If the company accepts the outside supplier's offer to buy Part A, there will be a decrease in profits.
By purchasing Part A from an outside supplier for $15 each, the company can avoid the costs associated with producing it internally. The total cost of producing Part A internally can be calculated as follows:
Total Cost = Direct materials + Direct labor + Variable factory overhead + Fixed factory overhead
= $100,000 + $40,000 + $35,000 + $65,000
= $240,000
Since the company produces 10,000 units of Part A annually, the cost per unit internally would be $240,000 / 10,000 = $24.
On the other hand, the outside supplier offers Part A for $15 each. Therefore, by accepting the supplier's offer, the company can save $24 - $15 = $9 per unit.
To calculate the increase or decrease in profits, we need to consider the number of units sold. Let's assume the company sells all 10,000 units of Part A each year.
Profit Increase/Decrease = (Savings per unit) x (Number of units sold)
= $9 x 10,000
= $90,000
Hence, if the outside supplier's offer is accepted, the company will experience a decrease in profits by $90,000.
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Describe a change that would improve the overall effectiveness of the organization. If you were responsible for leading that change, what skills and attributes do you possess that will help facilitate the proposed change? What resistance might you face within the organization? How might you gain support from key stakeholders for the change you propose? Think about the readings to date, and discuss strategies that you could initiate that would increase your effectiveness as a leader driving that change.
Implementing a more transparent and inclusive decision-making process, led by a leader with strong communication skills and empathy, can improve organization effectiveness by fostering open dialogue, encouraging participation, and addressing resistance through stakeholder engagement and collaboration.
One change that could improve the overall effectiveness of the organization is implementing a more transparent and inclusive decision-making process.
As a leader responsible for leading this change, I possess strong communication skills, empathy, and the ability to build trust among team members. I can facilitate open dialogue, encourage participation, and ensure that all voices are heard.
Resistance within the organization might come from individuals who are accustomed to hierarchical decision-making or fear loss of control. To gain support, I would engage key stakeholders early on, explain the benefits of the new process, address concerns, and provide opportunities for feedback and collaboration. Additionally, I would leverage the knowledge and expertise of influential stakeholders to create a sense of ownership and commitment to the change.
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1. Discuss the key steps in negotiating a union
contract.
2. Evaluate tools used in quality control systems. Provide two
real-life examples.
Negotiating a union contract involves a series of steps to reach an agreement between the union representing employees and the employer. While the specific process can vary depending on the industry, union, and specific circumstances, the following are key steps commonly involved in negotiating a union contract:
1. Preparation: Both the union and the employer need to prepare for negotiations. This involves gathering relevant information, such as industry standards, wage data, benefits packages, and understanding the needs and priorities of the union members and the employer.
2. Setting the Agenda: The parties involved need to agree on the issues to be discussed during negotiations. This includes identifying the key concerns, such as wages, working hours, benefits, job security, and any other relevant terms and conditions of employment.
3. Opening Statements: At the beginning of negotiations, each side presents its opening statements. The union may outline its proposals and demands, while the employer may present its position and any limitations or constraints.
4. Negotiation and Bargaining: The negotiation process involves back-and-forth discussions, compromises, and proposals from both sides. This stage often requires effective communication, active listening, and the willingness to find mutually acceptable solutions. Negotiations can cover various topics, including wages, working conditions, benefits, grievance procedures, and more.
5. Reaching an Agreement: Through negotiation and bargaining, the parties aim to reach a consensus on the terms of the contract. This includes settling on specific provisions, such as wage increases, healthcare benefits, vacation days, and any other relevant terms that will be included in the contract.
6. Drafting the Contract: Once the parties have reached an agreement, the next step is to formalize it by drafting the contract. This involves detailing the agreed-upon terms, conditions, and provisions in a written document. The contract should be clear, precise, and legally binding.
7. Ratification: After the contract is drafted, it is typically presented to the union members for ratification. The members vote to accept or reject the contract. If a majority approves it, the contract becomes effective and legally binding.
8. Implementation and Enforcement: Once the contract is ratified, it is implemented by the employer and enforced by both parties. Both the union and the employer have responsibilities to ensure compliance with the contract's provisions and resolve any disputes that may arise.
In conclusion, negotiating a union contract involves several key steps, including preparation, setting the agenda, opening statements, negotiation and bargaining, reaching an agreement, drafting the contract, ratification by union members, and implementation/enforcement of the contract.
2. Evaluation of Tools Used in Quality Control Systems with Real-Life Examples:
Quality control systems employ various tools and techniques to monitor and improve the quality of products or services. Here are two real-life examples of commonly used tools in quality control systems:
1. Statistical Process Control (SPC): SPC is a statistical tool used to monitor and control a process to ensure it operates within acceptable limits. It involves collecting and analyzing data over time to identify any variations or trends that may impact quality. SPC uses control charts, such as the X-bar and R charts, to visually display process performance and determine if it is within statistical control. For example, a manufacturing company may use SPC to monitor the dimensions of produced parts to ensure they meet specifications and detect any shifts or variations in the process that may lead to defects.
2. Failure Mode and Effects Analysis (FMEA): FMEA is a proactive risk assessment tool used to identify and address potential failures or defects in a product or process. It systematically examines each potential failure mode, its effects, and the likelihood of occurrence, severity, and detectability. By prioritizing failure modes based on their risk levels, organizations can develop preventive actions to mitigate or
eliminate the identified risks. For instance, an automotive company may use FMEA to assess potential failures in a new vehicle's braking system and implement design or process changes to enhance safety and reliability.
In conclusion, tools used in quality control systems, such as Statistical Process Control (SPC) and Failure Mode and Effects Analysis (FMEA), play crucial roles in ensuring product or service quality. SPC helps monitor and control processes, while FMEA enables proactive identification and mitigation of potential failures or defects. By utilizing these tools effectively, organizations can enhance quality, reduce defects, and improve customer satisfaction.
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Suppose you deposit $1,129.00 into an account 6.00 years from today. Exactly 12.00 years from today the account is worth $1,790.00. What was the account's interest rate?
Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243))
The interest rate of the account is approximately 3.213% or 0.03213 in decimal form. To determine the interest rate of the account, we need to calculate the annual interest rate compounded over the given time period.
Given that a deposit of $1,129.00 is made 6.00 years from today and the account is worth $1,790.00 exactly 12.00 years from today, we can use the compound interest formula to find the interest rate. The interest rate represents the growth rate of the account's value over time.
We can use the compound interest formula to calculate the interest rate:
A = P * (1 + r)^n
Where:
A = Future value of the account
P = Initial deposit or present value
r = Annual interest rate
n = Number of compounding periods (in this case, the number of years)
Given that the initial deposit (P) is $1,129.00 and the future value (A) is $1,790.00, we can rearrange the formula to solve for the interest rate (r). However, we need to adjust the number of compounding periods (n) to reflect the difference between the deposit and future value dates.
