Answer:
staff validity
Explanation:
Staff validity is the degree by which the members form good presentations to the leader. As they can have all the information needed to make a good decision.In the process of conversion from the equity method to the fair value method, the earnings or losses that the investor previously recognized under the equity method should
Answer: remain as a part of the carrying amount of the investment
Explanation:
Equity method is simply the process whereby investments are treated in associate companies. It usually occurs when the investor entity holds about twenty to fifty percent of the voting stock of the other company.
It should be noted that in a process of conversion from the equity method to the fair value method, the earnings or losses that the investor previously recognized under the equity method should remain as a part of the carrying amount of the investment.
The Chiemsee Knee Replacement Clinic (CKRC) is a sports clinic located at the northern edge of the German Alps. It specializes in knee replacements for skiers who come to CKRC from Germany, Austria, Switzerland, and Italy. The clinic currently has one operating room (OR). However, since the clinic has dramatically more demand than capacity, the management team contemplates investing in a second OR. A lean consulting firm, however, suggests that before going ahead with installing new capacity, the clinic should first look at how it uses its existing capacity. The data collected by the consulting firm reveal that:
The OR is available for 12 hours a day; the hospital has decided to not perform any procedures between 7pm and 7am. This time is equally divided across three surgeons.
The standard procedure time for the knee surgery done at the clinic is 1h.
The cleaning and housekeeping that needs to happen after each procedure takes 20 minutes. Almost all of this time could be saved if the cleaning crew were notified earlier on.
10 minutes are spent on patient preparation / anesthesia work before each procedure. (Note: this is not part of the 60-minute procedure time). Proposals have been evaluated to move these 10 minutes to outside the OR, and there exists no medical reason that would prohibit doing this.)
A surgeon only starts a case if all of the work associated with the case (preparation, procedure, and cleaning) can be completed in the 4h allotted to each surgeon. Surgeons never start BEFORE their allotted time.
Though the clinic aims to operate 7 days a week, holidays, vacation, and construction time lead to an average of one day a week that the OR cannot be used at all.
What is the OEE of the operating room? Assume a 12h window in which the OR could be used.
The OEE of the Operating Room is 34.8%.
Operating Room Overall Equipment EffectivenessTo calculate the OEE (Overall Equipment Effectiveness) of the OR, you need to consider three factors: availability, performance, and quality.
Availability: The OR is available for 12 hours a day, but there is a 1 hour window between 7pm and 7am when it is not used. Additionally, there is an average of one day a week when the OR cannot be used at all. Therefore, the availability is:(12 hours - 1 hour) / 12 hours * 7 days/week - 1 day/week = 0.92 or 92%
Performance: The standard procedure time for the knee surgery is 1 hour, and 10 minutes are spent on patient preparation and anesthesia work. The cleaning and housekeeping takes 20 minutes, and a surgeon only starts a case if all of the work can be completed in the 4 hours allotted to each surgeon. Therefore, the performance is:1 hour + 10 minutes + 20 minutes = 1 hour and 30 minutes / 4 hours = 0.375 or 37.5%
Quality: Quality is not mentioned in the data provided, so it is assumed to be 100%.To calculate OEE, you need to multiply availability, performance, and quality:
OEE = availability * performance * quality = 0.92 * 0.375 * 1 = 0.348 or 34.8%
So, the OEE of the OR is 34.8%.
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An overhead variance report includes which of the followings: _________
a. Variable and fixed flexible budget costs
b. Variable and fixed actual results
c. Variable and fixed sales results
d. Variable and fixed variances
Answer: a. Variable and fixed flexible budget costs
Explanation:
An overhead variance report shows the difference between the overhead that was actually incurred to either produce or sell vs the overhead that was budgeted.
Overhead can either be fixed or variable so an overhead report will include both fixed and variable budgeted costs which will then be compared to fixed and variable actual overhead costs.
Have you ever financed anything on a short term or long term arrangement?
Answer:
Financing is a very important part of every business. Firms often need financing to pay for their assets, equipment, and other important items. Financing can be either long-term or short-term. As is obvious, long-term financing is more expensive as compared to short-term financing.
