In a perfectly competitive market for cigarettes, where there is an external cost to society, the market equilibrium price and quantity can be determined. The deadweight loss (DWL) represents the efficiency loss in the market due to the external cost. A specific policy proposal can be made to eliminate the DWL and improve market outcomes.
a. To draw the demand, market supply, and social marginal cost (SMC) per pack of cigarettes, we need to consider the demand function Qp = 6000 - 600P, where Qp represents the quantity demanded and P is the price per pack.
The market supply is given by the private marginal cost (PMC) per pack, which is $3. The SMC includes the external cost to society, so it would be PMC + external cost, which is $3 + $2 = $5 per pack. By plotting these curves on a graph, the market equilibrium can be determined where the supply curve (PMC) intersects the demand curve. The equilibrium price and quantity can be read off from this point.
b. The deadweight loss (DWL) represents the efficiency loss in the market due to the presence of the external cost. It is the area between the SMC curve and the demand curve, up to the quantity traded at the market equilibrium. The DWL can be calculated by finding the difference in consumer surplus and producer surplus between the equilibrium and the socially optimal point (where SMC intersects demand).
c. To eliminate the DWL and improve market outcomes, a policy proposal can be made to internalize the external cost. One possible approach is to impose a tax or fee on each pack of cigarettes equal to the external cost per pack ($2). This would effectively shift the supply curve upward to align with the SMC curve.
By doing so, the market equilibrium would shift closer to the socially optimal point, reducing the DWL and accounting for the external cost. However, the specific policy proposal would require further consideration of factors such as the elasticity of demand and the administrative feasibility of implementing the tax.
Overall, by implementing a policy that internalizes the external cost, the market can achieve a more socially efficient outcome and reduce the deadweight loss associated with the external cost of cigarettes.
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When hired as a software engineer with Plush Media Inc, Paul signed an employment agreement that contained a clause stating that he agrees not to compete or take employment similar or related to Plush Media Inc. for 6 years after his employment ends with Plush Media Inc. This restriction includes geographic restriction of the entire province of British Columbia. Plush Media Inc. is located in Burnaby, B.C. and provides services within Burnaby and Vancouver. Please explain whether the clause will be enforceable if Paul ends his employment with Plush Media Inc.
The enforceability of the non-compete clause will depend on various factors, including the specific laws and regulations governing employment agreements in British Columbia, Canada.
The enforceability of the non-compete clause in Paul's employment agreement with Plush Media Inc. in British Columbia is uncertain due to its broad scope. Non-compete clauses are closely scrutinized by courts to ensure they are reasonable and do not overly restrict employees' career opportunities.
In this case, the clause restricts Paul from competing or taking similar employment in the entire province of British Columbia for six years. Such a wide geographic and temporal restriction may be considered excessive and potentially unenforceable.
Courts typically assess the necessity of the restriction to protect the employer's legitimate interests and whether it unreasonably limits the employee's ability to find work in their field. It is advisable for Paul to seek legal advice to fully understand his rights and obligations regarding the non-compete clause.
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How does an auditor know when they have collected a sufficient amount of audit evidence?
An auditor determines the sufficiency of audit evidence by considering the audit objectives, risks, materiality, and professional judgment. It involves obtaining an appropriate quantity and quality of evidence to support the auditor's opinion on the financial statements.
Auditors use professional judgment to assess the sufficiency of audit evidence. They consider various factors, including the audit objectives, inherent and control risks, materiality, and the complexity of the entity's transactions and operations. The auditor aims to gather enough evidence to form a reasonable basis for their opinion on the fairness of the financial statements. The sufficiency of audit evidence depends on the nature and quality of the evidence obtained. Audit procedures such as inspection, observation, inquiry, and analytical procedures are used to gather evidence. The auditor evaluates the relevance, reliability, and persuasiveness of the evidence to determine if it is sufficient to support their conclusions.
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For a third political party to survive in Jamaica, it must fully understand and appreciate the dynamics of political socialisation and the Jamaican political culture. In a discussion of the statement above, apply it to any TWO (2) third parties that have never held the reigns of governmental power in Jamaica.
Third political parties are parties that have never held the reins of governmental power in Jamaica. They can, however, survive in Jamaica if they fully comprehend and value the Jamaican political culture.
Let us take a look at two third parties that have never held the reins of power and how their understanding of political socialization and Jamaican political culture can help them survive in Jamaica.Jamaica Alliance Movement (JAM)The Jamaica Alliance Movement (JAM) was founded in 2019 with the aim of breaking Jamaica's political duopoly.
The party believes that Jamaica has reached a stage where it needs a change, which necessitates a change in its leadership. Jamaica's political culture, according to the party, must be transformed by enhancing good governance, enforcing the rule of law, and decreasing corruption.
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Exchange Rates I: The Monetary Approach in the Long Run This question uses the general monetary model, in which L is no longer assumed constant and money demand is inversely related to the nominal interest rate. Consider two countries: Japan and South Korea. In 1996 Japan experienced relatively slow output growth, 1\%, whereas South Korea had relatively robust output growth, 6%. Suppose the Bank of Japan allowed the money supply to grow by 2% each year, whereas the Bank of Korea chose to maintain relatively high money growth of 15% per year. In addition, the bank deposits in Japan pay a 3% interest rate, iy =3%. For the following questions, use the general monetary model, in which L is a function of i. You will find it easiest to treat South Korea as the home country and Japan as the foreign country. Assuming that relative PPP holds, compute the nominal interest rate paid on South Korean deposits. a. South Korea's nominal interest rate: b. What is the real interest rate in South Korea? c. What is the real interest rate in Japan?
a. Plugging in the values given, we get:r = 3% - 4.95% ≈ -1.95%
b. we get: r = 3% - 4.95% ≈ -1.95%
c. we get:πₖ = (1+0.01)/(1+0.06) - 1 ≈ -0.0455 or -4.55%
a. To compute the nominal interest rate paid on South Korean deposits, we can use the Fisher equation:
i = r + π
where i is the nominal interest rate, r is the real interest rate, and π is the inflation rate.
