Answer:
TRUE
Explanation:
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
In the short run, the firm would continue to operate if its revenue covers variable cost. if it doesn't it would shut down.
Determine the ending inventory using the periodic inventory system and the weighted average cost method (rounded to the nearest cent), assuming that 18 units were sold at a price of $14. Date Item Units Cost Total June 1 Beginning inventory 6 $5 $30 June 12 Purchase 10 6 60 June 18 Purchase 8 7 56 Totals 24 — $146 a.$36.48 b.$109.44 c.$145.92 d.$56.00
Answer:
The ending inventory using the periodic inventory system and the weighted average cost method is $36.48
Explanation:
Weighted Average Method.
The average cost of goods held is recalculated each time a new delivery of goods is received. Issues are then priced out at this weighted average cost.
First Calculate the average cost per unit
average cost per unit = Total cost / total units
= ($30 + $60 + $56) / 24
= $6.08
Then calculate ending inventory cost
ending inventory cost = units at hand × average cost per unit
= 6 units × $6.08333
= $36.48
Conclusion :
The ending inventory using the periodic inventory system and the weighted average cost method is $36.48
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt. c. only liable on pre-formation debt until a novation occurs.
Answer:
The answer is C. only liable on pre-formation debt until a novation occurs.
Explanation:
The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 155,000
Fixed manufacturing overhead cost $ 653,000
Variable manufacturing overhead cost per machine-hour $ 4.70
Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job 400 was started and completed. The following information was available with respect to this job:
Direct materials $ 390
Direct labor cost $ 220
Machine-hours used 37
Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 60 units, what is the unit product cost for this job?
4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
find- Predetermined overhead rate =
total manufacturing cost=
If Job 400 includes 60 units, what is the unit product cost for this job?
If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Machine-hours required to support estimated production 155,000
Fixed manufacturing overhead cost $ 653,000
Variable manufacturing overhead cost per machine hour $ 4.70
First, we need to calculate the predetermined overhead rate.
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (653,000/155,000) + 4.7
Predetermined manufacturing overhead rate= $8.91 per machine hour
Job 400:
Direct materials $ 390
Direct labor cost $ 220
Machine-hours used 37
To allocate overhead, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 8.91*37= $329.67
Now, we can calculate the total cost and unitary cost:
Total cost= 390 + 220 + 329.67= 939.67
Unitary cost= 939.67/60= $15.66
Finally, the selling price for Job 400:
Selling price0 939.67*1.2= $1,127.6
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below: Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 33,000 6,000 parties Serving a diner Number of diners served $ 138,000 15,000 diners Serving a drink Number of drinks ordered $ 24,000 10,000 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depends on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $240,000 and that 15,000 diners had been served. Therefore, the average cost per diner was $16.
Required:
1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
2. Convert the total costs you computed in (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Round your intermediate calculations to 2 decimal places and final answers to 3 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
Answer:
Kindly check attached picture
Explanation:
Required:
1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
2. Convert the total costs you computed in (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Round your intermediate calculations to 2 decimal places and final answers to 3 decimal places.)
a. A party of four dinners who order three drinks-?
b. A party of two dinners who do not order any drinks-?
c. A party of one dinner who order two drinks-?
Kindly check attached picture for detailed explanation.
Average cost per dinner is $12.375, $11.95, $19.50 respectively
Average cost based problem:Computation:
1.A.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 4 $36.8
Drinks $2.4 3 $7.2
Total $49.50
1.B.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 2 $18.4
Drinks $2.4 0 0
Total $23.9
1.C.
Activity pool Activity rate Activity Activity cost
Parties $5.5 1 $5.5
Dinners $9.2 1 $9.2
Drinks $2.4 2 $4.8
Total $19.50
2. Average cost per dinner
A = 49.50 / 4 = $12.375 per dinner
B =23.9 / 2 = $11.95 per dinner
C = 19.50 / 1 = $19.50 per dinner
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Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply. Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Imposing restrictions on foreign ownership of domestic capital Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Imposing a tax on looms
Answer:
Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement
Imposing restrictions on foreign ownership of domestic capital
Explanation:
A registered representative wishes to give a speech to a group of 35 potential retail clients at a restaurant. The speech is scripted and is a general discussion about investing in securities. Which statement is TRUE?
