(a) Profit Statement using Marginal Costing:
Sales Revenue: 3,000 units x GH¢150 = GH¢450,000
Less Variable Costs:
Direct Materials: 3,000 units x GH¢22.50 = GH¢67,500
Direct Labor: 3,000 units x GH¢45.00 = GH¢135,000
Variable Factory Overheads: 3,000 units x GH¢30.00 = GH¢90,000
Total Variable Costs: GH¢292,500
Contribution Margin: Sales Revenue - Total Variable Costs
GH¢450,000 - GH¢292,500 = GH¢157,500
Less Fixed Costs:
Total Fixed Factory Overheads: GH¢22,500
Total Selling & Distribution Costs: GH¢30,000
Total General & Administration Costs: GH¢25,000
Total Fixed Costs: GH¢77,500
Net Profit: Contribution Margin - Total Fixed Costs
GH¢157,500 - GH¢77,500 = GH¢80,000
(b) Profit Statement using Absorption Costing:
Sales Revenue: GH¢450,000
Less Cost of Goods Sold:
Direct Materials: 3,000 units x GH¢22.50 = GH¢67,500
Direct Labor: 3,000 units x GH¢45.00 = GH¢135,000
Variable Factory Overheads: 3,000 units x GH¢30.00 = GH¢90,000
Fixed Factory Overheads (allocated): GH¢22,500 / 4,500 units x 3,000 units = GH¢15,000
Total Cost of Goods Sold: GH¢307,500
Gross Profit: Sales Revenue - Cost of Goods Sold
GH¢450,000 - GH¢307,500 = GH¢142,500
Less Operating Expenses:
Total Selling & Distribution Costs: GH¢30,000
Total General & Administration Costs: GH¢25,000
Total Operating Expenses: GH¢55,000
Net Profit: Gross Profit - Total Operating Expenses
GH¢142,500 - GH¢55,000 = GH¢87,500
(c) Statement of Reconciliation:
Net Profit using Marginal Costing: GH¢80,000
Net Profit using Absorption Costing: GH¢87,500
Reconciliation:
Net Profit using Marginal Costing GH¢80,000
Add: Fixed Factory Overheads (deferred) GH¢15,000
Difference GH¢7,500
(d) Arguments in Support of Marginal Costing:
Simplicity: Marginal costing is easier to understand and implement compared to absorption costing. It focuses on the separation of costs into fixed and variable components, which simplifies cost analysis and decision-making.
Cost Control: Marginal costing helps in cost control by clearly identifying variable costs associated with each unit of production. This allows management to make more effective cost management decisions and respond to changes in the business environment.
Decision-Making: Marginal costing provides accurate and relevant information for decision-making. It facilitates the calculation of contribution margin and break-even point, enabling management to assess the financial impact of different production and pricing decisions.
(e) Arguments in Support of Absorption Costing:
Matching Principle: Absorption costing follows the matching principle by allocating fixed factory overheads to the cost of goods sold. This ensures that all costs, both fixed and variable, are included in the determination of profit, providing a more accurate representation of the true cost of production.
Inventory Valuation: Absorption costing includes fixed factory overheads in the valuation of inventory. This reflects the full cost of production
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What are the drivers for the UK energy system to become more flexible, and what options can provide increased flexibility? [10]
The drivers for the UK energy system to become more flexible are influenced by various factors and goals.
Here are some key drivers:
1. Renewable Energy Integration: The increasing share of intermittent renewable energy sources like wind and solar requires a more flexible energy system. Their variable nature necessitates the ability to balance supply and demand in real-time to ensure grid stability.
2. Decentralization and Distributed Energy Resources (DERs): The growth of DERs, such as rooftop solar panels and energy storage, is driving the need for flexibility. These localized energy resources can contribute to grid balancing and demand response programs.
3. Electrification of Transport and Heating: The electrification of transport and heating sectors increases the demand for electricity and requires flexible energy systems to accommodate the additional load. Flexible charging infrastructure and demand-side management are crucial for balancing the grid.
4. Energy Market Reform: Market reforms aim to promote competition, improve efficiency, and integrate new market participants. A more flexible energy system facilitates the participation of different stakeholders and enables new market mechanisms such as demand response and virtual power plants.
5. Grid Resilience and Security: Flexibility enhances the resilience and security of the energy system. By incorporating various sources, storage technologies, and demand response, the grid becomes more resilient to supply disruptions and better able to respond to emergencies or system failures.
Options to provide increased flexibility in the UK energy system include:
1. Energy Storage: Deploying large-scale energy storage systems, such as batteries or pumped hydro storage, allows excess energy to be stored and released when needed, helping to balance supply and demand fluctuations.
2. Demand Response: Encouraging consumer to adjust their electricity consumption in response to price signals or grid needs can provide valuable flexibility. Time-of-use tariffs and smart grid technologies enable demand response programs.
3. Interconnection and Grid Expansion: Enhancing interconnection with neighboring countries and expanding the grid infrastructure helps balance electricity supply and demand by importing or exporting energy during peak or low-demand periods.
4. Flexible Generation: Maintaining a mix of flexible generation sources, including natural gas power plants, combined heat and power (CHP) systems, and flexible nuclear power plants, allows for rapid adjustments to meet fluctuating demand.
5. Digitalization and Advanced Grid Management: Utilizing advanced grid management systems, intelligent sensors, and automation technologies can optimize grid operation, enable real-time monitoring, and enhance response capabilities.
6. Energy Efficiency and Demand-Side Management: Improving energy efficiency reduces overall demand and alleviates stress on the grid. Promoting energy-efficient technologies and practices, along with demand-side management programs, helps shift demand to off-peak hours.
By leveraging these s, the UK energy system can enhance its flexibility, adapt to changing energy landscapes, and ensure a reliable, resilient, and sustainable energy supply.
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The exchange rate between the dollar and the euro is defined as: a. the price of European goods relative to the prices of goods in the United States b. The price of goods in the United States relative to the prices of European goods. c. the number of euros you get by lending a dollar to a European for a period of one year. d. The number of euros you get for a dollar.
The exchange rate between the dollar and the euro is the number of euros you get for a dollar.
The correct answer is option d. The exchange rate between the dollar and the euro represents the value of one currency in terms of the other. It indicates how many units of the second currency you can obtain in exchange for one unit of the first currency. In this case, the exchange rate is expressed as the number of euros you can get for a dollar.