Using the adjusted time period, we have:
Adjusted n = 12.00 - 6.00 = 6.00 years
Now we can calculate the interest rate:
1,790.00 = 1,129.00 * (1 + r)^6.00
Dividing both sides of the equation by 1,129.00:
1 + r = (1,790.00 / 1,129.00)^(1/6.00)
Taking the 6th root of the right side:
1 + r ≈ 1.03213
Subtracting 1 from both sides:
r ≈ 0.03213 or 3.213%
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Tauros Inc provided the following data concerning its only product: The unit selling price of ∄100, current sales of 46,700 units, and break-even sales of 34,091 units. operating income should increase by
a. 250%
b. 167%
c. 100%
d. 334%
Tauros Inc needs to increase its operating income by approximately 37% to achieve its desired level. This exceeds the options provided, indicating that none of the given percentages accurately represents the required increase.None of the provided options are correct.
To calculate the increase in operating income, we first need to determine the current operating income and the break-even operating income. The current operating income can be calculated by multiplying the current sales by the unit selling price, and the break-even operating income is obtained by multiplying the break-even sales by the unit selling price.
Current operating income = ∄100 * 46,700 units = ∄4,670,000
Break-even operating income = ∄100 * 34,091 units = ∄3,409,100
The difference between the current operating income and the break-even operating income represents the increase in operating income that needs to be achieved.
Increase in operating income = ∄4,670,000 - ∄3,409,100 = ∄1,260,900
To find the percentage increase in operating income, we divide the increase by the break-even operating income and multiply by 100.
Percentage increase = (∄1,260,900 / ∄3,409,100) * 100 = 37%
Therefore, the correct answer is not provided among the options given. The operating income should increase by approximately 37%.
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Suppose Lee is offered a investment that pays a $1,000 payment to that person each year for the next 25 years . How much should Lee pay for that investment if the bank is giving 4% interest per year on invested money? (Choose the answer closest to your calculations)
a. $15,983
b. $14,980
c. $15,114
d. $15,622
The answer to the question is b. $14,980. This is the closest answer to the calculated present value of the annuity, which is $14,983.20.
The present value of an annuity is the value of a series of future payments today, discounted by the interest rate.
In this case, the future payments are $1,000 per year for 25 years, and the interest rate is 4%.
To calculate the present value, we can use the following formula:
Present Value = (Payment * Number of Payments) / (1 + Interest Rate)^Number of Payments
Plugging in the values from the problem, we get:
Present Value = [tex](1000 * 25) / (1 + 0.04)^{25} = 14983.20[/tex]
As you can see, the calculated present value is very close to answer choice b., which is $14,980. Therefore, this is the most likely answer to the question.
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Blossom Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 63% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 32,100 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.35 per unit. If Blossom Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $49,400 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Should Blossom Ranch buy the finials? , Blossom Ranch should the finials. Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $44,900 ? , income would by $
(a) By comparing the costs, Blossom Ranch should buy the finials since the incremental cost to make per unit is -$1.20, indicating savings, and fixed manufacturing overhead will be eliminated.
(b) Even with additional income of $44,900, the decision remains to buy the finials due to the negative incremental cost and the extra income supporting this choice.
(a) To analyze the decision to make or buy the finials, we need to compare the costs of the two options.
Cost to make the finials:
Direct materials cost per unit: $4
Direct labor cost per unit: $5
Variable manufacturing overhead (63% of direct labor cost): $5 * 63% = $3.15
Total variable cost per unit: $4 + $5 + $3.15 = $12.15
Fixed manufacturing overhead to be absorbed by other products: $49,400
Cost to buy the finials:
Supplier's price per unit: $13.35
Now, let's calculate the incremental analysis:
Incremental cost to make per unit: Cost to make - Supplier's price
= $12.15 - $13.35
= -$1.20 (or -$1.20 per unit)
Incremental fixed manufacturing overhead cost: $49,400
Therefore, the incremental analysis shows that Blossom Ranch should buy the finials since the incremental cost to make per unit is negative (-$1.20), indicating cost savings, and the fixed manufacturing overhead cost will be eliminated.
(b) If the productive capacity released by not making the finials could be used to produce income of $44,900, the incremental analysis would need to consider this additional income.
Incremental income from not making the finials: $44,900
In this case, the incremental analysis would be:
Incremental cost to make per unit: -$1.20
Incremental fixed manufacturing overhead cost: $49,400
Incremental income from not making: $44,900
Considering both the cost savings and the additional income, the decision would still be to buy the finials since the incremental cost to make per unit is negative, indicating cost savings, and the additional income further supports this decision.
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Which of the following is NOT a common responsibility of first-line managers?
a. Handle routine administrative duties.
b. Oversee day-to-day operations of their respective department/store.
c. Hire operating employees.
d. Make decisions about acquiring other companies.
The answer is (d) Make decisions about acquiring other companies.
First-line managers are typically responsible for the day-to-day operations of their department or store.
They may handle routine administrative duties, hire operating employees, and oversee the performance of their team. However, they are not typically involved in making decisions about acquiring other companies. This is a more strategic decision that is typically made by senior management.
Here is a more detailed explanation of the responsibilities of first-line managers:
Handle routine administrative duties: This includes tasks such as scheduling employees, processing paperwork, and managing budgets.
Oversee day-to-day operations: This includes ensuring that the department or store is meeting its goals, resolving customer complaints, and addressing any other issues that may arise.
Hire operating employees: This includes screening applicants, conducting interviews, and making hiring decisions.
Oversee the performance of their team: This includes setting performance goals, providing feedback, and resolving performance issues.
Making decisions about acquiring other companies is a more strategic decision that is typically made by senior management. This is because it involves a significant investment of time, money, and resources. First-line managers may be involved in the process of evaluating potential acquisitions, but they are not typically responsible for making the final decision.
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8 years ago, a new machine cost $7,000,000 to purchase and an additional $640,000 for the installation. The machine was to be linearly depreclated to zero over 25 years. The company has just sold the machine for $4,200,000, and its marginal tax rate is 25%. Part 1 Attempt 1/5 for 10 pts. What is the annual depreciation? Part 2 1. Attempt 1/5 for 10 pts. What is the current book value? Part 3 B Attempt 1/5 for 10 pts. What is the after-tax salvage value?
Part 1: To calculate the annual depreciation, we must first ascertain the machine's depreciable cost. Depreciable cost equals machine cost plus installation cost, or $7,000,000 plus $640,000. = $7,640,000 Depreciable cost divided by useful life, or $7,640,000 divided by 25, equals annual depreciation of $305,600.
Consequently, the machine's annual depreciation is $305,600. Part 2: The accumulated depreciation can be subtracted from the machine's initial purchase price to determine the current book value. Depreciation over time is calculated as Annual Depreciation x Number of Years, which equals $305,600 x 8 to $2,444,800. Initial cost minus accumulated depreciation is ($7,000,000 + $640,000) - $2,444,800 = $5,195,200. Current book value is the result. Consequently, the machine's current book value is $5,195,200. Part 3: We must apply the tax rate to the machine's selling revenues in order to calculate the after-tax salvage value. Sales revenue equals $4,200,000 25% tax rate Tax on Gain = (Revenue from Sale - Purchase Price) * Tax Rate = ($4,200,000 - $7,000,000) * 0.25 = -$700,000 (negative figure denotes a tax benefit). Salvage value after taxes equals proceeds from sale plus gain tax, which is $4,200,000 - $700,000, or $3,500,000. The machine's salvage value is therefore $3,500,000 after taxes.
