Answer:
Budgeted amount of fixed cost for 20,000 units = $30,000
Explanation:
For 22,000 units, Budgeted fixed cost was $30,000
Thus, since fixed cost do not change in totality under ordinary circumstances, the same amount of fixed cost would be budgeted for 20,000 units as well
Based on the information given, the budgeted amount of fixed costs for 20,000 units would be $30,000.
What is a budget?A budget simply means a financial plan that is used by an individual, business organization or government to estimate the amount of revenue and expenditures over a specified period of time, and it is usually on an annual basis i.e one year.
In this scenario, the budgeted amount of fixed costs for 20,000 units would be equal to $30,000 because fixed cost remains the same and doesn't change under ordinary circumstances.
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When a firm focuses on cost reductions through a variety of efforts including economies of scale, with little customization of products, the firm uses which kind of strategy?
Answer:
Global standardization
Explanation:
Global standardization is when a company(multinational) create a marketing strategy that is results driven in order to sell its products internationally. This type of strategy is used by these companies to promote/advertise, sell their products with a view to making profit.
Global standardization enables a firm to use same marketing strategy from one country to another while considering the culture of the host country. This means that global standardization is a useful tool especially for product like Coca Cola which have same appeal worldwide.
Broad network access, measured service, resource pooling, and rapid elasticity are essential characteristics of ___________.
Answer:
cloud computing
Explanation:
All of these characteristics alongside on-demand self-service are essential characteristics of cloud computing. Cloud computing refers to the different computer system resources that are always available to a client when needed from any remote location, usually in regards to data storage and computing power, without actual direct active involvement by the user themselves. Allowing the user to access information or computing power remotely.
Your estimate of the market risk premium is 9%. The risk-free rate of return is 3.7% and General Motors has a beta of 1.7. According to the Capital Asset Pricing Model (CAPM), what is its expected return?
Answer:
19%
Explanation:
The market risk premium is 9%
The risk free rate of return is 3.7%
General motors have a beta of 1.7
Therefore, using the capital asset pticing model the expected return can be calculated as follows
= 3.7% + 1.7×9%
= 3.7% + 15.3%
= 19%
Hence the expected return is 19%
Blaster, Inc., manufactures portable radios. Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.75 per unit. During May, the company purchased 24,120 units of the part for a total of $43,416. Also during May, the company manufactured 6,240 radios, using 20,620 units of part XBEZ52. The direct materials purchases variance is computed when the materials are purchased. During May, the materials price variance for part XBEZ52 was:
Answer:
$1,206 unfavorable
Explanation:
materials price variance = (AP – SP) x AQ
SP = $1.75
AQ = 24,120 units (units purchased)
AP = $43,416 / 24,120 = $1.80
materials price variance = ($1.80 - $1.75) x 24,120 = $1,206 unfavorable
Since the price paid for each part is higher than the standard price, the variance is unfavorable.
Pattison Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.
Fixed Element per Month Variable Element per Customer Served
Revenue $ 5,500
Employee salaries and wages $ 46,300 $ 1,000
Travel expenses $ 500
Other expenses $ 32,500
When the company prepared its planning budget at the beginning of May, it assumed that 20 customers would have been served. However, 17 customers were actually served during May.
The activity variance for "Travel expenses" for May would have been closest to:
A. $1,500 U
B. $1,500 F
C. $2,000 F
D. $2,000 U
Answer:
B. $1,500 F
Explanation:
Flexible Planning Activity
Budget Budget Variance
Customer served (q) 17 20
Travel expense ($500q) $8,500 $10,000 $1,500 (Favorable)
Workings
Travel Expense at 500q
Flexible budget = 500 * (17) = $8,500
Planning budget = 500 * (20) = $10,000
Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year zero-coupon bond and a 4-year zero-coupon bond. Calculate the par amount for the 2-year zero-coupon bond assuming full immunization is met.
