The correct option from the given choices is option A. Vertical integration strategies extend a company's competitive scope within the same industry by expanding its operations across more parts of the industry value chain.
Expanding a company's operations across several stages or areas of the industry value chain is a component of vertical integration plans. Both forward integration (growing into downstream activities) and backward integration (extending into upstream activities) might fall under this category. A corporation hopes to expand control over its value chain through vertical integration, which may also result in a number of strategic advantages, including cost savings, improved coordination, and increasing market dominance. The alternative choices do not adequately convey the advantages or results of vertical integration strategies.
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The complete question is:
Vertical integration strategies
A extend a company's competitive scope within the same industry by expanding its operations across more parts of the industry value chain.
B. are one of the best strategic options for helping companies win the race for global market leadership.
C. offer good potential to expand a company's lineup of products and services.
D are particularly effective in boosting a company's ability to expand into additional geographic markets, particularly the markets of foreign countries.
E. are a good strategy option for helping a company to revamp its value chain and bypass low value-added activities.
In January 2022, the management of Carla Vista Company concludes that it has sufficient cash to permit some short-term investments in debt and equity securities. During the year, the following transactions occurred. Feb. 1 Purchased 500 shares of Muninger common stock for $25,000. Mar. 1 Purchased 700 shares of Tatman common stock for $17,500. Apr. 1 Purchased 50 of $1,050,6% Yoakem bonds for $52,500. Interest is payable semiannually on April 1 and October 1. July 1 Received a cash dividend of $0.50 per share on the Muninger common stock. Aug. 1 Sold 167 shares of Muninger common stock at $65 per share. Sept. 1 Received a $1 per share cash dividend on the Tatman common stock. Oct. 1 Received the semiannual interest on the Yoakem bonds. Oct. 1 Sold the Yoakem bonds for $51,400. At December 31, the fair value of the Muninger and Tatman common stocks were $51 and $24 per share respectively. These stock investments by Carla Vista Company provide less than a 20% ownership interest. Prepare the adjusting entry at December 31, 2022, to report the investment securities at fair value. All securities are considered to be trading securities. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Show the balance sheet presentation of investment securities at December 31,2022 Give the statement classification of each income statement account. Sept. 1∨ Cash 700 Dividend Revenue 700 Interest Revenue 1575 (To record the receipt of semiannual interest on Yoakem bonds) Loss on Sale of Debt Investments \begin{tabular}{|l|} \hline 1000 \\ \hline \hline \end{tabular} Oct. 1∨ Cash \begin{tabular}{|l|} \hline 51500 \\ \hline \hline \end{tabular} Debt Investments 52500 (To record the sale of Yoakem bonds)
Adjusting entry at December 31, 2022: Particulars Accounts Debit Credit Muninger Common Stock $51 500 Tatman Common Stock $16 800 (700 × $24) (To adjust the value of the Muninger and Tatman common stock investments to their fair values) Investment securities balance sheet presentation at December 31, 2022:
The following is the presentation of the investment securities at December 31, 2022, in Carla Vista Company's balance sheet: Particulars Amount Trading Securities: Muninger Common Stock $17 000 Tatman Common Stock $16 800 Total $33 800
Income statement account classification: Revenue accounts: Particulars Amount Dividend Revenue $350 (500 × $0.50 × 70%) Interest Revenue $1 575 (50 × $1,050 × 6% × 67%) Loss on sale of debt investments $1 000 (To recognize the loss incurred on the sale of Yoakem bonds)
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The electricity accounts of residents in a very small town are calculated as follows: - If 500 units or fewer are used, the cost is 2 cents per unit. If more than 500 but not more than 1000 units are used, the cost is $10 for the first 500 units and 5 cents for every unit in excess of 500 . - If more than 1000 units are used, the cost is $35 for the first 1000 units plus 10 cents for every unit in excess of 1000 . A basic service fee of $5 is charged, no matter how much electricity is used. Write a program that enters the following five consumptions into a vector and uses a for loop to calculate and display the total charge for each one: 200,500,700,1000,1500. (Answers: $9,$15, $25,$40,$90)
Here's an example program in Python that calculates and displays the total charge for each consumption using the given pricing rules:
# Define the pricing rules
def calculate_charge(units):
if units <= 500:
return units * 0.02
elif units <= 1000:
return 10 + (units - 500) * 0.05
else:
return 35 + (units - 1000) * 0.1
# List of consumptions
consumptions = [200, 500, 700, 1000, 1500]
# Calculate and display the total charge for each consumption
for consumption in consumptions:
total_charge = calculate_charge(consumption) + 5
print("Consumption:", consumption, "units | Total charge: $", total_charge)
When you run this program, it will iterate through the list of consumptions, calculate the total charge using the calculate_charge() function, and add the basic service fee of $5. It will then display the consumption and the corresponding total charge for each entry in the list.
Output:
Consumption: 200 units | Total charge: $ 9.0
Consumption: 500 units | Total charge: $ 15.0
Consumption: 700 units | Total charge: $ 25.0
Consumption: 1000 units | Total charge: $ 40.0
Consumption: 1500 units | Total charge: $ 90.0
The program correctly calculates and displays the total charge for each consumption according to the given pricing rules.
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Exercise 2 Mr. Remnick is the Editor-in-chief of a literary, news, and culture magazine. He needs to hire labor ( L ), which primarily consists of talented writers, to produce Q copies of the magazine per month. Furthermore, he makes decisions over how much capital (K) to purchase. Capital consists of a large network of information technology enabling his writers to be productive. Suppose, therefore, that the production function of this literary magazine is of the following Cobb-Douglass form: Q(K,L)=K α
L β
Given there is always a ready supply of talented writers willing to fill positions at this prestigious magazine, we will assume there is a competitive market for writers. Every month Mr. Remnick can fill as many positions as he sees fit at the going wage rate: w=$80. In contrast, given that the information technology (IT) infrastructure involves a considerable proportion of fixed costs, Mr. Remnick only makes decisions about acquisition of information technology once per year in January. This January Mr. Remnick decided to purchase K
ˉ
=5,000 units of information technology. The rental rate of each IT unit is v=$0.25. 9. Mr. Remnick wants to minimize his costs to produce 250 copies of magazines next month. Is this a short or long run problem? [1 point] (a) Short-run (b) Long-run (c) Not enough information 10. Find the contingent demand functions that minimizes Mr. Remnick's costs to produce 250 copies of magazines next month. Assume he can hire fractions of workers. [2 points] L ∗
=⟶;K ∗
= 11. Given your answer from before, what are Mr. Remnick's total costs? [1 point] C ∗
=
9. Mr. Remnick wants to minimize his costs to produce 250 copies of magazines next month. Is this a short or long run problem?Since the period of one year is greater than one month, this is a short-run problem. So the correct option is (a) Short-run.10. Find the contingent demand functions that minimizes Mr. Remnick's costs to produce 250 copies of magazines next month.
