In the given scenario, we are supposed to find the recommended daily order quantity for the supermarket. Let us consider the following information provided in the question:Perishable dairy product is ordered daily. The cost per unit is $1.14 and the selling price per unit is $1.55.
Unsold units are taken back by the supplier at a rebate of $1 per unit. Daily demand is approximately normally distributed with a mean (μ) of 150 and a standard deviation (σ) of 30 units.To calculate the recommended daily order quantity, we can use the formula given below:Q* = μ + ZσWhere,Q* is the recommended daily order quantity.μ is the mean demand.σ is the standard deviation.Z is the z-score.The value of z can be obtained using the standard normal distribution table or calculator. The formula to calculate z-score is given below:z = (x - μ) / σWhere,x is the actual demand.
Let's substitute the values in the formula to find the value of z.z = (x - μ) / σz = (Q* - μ) / σ+1 is taken as the rebate given for unsold units. Hence, the profit per unit will be:Selling price - cost price + rebate= $1.55 - $1.14 + $1= $0.41The recommended daily order quantity (Q*) is calculated as follows:Q* = μ + ZσQ* = 150 + Z(30)To find the value of z, we need to calculate the z-score.z = (x - μ) / σz = ($1.55 - $1.14 + $1 - $1.14) / $0.30z = 1.37From the standard normal distribution table, the value of Z corresponding to 1.37 is 0.9177. Let us substitute this value in the equation to calculate Q*.Q* = 150 + ZσQ* = 150 + 0.9177(30)Q* = 178 unitsTherefore, the recommended daily order quantity for the supermarket is 178 units (rounded to the nearest integer).
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A fast growth share has the first dividend (t=1) of $2.48. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 1.5 percent. . If the required rate of return is 14 percent, what is the current price of the share? (to the nearest cent).
A fast growth share has the first dividend (t=1) of $2.48. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 1.5 percent. . If the required rate of return is 14 percent, the current price of the share is $33.02.
The dividend growth model can be used to calculate the current price of a share. The dividend growth model is as follows:
P0 = D1 / (r - g) + D1 * (1 + g)^1 / (r - g)^2 + D1 * (1 + g)^2 / (r - g)^3 + ...
Where:
P0 = Current price of the share
D1 = Dividend in year 1
r = Required rate of return
g = Dividend growth rate
In this case, the dividend in year 1 is $2.48, the required rate of return is 14%, and the dividend growth rate is 6% for the first 3 years and 1.5% thereafter. Plugging these values into the formula, we get the following current price:
P0 = $2.48 / (0.14 - 0.06) + $2.48 * (1.06)^1 / (0.14 - 0.06)^2 + $2.48 * (1.06)^2 / (0.14 - 0.06)^3 + $2.48 * (1.015)^4 = $33.02
It is important to note that this is just an estimate, and the actual price of the share may vary depending on a number of factors, such as the overall market conditions and the perceived risk of the investment.
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Vivica's Learning Center has assembled the following data for the year ended June 30, 2024: (Click the icon to view the data.) Prepare the business's complete statement of cash flows for the year ende
Vivica's Learning Center had a net cash inflow of $7,750 during the year ended June 30, 2024, with cash increasing from $3,700 to $4,050.
The statement of cash flows presents an overview of cash receipts and disbursements for the period. Vivica's Learning Center's cash flows are divided into three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities for the year ended June 30, 2024.Cash flows from operating activities Vivica's Learning Center generated $7,750 in cash from operating activities during the year ended June 30, 2024.
The cash balance increased by $4,050 from the beginning to the end of the year. Cash received from clients was $8,000 and cash paid for wages was $2,250.Cash flows from investing activities
Cash flows from investing activities decreased by $6,000 during the year ended June 30, 2024. The purchase of land and equipment was paid for in cash, resulting in a cash outflow of $12,000.Cash flows from financing activitiesCash flows from financing activities were $1,800 for the year ended June 30, 2024.
Vivica's Learning Center paid $1,500 in cash dividends to its shareholders and borrowed $3,300 in long-term debt. The increase in the cash balance from the beginning to the end of the year was $4,050 ($7,750 – $3,700), as shown in the reconciliation of the cash balance below:
Beginning cash balance = $3,700 Cash flows from operating activities = $7,750 Cash flows from investing activities = ($12,000) Cash flows from financing activities = $1,800 Ending cash balance = $4,050
Therefore, Vivica's Learning Center had a net cash inflow of $7,750 during the year ended June 30, 2024, with cash increasing from $3,700 to $4,050.
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[The following information applies to the questions displayed below.]
Megamart provides the following information on its two investment centers.
Investment Center Sales Income Average Assets
Electronics $ 45,000,000 $ 3,420,000 $ 18,000,000
Sporting goods 25,200,000 2,520,000 14,000,000
Compute profit margin and investment turnover for each center. Which center generates more income per dollar of sales? Which department is most efficient at generating sales from average invested assets?
Profit Margin
Investment Turnover
Compute profit margin for each center. Which center generates more income per dollar of sales?
The Sporting goods investment center has a higher profit margin, generating more income per dollar of sales. However, the Electronics investment center is more efficient at generating sales from average invested assets due to its higher investment turnover.
The profit margin measures the income generated per dollar of sales, and the Sporting goods investment center has a higher profit margin than the Electronics investment center. However, investment turnover considers the efficiency of utilizing average invested assets to generate sales, and in this case, the Electronics investment center has a higher turnover. This means that for each dollar of assets invested, the Electronics department generates a higher volume of sales compared to the Sporting goods department. Therefore, while the Sporting goods investment center generates more income per dollar of sales, the Electronics investment center is more efficient at utilizing assets to generate sales.
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Assume that Product Z is made of two units of A and four units of B. A is made of three units of C and four of D. D is made of two units of E. Lead times for purchase or fabrication of each unit to final assembly are: Z takes two weeks; A, B, C, and D take one week each; and E takes three weeks. SIxty slx units of Product Z are required in Perlod 10. (Assume that there is currently no Inventory on-hand of any of these items.) b. Develop an MRP planning schedule showing gross and net requirements and order release and order rellelpt dates. (Leave the cells blank, whenever zero (0) is requlred.)
Previous question
The MRP planning schedule showing gross and net requirements and order release and order receipt dates is shown below:Product Z is made up of two units of A and four units of B, and A is made up of three units of C and four of D.
D is made up of two units of E.The following are the lead times for the purchase or manufacture of each unit to the final assembly: Z takes two weeks; A, B, C, and D each take one week; and E takes three weeks.Sixty-six units of Product Z are required in Period 10. Assume that there is no on-hand inventory of any of these items.The MRP planning schedule is shown in the table below: We will use the MRP explosion method, which entails working backward from the final assembly, product Z. Gross and net requirements, as well as order release and order receipt dates, will be determined in the process.
