Answer:
Domingo Corporation
The cost per equivalent unit for materials for the month in the first processing department is closest to:______.
d. $19.88
Explanation:
a) Data and Calculations:
Beginning inventory = 1,100
Cost Percent Complete
Materials costs $ 6,200 50%
Conversion costs $ 2,400 20%
Units Materials Conversion
Work in process, beginning 1,100 50% 20%
Started into production 7,500
Completed and transferred out 6,800 100% 100%
Work in process, ending 1,800 85% 75%
Cost of production:
Materials Conversion
Work in process, beginning $6,200 $2,400
Cost added during June $159,400 $121,100
Total cost of production $165,600 $123,500
Equivalent units of production:
Units Materials Conversion
Completed and transferred out 6,800 6,800 (100%) 6,800 (100%)
Work in process, ending 1,800 1,530 (85%) 1,350 (75%)
Total equivalent units 8,330 8,150
Cost per equivalent unit:
Materials Conversion
Total cost of production $165,600 $123,500
Total equivalent units 8,330 8,150
Cost per equivalent unit $19.88 $15.15
5. Destiny is asked if she wants to open a Macy's credit card on the spot when she is checking out.
Macys is influencing which part of demand by this offer?
A. desire
B. ability to pay
C. willingness to pay
D.
none of the above
When developing baseline standards, it is vital to use industry best practices. Industry best practices standards enable one to justify choices being made to regulators. Furthermore, there is increased efficiency to be gained by modifying an existing standard as opposed to creating one from the ground up.
A. True
B. False
Answer:
A. True
Explanation:
A baseline may be defined as the minimum amount of security that a network, a device or a system must adhere to. They are generally mapped to the industry standards. It is applied to the several layers of the IT infrastructure of an organization.
When developing them, it is very important to make use of the industry best practices. It enables to justify the choices that are being made to the regulators.
Hence the answer is true.
(b) The citizens of this country are in general very clever people, but they are not good at multiplying by 2. This made shopping for potatoes excruciatingly difficult for many citizens. Therefore it was decided to introduce a new unit of currency, such that potatoes would be the numeraire. A sack of potatoes costs one unit of the new currency while the same relative prices apply as in the past. In terms of the new currency, what is the price of meatballs
Answer: 2 sacks of potatoes
Explanation:
In the past, meatballs cost 4 crowns per crock which was twice the price of Potatoes at 2 crowns per sack.
Now that potatoes were are the new currency but relative prices apply, the same notion above applies too.
If meatballs are twice the price of potatoes and potatoes are now the currency, then meatballs which are still twice the price of potatoes must be:
= 2 * 1 sack of potatoes
= 2 sacks of potatoes
In the market for financial capital,
a. those who supply financial capital pay interest on loans.
b. those who demand financial capital receive interest on loans.
c. the demand for financial capital comes from savings, and the supply goes to making loans.
d. the supply of financial capital comes from savings, and the demand goes to making loans.
Answer:
d. the supply of financial capital comes from savings, and the demand goes to making loans.
Explanation:
Capital markets refer to the areas where deposits and investment are transferred between the capital providers and others in need of capital. Capital markets consist of the main market, where new shares are released and exchanged, and the secondary market, where already issued securities are exchanged by investors.
Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 21,600 units, and transferred 22,200 units of product to the Assembly department. Its 3,000 units of beginning work in process consisted of $19,800 of direct materials and $221,940 of conversion costs. It has 2,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $496,800 of direct material costs and $2,165,940 of conversion costs were charged to production.
Required:
Prepare the company's process cost summary for May using the weighted-average method.
Answer:
Tamar Co.
Process Cost Summary for May, using the weighted-average method:
Process Cost Summary for May:
Materials Conversion Total
Units transferred $466,200 $2,197,800 $2,664,000
Ending WIP 50,400 190,080 240,480
Total cost $516,600 $2,387,880 $2,904,480
Explanation:
a) Data and Calculations:
Units started = 21,600
Units transferred = 22,200
Beginning work in process = 3,000 units
Cost of beginning work in process:
Direct materials $19,800
Conversion costs = $221,940
Ending work in process = 2,400 units
Degree of completion:
Materials = 100%
Conversion = 80%
Actual costs incurred:
Direct materials = $496,800
Conversion = $2,165,940
Calculation of Equivalent Units:
Materials Conversion
Units transferred out 22,200 (100%) 22,200 (100%)
Ending WIP 2,400 (100%) 1,920 (80%)
Total equivalent unit 24,600 24,120
Cost of production:
Materials Conversion Total
Beginning WIP $19,800 $221,940 $241,740
Current period 496,800 2,165,940 2,662,740
Total production cost $516,600 $2,387,880 $2,904,480
Cost per equivalent unit:
Materials Conversion Total
Total production cost $516,600 $2,387,880 $2,904,480
Total equivalent unit 24,600 24,120
Cost per equivalent unit $21 $99
Process Cost Summary for May:
Materials Conversion Total
Units transferred $466,200 $2,197,800 $2,664,000
($21 *22,200) ($99 * 22,200)
Ending WIP 50,400 190,080 240,480
($21 *2,400) ($99 * 1,920)
Total cost $516,600 $2,387,880 $2,904,480
Swifty Corporation had the following selected transactions.
