Answer:
$1,656.2263
Explanation:
The computation of the net present value is shown below:
= Cash inflows of the project - cash outflows or initial investment
= $18,453 × PVIFA factor for 3 years at 8% - $45,899
= $18,453 × 2.5771 - $45,899
= $47,555.2263 - $45,899
= $1,656.2263
Refer to the PVIFA factor table for the discounting factor
The learning curve is:_______
a. Really no different from a marginal cost curve.
b. Calculates average cost at a particular point in time.
c. Shows the decrease in unit cost as more of the same product is produced over time.
d. None of the above.
Answer:
Option C, Shows the decrease in unit cost as more of the same product is produced over time, is the right answer.
Explanation:
Option C is the correct answer because the learning curve shows the relationship between the cost of the production and output over the time period. Moreover, this curve shows the cost savings when more output is produced over time. The same can be seen in option C that the cost decreases when output rises which means there is a cost-saving.
Sufra Corporation is planning to sell 150,000 units for $2.90 per unit and will break even at this level of sales. Fixed expenses will be $93,000. What are the company's variable expenses per unit
Answer:
$2.28
Explanation:
Breakeven point is the number of units produced and sold at which net income is equal to zero.
Breakeven = F / P - V
F = fixed
P = price
V = variable cost
150,000 = $93,000 / $2.90 - V
Multiply both sides of the equation by $2.90 - V
= ($2.90 - V)150,000 = $93,000
$435,000 - 150,000V = $93,000
V = $2.28
I hope my answer helps you
Le Sun's has sales of $3,000, total assets of $2,500, and a profit margin of 5%. The firm has an equity multiplier of 2.5. What is the return on equity?
Answer:
Le Sun's return on equity is 15%
Explanation:
Assets turnover ratio = Net sales / Total fixed assets = $3,000 / $2,500 = 1.2 times
Return on Asset = Profit margin * Total assets turnover
ROA= 5% * 1.2 times
ROA = 6%
Return on Equity= ROA * Equity multiplier
ROE= 6% * 2.5
ROE= 15%
Le Sun's return on equity is 15%
Splish Brothers Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Sunland Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:_________.
1. Sunland has the option to purchase the equipment for $24,000 upon termination of the lease. It is not reasonably certain that Sunland will exercise this option.
2. The equipment has a cost of $280,000 and fair value of $330,500 to Splish Brothers Leasing. The useful economic life is 2 years, with a residual value of $24,000.
3. Splish Brothers Leasing desires to earn a return of 5% on its investment.
4. Collectibility of the payments by Splish Brothers Leasing is probable.
Prepare the journal entries on the books of Splish Brothers Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
Answer:
Journal entries
Date Account title Debit Credit
01-01-2017 Lease Receivable(Fair Value) $3,30,500.00
COGS(280000-21769) $2,58,231.00
Sales Revenue(330500-21769) $3,08,731.00
Equipment(Cost) $2,80,000.00
(Inception of lease)
12/31/2017 Cash $1,66,037.00
Lease Receivable $1,49,512.00
Interest income $16,525.00
(1st instalment recd.)(as per table)
12/31/2018 Cash $1,66,037.00
Lease Receivable $1,56,988.00
Interest income $9,049.00
( 2nd & Last instalment recd.)(as per table)
If Sunland exercises the option to purchase:
12/31/2018 Cash $24,000.00
Lease Receivable $24,000.00
Lease Receivable amortisation schedule:
Year Annuity Tow. Int. at 5% Tow. Lease Lease balance
0 $3,30,500.00
1 $1,66,037.00 $16,525.00 $1,49,512.00 $1,80,988.00
2 $1,66,037.00 $9,049.00 $1,56,988.00 $24,000.00
(Residual value)
If purchased $24,000.00 0
Working Note-1
PV of lease payments= Fair value of the equipment= $3,30,500.00
PV of residual value $21,769.00
So,amt.to be recovered thro' 2 end-of-yr. lease payments $3,08,731.00
Using the PV of ordinary annuity formula as under:
308731=Pmt.*(1-1.05^-2)/0.05
Pmt.=308731/((1-1.05^-2)/0.05)= $166037
Explanation:
Ethan's Eggroll House, a calendar year corporation, purchased a new computer and printer in January for $1,500. In February, the business purchased a new oven for $1,200. No other assets were purchased during the year. How much depreciation will be taken on these items in the second year of service if the taxpayer does NOT elect to use Section 179 and does NOT use bonus depreciation
Answer:
depreciation for year 2 = $773.88
Explanation:
the MACRS depreciation schedule for computer equipment is:
5 year class life (half year convention)
year depreciation % assets' cost depreciation expense
1 20% $1,500 $300
2 32% $1,500 $480
3 19.20% $1,500 $288
4 11.52% $1,500 $172.80
5 11.52% $1,500 $172.80
6 5.76% $1,500 $86.40
the MACRS depreciation schedule for an oven is:
7 year class life (half year convention)
year depreciation % assets' cost depreciation expense
1 14.29% $1,200 $171.48
2 24.49% $1,200 $293.88
3 17.49% $1,200 $209.88
4 12.49% $1,200 $149.880
5 8.93% $1,200 $107.16
6 8.92% $1,200 $107.04
7 8.93% $1,200 $107.16
8 4.46% $1,200 $53.52
depreciation for year 2 = $480 + $293.88 = $773.88
True or false: The main purpose of both financial and managerial accounting is similar in that both aim to provide relevant information to its users.
Answer: True
Explanation:
Even though Financial and Managerial accounting differ in the type of people who use it with Financial being used both internally and externally and Managerial being used internally, the main purpose is to provide relevant information to it's users.
Managerial accounting concerns analyzing and interpreting financial as well as other data so that the management can make informed decisions about their course of action.
Financial Accounting on the other hand provides the public with financial data on a company so that they may know whether to invest. Either way, they are both providing relevant information to users.
You need to borrow money and you are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a stated rate of 3.125% compounded monthly. Loan B offers a stated rate of 3.15% compounded semi-annually. What are the effective annual rates for the loans? Which one do you prefer
Answer:
For Loan A = 3.170%
For Loan B = 3.174%
Loan B has a higher effective annual rate.
Explanation:
The computation of effective annual rates for the loans is shown below:-
For Loan A
We will assume effective annual rate is a
Stated rate(r) = 3.125% compounded monthly
= Number of periods in an year n = 12
So,
(1 + a) = (1 + r ÷ n) × n
= a = (1+0.03125 ÷ 12) × 12 - 1
= 0.03170
or
= 3.170%
For Loan B
We will assume the effective annual rate is b
Stated rate (r) = 3.15% compounded semi annually
= Number of periods in an year n = 2
So
(1 + a) = (1 + r ÷ n) × n
= a = (1 + 0.0315 ÷ 2) × 2 - 1
= 0.03174
or
= 3.174%
From the above calculation we can see that Loan B, is greater than Loan A and has a higher effective annual rate.
When the amount earned on a deposit has become part of the principal at the end of a specified time period the concept is called
Answer:
Compound interest
Explanation:
Compound interest is a method of measuring interest by which interest is applied to the principal amount over time. You not only earn interest on the principal amount but also collect interest on your interest.
This tends to happen because you save your interest, rather than withdraw it
Hence, the compound interest is the correct answer
Corporate finance (Financial management) deals with main three types of managerial decision making problems in the context of business except:
Answer:
staffing decision making problems
Explanation:
In simple words, corporate finance relates to the branch of finance that studies how and when an organisation and individuals should incest their money in the market.
In this subject matter. the analyst takes into consideration various market factors such as interest rates, GDP etc. and by applying various tools and methods make a decision.
It particularly deals with investment decisions and asset management problems and not staffing decisions.