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At Page, the standard price for the M640 electrical relay (a component used in the production of a commercial refrigeration unit) is $62. Standards call for 2.0 relays per unit of finished product. In July, the company purchased 161 relays for $9,177. The company used 100 relays in the production of 48 refrigeration units ( 4 relays were damaged in the installation process).
Calculate the material price variance and the material quantity variance related to the M640 electrical relay. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, eg. 14.37 and final answers to 0 decimal places, eg. 125. Enter all variances as a positive number.).
Calculation of material price variance and material quantity variance related to the M640 electrical relay:Calculation of material price variance:The formula for calculating the material price variance is as follows:Material price variance = Actual quantity x (Actual price - Standard price)The actual quantity is the number of relays purchased and used by the company. In this case, the actual quantity of relays purchased was 161, and the actual quantity of relays used in the production of 48 refrigeration units was 96 (100 relays were used, but 4 were damaged).
The actual price per relay is the total cost of purchasing the relays divided by the number of relays purchased. In this case, the actual price per relay is $9,177 / 161 = $57.03.Material price variance = 96 x ($57.03 - $62) = $-439.68The material price variance is unfavorable as the actual price is less than the standard price.Calculation of material quantity variance:The formula for calculating the material quantity variance is as follows:Material quantity variance = (Actual quantity - Standard quantity) x Standard priceThe standard quantity is the quantity of relays that should have been used based on the standards, which call for 2.0 relays per unit of finished product. In this case, the standard quantity is 48 units x 2.0 relays per unit = 96 relays.Material quantity variance = (96 - 96) x $62 = $0The material quantity variance is zero as the actual quantity used is equal to the standard quantity.
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In 2012, the US government bond index yield (10-year maturity) is 0.6%. The
average return of the US equity markets is 8%, while the global equity market
returns is 6%. A US company’s domestic beta is estimated at 1.3, but its global
beta (against the larger global equity market portfolio) is estimated at 0.9.
Calculate this US company’s cost of equity based on the domestic portfolio, and
based on a global portfolio for a US investor, respectively. (Note: cost of equity is
ke = krf + βi(km ―krf))
The US company's cost of equity based on the domestic portfolio is approximately 10.22%, while the cost of equity based on a global portfolio for a US investor is approximately 5.46%.
To calculate the US company's cost of equity based on the domestic portfolio, we need to use the formula ke = krf + βi(km - krf), where ke represents the cost of equity, krf is the risk-free rate, βi is the beta of the company, and (km - krf) represents the equity risk premium.
Given that the US government bond index yield is 0.6% in 2012, we can assume it as the risk-free rate (krf). The average return of the US equity markets is 8%, which represents the equity risk premium (km - krf) for the domestic portfolio. The company's domestic beta is estimated at 1.3.
Using the formula, we can calculate the cost of equity based on the domestic portfolio:
ke (domestic) = 0.006 + 1.3 * (0.08 - 0.006)
ke (domestic) ≈ 0.006 + 1.3 * 0.074
ke (domestic) ≈ 0.006 + 0.0962
ke (domestic) ≈ 0.1022 or 10.22%
To calculate the cost of equity based on a global portfolio for a US investor, we need to use the global equity market returns, which is 6%. The company's global beta (against the larger global equity market portfolio) is estimated at 0.9.
Using the formula, we can calculate the cost of equity based on the global portfolio:
ke (global) = 0.006 + 0.9 * (0.06 - 0.006)
ke (global) ≈ 0.006 + 0.9 * 0.054
ke (global) ≈ 0.006 + 0.0486
ke (global) ≈ 0.0546 or 5.46%
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Assume that te consensus required rate of return on common stocks is 14 percent. In addition, you read in Fortune that the expected rate of inflation is 6 percent and the estimated long-term real growth rate of the economy is 3 percent. What interest rate would you expect on U.S. government T-bills? Round your answer to two decimal places.___%
What is the approximate risk premium for common stocks implied by these data? Do not round intermediate calculations. Round your answer to two decimal places.
___%
The expected interest rate on U.S. government T-bills can be calculated, and the approximate risk premium for common stocks can be determined. The interest rate on T-bills is expected to be lower than the required rate of return on common stocks due to their lower risk profile.
To calculate the expected interest rate on U.S. government T-bills, we need to subtract the expected inflation rate from the required rate of return on common stocks. Therefore:
Interest rate on T-bills = Required rate of return on common stocks - Expected inflation rate
= 14% - 6%
= 8%
Hence, the expected interest rate on U.S. government T-bills is approximately 8%.
To determine the approximate risk premium for common stocks, we subtract the estimated long-term real growth rate of the economy from the required rate of return on common stocks. Therefore:
Risk premium for common stocks = Required rate of return on common stocks - Estimated long-term real growth rate
= 14% - 3%
= 11%
Hence, the approximate risk premium for common stocks implied by the given data is approximately 11%.
This represents the additional return that investors expect to earn for taking on the risk associated with investing in common stocks compared to risk-free investments like T-bills.
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The Global Environment Assignment on the company Hulu
1. Explain incentives that can influence firms to use an international strategy. Those Incentives are listed in the text. Reflect on your organization and identify only the incentives that relate to your organization.
2. Identify three basic benefits of your company that firms gain by successfully implementing an international strategy.
3. Discuss two major risks of your company using international strategies.
1. Incentives for Hulu to use an international strategy include market expansion, revenue growth, and competitive advantage.
2. Three basic benefits of implementing an international strategy for Hulu are increased market reach, diversified revenue streams, and a competitive edge.
3. Major risks for Hulu in using international strategies include cultural and regulatory challenges, as well as the need for significant investments in resources.
1. By successfully implementing an international strategy, Hulu gains three basic benefits. Firstly, it expands its market reach and taps into new customer bases, increasing its potential subscriber base and revenue streams. Secondly, international expansion allows Hulu to diversify its revenue sources and reduce reliance on any single market, making it more resilient to economic fluctuations. Lastly, an international strategy provides Hulu with a competitive advantage by allowing it to compete with global streaming giants and establish its brand presence in new markets.
2. There are two major risks associated with Hulu using international strategies. Firstly, cultural and regulatory differences across countries can pose challenges in terms of content licensing, censorship, and compliance with local laws. Navigating these complexities requires careful adaptation and understanding of each market. Secondly, international expansion incurs additional costs and resource allocation, such as setting up regional offices, marketing campaigns, and localized content production. These investments may take time to yield returns and could strain the company's financial resources if not managed effectively.
3. Hulu is incentivized to pursue an international strategy to achieve market expansion, revenue growth, and competitive advantage. The benefits of successful implementation include increased market reach, diversified revenue streams, and a competitive edge. However, there are risks involved, such as cultural and regulatory challenges, as well as the need for significant investments in resources. Managing these risks effectively is crucial for Hulu's international expansion endeavors.
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Mr. Brown is an investor, he bought shares for R50 each at the beginning of the year. During the year he received a dividend of R3 per share. The price per share at the end of the year is R64. Required: Calculate the holding period return on the share.
Holding period return is a measure of investment performance that reflects the return earned by an investor over the time that they held the investment. It is calculated by taking the sum of all income and capital gains, and dividing by the initial investment.
In this question, Mr. Brown bought shares for R50 each at the beginning of the year. During the year, he received a dividend of R3 per share. The price per share at the end of the year is R64. Therefore, we can calculate Mr. Brown's holding period return as follows: Income from dividends = R3 per share Initial investment = R50 per share Final value of investment = R64 per share Total income = Income from dividends + capital gain Total income = R3 + (R64 - R50)Total income = R17Therefore, Mr. Brown's holding period return is :Total income ÷ Initial investment x 100 = Holding period return Holding period return = R17 ÷ R50 x 100Holding period return = 34%Therefore, Mr. Brown's holding period return on the share is 34%.
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TRUE / FALSE.
Correct answers will receive 1 mark. Incorrect answers will receive -0.75 mark. An answer left blank will receive 0 marks. So decide carefully before you answer.*** Goods and services are scarce because resources are scarce. Select one: O a. True O b. False
Answer:
The given statement is true.
Explanation:
The production of goods and services requires the use of resources and factor inputs. The resources are in limited supply and hence the goods and services produced using them are also in limited supply.
Assignment Question In this intensify competitive market, the goal of business varies depending on the situation. The business administrators should well understand the nature of the business market in order to gain a profit. Moreover, the business should always develop its business model in innovative ways in order to survive in this market. Among these other business functions, marketing and finance have become a manifested role in the growth of innovative business models. Please make the review for the changing nature of business by analyzing the above mentioned facts. Analysis 1: Discuss the nature of business markets. Analysis 2: Explain the concept of business innovation and growth Analysis 3: Briefly summarize the role of finance and marketing Please make the analysis based on the above mentioned facts by selecting the service firms.
Analysis 1: The nature of business markets:
The business market is characterized by intense competition, where companies strive to gain a profit and maintain their competitive edge.
Analysis 2: The concept of business innovation and growth:Business innovation is the process of introducing new ideas, products, services, or processes that create value and improve business performance.
Analysis 3: The role of finance and marketing:
Finance and marketing play crucial roles in the growth of innovative business models for service firms.
Analysis 1: The nature of business markets:
The business market is characterized by intense competition, where companies strive to gain a profit and maintain their competitive edge. In this intensified competitive market, businesses must have a thorough understanding of the market dynamics to succeed. Service firms, in particular, face unique challenges in the business market.
Service firms operate in an intangible environment, where the primary offering is a service rather than a tangible product. This presents challenges in terms of market differentiation and creating value for customers. Service firms need to focus on delivering exceptional customer experiences and building strong relationships to gain a competitive advantage. Moreover, they must constantly monitor and adapt to changing customer demands and preferences.
Service firms also face competition from both traditional competitors and emerging disruptors, which further intensifies the market. They need to stay agile and responsive to market trends, offering innovative solutions that meet evolving customer needs. This requires a deep understanding of customer behavior, market segmentation, and effective marketing strategies.
In conclusion, the nature of business markets is highly competitive, requiring service firms to be customer-focused, innovative, and adaptable to succeed.
Analysis 2: The concept of business innovation and growth:
Business innovation is the process of introducing new ideas, products, services, or processes that create value and improve business performance. In the context of service firms, innovation is crucial for sustained growth and staying ahead of the competition.
Service firms can innovate in various ways. They can introduce new service offerings, enhance existing services, improve service delivery processes, or implement technological advancements to enhance customer experiences. Innovation enables service firms to differentiate themselves, attract new customers, and retain existing ones.
To foster innovation and growth, service firms should create a culture that encourages and rewards creativity and risk-taking. They should invest in research and development, collaborate with external partners, and continuously scan the market for emerging trends and opportunities. Service firms must also foster an environment of continuous learning and improvement, empowering employees to contribute ideas and participate in innovation initiatives.
In conclusion, business innovation is essential for the growth of service firms. By embracing innovation and constantly seeking new ways to create value, service firms can sustain their competitive advantage and thrive in the ever-changing business market.
Analysis 3: The role of finance and marketing:
Finance and marketing play crucial roles in the growth of innovative business models for service firms.
Finance is responsible for managing the financial resources of a firm and ensuring that funds are allocated effectively to support innovation and growth initiatives. Service firms need to secure adequate funding to invest in research and development, technology, talent acquisition, and marketing efforts. Financial analysis and forecasting help service firms make informed decisions regarding resource allocation and investment strategies.
Marketing, on the other hand, is vital for understanding customer needs, identifying target markets, and creating effective strategies to reach and engage customers. Service firms need to develop innovative marketing campaigns that effectively communicate the value of their offerings. They must embrace digital marketing techniques, leverage social media platforms, and employ data analytics to gain insights into customer behavior and preferences.
In conclusion, finance and marketing are integral functions in the growth of service firms. Effective financial management and innovative marketing strategies enable service firms to navigate the competitive business market, drive innovation, and achieve sustainable growth.
Overall, service firms operating in today's highly competitive market need to be customer-centric, innovative, and agile. By understanding the nature of the business market, embracing innovation, and leveraging the roles of finance and marketing, service firms can position themselves for success and thrive in the evolving business landscape.
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A Company generated free cash flow to the firm of $1MM last year. We expect the Company to grow this by 14% per annum for 3 years, followed by a steady growth state of 2% per annum. The Company’s WACC is 9%. What is the value of the Company’s common stock if we assumed 100,000 shares outstanding and total debt of $5MM.
The value of the Company's common stock, assuming 100,000 shares outstanding and total debt of $5MM, can be calculated using the FCFF approach and the Gordon Growth Model.
To calculate the value of the Company's common stock, we can use the free cash flow to the firm (FCFF) approach and the Gordon Growth Model. Here's the calculation:
1. Calculate the FCFF for each year:
Year 1: $1MM
Year 2: $1MM * (1 + 14%) = $1.14MM
Year 3: $1.14MM * (1 + 14%) = $1.2996MM
Year 4 onwards: Steady growth of 2%, so the FCFF remains at $1.2996MM * 1.02 = $1.3252MM
2. Calculate the terminal value (TV) using the steady growth rate:
TV = FCFF at Year 4 / (WACC - steady growth rate)
TV = $1.3252MM / (9% - 2%) = $18.79MM
3. Calculate the present value (PV) of FCFF and TV:
PV = Year 1 FCFF / (1 + WACC)^1 + Year 2 FCFF / (1 + WACC)^2 + Year 3 FCFF / (1 + WACC)^3 + TV / (1 + WACC)^3
PV = $1MM / (1 + 9%)^1 + $1.14MM / (1 + 9%)^2 + $1.2996MM / (1 + 9%)^3 + $18.79MM / (1 + 9%)^3
4. Add the PV of FCFF and TV to get the total value of the Company's equity:
Total Value = PV + Total Debt - Cash
Total Value = PV + $5MM - $0 (assuming no cash)
5. Calculate the value per share:
Value per Share = Total Value / Number of Shares
Value per Share = (PV + $5MM) / 100,000
By plugging in the values and performing the calculations, you will be able to determine the value of the Company's common stock.
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The company’s policy is to have 25% of the following quarter’s projected sales in ending finished goods inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.
Each unit required 2 lbs. of direct materials. Projected direct materials cost is $5.00 per lb. The company’s policy is to have 20% of the following quarter’s production needs in ending raw materials inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.
Determine the total units to be produced in Year 1.
Determine the budgeted cost of direct materials purchases for Year 1, Quarter 1.
The total units to be produced in Year 1 is x, and the budgeted cost of direct materials purchases for Year 1, Quarter 1 is $2.5a.
The beginning inventory in Year 1 is expected to satisfy the inventory policy. To calculate the total units to be produced in Year 1, we need more information.
Therefore, the solution for it is not possible given the given information.
The budgeted cost of direct materials purchases for Year 1, Quarter 1 as follows:
Budgeted cost of direct materials purchases for Year 1, Quarter 1= (Units to be produced in Year 1, Quarter 1 × Direct materials required per unit × Direct materials cost per pound)
Budgeted cost of direct materials purchases for Year 1, Quarter 1= (Units to be produced in Year 1, Quarter 1 × 2 × $5.00)
Given that the company’s policy is to have 20% of the following quarter’s production needs in ending raw materials inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.
So, the total units to be produced in Year 1 and the amount of direct material purchases can be calculated as follows:
Total units to be produced in Year 1 = 4 × (25% of the following quarter’s projected sales)
Let's assume the following quarter’s projected sales as "x"
Total units to be produced in Year 1 = 4 × (0.25x)
Total units to be produced in Year 1 = x
Direct material purchases for Year 1, Quarter 1= (Units to be produced in Year 1, Quarter 1 × 2 × $5.00)
Now, let's assume that the first-quarter projected sales are "a"
Direct material purchases for Year 1, Quarter 1 = (1/4 of the following quarter’s projected sales × 2 × $5.00) [as per the given condition]Direct material purchases for Year 1, Quarter 1 = (1/4) × a × 2 × $5.00 = 0.5a × $5.00 = $2.5a
Hence, the total units to be produced in Year 1 is x, and the budgeted cost of direct materials purchases for Year 1, Quarter 1 is $2.5a.
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Rizzo's Delivery Company and Overland's Express Delivery exchanged delivery trucks on January 1 , 2022. Rizzo's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $3,000. Overland's truck cost $10,000. It has accumulated depreciation of $8,000 and a fair value of $3,000. The transaction has commercial substance. (a) Journalize the exchange for Rizzo's Delivery Company. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Include in your journal entry separate account entries for both the new and old equipment.)
Rizzo's truck had a cost of $22,000, accumulated depreciation of $15,000, and a fair value of $3,000. Overland's truck had a cost of $10,000, accumulated depreciation of $8,000, and a fair value of $3,000.
Here is the journal entry for Rizzo's Delivery Company for the exchange of delivery trucks:
Date: January 1, 2022
Debit:
Truck (New Equipment) $3,000
Accumulated Depreciation $15,000
Loss on Exchange $4,000
Credit:
Truck (Old Equipment) $22,000
Cash $0
The journal entry reflects the exchange of delivery trucks between Rizzo's Delivery Company and Overland's Express Delivery. Rizzo's truck, with a cost of $22,000 and accumulated depreciation of $15,000, is exchanged for Overland's truck, which has a cost of $10,000 and accumulated depreciation of $8,000. Both trucks have a fair value of $3,000.On the debit side, we record the new equipment (truck) received by Rizzo's Delivery Company, which has a value of $3,000. We also include the accumulated depreciation of $15,000 for the old truck and a loss on the exchange of $4,000.
On the credit side, we record the old equipment (truck) with a value of $22,000 and no cash is involved in the transaction.
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Question 4 Assume that you will need 50000 in three year time. Under the assumption that you can earn \( 10 \% \), how much should you deposit today to get the needed amount.
In order to accumulate $50,000 in three years with a 10% return, one should deposit around $37,559.24 today.
To determine the amount that should be deposited today to accumulate $50,000 in three years with an assumed annual interest rate of 10%, we can use the concept of present value.
The present value is the current value of a future sum of money, accounting for the time value of money. By discounting the future amount back to the present at the given interest rate, we can calculate the required deposit.
In this scenario, the future amount we need is $50,000, and the interest rate is 10%. We can use the formula for present value:
Present Value = Future Value / (1 + Interest Rate)^Number of Periods
Substituting the values, we have:
Present Value = $50,000 / (1 + 0.10)^3
Calculating this expression, we find:
Present Value = $50,000 / (1.10)^3
Present Value = $50,000 / 1.331
Present Value ≈ $37,559.24
Therefore, to accumulate $50,000 in three years with a 10% annual interest rate, one should deposit approximately $37,559.24 today.
The concept of present value recognizes that the value of money decreases over time due to factors such as inflation and the potential to earn returns on investments. By discounting the future amount back to the present, we can determine the equivalent value of that amount today.
In this case, we need to determine the present value of $50,000 in three years with a 10% interest rate. The formula for present value divides the future value by (1 + Interest Rate) raised to the power of the number of periods. In this formula, the interest rate is converted to a decimal by dividing it by 100.
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1. Analysing external environment tells a strategic manager 'what the company might do' and analysing the internal environment tell 'what the company may do.' Explain the concept of the two words 'might' and 'may' with suitable examples. 2. "The true wealth of a nation lies not in its gold or silver but in its learning, wisdom and in the uprightness of its sons." - Kahlil Gibran Write a commentary on the above statement by Khalil Gibran (Lebanese-American writer, poet, and visual artist) in the context of analysis of external environment while making strategic plans by a visionary corporate leader. 3. 'Value-chain analysis can help managers create value by investigating relationship among activities within the firm and make the firm more efficient and competent.' Do you agree with this statement? Justify your answer. 4. 'Use of proper technology can help to retain knowledge even when employees cannot be retained by an organization'. Do you agree with this statement? Justify your answer.
Analyzing the external and internal environments is crucial for strategic decision-making. It helps identify potential actions, leverage strengths, and consider intangible factors like knowledge and ethics in creating sustainable strategies.
1. The concept of 'might' and 'may' in analyzing the external and internal environment of a company signifies different levels of certainty and possibilities in strategic decision-making. When analyzing the external environment, the term 'might' is used to assess potential opportunities and threats beyond the company's control. On the other hand, analyzing the internal environment focuses on the company's capabilities and resources, using the term 'may' to indicate potential actions and strategies based on internal strengths and weaknesses.
2. Khalil Gibran's statement emphasizes that true wealth lies in intangible qualities rather than material possessions. In the context of analyzing the external environment for strategic planning, visionary corporate leaders understand the significance of factors beyond financial metrics. They consider societal trends, cultural values, and emerging technologies to align the organization's goals with those of society. By integrating learning, wisdom, and ethical values into strategic planning, leaders can create sustainable strategies that benefit both the organization and society at large. They foster a learning culture, prioritize wisdom-driven decision-making, and promote ethical practices to enhance the well-being of the organization and contribute positively to the community.
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Write new Strategic Plan of Apple Inc with following facts and supporting your answer with examples:
1. Critically evaluate the relationship between Apple Incs , corporate, business, and operational strategies
2. Apply strategic models and tools to recommend strategic options for Apple Inc.
3. Evaluate critical success factors/assumptions that underpin the strategic options you’ve developed
4. Recommend and justify a strategic option and accompanying business objectives
5. Identify change factors by completing a force field analysis for Apple Inc.
6. Identify the change agents and propose a suitable structure for the implementation of the plan
7. Create a resourced implementation plan for the strategy, with a justified timeline for implementation
8. Describe the potential risks during the implementation
1. The relationship between Apple Inc.'s corporate, business, and operational strategies is crucial for the company's success.
Apple's corporate strategy focuses on innovation, brand positioning, and ecosystem integration.
2. By applying strategic models and tools, Apple can consider various strategic options. One option is to further diversify its product portfolio by entering new industries, such as healthcare or electric vehicles.
3. Critical success factors for Apple's strategic options include maintaining a strong brand reputation, fostering customer loyalty, leveraging technological advancements, and adapting to changing market trends.
4. A recommended strategic option for Apple is to strengthen its position in the augmented reality (AR) market. This involves developing AR glasses or devices that seamlessly integrate with Apple's ecosystem.
5. Force field analysis identifies change factors impacting Apple. Driving forces include evolving consumer expectations, technological advancements, and emerging market trends.
6. Change agents for implementing the strategic plan could include top-level executives, product managers, and research and development teams.
7. The resourced implementation plan for Apple's strategy should include allocating sufficient financial and human resources, establishing milestones, and setting a realistic timeline.
8. Potential risks during implementation include technical challenges in developing AR hardware, regulatory hurdles, competitive threats from other players entering the AR market, and potential backlash from privacy concerns.
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Suppose the 2022 financial statements of 3M Company report net credit sales of $22.1 billion. Accounts receivable (net) are $3.15 billion at the beginning of the year and $3.25 billion at the end of the year. (a1) Compute 3M's accounts receivable turnover. (Do not round intermediate calculations. Round answer to 1 decimal place, e.g. 2.5.)
The credit sales are $3.15 billion. The accounts receivable turnover for 3M Company in 2022 is 6.9 times.
Accounts receivable turnover is a financial ratio that measures how efficiently a company collects payments from its customers. It is calculated by dividing net credit sales by the average accounts receivable balance. In this case, the net credit sales for 3M Company in 2022 were $22.1 billion. The average accounts receivable balance is the sum of the beginning and ending accounts receivable divided by 2, which amounts to $3.2 billion. By dividing the net credit sales by the average accounts receivable, we get an accounts receivable turnover of 6.9 times.
This means that, on average, 3M Company collected its accounts receivable 6.9 times during the year. A higher turnover ratio indicates that the company is collecting payments from its customers more quickly, which is generally favorable.
However, it's important to note that the interpretation of this ratio can vary depending on the industry and specific circumstances of the company. Comparing the turnover ratio to previous years or industry benchmarks can provide further insights into 3M's performance in managing its accounts receivable.
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Imagine we are studying a consumer choosing between two appliances.
Appliance A has a sticker price of $25 but has a 1-time future operating cost of 100. (This means you will face a bill for $100 exactly one year after purchasing it.)
Appliance B has a sticker price of $20 but has a 1-time future operating cost of 110. (This means you will face a bill for $100 exactly one year after purchasing it.)
The discount rate is 10%.
a. What is the Net Present Operating Cost of Appliance A? (Don't add the purchase prices just yet.)
b. What is the Net Present Operating Cost of Appliance B? (Again don't add the purchase price yet.)
c. If the consumer is perfectly rational and displays no energy paradox, which appliance will she chose? (Now consider also consider the purchase price.)
d. If the consumer displays an energy paradox where she only recognize half the value of the future costs, which will she chose?
a. The Net Present Operating Cost of Appliance A is $90.91.
b. The Net Present Operating Cost of Appliance B is $100.
c. The consumer, being perfectly rational, will choose Appliance A.
d. If the consumer displays an energy paradox, she will still choose Appliance A, as the total cost remains lower than that of Appliance B.
To calculate the Net Present Operating Cost of Appliance A, we need to find the present value of the future cost of $100. We use the formula:
NPV = FV / (1 + r)^nwhere NPV is the Net Present Value, FV is the future value, r is the discount rate, and n is the number of periods.
In this case, FV = $100, r = 0.1, and n = 1. Plugging these values into the formula gives us:
NPV = $100 / (1 + 0.1)¹NPV = $90.91So the Net Present Operating Cost of Appliance A is $90.91.
To calculate the Net Present Operating Cost of Appliance B, we use the same formula as above.
FV = $110, r = 0.1, n = 1
Hence:
NPV = $110 / (1 + 0.1)¹NPV = $100So the Net Present Operating Cost of Appliance B is $100.
To determine which appliance the consumer will choose, we need to add the purchase prices to the Net Present Operating Costs.
For Appliance A: $25 + $90.91 = $115.91For Appliance B: $20 + $100 = $120Since Appliance A has the lower total cost, the perfectly rational consumer would choose Appliance A.
If the consumer only recognizes half the value of the future costs, we need to adjust the Net Present Operating Costs accordingly.
For Appliance A: $25 + ($90.91 / 2) = $70.46For Appliance B: $20 + ($100 / 2) = $70In this case, both appliances have the same total cost. So the consumer may choose either one.
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Porter's Five Forces Framework SWOT Framework 4 P's Framework
analysis for "intelligent automation" industry in Roboyo
company
SWOT Analysis for Roboyo in the intelligent automation industry: Strengths - Strong technological expertise, diversified service offerings.
Weaknesses - Limited brand recognition, high competition. Opportunities - Growing demand for automation solutions, expansion into new markets. Threats - Rapid technological advancements, emergence of new competitors. Roboyo, in the intelligent automation industry, benefits from its strong technological expertise and diversified service offerings, positioning it as a key player. However, limited brand recognition and intense competition pose challenges. The company can leverage the growing demand for automation solutions as an opportunity for growth. Additionally, expanding into new markets can further enhance its market presence. However, Roboyo should be wary of rapid technological advancements and the potential emergence of new competitors. By capitalizing on its strengths, addressing weaknesses, and actively pursuing opportunities while mitigating threats, Roboyo can position itself for sustained success in the intelligent automation industry.
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The total annual returns on large company common stocks averaged 11.8% from 1926 to 2009 small company stocks averaged 16.6%, long-term government bonds averaged 5.8%, while Treasury Bills averaged 3.7%. What was the average risk premium earned by long-term government bonds and small company stocks, respectively?
a. 1.8%; 11.9%
b. 2.1%; 12.9%
c. 9.5%; 1.8%
d. 4.4%; 13.9%
The average risk premium earned by long-term government bonds is 2.1%, while the average risk premium earned by small company stocks is 9.5%. B is the correct option.
To calculate the risk premium, we need to find the difference between the average return of the investment and the average return of a risk-free asset, such as Treasury Bills.
