Substantive procedures are the audit processes designed to detect material misstatements in the financial statements. In the audit of plant and equipment additions, substantive procedures that an auditor could perform at the year-end to confirm plant and equipment additions include the following steps:
Step 1: Confirming the existence of plant and equipment additions: The auditor can confirm the existence of plant and equipment additions by conducting a physical inspection. They can examine the plants and equipment to ensure that they are present and in good condition. The auditor can also verify the location of each asset and ascertain if the asset is being used.
Step 2: Obtaining documentation: The auditor should obtain relevant documents related to the plant and equipment additions, such as purchase orders, invoices, and delivery notes. The auditor can check if the documents are genuine, accurate, and complete. Any missing or incomplete documentation can lead to inquiries or additional audit procedures.
Step 3: Checking depreciation and impairment: The auditor can review depreciation schedules to ensure that the plant and equipment have been correctly depreciated or impaired. The auditor can also analyze the useful life of each asset and ensure that it is reasonable.
Step 4: Test the accuracy of account balances: The auditor can perform substantive procedures to test the accuracy of the plant and equipment account balances. For instance, the auditor can conduct a test of details by analyzing the account balances to check if there are any anomalies. The auditor can also perform analytical procedures, such as comparing the plant and equipment additions with the budget or prior year. If the auditor finds any discrepancies, they can investigate further. Therefore, these are the substantive procedures that the auditor should perform at the year-end to confirm plant and equipment additions.
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An accurate PA oblique scapular Y shoulder projection is obtained a. when an imaginary line connecting the coracoid process and acromion angle is aligned perpendicular to the IR. b. when the resulting image demonstrates the superior scapular angle positioned superior to the clavicle. c. when an imaginary line connecting the coracoid process and acromion angle is aligned parallel with the IR. d. only when the glenoid cavity superimposes the humeral head.
The accurate PA oblique scapular Y shoulder projection is obtained when c. when an imaginary line connecting the coracoid process and acromion angle is aligned parallel with the IR.
In the PA oblique scapular Y shoulder projection, the patient is positioned facing the X-ray detector with the affected shoulder closest to the IR. The arm is abducted and externally rotated to separate the scapula from the ribcage.
To obtain an accurate projection, an imaginary line connecting the coracoid process and acromion angle should be aligned parallel with the IR. This alignment ensures that the scapula is properly visualized and demonstrates the desired anatomical structures.
Options a and b are incorrect because aligning the coracoid process and acromion angle perpendicular to the IR or positioning the superior scapular angle above the clavicle would result in an incorrect projection.
Option d is also incorrect because the superimposition of the glenoid cavity and humeral head is not the defining characteristic for obtaining an accurate PA oblique scapular Y shoulder projection. The alignment of the coracoid process and acromion angle parallel with the IR is the key factor in obtaining the correct projection.
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which of the following facts refers to life in 2017 compared with 1965?
In 2017, there was a notable increase in the use of technology and social media, which is not true of 1965. People in 2017 are generally more connected and informed than those in 1965.
Social media and the internet, in general, have revolutionized the way people communicate and share information. Today, people can connect with others around the world in a matter of seconds, whereas in 1965, communication was limited to phone calls, letters, and in-person interactions. Additionally, there has been a significant increase in the amount of time spent working, commuting, and using technology. In 1965, people had more free time to pursue leisure activities such as reading books, watching TV, and playing sports. Overall, life in 2017 is marked by greater connectivity and technological advancements, which have both positive and negative implications.
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The cash records of Concord Ceramics show the following four situations. For July: 1. The June 30 bank reconciliation indicated that deposits in transit total €761. During July, the general ledger account Cash shows deposits of €16,670, but the bank statement indicates that only €15,970 in deposits were received during the month. 2. The June 30 bank reconciliation also reported outstanding checks of €691. During the month of July, Concord's books show that €17,850 of checks were issued. The bank statement showed that €16,500 of checks cleared the bank in July. For September: 3. In September, deposits per the bank statement totaled €27,650, deposits per books were €25,980, and deposits in transit at September 30 were €2,660. 4. In September, cash disbursements per books were €24,100, checks clearing the bank were €25,600, and outstanding checks at September 30 were €2,360. There were no bank debit or credit memoranda. No errors were made by either the bank or Concord Ceramics. (a) In situation (1), what were the deposits in transit at July 31 ? Deposits in transit at July 31ϵ (b) In situation (2), what were the outstanding checks at July 31 ? Outstanding checks at July 31€ (c) In situation (3), what were the deposits in transit at August 31? Deposits in transit at August 31€ (d) In situation (4), what were the outstanding checks at August 31? Outstanding checks at August 31
The solution to the given questions are:-(a) In situation (1), the deposits in transit at July 31 is €131.(b) In situation (2), the outstanding checks at July 31 is €1,041.(c) In situation (3), the deposits in transit at August 31 is €2,010.(d) In situation (4), the outstanding checks at August 31 is €2,160.Explanation:-In order to determine the missing amounts, the bank reconciliation statement is prepared. Let us first prepare the bank reconciliation statement for situation 1.Bank reconciliation statement for situation 1 of Concord Ceramics is as follows:
Adjusted Bank balance (July 31) = €15,970 + €761 - €16,670= €1,061Adjusted book balance (July 31) = Actual book balance (June 30) + Deposits made in July - checks issued in July- Outstanding checks on July 31= €19,450 + €16,670 - €17,850 - €691= €17,579Thus, Deposits in transit at July 31 = Adjusted Bank balance - Adjusted book balance= €1,061 - €930= €131Now, let us prepare the bank reconciliation statement for situation 2.Bank reconciliation statement for situation 2 of Concord Ceramics is as follows:Adjusted Bank balance (July 31) = €16,500 + €761 - €17,850= €1,411Adjusted book balance (July 31) = Actual book balance (June 30) + Deposits made in July - checks issued in July- Outstanding checks on July 31= €19,450 + €17,850 - €17,850 - €691= €19,759Thus, Outstanding checks at July 31 = Adjusted book balance - Adjusted Bank balance= €19,759 - €18,718= €1,041Now, let us prepare the bank reconciliation statement for situation 3.Bank reconciliation statement for situation 3 of Concord Ceramics is as follows:Adjusted Bank balance (August 31) = €27,650 - €2,360 + €2,660= €28,950Adjusted book balance (August 31) = Actual book balance (July 31) + Deposits made in August - checks issued in August- Outstanding checks on August 31+ Deposits in transit on August 31= €17,579 + €25,980 - €24,100 - €2,360 + €2,010= €19,109Thus, Deposits in transit at August 31= Adjusted Bank balance - Adjusted book balance= €28,950 - €26,940= €2,010Now, let us prepare the bank reconciliation statement for situation 4.Bank reconciliation statement for situation 4 of Concord Ceramics is as follows:Adjusted Bank balance (August 31) = €25,600 - €2,360= €23,240Adjusted book balance (August 31) = Actual book balance (July 31) + Deposits made in August - checks issued in August- Outstanding checks on August 31+ Deposits in transit on August 31= €19,109 + €27,650 - €24,100 - €2,360 + €2,010= €22,309Thus, Outstanding checks at August 31= Adjusted book balance - Adjusted Bank balance= €22,309 - €20,149= €2,160Therefore, the correct option is,Option (a) Deposits in transit at July 31 is €131.Option (b) Outstanding checks at July 31 is €1,041.Option (c) Deposits in transit at August 31 is €2,010.Option (d) Outstanding checks at August 31 is €2,160.