1. Kim Leppard invested $7,274 cash in the business in exchange for common stock.
2. Paid office rent of $1,382.
3. Performed consulting services and billed a client $6,838.
4. Declared and paid a $873 cash dividend.
Answer:
Missing word "Indicate the effect each transaction has on the accounting equation, (Assets = Liabilities + Stockholders' Equity), using plus and minus signs."
Assets = Liabilities + Stockholders' Equity
1. Increase(+) No Effect Increase(+)
2. Decrease(-) No Effect Decrease(+)
3. Increase(+) No Effect Increase(+)
4. Decrease(-) No Effect Decrease(+)
Distributors of cigarettes earn some monopoly profits in their local markets but see them slowly erode as substitutes enter the market. Suppose Nebraska has scheduled a vote on the legalization of marijuana. Additionally, suppose that marijuana and cigarettes are substitutes and that the legalization of marijuana would lead to a decrease in the price of marijuana.
Given the relationship between marijuana and cigarettes, the legalization of marijuana would lead to_______in demand for cigarettes. Thus, distributors of cigarettes would likely____the legalization of marijuana.
Answer:
The question is incomplete, the options are missing. The options are the following:
For the first gap: increase/decrease.
For the second gap: support/oppose.
And the correct answers are: Decrease/oppose.
Explanation:
To begin with, in the microeconomics theory when it comes to concept of substitutes it refers to the relationship that exists between two goods that are similar in characteristics and therefore that they are probably to substitue one for the other in the market in the case when one's price is higher that the other. That is why that in this case presented, the legalization of the marijuana would obviously lead to a decrease in the demand of the cigarattes due to the fact that now the consumers will start to consume more of the other, letting the cigarette fall. And therefore that the distributors of cigarattes would likely be oppose to the legalization because it will affect their business.
Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Ericâs investment time horizon is flexible, which of the following investment options will exhibit the lower price?
a. An investment that matures in four years
b. An investment that matures in five years
Answer:
The second option which 5 years to maturity exhibited a lower price of
$523.95
Explanation:
In order to ascertain the option with lower, it is important we determine the price of each investment based on the fact the price of an investment opportunity today is the present value of its future cash flow is the maturity value of $1000 in both cases:
a.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=4 years
PV=$1000/(1+13.80%)^4
PV=$596.25
b.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=5 years
PV=$1000/(1+13.80%)^5
PV= $523.95
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $165,591 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines:
Activity Cost Cost Driver Cost Assigned Quantity/ Quantity
Pools to Pool Amount /Amount
Consumed Consumed
by Basic by Luxury
Materials
handling Number of moves $3,666 18 moves 60 moves
Quality Number of
inspections $37,125 200 100
inspections inspections
Machine
maintenance Number of
machine hours $124,800 6,000 3,600
machine hours machine hours
Required:
1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.
2. Calculate the activity rates for each cost pool in Hazelnut’s ABC system.
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
Answer:
Hazelnut Corp.
