The relevant cost of direct labour if the contract is accepted and undertaken is given by the amount as 521,000.
a) Calculation of variable cost per unit of Product P,
Variable cost per unit of Product P = Total monthly costs at the current level of capacity - Total fixed costs per month
Total monthly costs at the current level of capacity = R611,000
Total monthly costs at 100% capacity = R695,000
At 80% capacity, the company produces 112,000 units per month.
Total production at 100% capacity = 112,000/0.8 = 140,000 units per month
Variable cost per unit of Product P = (R695,000 - R611,000) / 140,000
Variable cost per unit of Product P = R6 per unit
Total fixed costs per month = Total monthly costs at the current level of capacity - Total variable costs per month
Total fixed costs per month = R611,000 - (112,000 * R6)
Total fixed costs per month = R611,000 - R672,000
Total fixed costs per month = -R61,000.
The fixed costs are negative which means that the company will earn a profit of R61,000 even if it sells no units. The fixed costs are irrelevant in this case as the company is producing above 85% of its capacity.
b) Calculation of current normal sales price per unit and contribution per unit at this price
Normal selling price per unit = Variable cost per unit of Product P / Contribution/sales ratio
Contribution/sales ratio = 60% = 60/100 = 0.6
Contribution per unit = Normal selling price per unit * Contribution/sales ratio
Contribution per unit = Normal selling price per unit * 0.6.
Let the normal selling price per unit be "S"Then, S * 0.6 = R6S = R10.
Normal selling price per unit = R10
Contribution per unit = R10 * 0.6
Contribution per unit = R6
c) Calculation of the effect on total profit each month of accepting the new customer’s offer, and selling 25,000 units per month to this customerThe new customer wants to buy 25,000 units per month at 20% below the normal selling price.
20% of the normal selling price = 20/100 * R10 = R2
The selling price to the new customer = R10 - R2 = R8
The contribution per unit when selling to the new customer = 60% * R8 = R4.80
The new customer will buy 25,000/5 = 5,000 units in place of the current sales.
Domco currently sells 112,000 units per month and will now sell 107,000 units (112,000 - 5,000) per month at the normal selling price.
Contribution from 107,000 units = R6 * 107,000 = R642,000
Contribution from 5,000 units to the new customer = R4.80 * 25,000 = R120,000
Total contribution = R642,000 + R120,000 = R762,000
Total variable cost = 112,000 * R6 = R672,000
Total fixed cost = -R61,000
Total cost = R611,000 (fixed cost) + R672,000 (variable cost) = R1,283,000
Total profit = Total contribution - Total cost = R762,000 - R1,283,000 = -R521,000.
The profit will reduce by R521,000 each month if the company accepts the new customer's offer.
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the labor market is in equilibrium when:
group of answer choices
a.the labor demand curve lies above the labor supply curve.
b.both labor demand and labor supply curves are positively sloped.
c.both labor demand and labor supply curves are negatively sloped.
d.the labor demand curve intersects the labor supply curve.
e.the labor demand curve is negatively sloped but the labor supply curve is positively sloped.
The correct option is option (d) the labor demand curve intersects the labor supply curve. Equilibrium can be defined as a state where all the involved parties are satisfied. In economics, the equilibrium point is where the quantity demanded is equal to the quantity supplied.
The intersection of labor demand and labor supply curves determines the equilibrium wage rate. At this point, the labor market is said to be in equilibrium. The quantity of labor supplied and demanded at this point is the same and the wage rate is satisfactory to both employers and employees.In contrast, if the wage rate is below the equilibrium rate, the demand for labor would increase and the supply of labor would decrease, resulting in a labor shortage. Similarly, if the wage rate is higher than the equilibrium rate, the supply of labor would increase while the demand for labor would decrease, resulting in a labor surplus. This can be shown graphically as below: Therefore, the equilibrium point is a very important concept in labor economics and helps in the effective allocation of resources to achieve maximum efficiency.
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Buehler Company on June 15 sells merchandise on account to Chaz Co. for $2,000, terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth $500 to Buehler Company. On June 25, payment is received from Chaz Co. for the balance due. What is the amount of cash received? a $1,470 b.$1,500 c. $2,000 d. None of the answer choices are correct
The payment on June 25 is for the balance due, Chaz Co. pays $1,470.The answer is A. $1,470.
Given, Buehler Company on June 15 sells merchandise on account to Chaz Co. for $2,000, terms 2/10, n/30.
On June 20, Chaz Co. returns merchandise worth $500 to Buehler Company. On June 25, payment is received from Chaz Co. for the balance due.
The total amount due is $2000. Since the terms are 2/10, n/30, Chaz Co. can take a 2% discount if they pay within 10 days of the invoice.
This means they can take a discount of $40 ($2,000 x 2%) if they pay by June 25.
On June 20, Chaz Co. returns $500 worth of merchandise, so they now owe $1,500 ($2,000 - $500). If they take the 2% discount, they'll pay $1,470 ($1,500 - $30 discount).
Since the payment on June 25 is for the balance due, Chaz Co. pays $1,470.The answer is A. $1,470.
