The Central Bank targets a positive rate of inflation because a low and stable inflation rate is considered beneficial for the economy.
A positive rate of inflation is targeted by the Central Bank for several reasons. First, a moderate level of inflation is believed to promote economic growth. It encourages spending and investment by reducing the incentive to hoard money. When people expect prices to rise gradually, they are more likely to spend and invest, stimulating economic activity.
Second, a positive inflation rate allows the Central Bank to have more flexibility in monetary policy. By maintaining a target inflation rate, the Central Bank can use interest rates and other tools to manage the economy effectively. It provides room for the Central Bank to stimulate or cool down the economy as needed.
Moreover, a positive inflation rate also helps to prevent deflation, which is generally considered more detrimental to the economy. Deflation, or a sustained decrease in the general price level, can lead to reduced consumption, delayed investments, and economic stagnation.
Overall, a positive inflation rate within a low and stable range allows the Central Bank to promote economic growth, maintain price stability, and have greater control over monetary policy.
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deals with the operational running of the business processes, allocation of people, and use of technology. Project governance Management system O Project execution Process execution.
Project governance management system is necessary to control the project execution. In the execution phase, process execution is carried out. All the tasks are performed according to the project plan during this phase. Project governance management system is essential for efficient project execution.
Project execution deals with the operational running of the business processes, allocation of people, and use of technology. The system is used for better control over the project, coordination among team members, and overall management of the project. It ensures that the project is completed on time, within budget, and meets all the project objectives. The execution process is a critical phase of the project life cycle. It is during this phase that all the planned activities are carried out to achieve the project objectives. The process execution involves allocating resources, managing schedules, monitoring the project, controlling costs, and maintaining quality standards. The project execution process should be systematic and well-defined. It should be followed by the project manager and team members. The execution process must have clear objectives and goals, well-defined activities, and appropriate resources. Communication is essential for the success of the project. All stakeholders must be informed of the project status regularly. To conclude, project execution is the core of any project. Project governance management system ensures that the project is executed efficiently. The process execution ensures that all the activities are performed according to the project plan. Communication is critical for project success.
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A. Consider THREE (3) ways information systems can be used as a
competitive tool. (12 marks)
B. Hackers and their companion viruses are an increasing
problem, especially on the Internet. What are the
Hackers and viruses pose a significant threat, particularly on the Internet, and can cause various security breaches and disruptions. Implementing robust security measures, such as firewalls, antivirus software, and regular system updates, can help mitigate these risks and protect organizations from cyber attacks.
Gaining Strategic Advantage: Information systems enable organizations to gather and analyze vast amounts of data, providing valuable insights for decision-making and strategic planning. This helps businesses identify market trends, forecast demand, and make informed decisions to gain a competitive edge.
Improving Operational Efficiency: Information systems automate processes, streamline workflows, and improve communication and collaboration within an organization. This leads to increased productivity, reduced costs, and improved efficiency in various business functions, such as inventory management, supply chain operations, and financial management.
Enhancing Customer Service and Satisfaction: Information systems facilitate customer relationship management, allowing organizations to track customer interactions, preferences, and purchasing behavior. This data helps personalize customer experiences, deliver targeted marketing campaigns, and provide efficient customer support, leading to higher customer satisfaction and loyalty.
Regarding hackers and viruses, they pose a significant threat to organizations, especially in the digital realm. Hackers use various techniques to gain unauthorized access to systems and networks, steal sensitive data, or disrupt operations. Viruses are malicious software programs designed to infect and damage computer systems. These security breaches can lead to financial losses, reputational damage, and legal issues for businesses.
To mitigate these risks, organizations should implement robust security measures. This includes using firewalls to monitor and control network traffic, installing antivirus software to detect and remove malicious programs, regularly updating software and systems to patch vulnerabilities, and implementing strong authentication and access control mechanisms. Training employees on cybersecurity best practices and establishing incident response plans are also crucial for effectively addressing security threats. By prioritizing cybersecurity measures, businesses can safeguard their systems and protect sensitive information from unauthorized access and potential harm.
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What challenges does the high growing city like Senzen face
years down the road? explain
As a high-growing city, Shenzhen, like any other rapidly expanding urban area, is likely to face several challenges in the years ahead. These challenges can arise due to the strain on infrastructure, resources, environment, and social systems.
Urban Planning and Infrastructure: High population growth puts pressure on urban planning and infrastructure development. Shenzhen may face challenges in providing adequate housing, transportation networks, utilities, and public services to accommodate the growing population.Traffic Congestion: With a larger population and increased economic activity, traffic congestion can become a significant challenge. Shenzhen may need to invest in expanding and improving its transportation infrastructure, including roads, public transportation, and traffic management systems.Housing Affordability: Rapid urban growth often leads to increased housing prices, making it difficult for low- and middle-income residents to afford suitable housing. Shenzhen may face challenges in ensuring affordable housing options for its residents, particularly as demand continues to rise.
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Eliminating unsystematic risk by holding a portfolio of
different assets reflects
a) portfolio variance spreading
b) the principle of diversification
c) the elimination of systematic risk
d) beta coef
The correct answer is b) the principle of diversification. By holding a portfolio of different assets, investors can reduce the impact of unsystematic risk, which is unique to individual stocks or assets.
This type of risk can be diversified away by holding a variety of assets, as the performance of one asset may not be correlated with another. By spreading their investments across multiple assets, investors can reduce the overall risk of their portfolio and potentially increase their returns. However, it's important to note that diversification does not eliminate systematic risk, which is inherent in the broader market or economy. To assess and manage this type of risk, investors may use beta coefficient, which measures the correlation of an asset's returns to the market. Overall, diversification is an important principle of investing and can help investors manage their risk while potentially improving their returns.
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Question 4: Assuming that the expectations theory is the correct theory of the term structure, calculate the interest rates for maturities of one to five years, and plot the resulting yield curve for the following paths of one-year interest rates over the next five years:
i) 6%, 7%, 8%, 7%, 6%
ii)6%, 5%, 4%, 5%, 6%
b) How would your yield curves both in (i) and (ii) change if people preferred shorter-term bonds over longer-term bonds?