Answer:
Prior principal approval must be obtained and a copy of the speech must be retained in your firm's Office of Supervisory Jurisdiction
Explanation:
Because the speech is to be givento 35 attendees, it is under the Retail Communication. Every speech should be honest and of good taste; and the speech must be informational, but far from promotional.
It is not required that the speech content has to be pre-filed with the SEC. A copy must be kept a period of f 3 years for inspection by FINRA examiners. The speech script would be kept on file in the firm's supervisory compliance office that is the Office of Supervisory Jurisdiction.
Net working capital is defined as current assets divided by current liabilities.
a. True
b. False
Answer:
The answer is False.
Explanation:
False, because the net working capital is determined by subtracting all the current liabilities from the current assets. But in the question, it says net working capital is determined by dividing the current assets with current liabilities which is wrong. Therefore, if the current assent is 10000 dollars and current liabilities are 5000 dollars then net working capital is 10000 – 5000 = $5000.
Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 12%, compute the net present value of each piece of equipment.
Answer:
NPV for puro = $289,529.95
NPV for briggs = $374,450.85
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
net present value can be calcuated using a financal calcuatopr
Puro Equipment
cash flow in year 0 = $-560,000
cash flow in year 1= $320,000
cash flow in year 2 = $280,000
cash flow in year 3 = $240,000
cash flow in year 4 = 160,000
cash flow in year 5 = 120,000
I = 12%
NPV = $289,529.95
Briggs Equipment
cash flow in year 0 = $-560,000
cash flow in year 1= $120,000
cash flow in year 2= $120,000
cash flow in year 3= $320,000
cash flow in year 4= 400,000
cash flow in year 5= 440,000
I = 12%
NPV = $374,450.85
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
The computation of the net present values of the two equipment are as follows:
Puro Equipment Briggs Equipment
Initial investment ($560,000) ($560,000)
Present value of cash inflows $849,600 $934,520
Net present value $289,600 $374,520
Data and Calculations:
Estimated useful life = 5 years
Discount factor = 12%
Initial cash outlay in each equipment = $560,000
Year Puro Equipment
Cash Flows PV Factor Present Value
0 ($560,000) 1 ($560,000)
1 $320,000 0.893 285,760
2 280,000 0.797 223,160
3 240,000 0.712 170,880
4 160,000 0.636 101,760
5 120,000 0.567 68,040
Total present value of cash inflows $849,600
Net present value = $289,600
Year Briggs Equipment
Cash Flows PV Factor Present Value
0 ($560,000) 1 ($560,000)
1 $120,000 0.893 107,160
2 120,000 0.797 95,640
3 320,000 0.712 227,840
4 400,000 0.636 254,400
5 440,000 0.567 249,480
Total present value of cash inflows $934,520
Net present value = $374,520
Thus, the net present value of Puro Equipment is $289,600 while that of Briggs Equipment is $374,520.
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Use the following information to determine this company's cash flows from financing activities.
A. Net income was $473,000.
B. Issued common stock for $74,000 cash.
C. Paid cash dividend of $13,000.
D. Paid $125,000 cash to settle a note payable at its $125,000 maturity value.
E. Paid $119,000 cash to acquire its treasury stock.
F. Purchased equipment for $86,000 cash.
Use the above information to determine this company's cash flows from financing activities.
Answer:
The answer is ($183,000)
Explanation:
This section deals with cash flows used to fund(e.g borrowing and repayment of loans) the business
Statement of cash flow(Partial)
Issued common stock for cash----------------------------------------------------------$74,000
Paid cash dividend-------------- ($13,000)
Paid cash to settle a note payable -----------------------------------------------($125,000)
Paid cash to acquire its treasury stock----------------------------------------($119,000)
Net cash flow from financing activities-----------------------------------------($183,000)
Assume that the following data characterize the hypothetical economy of Trance: money supply = $200 billion; quantity of money demanded for transactions = $160 billion; quantity of money demanded as an asset = $10 billion at 12 percent interest, increasing by $10 billion for each 2-percentage-point fall in the interest rate.
a. What is the equilibrium interest rate in Trance? _____ percent.
b. At the equilibrium interest rate, what is the quantity of money supplied, the money demanded, the amount of money demanded for transaction, and the amount of money demanded as an asset in trace?
Quantity of money supplied = $ _____ billion
Quantity of money demanded = $ _____ billion
Amount of money demanded for transactions = $ _____ billion
Amount of money demanded as an asset = $_____ billion
Answer:
a. What is the equilibrium interest rate in Trance?