The exchange rate is determined by various factors such as supply and demand for currencies in the foreign exchange market, interest rate differentials between countries, inflation rates, economic performance, and geopolitical events, among others. Changes in these factors can cause the exchange rate to fluctuate over time. When the exchange rate increases, it means the dollar has weakened relative to the euro, and when it decreases, it means the dollar has strengthened.
The exchange rate plays a crucial role in international trade and finance, as it affects the competitiveness of goods and services between countries. A higher exchange rate makes imports cheaper and exports more expensive, while a lower exchange rate has the opposite effect. Therefore, individuals, businesses, and governments closely monitor and analyze exchange rates to make informed decisions regarding trade, investment, and monetary policy.
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In adaptive cultures, managers are concerned with their individual projects processes O end results customers c & d
The correct answer is the option that reads: "Customers and end results".
Adaptive cultures are organizational structures or frameworks that prioritize customer satisfaction and adapt to changing market conditions. Such companies promote collaboration and open communication. Managers in adaptive cultures are focused on satisfying the customers by delivering the best possible results.
In adaptive cultures, managers are less concerned about individual projects and processes. They place more emphasis on the end results, which should benefit the customers. This means that they are less concerned about their individual projects. They take a holistic approach to problem-solving and make decisions based on customer needs and market trends.
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The annual planning process at Century Office Systems, Inc. had been arduous but produced a number of important marketing initiatives for the next year. Most notably, company executives had decided to restructure its product-marketing team into two separate groups: (1) Corporate Office Systems and (2) Home Office Systems. Angela Blake was assigned re- sponsibility for the Home Office Systems group, which would market the company's word-processing hardware and software for home and office- at-home use by individuals. Her marketing plan, which included a sales forecast for next year of $25 million, was the result of a detailed market analysis auki negouauonS WILL GIViuuus Dour side and outside te company. Discussions with the sales director indicated that 40 percent of the company sales force would be dedicated to selling products of the Home Office Systems group. Sales representatives would receive a 15 percent commission on sales of home office systems. Under the new organizational structure, the Home Office Systems group would be charged with 40 percent of the budgeted sales force expenditure. The sales director's budget for salaries and fringe benefits of the sales force and noncommission selling costs for both the Corporate and Home Office Systems groups was $7.5 million. The advertising and promotion budget contained three elements: trade magazine advertising, cooperative newspaper advertising with Century Office Systems, Inc. dealers, and sales promotion materials including prod- uct brochures, technical manuals, catalogs, and point-of-purchase displays. Trade magazine ads and sales promotion materials were to be developed by the company's advertising and public relations agency. Production and media placement costs were budgeted at $300,000. Cooperative advertis- ing copy for both newspaper and radio use had budgeted production costs of $100,000. Century Office Systems, Inc.'s cooperative advertising allow- ance policy stated that the company would allocate 5 percent of company sales to dealers to promote its office systems. Dealers always used their complete cooperative advertising allowances. Meetings with manufacturing and operations personnel indicated that the direct costs of material and labor and direct factory overhead to pro- duce the Home Office System product line represented 50 percent of sales. The accounting department would assign $600,000 in indirect manufactur ing overhead (for example, depreciation, maintenance) to the product line and $300,000 for administrative overhead (clerical, telephone, office space, and so forth). Freight for the product line would average 8 percent of sales. Blake's staff consisted of two product managers and a marketing assistant. Salaries and fringe benefits for Ms. Blake and her staff were $250,000 per year. a. Prepare a pro forma income statement for the Home Office Sys- tems group given the information provided.
A Proforma income statement is a financial statement that projects income and expenses for a future period and is usually used as a budget by a company. It helps the organization to take better financial decisions.
Sales revenue: $25,000,000Less: Cost of goods sold.
Direct material cost: 0.50 x 25,000,000= $12,500,000.
Direct labor cost: 0.50 x 25,000,000= $12,500,000.
Direct factory overhead: $600,000.
Total cost of goods sold: $25,600,000.
Gross profit: $25,000,000 - $25,600,000 = ($600,000).
Less: Selling and administrative expenses.
Advertising and promotion: $300,000.
Sales manager salary and fringe benefits: $250,000.
Salaries and fringe benefits of staff: $250,000.
Noncommissioned sales cost: $3,000,000 (60% of $7,500,000).
Commission cost: 15% of $25,000,000 = $3,750,000.
Freight: 8% of $25,000,000 = $2,000,000.
Total selling and administrative expenses: $9,550,000.
Operating loss: ($600,000) - $9,550,000 = ($10,150,000).
Therefore, the pro forma income statement shows that Home Office Systems Group will incur an operating loss of $10,150,000.
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Lupin & Co. is the auditor for Diamond Berhad, a large interior design company. During the audit for the year ended 30 June 2021, the managing director informed auditor that the company has recently lost a major government contract and contracts from developer. Diamond’s current ratio has fallen from 1 to 0.40 for the first time due to this matter. Diamond has paid a number of its interior supplier later than usual and some of them have withdrawn credit terms. In addition, one of Diamond’s suppliers is threatening legal action to recover the sums owing. The Diamond’s projections include fifty percent cash inflows from this contract.The company has been experiencing some cash flow difficulties in previous and current year. Management has extended their bank credit facility to pay day-today expenses. Additionally, Diamond has a loan of RM5 million which is due for repayment in full by September 2021. The audit partner is concerned that the company may be facing going concern problem, but the managing director believes that the company intends to cut back future capital expenditure to alleviate the going concern issue.
a. Evaluate the indicators of going concern problems facing by Diamond Berhad and briefly explain the audit procedures that should be carried on by the auditor in assessing whether or not the entity’s is going concern.
Diamond Berhad is facing going concern problems indicated by loss of contracts, decreased current ratio, delayed payments, threatened legal action, cash flow difficulties, reliance on credit facility, and upcoming loan repayment, requiring auditor to assess ability to continue operating and impact on financial statements.
Identify the indicators?
Indicators of going concern problems facing Diamond Berhad:
1. Loss of major government contract and contracts from developers.
2. Decrease in current ratio from 1 to 0.40.
3. Delayed payments to interior suppliers and withdrawal of credit terms.
4. Legal action threatened by one of Diamond's suppliers.
5. Cash flow difficulties in previous and current years.
6. Dependence on bank credit facility for day-to-day expenses.
7. Loan of RM5 million due for repayment by September 2021.
Audit procedures to assess the going concern of Diamond Berhad:
1. Review management's cash flow projections and assess the accuracy and reliability of the projected cash inflows from the lost contracts.