This process determines the gross and net requirements, as well as order release and order receipt dates, for each of the products' components. It enables manufacturers to forecast the products they will require to fulfill their consumers' needs.
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Athletic footwear
Your marketing plan should outline the strategies you will employ over the next three years. Discuss your marketing/advertising goals, target market, identify your competition and how they are doing. Discuss your advertising budget for the next three years. Consider whether you will use celebrity endorsements, who your celebrity is, and how much they cost. How will you market your footwear? In other words, describe your plan to get your product out there and ensure people are aware and tempted to buy.
Over the next three years, our marketing plan for athletic footwear includes targeting a niche market of fitness enthusiasts and active individuals seeking performance and style. Our goal is to establish brand awareness, increase market share, and drive sales. We will employ a combination of digital marketing strategies, influencer collaborations, and traditional advertising channels to reach our target audience effectively.
In the first step, our main answer states that our marketing plan for athletic footwear will target a niche market of fitness enthusiasts and active individuals. This highlights our focus on a specific segment of consumers who prioritize both performance and style in their athletic footwear choices.
To elaborate on our marketing plan, we will utilize various strategies to achieve our goals. Firstly, we will invest in digital marketing initiatives such as social media advertising, search engine optimization (SEO), and content marketing. These efforts will help us reach a wider audience online, increase brand visibility, and engage with potential customers. We will leverage popular fitness and lifestyle platforms to showcase our products, highlight their features, and connect with our target market.
In addition to digital marketing, we will explore collaborations with influential fitness personalities and athletes. Partnering with relevant influencers who align with our brand values will enable us to tap into their existing fan base and gain credibility among our target market. These collaborations may involve sponsored content, product placements, or even co-branded collections, depending on the nature of the partnership.
Furthermore, we will not overlook traditional advertising channels, as they still hold value in reaching certain demographics. We will allocate a portion of our advertising budget to print media, television commercials, and outdoor billboards in strategic locations. This will ensure our brand remains visible to a broader audience, including those who may not be as active on digital platforms.
Overall, our marketing plan for athletic footwear over the next three years will involve a multi-faceted approach that combines digital marketing, influencer collaborations, and traditional advertising. By targeting a niche market, utilizing various strategies, and capitalizing on the influence of key individuals, we aim to create brand awareness, increase market share, and ultimately drive sales.
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Hard Rock Hotel, p. 228
The pareto principle is based on the 80/20 rule. This Hard Rock gives an example of Pareto analysis of hotel complaints. On the bottom of the graph is the percentage of complaints (quality problems) and on the right hand-side is the cumulative percentage of complaints.
Which 20% of complaints would you recommend the manager fixes first? Give a suggestion to address the quality problem you have identified. If we could cut room service complaints in half, how does that affect the chart?
Based on the Pareto analysis of hotel complaints, the manager should focus on addressing the top 20% of complaints, as these account for the majority of the issues.
To determine which specific complaints to prioritize, the manager would look at the categories or types of complaints that fall within this 20% range.
For example, if room service complaints are within the top 20%, the manager should prioritize addressing this issue. One suggestion to improve room service could be to enhance the training of staff members responsible for taking orders and delivering meals. This could involve providing additional customer service training, emphasizing promptness and accuracy in order fulfillment, and implementing measures to ensure the quality and presentation of food.
If the manager successfully cuts room service complaints in half, it would likely have a significant impact on the Pareto chart. The percentage of room service complaints would decrease, and its position on the graph would shift lower. As a result, the cumulative percentage of complaints attributed to other categories would increase, potentially causing a different category to move into the top 20%. This would require the manager to reassess and prioritize the newly identified quality problem.
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Acme Company Balance Sheet As of January 5, 2017 (amounts in thousands)
Cash 9,900 Accounts Payable 2,700
Accounts Receivable 4,50 Debt 3,500
Inventory 3,800 Other Liabilities 1,000
Property Plant & Equipment 16,800 Total Liabilties 7,200
Other Assets 1,600 Paid-In Capital 8,000
Retained Earnings 21,400
Total Equity 29,400
Total Assets 36,600 Total Liabilities & Equity 36,600
Update the balance sheet above to reflect the transactions below, which occur on January 6, 2017?
Sell product for $35,000 with historical cost of $28,000
What is the final amount in Retained Earnings?
The final amount in Retained Earnings is $28,400.
The balance sheet for Acme Company as of January 5, 2017 is given below:
Acme Company Balance Sheet: As of January 5, 2017 (amounts in thousands)
Cash = 9,900
Accounts Payable = 2,700
Accounts Receivable = 4,500
Debt = 3,500
Inventory = 3,800
Other Liabilities = 1,000
Property, Plant & Equipment = 16,800
Total Liabilities = 7,200
Other Assets = 1,600
Paid-In Capital = 8,000
Retained Earnings = 21,400
Total Equity = 29,400
Total Assets = 36,600
Total Liabilities & Equity = 36,600
We need to update the balance sheet to reflect the transactions that occur on January 6, 2017.
The transaction is as follows: Sell product for $35,000 with historical cost of $28,000To record this transaction, we need to determine the gain on the sale of the product. The gain is the difference between the selling price and the historical cost. The gain is $7,000 ($35,000 – $28,000).
We now need to update the balance sheet for Acme Company:
Acme Company Balance Sheet: As of January 6, 2017 (amounts in thousands)
Cash = 44,900
Accounts Payable = 2,700
Accounts Receivable = 4,500
Debt = 3,500
Inventory = 3,800
Other Liabilities = 1,000
Property, Plant & Equipment = 16,800
Total Liabilities = 7,200
Other Assets = 1,600
Paid-In Capital = 8,000
Retained Earnings = 28,400
Total Equity = 29,400
Total Assets = 51,600,
Total Liabilities & Equity = 36,600 + 15,000 (Gain on sale of product) = 51,600
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You have decided to install an outdoor pool in your backyard, with caves, plants, waterfalls, capable of holding the party guests. Which would be better for you, a turnkey contract, or a cost-plus contract? Support your reasoning with the potential weaknesses of both approaches. (Project management)
In conclusion, the turnkey contract would be a better option for this project, as the contractor is responsible for the entire project and takes on the risk of cost overruns or delays.
In the given scenario, if someone has decided to install an outdoor pool in their backyard, they have to choose between the turnkey contract and cost-plus contract to complete the project. In my opinion, the turnkey contract would be a better option for this project.The turnkey contract is a contract in which the contractor is responsible for the entire project, from design to execution.
The contractor is responsible for providing the client with a finished product that meets their needs, without the client having to worry about the details of the construction process. In a turnkey contract, the contractor takes on the risk of cost overruns or delays.