There are different vehicles through which long-term and short-term financing is made available. This chapter deals with the major vehicles of both types of financing.
Explanation:
Long-Term Financing
Long-term financing is usually needed for acquiring new equipment, R&D, cash flow enhancement, and company expansion. Some of the major methods for long-term financing are discussed below.
Equity Financing
Equity financing includes preferred stocks and common stocks. This method is less risky in respect to cash flow commitments. However, equity financing often results in dissolution of share ownership and it also decreases earnings.
The cost associated with equity is generally higher than the cost associated with debt, which is again a deductible expense. Therefore, equity financing can also result in an enhanced hurdle rate that may cancel any reduction in the cash flow risk.
Corporate Bond
A corporate bond is a special kind of bond issued by any corporation to collect money effectively in an aim to expand its business. This tern is usually used for long-term debt instruments that generally have a maturity date after one year after their issue date at the minimum.
Short-Term Financing
Short-term financing with a time duration of up to one year is used to help corporations increase inventory orders, payrolls, and daily supplies. Short-term financing can be done using the following financial instruments −
Commercial Paper
Commercial Paper is an unsecured promissory note with a pre-noted maturity time of 1 to 364 days in the global money market. Originally, it is issued by large corporations to raise money to meet the short-term debt obligations.
It is backed by the bank that issues it or by the corporation that promises to pay the face value on maturity. Firms with excellent credit ratings can sell their commercial papers at a good price.
Asset-backed commercial paper (ABCP) is collateralized by other financial assets. ABCP is a very short-term instrument with 1 and 180 days’ maturity from issuance. ACBCP is typically issued by a bank or other financial institution.
Promissory Note
It is a negotiable instrument where the maker or issuer makes an issue-less promise in writing to pay back a pre-decided sum of money to the payee at a fixed maturity date or on demand of the payee, under specific terms.
ctivity-Based Costing (ABC) is useful in: Select one: A. Breakdown COGS into DL, DM, and FOH B. Breaking down FOH more accurately into cost drivers C. Breaking down FOH into one overhead rate D. Breaking down DL and DM by product
Answer:
B. Breaking down FOH more accurately into cost drivers
Explanation:
In the case of activity based costing, the activity of the fixed cost should be breakdown based on the number of activity pools while the fixed cost should be breakdown as per the cost drivers. Also, there is more than one overhead rate existed. In addition to this, it is the method for distribution of the overhead with those firms who is able to used it
Therefore the option b is correct
As project manager, Gabriella has discovered a major problem that could affect the remainder of the project.
What should she do before deciding how to resolve the problem?
Answer:
Develop a problem statement for the problem
Develop a problem statement for the problem she should do before deciding how to resolve the problem.
What is project manager?A project manager is in charge of the project's planning, acquisition, implementation, and conclusion. The project manager is in charge of the entire undertaking and manages every aspect of it, including the project scope, the project team, and the resources allotted to it.
At least three years of experience in a comparable capacity, communication skills, formal training, and a PMP certification are typically needed. A professional association, a university or college, or an online learning program with a narrow concentration are all options for obtaining certification.
One of the most difficult occupations is project management since no day is ever the same and you must use all of your project management abilities to address every issue.
Thus, Develop a problem statement for the problem.
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Where do you see Dow Jones in the coming two years ?
Suppose that the tax on interest income is levied on the nominal interest rate, the tax rate is 20 percent, and the real interest rate is 4 percent a year. There is no inflation.
Calculate the after-tax real interest rate and the true tax rate on interest income.
Answer:
After-tax interest rate ⇒ 3.2%True tax on interest income ⇒ 20%Explanation:
After-tax real interest rate:
= Real interest rate * (1 - tax rate)
= 4% * (1 - 20%)
= 4% * 80%
= 3.2%
True tax on interest income:
= 20%
True tax on interest income is the tax rate levied on the nominal interest rate which is 20%.
Welcome Inn Hotels is considering the construction of a new hotel for $90 million. The expected life of the hotel is 30 years, with no residual value. The hotel is expected to earn revenues of $26 million per year. Total expenses, including depreciation, are expected to be $15 million per year. Welcome Inn management has set a minimum acceptable rate of return of 14%.
a. Determine the equal annual net cash flows from operating the hotel.
b. Calculate the net present value of the new hotel. Use 7.003 for the present value of an annuity of $1 at 14% for 30 periods.
c. Does your analysis support construction of the new hotel?