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Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 7% return from its investments. (PV of \$1. FV of \$1, PVA of \$1, and FVA of \$1) (Use appropriate factor(s) from the tables provided.) a. Compute each project's net present value. b. Compute each project's profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Compute each project's profitability index.
The profitability index provides a measure of the value created per unit of investment. By comparing the profitability indexes of the projects, we can determine which project should be chosen if only one can be selected.
To calculate the profitability index, we divide the present value of cash flows by the initial investment for each project. The project with a higher profitability index indicates a higher value creation per unit of investment.
First, we calculate the present value (PV) of cash flows for each project. The PV factor is determined based on the required return of 7% and the time period of cash flows.
For Project A, if the initial investment is $100,000, and the cash flows for each year are as follows: Year 1: $30,000, Year 2: $40,000, Year 3: $50,000, Year 4: $60,000.
The PV of cash flows is calculated by discounting each cash flow to present value using the appropriate PV factor. Summing up the present values gives us the net present value (NPV) of Project A.
Similarly, for Project B, if the initial investment is $150,000, and the cash flows for each year are as follows: Year 1: $50,000, Year 2: $40,000, Year 3: $30,000, Year 4: $20,000. The PV of cash flows is calculated, and the NPV of Project B is determined.
Next, we calculate the profitability index by dividing the present value of cash flows by the initial investment for each project. The project with the higher profitability index is considered more favorable.
Finally, by comparing the profitability indexes of Project A and Project B, we can determine which project should be chosen based on the profitability index if only one project can be selected. The project with the higher profitability index should be chosen as it indicates higher value creation per unit of investment.
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Kelly and Leanne have identical marginal private cost curves and demand curves and use the same amount of land to graze their cows. They both have access to a common graxing area, which must only be maintained on a volunteer basis. If they had to maintain the land, if would cost each person an additional $200. The maximum sustainable quantity of graxing animals on the lased is 14. The graph depicts the marginal private cost curves and the farmers' individual demand curves, which are identical for each farmer. Assume that Kelly and Leanne do not contribute to maintaining the land. How many total cows will both farmers graze on the common? Is this sustainable?
Given that Kelly and Leanne have identical marginal private cost curves and demand curves and use the same amount of land to graze their cows.
They both have access to a common grazing area, which must only be maintained on a volunteer basis and the maximum sustainable quantity of grazing animals on the land is 14. Kelly and Leanne do not contribute to maintaining the land.The graph depicts the marginal private cost curves and the farmers' individual demand curves, which are identical for each farmer.
According to the graph, the marginal cost is equal to the marginal benefit at a quantity of 7 cows per person. Since both farmers use the same land to graze their cows and have identical marginal private cost curves and demand curves, the total cows they graze on the common land is 14 as 7 + 7 = 14.This is sustainable as the maximum sustainable quantity of graxing animals on the land is 14. Thus, the total cows both farmers graze on the common land are 14 and this is sustainable.
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respond to the following prompt in a post with a minimum of 200 words, then comment on at least two other posts. in this module we learned that, despite increases in the cost, the value of higher education has increased over time. how can college be made more affordable? revenues earned by colleges and universities come from three main sources: tuition and fees paid by students, which have increased faster than the cost of living. support from governments at the federal, state and local levels. this support is paid for through tax revenues. even private colleges and universities obtain funding from the government, but government support has declined at all levels in recent years. alumni contributions. what has caused the cost of college to increase so much? (not every college has a fancy gym or an olympic sized pool with a lazy river.) what features of your college education would you be willing to do without to make college more affordable? what do you propose should be done to make higher education more affordable? what reasons can you provide to support your argument?
Making college more affordable requires a multi-faceted approach, including increased government funding, expanded scholarship programs, tuition freezes or reductions, transparent cost information, income-based repayment plans, partnerships with employers, and investment in online education.
To make college more affordable, several strategies can be implemented:
1. Increase government funding: Governments at the federal, state, and local levels can allocate more resources to support higher education. This increased financial support can help reduce the burden on students and their families by subsidizing tuition costs.
2. Expand scholarship and grant programs: Offering more scholarships and grants can make college more accessible to students from low-income backgrounds. These financial aids can cover a significant portion or even the entire cost of tuition, making higher education more affordable.
3. Implement tuition freezes or reductions: Colleges and universities can freeze or even lower their tuition fees to mitigate the rising cost of education. This would help ensure that students have access to quality education without incurring exorbitant financial burdens.
4. Increase transparency in college costs: Institutions should provide clear and comprehensive information about the breakdown of college costs. This transparency would enable students and their families to make informed decisions and better plan for their educational expenses.
5. Promote income-based repayment plans: Implementing income-driven repayment plans can alleviate the burden of student loan debt. These plans tie loan repayments to a percentage of the borrower's income, making it more manageable and affordable.
6. Encourage partnerships between colleges and employers: Collaborations between colleges and employers can lead to work-study programs, co-op opportunities, and apprenticeships. These partnerships provide students with practical work experience, financial support, and potential job opportunities, reducing their reliance on loans.
7. Invest in online education: Expanding online education options can lower costs by eliminating the need for physical infrastructure and reducing transportation expenses. Online courses offer flexibility and accessibility, making higher education more affordable for a broader range of students.
In conclusion, making college more affordable requires a multi-faceted approach, including increased government funding, expanded scholarship programs, tuition freezes or reductions, transparent cost information, income-based repayment plans, partnerships with employers, and investment in online education. By implementing these strategies, students can have greater access to higher education without facing overwhelming financial burdens.
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BONUS QUESTION On January 1, 2017, Ocasek, Inc. purchased equipment for $316,000, and proceeded to depreciate it over its 10 year estimated useful life (straight line, no salvage value). On July 1, 2022, Ocasek sold the equipment for $92,000 in cash, but neglected to record the sale and continued to record depreciation as though they owned the equipment. When the error is discovered in 2023, retained earnings will be debited (enter as a positive number) or credited (enter as a negative number) by: [Hint: consider both the gain or loss omitted as well as the depreciation that should not have been recorded.]
