Answer and Explanation:
The computation of the total incremental cost is shown below;
For making 53,500 units
Particulars Relevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Variable Cost
Per Unit $2.95 $157,825
(53,500 units × $2.95)
Fixed
Manufacturing
Costs $67,000 $67,000
Total Incremental Costs to Make $224,825
For making 53,500 units
Particulars Relevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Purchase
Price
Per Unit $3.50 $187,250
(53,500 units × $3.50)
Total Incremental Cost to Buy $187,250
The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost
g The law of supply states that, other things equal, an increase in a. price causes quantity supplied to increase. b. price causes quantity supplied to decrease. c. quantity supplied causes price to increase. d. quantity supplied causes price to decrease.
Answer:
a. price causes quantity supplied to increase.
Explanation:
The law of supply states that, other things equal, an increase in price causes quantity supplied to increase. An increase in price causes the supply curve to slope upward, thus, giving producers of goods and service providers, an incentive to supply more quantity of their products and vice-versa.
Also, the demand for goods and services has an effect on the quantity of goods and services provided by the producers or suppliers. Hence, an increase in the demand for a product would result in an increase in price, thereby causing the producers to supply more quantity in order to maximize profits.
For instance, an electronic gadget company will manufacture more television sets if the price of those television increases.
Valuable Incorporated's stock currently sells for $45 per share. The firm has 20 million share of common outstanding. The firm's total debt equals $600 million and its common equity equals $400 million. What is the firm's market value added
Answer:
The firm's market value added is $500,000,000
Explanation:
According to the given data we have the following:
Stock market price per share= $ 45
No of shares= 20,000,000
Therefore, Market value of equity = MPS * no of shares
$45*20,000,000= $ 900,000,000
Invested capital or common equity = $400,000,000
Therefore, in order to calculate the firm's market value added we would have to make the following calculation:
Market value added = Market value of stock - invested capital
Market value added =$900,000,000 -$400,000,000
Market value added =$500,000,000
The firm's market value added is $500,000,000
Screening Model. Assume that the following criteria relevant to the process of screening various project opportunities are weighted in importance as follows:
• Quality (5)
• Cost (3)
• Speed to Market (7)
• Visibility (5)
• Reliability (1)
Our company has four project alternatives that satisfy these key feature as follows:
Alpha Bete Gamma Delta
Quality 1 3 3 5
Cost 7 7 5 3
Speed 5 5 3 5
Visibility 3 1 5 1
Reliability 5 5 7 7
Construct a project screening matrix to identify among these four projects the most likely candidates to be implemented.
Answer:
Project Alpha 81
Project Beta 81
Project Gamma 83
Project Delta 81
Among the four projects the most likely candidates to be implemented will
be Project Gamma .
Explanation:
Screening Model
1.Calculation for Project Alpha
Important Weight×Weight Score = Weighted Score
Quality 5 × 1 =5
Cost 3 ×7 =21
Speed 7 ×5 =35
Visibility 5 ×3= 15
Reliability 1× 5 =5
Total Score =81
2.Important Weight ×Weight Score = Weighted Score
Calculation for Project Beta
Quality 5 × 3 =15
Cost 3 ×7 =21
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×5 =5
Total Score =81
3.Important Weight ×Weight Score = Weighted Score
Calculation for Project Gamma
Quality 5 ×3 =15
Cost 3 ×5 =15
Speed 7× 3= 21
Visibility 5×5 =25
Reliability 1×7 =7
Total Score=83
4.Important Weight ×Weight Score = Weighted Score
Calculation for project Delta
Quality 5 ×5 =25
Cost 3 ×3 =9
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×7 =7
Total Score =81
Therefore among the four projects the most likely candidates to be implemented will
be Project Gamma because it has the highest
score with a score of 83.