The equilibrium interest rate is 6%, because it is the interest rate that brings the money supply and the money demand to equilibrium.
At 12% interest rate, the quantity of money demanded is 170 billion, while the money supply is 200 billion.
The quantity of moned demanded as an asset increases by 10 billion if the interest rate falls by two percentage points. Thus, if the interest rate falls 6 percentage points, the quantity of money demanded as an asset will increase by 30 billion, reaching 40 billion.
At this point, money demand is:
$160 billion (money demanded for transactions) + $40 billion (money demanded as an asset) = $200 billion.
Which is the same as the money supply.
b. At the equilibrium interest rate, what is the quantity of money supplied, the money demanded, the amount of money demanded for transaction, and the amount of money demanded as an asset in trace?
The quantity of money supplied is still 200 billion.
The quantity of money demanded is 200 billion.
The amount of money demanded for transactions is 160 billion.
And the amount of money demanded as an asset is 40 billion.
When analyzing stages of economic development in the United States, it appears that we have entered the "tertiary stage." This is a stage marked by a shift toward:_______
A) agriculture.B) manufacturing.C) services.D) population increases.
Answer:
C) services.
Explanation:
This is easily explained to be the stepping in to a tertiary stage. As it is explained that economic development analysis stages consists of different phases and levels. This services that is been denoted in this growth in the US plays a key role in financial services, humanity, health and other visible relevant parts which help in the building and aiding of economic growth of a country's economy.
Information technology and educational services in a product offering. These services are seen to boost different parts of an economy especially in developing countries is mostly concentrated in financial services, hospitality, retail, health and human services.
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption.
Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Answer:
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Explanation:
ere presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be prese
Oak Outdoor Furniture manufactures wood patio furniture. If the company reports the following costs for June 2018,Wood $ 270,000Nails, glue, stain 18,000Depreciation on saws 5,300Indirect manufacturing labor 45,000Depreciation on delivery truck 1,700Assemblyline workers' wages 51,000What is the balance in the Manufacturing Overhead account before overhead is allocated to jobs? Assume that the labor has beenincurred, but not yet paid. Prepare journal entries for overhead costs incurred in June. What is the balance in the Manufacturing Overhead account before overhead is allocated to jobs?1. First, prepare an entry for the overhead costs for materials used.2. Next, prepare an entry for the overhead costs for labor incurred.3. Finally, prepare an entry for all other overhead costs.
Answer:
0. Manufacturing Overhead account balance before allocation.
Every expense incurred that is not directly linked to manufacturing of wood patio furniture goes here.
Oak Outdoor Furniture Manufacturing Overhead June 30
Nails, Glue, Stain 18,000
Depreciation on Saws 5,300
Indirect Manufacturing Labour 45,000
Balance $68,300
1. Journal entry for the overhead costs for materials used.
DR Manufacturing Overhead $18,000
CR Raw material Inventory $18,000
(To record cost of indirect materials used)
2. Journal entry for the overhead costs for labor incurred.
DR Manufacturing Overhead $45,000
CR Wages Payable $45,000
(To record cost of overhead labor costs incurred)
3. Journal entry for all other overhead costs.
DR Manufacturing Overhead $5,300
CR Accumulated Depreciation $5,300
(To record depreciation on saws)
The calculated cost of trade credit for a firm that buys on terms of 2/10, net 30, is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.
A. True
B. False
Answer:
A. True
Explanation:
The terms of 2/10, net 30 implies that the firm is entitled to receive a 2 percent discount if it makes payment within 10 days for the goods it bought on term but the seller expects to pay full amount of the amount due in 30 days if it fails to pay within 10 days.
However, since there will be no more discount after the discount period, the cost of trade credit will continue to fall longer the payment is extended. For this question this can be demonstrated using the formula for calculating the cost of trade discount as follows:
Cost of trade discount = {[1 + (discount rate / (1 - discount rate))]^(365/days after discount)} - 1 ................... (1)
We can now applying equation (1) as follows:
For payment in 40 days
Cost of trade credit (payment in 40 days)= {[1 + (0.02 / (1 - 0.02))]^(365/40)} - 1 = 0.202436246672765, or 20%
For payment in 30 days
Cost of trade credit (payment in 30 days) = {[1 + (0.02 / (1 - 0.02))]^(365/30)} - 1 = 0.278643315029666, or 28%
Conclusion
Since the 20% calculated cost of trade credit for payment in 40 days is lower than 28% calculated cost of trade credit for payment in 30 days, the correct option is A. True. That is, the calculated cost of trade credit for a firm that buys on terms of 2/10, net 30, is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.