2. Analyze the impact of the loss of contracts and delayed payments on the company's liquidity and ability to meet its obligations.
3. Evaluate the company's ability to repay the RM5 million loan by September 2021.
4. Assess the company's plans to cut back future capital expenditure and evaluate the impact of these measures on its financial stability.
5. Perform additional tests and analyses to assess the accuracy and reliability of the financial statements, including reviewing the collectability of receivables, analyzing the aging of payables, and assessing the adequacy of provisions and contingencies.
6. Consider the impact of the going concern issues on the valuation of assets, including potential impairment of assets and reassessment of asset values.
7. Evaluate the company's discussions and negotiations with suppliers and the potential outcome of the threatened legal action.
8. Consider any additional information or events subsequent to the balance sheet date that may impact the going concern assessment.
By conducting these audit procedures, the auditor can gather sufficient evidence to assess whether Diamond Berhad is facing significant going concern problems and determine the appropriateness of the going concern assumption in the financial statements.
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Corporate-level strategy is senior management's game plan for directing and running the organization as whole. It cuts across all of an organization's activities, its different businesses, divisions, product lines and technologies. Discuss the key elements involved in undertaking the task of craftina a corporate strategy [15 MARKS] (b) Explain the concept of "Competitive Advantage" and validate how a business organization can achieve superior profitability.
Crafting a corporate strategy involves elements such as vision and mission, environmental and internal analysis, objective setting, strategy formulation and implementation, monitoring and control, and strategic leadership.
(a) Crafting a corporate strategy involves several key elements:
Vision and Mission: Clearly defining the organization's purpose and long-term aspirations.
Environmental Analysis: Assessing the external environment to identify opportunities and threats, including market trends, competition, regulatory factors, and technological advancements.
Internal Analysis: Evaluating the organization's internal capabilities, strengths, weaknesses, and core competencies. Setting Objectives: Establishing specific and measurable goals that align with the organization's vision and mission.
Strategy Formulation: Developing strategies that leverage the organization's strengths, mitigate weaknesses, and capitalize on opportunities to achieve its objectives. Strategy Implementation: Translating strategies into action plans, allocating resources, and aligning organizational structure, processes, and systems.
Monitoring and Control: Establishing mechanisms to track progress, evaluate performance, and make adjustments to ensure strategic goals are achieved. Strategic Leadership: Ensuring effective leadership, communication, and coordination across the organization to drive the strategy forward.
(b) Competitive Advantage refers to a business organization's ability to outperform its competitors in terms of profitability, market share, or customer value. It is achieved by creating and sustaining a unique position in the market that is not easily replicated by rivals.
To achieve superior profitability and gain a competitive advantage, a business organization can employ the following strategies:
Differentiation: Offering unique and superior products, services, or customer experiences that set the organization apart from competitors.
Cost Leadership: Achieving lower costs through operational efficiency, economies of scale, and effective supply chain management, allowing the organization to offer competitive prices or higher margins. Focus: Concentrating on a specific market segment, niche, or customer group, tailoring products and services to meet their specific needs and preferences.
Innovation: Continuously investing in research and development, fostering a culture of innovation, and introducing new products, technologies, or business models that provide a competitive edge. Strategic Partnerships: Collaborating with other organizations to leverage complementary capabilities, access new markets, or share resources, creating a mutually beneficial competitive advantage.
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4- What are the essential characteristics of public goods? Why might It be difficult for private sector to supply public goods? Please briefly discuss. 5- How does an overvalued dollar affect U.S. exports and imports? Please briefly discuss. 6- What are the arguments for and against globalism. Please briefly discuss. 7- In what ways do company Investments in research and development create positive externalities?
Public goods are characterized by non-excludability and non-rivalry, meaning they are available to all individuals and one person's consumption does not diminish others' ability to consume. The private sector may struggle to supply public goods due to the free-rider problem and the absence of price mechanisms to incentivize production.
An overvalued dollar affects U.S. exports and imports in different ways. It makes exports more expensive for foreign buyers, reducing their demand. At the same time, imports become relatively cheaper for U.S. consumers, increasing their demand. This leads to a trade deficit as exports decrease and imports rise. The arguments for globalism include increased economic growth, job creation, and access to global markets. It promotes specialization, efficiency, and technological progress. However, critics argue that globalism can lead to job displacement, income inequality, and exploitation of labor in developing countries.
Company investments in research and development (R&D) create positive externalities by generating spillover effects. R&D investments often result in new knowledge, innovations, and technological advancements that benefit society as a whole. These spill-overs can lead to productivity gains, improved standards of living, and the development of new industries and markets. Additionally, R&D investments contribute to the overall knowledge base and may be shared or used by other firms and industries, fostering further innovation and economic growth.
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1. For each independent situation, determine: USE Support test, Gross Income Test, Relationship Test.
The filing status of the taxpayer
The number of dependents the taxpayer can claim
To determine the filing status of the taxpayer and the number of dependents they can claim, we need to consider three tests: the Support test, Gross Income test, and Relationship test. Based on the information provided for each independent situation, we can assess the filing status and the number of dependents the taxpayer can claim.
1. Situation: The taxpayer is single and provides 100% of the support for their 18-year-old brother who is a full-time student and has no income.
- Support test: The taxpayer provides 100% of the support for their brother, meeting the support test.
- Gross Income test: The brother has no income, so the gross income test is met.
- Relationship test: The taxpayer and the brother meet the relationship test as they are siblings.
The taxpayer can file as Head of Household (if they meet other requirements) and claim one dependent, their 18-year-old brother.
2. Situation: The taxpayer is married, filing jointly, and supports their elderly mother who lives with them. The mother receives Social Security benefits but has no other income.
- Support test: The taxpayer provides support to their mother, meeting the support test.
- Gross Income test: The mother receives Social Security benefits, which are generally not included in gross income. Thus, the gross income test is met.
- Relationship test: The taxpayer and their mother meet the relationship test as they have a parent-child relationship.
The taxpayer can file as Married Filing Jointly and claim one dependent, their elderly mother.
3. Situation: The taxpayer is single and provides 70% of the support for their 25-year-old niece who has a part-time job and earns $6,000 per year.