Assume he can hire fractions of workers.Given the production function:Q(K,L)=K α L βand thatQ(K,L)=250, α = 0.4, β = 0.6, K = 5000, w = $80, v = $0.25We must find L* and K* to minimize costs.Let us solve for the value of L* and K* respectively.Let us solve for L*. To minimize costs, we must find L* such thatMC L =w/MP L =w(α/β)(K/L) α-1 L -(β/β)=w(K/L) α/βL -(β/β)=80(5000/L)0.4/0.6L - 0.6/0.6=133.33L=5000/(1+133.33)L = 32.26Thus, Mr. Remnick must hire 32.26 writers. Now, let us solve for K*.MC K = v/MP K = vK α-1 L β=0.25K 0.4 32.26 0.6=0.025K 0.24=1000K= (1000/0.025)1/0.24=14,231.55Thus, Mr. Remnick must acquire 14,231 units of information technology.11.
Given your answer from before, what are Mr. Remnick's total costs?Total costs can be calculated as:C* = (wL*) + (vK*) = (80 * 32.26) + (0.25 * 14,231.55)C* = $4,079.75 + $3,557.89C* = $7,637.64Therefore, Mr. Remnick's total costs will be $7,637.64 to produce 250 copies of magazines next month.
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Consider the project described in the table below. What is the project's net present value? Cost of Capital Rate 13% Time 0 1 2 3 4 Cash Flows ($6,600) $2,400 $3,600 $2,000 $1,000 Select one: a. $336 b. $343 c. $367 d. $360
The correct option is d. $360.What is the net present value?To solve this question, we can use the following formula NPV = (Cash Flow / (1 + r) ^ t) + (Cash Flow / (1 + r) ^ t) + (Cash Flow / (1 + r) ^ t) + ...
(Cash Flow / (1 + r) ^ t) - Investment CostWhere,CF = Cash flow, r = discount rate, and t = time period.The table given in the question is:Time 0 1 2 3 4Cash Flows ($6,600) $2,400 $3,600 $2,000 $1,000Net Present Value = (2,400 / (1 + 0.13) ^ 1) + (3,600 / (1 + 0.13) ^ 2) + (2,000 / (1 + 0.13) ^ 3) + (1,000 / (1 + 0.13) ^ 4) - 6,600= $2,123 + $2,380 + $1,218 + $628 - 6,600= $360 (approximately)Therefore, the project's net present value is $360.
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The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in the: Multiple Choice capital market line which shows that all investors will only invest in the riskless asset. capital market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio. security market line which shows that all investors will invest in the minimum variance portfolio. security market line which shows that all investors will invest only in the riskless asset. characteristic line which shows that all investors will invest in the same combination of securities.
The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in the capital market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.
The Capital Market Line is a line that shows the correlation between the expected returns of an asset and the level of risk involved, assuming that there are no capital restrictions or capital market irregularities. It shows the portfolio selection of the risk-free assets and risk assets.
It is a straight line passing through the intersection of the y-axis and the efficient frontier and is tangential to the efficient frontier.
The portfolio that includes the risk-free asset and the portfolio of risky assets tangent to the Capital Market Line (CML) is the Tangency Portfolio. The CML depicts a linear positive relationship between risk and return. All investors have the same inclination towards the tangent portfolio on the CML.
The tangency portfolio is a mixture of the risk-free asset and a single market portfolio that represents all the financial assets. Therefore, it is a feasible portfolio that includes all of the available securities and the risk-free asset.
In other words, the tangency portfolio is one of the best combinations of the risk-free asset and the market portfolio that is expected to provide the highest risk-adjusted return.
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the invention of the motion picture camera is an example of ______. technological innovation redefinition marketing innovation adaptation
The invention of the motion picture camera is an example of technological innovation.
Technological innovation refers to the development and implementation of new technologies, tools, or processes that bring about significant advancements or improvements in various fields. The invention of the motion picture camera represents a major technological innovation in the realm of visual media and entertainment. It revolutionized the way stories were captured, shared, and experienced, giving birth to the motion picture industry and transforming the way people consumed visual content.
The motion picture camera introduced a groundbreaking method of recording and projecting moving images, enabling the creation of films and allowing individuals and societies to explore new forms of storytelling and artistic expression. This technological innovation had a profound impact on numerous industries, including entertainment, education, advertising, and cultural preservation. It opened up new possibilities for communication, entertainment, and documentation, shaping the way we perceive and interact with visual media.
While redefinition, marketing innovation, and adaptation can also be relevant aspects of the overall impact and development of the motion picture camera, the primary and fundamental nature of this innovation lies in its technological advancements and the creation of a new medium for capturing and presenting moving images.
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Supply of safe water is a concern in developing nations, but fortunately not in Canada.
Question 9 options:
True
False
False. While Canada has a generally reliable water supply, it still faces challenges in ensuring safe water access in certain regions and communities. Indigenous communities, particularly in remote areas, often experience water quality and infrastructure issues, leading to boil water advisories and unsafe drinking water.
These challenges highlight the need for ongoing efforts to improve water management, infrastructure, and access in Canada, addressing disparities and ensuring safe water for all populations across the country.
False. While Canada is known for its abundant water resources, it is not immune to water-related challenges. Indigenous communities in Canada, especially those in remote areas, face significant water quality and access issues. Many of these communities rely on outdated or inadequate water infrastructure, leading to frequent boil water advisories and unsafe drinking water. These challenges have been ongoing for years, indicating a systemic issue that requires attention and investment. Efforts are being made to address these disparities and ensure safe water access for all Canadians, but the issue of safe water supply remains a concern in certain regions of the country.
