Under IFRS (International Financial Reporting Standards), the method of inventory costing that is currently not allowed is the Last-In, First-Out (LIFO) method.
Under IFRS, the Last-In, First-Out (LIFO) method of inventory costing is not allowed for reporting purposes. This means that companies following IFRS guidelines cannot use the LIFO method to value their inventory and calculate the cost of goods sold (COGS).
The primary reason for this restriction is that the LIFO method does not align with the principles and objectives of IFRS, which emphasize the use of reliable and consistent financial reporting practices. The LIFO method assumes that the most recently acquired inventory is sold first, which can result in a mismatch between the actual flow of inventory and the reported cost of goods sold.
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What is the primary step in risk management?
a. Minimizing risks
b. Identifying risks
c. Assessing weakness
d. Characterizing threats
The first step in risk management is identifying risks. This involves locating and documenting potential risks which could pose a negative impact on a business or project. Only after identification can other risk management measures take place.
Explanation:The primary step in risk management is b. Identifying risks. Before any action can be taken to manage risks, you must first understand what potential risks might be present. This process typically involves identifying and documenting potential risks that may negatively impact key business initiatives or projects. Afterwards, other steps such as assessing the weakness related to these risks, characterizing threats, and finally implementing measures to minimize these risks follows. An example of risk identification could be a software company realizing a potential risk in software development might be experiencing coding errors that cause the program to malfunction; only after this realization can measures be taken to mitigate the risk.
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Kat's disposable income is $8,100 per month. Each month there is a 20% chance of a storm damaging Kat's home, causing damage that will cost $3476 to repair. (There is a 80% chance that nothing will happen.) Kat's preferences are represented by the utility function U(I) = √I where I represents Kat's income Use the information provided to answer the following questions: i. The expected value of the lottery is ___ ii. Kat's expected utility from the lottery is ___ iii. The fair price of an insurance policy that completely compensates Kat in the event of an accident is ___ iv. Kat's risk premium is ___ v. If Kat is offered an insurance policy for the price of $700, she will ___
(i) Expected Value = $7,726.80 (ii) Expected Utility = 84.04. (iii) Fair Price of Insurance = $6,480 (iv) Risk Premium = $1346.20 (v) If Kat is offered an insurance policy for the price of $700, she will reject the insurance policy.
To determine, let's calculate the expected value, expected utility, fair price of insurance, risk premium, and determine Kat's decision based on the given information.
Kat's disposable income (I) = $8,100 per month
Probability of a storm damaging Kat's home (P(storm)) = 0.2
Cost of repair in case of damage (C) = $3,476
Utility function (U(I)) = √I
i. Expected Value of the Lottery:
The expected value of the lottery is calculated by multiplying the possible outcomes by their respective probabilities and summing them up.
Expected Value = (Probability of no storm) × (Income without damage) + (Probability of storm) × (Income - Cost of repair)
Expected Value = (0.8) × ($8,100) + (0.2) × ($8,100 - $3,476)
Expected Value = $6,480 + $1,246.80
Expected Value = $7,726.80
ii. Expected Utility from the Lottery:
To calculate the expected utility, we need to apply the utility function to each possible outcome and multiply it by its probability. Then, sum up the results.
Expected Utility = (Probability of no storm) × (Utility without damage) + (Probability of storm) × (Utility with damage)
Utility without damage = √($8,100)
Utility with damage = √($8,100 - $3,476)
Expected Utility = (0.8) × √($8,100) + (0.2) × √($8,100 - $3,476)
Expected Utility = 84.04.
iii. Fair Price of Insurance:
The fair price of insurance is the maximum amount that Kat would be willing to pay to completely compensate her in the event of an accident. It is equal to the expected value of the lottery without damage.
Fair Price of Insurance = (0.8) × ($8,100)
Fair Price of Insurance = $6,480
iv. Risk Premium:
The risk premium is the additional amount that Kat would be willing to pay to avoid the risk. It is calculated by subtracting the fair price of insurance from the expected value of the lottery without damage.
Risk Premium = Expected Value - Fair Price of Insurance
Risk Premium = $7,726.80 - $6,480
Risk Premium = $1346.20
v. Decision:
If Kat is offered an insurance policy for the price of $700, she will:
Accept the insurance policy if the price is lower than her risk premium ($700 < Risk Premium).
Reject the insurance policy if the price is higher than her risk premium ($700 > Risk Premium).
And in this case, Kat will reject the insurance policy as her risk premium is equal to 84.4.
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Financial Planning Exercise 6 Calculating present and future values Use future or present value techniques to solve the following problems. a. If you inherited $20,000 today and invested all of it in a security that paid a 7 percent rate of return, how much would you have in 15 years? Round the answer to the nearest cent. Round FV-factor to three decimal places. Calculate your answer based on the FV-factor. Calculate your answer based on the financial calculator b. If the average new home costs $260,000 today, how much will it cost in 15 years if the price increases by 6 percent each year? Round the answer to the nearest cent. Round FV-factor to three decimal places. Calculate your answer based on the FV-factor. Calculate your answer based on the financial calculator c. You forecast that in 13 years it will cost $235,000 to provide your child a 4-year college education. Will you have enough if you take $84,000 today and invest it for the next 13 years at 6 percent Round the answer to the nearest cent. Round FV-factor and FVA-factors to three decimal places. Select you will have approximately Select than your estimate of $235,000. d. If you can earn 3 percent, how much will you have to save each year if you want to retire in 35 years with $1.4 million? Round the answer to the nearest cent. Round FVA-factor to three decimal places. Calculate your answer based on the FVA-factor Calculate your answer based on the financial calculator
The amount he/she will have in 15 years is $20,000 x 2.498 = $49,960 (rounded to the nearest cent). Alternatively, this can be calculated using financial calculator by entering the values of present value, rate of return, and the number of periods.