The cost-plus contract, on the other hand, is a contract in which the client pays the contractor for the actual cost of the project plus a percentage of the total cost as profit. In this type of contract, the client has more control over the project, as they are more involved in the decision-making process. However, the cost-plus contract can be more expensive than a turnkey contract, as the client is responsible for all the costs associated with the project.The potential weaknesses of the turnkey contract are that the contractor may not have the expertise or experience to complete the project on time and within budget. They may also cut corners or use substandard materials to save costs.
Additionally, the client may have less control over the design and construction process, as they are relying on the contractor to make all the decisions.The potential weaknesses of the cost-plus contract are that the client may be responsible for cost overruns or delays, which can be expensive. They may also have to spend more time and effort overseeing the construction process to ensure that it meets their needs and specifications.
In conclusion, the turnkey contract would be a better option for this project, as the contractor is responsible for the entire project and takes on the risk of cost overruns or delays.
However, the client should choose a reputable contractor with a proven track record to ensure that the project is completed on time and within budget.
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Differentiate between ""napkin plan"" and ""venture capital"" plan. Then outline two (2) important types of information that must be included in a venture capital plan developed by entrepreneurs seeking funding
A "napkin plan" is an informal outline of a business idea, while a "venture capital" plan is a comprehensive document designed to attract funding and includes market analysis and financial projections.
A "napkin plan" refers to a rough and informal business plan that is typically sketched out on a napkin or any readily available surface. It is a preliminary idea or concept that outlines the basic elements of a business, such as the product or service, target market, and revenue model.On the other hand, a "venture capital" plan is a detailed and comprehensive document specifically designed to attract funding from venture capitalists. It includes in-depth market analysis, financial projections, competitive analysis, management team details, and a clear outline of how the capital will be utilized.
Two important types of information that must be included in a venture capital plan are:
1. Market Opportunity: This includes a thorough analysis of the target market, its size, growth potential, and trends, as well as an assessment of the competition and how the proposed business will capture a significant market share.
2. Financial Projections: Venture capitalists are particularly interested in the financial viability of a business. Entrepreneurs should include detailed financial projections, including revenue forecasts, expense breakdowns, profitability analysis, and a clear outline of how the funding will be utilized to achieve milestones and generate returns for the investors.
Therefore, A "napkin plan" is an informal outline of a business idea, while a "venture capital" plan is a comprehensive document designed to attract funding and includes market analysis and financial projections.
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What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $61, (b) $80, (c) $110, and (d) $135? R
The nominal rates of return for the perpetual preferred stock with different market prices are as follows:(a) $61: 18.03% (b) $80: 13.75% (c) $110: 10% (d) $135: 8.15%.
To calculate the nominal rate of return on a perpetual preferred stock, we need to divide the annual dividend by the current market price of the stock.
Par value (face value) = $100
Stated dividend rate = 11% of par value
We can calculate the annual dividend as follows:
Annual dividend = Stated dividend rate * Par value
= 0.11 * $100
= $11
Now, let's calculate the nominal rate of return for each given market price:
(a) Market price = $61
Nominal rate of return = Annual dividend / Market price
= $11 / $61
≈ 0.1803 or 18.03%
(b) Market price = $80
Nominal rate of return = Annual dividend / Market price
= $11 / $80
≈ 0.1375 or 13.75%
(c) Market price = $110
Nominal rate of return = Annual dividend / Market price
= $11 / $110
≈ 0.1 or 10%
(d) Market price = $135
Nominal rate of return = Annual dividend / Market price
= $11 / $135
≈ 0.0815 or 8.15%
The nominal rate of return represents the annual dividend income generated by the preferred stock relative to its market price. By dividing the annual dividend by the market price, we obtain the percentage return on the investment.
The nominal rates of return for the perpetual preferred stock with different market prices are as follows:
(a) $61: 18.03%
(b) $80: 13.75%
(c) $110: 10%
(d) $135: 8.15%
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Q 1 Describe the terms risk management document, Issue
management document, Change management document.
Course # Project planning and management
Risk Management Document:Risk management document refers to the process of identification, evaluation, and prioritization of risks. It is a plan that includes all the risks that can affect a project and how to mitigate or avoid them. It also includes the risks assessment methodology to be followed, the risks register, and the risks management plan. The risks management document outlines how the risk management process will be undertaken in a project, including the risk management approach to be taken, risk identification, and assessment strategies.
Issue Management Document:Issue management document refers to a systematic process that helps project managers identify, track, and resolve project issues. The issue management document provides a process to document, manage, and track issues from the initial identification to the final resolution. It defines how issues will be reported, tracked, and resolved throughout the project lifecycle. It also provides guidelines for issue prioritization and escalation if required.Change Management Document:Change management document refers to the process of managing changes to a project. The change management document specifies the steps to be taken to manage the impact of changes on a project's scope, schedule, budget, and quality objectives. It also outlines the process to be followed for identifying, assessing, and approving changes. The change management document is a plan that details the procedure for making changes to a project and the criteria for evaluating those changes. It also defines how changes will be documented, tracked, and communicated to the project team.
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With Porter’s strategies, show how cost, differentiation or focus can assist Yoplait (6 marks) and make recommendations regarding their Pricing (6 marks) and why re- Positioning strategy you think would be suitable (4 marks) ( Total 24 marks) (use TEAS method).
Yoplait should use differentiation and focus strategies to distinguish itself from its competitors. Penetration pricing strategy can help them to attract more customers while they gradually increase their prices.
Porter’s strategies are very significant for any business that is looking to be successful. In this case, it is essential for Yoplait to choose the best strategy in order to succeed. Cost, differentiation and focus are the three main strategies used in business. Yoplait can take advantage of the differentiation and focus strategy to be successful in the market.
The differentiation strategy would require Yoplait to distinguish itself from other companies in the same market by producing unique products. This could involve introducing new flavors, creating new packaging, or developing new marketing strategies that will appeal to their target customers. Yoplait can also consider a focus strategy where they focus on the needs of a specific group of customers.
This could involve creating products that are specific to a certain age group, gender or dietary requirements. By doing this, Yoplait can create a niche for itself in the market and differentiate itself from its competitors.Regarding the pricing strategy, Yoplait should consider implementing a penetration pricing strategy. This will involve setting a low price for their products in order to attract more customers.
By doing this, Yoplait can gain a foothold in the market and establish a customer base. Once Yoplait has established itself in the market, they can gradually increase their prices.Yoplait should also consider repositioning itself in the market. One strategy that Yoplait could use is product repositioning.
This involves changing the way the product is marketed or changing the target market. For example, Yoplait could market its products to older customers who are looking for healthier alternatives to regular yogurt. By doing this, Yoplait can create a new customer base and increase its sales.