The following information describes a product expected to be produced and sold by Hadley Company:selling price.......................$80 per unit
variable costs....................$32 per unit
Toatal fixed costs...............$ 630,000
Required:
(a) calculate the contribution margin in units.
(b) calculate the break-even point in units and in dollar sales.
(c) What dollar amount of sales would be necessary to achieve an income of $120,000?
Answer:
a. Contribution margin per unit is $48 per unit
b. Break-even point in units is 13,125 units; and Break-even point in dollar sales is $1,050,000
c. Dollar amount of sales to achieve $120,000 income is $1,250,000.
Explanation:
These can be determined as follows:
(a) calculate the contribution margin in units.
Contribution margin in units is the selling price per unit minus the variable cost per unit that produces incremental earning for each unit sold. This can be calculated as follows:
Contribution margin per unit = Selling price per unit - Variable cost per unit = $80 - $32 = $48 per unit
b) Calculate the break-even point in units and in dollar sales.
Break even point is the point at which there is no net loss or gain, i.e. where total revenue is equal to to cost. This can be calculated both in units and dollar sales as follows:
Break-even point in units = Total fixed costs / Contribution margin in units = $630,000 / $48 = 13,125 units
Break-even point in dollar sales = Selling price * Break-even point in units = $80 * 13,125 = $1,050,000
(c) What dollar amount of sales would be necessary to achieve an income of $120,000?
To calculate this, we first calculate the contribution margin ratio as follows:
Contribution margin ratio = Contribution margin in units / Selling price = $48 / $80 = 0.60
Therefore, we have:
Dollar amount of sales to achieve $120,000 income = (Targeted income + Total Fixed costs) / Contribution margin ratio = ($120,000 + $630,000) / 0.60 = $1,250,000.
a. The contribution margin in units is $48 per unit.
b. The break-even point in units and in dollar sales is $1,050,000.
c. The dollar amount of sales would be necessary to achieve an income of $120,000 is $1,250,000.
a. Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit Contribution margin per unit= $80 - $32
Contribution margin per unit= $48 per unit
b. Break-even point in units and in dollar sales:
Break-even point in units = Total fixed costs / Contribution margin in units
Break-even point in units= $630,000 / $48
Break-even point in units = 13,125 units
Break-even point in dollar = Selling price × Break-even point in units
Break-even point in dollar= $80×13,125
Break-even point in dollar= $1,050,000
c. Dollar amount of sales:
Contribution margin ratio = Contribution margin in units / Selling price
Contribution margin ratio = $48 / $80
Contribution margin ratio = 0.60
Dollar amount of sales = (Targeted income + Total Fixed costs) / Contribution margin ratio
Dollar amount of sales = ($120,000 + $630,000) / 0.60
Dollar amount of sales=$750,000/0.60
Dollar amount of sales = $1,250,000
Inconclusion the contribution margin in units is $48 per unit, the break-even point in units and in dollar sales is $1,050,000 and the dollar amount of sales would be necessary to achieve an income of $120,000 is $1,250,000.
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A manufacturer reports the following information below for its first three years in operation.
Year 1 Year 2 Year 3
Income under variable costing $76,000 $109,000 $115,000
Beginning inventory (units) 0 800 500
Ending inventory (units) 800 500 0
Fixed manufacturing overhead per unit $8.00 $8.00 $8.00
Income for year 3 using absorption costing is:
a. $109,000
b. $117,000
c. $106,600
d. $115,000
e. $111,000
Answer:
e. $111,000
Explanation:
Absorption costing income for year 3 = Income under variable costing - {Beginning inventory (units) * Fixed manufacturing overhead per unit} + {Ending inventory (units) * Fixed manufacturing overhead per unit}
Absorption costing income for year 3 = 115,000 - (500*8) + (0*8)
= 115,000 - 4,000 + 0
= $111,000
Identify the following questions as most likely to be asked by an internal or an external user of accounting information