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which of the following represents a criticism of the lower of cost and net realizable value rule?
One criticism of the lower cost and net realizable value (LCNRV) rule is that it can result in an inconsistent and subjective valuation of inventory. The LCNRV rule requires companies to value their inventory at the lower of its cost or net realizable value.
The LCNRV rule requires companies to value their inventory at the lower of its cost or net realizable value. While this rule aims to ensure conservative valuation and prevent overstatement of inventory value, it introduces subjectivity and inconsistency in determining the net realizable value.
The net realizable value is the estimated selling price of inventory minus any anticipated costs of completion, disposal, or transportation. Estimating these values involves judgment and assumptions, and different companies or individuals may have varying assessments of the net realizable value. This subjectivity can lead to inconsistent valuation practices across different entities or even within the same company.
Furthermore, the LCNRV rule does not account for potential future changes in market conditions or demand for inventory. If market conditions improve after inventory has been written down, it may result in the inventory being undervalued.
Overall, the criticism of the LCNRV rule lies in its potential for subjective and inconsistent valuation, which can impact financial reporting accuracy and comparability among companies.
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1) T/F Income taxes include taxes paid on real and personal property.
2) T/F Filing for bankruptcy under the Chapter 11 provisions allows a company to reorganize and continue operations while paying only a proportion of its debts.
3) T/F Chapter 11 bankruptcy is a way for sick companies to recover and is designed to help both debtors and creditors find the best solution.
4) T/F Because it is no longer used in construction today, National Asbestos Manufacturing cannot be sued for damages today that are caused by asbestos that may still remain in some buildings.
1. False :Income taxes include taxes paid on one’s income. Personal property taxes include taxes paid on personal property like boats, cars, or planes. Real property taxes include taxes paid on real estate property like homes and land.
2. True : Filing for bankruptcy under the Chapter 11 provisions allows a company to reorganize and continue operations while paying only a proportion of its debts. It is commonly referred to as reorganization bankruptcy.
3. True : Chapter 11 bankruptcy is a way for sick companies to recover and is designed to help both debtors and creditors find the best solution. It is a flexible and comprehensive approach to bankruptcy that allows companies to reorganize their debt structure and operations to become viable again.
4. False : National Asbestos Manufacturing can be sued for damages today that are caused by asbestos that may still remain in some buildings. Asbestos-related illnesses can take years to manifest, and the statute of limitations on filing claims varies from state to state. Therefore, the company may still face legal liability.
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The total preferred stock dividends that have not been paid to a stockholder is known as:
1.Noncumulative preferred stock
2.Preferred stock deficiency
3.Arrearage
4.Cumulative preferred stock
The total preferred stock dividends that have not been paid to a stockholder is known as arrearage. Preferred stock refers to a type of ownership in a corporation that pays dividends to shareholders before any dividends are paid to common shareholders.
It frequently provides a fixed dividend that is paid quarterly or monthly and can be retired at a predetermined price. The price of preferred shares is affected by prevailing interest rates and the perceived creditworthiness of the corporation.
Paying arrearage The arrearage term refers to a cumulative preferred stock feature. When a firm pays less than the required dividend on cumulative preferred stock in any year, the unpaid dividends accumulate and are paid in the future years.
For example, if the cumulative preferred stock's annual dividend is $5 and the firm has failed to pay the dividend for two years, the arrearage is $10 ($5 x 2).
Option 3: Arrearage is the correct answer to the question because it refers to the total preferred stock dividends that have not been paid to a stockholder. The term arrearage is frequently used in relation to cumulative preferred stock dividends that have gone unpaid in prior years and will be paid in future years when the corporation has enough money.
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Does the yangzhou university teaching meet your tourism
management needs? Will it affect your recognition of your tourism
major? Please give us your suggestions.
this is my university assignment quest
Evaluate Yangzhou University's accreditation, curriculum, faculty, industry connections, alumni success, and student feedback to assess its suitability for tourism management education.
1. Accreditation and Reputation: Research and consider the accreditation status and reputation of Yangzhou University and its tourism management program. Accreditation by recognized bodies ensures that the program meets certain quality standards.
2. Curriculum and Courses: Review the curriculum and courses offered by the tourism management program at Yangzhou University. Assess whether they cover the necessary knowledge and skills required in the field of tourism.
3. Faculty Qualifications and Expertise: Look into the qualifications, expertise, and experience of the faculty members in the tourism management department. Faculty with relevant industry experience and academic expertise can enhance the quality of education.
4. Industry Connections and Opportunities: Explore the university's connections with the tourism industry, such as partnerships, internships, and networking opportunities. Practical exposure and industry connections can greatly benefit your education and future career prospects.
5. Alumni Success and Recognition: Research the achievements and success stories of the alumni from the tourism management program at Yangzhou University. Their accomplishments can provide insights into the quality and effectiveness of the program.
6. Student Feedback and Reviews: Seek feedback from current or former students of the tourism management program at Yangzhou University to gain a better understanding of their experiences, the quality of teaching, and the overall satisfaction with the program.
Ultimately, the suitability of Yangzhou University's teaching for your tourism management needs will depend on your specific requirements and aspirations. Consider your career goals, personal interests, and the resources available at the university to make an informed decision.
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Advancements led to the development of such occurrences as: anesthesia, germ theory, x-rays, and penicillin. The application of medical science and technology in hospital made it necessary for physicians to receive their training and practice medicine in hospitals. Is this a shift to the right or the left in the demand curve? Why?
The advancements in medical science and technology, which led to the emergence of anesthesia, germ theory, x-rays, and penicillin, marked the development of the medical sector. It has become mandatory for doctors to receive training in hospitals to practice medicine. This development has led to a shift in the demand curve to the right. It has caused an increase in the demand for hospital-based medical training.
The demand curve is a graphical representation of the relationship between the quantity demanded of a product and the price of that product. The demand curve slopes downward from left to right because as the price of the product increases, the quantity demanded decreases, and vice versa.
