Answer:
The demand curve is less elastic.
Explanation:
The steeper demand curve shows that the demand had become less elastic because the steeper demand curve represents the less elastic demand while the flatter demand curve shows the more elastic demand. therefore, if the demand curve for a monopolistic competitor becomes steeper that means people are less responsive towards the quantity. So if the price increases or decreases, then people will not change their quantity more than the change in price.
Blossom Street Inc. makes unfinished bookcases that it sells for $57. Production costs are $37 variable and $10 fixed. Because it has unused capacity, Blossom Street is considering finishing the bookcases and selling them for $70. Variable finishing costs are expected to be $6 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Blossom Street should sell unfinished or finished bookcases. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer and Explanation:
The Preparation of an analysis on a per unit basis is shown below:-
Particulars Sell unfinished Sell finished Increase/Decrease
bookcases bookcases in income
Sale price per
unit $57 $70 $13
Less: variable cost
per unit $37 $43 $6
($37 + $6)
Les: fixed cost per
unit $10 $10 $0
Total cost per
unit $47 $53 $6
Net income per
unit $10 $17 $7
Therefore, Unfinished bookcases are further processed, as net profit per unit increases further by processing by $7
A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value at which the bond will trade if the current YTM is 6.1%?
a $411.40
b. $553.15
c $663.78
d. $885.05
e. $774.42
Answer:
The bond will trade at a. $411.40.
Explanation:
Use the following data to find the price, PV of the bond.
n = 15
pmt = $0
p/yr = 1
fv = $1,000
ytm = 6.10 %
pv = ?
Using a financial calculator, the bond price (PV) is $411,4047 or $411,40
Conclusion :
The bond will trade at $411.40 if the current YTM is 6.1%.
Mark Sports Inc. sold 500 pairs of skates at $50 each in 2012. The management estimates that 4% of the skates sold will need repair within a year. The repair cost for each pair is $10. Which is the correct journal entry for estimating warranty liability
Answer:
Warranty repair Expense (Dr.) $200
Warranty Payable (Dr.) $200
Explanation:
The warranty expense is the estimate of probable expense that will incur due to fault in the product. The estimated repair is the 4% of skates sold. If 500 pairs of skates are sold then out of them 4% will require repair. The repair for the faulty skates will cost $10. The total cost will be $200,
500 pairs of skates * 4% * $10
Here I Sit Sofas has 5,800 shares of common stock outstanding at a price of $81 per share. There are 630 bonds that mature in 17 years with a coupon rate of 5.5 percent paid semiannually. The bonds have a par value of $1,000 each and sell at 93 percent of par. The company also has 4,700 shares of preferred stock outstanding at a price of $34 per share. What is the capital structure weight of the debt?
Answer:
0.4820
Explanation:
The computation of the weight of debt is shown below:
= Debt value ÷ Total capital structure
where,
Debt value is
= 630 bonds × $1,000 × 0.93
= $585,900
And, the total capital structure is
= Debt value + common stock + preferred stock
= $585,900 + 5,800 shares × $81 + 4,700 shares × $34
= $1,215,500
So, the weight of debt is
= $585,900 ÷ $1,215,500
= 0.4820
Do your shopping behavior and purchase criteria differ between purchases made for yourself and purchases made as gifts? How?
Explanation:
Yes, as purchasing behavior and purchasing criteria tend to vary according to the reason for the purchase.
The consumer purchase decision process begins by identifying a need, searching for available information about the purchase need found, evaluating the options available for purchase and finally buying decision. And this process varies according to the type of purchase, if it is for yourself, you can consider different benefits and options, when a purchase is made to be a gift, you can have different criteria in relation to the price you want to pay, the preferences and needs of the person who will receive the gift, etc.
Which means that sellers must create different strategies for each purchase situation, in order to positively influence the purchase process for a gift, if that is the case.
