a) The company operates in a decreasing-cost industry.
b) [Graph illustrating quantity and price choice]
c) [Graph illustrating profit under government-mandated perfect competition]
What type of industry experiences decreasing average costs?In a decreasing-cost industry, a company experiences a decline in average cost as production increases. This is typically seen in industries where economies of scale come into play. As the company expands its operations and produces larger quantities of the good or service, it benefits from cost savings due to factors such as improved efficiency, bulk purchasing, or technological advancements.
When a company faces decreasing average costs for all quantities of Q, it indicates that it operates in a decreasing-cost industry. In such an industry, the company benefits from economies of scale as it produces more goods or services. As the company expands its output, it experiences cost savings due to various factors, including spreading fixed costs over a larger quantity, taking advantage of bulk discounts, or implementing technological improvements. These cost efficiencies result in a downward-sloping average cost curve.
Graphically, in an unregulated scenario, the company's quantity and price choice can be represented on a graph. The quantity (Q) is plotted on the horizontal axis, while the price (P) is shown on the vertical axis. The graph would depict a downward-sloping average cost curve, indicating decreasing costs as quantity increases. The company would choose a quantity and corresponding price that maximizes its profit, taking into account factors such as demand and market conditions.
However, if the government imposes perfect competition on the company, the graph representing profit would change. In perfect competition, the company is forced to produce at the quantity (Q) and price (P) determined by the market, which typically leads to a lower price compared to the unregulated scenario. The profit graph would reflect the area between the market-determined price and the average cost curve at the mandated quantity. This area could represent positive, negative, or zero economic profit, depending on the specific circumstances.
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Because property is not always
transferred at times when taxes, insurance, and rent are due,
amounts pre-paid, in large blocks, by the seller should be divided
between the seller and the buyer in the
When property is not always transferred at times when taxes, insurance, and rent are due, amounts pre-paid, in large blocks, by the seller should be divided between the seller and the buyer in the closing statement.
What is the reason?The seller is responsible for paying taxes, insurance, and rent up until the date of closing. However, since the buyer will now be the owner of the property, they will also be responsible for paying these expenses for the rest of the year.
As a result, the amounts that have already been pre-paid by the seller should be divided between the seller and the buyer in the closing statement.
This ensures that the buyer only pays for the period of time they own the property and not for any period before their ownership begins.
Dividing the expenses between the buyer and seller also helps to make the transaction more equitable for both parties and prevents either party from bearing an undue burden of the costs.
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please help me to solve this
Capital Irrigation has only a General Journal in its accounting system and uses it to record all transactions. However, the company recently set up a petty cash fund to facilitate payments of small it
Capital Irrigation can efficiently handle small expenditures without the need for detailed journal entries for each transaction. This streamlines the accounting process and allows for better control and management of minor expenses within the organization.
Capital Irrigation, although previously using only a General Journal to record all transactions, has recently established a petty cash fund to handle small expenditures. The petty cash fund enables the company to make convenient and efficient payments for minor expenses without the need for formal journal entries.
The purpose of a petty cash fund is to have a designated amount of cash on hand to cover small expenses such as office supplies, postage, or other miscellaneous items. Rather than going through the process of creating journal entries for each individual small payment, the petty cash fund allows for more streamlined and simplified handling of these transactions.
To implement the petty cash system effectively, Capital Irrigation should follow certain procedures. Initially, a specific amount of cash is set aside and placed in the petty cash fund. This amount is determined based on the estimated frequency and amount of small expenses. A designated employee, known as the petty cash custodian, is responsible for managing the fund.
When a small expense arises, the employee can request reimbursement from the petty cash fund by submitting a petty cash voucher or a receipt along with the details of the transaction. The petty cash custodian reviews the request, approves it, and provides the employee with the necessary cash to cover the expense. The petty cash voucher and the supporting documentation are retained for record-keeping purposes.
Periodically, the petty cash custodian reconciles the fund to ensure it matches the designated amount. This involves replenishing the fund with the exact amount of cash disbursed and documenting the expenses incurred during the specific period. The custodian then prepares a journal entry to record the replenishment of the petty cash fund and any adjustments required.
By establishing a petty cash fund, Capital Irrigation can efficiently handle small expenditures without the need for detailed journal entries for each transaction. This streamlines the accounting process and allows for better control and management of minor expenses within the organization.
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If a firm can sell a product, but in order to sell that product the selling price will be less than its variable costs, then the sale should be made because at least the fixed costs will be covered. TRUE OR FALSE
An investment of $1,000 with annual benefits of $150 per year for the first five years of its life and $100 per year the next five years of its life has a payback period of?
A. 7 years
B. 7.5 years
C. 8 years
D. none of the above
One thousand dollars invested today at 5 percent per year, compounded annually, for five years will be worth
a. $1,050
b. $1,250
c. $1,276
d. None of the above
If fixed costs are $500,000, the selling price is $10/unit and variable cost is $6/unit, then breakeven in dollars is
a. $5,000,000
b. $125,000
c. $1,250000
d. None of the above
The breakeven in dollars is $1,250,000.Option C: $1,250,000 is the correct answer.
The given statement, "If a firm can sell a product, but in order to sell that product, the selling price will be less than its variable costs, then the sale should be made because at least the fixed costs will be covered," is a False statement.
A firm should not sell a product if the selling price is less than the variable costs as this will result in the firm suffering a loss.
Given that an investment of $1,000 with annual benefits of $150 per year for the first five years of its life and $100 per year for the next five years of its life. We need to calculate the payback period.
To find out the payback period we can use the following formula: Payback period = Cost of investment / Annual cash inflowsLet's find out the cost of investment: Cost of investment = $1,000
Next, we need to calculate the annual cash inflows for the 10 years.
Let's find out the annual cash inflows for the first 5 years annual cash inflows for the first 5 years = $150 x 5= $750
Let's find out the annual cash inflows for the next 5 yearsAnnual cash inflows for the next 5 years = $100 x 5= $500Total annual cash inflows = $750 + $500= $1250
Now, we can calculate the payback period: Payback period = $1,000 / $1,250= 0.8 years
therefore, the payback period is 0.8 years or 7.5 months approximately.
Option B: 7.5 years is the correct answer.
Problem 2:One thousand dollars invested today at 5 percent per year, compounded annually, for five years will be worth
We given that $1000 is invested at 5% per year compounded annually for 5 years. We need to find out the future value of the investment.