American Corporation has the following financial information. Year 1 Year 2 Cash $ 202.95 $ 245.90 A/R 398.02 485.34 Inventory 785.12 648.54 If Year 1 is the base year, what is the percentage increase/decrease of each current asset amount
Answer: The answer is given below
Explanation:
Since Year 1 has been given as the base year, the percentage change will be:
(Year 2 - Year 1)/Year 1 × 100
Cash:
= (245.90 - 202.95)/202.95 × 100
= 42.95/202.95 × 100
= 0.21 × 100
= 21% Increase
A/R:
= (485.34 - 398.02)/398.02 × 100
= 87.32/398.02 × 100
= 0.22 × 100
= 22% Increase
Inventory:
= (648.54 - 785.12)/785.12 × 100
= -136.58/785.12 × 100
= -0.17 × 100
= 17% decrease
What are the strengths and weaknesses of the Campbell Soup Company's marketing?
Answer:
For one - their social media presance for a large corporation is really lacking. A company as well known as Campbell should be current in social media, they have not posted to in over a month.
They rely to heavily on the fact that they are the oldest name in the soup business and I feel like they are a little lazy when it comes to their marketing with other compitors on their heels.
A high-end clothing manufacturer has a policy to inspect each article of clothing before it is shipped to customers. Recently, the number of finished items that are failing this final inspection has more than doubled from 3% six months ago to 7% last month. This company would benefit from a strategy designed to:
Answer:
Examine the reliability of the process.
Explanation:
As a high end clothing company, it is a very good initiative and welcoming to have clothes that possibly posses global version and global value so it is good for such routine checks to be done. This could be tedious and cost the company more than usual.
In this case where there are a reasonable amount of such clothes failing these routine checks, it is not too good for the company as more re-evaluations are to be done in order to cub the rate at which this is in the last six months. This process of examining the reliability process is the company's best bet to tackle the issue they have at hand.
In 2001, President George W. Bush and Federal Reserve Chairman Alan Greenspan were both concerned about a sluggish U.S. economy. They also were concerned about the large U.S. trade balance deficit. To help stimulate the economy, President Bush proposed a tax cut. What are the effects of the proposed policy using the IS-LM model
Answer:
The answer is given below.
Explanation:
The effect of this tax cut would be a resultant shift in the IS curve to the right, resulting in higher interest rates, currency appreciation, and bigger current account deficits. The tax cut would encourage consumers to spend more and, thereby increasing planned expenditure. The tax cut raises both income and the interest rate.
Dusan is a member of the Tonda LLC, and all members have equal interests in capital and profits. The LLC has made an optional adjustment-to-basis election. Dusan's interest is sold to Adele for $35,000. The balance sheet of the LLC immediately before the sale shows the following:
Basis FMV
Cash $40,000 $40,000
Depreciable assets 80,000 100,000
$120,000 $140,000
Dusan, capital $30,000 $35,000
Randal, capital 30,000 35,000
Thom, capital 30,000 35,000
Erin, capital 30,000 35,000
$120,000 $140,000
a. How much is the 754 adjustment?
b. What is the amount of Adele's basis in the acquired interest?
c. Which partner receives deductions related to the step-up?
Answer: a. $5000 b. $35000 c. Adele
Explanation:
The balance sheet is a report which summarizes all of an entity's assets, the liabilities, and the equity at a given point in time.
Based on the balance sheet in the question, the following can be calculated:
a. The 754 adjustment will be the difference in the sale of interest and Susan's capital balance. This will be:
= Sale of interest - Dusan's capital balance
= $35,000 - $30,000
= $5000
b. Adele's basis in the acquired interest will be the value at which she acquired the interest. This will be = $35,000
c. Adele is the partner who receives deductions related to the step-up
Brief Exercise 10-18 Presented below is the partial bond discount amortization schedule for Whispering Winds Corp., which uses the effective-interest method of amortization. Interest PeriodsInterest to Be PaidInterest Expense to Be Recorded Discount Amortization Unamortized Discount Bond Carrying Value Issue date$67,991$1,350,009 1$70,900$74,250$3,35064,6411,353,359 270,90074,4353,53561,1061,356,894 (a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1.
