An automobile owner has 40% chance of having exactly one accident in a year and 60% chance of having no accidents in a year. There is no chance that the automobile owner incurs more than one accident in a year.
If there is an accident, the loss amount has the following distribution:
Loss amount & Prob
30 0.3
60 0.15
100 0.45
180 0.1
Suppose there is an ordinary deductible of $40 and the maximum payment by the insurer is $130.
Determine the standard deviation of the payment made by the insurer to the automobile owner.
Answer:
The answer is 32.437
Explanation:
Let X be the loss and let Y be the payment by the insurer.
Hence, we have Y = o if x<= 40,
x-40 if 40 < x < 130
130 if x > = 170
Therefore, Var (y) = E (y^2) - [E(y)]^2
E(y) = 0.4[130 (0.1)+60 (0.45) +20 (0.15)] = 17.2
E(^2) = 0.4 [130^2(0.1) + 60^2(0.45) +20^2(0.15)] = 1348
Finally, Var(y) = 1348 -17.2^2 = 1052.16
Sqrt(1052.16) = 32.437
Therefore, the standard deviation of the payment made by the insurer to the automobile owner is 32.437
Two mutually exclusive projects have an initial cost of $60,000 each. Project A produces cash inflows of $30,000, $27,000, and $20,000 for Years 1 through 3, respectively. Project B produces cash inflows of $80,000 in Year 2 only. The required rate of return is 10 percent for Project A and 11 percent for Project B. Which project(s) should be accepted and why
Answer:
Project B
Explanation:
The computation of the net present value is shown below:
For project A
(in dollars) (in dollars)
Year Cash flows Discount factor at 10% Present value
0 -60000 1 -60000.00 (A)
1 30000 0.9090909091 27272.73
2 27000 0.826446281 22314.05
3 20000 0.7513148009 15026.30
Total present value 64613.07 (B)
Net present value 4613.07 (B - A)
For project B
(in dollars) (in dollars)
Year Cash flows Discount factor at 11% Present value
0 -60000 1 -60000.00 (A)
1 0 0.9009009009 0
2 80000 0.8116224332 64929.79
3 0 0.7311913813 0
Total present value 64929.79 (B)
Net present value 4929.79 (B - A)
As we can see that project B has high net present value as compared with project A so project B should be accepted
When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:
If a major misdeed is committed by a brokerage that results in a substantial drain on the real estate recovery trust account, what options are available to replenish the fund?
Answer:
Explanation:
Real Estate Recovery Trust Account are accounts that are funded by administrative penalties and dispersed to consumers that are owed damages due to a license holder's conduct and subsequent inability to pay. These licence holders may be charged an additional $10 fee on the renewal date in order to make up for the substantial drain, or receive a special assessment if the replenishment is urgent.
Swinnerton Clothing Company's balance sheet showed total current assets of $1,800, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital that was financed by investors? Select the correct answer. a. $1,096 b. $1,088 c. $1,112 d. $1,080 e. $1,104
Answer:
d. $1,080
Explanation:
The computation of the net operating working capital that was financed by investors is shown below:
= Total current assets - account payable - accrued wages and taxes
= $1,800 - $575 - $145
= $1,080
By deducting the account payable and accrued wages from the total current assets we can calculate the net operating working capital and the same is to be considered
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
Required:
If the required return on this stock is 14 percent, what is the current share price?
Answer:
we have to divide the money
Explanation:
as it is written its
Aldo Redondo drives his own car on company business. His employer reimburses him for such travel at the rate of 36 cents per mile. Aldo estimates that his fixed costs per year such as taxes, insurance, and depreciation are $2,200. The direct or variable costs such as gas, oil, and maintenance average about 14.4 cents per mile.
How many miles must he drive to break even? (Do not round intermediate calculations. Roundup your answer to the next whole number.)
Answer:
10,185 miles
Explanation:
The computation of the break even miles is shown below:
As we know that
Break even units is
= (Fixed cost) ÷ (Selling price per unit - variable cost per unit)
= ($2,200) ÷ (36 cents per mile - 14.4 cents per mie)
= $2,200 ÷ 21.6 cents per mile
= $2,200 ÷ 0.216
= 10,185 miles
We simply applied the above formula so that the break even point in units could come and the same is to be considered
Suppose $1 comma 500 is deposited in a bank account today (time 0), followed by $1 comma 500 deposits in years 2, 4, 6, and 8. At 9% annual interest, how much will the future equivalent be at the end of year 12?
