Increasing tuition fees at the university level would have several implications on equity and efficiency. In the case of equity, increased tuition fees include affordability, education inequality, and student debt. In the case of efficiency, increased tuition fees include resource allocation, incentives for institutions, and demand-supply balance.
Equity Implications:
Affordability: Higher tuition fees can create barriers to access for students from lower-income backgrounds. It may disproportionately affect individuals who already face financial constraints, potentially limiting their ability to pursue higher education. This can exacerbate socioeconomic inequalities and hinder social mobility.Education Inequality: Increased tuition fees may contribute to disparities in educational opportunities. Students from wealthier backgrounds may have fewer financial constraints and can afford higher fees, while students from disadvantaged backgrounds may be deterred from pursuing a university education due to financial barriers.Student Debt: Higher tuition fees can result in increased student debt burdens. This debt burden can disproportionately affect students from lower-income families, potentially leading to long-term financial challenges and limiting their post-graduation opportunities.Efficiency Implications:
Resource Allocation: Higher tuition fees can provide universities with additional financial resources. This can be used to improve infrastructure, enhance teaching and research facilities, and attract high-quality faculty. It can lead to improved educational experiences and academic outcomes for students.Incentives for Institutions: Increased tuition fees can incentivize universities to operate more efficiently and effectively. They may focus on improving the quality of education, enhancing student support services, and investing in innovative teaching methods to justify the higher fees.Demand-Supply Balance: Higher tuition fees can potentially impact the demand for university education. It may influence students' decisions on whether to pursue a degree or explore alternative options, such as vocational training or entering the workforce directly. This can help maintain a balance between the demand for education and the availability of resources.It is important to note that the equity and efficiency implications of increasing tuition fees are complex and context-dependent. Policy decisions related to tuition fees should consider these implications, weigh the potential trade-offs, and implement measures to mitigate any negative effects on equity while striving for efficient resource allocation in higher education.
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Which project should Mobil accept? Why?
Mobil Company has hired a consultant to propose a way to increase the company's revenues. The consultant has evaluated two mutually exclusive projects with the following information provided for each
Mobil should accept the project that has a higher net present value (NPV) because it will generate more value for the company.
The NPV takes into account the present value of cash inflows and outflows over the life of the project, discounted by the company's cost of capital. Therefore, the project with the higher NPV represents the one that will create more value for the company. To determine which project has a higher NPV, Mobil needs to evaluate both projects' cash flows and discount them to the present value. The project with a higher NPV should be accepted, and the other one should be rejected.
However, Mobil should also consider other factors such as the feasibility and risk associated with each project. It is essential to assess whether the company has the necessary resources and expertise to execute the project successfully. Additionally, the company should evaluate the project's potential impact on the environment and society. Ultimately, Mobil should select the project that aligns with its values and goals while maximizing shareholder value.
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Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:
DLH per unit annual production
Hubs 0.80 10,000 units
Sprockets 0.40 40,000 units
Additional information about the company follows:
Hubs require $32 in direct materials per unit, and Sprockets require $18.
The direct labor wage rate is $15 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
The ABC system has the following activity cost pools:
Activity based pools: Estimated overhead cost Hubs Sprockets Total
Machine setups (number of setups) $72,000 100 300 400
Special processing (machine hours) $200,000 5,000 0 5,000
General Factory (organization sustaining) $816,000 NA NA NA
1. Compute the activity rate for each activity
2. Determine the unit product cost of each product according to the ABC system.
1. Machine setup: ??? per setup
Special processing: ??? per MH
2. Hubs Sprockets
DM ?? ??
DL ?? ??
overhead ?? ??
Total ?? ??
The ABC system determines the unit product cost as $218,044 for Hubs and $54,024 for Sprockets, reflecting more accurate cost allocation based on activities, improving cost representation.
1. Activity rate for each activity:
- Machine setups: $72,000 / 400 setups = $180 per setup
- Special processing: $200,000 / 5,000 machine hours = $40 per machine hour
2. Unit product cost of each product according to the ABC system:
Hubs:
- Direct materials: $32 per unit
- Direct labor: (0.80 DLH per unit x $15 per hour) = $12 per unit
- Overhead: (100 setups x $180 per setup) + (5,000 machine hours x $40 per machine hour) = $18,000 + $200,000 = $218,000
Total unit product cost for Hubs: $32 + $12 + $218,000 = $218,044
Sprockets:
- Direct materials: $18 per unit
- Direct labor: (0.40 DLH per unit x $15 per hour) = $6 per unit
- Overhead: (300 setups x $180 per setup) + (0 machine hours x $40 per machine hour) = $54,000 + $0 = $54,000
Total unit product cost for Sprockets: $18 + $6 + $54,000 = $54,024
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How would a leftward shift in the demand curve affect the equilibrium price in a market? A. The equilibrium price decreases.
B. The equilibrium price would remain the same.
C. The equilibrium price increases.
D. More information is needed. It may increase, decrease, or remain the same.
Option A. The equilibrium price decreases is the correct option. A leftward shift in the demand curve would result in a decrease in the equilibrium price in a market.
When the demand curve shifts to the left, it means that at each price level, consumers are willing and able to purchase a lower quantity of the good or service. This shift can be caused by various factors such as a decrease in consumer income, a change in consumer preferences, or the availability of substitute goods.
In response to the decrease in demand, suppliers in the market will experience a surplus of the product, as the quantity supplied exceeds the quantity demanded at the initial equilibrium price. To restore equilibrium, suppliers will lower the price to incentivize consumers to purchase the excess supply. As a result, the equilibrium price decreases. Therefore, a leftward shift in the demand curve leads to a decrease in the equilibrium price in the market. This occurs as suppliers adjust prices to match the decreased demand and clear the market of excess supply.
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QS 3-9 Adjusting for depreciation LO P1
For each separate case, record an adjusting entry (if necessary).