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Suppose there are claims that a new war in the Persian Gulf could shift the world supply curve to the left, causing the world price of oil to soar regardless of whether we drill in ANWR. How accurate is this claim? Use the same type of analysis as in the text solved problem to calculate how much a shock would cause the price to rise without and with the ANWR production. According to the solved problem, demand is initially: Q=117.50-0.47p and supply is initially Q=70.50 +0.47p (without negative oil shocks and ANWR oil production). Now incorporate a negative oil shock of 4 million barrels a day (shifting the supply curve for oil to the left by that amount). Without the ANWR production, price rises by $4.3 per barrel. (Enter a numeric response using a rea number rounded to two decimal places.) per barrel. With ANWR production of 0.8 million barrels of oil per day (and the negative oil shock), price rises by $ (Enter a numeric response using a real number rounded to two decimal places.)
To analyze the impact of a negative oil shock on the world price of oil, we'll first calculate the initial equilibrium price and quantity without the negative oil shock and ANWR oil production. Then we'll incorporate the negative oil shock and calculate the price increase both without and with ANWR production.
Initial Equilibrium:
Demand: Q = 117.50 - 0.47p
Supply: Q = 70.50 + 0.47p
Setting demand equal to supply:
117.50 - 0.47p = 70.50 + 0.47p
Simplifying the equation:
0.94p = 47
p = 50
So the initial equilibrium price is $50 per barrel.
Without ANWR Production:
With the negative oil shock of 4 million barrels per day, the supply curve shifts to the left. The new supply equation is:
Q = 70.50 + 0.47p - 4
Setting demand equal to the new supply:
117.50 - 0.47p = 70.50 + 0.47p - 4
Simplifying the equation:
0.94p = 52
p = 55.32
The price increases by $5.32 per barrel without ANWR production.
With ANWR Production:
Now let's incorporate ANWR production of 0.8 million barrels per day. The new supply equation is:
Q = 70.50 + 0.47p - 4 + 0.8
Setting demand equal to the new supply:
117.50 - 0.47p = 70.50 + 0.47p - 4 + 0.8
Simplifying the equation:
0.94p = 52.3
p = 55.64
The price increases by $5.64 per barrel with ANWR production.
To summarize:
Without ANWR production, the negative oil shock causes the price of oil to rise by $4.3 per barrel.
With ANWR production, the negative oil shock causes the price of oil to rise by $5.64 per barrel.
These calculations demonstrate the price impact of the negative oil shock under different scenarios, but it's important to note that actual price changes in the event of a war in the Persian Gulf can be influenced by various other factors and market dynamics.
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a) The electronic meters are useful for measuring temperature, pressure, and noise. The costs associated with manufacturing are salary of top management $20,000, cost of hiring office $170,000, cost of land $230,000, cost of raw materials $700, investor capital $190,000, purchasing machine $160,000 and bonus for sales staff $300. If a base unit sells for $2950 and other cost are cost of car for director $30,000, fuel cost $575 and salary of casual labor $500, (a) how many units must be sold each year for breakeven and (b) what will the profit be for sales of 3000 units per year? c) What is the difference between the revenue and variable cost per unit that is necessary to break even at a significantly reduced production level of 2800 units, if fixed costs remain constant? Draw graph showing break-even point [10 Marks]
The breakeven point is reached when total revenue equals total costs. By dividing the total fixed costs by the contribution margin per unit, you can find the breakeven quantity
a) To calculate the number of units that must be sold each year for breakeven, you need to determine the total fixed costs and the contribution margin per unit. The breakeven point is reached when total revenue equals total costs. By dividing the total fixed costs by the contribution margin per unit, you can find the breakeven quantity.
b) To calculate the profit for sales of 3000 units per year, you need to consider the total revenue and total costs. Subtract the total costs, including fixed costs and variable costs, from the total revenue to determine the profit.
c) To find the difference between the revenue and variable cost per unit necessary to break even at a significantly reduced production level of 2800 units, you need to calculate the contribution margin per unit and subtract the variable cost per unit from the selling price per unit.
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Reflect on a company you work or worked for in the past or even a company you purchase goods from on a regular basis. Give an example of a single sourcing strategy and multiple sourcing strategy for an item or service. Comment on whether the strategy should be continued.
During my time working for Company X, we implemented both single sourcing and multiple sourcing strategies for different items or services.
Single sourcing strategy: One example of single sourcing was for a critical component used in our manufacturing process. We had a long-term agreement with a specific supplier who provided us with the component exclusively. This allowed us to establish a strong relationship with the supplier, streamline our procurement process, and negotiate favorable pricing and terms. However, relying on a single supplier also posed risks, such as potential disruptions in the supply chain if the supplier faced production issues or went out of business.
Multiple sourcing strategy: In contrast, we adopted a multiple sourcing strategy for non-critical and readily available items. For instance, we sourced office supplies from multiple vendors to take advantage of competitive pricing, maintain flexibility, and mitigate the risk of supply disruptions. This approach allowed us to diversify our supplier base and leverage market dynamics to optimize costs. However, managing relationships with multiple suppliers required additional coordination and monitoring efforts.
In my opinion, both strategies had their merits and should be continued based on the specific context and requirements. Single sourcing can be beneficial for critical components or services where stability, quality, and long-term partnerships are essential. However, it is crucial to regularly assess the risks associated with single sourcing and have contingency plans in place to mitigate any potential disruptions.