The stock of Wiley United has a beta of 1. The market risk premium is 11.5 percent and the risk-free rate is 2.3 percent. What is the expected return on this stock in percent
Answer:
9.41%
Explanation:
Wiley United has a beta of 1
The market risk premium 11.5%
= 11.5/100
=0.115
Risk free rate is 2.3%
= 2.3/100
= 0.023
Therefore the expected rate of return can be calculated as follows
Expected rate of return= Risk free rate+beta(market return-risk free rate)
= 0.023+1(0.115-0.023)
= 1.023(0.092)
= 0.0941×100
=9.41%
Hence the expected return on the stock is 9.41%
The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below: University Store, Inc. Income Statement For the Quarter Ended March 31 Sales $ 800,000 Cost of goods sold 560,000 Gross margin 240,000 Selling and administrative expenses Selling $ 100,000 Administrative 110,000 210,000 Net operating income $ 30,000 On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed. The net operating income computed using the contribution approach for the first quarter is:
Answer: $30,000
Explanation:
Sales are $800,000 and the average price is $40. Number of units sold is;
= 800,000/40
= 20,000 units
Sales $ 800,000
Less: Cost of Goods Sold ($560,000)
Gross Margin $240,000
Less : Variable Costing
Selling Expenses (20,000 units X $3.00) ($60,000)
Administrative Expenses (5% of $ 800,000) ($40,000)
Contribution Margin $140,000
Less: Fixed Cost
Selling Expenses ($100,000 - $60,000) ($40,000)
Administrative Expenses ($110,000 -$40,000) ($70,000)
Net Operating Income $30,000
A stock has an expected return of 12.6 percent, the risk-free rate is 7 percent, and the market risk premium is 10 percent. What must the beta of this stock be
Answer:
0.56
Explanation:
In this question we used the Capital Asset Pricing Model formula i.e shown below:
As we know that
Expected rate of return = Risk free rate of return + Beta × market risk premium
12.6% = 7% + Beta × 10%
12.6% - 7% = Beta × 10%
5.6% = Beta × 10%
So, the beta is
= 5.6% ÷ 10%
= 0.56
Hence, the beta of the stock is 0.56
B2B co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows.
Sales $75,000
Costs Materials, labor, and overhead (except depreciation on new equipment) 40,000
Depreciation on new equipment 10,000
Selling and administrative expenses 7,500
Total costs and expenses 57,500
Pretax income 17,500
Income taxes (40%) 7,000
Net income $10,500
Required:
a. Compute the payback period.
b. Compute the accounting rate of return for this equipment.
Answer:
a. 5.85 years
b. 17.5%
Explanation:
a. For the computation of payback period first we need to find out the annual cash flow which is shown below:-
Annual Cash Inflow = Sales - Material - Selling and Administrative Expenses - Income Tax
= $75,000 - $40,000 - $7,500 - $7,000
= $20,500
Payback period = Initial investment ÷ Annual cash flow
= $120,000 ÷ $20,500
= 5.85 years
b. The computation of the accounting rate of return is shown below:-
accounting rate of return = Net income ÷ Average investment
= $10,500 ÷ ($120,000 ÷ 2)
= $10,500 ÷ $60,000
= 17.5%
a. The payback period would be 5.85 years.
b. The accounting rate of return for the given equipment would be 17.5%.
The payback period is computed when the initial investment is divided by the annual cash flow of the business. Therefore, the annual cash flow would be derived as follows:
[tex]75,000 - $40,000 - $7,500 - $7,000\\=$20,500[/tex]
Here, material expense, selling and administrative expenses, and Income tax is all deducted from the total sales.