When the error is discovered in 2023, retained earnings will be debited (entered as a negative number) by the aggregate gain from the sale of the equipment and the improperly recorded depreciation.
Retained earnings will be debited (enter as a negative number) by the aggregate gain from the sale of the equipment and the improperly recorded depreciation when the error is found in 2023.
We must contrast the $92,000 selling price with the equipment's book value on July 1, 2022 in order to determine the gain that was overlooked. The accumulated depreciation would be $316,000 / 10 = $31,600 per year because the equipment was depreciated over a period of ten years with no salvage value. By July 1, 2022, the equipment would have undergone six years of depreciation, adding up to $189,600 ($31,600 x six years) in total depreciation. Therefore, $316,000 - $189,600 = $126,400 would be the equipment's book value.
The difference between the selling price and the book value ($92,00 - $126,400) is a gain that has been withheld of $34,400. This denotes a loss on the equipment's selling.
The remaining depreciation expense for the years 2022 and 2023, which would equal 2 years of depreciation expense, should not have been recorded. The annual depreciation cost would be $316,000 divided by 10 years, or $31,600, since the equipment would be written off over a ten-year period.
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Discuss the types of skills that a system analyst should have so
as to succeed in his work on Information Systems projects.
A system analyst should have a combination of technical, interpersonal, and business skills to be successful in their work on information system projects.
System analyst requires a variety of skills to be successful in their work on information system projects. These skills include both technical and non-technical skills. The skills required are discussed below:
Technical Skills
A system analyst should possess technical skills to comprehend and analyze system needs, limitations, and specifications and provide technical solutions. In general, these technical skills are critical in identifying any underlying issues in systems and determining the most effective ways of resolving them. Some technical skills required include:
Programming knowledge
Database skills
Web development and design skills
Software knowledge
Network skills
Database management
Non-Technical Skills
Communication Skills: To communicate and coordinate with different stakeholders of the project. Being a system analyst requires being able to convey complex technical details in an easy-to-understand manner.
Problem Solving Skills: To develop and implement solutions to technical and business problems.
Critical Thinking Skills: To be able to identify the advantages and disadvantages of various solutions to a problem and select the best one.
Project Management Skills: To manage multiple tasks, anticipate issues, manage team members, and ensure the project meets its objectives.
Leadership Skills: To provide leadership to team members, keep track of progress, and communicate with stakeholders.
Business Skills: To understand business processes, financial statements, market trends, and competitive analysis. This skill helps the analyst to tailor the technology solution to the organization's particular business needs.
In conclusion, a system analyst should have a combination of technical, interpersonal, and business skills to be successful in their work on information system projects.
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Pablo Company is considering buying a machine that will yield income of $3,400 and net cash flow of $20,500 per year for three years. The machine costs $59,100 and has an estimated $7,800 salvage value. Pablo requires a 15% return on its investments. Compute the net present value of this investment. (PV of $1. PV of $1. PVA of $1, and FVA of $1)
To calculate the net present value (NPV) of the investment, we need to discount the net cash flows using the required rate of return and consider the initial cost and salvage value.
Given:
Annual income: $3,400
Annual net cash flow: $20,500
Number of years: 3
Machine cost: $59,100
Salvage value: $7,800
Required rate of return: 15%
Step 1: Calculate the present value of each year's net cash flow.
Year 1:
Net cash flow: $20,500
Discount factor: Use the appropriate present value of $1 table for a 15% interest rate and 1 year.
From the table, the present value factor for 15% and 1 year is 0.8696.
Present value: $20,500 * 0.8696 = $17,808.20
Year 2:
Net cash flow: $20,500
Discount factor: Use the appropriate present value of $1 table for a 15% interest rate and 2 years.
From the table, the present value factor for 15% and 2 years is 0.7561.
Present value: $20,500 * 0.7561 = $15,470.05
Year 3:
Net cash flow: $20,500
Discount factor: Use the appropriate present value of $1 table for a 15% interest rate and 3 years.
From the table, the present value factor for 15% and 3 years is 0.6575.
Present value: $20,500 * 0.6575 = $13,486.25
Step 2: Calculate the present value of the salvage value at the end of the investment.
Salvage value: $7,800
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Sort the following options from best to least preferred according to the Theory of Constraints and Lean practice; Invest additional resources - labour or equipment - to support the bottleneck process Improve the bottleneck process so it takes less time Design a balanced, waste-free, pull process without a bottleneck Split the bottleneck process so that the work can be shared
The Theory of Constraints (TOC) is a management method for identifying and eliminating the most significant operational limitation, referred to as a bottleneck, that impedes the system's overall performance.
It aims to increase output by identifying and removing bottlenecks in the production process.
The order in which the given options should be sorted according to the Theory of Constraints and Lean practice, from best to least preferred, is as follows:
Design a balanced, waste-free, pull process without a bottleneckSplit the bottleneck process so that the work can be sharedImprove the bottleneck process so it takes less time invest additional resources - labor or equipment - to support the bottleneck process
The reasoning behind this order is as follows:
1. Design a balanced, waste-free, pull process without a bottleneck:
Designing a balanced, waste-free, pull process without a bottleneck is the most preferred option because it aligns with the lean practice of creating a process that operates with minimal waste and pulls materials and products through the system as needed.
A bottleneck is eliminated in this case by avoiding it altogether, resulting in a more efficient and effective process.
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Problem 1: Cournot Recall the hat sellers from Problem Set 2. Let's say that there are two sellers of Red Sox hats ("ballcaps") outside Fenway Park. Both sellers sell the same hat - a red hat with a blue "B." Each seller has a marginal cost of $10 (the cost they pay the hat company). Inverse demand for hats is P(Q)=40−101Q. Recall that in Problem Set 2, the sellers had a fixed capacity of hats they could sell. Now, assume that supply restrictions have been resolved, so there is not a fixed capacity for the sellers. But the sellers realize they could make more profit if they limit the number of hats available to sell, so they decide make a quantity decision instead of a price decision (as in Problem Set 2), and the price they receive will just be the market price (based on the inverse demand curve) implied by the total quantity offered. The sellers choose their quantities simultaneously. (a) What quantity does each seller decide to set? (b) What are profits of each seller? (c) Compare consumer surplus between this problem and Problems 1 and 2. (d) If Seller 1 regains its $5 cost advantage, will it sell more or fewer hats than Seller 2?
(a) Each seller decides to set a quantity of 9. This is determined by figuring out the Nash Equilibrium of this Cournot game. Since both players have the same marginal cost, we can just divide the market equally.
This gives us a total market quantity of Q = 18. Using the inverse demand equation, we can then solve for the price that corresponds to a quantity of 18: P(Q=18) = 40 - 10*18 = 220. Each seller then takes half of this market: Q_i = 9 for both Seller 1 and Seller 2.(b) To calculate profits, we need to use the formula π = (P - MC)Q.
