Answer:
The correct answer is option (C)utilitarian approach.
Explanation:
Utilitarian approach: It is referred to as an action in relative to outcomes and reaction
For example, the cost and net benefits of all group of people based on an individual level. that is, by works towards achieving or aiming for the best for the greatest number while producing the least amount of suffering or harm.
Joy Elle’s Vegetable Market had the following transactions during 2010: Issued $50,000 of par value common stock for cash. Repaid a 6 year note payable in the amount of $22,000. Acquired land by issuing common stock of par value $100,000. Declared and paid a cash dividend of $2,000. Sold a long-term investment (cost $63,000) for cash of $6,000. Acquired an investment in IBM stock for cash of $12,000. What is the net cash provided by financing activities?
Answer:
$26,000
Explanation:
Joy Elle’s Vegetable Market
Cash flow from Financing Activities
Issuance of Stock $50,000
Less: Repaid Note payable $22,000
Less: Paid Dividend $2,000
Net Cash provided by financial activities $26,000
-Acquired land by issuing common stock is a Non cash investing and financing activities under cash flow
-Sold a long-term investment for cash is an investing activities under cash flow
-Acquired an investment in IBM stock for cash is an Investing activities under Cash flow
Arbor Systems and Gencore stocks both have a volatility of 33%. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is (a) +1.00, (b) 0.50, (c) 0.00, (d) −0.50, and (e) −1.00.
In which of the cases is the volatility lower than that of the original stocks?
Answer:
In case of b, c, d ,e volatility is less than that of original stockExplanation:
The formula to compute the volatility of a portfolio
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
Here,
The standard deviation of the first stock is σ₁
The standard deviation of the second stock is σ₂
The weight of the first stock W₁
The weight of the second stock W₂
The correlation between the stock c
a) If the correlation between the stock is +1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times1} \\\\=0.33[/tex]
Hence, the volatility of the portfolio is 0.33 0r 33%
b) If the correlation between the stock is 0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.5} \\\\=0.29[/tex]
Hence, the volatility of the portfolio is 0.29 0r 29%
c) If the correlation between the stock is 0.00
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times0.0} \\\\=0.23[/tex]
Hence, the volatility of the portfolio is 0.23 0r 23%
d) If the correlation between the stock is -0.50
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-0.5} \\\\=0.17[/tex]
Hence, the volatility of the portfolio is 0.17 or 17%
e) If the correlation between the stock is -1
[tex]=\sqrt{W_1^2\sigma_1^2+W_2^2\sigma_2^2+2W_1W_2\sigma_1\sigma_2*c}[/tex]
[tex]=\sqrt{(0.5\times0.33)^2+(0.5\times0.33)^2+(2\times(0.5\times 0.33)\times(0.5\times0.33)\times-1} \\\\=0[/tex]
Hence, the volatility of the portfolio is 0
In case of b, c, d ,e volatility is less than that of original stockMoonlight Bay Inn is incorporated on January 2, 2014, by its three owners, each of whom contributes $20,000 in cash inexchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the month ofJanuary:
January 2: A Victorian inn is purchased for $50,000 in cash. An appraisal performed on this date indicates that the land is worth $15,000, and the remaining balance of the purchase price is attributable to the house. The owners estimate that the house will have an estimated useful life of 25 years and an estimated salvage value of $5,000.
January 3: A two-year, 12%, $30,000 promissory note was signed at the Second State Bank. Interest and principal will be repaid on the maturity date of January 3, 2019.
January 4: New furniture for the inn is purchased at a cost of $15,000 incash. The furniture has an estimated useful life of 10 years and no salvage value.
January 5: A 24-month property insurance policy is purchased for $6,000 in cash.
January 6: An advertisement for the inn is placed in the local newspaper. Moonlight Bay pays $450 cash for the ad, which will run in the paper throughout January.
January 7: Cleaning supplies are purchased on account for $950. The bill is payable within 30 days.
January 15: Wages of $4,230 for the first half of the month are paid in cash.