1. What are reasonable payroll benefits and wages?
2. Should we make a five-year loan to that business?
3. What are the costs of our product's ingredients?
4. Do income levels justify the current stock price?
5. Should we spend additional money for redesign of our product?
6. Which firm reports the highest sales and income?
7. What are the costs of our service to customers?
Answer:
The answer is:
1. - Internal user of accounting information(management)
2. External user of accounting information(banks)
3. Internal user of accounting information(management)
4. External user of accounting information(potential investors)
5. Internal user of accounting information(management)
6. External user of accounting information
7. Internal user of accounting information(management)
Explanation:
Internal users of accounting information are people within a organization who use the accounting information for decision making. Examples of are the management and employees. External users are people that are not within the organization. Examples are government, the public, banks, potential investors etc
1. - Internal user of accounting information(management)
2. External user of accounting information(banks)
3. Internal user of accounting information(management)
4. External user of accounting information(potential investors)
5. Internal user of accounting information(management)
6. External user of accounting information
7. Internal user of accounting information(management)
As the income of bus riders increased, the wages of bus drivers increased simultaneously. How does this affect the market for bus rides (inferior good)?
Answer:
The demand curve and supply curve will shift leftwards.
Explanation:
The increase in the income of riders will decrease the number of bus rides because there is an inverse relationship between income and inferior goods. Therefore, the demand curve for bus rides will shift leftwards. Moreover, the increase in wages is an input cost, therefore, the rise in input cost will shift the supply curve leftwards.
Boxwood Company sells blankets for $30 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 03 Purchase 6 $14 10 Sale 4 17 Purchase 12 $16 20 Sale 4 23 Sale 3 30 Purchase 12 $18 Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of May using the LIFO inventory cost method.
Answer:
The ending inventory for the month of May using the LIFO inventory cost method is $324.
Explanation:
LIFO
LIFO method assumes that the last goods purchased are the first ones to be issued to the final customer.
This means valuation of inventory will use the value of the earliest goods purchased.
Ending Inventory : 2 units × $14 = $28
5 units × $16 = $80
12 units × $18 = $216
Total = $324
Conclusion :
The ending inventory for the month of May using the LIFO inventory cost method is $324.
g Ryngard Corp's sales last year were $24,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO).
Answer:
1.50
Explanation:
TATO = (net sales)/(total assets)
= (24000/16000) = 1.50
The total asset turnover ratio (TATO) for Ryngard Corp was 1.50 last year.
Wildhorse Company established a petty cash fund on May 1, cashing a check for $125. The company reimbursed the fund on June 1 and July 1 with the following results. June 1: Cash in fund $3.55. Receipts: delivery expense $27.45, postage expense $36.25, and miscellaneous expense $55.60. July 1: Cash in fund $4.15. Receipts: delivery expense $18.90, entertainment expense $52.25, and miscellaneous expense $49.70. On July 10, Wildhorse increased the fund from $125 to $155. Prepare journal entries for Wildhorse Company.
Answer:
journal entries for Wildhorse Company are given below
Explanation:
Wildhorse Company established a petty cash fund on May 1,
DEBIT CREDIT
Petty cash $125
Cash $125
The company reimbursed the fund on June 1
DEBIT CREDIT
delivery expense $27.45
postage expense $36.25
miscellaneous expense $55.60
Cash under/over $2.15
Cash ($125-$3.55) $121.45
The company reimbursed the fund on July 1
DEBIT CREDIT
delivery expense $18.90
entertainment expense $52.25
miscellaneous expense $49.70
Cash ($125 - 4.15) $120.85
Wildhorse increased the fund from $125 to $155
DEBIT CREDIT
Petty cash $30
Cash $30
The limited liability company form of organization:__________.
a) is a poor choice for new businesses.
b) can offer stock incentives to employees.
c) affords less protection from liability than partnerships.
d) avoids the double taxation of C corporations.