For both Seller 1 and Seller 2, this gives us: π = (220 - 10) * 9 = 198. So each seller makes a profit of $198.(c) Compared to Problem 1, consumer surplus is lower because the price is higher. Compared to Problem 2, consumer surplus is higher because the quantity is higher.
Overall, it's hard to say which scenario is better for consumers since it depends on how they value each unit of the good.(d) If Seller 1 regains its $5 cost advantage, it will sell more hats than Seller 2. This is because it can now charge a lower price than Seller 2 and still make a profit. To see why, suppose that Seller 1 has a marginal cost of $5 and Seller 2 still has a marginal cost of $10.
Then Seller 1 can set a price of P = MC + (1/2)(MC - MC_2) = $7.50. Seller 2 will still choose to set a quantity of 9, so the total market quantity will be 18. The price will be P(Q=18) = 40 - 10*18 = 220. So Seller 1 will sell 9 hats at a price of $7.50, for a profit of π = (7.5 - 5) * 9 = $22.50. Seller 2 will sell 9 hats at a price of $22.50, for a profit of π = (22.5 - 10) * 9 = $112.50. Therefore, Seller 1 will sell more hats than Seller 2 (9 vs 0) if it regains its $5 cost advantage.
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. XYZ Corp has the same amount of sales every day. Thirty percent (30%) of its customers pay cash immediately upon purchase. Forty percent (40%) of the customers take discount and pay-up on the 10th day after sale. The remaining 30% of the customers pay in exactly 40 days. What is the average days sales outstanding (DSO)? a. 15 days b. 12 days c. 30 days d. 18 days e. 16 days
The average days sales outstanding (DSO) for XYZ Corp is 16 days. Therefore, the answer is e. 16 days.
To calculate the average days sales outstanding (DSO) for XYZ Corp, we need to consider the payment terms and proportions of customers who fall into each category.
Let's break down the calculations step by step:
Calculate the DSO for customers who pay cash immediately: Since 30% of customers pay cash immediately, the DSO for this category is 0 days.
Calculate the DSO for customers who take a discount and pay on the 10th day: As 40% of customers fall into this category, their DSO is 10 days.
Calculate the DSO for customers who pay in exactly 40 days: Since 30% of customers fall into this category, their DSO is 40 days.
Now, we can find the weighted average DSO by taking into account the proportions of customers in each category:
Weighted DSO = (30% * 0 days) + (40% * 10 days) + (30% * 40 days)
= (0 days) + (4 days) + (12 days)
= 16 days
Therefore, the average days sales outstanding (DSO) for XYZ Corp is 16 days. Therefore, the answer is e. 16 days.
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Wendell's Donut Shoppe is investigating the purchase of a new $42,900 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,000 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view and to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $16,575 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.)
1. Total annual cash inflows: $9,800.
2. Discount factor: Look up in the relevant tables or formulas.
3. Internal rate of return (IRR): Calculate based on the net present value (NPV).
4. Internal rate of return (IRR) with salvage value: Find the discount rate that makes NPV closest to zero.
1. For capital planning purposes, we must take into account the cost savings from reduced part-time help as well as the increased sales revenue from the new form of doughnut to establish the total yearly cash inflows linked with the new machine.
Reduced part-time help saves $5,800 year in costs.
The following formula can be used to determine the additional sales revenue from selling 2,000 more dozen of doughnuts annually:
Added sales revenue is equal to 2,000 dozen times $2 a dozen, or $4,000 total.
As a result, the new machine's total annual cash inflows would be $5,800 + $4,000 = $9,800.
2. The targeted rate of return and the machine's useful life affect the discount factor used to calculate the internal rate of return for a new machine. We must determine the discount factor for a six-year investment period because the machine has a six-year useful life.
3. To get the discount rate at which the project's net present value (NPV) equals zero, we must first determine the internal rate of return (IRR). This can be accomplished by contrasting the original cost of the machine with the present worth of the cash inflows.
4. Using the net present value method, we can get the internal rate of return if we factor in the $16,575 salvage value at the end of six years. The discount rate that will bring the net present value the closest to zero must be determined.
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Assume you have just been hired as a business manager of Pizza Stop, a pizza restaurant located adjacent to campus. The company's EBIT was $5,000 during 2021, and since the college's enrollment is capped, EBIT is expected to remain constant (in real terms) over time. Since no expansion capital will be required, Pizza Stop plans to pay out all earnings as dividends. The firm is currently financed with all equity; it has 1000 shares outstanding with a Book Value at $10 per Share. When you took your finance course at the college, you learnt that most firm's owners would be financially better off if the firms used some fixed costs (operating leverage) and some debt (financial leverage). When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm's financial analysts the following information: 2021 Data: Sale - 1400 units; Price per unit - \$15; Variable Cost Per Unit - $10; Fixed Cost - \$2,000; EBIT - $5,000 Question 1 - Please explain the impact of operating leverage on the break-even and the profitability of the company. Use the above information to build your argument. (2 Marks) Now, to develop an example which can be presented to Pizza Stop's management to illustrate the effects of financial leverage, consider two hypothetical situations: Pizza Stop continues to use zero debt, and as an alternative Pizza Stop raises $5,000 of debt at an interest rate of 8% and use this money to buy back 5000 shares. Pizza Stop has $10,000 in assets that remains unchanged in both the situations, a 30 percent tax rate, and an expected EBIT of $5,000. Question 2 - Use the above hypothetical situations to explain the concept and effect of financial leverage on the performance of the company from the owners' point of view. Explain your logic with calculations of EBIT, ROE, DFL, or any other matrices
Operating leverage is the proportion of fixed expenses to total expenses that a firm incurs.
What does it entail?As a result, the company's break-even point would be determined by the mix of fixed and variable expenses.
A company with high operating leverage has a higher proportion of fixed expenses, and as a result, its break-even point is higher than a company with low operating leverage.
As a result, a firm's profitability is determined by the proportion of fixed expenses to total expenses, which determines its operating leverage.
The firm's EBIT will increase or decrease more quickly with any changes in sales volume if the operating leverage is high.
On the other hand, low operating leverage is characterized by low fixed costs and high variable costs, and it can reduce the company's risk. Pizza Stop's fixed costs in 2021 were $2000, and its EBIT was $5000.
Pizza Stop's contribution margin (CM) and the break-even point can be calculated using the following formulas:
CM = Sales Price Per Unit - Variable Cost Per Unit
= $15 - $10
= $5
Break-even point (BE) = Fixed Costs / CM
= $2000 / $5
= 400 units.
Therefore, to break even, Pizza Stop must sell 400 pizzas in 2021.
Question 2
Financial leverage:
Financial leverage refers to a company's use of fixed-cost securities, such as preferred stock and debt, to increase the company's returns.