In conclusion, Yoplait should use differentiation and focus strategies to distinguish itself from its competitors. Penetration pricing strategy can help them to attract more customers while they gradually increase their prices. Yoplait can also consider repositioning itself in the market through product repositioning.
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Collectibles purchased at auction have costs and fees comparable to stocks on organized exchanges. O True O False Factors that influence the quality of a collectible include all of the following EXCEPT O price. O rarity. O marketability. O popularity. all of these choices influence the quality of a collectible.
Collectibles purchased at auction have costs and fees comparable to stocks on organized exchanges. The statement is false.
Factors that influence the quality of a collectible include all of the following is all of these choices influence the quality of a collectible. Thus the correct option is D.
The value of a collectible can be influenced by a variety of characteristics, including price, rarity, marketability, and popularity. The cost reflects the item's perceived worth and market demand.
The collectible's rarity refers to how rare or unusual it is, which might raise its value. The ability of an object to be purchased and sold on the market, including elements like liquidity and simplicity of transaction, is referred to as marketability.
Popularity reveals the degree of demand and interest among collectors, which may affect its value. The value and attraction of a collectible are influenced by each of these elements.
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Calculate the Herfindahl-Hirschman Index (HHI) for each of the following markets. Using your results, arrange the markets from most competi- tive to least competitive. a. The market has two firms, each with a mar- 4.3 ket share of 50 percent. The market has two firms, one with a mar ket share of 90 percent and the other with a market share of 10 percent. b. c. The market has 10 firms, 5 with a market share of 18 percent each and 5 with a market share of 2 percent each. d. The market has 10 firms, 2 with a market share of 30 percent each and 8 with a market share of 5 percent each.
The markets, arranged from most competitive to least competitive based on the Herfindahl-Hirschman Index (HHI), are as follows options c, d, a and b.
To calculate the Herfindahl-Hirschman Index (HHI), we square the market shares of each firm and sum them up.
a. The market has two firms, each with a market share of 50 percent.
HHI = (50^2) + (50^2) = 2500 + 2500 = 5000
b. The market has two firms, one with a market share of 90 percent and the other with a market share of 10 percent.
HHI = (90^2) + (10^2) = 8100 + 100 = 8200
c. The market has 10 firms, 5 with a market share of 18 percent each and 5 with a market share of 2 percent each.
HHI = (18^2 + 18^2 + 18^2 + 18^2 + 18^2) + (2^2 + 2^2 + 2^2 + 2^2 + 2^2) = 1620 + 20 = 1640
d. The market has 10 firms, 2 with a market share of 30 percent each and 8 with a market share of 5 percent each.
HHI = (30^2 + 30^2) + (8 * 5^2) = 1800 + 200 = 2000
Arranging the markets from most competitive to least competitive based on the HHI:
c. The market with 10 firms, 5 with a market share of 18 percent each and 5 with a market share of 2 percent each (HHI = 1640)
d. The market with 10 firms, 2 with a market share of 30 percent each and 8 with a market share of 5 percent each (HHI = 2000)
a. The market with two firms, each with a market share of 50 percent (HHI = 5000)
b. The market with two firms, one with a market share of 90 percent and the other with a market share of 10 percent (HHI = 8200)
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You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 33-year mortgage loan for 85 percent of the $3,230,000 purchase price. The monthly payment on this loan will be $15,600.
Requirement 1:
What is the APR on this loan? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Requirement 2:
What is the EAR on this loan? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
The annual percentage rate (APR) on this loan can be calculated as follows:First, calculate the total amount of payments you'll make over the life of the loan by multiplying the monthly payment by the number of payments. n = 33 × 12 = 396 payments. Payment = $15,600.A = Payment × n = $15,600 × 396 = $6,177,600.
The APR is the interest rate charged on a loan, inclusive of any fees or charges that may be levied in relation to the loan's cost. It is a better indicator of the true cost of a loan than the nominal interest rate, as it takes into account all costs associated with the loan. In this case, the APR is 6.22%, which is relatively low for a mortgage loan.The EAR, also known as the effective annual rate, reflects the impact of compounding on the loan's cost. It is the actual rate that will be charged on the loan over the course of the year. In this case, the EAR is 6.76%. The EAR is greater than the APR because it takes into account the effects of compounding. Compounding means that interest is earned on interest, resulting in a higher overall interest cost to the borrower.
The APR on this loan is 6.22%, and the EAR is 6.76%. While the APR is a better measure of the true cost of a loan, the EAR takes into account the effects of compounding, providing a more accurate measure of the cost of borrowing.
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What is the end result of the budgeting process?
What does the sales budget forecast?
What information is contained in the capital budget?
How are budgets used for planning and controlling?
Provide one advantage and one disadvantage of using incremental budgeting
Budgeting is the process of creating a financial plan by forecasting income and expenses. It helps with planning, controlling, and making informed decisions, while incremental budgeting offers simplicity but may not be ideal for long-term goals due to its reliance on historical data.
The end result of the budgeting process is the creation of a budget, which is a financial plan that outlines expected income and expenses for a specified period. The budgeting process involves forecasting future financial results, setting goals, and creating a plan for achieving those goals. Budgets are important tools for both planning and controlling a company's financial activities.
The sales budget forecasts the expected sales revenue for a given period. It is a critical component of the budgeting process because it provides insight into the revenue that the company can expect to generate. A sales budget also helps to identify potential issues that could impact sales, such as changes in the market, competition, or customer demand.
The capital budget contains information about the company's long-term investments. This includes investments in property, equipment, and other assets that will be used for more than one year. The capital budget outlines the costs associated with these investments, as well as the expected benefits that will be generated. It is an important tool for helping companies to make informed decisions about their long-term investments.
Budgets are used for both planning and controlling. When used for planning, budgets help companies to set financial goals and create a plan for achieving those goals. When used for controlling, budgets provide a means for monitoring financial performance and identifying potential issues that could impact the company's financial health. Budgets also help companies to allocate resources more effectively, and to identify areas where improvements can be made.
One advantage of using incremental budgeting is that it is relatively simple and easy to use. It is based on historical data, which means that it is less time-consuming to create than other budgeting methods. One disadvantage of using incremental budgeting is that it may not be the most effective method for achieving long-term goals. Because it is based on historical data, it does not always take into account changing market conditions or other factors that could impact future performance. This can make it difficult for companies to achieve their long-term objectives.
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Scenario 17-2 Imagine that two oil companies, Big Petro Inc. and Gargantuan Gas, own adjacent oil fields. Under the fields is a common pool of oil worth $24 million. Drilling a well to recover oil cos
If Big Petro Inc. and Gargantuan Gas drill their own wells, each company will recover $12 million worth of oil. However, the total value of the oil pool is $24 million, so this is a suboptimal outcome.