For long-term government bonds:
Risk premium = Average return of long-term government bonds - Average return of Treasury Bills
= 5.8% - 3.7%
= 2.1%
For small company stocks:
Risk premium = Average return of small company stocks - Average return of Treasury Bills
= 16.6% - 3.7%
= 12.9%
Therefore, the average risk premium earned by long-term government bonds is 2.1%, and the average risk premium earned by small company stocks is 12.9%. Option (b) accurately represents these figures.
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DUE DATE: AUGUST 1, 2022 QUESTION ONE Apple Magic has been in business for many years preparing accounts to 31 December each year. Th e company has always calculated and paid provisional income tax on
Apple Magic Ltd is required to pay overdue taxes amounting to K1,020,000, with penalties and interest charged amounting to K19,320. The company submitted its provisional tax return for the year 2018 on time, but the provisional tax returns for the quarters ending 31 March 2019 and 30 June 2019 were submitted 101 days late, resulting in a penalty of K50.
a)The penalties and interest charged on overdue taxes on all payments made up to and including 20 September 2019:
PaymentDateAmount(K)Days OverdueInterest 14% Penalty 5%Total(K)
Provisional Tax31 March 2019*6001800.00 5000300.00 2500 10900.00
Provisional Tax30 June 2019*600 (Sept 9 – July 9) 1800.00 5000.00 2900.00
Provisional Tax31 Dec 2018#300 (Sept 20 – Dec 31) 2520.00 3000.00 5520.00
Total overdue taxes as at 20 September 2019: K1,020,000Penalties and interest charged on overdue taxes: K19,320.00 (rounded)
b) The dates when tax returns were submitted late and the amounts of penalties for late submission of those returns:
ReturnDue DateSubmission DateNo. of Days LatePenalty (5%) Amount(K)
Provisional Tax2018 31 March 2019Submitted on 9 July 2019 (101 days late)10150.00
Income Tax201820 September 2019Submitted on 20 September 2019 (
No. of days late = Nil)NilNilTotal penalties for late submission: K50.00 (rounded)
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Complete Question : DUE DATE: AUGUST 1, 2022 QUESTION ONE Apple Magic has been in business for many years preparing accounts to 31 December each year. Th e company has always calculated and paid provisional income tax on the due dates. At the start of t he tax year 2018, the company estimated the provisional taxable profits to be K1,200,000. Provision al income tax was calculated correctly and paid on the appropriate due dates. At the end of the tax year 2018 , the actual final taxable profit was K 1,500,000. The company calculated the balance of in come tax for the tax year 2018 and also calculated the provisional taxable profit for the tax year 20 19 of K2,100,000 in January 2019. In late January 2019, a fire gutted the company's main warehouse and destroyed propert y worth millions of Kwacha. Following the disaster, the company experienced a strain on its cash resources and as a result, started facing challenges in carrying enough inventori es to meet sales demand, leading to a reduction in sales volume. The company therefore revised the provisional taxable business profit for the tax year 2019 from the original esti mate of K2,100,000 to K1,600,000. As a result of the poor liquidity position, the company experienced after the fire disaster, t he provisional income tax for the quarter ended 31 March 2019, was paid on 9 July 2019 and the return of provisional income for the tax year 2019 was submitted on that date. T he provisional income tax for the quarter ended 30 June 2019 was paid on 9 September 2019, whilst the balance of income tax for the tax year 2018 was paid on 20 September 2019 with the self-assessment income tax return for the tax year 2018 also being submit ted on 20 September 2019. Cash flow problems were fully resolved after 20 September 2019 and the directors are no w confident that all the outstanding taxes thereafter, will be paid promptly on the relevan t due dates. You should assume that the income tax rates for the tax year 2019 apply throughout and t hat the Bank of Zambia discount rate is 14% per annum. Required: a) Advise Apple Magic Ltd of the amounts of penalties and interest c harged on overdue taxes on all payments made up to and includin g 20 September 2019. b) Identify the dates when tax returns were submitted late and calcul ate the amounts of penalties for late submission of those returns.
Scott Sinclair Inc. (SSI) is a merchandising company that sells binders, paper and other school
supplies. The company is planning its cash needs for the third quarter. In the past, SSI has had to
borrow money during the third quarter to support peak sales of back-to-school materials which occur
during August. The following information has been assembled to assist in preparing a cash budget
for the quarter:
a. Budgeted monthly income statements for July through October are as follows:
July August September October
Sales $40,000 $70,000 $50,000 $45,000
Cost of goods sold 24,000 42,000 30,000 27,000
Gross margin 16,000 28,000 20,000 18,000
Selling and administrative expenses:
Selling expense 7,200 11,700 8,500 7,300
Administrative expense* 5,600 7,200 6,100 5,900
Total expenses 12,800 18,900 14,600 13,200
Operating income $3,200 $9,100 $5,400 $4,800
*Includes $2,000 depreciation each month
b. Sales are 20% for cash and 80% on credit.
c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70%
in the month following sale, and 20% in the second month following sale. May sales totaled
$30,000 and June sales totaled $36,000.
d. Inventory purchases occur evenly throughout the month (assume 30 days) and are paid for within
15 days. Accounts payable for inventory for inventory purchases at June 30 total $11,700.
e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be
sold in the following month’ sales. The inventory at June 30 is $18,000.
f. Equipment costing $4,500 will be purchased in July.
g. Dividends declared in a particular month are paid in the following month. Dividends of $2,000 are
expected to be declared in August.
h. The cash balance on June 30 is $10,000; the company must maintain a cash balance of at least
this amount at the end of each month.
i. The company has an agreement with a local bank that allows the company to borrow up to
$50,000. The interest rate on there loans is 12% per annum. All borrowing is done at the
beginning of a month. The company would, as far as it is able, repay the loan at the end of each
month. Interest must be paid at the end of each month based on the outstanding loans for that
month. There are no loans outstanding as at June 30.
Required: [YOU CAN USE EXCEL.] (15 marks)
1. Prepare a schedule of expected cash collections for July, August, and September and for the
quarter in total.
2. Prepare the following for merchandise inventory:
a. An inventory purchases budget for July, August, and September.
b. A schedule of cash disbursements for purchases for July, August, and September and for the
quarter in total.
3. Prepare a cash budget for July, August, and September and for the quarter in total.
1) Cash collections for each month based on the credit sales and their collection patterns. 2) purchases for each month based on the projected cost of goods sold and the desired ending inventory. 3) cash budget that incorporates cash collections, cash disbursements, and other cash activities.
To answer your question, I will provide a step-by-step breakdown of the required calculations and schedules based on the given information. Please note that for convenience, I will present the calculations in a text format. However, it's recommended to use spreadsheet software like Excel for better organization and presentation.
1. Schedule of Expected Cash Collections:
We need to determine the cash collections for each month based on the credit sales and their collection patterns.
July:
Cash from May sales: $30,000 × 10% = $3,000
Cash from June sales: $36,000 × 10% = $3,600
August:
Cash from May sales: $30,000 × 70% = $21,000
Cash from June sales: $36,000 × 70% = $25,200
Cash from July sales: $40,000 × 10% = $4,000
September:
Cash from June sales: $36,000 × 20% = $7,200
Cash from July sales: $40,000 × 70% = $28,000
Cash from August sales: $70,000 × 10% = $7,000
Total Cash Collections:
July: $3,000 + $3,600 = $6,600
August: $21,000 + $25,200 + $4,000 = $50,200
September: $7,200 + $28,000 + $7,000 = $42,200
2. Merchandise Inventory:
a. Inventory Purchases Budget:
We need to calculate the inventory purchases for each month based on the projected cost of goods sold and the desired ending inventory.