- Support test: The taxpayer provides 70% of the support for their niece, meeting the support test.
- Gross Income test: The niece has a part-time job and earns $6,000, which is below the gross income threshold. Thus, the gross income test is met.
- Relationship test: The taxpayer and their niece meet the relationship test as they have a qualifying relative relationship.
The taxpayer can file as Single and claim one dependent, their 25-year-old niece.
In summary, based on the Support test, Gross Income test, and Relationship test for each independent situation, the filing status and the number of dependents the taxpayer can claim are as follows:
1. Situation: Head of Household, one dependent.
2. Situation: Married Filing Jointly, one dependent.
3. Situation: Single, one dependent.
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a)What Financial Risks is NexTier Oilfield a leading oilfield
company in the USA is exposed to?
b_)Determine and elaborate on why NexTier Oilfield solutions a
leading oilfield company should hedge and
a) NexTier Oilfield Solutions, as a leading oilfield company in the USA, is exposed to various financial risks in its operations. Some of the key financial risks it may face include:
Commodity Price Risk: NexTier is exposed to fluctuations in oil and gas prices, which can significantly impact its revenue and profitability. Changes in market prices can affect the demand for drilling and oilfield services.
Foreign Exchange Risk: If NexTier operates internationally or deals with foreign customers, it may face foreign exchange risk due to currency fluctuations. Changes in exchange rates can affect the company's revenue, expenses, and overall financial performance.
Interest Rate Risk: NexTier may be exposed to interest rate risk if it carries debt or uses financial instruments with floating interest rates. Changes in interest rates can affect the company's borrowing costs and the value of its debt.
Credit Risk: NexTier may face credit risk when providing services to customers who may fail to pay or face financial difficulties. Non-payment or delayed payment can impact the company's cash flow and profitability.
b) NexTier Oilfield Solutions, as a leading oilfield company, should consider hedging to mitigate various risks it faces. Hedging involves using financial instruments or strategies to offset the potential negative impact of price fluctuations or other risks. Here are some reasons why NexTier should hedge:
Revenue Stability: Hedging can help NexTier stabilize its revenue by protecting against adverse movements in commodity prices. For example, the company can use futures contracts or options to lock in prices for future sales, reducing the impact of price volatility.
Cost Control: By hedging against foreign exchange risk, NexTier can better manage its costs when dealing with international transactions. Hedging can help reduce the impact of currency fluctuations on expenses and maintain more stable profit margins.
Debt Management: Hedging interest rate risk can help NexTier manage its borrowing costs and reduce uncertainty. By using interest rate swaps or other derivatives, the company can lock in favorable interest rates or manage its exposure to interest rate movements.
Cash Flow Protection: Hedging can provide NexTier with cash flow protection by mitigating the risk of non-payment or delayed payment from customers. For instance, the company can use credit derivatives or trade credit insurance to safeguard against potential defaults.
Overall, hedging allows NexTier Oilfield Solutions to proactively manage its financial risks, enhance stability, and protect its profitability in the face of uncertain market conditions.
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Long Term Assets (30 points) 1. Long-term assets are shown on the balance sheet at: a. Their current market value. b. The amount it will cost to replace them after they reach the end of their useful life. C. Their original cost minus accumulated depreciation. d. Their purchase price multiplied by an inflation adjustment factor.
Long-term assets are shown on the balance sheet at their historical cost, which is the amount of money paid to acquire the asset.
This value is then reduced by accumulated depreciation, which represents the amount of the asset's value that has been used up over time due to wear and tear, obsolescence, or other factors. The resulting figure represents the book value of the asset, which reflects its current worth if the company were to sell it at its current condition and state of usefulness.
It is important to note that long-term assets are not shown at their current market value or the amount it will cost to replace them after they reach the end of their useful life. Instead, the historical cost minus accumulated depreciation is used as it provides a more accurate representation of the asset's actual value to the company.
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Why
business consider redundancy?
1 Reason (Explain with examples)
Redundancy is the process where an employer discharges or reduces the jobs of one or more workers due to the reduction of production in the company, a change in the direction of the business, or a merger or acquisition.
Redundancy in the workplace is an option for businesses to cut back on staff in times of economic uncertainty and a decline in business activity. Here are some of the reasons why business considers redundancy: Redundancy can save the business money in the short term by reducing employee expenses such as salaries, pensions, and bonuses. Redundancy enables the business to stay operational in the long term by making tough choices to ensure that it can weather the economic storms that come along.
For example, companies in the retail sector like BHS and Toys R Us closed their doors and laid off thousands of workers because they were unable to keep up with online competitors. Redundancy provides companies with the opportunity to remove underperforming employees who may be holding the business back or to restructure the workforce in a way that aligns with the current objectives of the company, for example, by increasing the number of technical staff in the business.
In conclusion, redundancy is a tough decision that most companies must face at some point in their lifespan. Although it can be emotionally difficult for employees, it can be the best course of action for businesses to stay afloat.
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C. IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling' method. If you borrow 5 lots of IOI'S share from the broker, show your net profit if your prediction is right. (4 marks) d. You would like to speculate on a rise in the price of a certain stock. The current stock price is RM40, and a three-month call option with a strike price of RM45 cost RM3. You have RM60,000 to invest. Identify two alternative strategies, one involving an investment in stock and the other involving in option. What are the potential gains and losses from each if: i) Price goes up to RM50. (4 marks) ii) Price goes down to RM 35. (4 marks) (Total: 25 marks) C. IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling' method. If you borrow 5 lots of IOI'S share from the broker, show your net profit if your prediction is right. (4 marks) d. You would like to speculate on a rise in the price of a certain stock. The current stock price is RM40, and a three-month call option with a strike price of RM45 cost RM3. You have RM60,000 to invest. Identify two alternative strategies, one involving an investment in stock and the other involving in option. What are the potential gains and losses from each if: i) Price goes up to RM50. (4 marks) ii) Price goes down to RM 35. (4 marks) (Total: 25 marks) b. The mood on MariBank very bullish when they propose to acquire HengBank at RM 4.26 billion. The proposed acquisition will see MariBank emerge as the single largest shareholder in HengBank. Most analysts and stock broking firms believe that the stock price would continue to rise. To bet on this expectation, Rizal Hidayat buys 1500 units of MariBank September RM 8.00 call option for 50 sen. Currently the shares are traded at RM 9.50. Identify: Type of option. (1 mark) Underlying asset. (1 mark) Exercise price. (1 mark) IV. Calculate the profit if the holder expectation is accurate. (4 marks) IOI's shares are currently selling at RM 8 and you knew that the price of an IOI's share is expected to fall to RM 6.50 in three day's time. As an opportunist, you want to take advantage of the fall in price by using 'short selling method. If you ii.
