ($16,290)
Add: Warranty expense accrued in 2019 $49,312.20
Ending Balance of Estimated Warranty Liability Dec. 31, 2019 $88,748.20
Does an organization/job exist if there are no people present?
Answer:
yes an organization/ job will always exist even if no one wanted the job or no one presented because its part of a buissness requirement
hope this helps!
The initial investment needed is $500,000 and the expected cash flows from this project will be 70,000 for the next 10 years. Will your project be approved, (generates a return higher than 12%). What cash flow would be required to get your project approved
Answer:
first part
Initial outlay = -$500,000
10 future cash flows = $70,000
PV of 10 future cash flows = $70,000 x 5.6502 (PVIFA, 12%, 10 periods) = $395,514
NPV = -$500,000 + $395,514 = -$104,486
the project will be rejected
second part
in order to have an NPV ≥ 0
annual cash flow = $500,000 / 5.6502 = $88,492.45 or higher
A company has $104,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 5% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is a(n) $940 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
Answer:
$4,260
Explanation:
The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense is given below:
Estimated Uncollectible Accounts is
= $104,000 × 5%
= $5,200
Now
Bad debt expense is
= Estimated Uncollectible accounts - credit balance in Allowance account
= $5,200 - $940
= $4,260
The following units of an inventory item were available for sale during the year. Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The ending inventory cost using FIFO is
Answer:
$1,375
Explanation:
Given the information above, the Ending inventory = Units available - Units sold
Units available = 10 + 25 + 30 + 70 = 80
Units sold = 60
Ending inventory = 80 - 60
Ending inventory = 20
Cost of ending inventory under FIFO
= (15 × $70) + (20 - 15) × $65
= $1,050 + $325
= $1,375
Therefore, the ending inventory cost using FIFO is $1,375
Networks are proven to be relevant in the context of innovation and entrepreneurship. Explain
the main features of an entrepreneurial network including the role of personal contact networks
and how they are developed over time by explaining at least three approaches that can be used to
manage network relationships. Support your answer with examples
Answer:
Accommodation
Engagement Refinement
Explanation:
In the entrepreneurial ecosystem, networks still remain a popular and important aspect which is often thought and seen as a stepping stone to achieving entrepreneurial greatness. This network simply entails the creation of a circle or set of skilled individuals usually in different strategic areas of specialization relevant to a certain business line or sector. This way embarking on projects tends to be much easier as these networks of people can offer help, tips or together engage in to proffer solution on time. Networks are created usually through meetups and good interpersonal relationships. Having professionals around can speed up processes and. However, networks has to be properly managed usy be being accommodating and warm when approcached; frequent engagement topics and trending issues, including the desire to learn more and measure up to new trends.
Summit Apparel has the following accounts at December 31: Common Stock, $1 par value, 1,800,000 shares issued; Additional Paid-in Capital, $17.80 million; Retained Earnings, $10.80 million; and Treasury Stock, 58,000 shares, $1.276 million. Prepare the stockholders’ equity section of the balance sheet. (Amounts to be deducted should be indicated by a min
Answer:
$29,124,000
Explanation:
Preparation of the stockholders’ equity section of the balance sheet.
SUMMIT APPAREL Balance Sheet
(Stockholder's Equity Section)Dec-31
Stockholder's equity:
Common stock $1,800,000
Additional paid-in capital $17,800,000
Total paid-in capital $19,600,000
($1,800,000+$17,800,000)
Retained earnings $10,800,000
Less Treasury stock ($1,276,000)
Total stockholder's equity $29,124,000
($19,600,000+$10,800,000-$1,276,000)
Therefore the stockholders’ equity section of the balance sheet is $29,124,000.
The Andrews Company has just purchased $43,088,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,308,800. What will the book value of this purchase (exclude all other plant and equipment) be after its third year of use?