Assume that the CEO of a company gave you the project charter specifying your authority, among others to work on an initiative providing health services to the community in a certain neighborhood. Before the company embarked on the project, the team analyzed the health sector development program of the country and read through laws the country enacted regarding the health sector. It also did a market survey to solicit information as to who does what. From the analysis, it learned that several companies where engaged in the provision of solar energy. As it did not want to be engaged in providing the same service that others were offering, it started developing solar powered mobile clinic. With an initial outlay of birr 5 Million, the project would last for 7 years. Since the whole work was too huge to consider all at once, the project manager and the team decomposed the project into manageable compartments and then to activities. It also developed schedule, set standards, and anticipated possible bottlenecks along the way. From the analysis it made, it found out that there would be a 20% chance that medical supplies would be delivered late costing the company ETB 350,000. There would also be a 40% chance that the company would save ETB 175,000 in time as it would build the component using already existing templates instead of starting from scratch. Finally, the team would like to make sure that the work would satisfy all of the requirements so that it would get the acceptance of the clients. 1. Characterize a project based on the above narration and distinguish the project manager from an operations manager? 2. What is the Expected Monetary Value for the two possibilities? What would you suggest as a solution to respond to risks? 3. Mention and elaborate the input the company used to develop products using templates already existing instead of starting from the scratch. 4. What are the areas of expertise indicated in the story? 5. If you were to produce documents thereby convince stakeholders to buy in the project idea, what would you do for a successful initiation? 6. Discuss the processes, process groups and knowledge areas narrated in the story.
Answer:
Characterize a project based on the above narration and distinguish the project manager from an operations manager?
Explanation:
You are given an annuity-immediate paying 10 for 10 years, then decreasing by one per year for nine years and paying one per year thereafter, forever. The annual effective rate of interest is 4%. Calculate the present value of this annuity.
Answer:
124.17
Explanation:
since the first payment is immediate, then this is an annuity due:
we must divide this annuity into 3 separate parts:
1) today plus 9 years = PV = 10 x 8.43533 (PV annuity due, 4%, 10 periods) = 84.3533
2) the second group of years where annuity decreases by $1
PV year 10 = 9/1.04¹⁰ = 6.08
PV year 11 = 8/1.04¹¹ = 5.20
PV year 12 = 7/1.04¹² = 4.37
PV year 13 = 6/1.04¹³ = 3.60
PV year 14 = 5/1.04¹⁴ = 2.89
PV year 15 = 4/1.04¹⁵ = 2.22
PV year 16 = 3/1.04¹⁶ = 1.60
PV year 17 = 2/1.04¹⁷ = 1.03
sum of PVs = 26.99
3) terminal value at year 17 = 1/0.04 = 25
PV of terminal value = 25/1.04¹⁷ = 12.83
now we add the three parts = 84.3533 + 26.99 + 12.83 = 124.17
When a firm focuses on cost reductions through a variety of efforts including economies of scale, with little customization of products, the firm uses which kind of strategy?
Answer:
Global standardization
Explanation:
Global standardization is when a company(multinational) create a marketing strategy that is results driven in order to sell its products internationally. This type of strategy is used by these companies to promote/advertise, sell their products with a view to making profit.
Global standardization enables a firm to use same marketing strategy from one country to another while considering the culture of the host country. This means that global standardization is a useful tool especially for product like Coca Cola which have same appeal worldwide.
1. Chang Industries has 1,900 defective units of product that have already cost $13.90 each to produce. A salvage company will purchase the defective units as they are for $4.90 each. Chang's production manager reports that the defects can be corrected for $6.10 per unit, enabling them to be sold at their regular market price of $20.80. The incremental income or loss on reworking the units is:_______.
a. $18,620 income.
b. $30,210 income.
c. $27,930 income.
2. Poe Company is considering the purchase of new equipment costing $85,500. The projected net cash flows are $40,500 for the first two years and $35,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.
Periods Present Value of 1 at 10% Present Value of anAnnuity of 1 at 10%
1 0.9091 0.9091
2 0.8264 1.7355
3 0.7513 2.4869
4 0.6830 3.1699
a. $(27,665).
b. $(14,857).
c. $27,665.
d. $35,709.
Answer:
1. $18620
2. $35709
Explanation:
1.we are required to find incremental loss.
= Defect(market price - price per unit - correction per unit)
Defect product = 900
Market price = 20.8
Price for each defect unit = 4.9
Price for defect correction = 6.1
1900(20.8-4.9-6.1)
= $18600
2. Present value of cash flow =
40500*0.9091 = 36818.55
40500*0.8264 = 33469.2
35500*0.7513 = 26671.15
35500*0.683 = 24246.5
Total = 121209
We subtract cost of new equipment from this value
121209-85500
= $35709
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.a. True
b. False
Answer:
a. True.
Explanation:
In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis.
In Financial accounting, Horizontal analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
Which is the first step toward initiating efficient and effective international business negotiations:
Answer: Selecting an appropriate negotiation team
Explanation:
The first step toward initiating efficient and effective international business negotiations is selecting an appropriate negotiation team.
When an appropriate negotiation team has been selected to negotiate on behalf of a particular company, negotiation becomes easier and are more feasible and both parties can agree on a particular stance.