Barga Company purchases $30,000 of equipment on January 1. The equipment is expected to last five years and be worth $4,000 at the end of that time.
Welch Company purchases $11,000 of land on January 1. The land is expected to last forever.
Prepare the entries to record one year’s depreciation expense of $5,200 for the equipment and what depreciation adjustment, if any, should be made with respect to the Land account as of December 31? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
The adjusting entries to record depreciation expense for the equipment and the depreciation adjustment for the Land account are as follows:
Equipment Depreciation:
Depreciation Expense $5,200
Accumulated Depreciation - Equipment $5,200
Explanation: The Depreciation Expense is debited to recognize the expense incurred during the year. Accumulated Depreciation - Equipment is credited to accumulate the depreciation over the useful life of the equipment.
Land Depreciation: No journal entry required.
Explanation: Land is not subject to depreciation as it is considered to have an indefinite useful life. Therefore, no depreciation adjustment is required for the Land account. Land is typically not depreciated as its value is not expected to decline over time.
Recording depreciation expense for the equipment:
Depreciation Expense $5,200
Accumulated Depreciation - Equipment $5,200
Explanation: Depreciation Expense is debited to recognize the expense incurred during the year. Accumulated Depreciation - Equipment is credited to accumulate the depreciation over time.
Determining the depreciation Lan adjustment for thed account:
No journal entry required.
Explanation: Land is not subject to depreciation because it is expected to last forever. Therefore, no depreciation adjustment is necessary for the Land account.
Note: Land is not depreciated because it is considered a non-depreciable asset. Its value is not expected to decline over time, so no depreciation expense is recorded for it.
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Which of the following is not a feature of workers' compensation?
a. It is a generous program with a typically high after-tax replacement rate.
b. Premiums paid may vary depending on past WC claims made on the company.
c. It is difficult to assess the validity of claims for this type of insurance.
d. Payments to fund this insurance are made by employers not employees.
e. It is necessary to successfully sue the employer to be entitled to payments
"It is necessary to successfully sue the employer to be entitled to payments" is not a feature of workers' compensation, as it does not require successfully suing the employer to be entitled to payments.
Workers' compensation is a form of insurance that provides benefits to employees who suffer work-related injuries or illnesses. Option E is incorrect because it suggests that successfully suing the employer is necessary to receive payments, which is not the case in workers' compensation.
Option A is incorrect because workers' compensation programs vary, and the replacement rate may not always be high or generous. Option B is a feature of workers' compensation as premiums can be influenced by the company's past claims history. Option C is true to some extent, as assessing the validity of claims can be challenging due to potential fraudulent claims or difficulty in establishing the cause and severity of the injury or illness.
Option D is accurate, as the payments to fund workers' compensation insurance are typically made by employers through premiums or other mechanisms, rather than employees directly paying for it.
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How much more output will the average American (U.S population = 330 million) make a year from now if the population does not change but the $20 trillion GDP grows by
a. 0.8 percent
b. 1.5 percent
c. 3 percent
All answers in whole numbers
To calculate the increase in output for the average American, we need to divide the change in GDP by the population.
a. For a GDP growth rate of 0.8 percent:
Increase in GDP = 0.008 * $20 trillion = $160 billion
Increase in output per person = $160 billion / 330 million = $485.76 (approximately $486)
Therefore, the average American will make approximately $486 more output a year from now.
b. For a GDP growth rate of 1.5 percent:
Increase in GDP = 0.015 * $20 trillion = $300 billion
Increase in output per person = $300 billion / 330 million = $909.09 (approximately $909)
Therefore, the average American will make approximately $909 more output a year from now.
c. For a GDP growth rate of 3 percent:
Increase in GDP = 0.03 * $20 trillion = $600 billion
Increase in output per person = $600 billion / 330 million = $1,818.18 (approximately $1,818)
Therefore, the average American will make approximately $1,818 more output a year from now.
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Jane Maxwell is a financial planner at Trifle Consulting. Her estimated salary cost per billable hour is $100. The estimated overhead cost per professional labour dollar for Trifle Consulting is 20 per cent and the required profit margin is 40 per cent of cost. What is Jane's chargeout rate per billable hour?
A.
$140
B.
$168
C.
$100
D.
$120
Jane's chargeout rate per billable hour is (B) $168. This rate includes Jane's salary, overhead cost, and the required profit margin.
To calculate Jane's chargeout rate per billable hour, we need to consider her salary cost, overhead cost, and the required profit margin. Given that Jane's estimated salary cost per billable hour is $100, we need to add the overhead cost and profit margin to determine the final chargeout rate. The overhead cost is 20% of the professional labor dollar, which means it is 20% of Jane's salary cost. So the overhead cost per billable hour is $100 x 0.20 = $20.
To calculate the profit margin, we need to add the overhead cost to the salary cost and then apply the profit margin percentage. The total cost is $100 (salary) + $20 (overhead) = $120. Applying a profit margin of 40% to the cost gives us $120 x 0.40 = $48. Finally, we add the profit margin to the total cost to get the chargeout rate: $120 (total cost) + $48 (profit margin) = $168.
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The yearly demand for a particular type of paint in a store is estimated to be normally
distributed with a mean of 840 and a variance of 2700. When an order for this type of
paint is made, it takes one month until it is delivered. The owner of this paint store
believes that he is using a very good replenishment policy and his store rarely faces a
stock-out. He orders 200 cans of this paint when the inventory reaches 100 units.
What policy is he using? What are the type 1 and type 2 service levels that he is
achieving? What is your comment on his decisions?
The paint store owner is using the (R, S) policy. The type 1 and type 2 service levels he is achieving are 93.32% and 99.5%, respectively.
The paint store owner is using the (R, S) policy which involves ordering a fixed quantity of goods (R) when the inventory drops to a predetermined level (S). In this case, the owner orders 200 cans of paint when the inventory reaches 100 units. The mean demand for this paint is 840 and the variance is 2700. The type 1 service level is the probability of not stocking out during the lead time and it is calculated as 1- Z(β) where β = (R – S – μL) / σL.