Answer:
interest expense 74,250 debit
discount on bonds payable 3,350 credit
cash 70,900 credit
Explanation:
Adjustment to a better display of the data:
Paid Expense Amortization Unarmotized Carrying Value
Issue Date 67,991 1,356,709
1 70,900 74,250 3,350 64,641 1,353,359
2 70,900 74,435 3,535 61,106 1,349,824
To record the payment of interest and discount we will debit the interst expense
and credit the cash given along with the discount on Bonds Payble for the difference
You have $6,600 to deposit. Regency Bank offers 12 percent per year compounded monthly (1.0 percent per month), while King Bank offers 12 percent but will only compound annually. How much will your investment be worth in 17 years at each bank
Answer:
Instructions are below.
Explanation:
Giving the following information:
Deposit= $6,600
Regency Bank:
12 percent per year compounded monthly (1.0 percent per month)
King Bank:
12 percent but will only compound annually.
Number of years= 17
To calculate the final value, we need to use the following formula for each bank:
FV= PV*(1+i)^n
Regency Bank:
n=17*12= 204
FV= 6,600*(1.01^204)
FV= $50,246.3
King Bank:
FV= 6,600*(1.12^17)
FV= $45,315.87
Suppose the U.S. economy is initially at long run equilibrium, when there is an unexpected large increase in the price of steel used by firms in production. How does this impact the U.S. economy? (write out either "inflationary" or "recessionary" In response to this what monetary policy would the Fed employ? (write one of the following: "raise taxes", "lower taxes", "raise money supply", or "lower money supply" What is the most likely way the Fed will accomplish this change in the monetary policy? (write one of the following: "buy securities", "sell securities", "raise discount rate", "lower discount rate", or "legislation" This action by the Fed will cause interest rates to _______. (Write out "increase" or "decrease" The end result of the monetary policy is a shift of which curve in which direction. (Write out one of the following: "AD right", "AD left" "AS left", "AS right"
Answer:
The price hike in the price of steel would cause an inflationary push in the U.S. economy, because steel is a input to the production processes of many firms.
In this scenario, the fed would lower the money supply in order to stop the inflationary push from continuing. To do so, the fed would sell government securities.
The classified balance sheet for a company reported current assets of $1,754,244, total liabilities of $817,540, common stock of $1,180,000, and retained earnings of $148,260. The current ratio was 2.7. What is the total amount of noncurrent assets?
Answer:
$391,556
Explanation:
The values given are:
Total liabilities= $817,540
Common stock= $1,180,000
Retained earnings= $148,260
Current assets= $1,754,244
Therefore the non-current assets can be calculated as follows
Total liabilities+Common stock+Retained earnings-Current assets
$817,540+$1,180,000+$148,260-$1,754,244
= $2,145,800-$1,754,244
= $391,556
Hence the total amount of non-current assets is $391,556
In Rooney Company, Treasury Stock increased $30,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $124,000 and cash dividends paid of $44,000. Net cash used by financing activities is: Group of answer choices
Answer:
Net cash used by financing activities is -$74,000
Explanation:
Finance activities consist of items related to sourcing of capital and ownership in the business.
Prepare the Cash flow from Financing Activities Section of the Cash flow Statement as follows :
Cash flow from Financing Activities
Purchase of Treasury Stock - $30,000
Dividends Paid - $44,000
Net Cash from Financing Activities -$74,000
Conclusion :
Net cash used by financing activities is -$74,000
How long can foodborne illnesses last
Answer: Symptoms begin 2 to 10 days after becoming infected, and may last 1 to 2 weeks.
Explanation:
Global market channels involve a firm producing goods in:______
A. Their home country and exporting them to other countries.
B. Their home country to sell at home.
C. A foreign country to sell at home.
D. A foreign country to sell abroad.
Answer:
A. Their home country and exporting them to other countries.
Explanation:
A global market channel generally explains the production of commodities by a certain or group of firms and goods by a home country and exporting them to other countries. This is seen generally in the production of phones, laptops, tv brands refrigerators and a whole lot of products amongst tier 1 or tier 2 countries and are been shipped to lowest their countries and other tier countries. This is seen to boost the economy and international trade friendship of either countries though the country at the recieving end is loosing per capital but at the end, we need each other to grow and live.