Answer:
Avoids the double taxation of C corporations
Explanation:
Double taxation occurs when an organization is made to pay their income taxes two times. This means that the tax is paid both on a personal level and on a corporate level.
This type of taxation puts a strain on the amount of profit that is realised as the corporation is mandated to pay income tax twice after which the remaining amount of profit is distributed to its partners.
Limited liability company do not make such double taxation payment as this type of business is arranged as a flow-through-organisation, this means that the profits comes straight to the shareholders.
This does not mean that they are exempted from tax payment. In a limited liability company taxes are paid only on a personal level.
The company expects dividends to growth at 20% per year for the next 12 years and eventually leveling off at 9% into perpetuity. DJI just paid a dividend of $1.95. If the required return on the stock is 12%, what is the current share price of the stock
Answer:
Price of the stock today = $199.83
Explanation:
The current price of the stock can be computed using the two stage dividend growth model of the DDM approach. The DDM or dividend discount model values a stock based on the present value of the expected future dividends from the stock.
The formula for the price of the stock today using the two stage growth model is attached.
Price of the stock today = 1.95 * (1+0.2) / (1+0.12) + 1.95 * (1+0.2)^2 / (1+0.12)^2
+ 1.95 * (1+0.2)^3 / (1+0.12)^3 + ... + 1.95 * (1+0.2)^12 / (1+0.12)^12 +
[ (1.95 * (1+0.2)^12 * (1+0.09)) / (0.12 - 0.09) ] / (1+0.12)^12
Price of the stock today = $199.83
The journal entry to record the transfer of partially completed work in process to the next process in process costing is a(n):
Answer:
Explanation:
The Journal Entry in these types of situations is done as Debit Work in Process-department #2 and credit Work in Process-department #1. Since it is being transferred from one to the other meaning the first department is losing the completed work (credit) while the second department is gaining the completed work (debit)
For financial accounting purposes, what is the total amount of product costs incurred to make 24,500 units
Answer:
The product cost for 24,500 units is $497,350.
Explanation:
The reason is that the the product cost always includes all the variable production cost and specific fixed production cost. In this scenario, direct material cost, direct labor cost, variable manufacturing overhead cost are variable production cost whereas the fixed manufacturing cost is specific fixed production cost which will form part of product cost. The remainder of the cost left is period cost.
Direct materials (24,500 * $7.7 per unit) $188,650
Direct labor (24,500 * $4.7 per unit) $115,150
Variable manufacturing overhead (24,500 * $2.2 per unit) $53,900
Fixed manufacturing overhead (24,500 * $5.7 per unit) $139,650
Total product costs $497,350
On February 1, a customer's account balance of $2,700 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method? Multiple Choice Debit Bad Debts Expense $2,700; credit Accounts Receivable $2,700. Debit Bad Debts Expense $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Accounts Receivable $2,700; credit Allowance for Doubtful Accounts $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700. Debit Allowance for Doubtful Accounts $2,700; credit Bad Debts Expense $2,700.
Answer:
On February 1, a customer's account balance of $2,700 was deemed to be uncollectible.
The entry to be recorded on February 1 to record the write-off assuming the company uses the allowance method is:
Debit Allowance for Doubtful Accounts $2,700; credit Accounts Receivable $2,700.
Explanation:
Using the allowance method, every bad debt entry is first reflected in the Allowance for Doubtful Accounts before it is taken to the bad debt expense account.
The entries above reduce the Accounts Receivable account by the amount of the write-off and reduces the Allowance for Doubtful Accounts by the same amount. Any recovery of written off debt is also treated in the Allowance for Doubtful Accounts and the Accounts Receivable account in revised order. This method is unlike the direct write-off method. With the direct write-off method, the Accounts Receivable is credited with the amount of the write-off and the write-off is expensed in the Bad Debts Expense account directly.
g "Walblue imports a desk from a French manufacturer for sale in its chain of U.S. stores. The cost of a desk to Walblue is 3,700 euros (€). What is the dollar cost of one of these desks if the exchange rate is currently 1.117 euros per U.S. dollar?"