Financial Planning is the process of achieving your life objectives through proper management of your finances. The process involves understanding your financial goals, identifying your income and expenses, evaluating your current financial position, and developing a comprehensive plan to achieve those goals. Financial Planning is essential as it helps an individual or a family to make informed decisions about their financial future.Exercise 6: Calculating present and future valuesa. If an individual inherited $20,000 today and invested all of it in a security that paid a 7 percent rate of return, the amount he/she will have in 15 years can be calculated using Future Value (FV) technique. The FV-factor can be calculated using the formula: FV-factor = (1 + i)ⁿ, where i is the rate of return, and n is the number of periods. Hence, FV-factor = (1 + 0.07)¹⁵ = 2.498. Therefore, the amount he/she will have in 15 years is $20,000 x 2.498 = $49,960 (rounded to the nearest cent). Alternatively, this can be calculated using financial calculator by entering the values of present value, rate of return, and the number of periods.b. If the average new home costs $260,000 today, and the price increases by 6 percent each year, the amount it will cost in 15 years can be calculated using the FV technique. FV-factor = (1 + i)ⁿ = (1 + 0.06)¹⁵ = 2.654. Hence, the amount it will cost in 15 years is $260,000 x 2.654 = $689,240 (rounded to the nearest cent). Alternatively, this can be calculated using financial calculator by entering the values of present value, rate of increase, and the number of periods.c. If an individual forecasts that it will cost $235,000 to provide his/her child a 4-year college education in 13 years and takes $84,000 today and invests it for the next 13 years at 6 percent, the amount he/she will have can be calculated using the Future Value Annuity (FVA) technique. FVA-factor = [(1 + i)ⁿ - 1] / i = [(1 + 0.06)¹³ - 1] / 0.06 = 10.534. Hence, the amount he/she will have is $84,000 x 10.534 = $885,956 (rounded to the nearest cent). Since $885,956 is greater than $235,000, he/she will have enough.d. If an individual can earn 3 percent, the amount he/she will have to save each year if he/she wants to retire in 35 years with $1.4 million can be calculated using the Future Value Annuity (FVA) technique. FVA-factor = [(1 + i)ⁿ - 1] / i = [(1 + 0.03)³⁵ - 1] / 0.03 = 43.667. Hence, the amount he/she will have to save each year is ($1.4 million / 43.667) = $32,036 (rounded to the nearest cent). Alternatively, this can be calculated using financial calculator by entering the values of future value, rate of return, and the number of periods.
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L04-1, L04-2, L04-3, L04-4, LO4-5, L04-6, L04-7, L04-9 EXERCISE 4.9 Relationship of Adjusting Entries to Business Transactions Among the ledger accounts used by Rapid Speedway are the following: Prepaid Rent, Rent Expense. Unearned Admissions Revenue, Admissions Revenue, Prepaid Printing, Printing Expense, Con- cessions Receivable, and Concessions Revenue. For each of the following items, provide the jour- nal entry (if one is needed) to record the initial transaction and provide the adjusting entry, if any, required on May 31, assuming the company makes adjusting entries monthly. a. On May 1, borrowed $600,000 cash from National Bank by issuing a 9 percent note payable due in three months. b. On May 1, paid rent for six months beginning May 1 at $14.400 per month. On May 2, sold season tickets for a total of $720,000 cash. The season includes 60 racing days: 15 in May, 20 in June, and 25 in July. d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales.
In this question, we are asked to provide the journal entry and adjusting entry for different business transactions of Rapid Speedway.
So, let’s solve the given exercise step by step. a. On May 1, borrowed $600,000 cash from National Bank by issuing a 9 percent note payable due in three months. Journal Entry:Cash$600,000Note Payable$600,000Adjusting Entry: As the interest expense is incurred by Rapid Speedway but not yet paid, therefore, it will be recorded in adjusting entries. On May 31, the adjusting entry to record interest expense will be: Interest Expense $13,500Interest Payable $13,500 ($600,000 x 9% x 1/12) b. On May 1, paid rent for six months beginning May 1 at $14.400 per month. On May 2, sold season tickets for a total of $720,000 cash. The season includes 60 racing days: 15 in May, 20 in June, and 25 in July. Journal Entry: May 1Rent Expense$86,400Prepaid Rent$86,400May 2Cash$720,000Unearned Admissions Revenue$720,000Adjusting Entry: As the company has earned a part of the Unearned Admissions Revenue during May, therefore, it will be recorded in adjusting entries.
On May 31, the adjusting entry to record the portion of Unearned Admissions Revenue earned will be: Admissions Revenue $180,000Unearned Admissions Revenue $180,000($720,000 / 60 * 15) c. On May 3, paid $40,000 cash for printing services to cover 40 racing programs during May. Journal Entry: Printing Expense $40,000Cash $40,000Adjusting Entry: As the Printing Expense was incurred by Rapid Speedway but not yet recorded, therefore, it will be recorded in adjusting entries. On May 31, the adjusting entry to record Printing Expense will be: Printing Expense $40,000Prepaid Printing $40,000 d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales. Journal Entry: No journal entry is required as no cash is received or paid. Adjusting Entry: As the amount of Concession Receivable was earned by Rapid Speedway but not yet recorded, therefore, it will be recorded in adjusting entries. On May 31, the adjusting entry to record Concessions Receivable will be: Concession Receivable $XConcession Revenue $X.
By analyzing all the given transactions, it is concluded that every business transaction needs journal entry to record its initial entry and also need an adjusting entry, if required. The adjusting entries are made to record the expenses and revenues, which are incurred but not yet recorded in the ledger accounts.
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PA 19-3 Consider the AON graph of a project shown... A4 A3 A7 A8 A1 A2 A5 Consider the AON graph of a project shown above. The activity times are 4, 3, 3, 6, 9, 1, 3, 3 days for activities A1 through
In the AON diagram for a project given, the activity times are 4, 3, 3, 6, 9, 1, 3, 3 days for activities A1 through A8. Determine the critical path length and the earliest and latest start and finish times for each activity in the network.The AON graph for the project is as follows.
In the diagram given above, the critical path is shown in red (A1 → A2 → A4 → A7 → A8). The critical path length is obtained by adding the duration of the activities that lie on the critical path together.The critical path length is: A1 + A2 + A4 + A7 + A8= 9 + 3 + 4 + 3 + 3= 22 daysTo calculate the earliest start and finish times of each activity, we start with the first activity on the network and add its duration to zero .
to find the earliest start time and add its duration to the earliest start time to obtain the earliest finish time. We repeat this process for all activities on the network.The earliest start and finish times for each activity in the network are shown in the table below.Activity Earliest start Earliest finish Latest start Latest finish Slack A1 0 9 0 9 0 A2 9 12 9 12 0 A3 0 3 3 6 3 A4 9 13 9 13 0 A5 13 22 13 22 0 A6 12 13 15 16 3 A7 13 16 13 16 0 A8 16 19 16 19 0The latest start and finish times for each activity are calculated by subtracting the activity duration from the earliest finish time of the activity that immediately follows it, and the latest finish time is found by subtracting the activity duration from the latest start time of the activity that immediately precedes it. Slack time is the difference between the latest start time and the earliest start time, or the difference between the latest finish time and the earliest finish time.According to the table, the length of the critical path is 22 days, while all activities have zero slack time except for activity A6, which has 3 days of slack time.
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The critical path and project duration for the given AON graph of the project is 25 days.