Answer:
a. Annual Net cash flows:
= Revenue - Expenses + Depreciation
= 26,000,000 - 15,000,000 + (90,000,000 / 30 years)
= 11,000,000 + 3,000,000
= $14,000,000
b. Net present value:
= Present value of cashflows - Investment cost
= (Annual cashflow * present value of an annuity, 14%, 30 periods) - Investment cost
= (14,000,000 * 7.003) - 90,000,000
= $8,042,000
c. Company should construct the hotel as it would bring a positive Net Present Value
Note: In "b" the cashflow was treated as an annuity because it is constant.
changing nature of the environment and adaptation to the changes are crucial factors of successful planning. discuss
Explanation:
societies (robust evidence, high agreement). The combined efforts of a broad range of international organizations, scientific reports, and
media coverage have raised awareness of the importance of adaptation to climate change, fostering a growing number of adaptation responses
in developed and developing countries. This represents major progress since the IPCC Fourth Assessment Report (AR4). The literature illustrates
heterogeneity in adaptation planning related to the context specific nature of adaptation, but also to the differences in resources, values,
needs, and perceptions among and within societies. However, it is not yet clear how effective these responses currently are and will be in the
future. Few adaptation plans have been monitored and evaluated. There is a tendency in the literature to consider adaptation planning a problem-
free process capable of delivering positive outcomes, underestimating the complexity of adaptation as a social process, creating unrealistic
expectations in societies, and perhaps overestimating the capacity of planning to deliver the intended outcome of adapt
Department M had 2,000 units 56% completed in process at the beginning of June, 13,500 units completed during June, and 1,000 units 28% completed at the end of June. What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories? a.14,780 units b.13,780 units c.12,660 units d.11,500 units
Answer:
c.12,660 units
Explanation:
Calculation to determine What was the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories
Using this formula
EUP (FIFO) = Completed Units + Ending units - Beginning units
Let plug in the formula
EUP (FIFO)=13,500 +( 1,000 x 28%)- (2,000 x 56%)
EUP (FIFO)= 13,500+280-$1120
EUP (FIFO)=12,660 units
Therefore the number of equivalent units of production for conversion costs for June if the first-in, first-out method is used to cost inventories is 12,660 units
information of samriyan enterprises is given below.a)Started bussiness with Rs 20000 b) purchase good of Rs 15000 from Ram.c)Goods sold on cash Rs 18000 d)Cash paid Ram Rs 10000 e)A gain goods purchase from Ram of rs 20000 f) Paid to Ram Rs 24000 in full settlement of his account.Required a) journal entries
Answer:
a) Dr: Cash 20000
Cr: Equity/Capital 20000
b) Dr: Goods 15000
Cr: Payable 15000
c) Dr: Cash 18000
Cr: Sales 18000
d) Dr: Payable 10000
Cr: Cash 10000
e) Dr: Goods 20000
Cr: Payable 20000
f) Dr: Payable 30000
Cr: Cash 24000
Cr: Profit and Loss 6000
Dextra Computing sells merchandise for $16,000 cash on September 30 (cost of merchandise is $11,200). Dextra collects 9% sales tax. Record the entry for the $16,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
Answer:
See journal entries under the explanation below:
Explanation:
The journal entries will look as follows:
Dextra Computing
Journal Entries
Date Particulars Debit ($) Credit ($)
Sep 30 Cash 17.440
Sales 16,000
Sales Taxes Payable ($16,000 * 9%) 1,440
(To record the cash sale and 9% sales tax)
Cost of Goods Sold 11,200
Merchandise Inventory 11,200
(To record the cost of sales.)
Oct 15 Sales Taxes Payable ($16,000 * 9%) 1,440
Cash 1,440
(To record sending sales tax to the government.)
The formula to determine the materials to be purchased is Multiple choice question. (budgeted production times materials required for each unit) plus budgeted ending materials inventory minus beginning materials inventory (budgeted production divided by materials required for each unit) plus budgeted ending materials inventory minus beginning materials inventory (budgeted production times materials required for each unit) minus budgeted ending materials inventory plus beginning materials inventory (budgeted production divided by materials required for each unit) minus budgeted ending materials inventory plus beginning materials inventory
Answer: (budgeted production times materials required for each unit) plus budgeted ending materials inventory minus beginning materials inventory.
Explanation:
On January 1, Baker Co. purchased equipment for $100,000. It has an estimated useful life of five years and its residual value is $10,000. The company has a calendar year-end. Using the straight-line method, depreciation expense for the first year of its life equals:
Answer:
Explanation:
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Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $220,000 and sell its old low-pressure glueball, which is fully depreciated, for $40,000. The new equipment has a 10-year useful life and will save $48,000 a year in expenses. The opportunity cost of capital is 10%, and the firm’s tax rate is 21%. What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
EQUIVALENT ANNUAL SAVING:
"the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately is $13,245.99".
Since they are purchasing the new machine by first disposing off the old machine.
Hence,
First step is to Determine the Net initial investment
Net initial investment = $220,000 - $40,000
Net initial investment= $180,000
Second step is to determine the Total savings
Depreciation = $220,000/10
Depreciation = $22,000
Savings before tax = $48,000 - $22,000
Savings before tax= $26,000
Tax at 21% = (21%*$26,000)
Tax at 21% =$5,460
Savings after tax $20,540
($26,000-$5,460)
Add back depreciation $22,000
Cash flow after tax $42,540
($20,540+$22,000)
Third step is to determine PV of CFAT and NPV
PV of CFAT = $42,540 x (10%, PVFA10Y)
PV of CFAT = $42,540 x 6.1446
PV of CFAT = $261,391
NPV = $261,391 - $180,000 = $81,391
Now let determine the EQUIVALENT ANNUAL SAVING(EAS)
Equivalent annual saving(EAS) = NPV/(10%, PVFA10Y)
Equivalent annual saving(EAS)= $81,391/6.1446
Equivalent annual saving(EAS)= $13,245.99
Therefore the EQUIVALENT ANNUAL SAVING from the purchase if Gluon can depreciate 100% of the investment immediately is $13,245.99
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Your uncle offers you a choice of $112,000 in 10 years or $51,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 8 percent, what is the present value of the $112,000
Answer:
the present value of the $112,000 is $51,856
Explanation:
The computation of the present value is given below:
Present Value = Amount × Present value factor at 8% for 10 years
= $112,000 × 0.463
= $51,856
hence, the present value of the $112,000 is $51,856
We simply applied the above formula so that the correct amount could come
Describe how you will operate your business
Brown Co. issued $100 million of its 10% bonds on April 1, 2016, at 99 plus accrued interest. The bonds are dated January 1, 2016, and mature on December 31, 2035. Interest is payable semiannually on June 30 and December 31. What amount did Brown receive from the bond issuance?
a) $87.8 million
b) $99.0 million
c) $100.0 million
d) $101.5 million
Answer:
d) $101.5 million
Explanation:
The computation of the amount received from the bond issuance is given below:
Interest Rate: 10%
Time period: 3 months (from 01.01.2016 to 31.03.2016)
Par Value=$100 million
Accrued Interest be 2.53 million
So,
Amount receive from Bond Issuance is
= 99 + 2.53
= $101.5 million
Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk-free rate is 4.4 percent, the expected return on the market is 10.6 percent, and the betas of the two stocks are 1.4 and 0.7, respectively. Stevens’s own forecasts of the returns on the two stocks are 10.60 percent for Furhman Labs and 10.50 percent for Garten.
Required:
a. Calculate the required return for each stock.
b. Is each stock undervalued, fairly valued, or overvalued?
Answer:
a. Furhman Labs, Inc. : 13.08%
Garten Testing, Inc. : 8.74%
b. Furhman Labs
the stock is undervalued
Garten Testing
the stock is overvalued
Explanation:
According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
Furhman Labs, Inc. : 4.4 + 1.4(10.6 - 4.4) = 13.08%
Garten Testing, Inc. : 4.4 + 0.7(10.6 - 4.4) = 8.74%
A stock is overvalued if its intrinsic value is less than the forecast, and, it is undervalued if its intrinsic value is greater than the forecast
Furhman Labs, intrinsic value = 13.08
forecasted value = 10.60
the stock is undervalued
Garten Testing, Inc , intrinsic value = 8.74%
forecasted value = 10.50
the stock is overvalued
Entries for Installment Note Transactions On the first day of the fiscal year, Shiller Company borrowed $63,000 by giving a five-year, 12% installment note to Soros Bank. The note requires annual payments of $17,773, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $7,560 and principal repayment of $10,213. Journalize the entries to record the following:
a. Issued the installment note for cash on the first day of the fiscal year.
b. Paid the first annual payment on the note. For a compound transaction, if an amount box does not require an entry, leave it blank.
c. Explain how the notes payable would be reported on the balance sheet at the end of the first year.
Answer:
Shiller Company
Journal Entries:
a) Jan. 1 Debit Cash $63,000
Credit 12% Note Payable (Soros Bank) $63,000
To record the issuance of the five-year, 12% installment note.
December 31: Debit Note Payable (Soros Bank) $10,213
Debit Interest Expense $7,560
Credit Cash $17,773
To record the first repayment, including interest.
c. The notes payable would be reported as Long-term Liability at $52,787.
Explanation:
a) Data and Analysis:
Jan. 1 Cash $63,000 12% Note Payable (Soros Bank) $63,000
Issuance of a five-year, 12% installment note.
December 31: Note Payable (Soros Bank) $10,213 Interest Expense $7,560 Cash $17,773
Balance of Notes Payable on December 31:
Amount of note = $63,000
Repayment = (10,213)
Balance of note = $52,787
Sandoval needs to determine its year-end inventory. The warehouse contains 33,000 units, of which 4,300 were damaged by flood and are not sellable. Another 3,300 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 5,300 units at a consignee's location. How many units should Sandoval include in its year-end inventory
Answer:
37,300
Explanation:
Calculation to determine How many units should Sandoval include in its year-end inventory
Using this formula
Year-end inventory units=(Warehouse units- Damaged units)+ Units purchased+ Units at consignee's location
Let plug in the formula
Year-end inventory units=(33,000 - 4,300) +3,300+5,300
Year-end inventory units=28,700+3,300+5,300
Year-end inventory units=37,300
Therefore How many units should Sandoval include in its year-end inventory is 37,300
DonCo. Inc. sold merchandise on January 14, and accepted a 90 day, 5% promissory note in the amount of $5,000. On January 14, the entry to record this transaction would include a debit to:
a. Cash in the amount of $5,000
b. Notes Receivable in the amount of $5,000
c. Accounts Receivable in the amount of $5,000
d. Sales in the amount of $5,000
Burlington Construction Company is considering selling excess machinery with a book value of $281,000 (original cost of $400,100 less accumulated depreciation of $119,100) for $277,400, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,300 for five years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,000.
Required:
Prepare a differential analysis, dated January 3, 2012, to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery.
Answer:
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Blooming Sun investment corporation is facing problems in their records
maintenance, So they have decided to launch a new Management Information
system. The cost of MIS includes 150 computers at $500 each, 5 Printers at
$400 each, 5 network connections at $900 each, 20 boxes of Papers and
stationery at $50 each, 5 Scanners at $2995 each. The training cost that is
required to be provided to the staff includes fringe benefits $50 each to 150
participants, 15 trainers at $ 500 each. Training room is required for three
sessions which will cost $750 per session and administrative cost is $300 per
session.
The experts have estimated that the new MIS will be helpful in adding $25000
per year in benefits.
Questions:
1. Identify the direct cost, Training cost and total cost of Management information system?
2. In how many years the breakeven of this project cost will be achieved?
Answer:
Achived that the breakeven
1. Direct cost is:
= $97,475
Training cost is:
= $18,150
Total cost of Management Information System is:
= $115,625
2. The number of years that the break-even of this project cost will be achieved is:
= 5 years.
