Answer: 9.31%
Explanation:
Given: Smathers Corp. stock has a beta of 0.89.
⇒ Beta = 0.89
Risk-free rate = 2.93 percent
Market risk premium = 7.20 percent
Formula: Cost of Equity = [ Risk free rate + (Beta) × ( Market risk premium) ]
Substitute all values, we get
Cost of Equity = [ 2.9 + (0.89) × ( 7.20) ]%
= [2.9+6.41]%
= 9.31%
Hence, the company's cost of equity is 9.31%.
Students arrive at the Administrative Services Office at an average of one every 15 minutes, and their requests take on average 10 minutes to be processed. The service counter is staffed by only one clerk, Judy Gumshoes, who works eight hours per day. Assume Poisson arrivals and exponential service times.
Required:
a. What percentage of time is Judy idle?
b. How much time, on average, does a student spend waiting in line?
c. How long is the (waiting) line on average?
d. What is the probability that an arriving student (just before entering the Administrative Services Office) will find at least one other student waiting in line?
On January 1, the Matthews Band pays $67,600 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000. During the first year, the band performs 45 concerts. Compute the first-year depreciation using the units-of-production method.
Answer: $14,985
Explanation:
Using the Units-of-Production method means that the asset is depreciated based on how many times it is used.
The formula is;
= ( Cost - Salvage Value)/Total Usage
= (67,600 - 1,000) / 200
= $333 per concert
Equipment depreciates by $333 per concert.
First year has 45 concerts;
= 333 * 45
= $14,985
In a memo to the college president, the athletic director argues for a new stadium scoreboard. One paragraph will describe the old scoreboard and why it needs to be replaced. Study the following list of ideas for that paragraph. 1. The old scoreboard is a tired warhorse that was originally constructed in the 1970s. 2. It is now hard to find replacement parts when something breaks. 3. The old scoreboard is not energy efficient. 4. Coca-Cola has offered to buy a new sports scoreboard in return for exclusive rights to sell soda pop on campus. 5. The old scoreboard should be replaced for many reasons. 6. It shows only scores for football games. 7. When we have soccer games or track meets, we are without any functioning scoreboard. 1. Which sentence should be the topic sentence? 2. Which sentence(s) should be developed in a separate paragraph? 3. Which sentences should become support sentences?
Answer:
Memo to the College President
New Stadium Scoreboard:
1. Topic Sentence:
5. The old scoreboard should be replaced for many reasons.
2. Sentence(s) for separate paragraph:
4. Coca-Cola has offered to buy a new sports scoreboard in return for exclusive rights to sell soda pop on campus.
3. Support Sentences:
1. The old scoreboard is a tired warhorse that was originally constructed in the 1970s.
2. It is now hard to find replacement parts when something breaks.
3. The old scoreboard is not energy efficient.
6. It shows only scores for football games.
7. When we have soccer games or track meets, we are without any functioning scoreboard.
Explanation:
1. Topic Sentence:
This is the theme or main topic of a paragraph that summarizes the information in the paragraph. It may be the first sentence or inserted elsewhere in the paragraph. But, all other sentences within the paragraph support it with points, reasons, or examples.
2. Support Sentences:
These are sentences that support the topic sentence by offering justifications and examples.
3. Separate Paragraph Sentence:
This is a sentence that introduces another idea which is not closely related to the idea contained in the other paragraph.
Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. What is the expected return on Bo's complete portfolio?
Answer:
The expected return on Bo's complete portfolio will be "10.32%".
Explanation:
The given question is incomplete. Please find attachment of the complete question.
According to the question, the given values are:
Port's expected return,
[tex]R_p=12 \ percent[/tex]
T-bill's expected return,
[tex]R_t=3.6 \ percent[/tex]
Port's weight,
[tex]W_p=80 \ percent \ i.e.,\ 0.80[/tex]
T-bill's weight,
[tex]W_t=20 \ percent \ i.e., \ 0.20[/tex]
Now,
The Bo's complete portfolio's expected return will be:
⇒ [tex]W_p\times R_p+W_t\times R_t[/tex]
On substituting the given values, we get
⇒ [tex]0.80\times 12 \ percent+0.20\times 3.6 \ percent[/tex]
⇒ [tex]10.32 \ percent[/tex]
Note: percent = %
A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. The management forecasts 2% growth in sales each month. Total July sales are anticipated to be:
Answer:
Budgeted sales July= $63,000
Explanation:
Giving the following information:
A July sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.
To calculate the budgeted sales, we simply need to multiply the number of units sold for the selling price:
Budgeted sales July= 6,000*10.5= $63,000
Proposal preparation is completed by Select one: a. a large team for a simple project. b. a single person when proposing a multimillion-dollar project. c. a proposal manager regardless of the project size. d. one or more people depending upon the requirements of the proposal.
Answer:
d. one or more people depending upon the requirements of the proposal.
Explanation:
A proposal can be defined as a plan or suggestion which are formally written to present an idea to an individual or organization for consideration.
Proposal preparation is completed by one or more people depending upon the requirements of the proposal.
In order to prepare a good proposal, it is very important to make it as formal as possible. The content of the proposal is strictly based on what the initiators wants to do or achieve, as well as how they wish to achieve.
Hence, a proposal is only prepared with regard to the requirements of the proposal and the number of people involved. Proposals are usually used by project managers or contractors seeking for a contract.
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports - the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 64 students enrolled in those two courses. Data concerning the company's cost formulas appear below:
Fixed Cost per Month Cost per Course Cost per Student
Instructor wages $2,910
Classroom supplies $310
Utilities $1,250 $55
Campus rent $4,900
Insurance $2,100
Administrative expenses$3,600 $42 $3
For example, administrative expenses should be $3,600 per month plus $42 per course plus $3 per student. The company's sales should average $870 per student.
The actual operating results for September appear below:
Actual
Revenue $52,780
Instructor wages $10,920
Classroom supplies $19,690
Utilities $1,880
Campus rent $4,900
Insurance $2,240
Administrative expenses $3,386
Required:
1. The Gourmand Cooking School expects to run four courses with a total of 64 students in September. Complete the company's planning budget for this level of activity.
2. The school actually ran four courses with a total of 56 students in September. Complete the company?s flexible budget for this level of activity.
3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Answer:
The Gourmand Cooking School
1. Planning Budget for 4 courses and 64 students:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910 x 4 $11,640
Classroom supplies $310 x 64 19,840
Utilities $1,250 $55 x 4 1,470
Campus rent $4,900 4,900
Insurance $2,100 2,100
Administrative
expenses $3,600 $42 x 4 $3 x 64 3,960
Total expenses $43,910
Sales Revenue $870 x 64 $55,680
Operating profit $11,770
2. Flexible Budget for 4 courses and 56 students:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910 x 4 $11,640
Classroom supplies $310 x 56 17,360
Utilities $1,250 $55 x 4 1,470
Campus rent $4,900 4,900
Insurance $2,100 2,100
Administrative
expenses $3,600 $42 x 4 $3 x 56 3,936
Total expenses $41,406
Sales Revenue $870 x 56 $48,720
Operating profit $7,314
3. Flexible Budget Performance Report for September:
Actual Flexible Budget Variance
Cost Revenue Cost Revenue
Revenue $52,780 $48,720 $4,060 F
Instructor
wages $10,920 $11,640 720 F
Classroom
supplies 19,690 17,360 2,330 U
Utilities 1,880 1,880 0 None
Campus rent 4,900 4,900 0 None
Insurance 2,240 2,240 0 None
Administrative
expenses 3,386 3,386 0 None
Total
expenses $43,016 43,016 $41,406 41,406 1,610 U
Operating income $9,764 $7,314 2,450 F
Explanation:
a) Data:
1. Cost Formulas:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910
Classroom supplies $310
Utilities $1,250 $55
Campus rent $4,900
Insurance $2,100
Administrative
expenses $3,600 $42 $3
Sales Revenue $870
2. Actual operating results for September:
Revenue $52,780
Instructor wages $10,920
Classroom supplies 19,690
Utilities 1,880
Campus rent 4,900
Insurance 2,240
Administrative expenses 3,386
Total expenses $43,016 43,016
Operating income $9,764
3. Budget planning is an important aspect of managing The Gourmand Cooking School. It helps to make some educated forecasts about its future activities, performance, and position. With it, actual performances and positions can be compared and across different units of the organization. Budget planning and its performance reporting aid management in controlling the organization towards achieving its goals. It also creates motivation, propelling the organization toward a better future.
In your opinion, does having two different existing labor federations (AFL-CIO and Change to Win) strengthen or weaken the ability of organized labor to represent the interests of employees today? Support your position.
Answer:
They weaken their ability to represent the interests of employees
Explanation:
The two organizations American Federation of Labor(AFL) and Congress of Industrial organizations(CIO) work differently regarding their approach to representing labor or employees. They have had disagreements in the past, from CIO breaking out of AFL to some violent exchanges and differing policies to representing labour. These differences make it less effective to represent employees as these unions are not entirely unified.
QUESTION 2
You spend RM 50,000 a year with e-book website and has done so for many years and now you are having some issues with the publisher. In your meeting with an e-book publisher representative, a particular e-book from the website has become too expensive at RM 50 a month, and it caused you to earn some extra income. You are going to unsubscribe if they do not change the subscription plan. What would you do if the representative suggested for a "free" subscription for your customer for a few months?
Answer:
would accept the offer
Explanation:
Yes, this appears to be a cost-effective decision because the fact is that, I have been spending for years with this particular e-book website and by offering me a "free" subscription for a few months gives me ample time to adjust to the new subscription fee. I it even caused me to earn some extra income.
It a common practice for some businesses to offer free subscription plans to all or some of their customers for a brief time period after which they will start paying.
You can now sell 40 cars per month at $20,000 per car, and demand is increasing at a rate of 3 cars per month each month. What is the fastest you could drop your price before your monthly revenue starts to drop
Answer:
More than $1500 price per car per month has to be dropped.
Explanation:
Given:
price per car = $20,000
car sale per month = 40
rate of increase in demand = 3
Solution:
Revenue R = Price × Quantity = P * Q
From the above given data
P = 20,000
Q = 40
R = P*Q
dQ/dt = 3
We have to find the rate at which the price is to be dropped before monthly revenue starts to drop.
R = P*Q
dR/dt = (dP/dt)Q + P(dQ/dt)
= (dP/dt) 40 + 20,000*3 < 0
= (dP/dt) 40 < 60,000
= dP/dt < 60000/40
= dP/dt < 1,500
Hence the price has to be dropped more than $1,500 before monthly revenue starts to drop.
Answer:
For the monthly revenue starts to drop, the price of the car has to drop more than $1500
Explanation:
Given that:
Price of a car = $20,000
quantity = 40
demand rate = 3
the fastest you could drop your price before your monthly revenue starts to drop can be calculated by using the formula
R = P × Q
i.e themontly revenue function R is the product of the price per unit P times the number of units sold Q
Differentiating with respect to time; we have :
[tex]\dfrac{dR}{dt}=(\dfrac{dP}{dt} )Q+P(\dfrac{dQ}{dt})[/tex]
[tex](\dfrac{dP}{dt} )40+20000 \times 3<0[/tex]
[tex](\dfrac{dP}{dt} )40+60000 <0[/tex]
[tex](\dfrac{dP}{dt} )40 <-60000[/tex]
[tex](\dfrac{dP}{dt} ) <\dfrac{-60000}{40}[/tex]
[tex](\dfrac{dP}{dt} ) <-1500[/tex]
Therefore; For the monthly revenue starts to drop, the price of the car has to drop more than $1500
Classify each of the following as:___________
a) Adding refrigerant to an air conditioning system
b) Fixing damage due to a car accident
c) Installing a new air conditioning system in an old building
d) Paving a new parking lot
e) Exterior and interior painting
f) Overhauling an engine in a large truck
g) Resurfacing a pool in an apartment building
h) New landscaping
Answer:
1. Ordinary maintenance and repairs.
a) Adding refrigerant to an air conditioning system.
b) Fixing damage due to a car accident.
e) Exterior and interior painting.
2. Assets improvements
c) Installing a new air conditioning system in an old building.
d) Paving a new parking lot.
h) New landscaping.
3. Extra ordinary repairs.
f) Overhauling an engine in a large truck.
g) Resurfacing a pool in an apartment building.
Explanation:
Assets improvements: this are improvements carried out on an assets for comfort and ease of use of such assets. Example is the installation of air conditioning unit in an old building.
Ordinary maintenance and repairs: this are maintenance and repairs carried out on machines, equipment and tools to bring them to the required working conditions or standard.
Extraordinary repairs: unlike ordinary maintenance and repairs this requires overhauling or changing of heavy components parts of a machine or equipment.
XYZ, Inc. just sold 700,000 shares in a public offering for an offering price of $24 per share. The underwriting fee was 7.50% of the issue’s total value based on the offering price. As soon as the shares were issued, the price jumped to $36 per share. What are the explicit, implicit, and total costs of the issue?
Answer:
explicit costs = $1,260,000
the implicit costs = $8,400,000
total costs = $9,660,000
Explanation:
the underwriter's explicit costs = total number of shares x initial price x % charged by underwriter = 700,000 x $24 x 7.5% = $1,260,000
the implicit costs = (market price - initial price) x total number of shares = ($36 - $24) x 700,000 = $8,400,000
total costs = $9,660,000
Bramble Woodcrafters sells $202,300 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Bramble estimates the fair value of the recourse liability to be $8,710. Prepare the journal entry for Bramble to record the sale.
Answer:
Dr Cash $184,093
Dr Due from Factor $8,092
Dr Loss on Sale of Receivables $18,825
Cr Accounts Receivable $202,300
Cr Recourse Liability $8,710
Explanation:
Preparation of the journal entry for for Bramble to record the sale.
Dr Cash $184,093
$202,300 – [$202,300 * (.05 + .04)]
$202,300-(202,300*0.09)
$202,300-$18,207
=$184,093
Dr Due from Factor $8,092
($202,300 *.04)
Dr Loss on Sale of Receivables $18,825
(184,093+8,092-$211,010)
Cr Accounts Receivable $202,300
Cr Recourse Liability $8,710
(Accounts Receivable $202,300 + Recourse Liability $8,710 =$211,010)
The Bank of Bramblewood would like to increase its loans to customers, but it is currently mandated by a high reserve rate. As a Federal Reserve member bank, it will borrow additional funds from the Fed and charge its customers an interest rate that is higher than the ________________.
Answer: discount rate
Explanation:
It should be noted that the discount rate is the rate that is charged by the Federal Reserve when any of its member banks borrow money from it.
Therefore, Federal Reserve member bank, the Bank of Bramblewood will borrow additional funds from the Fed and charge its customers an interest rate that is higher than the discount rate.
A firm expects to sell 25,200 units of its product at $11.20 per unit and to incur variable costs per unit of $6.20. Total fixed costs are $72,000. The total contribution margin is:
Answer:
The answer is $126,000
Explanation:
Contribution Margin is calculated as selling price minus the variable cost. It measures the ability of the sales price to cover the variable cost incurred on the goods produced.
Selling price per unit - $11.20
Variable cost per unit - $6.20
Contribution margin = $11.20 - $6.20
= $5
Total contribution margin is
$5 x 25,200 units
= $126,000
definition of home trade
Answer:
Domestic trade, also known as internal trade or home trade, is the exchange of domestic goods within the boundaries of a country. This may be sub-divided into two categories, wholesale and retail
Regina recently landed her dream job at a local clothes outlet. Within a few weeks of working in her new employment, however, Regina began to engage in fraud. Regina committed the fraud by doing the following:
When people returned merchandise, Regina would ring up an amount that was greater than the value of the item that was being returned. Regina would then pocket the extra cash and give the customer the amount due. Regina found this method of fraud very effective because people were, in reality, returning something and inventory and register totals wouldn't be out of balance at the end of the day.
Required:
1. What type of fraud is Regina committing?
2. How could her employer detect this kind of fraud?
Answer:
Fraudulent disbursements,
card statement review
Explanation:
Fraudulent disbursements are very common and occur when an employee misappropriates company funds by making inappropriate payments, fraudulent. They are also called on-book frauds and can only be traced by putting systems that keep these practices in check. The most likely way to have caught the employee in the above case was to review the card statement and review purchases made and to what amount the refund from the company's card was made
Allowance for Doubtful Accounts has a debit balance of $441 at the end of the year (before adjustment), and Bad Debt Expense is estimated at 3% of sales. If net credit sales are $903,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is a.$26,649 b.$27,531 c.$27,090 d.$441
Answer: $27,090
Explanation:
From the question, we are informed that the allowance for doubtful accounts has a debit balance of $441 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of sales and that the net credit sales are $903,000.
The amount of the adjusting entry to record the estimate of the uncollectible accounts will be 3% of $903,000. This will be:
= 3% × $903,000
= 3/100 × $903,000
= 0.03 × $903,000
= $27,090
Joan has the following assets and liabilities: Credit card balance$1,000 Cash$200 Government bonds$3,000 Checking$300 Car loan balance$10,000 Car$15,000 What is Joan's money demand
Answer:
$500
Explanation:
Money demand can be described as the part of an assets in which an individual is ready to hold as cash, this cash can be used to purchase goods and services.
In the scenario described above, Joan's money demand is
= Cash balance+Checking account balance
Cash balance = $200
Checking account balance = $300
Money demand= $200+$300
= $500
Hence Joan's money demand is $500
_______ is a political strategy for managers to exercise power unobtrusively. Controlling uncertainty Being irreplaceable Generating resources Building alliances Relying on objective information
Answer:
Controlling uncertainty
Explanation:
A $10,000 loan is being paid off by annual payments of $2,000 plus a smaller final payment. If the effective annual rate of interest is 15%, and the first payment is made one year after the time of the loan, find the amount of interest, $X, contained in the fifth payment.
Answer:
fifth payment $2,000
interests paid $1,125.50, principal paid $874.50
principal's balance $6,628.81
Explanation:
first payment $2,000
interests paid $1,500, principal paid $500
principal's balance $9,500
second payment $2,000
interests paid $1,425, principal paid $575
principal's balance $8,925
third payment $2,000
interests paid $1,338.75, principal paid $661.25
principal's balance $8,263.75
fourth payment $2,000
interests paid $1,239.56, principal paid $760.44
principal's balance $7,503.31
fifth payment $2,000
interests paid $1,125.50, principal paid $874.50
principal's balance $6,628.81
Currently, the yield curve is ascending. A customer believes that the Federal Reserve will start to tighten credit by raising short-term interest rates; and also believes that long term yields will move downwards from current levels because of record demand for long-term Treasury obligations by pension funds. To profit from this, the best recommendation would be to
Answer:
Short-selling long-term bonds and taking long position on short-term assets
Explanation:
When the yield curve ascends, the long-term bond's price will go down. Hence, do short-sell the long-term bonds. On the other hand, short-term asset's price will be depreciated because Fed tightens credit and raise short-term rate, which is the chance to purchase and make profits from capital gains.
The actual usage for grain depends on which llamas show up at feeding time, thus there is an average need for 50 pounds of grain each day with a standard deviation of five pounds. In addition, there is some variability in how long it takes the feed store to whip up a batch of llama feed. The standard deviation of the feed prep is one day. The farm is willing to tolerate a 2% chance of running out of feed before they can get some more hauled in. Which adjustment to their system would have the greatest impact on the reorder point? A. increase the standard deviation of daily demand to 10 pounds O B. reduce the average daily demand to 45 pounds O c. lower the standard deviation of the lead time to one half of a day OD. decrease the service level to 90
Answer:
The adjustment to system that would have the greatest impact on the reorder point is:
c. lower the standard deviation of the lead time to one half of a day.
Explanation:
Other listed options discussed issues not affecting the reorder point. It is the lead time that impacts the reorder point and directly affects the total inventory levels. The lead time sums the time occasioned by supply delay or how long the shipment of an order takes to reach the warehouse to the reordering delay or the time it takes to place an order after receiving the requisition or attaining the reorder point.
Watson consulting, llc is a consultancy to consultants. They have bonds which have a face value of $1,000. The bonds carry a 3.5 percent semi-annual coupon, and mature in 10 years. What is the current price of these bonds if the yield to maturity (the going market rate, rd) is 5 percent
Answer:
The current market price is $ 883.08
Explanation:
The current market price can be ascertained using the pv excel function as follows:
=-pv(rate,nper,pmt,fv)
rate is the semiannual yield to maturity which is 5%/2
nper is the number of semiannual coupons in the bond i.e 10*2=20
pmt is the semiannual coupon=3.5%*1/2*$1000=$17.5
fv is the face value of the bond
=-pv(5%/2,20,17.5,1000)=$ 883.08
Wesimann Co. issued 12-year bonds a year ago at a coupon rate of 7.8 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.1 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Price of bond =1,143.18
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Wesimann Co can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 7.8% × 1000 × 1/2 = 39
Semi-annual yield = 6.1%/2 = 3.05 % per six months
Total period to maturity (in months)
= (2 × 12) = 24 periods (Note it was sold 12 years ago)
PV of interest =
39 × (1- (1+0.0305)^(-24)/) 0.0305 = 656.94
Step 2
PV of Redemption Value
= 1,000 × (1.0305)^(-24) = 486.237
Price of bond
= 656.94 +486.23 = 1,143.179
Price of bond =1,143.18
The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016:
Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible
Not yet due $128,200 3%
1-30 days past due $90,900 13%
31-60 days past due $55,300 19%
Over 60 days past due $33,500 37%
Required:
a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,457 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
b. Johnston Supplies, Inc. writes off $3,251 of uncollectible accounts on August 15, 2016. Prepare the required adjusting entry to record the write-off. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.
c. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15
Answer:
a. June 30, 2016 adjusting entry for bad debt expense
Dr Bad debt expense 9,108
Cr Allowance for doubtful accounts 9,108
b. August 15, 2016, uncollectible accounts are written off
Dr Allowance for doubtful accounts 3,251
Cr Accounts receivable 3,251
c. Allowance for doubtful accounts
debit credit
June 30, 2016 $38,565
August 15, 2016 $3,251
August 15, 2016 $35,314
Explanation:
Number of Days Total Accounts Historical % Total
Unpaid Receivable Uncollectible
Not yet due $128,200 3% $3,846
1-30 days past due $90,900 13% $11,817
31-60 days past due $55,300 19% $10,507
Over 60 days past due $33,500 37% $12,395
Total $38,565
Indicate what components of GDP (if any) each of the following transactions would affect. a. Your parents buy a new house from a local builder. b. Your parents pay an accountant to file their tax returns. c. New York hires workers to plow snow after a snowstorm. d. Honda expands its factory in Ohio. e. Ford sells a Mustang from its inventory to the Martinez family. f. Aunt Polly buys a new air conditioner from a domestic manufacturer. You buy a new Toshiba computer. g. the Jackson family buys an old Victorian house from the Walker family.
Answer:
a. Consumption spending
b. consumption spending
c. government spending
d. investment
e. consumption and investment
f. consumption spending
g. not included in GDP
Purchase of a Toshiba laptop is consumption spending
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Net export = exports – imports
When exports exceeds import there is a trade deficit and when import exceeds import, there is a trade surplus.
Items not included in the calculation off GDP includes:
1. services not rendered to oneself
2. Activities not reported to the government
3. illegal activities
4. sale or purchase of used or old products
5. sale or purchase of intermediate products
Consumption spending includes expenditures by households on durable and non durable goods and services
the following are durable consumption by households and are included in the calculation of GDP :
Purchase of a house
Purchase of a mustang
Purchase of an air conditioner
purchase of a computer
the purchase of the old Victorian house isn't included in the calculation of GDP because it is old. Only items produced in the current year are included in the GDP. if the old home is counted, it would be double counting
hiring an accountant is an example of purchase of services by households and it is consumption spending.
Spending by businesses are included in investment spending.
expenditure by the government or state are included in government spending
The following data are for Paso Robles Company for the year ended 2009 December 31: Costs: Direct material $ 90,000 Direct labor 130,000 Manufacturing overhead: Variable 45,000 Fixed 90,000 Sales commissions (variable) 25,000 Sales salaries (fixed) 20,000 Administrative expenses (fixed) 35,000 Selling price per unit $ 10 Units produced and sold 60,000 Assume direct materials and direct labor are variable costs. Prepare a contribution margin income statement and a traditional income statement.
Answer:
Net operating income= 165,000
Explanation:
Giving the following information:
We need to make a contribution format income statement.
First, we will calculate the total variable cost:
Direct material= 90,000
Direct labor= 130,000
Variable overhead= 45,000
Sales commissions (variable)= 25,000
Total variable cost= 290,000
Contribution margin income statement:
Sales= 60,000*10= 600,000
Total variable cost= (290,000)
Total contribution margin= 310,000
Fixed overhead= (90,000)
Sales salaries (fixed)= (20,000)
Administrative expenses (fixed)= (35,000)
Net operating income= 165,000
During the first month of operations ended July 31, YoSan Inc. manufactured 2,400 flat panel televisions, of which 2,000 were sold. Operating data for the month are summarized as follows: Sales $2,150,000 Manufacturing costs: Direct materials $960,000 Direct labor 420,000 Variable manufacturing cost 156,000 Fixed manufacturing cost 288,000 1,824,000 Selling and administrative expenses: Variable $204,000 Fixed 96,000 300,000 Required: 1. Prepare an income statement based on the absorption costing concept. YoSan Inc. Absorption Costing Income Statement For the Month Ended July 31 $ Cost of goods sold: $ $ $ 2. Prepare an income statement based on the variable costing concept. YoSan Inc. Variable Costing Income Statement For the Month Ended July 31, 2016 $ Variable cost of goods sold: $ $ $ Fixed costs: $ $ 3. Explain the reason for the difference in the amount of income from operations reported in (1) and (2). The income from operations reported under costing exceeds the income from operations reported under costing by the difference between the two, due to manufacturing costs that are deferred to a future month under costing.
Answer:
1) YoSan Inc.
Income Statement
For the month ended July 31, 202x
Sales revenue $2,150,000
- Cost of goods sold $1,520,000
Gross profit $630,000
- S & A expenses $300,000
Operating profit $330,000
2) YoSan Inc.
Income Statement
For the month ended July 31, 202x
Sales revenue $2,150,000
- Variable costs:
Direct materials $800,000 Direct labor $350,000 Variable manufacturing cost $130,000Variable S & A expenses $170,000 $1,450,000Contribution margin $700,000
- Period costs:
Fixed manufacturing cost $288,000Fixed S & A expenses $96,000 $384,000Operating profit $316,000
3) When you prepare a variable costing income statement, the ending inventory of finished goods and WIP only includes variables costs. All fixed or period expenses are included during the period that they occur and are not carried over to the next period. I.e. the ending inventory (400 units) for next month will be lower under variable costing.
Demron is in serious negotiations to purchase a welding machine that will enable them to perform their own welding. They currently have their welding outsourced at a cost of $1.50 per weld and a fixed cost of $45,000. Their marketing team feels that they can sustain an annual sales volume sufficient to require 35,000 welds. If a fancy new welding rig costs $13,500 what is the maximum variable cost per weld that Demron should be willing to pay in order to bring this process in-house
Answer:
Demron
Outsourcing welding or Purchasing a welding machine for in-house welding:
Cost of outsourcing:
Variable cost = $1.50 x 35,000 = $52,500
Fixed cost 45,000
Total outsourcing costs $97,500
Cost of purchasing a welding machine:
Fixed cost = $13,500
Maximum Variable costs = $84,000
Total in-house cost = $97,500
Maximum variable cost per weld
= $84,000/35,000
= $2.40
Explanation:
This problem of outsourcing welding activities of Demron Company or buying the welding machine to enable in-house welding is like a make or buy decision challenge. The appropriate approach to tackling this challenge is to determine the total costs under each option. The option that yields the greater outcome is chosen. However, for Demron's case, a determination of the maximum variable costs that are acceptable for in-house option to be selected is made. The level required for this determination is the level of costs that makes no difference between outsourcing and in-housing welding.