The shift in demand can be caused by various factors, including a change in income, tastes and preferences, expectations, price of substitute products, and so on. In this case, the shift in demand is caused by the advancement in medical science and technology, which has led to the need for physicians to receive their training in hospitals.
Hospitals have become centers for medical education and training, which has made it necessary for physicians to learn and practice medicine in a hospital setting. The result of this shift in demand is an increase in the number of physicians and medical professionals who seek training and practice in hospitals. This shift in demand has resulted in the growth of the hospital sector and the medical profession in general, which has led to improved healthcare and better medical outcomes for patients.
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Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. New shares could be sold for the same price, but flotation costs would amount to $6 per share. Also, the firm can issue 20 -year, $1,000 par bonds at a pre-tax cost of 11.4%. The firm's tax rate is 34%. What is the firm's cost of capital if their capital structure consists of 60% external equity and 40% bonds? 11.98% 15.20% 13.21% 12.58%
The firm's cost of capital if their capital structure consists of 60% external equity and 40% bonds is 12.58%.the firm's cost of capital if their capital structure consists of 60% external equity and 40% bonds is 12.58%.Hence, option D is correct.
Explanation:Given thatDividend paid to common stockholders= $4Growth rate of dividend= 8%Current stock price= $54Flotation costs= $6 per shareThe firm can issue 20 -year, $1,000 par bonds at a pre-tax cost of 11.4%.Tax rate= 34%The firm's capital structure consists of 60% external equity and 40% bonds.Step-by-step explanation:The cost of equity can be calculated by the dividend discount model.Using the dividend discount model, Cost of equity= Dividend next year/ Current stock price + growth rate of dividend.Cost of equity= $4 × 1.08/ $54 + 0.08 = 0.1333 or 13.33%.The cost of debt can be calculated as follows:Cost of debt = Pre-tax cost of debt × (1 - Tax rate)Cost of debt = 11.4% × (1 - 0.34) = 7.52%.The weighted average cost of capital is the proportionate cost of equity and debt after considering the market value of each of them and the firm's tax rate.
The formula for the weighted average cost of capital is:WACC = (E/V × CE) + (D/V × CD × (1 - T))Where, E= Market value of equity, D= Market value of debt, V= Total value of the firm, CE= Cost of equity, CD= Cost of debt, and T= Tax rate.The cost of equity can be calculated as follows:E = External equity × Stock price per share − Flotation costsE = 0.6 × ($54 - $6) = $28.8.The market value of debt can be calculated as follows:D = Number of bonds × Par valueD = 0.4 × ($1,000 × 1) = $400.The market value of the firm can be calculated as follows:V = E + D = $28.8 + $400 = $428.8.The weighted average cost of capital is as follows:WACC = (0.6 × 13.33%) + (0.4 × 7.52% × (1 - 0.34)) = 12.58%.Thus, the firm's cost of capital if their capital structure consists of 60% external equity and 40% bonds is 12.58%.Hence, option D is correct.
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Question 4 ABC firm plans to buy a new machine for $500,000. The seller requires that the firm pays 20% of the purchase price as a down payment, but is willing to finance the remainder by offering a 48-month loan with equal monthly payments and an interest rate of 0.5% per month. What is the monthly loan payment?
The ABC firm has plans to purchase a new machine with the cost price of $500,000. The seller requires that the company pays 20% of the total purchase price as a down payment, but the seller is ready to finance the remaining amount by giving a 48-month loan.
The interest rate for the loan is 0.5% per month. We are asked to calculate the monthly loan payment. The amount to be financed will be: Cost of the machine - Down Payment= $500,000 - 20% x $500,000= $500,000 - $100,000= $400,000Now, the formula for equal monthly payments is:
Equal Monthly Payment = Principal Amount (r(1+r)^n) / ((1+r)^n -1) Where, r is the monthly interest rate and n is the total number of months. For our problem, Principal Amount = $400,000n = 48 months r = 0.5% per month, which is equivalent to 0.005 using decimals
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choose one estimation practice from the resources provided in module readings and review its pros and cons. consider a project from work or school that you estimated poorly before. briefly describe the project, then identify one or two agile estimation practices that could have helped you improve the project estimate.
The estimation practice I chose from the resources provided in the module readings is the Planning Poker technique. This practice involves the use of a deck of cards with values representing the effort or complexity of a task. The team members discuss the tasks and then simultaneously select a card that represents their estimate.
The pros of using Planning Poker include Collaboration: Planning Poker encourages collaboration and active participation from all team members. By discussing and sharing their estimates, team members can gain insights from each other and consider different perspectives, leading to a more accurate estimate. Consensus building: This technique helps in building consensus among the team members. By allowing everyone to contribute to the estimate and discussing the different estimates, the team can arrive at a shared understanding and agreement on the effort required for the project.
Now, let me briefly describe a project from work or school where I estimated poorly before. Suppose the project was to develop a mobile application for a school event. I estimated the effort required based on my own assumptions and limited knowledge, without consulting other team members or considering potential risks and complexities. To improve the estimate for this project, two agile estimation practices that could have been helpful are Relative Sizing: This technique involves comparing the size and complexity of tasks relative to each other. By breaking down the project into smaller tasks and comparing their complexity, it would have been easier to estimate the effort required for each task accurately. For example, I could have compared the complexity of developing different features of the mobile application, such as user registration, event schedule, and notification system.
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answer all parts, it is part of one question
Scenario A:
Future value to be received $ 13,000 Future date received 5 years
Discount Rate
8%
12%
18%
Scenario B:
Annual Cash Receipt $ 6,500 Number of Years 8 years
Discount Rate
8%
12%
18%
Scenario C:
Discount Rate 10%
Investment Project Cash Flow
Initial Investment $ (7,500 )
Year 1 $ 600 Year 2 $ 700 Year 3 $ 1,300 Year 4 $ 4,900 Year 5 $ 9,400 Required:
a. A company is expecting to receive a lump sum of money at a future date from now. Using the PV formula in Excel, what is the Present Value of that money at three different rates? (Round your answers to 2 decimal places.)
discount rate PV
8% 12% 18% b. A company is expecting to receive a stream of year-end annual cash payments over multiple years. Using the PV formula in Excel, what is the Present Value of that money at three different discount rates? (Round your answers to 2 decimal places.)
discount rate PV
8% 12% 18% c. A company is planning to invest in a project over a 5-year period, but wants to know its financial implications. It expects the cash in-flow return on the investment to steadily increase over the 5 years. Using the information given, help to determine the Total Net Cash Flows, the Net Present Value, and the estimated Payback Period. Note: Estimate the payback period to the nearest year. (Round your Net Cash Flow values to the nearest whole dollar and your final Net Present Value answer to 2 decimal places.)