Answer:
$15,391.91
Explanation:
the first step is to find the present value of the cash flows. After the future value of the sum would be determined.
present value is the sum of discounted cash flows.
present value can be determined using a financial calculator
Cash flow in year 0 = $1500
Cash flow in year 1 = 0
Cash flow in year 2 = $1500
Cash flow in year 3 = 0
Cash flow in year 4 = $1500
Cash flow in year 5 = 0
Cash flow in year 6 = $1500
Cash flow in year 7 = 0
Cash flow in year 8 = $1500
I = 9%
PV = $5472.36
The formula for calculating future value:
FV = P (1 + r) n
FV = Future value
P = Present value
R = interest rate
N = number of years
$5472.36(1.09)^12 = $15,391.91
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Virginia owns an interior design company and hires freelance decorators to help with large jobs. In this way, she is able to keep costs low by only employing staff when they are needed. However, over time Virginia has added full‐time staff members as the company grows. How would you classify Virginia’s company? Group of answer choices As an investment center As a profit center As a cost center but not a profit center As both a cost center and a profit center, but not an investment center
Answer: As an investment centre
Explanation:
Based on the question, we are told that Virginia owns an interior design company and hires freelance decorators to help with large jobs and that by doing this, she is able to keep costs low by only employing staff when they are needed. Virginia's company is an investment centre.
An investment center is a business unit that is within an entity that is responsible for its own assets, revenue, and expenses and its financial results will be based on these factors. An investment center focuses on how it will minimize costs.
Alvarez Company’s output for the current period yields a $22,000 favorable overhead volume variance and a $52,900 unfavorable overhead controllable variance. Standard overhead applied to production for the period is $226,000. QS 23-16 Overhead cost variances LO P4 What is the actual total overhead cost incurred for the period?
Answer:
$256,900
Explanation:
The computation of actual total overhead cost is shown below:-
The Actual overhead cost incurred
= Standard overhead cost + Unfavorable overhead controllable variance - Favorable overhead volume variance
= $226,000 + $52,900 - $22,000
= $278,900 - $22,000
= $256,900
Therefore for computing the actual total overhead cost we simply applied the above formula.
Ashley is an attorney who specializes in family law. She uses the cash method of accounting and is a calendar-year taxpayer. Last year, she represented a client in a lawsuit and billed the client $5,000 for her services. Although she made repeated attempts, Ashley was unable to collect the outstanding receivable. Finally, in November of the current year, she finds out that the individual has moved without leaving any forwarding address. Ashley’s attempts to locate the individual are futile. What is the amount, if any, of the deduction that she may claim in connection with this bad debt?
Answer:
The Answer is explained below
Explanation:
Ashley is unable to collect the outstanding receivable after repeated attempts. In order to claim any deduction in connection with this bad debt Ashley has to record the income first but Ashley is using the cash method of accounting here. Therefore she can only claim any deduction when she receives any payment.
On August 1, 2017, Gonzaga Corporation issued $600, 000, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Gonzaga's year-end is December 31.
1. Prepare journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
2. Prepare journal entry to record the accrual of interest on December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
3. Prepare journal entry to record the payment of interest on August 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer: Please see answers in the explanation column
Explanation:
journal entry to record the issuance of the bonds.
Date Account Debit Credit
August 1st Cash $600, 000
2017 Bonds payable $600, 000
2, journal entry to record the accrual of interest on December 31, 2017.
Date Account Debit Credit
Dec 31st Interest Expense $17,500
2017 Interest payable $17,500
Calculation =
Interest = P X T X R
From August - December31st = 5 months
600,000 x 5/12 x 7%= 600,000 x 0.07 x5/12= $17,500
3. journal entry to record the payment of interest on August 1, 2018
Date Account Debit Credit
Aug 1st Interest Expense $24,500
2018 Interest payable $17,500
Cash $42,000
Calculation =
Interest = P X T X R
From January- August `1st= 7 months
600,000 x 7/12 x 7%= 600,000 x 0.07 x7/12= $24,500
Swifty Corporation purchased from its stockholders 5,500 shares of its own previously issued stock for $275,000. It later resold 1,700 shares for $53 per share, then 1,700 more shares for $48 per share, and finally 2,100 shares for $42 per share. Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.