Data and Calculations:
Cost of the MIS:
150 computers at $500 each, = $75,000 (150 x $500)
5 Printers at $400 each = 2,000 (5 x $400)
5 network connections at $900 each = 4,500 (5 x $900)
20 boxes of Papers and stationery at $50 each 1,000 (20 x $50)
5 Scanners at $2,995 each 14,975 (5 * $2,995)
Total direct costs of the new MIS = $97,475
The training costs:
Fringe benefits $50 each to 150 participants = $7,500 ($50 x 150)
15 trainers at $ 500 each. 7,500 ($500 x 15)
Training room cost $750 per session 2,250 ($750 x 3)
Administrative cost is $300 per session 900 ($300 x 3)
Total cost of training $18,150
Total cost of the Management Information System = $115,625 ($97,475 + $18,150)
Annual benefits = $25,000
Break-even project cost (payback period) will be achieved in 4.625 years ($115,625/$25,000)
= 5 years approximately
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Slavery, as a business practice protected by state laws, provided unfair advantage against those employers not using slaves, and thus the economic incentives supported and sustained slavery within its sealed environment.
A. True
B. False
Journal Entry
On November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the Unearned Rent account. Complete the necessary adjusting entry for December 31 by selecting the account names and dollar amounts from the drop-down menus.
Date Account Title Debit Credit
Dec. 31 selectAccounts ReceivableAccumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseRent RevenueSalaries ExpenseSalaries PayableService RevenueSuppliesSupplies ExpensesUnearned Rent Revenue select300060009000 select300060009000
selectAccounts ReceivableAccumulated DepreciationCashDepreciation ExpenseEquipmentEquipment ExpenseRent RevenueSalaries ExpenseSalaries PayableService RevenueSuppliesSupplies ExpensesUnearned Rent Revenue select300060009000 select300060009000
Answer:
Explanation:
unearned rent 6000 (debit)
Rent revenue. 6000 (credit)
to record 2 months of realized rent revenue
Asonia Co. will pay a dividend of $4.95, $9.05, $11.90, and $13.65 per share for each of the next four years, respectively. The company will then close its doors. If investors require a return of 9.2 percent on the company's stock, what is the stock price
Answer: $30.86
P = $4.95/(1 + .92) + $9.05/(1 + .92)^2 + $11.90/(1 + .92)^3 + $13.65/(1 + .92)^4
P = 4.53+7.59+ 9.14+ 9.60=$30.86
Explanation:
Dividend discount: Dividend year 1 divided by (1 plus the required rate of return)
PLUS Dividend year 2 divided by (1 plus the required rate of return) to the second power
PLUS Dividend year 3 divided by (1 plus the required rate of return) to the third power
PLUS Dividend year 4 divided by (1 plus the required rate of return) to the fourth power
True or false: Interest expense and income tax expense are considered general and administrative expenses and, therefore, are included on the general and administrative expense budget. True false question. True False
Answer: True
Explanation:
Interest expense and income tax expenses generally are stand-alone expenses but they fall under general and administrative expenses required to run the business.
Interest expense is charged on debt that was taken to run the company so will be an admin expense and tax is part of the expenses that a company has to take care of in order to run the company so it is an admin expense as well.
A satellite radio company is the sole supplier of a brand-new service providing commercial-free music that competes with existing free, broadcast-radio music delivered via antennas. The service is automatically activated for a 6-month introductory free-trial period, and is only available to people who purchase a new car with a specially equipped receiver. After the trial period, customers must call the company to activate and retain the service. Match each customer below to the radio company’s best profit-maximizing price strategy.
a. Ricardo explains that he is indifferent to the new service, and has not yet sampled many of the stations.
b. Joe, who explains that he needs music to sing along with while he commutes two hours each day for work.
c. Natasha, who says that she likes the service, but who commutes less than a half hour each day for work.
1. high price
2. medium price
3. low price
The company's best profit-maximizing price strategy based on the views of their customers is:
Ricardo - Low price. Joe - High price. Natasha - Medium price. What is the company's best profit-maximizing price strategy?The company should charge more to customers that use the service a lot. This is why Joe should be charged the highest price.
Natasha would like to use the commercial music service more but she doesn't commute to work much so a medium price would be good.
Ricardo is indifferent and hasn't used the service much and so should get the lowest price.
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