On the other hand, multiple sourcing provides flexibility, mitigates supplier-related risks, and fosters competition among suppliers. This strategy can be advantageous for non-critical items or services where price and availability are the primary considerations. However, it requires effective supplier management and ongoing monitoring to ensure consistency in quality and timely delivery.
Ultimately, the decision to continue a single sourcing or multiple sourcing strategy should be based on a thorough evaluation of factors such as the criticality of the item or service, supplier reliability, market conditions, and the company's risk tolerance. A balanced approach that combines both strategies can provide the necessary stability, flexibility, and cost optimization for an organization's supply chain.
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Please Use Blockbuster Typically, There Are Signs To Indicate A Business Is Failing, Forcing The Business To Claim Bankruptcy, Seek Financial Help From The Courts To Pay Debts, Or Go Out Of Business. Using Your Knowledge Of Liquidity And Solvency, Find An Annual Report Of A Company That Went Out Of Business And Analyze The Financial Statements To Determine
Please use Blockbuster
Typically, there are signs to indicate a business is failing, forcing the business to claim bankruptcy, seek financial help from the courts to pay debts, or go out of business. Using your knowledge of liquidity and solvency, find an annual report of a company that went out of business and analyze the financial statements to determine if you could tell the business was going to fail. In your response, discuss your findings and why you think those items lead to the demise of the organization and include any indications to management that change needed to be made. Examples of high-profile companies that went out of business include Toys-R-Us, Blockbuster, Tower Records, Pan Am, Borders, Pets.com, and Compaq.
Blockbuster was a well-known video rental company that filed for bankruptcy in 2010 and eventually went out of business. One of the key factors that contributed to Blockbuster's failure was its inability to adapt to changing market trends and technology. With the rise of online streaming services and digital downloads, the demand for physical video rentals declined significantly. Blockbuster's business model, which relied heavily on brick-and-mortar stores, became outdated and unable to compete with the convenience and accessibility offered by online platforms.
From a liquidity perspective, Blockbuster faced challenges due to declining revenues and increased debt. As customers shifted to online platforms, Blockbuster experienced a decrease in rental income, leading to cash flow difficulties. Additionally, the company had significant lease obligations for its physical stores, which became burdensome as revenues declined. These liquidity challenges were evident in the company's financial statements, particularly in the form of decreasing cash balances and increasing debt levels.
Solvency was also a major concern for Blockbuster. As the company's financial performance deteriorated, its ability to meet long-term obligations became uncertain. Blockbuster's debt levels were high, and the company struggled to generate sufficient profits to cover its interest expenses and maintain a positive net income. This signaled solvency issues and the potential inability to sustain operations in the long term.
Indications that change was needed within Blockbuster's management included their failure to adapt to the evolving market landscape. Despite the growing popularity of online streaming and digital media, Blockbuster did not adequately invest in or transition to digital platforms. Additionally, the company's late entry into the DVD-by-mail rental market, which was pioneered by Netflix, further highlighted management's failure to recognize and respond to changing consumer preferences.
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Review Adam Smith’s invisible hand of the marketplace. The invisible hand takes all of the information about buyers and sellers into account and guides everyone in the marketplace to the best outcome as judged by the standard of economic efficiency. With this idea, many economists will often advocate for free markets as the best way to organize economic activity. Do you agree with this idea? Why or why not?
Adam Smith's invisible hand of the marketplace is a concept in economics that is used to describe how the self-interested actions of individuals in a free market can lead to benefits for society as a whole.
According to this idea, individuals in a market economy are motivated by self-interest and the pursuit of profit, and as they engage in buying and selling, the market price of goods and services is determined by supply and demand, with the invisible hand guiding the process to the best outcome as judged by the standard of economic efficiency. This outcome is achieved when all buyers and sellers are able to make choices that benefit them, and in doing so, contribute to the overall well-being of the economy. It is this idea of the invisible hand that many economists believe makes free markets the best way to organize economic activity.
I would say that while some people may agree with this idea, others may disagree for a variety of reasons. One possible reason for disagreeing is that the invisible hand may not always lead to the best outcome for everyone. For example, in a market where there is a monopoly or oligopoly, the invisible hand may lead to higher prices and lower quality goods or services. Additionally, the invisible hand may not take into account externalities, such as pollution or other negative impacts on the environment or society as a whole. In these cases, it may be necessary for government intervention to correct market failures and promote the public good.
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Rikell company produces helmets using labor (L) and capital (K).
Its production function is given by the following expression: Q =
26 L + 80 K where Q is the output of helmets. The prices of labor
(PL
The production function for the Rikell company that produces helmets using labor (L) and capital (K), the firm will hire labor and capital in the ratio of 40/13 to maximize the production output.
The labor (L) and capital (K) can be represented as follows: Q = 26L + 80K
where Q is the quantity or output of helmets, L is labor and K is capital. This production function indicates that the output of helmets depends on the input factors of labor and capital. Given the function of the Rikell company, we can calculate the marginal product of labor (MPL) and the marginal product of capital (MPK) using the formulas:
MPK = ΔQ/ΔK and MPL = ΔQ/ΔL
where ΔQ is the change in the output of helmets, and ΔL and ΔK are the change in labor and capital used respectively. The prices of labor and capital are PL and PK respectively. In order to maximize the production output, the firm will have to hire labor and capital until the point where the marginal product per dollar spent on both inputs is the same. Mathematically, this can be represented as:
MPL/PL = MPK/PKBy substituting the values of MPL and MPK from the production function, we can derive the equation:26/PL = 80/PK rearranging gives the equationPK/PL = 80/26Simplifying we getPK/PL = 40/13
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Gosling, Incorporated, a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
Gosling earned $3,500 on an investment in tax-exempt municipal bonds.
Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income.
Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000.
Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes.
Gosling's federal income tax expense per books was $220,000.
Compute Gosling's taxable income and regular tax liability.
Prepare a Schedule M-1, page 6, Form 1120, reconciling Gosling's book and taxable income.
Gosling's taxable income is $616,500. The regular tax liability is calculated as $82,499 on the first $335,000, $157,349 on the next $153,900, $28,800 on the next $75,600, and $6,348 on the remainder of taxable income. Gosling's Schedule M-1 shows a net income per return of $616,500.
To compute Gosling's taxable income and regular tax liability, we need to consider the following adjustments and reconciliations:
1. Tax-exempt municipal bond income of $3,500 is added back to book income as it is not taxable for federal income tax purposes.
2. The advance payment of rent of $25,000 received this year is not included in book income but needs to be included in taxable income.
3. The depreciation expense per books of $72,000 is adjusted to the MACRS depreciation deduction of $105,000 for tax purposes.
4. Business meals and entertainment expenses of $58,000 and $27,000, respectively, are not deductible for tax purposes and need to be added back to book income.
5. The federal income tax expense per books of $220,000 is subtracted from book income as it is not a deductible expense for tax purposes.
Based on these adjustments, we can calculate Gosling's taxable income and regular tax liability:
Book income: $756,000
Adjustments:
+ Tax-exempt municipal bond income: $3,500
+ Advance payment of rent: $25,000
- Depreciation adjustment: $72,000 - $105,000 = -$33,000
+ Meals and entertainment adjustments: $58,000 + $27,000 = $85,000
- Federal income tax expense: $220,000
Taxable income: $756,000 + $3,500 + $25,000 - $33,000 + $85,000 - $220,000 = $616,500
To prepare Schedule M-1, we reconcile the differences between book and taxable income:
Schedule M-1:
Book income: $756,000
Additions:
+ Tax-exempt municipal bond income: $3,500
+ Advance payment of rent: $25,000
+ Depreciation adjustment: $33,000
- Meals and entertainment adjustments: $85,000
- Federal income tax expense: $220,000
Taxable income: $616,500
Note: Additional information may be required to compute the regular tax liability, such as the applicable tax rate and any other deductions or credits.
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What is Shake Shack’s diversification strategy with respect to type(s), levels and means of growth the company uses?
Which type of competitive strategy/strategies is Shake Shack utilizing? What is the competitive advantage and competitive/market scope of each of the competitive strategies of the company?
What factors in the general external environment most strongly affect Shake Shack?
Shake Shack’s diversification strategy with respect to type(s), levels, and means of growth the company uses is the horizontal diversification strategy.
This is a growth strategy that involves the production of new products that are often related to the existing products of the company. By doing this, the company is able to tap into new markets while still maintaining the same line of business. The competitive strategies utilized by Shake Shack are differentiation and cost leadership. The competitive advantage of differentiation is that the company is able to create a unique product that is different from that of other competitors while the cost leadership competitive advantage is that the company is able to offer products at lower prices than competitors. The competitive/market scope of differentiation is that the company is able to create a product that is different from that of other competitors while the competitive/market scope of cost leadership is that the company is able to offer products at lower prices than competitors. Factors in the general external environment that most strongly affect Shake Shack are competition, regulations, and changes in customer preferences. Competition from other companies that offer similar products is a major external factor that affects Shake Shack. Regulations also affect Shake Shack since they affect the way the company produces its products. Changes in customer preferences affect Shake Shack since they influence the products that the company produces.
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Explain how the change in terms of trade accompanying growth can
leave a country worse off after growth compared with its state of
well-being prior to growth.
The change in terms of trade accompanying growth can potentially leave a country worse off after growth compared to its state of well-being prior to growth. This phenomenon is known as the "resource curse" or "Dutch disease."
When a country experiences economic growth, its exports usually increase, leading to a rise in export prices. However, if the prices of the country's imports, such as essential goods or raw materials, increase at a faster rate, the terms of trade can worsen.
As a result, even though the country's overall economic output may have increased, the increased cost of imports can have detrimental effects on the country's well-being. The higher prices for imported goods can lead to inflation, reduced purchasing power, and increased production costs for domestic industries reliant on imports. This can hamper competitiveness and negatively impact the country's economic performance.
Furthermore, if the country becomes overly dependent on a particular export sector, such as natural resources, it can lead to an over-reliance on a single industry. This can make the country vulnerable to fluctuations in commodity prices, exposing it to economic instability and volatility.
To mitigate these risks, it is crucial for countries to diversify their economies, invest in human capital and infrastructure, and implement sound macroeconomic policies. This can help reduce the negative impacts of changing terms of trade and ensure sustained and inclusive growth for the country's overall well-being.
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ites, 45 seconds. Question Completion Status: 2 10 11 L₂ 16 Click Submit to complete this assessment. Question 16 All, Basel and Ziad are sharing income and loss in a 4:32 ratio respectively and decided to liquidate their peership Prior to the tradema to the partners, Ali has a capital balance of $(30,000), Basel has a capital balance of $72.000, and Zad has a capital tance of $108.30 As balance is $150,000. All is NOT able to pay the amount he owes the partnership Which of the following two journal entries are right to record this liquidation case? OA Basel Capital 12,000 Ziad Capital 18,000 30,000 Basel capital Ziad capital 150,000 Cash SOB. Basel Capital Ziad Capital 30,000 Basel capital 150,000 Ziad capital Cash Ali Capital All Capital 1 54,000 96,000 15,000 15,000 57,000 93,000 5 6 Cash OB. Basel Capital Ziad Capital All Capital Basel capital Ziad capital Cash OC Basel Capital Ziad Capital All Capital Basel capital Ziad capital Cash OD. Basel Capital Ziad Capital Basel capital Ziad capital Cash Ali Capital 15.000 15,000 57,000 93,000 18,000 12,000 96,000 54,000 18,000 12,000 54,000 96,000 10 11 150,000 30,000 150,000 30,000 150,000 30,000 150,000 12
The correct journal entries to record the liquidation case would be: OD. Basel Capital Ziad Capital Basel capital Ziad capital Cash
This journal entry reflects the distribution of the remaining assets of the partnership to the partners according to their capital balances. It accounts for the fact that Ali is unable to pay the amount he owes the partnership.
The journal entry would be as follows:
Debit: Basel Capital - $15,000
Debit: Ziad Capital - $15,000
Credit: Basel capital - $57,000
Credit: Ziad capital - $93,000
Credit: Cash - $30,000
This entry reduces Basel and Ziad's capital balances and records the cash payment made to the partners. The remaining capital balance for All is not affected as he is unable to pay his debt to the partnership.
It's important to note that the given options in the question are not clear and some information is missing. However, based on the provided information, option OD seems to be the most appropriate choice.
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1. Explain how improving quality can lead to reduced cost.
2. What is the purpose of using a Pareto Chart for a given problem? Provide an example by using Pareto Chart if possible.
Improving quality can lead to reduced cost through several mechanisms:
a) Reducing rework and scrap: By improving the quality of products or services, there is a decrease in defects, errors, and rework. This reduction in rework and scrap leads to lower costs associated with fixing or remanufacturing faulty products.
b) Decreasing customer complaints and returns: Improved quality results in products that meet or exceed customer expectations, reducing the number of customer complaints and returns. This, in turn, reduces costs associated with handling customer complaints, processing returns, and providing replacements or refunds.
c) Enhancing process efficiency: Quality improvement often involves streamlining processes and eliminating waste. By identifying and addressing inefficiencies and bottlenecks, organizations can optimize their operations, reduce cycle times, and improve productivity. This increased efficiency results in cost savings.
d) Minimizing warranty and liability costs: Higher quality products are less likely to experience failures or malfunctions, reducing warranty claims and associated costs. Moreover, improved quality can also mitigate the risk of product recalls, lawsuits, and liability issues, resulting in significant cost savings and preserving the company's reputation.
The purpose of using a Pareto Chart is to prioritize and focus efforts on the most significant issues or causes that contribute to a problem. It helps in identifying the vital few factors that account for the majority of the problems, allowing organizations to allocate their resources effectively for improvement.
The Pareto Chart follows the Pareto principle, also known as the 80/20 rule, which states that roughly 80% of the effects come from 20% of the causes. It provides a visual representation of the frequency or impact of various factors in descending order, helping to identify the critical few factors that have the most significant influence on the problem.
For example, let's consider a manufacturing company that is experiencing defects in its products. The company creates a Pareto Chart to analyze the causes of these defects. The chart reveals that the top three causes of defects are incorrect assembly (40%), material defects (30%), and operator errors (20%). The remaining causes contribute to the remaining 10%.
Based on the Pareto Chart, the company can prioritize its improvement efforts by focusing on addressing incorrect assembly, material defects, and operator errors, as these are the primary contributors to the problem. By addressing these key causes, the company can expect to achieve significant improvements in product quality and reduce the overall defect rate.
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CASE: With each new generation of Apple iPhone, iPad, or Mac computer, new models start at a high price, then work their way down as newer models are introduced. In this way, Apple extracts the maximum amount of revenue from the various segments of the market. QUESTION: Identify the pricing strategy_used in this example.
Apple uses a price skimming strategy in this example. Apple employs a price skimming strategy with its new generation of products.
Price skimming is a pricing strategy where a company sets a high initial price for a product and gradually lowers it over time. This approach allows Apple to extract the maximum amount of revenue from different segments of the market. When Apple releases a new iPhone, iPad, or Mac computer, it enters the market with a premium price, targeting early adopters and customers who are willing to pay a premium for the latest technology and features. This initial high price helps Apple capitalize on the demand from these early adopters and capture a significant portion of the market's willingness to pay.
As newer models are introduced, Apple gradually reduces the prices of its older models to appeal to a broader customer base and maintain sales momentum. By doing so, Apple can cater to different segments of the market with varying price sensitivities and increase its market penetration. This price skimming strategy allows Apple to maximize its revenue by capturing the high-value customers initially and then expanding its customer base through price reductions over time. It also helps create a perception of value and exclusivity associated with Apple products, contributing to the company's brand image and customer loyalty.
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Imagine that you are the Chief Executive Officer (CEO) for Bluemotors, the largest company that specializes in producing cars in your country. Bluemotors' products are very popular, and the company has steady profits and cash inflows. 13a) If you combine your business with Redtires, a major tire supplier for your products, what is the terminology for this type of merger?
If you combine your business with Redtires, a major tire supplier for your products, the terminology for this type of merger is a vertical merger. A merger is a strategic business consolidation strategy in which two or more firms are merged into a single entity.
In this process, one company is subsumed into another, and the acquiring firm absorbs the target company. This can result in the formation of a new company, which then operates as a single entity. Merger Types are of the following three types: Horizontal merger, Vertical merger, and Conglomerate merger. A vertical merger is a form of merger that involves the integration of two firms that operate in different stages of the supply chain.
Vertical integration occurs when a company expands its operations by acquiring firms that supply raw materials or distribute their products. A vertical merger is a merger in which two or more companies that operate at different stages of the production process for a particular good join together to form a single company. This type of merger aids in the integration of the production process and the reduction of transaction costs.
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at the end of last year, games-2-use had merchandise costing $140,000 in inventory. during january of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. games-2-use uses a perpetual inventory system. the balance in the inventory account at january 31 was: at the end of last year, games-2-use had merchandise costing $140,000 in inventory. during january of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. games-2-use uses a perpetual inventory system. the balance in the inventory account at january 31 was: a. $84,000.
b. $158,000.
c. $140,000.
d. $242,000.
If games-2-use uses a perpetual inventory system, the ending inventory balance in the account at January 31 will be:
a. $84,000.
The merchandise costings of Games-2-Use can be easily calculated by balancing the merchandising account for the given period i.e. for January.
The calculation of merchandise costing can be made by the given formula:
Cost of goods sold = Beginning inventory + Purchases – Ending inventory
Given, beginning inventory of last year was $140,000
And, the company purchased merchandise costing $102,000 during January of the current year
And, sold merchandise that it had purchased at a total cost of $84,000.
Therefore, cost of goods sold can be calculated as follows:
Cost of goods sold = $140,000 + $102,000 - $84,000
= $158,000
Therefore, the merchandise balance at the end of January can be calculated as follows:
Ending Inventory = Beginning Inventory + Purchases - Cost of Goods Sold
= $140,000 + $102,000 - $158,000
= $84,000
Hence, the correct option is: a. $84,000.
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the five techniques used by managers to promote motivational attributions are...
Answer:
screening for resilience, attributional training, immunization, increasing psychological
The five techniques used by managers to promote motivational attributions are the following: Provide feedback, Give rewards, Recognize achievements, Encourage a positive attitude, and Provide challenging tasks.
1. Provide feedback: Providing feedback is a technique used by managers to motivate their subordinates. This helps employees know what they're doing well and what they need to improve on. Feedback can be in the form of constructive criticism, praise, or performance evaluation.
2. Give rewards: Rewarding employees is another technique that managers use to promote motivational attributions. Rewards can be in the form of a salary raise, promotions, bonuses, or even a promotion. Managers must ensure that the rewards they give are meaningful and valuable to their employees.
3. Recognize achievements: Managers recognize achievements in employees to boost their morale and make them feel valued. This recognition can be done verbally, in written form, or even publicly in front of other employees.
4. Encourage a positive attitude: Having a positive attitude helps to motivate employees. Managers can encourage a positive attitude by having a positive demeanor, setting a good example for their subordinates, and implementing team-building activities.
5. Providing challenging tasks: Lastly, managers can promote motivational attributions by assigning challenging tasks to their subordinates. This helps employees develop new skills and gain a sense of accomplishment when they complete difficult tasks.
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Aggregate Demand I-Work It Out Question 1 In the Keynesian cross model, assume that the consumption function is given by C = $170 +0.7(Y-T) Planned investment is $100; government purchases and taxes are both $100. c. If government purchases increase to $115, what is the new equilibrium income? What is the multiplier for government purchases? new Y= $ multiplier:
the new Y = $965 and the multiplier for government expenditure = 3.33.
In the Keynesian cross model, if the consumption function is given by C = $170 +0.7(Y-T), and planned investment is $100; government purchases and taxes are both $100. If government purchases increase to $115, the new equilibrium income and multiplier for government purchases are explained below:
Solutions: a) The equilibrium level of income is obtained where the planned aggregate expenditure is equal to the aggregate production of goods and services. The Keynesian cross model equation can be written as:
Y = C + I + G + NX,
Where, Y = Aggregate output C = Consumption expenditure I = Planned investment G = Government expenditure
NX = Net export= -20Y + 20(100)
Here, the consumption expenditure is given as C = $170 + 0.7(Y-T)
Putting Y for the income, T for taxes and substituting the values we get, C = $170 + 0.7(Y - T)C
= $170 + 0.7(Y - 100)C
= $70 + 0.7Y
Therefore, the aggregate output equation can be written as follows:
Y = 70 + 0.7Y + 100 + 0 - 20YY
= 850
The equilibrium income is 850.
b) The multiplier for government expenditure (G) can be calculated as follows:
Multiplier = ΔY / ΔGHere, ΔG = Increase in government expenditure
Multiplier = [1 / (1 - MPC)] Here, MPC = Marginal Propensity to Consume = 0.7
Therefore, Multiplier = [1 / (1 - 0.7)] = 3.33The multiplier for government expenditure is 3.33.
c) If government purchases increase to $115, the new government expenditure will be G = $115
Substituting this value in the aggregate output equation,
we get, Y = 70 + 0.7Y + 100 + 0 - 20 + 115Y
= 965
The new equilibrium income is $965.