Now, the payback period is calculated below:
[tex]\frac{120,000}{20,500} \\=5.85[/tex]
Finally, the accounting rate of return computation would be:
[tex]\frac{10,500}{60,000} \\=0.175*100\\=17.5[/tex]
Here, the net income is divided by average investment, that is:
[tex]\frac{120,000}{2} \\=60,000[/tex]
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A seller accepts a contingent backup offer from a second buyer and notifies the first buyer under a release clause. The first buyer decides to remove the sale of buyer's property contingency. What happens next
Answer: Completion of transaction and down payment
Explanation:
Contingency backup offer is when the seller has an already potential buyer for a property.
In this scenario, the seller would have to conclude with the first buyer to avoid fractions and disagreement in some factors and to see if the buyer can make a down payment on the propery.
Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on December 31, to record the accrued interest on the note
Answer:
The answer is
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
Explanation:
The yearly interest rate is 10%
So the interest rate for 90 days(assume 360 days make a year?
90/360 x 10%
2.5% is the interest rate for 90 days.
The interest payment for 90 days will be;
2.5% x $4,800
= $120
The entry will now be:
Dr: Notes Receivable $4,800
Dr: Interest Receivable $120
Cr: Sales $4,920
On January 1, 2018,MechanicsCredit Union (MCU)issued 8 %,20-yearbonds payable with face value of $ 200 comma 000.These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106.Journalize the following bond transactions:
A. Issuance of the bonds on January 1, 2018.
B. Payment of interest and amortization on June 30, 2018.
C. Payment of interest and amortization on December 31, 2018.
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Answer:
A. Issuance of the bonds on January 1, 2018.
Dr Cash 212,000
Cr Bonds payable 200,000
Cr Premium on bonds payable 12,000
B. Payment of interest and amortization on June 30, 2018.
premium on bonds payable = $12,000 / 40 coupons = $300 per coupon
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
C. Payment of interest and amortization on December 31, 2018.
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Dr Bonds payable 200,000
Cr cash 200,000
"Smokers are more likely to be murdered than nonsmokers." This statement is an example of: Select one: a. the fallacy of unintended consequences:. b. a positive economic statement. c. a normative economic statement. d. a value judgment.
Answer:
positive economic statement
Explanation:
positive economic statement are statements based on facts. they are objective, descriptive and measurable.
The information that smokers are liable to die young is based on extensive research on the effects of smoking on smokers
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 4.70% per year. What is the real risk-free rate of return, r*
Answer:
2.30%
Explanation:
Data has given as:
Yield for 1 year T-bill = 7.00%
Future inflation rate = 4.7%
In order to find the risk-free rate of return we need to deduct future inflation rate from the yield for the year
Risk-free Rate of return = 1 year T-bill yield - inflation
Risk-free Rate of return = 7.00% - 4.70%
Risk-free Rate of return = 2.30%
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,645,000 Variable expenses 623,950 Contribution margin 1,021,050 Fixed expenses 1,123,000 Net operating income (loss) $ (101,950) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $ 445,000 $ 610,000 $ 590,000 Variable expenses as a percentage of sales 53 % 23 % 42 % Traceable fixed expenses $ 299,000 $ 327,000 $ 203,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $21,000 based on the belief that it would increase that division's sales by 12%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising?
Answer:
Windgate Company
1. Segmented Income Statement
Company East Central West
Sales $ 1,645,000 $445,000 $610,000 $590,000
Variable expenses 623,950 235,850 140,300 247,800
Contribution margin 1,021,050 209,150 469,700 342,200
Fixed expenses Traceable 759,000 229,000 327,000 203,000
Fixed expenses: Common 364,000
Net operating income (loss) $ (101,950) ($19,850) $142,700 $139,200
2-a. Division West:
Sales $660,800 (590,000 x 1.12)
Variable expenses 247,800
Contribution 413,000
Fixed Costs 224,000
Net operating income (loss) $ 189,000
Difference = $49,800 ($189,000 - 139,200)
The net operating income would increase by $49,800.
2-b. I would recommend the increased advertising. It brings in more profit than the costs.
Explanation:
a) Data:
Income Statement
Sales $ 1,645,000
Variable expenses 623,950
Contribution margin 1,021,050
Fixed expenses 1,123,000
Net operating income (loss) $ (101,950)
b) Windgate Company's segmented income statement has enabled the tracing of fixed costs to the three divisions and the calculation of net operating income for the three divisions. Thus, revealing that Division East was not profitable. From this information, management can decide to make some changes or altogether dispose of Division East in order to redeem the fortunes of the company.
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in __________.
Answer:
Long-run equilibrium.