Rapid Enterprises applies manufacturing overhead to its cost objects on the basis of 75% of direct material cost. If Job 17X had $84,000 of manufacturing overhead applied to it during May, the direct materials assigned to Job 17X was:
a. $63,000.
b. $84,000.
c. $112,000.
d. $147,00
Answer:
Direct material cost = $112,000
Explanation:
Pre-determined overhead absorption rate rate = Estimated overhead for the period / estimated direct material cost
Pre-determined overhead absorption rate rate (OAR= 75% of direct material cost
Applied overhead = OAR × direct material cost
Applied overhead = 75% × direct material cost
Let direct material cost be represented by y
84,000= 75% × y
y = 84,000/75%= 112000
Direct material cost = $112,000
For the item below, determine whether the amount would be disclosed in the cash flow statement under: Operating (CFO), Investing (CFI), or Financing (CFF), as well as if would be a net increase (+) or decrease (-) in cash or cash equivalents:
A. Principal payments on long-term borrowings
B. Decrease in accounts receivable
C. Proceeds from long-term borrowings
D. Increase in deferred income tax net liability
E. Net earnings
F. Increase in prepaid expenses
G. Increase in merchandise inventories
H. Cash dividends paid
I. Proceeds from issuance of common stock
J. Increase in accrued salaries, wages, and related benefits
K. Payments for repurchase of common stock
L. Capital Expenditures
M. Increase in accounts payable
N. Depreciation and amortization expenses
Answer:
Explanation:
Operating Cashflows have to do with the transactions dealing with the day to day activities of the business including calculations of net income and revenue and expenses.
Investing Cashflow has to do with the transactions involving fixed assets such as Property, Land and Equipment since these are Capital Expenditure. Also included are stock ownership and bond holding of other entities.
Financing Cashflows refer to transactions relating to the provision of capital for the business through loans or Equity.
A. Principal payments on long-term borrowings.
FINANCING - decrease (-)
This is a financing transaction that deals with long term loans. It will decrease the cash or cash equivalents held.
B. Decrease in accounts receivable.
OPERATING - Increase +
This is an operating cashflow and it is an increase because Receivables reduce when they pay the business so cash increases.
C. Proceeds from long-term borrowings.
FINANCING - Increase +
This is a financing activity and the increase is due to money from Issuing Bonds or borrowing money coming into the business.
D. Increase in deferred income tax net liability.
OPERATING - Increase +
By reducing the amount that we pay in tax that means that less cash has been paid which also means that more cash is kept in the business which increases the Cash balance.
E. Net earnings.
OPERATING - Increase +
So long as the Net Earnings are positive, they go to the Operating Section and increase the amount of cash and cash equivalents.
F. Increase in prepaid expenses.
OPERATING - Decrease -
By increasing the amount of prepaid expenses, this means that the company used money to pay for expenses it hasn't incurred yet which reduces the cash in hand.
G. Increase in merchandise inventories.
OPERATING - Decrease -
By buying more Inventory, more cash was spent and this therefore reduces the cash and cash equivalents balance.
H. Cash dividends paid.
FINANCING - Decrease -
Dividends relate to equity and Equity is a Financing Cashflow Transaction. Paying Dividends means giving out cash so it reduces the cash and cash equivalents balance.
I. Proceeds from issuance of common stock.
FINANCING - Increase
Similar to proceeds from long term borrowings, Equity is a Financing activity as it finds the business, the proceeds received from here increase the cash and cash equivalents balance.
J. Increase in accrued salaries, wages, and related benefits.
OPERATING - Increase +
These are Operating Cashflow transactions and by withholding them, the business does not spend cash on them. That cash that was not paid is an increase to the cash and cash equivalents balance.