Maturity (Years) Interest Rates (%)1 6.002 6.883 7.3464 7.0275 6.805
Assuming that the expectations theory is the correct theory of the term structure, the long-term interest rate should equal the average of the expected future short-term rates. Given two paths of one-year interest rates over the next five years, we will calculate the interest rates for maturities of one to five years, and plot the resulting yield curve.
i) 6%, 7%, 8%, 7%, 6%The interest rates for maturities of one to five years will be as follows:
Maturity (Years) Interest Rates (%)1 6.002 6.883 7.3464 7.0275 6.805
Plotting the resulting yield curve gives: Yield Curve for i)
ii)6%, 5%, 4%, 5%, 6%The interest rates for maturities of one to five years will be as follows:
Maturity (Years) Interest Rates (%)1 6.002 5.873 5.6814 5.5735 5.567Plotting the resulting yield curve gives: Yield Curve for ii)
b)If people preferred shorter-term bonds over longer-term bonds, the yield curve would change. The yield curve would become upward-sloping or steeper than it would have been otherwise if investors preferred longer-term bonds over shorter-term bonds. The curve would become downward-sloping or flatter than it would have been otherwise if investors preferred shorter-term bonds over longer-term bonds.
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Can you identify and discuss a company example of environmental analysis that was done well or poorly? Why was the environmental analysis in your example important to this company’s success? Class, what is your conclusion about the role of environmental & competitive intelligence in corporate decision-making and strategic planning?
Environmental analysis is crucial in strategic management as it helps a firm in identifying external factors that can affect its business operations. One company that conducted its environmental analysis well is Apple. Apple has long realized the importance of identifying potential threats and opportunities in the industry. The firm has been keen on identifying new trends and technologies, and assessing how these trends can affect its products and services.
Apple has been at the forefront of introducing new and innovative products in the technology industry. The company introduced iPods, iPhones, iPads, and other products that have significantly transformed the technology industry. Apple has been keen on conducting a PESTEL analysis that helps the firm in identifying and assessing political, economic, social, technological, environmental, and legal factors that can affect its business operations.
Apple’s environmental analysis has been important to its success as it has allowed the company to stay ahead of the competition. Apple has been able to identify new trends and technologies that can affect its products and services, and align its strategies to tap into these trends. The firm has also been able to identify potential threats and take necessary measures to mitigate these threats.
In conclusion, environmental and competitive intelligence plays a crucial role in corporate decision-making and strategic planning. Companies that conduct environmental analysis are better positioned to identify potential threats and opportunities in the industry, and align their strategies to tap into these opportunities. Competitive intelligence helps companies in assessing their strengths and weaknesses, and identify potential opportunities and threats in the market. Companies that integrate environmental and competitive intelligence in their decision-making processes are more likely to be successful in their operations.
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For 2018, Ponte marketing managers project monthly sales of 500,000 12-ounce bottles and 190,000 1-gallon containers. Average selling prices are estimated at $0.80 per 12-ounce bottle and $1.80 per 1-gallon container. Prepare a revenues budget for Ponte, Inc., for the year ending December 31, 2018
As per the Revenue Budget for Ponte, Inc., the total revenue for the year ending December 31, 2018 is $8,904,000.
A revenue budget can be defined as an estimate of the revenues expected to be earned by an organization over a given period of time. This budget helps organizations to estimate future income by projecting sales volumes and prices. The budget also helps to plan how resources will be allocated to achieve the desired results.
To prepare a revenues budget for Ponte, Inc. for the year ending December 31, 2018, we need to calculate the revenues based on the projected monthly sales and average selling prices.
Revenues budget for Ponte, Inc. for the year ending December 31, 2018
Revenue Source- Unit Sales Price × Unit Sales = Total Sales
12-ounce bottle- $0.80 × 500,000 = $400,000
1-gallon container- $1.80 × 190,000 = + $342,000
Total revenue for the month = $742,000
Total revenue for the year= Total revenue for the month × 12
Total revenue for the year= $742,000×12 = $8,904,000
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Suppose that a manufacturer and its retailer both operate as a market monopoly. The retailer experiences no transaction cost for buying form the manufacturer, and the marginal cost of manufacturing is constant at 20. Market demand for the manufactured product is p = 100 - 2Q.
How much would the manufacturer and the retailer charge if they operate separately? Calculate their individual and joint profits. (16 points)
Are the prices derived in (a) Nash Equilibrium prices? Please explain in words. (6 points)
Based on your answers to (a), explain what Double Marginalization is. (6 points)
If the manufacturer and the retailer merge, how much would the vertically integrated firm charge the consumers? Calculate the profit, the Lerner Index, and the demand elasticity of the integrated firm. (14 points)
Does social welfare improve under vertical integration? Please explain why using your intuition. (6 points)
To calculate the prices, profits, and analyze the Nash Equilibrium, Double Marginalization, and the impact of vertical integration, we'll follow the steps outlined in the question:
Step 1: Calculate individual prices and profits for the manufacturer and the retailer operating separately.
Given:
Market demand: p = 100 - 2Q
Marginal cost of manufacturing (MC) = $20
To find the individual prices, we need to determine the quantities produced by the manufacturer (QM) and the retailer (QR). We can find these quantities by maximizing their individual profits.
To maximize manufacturer's profit, we take the derivative and set it equal to zero:
dPM/dQM = 80 - 4QM = 0
4QM = 80
QM = 20
To maximize retailer's profit, we take the derivative and set it equal to zero:
dPR/dQR = 80 - 4QR = 0
4QR = 80
QR = 20
Substituting QM = QR = 20 into the demand equation to find the prices:
p = 100 - 2Q
p = 100 - 2(20)
p = 100 - 40
p = 60
Manufacturer's price (PM) = 60
Retailer's price (PR) = 60
Manufacturer's profit (πM) = PM * QM = 60 * 20 = $1200
Retailer's profit (πR) = PR * QR = 60 * 20 = $1200
Step 2: Analyze Nash Equilibrium and Double Marginalization.
Nash Equilibrium occurs when both the manufacturer and the retailer are maximizing their profits given the prices charged in the market. In this case, the prices derived (PM = PR = $60) are Nash Equilibrium prices because neither the manufacturer nor the retailer can increase their profits by unilaterally changing their price.
Double Marginalization refers to the inefficiencies that arise when a vertically separated supply chain has multiple monopolistic intermediaries, each charging a markup on their cost.
In this scenario, the manufacturer and the retailer each operate as monopolies, charging prices above their marginal costs. This results in a double markup and higher prices for consumers compared to a vertically integrated supply chain.
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Which of the following would have no effect on Retained Earnings? a. Declaration of a stock split b. Declaration of a cash dividend c. A prior period adjustment d. Declaration of a stock dividend
The declaration of a stock dividend would have no effect on retained earnings. For that reason, the correct option is D.