1. The amount of overhead assigned to each product line:
Basic = $103,500 (6,000 * $17,25)
Luxury = $62,100 (3,600 * $17.25)
2. Activity Rate based on ABC System:
Overhead Rates :
Materials handling $3,666/78 moves = $47 per move
Quality $37,125/300 inspections = $123.75 per inspection
Machine maintenance $124,800/9,600 m.hours = $13 per machine hour
3. The amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system is:
= $103,596
4. The amount of overhead that Hazelnut will assign to the luxury line if it uses an ABC system is:
= $61,995
Explanation:
a) Data and Calculations:
Total overhead = $165,591
Activity Cost Cost Driver Cost Assigned Quantity/ Quantity
Pools to Pool Amount /Amount
Consumed Consumed
by Basic by Luxury
Materials
handling Number of moves $3,666 18 moves 60 moves
Quality Number of
inspections $37,125 200 100 inspections
Machine
maintenance No. of machine
hours $124,800 6,000 3,600 m.hours
Total overhead costs $165,591
Traditional costing system with machine hours as the cost driver:
Overhead assigned to each product line:
Basic Luxury Total
Machine hours 6,000 3,600 9,600
Overhead rate = $165,591/9,600 = $17.25
Overhead assigned $103,500 $62,100
Overate rate:
Materials handling $3,666 78 moves = $47 per move
Quality $37,125 300 inspections = $123.75 per inspection
Machine maintenance $124,800 9,600 m.hours = $13 per machine hour
Assignment of costs:
Basic Luxury
Materials handling $47 * 18 = $846 $47 * 60 = $2,820
Quality $123.75 * 200 = 24,750 $123.75 * 100 = 12,375
Machine maintenance $13 * 6,000 = 78,000 $13 * 3,600 = 46,800
Total overhead assigned $103,596 $61,995
Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt. The stock issue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate. Which of the following is likely to occur if the company goes ahead with the stock issue?
A. The ROA will decline.
B. Taxable income will decline.
C. The tax bill will increase.
D. Net income will decrease.
E. The times-interest-earned ratio will decrease.
Answer:
C. The tax bill will increase.
Explanation:
Interest paid on debt finance is tax deductible , unlike the dividends paid on common stock which are not deductible for tax purposes,hence, by reducing debt capital so also the interest expense which has the potential to reduce taxable income would also reduce.
Hence, there would higher taxable profit and eventually, there would higher tax, in essence, the correct option is the option C
Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
Cost of goods sold $88,250
Work in process inventory, January 1, 2016 21,800
Work in process inventory, December 31, 2016 17,250
Selling and Administrative Expenses 20,400
Net Income 35,500
Factory overhead 21,650
Direct materials inventory, January 1, 2016 28,200
Direct materials inventory, December 31, 2016 15,375
Cost of goods manufactured 107,350
Finished goods inventory, January 1, 2016 35,675
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31, 2016?
Answer:
$54,775
Explanation:
The computation of the finished goods inventory is shown below:
As we know that
Cost of Goods sold = Cost of goods manufactured + Opening stock of Finished goods - Closing stock of Finished goods
Now
Ending Stock of Finished goods = Cost of goods manufactured + Opening stock of Finished goods - Cost of Goods sold
So,
Ending Stock of Finished goods is
= $107,350 + $35,675 - $88,250
= $54,775
Kara files her income tax return 64 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $15,400, which is the balance of the tax she owes. Note: Assume 30 days in a month.
Required:
Disregarding the interest element, enter Kara's penalty amount for each, failure to file and failure to pay.
Failure to pay________$
Failure to file________$
Answer:
failure to file :$2079
failure to pay:$231
Explanation:
given data
remits a check = $15,400
days in a month = 30
return = 64 days
solution
computation of Kara's penalty amount for failure to pay
failure to pay will be
failure to pay = 0.5% of tax owed × number of months .......................1
failure to pay = 0.5% × $15400 × 3
failure to pay = $231
and
Computation of Kara's penalty amount for failure to file
failure to file will be
failure to file = (5% of tax owed × number of months or part thereof) - failure to pay penalty .......................2
failure to file = (5% × $15400 × 3) - $231
failure to file = $2310 - $231
failure to file = $2079
Question 7 of 10
Your company emphasizes the important of conserving (not wasting)
resources. How can you support that value when you print an 8-page report
you were asked to bring to your department's monthly meeting?
A. Use the Print option for two-sided printing.
B. Post the report online before printing it.
C. Use the Print option to create extra copies.
D. Use the Save option to choose a format readers can open.
SUBMIT
Answer:
A. Use the Print option for two-sided printing.
I'd choose A, although I don't really understand what option D means..