Answer: The answer is given below
Explanation:
A journal is a book that is used in accounting to record the transactions that takes place in a company.
It should be noted that in the attached file, the amount that was paid in capital from the treasury stock was calculated as:
= 5,100 - 3,400
= 1,700
The retained earnings was also calculated as:
= 105,000 - 88,200 - 1,700
= 15,100
Check the attached file for further information.
Answer with its Explanation:
1. The repurchase of 5,500 shares from the sharesholders will be recorded as under:
Dr Treasury Stock $275,000
Cr Cash $275,000
2. The sale of 1,700 shares at $53 per share would be recorded as under:
Dr Cash ( 1,700 shares * $53 ) $90,100
Cr Treasury Stock ( 1,700 shares * $50 ) $85,000
Cr Paid in capital ( 1,700 shares * $3 ) $5,100
3. The Selling of the 1,700 shares at $48 each will be recorded as under:
Dr Cash ( 1,700 Shares * $48) $81,600
Dr Paid in capital ( 1,700 shares * $2) $3,400
Cr Treasury Stock ( 1,700 shares * $ 50 ) $85,000
4. The selling of 2,100 shares at $42 will be recorded as under:
Dr Cash ( 2,100 shares * $ 42 ) $88,200
Dr Paid in capital from treasury stock $1,700 ........ Step 1
Dr Retained Earnings $15,100 ...... Balancing Figure
Cr Treasury Stock ( 2,100 shares * $ 50 ) $105,000
Step 1. Paid in capital from Treasury Stock
Paid in capital from Treasury Stock = 5,100 - 3,400 = $1,700 Paid In capital
Retained Earnings will be Balancing Figure = 105,000 - 88,200 - 1,700 Paid In capital = $15,100
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as
Answer:
Marketing tactics.
Explanation:
The detailed day-to-day operational decisions essential to the overall success of marketing strategies are referred to as marketing tactics.
Marketing tactics can be defined as both a strategic short-term and long-term actions employed by an organization to promote its goods and services with the intention of increasing sales and achieving a competitive market advantage by satisfying customers wants or need.
Hence, the purpose of a marketing tactics is to achieve substantial level of customer satisfaction as well as using the organization's limited financial resources efficiently in order to boost the effective promotion and sales of its products.
Some examples of marketing tactics are;
1. An organization sending newsletters or emails to its new and existing customers.
2. Participating in the exhibition of products in a trade fair.
3. Promotion of products on social media platforms.
Chang Co. issued a $50,172, 120-day, discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are:___________.
A. $55,189
B. $50,172
C. $50,590
D. $48,500
Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172. Thus, option (B) is correct
What is the rate?A number, amount, or degree measured in relation to another object. She typed at a speed of 80 words per minute. a charge or payment based on another quantity. more specifically: the premium per insurance unit. A rate in mathematics is the comparison of two related values expressed in different units.
Discounted note to Guarantee Bank. The discount rate is 10%. Assuming a 360-day year, the cash proceeds to Chang Co. are $50,172Investors buy discount notes at a price less than the note's face value since they are issued at a discount to par.
60 miles per hour is a standard or measure for a specific number or amount of one item when compared to a unit of another thing. a set price per quantity unit: 10 cents per pound is the price. To lower costs and prices for all home furniture.
Therefore, Thus, option (B) is correct
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Buckeye Incorporated has operating income of $ 434,000, a sales margin of 7%, and a capital turnover rate of 2. What amount would Buckeye report for sale
Answer:
The amount Buckeye would report for sale is $6,200,000.
Explanation:
Sale refers to income or revenue that a company got by selling its goods or providing its services.
In accounting ratio analysis, sales margin is obtained by dividing the operating profit by sale. Therefore, the formula for sales margin can be written as follows:
Sales margin = Operating income / Sale ................... (1)
To obtain Sale, we can substitute the figures for sales margin and operating profit from the question into equation (1) and then solve for sale as follows:
7% = $434,000 / Sale
Sale * 7% = $434,000
Sale = $434,000 / 7%
Sale = $6,200,000
Therefore, the amount Buckeye would report for sale is $6,200,000.