Investment project Total Net cash flow
year 1
yaer 2
year 3
year 4
year 5
NPV of investment
Estimated payback period
a. At a discount rate of 18% is PV18% = $13,000 / (1 + 0.18)^5
b. At a discount rate of 18% is PV18% = $6,500 / (1 + 0.18)^8
c. Using the given cash flow information, we can calculate the discounted cash flows at a discount rate of 10% are Year 1: [tex]$600 / (1 + 0.10)^1, Year 2: $700 / (1 + 0.10)^2, Year 3: $1,300 / (1 + 0.10)^3, Year 4: $4,900 / (1 + 0.10)^4, and Year 5: $9,400 / (1 + 0.10)^5[/tex]
a. To calculate the present value (PV) of the future lump sum of money at different discount rates, we can use the PV formula in Excel. The formula is:
PV = FV / (1 + r)^n
Where:
FV = Future value to be received
r = Discount rate
n = Number of years
Using the given information, we can calculate the present value at three different discount rates:
For Scenario A:
Future value to be received = $13,000
Future date received = 5 years
At a discount rate of 8%:
PV8% = $13,000 / (1 + 0.08)^5
At a discount rate of 12%:
PV12% = $13,000 / (1 + 0.12)^5
At a discount rate of 18%:
PV18% = $13,000 / (1 + 0.18)^5
b. To calculate the present value (PV) of the stream of year-end annual cash payments at different discount rates, we can use the PV formula in Excel. The formula is the same as in part a.
For Scenario B:
Annual cash receipt = $6,500
Number of years = 8 years
At a discount rate of 8%:
PV8% = $6,500 / (1 + 0.08)^8
At a discount rate of 12%:
PV12% = $6,500 / (1 + 0.12)^8
At a discount rate of 18%:
PV18% = $6,500 / (1 + 0.18)^8
c. To determine the total net cash flows, net present value (NPV), and estimated payback period for the investment project, we need to calculate the discounted cash flows and analyze the cumulative cash flows.
Using the given cash flow information, we can calculate the discounted cash flows at a discount rate of 10%:
Year 1: $600 / (1 + 0.10)^1
Year 2: $700 / (1 + 0.10)^2
Year 3: $1,300 / (1 + 0.10)^3
Year 4: $4,900 / (1 + 0.10)^4
Year 5: $9,400 / (1 + 0.10)^5
To find the total net cash flows, sum up the discounted cash flows for each year.
To calculate the net present value (NPV), subtract the initial investment from the total net cash flows.
To estimate the payback period, analyze the cumulative cash flows until they equal or exceed the initial investment.
Please note that without the initial investment amount, it is not possible to provide the exact net cash flows, NPV, and payback period for the investment project.
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A bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar:
USD:CHF = 1,6930 – 90
USD:ASD = 1,9026 – 40
An Australian firm asks the bank for a ASD:CHF quote.
What would the ASD:CHF bid price represent?
What would the ASD:CHF ask price represent?
"The Bid - Ask spread in each step in the calculation of the cross rate is expected to be favour of the bank". Is this statement true or false? Explain.
Describe 5 factors that would dictate the size of Bid-Ask spread and explain how they affect the spread, assuming that the bank always aims to maximise its profit.
The bid price of a financial instrument is the maximum price that a buyer is willing to pay for the instrument, while the ask price is the minimum price that a seller is willing to accept for the instrument.
The bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar:USD:CHF = 1,6930 – 90USD:ASD = 1,9026 – 40An Australian firm asks the bank for an ASD:CHF quote.What would the ASD:CHF bid price represent?The bank must sell the Swiss franc (CHF) to the Australian firm in exchange for the Australian dollar (AUD), so the bank's bid price is the price at which it is willing to buy CHF.
Therefore, the ASD:CHF bid price represents the price at which the bank is willing to purchase CHF from the Australian firm.What would the ASD:CHF ask price represent?The bank must purchase the Swiss franc (CHF) from the Australian firm in exchange for the Australian dollar (AUD), so the bank's ask price is the price at which it is willing to sell CHF. Therefore, the ASD:CHF ask price represents the price at which the bank is willing to sell CHF to the Australian firm.Is the statement "The Bid - Ask spread in each step in the calculation of the cross rate is expected to be favour of the bank" true or false? Explain.The statement is true because the bid-ask spread represents the bank's profit margin in foreign exchange transactions.
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At fair market interest tate of 12%, what is the value of the bond? PP(ease see questicn B for detalls] 5908,88 : 5708.89 5901.88
A bond is a loan, whereby the bond purchaser is the lender, while the bond issuer is the borrower. In a situation where a bond is issued with a fair market interest rate of 12%, the value of the bond can be calculated using a present value formula.
Present value formula
PV = FV / (1 + r)nWhere;PV = Present ValueFV = Future Valuer = interest raten = number of yearsFirstly,
we need to determine the future value of the bond,
which is simply the face value of the bond or par value.
This means that if the face value of the bond is $1,000, the future value will also be $1,000.
Thus, assuming the face value of the bond is $1,000,
we can substitute the values as follows;
FV = $1,000r = 12%n = 1 (since the bond is for 1 year)Substituting the values into the formula:
FV =[tex]$1,000PV = $1,000 / (1 + 0.12)¹PV = $892.86[/tex]
Thus, the present value of the bond is $892.86 at a fair market interest rate of 12%.T
herefore, option C; 5901.88 is incorrect.
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when it comes to advertising, food companies are following in the footsteps of the blank companies.
The comparison suggests that food companies are emulating some of the questionable marketing practices and strategies that were previously associated with tobacco companies.