After graduating from college, you are hired by the Ford automobile company as an economic analyst. For your first project, you are asked to estimate what would happen to the sales of Ford Mustangs as a result of a change in (i) the price of a Chevrolet Camaro, (ii) the price of gasoline, and (iii) consumer incomes. You are given the following elasticities:
price elasticity Of demand for Ford Mustangs= -2.5
Cross-price elasticity between Ford Mustangs and Camaros =1.5
Cross-price elasticity between Ford Mustangs and gasoline= -0.80
Income elasticity of demand for Ford Mustangs= 3.00
a. Suppose the price Of a Camaro falls by 10%. With all else being equal, sales of Ford Mustangs would______ by_______%
b. If the price of gasoline increases by 20%, the quantity of Ford Mustangs would _________by_______%
Answer:
a. Decrease by 15%
b. decrease by 16%
Explanation:
a. As we know that
Camaro and ford mustangs would be considered as a substitute goods as the cross price elasticity of demand comes in positive so in the case when the price of camaro decrease so the quantity of Mustang would also decreased by 1.5 ×10% = 15%
b. As we know that Gasoline and mustang would be considered as complementary goods so if the price of gasoline would increase by 20% so the quantity of mustang be decreased by 0.80 × 20% = 16%
Slapshot Company makes ice hockey sticks and sold 1,890 sticks during the month of June at a total cost of $378,000. Each stick sold at a price of $360. Slapshot also incurred two types of selling costs: commissions equal to 10% of the sales price and other selling expense of $64,700. Administrative expense totaled $53,800.
Required:
Prepare an income statement for Slapshot for the month of June
Answer:
Slapshot Company
Income statement for the month of June
Sales ( 1,890 x $360) $680,400
Less Costs of Sales ($378,000)
Gross Profit $302,400
Selling Costs :
Commissions $68,040
Other Selling Expense $64,700
Administrative Expense $53,800 ($186,540)
Net Income $115,860
Explanation:
The Income statement shows the Profit earned during the reporting period. This is determined as Gross Profit (Sales - Cost of Sales) minus the Operating Expenses.
A purchase of a pair of Italian designer jeans by a resident of Japan would be considered an_____when counting GDP in Japan. As a result, this purchase would be_____Japanese GDP. A purchase of a light pickup truck made in Japan and sold in Canada would be considered an_____for Japanese GDP, which would be_____Japanese GDP.
Answer and Explanation:
In the case when the purchase of Italian jeans made by the Japan resident so it would be considered an import at the time of counting GDP in Japan. So the purchase would be deducted or excluded from Japanese GDP
In the case when the purchase of truck would be made in Japan and then sold it in Canada so it would be considered as an export so the same would be included or added in Japanese GDP.
The next dividend payment by Zone, Inc., will be $2.08 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $42 per share, what is the required return
Answer:
10.95%
Explanation:
According to the gordon growth model,
the value of stock (price) = dividend / required return - growth rate
42 = 2.08/ r - 0.06
42(r-0.06) = 2.08
2.08/42 = r - 0.06
r = 10.95%
Question 2. (6)
Briefly explain why Investors, Competitors and Suppliers take interest in
accounting information related to a business. (Please include examples)
Answer:
They like googIe
Explanation:
In Year 1, the investor acquired 10% ownership of investee and applied fair value method to account for the investment. In Year 2, the investor acquired another 30% ownership and applied equity method to account for the investment (40% ownership). In Year 3, the investor sold 35% ownership of the investee and started using fair value method again to account for the investment (5% ownership). Should the investor apply retrospective adjustment in Year 2 and Year 3
Answer:
b
Explanation:
An economic profit includes implicit costs and accounting profit does not. A distinction between them is important because an accounting profit is a relative amount of money. Some amount of accounting profit may or may not be a sufficient amount of profit to keep an entrepreneur in:________
Answer:
his/ her present line of business
Explanation:
Economic profit is accounting profit less implicit cost
Accounting cost is total revenue less explicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Explicit cost is the actual cost incurred in carrying out an activity.
In determining profit, it is essential to consider implicit cost to determine if the business is earning economic profit
Tom is comparing two printers for his small business. The purchase price for Printer A is $1,000, with maintenance and operations costs of $400. Printer B increases productivity by $100, and reduces the maintenance and operations costs by half. The expected lifetime value is one year for both printers. What is the economic value to the customer (EVC) of Printer B
Answer:
EVC = $1300
Explanation:
In this question, we need to find the economic value to the customer (EVC) of Printer B.
First of all we need to know the basics of Economic value of a product,
It is basically starts with evaluating the additional values of the product first which are associated with it and then, those values are added to the next best product in the market. In this case, Printer A is the next best product whose price is $1000.
We know that, Printer B increase productivity by $100
Reduce the maintenance and operations costs by half, which means $400/2 = $200.
Additional value of the product = $100 + $200
Cost of the next best product = $1000
So,
According to the EVC definition and understandings, we must add the additional values of the product to value of the next best product.