Assuming relative PPP holds, the inflation rate in South Korea can be computed as:
πₙ = (1+gₙ)/(1+gₖ) - 1
where gₙ is the growth rate of output in South Korea and gₖ is the growth rate of output in Japan. Plugging in the values given, we get:
πₙ = (1+0.06)/(1+0.01) - 1 ≈ 0.0495 or 4.95%
The real interest rate in South Korea can be computed as:
r = iy - πₙ
where iy is the nominal interest rate on Japanese deposits. Plugging in the values given, we get:
r = 3% - 4.95% ≈ -1.95%
c. The real interest rate in Japan can be computed using the same formula:
r = iy - πₖ
where πₖ is the inflation rate in Japan. Assuming again that relative PPP holds, we can compute πₖ as:
πₖ = (1+gₖ)/(1+gₙ) - 1
Plugging in the values given, we get:
πₖ = (1+0.01)/(1+0.06) - 1 ≈ -0.0455 or -4.55%
Note that we have a negative inflation rate in Japan, which implies a positive real interest rate. Using the Fisher equation, we get:
r = 3% - (-4.55%) ≈ 7.55%
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1. CASE STUDY 1: The following excerpt is taken from the Ministry of Finance: Statement on the economic effects and financial response to the COVID 19 Pandemic in Trinidad and Tobago. The Central Bank of Trinidad and Tobago is helping the economy navigate through these difficult circumstances. For example, the Central Bank has reduced the reserve requirements for the commercial banks from 17.0 percent to 14.0 percent; and the repo rate from 5.0 percent to 3.5 percent. As a result, Commercial banks have reduced their prime lending rates from an average of 9.5 percent to 7.5 percent; the narrowing spread between lending rates and deposit rates will surely bring about improved efficiency within the banking system. It should be noted that whereas the reduction in the prime lending rate has an automatic beneficial effect on loans that have a variable interest rate, the commercial banks have advised that loan agreements with fixed interest rates require one-on-one consultation with the commercial banks, to discuss possible reductions. From the above excerpt answer the following questions: a. What form of monetary policy is the Central Bank using to address the downturn in the economy resulting from COVID-19? [2 marks] b. Identify and explain two macroeconomic issues resulting from the COVID-19 pandemic on the Trinidad and Tobago economy. [6 marks] c. Critically assess how changes in the repo rate and the reserve requirement ratio will impact the money supply in the economy. [6 marks] d. Using the Keynesian Transmission Mechanism, clearly explain and graphically illustrate the impact of the stimulus measures on aggregate demand and GDP. [8 marks]
a. The Central Bank of Trinidad and Tobago is using an expansionary monetary policy to address the downturn in the economy resulting from COVID-19.
b. Two macroeconomic issues resulting from the COVID-19 pandemic on the Trinidad and Tobago economy are:a) Increase in unemployment: COVID-19 pandemic has led to a loss of jobs and has also reduced the availability of employment opportunities in Trinidad and Tobago. As a result, the country has seen a significant increase in the unemployment rate.b) Negative economic growth: COVID-19 pandemic has led to a decline in the economic growth of Trinidad and Tobago, which has negatively impacted the country's GDP.
c. Changes in the repo rate and the reserve requirement ratio will have a significant impact on the money supply in the economy. A reduction in the repo rate will lead to an increase in money supply, while an increase in the reserve requirement ratio will lead to a decrease in money supply in the economy.
d. The Keynesian Transmission Mechanism explains how changes in fiscal and monetary policy affect aggregate demand and GDP. The diagram below illustrates the impact of the stimulus measures on aggregate demand and GDP. As seen in the graph, an increase in government spending leads to an increase in aggregate demand and GDP.
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A company has establistred 4 pounds of Material J at $2 per pound as the standard for the material in its Product 7 . The company has just produced 1,300 units of this product, using 5.400 pounds of Material J that cost $9.880. The direct materials quantity variance is:
To calculate the direct materials quantity variance, we need to compare the actual quantity of material used with the standard quantity allowed for the production of 1,300 units of Product 7.
Given information:
Standard quantity of Material J per unit: 4 pounds
Standard price per pound of Material J: $2
Actual quantity of Material J used: 5,400 pounds
Actual cost of Material J used: $9,880
Calculation:
Standard quantity for 1,300 units = 1,300 units × 4 pounds = 5,200 pounds
Direct materials quantity variance = (Actual quantity - Standard quantity) × Standard price
= (5,400 pounds - 5,200 pounds) × $2
= 200 pounds × $2
= $400
Therefore, the direct materials quantity variance is $400.
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In order to make jobs more interesting, job designers use all of the following EXCEPT: Select one: a. increase in wages. O b. job rotation C. self-directed teams. 9 d. job enrichment O e. job enlargement.
To make jobs more interesting, job designers use all of the following EXCEPT an increase in wages.
Job designers use different approaches and methods to make the work environment more appealing and exciting for the employees. The goal of these methods is to motivate the workers to increase their productivity and reduce employee turnover, which can be costly for organizations.The approaches include job enrichment, job enlargement, self-directed teams, and job rotation. Job enrichment is the process of adding new responsibilities to an employee's job description, while job enlargement involves increasing the number of tasks that an employee must do, making the work more varied and interesting. Self-directed teams are groups of employees that work together and manage themselves without the need for a supervisor or manager, while job rotation involves periodically changing an employee's work task in order to provide a broader range of experience and expertise.However, among these four methods, none involves an increase in wages. While it may be helpful to increase the workers' salaries and provide other financial incentives to enhance employee satisfaction, these approaches cannot solely make jobs more interesting. It is necessary to incorporate other job enrichment methods that can make jobs more varied, exciting, and satisfying for the employees.
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Victorian Shipping Corporation (VSC) decided to increase the company ship's fleet a year ago To finance this decision the company management has decided to issue bonds. Last year, the yield on AAA-rated corporate bonds averaged approximately 5 per cent; one year later, the yield on these same bonds had climbed to about 6 per cent because the Reserve Bank of Australia increased interest rates during the year. Under these circumstances VSC issued a 10-year, 5 per cent coupon $1000 bond one year ago (on 1 January). The bond interest pays annually. Assume that the market rate on similar risk bonds was 5 per cent at the time the bonds were issued.
a. Compute the market value of the bond at the time of issue.
b. Compute the market value of the bond one year after issue if the market yield for similar risk bonds was 6 per cent.
The market value of the bond at the time of issue was $1,000.
The market value of the bond one year after issue, with a market yield of 6%, is $956.52.
The market value of a bond is influenced by various factors, including the coupon rate, market interest rates, and the remaining time until maturity. In this case, VSC issued a 10-year bond with a 5% coupon rate when the market rate for similar risk bonds was also 5%. When the coupon rate matches the market rate, the bond is typically issued at its par value, which in this case is $1,000. Therefore, at the time of issue, the market value of the bond is equal to its par value.
However, one year later, the market yield for similar risk bonds increased to 6% due to an increase in interest rates by the Reserve Bank of Australia. The market yield represents the current market interest rate. When the market yield increases, the present value of future cash flows decreases, leading to a decrease in the market value of the bond. To calculate the market value of the bond one year after issue, we discount the future cash flows (coupon payments and principal) using the new market yield of 6%.
By applying the bond pricing formula, the market value of the bond one year after issue with a market yield of 6% is determined to be $956.52. This value is lower than the initial market value of $1,000 because the increase in market yield reduces the present value of the future cash flows. The decline in market value reflects the inverse relationship between market yields and bond prices.
Overall, the market value of a bond is affected by changes in market interest rates. When the market yield exceeds the coupon rate, the bond's market value tends to decrease. Conversely, when the market yield is lower than the coupon rate, the bond's market value tends to increase.
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the marginal cost curve intersects the average total cost curve
The intersection of the marginal cost curve and the average total cost curve represents the minimum efficient scale or the optimal production level.
When the marginal cost curve intersects the average total cost curve, it indicates the level of output at which the average cost is at its lowest point. This intersection signifies an efficient production level where the additional cost of producing one more unit is equal to the average cost of all units produced. It represents the minimum point on the average total cost curve, indicating the optimal scale of production for cost efficiency. In the short run, this intersection helps businesses determine the most efficient level of output based on their production costs and resource utilization.
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A monopoly faces a demand curve of Q = 80000 - 4000*P, where Q is the quantity of tickets sold, and P is the price, in dollars. The firm has no costs per ticket sold, no other revenue or capacity constraints. If they are profit maximizing, how many tickets will they sell?
The monopoly will sell 4000 tickets when profit-maximizing.
To find the quantity of tickets the monopoly will sell when profit-maximizing, we need to determine the point where marginal revenue (MR) equals marginal cost (MC). In this case, since there are no costs per ticket sold, we can equate MR to zero.
Given that the demand curve is Q = 80000 - 4000P, we can rearrange it to express price in terms of quantity: P = 20 - 0.0025Q.
To find MR, we differentiate the revenue function with respect to quantity (Q) to obtain the marginal revenue function:
MR = d(Revenue)/dQ = d(P*Q)/dQ = P + Q(dP/dQ).
Substituting P = 20 - 0.0025Q and differentiating, we get:
MR = (20 - 0.0025Q) + Q(-0.0025) = 20 - 0.005Q.
Setting MR equal to zero and solving for Q:
0 = 20 - 0.005Q
0.005Q = 20
Q = 4000.
Therefore, the monopoly will sell 4000 tickets when profit-maximizing.
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Which principle is in the Federal Sentencing Guidelines for Organizations
(FSGO)?
A. to ensure that corporations meet high moral standards
B. to protect CEOs when their subordinates commit crimes
C. to make fines commensurate to the severity of the crime
D. to encourage corporations to raise wages for their workers
The principle in the Federal Sentencing Guidelines for Organizations (FSGO) that encourages corporations to develop and implement compliance programs is:
The Federal Sentencing Guidelines for Organizations (FSGO) is a set of guidelines for determining penalties in cases of corporate crime. It establishes sentencing criteria for corporations that are convicted of federal offenses, such as fraud, corruption, and environmental crimes, and encourages organizations to develop and implement compliance programs to reduce their risk of criminal liability. The principle in the Federal Sentencing Guidelines for Organizations (FSGO) that encourages corporations to develop and implement compliance programs is to reduce their risk of criminal liability.
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Which of the following is considered a failure cost?
A) on-site performance tests
B) warranty
C) supplier quality assurance
D) robust design
E) product quality audits
B) Warranty is considered a failure cost.
Failure costs refer to the expenses incurred as a result of poor quality or non-conformance to specifications during the production or delivery of a product or service.
Failure costs refer to the expenses incurred as a result of poor quality or non-conformance to specifications during the production or delivery of a product or service. These costs can be categorized into two types: internal failure costs and external failure costs. Internal failure costs are associated with defects detected before the product or service reaches the customer, while external failure costs arise from defects identified after delivery to the customer.
Warranty falls under the category of external failure costs and is considered a failure cost. A warranty is a guarantee provided by the seller to the buyer, promising to repair or replace a faulty product within a specific period. When a product fails to meet the expected quality standards and requires repair or replacement under warranty, the associated costs, such as labor, parts, shipping, and administrative expenses, become failure costs.
When customers encounter defects or malfunctions in a product during the warranty period, the company incurs expenses to address these issues. These costs not only include the direct expenses of repairing or replacing the defective product but also indirect costs such as customer service support, logistics, and potential damage to the company's reputation. Warranty-related failure costs can have a significant impact on a company's profitability and customer satisfaction.
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The procedure for dismantling and evaluating a competitor's new or altered product in order to get design ideas is known as:
Select one:
a.
Product analysis
b.
Benchmarking
c.
Design by imitation
d.
Reverse engineering
e.
Disassembly
The procedure for dismantling and evaluating a competitor's new or altered product in order to get design ideas is known as Reverse engineering. The correct answer is d. Reverse engineering.
Reverse engineering is the process of dismantling and evaluating a competitor's new or altered product in order to understand its design, functionality, and manufacturing techniques. By analyzing and studying the competitor's product, engineers and designers can gain insights and ideas that can be applied to their own product development process. Reverse engineering involves disassembling the product, examining its components, and studying its features and mechanisms to uncover the underlying design principles and technologies. This information can then be used to enhance or improve one's own product design.
During the disassembly phase, engineers and designers closely observe and document the product's features, materials, connections, and any unique or innovative aspects. This information helps in understanding how the product is designed and manufactured, including the arrangement of components, the choice of materials, and the use of specific manufacturing processes.
After disassembling the product, the next step is to evaluate and analyze each component and subsystem in detail. This examination may involve measurements, testing, and experimentation to determine the functionality and performance of different parts. Engineers may use various tools and techniques, such as scanning electron microscopy, X-ray analysis, or computer-aided design (CAD) software to gain a comprehensive understanding of the product's inner workings.
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Illinois Metallurgy Corporation Has Two Divisions. The Fabrication Division Transfers Partially Completed Components To The Assembly Division At A Predetermined Transfer Price. The Fabrication Division’s Standard Variable Production Cost Per Unit Is $300. The Division Has No Excess Capacity, And It Could Sell All Of Its Components To Outside Buyers At $380
Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division’s standard variable production cost per unit is $300. The division has no excess capacity, and it could sell all of its components to outside buyers at $380 per unit in a perfectly competitive market.
Required:
1. Determine a transfer price using the general rule.
To determine a transfer price using the general rule, Illinois Metallurgy Corporation can consider various factors such as the division's standard variable production cost and the market price for the components.
The general rule for setting the transfer price is to use the market price as the transfer price if the division has no excess capacity and the components can be sold to outside buyers in a perfectly competitive market.
In this case, the Fabrication Division's standard variable production cost per unit is $300, and the components could be sold to outside buyers at $380 per unit in a perfectly competitive market. Since the division has no excess capacity and the market price is higher than the production cost, the transfer price using the general rule would be $380 per unit.
Using the general rule ensures that the division is treated as a separate entity and the transfer price reflects the market value of the components. This approach helps maintain fairness and efficiency within the organization.
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4. Bretton Woods Suppose that after World War II, the United States and France agree to peg their currencies to each other under the Bretton Woods system at an exchange rate of $2.00 per franc. Suppose American demand for francs decreases, and the equilibrium dollar price of a franc falls to $1.00 per franc. Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-of-payments imbalance at the pegged exchange rate? a.Use monetary policy to increase real interest rates in the United States
b.Use dollars to buy French francs in the foreign exchange market c.Borrow French francs from the IMF and use the francs to buy dollars
In the given scenario, where the equilibrium dollar price of a franc falls to $1.00 per franc, the United States can take the following actions under the Bretton Woods system to help eliminate the balance-of-payments imbalance at the pegged exchange rate of $2.00 per franc:
b. Use dollars to buy French francs in the foreign exchange market: The U.S. government can intervene in the foreign exchange market by using its reserves of U.S. dollars to buy French francs. This would increase the demand for francs and help maintain the exchange rate at the pegged level.
c. Borrow French francs from the IMF and use the francs to buy dollars: The U.S. government can borrow French francs from the International Monetary Fund (IMF) and use them to buy dollars. By reducing the supply of francs and increasing the supply of dollars in the foreign exchange market, this action can help support the exchange rate and address the balance-of-payments imbalance.
Option a, which suggests using monetary policy to increase real interest rates in the United States, may not directly impact the exchange rate under the Bretton Woods system as the exchange rate was fixed. However, it could indirectly affect the balance of payments by influencing capital flows and attracting foreign investment.
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The wording of a company's vision statement should commonly be
A) vague or incomplete—short on specifics.
B) flexible—adjustable according to changing circumstances.
C) bland or uninspiring—short on inspiration.
D) generic—could apply to almost any company (or at least several others in the same industry).
E) reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers).
The correct answer is B) flexible—adjustable according to changing circumstances.
The wording of a company's vision statement should commonly be inspiring, ambitious, and concise.
The statement should clarify the company's ultimate goal, its reason for being, and its core values.
It should focus on what the company seeks to achieve, provide direction for future decisions, and inspire its employees, shareholders, and customers.
Therefore, option C: bland or uninspiring—short on inspiration is incorrect.
Option A: vague or incomplete—short on specifics is also not the right answer as the statement should be clear, concise, and precise, avoiding ambiguity and confusion.
Option D: generic—could apply to almost any company (or at least several others in the same industry) is not an appropriate answer because a vision statement should be specific to the company's unique vision and goals. It should differentiate the company from its competitors, rather than blend it in with them.
Option E: reliant on superlatives (best, most successful, recognized leader, global or worldwide leader, first choice of customers) is also not an accurate answer.
A company's vision statement should be realistic and achievable and should avoid exaggerated language or false claims.
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true/false. "Retained earnings are always shown in before tax amounts, NOT net of tax amounts.
False. Retained earnings can be presented in both before tax and net of tax amounts, depending on the reporting requirements and accounting policies of a company.
The statement "Retained earnings are always shown in before tax amounts, NOT net of tax amounts" is false. Retained earnings, which represent the accumulated profits of a company that have not been distributed as dividends, can be presented in financial statements in different ways, depending on the reporting framework and accounting policies followed by the company.
In some financial statements, retained earnings are shown before tax, meaning they do not incorporate the impact of income taxes. This presentation is common in many financial statements where the focus is on the underlying business performance before tax effects.
However, in other financial statements, retained earnings can be shown net of tax, taking into account the income tax expense or benefit related to the retained earnings. This presentation provides a more comprehensive view of the company's financial position and takes into consideration the impact of taxes on the retained earnings balance.
Ultimately, the presentation of retained earnings, whether before tax or net of tax, is determined by the specific reporting requirements and accounting policies adopted by the company. Therefore, the statement that retained earnings are always shown in before tax amounts is false.
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En Khairul and En Mosbah are best friend since their primary school time. Due to the pandemic covid 19, both of them were retrenched from their previous employment. Both of them have sum amount of capital to set up a new business together. If both of them decide to build up the business as one entity, briefly explain the benefits and risk for them of developing this kind of business. 3/6 (Question 3) (a) On 21 December 2016, Malaysia Building Society Bhd (MBSB) had proposed the merger through acquisition of Asian Finance bank (AFB) to Bank Negara Malaysia (BNM). AFB is a foreign financial institution which operated in Malaysia. Due to the global financial crisis starting from 2008, AFB was much affected and keep incurred losses year by year. Board of directors of MBSB were decided to take over the AFB in order to get the bank licensing. They went through a lot of process and effective by 2nd April 2018 all the operations of AFB are under control of MBSB and MBSB known as MBSB Bank Berhad. Based on the above case, briefly explain FIVE (5) motives of companies involving in this kind of practice. (b) Before the acquisition of AFB, the market value of MBSB and AFB were RM250 million and RM15 million respectively. The offer from MBSB to AFB was at cost of RM17.2 million which above the market value and number of share outstanding for MBSB and AFB were 25 million and 34 million respectively. Based on the information given, calculate: i. Number of shares to be exchange for the acquisition. ii. Share price of merged firm. iii. The synergy value created by this merger. (c) En Khairul and En Mosbah are best friend since their primary school time. Due to the pandemic covid 19, both of them were retrenched from their previous employment. Both of them have sum amount of capital to set up a new business together. If both of them decide to build up the business as one entity, briefly explain the benefits and risk for them of developing this kind of business.
(a) Motives are Expansion of market presence, Diversification of services, Access to banking license, Cost synergies, Cost synergies. (b) The synergy value created by this merger is zero. (c) Benefits are Shared capital and resources, Complementary skills and expertise, Shared workload and decision-making, Synergy and innovation. Risks are Disagreements and conflicts, Financial risks, Lack of expertise in certain areas.
(a) Motives of companies involving in the acquisition of AFB:
Expansion of market presence: MBSB's motive behind acquiring AFB is to expand its market presence. By acquiring AFB, MBSB can enter new markets and tap into AFB's existing customer base, potentially increasing its market share and revenue.
Cost synergies: Merging with AFB may lead to cost synergies for MBSB. By consolidating operations, eliminating redundancies, and streamlining processes, MBSB can reduce costs and improve operational efficiency, which can positively impact its profitability.
(b) Based on the given information
i. Number of shares to be exchanged for the acquisition:
MBSB's offer cost: RM17.2 million
MBSB's market value: RM250 million
Number of MBSB shares outstanding: 25 million
Number of AFB shares outstanding: 34 million
To calculate the number of MBSB shares to be exchanged:
Offer cost / Market value = Number of shares to be exchanged
RM17.2 million / RM250 million = 0.0688
Number of MBSB shares to be exchanged = 0.0688 × 25 million = 1.72 million shares
ii. Share price of merged firm:
Total market value of merged firm = MBSB's market value + AFB's market value
Total market value = RM250 million + RM15 million = RM265 million
Share price of merged firm = [tex]\frac{Total market value}{Total number of shares outstanding}[/tex]
Share price of merged firm = RM265 million / [tex]\frac{RM265 million }{(25 million + 34 million)}[/tex]
= RM4.49
iii. Synergy value created by this merger:
Synergy value = Market value of merged firm - Sum of individual market values
Synergy value = RM265 million - (RM250 million + RM15 million) = RM265 million - RM265 million = RM0
The synergy value created by this merger is zero.
(c) Benefits and risks of developing a business as one entity:
Benefits:
Shared capital and resources: By pooling their capital together, En Khairul and En Mosbah can access more funds to start and grow their business. They can invest in better infrastructure, equipment, marketing, and talent, increasing their chances of success.
Complementary skills and expertise: As best friends, En Khairul and En Mosbah likely have a good understanding of each other's strengths and weaknesses. By combining their skills and expertise, they can leverage each other's abilities to effectively manage different aspects of the business, such as operations, finance, and marketing.
Shared workload and decision-making: Running a business can be demanding, and having a partner can help distribute the workload and decision-making. En Khairul and En Mosbah can share responsibilities, collaborate on strategic decisions, and provide support to each other, reducing individual stress and increasing efficiency.
Synergy and innovation: When two individuals with different perspectives and ideas come together, it can lead to innovation and creative problem-solving. En Khairul and En Mosbah can brainstorm ideas, challenge each other's thinking, and create synergies that may lead to unique business opportunities and competitive advantages.
Risks:
Disagreements and conflicts: Working closely together can strain personal relationships. Disagreements on business decisions, conflicting visions, or differences in work styles may arise, potentially leading to conflicts and putting a strain on the friendship between En Khairul and En Mosbah.
Financial risks: Starting a new business involves financial risks. There is a possibility of losses, especially in the early stages. En Khairul and En Mosbah should be prepared for potential financial challenges and have a contingency plan to mitigate the risks associated with a new business venture.
Lack of expertise in certain areas: En Khairul and En Mosbah may possess specific skills and knowledge, but they may lack expertise in certain critical areas of business management.
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During which stage of the listed stages of the Product Life Cycle are innovators targeted? 1) Product Introduction 2) Product Maturity 3) Product Growth 4) Product Development
Innovators are targeted during the product introduction stage of the product life cycle. In the product life cycle, there are four stages, and each stage has a different target audience that marketers want to reach and satisfy.
The four stages of the product life cycle include: Introduction growth maturity decline. The product introduction stage of the product life cycle is the stage where a new product is launched into the market. At this stage, the target audience is the innovators.
Innovators are individuals who like to experiment with new products and are willing to take risks. They are the first group of people to adopt new products and ideas. Innovators are typically a small percentage of the total market.
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Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $2,000 and the variable cost per cup of coffee served is $0.63. Required: 1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. 2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? eBook Hint Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.) Cups of Coffee Served in a Week 2,200 2,300 2,100 $ Fixed cost 2 Variable cost Total cost $ 2 0 $ Average cost per cup of coffee served
The table below shows the company's total cost and average cost per cup of coffee served at the indicated levels of activity:Cups of Coffee Served in a Week 220023002100 Fixed cost$2,000 $2,000 $2,000 Variable cost (2,200 cups x $0.63) $1,386.00(2,300 cups x $0.63) $1,449.00(2,100 cups x $0.63) $1,323.00 Total cost$3,386.00$3,449.00$3,323.00 Average cost per cup of coffee served $1.538 $1.500 $1.5812.
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $2,000 and the variable cost per cup of coffee served is $0.63.
The company's total cost and average cost per cup of coffee at the indicated levels of activity given that the fixed weekly cost of a coffee stand is $2,000 and the variable cost per cup of coffee served is $0.63.
To determine the company's total cost at the indicated levels of activity, the following formula may be used:-
Total cost = Fixed cost + Variable cost Fixed cost = $2,000 Variable cost = Number of cups of coffee served x Variable cost per cup.
The table below shows the company's total cost and average cost per cup of coffee served at the indicated levels of activity: Cups of Coffee Served in a Week 220023002100 Fixed cost $2,000 $2,000 $2,000 Variable cost (2,200 cups x $0.63) $1,386.00(2,300 cups x $0.63) $1,449.00(2,100 cups x $0.63) $1,323.00 Total cost $3,386.00 $3,449.00$3,323.00 Average cost per cup of coffee served $1.538 $1.500 $1.5812 The average cost per cup of coffee served decreases as the number of cups of coffee served in a week increases.
This is due to the fact that as the number of cups of coffee sold increases, the total cost of the company increases at a slower rate than the total number of cups sold. Therefore, the average cost per cup sold decreases.
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all of the following are true about the issuance of non-voting common stock except a. it has been issued when the corporation wishes to raise capital through the sale of common stock but does not want to relinquish its voting control b. it has been issued as a defense against an unfriendly takeover c it tends to result in the dilution of voting rights of current stockholders od. it tends to result in unequal voting rights among the shareholders
The correct answer is d. It tends to result in unequal voting rights among the shareholders.
Non-voting common stock is a class of shares issued by a corporation that does not carry voting rights. It is used in various scenarios, such as when a corporation wants to raise capital through the sale of common stock but does not want to relinquish its voting control (option a). It can also be issued as a defense mechanism against an unfriendly takeover (option b).Additionally, the issuance of non-voting common stock can result in the dilution of voting rights of current stockholders (option c).
This means that the proportion of voting rights held by existing shareholders may decrease when non-voting common stock is introduced.However, the issuance of non-voting common stock does not necessarily result in unequal voting rights among shareholders (option d). Non-voting shares typically carry the same economic rights as voting shares but do not provide the shareholders with the ability to vote on corporate matters. Therefore, while the voting rights may be different, the economic rights are generally equal for all shareholders.So, the correct statement is: "It tends to result in the dilution of voting rights of current stockholders" (option c).
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At an 8% annual interest rate, what is the present value of the following table? Use a gradient
Present Value of an Annuity:An annuity is a financial product that pays out a fixed amount of money to the holder on a regular basis.
If the payments are made at a regular interval, such as monthly or annually, it is referred to as an ordinary annuity. In contrast, if the payments are made at the start of each period, it is referred to as an annuity due.When calculating the present value of an annuity, the following formula is used.
Radient is a series of payments that grow or decline at a specific rate over time. The following formula is used to calculate the present value of a gradient:PV = (PMT / r) x (1 - (1 + g) ^ (-n)) - (G / r) x (1 - (1 + r) ^ (-n)), where PV is the present value, PMT is the first payment, r is the interest rate, n is the number of payments, and G is the gradient.
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When discussing and evaluating professional ethics, it is essential to understand the purpose, terminology, and repercussions of professional misconduct. The American Institute of Certified Public Accountants (AICPA) code of professional conduct is the gold standard for defining professional conduct in accounting; it is therefore important for business professionals to be familiar with. In this discussion, you will explore one principle in depth and discuss it and others with your peers.
First, select one of the following principles of professional conduct to examine in the AICPA Code of Professional Conduct document:
Responsibilities
Public interest
Integrity
Objectivity and independence
Due care
Scope and nature of services
Then, for your initial post, reflect on what appropriate practice of your selected principle would look like in the field, and also on some potential examples of violations of the principle. Use the following questions to help guide your reflections:
How would you define and describe your selected principle in your own words?
What value does the principle bring to practitioners, businesses, and clients?
What is an example of a difficult situation that a practitioner may face related to your selected principle, and what would an ethical response to the situation be? Why might a practitioner be tempted to, or accidentally, not take an ethical course of action?
The selected principle of professional conduct to examine in the AICPA Code of Professional Conduct document is 'Integrity'.
Integrity, a principle of professional conduct, means "to be straightforward and truthful in all professional and business relationships." This principle necessitates that you behave in a manner that is ethical, honest, and that you are not willing to compromise in any way. Ethical principles are essential to the accounting profession, and a lack of integrity might damage the public trust in accounting and auditing. The value of this principle for practitioners, businesses, and clients is as follows:
Integrity is critical in developing trust and confidence in the business environment. In the accounting industry, this is particularly important because it encourages investors to invest their money in reliable enterprises. Clients will rely on the accountant's honesty and transparency when conducting audits or other services, and if they find these characteristics lacking, they will not engage the accountant's services. A difficult situation that a practitioner may face related to the integrity principle is when they become aware of fraudulent financial reporting by a client. The practitioner may be tempted to turn a blind eye to the situation and keep the information confidential to avoid losing the client. However, this would not be ethical since the client's deceit would harm other stakeholders, and the practitioner has a professional obligation to disclose such information and prevent further harm.Therefore, in an ethical response to the situation, the practitioner would report the fraudulent activity to the appropriate authorities, such as the SEC, and withdraw from the client's service. The practitioner would be motivated to not take an ethical course of action because of the desire to keep the client, which would result in a loss of income. However, such behavior would damage the practitioner's integrity, credibility, and reputation in the long run.
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Your topic must be for a new product (a good or service). Because this is an applied project and not a research paper, please be creative and do not select a new product for a large brand, such as Starbucks, Apple, and so forth. If you are interested in coffee, for example, consider your own bistro as your topic and then use information from companies such as Starbucks or Seattle's Best Coffee for ideas and competitive research as you work on your project.
Topic: Launching a Sustainable Home Cleaning Product Line This applied project aims to develop and launch a new line of sustainable home cleaning products.
The project focuses on creating eco-friendly and effective cleaning solutions for environmentally conscious consumers. The objective is to meet the growing demand for sustainable alternatives in the home cleaning market while establishing a competitive advantage in the industry. The project will involve extensive market research, product development, branding, marketing, and distribution strategies. By offering a range of eco-friendly cleaning products, the project aims to contribute to a cleaner and greener future while meeting the needs and preferences of modern consumers.
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The mip before a process change is 1.34 units and the MFP after the
process change is 1.25 units/S. What is the % change in the
MFP
The percentage change in MFP is approximately 6.72%.
Given: MIP before process change = 1.34 units MFP after process change = 1.25 units/s Formula to calculate percentage change = ${{\text{Final value - Initial value}}\over{\text{Initial value}}}
$Initially, the MFP was 1.34 units. After the process change, it became 1.25 units/s.$$\text{Percentage change} = {{1.25 - 1.34}\over{1.34}}\times100\%$$$$\Rightarrow{{-0.09}\over{1.34}}\times100\%$$$$\Rightarrow-0.067\approx-6.72\%$$Therefore, the percentage change in MFP is approximately 6.72%.
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1a Explain the logic behind Say’s law and how it really only makes sense in a barter economy or where money is simply an aid to exchange. [10]
1b. Explain how the Keynesian view of how a monetary economy functions challenged Say’s law. [20]
1c The debate between orthodox Keynesians and their monetarist critics concentrated on the shape of the Aggregate Supply curve. Describe the opposing positions and explain how real live economic and theoretical developments in the 1970s and later undermined orthodox Keynesianism. [20]
1a Explain the logic behind Say’s law and how it really only makes sense in a barter economy or where money is simply an aid to exchange. [10]
1b. Explain how the Keynesian view of how a monetary economy functions challenged Say’s law. [20]
1c The debate between orthodox Keynesians and their monetarist critics concentrated on the shape of the Aggregate Supply curve. Describe the opposing positions and explain how real live economic and theoretical developments in the 1970s and later undermined orthodox Keynesianism. [20]
Say's law of market states that supply generates its own demand, but in a monetary economy, where money is used for transactions, production does not automatically create demand. Keynesian economics challenges Say's law, advocating for government intervention to stimulate demand during recessions.
1a. Say's law of market is a fundamental principle of classical economics that states supply generates its own demand. In a barter economy, individuals produce goods, earn income, and spend that income on other goods, resulting in a circular flow of income.
The law assumes supply and demand are always in equilibrium, preventing recessions. However, in a monetary economy, the ability to buy goods depends on having enough money, challenging Say's law.
1b. Keynesian economics rejects Say's law, arguing that an economy can experience excess supply and demand for money simultaneously, leading to recessions.
Keynes advocated for government intervention through fiscal policy to stimulate demand and overcome unemployment. Keynes challenged the assumption that production automatically creates demand in a monetary economy.
1c. Orthodox Keynesians view the aggregate supply curve as relatively flat, allowing for increases in demand to boost output without significant inflation. Monetarist critics argue the curve is steep, implying a close-to-potential economy where increased demand leads to inflation.
Stagflation in the 1970s challenged orthodox Keynesianism, boosting the popularity of controlling the money supply to curb inflation. The emergence of rational expectations and the natural rate of unemployment further undermined orthodox Keynesianism, paving the way for new classical economics and the belief in limited government intervention.
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Florida State University is trying to figure out which tuition structure would be most effective to offer for their students. They show students three different options: Full priced tuition that includes classes, all sporting events and gym access; 80% tuition that includes classes, gym access, and no sporting events; and 60% tuition including only classes without gym access or sporting events. This helps them determine how much these additional perks are worth to students. What type of analysis would FSU be using for this question? Cluster Analysis Conjoint Analysis O Segmentation Analysis Cost-sensitivity Analysis Regression Analysis
The type of analysis that Florida State University (FSU) would be using for this question is Conjoint Analysis. Conjoint analysis is a research technique that helps determine how individuals value different attributes or features of a product or service by presenting them with various combinations of these attributes.
In the case of FSU, they are presenting students with three different options for tuition structure, each with different attributes (classes, sporting events, gym access). By analyzing the choices made by the students, FSU can assess the relative importance and value placed on these attributes. This analysis allows them to understand how much value students associate with each perk and make informed decisions about the tuition structure that would be most effective and appealing to their student body.
Conjoint analysis is particularly useful when evaluating trade-offs and understanding the preferences of individuals within a target market. It helps organizations like FSU determine the optimal combination of attributes to offer in order to maximize value and meet the needs of their students.
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Cost reductions increase profits. Describe 3 out of the 8 ways
firms reduce costs and provide your own real examples.
Three ways firms can reduce costs are: Streamlining operations: This involves optimizing internal processes to eliminate inefficiencies and reduce costs.
For example, a manufacturing company may implement lean manufacturing principles to minimize waste and improve productivity. By identifying and eliminating non-value-added activities, they can reduce costs and increase profits. Outsourcing: Companies can reduce costs by outsourcing certain functions or tasks to external providers. For instance, a software development company may outsource its customer support operations to a third-party call center. This allows them to save on labor costs, infrastructure expenses, and training, ultimately leading to higher profits. Implementing technology solutions: Automation and technology can help reduce costs by improving efficiency and productivity. For instance, a retail business may invest in a point-of-sale system that automates inventory management, sales tracking, and customer data analysis. By reducing manual work and optimizing processes, the company can cut costs and increase profitability.
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lasco Co. uses a job order cost system. The following data summarize the operations related to production for July: July 1 Materials purchased on account, $635,470 2 Materials requisitioned, $628,070, of which $74,070 was for general factory use 31 Factory labor used, $674,350, of which $94,570 was indirect 31 Other costs incurred on account for factory overhead, $151,200; selling expenses, $228,420; and administrative expenses, $152,810 31 Prepaid expenses expired for factory overhead, \$27,820; for selling expenses, $28,010; and for administrative expenses, $18,240 31 Depreciation of office building was $81,480; of office equipment, $43,370; and of factory equipment, $31,020 31 Factory overhead costs applied to jobs, $363,480 31 Jobs completed, $992,960 31 Cost of goods sold, $885,860 Required: Journalize the entries to record the summarized operations. Refer to the chart of accounts for the exact wording of the account bites. 0 journals do not use lines for joumar explanations. Every line on a joumal page is used for dobit or credit entries. CNOW joumals will aun
The journal entries for the summarized operations are:Date Account Titles Debit CreditJul. 1 Raw Materials $635,470 Accounts Payable $635,470(To record the purchase of raw materials on account)Jul. 2 Work in Process $554,000 Manufacturing Overhead $74,070 Raw Materials Inventory $628,070
Lasco Co. uses a job order cost system to calculate the cost of each job. The journal entries for the summarized operations are presented above. These entries have been presented to record the cost of raw materials, manufacturing overhead, indirect materials, indirect labor, and other factory costs.Lasco Co. has charged the cost of goods sold account with $885,860 and the work in process account with $885,860. Manufacturing overhead, wages payable, payroll taxes payable, factory supplies, prepaid expenses, depreciation expenses, raw materials inventory, and accounts payable are some of the accounts affected by these entries.
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A company's batance sheet shows: cash $48,000, accounts receivable $29,000, office equipment $63,000, and accounts-payabie $30,000. What is the amount of owner's equity? a) $30000. b) $42,000 c) $10,000 d) $140,000. If a company is considering the purchase of a parcel of land that was originally acquired by the selfer for $98,000, is currently offered for sale at $176,000, is considered by the purchaser as easily being worth $166,000, and is finally purchased for $163,000, the land should be recorded in the purchaser's books at: a) $108,000 b) $163,000 c) $164.500 d) $166.000 A law firm billed a client $3.100 for work performed in the current month. Which of the following general journai entries will the firm make to fecord this transaction? a) Debit Accounts Recelvable, $3,100; credit Unearned Revenue, $3,100 b) Debit Cash, 53,100 , credit Unoarned Revenve, $3,100. c) Debit Legal Revenue, $3,100, credt Accounts Receivable, 53,100 d) Debit Accounts Recelable, 53,100 ; credit Legal Revenue, $3,100.
1. Owner's equity will be $110,000.
2. The land should be recorded in the purchaser's books at $166,000.
3. The law firm will make the following general journal entry to record the transaction: Debit Accounts receivable, $3,100; credit Legal revenue, $3,100.
The company's balance sheet shows cash $48,000, accounts receivable $29,000, office equipment $63,000, and accounts payable $30,000. From this, the owner's equity is computed as: Cash + Accounts receivable + Office equipment - Accounts payable= $48,000 + $29,000 + $63,000 - $30,000= $110,000 Therefore, the amount of owner's equity is $110,000.
The cost at which the land should be recorded in the purchaser's books will be the purchase price. In this case, it is $163,000.
The law firm billed a client $3,100 for work performed in the current month. This will increase the accounts receivable by $3,100. And since it has earned $3,100 of revenue, it will increase the legal revenue account by $3,100. Therefore, the general journal entry will be: Debit Accounts Receivable, $3,100; Credit Legal Revenue, $3,100.
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