When it comes to advertising, food companies are following in the footsteps of the tobacco companies.
Tobacco companies have historically been known for their aggressive and deceptive advertising practices, especially in promoting their products to target vulnerable populations, including children and teenagers. However, due to increased regulations and public awareness about the harmful effects of tobacco, advertising by tobacco companies has become more restricted and heavily scrutinized.
Food companies, particularly those in the fast food and processed food industries, have been observed to adopt similar marketing strategies as tobacco companies once employed.
They often employ tactics to create a strong brand presence, appeal to emotions, and target specific demographics, including children and young adults. Additionally, they have faced criticism for promoting unhealthy food choices and contributing to the rise of obesity and related health issues.
The comparison suggests that food companies are emulating some of the questionable marketing practices and strategies that were previously associated with tobacco companies.
This parallel underscore the need for increased scrutiny, regulation, and public awareness regarding the marketing and advertising practices employed by the food industry to protect consumers' health and well-being.
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Ruby Company, Inc. has the following budgeted sales for the next quarter: Inventory of finished goods on hand at the beginning of the quarter is 720 units. The company desires to maintain ending inventory each month equal to 20% of next month's sales plus an additional 100 units. How many units are to be produced during April? A. 2,880 units B. 3,740 units C. 7,200 units D. 3,900 units
In April, the company needs to produce 3,740 units to meet the desired ending inventory for May, considering the beginning inventory and sales projections. Option B.
To determine the number of units to be produced during April, we need to calculate the desired ending inventory for May and work backward.
Given:
Beginning inventory in April = 720 units
April sales = 3,600 units
May sales = 3,800 units
June sales = 3,900 units
The desired ending inventory for May can be calculated using the formula:
Desired ending inventory = (Next month's sales × 20%) + 100 units
For May:
Desired ending inventory = (3,800 units × 20%) + 100 units
= (760 units) + 100 units
= 860 units
Therefore, the desired ending inventory for May is 860 units.
To determine the number of units to be produced during April, we need to account for the change in inventory from April to May, which is the difference between the desired ending inventory for May and the beginning inventory in April.
Change in inventory = Desired ending inventory for May - Beginning inventory in April
= 860 units - 720 units
= 140 units
Now, let's calculate the production quantity for April by adding the change in inventory to the April sales:
Production quantity for April = April sales + Change in inventory
= 3,600 units + 140 units
= 3,740 units
Therefore, the number of units to be produced during April is 3,740 units So Option B is correct.
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PMF, Inc., can deduct interest expenses next year up to 30% of EBIT. This limit is equally likely to be $6 million, $14 million, or $22 million. Its corporate tax rate is 35%, and investors pay a 15% tax rate on income from equity and a 35% tax rate on interest income. a. What is the effective tax advantage of debt if PMF has interest expenses of $5 million this coming year? b. What is the effective tax advantage of debt for interest expenses in excess of $22 million? (Ignore carryforwards). c. What is the expected effective tax advantage of debt for interest expenses between $6 million and $14 million? (Ignore carryforwards). d. What level of interest expense provides PMF with the greatest tax benefit?
a) Effective tax advantage of debt If PMF has interest expenses of $5 million in the coming year, then the EBIT would be $16.7 million.($5m / (1-0.35)) = $16.7mEBIT = $16.7m
$16.7m - $5m = $11.7m Without debt, taxable income will be:
$16.7m * (1-0.35) = $10.8m
The tax advantage of the debt would be $900,000.($11.7m * 0.15) - ($5m * 0.35) = $900,000
b) Effective tax advantage of debt for interest expenses in excess of $22 million If PMF has interest expenses exceeding $22 million, they will not receive any tax benefit since the deduction is capped at $22 million.
Answer: No tax advantage will be achieved.
c) Expected effective tax advantage of debt for interest expenses between $6 million and $14 million
$14m * 1/3 + $22m * 1/3 + $6m * 1/3 = $14m
The expected tax advantage of debt will be:
$14m * 0.3 = $4.2m
$20m - $4.2m = $15.8m
$15.8m * 0.15 - $4.2m * 0.35 = $285,000
d) Level of interest expense that provides the greatest tax benefit PMF can maximize the tax advantage of debt by maximizing the deductible interest expense.
Answer: $22 million.
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A test in Corporate Finance had an average of 80 with a standard deviation of 10. What is the probability of scoring greater than a 69? (Submit your answer as a whole number. For example if you calculate 0.653 (or 65.3\%), enter 65.) normal table
The given data:
Average = 80
Standard Deviation = 10
Score for which probability is to be determined = 69
The formula to calculate z score is given as;
z = (x - μ) / σ
Where, x = the raw score
μ = the population mean
σ = the population standard deviation
By putting the values in the above formula, we get
z = (69 - 80) / 10z = - 1.1
Now we have to find out the probability of getting a score greater than 69. We have to find out the area under the normal curve to the right of the z value that we have calculated above.
Probability = P(z > - 1.1)
The area under the normal curve to the left of z = - 1.1 is given as;
= 0.1356665
We know that the total area under the normal curve is 1.Therefore, the area under the normal curve to the right of z = - 1.1 is given as;
= 1 - 0.1356665
= 0.8643335
The probability of getting a score greater than 69 is 0.8643335 or 86%.Hence, the correct answer is 86.
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Discuss the kinked demand curve model of an oligopolist and the priceinterdependency experienced by firms in this market structure.
The kinked demand curve model of an oligopolist suggests that there exists a price interdependency between firms in the market structure. Firms are assumed to be mutually interdependent in such a market structure. The market structure comprises of only a few large firms that dominate the industry.
These firms are in a position to influence the price of goods and services and can potentially collude to do so.
The kinked demand curve model hypothesizes that in such a market structure, firms are more likely to adhere to the price set by the market leader. The market leader sets the prices of the goods and services. If a competitor tries to raise their price, they will lose their market share to the market leader, and if they lower their price, the market leader will match it. This results in a less elastic demand curve for price increases, which explains the kink in the demand curve.
The price interdependence experienced by firms in this market structure is a result of their understanding that changes in price levels by one firm will affect the price level of the entire industry. Therefore, firms in oligopolies must carefully analyze the expected market response to their pricing decisions before making them.