The (option D) declaration of a stock dividend doesn´t impact in the retained earnings, and they are a portion of a corporation's earnings that is kept after all of its dividends have been paid out to stockholders.
A corporation's net income that is not distributed as dividends to shareholders but kept in the company is referred to as retained earnings. Only option d i.e. Declaration of a stock dividend would have no effect on retained earnings.
Stock dividends are dividends given in the form of shares of the corporation rather than cash. They have no bearing on a company's overall wealth since they are issued against the company's stock.
Hence, declaration of a stock dividend would not impact the company's retained earnings. However, if the company issues a cash dividend, it will have an impact on the company's retained earnings.
For example, a cash dividend would lower the amount of money the company has on hand because it pays out cash to the shareholders.
A prior-period adjustment would cause an error to the previously prepared financial statements. The declaration of a stock split would impact the number of outstanding shares,
but the value of the shares would not change. A cash dividend would impact the company's cash account and retained earnings account.
A stock dividend would impact the company's paid-in capital account, but it would not impact the company's retained earnings account. Therefore, option d is the only correct option.
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A carwash company specializes in several customized services as follows.
Service
Description
Processing time
Resource used
A. Wash
Exterior Washing and Drying
20 min
1 Automated washing Machine
B. Wax
Exterior Car waxing
10 min
1 Automated waxing Machine
C Wheel cleaning
Cleaning all wheels
8 min
1 employee
D. Interior cleaning
Cleaning inside
20 min
1 employee
E. Wheel Alignment
Wheel Alignment
30 min
1 employee
The car wash company specializes in customized packages as
Package 1: includes only A
Package 2: includes A and B
Package 3: includes A, B, C, and D
Package 4: includes only A, B, C, D, and E
Customers (cars) arrive at a rate of 50 cars per day. Of these 40% choose package 1; 15% choose package 2; 15% choose package 3; 30% choose package 4. The store operates 14 hours a day.
a. What is the implied utilization of the employee doing the wheel cleaning service?
b. Which resource has the highest implied utilization?
it's anticipated that customers demand may go up next summer to 60 customers(cars) a day; Together with this growth, the composition of car arrivals is expected to change as: 30% choose package 1; 10% choose package 2; 10% choose package 3; 50% choose package 4. The company installs an additional machine to serve A. The store plans to operate 12 hours a day.
c. What will be the new bottleneck in the process?
d. How many customers a day will not be served? Which customers are going to wait? Explain your reasoning!
e. Draw a flow process chart to show the processes and packages.
a. The implied utilization rate for the worker doing the wheel cleaning service is (1.2 minutes / 840 minutes) * 100 = 0.1429%, or around 0.14 percent. b. The resource used for cleaning wheels has the greatest implied utilization since it is processed in the shortest amount of time (8 minutes) and is used for the shortest period of time (0.14%). c. Wheel cleaning is currently the limiting service since its processing time (8 minutes) is so much less than that of any other service.
The first approach divides the total number of hours logged during a certain period of time by the total number of billable hours.
The implied utilization rate rate would be 30 / 40, or 75%, for instance, if a week's worth of 40 hours of time were recorded but only 30 of them were billable.
This approach makes it processed simple to understand how this utilization rate may be manipulated, though, as a company's utilization rate will always be 100% if it stops tracking non-billable time.
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Which of the following statements is true regarding a statutory merger? Multiple Choice The original companies dissolve while remaining as separate divisions of a newly created company. Both companies remain in existence as legal corporations with one corporation now a subsidiary of the acquiring company. O The acquired company dissolves as a separate corporation and becomes division of the acquiring company. O The acquiring company acquires the stock of the acquired company as an investment. A statutory merger is no longer a legal option.
The correct statement regarding a statutory merger is:
Both companies remain in existence as legal corporations with one corporation now a subsidiary of the acquiring company.
In a statutory merger, two or more companies combine their assets and liabilities to form a new entity. The original companies cease to exist as separate legal entities, and instead, one company becomes the surviving entity while the other(s) become subsidiary(ies) of the acquiring company. This allows for the consolidation of resources, operations, and management while maintaining the legal distinction between the acquiring company and the acquired company.
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Kenji is working for an advertising firm making $60,000 per year but considers starting his own advertising company. Kenji has determined that to launch the business, he needs to invest $100,000 of his own funds. The annual cost of running the business will include $75,000 for the rent of the office space, $190,000 for employee wages, and $6,000 for materials and utilities. Kenji plans to manage the business, which means that he will have to quit his current job. Suppose that the interest rate (or rate of return) on investments in the economy is 6%.
Kenji's total explicit cost per year is ?
Kenji's total cost per year is ?
Kenji's total explicit cost per year is $271,000. Kenji's total cost per year is $331,000. The details of the calculation of these costs are given below: Explicit cost: The out-of-pocket costs of an enterprise that require direct payment in cash or check are known as explicit costs.
Kenji's total explicit cost per year is $271,000. Kenji's total cost per year is $331,000. The details of the calculation of these costs are given below:Explicit cost:The out-of-pocket costs of an enterprise that require direct payment in cash or check are known as explicit costs. As a result, explicit costs are expenses that may be easily quantified and identified in a business's financial statements.Costs for employee wages are $190,000. Cost for the office space rent is $75,000, and costs for materials and utilities are $6,000. Thus, Kenji's total explicit cost per year is:$190,000 + $75,000 + $6,000 = $271,000Total cost:Explicit cost plus implicit cost equals total cost. The opportunity cost of the entrepreneur's time, which is what they must give up in order to start the business, is known as implicit costs. When Kenji quits his present job and begins running his own business, he will lose the $60,000 he currently earns as a salary. This opportunity cost is implicit cost. Thus, Kenji's total cost per year is:$271,000 + $60,000 = $331,000Hence, Kenji's total explicit cost per year is $271,000 and his total cost per year is $331,000.
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As a newly hired production engineer, you first project was to study one of the underperforming manufacturing cells. The situation description is as follows. Two products are manufactured on two sequential machines A and B. The machining times in minutes per unit of the two products are given in the table below. Machining time in minutes per unit Machine Product 1 Product 2 A 4 5 B 5 3 Management has the following goals: • Goal 1) A production rate of 70 units for product 1 per day • Goal 2) A production rate of 80 units for product 2 per day Further, and given the need for machine B for a special type of maintenance, it was decided to also have it as a goal. Thus, the usage of machine B was set at 420 minutes. The available time for each machine is 8 hours per day. Use equal penalties to formulate the problem as a goal programming problem. Cleary show the penalties (define variables first).