January 16: A guest mails the business $980 in cash as a deposit for a room to be rented for two weeks. The guest plans to stay at the inn during the last week of January and the first week of February.
January 31: Cash receiptsfrom rentals of rooms for the month amount to $8,300.
January 31: Cash receiptsfrom operation of the restaurant for the month amount to $6,600.
January 31:. Each stockholder is paid $200 in cash dividends.
Required 1. Prepare journal entries to record each of the preceding transactions. Don’t forget the stock.
2. Post each of the journal entries to T accounts.
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
b. Depreciation of the furniture
c. Interest on the promissory note
d. Recognition of the expired portion of the insurance
e. Recognition of the earned portion of the guests’ deposit
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
g. Cleaning supplies on hand on January 31 amount to $230
h. A utility bill is received amounts to $740 and is payable by Feb. 5
i. Income taxes are to be accrued at a rate of 30% of income before taxes
4. Post each adjusting journal entry to T accounts
5. Prepare the following financial statements: a. Income statement for month ended January 31 b. Statement of retained earnings for the month ended January 31 c. Balance sheet at January 31
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Answer:
1. Prepare journal entries to record each of the preceding transactions.
January 2, 2014, Moonlight Bay Inn is incorporated
Dr Cash 60,000
Cr Common stock 60,000
January 2, 2014, a Victorian Inn is purchased
Dr Land 15,000
Dr Building 35,000
Cr Cash 50,000
January 3, 2014, promissory note signed at bank
Dr Cash 30,000
Cr Notes payable 30,000
January 4, 2014, furniture is purchased
Dr Furniture 15,000
Cr Cash 15,000
January 5, 2014, insurance policy is purchased
Dr prepaid insurance 6,000
Cr cash 6,000
January 6, 2014, advertisement is placed in the local newspaper
Dr Advertising expense 450
Cr Cash 450
January 7, 2014, cleaning supplies purchased on account
Dr Cleaning supplies 950
Cr Accounts payable 950
January 15, 2014, wages for first 15 days are paid
Dr Wages expense 4,230
Cr Cash 4,230
January 16, 2014, check received form customer
Dr Cash 980
Cr Unearned revenue 980
January 31, 2014, cash receipts from room rentals are accounted for
Dr Cash 8,300
Cr Rental revenue 8,300
January 31, 2014, cash receipts from restaurant are accounted for
Dr Cash 6,600
Cr Restaurant revenue 6,600
January 31, 2014, dividends are distributed
Dr Retained earnings 600
Cr Dividends payable 600
Dr Dividends payable 600
Cr Cash 600
2. Post each of the journal entries to T accounts.
I used an excel spreadsheet to post the T accounts (attached file).
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
depreciation expense per month = $30,000 x 1/25 x 1/12 = $116.67 ≈ $117
Dr Depreciation expense 117
Cr Accumulated depreciation - building 117
b. Depreciation of the furniture
depreciation expense per month = $15,000 x 1/10 x 1/12 = $125
Dr Depreciation expense 125
Cr Accumulated depreciation - furniture 125
c. Interest on the promissory note
interest expense per month = $30,000 x 12% x 28/365 = $276.16 ≈ $276
Dr Interest expense 276
Cr Interest payable 276
d. Recognition of the expired portion of the insurance
insurance per month = $6,000 /24 = $250
Dr insurance expense 250
Cr Prepaid insurance 250
e. Recognition of the earned portion of the guests’ deposit
Dr Unearned revenue 490
Cr Rental revenue 490
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
Dr Wages expense 520
Cr Wages payable 520
g. Cleaning supplies on hand on January 31 amount to $230
cleaning supplies expense = $950 - $230 = $720
Dr Cleaning supplies expense 720
Cr Cleaning supplies 720
h. A utility bill is received amounts to $740 and is payable by Feb. 5
Dr Utilities expense 740
Cr Accounts payable 740
i. Income taxes are to be accrued at a rate of 30% of income before taxes
Dr Income taxes expense
Cr income taxes payable
4. Post each adjusting journal entry to T accounts
I used an excel spreadsheet to post the T accounts (attached file).