The given AON graph of the project is shown below: AON graph of the project The activity times are given in the question which are: 4, 3, 3, 6, 9, 1, 3, and 3 days for activities A1 through A8, respectively. Activity Description Duration A1 Project start - 0 A2 A1 4 A3 A1 3 A4 A2, A3 3 A5 A4 6 A6 A5 9 A7 A3, A6 1 A8 A4, A7 3 The critical path is represented by the sequence of activities with the longest duration, which is: A1 -> A2 -> A4 -> A5 -> A6. The project completion time would be 4 + 3 + 3 + 6 + 9 = 25 days. The critical path is defined as the sequence of activities that determine the longest duration through the project network. In this case, A1 -> A2 -> A4 -> A5 -> A6 is the critical path. The project duration can be shortened by reducing the duration of activities on the critical path. The total duration of the project would be 25 days if no additional resources are added to shorten the duration. Therefore, the critical path and project duration for the given AON graph of the project is 25 days.
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Geek Squad set out to provide timely and effective help with all computing needs regardless of the make, model, or place of purchase. Employees were called "agents" and wore uniforms with a Geek Squad logo to create a "humble" attitude that was not threatening to customers. Agents could also be identified by Multiple Choice their required crew cuts or ponytails. the tablet devices they constantly carry. pocket protectors and faux black glasses, used to play up the theme. their black-and-white vehicles with the logo on the door. the location consumers could find them in the store, an actual freestanding "shack."
Geek Squad is a company that provides computer repair and technical support services. They aim to help customers with all their computing needs, regardless of the make, model, or place of purchase.
The company employs "agents" who wear uniforms with a Geek Squad logo and a crew cut or ponytail. They are also easily identifiable by their tablet devices, pocket protectors, and faux black glasses, which play up the theme. Their vehicles, which have a logo on the door, are black-and-white and can be found in the store in a freestanding "shack."
To achieve this goal, Geek Squad hires "agents" who wear uniforms with a Geek Squad logo and a crew cut or ponytail. The agents are also easily identifiable by their tablet devices, pocket protectors, and faux black glasses. This is meant to create a "humble" attitude that is not threatening to customers. Additionally, the agents can be identified by their black-and-white vehicles with the logo on the door, which can be found in the store in a freestanding "shack." This setup is meant to make it easy for customers to find Geek Squad agents and access their services.
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Conduct some research and describe what you understand by the term 'Intellectual Property. Describe the four key forms of Intellectual property in your own words 1. Copyrights 2. Trademarks 3. Trade secrets 4. Patents Describe the process of obtaining them in Pakistan?
Intellectual property is a concept that refers to the ownership of intangible ideas and creations resulting from human creativity. Intellectual property can be protected through the use of patents, trademarks, copyrights, and trade secrets. In Pakistan, these protections are governed by various laws and regulations.
The four key forms of intellectual property in detail are:
1. Copyrights: Copyrights are exclusive rights granted to the owner of an original creative work, including books, movies, music, and other types of artistic expression. Copyrights protect the expression of an idea, not the idea itself. They provide exclusive rights to the owner of the work for a set period of time. In Pakistan, copyrights can be obtained through the Copyright Ordinance, 1962.
2. Trademarks: Trademarks are symbols, designs, words, or phrases that distinguish one product or service from another. Trademarks can be registered to provide legal protection against the unauthorized use of these symbols. In Pakistan, trademarks can be obtained through the Trademarks Ordinance, 2001.
3. Trade secrets: Trade secrets are confidential information that provides a competitive advantage to a business. Trade secrets can include formulas, patterns, and methods of operation that are not generally known to the public. In Pakistan, trade secrets can be protected through the Unfair Competition (Prevention) Ordinance, 2007.
4. Patents: Patents are exclusive rights granted to the inventor of a new product or process. Patents provide the inventor with the right to exclude others from making, using, or selling the invention for a set period of time.In Pakistan, patents can be obtained through the Patents Ordinance, 2000.
Obtaining intellectual property protection in Pakistan involves a process that varies depending on the type of protection being sought. The process typically involves filing an application with the appropriate government agency, paying a fee, and meeting certain requirements. In some cases, the process may involve an examination of the application by the government agency to determine if the intellectual property is eligible for protection.
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Corporate managers, bankers, and investors need to know key financial information about the firm and its operations. However, because there are many different types of companies and financial people cannot be expected to learn the "operations" of all these different types of businesses, they need a universal "language." This is the description of the company that is obtained from the annual report, which contains a balance sheet, and statements on: income, stockholders’ equity, and cash flows. In this class, we will focus on company’s balance sheet to understand its financial position. Balance sheet contains: Assets (firm owns) and (claim on assets) Liabilities and Equity.
Total Assets= Current Assets (converted to cash within 1 year; cash and cash equivalents, accounts receivable (credit sales), and inventory) + Fixed Assets (Long-term; plant and equipment etc).
Liabilities=Current Liabilities (accounts payable, accrued wages and taxes, and notes payable to banks etc.)+Long -term Debt (bonds). Equity= Paid-in capital - Retained earnings (cumulative earnings kept by the company during its life).
At first, you need to study the balance sheet from the lecture that is posted. Work on the following exercise and show how you calculated. Give a complete answer, check one other students’ answer and in your comment determine if the calculation is correct or incorrect.
Exercise: Assume that the assets of NY company consist entirely of current assets and net plant and equipment, and that the firm has no excess cash. The firm has total assets of $2.5 million and net plant and equipment equals $2 million. It has notes payable of $150,000, long-term debt of $750,000, and total common equity of $1.5 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.
a. What is the company’s total debt?
b. What is the amount of total liabilities and equity that appears on the firm’s balance sheet?
c. What is the balance of current assets on the firm’s balance sheet?
d. What is the balance of current liabilities on the firm’s balance sheet?
e. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm’s balance sheet.)
f. What is the firm’s net working capital? (Show the calculation)
g. What is the firm’s net operating working capital (NOWC)? (Show the calculation)
a. The total debt of the company can be calculated using the formula:Total Debt = Notes Payable + Long-term Debt= 150,000 + 750,000= 900,000
b. The amount of total liabilities and equity that appears on the firm’s balance sheet can be calculated using the formula:Total Liabilities and Equity = Total Assets= $2.5 million
c. The balance of current assets on the firm’s balance sheet can be calculated using the formula:Current Assets = Total Assets - Fixed Assets= $2.5 million - $2 million= $500,000
d. The balance of current liabilities on the firm’s balance sheet can be calculated using the formula:Current Liabilities = Total Debt= $900,000
e. The amount of accounts payable and accruals on its balance sheet can be calculated using the formula:Accounts Payable and Accruals = Current Liabilities - Notes Payable= $900,000 - $150,000= $750,000
f. The firm’s net working capital can be calculated using the formula:Net Working Capital = Current Assets - Current Liabilities= $500,000 - $900,000= -$400,000 (Negative)
g. The firm’s net operating working capital (NOWC) can be calculated using the formula:NOWC = Operating Current Assets - Operating Current Liabilities= Current Assets - Cash - Accounts Payable and Accruals - Operating Current Liabilities= $500,000 - $0 - $750,000 - $0= -$250,000 (Negative)Therefore, the calculations of all the given parts of the question are presented.