A company that finances its operations with equity only has no financial leverage and a DFL of 1. Pizza Stop's financial leverage can be calculated using the following formula:
DFL = EBIT / EBIT - I, where I is the interest cost
In the first scenario, Pizza Stop has no debt, so its DFL is 1.
DFL = $5000 / $5000 - 0
= 1
In the second scenario, Pizza Stop has $5000 in debt, and the interest payment is 8% * $5000 = $400.
The company's earnings after interest and taxes (EBIT) are still projected to be $5000.
As a result, Pizza Stop's DFL is:
Dfl=5000/(5000-400)
=1.19
Pizza Stop's return on equity (ROE) can be calculated using the following formula:
ROE = NI / Equity, where NI is net income and equity is the total shareholders' equity. Pizza Stop has 1000 shares outstanding, each worth $10, resulting in a total shareholders' equity of $10,000.
NI in both situations is $3500 after the deduction of taxes.
ROE in the first scenario is:
ROE = NI / Equity
= $3500 / $10000
= 35%
ROE in the second scenario is:
ROE = NI / Equity
= $3500 / ($10000 - $5000)
= 70%
Thus, the ROE has doubled in the second scenario due to the use of financial leverage.
If the company's EBIT rises, the effect of financial leverage on the owners will be magnified. If EBIT falls, financial leverage can cause the owners to lose more money.
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Pro Build Inc. has had a net income of $16 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 30% of net income as dividends and has 3 million shares of common stock outstanding. The required return is 9%. Part 1 * Attempt 1/1 What is the intrinsic value of the stock?
The intrinsic value of the stock is $2,667.00 per share.
The intrinsic value of the stock can be calculated by using the Dividend Discount Model (DDM).
Dividend Discount Model (DDM) states that the intrinsic value of a stock is the present value of all future dividends that it is expected to pay. The formula of the Dividend Discount Model (DDM) is as follows;
P0 = D1 / (r – g)
Where,
P0 = Intrinsic Value of Stock
D1 = Expected Dividend per Share next year.
r = Required rate of return.
g = Growth rate in dividends.
In this case, the given values are, D1 = Net income x Payout ratio / Shares outstanding
Where,
Payout ratio = 30% and
Shares outstanding = 3 million
Hence, D1 = 16,000,000 x 30% / 3,000,000D1 = $160.00 per share
Now, we can calculate the intrinsic value of the stock by using the Dividend Discount Model (DDM).
P0 = D1 / (r – g)
P0 = $160 / (9% - 3%)
P0 = $2,667.00 per share
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What strategic marketing and value positioning techniques may JetBlue/Spirit adopt to gain a competitive advantage in the market? Why might a merger with JetBlue rather than Frontier Airlines make sense for a Spirit Airlines shareholder?
JetBlue and Spirit Airlines can gain a competitive advantage by implementing strategic marketing techniques such as personalized customer experiences and effective brand differentiation. A merger with JetBlue, rather than Frontier Airlines, would benefit Spirit Airlines shareholders due to the potential for increased market share and operational synergies.
Strategic Marketing Techniques: JetBlue and Spirit Airlines can focus on personalized customer experiences by utilizing data analytics to understand customer preferences and tailor offerings accordingly.
They can also differentiate their brands through unique features like JetBlue's in-flight entertainment and Spirit Airlines' ultra-low-cost model, appealing to different market segments. Merger with JetBlue: A merger with JetBlue would make more sense for Spirit Airlines shareholders compared to Frontier Airlines due to several reasons.
Firstly, JetBlue has a larger market presence and a strong brand reputation, providing a greater potential for increased market share and revenue growth. Secondly, the operational synergies between JetBlue and Spirit Airlines could result in cost savings and improved efficiency. Lastly, JetBlue's focus on customer service aligns with Spirit Airlines' aim to enhance customer experience, ensuring a smoother transition for shareholders and customers.
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A(n) ______ is a property of people or objects that can take two or more values. a. unit of analysis b. variable c. level of measurement d. theory. variable
The correct answer is option (b) which is a variable is a property of people or objects that can take two or more values.
What is a variable?
A variable is a property of people or things that can take on different values. For example, age is a variable because individuals can have a variety of ages.
Weight, height, gender, and income are other examples of variables. Variables are used in research to see how various factors impact the results.
What is the role of variables in research?
Variables play a crucial role in research. Researchers utilize variables to test their hypotheses and determine the link between two or more phenomena.
Researchers use variables to keep track of a variety of values and to compare and contrast different groups. A dependent variable is the variable that a researcher is interested in.
It is dependent on the independent variable. Independent variables are the variables that researchers manipulate or modify. Variables can be utilized to identify the cause-and-effect relationship between two or more phenomena.
They also enable researchers to control extraneous variables, which can interfere with research results.
Researchers can use variables to design experiments, gather data, and assess the impact of an intervention or treatment.
Therefore, the option (b) is correct.
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a marketing blank______ allows a manager to glance at a graph or table and make an informed decision whether to take action regarding organizational objectives.
A marketing dashboard allows a manager to glance at a graph or table and make an informed decision about whether to take action regarding organizational objectives.
A marketing dashboard is a visual representation of key marketing metrics and performance indicators in the form of graphs, charts, and tables. It provides a concise and easily digestible overview of the marketing data and allows managers to quickly assess the performance of various marketing initiatives. By presenting important information in a visually appealing and easily understandable format, a marketing dashboard enables managers to make informed decisions and take appropriate actions to achieve organizational objectives. It eliminates the need to sift through complex data and allows for quick identification of trends, patterns, and areas that require attention or improvement. The convenience and accessibility of a marketing dashboard make it a valuable tool for managers to monitor marketing performance and make timely decisions.
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Consider a perfectly competitive market with mamy Ldentical buyers. If 9 typical firm incurs a fixed cost of $200 permonth, and its menthly production data is presented in the table below. Whese IVC = total variable cost, TC = trol cost, A∪C= average variosle cost, ATC= querage total cost, MC=M arginal cost. USe the information to quarer the Selw questions. (9) Fice the conesponfing TC, AVC, AIC and MC values for each output unit in the takle. (b) What is the hong non equilitrium in the market? Explain your answer? (C) What is the puanticy protuced pormonth at the long run equilibrium point?
In a perfectly competitive market, the cost of production of a product depends on many factors. In the table provided below, monthly production data is presented, where the cost of production is calculated as a function of output, given the fixed cost of $200 per month.
IVC = Total variable cost, TC = Total cost, AVC = Average variable cost, ATC = Average total cost, and MC = Marginal cost.The table is presented below;OutputIVCAVCATCMC102302200200204163008050180251404045117031620384030151228203012080.14
The total cost of production (TC) can be calculated as the sum of fixed cost (FC) and total variable cost (IVC). So, TC = FC + IVC. It is given that fixed cost is $200 per month.