Tyler Hawes and Piper Albright formed a partnership, investing $112,000 and $168,000, respectively. Determine their participation in the year's net income of $280,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $36,000 and $48,000, respectively, and the balance divided equally. Allowance of interest at the rate of 6% on original investments, salary allowances of $36,000 and $48,000, respectively, and the remainder divided equally.
Answer:
Income Summary 280,000 debit
Piper Account 140,000 credit
Tyler Account 140,000 credit
--under no agreement--
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under capital share --
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under 2:3 ratio with 6% interest rate --
Income Summary 280,000 debit
Piper Account 134,000 credit
Tyler Account 146,000 credit
--under salaries and equal share of the remainder --
Income Summary 280,000 debit
Piper Account 132,320 credit
Tyler Account 147,680 credit
--under interest, salaries and equal share of the remainder --
Explanation:
If the partners made the proper accounting the income will be stored under income summary account then split accordingly
A) If there is no agreement then, they share equally
b) 112,000 + 168,000 = 280,000
participation
Tyler 112,000/280,000 = 40%
Piper 168,000/280,000 = 60%
application
Tyler 280,000 x 40% 112,000
Piper 280,000 x 60% = 168,000
c)
6% interest
112,000 x 6% = 6,720
168,000 x 6% = 10,080
Remainder: 280,000 - 6,720 - 10,080 = 263,200
ratio:
Tyler 40% (2 / (2+3)) = 105280
Piper 60% (3 / (2+3)) = 157920
Total
Tyler: 105,280 + 6,720 = 112,00
Piper 157,920 + 10,080 = 168,000
with salaries:
280,000 - 36,000 - 48,000 = 196,000
equally divided in 98,000
Tyler 98,000 + 36,000 = 134,000
Piper 98,000 + 48,000 = 146,000
with slaries and interest:
112,000 x 6% = 6,720
168,000 x 6% = 10,080
280,000 - 6,720 - 10,080 - 36,000 - 48,000 = 179,200
Divided equally in 89,600
Tyler 89,600 + 6,720 + 36,000 = 132,320
Piper 89,600 + 10,080 + 48,000 = 147,680
The ____ the existing spot price relative to the strike price, the ____ valuable the call options will be.
Answer:
The Higher the existing spot price relative to the strike price the more valuable the call options will be.
Explanation:
Spot price simply refers to how much a particular stock is trading in the market (that is, Market Price of the Stock).
Strike Price, also known as exercise price, is the price at which a person (corporate or individual) can purchase security.
Call options refers to the option to purchase an asset at an agreed price prior to/or at a particular day.
If for instance an employee is presented with Stock Options at a particular price, it will be more attractive for him or her if the price at which it is being offered is lower than it's actual market value. That way, he or she has already made a profit.
For example, if the spot price for the stock of Google is $2000/Unit and it is offered to an employee at $1450, if he elects to buy it at that time, he stands a chance to make $550 on each unit that if he sells whilst the spot price is still reasonable.
Cheers!
Answer:
The higher the existing spot price relative to the strike price, the less valuable the call options will be.
Explanation:
Call options refer to financial contracts in which the buyer of the option has the right, but not obligation, to buy asset or instrument at an already agreed price on or before a particular date. The particular date is also known as the expiration date.
The strike price is refers to the price at which a put or call option can be exercised on or before a particular date.
The spot price refers the current market price at which an instrument or asset is bought or sold now for immediate payment and delivery.
The relationship between the strike price and the spot price is that a call option is most valuable when the strike price is higher than the spot price. At this point, the call option is said to be in the money (ITM). On the other hand, a call option is least valuable when the strike price is lower than the spot price. At this point, the call option is said to be out of the money (OTM).
Based on the explantion above, therefore, the higher the existing spot price relative to the strike price, the less valuable the call options will be.
Explain the steps that should be taken by an internal accountant/CMA when there is a difference of opinion with one's supervisor on an accounting or financial reporting manner.