Two products are manufactured on two sequential machines A and B. The machining times in minutes per unit of the two products are given in the table below. Machine Product 1 Product 2 A 4 5 B 5 3.
As a newly hired production engineer, you first project was to study one of the underperforming manufacturing cells. The situation description is as follows: Two products are manufactured on two sequential machines A and B. The machining times in minutes per unit of the two products are given in the table below:Machine Product 1 Product 2 A 4 5 B 5 3 Goal programming problems:Goal programming, a sub-discipline of multi-objective programming, can be used to solve the current problem. The goal programming problem can be formulated as follows: Minimize the deviation from the goals: Z= Σ(α+β+γ)Penalty coefficients:α = the penalty for the underachievement of goal 1,β = the penalty for the underachievement of goal 2,γ = the penalty for the underachievement of goal 3. Variables:Xij = number of minutes spent producing product i on machine j, (i=1,2; j=A,B). The model can be formulated as follows: Minimize Z= α+ β+ γWhereα = 70 - x11 - x12β = 80 - x21 - x22γ = 420 - x12 - x22 and xij ≥0i = 1,2; j = A,BA production engineer was hired for a specific manufacturing cell. Two products are manufactured on two sequential machines A and B. The machining times in minutes per unit of the two products are given in the table below. Machine Product 1 Product 2 A 4 5 B 5 3.
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Graw Hall Espresso Express operates a number of espresso coffee stands in busy suburban mals. The fixed weekly expense of a coffee stand $1600 and the variable cost per cup of coffee served is $0.46 Required: 1 Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity 2. Does the average cost per cup of coffee served increase decrease or remain the same as the number of cups of coffee served in a week increases? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the following table with your estimates of the company's levels of activity. (Round the "Average cost per cup of coffee cost and average cost per cup of coffee at the dicated to 3 decemal places) 2.200 2.400 Foxed cost Variable co Total co Average cost p r cup of cofe
Graw Hall Espresso Express operates coffee stands and incurs a fixed weekly expense of $1600 and a variable cost of $0.46 per cup of coffee served. The table needs to be filled with estimates of the company's total cost and average cost per cup of coffee at different levels of activity.
To fill in the table, we can use the formula for total cost, which is the sum of fixed costs and variable costs. The fixed cost of $1600 remains the same regardless of the number of cups served. The variable cost per cup of coffee served is $0.46, so to find the total cost at each level of activity, we multiply the variable cost by the number of cups served.
For example, at an activity level of 2,200 cups served, the total cost would be $1600 (fixed cost) plus (2,200 cups × $0.46) = $1600 + $1012 = $2612. Similarly, we can calculate the total cost and average cost per cup of coffee at other levels of activity.
To determine whether the average cost per cup of coffee served increases, decreases, or remains the same as the number of cups served increases, we need to compare the average cost at different levels of activity. If the average cost per cup of coffee decreases as the number of cups served increases, it indicates economies of scale, where the fixed costs are spread over a larger number of cups, resulting in lower average cost. Conversely, if the average cost increases, it suggests diseconomies of scale, where the fixed costs are not efficiently utilized, leading to higher average cost. By examining the values in the table, we can determine the trend of the average cost per cup of coffee served as the activity level increases and identify whether it increases, decreases, or remains the same.
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When the null hypothesis is accepted,it is possible that aOA correct decision is made bO A type II error has been made cO both (aand (b d none of the above Question 13:-Which of the following is an example of a Type I error. The null hypothesis is : aOtrue and accepted bOfalse and is rejected cOtrue and is rejected dO none of the above Ouestion 14:-As the degrees of freedom increases a)O-The normal distribution approaches t-distribution b)O The t-distribution-approaches normal distribution cO Binomial distribution approaches F distribution dO none of the above Question 15:-In hypothesis testing a indicates aOThe probability of committing a type Ierror bO The probability of not committing a Type I error cO The probability of committing a Type II error dOAll the above Question 16:-In hypothesis testing,the power of test is equal to bOB O1-a dO1-B Question 17:- If the population variance is 81 and sample size is 9, considering an infinite population then the standard error s 9 bO3 027 dnone of the above
Option (b) - "3.027" - is the correct answer. (13) When the null hypothesis is accepted, it is possible that a Type II error has been made. (14) An example of a Type I error is when the null hypothesis is false and is rejected.
(13) When the null hypothesis is accepted, it means that the evidence did not provide enough support to reject the null hypothesis. So, option (b) - "A Type II error has been made" - is the correct answer. (14) A Type I error occurs when the null hypothesis is true, but it is incorrectly rejected based on the sample evidence. In this case, option (b) - "False and is rejected" - is an example of a Type I error.
(15) In hypothesis testing, (a) represents the significance level or the probability of committing a Type I error, (b) represents the complement of the significance level or the probability of not committing a Type I error (also known as the confidence level), and (c) represents the probability of committing a Type II error. (16) The power of a test is the probability of correctly rejecting the null hypothesis when it is false. It is equal to 1 minus the probability of a Type II error. So, option (d) - "1 - B" - represents the power of the test.
(17) The standard error is a measure of the variability of the sample mean. In this case, considering an infinite population, the standard error would be the population standard deviation divided by the square root of the sample size.
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Pro Sports had the following transactions during 2017:
1. Issued $200,000 of par value ordinary shares for cash.
2. Repaid a 10 year note payable in the amount of $45,000.
3. Acquired land by issuing
During 2017, Pro Sports made a repayment of a note payable, which had an original term of 10 years, amounting to $45,000.
Pro Sports had the following transactions during 2017:
Issued $200,000 of par value ordinary shares for cash.
In 2017, Pro Sports issued ordinary shares with a par value of $200,000 in exchange for cash. This transaction represents a capital-raising activity where Pro Sports obtained additional funds from investors by issuing new shares. By selling shares, the company increased its equity base, allowing for potential future investments, debt repayment, or other business activities.
Repaid a 10-year note payable in the amount of $45,000.
During 2017, Pro Sports made a repayment of a note payable, which had an original term of 10 years, amounting to $45,000. The repayment of the note payable signifies the settlement of a long-term debt obligation. By repaying the note, Pro Sports reduced its liabilities, improving its financial position and potentially lowering future interest expenses.
Acquired land by issuing.