Hence,
EVC = $1000 + $100 + $200
EVC = $1300
An outside supplier has offered to sell the component for $17. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,000. If Damon purchases the component from the supplier instead of manufacturing it, the effect on income would be:
Answer:
C. a $10,000 decrease.
Explanation:
Calculation for what the effect on income would be
First step is to calculate Make
Make=$100,000 + $160,000 + $60,000
Make = $320,000
Second step is to calculate Buy
Buy= $20,000 × $17 = $340,000 – $10,000
Buy = $330,000
Now let calculate the effect on income
Effect on income = $320,000 – $330,00
Effect on income = –$10,000 decrease
Therefore the effect on income would be –$10,000 decrease
The following information is available for the adjusting entries. Accrued interest on the notes payable at year-end amounted to $4,000 and will be paid January 1, 2022. Accrued salaries at year-end amounted to $3,000 and will be paid on January 5, 2022. Supplies remaining on hand at the end of the year equal $3,800. Problem 3-9B Part 9 9. Record closing entries.
Question Completion:
Assume that Supplies were purchased during the year worth $13,000.
Record the adjusting entries.
Answer:
Adjusting Journal Entries on December 31, 2021:
Debit Interest Expense $4,000
Credit Interest payable $4,000
To record the accrued interest on the notes payable.
Debit Salaries Expense $3,000
Credit Salaries payable $3,000
To record the accrued salaries at year end.
Debit Supplies Expense $9,200
Credit Supplies $9,200
To record supplies expense for the year.
Explanation:
a) Data and Calculations:
Supplies purchased = $13,000
Supplies at year-end = 3,800
Supplies consumed = $9,200 ($13,000 - $3,800)
b) Adjusting entries are journal entries done at the end of a financial period to ensure that expenses and revenues are matched to the period they occur instead of when cash is exchanged. This accords with the accrual concept and the matching principle of accounting.
Testbank Multiple Choice Question 145 Sheffield Corp. had 330 units of product A on hand at January 1, 2020, costing $22 each. Purchases of product A during January were as follows: Date Units Unit Cost Jan. 10 410 $23 18 450 24 28 180 25 A physical count on January 31, 2020 shows 440 units of product A on hand. The cost of the inventory at January 31, 2020 under the LIFO method is $10740. $9790. $9490. $10190.
Answer:
$9790
Explanation:
LIFO means last in first out. It means it is the last purchased inventory that is the first to be sold.
If LIFO method is used, the reaming inventory would consist of the earliest purchased inventories.
If 440 units remain, they wold consist of beginning inventory and inventory purchased on 10th of January
(330 x $22) + [(440 - 330) x $23) = $9790
Zeitler's Department Stores sells its products online and through traditional brick-and-mortar stores. The following parallel coordinates plot displays data from a sample of 20 customers who purchased clothing from Zeitler's either online or in-store. The data include variables for the customer's age, annual income, and the distance from the customer's home to the nearest Zeitler's store. According to the parallel coordinates plot, how are online customers differentiated from in-store customers?
Question Completion:
Choose the correct answer below
(1) in-store customers appear to be middle aged, have higher annual income and live further distance away from a store
(2) in-store customers appear to be generally younger, have lower annual income and live near a store
(3) Online customers appear to be generally younger, have higher annual income and live further distance away from a store
(4) Online customers appear to be middle aged, have lower annual income and live near a store
Answer:
Zeitler's Department Stores
Online and In-store Customers:
According to the parallel coordinates plot, online customers are differentiated from in-store customers in the following ways:
(3) Online customers appear to be generally younger, have higher annual income and live further distance away from a store
Explanation:
Younger persons tend to embrace technology more than their older counterparts. Based on this, they also engage on online purchasing of goods and services instead of visiting the traditional brick-and-mortar stores. With online purchase, a customer is in better control because she can search for the best deals from any location.
On January 1, Year 1, a contractor began work on a $3.2 million construction contract that is expected to be completed in 3 years. The contractor concludes that it is appropriate to recognize revenue over time using the input method based on costs incurred (cost-to-cost method). At the inception date, the estimated cost of construction was $2.4 million. The following data relate to the actual and expected construction costs:
Year 1 Year 2 Year 3
Costs incurred $720,000 $1,170,000 $1,110,000
Expected future costs $1,680,000 $810,000 $0
For this long-term construction contract, the contractor needs to calculate the estimated dollar values of the revenue and gross profit (loss) to be recognized each year. Complete the contractor's long-term construction contract using the information above. Write the appropriate amounts in the associated cells. Indicate losses by using a leading minus (-) sign. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).