Answer:
1. Understand difference in the reporting manner for Management Accountants and Financial Accountants.
2. Refer to Company policy documents and International Reporting Standards to clearly expose the difference.
3. Consult with other co-workers on who the information is intended and agree on whose opinion to base the reporting.
Explanation:
Management Accountants or CMA prepare Financial Statements for Management use and there are no Statotory or Strict guidelines on how these statements are prepared.
Whilst Financial Accountants prepare Financial Statements for External reporting and have to abide by the Reporting Standards (either GAAP or IFRS).
So, they will be always be differences in the manner of reporting.
The solution is to understand the user of those statements that are being prepared and take the opinion that meets those users needs.
Categorize each statements as a component of Gross Domestic Product (GDP): consumption, investment, government, or net exports. If it is not included in GDP, leave it.
i. Consumption
ii. Investment
iii. Goverment
iv. Net exports
Answer:
The Gross Domestic Product (GDP) is a measure of the value of all final Goods and Services in an Economy in a given period usually a year.
It can be calculated using the Expenditure method which is;
= Consumption + Investment + Government Spending + Net Exports
Consumption
Here, the final goods and services that all households in the Economy purchased and used for the year are included. It is usually the largest component of GDP.
The following will fall here.
- Ice cream
- A domestically manufactured personal computer
- Cab fare for personal use
- A ticket to a local sporting event
- 55 cent tacos
Investment
The Goods that will fall under here include Capital goods purchased or made in an Economy for the purpose of increasing production capacity.
Of the goods listed only one will fall here being;
- A Domestically Manufactured Personal Computer.
Government Spending
This includes all Public Spending in the Economy on goods and services for things such as Health and Defense but excluding transfer payments such as Social Security.
- Public School Teacher's Salary will fall under here.
Net Exports
These are the Exported goods from the country less the goods that it imported. From the above only one item falls under this category;
- Exported Doll House
sales of $1.67 million, cost of goods sold of $810,800, depreciation expenses of $175,000, and interest expenses of $89,575. Assume that the firm has an average tax rate of 35 percent. What is the company’s net income? Set up an income statement to answer the question.
Answer:
Net income= 561,506.25
Explanation:
Giving the following information:
sales of $1.67 million, cost of goods sold of $810,800, depreciation expenses of $175,000, and interest expenses of $89,575.
Tax= 35 percent
We need to determine the net income.
Sales= 1,670,000
COGS= (810,800)
Gross profit= 859,200
Depresiation= (175,000)
Interest= (89,575)
EBT= 594,625
Tax= (594,625*0.35)= (208,118.75)
Depreciation= 175,000
Net income= 561,506.25
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations?
a) Cost of goods manufactured = Total manufacturing costs + Beginning finished goods inventory – Ending finished goods inventory
b) Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory – Ending work in process inventory
c) Cost of goods manufactured = Total manufacturing costs + Ending work in process inventory – Beginning work in process inventory
d) Cost of goods manufactured = Total manufacturing costs + Ending finished goods inventory – Beginning finished goods inventory
Answer:
Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory – Ending work in process inventory
Explanation:
Cost of goods sold is the total direct costs of producing the goods sold by a company.
Cost of goods sold = cost of direct materials + cost of direct labour + Manufacturing Overhead + Beginning work in process inventory – Ending work in process inventory
"A company offers ID theft protection using leads obtained from client banks. Four employees work 40 hour a week on the lead, at a pay rate of $35 per hour per employee. Each employee identifies an average of 3500 potential leads a week from a list of 6000. An average of 3 percent actually sign up for the service, paying a one-time fee of $60. Material costs are $1500 per week, and overhead costs are $8000 per week. What is the multi-factor productivity for this operation in fees generated per dollar of input (rounded to 2 decimals)?"
Answer:
1.67
Explanation:
The computation of multi-factor productivity is shown below:-
Multi-factor productivity = Potential leads × Number of workers × Fee × Conversion percentage ÷ Labor cost + Material cost + Overhead cost
= 3,500 × 4 × $60 × 0.03 ÷ 4 × 40 × $35 + $1,500 + $8,000
= 25,200 ÷ 15,100
= 1.67
Therefore for computing the multi-factor productivity we simply applied the above formula.
Payback period The Ball Shoe Company is considering an investment project that requires an initial investment of $ 544,000 and returns after-tax cash inflows of $77,624 per year for 10 years. The firm has a maximum acceptable payback period of 8 years. a. Determine the payback period for this project. b. Should the company accept the project?
