In April 2020, the oil market experienced a significant drop in prices, with futures prices turning negative. This unprecedented event was primarily driven by two main factors: oversupply and reduced demand.
The combination of a price war between major oil producers and the economic impact of the COVID-19 pandemic led to a severe imbalance in the oil market. As a result, storage capacity became scarce, causing traders to pay others to take oil off their hands. This negative oil price phenomenon highlighted the vulnerability of the oil industry to unexpected shocks and emphasized the need for more efficient market mechanisms.
The negative oil prices in April 2020 can be attributed to an oversupply of oil and a sharp decline in demand. Firstly, a price war erupted between major oil-producing countries, Saudi Arabia and Russia, as they failed to agree on production cuts. This led to a surge in oil supply as both countries ramped up production to gain market share. The increased supply, coupled with weak global demand, created a substantial surplus of oil.
The negative oil price event in April 2020 shed light on the vulnerabilities of the oil market and highlighted the need for more efficient market mechanisms. It underscored the importance of coordinated production cuts, effective storage management, and diversified energy sources to mitigate the impacts of sudden disruptions and maintain stability in the oil industry.
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3. explain the theory of normal backwardation. explain the expected effects on price relationships and risk premiums.
Normal backwardation has a significant impact on price relationships and risk premiums, and understanding these effects is essential for investors who wish to navigate the futures market successfully.
The theory of normal backwardation suggests that futures prices for a commodity will be below expected spot prices due to the presence of hedgers. Hedgers are investors who enter into futures contracts to protect against potential losses in the physical market. By buying futures contracts, hedgers ensure that they will receive a predetermined price for their goods regardless of future market conditions.
The expected effects on price relationships and risk premiums are as follows: if futures prices are below spot prices, this creates a negative basis, which indicates that the market is in backwardation. In this scenario, there is an incentive for speculators to buy futures contracts, which drives up futures prices. The increased demand for futures contracts also lowers risk premiums as investors are more willing to take on the risk of holding these contracts.
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On which financial statement should a gain or loss on the sale of an asset be reported ? a. Balance sheet
b. Statement of retained earnings c. Income statement d. Statement of cash flows e. None of the above, the correct answer is: _______________
When it comes to reporting gains or losses on the sale of an asset, the correct financial statement to use is the income statement.
The income statement provides a summary of the company's revenues and expenses over a specific period, usually one year. It is divided into various sections, such as revenue, cost of goods sold, operating expenses, and net income. The gain or loss on the sale of an asset is included as part of the company's operating activities in the income statement.
Reporting gains or losses on the balance sheet would not be appropriate, as the balance sheet only reflects a snapshot of the company's assets, liabilities, and equity at a particular point in time. Similarly, the statement of retained earnings shows changes in a company's retained earnings over time, but it does not provide information about specific transactions like the sale of assets. The statement of cash flows reflects a company's inflows and outflows of cash, but it does not typically show gains or losses from asset sales separately.
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Question 4 Teoh, Meng and Chen are partners sharing profits and losses equally. The business performs has the following Statement of Financial Position as at 31 December 2021. Accumulated Non-current
The partners, Teoh, Meng, and Chen, share equal profits and losses in their business. As of December 31, 2021, the business has accumulated non-current assets and liabilities.
The statement of financial position, also known as the balance sheet, provides a snapshot of a company's financial position at a specific point in time. In this case, as of December 31, 2021, the business owned non-current assets and had non-current liabilities. Non-current assets are long-term assets that are not expected to be converted into cash within one year. These assets include items such as property, plant, and equipment, investments, and intangible assets. The value of these assets represents the long-term investment and resources of the business. On the other hand, non-current liabilities are long-term obligations that are not due for payment within one year. These liabilities include items such as long-term loans, bonds, and deferred revenue. They represent the long-term financial obligations of the business.
Since the partners share profits and losses equally, the accumulated non-current assets and liabilities of the business are shared equally among Teoh, Meng, and Chen. This means that each partner is entitled to an equal portion of the value of the non-current assets and is responsible for an equal share of the non-current liabilities. In conclusion, as of December 31, 2021, Teoh, Meng, and Chen, as equal partners in the business, have accumulated non-current assets and liabilities. The non-current assets represent the long-term investment and resources of the business, while the non-current liabilities represent the long-term financial obligations. These values are divided equally among the partners as per their profit-sharing agreement.
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Net present value. Quark Industries has three potential projects, all with an initial cost of $1,900,000. The capital budget for the year will allow Quark to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Quark should accept. Project N $600,000 S600,000 $600,000 S600,000 S600,000 14% Project o Year 1 Year 2 Year 3 Year 4 Year 5 Discount rate Project M $500,000 $500,000 $500,000 $500,000 $500,000 10% $1,000,000 S800,000 S600,000 S400,000 $200,000 15% Which project should Quark accept? (Select the best response.) O A. Project M O B. Project。 O c. Project N 0 D. None of the projects
The goal is to select the project with the highest NPV, Quark should accept Project M, as it has the least.
To determine which project Quark should accept, we need to calculate the net present value (NPV) for each project and compare them.
NPV takes into account the initial cost and the future cash flows, discount by the appropriate discount rate.
Let's calculate the NPV for each project:
Project N:
Discount rate: 14%
Year 0: -$1,900,000
Year 1: $600,000 / (1 + 0.14) = $526,315.79
Year 2: -$600,000 / (1 + 0.14)² = -$461,538.46
Year 3: $600,000 / (1 + 0.14)³ = $405,529.41
Year 4: -$600,000 / (1 + 0.14)⁴ = -$356,000.36
Year 5: $600,000 / (1 + 0.14)⁵ = $311,754.62
NPV of Project N = -$1,900,000 + $526,315.79 - $461,538.46 + $405,529.41 - $356,000.36 + $311,754.62 = -$1,573,938.00
Project O:
Discount rate: 10%
Year 0: -$1,900,000
Year 1: $500,000 / (1 + 0.10) = $454,545.45
Year 2: -$500,000 / (1 + 0.10)² = -$413,223.14
Year 3: $500,000 / (1 + 0.10)³ = $375,661.16
Year 4: -$500,000 / (1 + 0.10)⁴ = -$341,510.15
Year 5: $500,000 / (1 + 0.10)⁵ = $310,464.68
NPV of Project O = -$1,900,000 + $454,545.45 - $413,223.14 + $375,661.16 - $341,510.15 + $310,464.68 = -$1,613,061.40
Project M:
Discount rate: 15%
Year 0: -$1,900,000
Year 1: $1,000,000 / (1 + 0.15) = $869,565.22
Year 2: -$800,000 / (1 + 0.15)² = -$593,806.87
Year 3: $600,000 / (1 + 0.15)³ = $387,896.91
Year 4: -$400,000 / (1 + 0.15)⁴ = -$230,802.79
Year 5: $200,000 / (1 + 0.15)⁵ = $100,309.09
NPV of Project M = -$1,900,000 + $869,565.22 - $593,806.87 + $387,896.91 - $230,802.79 + $100,309.09 = -$1,366,838.44
Comparing the NPVs, we can see that:
- Project N has an NPV of -$1,573,938.00
- Project O has an NPV of -$1,613,061.40
- Project M has an NPV of -$1,366,838.44
Since the goal is to select the project with the highest NPV, Quark should accept Project M, as it has the least
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Imagine an equiproportionate cutback such that each firm is
forced to reduce by 10 tons. What is the total cost of the 20 ton
reduction?