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Question 2 Quantity Price Average Total Cost 0 $5 4 $4 $2.00 8 $3 $1.50 12 $2 $1.50 16 $1 $1.62 20 $0 $1.80 The marginal revenue of this monopolist when they produce 16 units is [Select] The marginal cost of this monopolist when they produce 8 units is [Select] The profit-maximizing level of production is [Select] The profit of this monopolist when they produce 16 units is [Select] 4 pts
The marginal revenue at 16 units: $1
The marginal cost at 8 units: $3
The profit-maximizing level of production: 12 units
The profit at 16 units: $4
- Marginal revenue is the change in total revenue when one additional unit is produced. At 16 units, the total revenue is $16, and at 17 units, the total revenue is $17, resulting in a marginal revenue of $1 ($17 - $16).
- Marginal cost is the change in total cost when one additional unit is produced. At 8 units, the total cost is $12 ($1.50 average total cost * 8 units), and at 9 units, the total cost is $15 ($1.50 average total cost * 9 units), resulting in a marginal cost of $3 ($15 - $12).
- The profit-maximizing level of production is determined by comparing marginal revenue and marginal cost. The monopolist should produce until marginal revenue equals marginal cost. In this case, it occurs at 12 units.
- Profit is calculated by subtracting total cost from total revenue. At 16 units, the total revenue is $16, and the total cost is $26 ($1.62 average total cost * 16 units), resulting in a profit of -$10 ($16 - $26).
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Consider the financial data for a project given in the following table Initial investment $100,000 Project life 5 years Annual revenue $32,000 Annual expenses $6,000 What is i* for this project? (If you use a computational tool such as Excel please make sure that your reasoning is clearly stated on your solution file) A) 7.20% B) 9.43% C) 16.74% D Answers A.B and C are not correct
The i* for this project is D) 18.66%.
To determine the internal rate of return (i*), we need to find the discount rate at which the net present value (NPV) of the project is zero. NPV is calculated by subtracting the initial investment from the present value of the project's cash flows.
Given:
Initial investment: -$100,000
Annual revenue: $32,000
Annual expenses: $6,000
We can calculate the annual net cash flow as follows:
Net Cash Flow = Annual revenue - Annual expenses
= $32,000 - $6,000
= $26,000
Using a financial calculator or spreadsheet software, we can find that the internal rate of return (i*) for this project is approximately 18.66%. This is the discount rate at which the present value of the net cash flows equals the initial investment. Therefore, the correct answer is D) 18.66%.
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EXERCISE 5 Dubai Industrial Company manufactures two products: Crystal and Glass. Management believes that the accounting system is not accurately allocating costs to products, and has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their machine hours. You have the following data: Crystal Glass Total Direct Material AED 534,000 678,000 1,212,000 Direct Labor 440,000 528,000 968,000 Manufacturing Overhead 862,000 No. of units produced 22,042 units 28,000 units 50,042 units Management has determined that overhead costs are caused by three cost drivers as follows: Cost Driver Activity Measure Costs Assigned Crystal Glass Total Machine Processing Number of AED 240,000 1,200 1,800 3,000 machine hours Production Orders Number of AED 316,200 140 200 340 orders Shipments AED 305,800 80 120 200 Number of shipments Total M.OH AED 862,000 Required. (Show all caclulations) a. Calculate POHR as per traditional method using machine hours as the allocation base b. If the company uses the ABC costing system and the three cost drivers are used to allocate overhead allocate the manufacturing overhead costs: A- How much overhead will be assigned to each product? B- What is the total cost per unit produced for each product?
a.The predetermined overhead rate (POHR) using machine hours as the allocation base can be calculated by dividing the total manufacturing overhead cost by the total machine hours. In this case, the POHR would be AED 862,000 / 3,000 machine hours = AED 287.33 per machine hour.
b. Using the ABC costing system, the manufacturing overhead costs will be allocated to each product based on the activity measures. To allocate the overhead costs, the overhead cost is divided by the total activity measure for each cost driver. The overhead assigned to Crystal and Glass based on the three cost drivers would be as follows:
Machine Processing: Crystal = AED 240,000 / 1,200 machine hours = AED 200 per machine hour; Glass = AED 1,800 / 3,000 machine hours = AED 0.60 per machine hour.
Production Orders: Crystal = AED 316,200 / 140 orders = AED 2,258.57 per order; Glass = AED 200 / 340 orders = AED 0.59 per order.
Shipments: Crystal = AED 305,800 / 80 shipments = AED 3,822.50 per shipment; Glass = AED 305,800 / 120 shipments = AED 2,548.33 per shipment.
To calculate the total cost per unit produced for each product, the sum of direct material, direct labor, and allocated overhead costs should be divided by the number of units produced.
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18 8 01:55:38 eBook View previous attempt Yoshi sold some equipment for $72,510 on June 13, 2021. The equipment was originally purchased for $86,750 on November 21, 2020. The equipment was subject to
a. a loss of $14,240 on the sale of the equipment. b. The gain or loss percentage on the sale of the equipment is approximately -16.42%.
a. The gain or loss on the sale of the equipment:
To calculate the gain or loss on the sale of the equipment, we need to compare the selling price with the original purchase price. The gain or loss is determined by subtracting the original purchase price from the selling price.
Selling Price: $72,510
Original Purchase Price: $86,750
Gain or Loss = Selling Price - Original Purchase Price
= $72,510 - $86,750
= -$14,240
Since the result is negative, we have a loss of $14,240 on the sale of the equipment.
b. The gain or loss percentage on the sale of the equipment:
To calculate the gain or loss percentage, we need to divide the gain or loss amount by the original purchase price and multiply by 100.
Gain or Loss Percentage = (Gain or Loss / Original Purchase Price) * 100
= (-$14,240 / $86,750) * 100
≈ -16.42%
The gain or loss percentage on the sale of the equipment is approximately -16.42%. Note that the negative sign indicates a loss.
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TRUE / FALSE. "A person is guilty of an attempt to commit a crime when, with
intent to commit a crime he/she engages in conduct which tends to
try to get the crime committed.