5. Prepare the following financial statements: a. Income statement for month ended January 31
Income Statement
Rental revenue $8,790
Restaurant revenue $6,600
Wages expense ($4,750)
Advertising expense ($450)
Depreciation expense ($242)
Insurance expense ($250)
Cleaning supplies expense ($720)
Utilities expense ($740)
EBIT $8,238
Interest expense ($276)
Net income before taxes $7,962
Income taxes ($2,389)
Net income after taxes $5,573
b. Statement of retained earnings for the month ended January 31
Retained earnings at the beginning of the period: $0
Net income: $5,573
Dividends distributed: ($600)
Retained earnings at the end of the period $4,973
c. Balance sheet at January 31
Assets:
Cash $29,600
Prepaid insurance $5,750
Cleaning supplies $230
Furniture $14,875
Land $15,000
Building $34,883
Total Assets: $100,338
Liabilities and Stockholders' Equity:
Accounts payable $1,690
Unearned revenue $490
Wages payable $520
Interest payable $276
Income tax payable $2,389
Notes payable $30,000
Common stock $60,000
Retained earnings $4,973
Total Liabilities and Stockholders' Equity: $100,338
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Yes, the bank should be OK with the loan since the Inn was able to make a profit during the first month of operations (something very uncommon).
Journal entry worksheet
The company has 15 employees, who earn a total of $1,600 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2019, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2020.
Transaction General Journal Debit Credit
The Office Supplies account started the year with a $3,500 balance. During 2019, the company purchased supplies for $14,455, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2019, totaled $3,080.
Transaction General Journal Debit Credit
Record the adjusting entry related to the company's insurance.
Transaction General Journal Debit Credit
Explanation: BIG STONKS
Quisco Systems has 6.6 billion shares outstanding and a share price of $18.41. Quisco is considering developing a new networking product in house at a cost of $498 million. Alternatively, Quisco can acquire a firm that already has the technology for $913 million worth (at the current price) of Quisco stock. Suppose that absent the expense of the new technology, Quisco will have EPS of $0.74.
A. Suppose Quisco develops the product in house. What impact would the development cost have on Quisco’s EPS. Assume all costs are are incurred this year.and are treated as an R&D expense. Quisco’s tax rate is35%, and the number of shares outstanding is unchanged.
B. Suppose Quisco does not developthe product in house but instead acquire the technology. What effect would the acquisition have on Quisco’s EPS thisyear?
C. Which method of acquiring the technology has a smaller impact on earning? Is this method cheaper?Explain.
Answer:
A) EPS will decrease by $0.05 to $0.69
B) EPS will decrease by $0.01 to $0.73
C) The impact on EPS is smaller if the company is acquired. This doesn't mean that it is cheaper to do it that way, but since the EPS is very low, any significant increase in costs will result in steep reduction of EPS. The cheapest way would be to issue new stocks to cover the expenses of developing the new technology.
Explanation:
6.6 billion shares outstanding and a share price of $18.41, current EPS $0.74, total current earnings = $4,884 million
in house development = $498 million will reduce net earnings by $498 x 65% = $323.7 million or $0.05 per share
EPS = $0.74 - $0.05 = $0.69
if Quisco decides to acquire the company, then total shares will increase by $913,000,000 / $18.41 = 49,592,613 shares
total outstanding shares = 6,600,000,000 + 49,592,613 = 6,649,592,613 shares
EPS = $4,884,000,000 / 6,649,592,613 = $0.73
On January 3, Halsall Corporation purchased 1,800 shares of the company's $1 par value common stock as treasury stock, paying cash of $ 8 per share. On January 30, Halsall sold 1,200 shares of the treasury stock for cash of $9 per share. Journalize these transactions.