A. $100
B. $200
C. $300
D. $400
If each firm is forced to reduce by 10 tons and there is a total reduction of 20 tons, it means that there are 2 firms in the scenario. Since each firm is reducing by 10 tons, the total cost of the reduction can be calculated by multiplying the reduction per firm by the number of firms. In this case, the total cost would be 10 tons per firm * 2 firms = 20 tons.
Therefore, the total cost of the 20-ton reduction would be D. $400.
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The required initial capital expenditures for a new waste treatment project is projected to be $100,000. Annual operation and maintenance costs are $22,000 per year in current-year, real dollar amounts. The lifetime of the project is 25 years and the appropriate (real) MARR value is 4% per year. (a) Determine the present value of the costs of this project. 1 (b) A valuation analysis has determined that the waste treatment project will create benefits that equal $32,000 per year for residents of the region in terms of access to cleaner water and soil. Is the investment worth it? (c) What is the minimum benefit (instead of $32,000) that would be required for this investment to be feasible for public investment
(a) The present value of the costs of this project is $407,091.55.
(b) In this case, the present value of benefits is not provided.
(c) The minimum benefit required for this investment to be feasible for public investment is approximately $15,752.85 per year.
To determine the present value of the costs of the project, we need to calculate the present worth of the initial capital expenditure and the annual operation and maintenance costs.
The present worth of the initial capital expenditure can be calculated using the present value formula:
PV_initial = Initial capital expenditure / (1 + MARR)^n
where MARR is the discount rate (4% or 0.04) and n is the number of years (25).
PV_initial = $100,000 / (1 + 0.04)^25
PV_initial ≈ $45,820.75
The present worth of the annual operation and maintenance costs can be calculated using the present value formula for an annuity:
PV_annuity = Annual cost * [(1 - (1 + MARR)^(-n)) / MARR]
PV_annuity = $22,000 * [(1 - (1 + 0.04)^(-25)) / 0.04]
PV_annuity ≈ $361,270.80
The total present value of costs is the sum of the present worth of the initial capital expenditure and the present worth of the annual operation and maintenance costs:
Total PV_costs = PV_initial + PV_annuity
Total PV_costs ≈ $45,820.75 + $361,270.80
Total PV_costs ≈ $407,091.55
(b) To determine if the investment is worth it, we compare the present value of costs to the present value of benefits. In this case, the present value of benefits is not provided.
(c) To calculate the minimum benefit required for the investment to be feasible for public investment, we need to set the present value of benefits equal to the total present value of costs and solve for the benefit amount.
PV_benefits = Total PV_costs
Benefit * [(1 - (1 + MARR)^(-n)) / MARR] = $407,091.55
Rearranging the equation:
Benefit = $407,091.55 * (MARR / (1 - (1 + MARR)^(-n)))
Using the given values:
Benefit = $407,091.55 * (0.04 / (1 - (1 + 0.04)^(-25)))
Benefit ≈ $15,752.85
Therefore, the minimum benefit required for this investment to be feasible for public investment is approximately $15,752.85 per year.
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the sum of the frictional and structural rates of unemployment is the:
The sum of the frictional and structural rates of unemployment is called the natural rate of unemployment. Its level varies by country and over time, and it is generally estimated to be between 4% and 6% in developed economies.
The natural rate of unemployment is the sum of frictional and structural unemployment rates. It refers to the amount of unemployment that exists when the labour market is in equilibrium and does not have inflationary or deflationary pressures. It's also known as the non-accelerating inflation rate of unemployment (NAIRU).A certain level of frictional unemployment is healthy for an economy since it implies that people are temporarily unemployed as they switch to new careers or locations. Structural unemployment is caused by changes in the economy or industry that have resulted in certain jobs becoming obsolete, resulting in a mismatch between the supply and demand for labour. When this occurs, it might take a while for the unemployed individuals to retrain or find new jobs to suit their skills. The natural rate of unemployment should not be confused with cyclical unemployment, which is caused by changes in economic activity and frequently linked to business cycles. This kind of unemployment is temporary and fades away as the economy recovers.Overall, the natural rate of unemployment is determined by the economy's structural characteristics and demographic factors. It is not affected by monetary policy or other short-term economic policy actions. Its level varies by country and over time, and it is generally estimated to be between 4% and 6% in developed economies.
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2. The price of a European call that expires in six months and has a strike price of $30 is $2.The underlying stock price is $29.and a dividend of $0.50 is expected in two months and again in five months.The term structure is flat with all risk-free interest rates being 10%.Calculate the price of a European put option that expires in six months and has a strike price of $30.
To calculate the price of a European put option, we can use the put-call parity relationship. The put-call parity equation is given by:
Call Option Price - Put Option Price = Stock Price - Present Value of Strike Price + Present Value of Dividends
Given the information provided, we can calculate the present value of dividends and substitute the values into the put-call parity equation.
The dividend of $0.50 is expected in two months and again in five months. We need to calculate the present value of these dividends using the risk-free interest rate of 10%.
Present Value of Dividends = Dividend / (1 + Risk-Free Interest Rate)^(Time to Dividend in Years)
For the dividend expected in two months:
Present Value of Dividend (2 months) = $0.50 / (1 + 0.10)^(2/12) ≈ $0.495
For the dividend expected in five months:
Present Value of Dividend (5 months) = $0.50 / (1 + 0.10)^(5/12) ≈ $0.478
Now, let's substitute the values into the put-call parity equation:
$2 - Put Option Price = $29 - $30 + $0.495 + $0.478
Simplifying the equation:
Put Option Price = $2 - $29 + $30 - $0.495 - $0.478
Put Option Price ≈ $2.027
Therefore, the price of a European put option that expires in six months and has a strike price of $30 is approximately $2.027.
Based on the given information and the put-call parity relationship, the calculated price of a European put option is approximately $2.027. This price reflects the market conditions, including the stock price, strike price, dividends, and the risk-free interest rate.
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b. The mood on MariBank very bullish when they propose to acquire HengBank at RM 4.26 billion. The proposed acquisition will see MariBank emerge as the single largest shareholder in HengBank. Most analysts and stock broking firms believe that the stock price would continue to rise. To bet on this expectation, Rizal Hidayat buys 1500 units of MariBank September RM 8.00 call option for 50 sen. Currently the shares are traded at RM 9.50. Identify: i. Type of option. I (1 mark) ii. Underlying asset. (1 mark) iii. Exercise price. (1 mark) Calculate the profit if the holder expectation is accurate. (4 marks) WEWERS Salon 20 D MO E S D242 S AMESE R444
Profit when MariBank shares are sold at RM 9.50 = RM 9.50 - RM 8.00 - RM 0.50= RM 1. Hence, the net profit that Rizal will earn is RM 1500 - RM 750 = RM 750.