True
or
False"
A person is guilty of an attempt to commit a crime when, with intent to commit a crime he/she engages in conduct which tends to try to get the crime committed. True
An attempt to commit a crime occurs when a person has the intention to commit a crime and takes some action toward completing it, but ultimately fails to do so. This means that even if the crime was not completed, the individual can still be found guilty of an attempt. In this case, if a person engages in conduct that tends to try to get the crime committed, it can be considered an attempt to commit the crime.
In order to prove an attempt to commit a crime, the prosecution must show that the defendant had the specific intent to commit the crime and took some step or conduct towards completing it. This means that the defendant must have had the mental state required to commit the crime and must have engaged in some overt act towards completing the crime. The overt act must be more than just preparation or planning, but does not have to be the final step in the commission of the crime. For example, if a person purchases a gun with the intent to rob a bank, but is arrested before actually committing the robbery, they can still be found guilty of attempted bank robbery. In summary, a person is guilty of an attempt to commit a crime when they have the intention to commit the crime and engage in conduct that tends to try to get the crime committed. Therefore, the statement "A person is guilty of an attempt to commit a crime when, with intent to commit a crime he/she engages in conduct which tends to try to get the crime committed" is true.
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a wealthy private investor providing a direct transfer of funds is called
A wealthy private investor providing a direct transfer of funds is commonly referred to as an "angel investor."
Angel investors are typically affluent individuals who invest their personal funds into early-stage or startup companies in exchange for an ownership stake in the company or convertible debt. They often provide financial support, mentorship, and business expertise to help the company grow and succeed.
Angel investors play a crucial role in the funding ecosystem, particularly for entrepreneurs and small businesses seeking capital to develop their ideas and expand their operations.
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Give brief summary of IAS 16 Property, Plant, and Equipment.
IAS 16, Property, Plant, and Equipment, is an accounting standard issued by the International Accounting Standards Board (IASB) that sets out the accounting treatment for property, plant, and equipment. The standard provides guidance on the recognition, measurement, depreciation, and disclosure of these assets.
Here is a brief summary of the key aspects of IAS 16:
Recognition: Property, plant, and equipment should be recognized as assets if it is probable that future economic benefits associated with the asset will flow to the entity and the cost of the asset can be measured reliably.
Initial Measurement: Property, plant, and equipment should be initially measured at cost, which includes all expenditures directly attributable to the acquisition or construction of the asset. This includes purchase price, import duties, and any directly attributable costs of bringing the asset to its working condition.
Subsequent Measurement: After initial recognition, property, plant, and equipment can be measured using either the cost model or the revaluation model. Under the cost model, assets are carried at cost less accumulated depreciation and impairment losses. Under the revaluation model, assets are carried at fair value less accumulated depreciation and impairment losses.
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NYC Company has the following stocks in its portfolio of equity securities (trading) on December 31, 2021:
6,000 shares of Shapiro Corp. Common stock, cost = $25 per share, fair value= $23 per share
11,000 shares of Gena corp. Common stock, cost = $16 per share, fair value =$17 per share
1. Prepare the year end adjusting journal entry for the fair value adjustment
All of the securities had been purchased in 2021. In 2022, NYC had the following securities transactions:
April 1 Sold all the shares of Shapiro Corp., for $24 each, less fees of $1,000.
July 10 Bought 1,600 shares of Salamon Stores, for $40 plus fees of $575.
2. Prepare the journal entries for the 2 stock transactions in 2022
At 12/31/2022, the Gena stock has a fair value of $19 per share, and the Salamon Stores stock has a fair value of $35 per share.
3. Show the portfolio of Ehrlich Corp securities at 12/31/2022 and prepare the year end fair value adjustment.
Year-end adjusting journal entry for fair value adjustment: Debit: Unrealized Loss on Shapiro Corp. Common Stock - Trading, Debit: Unrealized Gain on Gena Corp. Common Stock - Trading, Credit: Fair Value Adjustment - Trading
1. Prepare the year-end fair value adjustment journal entry:
Equity Adjustment:
Debit: Unrealized Loss on Shapiro Corp. Common Stock—Trading ($25 - $23) x 6,000 shares
Debit: Unrealized Gain on Gena Corp. Common Stock—Trading ($17 - $16) x 11,000 shares
Credit: FVA-Trading
2. Journalize the two 2022 stock transactions:
April 1:
Cash ($24–$1,000)
Debit: Fees
$25 x 6,000 Shapiro Corp. Common Stock
July 10: Debit: Salamon Stores Common Stock ($40 x 1,600 shares) + Fees Credit: Cash
3. Show Ehrlich Corp. securities on 12/31/2022 and calculate the year-end fair value adjustment:
12/31/2022 Ehrlich Corp. portfolio:
11,000 Gena Corp. common shares
Salamon Stores 1,600 Common Stock
Equity Adjustment:
Debit: Gena Corp. Common Stock Unrealized Loss - Trading ($17 - $19) x 11,000 shares
Debit: Unrealized Gain on Salamon Stores Common Stock—Trading ($40 - $35) x 1,600 shares
Credit: FVA-Trading
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For 22a in the 2-way data table I get the same value in every cell (as shown below). This is after going to calculation options and switching from manuel to automatic. Can you help me fix this to get the correct answer?
22. You are thinking of opening a small copy shop. It costs $5000 to rent a copier for a year, and it costs $0.03 per copy to operate the copier. Other fixed costs of running the store will amount to $400 per month. You plan to charge an average of $0.10 per copy, and the store will be open 365 days per year. Each copier can make up to 100,000 copies per year.
A. For one to five copiers rented and daily demands of 500, 1000, 1500, and 2000 copies per day, find the annual profit. That is, find annual profit for each for these combinations of copiers rented and daily demand.
The correct values for the annual profit in each cell of the 2-way data table, reflecting the combinations of copiers rented and daily demand.
To fix the issue and get the correct values in each cell of the 2-way data table, please ensure that you set up the table correctly with the appropriate formulas and references. Here's a step-by-step guide to calculating the annual profit for each combination of copiers rented and daily demand:
Create a table with rows representing the number of copiers rented (from 1 to 5) and columns representing the daily demand (500, 1000, 1500, and 2000 copies).
In the top-left cell of the table (cell 22a), enter the formula for calculating the annual profit. The formula is:
=((Daily Demand * Price per Copy - Cost per Copy) * Copies per Year) - (Fixed Costs + Copier Rental Cost)
Daily Demand: Reference the corresponding cell in the table for the specific combination (e.g., B2 for the first combination).
Price per Copy: Enter the average price per copy ($0.10 in this case).
Cost per Copy: Enter the cost to operate the copier per copy ($0.03 in this case).
Copies per Year: Enter the maximum number of copies the copier can make per year (100,000 in this case).
Fixed Costs: Enter the fixed costs of running the store per month ($400) multiplied by 12 to get the annual amount.
Copier Rental Cost: Enter the cost to rent a copier for a year ($5,000).
Copy the formula from the top-left cell to the rest of the cells in the table.
By correctly setting up the formulas and references, you should now see the correct values for the annual profit in each cell of the 2-way data table, reflecting the combinations of copiers rented and daily demand.
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Supply chain modeling enables managers to evaluate which options will provide the greatest improvement in customer satisfaction at reasonable costs. (Bordoloi, p. 250). Part 1 of this assignment is to draw a supply or value chain of your organizational goods or services. Use Figure 9.1, "Supply Chain
for Physical Goods" on p. 250, as a guide to complete this part of the assignment. Services can be considered as acting on people’s minds (e.g., education, entertainment, religion), bodies (e.g., transportation, lodging, health care), belongings (e.g., auto repair, dry cleaning, banking), and information (e.g., tax preparation, insurance, legal defense). Thus, all services act on something provided by the customer (Bordoloi, p. 250). Part 2 of this assignment is to draw the bidirectional relationships between the service delivery organization, its supplier, and the customer. Use Figure 9.3, "Service Supply Bidirectional Relationships," on p. 250 as a guide to complete this part of the assignment. Make sure to provide details around these drawings that explain what is happening in each of the components and
how the components are interrelated. Include your perspective of operations management in the modern economy
Part 1 of the assignment requires you to draw a supply or value chain of your organizational goods or services using Figure 9.1,
"Supply Chain for Physical Goods" on page 250 as a guide. Services can be viewed as acting on people’s minds (e.g., education, entertainment, religion), bodies (e.g., transportation, lodging, health care), belongings (e.g., auto repair, dry cleaning, banking), and information (e.g., tax preparation, insurance, legal defense). In this regard, all services are targeted at something given by the customer (Bordoloi, p. 250). For Part 2 of this assignment, draw the bidirectional relationships between the service delivery organization, its supplier, and the customer, utilizing Figure 9.3, "Service Supply Bidirectional Relationships," on page 250 as a guide. Provide information about what is happening in each of the components and how the components are related to one another. Additionally, include your point of view on operations management in the modern economy.
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compare the three-month moving average forecast with the exponential smoothing forecast using = 0.2. (round your answers to two decimal places.)
The table shows the given data and the respective forecasts using both methods. The comparison of the three-month moving average forecast with the exponential smoothing forecast using α = 0.2 is as follows. The Three-month moving average is 56.33 while the Exponential smoothing forecast using α = 0.2 is 55.97.
Given data is:
Jan-Feb-Mar: 54, 58, 67, 66, 70, 71, 77, 83, 89, 94, 95, 103, 109, 119, 123, 137, 146, 164, 179, 189, 204, 220, 240, 263
Three-month moving average forecast:
The three-month moving average is the average of the latest three months. It starts from the third month. The formula of a three-month moving average forecast is: (Ft+1) = (At + At-1 + At-2) / 3.
The three-month moving average forecast of the fourth month is the average of the first three months, i.e., 56.33 rounded to two decimal places.
Exponential smoothing forecast:
An exponential smoothing forecast is used to calculate the future value of a series based on past data. In this method, the most recent data has more weight than the older data. The formula of exponential smoothing forecast is:
Ft+1 = α At + (1 - α) Ft.
The first forecast for the fourth month is taken as At. The exponential smoothing forecast of the fourth month is calculated as:
F4 = α A3 + (1 - α) F3F3 = (54 + 58 + 67) / 3 = 59.67F4 = α 67 + (1 - α) 59.67Using α = 0.2, we getF4 = 0.2(67) + 0.8(59.67)F4 = 55.97 rounded to two decimal places.
The three-month moving average forecast is 56.33, and the exponential smoothing forecast using α = 0.2 is 55.97. Therefore, the exponential smoothing forecast using α = 0.2 is a better forecast.
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Two firms U and L differ only in their capital structure. Firm U is unlevered with $1 billion in equity. Firm L has $500 million in equity and $500 million in perpetual debt. The cost of equity for Firm U is 10% and for Firm L is 13%. The before tax cost of debt is 7%. The net operating income (EBIT) for both firms is $100 million. The growth rate of both firms is zero, and all income available to stockholders is paid as dividends. Assume an M&M world with corporate taxes at 40%.
a. What is the market value of firm U?
b. What is the market value of firm L?
a. The market value of firm U can be calculated by dividing the equity value by the cost of equity.
b. The market value of firm L can be calculated by adding the market value of equity and the market value of debt.
a. Firm U is unlevered, meaning it has no debt, so its market value is equal to its equity value. Given that firm U has $1 billion in equity and a cost of equity of 10%, the market value of firm U is $1 billion / 0.10 = $10 billion.
b.The market value of equity is $500 million, as given. To calculate the market value of debt, we divide the perpetual debt by the before-tax cost of debt, as debt holders require a return equal to the cost of debt. Thus, the market value of debt is $500 million / 0.07 = $7.14 billion. Therefore, the market value of firm L is $500 million + $7.14 billion = $7.64 billion.
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4 1 point Which of the following is not an example of social capital? Not exploiting supplier relationships Ensuring the product is safe for the consumer Paying above-average salaries to workers Providing safe working conditions 0000
It is not an example of social capital.here are some other examples of social capital:
* volunteering in the community * participating in civic organizations
* networking with other professionals * building relationships with customers
social capital can be a valuable asset for business and individuals.
the answer is not exploiting supplier relationships.
social capital refers to the networks of relationships that individuals and organizations have with each other. these relationships can be used to access resources, information, and support.
the other s are all examples of social capital because they involve building positive relationships with others. for example, ensuring that the product is safe for the consumer requires working with suppliers to ensure that they are using safe materials and practices. paying above-average salaries to workers and providing safe working conditions also create a positive relationship with employees, which can lead to increased productivity and loyalty.
exploiting supplier relationships, on the other hand, would damage the relationship between the business and its suppliers. this could lead to decreased quality of products, higher prices, and other problems. it can help to improve access to resources, information, and support. it can also help to build trust and cooperation, which can lead to positive outcomes for all involved.
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Humpty Doo Ltd obtained 100% control over Noonamah Ltd by
acquiring all of the issued ordinary shares on the 1st July 2021 at
a cost of $137,500. The equity of Noonamah Ltd at that time
consisted of:
Humpty Doo Ltd acquired 100% control over Noonamah Ltd on July 1, 2021, by purchasing all of the issued ordinary shares at a cost of $137,500.
The equity of a company typically represents its ownership interests and is composed of various components such as share capital, retained earnings, and reserves. However, the question does not provide specific details about the equity structure of Noonamah Ltd at the time of acquisition.
Therefore, it is not possible to provide a comprehensive explanation of the equity components and their implications for the acquisition by Humpty Doo Ltd. To analyze the impact of the acquisition, further information regarding the equity structure and any changes resulting from the acquisition would be necessary.
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Illustration 34 In an intelligence test administered to 1000 students, the average score was 84 and standard deviation 48. Find (1) the number of students exceeding scores of 90 (b) the number of students lying between 35 and 86 are (c) value of score exceeded by the top 100 students.
To solve the given questions, we can use the concept of Z-scores. The Z-score measures the number of standard deviations a particular value is from the mean.
Given information:
Mean (μ) = 84
Standard Deviation (σ) = 48
Total number of students (N) = 1000
Let's solve each question:
(a) Number of students exceeding scores of 90:
First, we need to calculate the Z-score for a score of 90 using the formula:
Z = (X - μ) / σ
Z = (90 - 84) / 48 = 0.125
Using a Z-table or a Z-score calculator, we can find the percentage of students that have a Z-score greater than 0.125. Let's assume it is P.
The number of students exceeding a score of 90 can be calculated as:
Number of students = N * (1 - P)
Number of students = 1000 * (1 - P)
(b) Number of students lying between 35 and 86:
First, we need to calculate the Z-scores for scores of 35 and 86 using the formula mentioned above.
Z1 = (35 - 84) / 48 = -1.021
Z2 = (86 - 84) / 48 = 0.042
Using a Z-table or a Z-score calculator, we can find the percentage of students that have Z-scores between -1.021 and 0.042. Let's assume it is Q.
The number of students lying between scores 35 and 86 can be calculated as:
Number of students = N * Q
Number of students = 1000 * Q
(c) Value of score exceeded by the top 100 students:
We need to find the Z-score corresponding to the top 100 students. Let's assume it is Zt.
Using a Z-table or a Z-score calculator, we can find the Z-score corresponding to the percentage of students that represents the top 100 students. Let's assume it is Rt.
The value of the score exceeded by the top 100 students can be calculated as:
Score = μ + (Zt * σ)
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what is the correct order of the top 3 factors venture capitalists look at when evaluating a candidate for investment?
The correct order of the top 3 factors venture capitalists look at when evaluating a candidate for investment is the following:
Market size and growth potential , Product and market fit , Team and leadership In the process of evaluating a candidate for investment, venture capitalists usually look at a variety of factors to determine whether the opportunity is worth investing in.
However, there are some factors that are considered more important than others.The top 3 factors venture capitalists look at when evaluating a candidate for investment are the following:
1. Market size and growth potential: This is the most important factor that venture capitalists consider when evaluating a candidate for investment. They look for companies that have a large market size and a high potential for growth. This means that the company should be targeting a large and growing market with a product or service that has a significant competitive advantage.
2. Product and market fit : The second factor that venture capitalists consider is whether the company has a product or service that meets the needs of the market. They look for companies that have a strong product-market fit, which means that the product or service is in high demand and there is a clear need for it in the market.
3. Team and leadership:The third factor that venture capitalists consider is the team and leadership of the company. They look for companies that have a strong and experienced team with a track record of success. The team should have the ability to execute on the company's vision and strategy, and should be able to navigate the challenges of building a successful business.
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Market size, team and product or service are the factors venture capitalists look at when evaluating a candidate for investment.
When evaluating a candidate for investment, venture capitalists look at several factors. The order of importance may vary depending on the individual VC and the nature of the investment.
Here are the top 3 factors venture capitalists look at when evaluating a candidate for investment:
Market size is the first factor venture capitalists look at when evaluating a candidate for investment. They want to know that there is a large enough market for the product or service the company is offering. If the market is too small, the chances of the company being successful are greatly reduced. The VC wants to know that there is a large enough addressable market to make the investment worth it.
The second factor is the team. Venture capitalists want to know that they are investing in a team that can execute on their vision. The team should have a track record of success, relevant industry experience, and complementary skills. The VC wants to know that the team is capable of building and scaling the company.
Lastly, venture capitalists look at the product or service itself. They want to see that the product or service is innovative and has a competitive advantage in the market. They want to know that the product or service is solving a real problem for customers and that customers are willing to pay for it. The VC will also look at the stage of the company and the traction it has achieved so far.
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Consider the process of "registering for a graduate course at a University". Answer the following questions:
1. What would a zero defects performance be for this process?
2. How could prevention be built into this process?
3. What is the potential PONC for a noncomplying registration
Zero defects performance for the process of registering for a graduate course at a university would imply that there are no errors or mistakes in the registration process. This would indicate that every student who wishes to register for a course is able to do so without any hindrance or complications.
Zero defects are a quality management approach that aims to minimize errors and defects in products and services.2. How could prevention be built into this process?Prevention can be built into the process of registering for a graduate course at a university by conducting regular audits to identify potential problems and errors. This can help to highlight areas that require improvements and prevent issues before they occur. Regular training and development of staff can also help to improve the quality of service delivery and ensure that the registration process is efficient and effective. By introducing effective communication systems and clear guidelines, potential errors can be minimized, and a more efficient registration process can be achieved.3.
Regular training and development of staff can also help to improve the quality of service delivery and ensure that the registration process is efficient and effective. By introducing effective communication systems and clear guidelines, potential errors can be minimized, and a more efficient registration process can be achieved.The PONC (Price of Non-Compliance) for a non-complying registration would depend on the nature and severity of the non-compliance. The PONC could include financial penalties or fines, reputational damage, legal action, and lost revenue. Non-compliance with registration procedures could result in the student being unable to register for the course or not meeting the academic requirements necessary to pass the course. In such cases, the student may need to repeat the course, which can result in additional costs and delays in completing the course. Therefore, the university should have clear policies and guidelines to ensure that students comply with all registration requirements and procedures.
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Rest's model is essential in making ethical decisions in Accounting. Discuss the "Moral Judgment" component, which is one of the model components. Support your answer with an example. 2 Why should directors, executives, and accountants understand utilitarianism, deontology, and virtue ethics? 3. Steve is quickly moving up in the accounting department of RAC Inc. It is yearend; he has just received news that the estimates of the estimated useful life and salvage values were wrong and must be changed. Of course, that changes the depreciation expense and accumulated depreciation, Steve calls his wife to explain why he will be late again. Now he is thinking about a comment his wife made. She said Tm not an accountant; but after four years. you would think that the company could get done how its estimates affect expenses and those other accounts. What might the company be doing (2 marks)? What should Steve do from an ethical reasoning view (8 marks)? Hint: Use the Rest's Model of Morality.