Answer:
Par amount = $9,615.39
Explanation:
The condition that must hold in order to meet full immunization are as follows:
Condition 1: PV(assets) = PV(liabilities)
Condition 2: MD(assets) = MD(liabilities) or P'assets = P'liabilities
Condition 3: There is one asset cash inflow before the liability cash outflow, and there is also one asset cash inflow after the liability cash outflow.
Where PV denotes Present Value and MD denotes Macaulay Duration.
PV(liabilities) = Amount required to pay / (1 + i)^n ............ (1)
Where;
Amount required to pay = $20,000
i = interest rate = 4%
n = number of years after = 3 years
Substituting the values into equation (1), we have:
PV(liabilities) = $20,000 / (1 + 4%)^3 = 17,779.93
Let;
A = Weight of two-year-zero-coupon bond in the portfolio
n = Macaulay Duration of n-year-zero-coupon bond
Therefore, we can construct a portfolio of assets using a 2-year zero-coupon bond and a 4-year zero-coupon bond as follows:
A(2) + (1 – A)(4) = 3
2A + 4 – 4A = 3
2A – 4A = 3 – 4
-2A = - 1
A = -1/-2
A = 0.5
We can now calculate the par amount as follows:
Par amount = PV(liabilities) * A * (1 + i)^t .............. (2)
Where t = 2 as the duration of the bond
Substituting the values into equation (2), we have:
Par amount = 17,779.93 * 0.5 * (1 + 4%)^2
Par amount = 17,779.93 * 0.5 * 1.04^2
Par amount = 17,779.93 * 0.5 * 1.0816
Par amount = $9,615.39
Therefore, the par amount for the 2-year zero-coupon bond assuming full immunization is met is $9,615.39.
You took out a mortgage for $300,000. You need to pay $2,730 every month for 15 years. what is the monthly interest rate
Answer:
491.4
Explanation:
15×12=180
2.730×180=491.4
The term economies of scale refers to the fact that as the:
o physical size of the product gets larger, the costs of production become lower
O quantity of product produced in a given period increases, the cost of manufacturing each unit increases
o quantity of product produced in a given period increases, the cost of manufacturing each unit remains constant
quantity of product produced in a given period increases, the cost of manufacturing each unit decreases
Need!
Answer:
quantity of product produced in a given period increases, the cost of manufacturing each unit decreases
Explanation:
Economies of scale happens when the average total cost (variable + fixed production costs per unit) decreases as total output increases. This generally takes place because fixed costs are the same for a small number of units produced or a large number of units produced, so the average fixed cost per unit tend to decrease as more units are produced (at least up to certain point). Variable production costs per unit can also decrease as total output increases since materials might be purchased in larger quantities resulting in higher discounts or labor productivity increases.
Use the following information to determine the break-even point in sales dollars:
Unit sales 51,600 Units
Dollar sales $516,000
Fixed costs $206,000
Variable costs $193,500
$206,000.
$116,500.
$186,400.
$329,600.
$516,000.
Answer:
$329,600
Explanation:
The computation of break-even point is shown below:-
But before that first we need to compute the following calculations
Total contribution margin ratio = Sales - Variable cost
= $516,000 - $193,500
= $322,500
Contribution margin in percentage = Total Contribution Margin ÷ Total Sales
= $322,500 ÷ $516,000
= 62.50%
Now,
Break-even point = Total fixed cost ÷ Contribution margin in percentage
= $206,000 ÷ 62.50%
= $329,600
On January 1, 2021, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required:Assuming the market interest rate on the issue date is 8%, the bonds will issue at $320,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Journal entries are given below
Explanation:
Entry for the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021, are prepared as follows
January 01, 2021 (Splash City issues $320,000 of 8% bonds)
Debit Credit
Cash 320,000
Bonds payable 320,000
June 30, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
December 31, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
You are helping a customer who wants to purchase pavers and they have selected
a style and color they like. How should you proceed next?