K. Payments for repurchase of common stock.
FINANCING - Decrease -
By repurchasing stock which is an Equity transaction, this goes to the Financing Section. The cash spent to repurchase the stock reduces the amount of cash and cash equivalents on hand.
L. Capital Expenditures.
INVESTING - Decrease -
By buying capital items or spending on Capital Investments, the company makes an investment and as such this goes to the Investment Section. The expenses are a reduction on cash.
M. Increase in accounts payable.
OPERATING - Increase +
Accounts Payable are an Operating Activity and when they are increased that means that the company paid less cash and bought more things on credit. That cash that wasn't paid is an increase in the cash balance.
N. Depreciation and amortization expenses.
OPERATING - Increase +
By including depreciation and amortization in the operating cashflow, these increase the Cashflow because they are non cash items. Even though they are recorded, no physical cash actually flows to them. This cash that was supposed to flow to them is in increase.
A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units. Units Unit Cost Beginning inventory on January 1 320 $ 3.00 Purchase on January 9 80 3.20 Purchase on January 25 100 3.34 Required: Assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.
Answer:
494.00
Explanation:
The computation of the cost assigned to ending inventory using the FIFO method is shown below:
Particulars Units Unit Cost Amount
Purchase on January 9 50 3.20 160.00
Purchase on January 25 100 3.34 334.00
Cost of Ending Inventory 150.00 494.00
Since there are 150 units in the ending inventory so we take 50 units at $3.20 and the rest 100 units at 3.34 so that the cost assigned to the ending inventory could come
Effect of Omitting Adjustments For the year ending April 30, Mann Medical Services Co. mistakenly omitted adjusting entries for (1) $9,200 of supplies that were used, (2) unearned revenue of $12,000 that was earned, and (3) insurance of $2,500 that expired. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30. (a) Revenues understated $ (b) Expenses $ (c) Net income $
Answer:
(a) Revenues overstated $12,000
(b) Expenses understated $11,700
(c) Net income overstated $300
Explanation:
First prepare the journal entries pertaining to the omitted adjusting entries as follows;
Entry 1
Supplies Expense $9,200 (debit)
Supplies $9,200 (credit)
Entry 2
Revenue $12,000 (debit)
Unearned Revenue $12,000 (credit)
Entry 3
Insurance Expense $2,500 (debit)
Prepaid Insurance $2,500 (credit)
Then consider the Effects on the named Accounts
Expenses.
Affected by Entry 1 and Entry 3
Expenses are understated by $11,700
Revenues.
Affected by Entry 2.
Revenues are overstated by $12,000
Net Income
Affected by Entries 1, 2, 3 also the net effect of the two items above.
Income is overstated by $300
The Andersons have contracted with a minimum-services real estate broker to assist them in marketing their home. By law their broker has all of these duties EXCEPT:_________ a) to instruct another broker to negotiate an offer with the sellers on his behalf. b) to instruct another broker to deliver a contract to the sellers on his behalf. c) to inform the sellers of material information related to the transaction. d) to answer their questions and present any offers.
Answer:
A. to instruct another broker to negotiate an offer with the sellers on his behalf
Explanation:
Brokers job includes facilitation of a variety of business transactions, such as real estate deals, by acting as a middle man between the parties involved. The broker acts as an agent for the client and charges the client certain amounts for his service.
By law a broker can not ask another broker to help him negotiate an offer. All other options in the question are duties of the broker
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. The company has 430,000 shares outstanding, and the stock currently sells for $51, If there are four seats in the current election, how much will it cost you to buy a seat
Answer:
$4,386,051
Explanation:
For computation of cost to buy a seat first we need to follow some steps which is shown below:-
Step 1 :
Number of seats available for election = 4
So, the percentage of stock needed = 1 ÷ (4 + 1)
= 20%
Step 2
Number of Stock needed = (Outstanding shares × Percentage of stock) + 1
= (430,000 × 20%) + 1
= 86,000 + 1
= 86,001
and finally
Total cost required to buy a seat = Number of Stock × Stock Currently Sold
= 86,001 × $51
= $4,386,051
So, we have applied the above formula.