The formula to calculate the future value of an investment is: FV = PV x (1+r)
where FV = Future value = Present Value (Amount invested today)r = Interest rate per period = Number of periodsFor this problem, we have PV = $1000, r = 5% per year and n = 5 years
now, we can find out the Future Value:FV = $1,000 x (1+0.05)^5= $1,276.28
Therefore, the investment of $1000 will be worth $1,276.28 in 5 years.
Option C: $1,276 is the correct answer.
Problem 3:If fixed costs are $500,000, the selling price is $10/unit and variable cost is $6/unit, then breakeven in dollars is:
We are given that fixed costs are $500,000, the selling price is $10/unit and variable cost is $6/unit. We need to calculate the breakeven in dollars.
The break-even point is the level of sales at which the company makes no profit and no loss.
The formula to calculate the breakeven point is: Breakeven point (units) = Fixed costs / (Selling price - Variable cost per unit)Breakeven point (units) = $500,000 / ($10 - $6)= $500,000 / $4= 125,000 units
Therefore, the breakeven point is 125,000 units. Now we can calculate the breakeven in dollars by multiplying the breakeven point by the selling price:$10 x 125,000= $1,250,000
Therefore, the breakeven in dollars is $1,250,000.Option C: $1,250,000 is the correct answer.
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when comparing several investments with the same initial cost, the decision should be made on the basis of the ________.
When comparing several investments with the same initial cost, the decision should be made on the basis of the profitability of the investment options. Investors seek to maximize profits by selecting investment options that generate the highest returns or yields.
In most cases, the profitability of an investment is based on the rate of return (RoR), which is the annual return an investment earns. RoR is expressed as a percentage of the amount invested. Aside from profitability, other factors to consider when making investment decisions include the time frame, risk tolerance, and market trends, among others. Timeframe refers to the length of time an investor plans to hold an investment, which can range from a few days to several years.
This determines the type of investment that would be best suited for a particular investment option. Risk tolerance is another critical factor to consider when making investment decisions. It refers to the level of risk that an investor is willing to take on. Some investors prefer to invest in high-risk ventures that generate high returns, while others prefer to invest in low-risk ventures that yield lower returns. Market trends also play a crucial role in making investment decisions. Investors usually invest in sectors or industries that have a high growth potential or that are likely to yield high returns in the future.
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Peter Edwards is contemplating paying his son to help maintain medical records. He intends to employ an income-shifting tax strategy to reduce the family's overall tax liability. The constructive receipt doctrine is a natural limitation for this strategy. True False 5 pts Question 6 Deductions result in tax benefits which for a cash-basis taxpayer represent cash inflows. True O False
The constructive receipt doctrine is a tax law principle that states that income is taxable when it is available to be received, even if it is not actually received.
This doctrine can limit the effectiveness of income-shifting tax strategies, such as paying a son to help maintain medical records.
In order for income-shifting to be effective, the son must actually be doing work that is worth the amount of money he is being paid. If the son is not actually doing any work, or if the work he is doing is not worth the amount of money he is being paid, then the IRS may challenge the income-shifting strategy and declare that the son's income should be taxed in the father's hands.
The constructive receipt doctrine can make it difficult to successfully implement income-shifting strategies. However, there are still ways to reduce a family's overall tax liability through income-shifting. It is important to consult with a tax advisor to discuss the specific circumstances of your family and to develop a tax strategy that is both legal and effective.
Deductions result in tax benefits, but they do not represent cash inflows for a cash-basis taxpayer. This is because deductions reduce the amount of taxable income, which in turn reduces the amount of taxes that are owed. For example, if a taxpayer has $100 of income and $50 of deductions, their taxable income will be $50. This means that they will only owe taxes on $50 of their income, rather than $100.
Cash inflows, on the other hand, represent money that is actually received by the taxpayer. For example, if a taxpayer receives a $100 gift, this would be considered a cash inflow. Cash inflows can be used to offset deductions, but they do not directly reduce the amount of taxes that are owed.
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An appreciation means an increase in the value of a currency against other foreign currency. An appreciation makes exports more expensive and imports cheaper. International turmoil and Switz…
The appreciation of the Swiss franc caused Swiss products to become expensive to other countries. So, the Swiss exports went down and imports increased.
An appreciation of a currency means an increase in its value against other foreign currencies. This makes the exports more expensive and imports cheaper. As for Switzerland, the appreciation of the Swiss franc caused Swiss products to become expensive to other countries. So, the Swiss exports went down and imports increased. As a result, the Swiss economy faced a great loss as they depend on their exports to improve their economy. Because of the decline in exports, the Swiss GDP growth rate has become negative and led to a recession. Therefore, it can be concluded that the appreciation of the Swiss franc led to a decline in exports and an increase in imports.
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Suppose that the U.S. imposes a tariff on imported clothing. Answer the following questions in words and with a diagram. (a) What happens to the demand for dollars in the market for foreign-currency exchange? (b) What happens to the supply of dollars in the market for foreign-currency exchange? (c) What happens to the real exchange rate? (d) What happens to net exports?
(a) The imposition of a tariff on imported clothing affects the demand for dollars in the market for foreign-currency exchange.
When a tariff is imposed, it increases the price of imported clothing, making it relatively more expensive compared to domestically produced clothing. As a result, consumers may shift their preferences towards domestic clothing, leading to a decrease in the demand for imported clothing. To purchase fewer imports, fewer dollars are needed, causing a decrease in the demand for dollars in the foreign-currency exchange market.
(b) The supply of dollars in the market for foreign-currency exchange remains unchanged by the imposition of a tariff on imported clothing. The tariff primarily affects the demand side, while the supply of dollars is determined by factors such as exports, capital flows, and foreign investment. Therefore, the supply of dollars is not directly affected by the tariff.
(c) The real exchange rate is the relative price of domestic goods and services compared to foreign goods and services. When a tariff is imposed, it reduces the demand for foreign goods (imported clothing in this case) and increases the demand for domestic goods. This shift in demand leads to an appreciation of the domestic currency, resulting in an increase in the real exchange rate.
(d) Net exports are affected by changes in the real exchange rate. An increase in the real exchange rate, as mentioned in (c), makes domestic goods relatively more expensive compared to foreign goods. As a result, exports become more expensive for foreign consumers, leading to a decrease in exports. On the other hand, imports become relatively cheaper for domestic consumers, which may lead to an increase in imports. Consequently, net exports tend to decrease as a result of the tariff.
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Need help for below
question and explain which criminology theory or theories apply to
it.
What is your
personal theory on why people commit crime?
Thank you so
much
Crime is one of the major problems of any society and every individual must contribute to its eradication. Criminology is the study of crime, its causes, prevention, and penalties.
Crime is one of the major problems of any society and every individual must contribute to its eradication. Criminology is the study of crime, its causes, prevention, and penalties. A theory refers to a plausible explanation of an observed phenomenon. Thus, theories of criminology endeavor to explain the various causes of crime.Individuals commit crime due to various reasons such as poverty, unemployment, peer pressure, mental illness, drug abuse, and lack of education. However, from my perspective, the most common cause of crime is poverty. Poverty leads to unemployment, poor education, lack of healthcare and housing, and all of these factors contribute to the criminal activities of people. If a person is unable to afford basic necessities such as food, shelter, and clothing, then they may resort to crime to acquire these basic needs.Furthermore, social learning theory may also apply to this. This theory proposes that criminal behavior is learned through interactions with others in their social environment. Thus, exposure to criminal activities increases the probability of an individual committing a crime. For instance, if a person's family members are criminals, they may learn these criminal behaviors and develop the mindset that crime is a way of life.In conclusion, poverty is the most common cause of crime from my personal perspective, and social learning theory may also apply to it. However, there are various other theories of criminology that may also contribute to this explanation, and it is crucial to analyze these theories to develop effective crime prevention strategies.
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a. Distinguish between systematic risk and unsystematic risk. (4 marks) b. NCB stock Grace kennedy stock Rate of return Probability Rate of return Probability 12 0.15 -10 0.20 15 0.20 17 0.18 18 0.30
NCB stock return of 12% with a probability of 15%, 15% with a probability of 20%, and 18% with a probability of 30%. Grace Kennedy stock has a rate of return of -10% with a probability of 20% and 17% with a probability of 18%.
Systematic risk, also known as market risk, is inherent to the entire market or a specific sector. It cannot be eliminated through diversification and affects a wide range of assets. Factors such as interest rates, inflation, and political events contribute to systematic risk.
Unsystematic risk, on the other hand, is specific to an individual company or asset. It can be mitigated through diversification by holding a portfolio of different assets. Unsystematic risk arises from company-specific factors like management decisions, competition, or technological advancements.
b. The given information provides the rate of return and probabilities for two stocks: NCB and Grace Kennedy. NCB stock has a 15% probability of a 12% return, a 20% probability of a 15% return, and a 30% probability of an 18% return. Grace Kennedy stock has a 20% probability of a -10% return and an 18% probability of a 17% return.
The probabilities associated with each rate of return indicate the likelihood of those returns occurring. These probabilities allow investors to assess the potential risk and return of investing in these stocks. By analyzing the probabilities and associated rates of return, investors can make informed decisions based on their risk tolerance and investment objectives.
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Your credit card billing period starts on the 11th of the month. Assume that you carry a $1,000 unpaid credit card balance as of July 11. For the first 15 days of the billing period, your balance remains at $1,000. Then, you make a $600 payment. This reduces the balance on your card to $400 for the remainder of the billing period. Interest is charged at a rate of 18%, compounded daily. How much interest will you be charged using the adjusted balance method?
$15.29
$4.06
$6.12
$10.55
To calculate the interest using the adjusted balance method, we need to determine the average daily balance during the billing period.
First, let's calculate the number of days for each balance amount:
Days 1-15: Balance of $1,000
Days 16-31: Balance of $400
Next, we calculate the average daily balance:
Average Daily Balance = [(Balance 1 * Days 1) + (Balance 2 * Days 2)] / Total Days
Average Daily Balance = [(1,000 * 15) + (400 * 16)] / 31
Average Daily Balance = (15,000 + 6,400) / 31
Average Daily Balance ≈ 709.68
Now, let's calculate the interest using the adjusted balance method:
Interest = Average Daily Balance * Daily Interest Rate * Billing Days
Since the interest is compounded daily, the daily interest rate is calculated by dividing the annual interest rate by 365:
Daily Interest Rate = 18% / 365 ≈ 0.0493%
Billing Days = 31 (total days in the billing period)
Interest = 709.68 * 0.0493% * 31
Interest ≈ $4.06
Therefore, you will be charged approximately $4.06 in interest using the adjusted balance method. So the correct answer is $4.06.
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Short-term scheduling is important to efficiency and to cost reduction, but its impact is not of strategic importance. True/False?
False. Short-term scheduling can indeed have strategic importance in addition to its impact on efficiency and cost reduction. While short-term scheduling primarily focuses on immediate operational considerations, such as resource allocation and task sequencing.
Meeting customer demands: Efficient short-term scheduling ensures timely delivery of products or services, which can enhance customer satisfaction and loyalty. This, in turn, contributes to the overall strategic objective of maintaining a competitive advantage in the market.
Flexibility and responsiveness: Short-term scheduling allows organizations to respond quickly to changes in demand, supply disruptions, or unforeseen events. The ability to adapt and adjust schedules in a timely manner can be crucial in maintaining operational effectiveness and competitiveness.
Resource optimization: Effective short-term scheduling optimizes the utilization of resources, including labor, equipment, and materials. By efficiently allocating resources, organizations can reduce costs, improve productivity, and enhance overall operational performance.
Quality control: Short-term scheduling can help organizations ensure that quality standards are met consistently. By scheduling appropriate quality checks, inspections, or testing procedures, organizations can maintain product or service quality, which can impact their reputation and strategic positioning in the market.
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What does E-score stand for?
The e-score is a consumer rating metric used to determine an individual's potential value as a customer and to use that information to guide marketing efforts. E-score algorithms factor in variables such as salary, occupation, home value, debt load and shopping history, and assign a numerical score.
Address the following in your response.
How do you personally feel about the idea of implementing and using eScores? Why do you feel that way? Support your answer.
What are possible disadvantages to companies that use eBureau to rank potential customers?
Should consumers have access to their eScores? Why or why not?
E-Score stands for “engagement score”. The e-score is a consumer rating metric used to determine an individual's potential value as a customer and to use that information to guide marketing efforts.
E-Scores are designed to give companies insights into their customer's behaviors and purchasing habits, providing them with valuable data they can use to tailor their marketing strategies. The implementation and use of eScores can be both beneficial and detrimental. On the one hand, it can help companies determine which customers are most valuable and adjust their marketing strategies accordingly. On the other hand, it can be an invasion of privacy and create biases against certain individuals, such as those with lower salaries or debt loads. I think it's important to strike a balance between using e-scores for marketing purposes and respecting individual privacy and autonomy.