The solution to the problem is for each company to drill its own well. This will maximize the profits of each company, but it will also lead to the overexploitation of the oil pool. If both companies drill their own wells, they will each recover 50% of the oil pool, which is worth $12 million each. However, the total value of the oil pool is $24 million, so this is a suboptimal outcome.
The reason why this is a suboptimal outcome is because the companies are not taking into account the externality that they are creating. When each company drills its own well, it is extracting oil that could have been extracted by the other company. This means that the companies are essentially competing with each other, and they are both losing out on potential profits.
A better solution would be for the two companies to cooperate and drill a single well together. This would allow them to recover the entire oil pool, which is worth $24 million. This would be a more efficient outcome, and it would also generate more profits for both companies.
In addition to being more efficient, cooperation would also help to avoid the tragedy of the commons. The tragedy of the commons is a situation where a shared resource is overexploited because each individual user is trying to maximize their own profits. In this case, the shared resource is the oil pool, and the individual users are the two oil companies. By cooperating, the companies can avoid overexploiting the oil pool and ensure that it is used in a sustainable way.
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1. An analyst has determined that when the price of product X increases from $10 to $12, the quantity demanded declines from 30 units to 28 units. The price elasticity of demand for product X is closest to: (Show your solution) - 5 points 2. Discuss at least three factors that affect demand. (6 points) 0) Class comments Add a class comment
The price elasticity of demand for product X is closest to -0.3335.
How to find?To calculate the price elasticity of demand, we use the formula:
Price Elasticity of Demand = (Percentage change in quantity demanded) / (Percentage change in price)
Given that the price of product X increases from $10 to $12 and the quantity demanded declines from 30 units to 28 units, we can calculate the percentage changes:
Percentage change in quantity demanded = ((28 - 30) / 30) * 100
= -6.67%
Percentage change in price = ((12 - 10) / 10) * 100
= 20%
Now, we can substitute these values into the formula:
Price Elasticity of Demand = (-6.67% / 20%)
= -0.3335
Therefore, the price elasticity of demand for product X is closest to -0.3335.
2. Three factors that affect demand include:
- Price of the product: When the price of a product increases, the quantity demanded usually decreases, and vice versa. This is known as the law of demand.
- Income levels: Higher income levels generally lead to an increase in demand for most products, while lower income levels may result in a decrease in demand.
- Consumer preferences and tastes: Consumer preferences and trends can significantly impact demand. For example, if a new product becomes trendy or more fashionable, its demand may increase.
Remember, there are many other factors that can influence demand, such as the availability of substitutes, population changes, and marketing efforts.
These three factors mentioned are just a starting point for understanding the complexities of demand.
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On August 1, 20X5, Graham Ltd. decided to discontinue the operations of its services division. The services division is not a separate corporation, but it is a major operating segment, financially and operationally. On 22 September 20X5, Graham closed a deal to sell the division to Frost Ltd. Frost will assume responsibility for the current liabilities (eg accounts payable and accrued liabilities) that pertain to the division. The facts pertaining to the sale are as follows: Divisional assets, book values at 1 August 20X5 (cost of 475,000), less accumulated depreciation of 167,500 307,500 Division assets, estimated fair values at 1 August, 20X5 275,000 Liabilities assumed by purchaser, fair value = book value 135,000 Purchase price paid by Frost Ltd. 235,000 Division revenue to 22 September, 20X5 345,000 Division profit (before taxes) to 22 September, 20X5 27,500 Commission fee paid to the business brokerage that facilitated the sale 40,000 Graham Ltd. marginal income tax rate 32% On 31 December, 20X5, the after tax net income, including the services division, was $300,000 Required 1. Give the entries to record the (a) reclassification and (b) sale of the services division 2. Complete the 20X5 income statement, starting with income from continuing operations, after tax 3. Explain what other disclosures and/or reclassifications are necessary in the 20X4 comparative financial statements and notes
Disclosures and reclassifications provide relevant information to the users of the financial statements regarding the discontinuation and sale of the services division, enabling them to understand the impact on the company's financial position and performance.
1. Entries to record the (a) reclassification and (b) sale of the services division:
(a) Reclassification of the services division:
To reclassify the services division as held for sale, the following journal entry is made:
[Date]
Services Division (Asset) - Accumulated Depreciation $167,500
Accumulated Depreciation (contra-asset) - Services Division $167,500
[Explanation]
To remove the accumulated depreciation related to the services division as it is classified as held for sale.
(b) Sale of the services division:
To record the sale of the services division to Frost Ltd., the following journal entry is made:
[Date]
Accounts Receivable - Frost Ltd. $235,000
Gain on Sale of Services Division $72,500
Services Division (Asset) - Net Book Value $307,500
[Explanation]
To record the sale of the services division for the purchase price of $235,000, recognizing a gain on the sale of $72,500. The net book value of the services division is removed from the books.
2. Income statement for 20X5, starting with income from continuing operations, after tax:
Income from continuing operations (after tax) = After tax net income - (Profit from the services division + Gain on Sale of Services Division - Commission fee paid to the business brokerage)
Income from continuing operations (after tax) = $300,000 - ($27,500 + $72,500 - $40,000)
Income from continuing operations (after tax) = $240,000
3. Other disclosures and/or reclassifications necessary in the 20X4 comparative financial statements and notes:
In the 20X4 comparative financial statements and notes, the following disclosures and/or reclassifications may be necessary:
- Presentation of the services division as a separate major operating segment, highlighting its financial and operational significance.
- Disclosure of any impairment loss recognized on the services division in the 20X5 financial statements prior to its classification as held for sale.
- Disclosure of the decision to discontinue the operations of the services division and the rationale behind it.
- Presentation of the services division as held for sale in the balance sheet, separately from other assets and liabilities.
- Disclosure of the estimated fair value of the services division's assets and the liabilities assumed by the purchaser.
- Explanation of any significant events or transactions related to the services division, such as the sale to Frost Ltd., including the purchase price and any associated costs.
- Presentation of the gain on the sale of the services division as a separate line item in the income statement, highlighting its impact on the overall financial performance.
- Disclosure of the marginal income tax rate applied by Graham Ltd. to calculate the after-tax net income.
These disclosures and reclassifications provide relevant information to the users of the financial statements regarding the discontinuation and sale of the services division, enabling them to understand the impact on the company's financial position and performance.