Unfortunately, the information provided is incomplete for the third transaction. It states that Pro Sports acquired land but does not specify the method of acquisition or the amount involved. To provide a comprehensive answer, it would be necessary to know if the land was acquired through cash payment, issuance of shares, or another means. Additionally, the specific value or terms of the land acquisition are missing. Without this information, it is not possible to provide a detailed explanation or analysis of this particular transaction.
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A company produces a product with the following forecast for producing and selling the product in December 2022.
GH¢
Sales(3000units)150
Production (4500units)
Variable cost per Units:
Direct Materials22.50
Direct Labour45.00
Variable factory Overheads30.00
Total fixed factoryoverheads22500
Total selling&Distributioncost30000 TotalGeneral&Administrationcost25000
Show the profit statements for the month using (a). Marginal costing (b). Absorption costing (c). Prepare a statement of reconciliation (d). List and explain 3 arguments in support of Marginal costing. (e). List and explain 4 arguments in support of absorption costing.
(a) Profit Statement using Marginal Costing:
Sales Revenue: 3,000 units x GH¢150 = GH¢450,000
Less Variable Costs:
Direct Materials: 3,000 units x GH¢22.50 = GH¢67,500
Direct Labor: 3,000 units x GH¢45.00 = GH¢135,000
Variable Factory Overheads: 3,000 units x GH¢30.00 = GH¢90,000
Total Variable Costs: GH¢292,500
Contribution Margin: Sales Revenue - Total Variable Costs
GH¢450,000 - GH¢292,500 = GH¢157,500
Less Fixed Costs:
Total Fixed Factory Overheads: GH¢22,500
Total Selling & Distribution Costs: GH¢30,000
Total General & Administration Costs: GH¢25,000
Total Fixed Costs: GH¢77,500
Net Profit: Contribution Margin - Total Fixed Costs
GH¢157,500 - GH¢77,500 = GH¢80,000
(b) Profit Statement using Absorption Costing:
Sales Revenue: GH¢450,000
Less Cost of Goods Sold:
Direct Materials: 3,000 units x GH¢22.50 = GH¢67,500
Direct Labor: 3,000 units x GH¢45.00 = GH¢135,000
Variable Factory Overheads: 3,000 units x GH¢30.00 = GH¢90,000
Fixed Factory Overheads (allocated): GH¢22,500 / 4,500 units x 3,000 units = GH¢15,000
Total Cost of Goods Sold: GH¢307,500
Gross Profit: Sales Revenue - Cost of Goods Sold
GH¢450,000 - GH¢307,500 = GH¢142,500
Less Operating Expenses:
Total Selling & Distribution Costs: GH¢30,000
Total General & Administration Costs: GH¢25,000
Total Operating Expenses: GH¢55,000
Net Profit: Gross Profit - Total Operating Expenses
GH¢142,500 - GH¢55,000 = GH¢87,500
(c) Statement of Reconciliation:
Net Profit using Marginal Costing: GH¢80,000
Net Profit using Absorption Costing: GH¢87,500
Reconciliation:
Net Profit using Marginal Costing GH¢80,000
Add: Fixed Factory Overheads (deferred) GH¢15,000
Difference GH¢7,500
(d) Arguments in Support of Marginal Costing:
Simplicity: Marginal costing is easier to understand and implement compared to absorption costing. It focuses on the separation of costs into fixed and variable components, which simplifies cost analysis and decision-making.
Cost Control: Marginal costing helps in cost control by clearly identifying variable costs associated with each unit of production. This allows management to make more effective cost management decisions and respond to changes in the business environment.
Decision-Making: Marginal costing provides accurate and relevant information for decision-making. It facilitates the calculation of contribution margin and break-even point, enabling management to assess the financial impact of different production and pricing decisions.
(e) Arguments in Support of Absorption Costing:
Matching Principle: Absorption costing follows the matching principle by allocating fixed factory overheads to the cost of goods sold. This ensures that all costs, both fixed and variable, are included in the determination of profit, providing a more accurate representation of the true cost of production.
Inventory Valuation: Absorption costing includes fixed factory overheads in the valuation of inventory. This reflects the full cost of production
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The Counting Crows Company uses normal costing. The company began operations at the beginning of Year 1. Because the company is new and because they only make one product, overhead is charged to production on the basis of product units. The denominator level for both Year 1 and Year 2 is 20,000 product units. The budgeted overhead at 20,000 units for both Year 1 and for Year 2 is $60,000 variable and $100,000 fixed. During Year 1, the company actually produced 21,000 units and sold 18,000 units. During Year 2, the company actually produced 22,000 and sold 21,000 units. The company carries no Work in Process inventories and uses the FIFO method to assign costs to Finished Goods as needed. Any underallocated or overallocated overhead is charged totally to Cost of Goods Sold at the end of the year. For both years, the actual direct materials cost was $8 per unit and the actual direct labor cost was $6 per unit. The actual variable overhead cost in Year 2 was $64,000 and the actual fixed overhead cost in Year 2 was $102,000. Assume that the Unadjusted Cost of Goods Sold for Year 2 was $357,000 using variable costing. Compute the Adjusted Cost of Goods Sold using variable costing for Year. Do not put a dollar sign in your answer.
Adjusted COGS using variable costing for Year 2: $347,000.
COGS calculation methods explanation.To compute the Adjusted Cost of Goods Sold using variable costing for Year 2, we need to determine the total overhead cost allocated to production and adjust it accordingly. Here's the step-by-step calculation:
Calculate the total budgeted overhead at the denominator level for Year 2:Budgeted overhead at 20,000 units = $60,000 variable + $100,000 fixed = $160,000Calculate the overhead rate per unit for Year 2:Overhead rate per unit = Total budgeted overhead / Denominator level
Overhead rate per unit = $160,000 / 20,000 units = $8 per unit
Calculate the overhead allocated to production for Year 2:Overhead allocated to production = Overhead rate per unit * Actual production
Overhead allocated to production = $8 per unit * 22,000 units = $176,000
Calculate the underallocated/overallocated overhead for Year 2:Underallocated/Overallocated overhead = Actual overhead - Overhead allocated to production
Underallocated/Overallocated overhead = ($64,000 variable + $102,000 fixed) - $176,000
Underallocated/Overallocated overhead = $166,000 - $176,000 = -$10,000
Adjust the Cost of Goods Sold (COGS) using variable costing for Year 2:Adjusted COGS = Unadjusted COGS + Underallocated/Overallocated overhead
Adjusted COGS = $357,000 + (-$10,000) = $347,000
Therefore, the Adjusted Cost of Goods Sold using variable costing for Year 2 is $347,000.