Short selling is a trading technique used by speculators who believe that the price of a stock or security will decline in the future.
It entails selling borrowed securities and repurchasing them at a lower price, profiting from the price difference. A speculator who wants to profit from a short sale borrows stock from a broker and sells it on the market with the expectation that the price will decline before the stock must be returned to the broker. In this case, you want to take advantage of the fall in IOI's share price from RM 8 to RM 6.50 by short selling 5 lots of IOI'S share from the broker. Each lot consists of 100 shares. If the price of an IOI's share falls to RM 6.50, the profit would be as follows: Net Profit = [(Initial selling price - Final buying price) × Total number of shares sold] - Interest on borrowed shares. Initially, the total amount of shares borrowed will be 5 lots × 100 shares/lot = 500 shares. Initial Selling price of IOI's shares = RM 8Final Buying price of IOI's shares = RM 6.50Therefore, Net Profit = [(RM 8 - RM 6.50) × 500] - Interest on borrowed shares = RM 750
The net profit earned would be RM 750 if the price of IOI's share falls to RM 6.50 in three days time. This would be a profitable trade for the speculator.
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The credibility theory of the European monetary system actually implies the political cost of violating international exchange rate treaties
A. Unable to restrain the government from devaluing the currency
B. Can restrain the government from devaluing the commodity market
C Inability to restrain the government from devaluing the currency in the short term
D Inability to restrain the government from devaluing the currency in the long run
E None of the above is correct
The credibility theory of the European monetary system implies that it is unable to restrain the government from devaluing the currency (option A).
The credibility theory of the European monetary system refers to the belief that governments should adhere to international exchange rate treaties in order to maintain the credibility of their currency. The theory suggests that violating these treaties would result in a loss of confidence in the currency and increased uncertainty in the financial markets. In this context, the theory does not provide mechanisms or constraints to prevent governments from devaluing their currency.
Instead, it emphasizes the importance of maintaining credibility and the potential political costs associated with violating international exchange rate treaties. Therefore, the correct answer is option A, which states that the credibility theory is unable to restrain the government from devaluing the currency.
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1)the number of countries in the european union has increased steadily since its inception? True or False? please explain
2) the agricultural policies of the Europenian Union have led to: Surpluses of agricultural products/ Shortages of agricultural products ( choose one option)
3) what is the objective of Economic Sanctions? When are they likely to be successful?
4)Please Explain the concept of trade diversion.
The statement that the number of countries in the European Union has increased steadily since its inception isTrue.
The European Union (EU) has indeed experienced expansion over the years. When the EU was established in 1957, it consisted of six member countries: Belgium, Germany, France, Italy, Luxembourg, and the Netherlands. Since then, the EU has undergone multiple rounds of enlargement, with more countries joining over time. The EU has expanded to include 27 member countries as of 2021. The process of enlargement has allowed more nations to join and participate in the EU's political, economic, and social integration.
The agricultural policies of the European Union have led to surpluses of agricultural products.
The agricultural policies of the European Union, such as the Common Agricultural Policy (CAP), have historically aimed to support and protect European farmers. These policies have included measures like subsidies, price supports, and import restrictions. However, these policies have often led to overproduction and surpluses of agricultural products within the EU. This surplus has sometimes resulted in challenges, such as storage issues, disposal of excess produce, and the need for export subsidies to sell the surplus on international markets.
The objective of economic sanctions is to exert pressure on a targeted country or entity to change its behavior or policies. Economic sanctions are likely to be successful when they are implemented with broad international support, have clear objectives, and are accompanied by diplomatic efforts.
Economic sanctions are measures taken by countries or groups of countries to restrict economic relations with a targeted country or entity. The objective of economic sanctions is usually to influence the behavior or policies of the target by imposing economic costs and creating incentives for change. Success in achieving the desired outcomes of sanctions depends on several factors, including the level of international support and cooperation, the specific objectives of the sanctions, the economic interdependence between the target and the sanctioning countries, and the effectiveness of diplomatic efforts accompanying the sanctions.
Trade diversion refers to a situation where the imposition of trade barriers, such as tariffs or quotas, redirects trade flows from more efficient or lower-cost suppliers to less efficient or higher-cost suppliers.
Trade diversion occurs when the introduction of a regional trade agreement or trade policy leads to a shift in trade patterns. Specifically, it involves a situation where the preferential treatment given to certain trading partners diverts trade away from more efficient suppliers who are not part of the agreement. This can happen when a regional trade bloc, such as a free trade area or a customs union, is formed and members grant preferential treatment, such as lower tariffs, to each other. As a result, trade flows may shift from non-member countries that were previously competitive to member countries, even if the non-members could have offered goods at a lower cost or higher quality. Trade diversion can have both economic and welfare implications, as it may result in higher costs and inefficiencies for consumers and businesses.
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The following facts apply to a convertible bond making semiannual payments: Conversion price $53/share Coupon rate 6% Par value $1,000 Yield on nonconvertible debentures 8% of same quality Maturity 30 years $43 /share Market price of stock What is the minimum price at which the convertible should sell?
The minimum price at which the convertible bond should sell can be determined by comparing the value of the bond as a straight bond (nonconvertible debenture) and its conversion value.
The lower of these two values represents the minimum price at which the convertible should sell.
In this case, the bond has a conversion price of $53/share, a coupon rate of 6%, a par value of $1,000, and a maturity of 30 years. The yield on nonconvertible debentures of the same quality is 8%. The market price of the stock is $43/share.
To calculate the value of the bond as a straight bond, we can determine the present value of its future cash flows (coupon payments and principal repayment) using the yield on nonconvertible debentures. The value of the bond as a straight bond would be lower than its par value due to the higher yield.
The conversion value of the bond can be calculated by multiplying the market price of the stock by the conversion ratio (par value / conversion price). The conversion value represents the value the bondholder would receive if they chose to convert the bond into stock.
Comparing the straight bond value and the conversion value, the lower of the two will determine the minimum price at which the convertible bond should sell. If the conversion value is lower, the bondholder would be better off converting the bond into stock rather than selling it as a straight bond.