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Click in the boxed areas to the right of each item below. A pick list will launch. Click on the pick list icon to reveal a drop-down menu of choices. Select the correct choice to turn the boxed area green. The base of the master budget; forecasts sales revenues and drives the production and SG\&A budgets Often based on direct labor hours, but could be based on another cost driver instead Uses scheduled production to assess raw materials needed and the cash payments for those materials Combines sales projections with beginning finished goods inventory and desired ending firished goods inventory to assess manufacturing needs Based largely on fixed costs; also influenced by sales projections Uses scheduled production to estimate Iabor hours and costs Combines projected cash inflows and outflows for all portions of the master budget including items such as taxes. financing, and equipment Includes estimates from the master budget to show what the company's financial status would be if the forecasts hold true The base of the master budget; forecasts sales revenues and drives the production and SG\&A budgets Question 2 1pts Often based on direct labor hours, but could be based on another cost driver instead Question 3 1pts Uses scheduled production to assess raw materials needed and the cash payments for those materials Combines sales projections with beginning finished goods inventory and desired ending finished goods inventory to assess manufacturing needs Question 5 1 pts Based largely on fixed costs; also influenced by sales projections Question 6 1 pts Uses scheduled production to estimate labor hours and costs
The base of the master budget; forecasts sales revenues and drives the production and SG&A budgets is the Sales budget. The sales budget is the base of the master budget and is used to project the sales revenues. It plays an important role in driving the production and SG&A budgets.Often based on direct labor hours, but could be based on another cost driver instead is Direct labor budget.
The Direct labor budget is an estimation of the number of direct labor hours and the cost of direct labor that will be required to meet the budgeted production. The Direct labor budget could be based on another cost driver instead.Uses scheduled production to assess raw materials needed and the cash payments for those materials and Combines sales projections with beginning finished goods inventory and desired ending finished goods inventory to assess manufacturing needs is the Production budget.
The production budget is prepared after the sales budget and is used to assess the manufacturing needs. The raw materials, labor, and overheads required for production are estimated in this budget.Based largely on fixed costs; also influenced by sales projections is the SG&A budget. The SG&A budget is the budget prepared for the selling, general, and administrative expenses of the company. It is based largely on fixed costs, but it is also influenced by sales projections.Uses scheduled production to estimate labor hours and costs is the Direct labor budget.
The direct labor budget estimates the number of direct labor hours required to meet the budgeted production. The cost of direct labor is also estimated. In summary, sales budget is used to forecast sales revenues and drives the production and SG&A budgets, Direct labor budget estimates direct labor hours and cost, Production budget assesses manufacturing needs, and SG&A budget is the budget prepared for selling, general, and administrative expenses.
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CHC Salmon Processing manufactures and sells canned salmon to restaurants. Variable cost per can amounts to $6 and the selling price of each can is $32. Total annual fixed costs amount to $13,424,211. Sales are estimated to amount to 1,090,000 cans of salmon. Do not enter dollar signs or commas in the input boxes. Round dollar answers to the nearest whole number and round BE units up to the nearest whole number, unless otherwise indicated. a) Calculate the following values. Gross Sales: $ Total Variable Costs: $ Contribution Margin: $ Operating Profit: $ b) If the company sells according to their estimates, what is the degree of operating leverage? The break-even point (in units)? Round the degree of operating leverage to 2 decimal places. Degree of operating leverage: Break-even Point (units): c) If the company increases the sales volume (cans) by 23%, by what percentage will operating profit increase? By what dollar amount will operating income increase? Use the degree of operating leverage. Round the percentage increase to 2 decimal places. c) If the company increases the sales volume (cans) by 23%, by what percentage will operating profit increase? By what dollar amount will operating income increase? Use the degree of operating leverage. Round the percentage increase to 2 decimal places. Percentage Increase: Dollar Increase: $ % d) If the company spends $25,000 as additional advertising expense (fixed cost), sales volume will increase by 8%. Determine the new operating leverage and the new break-even point in units. Round the degree of operating leverage to 2 decimal places. Degree of operating leverage: Break-even point (units):
CHC Salmon Processing's gross sales, total variable expenses, contribution margin, and operating profit were computed. We also calculated the degree of operational leverage, the break-even point, the percentage and dollar gain in operating profit for an increase in sales volume, and the new operating leverage and break-even point with extra fixed expenses. These calculations give information on the company's financial performance and the possible influence of numerous circumstances on its profitability.
We may utilise the supplied information to compute the values and answer the questions for CHC Salmon Processing.
a) Determine the following values:
Gross Sales: $32 divided by 1,090,000 cans is $34,880,000.
Total Variable Costs: $6 divided by 1,090,000 cans is $6,540,000.
Gross Sales - Total Variable Costs = $34,880,000 - $6,540,000 = $28,340,000 Contribution Margin
Operating Income: Total Fixed Costs - Contribution Margin = $28,340,000 - $13,424,211 = $14,915,789
b) If the firm sells as expected, we may determine the degree of operational leverage and the break-even point. Contribution Margin / Operating Profit = $28,340,000 / $14,915,789 1.90 (rounded to two decimal places) Degree of Operating Leverage
The break-even point (in units) is: Total Fixed Costs / Contribution Margin per Unit = $13,424,211 / $26 = 516,316 cans (to the closest full amount)
c) If the corporation raises its sales volume (cans) by 23%, we can use the degree of operational leverage to calculate the percentage and dollar amount increase in operating profit.
Increase in Percentage: Degree of Operating Leverage Change in Sales Volume = 1.90 23% = 43.70% (rounded to two decimal places)
Operating Profit = 43.70% $14,915,789 = $6,514,634 (rounded to the closest whole amount) Dollar Increase: Percentage Increase
d) If the firm spends an additional $25,000 on advertising (a fixed cost) and sales volume grows by 8%, we may compute the new operational leverage and break-even point.
Total Fixed Costs plus Additional Fixed Costs = $13,424,211 + $25,000 = $13,449,211
Break-even Point (units): New Total Fixed Costs / Contribution Margin per unit = $13,449,211 / $26 = 517,274 cans (rounded to the closest full number)
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Research David McClelland’s Need for Power, socialized power and personalized power.
• In your own words, explain the two types of power.
• Include examples of how each type of power was used by a leader.
o You can use examples you personally witnessed, or examples from a current or historical business and/or a social or political figure.
• Also discuss how you have used both types of power in your career or life experiences.
David McClelland's Need for Power theory distinguishes between socialized power and personalized power. Socialized power is used for the benefit of others, while personalized power is driven by self-interest. Leaders like Gandhi exemplify socialized power, while figures like Skilling represent personalized power. In my career, I have experienced both types of power, learning to balance personal and collective goals.
David McClelland's Need for Power theory suggests that individuals have a psychological need for power, which drives their behavior and influences their effectiveness as leaders. There are two types of power identified in this theory: socialized power and personalized power.
Socialized power refers to power used for the benefit of others and the greater good. Leaders with socialized power are driven by a genuine desire to make a positive impact and bring about collective success. They use their power to empower others, foster collaboration, and achieve common goals. An example of a leader with socialized power is Mahatma Gandhi, who led the Indian independence movement through nonviolent means. Gandhi's power was centered around his ability to inspire and mobilize masses, ultimately leading to India's freedom from British rule.