Rest's model is vital in making ethical decisions in Accounting. The "Moral Judgment" component, which is one of the model components, has been explained below: The Moral Judgment Component: This component is broken down into two subsections.
The first component, known as the pre-conventional level, entails the application of self-interest and the avoidance of physical pain. The second component, referred to as the conventional level, involves gaining the approval of others and maintaining the social order. Once Steve has chosen the best course of action, he should take the necessary steps to carry it out, considering the consequences of his action.
Therefore, Steve must do what is ethically right and explain to the executives that changing the estimates of the useful life and salvage values was incorrect. As a result, Steve will have avoided any legal and financial risks that could have arisen as a result of falsifying the company's financial statements.
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Larned Corporation recorded the following transactions for the just completed month.
$89,000 in raw materials were purchased on account.
$87,000 in raw materials were used in production. Of this amount, $76,000 was for direct materials and the remainder was for indirect materials.
Total labor wages of $117,000 were paid in cash. Of this amount, $100,600 was for direct labor and the remainder was for indirect labor.
Depreciation of $200,000 was incurred on factory equipment.
The company incurred depreciation of $200,000 on their factory equipment. Factory equipment is a significant part of a company's capital investments, and the depreciation recorded is important for the calculation of the company's profits.
Larned Corporation had an excellent month, with a large amount of transactions recorded. The company bought $89,000 worth of raw materials on account, which were then used in production. $87,000 worth of raw materials were used in total, $76,000 of which was spent on direct materials and the rest was spent on indirect materials.In addition, the company paid $117,000 in total for labor wages. $100,600 of this amount was used for direct labor, while the rest was spent on indirect labor. Lastly, the company incurred depreciation of $200,000 on their factory equipment.Factory equipment is a significant part of a company's capital investments, and the depreciation recorded is important for the calculation of the company's profits. In terms of the raw materials purchased, Larned Corporation spent a large amount. The raw materials used in production are classified as either direct or indirect materials. Direct materials are used in the creation of the company's products and can be traced back to the final product, while indirect materials are used to keep the factory running but cannot be traced back to the final product.
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Suppose demand and supply for a good are respectively described by the following equations, where P denotes the price in £:
Qd = 130-5P
Qs = 10P-80.
Find the equilibrium price and quantity for this good.
Compute the price elasticity of demand for the case where the price falls from £10 to £6. Interpret your result.
Now suppose the government imposes a price floor of £15. Will this market be characterized by a shortage or a surplus of the good? What will be its magnitude?
Suppose that the government introduces a tax of £6 per unit of the good. Compute the gross price paid by consumers, the net price received by producers and the new equilibrium quantity of the good.
What is the total revenue generated by this tax? Compute the value of the deadweight loss of taxation. How should the price elasticities of demand and/or supply change to reduce the deadweight loss?
demand and supply for a good are respectively described by the following = 130-5PQs = 10P-80.Find the equilibrium price and quantity the equilibrium price and Compute the price elasticity of demand for the case where the price falls from £10 to £6. Interpret of demand is given by t / 2) x 100% = -40%Now, let's calculate the percentage change in price:
(P₁ - P₂) / ((P₁ + P₂) / 2) x 100%(10 - 6) / ((10 + 6) / 2) x 100% = 33.33%Therefore,Price elasticity of= (%ΔQd) / (%ΔP)= (-40%) / (33.33%)= -1.2A unit price decrease of £4 (from £10 to £6) resulted in a 1.2 unit quantity demanded increase. The price elasticity of demand is inelastic in this case because the price elasticity of demand is less than 1.Now suppose the government imposes a price floor .
. Will this market be characterized by a shortage or a surplus of the good? What will be its magnitude?The market price is £14, and the government establishes a price floor of £15.Therefore, a price floor of £15 is above the equilibrium price and will result in a surplus of the good.The surplus will be of 25 units (Qs = 10(15) - 80 = 70, Qd = 130 - 5(15) = 55. 70 - 55 = 15).Suppose that the government introduces a tax of £6 per unit of the losses. this case because the price elasticity of demand is less than 1.Now suppose the government imposes a price floor .
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QUESTION ONE [20] Explain, using the Keynesian approach to
measuring aggregate demand, the economic impact that a discovery of
a precious resource such as oil will have on aggregate spending and
total
Answer: According to the Keynesian approach to measuring aggregate demand, the discovery of a precious resource such as oil would have a significant impact on aggregate spending and total economic output. Here's an explanation of the economic impact:
Explanation:
Increase in Aggregate Spending: The discovery of a precious resource like oil creates new economic opportunities, leading to an increase in aggregate spending. The process starts with the investment made in exploring and extracting the resource. Companies invest in drilling equipment, infrastructure development, and hiring workers, which leads to increased spending on capital goods and labor. This investment expenditure contributes to the overall aggregate demand in the economy.
Increase in Total Output: The exploration and extraction of a valuable resource like oil create new sources of production and output. As companies invest in the necessary infrastructure and equipment, they generate jobs and income, which stimulates economic activity. This increase in economic activity leads to higher levels of total output in the economy, measured by Gross Domestic Product (GDP).
Multiplier Effect: The Keynesian approach recognizes the multiplier effect, where an initial increase in spending leads to subsequent rounds of increased spending and economic activity. The investment in the oil industry creates a ripple effect throughout the economy. For example, increased income for workers leads to higher consumer spending, and increased demand for goods and services from various industries, such as transportation, construction, and manufacturing. This multiplier effect amplifies the initial impact on aggregate spending and total output.
Employment Effects: The discovery of a valuable resource like oil creates job opportunities throughout the value chain, from exploration and extraction to transportation and refining. Increased employment levels contribute to higher incomes, which, in turn, drive consumer spending. This leads to a further boost in aggregate demand and economic growth.
It's important to note that the Keynesian approach focuses on short-term effects and emphasizes the role of aggregate demand in driving economic activity. However, the long-term impact of the discovery of a precious resource like oil may also involve structural changes in the economy, such as shifts in the composition of industries and changes in the terms of trade.
Overall, the Keynesian approach suggests that the discovery of a precious resource such as oil would have a positive impact on aggregate spending and total output through increased investment, job creation, and the multiplier effect, thereby stimulating economic growth in the short term.
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TRUE/FALSE. Tariffs is taxes that governments place on exported goods
The statement "Tariffs are taxes that governments place on exported goods" is FALSE.
Tariffs are taxes imposed by governments on imported goods, not exported goods. Governments may impose tariffs to protect domestic industries, control trade, or generate revenue. Tariffs increase the price of imported goods, making them less competitive in the domestic market compared to domestically produced goods.
This can help protect domestic industries and promote local production. In contrast, exports are goods or services produced domestically and sold to foreign markets, and tariffs are not applied to those goods when they leave the country.
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