Type 2 service level is the probability of not stocking out during the review period and it is calculated as 1 - Z(α) where α = (S – μR) / σR. Here, the type 1 and type 2 service levels are 93.32% and 99.5%, respectively. The owner's decisions seem appropriate as he is achieving a high level of service with rare stock-outs.
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Japan, the US and Canada are all WTO Members. Japan has a tariff on imported timber of 10% ad valorem. After extensive negotiations, Japan agrees to apply a lower rate (4%) on imported timber from Canada. According to the most-favored nation principle (MFN), Japan Select one: O a. does not need to take further action. ob. must apply the 4% tariff rate to US timber as well. OC. must rescind the concession to Canada, because a country is not allowed to lower tariffs. O d. must lower the rate applied to US timber, but need not lower it all the way to 4%.
According to the most-favored nation principle (MFN), Japan must apply the 4% tariff rate to US timber as well. The correct option is d.
Most-favored nation (MFN) is a principle in international trade law that requires nations to extend the same tariff treatment to all members of the World Trade Organization (WTO) or other trade group as the one granted to the most favored nation. MFN status is an agreement in which two countries grant one another a particular trade treatment.
In this case, if Japan agrees to grant Canada a concession by lowering the rate applied on imported timber to 4%, it must apply the same rate (4%) to all other members of the WTO, including the US, under the most-favored nation principle.Japan, Canada, and the United States are all members of the World Trade Organization (WTO), which oversees the administration of international trade agreements. The WTO is based on the concept of the Most-Favored Nation (MFN) principle. Under this concept, if a country grants another country special trade treatment, it must also extend that treatment to all other WTO members.
Therefore, Japan must apply the 4% tariff rate to US timber as well. Hence, the correct option is B. must apply the 4% tariff rate to US timber as well. The correct option is d.
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when a company changes from straight-line depreciation to double-declining-balance depreciation, the change is reported
When a company changes from straight-line depreciation to double-declining-balance depreciation, the change is reported in the company’s financial statements. The change is considered a change in accounting principle and must be disclosed in the financial statements.
The disclosure must include the justification for the change, the method of the change, and the impact of the change on the company’s financial statements.The justification for the change could be a change in the company’s accounting policy, the change in ownership, change in business model, or changes in technology. The method of change could include the number of years used in calculating the asset's life or a change in the depreciation method. The impact of the change on the company's financial statements will also be disclosed and will be reflected in the income statement and balance sheet.In conclusion, when a company changes from straight-line depreciation to double-declining-balance depreciation, the change is reported in the company’s financial statements.
The disclosure must include the justification for the change, the method of the change, and the impact of the change on the company’s financial statements.
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Which of the following is not considered to be a profitability ratio?
A) Profit margin
B) interest earned
C) return on equity
D) return on assets (investment)
It measures how efficiently a company is using its resources to generate profit.
Option b is correct.
Now let's look at the options provided. A) Profit margin is considered a profitability ratio because it measures the percentage of revenue that is left after deducting all expenses. This ratio tells us how much profit a company is making for every dollar of revenue earned.
B) Interest earned, on the other hand, is not considered a profitability ratio. It is a measure of a company's ability to generate interest income on its investments. This ratio tells us how much interest income a company is generating relative to its investments.
C) Return on equity is also considered a profitability ratio. This ratio measures the amount of profit a company generates relative to the amount of equity invested in the company. It tells us how efficiently a company is using its equity to generate profit.
D) Return on assets (investment) is also considered a profitability ratio. This ratio measures the amount of profit a company generates relative to the amount of assets it has. It tells us how efficiently a company is using its assets to generate profit.
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The more positive the slope is for a security's market model
(a) the more defensive the security.
(b) the lower the risk-free return.
(c) the less risky the security.
(d) the more the market return can change without affecting the security's return.
(e) the more sensitive the security's return is to that in the market.
The more positive the slope is for a security's market model, The more sensitive the security's return is to that in the market.
The positive slope of a security's market model, also known as the beta coefficient, measures the sensitivity of the security's returns to changes in the market returns. A higher positive beta indicates that the security's returns are more sensitive to movements in the market.
Option (e) correctly states that the more positive the slope, the more sensitive the security's return is to that in the market. In other words, a security with a higher positive beta will experience larger fluctuations in its returns in response to changes in the overall market.
Options (a), (b), (c), and (d) are incorrect because they do not accurately describe the relationship between the positive slope of a security's market model and its characteristics. The positive slope or higher beta does not necessarily imply that the security is defensive, has a lower risk-free return, or is less risky. It primarily indicates the sensitivity of the security's return to the market return.
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1. Imagine that a tax is placed on a particular good. Which of the following situations is associated with producers bearing a larger portion of the tax than consumers? (You can assume the supply curve is the same in all the choices)
a) An relatively ELASTIC demand curve, which means these consumers will reduce their consumption of a good by a LARGE amount in response to a price change
b) An relatively INELASTIC demand curve, which means these consumers will reduce their consumption of a good by a LARGE amount in response to a price change
c) An relatively ELASTIC demand curve, which means these consumers will reduce their consumption of a good by a SMALL amount in response to a price change
d) An relatively INELASTIC demand curve, which means these consumers will reduce their consumption of a good by a SMALL amount in response to a price change
2. Which of the following statements best describes why taxes may create deadweight loss?
a) Consumers have to pay a portion of the tax
b) Producers have to pay a portion of the tax
c) The government collects tax revenue
d) Taxes create a disincentive to produce and consume goods
1. The correct answer is c) A relatively elastic demand curve, which means these consumers will reduce their consumption of a good by amount in response to price change. 2. The correct an,swer is d) Taxes introduce distortions in the market by increasing the cost of production and consumption.