Therefore, the new Y = $965 and the multiplier for government expenditure = 3.33.
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A study compares Incandescent, CFL and LED light bulbs. Energy consumption for the 3 bulb types in MJ/20 million lumen-hours is: 15100, 3950 and 1760 The weight of the minerals used in the product specified in g/20 million lumen-hours are: 600, 300 and 200 The study is interested in emissions to the air (CO₂) and emissions to the soil (landfill). The bulbs are sent to a landfill after usage. The following conversion factors are to be used: 1 MJ = 0.28 kWh 1 kWh results in 0.61 lb. of CO A study compares Incandescent, CFL and LED light bulbs. Energy consumption for the 3 bulb types in MJ/20 million lumen-hours is: 15100, 3950 and 1760 The weight of the minerals used in the product specified in g/20 million lumen-hours are: 600, 300 and 200 The study is interested in emissions to the air (CO₂) and emissions to the soil (landfill). The bulbs are sent to a landfill after usage. The following conversion factors are to be used: 1 MJ = 0.28 kWh 1 kWh results in 0.61 lb. of CO2 a. What is the functional unit? b. Life Cycle Inventory per Functional Unit (show formulas) Electricity Lighting Unit of Measure MJ Lumen-hours Technology Incandescent CFL LED Air Emission Lb. of CO2 Minerals gram
a. The functional unit in this study is defined as 20 million lumen-hours of lighting. This unit provides a standardized measure for comparing the performance of different light bulb technologies.
b. To calculate the Life Cycle Inventory per functional unit, we need to convert the energy consumption and mineral weight into their respective units of measure and determine the associated air emissions and mineral usage.
For energy consumption: Convert MJ to kWh: 1 MJ = 0.28 kWh
Convert kWh to lb. of CO2: 1 kWh results in 0.61 lb. of CO2
For mineral weight: The weight of minerals is already specified in grams, so no conversion is needed.
Using the given data, we can calculate the Life Cycle Inventory per functional unit as follows:
Incandescent: Energy consumption: 15100 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = X lb. of CO2
Mineral weight: 600 g
CFL: Energy consumption: 3950 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = Y lb. of CO2
Mineral weight: 300 g
LED: Energy consumption: 1760 MJ * 0.28 kWh/MJ * 0.61 lb. CO2/kWh = Z lb. of CO2
Mineral weight: 200 g
These values will provide the Life Cycle Inventory per functional unit in terms of air emissions (CO2) and mineral usage for each light bulb technology.
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Which of the following is NOT one of the procedures in process costing? O A. summarize total costs to account for B. assign costs to completed units C. assign costs to equivalent units based on their percentage of completion D. compute equivalent unit costs O E. summarize the flow of physical units of output Which costing system is well-suited for companies which have infrequent changes in their basic products? 11 O A. standard costing B. last in first out costing OC. weighted-average costing D. equivalent-average unit costing method E. first-in, first-out method measures the relationship between actual inputs used and actual outputs achieved. www O A. Product yield variance B. Partial productivity OC. Total factor productivity OD. Labour yield E. Productivity
E. summarize the flow of physical units of output. This procedure is not one of the steps in process costing. The other s, A, B, C, and D, are all essential procedures in process costing.
The costing system that is well-suited for companies with infrequent changes in their basic products is C. weighted-average costing. Weighted-average costing calculates the average cost of units in inventory by considering both the current period's costs and the costs carried over from previous periods. It smooths out fluctuations in costs and is suitable when there are infrequent changes in product costs or when it is difficult to track individual costs for specific units. This method provides a more stable cost measurement over time compared to other methods like FIFO (first-in, first-out) or LIFO (last-in, first-out) costing, which rely on specific cost flows and can lead to significant cost variations when there are changes in product costs.
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On July 1, 2021, the CFAS Corporation was registered with the SEC. Its authorized share capital consists of 100,000 ordinary shares with par value P20.00 per share. On July 15, 2021, it issued 10,000 shares at P24 per share. On October 15, 2021, the CFAS Corp. paid to the majority shareholder the sum of P80,000 for a certain parcel of land; and issued 5,000 ordinary shares for the building on the land. The land was appraised at P130,000. The building has a cost of P150,000 and its depreciated value is P90,000. It was appraised at P120,000. On April 15, 2022, the corporation purchased 5,000 of its own ordinary shares for P100,000. On June 15, 2022, 2,000 of the treasury shares were sold at P24 per share. How much is the total share premium of CFAS Corp. on June 30, 2020?
The total share premium of CFAS Corp. on June 30, 2020, is P40,000.
To calculate the total share premium of CFAS Corp. on June 30, 2020, we need to consider the share issuances and purchases that occurred before that date.
1. Issuance of 10,000 shares on July 15, 2021:
Share capital: 10,000 shares * P20.00 par value = P200,000
Share premium: 10,000 shares * (P24.00 - P20.00) = P40,000
2. Issuance of 5,000 shares for the building on October 15, 2021:
Share capital: 5,000 shares * P20.00 par value = P100,000
Share premium: No additional share premium since the shares were issued for the building.