Break-Even Sales Currently, the unit selling price of a product is $370, the unit variable cost is $300, and the total fixed costs are $1,001,000. A proposal is being evaluated to increase the unit selling price to $410. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
Answer:
a. 14,300 units
b. 9,100 units
Explanation:
a. For computation of current break-even sales (units) first we will find out the contribution margin per unit which is shown below:-
Contribution margin per unit = Selling price per unit - Variable cost
= $370 - $300
= $70
Current break-even sales (units) = Fixed cost ÷ Contribution margin per unit
= $1,001,000 ÷ $70
= 14,300 units
b. For computation of anticipated break-even sales (units) first we will find out the contribution margin per unit which is shown below:-
Contribution margin per unit = Selling price per unit - Variable cost
= $410 - $300
= $110
Anticipated break-even sales (units) = Fixed cost ÷ Contribution margin per unit
= $1,001,000 ÷ $110
= 9,100 units
So, we have applied the above formula.
You want to buy a house and will need to borrow $255,000. The interest rate on your loan is 5.89 percent compounded monthly and the loan is for 25 years. What are your monthly mortgage payments
Answer: $1,626
Explanation:
A Mortgage payment is a type of annuity so the Present Value of an Annuity formula can be used to calculate this.
The Period is 12 months so adjustments need to be made to the interest rate and the period.
Period.
= 25 years * 12 months
= 300
Interest Rate
= 5.89/12
= 0.4908%
Present Value of the Annuity is the mortgage amount of $255,000
Present Value of Annuity is,
P = PMT ( 1 - ( 1 + r)^-n) / r
Where,
P = Present Value
PMT = payment per period
r = Interest rate
n= no. of periods
255,000 = PMT ( 1 - (1+0.4908%)^-³⁰⁰) / 0.4908%
255,000 = 156.8456 PMT
PMT = 255,000/156.8456
= $1,625.80
= $1,626
Mountain High Ice Cream Company transferred $63,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,300). Mountain High anticipates a $3,300 recourse obligation. The bank charges a 3% fee (3% of $63,000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Journal entries for Mountain high Ice cream is given below
Explanation:
Journal entries:
Debit Credit
Cash 54810(w1)
Loss on receivables 6190
Factoring amount 5300(fair value)
Recourse liability 3300
Receivables 63000
Workings 1
63000 x 90%-3% = 54810
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.4 pounds $ 3.00 per pound $ 16.20 Direct labor 0.4 hours $ 6.00 per hour $ 2.40 During the most recent month, the following activity was recorded:
a. Ten thousand four hundred pounds of material were purchased at a cost of $2.90 per pound.
b. The company produced only 1,040 units, using 9,360 pounds of material. (The rest of the material purchased remained in raw materials inventory.)
c. Five hundred and sixteen hours of direct labor time were recorded at a total labor cost of $6,192.
Required: Compute the materials price and quantity variances for the month. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct materials 5.4 pounds $ 3.00 per pound.
10,400 pounds of material was purchased at a cost of $2.90 per pound.
The company produced only 1,040 units, using 9,360 pounds of material.
To calculate the direct material price and efficiency variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (3 - 2.9)*10,400
Direct material price variance= $1,040 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 5.4*1,040= 5,616
Direct material quantity variance= (5,616 - 9,360)*3
Direct material quantity variance= $11,232 unfavorable
According to Keynesian business cycle theory, A. inflation is procyclical and leading. B. the procyclical movement of investment is well explained when shocks to durable goods are themselves a main source of the cycle (so-called "animal spirits"), but not when cycles are caused by fluctuations in the LM curve. C. beneficial aggregate demand shocks, regardless of whether they shift the IS curve or the LM curve, will increase both output and the real interest rate. D. the procyclical behavior of labor productivity occurs due to firms' labor hoarding practices.