Revenue Gross profit (loss)
Year 1
Year 2
Answer:
Revenue Costs Incurred Gross profit (loss)
Year 1 $768,000 $720,000 $48,000
Year 2 $1,248,000 $1,170,000 78,000
Year 3 $1,184,000 $1,110,000 74,000
Total $3,200,000 $3,000,000 $200,000
Explanation:
a) Data and Calculations:
Construction contract = $3.2 million
Completion period = 3 years
Estimated cost of construction = $2.4 million
Construction costs:
Year 1 Year 2 Year 3 Total Costs
Costs incurred $720,000 $1,170,000 $1,110,000 $3 million
% of annual costs to total 24% 39% 37% 100%
Expected future costs $1,680,000 $810,000 $0
Annual Revenue $768,000 $1,248,000 $1,184,000 $3.2 million
Revenue Calculation:
Costs incurred/Total costs * $3,200,000
Revenue Costs Incurred Gross profit (loss)
Year 1 $768,000 $720,000 $48,000
Year 2 $1,248,000 $1,170,000 78,000
Year 3 $1,184,000 $1,110,000 74,000
Total $3,200,000 $3,000,000 $200,000
b) The revenue for each year is based on the costs incurred, as determined by the contractor.
Below, you are provided with four groups of different goods. These goods are differentiated by the number of likely substitutes that each has, and by the fraction of income that consumers spend on each. You will rank the goods within each group by their expected price elasticities of demand.
Consider the following three goods:
1. a red convertible car
2. a car
3. a convertible car.
Rank the demand of these three goods by their expected price elasticities of demand from most elastic to least elastic.
Answer and Explanation:
The red and the convertible cars would be considered similar i.e. they are perfect substitutes also the car and the convertible car would be the substitutes but it is not a perfect as the convertible car would be the subset of the car group plus the expenditure made on the convertible car would be high so here the elasticity is more
The bonds in our model have a maturity close to zero; they just pay the current interest rate, i, as a flow over time. We could consider, instead, a discount bond, such as a U.S. Treasury Bill. This type of asset has no explicit interest payments (called coupons) but pays a principal of, say, $1000 at a fixed date in the future. A Bill with one- year maturity pays off one year from the issue date, and similarly for 3-month or 6-month Bills. Let PB be the price of a discount bond with one-year maturity and principal of $1000. a. Is PB greater than or less than $1000.
a. Is P^B greater than or less than $1000?
b. What is the one-year interest rate on these discount bonds?
c. If prises, what happens to the interest rate on these bonds?
d. Suppose that, instead of paying $1000 in one year, the bond pays $1000 in two years. What is the interest rate per year on this two-year discount bond?
Answer:
Answer is explained in the explanation section below.
Explanation:
Part a.
[tex]P^{B}[/tex] will be less than $1000.
Reason: [tex]P^{B}[/tex] + interest = $1000, since interest >0 (Cannot be negative)
Hence,
[tex]P^{B}[/tex] < $1000
Part b.
Assuming the amount of interest to be i, [tex]P^{B}[/tex] would be $1000 - I
Rate of interest would be:
($1000 - ($1000-i)) / ($1000 - i) = i / ($1000 - i)
Rate of interest = i / ($1000 - i)
Part c.
If [tex]P^{B}[/tex] rises, the interest rate on these bonds would come down. Going back to a. [tex]P^{B}[/tex] = $1000 - i, and if [tex]P^{B}[/tex] rises, it implies that i reduces, which means that rate of interest will be reduced.
Part d.
If $1000 is a payment two years later, it implies that i (refer to b.) is the interest for two years. Assuming annual compounding, let's calculate rate of interest as follows:
Interest for two year (i) = $1000 - [tex]P^{B}[/tex] at the rate of i per year
= [tex]P^{B}[/tex] X i / 100 + ([tex]P^{B}[/tex] X (1+i/100))X i/100
We can solve for i to get annual rate of interest.
What skills and interests might someone in a trade career have?
Answer:
Confidence.
Numerical skills.
IT skills.
Communication skills.
An interest in financial markets.
Analytical skills.
Interpersonal skills.
Teamworking skills.
preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $1.70 per direct labor-hour; the budgeted fixed manufacturing overhead is $116,000 per month, of which $30,000 is factory depreciation. If the budgeted direct labor time for December is 4,000 hours, then the predetermined manufacturing overhead per direct labor-hour for December would be: