The correct answer is: Accept the project since the project's IRR is greater than the discount rate of 12%.
The internal rate of return (IRR) is the rate of return at which the present value of the project's cash inflows equals the initial investment. In this case, the project requires an initial investment of $100,000 and generates cash inflows of $25,000 annually for six years.
To determine whether the project should be accepted or rejected, we compare the project's IRR to the firm's discount rate. If the project's IRR is greater than the discount rate, it means the project's return exceeds the required rate of return, making it a favorable investment.
In this scenario, we do not have the specific IRR value calculated. However, if the project's IRR is greater than the firm's discount rate of 12%, it indicates that the project's return is higher than the required rate of return. Therefore, the firm should accept the project.
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Please Use Blockbuster Typically, There Are Signs To Indicate A Business Is Failing, Forcing The Business To Claim Bankruptcy, Seek Financial Help From The Courts To Pay Debts, Or Go Out Of Business. Using Your Knowledge Of Liquidity And Solvency, Find An Annual Report Of A Company That Went Out Of Business And Analyze The Financial Statements To Determine
Please use Blockbuster
Typically, there are signs to indicate a business is failing, forcing the business to claim bankruptcy, seek financial help from the courts to pay debts, or go out of business. Using your knowledge of liquidity and solvency, find an annual report of a company that went out of business and analyze the financial statements to determine if you could tell the business was going to fail. In your response, discuss your findings and why you think those items lead to the demise of the organization and include any indications to management that change needed to be made. Examples of high-profile companies that went out of business include Toys-R-Us, Blockbuster, Tower Records, Pan Am, Borders, Pets.com, and Compaq.
Blockbuster was a well-known video rental company that filed for bankruptcy in 2010 and eventually went out of business. One of the key factors that contributed to Blockbuster's failure was its inability to adapt to changing market trends and technology. With the rise of online streaming services and digital downloads, the demand for physical video rentals declined significantly. Blockbuster's business model, which relied heavily on brick-and-mortar stores, became outdated and unable to compete with the convenience and accessibility offered by online platforms.
From a liquidity perspective, Blockbuster faced challenges due to declining revenues and increased debt. As customers shifted to online platforms, Blockbuster experienced a decrease in rental income, leading to cash flow difficulties. Additionally, the company had significant lease obligations for its physical stores, which became burdensome as revenues declined. These liquidity challenges were evident in the company's financial statements, particularly in the form of decreasing cash balances and increasing debt levels.
Solvency was also a major concern for Blockbuster. As the company's financial performance deteriorated, its ability to meet long-term obligations became uncertain. Blockbuster's debt levels were high, and the company struggled to generate sufficient profits to cover its interest expenses and maintain a positive net income. This signaled solvency issues and the potential inability to sustain operations in the long term.
Indications that change was needed within Blockbuster's management included their failure to adapt to the evolving market landscape. Despite the growing popularity of online streaming and digital media, Blockbuster did not adequately invest in or transition to digital platforms. Additionally, the company's late entry into the DVD-by-mail rental market, which was pioneered by Netflix, further highlighted management's failure to recognize and respond to changing consumer preferences.
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the labor market is in equilibrium when:
group of answer choices
a.the labor demand curve lies above the labor supply curve.
b.both labor demand and labor supply curves are positively sloped.
c.both labor demand and labor supply curves are negatively sloped.
d.the labor demand curve intersects the labor supply curve.
e.the labor demand curve is negatively sloped but the labor supply curve is positively sloped.
The correct option is option (d) the labor demand curve intersects the labor supply curve. Equilibrium can be defined as a state where all the involved parties are satisfied. In economics, the equilibrium point is where the quantity demanded is equal to the quantity supplied.
The intersection of labor demand and labor supply curves determines the equilibrium wage rate. At this point, the labor market is said to be in equilibrium. The quantity of labor supplied and demanded at this point is the same and the wage rate is satisfactory to both employers and employees.In contrast, if the wage rate is below the equilibrium rate, the demand for labor would increase and the supply of labor would decrease, resulting in a labor shortage. Similarly, if the wage rate is higher than the equilibrium rate, the supply of labor would increase while the demand for labor would decrease, resulting in a labor surplus. This can be shown graphically as below: Therefore, the equilibrium point is a very important concept in labor economics and helps in the effective allocation of resources to achieve maximum efficiency.
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Totally focused on serving the customer by offering quick service, a good variety and low prices. A)Jeff Bezos B)Richard Branson C)Bill Gates D)Steve Jobs E)Jack Ma F)Elon Musk
The person who is totally focused on serving the customer by offering quick service, a good variety and low prices is Jeff Bezos. The correct answer is A)Jeff Bezos.
Jeff Bezos is an American entrepreneur who founded Amazon.com in 1994. Amazon.com is an online marketplace that started selling books online. Currently, Amazon.com is one of the world's largest online marketplaces offering products like electronics, clothing, and household goods. Jeff Bezos was born in Albuquerque, New Mexico in 1964. He graduated from Princeton University in 1986 with degrees in electrical engineering and computer science. He worked at a startup called Fitel and then worked for a company called Bankers Trust before founding Amazon.com in 1994. He became the CEO of Amazon.com and helped to grow the company into one of the world's largest online marketplaces. Jeff Bezos is known for his focus on customer satisfaction and his dedication to offering a wide selection of products at low prices. He has been praised for his innovative ideas and his willingness to take risks in order to grow his business.
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the five techniques used by managers to promote motivational attributions are...
Answer:
screening for resilience, attributional training, immunization, increasing psychological
The five techniques used by managers to promote motivational attributions are the following: Provide feedback, Give rewards, Recognize achievements, Encourage a positive attitude, and Provide challenging tasks.
1. Provide feedback: Providing feedback is a technique used by managers to motivate their subordinates. This helps employees know what they're doing well and what they need to improve on. Feedback can be in the form of constructive criticism, praise, or performance evaluation.
2. Give rewards: Rewarding employees is another technique that managers use to promote motivational attributions. Rewards can be in the form of a salary raise, promotions, bonuses, or even a promotion. Managers must ensure that the rewards they give are meaningful and valuable to their employees.
3. Recognize achievements: Managers recognize achievements in employees to boost their morale and make them feel valued. This recognition can be done verbally, in written form, or even publicly in front of other employees.
4. Encourage a positive attitude: Having a positive attitude helps to motivate employees. Managers can encourage a positive attitude by having a positive demeanor, setting a good example for their subordinates, and implementing team-building activities.
5. Providing challenging tasks: Lastly, managers can promote motivational attributions by assigning challenging tasks to their subordinates. This helps employees develop new skills and gain a sense of accomplishment when they complete difficult tasks.
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the total variable cost of producing 5 units is 14.60 10 63 73
The total variable cost of producing 5 units is $73.
Total variable cost refers to the sum of all costs that vary with the level of production. In this case, the total variable cost of producing 5 units is given as $73. This means that the costs associated with producing those 5 units, such as direct materials, direct labor, and variable overhead, amount to a total of $73.
It's important to note that the cost figures provided ($14.60, $10, $63, $73) are not specific to individual units. They represent the cumulative total variable cost for producing 5 units. The breakdown of costs per unit cannot be determined with the information provided.
Total variable cost is a key component in calculating the total cost of production and understanding the cost structure of a business. By analyzing the relationship between total variable cost and the number of units produced, businesses can assess their cost efficiency, make informed pricing decisions, and optimize production levels.
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Imagine that you are the Chief Executive Officer (CEO) for Bluemotors, the largest company that specializes in producing cars in your country. Bluemotors' products are very popular, and the company has steady profits and cash inflows. 13a) If you combine your business with Redtires, a major tire supplier for your products, what is the terminology for this type of merger?
If you combine your business with Redtires, a major tire supplier for your products, the terminology for this type of merger is a vertical merger. A merger is a strategic business consolidation strategy in which two or more firms are merged into a single entity.
In this process, one company is subsumed into another, and the acquiring firm absorbs the target company. This can result in the formation of a new company, which then operates as a single entity. Merger Types are of the following three types: Horizontal merger, Vertical merger, and Conglomerate merger. A vertical merger is a form of merger that involves the integration of two firms that operate in different stages of the supply chain.
Vertical integration occurs when a company expands its operations by acquiring firms that supply raw materials or distribute their products. A vertical merger is a merger in which two or more companies that operate at different stages of the production process for a particular good join together to form a single company. This type of merger aids in the integration of the production process and the reduction of transaction costs.
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Provide a one to two-paragraph answer. Please.
Explain what environmental justice means and discuss an example that illustrates this.
Environmental benefits and burdens, ensuring that no particular community or group is disproportionately affected by environmental hazards or deprived of environmental resources.
It highlights the intersectionality of social, economic, and environmental factors and aims to address environmental inequalities and protect vulnerable populations. An example that illustrates environmental justice is the case of Flint, Michigan. In 2014, the city switched its water supply source to the Flint River as a cost-saving measure, leading to a public health crisis. The river water was highly corrosive and contaminated with lead, resulting in elevated levels of lead in the drinking water.
The majority of Flint's population consisted of low-income communities, primarily African American, who were disproportionately affected by this environmental hazard. The incident highlighted the systemic environmental injustice faced by marginalized communities, as their concerns were ignored and their health and well-being were compromised. It sparked national attention and efforts to rectify the situation, emphasizing the importance of addressing environmental justice issues and protecting vulnerable communities from environmental harm.
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Batelco's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department inuated 5.000 calls and incurred come $125,000 f 1,750 of these calls were for the company's wholesale operation (the remainder were for the retail divisions, costs allocated to the retail division should amount to
a. $78,750
b. $112,500
c. $146.250
d. $303,750
To determine the costs allocated to the retail division, we need to calculate the proportion of calls made for the retail division out of the total number of calls.
Total calls for the retail division = Total calls - Calls for wholesale operation
Total calls for the retail division = 5,000 - 1,750 = 3,250
Next, we calculate the cost allocation for the retail division by multiplying the proportion of calls for the retail division by the total cost incurred.
Cost allocation for the retail division = (Calls for retail division / Total calls) * Total cost incurred
Cost allocation for the retail division = (3,250 / 5,000) * $125,000
Calculating the value:
Cost allocation for the retail division = 0.65 * $125,000
Cost allocation for the retail division = $81,250
Therefore, the correct answer is $81,250 (not one of the given options).
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Which of the following is NOT one of the procedures in process costing? O A. summarize total costs to account for B. assign costs to completed units C. assign costs to equivalent units based on their percentage of completion D. compute equivalent unit costs O E. summarize the flow of physical units of output Which costing system is well-suited for companies which have infrequent changes in their basic products? 11 O A. standard costing B. last in first out costing OC. weighted-average costing D. equivalent-average unit costing method E. first-in, first-out method measures the relationship between actual inputs used and actual outputs achieved. www O A. Product yield variance B. Partial productivity OC. Total factor productivity OD. Labour yield E. Productivity
E. summarize the flow of physical units of output. This procedure is not one of the steps in process costing. The other s, A, B, C, and D, are all essential procedures in process costing.
The costing system that is well-suited for companies with infrequent changes in their basic products is C. weighted-average costing. Weighted-average costing calculates the average cost of units in inventory by considering both the current period's costs and the costs carried over from previous periods. It smooths out fluctuations in costs and is suitable when there are infrequent changes in product costs or when it is difficult to track individual costs for specific units. This method provides a more stable cost measurement over time compared to other methods like FIFO (first-in, first-out) or LIFO (last-in, first-out) costing, which rely on specific cost flows and can lead to significant cost variations when there are changes in product costs.
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at the end of last year, games-2-use had merchandise costing $140,000 in inventory. during january of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. games-2-use uses a perpetual inventory system. the balance in the inventory account at january 31 was: at the end of last year, games-2-use had merchandise costing $140,000 in inventory. during january of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. games-2-use uses a perpetual inventory system. the balance in the inventory account at january 31 was: a. $84,000.
b. $158,000.
c. $140,000.
d. $242,000.
If games-2-use uses a perpetual inventory system, the ending inventory balance in the account at January 31 will be:
a. $84,000.
The merchandise costings of Games-2-Use can be easily calculated by balancing the merchandising account for the given period i.e. for January.
The calculation of merchandise costing can be made by the given formula:
Cost of goods sold = Beginning inventory + Purchases – Ending inventory
Given, beginning inventory of last year was $140,000
And, the company purchased merchandise costing $102,000 during January of the current year
And, sold merchandise that it had purchased at a total cost of $84,000.
Therefore, cost of goods sold can be calculated as follows:
Cost of goods sold = $140,000 + $102,000 - $84,000
= $158,000
Therefore, the merchandise balance at the end of January can be calculated as follows:
Ending Inventory = Beginning Inventory + Purchases - Cost of Goods Sold
= $140,000 + $102,000 - $158,000
= $84,000
Hence, the correct option is: a. $84,000.
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Home Heart Ange Titions Aula M Lac 34 Protected View (Rapaed-PowerPoint Adobe Presen Tell me what you want to do Armation Record Example Either of the cost alternatives shown below can be used in a chemical refining process. If the company's MARR is 15% per year, determine which should be selected on the basis of ROR analysis? A B -40,000 -60,000 First cost $ Annual cost, S/year -25,000 -19,000 Salvage value, $ 8,000 10,000 Life, years 5 5 Initial observations: Mutually Exclusive, cost alternatives with equal life estimates and no multiple ROR values indicated.
To determine which cost alternative should be selected based on the Rate of Return (ROR) analysis, we need to calculate the ROR for each alternative and compare them to the company's Minimum Acceptable Rate of Return (MARR), which is stated as 15% per year.
To calculate the ROR for each alternative, we need to consider the initial cost, annual costs, salvage value, and the life of the alternatives. The ROR is the rate at which the project's net present value (NPV) becomes zero.
Let's calculate the ROR for each alternative:
For Alternative A:
[tex]\text{Initial Cost:} & \$40,000 \text{ (negative because it's an expense)} \\[/tex]
[tex]\text{Annual Cost:} & \$25,000 \text{ (negative)} \\[/tex]
[tex]\text{Salvage Value:} & \$8,000 \\[/tex]
[tex]\text{Life:} & 5 \text{ years}[/tex]
Using these values, we can calculate the NPV at the MARR of 15% using the following formula:
[tex]\[\text{NPV} = \text{Initial Cost} + (\text{Annual Cost} \times (1 - (1 + \text{MARR})^{-\text{Life}})) + \left(\frac{\text{Salvage Value}}{(1 + \text{MARR})^{\text{Life}}}\right)\][/tex]
Substituting the values:
[tex]\[\text{NPV} = -\$40,000 + (\$25,000 \times (1 - (1 + 0.15)^{-5})) + \left(\frac{\$8,000}{(1 + 0.15)^5}\right)\][/tex]
[tex]\text{NPV} = -\$40,000 + (\$25,000 \times 3.3522) + \left(\frac{\$8,000}{1.8694}\right)\][/tex]
[tex]\[\text{NPV} = \$48,088\][/tex]
For Alternative B:
[tex]\text{Initial Cost:} & \$60,000 \text{ (negative)} \\[/tex]
[tex]\text{Annual Cost:} & \$19,000 \text{ (negative)} \\[/tex]
[tex]\text{Salvage Value:} & \$10,000 \\[/tex]
[tex]\text{Life:} & 5 \text{ years}[/tex]
Using the same formula:
[tex]\[\text{NPV} = -\$60,000 + (\$19,000 \times (1 - (1 + 0.15)^{-5})) + \left(\frac{\$10,000}{(1 + 0.15)^5}\right)\][/tex]
[tex]\[\text{NPV} = -\$60,000 + (\$19,000 \times 3.3522) + \left(\frac{\$10,000}{1.8694}\right)\][/tex]
[tex]\[\text{NPV} = \$9,050\][/tex]
Comparing the NPVs, we see that the NPV for Alternative A is [tex]\$48,088[/tex] and for Alternative B is [tex]\$9,050[/tex] . Since the objective is to select the alternative with the higher ROR, Alternative A should be selected as it has the higher NPV.
Therefore, based on the ROR analysis and the MARR of 15% per year, Alternative A should be chosen over Alternative B in this chemical refining process.
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Question 15. Which of the following factors describes a possible cause for an unfavorable materials price variance? Last minute purchases Vendors flooding the marketplace with their products Purchasing low quality materials Making a long-term commitment with one vendor for a specific raw material
The correct answer is:
c.purchasing low-quality materials.
among the given s, the factor that describes a possible cause for an unfavorable materials price variance is:
c. purchasing low-quality materials.
an unfavorable materials price variance occurs when the actual cost of materials is higher than the standard or expected cost. purchasing low-quality materials may result in a higher actual cost due to various factors such as rework, scrap, or inefficiencies caused by the lower quality materials. this can lead to an unfavorable variance.
the other s listed do not necessarily relate to an unfavorable materials price variance:
a. last-minute purchase:
last-minute purchases may impact other factors like delivery time or efficiency, but they do not directly relate to the price variance of materials.
b. vendors flooding the marketplace with their products:
while this scenario may create competition and potentially lower prices, it does not necessarily cause an unfavorable materials price variance.
d. making a long-term commitment with one vendor for a specific raw material:
making a long-term commitment with one vendor may have benefits such as cost stability or relationship building, but it does not directly relate to an unfavorable materials price variance.
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On June 1, 2020, JetCom Inventors Inc issued a $470,000 9%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020 Required: a. Calculate the issue price of the bond assuming a market interest rate of 10%. (Do not round Intermediate calculations. Round the final answer to the nearest whole dollar.) los pobe of the bond b. Using the effective interest method, prepare an amortization schedule. (Do not round Intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)
a. To calculate the issue price of the bond, we need to determine the present value of the bond's future cash flows. The bond has a face value of $470,000, a stated interest rate of 9%, and a maturity period of three years. The market interest rate is 10%.
Using the present value formula for a bond, the bond issue price can be calculated as follows:
PV = C × [1 - (1 + r)^(-n)] / r + M / (1 + r)^n
Where:
PV = Present value or bond issue price
C = Periodic interest payment
r = Market interest rate per period
n = Number of periods
M = Face value of the bond
In this case, the periodic interest payment is calculated as $470,000 × 9% / 2 = $21,150 (since interest is payable semiannually), the market interest rate is 10% / 2 = 5% per period, and the number of periods is 3 years × 2 = 6 periods.
Plugging in the values, we have:
PV = $21,150 × [1 - (1 + 5%)^(-6)] / 5% + $470,000 / (1 + 5%)^6
Calculating this expression will give us the bond issue price.
PV = $104,415 + $383,864
PV = $488,279
Therefore, the bond issue price is $488,279.
b. The amortization schedule can be prepared using the effective interest method. Here's the schedule:
Period Interest Payment Interest Expense Amortization Carrying Value
1 $21,150 $24,414 -$3,264 $491,936
2 $21,150 $24,597 -$3,447 $495,383
3 $21,150 $24,786 -$3,636 $498,747
4 $21,150 $24,981 -$3,831 $502,018
5 $21,150 $25,181 -$4,031 $505,187
6 $21,150 $25,388 -$4,238 $508,249
Note: The negative amortization indicates a decrease in the carrying value of the bond.
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Rikell company produces helmets using labor (L) and capital (K).
Its production function is given by the following expression: Q =
26 L + 80 K where Q is the output of helmets. The prices of labor
(PL
The production function for the Rikell company that produces helmets using labor (L) and capital (K), the firm will hire labor and capital in the ratio of 40/13 to maximize the production output.
The labor (L) and capital (K) can be represented as follows: Q = 26L + 80K
where Q is the quantity or output of helmets, L is labor and K is capital. This production function indicates that the output of helmets depends on the input factors of labor and capital. Given the function of the Rikell company, we can calculate the marginal product of labor (MPL) and the marginal product of capital (MPK) using the formulas:
MPK = ΔQ/ΔK and MPL = ΔQ/ΔL
where ΔQ is the change in the output of helmets, and ΔL and ΔK are the change in labor and capital used respectively. The prices of labor and capital are PL and PK respectively. In order to maximize the production output, the firm will have to hire labor and capital until the point where the marginal product per dollar spent on both inputs is the same. Mathematically, this can be represented as:
MPL/PL = MPK/PKBy substituting the values of MPL and MPK from the production function, we can derive the equation:26/PL = 80/PK rearranging gives the equationPK/PL = 80/26Simplifying we getPK/PL = 40/13
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A study compares Incandescent, CFL and LED light bulbs. Energy consumption for the 3 bulb types in MJ/20 million lumen-hours is: 15100, 3950 and 1760 The weight of the minerals used in the product specified in g/20 million lumen-hours are: 600, 300 and 200 The study is interested in emissions to the air (CO₂) and emissions to the soil (landfill). The bulbs are sent to a landfill after usage. The following conversion factors are to be used: 1 MJ = 0.28 kWh 1 kWh results in 0.61 lb. of CO A study compares Incandescent, CFL and LED light bulbs. Energy consumption for the 3 bulb types in MJ/20 million lumen-hours is: 15100, 3950 and 1760 The weight of the minerals used in the product specified in g/20 million lumen-hours are: 600, 300 and 200 The study is interested in emissions to the air (CO₂) and emissions to the soil (landfill). The bulbs are sent to a landfill after usage. The following conversion factors are to be used: 1 MJ = 0.28 kWh 1 kWh results in 0.61 lb. of CO2 a. What is the functional unit? b. Life Cycle Inventory per Functional Unit (show formulas) Electricity Lighting Unit of Measure MJ Lumen-hours Technology Incandescent CFL LED Air Emission Lb. of CO2 Minerals gram
a. The functional unit in this study is defined as 20 million lumen-hours of lighting. This unit provides a standardized measure for comparing the performance of different light bulb technologies.
b. To calculate the Life Cycle Inventory per functional unit, we need to convert the energy consumption and mineral weight into their respective units of measure and determine the associated air emissions and mineral usage.
For energy consumption: Convert MJ to kWh: 1 MJ = 0.28 kWh
Convert kWh to lb. of CO2: 1 kWh results in 0.61 lb. of CO2
For mineral weight: The weight of minerals is already specified in grams, so no conversion is needed.
Using the given data, we can calculate the Life Cycle Inventory per functional unit as follows:
Incandescent: Energy consumption: 15100 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = X lb. of CO2
Mineral weight: 600 g
CFL: Energy consumption: 3950 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = Y lb. of CO2
Mineral weight: 300 g
LED: Energy consumption: 1760 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = Z lb. of CO2
Mineral weight: 200 g
These values will provide the Life Cycle Inventory per functional unit in terms of air emissions (CO2) and mineral usage for each light bulb technology.
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APICS and ISM are creating new SCM certifications. write in details.
Here is an example of a company formally endorsing a certification.
Johnson Controls Inc. (JCI) is headquartered in Milwaukee and has $35 billion in annual sales revenue with around 40,000 employees. JCI has 160 SCM employees in North America. There is a development goal within the company’s purchasing organization to have 100% of the purchasing team pass all three modules of the ISM CPM certification. To date about 50 team members are certified, with 80 awaiting results.
Many companies are formally endorsing certification programs to ensure that their employees have the knowledge and skills required to succeed in the supply chain management field.
APICS and ISM are organizations in the supply chain management field that are working together to create new SCM certifications. These new certifications are being designed to reflect the latest developments and technologies in the supply chain management industry. The Association for Supply Chain Management (APICS) is the world's leading organization for supply chain management professionals. The organization has been offering certification programs for over 60 years, and its certifications are recognized worldwide. The Institute for Supply Management (ISM) is another leading organization in the field of supply chain management. ISM has been providing training, certification, and professional development programs for supply chain professionals for over 100 years.
The new SCM certifications being developed by APICS and ISM are designed to reflect the latest trends and technologies in the supply chain management industry. These certifications will be designed to help supply chain professionals stay up-to-date with the latest best practices and to provide a way for companies to verify the skills and knowledge of their supply chain employees. As shown by the example of Johnson Controls Inc. (JCI), many companies are formally endorsing certification programs to ensure that their employees have the knowledge and skills required to succeed in the supply chain management field. By endorsing these certifications, companies can help ensure that their employees are better prepared to handle the complex challenges of modern supply chain management.
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What was the main variable that caused a stubbornly high
inflation rate in the US in the 1970s?
Group of answer choices
Political instability
Unemployment
Expectations
The interest rate
The main variable that caused a stubbornly high inflation rate in the US in the 1970s was expectations.
This was because of a combination of factors such as an increase in oil prices, the Vietnam War, and expansionary monetary policy. This led to expectations of higher prices, which in turn led to higher prices as businesses raised prices to protect themselves from anticipated inflation.
Expectations refer to the belief or expectation of inflation that businesses and individuals have for the future. For instance, if people believe that prices will rise in the future, they may start buying goods and services today in anticipation of future price increases, which will cause demand-pull inflation. The expectation of higher prices led businesses to raise prices, which led to an increase in the overall price level.
The high inflation rate was also caused by an increase in oil prices, which resulted from the Arab oil embargo of 1973. The embargo resulted in a significant reduction in the supply of oil, which increased its price globally. This led to higher prices for oil-dependent goods and services, which increased the overall price level in the US.
Moreover, the expansionary monetary policy of the government also contributed to the high inflation rate. The monetary policy led to an increase in the money supply, which increased aggregate demand, leading to an increase in prices. The government's attempts to stimulate economic growth by increasing the money supply led to high inflation, which persisted throughout the 1970s.
In conclusion, expectations were the main variable that caused a stubbornly high inflation rate in the US in the 1970s. This was due to a combination of factors such as an increase in oil prices, expansionary monetary policy, and the Vietnam War.
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Firth Ltd's financial statements show the following:
2020 2019
Cash provided by operating activities $610.000 $488,000
Net capital expenditures $152.500 $244,000
Dividends paid $48,800 $
Calculate Firth's free cash flow for both years. (Enter negative amount using either a negative sign preceding the number eg.-45 or porentheses g. (45))
2020 2019
Free cash flow $ _____ _____
indicate whether this trend is positive or negative.
This trend is ______
To calculate Firth Ltd's free cash flow for both years, we need to use the formula:
Free Cash Flow = Cash provided by operating activities - Net capital expenditures - Dividends paid
Let's calculate the free cash flow for each year:
For 2020:
Free Cash Flow = $610,000 - $152,500 - $48,800
Free Cash Flow = $408,700
For 2019:
Free Cash Flow = $488,000 - $244,000 - $0 (assuming no dividends were paid in 2019)
Free Cash Flow = $244,000
Now, let's determine the trend by comparing the free cash flow for each year:
Change in Free Cash Flow = Free Cash Flow (2020) - Free Cash Flow (2019)
Change in Free Cash Flow = $408,700 - $244,000
Change in Free Cash Flow = $164,700
Since the change in free cash flow is positive ($164,700), we can conclude that the trend in Firth Ltd's free cash flow is positive. This indicates an improvement in their ability to generate cash from their operations and investments, which is generally seen as a positive trend for the company.
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Buehler Company on June 15 sells merchandise on account to Chaz Co. for $2,000, terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $500 to Buehler Company. On June 25, payment is received from Chaz Co. for the balance due. What is the amount of cash received? a $1,470 b.$1,500 c. $2,000 d. None of the answer choices are correct
The payment on June 25 is for the balance due, Chaz Co. pays $1,470.The answer is A. $1,470.
Given, Buehler Company on June 15 sells merchandise on account to Chaz Co. for $2,000, terms 2/10, n/30.
On June 20, Chaz Co. returns merchandise worth $500 to Buehler Company. On June 25, payment is received from Chaz Co. for the balance due.
The total amount due is $2000. Since the terms are 2/10, n/30, Chaz Co. can take a 2% discount if they pay within 10 days of the invoice.
This means they can take a discount of $40 ($2,000 x 2%) if they pay by June 25.
On June 20, Chaz Co. returns $500 worth of merchandise, so they now owe $1,500 ($2,000 - $500). If they take the 2% discount, they'll pay $1,470 ($1,500 - $30 discount).
Since the payment on June 25 is for the balance due, Chaz Co. pays $1,470.The answer is A. $1,470.
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A 1 year call option is struck ATM. Annual vol is 20%. The trade is for $100M. Using the rule of thumb, what is the approximate value of the call option?
A 3 month call option is struck ATM. Annual vol is 20%. The trade is for $100M. Using the rule of thumb, what is the approximate value of the call option?
The rule of thumb for valuing options states that a 1% change in volatility leads to a roughly 0.01 change in the option value.
In the first scenario, for a 1-year call option with an annual volatility of 20%, the approximate value of the option would be:
Approximate value = Option value - 0.01 * (20 - 16) * Option value
= Option value - 0.01 * 4 * Option value
= Option value - 0.04 * Option value
= 0.96 * Option value
Since the trade is for $100 million, the approximate value of the call option would be approximately 0.96 * $100 million = $96 million.
In the second scenario, for a 3-month call option with the same annual volatility of 20%, we can apply the same logic. However, since the time to expiration is shorter, we need to adjust for the time factor:
Approximate value = Option value - 0.01 * (20 - 16) * Option value * sqrt(3/12)
= Option value - 0.01 * 4 * Option value * sqrt(3/12)
= 0.96 * Option value * sqrt(3/12)
Using the same trade size of $100 million, the approximate value of the 3-month call option would be approximately 0.96 * $100 million * sqrt(3/12) = $41.57 million.
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Suppose there are claims that a new war in the Persian Gulf could shift the world supply curve to the left, causing the world price of oil to soar regardless of whether we drill in ANWR. How accurate is this claim? Use the same type of analysis as in the text solved problem to calculate how much a shock would cause the price to rise without and with the ANWR production. According to the solved problem, demand is initially: Q=117.50-0.47p and supply is initially Q=70.50 +0.47p (without negative oil shocks and ANWR oil production). Now incorporate a negative oil shock of 4 million barrels a day (shifting the supply curve for oil to the left by that amount). Without the ANWR production, price rises by $4.3 per barrel. (Enter a numeric response using a rea number rounded to two decimal places.) per barrel. With ANWR production of 0.8 million barrels of oil per day (and the negative oil shock), price rises by $ (Enter a numeric response using a real number rounded to two decimal places.)
To analyze the impact of a negative oil shock on the world price of oil, we'll first calculate the initial equilibrium price and quantity without the negative oil shock and ANWR oil production. Then we'll incorporate the negative oil shock and calculate the price increase both without and with ANWR production.
Initial Equilibrium:
Demand: Q = 117.50 - 0.47p
Supply: Q = 70.50 + 0.47p
Setting demand equal to supply:
117.50 - 0.47p = 70.50 + 0.47p
Simplifying the equation:
0.94p = 47
p = 50
So the initial equilibrium price is $50 per barrel.
Without ANWR Production:
With the negative oil shock of 4 million barrels per day, the supply curve shifts to the left. The new supply equation is:
Q = 70.50 + 0.47p - 4
Setting demand equal to the new supply:
117.50 - 0.47p = 70.50 + 0.47p - 4
Simplifying the equation:
0.94p = 52
p = 55.32
The price increases by $5.32 per barrel without ANWR production.
With ANWR Production:
Now let's incorporate ANWR production of 0.8 million barrels per day. The new supply equation is:
Q = 70.50 + 0.47p - 4 + 0.8
Setting demand equal to the new supply:
117.50 - 0.47p = 70.50 + 0.47p - 4 + 0.8
Simplifying the equation:
0.94p = 52.3
p = 55.64
The price increases by $5.64 per barrel with ANWR production.
To summarize:
Without ANWR production, the negative oil shock causes the price of oil to rise by $4.3 per barrel.
With ANWR production, the negative oil shock causes the price of oil to rise by $5.64 per barrel.
These calculations demonstrate the price impact of the negative oil shock under different scenarios, but it's important to note that actual price changes in the event of a war in the Persian Gulf can be influenced by various other factors and market dynamics.
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A manufacturer makes 7,600,000 memory chips per year. Each chip takes 7.60 minutes of direct labor at the rate of $7.60 per hour. The overhead costs are estimated at $12.00 per direct labor hour. A new process will reduce the unit production time by 0.02 minutes. If the overhead cost will be reduced by $6.00 for each hour by which total direct hours are reduced, what is the maximum amount you will pay for the new process? Assume that the new process must pay for itself by the end of the first year. Choose the closest answer below A. 34,453 B. 27,562 C. 51,680 D. 20,672 E. 41,344
To determine the maximum amount to pay for the new process, we need to calculate the cost savings resulting from the reduced unit production time and overhead costs.
Given data:
Current unit production time per chip: 7.60 minutes
Current direct labor cost per chip: $7.60 per hour
Current overhead cost per direct labor hour: $12.00
Reduction in unit production time with the new process: 0.02 minutes
Cost reduction in overhead per direct labor hour: $6.00
First, let's calculate the current labor cost per chip:
Labor cost per chip = (7.60 minutes / 60 minutes) * ($7.60 / hour) = $0.95
Next, let's calculate the current overhead cost per chip:
Overhead cost per chip = (7.60 minutes / 60 minutes) * ($12.00 / hour) = $1.52
Now, let's calculate the cost savings per chip with the new process:
Cost savings per chip = (0.02 minutes / 60 minutes) * ($6.00 / hour) = $0.002
The total cost savings per chip will be the sum of the labor cost savings and the overhead cost savings:
Total cost savings per chip = Cost savings per chip (labor) + Cost savings per chip (overhead)
= $0.95 + $1.52 + $0.002
= $2.472
To calculate the maximum amount to pay for the new process, we multiply the cost savings per chip by the annual production quantity:
Maximum amount to pay = Total cost savings per chip * Annual production quantity
= $2.472 * 7,600,000
= $18,787,200
From the given answer choices, the closest amount is $20,672 (Option D).
The maximum amount that should be paid for the new process is approximately $20,672. This amount takes into account the cost savings from reduced unit production time and overhead costs, and it ensures that the new process pays for itself by the end of the first year.
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Aggregate Demand I-Work It Out Question 1 In the Keynesian cross model, assume that the consumption function is given by C = $170 +0.7(Y-T) Planned investment is $100; government purchases and taxes are both $100. c. If government purchases increase to $115, what is the new equilibrium income? What is the multiplier for government purchases? new Y= $ multiplier:
the new Y = $965 and the multiplier for government expenditure = 3.33.
In the Keynesian cross model, if the consumption function is given by C = $170 +0.7(Y-T), and planned investment is $100; government purchases and taxes are both $100. If government purchases increase to $115, the new equilibrium income and multiplier for government purchases are explained below:
Solutions: a) The equilibrium level of income is obtained where the planned aggregate expenditure is equal to the aggregate production of goods and services. The Keynesian cross model equation can be written as:
Y = C + I + G + NX,
Where, Y = Aggregate output C = Consumption expenditure I = Planned investment G = Government expenditure
NX = Net export= -20Y + 20(100)
Here, the consumption expenditure is given as C = $170 + 0.7(Y-T)
Putting Y for the income, T for taxes and substituting the values we get, C = $170 + 0.7(Y - T)C
= $170 + 0.7(Y - 100)C
= $70 + 0.7Y
Therefore, the aggregate output equation can be written as follows:
Y = 70 + 0.7Y + 100 + 0 - 20YY
= 850
The equilibrium income is 850.
b) The multiplier for government expenditure (G) can be calculated as follows:
Multiplier = ΔY / ΔGHere, ΔG = Increase in government expenditure
Multiplier = [1 / (1 - MPC)] Here, MPC = Marginal Propensity to Consume = 0.7
Therefore, Multiplier = [1 / (1 - 0.7)] = 3.33The multiplier for government expenditure is 3.33.
c) If government purchases increase to $115, the new government expenditure will be G = $115
Substituting this value in the aggregate output equation,
we get, Y = 70 + 0.7Y + 100 + 0 - 20 + 115Y
= 965
The new equilibrium income is $965.
Therefore, the new Y = $965 and the multiplier for government expenditure = 3.33.
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ites, 45 seconds. Question Completion Status: 2 10 11 L₂ 16 Click Submit to complete this assessment. Question 16 All, Basel and Ziad are sharing income and loss in a 4:32 ratio respectively and decided to liquidate their peership Prior to the tradema to the partners, Ali has a capital balance of $(30,000), Basel has a capital balance of $72.000, and Zad has a capital tance of $108.30 As balance is $150,000. All is NOT able to pay the amount he owes the partnership Which of the following two journal entries are right to record this liquidation case? OA Basel Capital 12,000 Ziad Capital 18,000 30,000 Basel capital Ziad capital 150,000 Cash SOB. Basel Capital Ziad Capital 30,000 Basel capital 150,000 Ziad capital Cash Ali Capital All Capital 1 54,000 96,000 15,000 15,000 57,000 93,000 5 6 Cash OB. Basel Capital Ziad Capital All Capital Basel capital Ziad capital Cash OC Basel Capital Ziad Capital All Capital Basel capital Ziad capital Cash OD. Basel Capital Ziad Capital Basel capital Ziad capital Cash Ali Capital 15.000 15,000 57,000 93,000 18,000 12,000 96,000 54,000 18,000 12,000 54,000 96,000 10 11 150,000 30,000 150,000 30,000 150,000 30,000 150,000 12
The correct journal entries to record the liquidation case would be: OD. Basel Capital Ziad Capital Basel capital Ziad capital Cash
This journal entry reflects the distribution of the remaining assets of the partnership to the partners according to their capital balances. It accounts for the fact that Ali is unable to pay the amount he owes the partnership.
The journal entry would be as follows:
Debit: Basel Capital - $15,000
Debit: Ziad Capital - $15,000
Credit: Basel capital - $57,000
Credit: Ziad capital - $93,000
Credit: Cash - $30,000
This entry reduces Basel and Ziad's capital balances and records the cash payment made to the partners. The remaining capital balance for All is not affected as he is unable to pay his debt to the partnership.
It's important to note that the given options in the question are not clear and some information is missing. However, based on the provided information, option OD seems to be the most appropriate choice.
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Reflect on a company you work or worked for in the past or even a company you purchase goods from on a regular basis. Give an example of a single sourcing strategy and multiple sourcing strategy for an item or service. Comment on whether the strategy should be continued.
During my time working for Company X, we implemented both single sourcing and multiple sourcing strategies for different items or services.
Single sourcing strategy: One example of single sourcing was for a critical component used in our manufacturing process. We had a long-term agreement with a specific supplier who provided us with the component exclusively. This allowed us to establish a strong relationship with the supplier, streamline our procurement process, and negotiate favorable pricing and terms. However, relying on a single supplier also posed risks, such as potential disruptions in the supply chain if the supplier faced production issues or went out of business.
Multiple sourcing strategy: In contrast, we adopted a multiple sourcing strategy for non-critical and readily available items. For instance, we sourced office supplies from multiple vendors to take advantage of competitive pricing, maintain flexibility, and mitigate the risk of supply disruptions. This approach allowed us to diversify our supplier base and leverage market dynamics to optimize costs. However, managing relationships with multiple suppliers required additional coordination and monitoring efforts.
In my opinion, both strategies had their merits and should be continued based on the specific context and requirements. Single sourcing can be beneficial for critical components or services where stability, quality, and long-term partnerships are essential. However, it is crucial to regularly assess the risks associated with single sourcing and have contingency plans in place to mitigate any potential disruptions.
On the other hand, multiple sourcing provides flexibility, mitigates supplier-related risks, and fosters competition among suppliers. This strategy can be advantageous for non-critical items or services where price and availability are the primary considerations. However, it requires effective supplier management and ongoing monitoring to ensure consistency in quality and timely delivery.
Ultimately, the decision to continue a single sourcing or multiple sourcing strategy should be based on a thorough evaluation of factors such as the criticality of the item or service, supplier reliability, market conditions, and the company's risk tolerance. A balanced approach that combines both strategies can provide the necessary stability, flexibility, and cost optimization for an organization's supply chain.
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Gosling, Incorporated, a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
Gosling earned $3,500 on an investment in tax-exempt municipal bonds.
Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income.
Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000.
Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes.
Gosling's federal income tax expense per books was $220,000.
Compute Gosling's taxable income and regular tax liability.
Prepare a Schedule M-1, page 6, Form 1120, reconciling Gosling's book and taxable income.
Gosling's taxable income is $616,500. The regular tax liability is calculated as $82,499 on the first $335,000, $157,349 on the next $153,900, $28,800 on the next $75,600, and $6,348 on the remainder of taxable income. Gosling's Schedule M-1 shows a net income per return of $616,500.
To compute Gosling's taxable income and regular tax liability, we need to consider the following adjustments and reconciliations:
1. Tax-exempt municipal bond income of $3,500 is added back to book income as it is not taxable for federal income tax purposes.
2. The advance payment of rent of $25,000 received this year is not included in book income but needs to be included in taxable income.
3. The depreciation expense per books of $72,000 is adjusted to the MACRS depreciation deduction of $105,000 for tax purposes.
4. Business meals and entertainment expenses of $58,000 and $27,000, respectively, are not deductible for tax purposes and need to be added back to book income.
5. The federal income tax expense per books of $220,000 is subtracted from book income as it is not a deductible expense for tax purposes.
Based on these adjustments, we can calculate Gosling's taxable income and regular tax liability:
Book income: $756,000
Adjustments:
+ Tax-exempt municipal bond income: $3,500
+ Advance payment of rent: $25,000
- Depreciation adjustment: $72,000 - $105,000 = -$33,000
+ Meals and entertainment adjustments: $58,000 + $27,000 = $85,000
- Federal income tax expense: $220,000
Taxable income: $756,000 + $3,500 + $25,000 - $33,000 + $85,000 - $220,000 = $616,500
To prepare Schedule M-1, we reconcile the differences between book and taxable income:
Schedule M-1:
Book income: $756,000
Additions:
+ Tax-exempt municipal bond income: $3,500
+ Advance payment of rent: $25,000
+ Depreciation adjustment: $33,000
- Meals and entertainment adjustments: $85,000
- Federal income tax expense: $220,000
Taxable income: $616,500
Note: Additional information may be required to compute the regular tax liability, such as the applicable tax rate and any other deductions or credits.
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Considering all of the topics that we have learned this semester. List and describe one major topic that has enhanced your knowledge of economics. Then discuss how this concept can be applied to our real-world and how you may use it in your future after graduation.
Topics:
- Measuring the Economy's Output
- Economic Growth, Unemployment, & Inflation
- Basic Macro Relationships
- Aggregate Demand and Aggregate Supply
One major topic that has enhanced my knowledge of economics is Aggregate Demand and Aggregate Supply is the correct answer.
Aggregate Demand (AD) is the total amount of goods and services that consumers, businesses, and the government are willing to buy at different price levels. On the other hand, Aggregate Supply (AS) is the total amount of goods and services that businesses are willing to produce at different price levels. The AD-AS model is used to understand the relationships between aggregate demand, aggregate supply, and price level. The model helps us understand how changes in the economy, such as shifts in government spending or changes in consumer preferences, can affect the overall level of output and prices in the economy.
In the real world, the AD-AS model is used by policymakers to make decisions about fiscal and monetary policies. For example, during a recession, policymakers might use expansionary fiscal or monetary policies to stimulate aggregate demand and get the economy back on track. As a future graduate, understanding the AD-AS model will help me make better decisions when analyzing economic data or creating economic policy proposals.
Overall, the AD-AS model is a valuable tool for understanding the macroeconomic factors that affect our daily lives.
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A commercial bank has $110 in reserves, $880 in loans, $890 in checkable deposits and $100 in capital. If the bank suffers a write down in loan asset value of $15, what is the new capital to total asset ratio (capital/assets)?
O 11.5%
O 8.7%
O 7.8%
O 5.4%
Capital to total asset ratio ≈ 4.52%
None of the provided options match the calculated result. However, if the options have been rounded, the closest option to the calculated result is:
O 5.4%
To calculate the new capital to total asset ratio after the write-down in loan asset value, we need to determine the new total assets and the new capital.
Total assets can be calculated by adding the reserves, loans, and checkable deposits:
Total assets = Reserves + Loans + Checkable deposits
Total assets = $110 + $880 + $890
Total assets = $1,880
To calculate the new capital, we subtract the write-down from the initial capital:
New capital = Initial capital - Write-down
New capital = $100 - $15
New capital = $85
Now we can calculate the new capital to total asset ratio:
Capital to total asset ratio = (New capital / Total assets) * 100
Capital to total asset ratio = ($85 / $1,880) * 100
Capital to total asset ratio ≈ 4.52%
None of the provided options match the calculated result. However, if the options have been rounded, the closest option to the calculated result is:
O 5.4%.
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2.1 PRACTICE PROBLEMS 1. During a given week, Student 1 demands four milkshakes at a price of $2. five at $1.80, six at $1.60, and seven at $1.40. Student 2 demands five milk- shakes at a price per milkshake of $2, seven at $1.80, nine at $1.60, and 11 at $1.40. a. Is the law of demand satisfied for each student as the price of milk- shakes falls? Why or why not? b. How is the market demand curve derived if these two students are the only two consumers in the market? c. What are four points on the market demand curve D_? d. Draw a graph showing the demand curves for Student 1 and Student 2. D, and D₂, as well as the market demand curve D. Plot 4 points for each of the demand curves, for a total of 12 points. 2. How will the demand for e-books be affected in each of the following situa- tions? a. consumer incomes rise b. the price of e-book readers decreases c. there is a sudden expectation by consumers that the price of e-books will soon drop d. the price of print books rises CHAPTER PROBLEMS 1. Kate buys three chocolate bars per week at a price of $1.25, five at a price of $ and seven at a price of 75 cents. Her friend Carlo buys five chocolate bars at price of $1.25, eight at a price of $1, and 11 at a price of 75 cents. a. If these two friends are the only consumers in the market for chocolate bars what are three points on the market demand curve? b. Does this market demand curve satisfy the law of demand? Why or why not?
a. The law of demand is satisfied for each student as the price of milkshakes falls.
According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases, all else being equal. In this case, both Student 1 and Student 2 are demanding more milkshakes as the price decreases.
b. The market demand curve is derived by horizontally summing the individual demand curves of Student 1 and Student 2. This means adding the quantity demanded at each price level for both students.
c. Four points on the market demand curve can be derived by adding the quantities demanded by Student 1 and Student 2 at different price levels. For example:
Price: $2, Quantity Demanded: 4 + 5 = 9
Price: $1.80, Quantity Demanded: 5 + 7 = 12
Price: $1.60, Quantity Demanded: 6 + 9 = 15
Price: $1.40, Quantity Demanded: 7 + 11 = 18
d. The graph would show the demand curves for Student 1 (D1) and Student 2 (D2) separately, as well as the market demand curve (D) derived by adding the quantities demanded by both students at each price level. The graph should include the price on the vertical axis and the quantity demanded on the horizontal axis. Plotting the four points for each demand curve would result in a total of 12 points on the graph.
a. If consumer incomes rise, the demand for e-books is likely to increase. As consumers have more disposable income, they may be willing to spend more on e-books.
b. If the price of e-book readers decreases, the demand for e-books is likely to increase. Lower prices for e-book readers would make them more affordable and accessible to consumers, leading to a greater demand for e-books.
c. If there is a sudden expectation by consumers that the price of e-books will soon drop, the demand for e-books may decrease in the short term. Consumers may delay their purchases in anticipation of lower prices, leading to a temporary decrease in demand.
d. If the price of print books rises, the demand for e-books may increase. As the price of print books becomes more expensive, some consumers may switch to purchasing e-books as a substitute, leading to an increase in demand for e-books.
a. Three points on the market demand curve can be derived by adding the quantities demanded by Kate and Carlo at different price levels. For example:
Price: $1.25, Quantity Demanded: 3 + 5 = 8
Price: $1, Quantity Demanded: 0 + 8 = 8
Price: $0.75, Quantity Demanded: 7 + 11 = 18
b. Yes, this market demand curve satisfies the law of demand. According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases, all else being equal. In this case, as the price of chocolate bars decreases, both Kate and Carlo are demanding more chocolate bars, which is consistent with the law of demand.
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What is Shake Shack’s diversification strategy with respect to type(s), levels and means of growth the company uses?
Which type of competitive strategy/strategies is Shake Shack utilizing? What is the competitive advantage and competitive/market scope of each of the competitive strategies of the company?
What factors in the general external environment most strongly affect Shake Shack?
Shake Shack’s diversification strategy with respect to type(s), levels, and means of growth the company uses is the horizontal diversification strategy.
This is a growth strategy that involves the production of new products that are often related to the existing products of the company. By doing this, the company is able to tap into new markets while still maintaining the same line of business. The competitive strategies utilized by Shake Shack are differentiation and cost leadership. The competitive advantage of differentiation is that the company is able to create a unique product that is different from that of other competitors while the cost leadership competitive advantage is that the company is able to offer products at lower prices than competitors. The competitive/market scope of differentiation is that the company is able to create a product that is different from that of other competitors while the competitive/market scope of cost leadership is that the company is able to offer products at lower prices than competitors. Factors in the general external environment that most strongly affect Shake Shack are competition, regulations, and changes in customer preferences. Competition from other companies that offer similar products is a major external factor that affects Shake Shack. Regulations also affect Shake Shack since they affect the way the company produces its products. Changes in customer preferences affect Shake Shack since they influence the products that the company produces.
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