Answer: D. the procyclical behavior of labor productivity occurs due to firms' labor hoarding practices.
Explanation:
Keynesian Economists argue that firms practice labor hoarding which is the practice of keeping workers when they should not such as when there is a Recession. They should not keep these workers because demand has slowed so keeping them means that they will not be producing to meet the demand.
The procyclical behavior of labor productivity means that labor productivity goes by the Business Cycle in that it is high when the Economy is booming and low when it is in a Recession.
Productivity is calculated by dividing goods produced by the number of labor producing them.
By refusing to fire workers during a Recession, there will be too many workers producing too few goods which will decrease labor productivity which is why according to Keynesian Economists, the productivity is low in Recessions.
Lucy's Music Emporium opened its doors on January 1, 2015, and it was granted permission to use the same depreciation calculations for shareholder reporting and income tax purposes. The company planned to depreciate its fixed assets over 20 years, but in December 2015 management realized that the assets would last for only 15 years. The firm's accountants plan to report the 2015 financial statements based on this new information. How would the new depreciation assumption affect the company's financial statements
Answer: d. The firm's cash position in 2015 and 2016 would increase.
Explanation:
The financila statements had been calculated with the view that fixed assets would be depreciated over a 20 year period. However, it was discovered that the assest should be depreciated over 15 years instead. This reduction in the period would have the effect for increasing the depreciation payment.
For example, say the asset cost $20,000 and was originally to be depreciated over 20 years using Straight Line Depreciation. This means that the depreciation per year would be,
= [tex]\frac{20,000}{20}[/tex]
= $1,000 a year.
If it was however discovered that it was supposed to be 15 years that figure would go to,
= [tex]\frac{20,000}{15}[/tex]
= $1,333.33 a year
Notice how depreciation increased. Lucy's Music emporium will therefore see their depreciation cost rise. Depreciation is subtracted from revenue as it is tax deductible. When Lucy's Emporium deduct this new depreciation, they will have less profit. They will be taxed on this less profit and so pay a lower tax. This will thus increase their cash holdings because Depreciation is a non cash expense and does not actually require a cash payment.
During the fiscal year ended June 30, 20X9, the city of Moorhead constructed a new courthouse that was budgeted to cost $5,000,000. Moorhead used a capital projects fund to account for the construction activities. In July of 20X8, a bid was accepted from Diamond Construction to build the courthouse for $4,800,000. On June 15, 20X9, Diamond completed construction and submitted a bill to the city for $4,900,000. The city accepted the bill and paid Diamond the entire amount owed, except for a 10 percentage retainage. On the statement of revenues, expenditures, and changes in fund balance prepared for the capital projects fund for the year ended June 30, 20X9, expenditures should be reported at
Answer:
Expenditures should be reported at $4,900,000
Explanation:
According to the given data On June 15, 20X9, Diamond completed construction and submitted a bill to the city for $4,900,000.
As city already accepted the bill and identified the liability, which they have to pay in case construction meets all the agreed requirement. 10% is just retention to deduct only if work not as per agreed terms and requirement
Hence, The expenditure will be recorded at actual amount spent for construction irrrespective of budget or retention amount.
So, so expenditures will be $4,900,000
Phionia Phelps has developed a gourmet cat food. Not only is this food eagerly eaten by the most finicky felines, but it is specially formulated to prevent the many health problems of aging cats. Phionia has been making the food on her kitchen range and selling it at $250 per case only to close acquaintances who are also cat lovers. One of her wealthy acquaintances has now offered to invest in her business if Phionia will begin selling the product through her website. However, the investor wants Phionia to produce a budget for the first six months of operation. Based on her experience to date, Phionia predicts the following sales in cases:
Each case of Finicky Feline Gourmet Cat Dinner requires 5 pounds of prime lamb meat, 10 pounds of short grain Chinese rice, 2 pounds of wild caught Alaskan salmon, and 1 pound of secret vitamins and supplements. Phionia plans to maintain end-of-month inventories equal to 10 percent of the next month's projected sales, to meet expected sales growth. All the ingredients inventories are to be maintained at 5 percent of the production needs for the next month, but not to exceed 1,000 pounds of any one ingredient. January will begin with all inventories at the projected levels. Phionia has the following price quotes good for the following year:
The production process requires direct labor at two skill levels: (1) ingredient preparation, $18 per hour, and (2) cooking and canning, $24 per hour. Two workers are willing to work part days if there is not enough demand for them to work full time. lt takes one hour to process one batch. Because of preparation and cleanup time, only six batches can be produced per day. Each batch produces enough food to fill 100 cases. Manufacturing overhead is $6,000 fixed per month plus $15 per case.