Answer: $35,332,160
Explanation:
The boik value of the purchase will be calculated thus:
Cost of plant = $43,088,000
Useful life = 15
Savage value = $4,308,800
Depreciation per year = ($43,088,000 - $4,308,800) / 15
= $38779200/15
= $2,585,280
Accumulated depreciation after third year will be:
= $2,585,280 × 3
= $7755840
Book value = $43,088,000 - $7,755,840
= $35,332,160
a. Due to high demand and high prices, profits in the carpet-painting industry are at all-time highs. Since the carpet-painting industry is perfectly competitive, this will cause firms to (Click to select) in the long run. b. You observe high profits in the perfectly competitive pencil eraser industry. In the long run, you expect those profits to (Click to select) .
Answer:
enter into the industry
fall
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
In the market for tomatoes, assume the market demand is perfectly inelastic and the market supply is inelastic. If a tax is placed on the suppliers in this market, how will the tax burden be distributed
Answer:
Consumers will bear all the tax
Explanation:
O Consumers will bear a greater burden of the tax, but not all the tax. O Consumers and producers will bear the tax burden equally O Producers will bear all the tax Consumers will bear all the tax O Producers will bear a greater burden of the tax, but not all of the tax.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
The party with the less elastic demand bears the tax burden
AutoEdge hires a new economic analyst who decides to compute marginal profit for each product line. What might cause AutoEdge to stop producing a certain auto part erroneously?
Answer:
AutoEdge will stop producing a certain auto part when its marginal profit becomes zero.
Explanation:
Marginal profit is the difference between the marginal cost of production and marginal revenue earned from the sale of the same. Marginal profit is supposed to occur when an additional unit of product or auto part is sold.
When these increment in profit stops, then the economic analyst at AutoEdge knows that it is time to stop producing additional units of the auto part. This is because increasing output no longer tends towards profit.
The new economic analyst at AutoEdge will advise management to stop increasing production when its marginal cost is equal to its marginal revenue because at that point the profit is maximized. This point where MC=MR is also the point where Marginal Profit equals zero.
This is called Shut Down point. Beyond this point, the marginal profit of the firm becomes negative. Hence any production activity carried out at this point will be termed erroneous.
Cheers
Hypercompetitive environments are most common among global competitors, and Lululemon would fall into this category. Which of the following is a characteristic of hypercompetition that is an essential part of Lululemon's strategic management process?
a. High barriers to entry
b. A low-cost environment
c. A monopoly on resources
d. Successful innovation
Answer:
d. Successful innovation
Explanation:
The company should focused on the innovation of the product and the technology in order to develop the innovative yoga pants along with the fabrics. So for successful innovation it represent the key to received the competitor head for the hypercompetitive environment
So as per the given situation, the option d is correct
And, the same should be considered
Suppose the owners of the bank contribute an additional $175 from their own funds and use it to buy securities in the name of the bank. This would increase the securities account a
Answer: increase; capital account
Explanation:
This would increase the securities account and increase the capital account.
When owners of a company put in their own money, it increase the capital of the company and this is reflected in the capital account. This is why the sale of shares to equity holders increases the capital account.
The owners of the bank in this instance, put forward additional cash. from their own funds This will therefore increase the capital of the bank and be reflected as an increase in the capital account.
This would increase the securities account and increase the capital account.
What is capital?Capital can be defined as the amount used in commencing a business. Firms, businesses require opening capital to begin or start off their operations.
At any point owners of a company put in their own money, it will increase the capital of the company hence reflect in the capital account. This is why the sale securities to holders increases the capital account.
Hence, additional input would increase the securities account and increase the capital account.
Learn more about capital here : https://brainly.com/question/1957305
Milton Corporation gives the preferred stockholders an annual dividend of $5 per share. Each share of stock sells for $100 and selling costs of $3. What is the company's cost of preferred stock
Answer:
Milton Corporation
The company's cost of preferred stock is:
= 5.2%.
Explanation:
a) Data and Calculations:
Annual dividend per share = $5
Selling price of preferred stock = $100
Flotation cost per share = $3
The Company's cost of preferred stock, using the flotation cost is = Dividend per share/(Selling price - Flotation cost per share)
= $5/($100 - $3)
= $5/$97
= 0.052
= 5.2%
If the flotation cost was not incurred in the current period, the cost of preferred stock will be = $5/$100 = 0.05 = 5%
True or false:
SOX compliance law now holds CEOs and CFOs of publicly traded companies accountable for their actions as officers in a publicly traded company.