July:
Cost of goods sold: $24,000
Desired ending inventory: $40,000 × 75% = $30,000
Inventory purchases: $24,000 + $30,000 - $18,000 = $36,000
August:
Cost of goods sold: $42,000
Desired ending inventory: $50,000 × 75% = $37,500
Inventory purchases: $42,000 + $37,500 - $30,000 = $49,500
September:
Cost of goods sold: $30,000
Desired ending inventory: $45,000 × 75% = $33,750
Inventory purchases: $30,000 + $33,750 - $37,500 = $26,250
b. Schedule of Cash Disbursements for Purchases:
We need to calculate the cash disbursements for inventory purchases based on the payment terms.
July:
Inventory purchases: $36,000
Cash disbursements: $36,000 × (15/30) = $18,000
August:
Inventory purchases: $49,500
Cash disbursements: $49,500 × (15/30) = $24,750
September:
Inventory purchases: $26,250
Cash disbursements: $26,250 × (15/30) = $13,125
Total Cash Disbursements:
July: $18,000
August: $24,750
September: $13,125
3. Cash Budget:
We need to prepare a cash budget that incorporates cash collections, cash disbursements, and other cash activities.
July:
Beginning cash balance: $10,000
Cash collections: $6,600
Cash disbursements: $18,000 (Inventory purchases) + $4,500 (Equipment purchase)
Dividends: $0
Loan: $0
Ending cash balance: $10,000 + $6,600 - $22,500 = -$5,900
August:
Beginning cash balance: -$5,900
Cash collections: $50,200
Cash disbursements: $24,750 (Inventory purchases) + $2,000 (Dividends)
Dividends: $0
Loan: $0
Ending cash balance: -$5,900 + $50,200 - $26,750 = $17,550
September:
Beginning cash balance: $17,550
Cash collections: $42,200
Cash disbursements: $13,125 (Inventory purchases) + $2,000 (Dividends)
Dividends: $0
Loan: $0
Ending cash balance: $17,550 + $42,200 - $15,125 = $44,625
Quarter Total: July to September
Net cash inflow: $6,600 + $50,200 + $42,200 = $99,000
The cash budget provides a summary of the expected cash position for each month and for the quarter as a whole. It helps in identifying periods of cash surplus or shortfall, aiding in effective cash management and planning.
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Select the type of government policy that Neo Classical economists would advocate (Select all correct answers) A. Intervention to reduce unemployment in the short term OB. Focus on policies towards long term growth C. Control inflation O D. Government price control of key markets Select all the statements below that represents characteristics of the neo-classical macroeconomic model: A. Flexible prices and wages B. Sticky prices and wages C. Potential GDP determining the size of the economy D. Focus on long term macroeconomic conditions E. Focus on government intervention in the economy Potential Gross Domestic Product represents O A. A level of output where unemployment is zero O B. A level of output where all resources are fully employed O C. The maximum level of output an economy can achieve in the short term O D. The level of output produced when inflation is zero.
Neo-Classical economists advocate government policies focused on long-term growth and controlling inflation. The correct options are: 1) B and C, 2) A and D, 3) B.
The correct answers are
1. Select the type of government policy that Neo-Classical economists would advocate:
B. Focus on policies towards long-term growth
C. Control inflation
2. Select the statements below that represent characteristics of the neo-classical macroeconomic model:
A. Flexible prices and wages
D. Focus on long-term macroeconomic conditions
3.Potential Gross Domestic Product represents:
B. A level of output where all resources are fully employed
Neo-Classical economists prioritize policies that promote long-term economic growth and stability. They believe that market forces, such as supply and demand, should be allowed to operate freely with minimal government intervention. By focusing on policies towards long-term growth, they aim to create an environment conducive to sustainable economic development.
The neo-classical macroeconomic model emphasizes the importance of flexible prices and wages. According to this model, prices and wages should adjust freely to reflect changes in supply and demand, allowing the economy to reach equilibrium more efficiently. This flexibility enables market forces to allocate resources efficiently and maintain stability.
Potential Gross Domestic Product represents a level of output where all available resources in the economy are fully employed. It signifies the maximum level of output that can be produced in an economy given the available resources and technology. Achieving potential GDP indicates optimal utilization of resources and efficient production capabilities. It does not necessarily imply zero unemployment or zero inflation, but rather represents the economy's capacity to produce output when all resources are fully utilized.
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You have been asked to join a group of students at school or college to join a protest against Green Mountain Coffee Roasters. They are concerned about the rapid growth of the company’s plastic K-Cups and the disposal of these cups into your local landfall. How would you respond to their invitation to join them?
While I cannot physically join the protest, I am ready to contribute by providing information, drafting messages, creating social media content, or researching alternative solutions to single-use coffee pods.
Thank you for inviting me to join your protest against Green Mountain Coffee Roasters. I understand your concerns about the rapid growth of the company's plastic K-Cups and their impact on local landfills. It is crucial to address environmental issues and hold companies accountable for their actions.
While I support the cause and share your concerns, as an AI language model, I don't possess physical presence or the ability to physically join a protest. However, I can still contribute by providing information and raising awareness about the issue. I can help you draft compelling messages, create social media content, or even research alternative solutions to single-use coffee pods.
I believe it's important to encourage companies like Green Mountain Coffee Roasters to adopt more sustainable practices. This could include developing recyclable or compostable alternatives to plastic K-Cups, promoting recycling programs, or advocating for a shift towards traditional brewing methods. By raising awareness and pushing for change, we can contribute to a greener future.
Ultimately, I support your cause and I'm here to assist in any way I can. Let's work together to make a positive impact on the environment.
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Larkspur Inc. is building a new hockey arena at a cost of $2,450,000. It received a down payment of$490,000from local businesses to support the project, and now needs to borrow $1,960,000to complete the project. It, therefore, decides to issue$1,960,000 of 10 year, 10.5% bonds. These bonds were issued on January 1,2020 , and pay interest annually on each January 1 . The bonds yield 10%to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Larkspur Inc. paid and capitalized$49,000in bond issuance costs related to the bond issue. Larkspur prepares financial statements in accordance with IFRS.
Larkspur Inc. is building a new hockey arena at a cost of $2,450,000. It will issue $1,960,000 of 10-year, 10.5% bonds, which have an effective interest rate to the issuer of 10.4053%. The bond issuance costs were $49,000 and have been capitalized.
The effective interest rate is the rate that takes into account the time value of money and the bond issuance costs. It is higher than the stated interest rate because the issuer has to pay the bond issuance costs upfront.
The capitalization of the bond issuance costs means that they are added to the carrying value of the bonds and amortized over the life of the bonds. This increases the effective interest rate.
The total borrowings of Larkspur Inc. are $1,960,000 + $49,000 = $2,009,000.
The effective interest expense for the first year will be $2,009,000 * 10.4053% = $208,946.
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