2. Whom would you choose as a referent on this job? What steps would your manager take to make you feel that you were being equitably treated? What would you do if, after a year on the job, you experienced underpayment equity?
Answer is given below
Explanation:
The comparison is an indication to determine if the treatment is the same. Mentioned may be another person or a group of people similar to them. The Reference Canal may be a person with a previous job or anyone has guesses as to what the result/input ratio will be. Employees are treated equally when they feel that their result / input ratio is equal to the output or input ratio mentioned. Equity is related to the fairness of the results relative to the inputs. Managers help treat employees equally by ensuring that those who provide multiple inputs are rewarded with more results than those who provide less input. If a person changes one aspect of his ratio, the manager must ensure that the other side of the ratio also changes. As the input increases, so does the outcomhold. If the input decreases, the results also decrease. Equity is present when an individual's own result / input ratio is less than the forecast. This happens when an employee compares him or her to a reference and does not want to achieve the results he or his investment has achieved. Equity can be restored by trying to increase growth (by inputs, bonuses or allocating time) or by removing inputs (being late or falling short, doing less work) and turning it into a more accurate indication. If these methods fail, a planned company will choose to departA firm's total cost function is given by the equation TC=4000+5Q+10Q and marginal cost is given by the equation MC=5+20Q
(A) Write an expression for each of the following cost concepts:
a. Total Fixed Cost
b. Average Fixed Cost
c. Total Variable Cost
d. Average Variable Cost
e. Average Total Cost
(B) Calculate the values of marginal cost and the costs in (a)-(e) above for Q=0,1,2,3.
(C) Determine the quantity that minimizes average total cost. Demonstrate that the predicted relationship between marginal cost and average cost holds.
Following are the calculation to the given question:
[tex]\to TC = 4,000 + 5Q + 10 \ Q2\\\\\to MC = 5 + 20\ Q\\\\[/tex]
For point A)
[tex](a)\ TFC = 4,000\\\\(b)\ AFC = \frac{TFC}{ Q} = \frac{4,000}{ Q}\\\\(c)\ TVC = 5Q + 10\ Q2\\\\(d)\ AVC = \frac{TVC }{Q} = 50 + 10\ Q\\\\(e)\ ATC = \frac{TC }{ Q} = (\frac{4,000}{ Q}) + 50 + 10Q \ \text{Also, ATC = AVC + AFC}\\\\[/tex]
For point B)
TFC remains unchanged at 4,000, regardless of the price of Q.
i)
[tex]\to Q = 0[/tex]
AFC, AVC, and ATC cannot be calculated (division by zero is not possible).
ii)
[tex]Q = 1\\\\AFC =\frac{4,000}{ 1} = 4,000\\\\TVC = (5 \times 1) + (10 \times 1) =5 + 10 = 15\\\\AVC = \frac{TVC}{ Q} = \frac{15}{1} = 15\\\\ATC = 4,000 + 15 = 4,015\\\\MC = 5 + (20 \times 10 = 5 + 20 = 25[/tex]
iii)
[tex]Q = 2\\\\AFC = \frac{4,000}{ 2} = 2,000\\\\TVC = (5 \times 2) + (10 \times 2 \times 2) = 10 + 40 = 50\\\\AVC = \frac{50}{2} = 25\\\\ATC = 2,000 + 25 = 2,025\\\\MC = 5 + (20 \times 2) = 5 + 40 = 45\\\\[/tex]
iv)
[tex]Q = 3\\\\AFC = \frac{4,000}{ 3} = 1,333.33\\\\TVC = (5 \times 3) + (10 \times 3 \times 3) = 15 + 90 = 105\\\\AVC = \frac{105}{3} = 35\\\\ATC = 1,333.33 + 35 = 1,368.33\\\\MC = 5 + (20 \times 3) = 5 + 60 = 65\\\\[/tex]
For point C)
i)
[tex]ATC[/tex] is minimized when [tex]\frac{dATC}{dQ} = 0[/tex]
[tex](- \frac{4,000}{Q2} ) + 10 = 0\\\\\frac{4,000}{Q2} = 10\\\\Q2 = 400\\\\Q = 20\\[/tex]
ii)
Part (B) shows that as MC increases from Q = 0 to Q = 3, ATC decreases, validating the link.