Answer:
Payback period is 7.01 years
The project should be accepted
Explanation:
The payback period is the time taken for the initial cash outlay of $544,000 to recoup itself, in other words,the length of time taken for the company to receive cash inflows equivalent to the amount invested initially.
payback period=initial capital outlay/annual after-tax cash inflows
payback period=$544,000/$77,624= 7.01 years.
It shows that the project's payback is lesser than the company's target,hence,the project should be accepted
Which of the following is an incorrect statement? a If individual audit risk remains the same, detection risk bears an inverse relationship to inherent and control risk. b The greater the inherent and control risk the auditor believes exist the less detection risk that can be accepted. c The auditor might make separate or combined assessments of inherent risk and control risk. d Detection risk cannot be changed at the auditor’s discretion.
Answer:
d Detection risk cannot be changed at the auditor’s discretion.
Explanation:
Audit risk can be defined as the risk that financial reports issued by an auditor are materially incorrect due to fraud or errors, despite the fact that the inappropriate audit opinion states that the financial reports are void of any material misstatements. There are two (2) main components of an audit risk, these are;
1. Detection risk: this deals with the fact that procedures used by the auditor will not detect any material misstatement as a result of errors.
2. Risk of material misstatement: this deals with the material misstatements of financial statements before auditing. There are two main types namely, inherent and control risks.
The following statements are true and correct;
A. If individual audit risk remains the same, detection risk bears an inverse relationship to inherent and control risk.
B.The greater the inherent and control risk the auditor believes exist the less detection risk that can be accepted.
C. The auditor might make separate or combined assessments of inherent risk and control risk.
However, saying that detection risk cannot be changed at the auditor’s discretion is false. Since it is arises as a result of error, if the auditor conducts a proper sampling procedure it can be detected and eventually changed.
The price elasticity of supply for basmati rice (an aromatic strain of rice) is likely to be which of the following?
A. High in both the long run and the short run, because the inputs required to produce basmati rice can easily be duplicated.
B. Low in both the long and short runs, because rice farming requires only unskilled labor.
C. High, because consumers have a lot of other kinds of rice and other staple foods to choose from.
D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Answer: D. Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
Explanation:
Price Elasticity of Supply refers to how Supply changes in response to a change in price. Essentially, if the price of a good increases, will Supplier supply more or less of that good as a result and by how much will they do so.
In the short run, the farmers would have already planted the crops and so would be unable start changing the quantity that they expect from the harvest. They will therefore supply the amount they harvested regardless of a price change.
In the long run however, they can change the amount of rice planted depending on the price of the rice in the market. Price Elasticity is therefore higher in the long run than in the short run.
how to calculate WACC using the CAPM
Answer:
The CAPM formula is widely used in the finance industry. It is vital in calculating the weighted average cost of capital. The WACC formula is = (E/V x Re) + ((D/V x Rd) x (1-T)).
Company F purchased 40% of the outstanding stock of company K on June 30, 20XX. Both of the companies have a December 31st, year end. Company K is a publicly traded company and reports its net income to company F. Company K also pays a hefty dividend to the shareholders of company F. How should company F report the above facts on its December 31, 20XX balance sheet and income statement
Answer and Explanation:
Within the U.S. GAAP, Company F is an owner owning greater than 20 percent but smaller than or equivalent to 50 percent of Company K's stock and is thus considered to have the right to exercise considerable control on Company K's financial affairs.
According to the GAAP, there is nothing exist explicit information that there is no substantial impact.
Company F will use the EQUITY method to compensate for all assets in the 20 to 50 percent ownership range.