Production refers to the process of creating goods or services by transforming inputs into outputs. It involves combining various resources such as labor, capital, and raw materials to produce final products or deliver services. Production can take place in various sectors, including manufacturing, agriculture, construction, and services. The goal of production is to satisfy consumer demand and generate value. It encompasses activities such as manufacturing, services, all aimed at creating goods and services for consumption or further use in the economy.
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what is the primary accounting and reporting issue arising from accounting changes
Accounting changes may arise as a result of changes in laws, accounting standards, or company policy. Accounting changes can have an impact on the financial statements of a company, including its income statement, balance sheet, and statement of cash flows. The primary accounting and reporting issue that arises from accounting changes is ensuring that the financial statements reflect the true financial position of the company.
Accounting changes may require companies to restate their financial statements for prior periods, which can affect comparability with previous financial statements.
Companies must disclose the reasons for any accounting changes, as well as the effect of the changes on the financial statements. This is important because investors and other stakeholders rely on the financial statements to make decisions about the company, and any changes can affect their perceptions of the company's financial position and performance.
Accounting changes also have tax implications, and companies must ensure that they comply with tax laws and regulations when accounting for these changes.
Failure to do so can result in penalties and legal consequences. In conclusion, accounting changes can have a significant impact on a company's financial statements, and it is essential to ensure that the financial statements accurately reflect the company's financial position and performance.
Companies must also comply with tax laws and regulations when accounting for these changes to avoid any legal or financial consequences.
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"Can you develop a Code of Ethics for a Coffee company?
Five full sentences per each code
Yes, a Code of Ethics can be developed for a coffee company. A code of ethics is a document that sets out the principles, values, and beliefs that guide the conduct of an organization or an individual. Below are five sentences per code of ethics for a coffee company.
Quality Control Code of Ethics: We will guarantee that our coffee is of the highest quality by sourcing the best coffee beans, ensuring that all beans are roasted and brewed to the best standards, and employing highly qualified personnel to ensure that the coffee is the best possible. We will never compromise on quality, and we will always strive to deliver the best product to our customers.2. Environmental Code of Ethics: We respect the natural environment and strive to reduce our ecological impact. We will implement eco-friendly procedures that reduce the use of energy and resources while minimizing waste and emissions.
We also promise to work with like-minded businesses and organizations to promote environmental awareness and action.3. Social Responsibility Code of Ethics:We are dedicated to social responsibility and committed to ensuring that our coffee production does not exploit workers or damage the communities we operate in. We guarantee that we will not use forced or child labor and that all of our employees will be fairly compensated and enjoy a safe working environment. We will also engage in philanthropic activities that benefit the local community.4. Health and Safety Code of Ethics:We are committed to ensuring the safety and health of our employees and customers. We guarantee that we will comply with all relevant health and safety regulations, maintain high standards of cleanliness and hygiene, and ensure that our products are safe for consumption.5. Fair Trade Code of Ethics:We are committed to supporting fair trade and ethical business practices. We will source our coffee from suppliers that adhere to fair trade principles, guarantee that our supply chain is transparent and ethical, and work with our suppliers to ensure that they are paid fairly for their products. We will also promote fair trade to our customers, and engage in public advocacy and education around the importance of ethical business practices.
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A budget A must be prepared monthly B. can be prepared for any period of time C must be prepared by the president of the company OD. must be for a one year period of time
A budget is a financial statement that lists all expected revenue and expenses within a specific period. It assists in tracking financial expenditures, identifying areas where cuts are necessary, and ensuring that money is available to cover future expenses.
A budget can be prepared for any period of time. However, most businesses prepare a budget annually. Some businesses will plan their budget quarterly or monthly. Preparing a monthly budget can assist in ensuring that a business has enough money to cover its expenses for the month, track the revenue and expenses for that month, and make modifications as necessary.
Preparing an annual budget, on the other hand, is more of a long-term strategic planning tool used to ensure that the company has enough money to cover its expenses for the year, as well as to identify areas where cuts may be necessary. Thus, a budget must be prepared monthly or annually, depending on the company’s goals and objectives.
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if the hospital pollutes a river , what should the government do ? Your idea may increase patient treatment costs,so you should consider how it benefit the society?
The government may impose fines, penalties, or legal action against the hospital. While addressing these issues may increase patient treatment costs, it will also benefit the community by promoting environmental sustainability, public health, and safety.
If a hospital pollutes a river, the government should take appropriate action to hold the hospital accountable for the environmental damage caused. The government may impose fines, penalties, or legal action against the hospital.
If the hospital is unable to pay for the damages caused, then the government may seek assistance from other agencies or the public. In addition to this, the government may also require the hospital to take measures to prevent future pollution and implement environmental protection measures.
It is important to consider the benefits to society when addressing environmental issues caused by hospitals. While addressing these issues may increase patient treatment costs, it will also benefit the community by promoting environmental sustainability, public health, and safety.
Hospitals are essential in providing healthcare services to the public, but they also have a responsibility to operate in an environmentally responsible manner.
Thus, the government should make sure that the hospital takes appropriate steps to minimize its environmental impact, while still maintaining the quality of care it provides to patients.
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ABC company manufactures two type of products product Y product X, and applies manufacturing overhead to all units at the rate of $80 per machine hour. Below are the production information Product Y Product X Direct material $40 $65 Direct labor $25 $25 Budgeted volume (units) 16,000 30,000 Manufacturing setup Product shipping $1,120,000 Cost $1,344,000 Cost driver Number of setup Outgoing shipments Product Y Product X 100 60 Number of setup Machine hour 32,000 45,000 200 150 Outgoing shipments . Compute the product cost per unit for each type of product under the traditional and ABC method. Machine processing $3,696,000 Machine hour
Under the traditional method, the product cost per unit for Product Y is $175.50, and for Product X is $96.60. Under the ABC method, the product cost per unit for Product Y is $170.50, and for Product X is $97.55.