A. Thank the customer for shopping with us
B. Ask the customer if they need the patio project installed
C. Close the sale with the customer
D. Ask the customer if they need any other products for the project.
Answer:
D. Ask the customer if they need any other products for the project.
Explanation:
Customers who buy pavers are usually involved in a medium or large house project, and probably need other products. For this reason, a sales representative should ask the customer if they need anything else for the project in order to increase sales for the company.
Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $166,400 to $201,500. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 6%, travel 4%, and delivery 1%. Fixed selling expenses will consist of sales salaries $34,900, depreciation on delivery equipment $6,600, and insurance on delivery equipment $1,700. Prepare a monthly selling expense flexible budget for each $11,700 increment of sales within the relevant range for the year ending December 31, 2020.
Answer:
there is not enough room here, so I prepared an excel spreadsheet
Costs which can be eliminated in whole or in part if a particular business segment is discontinued are called:
Answer:
Avoidable costs
Explanation:
An avoidable cost is defined as one that an entity will not incur if a particular activity is not undertaken.
In business operations avoidable costs are usually variable costs. These are costs that vary or change in the cost of production. For example wages, cost of raw materials, and labour. These can be avoided depending on business needs.
Costs that are not avoidable are fixed cost. For example rent, insurance, and utilities.
These costs are paid wether production occurs or not.
Suspect Corp. issued a bond with a maturity of 30 years and a semiannual coupon rate of 6 percent 4 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $45 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $50 million and the bonds sell for 54 percent of par. The company’s tax rate is 40 percent.Required:a. What is the company’s total book value of debt?b. What is the company’s total market value of debt? c. What is your best estimate of the aftertax cost of debt?
Answer and Explanation:
The computation of each point is shown below:-
But before that we need to do the following calculations
First Issue of Bonds:
Face Value = $45,000,000
Market Value = 95% × $45,000,000
= $42,750,000
Annual Coupon Rate = 6%
Semiannual Coupon Rate = 3%
= 3% × $45,000,000
= $1,350,000
Time to Maturity = 26 years
Semiannual Period to Maturity = 52
Let semiannual YTM be i%
$42,750,000 = $1,350,000 × PVIFA(i%, 52) + $45,000,000 × PVIF(i%, 52)
N = 52
PV = -42750000
PMT = 1350000
FV = 45000000
I = 3.20%
Semiannual YTM = 3.20%
Annual YTM = 2 × 3.20%
Annual YTM = 6.40%
Before-tax Cost of Debt = 6.40%
After-tax Cost of Debt = 6.40% × (1 - 0.40)
= 3.84%
Second Issue of Bonds:
Face Value = $50,000,000
Market Value = 54% × $50,000,000
= $27,000,000
Time to Maturity = 15 years
Semiannual Period to Maturity = 30
Let semiannual YTM be i%
$27,000,000 = $50,000,000 × PVIF(i%, 30)
Using a financial calculator:
N = 30
PV = -27000000
PMT = 0
FV = 50000000
I = 2.075%
Semiannual YTM = 2.075%
Annual YTM = 2 × 2.075%
= 4.15%
Before-tax Cost of Debt = 4.15%
After-tax Cost of Debt = 4.15% × (1 - 0.40)
= 2.49%
a. The total book value of debt is
Total Book Value of Debt = $45,000,000 + $50,000,000
= $95,000,000
b. The total market value of debt is
Total Market Value of Debt = $42,750,000 + $27,000,000
= $69,750,000
c. The estimate of the aftertax cost of debt is
Weight of first Issue of Debt is
= $42,750,000 ÷ $69,750,000
= 0.6129
Weight of second issue of Debt
= $27,000,000 ÷ $69,750,000
= 0.3871
So,
Estimated After-tax Cost of Debt is
= 0.6129 × 3.84% + 0.3871 × 2.49%
= 3.32%
All the individuals that buy the product for their personal consumption is called………
Answer:
A consumer
Explanation:
Tracy Company owns 4,000 of the 10,000 outstanding shares of Penn Corporation common stock. During 2018, Penn earns $450,000 and pays cash dividends of $150,000. If the beginning balance in the investment account was $900,000, the balance at December 31, 2018 should be:_______.
a. $900,000.
b. $1,020,000.
c. $1,080,000.
d. $1,200,000.