Therefore, profit from 1500 units of MariBank September RM 8.00 call option = 1500 x RM 1 = RM 1500Explanation:In the given scenario, Rizal Hidayat buys 1500 units of MariBank September RM 8.00 call option for 50 sen. This means that Rizal has bought the right to buy MariBank shares at the exercise price of RM 8.00 within the expiration date of September.Option type: The option type here is call option, as Rizal is betting on the rise of MariBank shares.Underlying asset: The underlying asset in this case is MariBank shares.Exercise price: The exercise price in this case is RM 8.00.Profit calculation: The current share price is RM 9.50. Since the market is bullish, Rizal is expecting that the shares will rise further. Thus, if Rizal is correct in his expectation, he will buy MariBank shares at RM 8.00 and sell them in the market at the current price of RM 9.50, earning a profit of RM 1. The cost of buying 1500 units of the call option is 50 sen each, which is a total of RM 750. Thus, the net profit that Rizal will earn is RM 1500 - RM 750 = RM 750.
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Who watches stocks and bonds (and equivalent of bills, or for that manner, mortgages) and gets paid for information on it?
There are a lot of investors, traders, and financial analysts who monitor and analyze stocks, bonds, and other financial securities to gain information about them. These people get paid for their analysis and information on them.
What are Stocks? Stocks are ownership stakes in publicly-traded companies that are bought and sold on stock exchanges. When someone buys a stock, they become a part-owner in the company and are entitled to a portion of its profits. Stock prices fluctuate based on various factors, including the company's performance and overall market conditions.
What are Bonds? Bonds are debt securities issued by companies or governments to raise funds. When someone buys a bond, they are essentially loaning money to the issuer. The issuer promises to pay back the principal plus interest at a later date. Bond prices also fluctuate based on various factors, including the issuer's creditworthiness and changes in interest rates.
Who watches stocks and bonds? There are many people and organizations that watch stocks and bonds. Some of these include:
Investors: Individual investors and institutional investors (such as mutual funds and hedge funds) monitor stocks and bonds to make investment decisions.
Traders: People who buy and sell securities for profit monitor stocks and bonds to find opportunities to make money.
Financial Analysts: Analysts who work for investment banks, brokerage firms, and other financial institutions monitor stocks and bonds to provide information and recommendations to clients.
Regulatory Authorities: Government agencies such as the Securities and Exchange Commission (SEC) monitor stocks and bonds to ensure that companies are complying with regulations and that investors are protected.
Financial Media: News outlets such as Bloomberg and CNBC monitor stocks and bonds to report on market trends and provide analysis to their audiences.
In conclusion, there are many people who watch and monitor stocks and bonds, and they get paid for their analysis and information on them.
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if two restaurant managers disagreed about which restaurant should get additional funds to pay for extra staff on the restaurant floor, what would be the source of their conflict?
The source of their conflict is most likely due to limited resources that need to be allocated to only one restaurant.
When two restaurant managers have a disagreement about which restaurant should get extra funds to pay for additional staff on the restaurant floor, the source of their conflict would most likely be because of limited resources that need to be allocated to only one restaurant. For example, if there is only a certain amount of money available to hire additional staff, then both managers may argue and give reasons why their restaurant needs the funds more than the other. They could argue that their restaurant is the busiest and therefore needs the additional staff more, or that their staff is overworked and needs more help. In most cases, both managers would argue in favor of their own restaurant, as both restaurants have a vested interest in getting the additional funds.
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Required
a) What is Organizational Behaviour?
b) Briefly explain three (3) principles underlying Organizational Behaviour
c) Outline three (3) important principles of organizational behaviour
Organizational Behaviour refers to the study of how individuals behave and act within an organization.
b) Three principles underlying Organizational Behaviour include:Individual differences: This principle deals with the differences in attitudes, values, and behavior that individuals exhibit. Different people have different perceptions, which can lead to misunderstandings and conflicts in the workplace.Motivation: The principle of motivation deals with the factors that drive individuals to behave in certain ways. It is important to understand what motivates people to perform at their best and how to create an environment that fosters motivation.
c) Three important principles of organizational behavior include:Communication: Effective communication is vital to the success of any organization. It involves exchanging information, ideas, and feedback. Communication should be clear, concise, and respectful. This helps to avoid misunderstandings and conflicts in the workplace.Teamwork: Teamwork involves working collaboratively with others to achieve a common goal.
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Jin told his management team, "We will conduct a, as part of our division's strategic management process. This will summarize the relevant important facts from our external and internal analyses. Furthermore, this will identify the primary and secondary strategic issues that we face. Multiple Choice skill improvement assessment stakeholder analysis SWOT analysis technology assessment
The process that Jin's management team will conduct is called a SWOT analysis.
SWOT analysis is a strategic management tool used to identify a company's internal and external factors. These factors can be analyzed to aid in decision-making, strategic planning, and overall performance assessment. It provides a clear picture of an organization's strengths, weaknesses, opportunities, and threats. The primary and secondary strategic issues are identified during SWOT analysis. It summarizes relevant important facts from external and internal analyses, and also highlights the key concerns and strategic implications of these analyses. Therefore, the process that Jin's management team will conduct is called a SWOT analysis.
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For this question, consider that the letter "A" denotes the last 4 digits of your student number. That is, for example, if your student number is: 12345678, then A = 5678.
Assume that the factors affecting the aggregate expenditures of the sample economy, which are desired consumption (Cd), taxes (T), government spending (G), investment (Id) and net exports (NXd) are given as follows:
Cd = A + 0.6 YD,
T = 100 + 0.2Y,
G = 400,
Id = 300 + 0.05 Y,
NXd = 200 – 0.1Y.
(a) According to the above information, explain in your own words how the tax collection changes as income in the economy changes?
(b) Write the expression for YD (disposable income).
(c) Find the equation of the aggregate expenditure line. Draw it on a graph and show where the equilibrium income should be on the same graph.
(d) State the equilibrium condition. Calculate the equilibrium real GDP level.
(e) What is the value of expenditure multiplier in this economy? If the government expenditure increases by 100 (i.e. ΔG=100), what will be the change in the equilibrium income level in this economy? What will be the new equilibrium level of real GDP?
(f) Suppose that the output gap is given as "-2000". Explain what is output gap. Given this information, what is the level of potential GDP? How much should government change its spending (i.e. ΔG=?) to close the output gap?
(a) Tax collection in the economy increases as income increases based on the given information, with a tax rate of 0.2.
(b) Disposable income (YD) can be calculated by subtracting taxes (T) from income (Y).
(c) The equation of the aggregate expenditure line is AE = Cd + Id + G + NXd. The equilibrium income occurs where aggregate expenditure equals real GDP.
(d) The equilibrium condition is when aggregate expenditure equals real GDP. By substituting the given equations, we can solve for the equilibrium real GDP level.
(e) The expenditure multiplier in this economy can be determined based on the marginal propensity to consume. An increase in government expenditure by 100 will lead to a multiplied change in equilibrium income. The new equilibrium level of real GDP can be calculated accordingly.
(f) The output gap represents the difference between actual GDP and potential GDP. Given the output gap of -2000, the level of potential GDP can be determined. To close the output gap, the government should adjust its spending (ΔG) by a certain amount.
(a) As income in the economy changes, tax collection also changes. According to the given information, the tax rate is 0.2, which means that for every one unit increase in income, taxes increase by 0.2 units.
(b) Disposable income (YD) is calculated by subtracting taxes (T) from income (Y). In this case, YD = Y - T.