Answer:
The journal entries alongwith its explanation are as under:
Explanation:
Journal entry at Jan 3, to record purchase of treasury stock would include the recording of treasury stock at the price paid to the shareholders for purchase of the stock, the journal entry is as under:
Dr Treasury Stock (1800 share*$8 per share) $14,400
Cr Cash $14,400
Journal entry at Jan 30, of selling treasury stock would include the elimination of the treasury stock at the amount purchased and the remainder will will be the Paid-In Capital, the journal entry is as under:
Dr Cash (1200*9) $10,800
Cr Treasury stock (1200*8) $9,600
Cr Paid in capital from sale of treasury stock $1,200
The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed: Group of answer choices manufacturing margin contribution margin differential cost differential revenue Flag this Question Question 21 pts Partridge Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $37 per pound and would require an additional cost of $9.25 per pound to produce. What is the differential cost of producing Product D
Answer:
a) The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed:
Differential Revenue
b) The Differential cost of producing Product D is the additional cost of $9.25 per pound.
Explanation:
a) Differential Revenue is the difference in sales revenue that results from two different courses of action.
b) The corporate finance institute defines Differential cost as "the difference between the cost of two alternative decisions."
"An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity. An investor who purchases the new issue of Federal Home Loan Bank bonds can expect to pay:"
Answer: A. Par
Explanation:
While US Government bonds are usually sold at auction which means a price different from Par, Federal Agency bonds operate much like Corporate Bonds in their selling procedure. They engage a group of Underwriters called a Selling group which can be made up of large banks and brokers.
These underwriters will then handle everything that have to do with the sale and sell it to the public. Like a Corporate listing, they get a commission from this.
Because of this direct sale by the Underwriter to the public, the Public is most likely to get the offering at Par.
The following information is available for Brendon Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Retained earnings? Retained earnings $ 112,000 Dividends 32,000 Fees earned 187,000 Depreciation Expense—Equipment 12,000 Wages expense 71,400 Interest expense 3,300 Insurance expense 11,700 Rent expense 24,200
Answer:
$64,400
Explanation:
The amount of in the income summary that would be closed to retained earnings is the fees earned of $187,000 less the depreciation expense of $12,000,wages expense of $71,400,interest expense of $3,300,insurance expense of $11,700 as well as the rent expense of $24,200 as computed thus:
net income from income summary=$187,000-$12,000-$71,400-$3,300-$11,700-$24,200=$64400
Retained earnings closing balance=$112,000-$32,000+$64400 =$ 144,400.00
In no case can "market" in the lower-of-cost-or-market rule be more than:_______.
a. estimated selling price in the ordinary course of business.
b. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.
c. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.
d. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.
Answer:
b. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.
Explanation:
Note that the lower of cost market rule is explicitly encouraging businesses to record the lowest cost of inventory; for example using the original cost or its current market price, whichever is favourable.
Thus, the "market" must not be more than the estimated selling price in the ordinary course of business, with an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.
The Fine Point Company currently produces all of the components for its one product, an electric pencil sharpener. The unit cost of manufacturing the motor for this pencil sharpener is: Direct materials$1.75 Direct labor$1.65 Variable overhead$0.75 Fixed overhead$0.60 The company is considering the possibility of buying this motor from a subcontractor and has been quoted a price of $3.60 per unit. The relevant cost of manufacturing the motor to be considered in reaching the decision is:
Answer:
$4.15 per unit
Explanation:
The computation of the relevant cost of manufacturing the motor is shown below:
Relevant cost per unit = Direct material per unit + direct labor per unit + variable overhead per unit
= $1.75 + $1.65 + $0.75
= $4.15 per unit
For reaching the decision, we simply added the direct material per unit, direct labor per unit and variable overhead per unit so that the correct answer could arrive
The Talbot Company uses electrical assemblies to produce an array of small appliances. One of the assemblies, the XOminus01, has an estimated annual demand of 12 comma 000 units. The cost to place an order for these assemblies is $650, and the holding cost for each assembly unit is approximately $30 per year. The company has 260 workdays per year.
Required:
What are the annual inventory holding costs if Talbot orders using the EOQ quantity?
Answer:
$1,975 per year
Explanation:
The first step is to calculate Economic order quantity using the following formula:
Economic Order Quantity = √2DO / H
Here
A is Annual Demand which is 12,000 Units.
O is Ordering Cost per order $650 per order.