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J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. J. Ross's cost of retained earnings is closest to:
Answer:
J. Ross's cost of retained earnings is 18.33%
Explanation:
Cost of retained earnings is also call Cost of Equity
Cost of retained earnings = (Dividend per share for next year / Current market value of stock) + Growth rate of dividend
Cost of retained earnings = 2 / 40(1-40%) + 10%
Cost of retained earnings = 2 / 24 + 10%
Cost of retained earnings = 0.08333 + 0.1
Cost of retained earnings = 0.183333
Cost of retained earnings = 18.3333%
Cost of retained earnings = 18.33%
Calculate the marginal cost of the 70th toy car produced. Round your answer to the nearest hundredth.
Answer:
$1.43
Explanation:
A lot of information is missing, but i found a similar question. Hope it can help.
Labor Q Fixed Variable Total Marginal Average
costs costs cost cost total cost
0 0 50 0 50 0 0
1 10 50 30 80 8 8
2 24 50 60 110 2.5 4.58
3 49 50 90 140 1.20 2.86
4 70 50 120 170 1.43 2.43
5 82 50 150 200 2.50 2.44
marginal cost is calculated by dividing the incremental cost ($30) by the incremental output (21) = $30 / 21 = $1.4286 ≈ $1.43
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Required:
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
3. Explain the reason for the difference in the amount of operating income reported in (1) and (2). Refer to the list of Labels and Amount Descriptions provided
Labels and Amount Descriptions
Labels
August 31
Cost of goods sold
Fixed costs
For the Month Ended
August 31
Variable cost of goods sold
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods manufactured
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Operating income
Inventory, August 31
Loss from operations
Manufacturing margin
Planned contribution margin
Sales
Sales mix
Selling and administrative expenses
Total cost of goods sold
Total fixed costs
Total fixed costs
Total variable cost of goods sold
Variable cost of goods manufactured
Variable selling and administrative expenses
Answer:
Kodiak Fridgeration Company
1. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00
Total manufacturing 8,940,000.00
Less Ending Inventory 894,000.00 8,046,000.00
Gross profit $2,214,000.00
Selling and administrative expenses:
Variable $972,000.00
Fixed 324,000.00 1,296,000.00
Net Income $918,000.00
2. Income Statement for the month ended August 31, absorption costing concept:
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Total manufacturing 8,100,000.00
Less Ending Inventory 810,000.00 7,290,000.00
Gross profit $2,970,000.00
Fixed manufacturing cost 840,000.00
Selling and administrative expenses:
Variable 972,000.00
Fixed 324,000.00 2,136,000.00
Net Income $834,000.00
3. The reason for the difference in the amount of operating income reported in (1) and (2) are the cost of products assigned to cost of goods sold and ending inventory are not the same. The following reconciliation buttresses this point:
Net operating income as per absorption costing $918,000.00
less Ending inventory, ($149 - $135) x 6,000 84,000.00
Net operating income as per variable costing $834,000.00
Explanation:
a) Data and Calculations:
Units produced = 60,000
Units sold = 54,000
Ending inventory = 6,000
Sales $10,260,000.00
Manufacturing costs:
Direct materials $5,100,000.00
Direct labor 1,800,000.00
Variable manufacturing cost 1,200,000.00
Fixed manufacturing cost 840,000.00 8,940,000.00
Selling and administrative expenses:
Variable $972,000.00 324,000.00
Fixed 1,296,000.00
Kodiak's absorption costing concept incorporates all production costs into the cost of products. This means that the cost of production includes all variable and fixed costs associated with production. Costs that are not related to production are treated as period costs. Whereas, with variable costing technique, only the variables costs of production are included in the costs of production. All fixed costs, including factory overheads are treated as period costs.
A monopoly's cost function is
C = 1.5q^2 + 40 Q
and its the demand for its product is
p = 320-0.5Q
where Q is output, p is price, and C is the total cost of production. Determine the profit-maximizing price and output for a monopoly. The profit maximizing output level is units. (Enter a numeric response using an integer)
Answer:
70 units
Explanation:
The computation of profit maximizing output level is shown below:-
Monopolist perform Marginal Revenue which equivalent to the Marginal Cost as
MR = Marginal Revenue and MC = Marginal Cost
[tex]MR = \frac{\partial TR}{\partial Q} = \frac{\partial PQ}{\partial Q} = \frac{\partial (320-0.5Q)Q}{\partial Q}[/tex]
[tex]MR = \frac{\partial (320Q -0.5Q^2)}{\partial Q}[/tex]
MR = 320 - Q
Now we will find the MC which is
[tex]MC = \frac{\partial TC}{\partial Q} =\frac{\partial (1.5Q^2 + 40Q)}{\partial Q} = 3Q + 40[/tex]
now we will put the value of which is into MR = MC
320 - Q = 3Q + 40
280 = 4Q
70 = Q
So, the profit maximizing output level is 70 units.