Within this approach,
Business F will pass the following journal entry on the purchase of shares in K:
Particulars Debit Credit
Investment In K Dr, XXXXXX
To Cash XXXXXX
(Being cash paid is recorded)
For recording this we debited the investment as it increased the assets and credited the cash as it decreased the assets
If Company K declares net income in Dec 20XX, Company F will instantly recognize its share of income for the proportionate period of keeping the 40 percent (that is 6 months net income) by way of a journal entry is shown below: (Total net income of K × 40 percent × 6 ÷ 12)
Particulars Debit Credit
Investment in K Dr, XXXXXX
To Investment Income -Co. K XXXXXX
(Being the investment is recorded)
For recording this we debited the investment as it increased the assets and credited the investment income as it also increased the income
If Company K pays dividends to company owners F
The investment account reduces by the amount of cash dividend earned, and the below entry must be passed on to F's books:
Particulars Debit Credit
Cash Dr, XXXXXX
To Investment in K XXXXXX
(Being the cash is recorded)
For recording this we debited the cash as it increased the assets and credited the investment as it decreased the assets
Once Company F sells shown above investment it makes a clear entry:
Particulars Debit Credit
Cash Dr, XXXXXX
To Investment in K XXXXXX
(Being the cash is recorded)
For recording this we debited the cash as it increased the assets and credited the investment as it decreased the assets
The investment carrying value come by
= Purchase price + Net income accrued - Dividends received
Any balance shall be debited in respect of losses on the selling of investment in K-equity securities or Credited to Investment in K -Equity Securities Gain on Sale
So this amount of investment in other companies' equity (40 percent), includes forwarding the above-mentioned journal entries, in the buying company's accounts.
Amos Rubber company manufactures tires. They reported the following information from their operations last period: Cost of Direct Materials used in production: $35,000 Cost of Direct Labor wages: $40,000 Variable Manufacturing Overhead: $30,000 Fixed Manufacturing Overhead: $75,000 Total units produced and sold: 50,000 Under absorption costing, the per-unit cost is greater than the variable per-unit cost by how much?
Answer:
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
Explanation:
Units costs under variable costing include only the variable manufacturing costs.
Manufacturing Costs - Variable Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Total Costs $105,000
Unit Cost = $105,000/ 50,000
= $2.10
Units costs under absorption costing include both the variable manufacturing costs and fixed manufacturing costs.
Manufacturing Costs - Absorption Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Fixed Manufacturing Overhead: $75,000
Total Costs $180,000
Unit Cost = $180,000/ 50,000
= $3.60
Difference :
Unit Cost - Absorption Costing $3.60
Less Unit Cost - Variable Costing $2.10
Difference $1.50
Conclusion :
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
The per-unit cost under absorption costing is greater than the variable per-unit cost by $1.50.
Calculation of per-unit as follows:Units costs under variable costing involved only the variable manufacturing costs.
So,
Manufacturing Costs - Variable Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Total Costs $105,000
Now
Unit Cost = $105,000/ 50,000
= $2.10
Unit costs under absorption costing involve both the variable manufacturing costs and fixed manufacturing costs.
So,
Manufacturing Costs - Absorption Costing
Direct Materials used in production: $35,000
Cost of Direct Labor wages: $40,000
Variable Manufacturing Overhead: $30,000
Fixed Manufacturing Overhead: $75,000
Total Costs $180,000
Unit Cost = $180,000/ 50,000
= $3.60
Now the difference is
Unit Cost - Absorption Costing $3.60
Less Unit Cost - Variable Costing $2.10
Difference $1.50
Learn more about cost here: https://brainly.com/question/24541771
Suppose a monopoly firm produces a medical device and can sell 15 items per month at a price of $2,000 each. In order to increase sales by one item per month, the monopolist must lower the price of its medical device by $100 to $1,900. The marginal revenue of the 16th item is: Group of answer choices
Answer: $400
Explanation:
Marginal Revenue is the revenue that is added by one additional unit.
When the product was selling at $2,000 it sold 15 units meaning the total revenue was;
= 2,000 * 15
= $30,000
When the product started selling for $1,900 it would be able to sell 16 units so the total Revenue is;
= 16 * 1,900
= $30,400
The difference in total Revenue is as a result of 1 extra unit, the 16th unit which contributed an amount of;
= 30,400 - 30,000
= $400
The equal total payments pattern for installment notes consists of changing amounts of interest but constant amounts of principal over the life of the note.
A. True
B. False
Answer:
B. False
Explanation:
The equal total payments pattern for installment notes is when the regular payments on an installment note are always for the same amount. However, the amounts of interest and principal change over the life of the note because at the begining, most of the payment amount goes toward the interest and as you make payments your principal starts to decrease making the amount that goes toward the interest to decrease and the money that goes towards the principal to increase. According to that, the statement is false.