H is Holding or Carrying Cost per unit per year is $30 per unit per year.
By putting values, we have:
Economic Order Quantity = √(2 * 12,000 * $650) / 30 = 131.66 units
Now annual inventory holding costs can be calculated using the following formula:
Inventory Holding Cost = Average Inventory * Holding Cost
Here,
Average Inventory = EOQ /2 = 131.66 / 2 = 66 units
By putting values we have:
Annual Inventory Holding Cost = 66 * 20 = $1,975 per year
You have a portfolio that is invested 17 percent in Stock A, 38 percent in Stock B, and 45 percent in Stock C. The betas of the stocks are .62, 1.17, and 1.46, respectively. What is the beta of the portfolio
Answer:
The portfolio beta is 1.207
Explanation:
The portfolio beta is the weighted average of the individual stock betas that form up the portfolio. The weightage of each stock in the portfolio is calculated on the basis of investment in that stock as a proportion of total investment in the portfolio. The portfolio beta is calculated as follows,
Portfolio beta = Weight of Stock A * Beta of Stock A + Weight of Stock B * Beta of Stock B + ... + Weight of Stock N * Beta of Stock N
Portfolio beta = 0.17 * 0.62 + 0.38 * 1.17 + 0.45 * 1.46
Portfolio beta = 1.207
Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value of $990,000. We call these bonds prior to maturity on September 30. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.
Answer and Explanation:
The journal entry is shown below;
Bond payable $1,000,000
Loss on retirement of bond $20,000
To Discount on bond $10,000
To Cash $1,010,000
(Being the loss on retirement of bond is recorded)
For recording this we debited the bond payable and loss as it decrease the current liabilities and it increased the losses at the same time it decreased the discount and decreased the cash so the respective accounts are credited
On October 1, Oriole Corporation’s stockholders’ equity is as follows.
Common stock, $7 par value $535,500
Paid-in capital in excess of par—common stock 30,000
Retained earnings 167,000
Total stockholders’ equity $732,500
On October 1, Oriole declares and distributes a 10% stock dividend when the market price of the stock is $14 per share.
Required:
a. Compute the par value per share (1) before the stock dividend and (2) after the stock dividend.
b. Indicate the balances in the three stockholders? equity accounts after the stock dividend shares have been distributed.
Answer:
a. Compute the par value per share (1) before the stock dividend and (2) after the stock dividend.
1) $7 per stock2) $7 per stockb. Indicate the balances in the three stockholders? equity accounts after the stock dividend shares have been distributed.
Common stock $589,050Paid-in capital in excess of par - common stock $83,550Retained earnings $625,400Explanation:
since it is a "small" stock dividend, it will be carried out at market value and not at par value.
the total number of stocks = $535,500 / $7 par value = 76,500 stocks
total transaction = 76,500 stocks x $14 x 10% = $107,100
the journal entry should be:
Dr Retained earnings 107,000
Cr Common stock 53,550
Cr Paid in capital in excess of par value 53,550
total common stock account = $535,500 + $53,550 = $589,050 / 84,150 stocks = $7 per stock
A financial advisor offers you two investment opportunities. Both offer a rate of return of 11%. Investment A promises to pay you $450 in 1 year, $650 in 2 years, and $850 in 3 years. Investment B promises to pay you $850 in 1 year, $x in 2 years, and $450 in 3 years. What must x be to make you indifferent between Investing A and B
Answer:
The value of x is 566.36
Explanation:
The value of x should be such that the present value of both Investments is the same when discounted at a rate of 11%. To calculate the present value, we use the following formula,
Present Value = CF 1 / (1+r) + CF 2 / (1+r)^2 + ... + CFn / (1+r)^n
Where,
CF represents Cash flowr represents the discount rateSo, we equate both the present value of Investment A and B to calculate the value of x.