Explanation:
When all firms earn zero economic profits producing the output level where P=MR=MC and P=AC and there is no incentive to leave or join the market, the market is in long-run equilibrium.
In a perfectly competitive market in long-run equilibrium, a long-run equilibrium avails firms the opportunity to adjust all inputs and all fixed costs are maximized. Also, it's characterized by free entry and exit, as such there isn't a fixed number of firms. This simply means that, since the number of firms in a long-run equilibrium can change, a firm must exit the market as a result of losses i.e when the firm is unable to cover its fixed costs in the long-run while new firms are allowed entry into the market when it anticipates potential profits or gains.
However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.
In a nutshell, in the long run equilibrium P=MR=MC and P=AC.
Where, P represents the price.
Answer:
The correct answer is: long-run equilibrium.
Explanation:
To begin with, the market that is refered in the question is a perfect competitive one, you can tell by the fact that the price equals the marginal revenue(MR) and that equals the marginal costs(MC) and also the price equals the average cost and that combination only happens in the competitive market and therefore that the relationship established happen when that industry is in the long run equilibrium and there is no incentive to leave or join the market.
n January, Marigold company requisitions raw materials for production as follows: Job 1 $920, Job 2 $1,600, Job 3 $720, and general factory use (indirect materials) $700. Prepare a summary journal entry to record raw materials used. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer and Explanation:
The summarized journal entry for using the raw material is shown below:
Work in process inventory $3,240 ($920 + $1,600 + $720) Dr
Manufacturing overhead 700 Dr
To Raw material inventory $3,940
(Being the raw material used is recorded)
For recording this we debited the work in process and factory overhead as it increased the assets and expenses and credited the raw material inventory as it decreased the assets
Which method of business buying is most likely to be used when the products being purchased are standardized based on certain characteristics
Answer:
Description
Explanation:
The description method of business buying is when the seller provides the list of features that the product should have and the seller has to provide a product that fulfills those characteristics. It is used when the product need to have certain features according to the company's needs. Because of this, the answer is that the method of business buying that is most likely to be used when the products being purchased are standardized based on certain characteristics is description.
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? X Y Price $25 $25 Expected dividend yield 5% 3% Required return 12% 10% a. Stock X pays a higher dividend per share than Stock Y. b. Stock Y pays a higher dividend per share than Stock X. c. Stock Y has a lower expected growth rate than Stock X. d. One year from now, Stock X should have the higher price. e. Stock Y has the higher expected capital gains yield.
Answer:
a. Stock X pays a higher dividend per share than Stock Y.
Explanation:
stock x, dividend = $1.25
$25 = $1.25 / (12% - g)
12% - g = $1.25 / $25
12% - g = 5%
g = 7%
stock y, dividend = $0.75
$25 = $0.75 / (10% - g)
10% - g = $0.75 / $25
10% - g = 3%
g = 7%
both growth rates are equal, what varies are the dividends that the stocks yield and the required rates of return
The next dividend payment by Savitz, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. If the stock currently sells for $43 per share, what is the required return?
Answer:
The answer is 12.9%
Explanation:
This question will be solved using the Dividend Discount Model(DDM).
Po = D1/r - g
Po is the current worth of stocks
D1 is the next dividend paid
r is the rate of return
g is the growth rate
$43 = $2.12/ r - 0.08
43r - 3.44 = 2.12
43r = 5.56
r = 5.56/43
=0.129
Expressed as a percentage:
The required return for Savitz, Inc., is therefore 12.9%
A total asset turnover ratio of 5.1 indicates that: Multiple Choice For every $1 in sales, the firm acquired $5.1 in assets during the period. For every $1 in assets, the firm produced $5.1 in net sales during the period. For every $1 in assets, the firm earned gross profit of $5.1 during the period. For every $1 in assets, the firm earned $5.1 in net income. For every $1 in assets, the firm paid $5.1 in expenses during the period.
Answer:
For every $1 in assets, the firm produced $5.1 in net sales during the period.
Explanation:
The formula to compute the total asset turnover ratio is shown below:
Total Asset turnover ratio = Net Sales ÷ Average Total Asset
where,
Net sales come after deducting the sales discounts, and other expenses
And, the average total assets could be computed by taking an average of opening and closing total assets
So, the total asset turnover shows that for every $1 of assets would create $5.1 of sales
Hence, the first option is correct