One possible disadvantage of using e Bureau to rank potential customers is that it may create a false sense of security for companies. Just because someone has a high e-score does not mean that they will necessarily become a loyal customer or make frequent purchases. Additionally, companies may risk alienating potential customers by making them feel like they are being overly monitored or judged by their e-scores. Consumers should have access to their e-scores. This would allow them to better understand how companies are evaluating them and to correct any inaccuracies or biases that may be present in the system. It would also promote transparency and accountability on the part of companies that use e-scores to rank potential customers.
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Calculate the ES, EF, LS, and LF times and the slack for each activity in the figure below, and identify the critical path for the project. Can the project be completed in 30 weeks? Assume that activity A actually finished at 5 weeks and activity B actually finished at 5 weeks. Recalculate the expected project completion time. Which activities would you focus on to get the project back on schedule?
Given the below diagram of the project, the Expected Start (ES), Expected Finish (EF), Latest Start (LS), Latest Finish (LF), and Slack time for each activity are to be calculated. We have to identify the critical path and determine whether the project can be completed in 30 weeks or not. We also need to determine the activities on which we should focus to get the project back on track.
Given diagram:
image
We can calculate the ES, EF, LS, LF, and Slack time for each activity using the following formulas:
1. Expected Finish (EF) = Expected Start (ES) + Activity Duration
2. Slack (SL) = LS - ES or LF - EF
3. Expected Start (ES) of an activity is the maximum of the Expected Finish (EF) times of all the immediate predecessor activities.
4. Latest Finish (LF) of an activity is the minimum of the Latest Start (LS) times of all the immediate successor activities.
5. Latest Start (LS) = LF - Activity Duration
The calculation of ES, EF, LS, LF, and Slack time for each activity is shown in the table below:
Activity | Duration | Predecessors | ES | EF | LS | LF | Slack (SL)
A | 5 | None | 5 | 10 | 5 | 10 | 0
B | 10 | A | 10 | 20 | 10 | 20 | 0
C | 6 | A | 10 | 16 | 16 | 22 | 6
D | 8 | B, C | 20 | 28 | 22 | 30 | 2
E | 5 | C | 16 | 21 | 22 | 27 | 6
F | 7 | D, E | 28 | 35 | 30 | 37 | 2
G | 6 | D, E | 28 | 34 | 27 | 33 | 2
H | 9 | F, G | 37 | 46 | 37 | 46 | 0
The critical path is A-B-D-F-H, with a duration of 46 weeks.
To determine whether the project can be completed in 30 weeks, we need to calculate the expected project completion time assuming that activity A finished in 5 weeks and activity B finished in 5 weeks.
The expected completion time for the project is the EF time of the last activity, H, which is 46 weeks. However, if activity A finished in 5 weeks and activity B finished in 5 weeks, the expected completion time would be reduced by 10 weeks (5 weeks for activity A and 5 weeks for activity B). Therefore, the expected completion time would be 36 weeks.
To get the project back on track, we should focus on the activities with the most Slack time. In this case, activities C, D, E, F, G have a slack time of only 2 weeks. Therefore, we should focus on these activities to get the project back on schedule.
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The given network diagram shows the interdependence of activities, the expected duration of each activity, and the sequence of their occurrence. It allows us to identify the activities on the critical path and the slack that is available in the non-critical activities.
In order to calculate the ES, EF, LS, and LF times, and slack for each activity in the given figure, we can use the following formulae: Earliest Start Time (ES): It is the earliest possible time that an activity can start and is the maximum of the EF times of all its preceding activities. ES = max (EF of all preceding activities) Earliest Finish Time (EF): It is the earliest possible time that an activity can finish. EF = ES + duration of the activity. Latest Start Time (LS): It is the latest possible time that an activity can start and is the minimum of the LS times of all its succeeding activities. LS = min (LF of all succeeding activities) – duration of the activity. Latest Finish Time (LF): It is the latest possible time that an activity can finish. LF = LS + duration of the activity5. Slack: It is the amount of time that an activity can be delayed without delaying the project completion time. Slack = LS – ES or LF – EF Using these formulae, the following table can be prepared: Activity ES (weeks)EF (weeks)LS (weeks)LF (weeks)Slack (weeks)Critical Path: The critical path is the longest path through the network and determines the minimum time required to complete the project. It consists of the activities with zero slack and is shown in red in the above table. In the given figure, the critical path is A-B-D-E-G with a duration of 20 + 32 + 8 + 11 + 21 = 92 weeks. Therefore, the expected project completion time is 92 weeks. The activities that need to be focused on to get the project back on schedule are those that are on the critical path as they do not have any slack. In this case, the activities that need attention are B, D, E, and G. Answer in more than 100 words: To calculate the ES, EF, LS, and LF times and slack for each activity in the given figure, the formulae discussed above can be used. The critical path can then be identified by highlighting the activities with zero slack. In this case, the critical path is A-B-D-E-G with a duration of 92 weeks. To answer the second part of the question, we can assume that activity A actually finished at 5 weeks and activity B actually finished at 5 weeks. In this case, the ES and EF times of activity C will remain the same as before, i.e., 5 and 10 weeks, respectively. The ES and EF times of activity D will be modified as follows: ES (D) = max (EF (B)) = 5EF (D) = ES (D) + duration (D) = 5 + 8 = 13Similarly, the ES and EF times of activity E will be modified as follows: ES (E) = max (EF (D)) = 13EF (E) = ES (E) + duration (E) = 13 + 11 = 24Finally, the ES and EF times of activity G will be modified as follows: ES (G) = max (EF (E)) = 24EF (G) = ES (G) + duration (G) = 24 + 21 = 45 Therefore, the new expected project completion time is 45 weeks. To get the project back on schedule, the focus should be on the activities on the critical path as they do not have any slack. In this case, the activities that need attention are B, D, E, and G. The duration of these activities needs to be reduced in order to bring the project completion time back to 30 weeks. The network diagram shows the interdependence of activities and the sequence of their occurrence. The critical path is the longest path through the network and determines the minimum time required to complete the project. The activities on the critical path are those that need to be focused on to get the project back on schedule. In this case, the activities that need attention are B, D, E, and G.
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Judgemental methods would be used in which of the following situations?
a. When there is data on past sales.
b. When forecasting services.
c. When introducing new products.
d. Forecasting for established products.
e. When an identifiable trend is present.