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The Question is as follows: The entities they refer to are attached below
2. Write down the highest normal form each of these relations are in. For each of these relations, state the
reasons why it doesn’t meet the next normal form requirements. This is not required if the relation is in 3NF.
the two referred are Order(entity) , 1NFReasons why it doesn’t meet the next normal form requirements: In this relation, the Customer_ID and Salesperson_ID fields are repeated in every row,. Salesperson(entity) , n this relation, the Region_Name and Commission_Rate fields are repeated in every row.
The two entities and their corresponding tables are as follows:1. Order(entity) Table:Order_ID | Order_Date | Order_Amount | Customer_ID | Customer_Name | Customer_Address | Customer_City | Customer_State | Customer_Zip | Salesperson_ID | Salesperson_Name | Salesperson_Phonenumber | Product_ID | Product_Description | Product_PriceHighest Normal Form of this Relation: 1NFReasons why it doesn’t meet the next normal form requirements:In this relation, the Customer_ID and Salesperson_ID fields are repeated in every row. This is a problem because it violates the second normal form rule which states that all non-key attributes must be dependent on the primary key. As a result, this relation should be split into two separate tables, one for customer details and another for salesperson details.2. Salesperson(entity) Table:Salesperson_ID | Salesperson_Name | Salesperson_Phonenumber | Region_ID | Region_Name | Commission_Rate | Salesperson_HiredateHighest Normal Form of this Relation: 1NFReasons why it doesn’t meet the next normal form requirements:In this relation, the Region_Name and Commission_Rate fields are repeated in every row. This is a problem because it violates the second normal form rule which states that all non-key attributes must be dependent on the primary key. As a result, this relation should be split into two separate tables, one for region details and another for salesperson details. If this were done, the Region_ID field could serve as the foreign key for the region table.
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Match the item found within a typical paystub to its definition. paycheck, gross pay, dedications, net pay 1. The amount remitted to the employee within the paycheck. 2. Amounts withheld from an emplo
Here's the match between the items found within a typical paystub and their definitions:
1. Paycheck: The amount remitted to the employee within the paycheck.
represents the total payment earned by the employee for a specific period, such as a week or a month, after deducting taxes and other withholdings.
2. Gross pay: The total amount of compensation earned by an employee before any deductions are taken out. It includes wages, salary, bonuses, commissions, or any other forms of income received from the employer.
3. Deductions: Amounts withheld from an employee's gross pay for various purposes, such as taxes (federal, state, and local), Social Security contributions, Medicare contributions, health insurance premiums, retirement plan contributions, or other authorized deductions.
4. Net pay: The amount received by the employee after all deductions have been subtracted from the gross pay. It represents the actual take-home pay or the amount the employee can use for personal expenses.
Please note that the specific items and their definitions may vary slightly depending on the country, company policies, and individual circumstances.
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on january 2, 20x1, the blue legal clinic issued check 2108 for $250 to establish a petty cash fund. indicate how this transaction would be recorded in a general journal.
The entry must reflect the cash account as an increase and the petty cash account as a non-increase.
A general journal is a bookkeeping ledger that helps to track and record financial transactions made by a company.
Petty cash funds are the small amount of cash a business has set aside for miscellaneous expenses. The establishment of a petty cash fund is usually made through a check, which is recorded as follows:
The transaction on January 2, 20X1, would be recorded in the General Journal as follows:
Accounts Debit Credit Petty Cash $250Cash in Bank $250
To establish a petty cash fund, the blue legal clinic issues a check for $250. The cash account in the general ledger reflects the check, but the petty cash account does not, because there is no change to the balance of the petty cash account.
Hence, the entry must reflect the cash account as an increase and the petty cash account as a non-increase. It can be accomplished by debiting the Petty Cash account and crediting the Cash in Bank account.
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Do
games belong in the workplace? Are firms blurring the lines between
work and play by trying to make the office too oriented towards fun
and games? Have you ever worked somewhere with a culture of
g
The inclusion of games in the workplace raises the question of whether firms are blurring the lines between work and play. While some argue that incorporating games can enhance employee engagement and creativity, others express concerns about potential distractions and a lack of focus on core responsibilities.
The inclusion of games in the workplace can have both positive and negative effects. Advocates of workplace games argue that they can boost employee morale, foster team-building, and encourage creativity and innovation. Games can provide a break from routine tasks, allowing employees to recharge and approach their work with renewed energy. Additionally, games can promote a positive work culture and improve work-life balance.
However, there are concerns about the potential drawbacks of excessive gaming in the workplace. Critics argue that an overemphasis on fun and games may lead to a lack of focus on core responsibilities, decreased productivity, and distractions. It is essential to strike a balance between incorporating games and maintaining a productive work environment.
Some workplaces do foster a culture of gamification, where games are integrated into various aspects of work, such as team-building exercises, training programs, or rewards systems. The success of implementing games in the workplace largely depends on the company's culture, industry, and individual preferences of the employees.
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alculate the deadweight loss associated with the monopoly situation shown.
The deadweight loss associated with the monopoly situation shown is $1,000.
In microeconomics, deadweight loss is a loss of economic efficiency that can occur when equilibrium is not achieved or is underutilized. A deadweight loss arises when the socially optimal output is not achieved. It can be defined as the difference between the amount that consumers are willing and able to pay and the amount that they actually pay at the market price. The calculation of deadweight loss (DWL) can be made using the following formula: DWL = 1/2 * (Pm - Pc) * (Qm - Qc)Where: Pm = monopoly price Pc = competitive price Qm = monopoly quantity Qc = competitive quantity. Using the given information, we can calculate the deadweight loss associated with the monopoly situation as follows: DWL = 1/2 * ($20 - $8) * (150 - 200) = $1,000. Therefore, the deadweight loss associated with the monopoly situation shown is $1,000.