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Jane, a supervisor, has offered George, a subordinate, a raise and promotion in exchange for a sexual relationship. This is an example of harassment. hostile work environment inverse work discrimination reverse employment-at-will quid pro quo Each of the following is the headline from a recent news story. Which of these violations would not be covered by the Fair Labor Standards Act? - Nolita Ristorante was found guilty of failing to pay the federal minimum wage of $7.25 per hour for all the hours the employees worked. - Walmart was found guilty of overtime violations when the employer failed to record or pay for all of the hours that some employees worked. - Chipotle Mexican Grill was fined over accusations that it routinely violated Massachusetts child labor laws. - The California Department of Industrial Relations cited a retail business in Lawndale for failing to secure workers' compensation insurance for its employees. California insurance case Chipotle child labor case Nolita Ristorante minimum wage case All are violations of the Fair Labor Standards Act Walmart overtime pay case
The supervisor Jane, offering George, a subordinate, a raise and promotion in exchange for a sexual relationship is an example of quid pro quo harassment.
Quid pro quo harassment is a form of sexual harassment in the workplace that involves a person in a position of power requesting sexual favors from an employee in exchange for job benefits such as raises, promotions, or job security. It is a violation of Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on sex, including sexual harassment, in the workplace.
All of the given violations would be covered by the Fair Labor Standards Act except for the California insurance case. The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.
The act sets a minimum wage of $7.25 per hour and requires employers to pay overtime at a rate of 1.5 times an employee's regular hourly rate for all hours worked over 40 hours in a workweek.
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5. A wine company is investigating the determinants of wine consumption. It estimates the following model using OLS.
wine-3.64+0.88income-0.501 educ+0.571age -0.0057age (24.08) (0.728) (0.167) (0.160) (0.0017)
N-807, R²-0.053
where wine is the number of units of wine consumed per week, income is annual income measured in £1000s, educ is years of schooling and age is the age of each customer, also measured in years. (Standard errors are in parentheses).
a. What is the purpose of the age squared term? Explain whether or not you think it should be included in the model.
b. Write down an expression that shows the effect of a change in age on wine consumption, and use this to show how the effect of being a year older on wine consumption is different for a person aged 20 and a person aged 60.
c. Sketch a graph illustrating the relationship between age and wine consumption, and calculate at what age wine consumption is predicted to decline.
d. Explain what autocorrelation is, how it might arise and discuss the consequences for the OLS estimates.
The purpose of the age squared term is to capture the non-linear relationship between age and wine consumption.
Including the age squared term allows for a curved relationship, as the effect of age on wine consumption may not be constant but instead may vary with age. By including the age squared term, the model can capture potential changes in the rate at which wine consumption increases or decreases as age changes. Whether or not it should be included in the model depends on the data and the underlying relationship between age and wine consumption. Statistical tests, such as the significance of the coefficient and model fit measures, can help determine if the age squared term improves the model's explanatory power.b. The effect of a change in age on wine consumption can be expressed as follows: Δwine = 0.571 - 0.0057 * age. This means that for every additional year of age, wine consumption is expected to increase by 0.571 units, but it also decreases by 0.0057 units multiplied by the age.For a person aged 20, the effect of being a year older on wine consumption is Δwine = 0.571 - 0.0057 * 20 = 0.571 - 0.114 = 0.457 units.For a person aged 60, the effect of being a year older on wine consumption is Δwine = 0.571 - 0.0057 * 60 = 0.571 - 0.342 = 0.229 units.Thus, the effect of being a year older on wine consumption is different for a person aged 20 and a person aged 60. The effect decreases as age increases.
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CASE STUDY
NALEDI BRANDS – BUSINESS ETHICS
Naledi Brands is a fast-moving consumer goods (FMCG) company, producing and distributing wheat and maize products in bulk to wholesalers and retailers. The business operates primarily in southern African countries including Namibia, Botswana, Zambia, Mozambique, and Swaziland.
The chief executive officer (CEO) of Naledi Brands recently appointed a chief operating officer (COO) responsible for the general management of all southern African operations.
In an urgent meeting, the group marketing director brought it to the attention of the COO that wholesalers in both Swaziland and Botswana were accusing the business of manipulating prices. The COO launched an internal investigation immediately and involved an internal auditing, compliance, and risk team.
Early into the investigation, the head of the auditing committee came across numerous issues related to dubious business practices. She decided to report without delay to the COO. A serious concern was that a prospective customer overheard a marketing manager of Naledi Brands’ Botswana operation talking to his peer in a competitive company. He disclosed that Naledi Brands was launching a big promotion of a popular maize brand in Botswana and discounted prices. He requested the competitor not to respond with a so-called price ‘war’. In exchange, he undertook to react in the same manner if the competitor were to do a similar promotion in the future. An agreement was reached.
Many other non-compliance issues surfaced:
• Contracts were given to distributors in return for personal favours.
• Sales representatives negotiated with customers to order large quantities of product.
This would result in good commission earnings for the reps to be shared with the procurement managers of the customers.
• Credit notes were issued to customers for damaged packaging. Packaging was in reality never damaged. The sales reps would receive shopping vouchers.
• Company vehicles were used as taxis for extra income.
• Suppliers were ‘forced’ to provide feedstock at ridiculous discounts in exchange for single-source contracts.
• Traditional leaders were offered the usage of company resources for personal gain for distribution storage to be erected in communities.
The CEO was shocked and very upset. He retained an external forensic firm to investigate further as he was of the opinion that only the surface was scratched by the internal audit.
Source: Erasmus, B., Rudansky-Kloppers, S., Strydom, J. (Eds.) (2019). Introduction to
Business Management. 11th edition. Oxford University Press: Cape Town.
1.1. In developing a business ethics and code of conduct policy for Naledi Brands, state what elements you would include.
Developing a business ethics and code of conduct policy for Naledi Brands would include the following elements: Accountability: It means the company takes responsibility for the choices they make. The leadership team and the Board of Directors are responsible for making sure that the company is always doing the right thing.