Personalized power, on the other hand, is power used for personal gain and self-interest. Leaders with personalized power are focused on enhancing their own status, influence, and control. They may use manipulative tactics or exploit others to achieve their individual goals. An example of a leader with personalized power is former CEO of Enron, Jeffrey Skilling. Skilling used his position to manipulate financial records and deceive investors for personal gain, ultimately leading to the collapse of the company.
In my own career, I have experienced both types of power. There have been instances where I have sought to empower and support my team members, leveraging socialized power to create a positive and collaborative work environment. By involving others in decision-making and providing opportunities for growth, I aimed to contribute to their success and overall team performance.
However, I must admit that there have also been times when I may have been driven by personalized power, focusing more on personal recognition and advancement. In those instances, I learned the importance of self-awareness and reflection, reminding myself to align my actions with the collective goals and interests of the team or organization.
Understanding these two types of power and their implications can help leaders make conscious choices about how they use their influence, promoting a more ethical and effective leadership approach.
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Coco Corporation has a piece of machinery it has been using in operations for the past 5 years. It originally cost them $250,000 with an expected useful life of 8 years and no salvage value (they depreciate all assets using straight line method). It currently costs $45,000 a year to operate.
Lately they have been thinking of upgrading all operations by replacing machinery with up to date versions. A newer version of this machine would cost Coco $375,000, with expected annual operating costs much lower at $15,000 (due to it being much more efficient).
What should Coco do, assuming quality of product is the same for each machine?
Coco Corporation should upgrade its machinery to the newer version.
Coco Corporation should upgrade its machinery to the newer version because it offers several advantages over the current machine. Firstly, the newer version is more efficient, which would result in significantly lower annual operating costs of $15,000 compared to the current $45,000.
This cost reduction would lead to substantial savings for the company in the long run. Secondly, although the upfront cost of the newer machine is higher at $375,000, it is important to consider the depreciation of the existing machine. With a useful life of 8 years, the current machine has already been used for 5 years, meaning it has only 3 years of remaining useful life.
Therefore, its value has already depreciated significantly. By upgrading to the newer machine, Coco Corporation would benefit from the full 8-year useful life, maximizing the return on investment.
Taking into account the cost savings from reduced operating expenses and the extended useful life, the decision to upgrade becomes even more compelling. Overall, upgrading to the newer machinery would be a wise strategic move for Coco Corporation, enhancing operational efficiency and reducing costs in the long term.
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One of the "consequences of error of measurement in the regressand is increased variance of the estimators". Formulate a scenario and provide proof of this statement. (4) 5. Consider a two-variable model where consumption as a regressand and income as a regressor. (a) Name the parameter that is used to measure the spread of the values from their expected values? (2) (b) Suppose, a researcher is interested in measuring the strength of the relationship between consumption and income, name the parameter one can use to quantify this relationship? (2) 6. Assuming a three-variable model Y₁ = a₁ + a₂X2 + a3X3, where a₂ and as are partial regression coefficients. You have been asked in a job interview to briefly describe the meaning of the two parameters in this context.
In the context of error of measurement in the regressand, the variance of the estimators increases, leading to less precise estimates. In the consumption and income model, the variance of consumption measures the spread of values, while the correlation coefficient quantifies the strength of the relationship.
4. One scenario where error of measurement in the regressand increases the variance of the estimators is in the context of measuring a person's weight and height to predict their health outcomes. If there is measurement error in the weight measurement, this will result in an error in the dependent variable, which is weight. This error will be propagated through the regression analysis, leading to higher variance and less precise estimates of the regression coefficients.
5. (a) The parameter used to measure the spread of the values from their expected values is the variance. In the context of the consumption and income model, the variance of consumption would measure how spread out the consumption values are around their expected value.
(b) The parameter one can use to quantify the strength of the relationship between consumption and income is the correlation coefficient. The correlation coefficient measures the degree of association between two variables and ranges from -1 to 1, with values closer to -1 or 1 indicating a stronger relationship.
6. In the three-variable model Y₁ = a₁ + a₂X2 + a3X3, where a₂ and a₃ are partial regression coefficients:
a₂ represents the change in the dependent variable, Y₁, for a one-unit change in the independent variable, X₂, while holding X₃ constant.
a₃ represents the change in the dependent variable, Y₁, for a one-unit change in the independent variable, X₃, while holding X₂ constant.
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Discuss the importance of having an effective leadership in a
state of change as witnessed in the case of Cross Border
Having an effective leadership is crucial in a state of change, as witnessed in the case of Cross Border. Effective leadership provides clear direction and guidance, ensuring a smooth transition and minimizing disruption. It inspires confidence and motivates employees to embrace change, fostering a positive and productive environment.
In a state of change, effective leadership facilitates effective decision-making and problem-solving. Leaders with strong communication skills can effectively convey the need for change, address concerns, and keep stakeholders informed throughout the process. They can rally support and build consensus, minimizing resistance and fostering collaboration.Furthermore, effective leadership during change ensures the alignment of organizational goals and objectives with the new direction. Leaders provide strategic vision and prioritize initiatives, allocating resources effectively. They also promote a culture of adaptability and continuous improvement, empowering employees to embrace change and contribute to the organization's success.
Having effective leadership is crucial in times of change like the case of Cross Border. It enables a smooth transition, facilitates decision-making, and ensures the alignment of goals. With effective leadership, organizations can navigate change successfully, adapt to new circumstances, and seize opportunities for growth and innovation.
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Skysong Company purchased a computer for $8,480 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,060 salvage value. On January 1, 2021, the estimates are revised. Skysong now feels the computer will be used until December 31, 2022, when it can be sold for $530. Compute the 2021 depreciation. (Round answer to O decimal places, eg. 45,892.) Depreciation expense, 2021 $ T
The depreciation expense for 2021 is $1,987.50.
To compute the depreciation expense for 2021, we need to calculate the annual depreciation based on the revised estimates and then determine the depreciation expense for the specific year.
Given information:
Purchase cost: $8,480
Salvage value: $1,060
Original useful life: 5 years
Revised useful life: 4 years (January 1, 2019, to December 31, 2022)
Revised salvage value: $530
First, let's calculate the annual depreciation based on the revised estimates:
Depreciation per year = (Purchase cost - Revised salvage value) / Revised useful life
Depreciation per year = ($8,480 - $530) / 4
Depreciation per year = $7,950 / 4
Depreciation per year = $1,987.50
Now, we can calculate the depreciation expense for 2021. Since the estimates were revised on January 1, 2021, we will consider the revised useful life from that point:
Depreciation expense, 2021 = Depreciation per year x Number of years in 2021
Since 2021 has 365 days, we need to determine the portion of the year that falls within 2021. To do that, we calculate the ratio of days from January 1, 2021, to December 31, 2021, to the total number of days in a year (365 days).
Number of days in 2021 = 365
Number of days from January 1, 2021, to December 31, 2021 = 365
Ratio = (Number of days from January 1, 2021, to December 31, 2021) / (Number of days in a year)
Ratio = 365 / 365 = 1
Depreciation expense, 2021 = Depreciation per year x Ratio
Depreciation expense, 2021 = $1,987.50 x 1 = $1,987.50
Therefore, the depreciation expense for 2021 is $1,987.50.
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Calculate the approximate price change for this bond using both duration ity in the computation, once again assuming that its yield to maturity dec basis points.
d. Discuss (without calculations) what would happen to your estimate
The approximate price change for a bond can be calculated using duration as a measure, assuming a decrease in yield to maturity by a certain basis point.
Duration is a measure of a bond's sensitivity to changes in interest rates. It quantifies the expected percentage change in the bond's price for a given change in yield to maturity. To calculate the approximate price change, we need to multiply the negative duration by the change in yield to maturity in decimal form.
When the yield to maturity decreases, the bond's price typically increases. This relationship is due to the inverse nature of bond prices and yields. As the yield decreases, the bond becomes more attractive, and investors are willing to pay a higher price for it. The duration provides an estimate of how much the price is expected to change based on the magnitude of the yield change.
It's important to note that the duration is an approximation and assumes a linear relationship between yield and price. In reality, bond price-yield relationships are convex, meaning the relationship is not perfectly linear. Therefore, the estimate provided by duration may not be entirely accurate, especially for large changes in yields or for bonds with high convexity.
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Brothers Mike and Tim Hargenrater began operations of their tool and die shop (H & H Tool, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, follows:
H & H Tool, Inc.
Trial Balance on January 1, 2020
Debit Credit
Cash 6,000 Accounts receivable 5,000 Supplies 13,000 Land Equipment 78,000 Accumulated depreciation (on equipment) 8,000 Other noncurrent assets (not detailed to simplify) 7,000 Accounts payable Wages payable Interest payable Dividends payable Income taxes payable Long-term notes payable Common stock (8,000 shares, $0.50 par value) 4,000 Additional paid-in capital 80,000 Retained earnings 17,000 Service revenue Depreciation expense Supplies expense Wages expense Interest expense Income tax expense Miscellaneous expenses (not detailed to simplify) Totals 109,000 109,000 Transactions during 2020 follow:
1. Borrowed $15,000 cash on a five-year, 8 percent note payable, dated March 1, 2020.
2. Purchased land for a future building site; paid cash, $13,000.
3. Earned $215,000 in revenues for 2020, including $52,000 on credit and the rest in cash.
4. Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2020.
5. Incurred $89,000 in wages expense and $25,000 in miscellaneous expenses for 2020, with $20,000 on credit and the rest paid in cash.
6. Collected accounts receivable, $34,000.
7. Purchased other assets, $15,000 cash.
8. Purchased supplies on account for future use, $27,000.
9. Paid accounts payable, $26,000.
10. Signed a three-year $33,000 service contract to start February 1, 2021.
11. Declared cash dividends on December 1, $25,000, which were paid by December 31. [Hint: Prepare two entries.]
Data for adjusting entries:
12. Supplies counted on December 31, 2020, $18,000.
13. Depreciation for the year on the equipment, $10,000.
14. Interest accrued on notes payable (to be computed).
15. Wages earned by employees since the December 24 payroll but not yet paid, $16,000.
16. Income tax expense, $11,000, payable in 2021.
• Requirement
• General Journal
• General Ledger
• Trial Balance
• Income Statement
• Statement of SE
• Balance Sheet
• Stmt of Cash Flows
• Analysis
The balance sheet for H&H company can be formulated based on the details provided. The current ratio, total asset turnover and net profit margin can be used to assess the efficinecy and effectiveness of the management.
The current ratio, total asset turnover and net profit margin can be calculated from the data suing formula as follows:
a) Current Ratio = Current assets ÷ Current liabilities
= 90,000 ÷ 49,000 = 1.84
From the ratio, it is understood that the current liabilities can be paid off using the current assets.
b) Total asset turnover = Sales ÷ Average total assets
= $215000 ÷ [($101000+$185000)÷2]
= 1.50
Therefore,for every dollar of asset, the service revenue generated was $1.50
c) Net profit margin = Net income ÷ Operating revenues
= $41000 ÷ $ 215000
= 0.191
Therefore, for every dollar of service generated, the company earned $0.191.
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Menu nments omework a Quiz/Test An advance in technology lowers the price of a laptop. If the demand for laptops is price inelastic, the quantity of laptops sold will OA. increase; rise OB. decrease; rise OC. increase; fall D. decrease; fall and total revenue will
When an advance in technology lowers the price of a laptop and if the demand for laptops is price inelastic, the quantity of laptops sold will increase and total revenue will increase as well.
What is Price Elasticity of Demand?
Price elasticity of demand refers to the percentage change in quantity demanded due to a percentage change in price. If the percentage change in quantity demanded exceeds the percentage change in price, the demand is elastic, and if the percentage change in quantity demanded is less than the percentage change in price, the demand is inelastic.
The answer to the given question is:
A. increase; rise
Explanation:
Price inelasticity of demand refers to a situation when the percentage change in quantity demanded is less than the percentage change in price. The demand for laptops is considered to be price inelastic, as there are not many alternatives to laptops.
Hence, when the advance in technology lowers the price of a laptop, the quantity of laptops sold will increase as the people will prefer to buy the laptops over the other alternatives, and the total revenue will increase as well, since the change in quantity demanded will not offset the change in price.
Hence, the option A is correct.
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Which of the following ledger accounts would require a credit entry in order to decrease their value? (Note: select no more than two) Select one or more: A. Payables B. Purchases C. Capital D. Bank
The ledger accounts that would require a credit entry in order to decrease their value are A. Payables and D. Bank.
1.Payables: Payables represent the amounts owed by a business to its suppliers or creditors. When a payment is made to reduce the outstanding balance of payables, a credit entry is made to decrease the value of the account. This indicates a decrease in the liability or amount owed by the business.
2. Bank: Bank accounts represent the funds held by a business in its bank. When a withdrawal or payment is made from the bank account, a credit entry is made to decrease the value of the account. This indicates a decrease in the available funds held by the business.
Purchases and Capital do not typically require a credit entry to decrease their value. Purchases represent the goods or services acquired by a business, and their value is usually recorded as debits. Capital represents the owner's investment in the business, and any decrease in its value would usually be recorded through a debit entry.
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