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In the Financial Times’ article "Why the UK inflation risk after lockdown is hard to assess" (15 March 2021) we can read: The question [...] is whether broader inflation pressures will build as the UK economy reopens – with many consumers ready to spend amassed savings and many businesses still unable to operate at full capacity. So far, price rises have been patchy. [...]. Research [...] shows that prices have been more volatile in the past year than at any point in the last 20. But the measure of consumer price inflation targeted by the Bank of England stood at just 0.7 per cent in January, even after adjustments by the ONS to take account of the way lockdowns have skewed spending. The BoE is unlikely to worry about temporary mismatches of demand and supply as the economy reopens. [...] the risk is of a more persistent hit to supply, if structural changes such as the shift to remote working and online retail leave people with the wrong skills for the jobs available, or if companies’ capital is tied up in the wrong locations. [...] What is clear is that the headline rate of inflation is increasingly unlikely to reflect individuals’ experience. This is not only because essentials such as food and energy make up a bigger share of spending for poorer households, while those on higher incomes spend more on services. (a) Represent the UK labour market in a Wage-Setting/Price-Setting graph. (5 marks) (b) Explain what are the future challenges for the BoE (Bank of England) in making monetary policy decisions and explain how the potential structural changes mentioned in the article may affect different groups of the UK income distribution.
(a) Representing the UK labor market in a Wage-Setting/Price-Setting graph involves plotting the nominal wage rate (W) on the vertical axis and the level of employment (L) on the horizontal axis.
The graph typically consists of two curves: the labor supply curve (LS) and the labor demand curve (LD).
The labor supply curve (LS) slopes upward, indicating that as the nominal wage rate increases, more individuals are willing to supply their labor. The labor demand curve (LD) slopes downward, showing that as the wage rate increases, employers demand fewer workers due to higher labor costs.
The intersection of the labor supply curve and the labor demand curve represents the equilibrium point, where the wage rate (W*) and employment level (L*) are determined.
(b) The future challenges for the Bank of England (BoE) in making monetary policy decisions relate to the potential structural changes mentioned in the article. These changes, such as the shift to remote working and online retail, can have varying effects on different income groups in the UK.
Impact on Job Availability: Structural changes may result in certain jobs becoming obsolete or requiring different skills. This can lead to challenges for individuals with skills mismatched to the available jobs, potentially affecting their employment prospects and income.
Income Distribution: The article mentions that essentials like food and energy make up a larger share of spending for poorer households, while higher-income individuals spend more on services. Any changes in the prices of these goods and services due to structural shifts can have differential effects on income distribution.
Inflation Measurement: The article highlights that the headline rate of inflation may not accurately reflect individuals' experiences due to differing spending patterns. This poses challenges for the BoE in accurately assessing and targeting inflation levels.
To address these challenges, the BoE would need to closely monitor and analyze the impacts of structural changes on employment, income distribution, and inflation. They may need to adjust their monetary policy tools and strategies accordingly to support a balanced and inclusive economic recovery.
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the entry to record a purchase of $13,000 on account, terms of 2/10, n/30, would include a:
When a purchase of $13,000 is made on account with terms of 2/10, n/30, it means that a cash discount of 2% can be taken if the amount is paid within 10 days, and the total amount is due in 30 days. The entry to record this purchase would include a debit to Purchases account for $13,000 and a credit to Accounts Payable for $13,000.
Generally, entries are recorded in the accounting journal and the entry to record a purchase of $13,000 on account, terms of 2/10, n/30, would include a:Debit to purchases account for $13,000 Credit to accounts payable for $13,000When a purchase is made on account, it means that the amount will be due at a later date. It is recorded in the accounts payable account.
Terms of 2/10, n/30 mean that the buyer can get a 2% cash discount if the payment is made within 10 days, and the full payment is due in 30 days. This is called a sales discount. Entry to record a purchase of $13,000 on account, terms of 2/10, n/30Debit Purchases Account - $13,000 Credit Accounts Payable Account - $13,000Explanation: Thus, to record a purchase of $13,000 on account, terms of 2/10, n/30.
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focus on d
Selected financial statement data for Investment Co are presented below.
Dec 2022 Dec, 2021
Inventories $ 85,000 $65,000
Accounts receivable (net) 100,000 80,000
Short-term investments 25,000 18,000
Cash 20,000 30,000
Short term Loans 30,000 50,000
Accounts Payable 100,000 90,000
Net Income before interest 200,000
Shareholders’ equity 525,000 400,000
Interest 40,000
During 2022, net sales were $810,000, and cost of goods sold was $635,000.
Instructions
Compute the following ratios at December 31, 2022:
(a) Current ratio 3 marks
(b) Accounts receivable turnover and in days 4 marks
(c) Inventory turnover and in days 4 marks
(d) Times Interest earned 4 marks
(a) Current ratio:
Current ratio = Current assets / Current liabilities
Current assets = Inventories + Accounts receivable (net) + Short-term investments + Cash
Current liabilities = Short-term Loans + Accounts Payable
Current assets = $85,000 + $100,000 + $25,000 + $20,000 = $230,000
Current liabilities = $30,000 + $100,000 = $130,000
Current ratio = $230,000 / $130,000 = 1.77
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ABC Co. sells snowboards to customers. During the month of September, the company sold 115 snowboards. ABC uses a periodic inventory system. The following information is collected: Date Units of purchase Unit Cost Total Cost Sep -1 32 $100 $3,200 Sep-3 50 106 $5,300 Sep-19 25 107 $2,675 Sep-26 32 109 $3,488 139 $14,663 What is the cost of ending inventory if the company uses LIFO costing system? a. 2,400 b. 2,532 c. 2,616 d. None of the above Answer 7. ABF is a merchandising company, selling computers. During the first month of operation, it purchased inventory of $ 525,000 and sold the computers for $ 1,020,000. Ending inventory consists of computers worth $15,000. What’s the cost of goods sold for the month? a. 495,000 b. 515,000 c. 480,000 d. 510,000 Answer 8. The following information has been extracted from the financial statements and notes thereto of Complicated Limited Co. 2019 2018 Services Revenue $580 000 $575 000 Interest expense 23 000 26 500 Income tax expense 44 600 53 000 Profit 52 500 56 100 Preference dividends 2 800 2 800 Total assets 540 000 555 000 Total liabilities 300 000 330 000 Preference share capital 62 000 62 000 Ordinary share capital 110 000 100 000 Retained earnings 68 000 63 000 Assuming the company uses total assets in calculating return on asset, the return on asset for 2019 is? a. 9.7% b. 10.1% c. 5.9% d. 7.8% Answer 9. The following information has been extracted from the financial statements and notes thereto of Complicated Limited Co. 2019 2018 Services Revenue $580 000 $575 000 Interest expense 23 000 26 500 Income tax expense 44 600 53 000 Profit 52 500 56 100 Preference dividends 2 800 2 800 Total assets 540 000 555 000 Total liabilities 300 000 330 000 Preference share capital 62 000 62 000 Ordinary share capital 110 000 100 000 Retained earnings 68 000 63 000 The Debt to asset ratio for 2018 is? a. 0.56 b. 0.905 c. 0.976 d. 0.59
The cost of ending inventory using the LIFO costing system is $2,532.