Answer:
$1,020,000
Explanation:
Tracy company has 4,000 out of the 10,000 outstanding shares the common stock of Penn corporation
Penn earns $450,000 during 2018
They make a cash dividend payment of $150,000
The beginning balance in the investment is 900,000
Therefore, the balance at December 31, 2018 can be calculated as follows
= $900,000 + ($450,000×0.4)-($150,000×0.4)
= $900,000+$180,000-$60,000
= $1,080,000-$60,000
= $1,020,000
Hence the balance at December 31st, 2018 is $1,020,000
Why do tourism business have market cost for the printing
Answer:
Launching tourist ventures involves overcoming two major hurdles: first, the venture must be
financed; and second, demand must be generated. In particular, the marketing of tourism and
hospitality ventures provides special challenges, the ability to reach the target market and convince
them to travel to remote locations being a critical success factor (Dolli, N.; Pinfold, J.F., 1997). Thus,
the main issue related to the marketing of tourist services is not their production, but their sale and
promotion, so as to ensure that all the consumers’ needs are comprehensively satisfied. (Nistoreanu,
P., 2006).
It is in this context that both the producers as well as the suppliers (intermediaries) of tourism services
should take into consideration the fact that a touristic product is sold only if there is a demand on the
market for that particular product. This means that suppliers have the possibility to either offer what is
requested on the market, responding to the consumers’ needs, or to stimulate or generate the demand
for a certain product so as to facilitate the selling of that product. In both cases, however, the
producers and suppliers need to apply a promotion strategy, through which potential clients may be
informed with regard to the offer on the market, as well as induce the clients’ desire to consume a
certain product.
Explanation:
Kate is in the 15% tax bracket and has $29,000 available for investment during her current tax year. Assume that she remains in the same tax bracket over the next 11 years, and determine the accumulated amount of her investment after taxes if she puts the$29,000 into the following. (Round your answers to the nearest cent.)(a) a tax-deferred annuity that pays 4%/year, tax deferred for 11 years$ (b) a taxable instrument that pays 4%/year for 11 years
Answer and Explanation:
The computation is shown below:
a. The Accumulated amount of her investment atter taxes is
Before that first we have to determine the future value which is shown below:
As we know that
Future value = Present value × (1 + interest rate)^number of years
= $29,000 × (1 + 0.04)^11
= $44,644.17
And, the tax rate is 15%
So, the after tax value is
= $44,644.17 × (1 - 0.15)
= $37,947.54
b. Now for the second part it is
= Annual cash flows × Annuity factor at 3.4% for 11 years
= $29,000 × 10.638
= $308,502
Which of the following statements is not true about self-awareness?
a. Self-awareness involves a capacity to monitor and control biases that potentially affect your decision making.
b. Managers who have low self-awareness are superior performers.
c. Self-awareness can be increased by acquiring multiple experiences in diverse situations and with diverse others.
d. Self-awareness is best described as the capacity for introspection and the ability to reconcile oneself as an individual separates from the environment and other individuals.
Answer:
b. Managers who have low self-awareness are superior performers.
Explanation:
Self-awareness can be defined as a mental process, which occurs when an individual has knowledge about himself, about his knowledge, his actions and attitudes.
Therefore, in the workplace, having self-awareness is essential for a manager to achieve high performance, as this is a skill that includes knowing your skills, values, internal resources that ensure that there is the possibility of better monitoring of environments and oneself, control of emotions and improved perception of oneself and others.
This is a characteristic that adds to a manager 's assertive ability to establish communication focused on ethics, mutual respect, cordiality, etc.
The statement that is not true about self awareness from the list is B. "Managers who have low self-awareness are superior performers."
Self awareness refers to the ability of one to understand their thoughts, feelings, impulses and actions. Being self aware is a very important leadership attribute.
Therefore the statement that 'managers who have low self awareness are superior performers' is wrong.
A manager that lacks self awareness will definitely not perform their job effectively.
Self awareness helps one to become better at making decisions, it helps control biases, communicate more effectively and build good relationships in the work place or other places.
Thus, we can conclude that managers who have low self awareness are not superior performers.
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A company releases a? five-year bond with a face value of? $1000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, which of the following coupon rates will cause the bond to be issued at a? premium?
A. 6%
B.10%
C. 8%
D. 5%
Answer: B.10%
Explanation:
For a bond to be issued at a premium, the Coupon rate needs to be higher than the current Market Yield to Maturity as this will cause the price of the bond to be higher than Par signifying that the bond is an attractive one.
If the Coupon rate is equal to the YTM then the bond will trade at Par.
If the Coupon rate is less than the YTM then the bond will trade at a discount.
Only 10% of the coupon rate will allow the bond by issued at a premium.
The coupon rate of a a bond refers to the amount of interest income earned each year based on the face value.
The yield to maturity of a band refers to the total estimated return if the bond is held until maturity.
When coupon rate is equal to YTM at issue, then, bond is issued at par value.When coupon rate is lower than YTM at issue, then, bond is issued at a discount.When coupon rate is higher than YTM at issue, then, bond is issued at a premium.
Therefore, the Option B is correct because only 10% of the coupon rate will allow the bond by issued at a premium
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The initial price for a stadium is $800,000,000. There will be a 2% adjustment to the price, and $85,000,000 of revenue from the sale of previous equipment and land. The projected future cash flow is $675,000,000. The government has decided to provide $300,000,000 of cash to discount the price. What is the Net Present Value of the Stadium
Answer:
NPV = $246764705.88
Explanation:
The net present value of the stadium can be calculated by deducting the present value of cash outflow from the present value of cash inflow.
DATA
Initial price = $800,000,000
Revenue from sale of previous equipment = $85,000,000
Goverment provided fund to discount the price = $300,000,000
Discount factor for year 1 at 2% = 0.9804
Future Cash inflow = $675,000,000
Solution
NPV = Present value of cash inflows - Present value of cash outflows
NPV = $661,764,705.88 - $415,000,000
NPV = $246,764,706
Working
PV of Cash inflow = $675,000,000 x 0.9804
PV of cash inflow = $661,764,706
PV of Cash outflow = Initial price - Revenue form sale - Goverment fund
PV of cash outflow = $800,000,000 - $85,000,000 - $300,000,000
PV of cash outflow = $415,000,000
Assume that the tracking error of Portfolio X is 13.20 percent. What is the information ratio for Portfolio X
Answer:
The answer is below
Explanation:
To calculate the information ratio of portfolio X, we have to first calculate the Jensen's alpha of portfolio X. The Jensen's alpha is given as:
Jensen’s Alpha = Expected Portfolio Return – [ Risk-Free Rate + Beta of the Portfolio* (Expected Market Return – Risk-Free Rate) ]
From the picture attached, the values of the data are gotten, substituting:
[tex]\alpha_p=R_p-[R_f+B_p(R_m-R_f)]\\\\\alpha_p=13-[5+1.3(10.1-5)]=1.37=1.37\%[/tex]
Information ratio = Jensen's alpha / Tracking error = 1.37% / 13.2% = 0.1038
. Define a primary and secondary market for securities and discuss how they differ. Discuss how the primary market is dependent on the secondary market. (
Explanation:
Primary market for securities is one that provides access to buy new new issues of stocks and bonds of a company. A good example of primary market is an Initial Public Offering (IPO), organized by a company that wants to sell it's shares for the first time to investors.
While Secondary market, are places to sell securities to a secondary (second) buyer from the current security owner who bought from the primary market.
The primary market is dependent on the secondary market since it is the demand from the secondary market that determines the asset valuation of the primary market.
Refer to the following scenario to answer the following questions.
Five fishermen live in a village and have no other employment or income-earning possibilities besides fishing. They each own a boat that is suitable for fishing but does not have any resale value. Fish are worth $5 per pound, and the marginal cost of operating the boat is $500 per month. They all fish a river next to the village. According to the following schedule, they have determined that when there are more of them out on the river fishing, they each catch fewer fish per month.
Boats Fish Caught per
Boat (pounds)
1 200
2 190
3 175
4 155
5 130
How many fishermen will choose to operate their boats?
Answer:
5 fishermen will choose to operate their boats as each of them will earn a profit of $150
Explanation:
Per boat operating cost = $500 per month.
Price of fish = $5 per pound.
There are 5 fishermen and each fishermen has 1 boat.
For 1 boat
Total revenue = Price * quantity = $5 * 200 = $1,000
Cost = $500
Profit = Total revenue - Cost = 1000 - 500
Profit = $500.
For 2 boats
Total Revenue of each boat = $5 * 190 = $950
Cost of each boat = $500
Profit of each boat = Total revenue - Cost = 950 - 500
Profit of each boat = $450.
For 3 boats
Total Revenue of each boat = 5 * 175 = $875
Cost of each boat = $500
Profit of each boat = TR - Cost = 875 - 500
Profit of each boat = $375
For 4 boats
Total Revenue of each boat = 5 * 155 = $775
Cost of each boat = $500
Profit of each boat = TR - Cost = 775 - 500
Profit of each boat = $275
For 5 boats
Total Revenue of each boat = 5 * 130 = $650
Cost of each boat = $500
Profit of each boat = TR - Cost = 650 - 500
Profit of each boat = $150.
Conclusion: As there are 5 fishermen and if all of them out on the river at the same time then each fisherman earns profit of $150. As all fishermen earns profit hence all of them will choose to operate their boats. Therefore, 5 fishermen will be ready to operate their boats.
A ________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.
Answer: network
Explanation:
Network externality simply states that demand for a good or service has to do with how other people demand for that particular good or service. It means consumer's buying patterns are influenced by the purchase of others buying the product.
Therefore, a network externality exists when the number of customers who purchase a good or use it influences the quantity demanded.
TB MC Qu. 9-100 The following labor standards have been ... The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.6 hours Standard labor rate $ 13.40 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,400 hours Actual total labor cost $ 96,200 Actual output 950 units What is the labor efficiency variance for the month
Answer:
Direct labor time (efficiency) variance= $23,048 favorable
Explanation:
Giving the following information:
Standard labor-hours per unit of output 9.6 hours
Standard labor rate $ 13.40 per hour
Actual hours worked 7,400 hours
Actual output 950 units
To calculate the direct labor efficiency variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 9.6*950= 9,120
Direct labor time (efficiency) variance= (9,120 - 7,400)*13.4
Direct labor time (efficiency) variance= $23,048 favorable
Southland Corporation has a present capital structure consisting of common stock (10 million shares) and debt ($150 million, 8% coupon rate). The company needs to raise $60 million and is undecided between two financing plans. Plan A: Equity financing. Under this plan, an additional common stock will be sold at $15 per share. Plan B: Debt financing. Under this plan, the firm will issue 10% coupon bonds. At what level of operating income (EBIT) will the firm be indifferent between the two plans? Assume a 40% marginal tax rate.
Answer:
The level of operating income (EBIT) where the firm will be indifferent between the two plans is $33 million.
Explanation:
Indifferent level of EBIT refers to the EBIT level where the he Earnings Per Share (EPS) two alternative financial plans are the same.