Judgmental methods are typically used in situations where quantitative data or historical information is limited or unreliable. They rely on the expertise and judgment of individuals or experts to make informed forecasts or decisions. Let's analyze each option:
a. When there is data on past sales: In this case, quantitative forecasting methods, such as time series analysis or regression analysis, can be used effectively. Judgmental methods may not be necessary if reliable historical data is available.
b. When forecasting services: Judgmental methods can be useful when forecasting services because service demand can be influenced by factors that are difficult to quantify. Expert opinions and qualitative assessments can provide valuable insights in these situations.
c. When introducing new products: When introducing new products, there is often limited historical data available. Therefore, judgmental methods, such as expert opinions or market research, are commonly used to estimate potential demand and market acceptance.
d. Forecasting for established products: Established products typically have a history of sales data, making quantitative forecasting methods more appropriate. Judgmental methods may be used to complement the quantitative analysis in cases where qualitative factors play a significant role.
e. When an identifiable trend is present: If there is an identifiable trend, quantitative forecasting methods can effectively capture and predict the pattern. Judgmental methods may still be used to validate or refine the quantitative forecasts.
Judgmental methods are typically used in situations where there is limited quantitative data, uncertainty, or qualitative factors that influence the forecasting process. They can be particularly useful when forecasting services, introducing new products, or dealing with situations where reliable historical data is not available. However, for situations with ample past sales data or identifiable trends, quantitative forecasting methods are more suitable.
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Distinguish between public and private management with suitable examples
Public management refers to the management of public resources, including all of the associated government services.
Public management is the process of planning, organizing, controlling, and directing the activities of public organizations so that they can be effective in fulfilling their intended purposes. Public management aims to deliver public services to the public in an efficient, effective, and equitable manner. The main features of public management include its accountability, transparency, and public ownership.
Public and private management are different because they operate in different sectors. Public management is focused on the public sector, while private management is focused on the private sector. Public management is accountable to the public, while private management is accountable to shareholders.
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Section 3 1- Purchase & sales Stock (Jan) Capital Bank overdraft Cash Discounts Return inwards Return outwards Carriage outwards Rent & insurance Provision for doubtful debts Fixtures & fittings Delivery van Debtors & creditors Wages & salaries General office expenses Drawings Additional Information 1- The year end stock is RM 429 2- The wages and salaries accrued is RM 210. Prepare the income statement for the year ended 2021 for the above company. (15m) DR (RM) 22860 5160 90 1440 810 2160 1740 1200 2100 11910 8940 450 2880 CR (RM) 41970 7200 4350 930 570 660 6060
Income Statement for the year ended 2021 Income Statement shows the net income of a company by subtracting all expenses from its revenue. The income statement equation is as follows Net Income = Revenue - Expenses
The preparation of the Income statement includes the following steps Step 1: Calculate the Cost of Goods Sold (COGS)Step 2: Determine the Gross Profit Step 3: Calculate Operating Expenses Step 4: Determine Operating Profit or Loss Step 5: Determine the net profit or loss of the company After calculating all the values, we can prepare the Income statement. We are given some information about the company that we need to use to prepare the Income Statement for the year ended 2021. The given information is as follows Additional Information The year end stock is RM 429The wages and salaries accrued is RM 210RevenueWe are not given the revenue earned by the company. Therefore, we cannot calculate the net income. We need revenue to calculate the net income.
Income Statement is a financial statement that reports the revenues, expenses and net income (loss) of a company over a specific period of time. The income statement is also called a profit and loss statement. It is important for a company to prepare the Income statement as it helps the investors to see the performance of the company. It is a tool that helps in making important financial decisions. It shows how much profit or loss a company has earned during a specific period of time. It helps to calculate the financial ratios like gross profit margin, operating profit margin, net profit margin, etc.
we can say that without the revenue earned by the company, we cannot prepare the Income statement for the year ended 2021. The information given about the yearend stock and wages and salaries accrued is insufficient to prepare the Income statement. Therefore, the Income statement cannot be prepared.
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The following information pertains to Big Watches Co. which only manufactures one product: big watches. Selling price: $150 per unit Produced: 57,000 units Sold: 37,000 units Direct Materials: $40 per unit Direct Labor: $23 per unit Variable MOH: $6 per unit Variable S&A: $7 per unit Yearly Fixed Costs for MOH: $600,000 Yearly Fixed Costs for S&A: $598,000 What is the gross margin under absorption costing? Round your answer to the nearest whole number.
The gross margin under absorption costing for Big Watches Co. is $1,540,000 (rounded to the nearest whole number). This calculation considers the sales revenue, cost of goods sold, and total fixed costs.
How to calculate gross margin using absorption costing?
To calculate the gross margin under absorption costing, we need to subtract the cost of goods sold from the sales revenue.
Variable costs per unit:
Direct materials: $40
Direct labor: $23
Variable manufacturing overhead (MOH): $6
Variable selling and administrative (S&A): $7
Total variable cost per unit = Direct materials + Direct labor + Variable MOH + Variable S&A
= $40 + $23 + $6 + $7
= $76
Total units sold = 37,000 units
Sales revenue = Selling price per unit * Total units sold
= $150 * 37,000
= $5,550,000
Cost of goods sold = Total variable cost per unit * Total units sold
= $76 * 37,000
= $2,812,000
Total fixed costs = Yearly Fixed Costs for MOH + Yearly Fixed Costs for S&A
= $600,000 + $598,000
= $1,198,000
Gross margin under absorption costing = Sales revenue - Cost of goods sold - Total fixed costs
= $5,550,000 - $2,812,000 - $1,198,000
= $1,540,000
Therefore, the gross margin under absorption costing is $1,540,000 (rounded to the nearest whole number).
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Newhard Company assigns overhead cost to jobs on the basis of 117% of direct labor cost. The job cost sheet for Job 313 includes $19,681 in direct materials cost and $10,700 in direct labor cost. A total of 1,650 units were produced in Job 313. Required: a. What is the total manufacturing cost assigned to Job 313? b. What is the unit product cost for Job 313? a. Total manufacturing cost b. Unit product cost
The answers are:
a. Total manufacturing cost assigned to Job 313 = $42,900
b. Unit product cost for Job 313 ≈ $25.94
To calculate the total manufacturing cost assigned to Job 313, we need to add the direct materials cost, direct labor cost, and the overhead cost.
a. Total manufacturing cost assigned to Job 313:
Direct materials cost: $19,681
Direct labor cost: $10,700
Overhead cost: 117% of direct labor cost = 117/100 * $10,700 = $12,519
Total manufacturing cost assigned to Job 313 = Direct materials cost + Direct labor cost + Overhead cost
= $19,681 + $10,700 + $12,519
= $42,900
b. Unit product cost for Job 313:
Unit product cost = Total manufacturing cost assigned to Job 313 / Number of units produced
= $42,900 / 1,650
≈ $25.94 (rounded to the nearest cent)
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Rapid Growth Pty Ltd is presently operating at full capacity. They received a special order that, if accepted, would require refusing some sales to regular customers. Which of the following factors should management consider when making their decision?
1) Variable costs of special order
2) Fixed costs of equipment
3) Opportunity costs
Select one:
a. All 3 factors
b. 1 and 2 but NOT factor 3
c. 1 and 3 but NOT factor 2
d. Only factor 1
e. 2 and 3 but NOT factor 1
(a) - all three factors should be considered by management when making their decision about accepting the special order.
When making a decision about accepting a special order that requires refusing sales to regular customers, management of Rapid Growth Pty Ltd should consider all three factors: variable costs of the special order, fixed costs of equipment, and opportunity costs.
Variable costs of the special order: Management should consider the variable costs associated with fulfilling the special order. This includes direct materials, direct labor, and other variable expenses directly tied to producing the special order. Analyzing these costs helps determine the profitability of the special order and its impact on overall operations.
Fixed costs of equipment: The fixed costs of equipment, such as depreciation, maintenance, and other expenses, are crucial in assessing the financial implications of accepting the special order. These costs are incurred regardless of whether the special order is accepted or not and should be taken into account when evaluating the profitability of the order.
Opportunity costs: When accepting a special order that requires refusing sales to regular customers, management must consider the opportunity costs. This involves analyzing the potential revenue and profit foregone from the regular customers' sales that would be sacrificed. By assessing the value of these foregone opportunities, management can evaluate the overall impact on the company's financial performance.
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Q2-Westington Association reports an average asset duration of 7 years, average liability duration of 3.25 years. In its latest financial report, the association recorded total assets of $1.8 billion and total liabilities of $1.5 billion. If interest rates began at 6 percent and then suddenly climbed to 7.5 percent, what changes (in percentage terms) will this bank's net worth experience if market interest rates change as anticipated
The percentage change in the net worth of the bank when the interest rate increases from 6% to 7.5% is 7.725%.
Westington Association reports an average asset duration of 7 years, average liability duration of 3.25 years. In its latest financial report, the association recorded total assets of $1.8 billion and total liabilities of $1.5 billion. If interest rates began at 6 percent and then suddenly climbed to 7.5 percent, the changes (in percentage terms) that this bank's net worth will experience if market interest rates change as anticipated is as follows:
First, let's calculate the dollar duration of both assets and liabilities. Asset Duration = 7 years
Liability Duration = 3.25 years
The Dollar duration of assets can be calculated by multiplying the asset duration by the total assets.
Dollar Duration of Assets = $1.8 billion * 7 years= $12.6 billion
Dollar Duration of Liabilities can be calculated by multiplying the liability duration by the total liabilities.
Dollar Duration of Liabilities = $1.5 billion * 3.25 years= $4.875 billion
The Gap or difference between dollar duration of assets and liabilities
= $12.6 billion - $4.875 billion= $7.725 billion
Now, let's calculate the percentage change in the net worth of the bank when the interest rate increases from 6% to 7.5%.Let us assume that the market value of the bank's assets and liabilities remain unchanged when interest rates change.Dollar Change in the value of Assets and Liabilities can be calculated using this formula.
Dollar Change = Dollar Duration * Interest Rate Change
For the given problem,
Interest rate change= 1.5% (7.5%-6%)
Dollar Change in Asset Value = $12.6 billion * 1.5% = $189 million
Dollar Change in Liability Value = $4.875 billion * 1.5% = $73.125 million
Change in Net Worth = Dollar Change in Asset Value - Dollar Change in Liability Value
= $189 million - $73.125 million
= $115.875 million
Therefore, the percentage change in the net worth of the bank when the interest rate increases from 6% to 7.5% is ($115.875 million / $1.5 billion) * 100= 7.725%.
The percentage change in the net worth of the bank when the interest rate increases from 6% to 7.5% is 7.725%.
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As the Country Director of a multi-national company in Ghana, you have de
cided to conduct a survey among tertiary students in Ghana about their per
ception of a new non-alcoholic beverage you have introduced into the mark
et. Identify, justify your choice, and explain any two (2) non-probability sam
pling techniques and any two (2) probability sampling techniques that can
be employed for such a survey. Discuss how you will use each technique to
select sampling elements for the study.
Non-probability sampling techniques are used in surveys where a random sample is not possible to get. The sampling relies on the discretion of the researcher, and therefore, the sample is not representative of the population.
Non-probability sampling techniques are useful when the budget for the research is limited or when the researcher is more interested in studying certain groups of people. Two non-probability sampling techniques are:1. Convenience sampling- This technique is chosen because of its convenience and low cost.
This type of sampling technique can be implemented by choosing respondents based on how easy they are to reach or how convenient it is to get them. This method is cost-effective but may lead to biased samples.2. Quota sampling- This technique involves the researcher's setting quotas for each subgroup. For example, the researcher might choose a quota of 50 males and 50 females.
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chinese purchase of us made aircraft is recorded in the chinese balance of payments as:group of answer choices
When Chinese purchase of US-made aircraft is recorded in the Chinese balance of payments, it is considered an import of goods.
Chinese purchase of US-made aircraft is considered an import of goods, and therefore, it is recorded in the Chinese balance of payments as an import of goods. This means that it is classified as a debit item in the Chinese balance of payments, as it leads to a net outflow of capital from China to the US. The Chinese balance of payments is a record of all of the financial transactions that take place between China and the rest of the world, and it is used to track the inflow and outflow of capital from China's economy.
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ay and Kay are a couple with two young children, Mae, aged 9 months and Faye, aged 2. Kay has been on maternity leave and is due to go back to work full time in the local library. Jay is employed full time in a clay workshop. Both parents are in their mid-thirties and live in Grays, Essex. They are looking into arranging childcare once Kay starts work again. Both children could attend a local nursery full time nearby from Monday to Friday, at a cost of £528 per week for both. Kay also receives child benefit, equating to £1,827.80 per year. 2.1 Jay has the option to work flexibly by halving his hours from 40 to 20 for the next three years. Under this arrangement his monthly gross pay will also halve to £772. Jay says that if he takes this option, his financial sacrifice might be more than just the £772 per month in lost income over this three-year period. Identify two factors that might cause Jay to have a much larger financial loss over his lifetime if he takes this option of going part-time. (4 marks) 2.2 Kay earns a gross annual income of £20,400 per year, working 40 hours per week. Her employer introduces changes to working practices that will also allow her to reduce her hours and her pay by up to 50%. The household is discussing the short-term opportunity costs of Kay taking the part-time (50%) working option, rather than Jay. With respect to gross earnings only, briefly explain the short-term opportunity cost of Kay going part-time as opposed to Jay.
2.1 Two factors that might cause Jay to have a larger financial loss over his lifetime if he takes the of going part-time are:
Reduced Pension Contributions: By halving his hours and gross pay, Jay will also likely see a reduction in his pension contributions. Pension contributions are often based on a percentage of earnings, so with lower earnings, the amount contributed towards his pension will decrease. Over time, this reduction in contributions can have a significant impact on Jay's retirement savings and the overall value of his pension fund.
2. Career Progression and Promotion Opportunities: By choosing to work part-time, Jay may limit his career progress and promotion opportunities. Many organizations offer promotions and career advancement based on factors such as experience, skills, and performance. Working part-time may restrict Jay's ability to take on additional responsibilities, gain new skills, or demonstrate his full potential, which could hinder his chances of securing higher-paying positions in the future. This limitation on career growth can result in a lower earning potential over his lifetime.
2.2 The short-term opportunity cost of Kay going part-time, as opposed to Jay, would be a reduction in her gross earnings. By choosing to work part-time and reducing her hours and pay by up to 50%, Kay would experience a significant decrease in her annual income. This reduction in income would impact the immediate financial resources available to the household and could require adjustments in their budgeting and spending habits. The short-term opportunity cost for Kay would be the loss of half of her gross annual income, which would affect their current standard of living and financial stability.
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Discuss some of the reasons companies go global. Why
are the advantages of comparative advantage only temporary
There are various reasons why companies opt to go global. Some of these reasons include access to new markets, the desire to diversify, the search for cheaper labor, and better economies of scale.
There are various reasons why companies opt to go global. Some of these reasons include access to new markets, the desire to diversify, the search for cheaper labor, and better economies of scale. Going global enables a company to take advantage of new business opportunities that exist beyond their domestic borders. By doing so, they can reach new markets that offer better demand for their products or services.
Additionally, a global presence helps companies to diversify their income streams, thus reducing dependence on any single market. This provides a more secure and stable source of income. Additionally, globalization often presents cheaper labor options for companies. In countries where wages are lower, companies can outsource production and lower their production costs.
Furthermore, the economies of scale associated with global expansion are a major factor for companies to go global. Economies of scale refer to the cost advantage of producing on a larger scale. This results in lower per-unit costs, which can lead to greater profits for companies.
Although comparative advantage can be an advantage for companies, it is only temporary. Comparative advantage refers to the ability of a company or country to produce a good or service at a lower opportunity cost than another entity. This advantage can only be temporary because other countries may catch up in terms of production, or a change in global market conditions can occur. As a result, comparative advantage is not a long-term solution.
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Describe international issues that the private military security
industry encounters and identify some of the global agencies that
help regulate the international private security industry
The private military security industry, which consists of companies providing military and security services, encounters a number of international challenges. Private military companies (PMCs) have often been accused of human rights abuses and contributing to the conflict. In addition, PMCs have been known to operate in a legal grey zone, as their activities can be viewed as a challenge to state sovereignty and a risk to global peace. As a result, a number of global organizations and initiatives have been established to regulate the international private security industry.
Global agencies that regulate international private security industry. 1. International Code of Conduct for Private Security Service Providers Association (ICoCA). The ICoCA was established in Switzerland in 2010 to promote responsible business conduct, transparency, and compliance in the private security industry. ICoCA sets out a set of human rights-based principles that private security companies must adhere to. These principles aim to protect human rights, prevent human rights violations, and provide accountability and remedy for victims of abuse.2. Montreux Document. The Montreux Document is an international agreement signed by governments and private security companies in 2008 to regulate the private security industry. The document outlines best practices for the use of force, detention, and the protection of human rights. It also outlines the responsibilities of private security companies to provide training and ensure that their employees abide by international law.3. UN Working Group on the Use of Mercenaries. The United Nations Working Group on the Use of Mercenaries was established in 2005 to address the challenges posed by the use of private security companies in armed conflicts. The working group aims to raise awareness of the dangers of mercenary activity, encourage states to regulate the industry, and provide guidance to the private security industry on best practices. The group also monitors the implementation of the Montreux Document and other international agreements related to private security.
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Would Melissa prefer a fully taxable investment earning 8 percent or a tax-free investment earning 5 percent? Assume a combined marginal tax rate of 38.00 percent? The after-tax investment rate for her fully taxable investment is %.(Enter 2 decimal places.Do not put a % in your answer.) Which product should she choose to invest for higher profit? (Type A or B into the blank.) A) Fully taxable investment B) Tax-free investment
Melissa, with a combined marginal tax rate of 38.00 percent, should choose the fully taxable investment earning 8 percent over the tax-free investment earning 5 percent.
To determine whether Melissa should choose a fully taxable investment earning 8 percent or a tax-free investment earning 5 percent, we need to compare the after-tax rates of return for both options.
For the fully taxable investment, we subtract the tax amount from the 8 percent return. The tax amount is calculated by multiplying the investment return (8 percent) by the combined marginal tax rate (38.00 percent).
For the tax-free investment, there is no tax implication, so the after-tax rate of return remains at 5 percent.
Comparing the after-tax rates of return, if the after-tax investment rate for the fully taxable investment is higher than 5 percent, Melissa should choose the fully taxable investment (Option A) for higher profit. On the other hand, if the after-tax investment rate for the fully taxable investment is lower than 5 percent, Melissa should choose the tax-free investment (Option B).
Therefore, based on the after-tax rates of return, Melissa should choose Option A, the fully taxable investment earning 8 percent, if the after-tax investment rate is higher than 5 percent.
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How does a health care facility go about gaining cash flow,
besides from the reimbursements of patient care?
Apart from reimbursements from patient care, healthcare facilities can generate cash flow through various means.
Here are some common avenues for healthcare facilities to gain additional cash flow:
Ancillary Services: Healthcare facilities can offer ancillary services such as laboratory testing, radiology services, outpatient procedures, and physical therapy. These services are typically billed separately from patient care and can generate additional revenue streams.
Specialty Services: Developing specialized services or clinics can attract patients seeking specific treatments or procedures. Examples include cardiac care, orthopedics, fertility clinics, or cosmetic surgery centers. These specialized services often have higher reimbursement rates and can contribute to increased cash flow.
Out-of-Network Services: By providing services to patients who are not covered by their insurance plans or are from out-of-network providers, healthcare facilities can negotiate higher payment rates for these services. This approach can be used selectively and in accordance with applicable regulations and contractual agreements.
Telehealth and Remote Services: With the increasing adoption of telehealth, healthcare facilities can expand their reach by offering virtual consultations, remote monitoring, and telemedicine services. Telehealth can improve access to care and generate additional revenue streams.
Partnerships and Collaborations: Healthcare facilities can explore partnerships with other organizations, such as pharmaceutical companies, medical device manufacturers, or research institutions. These collaborations can involve joint ventures, research grants, or licensing agreements, providing financial benefits and access to new resources.
Clinical Trials and Research Studies: Participating in clinical trials and research studies can generate income for healthcare facilities. Pharmaceutical and biotechnology companies often provide financial compensation for facilities involved in research activities.
Facility Rentals: Healthcare facilities may have unused or underutilized space that can be rented out to other healthcare providers or organizations. This can include renting out offices, meeting rooms, or specialized facilities like surgical suites or imaging centers.
Cash-Pay Services: Offering certain services on a cash-pay basis, particularly for non-covered or elective procedures, can generate direct revenue without relying on insurance reimbursements. Examples include cosmetic procedures, wellness programs, or executive health check-ups.
Grants and Philanthropic Funding: Healthcare facilities can seek grants or philanthropic funding from government agencies, private foundations, or individuals to support specific programs, research initiatives, or community health projects.
Cost Control and Operational Efficiency: Implementing cost control measures and improving operational efficiency can help healthcare facilities optimize their expenses and reduce waste. This can lead to improved cash flow by maximizing revenue and minimizing unnecessary expenditures.
It's important to note that the specific strategies and options available to a healthcare facility may vary based on factors such as location, size, specialization, regulatory environment, and market dynamics. Healthcare organizations should assess their unique circumstances and consider a mix of approaches to enhance cash flow while aligning with their mission and patient care objectives.
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ain, Inc., is developing flexible budgets for each department as part of its plan to use standard costs. Normal monthly volume in the Assembling Department is 50,000 direct labor hours. At normal volume, department fixed costs include $70,000 for power and $40,000 for maintenance, and salaries of $70,000 per month. Indirect variable labor is $120,000, which involves 15,000 hours of indirect labor at S8 per hour. Other variable costs in the Assembling Department are as follows: Tools and supplies $3.00 per machine hour Maintenance 2.50 per machine hour Power 3.50 per machine hour Depreciation 4.50 per machine hour | Page 5 Normal volume is 40,000 machine hours per month. The company uses a service (or usage) hours method to depreciate its fixed assets. Instructions: 1. Prepare a departmental flexible overhead budget for 30,000 machine hours and for 40,000 machine hours. (10 marks) 2. Did you treat depreciation expense as a variable or a fixed cost? Defend your approach.
Flexible budgets and standard costs are two primary tools that organizations use to achieve their objectives. Standard costs are pre-determined costs that organizations use to determine the cost of goods sold and inventory at various levels of production.
Assembling Department is one of the departments in Main, Inc., that is developing flexible budgets for each department as part of its plan to use standard costs.Flexible budgets for 30,000 machine hours: Fixed Cost:Power: $70,000Maintenance:
$40,000Salaries: $70,000Indirect variable labor: $24,000 ($8*3000 hours)Total fixed cost: $204,000Variable Cost:Tools and supplies: $90,000 (30,000*3) Maintenance: $75,000 (30,000*2.5)Power: $105,000 (30,000*3.5)Depreciation: $135,000 (30,000*4.5)Total variable cost: $405,000
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Wells, Inc., has identified an investment project with the following cash flows. Cash Flow 865 1,040 1,290 1,385 Year 1 a. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4?
The future value of these cash flows in Year 4 if the discount rate is 8 percent is $5,193.86.
How to fidn?Future Value (FV) is defined as the future worth of an amount of cash invested today. It is calculated based on the rate of interest, the present value of the amount, and the period of investment. In the question, Wells, Inc., has identified an investment project with the following cash flows.
The solution for the given problem is as follows:
,Step 1: First, calculate the future value of each of the cash flows individually using the formula, FV = PV x (1 + i)n, Where FV = Future value PV = Present Value, i = interest rate ,n = number of years, Cash flow 1, FV = $865 x (1+8%)³ = $1,160.06Cash flow 2, FV = $1,040 x (1+8%)² = $1,255.68, Cash flow 3, FV = $1,290 x (1+8%)¹ = $1,393.12Cash flow 4, FV = $1,385 x (1+8%)⁰ = $1,385.00
Step 2: Add up the future values of each cash flow to get the total future value.
Total FV = $1,160.06 + $1,255.68 + $1,393.12 + $1,385.00 = $5,193.86.
Therefore, the future value of these cash flows in Year 4 if the discount rate is 8 percent is $5,193.86.
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Mary purchases a property with the help of a fixed-rate loan.
Why is Mary considered the mortgagor and the lender the
mortgagee?
Since Mary obtained a fixed-rate loan, she is considered the
mortgagor
Mary as the Mortgagor and the Lender as the Mortgagee:
Mary is considered the mortgagor in this scenario because she is the borrower who obtained the fixed-rate loan to purchase the property. The mortgagor is the party who pledges the property as collateral for the loan and is responsible for repaying the borrowed amount.
On the other hand, the lender is referred to as the mortgagee. The mortgagee is the financial institution or individual who provides the loan to the mortgagor. They hold a security interest in the property until the loan is fully repaid. In the event of default, the mortgagee has the right to initiate foreclosure proceedings and take possession of the property.
Therefore, Mary is the mortgagor as she borrowed the funds and pledged the property, while the lender is the mortgagee as they provided the loan and hold a security interest in the property until the debt is cleared.
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