Mary-Jo owns a theater. She purchased a new computer to run the accounting software and lighting for the theater. The computer cost $2,000 and was purchased on May 4, 2020. It was the only equipment purchased by the theater for 2020. Using the MACRS system, how much is her depreciation deduction for 2020
Answer:
The depreciation for 2020 is $233.33
Explanation:
Under the MACRS, computer useful life is 5 years.
The depreciation rate for every year, applying double declining method is: 100% / 5 = 20%. So, depreciation expenses for first year of the computer is calculated as: Cost of the computer x 20% = = 2,000 x 20% = $400.
As the computer is purchased in May, the year 2020 would only account for 7 month out of the first year of depreciation. Thus 2020 depreciation expenses = First year depreciation x 7/12 = 400 x 7/12 = $233.33
1. Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years. How much money did you pay as your down payment?
2. How much money was your existing mortgage (loan) for?
3. What is your current monthly payment on your existing mortgage? Note: Carry at least 4 decimal places during calculations, but round your final answer to the nearest cent.
4. How much total interest will you pay over the life of the existing loan?
5. This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $112,681 left to pay on your loan. Your house is now valued at $180,000.
6. How much of the original loan have you paid off (i.e, how much have you reduced the loan balance by?
7. How much money have you paid to the loan company so far (over the last 10 years)?
8. How much interest have you paid so far (over the last 10 years)?
9. How much equity do you have in your home (equity is value minus remaining debt)?
10. Since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate. If you took out a new 30 year mortgage at 6% for your remaining loan balance, what would your new monthly payments be?
11. Notice that if you refinance, you are going to be making payments on your home for another 30 years. In addition to the 10 years you’ve already been paying, that’s 40 years total. How much will you save each month because of the lower monthly payment?
12. How much total interest will you be paying (consider the interest you paid over the first 10 years of your original loan as well as interest on your refinanced loan)?
13. Now the non-computational question: Does it make sense to refinance?
Answer:
1. Down payment = $15,000
2. The existing mortgage (loan) was for $135,000
3. The current monthly payment on the existing mortgage is $990.58
4. The total interest over the life of the existing loan = $221,609.58
6. The amount of the original loan paid off is $22,319.
7. Total amount paid to the loan company over the last 10 years is $258,928.58 ($243,928.58 + $15,000)
8. Total interest paid over the last 10 years is $221,609.58
9. The equity in the home is $67,319 ($180,000 - $112,681)
10. The new monthly payments will be $675.58
11. Saving each month because of the lower monthly payment is $315 ($990.58 - $675.58)
12. Total Interest = $352,137.21 ($221,609.58 + $130,527.63)
13. It does not make sense to refinance because what is saved per month cannot compare with the additional interest expense to be incurred for prolonging the payments.
Explanation:
a) Data and Calculations:
1. Cost of a home = $150,000
10% down payment = $15,000
Existing Mortgage = $135,000 ($150,000 - $15,000)
Home Price 150000
Down Payment 10 %
Loan Term 30 years
Interest Rate 8%
House Price $150,000.00
Loan Amount $135,000.00
Down Payment $15,000.00
Total of 360 (30 years * 12)
Mortgage Payments $356,609.58
Total Interest $221,609.58
Ten years after, the loan balance has been reduced by $22,319 ($135,000 - $112,682)
Refinancing calculations:
Home Price 112681
Down Payment 0 %
Loan Term 30 years
Interest Rate 6
Monthly Pay: $675.58 Monthly
Total Mortgage Payment $243,208.63
Total Out-of-Pocket $243,208.63
Total of 360 Mortgage Payments $243,208.63
Total Interest $130,527.63
1. Discuss the consumer decision making process for a product such as canned/packaged tuna and the response hierarchy model this is most likely to be applicable in the purchase of this product.