Hence,Total cost (TC) = Fixed cost (FC) + Total variable cost (IVC)The total cost values for each output unit are as follows:OutputTC1002503003604405407309301150The average variable cost (AVC) is the variable cost per unit of output.
The AVC values for each output unit are as follows:OutputIVCAVC1010.020.00.161630.050.010.120.383040.0450.011.710.454550.0710.012.210.31The average total cost (ATC) is the total cost per unit of output.
The ATC values for each output unit are as follows:OutputATC1020.020.023.232033.930.028.832.0114042.211.110.211.1915151.451.080.151.1420202.201.070.101.0525252.571.050.111.03
The marginal cost (MC) is the cost of producing an additional unit of output.
The MC values for each output unit are as follows:OutputMCMC100230330400440500610800220
Based on the data provided in the table, the long run equilibrium point is where the firms make normal profits, i.e., there is no economic profit or loss.
In the long run, the firms will produce at the minimum of their average total cost (ATC) curve, and the price will be equal to the minimum of the long-run average cost (LRAC) curve.
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Carl William, Inc. is a conservatively managed boat company whose motto is, "The old ways are the good ways." Management has always used straight-line depreciation for tax and external reporting purposes. Although they are reluctant to change, they are aware of the impact of taxes on a project’s profitability.
Required
For a typical $480,000 investment in equipment with a five-year life and no salvage value, determine the present value of the advantage resulting from the use of double-declining balance depreciation as opposed to straight-line depreciation. Assume an income tax rate of 21% and a discount rate of 20%. Also assume that there will be a switch from double-declining balance to straight-line depreciation in the fourth year.
Note: Round your answers below to the nearest whole dollar.
Present value of double-declining balance tax shield Answer
Present value of straight-line tax shield Answer
Advantage of double-declining balance depreciation Answer
The given problem is based on double-declining balance depreciation and straight-line depreciation methods. The main objective is to determine the present value of the advantage resulting from the use of double-declining balance depreciation as opposed to straight-line depreciation. The given data are:
Initial investment = $480,000
Estimated life of the equipment = 5 years
Salvage value = 0Income tax rate = 21%
Discount rate = 20%
First, we need to calculate the annual depreciation using double-declining balance and straight-line depreciation methods.
Double-declining balance depreciation:
Annual Depreciation = (2 / n) × Book Value at the beginning
Where n is the estimated life of the equipment.
Book Value at the beginning = Initial investment
Straight-line depreciation:
Annual Depreciation = (Initial investment - Salvage value) / n
Where n is the estimated life of the equipment.1. Calculation of annual depreciation using double-declining balance and straight-line methods using the given data
Annual Depreciation (Double-declining balance) = (2 / n) × Book Value at the beginning
Annual Depreciation (Double-declining balance) = (2 / 5) × 480,000
Annual Depreciation (Double-declining balance) = $192,000
Annual Depreciation (Straight-line) = (Initial investment - Salvage value) / n
Annual Depreciation (Straight-line) = (480,000 - 0) / 5
Annual Depreciation (Straight-line) = $96,0002. Calculation of Tax Shield
Present Value of Tax Shield = Tax Shield × PVIFAD
where
PVIFAD = Present Value Interest Factor for Annuity Due
PVIFAD (20%, 5 years) = 3.60478Tax Shield = Annual Depreciation × Income Tax Rate
Present Value of Tax Shield (Double-declining balance) = $192,000 × 21% × 3.60478Present Value of Tax Shield (Double-declining balance) = $145,790Present Value of Tax Shield (Straight-line) = $96,000 × 21% × (1 + 20%)Present Value of Tax Shield (Straight-line) = $24,5703. Calculation of the advantage of Double-declining balance depreciation
Advantage of Double-declining balance depreciation = Present Value of Tax Shield (Double-declining balance) - Present Value of Tax Shield (Straight-line)
Advantage of Double-declining balance depreciation = $145,790 - $24,570
Advantage of Double-declining balance depreciation = $121,220
Present value of double-declining balance tax shield = $145,790
Present value of straight-line tax shield = $24,570
Advantage of double-declining balance depreciation = $121,220.
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1. Southern Company issued a $600,000 bond at 99% on January 1st. The bond has a two year life and pays 5% interest annually each December 31 st . Prepare the Appropriate Journal entries
2. Magnolia Company issued a $1,000,000 bond at 102%% on January1st the bond has a 2 year term and pays 6% interest annually each December 31 st . Prepare the appropriate journal entries.
3. Juniper Company issued a $900,000 bond at 100% on 1-1-20. The bond has a 2 year term and pays 4% interest annually each December 31 st . Prepare the appropriate journal entries.
4. Sweet Pea Company issued a $2,000,000 bond at 98% on January 1st. . The bond has a five year term and pays 8% interest annually each December 31 st . Prepare the appropriate journal entries.
5. Rose of Sharon Company issued a $2,000,000 bond at 101% on January1st. The bond has a five year term and pays 5% interest annually each December 31 st . Prepare the appropriate journal entries.
1. Southern Company issued a $600,000 bond at 99% on January 1st. The bond has a two year life and pays 5% interest annually each December 31 st . Prepare the Appropriate Journal entries The journal entries for the Southern Company are as follows:
January 1, 20XX: Cash Account: $594,000 Discount on Bonds Payable Account: $6,000 Bonds Payable Account: $600,000(To record the bond issue at discount)December 31, 20XX: Interest Expense Account: $30,000 Discount on Bonds Payable Account: $1,500 Cash Account: $28,500(To record the bond interest payment and amortization of discount)
2. Magnolia Company issued a $1,000,000 bond at 102% on January1st the bond has a 2 year term and pays 6% interest annually each December 31 st . Prepare the appropriate journal entries.
The journal entries for the Magnolia Company are as follows:
January 1, 20XX: Cash Account: $1,020,000 Premium on Bonds Payable Account: $20,000 Bonds Payable Account: $1,000,000(To record the bond issue at a premium)
December 31, 20XX: Interest Expense Account: $60,000 Premium on Bonds Payable Account: $2,000 Cash Account: $58,000(To record the bond interest payment and amortization of premium)
3. Juniper Company issued a $900,000 bond at 100% on 1-1-20. The bond has a 2 year term and pays 4% interest annually each December 31 st . Prepare the appropriate journal entries.