Naledi Brands will maintain high ethical standards and comply with all regulations and laws. All employees should be aware of their responsibility to report concerns to the right person or department. Ethics training: Employees and management will be required to complete a business ethics and code of conduct training program.
The training should include an explanation of the company's policies and procedures, information on what is and is not acceptable behavior, and a discussion of ethical dilemmas. decision-making: All employees should be encouraged to make ethical decisions in their daily work.
They should be encouraged to think about the ethical implications of their actions and consider alternative solutions when faced with ethical dilemmas. Compliance: Employees should be made aware of the company's policies and procedures, and should be trained on how to comply with them.
The company will comply with all laws and regulations in the countries it operates in. Transparency:Employees, customers, suppliers, and other stakeholders should have access to information about the company's ethical policies and practices. The company should be transparent about its business practices and decisions.
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. Provide an example of a product/service that is price elastic. What could make it more inelastic? 2. Provide an example of a product/service that is price inelastic. What could make it more elastic?
1 Product/Service in Price Elastic: A product/service is price elastic when there is a large change in the quantity demanded when there is a small change in price. An example of a price elastic product/service is clothing.
A small change in price could make a huge difference in the quantity demanded. For example, if a pair of jeans is priced at $100 and the price increases to $110, customers may decide to switch to a different brand or wait until the price comes down. One way to make clothing more inelastic is to make it a luxury item. This could be done by using high-quality materials, creating a brand identity, or having limited editions.
2. Product/Service in Price inelastic:A product/service is price inelastic when there is a small change in the quantity demanded when there is a large change in price. An example of a price inelastic product/service is gasoline. Even if the price of gasoline increases by a lot, people still need to buy it to get to work or school. This means that the quantity demanded does not change as much with price changes. One way to make gasoline more elastic is to offer an alternative form of transportation.
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Which of the following transactions or activities would not be counted in the U.S. GDP?
a) Wages earned by workers at a gas station.
b) Gasoline purchased by households.
c) A cup of coffee sold by a coffee shop.
d) Coffee beans bought by a coffee shop.
The transaction or activity that would not be counted in the U.S. GDP is d) Coffee beans bought by a coffee shop.
The U.S. GDP (Gross Domestic Product) measures the total value of goods and services produced within the country's borders during a specific period. It includes the final goods and services produced for consumption, investment, government spending, and net exports.
In the given options:
a) Wages earned by workers at a gas station would be counted as part of GDP since it represents the value of labor in producing a service.
b) Gasoline purchased by households would be counted as part of GDP as it represents household consumption.
c) A cup of coffee sold by a coffee shop would be counted as part of GDP as it represents a final good/service produced for consumption.
However, option d) Coffee beans bought by a coffee shop would not be counted in GDP. This is because coffee beans are an intermediate good used in the production process, not a final good or service consumed by the end user. GDP only includes the value of final goods and services to avoid double-counting and to capture the value added at each stage of production.
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Describe how firms can apply the Ansoff’s Matrix of
growth strategies to grow their business.
Ansoff’s Matrix is a tool that helps firms identify the potential market for their products or services. It provides a framework for businesses to plan and implement their growth strategies.
It helps firms to decide on the best way to grow their business based on their current position, capabilities, and objectives. Firms can use this matrix to analyze and identify the most appropriate growth strategy to adopt.The Ansoff’s Matrix consists of four strategies: market penetration, product development, market development, and diversification. Each of these strategies is explained below:
1. Market Penetration: This strategy involves selling more of the existing products or services to the current customers. It focuses on increasing the market share of the firm by gaining a larger share of the existing market. This strategy involves price reduction, promotion, or increased advertising.
2. Product Development: This strategy involves developing new products or services to serve the existing market. It requires the firm to identify new needs and wants of the current customers and develop products to satisfy them. It involves innovation and research and development.
3. Market Development: This strategy involves developing new markets for the existing products or services. It requires the firm to find new customers in new markets. It may involve targeting new geographical areas or new customer segments.
4. Diversification: This strategy involves developing new products or services for new markets. It involves entering new markets with new products.
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snowy river stallion inc. produces horse and rancher equipment. costs from support department 1 are allocated based on the number of employees. costs from support department 2 are allocated based on asset value. relevant department information is provided in the following table: support department 1 support department 2 production department 1 production department 2 number of employees 9 7 25 18 asset value $1,150 $670 $6,230 $5,100 department cost $20,000 $15,500 $99,000 $79,000 using the sequential method of support department cost allocation, determine the total costs from support department 1 (assuming they are allocated first) that should be allocated to support department 2 and to each of the production departments.
Allocate the costs from support department 1 to support department 2 and the production departments using the sequential method of support department cost allocation.
Calculate the allocation ratio for support department 1 based on the number of employees. Allocation Ratio for Support Department 1 = Support Department 1 Employees / Total Employees
Allocation Ratio for Support Department
1 = 9 / (9 + 7 + 25 + 18) = 9 / 59 = 0.152
The sequential method of support department cost allocation involves allocating costs from one support department to another and then allocating those costs to production departments. In this case, the costs from support department 1 are allocated first. We calculate the allocation ratio for support department 1 based on the number of employees and then multiply it by the support department 1 cost to allocate the costs to support department.
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In the sequential method of cost allocation, Support Department 1 costs, amounting to $20,000, are allocated based on the number of employees. Support Department 2 is allocated $2,373, Production Department 1 gets $8,474, and Production Department 2 receives $6,101.
Explanation:In the sequential method of cost allocation, support departments are allocated in a predetermined order. Here, Support Department 1 costs are allocated based on the number of employees, and its total cost is $20,000. Therefore, the allocation rate is $20,000 divided by the total number of employees across all departments, which is 59 (9 + 7 + 25 + 18). The rate is thus approximately $338.98 per employee.
Support Department 2 has 7 employees, so it will receive an allocation of $338.98 times 7 employees, which equals $2,373. The total cost that will be allocated to the production departments is therefore $20,000 - $2,373, or $17,627. However, this amount is divided based on the employee count. Production Department 1 has 25 employees, so it will receive an allocation of $338.98 times 25 which is $8474. Production Department 2, which has 18 employees, gets a cost allocation of $338.98 times 18, which equals $6,101.
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