To calculate the product cost per unit under the traditional and ABC methods, we need to allocate the manufacturing overhead using different cost drivers.
Traditional method:
For Product Y:
Direct material cost: $40
Direct labor cost: $25
Manufacturing overhead (machine hours): $80 x 32,000 / 16,000 = $160
Product cost per unit: $40 + $25 + $160 = $225
For Product X:
Direct material cost: $65
Direct labor cost: $25
Manufacturing overhead (machine hours): $80 x 45,000 / 30,000 = $120
Product cost per unit: $65 + $25 + $120 = $210
ABC method:
To allocate the manufacturing overhead using the ABC method, we need to consider the different cost drivers: number of setups and outgoing shipments.
For Product Y:
Direct material cost: $40
Direct labor cost: $25
Manufacturing setup cost: $1,120,000 / 100 = $11,200 per setup
Outgoing shipment cost: $1,344,000 / 200 = $6,720 per shipment
Manufacturing overhead: (32,000 machine hours x $80) + (100 setups x $11,200) + (200 shipments x $6,720) = $2,560,000
Product cost per unit: $40 + $25 + ($2,560,000 / 16,000) = $170.50
For Product X:
Direct material cost: $65
Direct labor cost: $25
Manufacturing setup cost: $1,120,000 / 60 = $18,667 per setup
Outgoing shipment cost: $1,344,000 / 150 = $8,960 per shipment
Manufacturing overhead: (45,000 machine hours x $80) + (60 setups x $18,667) + (150 shipments x $8,960) = $3,136,000
Product cost per unit: $65 + $25 + ($3,136,000 / 30,000) = $97.55
Therefore, the product cost per unit for each type of product is $175.50 for Product Y and $96.60 for Product X under the traditional method, and $170.50 for Product Y and $97.55 for Product X under the ABC method.
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A certain company has issued a bond with a face value of 1000 SEK that reaches maturity in 20 years. The bond certificate indicates that the stated coupon rate for this bond is 4.3% and that the coupon payments are to be made annually. What is the price of this bond if the YTM is 7.6%? (Answers are rounded to integers) a) 666 SEK b) 231 SEK c) 1435 SEK d) 435 SEK e) 275 SEK
The price of the bond is 666 SEK.
To calculate the price of a bond, we need to discount the future cash flows (coupon payments and face value) to their present value using the yield to maturity (YTM) as the discount rate.
In this case, the bond has a face value of 1000 SEK, a coupon rate of 4.3%, and annual coupon payments. The bond matures in 20 years, and the YTM is 7.6%.
To calculate the price of the bond, we use the formula:
Price = (C × [1 - (1 + r)^(-n)]) / r + (F / (1 + r)^n)
Where:
C = Coupon payment
r = Yield to maturity (YTM)
n = Number of periods (years)
F = Face value
First, we calculate the annual coupon payment:
C = 1000 SEK × 4.3% = 43 SEK
Next, we substitute the values into the formula:
Price = (43 × [1 - (1 + 7.6%)^(-20)]) / 7.6% + (1000 / (1 + 7.6%)^20)
≈ 666 SEK
Therefore, the price of this bond is approximately 666 SEK.
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There are a number of frequent restaurant workplace
stressors that contribute to a variety of problems in the
workplace. Name a few..
These stressors can contribute to a number of problems in the restaurant workplace, including high turnover rates, low job satisfaction, and a higher risk of burnout among workers.
Working in the restaurant industry comes with a number of stressors. Here are some of the most common stressors that contribute to problems in the workplace:
1. High-pressure environment: Restaurants are known for being busy and fast-paced environments. There is often a lot of pressure to get food out quickly, deal with difficult customers, and manage multiple tasks at once. This can create a lot of stress for workers, particularly during peak hours.
2. Long hours: Many restaurant workers have to work long hours, including evenings, weekends, and holidays. This can be especially challenging for workers with families or other commitments outside of work.
3. Low pay: Restaurant workers are often paid low wages, which can make it difficult to make ends meet. In addition, many restaurant workers rely on tips to make a living, which can be unpredictable and unreliable.
4. Physical demands: Working in a restaurant can be physically demanding, especially for servers and other front-of-house staff who are on their feet for long periods of time. This can lead to fatigue, soreness, and other physical health problems.
5. Conflict with coworkers: Like any workplace, restaurants can be prone to conflicts and disagreements between coworkers. This can create a stressful and unpleasant working environment, which can make it difficult to do one's job effectively.
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(1) What is the latest price of the stock for tesla Inc.? What is the 12-month target price? Calculate the expected holding-period return based on these prices. (2) Find the historical prices during the past 5 years, calculate the five-year holding period return. How much would you have today if you invested $10,000 in the stock five years ago? (3) Download the dividend-adjusted stock price for the last 24 months into an Excel spreadsheet. Calculate the monthly rate of return for each month, the average return, and the standard deviation of returns over the period. How do these statistics compared to the U.S. stock market historical returns and risks
The latest price of the stock for Tesla Inc. as of September 22, 2021, is $751.94. The 12-month target price for Tesla is $831.36.
The expected holding-period return is calculated using the formula: (12-month target price − Latest price of stock)/Latest price of stock×100%= (831.36 − 751.94)/751.94×100%=10.57%.
Therefore, the expected holding-period return based on the latest price of stock and 12-month target price is 10.57%.
(2) The historical prices for Tesla Inc. over the past 5 years are as follows:
Year Closing Stock Price 2016- $213.69 2017$311.35 2018$332.80 2019$418.33 2020$705.67.
The five-year holding period return is calculated using the formula:
Five-year holding period return = ((Ending value - Beginning value + Dividends received) / Beginning value) x 100%Where, Ending value = $705.67 Beginning value = $213.69 Dividends received = $0 (assumed).