Answer: $3312.4
Explanation:
The exchange rate in the rate at which a currency is being converted for another currency in the foreign exchange market. From the question, we are told that Walblue imports a desk from a French manufacturer for sale in its chain of U.S. stores.and that the cost of a desk to Walblue is 3,700 euros (€).
The dollar cost of one of these desks if the exchange rate is currently 1.117 euros per U.S. dollar goes thus:
$1 = €1.117
Therefore, €3700 will be converted to dollars as:
= 3700/1.117
= $3312.4
The answer is $3312.4
Suppose Alex owns a business making quilts that generates $7,000 a month in revenue. Each month, Alex spends $1,500 on fabric and other sewing materials, and he pays his two employees a combined total of $4,000 per month (they each earn $2,000). Alex makes his quilts in a workshop he has set up in his basement. If Alex did not own the quilt business, he would work as a yoga instructor earning $2,300 per month, and he would use the basement as a TV room, an option he would value at $40 per month. a. What is Alex's accounting profit
Answer:
Alex's accounting profit is calculated as follows:
Revenue from quilts = $7,000
Materials costs (1,500)
Labor costs (4,000)
Accounting profit $1,500
Explanation:
Alex's accounting profit is different from the profit when calculated from the economist's point of view. The economist would include the opportunity costs of lost earnings as a yoga instructor of $2,300 per month and the monthly rental value of $40 for the TV room in the monthly cost. These are not considered in arriving at the accounting profit. Accounting profit does not include opportunity costs. It only includes the actual costs of goods sold or produced. And it is not the costs that were paid for in cash that accounting profit considers. All related costs whether paid for in cash or not, provided they are incurred in generating the revenue are included in accordance with the accrual concept and the matching principle of generally accepted accounting principles.
Item 35Item 35 You expect to receive $4,100 upon your graduation and will invest your windfall at an interest rate of 0.63 percent per quarter until the account is worth $5,500. How many years do you have to wait until you reach your target account value
Answer:
It will take 11.7 years to reach the objective
Explanation:
Giving the following information:
PV= $4,100
FV= $5,500
i= 0.0063
n= ?
To calculate the time required to reach the future value, we need to use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(5,500/4,100) / ln(1.0063)
n= 46.78
in years= 46.78/4= 11.70
It will take 11.7 years to reach the objective
Winkle Corporation uses the FIFO method in its process costing system. Beginning inventory in the mixing processing center consisted of 5,000 unites, 90% complete with respect to conversion costs. Ending work in process inventory consisted of 2,000 units, 60% complete with respect to conversion costs. If 10,000 units were transferred to the next processing center during the period, how many would the equivalent units for conversion costs be?
a. 10,000 units
b. 12,200 units
c. 12,000 units
d. 6,700 units
Answer:
d. 6,700 units
Explanation:
The computation of the equivalent units for conversion cost by using the FIFO method is shown below:
= Beginning inventory units × remaining percentage + units started and completed + ending inventory units × completion percentage
= 5,000 × 10% + (10,000 - 5,000) + 2,000 × 60%
= 500 + 5,000 + 1,200
= 6,700 units
We simply applied the above formula
When unemployment is high, government policymakers might decide to do which of the following?
a. Decrease the amount of funds in the economy available for loans
b. Decrease government spending on goods and services
c. Increase government spending on goods and services
d. Raise taxes
Answer:
Option C is correct.
Explanation:
The option is C, “Increase government spending on goods and services” is correct because the spending by the government will create new employment opportunities. Therefore, this will decrease unemployment. However, if the government decreases the loan funds in the economy, decreases the spending on goods and services, and rises the taxes then it will raise unemployment in the economy.
In the case when the unemoloyment is high, the government policymakers should increase the government spending on the goods and services.