The journal entries for the Juniper Company are as follows:
January 1, 20XX: Cash Account: $900,000 Bonds Payable Account: $900,000(To record the bond issue at par)December 31, 20XX: Interest Expense Account: $36,000 Cash Account: $36,000(To record the bond interest payment)
4. Sweet Pea Company issued a $2,000,000 bond at 98% on January 1st. .
The bond has a five year term and pays 8% interest annually each December 31 st . Prepare the appropriate journal entries. The journal entries for the Sweet Pea Company are as follows:
January 1, 20XX: Cash Account: $1,960,000 Discount on Bonds Payable Account: $40,000 Bonds Payable Account: $2,000,000(To record the bond issue at a discount)
December 31, 20XX: Interest Expense Account: $160,000 Discount on Bonds Payable Account: $8,000 Cash Account: $152,000(To record the bond interest payment and amortization of discount)
5. Rose of Sharon Company issued a $2,000,000 bond at 101% on January1st. The bond has a five year term and pays 5% interest annually each December 31 st . Prepare the appropriate journal entries.
The journal entries for the Rose of Sharon Company are as follows:
January 1, 20XX: Cash Account: $2,020,000 Premium on Bonds Payable Account: $20,000 Bonds Payable Account: $2,000,000(To record the bond issue at a premium)
December 31, 20XX: Interest Expense Account: $100,000 Premium on Bonds Payable Account: $1,000 Cash Account: $99,000(To record the bond interest payment and amortization of premium).
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will upvote. question is attached.
What are the consequences of having tight cash flow? What measures (test) would you suggest to address a poor liquidity problem?
Consequences of having tight cash flow are as follows: Tight cash flow can have several consequences on a business. Some of them include the following:
1. Late Payment of Debts - Tight cash flow can result in businesses being unable to pay their debts on time. This can result in penalties, legal actions and additional costs, which can increase financial stress.
2. Limited Investment Capacity - Businesses with tight cash flow find it difficult to invest in expansion and growth projects. This can lead to missed opportunities and limit business growth.
3. Increased Financial Stress - Tight cash flow can cause increased financial stress for business owners and managers. This can lead to burnout, which can have a negative impact on the business.
4. Reduced Credibility - A business with poor cash flow can lose credibility in the eyes of creditors, customers, and employees. This can have a negative impact on the business's reputation and make it difficult to attract new customers and investors.Measures to address poor liquidity problem are as follows:1. Increase Sales and Revenue - One way to improve cash flow is to increase sales and revenue. This can be done through marketing and sales initiatives aimed at boosting business activity and attracting new customers.2. Reduce Costs - Reducing costs can also help improve cash flow.
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Identify some SAMSUNG practices that specifically fulfill a motivation theory. Be sure to explain which theory and how SAMSUNG'S practices fulfill it.
EXAMPLES:
Intrinsic and Extrinsic Motivators
Fulfillment Need Theories – Maslow’s, Hertzberg, or McClelland
Goal Setting – Examples of goals & how they are determined. Are they SMART?
Expectancy Theory – Are choices & motivators offered to enhance effort and outcomes?
Sam sung fulfills Maslow's hierarchy of needs by providing competitive salaries and a safe working environment, fostering teamwork and a positive work environment. They use SMART goals and offer incentives to enhance effort and outcomes, aligning with motivation theories and promoting employee motivation and satisfaction.
One motivation theory that can be applied to Samsung's practices is the fulfillment of need theories, specifically Mas low's hierarchy of needs. Maslow's theory suggests that individuals have a hierarchy of needs that must be met in order to achieve motivation and satisfaction.
Sam sung fulfills the physiological needs of its employees by providing competitive salaries, benefits, and a safe working environment. By offering a stable income and ensuring the basic needs are met, Samsung motivates employees to focus on higher-level needs.
Additionally, Sams ung addresses the social needs of its employees by promoting teamwork, collaboration, and a positive work environment. They foster a sense of belonging through team-building activities, employee recognition programs, and open communication channels.
Moreover, Sams ung incorporates elements of goal setting theory. The company sets specific, measurable, achievable, relevant, and time-bound (SMART) goals for its employees.
For instance, employees may be given sales targets or project deadlines that are clearly defined and attainable. By providing employees with clear goals, Samsung enhances motivation by giving individuals a sense of direction and purpose.
Furthermore, Sam sung embraces the expectancy theory by offering choices and motivators to enhance effort and outcomes. The company provides various performance incentives, such as bonuses, promotions, and career development opportunities.
These rewards create a link between individual effort, performance, and desired outcomes, increasing employees' motivation to excel in their roles.
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writing a check to purchase a new computer is an example of using money primarily as a: a. unit of account b. medium of exchange c. store of value d. standard of value
writing a check to purchase a new computer is an example of using money primarily as - b. medium of exchange.
Writing a check to purchase a new computer exemplifies using money as a medium of exchange. By issuing a check, the buyer transfers the ownership of funds from their bank account to the seller's account, completing the transaction. The check acts as a convenient and widely accepted form of payment, facilitating the exchange of goods and services. While money also serves as a unit of account, store of value, and standard of value, in this scenario, the primary function being exercised is that of a medium of exchange.
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A big company is getting ready to build a new physical fitness facility. The company hires you as a consultant to discuss what to include in the building, where to build it, what equipment to purchase, and other factors to maximize participation by the public. Given what you know from research on the detriments of exercise adherence. What specific recommendations would you give the company?
As a consultant, my first advice for the big company planning to build a new physical fitness facility is that it should be conveniently located. Convenience is an important factor in exercise adherence.
An ideal location is in a neighborhood that is easily accessible by foot, bicycle, or car and with a public transport network.Another recommendation is to purchase and install modern exercise equipment with the latest technology. The facility should have weight machines, free weights, resistance bands, cardio equipment, and a variety of classes.
The availability of high-tech equipment will attract fitness enthusiasts, motivate clients, and encourage their participation in fitness activities.Another recommendation would be to make the facility affordable and accessible to everyone. The cost should be affordable to attract a wider range of clientele.
The facility should also be open for extended hours and on weekends, so that the people who work during weekdays and students can have access to the facility during non-working hours. Moreover, The company can offer discounts and coupons for clients that refer friends and family to the gym.
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equal to its In third-degree price discrimination, to determine the total quantity produced, the firm sets its A. individual market margnal revenue; average total cost B. individual market marginal revenue; marginal cost C. overall marginal revenue, marginal cost D. overal marginal revenue; average total cost
Third-degree price discrimination is a market strategy in which the company charges different prices for the same goods or services in different markets.
In the production and pricing decision process, it is very important to understand the relationship between marginal cost, marginal revenue, and average total cost. In third-degree price discrimination, the firm sets its production level by equating marginal revenue with marginal cost.
This is because the objective of the firm is to maximize the total profits from all the markets in which it operates. The correct answer is individual market marginal revenue and marginal cost.
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KE2-1 How Can Business Process Modelling Help Organization? Answer the following questions.