Without the specific values for the coupon payments and the conversion ratio, it is not possible to provide an exact minimum price at which the convertible bond should sell in this case.
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the inventory decision model provides which type of information? multiple choice optimal total inventory optimal safety stock optimal order size optimal carrying cost per unit
The safety stock is an extra quantity of inventory that is maintained to protect against fluctuations in demand and supply.
The inventory decision model provides optimal safety stock type of information. Optimal safety stock is the level of inventory that provides the desired level of customer service while minimizing the total inventory holding cost. Hence, the main answer to the given question is "optimal safety stock". The inventory decision model is used to determine how much inventory to order and when to order it. It considers different factors such as the carrying cost of inventory, the ordering cost, the lead time, the demand rate, and the cost of stock outs. The inventory decision model is important for businesses because it helps them to balance the costs of holding too much inventory against the costs of running out of stock.
In conclusion, the inventory decision model provides information about optimal safety stock. To maintain the desired level of customer service, businesses use safety stock, which is the extra quantity of inventory kept to protect against fluctuations in demand and supply. The inventory decision model helps businesses determine the optimal level of safety stock and balance inventory holding costs against the costs of stock outs.
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2a. Review the level of analysis in table 2.1 in the Darwin (2013) reading again and share if the macro-level environmental scan is useful in the organization you selected.
2b. Provide a few elements you would include in both an internal and external environmental scan in regards to staffing.
2a. The macro-level environmental scan involves the analysis of the industry and the market to recognize possible opportunities and threats.
2b. An environmental scan is a methodical and broad examination of the internal and external factors that influence a business.
As indicated by the table 2.1 in the Darwin (2013) reading, environmental scanning could be executed at a micro or macro level to analyze and scrutinize the potential risks and opportunities for businesses. The macro-level environmental scan would be valuable in the association I chose, mainly because it operates in a dynamic market. Therefore, it is critical to have a comprehensive comprehension of the industry, potential markets, and competitive challenges. Additionally, examining macro-level environmental elements will support the organization to understand the wider trends that could have an impact on their business. As an illustration, if there were political or economic changes, it would be vital for the organization to understand the possible effects that could arise as a result. By understanding the macro-environment, the business can make informed decisions to develop its business strategies. To conduct a proper environmental scan, it is necessary to consider both the internal and external factors that impact staffing. Below are a few elements that should be included in both an internal and external environmental scan in regards to staffing:Internal Environmental ScanFactors that should be considered during the internal environmental scan in regards to staffing are:Evaluation of Staff Performance: Evaluate the quality of work, the skill set, and the performance of the existing workforce.Organizational Culture: Review the organizational culture, company policies, and procedures that could impact staffing.Human Resource Management: Analyze the HR policies, processes, and practices and how they impact staffing.External Environmental ScanFactors that should be considered during the external environmental scan in regards to staffing are:Competitors: Analyze the human resource policies of competitors and identify areas of improvement in the organization.Labor Market: Analyze the labor market conditions and the competition for employees.Technological Advancement: Analyze the impact of technology on staffing and the skills that are necessary for the workforce.
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You will be assigned into your official groups. You will attempt to create a Balanced Scorecard for your chosen company. SEE the Balanced Scorecard shown in the class materials for today. Use that as a guide, but try to be creative! The next Strategic Plan Project has this as a requirement, so you can use this time to experiment and learn.( air canada)
A balanced scorecard is an important tool in strategic planning. It is used to measure and evaluate the performance of an organization. It is a comprehensive system that tracks financial and non-financial measures. The balanced scorecard consists of four perspectives: financial, customer, internal business process, and learning and growth.
Financial Perspective- The financial perspective focuses on the financial performance of the company. The metrics in this perspective include revenue, profit, return on investment, and cash flow. For Air Canada, the financial objectives would be to increase revenue and profits, reduce costs, and improve cash flow. The metrics that could be used to measure these objectives include revenue growth rate, profit margin, cost per seat, and cash flow from operations.
Customer Perspective- The customer perspective focuses on the customer experience. The metrics in this perspective include customer satisfaction, customer retention, and customer acquisition. For Air Canada, the customer objectives would be to improve the customer experience and increase customer loyalty. The metrics that could be used to measure these objectives include customer satisfaction rate, Net Promoter Score, and customer retention rate.
Internal Business Process Perspective- The internal business process perspective focuses on the efficiency and effectiveness of the company's internal processes. The metrics in this perspective include cycle time, quality, and cost. For Air Canada, the internal business process objectives would be to improve operational efficiency and reduce costs. The metrics that could be used to measure these objectives include on-time performance, aircraft utilization, and cost per available seat mile.
Learning and Growth Perspective- The learning and growth perspective focuses on the company's ability to innovate and improve. The metrics in this perspective include employee satisfaction, employee turnover, and employee training. For Air Canada, the learning and growth objectives would be to improve employee satisfaction and increase employee retention. The metrics that could be used to measure these objectives include employee engagement score, turnover rate, and training hours per employee.
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Suppose the interest rate is 6.7% APR with monthly compounding. What is the present value of an annuity that pays $105 every three months for four years? (Note: Be careful not to round any intermediate steps less than six decimal places.) The present value of the annuity is $ (Round to the nearest cent.)
The present value of the annuity that pays $105 every three months for four years is approximately $1,736.18.
To calculate the present value of the annuity, we can use the formula for the present value of an ordinary annuity:
PV = C * (1 - (1 + r)^(-n)) / r
Where PV is the present value, C is the cash flow per period ($105), r is the interest rate per period (6.7% divided by 12 for monthly compounding), and n is the total number of periods (four years multiplied by 12 for monthly compounding).
By plugging in the values and performing the calculations, we find that the present value is approximately $1,736.18.
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Which of the following is not true for the FOQ Gradual Replenishment Model?
Group of answer choices
Annual demand is constant.
No shortage in order quantities is allowed.
Delivery lead time is independent of the order quantity and equals zero.
Order quantity for each order is constant.
Demand rate is always less than production rate.
The statement "Demand rate is always less than production rate" is not true for the FOQ Gradual Replenishment Model.
In this model, the annual demand is assumed to be constant, and no shortage in order quantities is allowed. Additionally, the delivery lead time is independent of the order quantity and is equal to zero. However, the order quantity for each order is not necessarily constant, as it is determined by the inventory level and the production rate. Moreover, the demand rate can be higher or lower than the production rate, depending on the inventory level and the replenishment policy. Therefore, the FOQ Gradual Replenishment Model does not assume that the demand rate is always less than the production rate.
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Which of the various reasons for resisting change do you
believe to be the most common? What are
your "top three" in this regard?
Top three reasons for resisting change that are most common: 1. Lack of trust 2. Fear of the unknown 3. Fear of failure.
Among the various reasons for resisting change, there are several factors that an individual might have. The most common reasons for resisting change are discussed below:
1. Fear of the unknown: Change resistance might occur when a person is afraid of the unknown. As a result, they oppose change since they do not understand what it entails. People feel uncomfortable with ambiguity, and change can produce it.
2. Lack of trust: In some instances, employees may be hesitant to embrace change because they do not trust the management. Workers may fear that if they embrace change, they may jeopardize their jobs. Workers may also be hesitant to reveal any vulnerabilities to their managers.
3. Fear of failure: Failure is a natural human emotion, and it can be a significant barrier to change. A person's identity may be linked to their work, and if they fail to adapt to the new approach, they may believe that they have failed as well. Fear of failure can cause individuals to oppose change.
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TRUE/FALSE. Mood effects based on exercise tend to be optimal at a moderate intensity level.TRUE/FALSE. The most important component of Theories of reasoned action and planned behavior is that an individual's intentions form the best predictors of actual behavior. TRUE/FALSE. When their is no temptation to engage in the old behavior and 100 percent confidence about overcoming previous temptations not to exercise a person is believed to be in the maintenance stage of the Transtheoretical Model of Change.
Moderate-intensity exercise is associated with optimal mood effects, intentions are important predictors of behavior according to the Theories of Reasoned Action and Planned Behavior, and the maintenance stage of the Transtheoretical Model of Change is characterized by confidence in sustaining the new behavior without relapse.
True. Research suggests that moderate-intensity exercise has a positive impact on mood. It can improve overall well-being, reduce stress, and enhance mood states. Extreme exercise intensity may lead to increased fatigue or stress on the body, while low-intensity exercise may not provide sufficient physiological stimulation to induce mood benefits.
True. The Theories of Reasoned Action and Planned Behavior propose that an individual's intentions play a crucial role in predicting their behavior. These theories suggest that attitudes, subjective norms, and perceived behavioral control influence intentions, which, in turn, determine actual behavior. Intentions reflect a person's motivation and willingness to engage in a specific behavior.
True. The Transtheoretical Model of Change describes different stages individuals go through when adopting and maintaining behavior change. The maintenance stage is characterized by sustained behavior change without relapse. At this stage, individuals have overcome previous temptations and have high confidence in their ability to maintain the new behavior, such as regular exercise.
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A bond with a par value of $1,000, a maturity of 14 years, and an annual interest or coupon rate of 9% sells in the market for $1,100. The market required return for a comparable bond at risk is 10%. Answer or calculate the following: I. Is the bond selling at par, at a premium, or at a discount? explain II. Is the bond being sold in the primary or secondary market? explain III. List two reasons why a company or government issues or sells bonds. a. b. IV. Calculate the bond's yield to maturity. a. YMT= V. Show procedure or what you did to get to that performance. VI. Determine the value of the bond or the price paid, given the required rate of return. a. Price = VII. Show procedure or what you did to determine the price. VIII. Would you buy the bond? explain
To analyze this situation, we need to determine whether the bond is selling at par, at a premium, or at a discount, identify whether it is being sold in the primary or secondary market, list reasons why companies or governments issue bonds, calculate the bond's yield to maturity, determine the bond's value given the required rate of return, and evaluate whether it would be a good investment.
I. To determine whether the bond is selling at par, at a premium, or at a discount, we compare the market price ($1,100) with the par value ($1,000). Since the market price is higher than the par value, the bond is selling at a premium.
II. The bond is being sold in the secondary market because it is already issued and is now being bought and sold among investors, rather than being sold directly by the issuer.
III. Two reasons why companies or governments issue or sell bonds are:
a. To raise capital for financing projects, expansion, or operations.
b. To take advantage of lower interest rates compared to other forms of financing, such as bank loans.
IV. To calculate the bond's yield to maturity (YTM), we need to use the present value formula and solve for the discount rate that makes the present value of the bond's cash flows equal to its market price. The formula is:
YTM = (Coupon Payment + ((Par Value - Market Price) / Number of Years)) / ((Par Value + Market Price) / 2)
V. By plugging in the values into the formula, we can calculate the bond's yield to maturity.
VI. To determine the value of the bond or the price paid, given the required rate of return, we use the present value formula. We discount the bond's cash flows (coupon payments and par value) at the required rate of return.
VII. By applying the present value formula to the bond's cash flows and the required rate of return, we can determine the price.
VIII. Whether to buy the bond or not depends on various factors such as the investor's risk tolerance, investment objectives, and other available investment options. A comprehensive evaluation considering these factors is necessary to make an informed decision.
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Which of the following causes an upward movement along the short-run aggregate supply curve? The price level increases. The price level decreases. Decrease in consumer confidence. Productivity of machines decreases. O There are fewer workers in the labor force.
The correct answer would be "The price level decreases.
An upward movement along the short-run aggregate supply (SRAS) curve is typically caused by a decrease in the price level. When the price level decreases, businesses are willing to produce and supply more goods and services at lower prices, leading to an upward movement along the SRAS curve.
Therefore, among the options provided, the correct answer would be "The price level decreases."
In macroeconomics, the short-run aggregate supply (SRAS) curve represents the relationship between the price level and the quantity of goods and services that firms are willing to produce and supply in the short run, holding other factors constant.
An upward movement along the SRAS curve implies an increase in the quantity of goods and services supplied by firms. This can occur when the price level decreases.
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Question 13 (2 points) Saved When an economy achieves both allocative and productive efficiency, it implies that there is: income equality. fixed technology. full production. G price stability. Page 13 of 50 Previous Page Next Page
The correct answer is full production.
When an economy achieves both allocative and productive efficiency, it implies that there is full production. Allocative efficiency means that resources are allocated in a way that maximizes society's welfare, while productive efficiency means that goods and services are produced at the lowest possible cost. When both efficiency conditions are met, the economy is operating at its maximum potential output, which is referred to as full production. Therefore, the correct answer is full production.