The following information should be considered:
The spending by the government developed the new employment opportunities.Due to this, the unemployment should decreased.In the case when the government reduced the loan funds so it reduced the spending on goods & services.Learn more: brainly.com/question/17429689
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1 comma 000, and a coupon rate of 7.7 % (annual payments). The yield to maturity on this bond when it was issued was 6.3 %. What was the price of this bond when it was issued? When it was issued, the price of the bond was $ nothing. (Round to the nearest cent.)
Answer:
The price of the bond when it was issued was $1101.59
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms.
Coupon Payment (C) = 1000 * 0.077 = $77
Total periods (n)= 10
r = 6.3%
The formula to calculate the price of the bonds today is attached.
Bond Price = 77 * [( 1 - (1+0.063)^-10) / 0.063] + 1000 / (1+0.063)^10
Bond Price = $1101.592357 rounded off to $1101.59
The price of the bond when it was issued was $1101.59
Assuming that ATCHULO Company Ltd is committed to the current design, how would you improve it?
Answer:
Atchulo company should focus on its income centers rather than the whole organization. The company has limited itself to only domestic shipments. It has not considered the international shipment where profit margin can be high and company can benefit from expanding its operations. Also all the cost related to the travelling of shipment to and from the hub is charged to the hub and terminals does not bears the cost.
Explanation:
The revenue for the different terminals and hub is divided so the cost should also be allocated to the respective activities. If the hub is set as cost bearing center then there will no profit to the hub and terminals cost will be reduced and they will enjoy high profit.
Assume that there is an autonomous increase in investment spending of $20 billion and the MPC is given as 0.4, and assuming taxes, imports, and savings are all equal and no leakages:
Answer:
a. 1.67
b. $33.4 billion
c. A larger MPC
Explanation:
a. The Spending Multiplier is used to calculate how much an Economy increases as a result of an extra dollar being put into it and can be calculated by using the following formula;
= 1 / ( 1 - MPC)
= 1/ ( 1 - 0.4
= 1.67
b. Total Change in GDP = Amount invested * Spending Multiplier
= 20 * 1.67
= $33.4 billion.
c. An Economy is helped when it's GDP increases. A higher Marginal Propensity to Consume (MPC) will help it more in that case because from the formula, a larger MPC would reduce the divisor of 1 resulting in a larger Spending Multiplier which will increase the GDP more per dollar.
To explain further, the MPC measures how much of an extra dollar that people in the Economy spend, if the MPC is higher it means they spend more which will contribute to a rise in Consumption which is part of GDP.
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 5 workers, who together produced an average of 100 carts per hour. Workers receive $20 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $11 per hour while output increased by 5 carts per hour.
Required:
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment. (Round to 4 decimal places)
b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places)
Answer:
a. The multifactor productivity(MFP)Prior to buying the new equipment=0.71 carts
b. The % growth in productivity between the Prior and after buying the new equipment=12.81%
Explanation:
a. In order to calculate the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment we would have to make the following calculation:
multifactor productivity(MFP)Prior to buying the new equipment=Carts produced / [(Number of workers x Worker wage) + Equipment cost)
According to given data we have the following:
Carts produced=100 per hour
(Number of workers= 5
Worker wage=$20
Equipment cost=$40
Therefore, multifactor productivity(MFP)Prior to buying the new equipment=100 / [(5 x $20) + $40
multifactor productivity(MFP)Prior to buying the new equipment=0.71 carts
b. In order to calculate the % growth in productivity between the Prior and after buying the new equipment we would have to make the following calculation:
% growth in productivity between the Prior and after buying the new equipment=(New productivity - Old productivity) / Old productivity] x 100
multifactor productivity(MFP after buying the new equipment=105 / [(4 x $20) + $51
multifactor productivity(MFP after buying the new equipment=0.801
Therefore, % growth in productivity between the Prior and after buying the new equipment=0.801 - 0.71) / 0.71] x 100
% growth in productivity between the Prior and after buying the new equipment=12.81%