Answer
Because of the shift away from media promoting, the dynamic interaction has changed incredibly. When media promoting was weighty with COSI and StarKist, customers had gotten used to seeing the advertisements and their separate symbols. Buyers were extremely faithful to a particular brand and the reliability outgrew the recognizable symbols "Charlie the Fish" and the mermaid for COSI. Since the center has moved to principally print advertisements, advancements coming up, and coupons, there is something else entirely to keep the customer dynamic cycle occupied. An item, for example, canned fish isn't a need, and in this way can without much of a stretch be supplanted by substitutes. There is more seriousness since a buyer could simply pick a brand since it is the least expensive at a specific store or in light of the fact that they discovered a coupon in a notice. Brand devotion is done being squeezed into shoppers' psyches through business spots with an agreeable mermaid. Presently, organizations are battling to offer more advancements or more limits to build deals, yet the outcome is that for certain buyers each excursion to the store could end with an alternate brand on fish being bought. Purchasers are presently being reached at home through paper advertisements, intelligent item sites, and different advancements. Clients might have settled on their choice before going on an outing to the store. Clients would have followed the Progressive system of Impacts Model before the promoting endeavors moved from media publicizing. Shoppers knew about the brands since they were faithful and fabricated inclinations after some time that prompted buying one brand over the other. Presently, the last buy isn't driven by dedication, however rather each buy has the customer taking a gander at a few components. The activities of retail deals, print advertisements, or different advancements influence their purchasing conduct.
All of the following are examples of qualitative information that should be collected by the financial planner EXCEPT: Group of answer choices General attitudes towards spending. Risk tolerance. Client age and number of children. Education goals.
Answer:
Client age and number of children.
Explanation:
A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on a periodic basis.
A financial planner refers to an individual who is an expert in the planning of a financial budget for another.
A client age and number of children aren't examples of qualitative information that should be collected by the financial planner.
Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $9,000 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.
Answer and Explanation:
The journal entries are as follows:
a. Bad debt $9,000
To account receivable $9,000
(Being the bad debt expense is recorded)
b. Account receivable Dr $9,000
To bad debt $9,000
(being the reversal is recorded)
c. Cash Dr $9,000
To account receivable $9,000
(Being the recovery of the bad debt is recorded)
Pikes Peak is a ski resort in upstate New York. The company sells lift tickets, ski lessons, and ski equipment. It operates several restaurants and rents townhouses to vacationing skiers. The following hypothetical December transactions are typical of those that occur at the resort.
Borrowed $745,000 from the bank on December 1, signing a note payable, due in six months.
1. Purchased a new snowplow for $27,500 cash on December 31.
2. Purchased ski supplies for $14,300 on account.
3. Incurred $31,800 in routine maintenance expenses for the chairlifts; paid cash.
4. Received $74,500 for season passes (beginning in the new year).
5. Daily lift passes were sold this month for a total of $84,200 cash.
6. Received a $520 deposit on a townhouse to be rented for five days in January.
7. Paid half the charges incurred on account in (c).
8. Incurred and paid $22,300 in wages to employees for the month of December.
Required:
1. Prepare accrual basis journal entries for each transaction.
2. Calculate the company’s preliminary net income.
Answer:
1. a. Dr Cash $745,000
Cr Note payable $745,000
b. Dr Equipment $27,500
Cr Cash $27,500
c Dr Supplies $14,300
Cr Accounts payable $14,300
d. Dr Repairs and maintenance expense $31,800
Cr Cash $31,800
e. Dr Cash $74,500
Cr Unearned revenue $74,500
f. Dr Cash $84,200
Cr Service revenue $84,200
g. Dr Cash $520
Cr Unearned revenue $520
h. Dr Accounts payable (14300*1/2] $7,150
Cr Cash $7,150
i. Dr Salaries and wage expense $22,300
Cr Cash $22,300
2. Net income $30,100
Explanation:
1. Preparation of the accrual basis journal entries for each transaction
a. Dr Cash $745,000
Cr Note payable $745,000
b. Dr Equipment $27,500
Cr Cash $27,500
c Dr Supplies $14,300
Cr Accounts payable $14,300
d. Dr Repairs and maintenance expense $31,800
Cr Cash $31,800
e. Dr Cash $74,500
Cr Unearned revenue $74,500
f. Dr Cash $84,200
Cr Service revenue $84,200
g. Dr Cash $520
Cr Unearned revenue $520
h. Dr Accounts payable (14300*1/2] $7,150
Cr Cash $7,150
i. Dr Salaries and wage expense $22,300
Cr Cash $22,300
2. Calculation to determine the company’s preliminary net income.
Service revenue $84,200
Less Expense :
Repairs and maintenance expense
($31,800)
Salaries and wage expense ($22,300)
Total expense (54100)
Net income $30,100
Therefore the company’s preliminary net income is $30,100
Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit and average total cost at the 500 units of output is $6. Its total fixed cost id $2000. On the basis of this information we:
A) can say that the firm should close down in the short run
B) can say that the firm is maximizing profit in the short run
C) cannot determine whether the firm should produce or shut down in the short run
D) can assume the firm is not using the most efficient technology
Answer: D) can assume the firm is not using the most efficient technology
Explanation:
The profit maximizing point of production for a company is the point where the marginal cost of production equals the marginal revenue. At this point, resources are being fully utilized efficiently to produce goods and any increase in production quantity would result in a loss.
In this case however, the company is at the profit maximizing quantity and still making a loss (selling price is less than average total cost). This can only mean that the company is not utilizing resources efficiently and this can be due to a lack of efficient technology.
Suppose you are stranded on an island. Luckily, this island is rich in clams and mangos. If you devote all of your time to harvesting clams, you can get 100 clams in a week. If you us all of your time to collect mangos, you can find 200 mangos in a week.
Assume it is possible to collect fractional amounts of both goods and draw a sketch of your production possibility frontier for a week. (Place mangos on the x-axis and clams on the y-axis.)
Calculate the opportunity cost of each good. (Use a straight-line PPF for this question because the opportunity cost is constant - it doesn't change)
Answer:
a. See the attached photo for the sketched PPF.
b. We have:
Opportunity cost of a clam = 2 mangos
Opportunity cost of a mango = 0.5 clam
Explanation:
a. Assume it is possible to collect fractional amounts of both goods and draw a sketch of your production possibility frontier for a week. (Place mangos on the x-axis and clams on the y-axis.)
Note: See the attached photo for the sketched PPF.
In the attached PPF, Point A indicates when you use all of your time to collect mangos and find 200 mangos in a week; while Point B shows when you devote all of your time to harvesting clams and can get 100 clams in a week. Since it assumed that it is possible to collect fractional amounts of both goods, Point C indicates when you use half of your time to find 100 mangos and harvest 50 clams in a week.
b. Calculate the opportunity cost of each good.
If you devote all of your time to harvesting clams or to collect mangos, we have:
100 clams = 200 mangos ................. (1)
Dividing both sided of equation (1) by 100, we have:
Opportunity cost of a clam = 2 mangos
Dividing both sided of equation (1) by 200, we have:
Opportunity cost of a mango = 1/2 clam, or 0.5 clam
Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Repurchase of common stock b. Cash received from customers c. Payment of accounts payable d. Retirement of bonds payable e. Purchase of equipment f. Purchase of inventory for cash
Answer:
Identification of Transactions as Operating, Investing, or Financing Activity
Transaction Activity
a. Repurchase of common stock Financing (Outflow)
b. Cash received from customers Operating (Inflow)
c. Payment of accounts payable Operating (Outflow)
d. Retirement of bonds payable Financing (Outflow)
e. Purchase of equipment Investing (Outflow)
f. Purchase of inventory for cash Operating (Outflow)
Explanation:
Operating activities show the cash activities that produce revenue and net income for the entity.
Investing activities are cash activities involved in the purchase and sale of noncurrent assets and other non-cash equivalent investments.
Financing activities are cash activities related to noncurrent liabilities and owners' equity.