Item $ per pound
Lamb 15
Rice 1,20
Saimon 24
Viamlns 45
1. Prepare the following budgets for the period. January through June:________.
a. Sales budget in dollars.
b. Production budget in units.
c. Direct materials purchases budget in pounds.
d. Direct materials purchases budget in dollars.
e. Direct manufacturing labor budget in dollars.
2. Comment on the viability of this business and the advisability of the investor making a $50,000 investment to get it started.
Answer:
Explanation:
a.
Sales budget = $ 250 per case * 100 cases per batch * 6 batches per day * 20 days a month * 6 months
= $ 18,000,000
b. Production budget in units = 100 cases per batch * 6 batches per day * 20 days a month * 6 months
= 72,000 cases
Production budget including 10 percent inventories
= 72000 + 100*6*20*10%
= 73200 cases
c. Direct materials purchases budget in pounds including 5% inventories
Lamb = 5 pounds per case * (73200 cases + 100*6*20*5% cases )
= 369,000 pounds
Rice Lamb = 10 pounds per case * (73200 cases + 100*6*20*5% cases )
= 738,000 pounds
Salmon = 2 pounds per case * (73200 cases + 100*6*20*5% cases )
= 147,600 pounds
Vitamins = 1 pound per case * (73200 cases + 100*6*20*5% cases )
= 73,800 pounds
d. Direct materials purchases budget in dollars = 369000*15 + 738000*1.2 + 147600*24 + 73800*45
= $ 1,328,400
e. Manufacturing labor budget in dollars = 1 hours per batch * 6 batches per day * 20 days per month * 6 months * ($ 18 per hour for ingredient preparation + $ 24 per hour for cooking and canning ) * 2 workers
= $ 60,480
2. The business requires an investment of $ 1,328,400 + 60,480
= $ 1,388,880 over six months.
This translates to monthly investment of $ 231,480
Therefore $ 50,000 investment is too small to begin with.
Complete the following table by selecting the term that matches each definition on the left.
Definition
1. Market Labor Demand Curve
2. Market Labor Supply Curve
3. Marginal Product of Labor
4. Value of the Marginal Product of Labor
a. The additional revenue the firm receives from selling the output produced from an additional unit of labor.
b. The graphical representation of the relationship between the wage rate and the quantity of labor workers are willing to provide in a market.
c. The graphical representation of the relationship between the wage rate and the quantity of labor firms are willing to hire in a market.
d. The increase in the amount of output from an additional unit of labor.
Answer:
The correct answers are the following:
1 - C
2 - B
3 - D
4 - A
Explanation:
1 - C: The market labor demand curve is represented graphically by the relationship between the wage rate and the quantity of labor firms are willing to hire in a market due to the fact that the firms are the ones who are looking for workers and therefore they demand it.
2 - B: The market labor supply curve is represented graphically by the relationship between the wage rate and the quantity of labor that the workers are willing to provide due to the fact that they are the one who put their work in the market in order to be used.
3 - D: The marginal product of labor represents the increase in the amount of output from an additional unit of labor that an additional worker puts in the firm.
4 - A: The value of the marginal product of labor comprehends the additional revenue the firm receives from selling the output produced from and additional unit of labor that an additional worker put in the firm.