The cost of goods sold for the month is $480,000.
The return on assets for 2019 is 7.8%.
The debt to asset ratio for 2018 is 0.56.
To calculate the cost of ending inventory using the LIFO (Last-In, First-Out) costing system, we assume that the most recent purchases are the first to be sold. Based on the given information, the total cost of purchases is $14,663, and the company sold 115 snowboards.
To determine the cost of ending inventory, we need to subtract the cost of goods sold (115 snowboards) from the total cost of purchases.
The calculation is as follows: $14,663 - (115 x $109) = $14,663 - $12,535 = $2,128. Therefore, none of the provided options is correct, and the cost of ending inventory is $2,128.
The cost of goods sold is calculated by subtracting the cost of ending inventory from the total cost of goods available for sale.
In this case, the total cost of goods available for sale is $525,000, and the cost of ending inventory is $15,000.
Therefore, the cost of goods sold is $525,000 - $15,000 = $510,000. Thus, option (d) $510,000 is the correct answer.
The return on assets is calculated by dividing the profit by the total assets and multiplying by 100. For 2019, the profit is $52,500, and the total assets are $540,000.
Thus, the return on assets is ($52,500 / $540,000) x 100 ≈ 9.7%. Therefore, option (a) 9.7% is the correct answer.
The debt to asset ratio is calculated by dividing the total liabilities by the total assets. For 2018, the total liabilities are $330,000, and the total assets are $555,000.
Thus, the debt to asset ratio is $330,000 / $555,000 ≈ 0.594. Therefore, option (d) 0.59 is the correct answer.
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Nancy is a New York domiciliary, who receives a job promotion from her New York based employer on December 15, 2013. As part of the job promotion, she is required to move to Denmark on December 16, 2013, where she will work at a bona fide office of her employers. Although she is moving to Denmark, she decides to keep her apartment in New York, which she will rent out on Craigslist. She stays in Denmark for the next 7 years. While she is there, she marries a Denmark citizen, has two children, owns a home in Denmark, and becomes a Denmark citizen. She visits New York occasionally each year for social events. From 2014-18, Nancy is in NY 30 days each year. In 2019, she is in NY for 31 days. Nancy however, always intends to return to New York after her stay in Denmark, which she eventually does on January 5, 2020.
Which of the following years is Nancy treated as a New York resident for NY income tax?
a. 2013 and 2020 only
b. 2020 only
c. 2019 only
d. 2013 to 2020
e. 2013, 2019 and 2020 only
Nancy is not considered a New York resident for income tax purposes during those years.
Based on the information provided, Nancy is treated as a New York resident for NY income tax in the years 2013 and 2020. In 2013, Nancy receives a job promotion and moves to Denmark, but her intent to return to New York is evident. Therefore, she is still considered a New York resident for that year. In 2020, Nancy finally returns to New York with the intention of staying, solidifying her status as a New York resident for that year.
The other years mentioned in the options do not meet the criteria for Nancy to be treated as a New York resident for NY income tax purposes. Although she occasionally visits New York during the years 2014-2019, her visits are within the allowed limits of the statutory residency test, which is 30 days or less. Therefore, she is not considered a New York resident for income tax purposes during those years.
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Supply 30 60 90 120 5 0 150 i. Draw demand and supply using a graph. (5 marks) ii. Describe the situation if Price=1 Price = 4 (6 marks) c. Explain the importance of the 'ceteris paribus' assumption in economic theory (3 marks) Price 0 1 2 3 Demand 100 80 60 40 20
At a price of 1, the quantity demanded is 80, and at a price of 4, the quantity demanded decreases to 40.
The demand curve, represented by the data points (Price, Demand), shows that as the price increases from 0 to 3, the quantity demanded decreases from 100 to 20. This demonstrates the inverse relationship between price and quantity demanded - consumers are willing to purchase more at lower prices. However, the data for the supply curve is not provided, so it cannot be graphed.
When the price is 1, the quantity demanded is 80. This suggests that consumers are willing to buy 80 units of the product at that price level. As the price increases to 4, the quantity demanded further decreases to 40, indicating that consumers are less willing to purchase the product at a higher price.
The 'ceteris paribus' assumption is vital in economic theory as it enables economists to isolate the impact of specific variables on market equilibrium. By assuming that other factors remain constant, economists can analyze the relationship between variables like price and quantity demanded. This simplifies the analysis, allowing for a clearer understanding of the factors influencing consumer and producer behavior in response to changes in these variables.
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Bismarck and Altoona exchange buildings. The transaction has commercial substance. The following information was obtained: Bismarck's Building $60,000 Cost Altoona's Building $45,000 20,000 Accumulated Depreciation 20,000 Fair value based upon appraisal 50,000 40,000 The exchange was made, and based on the difference in appraised value, Altoona paid $10,000 to Bismarck. The new building should be recorded on Bismarck's books at: Select one: O a. $35,000 O b. $32,000 OC $40,000 O d. $38,000 O e. $50,000
The new building should be recorded on Bismarck's books at $45,000.
In the given situation, both parties exchanged their buildings with each other. Bismarck's Building's cost was $60,000 while the fair value of Altoona's Building was appraised at $50,000. Altoona had also paid $10,000 to Bismarck, based on the difference in appraised value. Moreover, the accumulated depreciation on Altoona's Building was $20,000. Now, Bismarck must record the new building's value on its books. We will determine the gain or loss on the exchange based on the fair value of the buildings before the exchange.The gain or loss will be calculated by using the following formula:Gain or loss on the exchange = Fair value of the building given up − Book value of the building given upBased on the given data, we can calculate the gain or loss for both parties. The calculation is as follows:For Bismarck:Gain or loss on the exchange = $50,000 − $60,000 = − $10,000Therefore, Bismarck has incurred a loss of $10,000. Altoona has paid $10,000 to Bismarck to compensate for the loss.Bismarck will record the new building on its books based on the fair value of the property that it has acquired in exchange. Therefore, the new building should be recorded on Bismarck's books at $45,000.
In conclusion, Bismarck's new building should be recorded on its books at $45,000.
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