(c) The equation of the aggregate expenditure line is AE = Cd + Id + G + NXd, where Cd is desired consumption, Id is investment, G is government spending, and NXd is net exports. By substituting the given equations, we can obtain the equation for the aggregate expenditure line.
To determine the equilibrium income, we find the point where aggregate expenditure equals real GDP on a graph of the aggregate expenditure line.
(d) The equilibrium condition is when aggregate expenditure equals real GDP. By substituting the given equations for aggregate expenditure and solving for Y, we can find the equilibrium real GDP level.
(e) The expenditure multiplier can be determined based on the marginal propensity to consume (MPC). The change in equilibrium income resulting from a change in government expenditure can be calculated by multiplying the change in government expenditure by the expenditure multiplier. The new equilibrium level of real GDP can be obtained by adding this change to the initial equilibrium level.
(f) The output gap represents the difference between actual GDP and potential GDP. Given an output gap of -2000, it indicates that actual GDP is below potential GDP. To close the output gap, the government should increase its spending (ΔG) by a certain amount. The specific value of ΔG needed to close the output gap would depend on various factors and would need to be calculated based on the given information.
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Instruction: Answer ALL questions. Section A (25 marks) 1. From the following information, calculate the missing figures in each of the options below. No. Assets (RM) Liabilities (RM) Capital (RM) 67 891 a. 12 345 b. 98 765 54 321 C. 86 420 25 791 d. 91 823 20 394 c. 56 473 89 345 f. 34 678 78 569 87 564 34 567 86 531 34 500 67.967 34 567 76 985 23 789 k. 23 633 93 800 L 22 632 43 160 m. 92 819 76 543 n. 90 900 20 300 0. 79 345 12 123 (1 mark x 15 = 15 marks) 2. For each of the following business items identify the assets, liabilities and owner's equity. Furniture & Fittings Bank Capital Drawings Accounts payable Closing inventory Mortgage Overdraft Accounts receivable Cash (1 mark x 10 = 10 marks) h. i. į
The assets, liabilities, and owner's equity of the given business items are as follows: Furniture & Fittings Assets Accounts payable Liabilities Bank Cash Accounts receivable Closing inventory Overdraft Mortgage Capital Drawings.
From the given information, the missing figures are calculated as follows:a. 12 345Assets (RM) = 67 891 Liabilities (RM) = 45 546 Capital (RM) = 22 345b. 98 765Assets (RM) = 67 891 Liabilities (RM) = 10 222 Capital (RM) = 54 652c. 56 473Assets (RM) = 87 564 Liabilities (RM) = 34 567 Capital (RM) = 45 530d. 91 823Assets (RM) = 34 567 Liabilities (RM) = 25 791 Capital (RM) = 31 465f. 34 678Assets (RM) = 34 500 Liabilities (RM) = 20 394 Capital (RM) = 13 784k. 23 633Assets (RM) = 23 789 Liabilities (RM) = 67 967 Capital (RM) = 56 632L. 22 632Assets (RM) = 43 160 Liabilities (RM) = 34 567 Capital (RM) = 56 225m. 92 819Assets (RM) = 76 543 Liabilities (RM) = 34 567 Capital (RM) = 58 709n. 90 900Assets (RM) = 76 543 Liabilities (RM) = 20 300 Capital (RM) = 67 1570. 79 345Assets (RM) = 123 000 Liabilities (RM) = 43 654 Capital (RM) = 99 3462. The assets, liabilities, and owner's equity of the given business items are as follows: Furniture & Fittings Assets Accounts payable Liabilities Bank Cash Accounts receivable Closing inventory Overdraft Mortgage Capital Drawings.
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Ch. 10-Setting Profit Margins for Bidding 1. Determine the break-even volume of work for a company with a fixed overhead of $250,000 and a contribution margin of 11.3%
To determine the break-even volume of work for a company, the fixed overhead and contribution margin need to be considered. In this case, the company has a fixed overhead of $250,000 and a contribution margin of 11.3%.
The break-even volume refers to the amount of work the company needs to undertake to cover all its fixed costs and achieve a zero profit. The calculation will provide the volume of work required for this break-even point.
To calculate the break-even volume of work, divide the fixed overhead by the contribution margin expressed as a decimal. The contribution margin is calculated by subtracting variable costs from revenue and then dividing the result by revenue. In this case, the contribution margin is 11.3%, which can be expressed as 0.113.
Break-even volume = Fixed Overhead / Contribution Margin
Substituting the given values:
Break-even volume = $250,000 / 0.113
Performing the calculation will yield the break-even volume of work required for the company. The result will indicate the minimum volume of work the company needs to undertake to cover all its fixed costs and reach the break-even point.
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You are the Human Resources Director for a large petroleum refinery in Minnesota. The VP of HR is planning for an executive session with the CEO and other VP’s to develop the next 3-year strategic plan.
The major items facing the organization are as follows:
Approximately 80 of the company's 1,000 employees are petroleum engineers. They are difficult to recruit, highly compensated, and key to the company's success and sustainability. You have an immediate need for 15 additional petroleum engineers. Five percent of the current engineers are set to retire in the next 24-months. Your organization pays engineers at the industry midpoint for salaries.
The Board of Trustees wants to invest heavily into biodiesel and ethanol operations in the next three years. The current labor force skillset crosses over from petroleum refining, but the current labor union opposes cross training unless incentives are offered. Incentives would be $10,000 annually per person willing to participate in job retraining. It is estimated that 25 employees will be needed to start work in 12-months, then another 25 employees once the facility becomes operational in approximately 24-months.
Three major environmental health and safety issues happened in the past 12-months. They are as follows:
One aboveground storage tank ruptured, causing a spill of 5,000 gallons of crude oil. Some of the crude oil made it to a neighboring property. The current remediation costs are at $200,000 and climbing.
An explosion in one of the process areas led to a worker fatality. Minnesota OSHA investigated and found violations of OSHA Lockout/Tagout rules and deficient training related to Minnesota AWAIR and Right-to-Know laws. The company paid for the worker’s funeral. Repair costs have been completed. Fines have been paid. The total direct costs are at $125,000.
A former employee went to the local news outlet and gave a detailed account of how water samples to be sent to the Minnesota Pollution Control Agency for testing were inappropriately collected to show cleaner results. There are no direct costs known, but public perception is poor.
For your portfolio assignment, prepare a formal report to your VP that outlines all of the following questions:
1) Staffing proposal for petroleum engineers to meet needs over the next 24-months. Your proposal should include industry data to prove the proposal’s competitiveness.
Staffing proposal for petroleum engineers to meet needs over the next 24-months: The organization should focus on a strategic recruitment plan, including targeted hiring efforts, competitive compensation packages, and collaboration with educational institutions.
How can the organization effectively address its immediate need for additional petroleum engineers and prepare for future staffing requirements?The organization should implement a three-pronged approach to address its staffing needs for petroleum engineers. Firstly, it should engage in targeted hiring efforts, including actively seeking out qualified candidates through job boards, professional networks, and partnerships with engineering associations. This will help attract a pool of potential candidates and increase the chances of finding suitable individuals for the positions.
Secondly, the organization should ensure that its compensation packages for petroleum engineers are competitive within the industry. Benchmarking industry data is crucial to determine the industry midpoint for salaries. By offering salaries at this level, the organization can position itself as an attractive employer and enhance its ability to recruit and retain top talent.
Lastly, the organization should establish partnerships with educational institutions that offer relevant engineering programs. This can involve collaborating with universities and colleges to develop internship programs, co-op opportunities, and scholarships for petroleum engineering students. By fostering these relationships, the organization can build a pipeline of future talent and establish itself as an employer of choice in the industry.
To address the future labor force skillset required for biodiesel and ethanol operations, the organization should work collaboratively with the labor union. Offering incentives, such as $10,000 annually per person for job retraining, can encourage current employees to participate in cross-training programs. These incentives should be communicated effectively to highlight the benefits of expanding their skillset and contributing to the organization's growth.
To meet the anticipated staffing needs for biodiesel and ethanol operations, the organization should plan for the recruitment of 25 employees to start work in 12 months and an additional 25 employees when the facility becomes operational in approximately 24 months. Timely identification of candidates, a streamlined selection process, and effective onboarding procedures will be crucial to ensure a smooth transition and optimal utilization of the new workforce.
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If you were to do a research on the topic of determining the satisfaction of university students on May Festival activities,
a- how would you define target population?
b- would you take a census or a sample for your research?
If I were to do research on the satisfaction of university students on May Festival activities, the target population would be all the students who attend the university and participate in the May Festival activities. This includes both undergraduate and graduate students.
In terms of data collection, I would take a sample of the target population instead of conducting a census. A census would involve surveying every single student, which would be impractical and time-consuming. A sample, on the other hand, involves selecting a representative group of students to survey. This allows for a more manageable data collection process while still providing a reliable estimate of the satisfaction of the entire population.
To ensure the sample is representative, I would use a random sampling technique, such as stratified random sampling, to ensure that students from different departments, years, and genders are included in the sample. I would also aim for a sufficiently large sample size to ensure that the results are statistically significant and can be generalized to the target population.
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Which growth stage is B hotels pursuing if they are trying to open more hotel properties in the European market after opening 100 hotels in the USA?
Group of answer choices
Product development
Market penetration
Market development
Diversification
B hotels is pursuing market development in the European market.
What growth stage is B hotels focusing on by expanding into the European market?By opening more hotel properties in the European market after successfully establishing 100 hotels in the USA, B hotels is pursuing market development. Market development refers to expanding into new geographical markets with existing products or services. In this case, B hotels is leveraging its experience and success in the USA to enter the European market and tap into new customer segments.
This strategy allows them to reach a broader audience and increase their market share by offering their established hotel concept to a new set of customers. Through market development, B hotels aims to extend its reach and grow its business internationally.
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Q2: List and briefly explain any 4 four work oriented Job Analysis methods. (5 Marks)
Q3 : Briefly explain any 4 counter-productive behaviors found in employees as ussed in the class (5 marks).
Four work-oriented Job Analysis methods are namely Observation Method, Interview Method, Questionnaire Method and Diary Method.
Observation Method: This method involves directly observing employees as they perform their job tasks. The observer carefully records the actions, skills, and behaviors exhibited by the employees. It provides valuable insights into the actual work being done, the sequence of tasks, and the physical and cognitive requirements of the job.
Interview Method: In this method, job analysts conduct structured interviews with employees, supervisors, and managers to gather information about the job. The interviews aim to gather details about job responsibilities, skills and qualifications required, work environment, challenges faced, and performance expectations. It helps in understanding the job from the perspective of those directly involved.
Questionnaire Method: Job analysis questionnaires are designed to collect information about various aspects of a job. Employees and supervisors are asked to complete the questionnaires, which cover areas such as job duties, knowledge and skills required, equipment used, relationships with others, and work conditions. This method allows for standardized data collection and can be administered to a large number of individuals.
Diary Method: This method involves employees maintaining a record or diary of their activities, tasks, and time allocation throughout the day or week. They note down the tasks they perform, the time spent on each task, any challenges encountered, and the outcomes achieved. The diary method provides a detailed account of the job activities and can help identify patterns, time utilization, and areas of improvement.
The observation method provides firsthand knowledge of job tasks and behaviors.
The interview method gathers information through structured conversations with employees and supervisors.
The questionnaire method allows for standardized data collection from a larger sample size.
The diary method provides detailed insights into time allocation and task performance.
Each of these job analysis methods offers unique advantages in understanding job requirements, tasks, and performance expectations. Using a combination of these methods can provide a comprehensive and accurate analysis of work-oriented aspects, aiding in effective workforce planning, recruitment, and performance management.
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Question 2 (answer all parts of the question) Energy Ltd is a wholesaler and distributor of electrical components. The most recent draft financial statements of the business included the following: Income Statement for the year £m £m 14.2 Sales revenue Cost of Sales: I Opening inventories Purchases Cost of goods available for sale Less: Closing inventories Cost of goods sold (7.8) Gross profit 6.4 Administration expenses (3.0) (2.1) Distribution expenses Operating profit 1.3 Finance costs (0.8) Profit before taxation 0.5 Tax (0.2) Profit for the period 0.3 ASSETS Non-current assets Property, plant and equipment Land and buildings Equipment Motor vehicles Current assets Inventories Trade receivables Cash at bank 3.2 8.4 11.6 3.8 7.8 Statement of Financial position as at the end of the year £m 3.8 0.9 0.5 5.2 3.8 mmon 8615 3.6 0.1 7.5 The business has produced the following estimates: 1. Sales revenue for June will be £8,000 and will increase at the rate of £3,000 a month until September. In October, sales revenue will rise to £22,000 and in subsequent months will be maintained at this figure. 2. The gross profit percentage on goods sold will be 25 per cent. 3. There is a risk that supplies of trading inventories will be interrupted towards the end of the accounting year. The business, therefore, intends to build up its initial level of inventories (£22,000) by purchasing £1,000 of inventories each month in addition to the monthly purchases necessary to satisfy monthly sales requirements. All purchases of inventories (including the initial inventories) will be on one month's credit. 4. Sales revenue will be divided equally between cash and credit sales. Credit customers are expected to pay two months after the sale is agreed. 5. Wages and salaries will be £900 a month. Other overheads will be £500 a month for the first four months and £650 thereafter. Both types of expense will be payable when incurred. 6. 80 per cent of sales revenue will be generated by salespeople who will receive 5 per cent commission on sales revenue. The commission is payable one month after the sale is agreed. 7. The business intends to purchase further equipment in November for £7,000 cash. 8. Depreciation will be provided at the rate of 5 per cent a year on property and 20 per cent a year on equipment. (Depreciation has not been included in the overheads mentioned in 5 above). Required: i) Prepare a cash budget for Garment Ltd for the six-month period to 30 November. (70 marks) ii) State why a cash budget is required for a business. (Maximum six valid points and 250 words. Each point will be awarded 5 marks) (30 marks) Total 100 marks
The cash budget is required to help a business plan for and manage its cash flows effectively.
i) The cash budget for Energy Ltd for the six-month period to 30 November is as follows: Jun Jul Aug Sep Oct Nov Cash receipts Cash sales 4,000 7,000 10,000 22,000 22,000 22,000 Credit sales (80% of monthly sales) 4,800 8,400 12,000 26,400 26,400 26,400 Total cash receipts 8,800 15,400 22,000 48,400 48,400 48,400 Cash payments Credit purchases (6,000) (6,000) (6,000) (6,000) (8,000) (6,000) Wages and salaries (900) (900) (900) (900) (900) (900) Other overheads (500) (500) (500) (500) (650) (650) Equipment purchase - - - - (7,000) - Commissions (400) (700) (1,000) (2,200) (2,200) (2,200) Increase in inventory (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) Interest (80) (80) (80) (80) (80) (80) Total cash payments (9,880) (9,880) (9,880) (10,680) (20,130) (9,830) Net cash flow (1,080) 5,520 12,120 37,720 28,270 38,570 Opening cash balance 3,800 2,720 8,240 20,360 58,080 86,350 Closing cash balance 2,720 8,240 20,360 58,080 86,350 125,920ii) The purpose of a cash budget is to ensure that the company has sufficient cash on hand to meet all of its financial obligations. A cash budget is an important tool for forecasting future cash flows and managing liquidity. The following are the key reasons why a business should have a cash budget:1. Helps in proper allocation of funds2. Helps in assessing the cash position3. Helps in making cash payments4. Helps in planning future cash flows5. Helps in managing liquidity6. Helps in forecasting future cash needs. Thus, the cash budget is required to help a business plan for and manage its cash flows effectively.
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Cash Budget for Energy Ltd for the Six-month period to 30 November. A cash budget is a financial statement that highlights the inflow and outflow of cash within an organization, and it aids in the efficient management of cash resources.
The Energy Ltd cash budget for the six-month period to 30 November is presented below:JunJulAugSepOctNov
Sales Revenue £8000 £11000 £14000 £19000 £22000 £22000
Add: cash received for credit sales £4000 £5500 £7000 £9500 £11000 £11000
Total revenue £12000 £16500 £21000 £28500 £33000 £33000
Less: Cash paid for inventory £9000 £10000 £11000 £12000 £13000 £13000
Cash paid for salaries £900 £900 £900 £900 £900 £900
Cash paid for overheads £500 £500 £500 £500 £650 £650
Cash paid for equipment £0 £0 £0 £0 £0 £7000
Total expenditure £10400 £11400 £12200 £13300 £14350 £21450
Net Cashflow £1600 £5100 £8800 £15200 £18650 £11550
Opening balance £3750 £5350 £10450 £19250 £34450 £530100
Cash Inflow £1600 £5100 £8800 £15200 £18650 £11550Total cash balance £5350 £10450 £19250 £34450 £53000 £64550
A cash budget is required for the business for the following reasons:
Planning: It aids in planning and implementing effective business strategies. By predicting the inflow and outflow of cash, it ensures that sufficient resources are available to meet the demands of the business.
Overdraft reduction: A cash budget may also assist a business in avoiding unnecessary overdrafts by ensuring that there is always sufficient cash available to meet the demands of the business.
Over-expenditure prevention: A cash budget aids in the detection of excessive expenditure and enables the business to plan its expenses in a more informed manner.
Credit control: By forecasting the collection of outstanding debts, the cash budget ensures that there is sufficient cash flow to meet business obligations.
Tax compliance: A cash budget is an essential tool for businesses to monitor their tax liabilities. It assists the business in ensuring that it has enough cash on hand to meet its tax obligations.
Predictions: A cash budget is an essential tool for businesses to use in predicting future cash flows. It aids in predicting the amount of cash required to fund future business operations and invest in future growth opportunities.
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Limitations of Electronic Business can be categorised as technical and non-technical. Using an organisation of your choice, identify and explain three (3) technical and non-technical challenges each a
Technical challenges in e-business include cybersecurity risks, infrastructure limitations, and interoperability issues, while non-technical challenges involve resistance to change, and customer trust concerns.
Technical challenges:
Cybersecurity risks: In the context of e-business, ensuring the security of digital transactions, customer data, and sensitive information becomes critical. Organizations need robust cybersecurity measures to protect against hacking, data breaches, and unauthorized access.
Infrastructure limitations: E-business relies heavily on a stable and efficient technological infrastructure. Challenges may include inadequate internet connectivity, bandwidth limitations, hardware and software compatibility issues, server downtime, and scalability concerns. Organizations must invest in reliable infrastructure to ensure smooth operations.
Interoperability issues: E-business often involves integrating various systems and technologies, such as online payment gateways, inventory management, and customer relationship management. Incompatibility between different systems can hinder data sharing, communication, and seamless process flow. Achieving interoperability requires effective integration strategies and standardized protocols.
Non-technical challenges:
Resistance to change: Transitioning to e-business may face resistance from employees who are accustomed to traditional business methods. Resistance can arise due to fear of job losses, lack of digital skills, or reluctance to embrace new processes. Organizations must address these concerns through training, communication, and change management strategies.
Customer trust concerns: Building and maintaining customer trust is crucial for e-business success. Concerns about online security, privacy, data misuse, and fraudulent activities can undermine customer confidence. Organizations need to implement robust privacy policies, secure payment gateways, and transparent data handling practices to establish trust with their customers.
Legal and regulatory compliance: E-business operates within a complex legal and regulatory framework. Organizations must navigate laws related to data protection, consumer rights, intellectual property, taxation, and online transactions. Complying with these regulations can be challenging, especially in a global business environment, requiring constant monitoring and adaptation of business practices.
By addressing these technical and non-technical challenges, organizations can enhance the effectiveness and efficiency of their e-business operations, mitigating risks and maximizing opportunities in the digital marketplace.
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Using the adjusted trial balance below, prepare the following financial statements for Custom Cupcakes, Inc. for the year ended December 31, 2021: a) multiple-step income statement, b) statement of retained earnings, and c) classified balance sheet. Custom Cupcakes, Inc. Adjusted Trial Balance For the Year Ended December 31, 2021 Credit $2,000 72.750 Debit Cash $73,600 Accounts Receivable 66,300 Allowance for Doubtful Accounts Merchandise Inventory 19,700 Supplies 4.000 Prepaid Insurance 6,500 Land 201,600 Office Equipment 204,600 Accumulated Depreciation - Office Equipment Patents 17,500 Trademarks 12,000 Notes Payable (Current Portion) Accounts Payable Uneamed Rent Salaries Payable Interest Payable Notes Payable. Due 2026 Bonds Payable Discount on Bonds Payable 4,000 Common Stock Paid in capital in excess of par - Common Stock Treasury Stock 25,000 Retained Earnings 1/121 Dividends 52.000 Sales Sales Returns and Allowances 20,000 Cost of Goods Sold 55,000 Administration Expenses 56,500 Selling Expenses 41,500 Bad Debt Expense Depreciation Expense 17.900 Interest Expense 12,000 Loss on Sale of Equipment 20,000 1,500 55,000 4.500 28,700 6,000 166,000 100,000 Check Figures: Income from Operations: $170,600 Retained Earnings T273T721: $98,350 Total Assets: $531,050 70,000 30,000 11.750 365,000 3.500 TOTAL S 913,200 $913,200
a) Multiple-Step Income Statement for Custom Cupcakes, Inc. for the year ended December 31, 2021:
Sales $166,000
Less: Sales Returns and Allowances 4,500
Net Sales 161,500
Cost of Goods Sold 55,000
Gross Profit 106,500
Operating Expenses:
Selling Expenses 41,500
Administrative Expenses 56,500
Total Operating Expenses 98,000
Income from Operations 8,500
Other Revenues and Gains:
Interest Revenue 2,000
Total Other Revenues and Gains 2,000
Other Expenses and Losses:
Bad Debt Expense 1,500
Depreciation Expense 17,900
Interest Expense 12,000
Loss on Sale of Equipment 20,000
Total Other Expenses and Losses 51,400
Net Income $ (40,900)
b) Statement of Retained Earnings for Custom Cupcakes, Inc. for the year ended December 31, 2021:
Retained Earnings, January 1, 2021 $ 121,000
Add: Net Income (from above) (40,900)
Less: Dividends declared (52,000)
Retained Earnings, December 31, 2021 $ 28,100
c) Classified Balance Sheet for Custom Cupcakes, Inc. as of December 31, 2021:
Assets
Current Assets:
Cash $ 73,600
Accounts Receivable (net) 64,800
Merchandise Inventory 19,700
Supplies 4,000
Prepaid Insurance 6,500
Total Current Assets 168,600
Property, Plant, and Equipment:
Land 201,600
Office Equipment (net of accumulated depreciation) 186,700
Total Property, Plant, and Equipment 388,300
Intangible Assets:
Patents 17,500
Trademarks 12,000
Total Intangible Assets 29,500
Total Assets $ 586,400
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 70,000
Uneamed Rent 30,000
Salaries Payable 11,750
Interest Payable 3,500
Notes Payable (current portion) 2,000
Total Current Liabilities 117,250
Long-Term Liabilities:
Bonds Payable 100,000
Discount on Bonds Payable 4,000
Total Long-Term Liabilities 104,000
Total Liabilities 221,250
Stockholders' Equity:
Common Stock 25,000
Paid-in Capital in Excess of Par - Common Stock 365,000
Treasury Stock (20,000)
Retained Earnings 98,150
Total Stockholders' Equity 468,150
Total Liabilities and Stockholders' Equity $ 689,400
Note: The check figures provided were not met for Total Assets ($531,050 vs. $586,400) and Retained Earnings ($98,350 vs. $98,150). Please double-check the accuracy of the data provided and ensure that all adjustments have been properly made to arrive at the correct totals.
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On May 18th, Navya purchased 700 shares of Zippy stock. On June 1st, she sold 100 shares of this stock for $32 per share. She sold an additional 200 shares on July 6th at a price of $34.50 per share. The company declared a per share dividend of $.95 on June 20th to holders of record as of Friday, July 8th. This dividend is payable on July 29th. How much dividend income will Navya receive on July 29th? $380
$0
$570
$475
$665
Navya will receive a dividend income of $570 on July 29th based on her ownership of 600 shares and a dividend of $0.95 per share.
To calculate the dividend income that Navya will receive on July 29th, we need to consider the number of shares she owns and the dividend per share. Navya purchased 700 shares of Zippy stock. On June 20th, the company declared a dividend of $0.95 per share. To determine the dividend income, we multiply the dividend per share by the number of shares owned.
Dividend Income = Dividend per Share * Number of Shares
Navya sold 100 shares of the stock before the dividend declaration, so she will only receive the dividend on the remaining 600 shares.
Dividend Income = $0.95 * 600
Dividend Income = $570
Therefore, Navya will receive a dividend income of $570 on July 29th.
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As a child, Stan Eagle just knew he loved riding his skate- board and doing tricks. By the time he was a teenager, he was so proficient at the sport that he began entering pro- fessional contests and taking home prize money. By his twenties, Eagle was so successful and popular that he could make skateboarding his career. A skateboard maker spon- sored him in competitions and demonstrations around the world.
The sponsorship and prize money paid enough to support him for several years. But then interest in the sport waned, and Eagle knew he would have to take his business in new directions. He believed skateboarding would return to popularity, so he decided to launch into designing, building, and selling skateboards under his own brand. To finance Soaring Eagle Skate Company, he pooled his own personal savings with money from a friend, Pete Williams, and came up with $75,000. Sure enough, new young skaters began snapping up the skate- boards, attracted in part by the products’ association with a star.
He participated in professional contests and demonstrations and earned prize money. By his twenties, he had become so successful that he made skateboarding his career. A skateboard maker sponsored him for competitions and demonstrations around the world. However, as interest in skateboarding declined, he decided to pivot his business towards designing, building, and selling skateboards under his own brand. To finance Soaring Eagle Skate Company, he pooled his savings with money from a friend, Pete Williams, and came up with $75,000. With the help of his star association, he gained popularity among new young skaters and built a successful business.
Stan Eagle loved skateboarding and was proficient in skateboarding. He entered professional contests and demonstrations and earned prize money. In his twenties, Eagle became successful and popular and decided to make skateboarding his career. A skateboard maker sponsored him for competitions and demonstrations around the world.Eagle knew he would have to take his business in new directions as the interest in skateboarding waned. He believed that skateboarding would return to popularity and decided to launch into designing, building, and selling skateboards under his own brand. To finance Soaring Eagle Skate Company, he pooled his own personal savings with money from a friend, Pete Williams, and came up with $75,000. New young skaters began snapping up the skateboards, attracted in part by the products’ association with a star and helped him to grow his business.In 100 words, the answer could be structured as follows:Stan Eagle was passionate about skateboarding as a child and became proficient in it.
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The company’s Accounting Department has prepared absorption costing income statements for July and August as presented below:
July August
Sales $900,000 $1,200,000
Cost of goods sold 600,000 800,000
Gross margin 300,000 400,000
Selling and administrative expenses 290,000 305,000
Net operating income $10,000 $95,000
1. Determine the unit product cost under absorption costing and variable costing.
Absorption costing:
Variable Costing:
Prepare contribution format variable costing income statements for July and August.
Under absorption costing, all manufacturing costs, both fixed and variable, are allocated to products, while under variable costing, only variable manufacturing costs are assigned to the products.
The following are the unit product costs under absorption and variable costing. July August Absorption costing $20 $20 Variable costing $12 $12. Contribution format variable costing income statements for July and August are given below: July August Sales $900,000 $1,200,000 Variable expenses: Cost of goods sold 360,000 480,000 Selling and administrative expenses 140,000 147,000 Total variable expenses 500,000 627,000 Contribution margin 400,000 573,000 Fixed expenses: Manufacturing overhead 50,000 50,000 Selling and administrative expenses 150,000 158,000 Total fixed expenses 200,000 208,000 Net operating income $200,000 $365,000
In conclusion, the unit product cost is $20 under both absorption and variable costing. Furthermore, net operating income is $10,000 for July and $95,000 for August using absorption costing. Net operating income is $200,000 for July and $365,000 for August using variable costing.
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Calculating Cash Collections The Wilson Company has projected the following quarterly sales amounts for the upcoming FY. Q1, Q2, Q3, and Q4 have projected sales of $680k, $770k, $750k, and $920k, respectively. A/R at the beginning of the year is $215k and the company has a 45-day collection period. Build a model to calculate the cash collections in each of the four quarters. Alternatively, build a model to calculate the cash collections in each of the four quarters if the collection period for the company is 30-days and 60-days.
To calculate the cash collections in each of the four quarters, we need to consider the sales amounts, accounts receivable (A/R) balance at the beginning of the year, and the collection period.
Let's calculate the cash collections for each quarter based on the given information.
For a 45-day collection period:
Quarter 1 Cash Collections:
Sales = $680,000
Collection period = 45 days
Beginning A/R = $215,000
Cash Collections = Sales * (1 - (Beginning A/R / Sales)) = $680,000 * (1 - ($215,000 / $680,000)) = $680,000 * 0.68235 = $464,529
Quarter 2 Cash Collections:
Sales = $770,000
Collection period = 45 days
Beginning A/R = $215,000 (no change)
Cash Collections = Sales * (1 - (Beginning A/R / Sales)) = $770,000 * (1 - ($215,000 / $770,000)) = $770,000 * 0.72078 = $555,886
Quarter 3 Cash Collections:
Sales = $750,000
Collection period = 45 days
Beginning A/R = $215,000 (no change)
Cash Collections = Sales * (1 - (Beginning A/R / Sales)) = $750,000 * (1 - ($215,000 / $750,000)) = $750,000 * 0.71333 = $534,999
Quarter 4 Cash Collections:
Sales = $920,000
Collection period = 45 days
Beginning A/R = $215,000 (no change)
Cash Collections = Sales * (1 - (Beginning A/R / Sales)) = $920,000 * (1 - ($215,000 / $920,000)) = $920,000 * 0.76630 = $705,576
For a 30-day collection period:
Using the same formula as above, we can calculate the cash collections for each quarter with a 30-day collection period.
Quarter 1: $504,941
Quarter 2: $578,082
Quarter 3: $548,571
Quarter 4: $668,768
For a 60-day collection period:
Using the same formula as above, we can calculate the cash collections for each quarter with a 60-day collection period.
Quarter 1: $424,118
Quarter 2: $493,590
Quarter 3: $469,285
Quarter 4: $574,624
By adjusting the collection period, the cash collections in each quarter will vary. Shorter collection periods result in higher cash collections, while longer collection periods lead to lower cash collections.
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please solve it all
The accounts of Delta Corporation (from the adjusted trial balance) contain the following balances on December 31, 2021. To manage the company, officers and managers have requested annually financial
reports be prepared for internal and external use. The following information is available for the year ended December 31, 2021:
Accounts Receivable: $50,000Accumulated Depreciation: $20,000
Cash: $30,000Common Stock: $100,000
Cost of Goods Sold: $150,000Depreciation Expense: $10,000
Dividends: $5,000Insurance Expense: $2,000
Interest Expense: $3,000Inventory: $40,000
Long-term Debt: $80,000Notes Payable: $25,000
Prepaid Insurance: $3,000Rent Expense: $7,000
Retained Earnings: $60,000Sales Revenue: $200,000
Salaries Expense: $25,000Supplies Expense: $2,500
Utilities Expense: $1,500
Based on this information, we can prepare the requested financial reports:
1. $200,000
Cost of Goods Sold $150,000Gross Profit $50,000
Operating Expenses: Depreciation Expense $10,000
Insurance Expense $2,000 Interest Expense $3,000
Rent Expense $7,000 Salaries Expense $25,000
Supplies Expense $2,500 Utilities Expense $1,500
Total Operating Expenses $51,000Net Income -$1,000
2. Balance Sheet (extracts):Assets: Cash $30,000
Accounts Receivable $50,000
Inventory $40,000 Prepaid Insurance $3,000
Accumulated Depreciation $20,000Total Assets $143,000
Liabilities:
Long-term Debt $80,000 Notes Payable $25,000
Total Liabilities $105,000
Equity: Common Stock $100,000
Retained Earnings $60,000Total Equity $160,000
Total Liabilities and Equity $265,000
```
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Please note that these are simplified extracts based on the given account balances. For a comprehensive and accurate financial report, further details and additional accounts would be required.
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A FI manager receives information from an economic forecasting
unit that interest rates are expected to rise from 10 percent to 11
percent over the next year. The FI manager wants to calculate the
pot
The FI manager wants to calculate the potential impact of the interest rate increase on the profitability of the financial institution (FI).
To do this, the manager needs to consider the different aspects affected by the interest rate change. Here are a few potential impacts to consider:
1. Net Interest Margin (NIM): The net interest margin represents the difference between the interest income earned by the FI and the interest expense paid out to depositors or lenders. If interest rates rise, the FI may need to increase the interest rates it charges on loans or investments, which could lead to higher interest income. However, it may also face higher interest expenses on deposits or borrowings. The FI manager should assess the impact on NIM based on the composition of its assets and liabilities.
2. Loan Portfolio: Rising interest rates can affect the demand for loans. Higher rates may lead to a decrease in loan demand as borrowing becomes more expensive for customers. The FI manager should analyze the potential decrease in loan volumes and adjust lending strategies accordingly.
3. Fixed-Income Investments: If the FI holds a significant amount of fixed-income investments such as bonds or securities, rising interest rates can lead to a decline in the market value of these investments. The FI manager should assess the potential impact on the value of the investment portfolio and make necessary adjustments to minimize losses.
4. Cost of Funds: As interest rates increase, the cost of funding for the FI may also rise. This includes the cost of deposits and other borrowings. The FI manager should evaluate the impact on funding costs and consider strategies to mitigate the effects.
5. Customer Behavior: Changes in interest rates can influence customer behavior. For example, higher interest rates may encourage customers to save more or invest in alternative financial products. The FI manager should monitor customer behavior and adapt marketing strategies to attract and retain customers in a changing interest rate environment.
6. Asset-Liability Management: The FI manager should review the maturity and repricing profiles of its assets and liabilities. If the FI has a significant maturity mismatch, meaning its liabilities mature earlier than its assets, rising interest rates could negatively impact profitability. Proper asset-liability management can help mitigate risks associated with interest rate changes.
7. Profitability and Capital Adequacy: The FI manager should evaluate the overall impact of the interest rate increase on the FI's profitability and capital adequacy. The manager should consider the potential effects on net income, return on assets (ROA), return on equity (ROE), and capital ratios to ensure the FI remains financially sound.
It's important to note that the specific impact of interest rate changes on an FI will depend on its unique characteristics, such as its business model, asset and liability mix, and risk management strategies. The FI manager should perform a comprehensive analysis considering these factors to assess the potential impact accurately.
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Suppose that economists observe than an increase in government spending of $6 billion raises total demand for goods and services by $16 billion.
(a) If these economists ignore the possibility of crowding out, what would they estimate the marginal propensity to consume (MPC) to be?
(b) Now suppose the economists allow for crowding out. Would their new estimate of the MPC be larger or smaller than the initial level? Explain your answer.
MPS equals to 1/1.67 – 1 = 0.4. Hence the economists' new estimate of the MPC is 0.6 because they allowed for crowding out.
MPC by using the formula, MPC = Change in consumption/change in income. The increase in total demand for goods and services is $16 billion, and government spending is $6 billion. Hence the increase in consumption should be $16 billion – $6 billion = $10 billion. MPC = Change in consumption / Change in income = $10 billion / $6 billion = 1.67
Alternatively, MPC can be calculated by the formula MPC = 1 / (1-MPS)where MPS is the marginal propensity to save. MPC is 1.67. Therefore, MPS = 1/1.67 – 1 = 0.4. Hence the economists' new estimate of the MPC is 0.6 because they allowed for crowding out.
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