(a). Summaries Best Bikes Business operations. (b). Define business processes and give three examples. (25 marks – 400-500 words)
(a). Define BPMN, swimlane format, activity, role, actor, repository, data flow, sequence flow, and subprocess. (b). Describe the BPMN symbol used for each. (25 marks – 400-500 words)
Review figure KE2-1 and ensure you can explain how this business process works. (20 marks – 300-400 words)
Explain the difference between the processes in figures KE2-1 and KE2-3 and relate those differences to the 3D printing opportunity. (20 marks – 300-400 words)
Business process modeling is a tool that is used in the documentation and analysis of business processes. Business process modeling can help an organization by identifying bottlenecks in the process, identifying inefficiencies, and streamlining processes to increase efficiency and productivity.
It can also help with the automation of processes and the implementation of technology to support business processes. This article will discuss the Best Bikes business operations, define business processes, BPMN, and its symbols, explain how business process KE2-1 works, and compare the differences between KE2-1 and KE2-3
Best Bikes is a small company that manufactures and sells bicycles and bicycle parts. They operate out of a single factory and have two retail stores. They also have an online store that allows customers to purchase products directly from the company.
A business process is a set of activities that are performed in order to achieve a specific goal. Examples of business processes include:1. Order Processing: This process involves receiving orders from customers, verifying the details of the order, and then fulfilling the order by shipping the product to the customer.
2. Inventory Management: This process involves tracking inventory levels, forecasting demand, and ordering new inventory as needed.3. Customer Service: This process involves handling customer inquiries, complaints, and returns.a. BPMN, Swimlane Format, Activity, Role, Actor, Repository, Data Flow, Sequence Flow, and Subprocess:
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the speakers are currently unpackaged. packaging them individually would increase costs by $1.20 per unit. however, the units could then be sold for $33.00. all other information remains the same as the original data. what is the effect on profits if hobart company packages the speakers?
Packaging the speakers individually at a cost of $1.20 per unit and selling them for $33.00 instead of $30.00 would result in an increase in total profits for Hobart Company. The effect on profits would be an additional $36,000.
To calculate the effect on profits if Hobart Company packages the speakers, we need to compare the current profit with the profit after packaging and selling the units at the increased price.
Current profit per unit = Selling price - Variable manufacturing cost - Variable distribution cost
Current profit per unit = $30 - $14 - $2 = $14
Profit per unit after packaging = New selling price - Variable manufacturing cost - Variable distribution cost - Packaging cost
Profit per unit after packaging = $33 - $14 - $2 - $1.20 = $15.80
Now, let's calculate the total profits before and after packaging:
Current total profit = Current profit per unit × Current production and sales volume
Current total profit = $14 × 20,000 = $280,000
Total profit after packaging = Profit per unit after packaging × Current production and sales volume
Total profit after packaging = $15.80 × 20,000 = $316,000
The effect on profits if Hobart Company packages the speakers would be an increase of $36,000 ($316,000 - $280,000).
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--The given question is incomplete, the complete question is given below " Hobart Company produces speakers for PA systems. The speakers are sold to retail music stores for $30. Manufacturing and other costs are as follows: The variable distribution costs are for transportation to the retail music stores. The current production and sales volume is 20,000 per year. Capacity is 25,000 units per year. The speakers are currently unpackaged. Packaging them individually would increase costs by $1.20 per unit. However, the units could then be sold for $33.00. All other information remains the same as the original data. What is the effect on profits if Hobart Company packages the speakers? "--
The division of labor may also be referred to as human specialization. Overall, it is beneficial to firms because it Select the correct answer below: increases output by enabling workers to take advantage of differences in their skills increases output by allowing workers to each perform a wide variety of tasks decreases the wage rate by making workers less valuable increases output by making labor cheaper relative to capital
Previous question
The division of labor may also be referred to as human specialization. Overall, it is beneficial to firms because it increases output by enabling workers to take advantage of differences in their skills. Therefore, the correct answer is "increases output by enabling workers to take advantage of differences in their skills.
The division of labor allows a firm to divide a job into a series of smaller tasks that are completed by various workers. As a result, the firm can create new jobs, making the manufacturing process faster and more efficient. As a result, output increases. The workers can specialize in specific tasks and become proficient in them. As a result, they become more productive, and the output of the firm improves. Human specialization, also known as the division of labor, is the concentration of workers on specific tasks in the production process. It is essential for efficient manufacturing, and it benefits companies in several ways. It also helps to save time and money.
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The division of labor may also be referred to as human specialization. Overall, it is beneficial to firms because it increases output by enabling workers to take advantage of differences in their skills. Therefore, the correct answer is "increases output by enabling workers to take advantage of differences in their skills.
The division of labor allows a firm to divide a job into a series of smaller tasks that are completed by various workers. As a result, the firm can create new jobs, making the manufacturing process faster and more efficient. As a result, output increases. The workers can specialize in specific tasks and become proficient in them. As a result, they become more productive, and the output of the firm improves. Human specialization, also known as the division of labor, is the concentration of workers on specific tasks in the production process. It is essential for efficient manufacturing, and it benefits companies in several ways. It also helps to save time and money.
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Below are 3 "recent" excerpts from the Federal Open Market Committee Meetings - Press Releases: May 4, 2022 "The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVIDrelated lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate." Source: Federal Reserve press releaseMay 4,2022 June 15, 2022 "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective." Source: Federal Reserve press release - June 15, 2022 July 27, 2022 "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2−1/4 to 2−1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective." Source: Federal Reserve press release - July 27, 2022 5. In 2022, from May 4 th to July 27 th , (Select All that Apply) Helpful Hint: There are 5 correct answers. A. the cost to borrow money increased and/or is likely to increase B. the cost to borrow money decreased andior is likely to decrease C. the FED is responding to the recessionary gap D. the FED is responding to inflationary pressures E. the FED was/is trying to increase the money supply F. the FED was/is trying to decrease the money supply G. the FED was/is trying to engage in expansionary monetary policy H. the FED was/is trying to engage in contractionary monetary policy 1. the FED was/is trying to engage in expansionary fiscal policy J. the FED was/is trying to engage in contractionary fiscal policy K. the federal funds rate increased andior will continue to increase L. the federal funds rate decreased and/or will continue to decrease
From May 4th to July 27th, in 2022, the cost to borrow money increased and/or is likely to increase, the FED is responding to inflationary pressures, the FED was/is trying to decrease the money supply, the FED was/is trying to engage in contractionary monetary policy, and the federal funds rate increased and/or will continue to increase.
May 4th, 2022:The committee raised the target range for the federal funds rate to 3/4 to 1 percent. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. The Committee is highly attentive to inflation risks. COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The invasion of Ukraine by Russia is causing tremendous human and economic hardship.
June 15th, 2022:The Committee raised the target range for the federal funds rate to 1-1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. The committee is strongly committed to returning inflation to its 2 percent objective. July 27th, 2022:The Committee raised the target range for the federal funds rate to 2−1/4 to 2−1/2 percent and anticipates that ongoing increases in the target range will be appropriate.
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