Indifferent level of EBIT can be calculated using the following formula:
[(EBIT - FB) * (1 - T)] / SA = [(EBIT - FB) * (1 - T)] / SB .................... (1)
Where:
EBIT = Indifference level of EBIT
FA = Fixed interest costs under plan B = Interest on existing debt = $150 * 8% = $12 million
FB = Fixed interest costs under plan A = Interest on existing debt + Interest on new debt = ($150 * 8%) + ($60 * 10%) = $18 million
T = Tax rate = 40%, or 0.40
SA = Number of equity shares outstanding under Plan B = Existing number of shares + New number of shares = 10 million + ($60 million / $15) = 10 million + 4 million = 14 million
SB = Number of equity shares outstanding under Plan A = Existing number of shares = 10 million
Substiuting the values into equation (1) and solve for EBIT, we have:
[(EBIT - 12) * (1 - 0.40)] / 14 = [(EBIT - 18) * (1 - 0.40)] / 10
[(EBIT - 12) * 0.60] / 14 = [(EBIT - 18) * 0.60] / 10
[EBIT0.60 - 7.20] / 14 = [(EBIT0.06 - 10.80] / 10
[EBIT0.60 - 7.20] * 10 = [(EBIT0.06 - 10.80] * 14
EBIT6 - 72 = EBIT8.40 - 151.20
-72 + 151.20 = EBIT8.40 - EBIT6
EBIT2.40 = 79.20
EBIT = 79.20 / 2.40
EBIT = $33 million
Therefore, the level of operating income (EBIT) where the firm will be indifferent between the two plans is $33 million.
Leslie works as customer service representative for Lighthouse Point Lanterns. Her job is to fulfill customer orders and answer any questions that the customer may have. In order to ensure the best service possible, Lighthouse Point Lanterns makes test phone calls to their customer service representatives and rates their ability to correctly answer customer calls. If Leslie properly handles 80% of the test calls, she will receive a 20% bonus in her next pay check. This is an example of:_________.
Answer:
a performance reward.
Explanation:
A performance reward is a type of employee reward system. Companies generally reward employees in an attempt to motivate them to work more, harder or more efficiently. E.g. a company may reward salespeople that close 100 sales per week, regardless of the type of sales made. This type of reward is based on the gross amount of work carried out by the employee.
In Leslie's case, she is being rewarded for being an efficient employee. The parameter for measuring her efficiency is that 80% of the test calls that she makes are handed properly. She is not rewarded on the number of test calls, but instead on how she handled them.
This is an example of a performance reward if Leslie is going to be rewarded with a 20% bonus for handling 80% of the test calls.
A performance reward is a reward that a customer receives in an organization which is based on how well they have performed in the business.
The reward system here has stated that if Leslie is able to meet up with the target that the business has placed for her to reach she would be rewarded with a bonus of 20% when she receives her next salary.
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Revenue of $1,000 was collected in advance from customers for goods and was recorded as sales revenue. At year end, $600 of the revenue collected in advance is earned. The adjusting entry includes a:
Answer:
Please see below
Explanation:
The adjusting entries include
Revenue A/c. Dr. $400
To Deferred revenue A/c. Cr $400
($1,000 - $600)
* When a company makes a journal entry to record revenue that it had previously collected in advance, which was recorded as sales revenue, then the adjusting entry to record portion of the earned revenue received in advance would include a debit to revenue a/c
Suppose Lizzie consumes soda and pizza. If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar:_____.
a. the demand curve for soda must have shifted outward.
b. the demand curve for pizza must have shifted inward.
c. Lizzie should buy more pizza and less soda to maximize her utility.
d. the indifference curve for soda and pizza must have rotated inward.
e. the marginal rate of substitution between soda and pizza equals 3.
The answer is option c. Lizzie has to buy more pizza and less soda so that she can maximize her utility.
The reason why this is the answer is because, the utility that she gets from the consumption of pizza is greater than the utility that she derives from consuming soda.
From the question, when she eats pizza she gets 300 units of utility compared to when she drinks her last soda that only gives her 100 units of utility.
In conclusion, She should buy more of what gives her maximum utility. That is Pizza.
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