________________ allow(s) for more wealth because a larger market allows producers and consumers to benefit from lower costs.
Answer:
Global competition
Explanation:
Global competition is the competition in which the products and the services are provided by the companies that are competed and serve their products and services to international customers. In this the companies should faced a lot of challenges like taste and preferences, a lifestyle that occurs due to the difference in cultures also it generated the benefit from lowering the cost
Therefore according to the given scenario, global competition is the answer
obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as
Answer:
Long term liabilities.
Explanation:
This can be easily or mostly be used in companies and also firms. In most cases they are been tagged a non-current liability.
They are generally defined to be obligations that are not been settled for/paid off in the current year or accounting period. Therefore, debts of this kind are not due within a year. Dept of this kind ranges from notes payable to bonds payable, also mortgages and are also seen as leases in a company settings.
In as much as this is not good for a company's financial health, investors and creditors see how the company is financed through this. Current obligations are seen to be more risky than non-current debts because they will need to be paid sooner.
The Auto Division of Big Department Store had a net operating income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12%. Sales for the period totaled $3,000,000. The residual income for the period is
Answer:
Residua income = $80,000
Explanation:
Residual income is the excess of the controllable profit over the opportunity cost of capital invested.
It is used to evaluate the financial performance of a division or department.
The a positive residual value indicate a good performance, hence the higher the residual value the better
It is computed as follows:
Residual income = Controllable profit - (cost of capital× operating assets)
Controllable profit = 560,000,
Interest on capital = × 12% × 4,000,000 = 480,000
Residual income = 560,000 - 480,000= 80,000
Residua income = $80,000
You have been hired by the CFO of Lugones Industries to help estimate its cost of common equity. You have obtained the following data: (1) r d = yield on the firm's bonds = 7.00% and the risk premium over its own debt cost = 4.00%. (2) r RF = 5.00%, RP M = 6.00%, and b = 1.25. (3) D 1 = $1.20, P 0 = $35.00, and g = 8.00% (constant). You were asked to estimate the cost of common based on the three most commonly used methods and then to indicate the difference between the highest and lowest of these estimates. What is that difference?
Answer:
Under CAPM:
Re = Rf + Beta(Rm - Rf)
Rf = 5%
Rm - Rf = 6%
Beta = 1.25
Re = 5% + (1.25 x 6%) = 12.5%
Under dividend discount model:
Re = (Div₁ / P₀) + g
Div₁ = $1.20
P₀ = $35
g = 8%
Re = ($1.20 / $35) + 8% = 11.43%
Under bond yield plus risk premium approach:
Re = Pre-tax cost of debt + risk premium over its own debt
Pre-tax cost of debt = 7%
risk premium over its own debt = 4%
Re = 7% + 4% = 11%
The highest cost of equity results from the CAPM model and it is 12.5% while the lowest results from using the bond yield plus risk approach (11%), the difference is 1.5% between them.
Ignatius Corporation had 7 million shares of common stock outstanding during the current calendar year. It issued ten thousand $1,000, convertible bonds on January 1. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semiannually at an annual rate of 10%. On June 30, Ignatius issued 100,000 shares of $100 par 6% cumulative preferred stock. Dividends are declared and paid quarterly. Ignatius has an effective tax rate of 25%. Ignatius would report the following EPS data (rounded) on its net income of $20 million: Basic EPS Diluted EPS a. $ 2.77 $ 2.67 b. $ 2.81 $ 2.73 c. $ 2.85 $ 2.67 d. $ 2.81 $ 2.68
Answer:
Ignatius Corporation
Basic and Diluted EPS are:
c. $ 2.85 $ 2.67
Explanation:
Data and Calculations:
Common stock outstanding = 7 million shares
Issued 10,000, $1,000 convertible bonds = $10,000,000
Convertible bonds = 10,000 bonds = 500,000 shares (10,000 x 50)
Interest payment = semiannual at 10% per annum
6%, 100,000 Cumulative preferred stock at $100 par = $10,000,000
Preferred dividend = $600,000
Net Income of $20 million
Basic EPS = $20,000,000/7,000,000 = $2.857 per share
Diluted EPS = $20,000,000/7,500,000 = $2.67 per share
To obtain the diluted EPS, the outstanding common stock is increased by the number of potential convertible bonds.