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Which of the following correctly describes the accounting treatment for interest payable?
A. It is shown on the balance sheet as a current liability.
B. It is shown on the balance sheet as a long-term liability.
C. It is shown on the income statement as an operating expense.
D. It is shown on the balance sheet as a current asset.
The correct answer is: A. It is shown on the balance sheet as a current liability.
Interest payable represents the amount of interest that a company owes but has not yet paid. It is considered a current liability because it is expected to be settled within one year or the operating cycle, whichever is longer. Therefore, it is reported on the balance sheet under the current liabilities section, reflecting the company's obligation to pay the accrued interest in the near term.
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A four-worker crew was assigned to install plumbing in a house. To accelerate the work, it was suggested that two additional crews (consisting of four workers each) be assigned to do the work. - If the initial estimate was that the four-worker crew could complete the work in 12 days, what is the best estimate of the completion time with the additional crews? - What is the estimated labor cost of the change in worker assignments if all workers are paid $20 per hour?
The best estimate of the completion time with the additional crews is 4 days and the estimated labor cost of the change in worker assignments if all workers are paid $20 per hour is $6,720.
Given data:The number of workers in a four-worker crew = 4The number of additional crews to be assigned = 2The number of workers in each additional crew = 4The initial estimate time required to complete the work by a four-worker crew = 12 daysThe total number of workers required to complete the work:4-worker crew + 2 additional crews(4 workers each) = 4 + (2 × 4) = 12 workers
The number of days required to complete the work with 12 workers:Workforce × Time required to complete the work by 4 workers = Workforce × Time required to complete the work by 12 workers4 × 12 = 12 × Time required to complete the work by 12 workers48 = 12TTime required to complete the work by 12 workers = 4 daysThe best estimate of the completion time with the additional crews is 4 days.Estimated labor cost:Total work hours required to complete the work by 4 workers = 4 × 12 = 48 hours
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In January 2009, Rashed enterprises purchased equipment for 710,000 and was estimated to have a useful life of 14 years with a residual value of 10,000. At the end of 2019, it was determined that the equipment is of lower quality and there was a change of estimates accordingly. The useful life is now estimated to be 15 years with 10,000 residual value. (All figures are in AED) (5 Marks) Required: A. Compute the depreciation expenses for 2020 (1 mark) B. Show the journal record for 2020 (1 mark) C. Explain three factors involved in the depreciation process
A. Calculation of the depreciation expense for 2020: Using the straight-line method,
Depreciation expense = (Purchase cost - residual value) / useful life
Depreciation expense = (710,000 - 10,000) / 14= 50,000 per year
Change in the estimated useful life, on the other hand, causes a change in depreciation expense.
The new depreciation expense for the year 2020 will be:
New Depreciation expense = (Purchase cost - residual value) / useful life
New Depreciation expense = (710,000 - 10,000) / 15= 46,000 AED
B. Journal record for 2020 will be:
Depreciation expenses (Profit & Loss Account)46,000 AED
Equipment (Balance Sheet)46,000 AED
C. Three factors involved in the depreciation process are as follows:
Depreciable asset cost: This is the purchase cost of an asset that is depreciable. Cost reduction implies that the asset's depreciation expense will decrease while residual value increases.
Depreciable base: This refers to the amount of the asset's cost that can be used in the calculation of the asset's depreciation. When a residual value is present, it decreases the depreciable base.
Life of the asset: The amount of time that the asset is expected to be useful is referred to as its useful life. When the useful life of an asset is lengthened, it decreases the annual depreciation charge.
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Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%
Invoices are issued on the last day of each month.
Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Credit sales values for June to September are budgeted as follows.
June
July
August
September
$35,000
$40,000
$60,000
$45,000
What is the amount budgeted to be received from credit sales in September? (show your working)
the amount budgeted to be received from credit sales in September is $42,750.
To determine the amount budgeted to be received from credit sales in September, we need to calculate the expected cash collections based on the given payment terms and discount policy.
Credit Sales for September: $45,000
Customers paying in the month after sale: 60%
Amount expected to be received in October: 60% * $45,000 = $27,000
Customers paying in the second month after sale: 25%
Amount expected to be received in November: 25% * $45,000 = $11,250
Customers paying in the third month after sale: 12%
Amount expected to be received in December: 12% * $45,000 = $5,400
Total expected cash collections from credit sales in September:
September Sales - Discount - Bad Debts
$45,000 - (2% * $45,000) - (3% * $45,000)
$45,000 - $900 - $1,350
$45,000 - $2,250
$42,750
Therefore, the amount budgeted to be received from credit sales in September is $42,750.
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Using the monetarist/new classical model and the
Keynesian model, discuss the view that increases in aggregate
demand will inevitably be inflationary.
The monetarist/new classical model and the Keynesian model provide different perspectives on the relationship between increases in aggregate demand and inflation.
According to the monetarist/new classical model, increases in aggregate demand can lead to inflation. This view is based on the Quantity Theory of Money, which asserts that inflation is primarily caused by an excessive growth in the money supply. Monetarists argue that when aggregate demand increases, it stimulates spending and leads to an increase in prices. They emphasize the role of monetary policy in controlling inflation by managing the money supply growth rate. In their view, if aggregate demand grows faster than the potential output of the economy, it will eventually result in inflationary pressure.
On the other hand, the Keynesian model provides a more nuanced perspective. Keynesians acknowledge that increases in aggregate demand can lead to inflation in certain circumstances, but they also recognize that inflationary outcomes are contingent on various factors. Keynesians emphasize the importance of analyzing the supply-side of the economy, including factors such as production capacity, labor market conditions, and price rigidities.
In the Keynesian view, increases in aggregate demand can potentially lead to inflation if they exceed the economy's productive capacity. However, if there are idle resources or underutilized capacity in the economy, increases in aggregate demand may result in higher output and employment without triggering significant inflationary pressures. Keynesians argue that managing inflation requires a balanced approach that considers both demand-side and supply-side factors, including the use of fiscal policy and targeted interventions to address supply constraints.
In summary, while the monetarist/new classical model suggests that increases in aggregate demand will inevitably be inflationary, the Keynesian model recognizes that the relationship between aggregate demand and inflation is complex and contingent on various economic conditions and factors. Keynesians emphasize the importance of analyzing both demand and supply dynamics to effectively manage inflation and achieve stable economic growth.
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