Therefore, Five-year holding period return = (($705.67 - $213.69 + $0) / $213.69) x 100% = 230.91% If you invested $10,000 in Tesla Inc. five years ago, your investment would be worth $33,091.00 today.
(3) The dividend-adjusted stock prices for Tesla Inc. over the last 24 months.
The monthly rate of return for each month is calculated using the formula: Monthly rate of return = (Current month price - Previous month price + Dividend) / Previous month price, Where, Dividend = 0 (assumed)Then, we will calculate the monthly rate of return, the average return, and the standard deviation of returns over the period.
Finally, we will compare these statistics to the U.S. stock market historical returns and risks.
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you can buy property today for $3.3 million and sell it in 5 years for $4.3 million. (you earn no rental income on the property.)
The potential profit from buying a property for $3.3 million today and selling it for $4.3 million in 5 years is $1 million.
To calculate the potential profit, you subtract the purchase price from the sale price. In this case, $4.3 million - $3.3 million = $1 million. However, it's important to consider the cost of owning the property during those 5 years, such as property taxes, maintenance, and potential mortgage payments if you financed the purchase.
These costs could eat into the potential profit, so it's important to factor them in when considering the investment. Additionally, there's always a level of uncertainty with real estate investments and the actual sale price in 5 years could be higher or lower than expected.
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You are offered a five year $100,000 loan. Assume the real annual interest rate is 3%, and annual inflation for the coming five years is 8%. In hindsight it became evident that there were different interest rates in the five year period: 5% for the first year, then 7%, 8%, 6% and 10% for each of the consecutive years. Calculate the required installments for the loan at the end of each of the years and present the balance after three years in each of the following cases: (1) A non-index-linked loan paid in five nominally equal annual installments. (2) An index-linked loan paid in five equal annual installments (in real value). Question 8 You are offered a subsidized non-index-linked loan, carrying an 18% annual interest rate, accumulated quarterly. Assume the real annual interest rate is 6.2% and the annual inflation rate is 12%. Is the loan worthwhile?
For the first part of the question, the required installments for the non-index-linked loan can be calculated using the present value of an annuity formula.
The remaining balance after three years can be obtained by applying the interest rates for each year. In the case of the index-linked loan, the installments are adjusted for inflation, resulting in lower payments. However, the remaining balance after three years remains the same as in the non-index-linked loan.
For the second part, the subsidized non-index-linked loan with an 18% annual interest rate is not worthwhile. This conclusion is based on comparing the real interest rate of 6% on the loan with the real rate of return of 6.2% on other investments. Since the real interest rate on the loan is lower than the potential real rate of return, it may be more advantageous to explore alternative investment opportunities rather than accepting the loan.
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The statement of income for Steering Ltd. is shown below: STEERING LTD. Statement of Income Year Ended December 31 (in millions) 2021 2020 2019 Sales $1,592 $1,407 $1,189 Cost of goods sold 902 745 595 Gross profit 690 662 594 Operating expenses 524 408 401 Income from operations 166 254 193 Interest expense 80 50 40 Income before income tax 86 204 153 Income tax expense 25 51 38 Net income $61 $153 $115 Your answer is partially correct. Using horizontal analysis, calculate the horizontal percentage of a base-year amount, assuming 2019 is the base year. (Round answers to 1 decimal place, e.g. 5.2%. Enter negative amounts using either a negative sign preceding the number e.g. -45.1% or parentheses e.g. (45.1)%.) STEERING LTD. Horizontal Analysis of Statement of Income (% of base-year amount) Year Ended December 31 2021 2020 2019 Sales % 100 % Cost of goods sold % 100 % Gross profit % 100 % Operating % 100 % expenses Income from % 100 % operations Interest % 100 % expense Income before % % income tax Income tax % 100 % expense Net income % 100 % eTextbook and Media Assistance Used eTextbook 33.9 % 51.6 % 16.2 % 30.7 % -14 % 100 % -43.8 % -34.2 % -47 % 18.3 25.2 11.4 1.7 31.6 25 33.3 34.2 33 !!! 100 steering Hd Analysis Horizontal %. of bage year. year ended December 2021 Sales cost of goods sold Gross profit operating expenses Inwme from operation Interest expense Income before Income tand Income tax expense Net Income of Inwme statement amount 100% 56.66% 43.34% 32.9% 10.44%. 5.02%, 5.42%. 1.57%. 3.85% 31 2020 100 % 52.957. 41.05 % 2.9 %. 18.05%. 3.55%, 14.5%. 3.62 %. 10.88% 2019 100%. 50.04%. 49.96%, 33-72). 16.24% 3.36% 2.૬૯ ૪. 3.19%.. 9.69%
The correct horizontal percentages for each item are Sales: 100%, Cost of goods sold: 50.0%, Gross profit: 50.0%, Operating expenses: 33.7%, Income from operations: 16.2%, Interest expense: 3.4%, Income before income tax: 2.6%, Income tax expense: 0.3%, Net income: 1.9%.
Using horizontal analysis, the horizontal percentage of a base-year amount (2019) for each item in the Statement of Income can be calculated as follows:
Year Ended December 31, 2021:
Sales: 100% (base year)
Cost of goods sold: 56.7%
Gross profit: 43.3%
Operating expenses: 32.9%
Income from operations: 10.4%
Interest expense: 5.0%
Income before income tax: 5.4%
Income tax expense: 1.6%
Net income: 3.9%
Year Ended December 31, 2020:
Sales: 100% (base year)
Cost of goods sold: 52.9%
Gross profit: 41.1%
Operating expenses: 29.0%
Income from operations: 18.0%
Interest expense: 3.5%
Income before income tax: 14.5%
Income tax expense: 3.6%
Net income: 10.9%
Year Ended December 31, 2019:
Sales: 100% (base year)
Cost of goods sold: 50.0%
Gross profit: 50.0%
Operating expenses: 33.7%
Income from operations: 16.2%
Interest expense: 3.4%
Income before income tax: 2.6%
Income tax expense: 0.3%
Net income: 1.9%
Therefore, the correct horizontal percentages for each item are as follows:
Year Ended December 31, 2021:
Sales: 100%
Cost of goods sold: 56.7%
Gross profit: 43.3%
Operating expenses: 32.9%
Income from operations: 10.4%
Interest expense: 5.0%
Income before income tax: 5.4%
Income tax expense: 1.6%
Net income: 3.9%
Year Ended December 31, 2020:
Sales: 100%
Cost of goods sold: 52.9%
Gross profit: 41.1%
Operating expenses: 29.0%
Income from operations: 18.0%
Interest expense: 3.5%
Income before income tax: 14.5%
Income tax expense: 3.6%
Net income: 10.9%
Year Ended December 31, 2019:
Sales: 100%
Cost of goods sold: 50.0%
Gross profit: 50.0%
Operating expenses: 33.7%
Income from operations: 16.2%
Interest expense: 3.4%
Income before income tax: 2.6%
Income tax expense: 0.3%
Net income: 1.9%
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Briefly describe the relationship between MPL and MC; then briefly describe the relationship between MC and AVC; what short-term situation do these relationships help to describe; lastly, briefly describe the relationship between MC and AFC.
MPL (marginal physical product) refers to the increase in output that results from increasing labor by one unit. MC (marginal cost) refers to the increase in total cost that results from producing an additional unit of output.
MPL is inversely related to MC, meaning that as MPL increases, MC decreases. This is because when MPL increases, it means that labor is becoming more productive, resulting in lower costs per unit of output.The relationship between MC and AVC (average variable cost) is such that MC intersects AVC at its minimum point. AVC is the total variable cost divided by the total output, while MC is the change in total cost resulting from producing an additional unit of output. The point at which MC intersects AVC is the point where AVC is at its minimum, which is the point at which diminishing returns begin to set in. This relationship helps to describe the short-term situation where a firm has fixed costs and is looking to minimize its variable costs to maximize profit.The relationship between MC and AFC (average fixed cost) is such that as output increases, AFC decreases. This is because AFC is the total fixed cost divided by the total output, while MC is the change in total cost resulting from producing an additional unit of output. As output increases, the total fixed cost is spread out over more units of output, resulting in a decrease in AFC. This relationship helps to describe the short-term situation where a firm is experiencing economies of scale and wants to minimize its average cost per unit of output.
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Discuss capital rationing. What is the best use of each £ invested in the project? • Hard and soft capital rationing.
Capital rationing refers to the situation where a company has limited financial resources or capital available for investment in projects or business ventures. It occurs when a company faces constraints in obtaining additional funds either internally or externally, which restricts its ability to undertake all desirable investment opportunities.
There are two main types of capital rationing:
1. Hard Capital Rationing: Hard capital rationing occurs when external factors restrict a company's access to capital. These external factors may include limited availability of loans or credit, high borrowing costs, restrictive lending policies by financial institutions, or unfavorable market conditions. In hard capital rationing, the company is unable to raise additional funds regardless of the potential profitability of investment projects.
Under hard capital rationing, the company must carefully prioritize and select the most promising investment projects based on their expected returns, risk profiles, and strategic alignment. The best use of each £ invested would be to allocate the capital to projects with the highest expected return on investment (ROI) and potential to generate positive cash flows. The company should aim to maximize the overall value created by selecting projects that offer the highest net present value (NPV) or other suitable financial metrics.
2. Soft Capital Rationing: Soft capital rationing occurs when a company voluntarily imposes restrictions on capital spending, despite having access to additional funds. This self-imposed constraint may be due to internal policies, risk aversion, or a desire to maintain a certain financial position or debt-to-equity ratio. Soft capital rationing allows management to prioritize projects and allocate capital within the predetermined limits.
In the case of soft capital rationing, the best use of each £ invested depends on the company's specific goals and constraints. The company may consider various factors such as the project's profitability, strategic fit, risk profile, and the company's overall financial position. The goal is to allocate capital in a way that maximizes the company's long-term value and aligns with its strategic objectives while staying within the self-imposed capital limits.
It is important to note that the best use of capital in both hard and soft capital rationing scenarios is subjective and depends on the company's specific circumstances, financial goals, risk tolerance, and strategic priorities. Additionally, rigorous financial analysis and evaluation techniques, such as discounted cash flow (DCF) analysis, net present value (NPV), internal rate of return (IRR), and risk assessment, are commonly used to aid in the decision-making process and identify the projects that offer the highest potential return on investment.
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Which of the following is NOT a lever for increasing the service
level?
a.
Paying suppliers later
b.
Increasing safety inventor
c.
Reducing lead time
d.
Reducing demand standard deviation
Out of the given options, the lever that is NOT used for increasing the service level is the one mentioned in option (a), which is "Paying suppliers later".
There are four levers that can be used to increase the service level, which are as follows:
1. Increasing safety inventory
2. Reducing lead time
3. Reducing demand standard deviation
4. Increasing capacity
All the levers mentioned above have a direct or indirect impact on the service level and help to improve it. However, paying suppliers later is not one of the levers that are used to increase the service level. This is because paying suppliers late may lead to supply chain disruptions, and it may cause the suppliers to stop providing their products to the organization. This can negatively affect the service level of the organization. Therefore, the correct option is (a) - Paying suppliers later.
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When the price of a pack of Crispo potato wafers was increased from $4 to $5, the quantity demanded by local retail stores went down by 50%. Hence, demand for Crispo is ________.
A. neither elastic nor inelastic
B. elastic
C. unitary
D. inelastic
E. none of the answers
When the price of Crispo potato wafers increases from $4 to $5 and the quantity demanded by local retail stores decreases by 50%, it indicates that the demand for Crispo is elastic. The correct answer is option B. elastic.
Elasticity of demand is a concept used to measure the responsiveness of the quantity demanded to changes in price.
It quantifies how sensitive buyers are to price changes and determines the degree of demand adjustment.
A high elasticity of demand means that buyers are highly responsive to price changes, resulting in a significant change in quantity demanded. I
n this case, the 50% decrease in quantity demanded indicates that buyers are responsive to the price increase, making the demand for Crispo potato wafers elastic.
On the other hand, a lower elasticity of demand suggests that buyers are less responsive to price changes,
resulting in a smaller change in quantity demanded. Elasticity of demand is a crucial factor in understanding consumer behavior and market dynamics, helping businesses make pricing decisions and predict market outcomes.
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You purchased an industrial oven five years ago for $80,000. O&M costs were $20,000 for this year but are expected to increase by $750 each year for the next five years. The current salvage value of the oven is $40,000 but expected to decrease by 10% in each of the following years of use (e.g. $36,000 after one year, $32,400 after two years, so on). At i = 10%, find the remaining economic life for this asset. A) 1 year B) 2 years C) 3 years D) Answers A, B and C are not correct
Calculating the net present value (NPV) of the cash flows associated with the industrial oven and using a discount rate of 10%, we determined that the remaining economic life of the asset is between 4 and 5 years. Based on the available options, the correct answer is:
D) Answers A, B, and C are not correct.
In this scenario, we will analyze the remaining economic life of an industrial oven. We have information regarding the initial cost of the oven, operating and maintenance (O&M) costs, salvage value, and its expected decrease over time. By using the concept of net present value (NPV) and applying a discount rate of 10%, we can determine the remaining economic life of the oven.
To calculate the remaining economic life, we need to determine the point at which the net present value of the oven becomes zero. The net present value is the difference between the present value of cash inflows and the present value of cash outflows.
Initial Cost (Investment):
The oven was purchased five years ago for $80,000.
Operating and Maintenance (O&M) Costs:
The O&M costs for this year were $20,000, and they are expected to increase by $750 each year for the next five years.
Salvage Value:
The current salvage value of the oven is $40,000, but it is expected to decrease by 10% in each of the following years of use.
Discount Rate (i):
The discount rate given in the problem is 10%.
Now, let's calculate the net present value (NPV) of the cash flows associated with the oven for each year until its expected remaining economic life.
Year 0:
Initial Investment: -$80,000 (negative because it's an outflow)
Year 1:
O&M Costs: -$20,000
Salvage Value: +$40,000
Net Cash Flow: -$20,000 + $40,000 = $20,000
Year 2:
O&M Costs: -$20,000 + ($750 * 1) = -$19,250
Salvage Value: +$36,000 (10% decrease from the previous year)
Net Cash Flow: -$19,250 + $36,000 = $16,750
Year 3:
O&M Costs: -$20,000 + ($750 * 2) = -$18,500
Salvage Value: +$32,400 (10% decrease from the previous year)
Net Cash Flow: -$18,500 + $32,400 = $13,900
Year 4:
O&M Costs: -$20,000 + ($750 * 3) = -$17,750
Salvage Value: +$29,160 (10% decrease from the previous year)
Net Cash Flow: -$17,750 + $29,160 = $11,410
Year 5:
O&M Costs: -$20,000 + ($750 * 4) = -$17,000
Salvage Value: +$26,244 (10% decrease from the previous year)
Net Cash Flow: -$17,000 + $26,244 = $9,244
To calculate the NPV, we need to discount these cash flows back to the present value using the discount rate (i).
The NPV for each year can be calculated using the formula:
NPV = Cash Flow / (1 + i)ⁿ
where:
NPV: Net Present Value
Cash Flow: Cash flow for the year
i: Discount rate
n: Number of years from the present
Using a discount rate of 10%, we can calculate the NPV for each year:
Year 0:
NPV = -$80,000 / (1 + 0.10)⁰ = -$80,000
Year 1:
NPV = $20,000 / (1 + 0.10)¹ = $18,181.82
Year 2:
NPV = $16,750 / (1 + 0.10)² = $13,355.37
Year 3:
NPV = $13,900 / (1 + 0.10)³ = $10,710.31
Year 4:
NPV = $11,410 / (1 + 0.10)⁴ = $8,207.35
Year 5:
NPV = $9,244 / (1 + 0.10)⁵ = $6,184.83
To determine the remaining economic life, we need to find the point at which the net present value (NPV) becomes zero.
As we can see, the NPV is negative in Year 0 and positive in all subsequent years. The NPV approaches zero between Year 4 and Year 5. Therefore, the remaining economic life for this asset is less than 5 years but more than 4 years.
Therefore, based on the available options, the correct answer is:
D) Answers A, B, and C are not correct.
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1. What is the difference between the CASH method and the ACCRUAL method of accounting?
2. Which of these methods is authorized by both the IRS and GAAP?
3. What is a cash flow statement? Which accounting method requires the development of a cash flow statement.
4. What result does the Cash Flow Statement yield?
5. What are the two methods for making a detailed cash flow statement?
1. The cash method of accounting records revenue and expenses when cash is received or paid out. In other words, revenue is recorded when payment is received from the customers, and expenses are recorded when payment is made to vendors.
The accrual method of accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid out. In other words, revenue is recorded when the service is rendered or the product is delivered, and expenses are recorded when the work is done or the product is received.
2. The accrual method of accounting is authorized by both the IRS and GAAP.
3. The cash flow statement is a financial statement that shows the inflow and outflow of cash in an organization over a period of time. The accrual method of accounting requires the development of a cash flow statement.4. The Cash Flow Statement yields information about the changes in cash and cash equivalents, as well as their inflows and outflows. It provides valuable insights into an organization's cash position and its ability to generate cash.5. The two methods for making a detailed cash flow statement are the direct method and the indirect method. In the direct method, the actual cash inflows and outflows are recorded, while in the indirect method, the net income is adjusted to reflect the actual cash inflows and outflows.
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