In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome
Answer: risk
Explanation:
In the decision making under risk, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.
Unlike in uncertainties whereby the decision maker won't know the probability of the occurrence of the outcomes, in risk, one is aware.
Four companies were sued by customers for injuries sustained from faulty products. All four companies settled out of court for $400,000. For which of the following companies is this event the LEAST material?a. A company with assets totaling $36 billion.b. A company with assets totaling $40 billion.c. A company with assets totaling $15 billion. d. A company with assets totaling $50 billion.
Answer:
d. A company with assets totaling $50 billion.
Explanation:
In order to calculate the material impact of the lawsuit on each company, we must divide the settlement by total assets. In this case, we do not need to do the math, we simply have to select which company has the most assets. The more assets a company has, the lesser the material impact of any unfavorable settlement.
A manufacturing company's costs can be classified broadly as __________, __________, and __________. The costs to manufacture a product are classified as __________ __________, __________ __________, and __________ __________.
Answer:
1. A manufacturing company's costs can be classified broadly as direct materials, direct labor, and factory overhead cost.
2. The costs to manufacture a product are classified as Period cost, Administrative Expense, and Selling expenses.
Explanation:
A manufacturing company encounters so many costs in the cause of the manufacturing of the products which they are into. Some of these cost are periodic in nature (one off payment or interval cost ) while others are directly related to the product being manufactured.
Countess Corp. is expected to pay an annual dividend of $4.63 on its common stock in one year. The current stock price is $74.11 per share. The company announced that it will increase its dividend by 3.75 percent annually. What is the company's cost of equity?
Answer:
r = 0.099974 or 9.9974% rounded off to 10.00%
Explanation:
Using the constant growth model of DDM we calculate the price of a stock today which is expected to pay a dividend which increases at a constant rate through out. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price under this model is,
P0 = D1 / r - g
Where,
r is the required rate of return or cost of equityg is the constant growth rate in dividendsPlugging in the available values in the formula, we calculate r to be,
74.11 = 4.63 / (r - 0.0375)
74.11 * (r - 0.0375) = 4.63
74.11r - 2.779125 = 4.63
74.11r = 4.63 + 2.779125
r = 7.409125 / 74.11
r = 0.099974 or 9.9974% rounded off to 10.00%
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is:_______.
a. Debit Depletion Expense $93,750; credit Natural Resources $93,750.
b. Debit Cash $112,500; credit Natural Resources $112,500.
c. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750.
d. Debit Cash $93,750; credit Accumulated Depletion $93,750.
e. Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500.
Answer:
Option c is the correct answer.
Explanation:
The depletion expense or charge for the period can be calculated using the following formula,
Depletion expense = [(Cost - Salvage Value) / Total units expected to be mined] * Units mined during the period
Depletion expense = [(1500000 - 250000) / 2000000] * 150000
Depletion expense = $93750
The entry to record the expense is,
Depletion expense 93750 Dr
Accumulated depletion 93750 Cr
So, option c is the correct answer.
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance.
A. True
B. False
Answer:
A. True
Explanation:
Unlike direct materials, the sum of all the direct labor variances is always equal to the flexible budget variance. Also, a negative direct labor efficiency variance is considered favorable one. And for a direct labor, if the efficiency and rate variances are both negative, then the flexible budget variance will be unfavorable. Therefore, the statement of the question is true.
Absolute Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Absolute collected the following information from its main production line:Actual quantity purchased 200 unitsActual quantity used 110 unitsUnits standard quantity 100 unitsActual price paid $8 per unitStandard price $10 per unitAbsolute isolates price variances at the time of purchase. What is the materials price variance for Year 1?a. $400 favorableb. $400 unfavorablec. $220 favorabled. $220 unfavorable
Answer:
Direct material price variance= $400 favorable
Explanation:
Giving the following information:
Actual quantity purchased 200 units
Actual price paid $8 per unit
Standard price $10 per unit
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (10 - 8)*200
Direct material price variance= $400 favorable
Annabelle owns an Italian ice shop. If she decided to expand the size of her shop so that she could sell more Italian ices, how would she know if she is experiencing economies of scale in the long run
Answer:
her long-run average cost of selling each Italian ice decreases.
Explanation:
Economies of scale is when a firm produces more units of goods or services on a much larger scale, with very little input cost(average cost). Invariably, this implies that the production units of a firm increases as it grows while having a decreased input costs.
A firm will experience economies of scale in the long run if it's average total costs(cost per unit required for production which remains the same irrespective of output) decreases as it increases its scale of production.