Present Value of A = Present Value of B
450/(1.11) + 650/(1.11)^2 + 850/(1.11)^3 = 850/(1.11) + x/(1.11)^2 + 450/(1.11)^3
1554.472661 = 765.7657658 + x/(1.11)^2 + 329.0361216
1554.472661 - 765.7657658 - 329.0361216 = x/(1.11)^2
459.6707736 * (1.11)^2 = x
x = 566.3603602 rounded off to 566.36
2 brothers, Joe and Bob get equal dollar amounts of securities as a gift. Joe immediately sells his securities and deposits the money to a bank account. On the other hand, Bob keeps his securities positions and holds them in a brokerage account. After 5 years, Joe has $10,000 in his bank account, while Bob has $30,000 in his brokerage account. The $20,000 difference between the account balances is explained by:
Answer:
Opportunity cost
Explanation:
The opportunity cost Bob's brother Joe $20,000. Remember, the term Opportunity cost refers to the cost (loss in this context) incurred when one forgoes an alternative best option–holding them in a brokerage account, in place for a less beneficial one.
Thus, Bob chose the best alternative over his brother.
"Today's settlement price on a Chicago Mercantile Exchange (CME) yen futures contract is $0.8011/¥100. Your margin account currently has a balance of $2,000. The next three days' settlement prices are $0.8057/¥100, $0.7996/¥100, and $0.7985/¥100. (The contractual size of one CME yen contract is ¥12,500,000). If you have a short position in one futures contract, the changes in the margin account from daily marking-to-market will result in the balance of the margin account after the third day to be A. $2,325. B. $2,000. C. $3,425. D. $1,425."
Answer:
Explanation:
The solution to the above problem is shown in the attached picture below. It is because of the arrangement i had ti use pen and book. Thank you
Data collected from the economy of Pokerville reveals that a 16% increase in income leads to the following changes:
• A 12% increase in the quantity of horses demanded.
• A 14% decrease in the quantity of clubs demanded.
• A 28% increase in the quantity of diamonds demanded.
Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table.
Good Income Elasticity of Demand Normal or Inferior Good
Horses
Spades
Aces
Which of the following three goods is most likely to be classified as a luxury good?
a. Aces
b. Spades
c. Horses
Answer:
Horses - 0.75 - normal
Clubs- 0.875 - inferior
Diamonds - 1.75 - normal
Diamond is a luxury good
Explanation:
Income elasticity of demand measures the responsiveness of quantity demanded to changes in income of the consumer.
Income elasticity of demand = percentage change in demand / percentage change in income
Income elascitiy for horses = 12% / 16% =
Income elasticity of demand for spades = 14% / 16% = 0.875
Income elasticity of demand for diamonds 28% / 16% = 1.75
A normal good is a whose demand increases when income increases and falls when income falls.
An inferior good is a good whose demand increases when income falls and whose demand falls when income increases.
Horses and diamonds are normal goods because the demand for the goods increases with income while clubs are inferior goods because the demand for the goods falls when income rises.
A luxury good is a good whose demand rises more than the rise in income. The demands for diamonds increase more than the increase in income, so diamonds are luxury goods.
I hope my answer helps you
The Dominican Republic is considering placing a room tax on Eco Hotels. The preliminary analysis requires them to calculate consumer and producer surplus before the tax. Below are the demand and supply equations for eco hotel rooms in the Dominican Republic.
Demand equation: Qd = 2500 - 5P
Supply equation: Qs = 1OP - 500
Calculate consumer surplus. Number
Calculate producer surplus.
Answer:
The consumer surplus is 225,000
The producer surplus is 112,500
Explanation:
According to the given data we have the following:
Demand equation: Qd = 2500 - 5P
Supply equation: Qs = 1OP - 500
Therefore, the equilibrium is at demand equal to the supply
2500-5P=10P-500
15P=3000
P=200
Q=10P-500=10*200-500=1500
The inverse demand function is
P=500-0.2Q
Therefore, CS=0.5*(Pmax -Pe)*Qe
=0.5*(500-200)*1500
=225,000
The consumer surplus is 225,000
Regarding PS, maximum price or y-intercept of the demand curve
Pe and Qe are equilibrium price and quantity the inverse supply curve
P=50+0.1Q
PS=0.5*(Pe-Pl)Qe
Pl=y intercept of supply curve
PS=0.5*(200-50)*1500
=112,500
The producer surplus is 112,500
Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds to make this investment
Answer and Explanation:
The computation is shown below:
But before reaching any decision, first we have to find out the ROI for new investment which is
ROI of new investment = net operating income ÷ investment
= $12,950 ÷ $70,000
= 18.50%
Now
If investment taken place, then overall ROI is
= Total net operating income ÷ Total average operating assets
= ($380,000 + $12,950) ÷ ($2,000,000 + $70,000)
= 18.98%
As we can see that the overall ROI i.e 18.98% is less than the currently ROI i.e 20% so he should not recommend ROI as it is shows fallen
Drivers of the growth of international acquisitions include all of the following except:_________.
1. the need to grow the business to compete with other global firms.
2. to acquire assets and resources needed to compete.
3. a faster way to develop a presence in the local market.
4. the desire to develop all of the required resources internally.
Answer:
the desire to develop all of the required resources internally.
Explanation:
(c)
Your answer is partially correct. Try again.
Prepare a CVP income statement for current operations and after Mary's changes are introduced.
v
MARIGOLD SHOE STORE
CVP Income Statement
Current
New
Sales
$800,000
$912,000
जी
Variable Expenses
$480,000
$576,00
Contribution Margin
$320,000
$336,000
Fixed Expenses
$270,000
$294,000
Net Income/(Loss)
$50,000
$42,000
$
Would you make the changes suggested?
No
Answer:
The changes suggested increase income by 16,000 therefore is a good idea to made the changes
Explanation:
Your Mistake is that fixed expenses should remain constant with a sales increase
Current New
Sales $800,000 $ 912,000
Variable $ 480,000 $ 576,000
Contribution $ 320,000 $ 336,000
Fixed $ 270,000 $ 270,000
Net Income $ 50,000 $ 66,000
Listed below are a few events and transactions of Kim Company. Year 1 Jan. 2 Purchased 95,000 shares of Grey Co. common stock for $501,000 cash. Grey has 285,000 shares of common stock outstanding, and its activities will be significantly influenced by Kim. Sept. 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $500,400. Year 2 June 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $722,900. Dec. 31 Kim sold 10,000 shares of Grey for $126,500 cash. Prepare journal entries to record the above transactions and events of Kim Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)
Answer:
Year 1
Jan. 2
Investment in Grey $501,000 (debit)
Cash $501,000 (credit)
Sept. 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Year 2
June 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Dec. 31
Cash $126,500 (debit)
Investment In Grey $126,500 (credit)
Explanation:
During the first year, Kim Company purchased 33% of stocks in Grey Co. This led to Kim Company having significant influence over Grey Co. Grey Co. is known as Associate Company.
The dividend paid by an Associate is Part of Share of profit from an associate and must be presented as such in the entity books.
During the second year, when Kim Company sells 10,000 shares of Grey Co, they lost part of Investment but still have significant influence (29%) in Grey Co.The Grey Co remains an Associate of Kim Company.
Within the relevant range, the variable cost per unit: remains constant as activity changes. increases as activity increases. decreases as activity increases. can increase or decrease as the activity changes.
Answer:
remains constant as activity changes.
Explanation:
The Variable Cost per unit is the actual production cost that is incurred in order to produce each unit that is affected by changes in the company's output or activity level. Within the relevant range, the variable cost per unit remains constant as activity changes, even though the total dollar amount varies in accordance to the various changes in the company's activity, the variable cost will stay constant on a per unit basis.
The U.S. Department of Defense needs to buy several million dollars worth of tires for its armored personnel carriers. An American manufacturer can supply the tires for $20 million. A foreign supplier can provide the tires for $15 million. Under these facts:________.
A) GATT requires that the tires be bought from the foreign supplier.B) A U.S. statute requires that the government buy from the U.S. supplier.C) Since the foreign supplier is cheaper, the government must buy from the foreign supplier to save money.D) None of the above is correct.
Answer:
The correct answer to the following question will be Option B.
Explanation:
The United States Department of Defense wants to supply tires valued many millions of dollars for some of its tanks and armored vehicles. An American manufacturer could supply 20 million dollars for the tires. Variables are dependent can supply $15 million again for tires. Beneath such factual information.The other three choices have no relation with the specified scenario. So choice B is the perfect solution to that.
A company produces a single product. Variable production costs are $13.50 per unit and variable selling and administrative expenses are $4.50 per unit. Fixed manufacturing overhead totals $51,000 and fixed selling and administration expenses total $55,000. Assuming a beginning inventory of zero, production of 5,500 units and sales of 4,350 units, the dollar value of the ending inventory under variable costing would be:
Answer:
$15,525
Explanation:
Calculation for ending inventory under variable costing
Using this formula
Units in ending inventory = Units in beginning inventory + Units produced −Units sold
Thus,
= 0 units + 5,500 units −4,350 units
= 1,150 units
Formula for Value of ending inventory under variable costing
= Unit in ending inventory × Variable production cost
= 1,150 units × $13.50 per unit
= $15,525
On January 1, 2018, White Corporation signed a $ 120,000, four-year, 2% note. The loan required White to make payments annually on December 31 of $ 30,000 principal plus interest.
Required:
a. Journalize the issuance of the note on January 1, 2018
b. Journalize the first payment on December 31, 2018
Answer:
Dr cash $120,000
Cr Notes payable $120,000
Dr interest expense $2,400
Dr notes payable $30,000
Cr cash $32,400
Explanation:
The issuance of the notes payable of $120,000 means that White Corporation's cash inflow has increased by $120,000 while its corresponding loan obligation has also gone up by the same amount.
On 31 December 2018,White Corporation would need to repay $30,000 principal plus interest of $2,400 ($120,000*2%).The interest payment is debited to interest expense while $30,000 repayment is debited to notes payable and cash is credited with the total of $32,400
Gasoline is considered a final good if it is sold by a a. gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. b. pipeline operator to a gasoline station in San Francisco. c. gasoline station to a motorist in Los Angeles. d. All of the above are correct.
Answer:
c. gasoline station to a motorist in Los Angeles.
Explanation:
A final good is a good that is used by the consumer to satisfy current wants and it is not used to produce another good.
Gasoline would be used by the fuel station in San Francisco to generate cash by selling it. So it is not a final good.
The bus company uses the fuel as an input needed to generate cash. It is not a final good to the bus company.
I hope my answer helps you
The Sky Blue Corporation has the following adjusted trial balance at December 31. Debit Credit Cash $ 1,340 Accounts Receivable 3,100 Prepaid Insurance 3,400 Notes Receivable (long-term) 4,100 Equipment 17,500 Accumulated Depreciation $ 4,800 Accounts Payable 6,520 Salaries and Wages Payable 1,550 Income Taxes Payable 4,000 Deferred Revenue 820 Common Stock 3,500 Retained Earnings 1,440 Dividends 410 Sales Revenue 51,930 Rent Revenue 410 Salaries and Wages Expense 23,800 Depreciation Expense 2,400 Utilities Expense 5,320 Insurance Expense 2,500 Rent Expense 7,100 Income Tax Expense 4,000 Total $ 74,970 $ 74,970 Required: Prepare an income statement for the year ended December 31. How much net income did the Sky Blue Corporation generate during the year
Answer:
Net Income that Sky Blue Corporation generated during the year $ 7220
Explanation:
Sky Blue Corporation
Income Statement
For the year ended December 31
Sales Revenue $51,930
Less Expenses:
Operating Expenses : $ 38,620
Rent Expense 7,100
Salaries and Wages Expense 23,800
Depreciation Expense 2,400
Utilities Expense 5,320
Operating Income : $ 13,310
Add Other Income : $ 410
Rent Revenue 410
Less Other Expenses : $ 6500
Insurance Expense 2,500
Income Tax Expense 4,000
Net Income $ 7220
We get the net income by subtracting the total expenses from the total revenues. This includes other income and other expenses.