3. Purchase of 5,000 treasury shares on April 15, 2022:
There is no change in share capital or share premium because treasury shares are considered as repurchased shares.
4. Sale of 2,000 treasury shares on June 15, 2022:
Share capital: 2,000 shares * P20.00 par value = P40,000
Share premium: No additional share premium since the treasury shares were sold.
To calculate the total share premium on June 30, 2020, we sum up the share premium amounts from the above transactions:
Total share premium = P40,000
Therefore, the total share premium of CFAS Corp. on June 30, 2020, is P40,000.
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ongegnum Describe sustainable business activities and eco-effici oblem #3 of 3 Cost savings from replacing terting fixtures in a production to any set waste efficiency material use efficiency fuel efficiency d. energy efficiency : . SO 23 . 6 % A e 2 # 3 $ 4 Оля N 1 6 5
Sustainable business activities refer to practices and actions undertaken by businesses that aim to minimize their negative impact on the environment and society while ensuring long-term economic viability.
These activities typically focus on reducing resource consumption, minimizing waste generation, and promoting social responsibility.
One aspect of sustainable business activities is eco-efficiency, which involves optimizing resource utilization and minimizing waste throughout the production process. This can include implementing measures such as material use efficiency, fuel efficiency, and energy efficiency.
In the context of the given problem, the cost savings from replacing lighting fixtures in a production facility can be attributed to energy efficiency. By upgrading to more energy-efficient lighting fixtures, the business can reduce its energy consumption and, consequently, lower its electricity costs. Energy-efficient lighting fixtures are designed to use less energy while providing the same or better lighting output compared to traditional fixtures.
The statement "SO 23.6%" may indicate that the energy-efficient lighting fixtures have resulted in a 23.6% reduction in energy consumption compared to the previous fixtures. This reduction in energy usage leads to cost savings for the business, contributing to its overall sustainability efforts.
Implementing energy efficiency measures is a common practice in sustainable business operations as it helps reduce greenhouse gas emissions, conserve natural resources, and decrease operational costs. It aligns with the goals of sustainability by promoting environmental stewardship and economic efficiency.
Overall, sustainable business activities, such as improving energy efficiency through the replacement of lighting fixtures, can contribute to cost savings, resource conservation, and a reduced environmental footprint.
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2.1 PRACTICE PROBLEMS 1. During a given week, Student 1 demands four milkshakes at a price of $2. five at $1.80, six at $1.60, and seven at $1.40. Student 2 demands five milk- shakes at a price per milkshake of $2, seven at $1.80, nine at $1.60, and 11 at $1.40. a. Is the law of demand satisfied for each student as the price of milk- shakes falls? Why or why not? b. How is the market demand curve derived if these two students are the only two consumers in the market? c. What are four points on the market demand curve D_? d. Draw a graph showing the demand curves for Student 1 and Student 2. D, and D₂, as well as the market demand curve D. Plot 4 points for each of the demand curves, for a total of 12 points. 2. How will the demand for e-books be affected in each of the following situa- tions? a. consumer incomes rise b. the price of e-book readers decreases c. there is a sudden expectation by consumers that the price of e-books will soon drop d. the price of print books rises CHAPTER PROBLEMS 1. Kate buys three chocolate bars per week at a price of $1.25, five at a price of $ and seven at a price of 75 cents. Her friend Carlo buys five chocolate bars at price of $1.25, eight at a price of $1, and 11 at a price of 75 cents. a. If these two friends are the only consumers in the market for chocolate bars what are three points on the market demand curve? b. Does this market demand curve satisfy the law of demand? Why or why not?
a. The law of demand is satisfied for each student as the price of milkshakes falls.
According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases, all else being equal. In this case, both Student 1 and Student 2 are demanding more milkshakes as the price decreases.
b. The market demand curve is derived by horizontally summing the individual demand curves of Student 1 and Student 2. This means adding the quantity demanded at each price level for both students.
c. Four points on the market demand curve can be derived by adding the quantities demanded by Student 1 and Student 2 at different price levels. For example:
Price: $2, Quantity Demanded: 4 + 5 = 9
Price: $1.80, Quantity Demanded: 5 + 7 = 12
Price: $1.60, Quantity Demanded: 6 + 9 = 15
Price: $1.40, Quantity Demanded: 7 + 11 = 18
d. The graph would show the demand curves for Student 1 (D1) and Student 2 (D2) separately, as well as the market demand curve (D) derived by adding the quantities demanded by both students at each price level. The graph should include the price on the vertical axis and the quantity demanded on the horizontal axis. Plotting the four points for each demand curve would result in a total of 12 points on the graph.
a. If consumer incomes rise, the demand for e-books is likely to increase. As consumers have more disposable income, they may be willing to spend more on e-books.
b. If the price of e-book readers decreases, the demand for e-books is likely to increase. Lower prices for e-book readers would make them more affordable and accessible to consumers, leading to a greater demand for e-books.
c. If there is a sudden expectation by consumers that the price of e-books will soon drop, the demand for e-books may decrease in the short term. Consumers may delay their purchases in anticipation of lower prices, leading to a temporary decrease in demand.
d. If the price of print books rises, the demand for e-books may increase. As the price of print books becomes more expensive, some consumers may switch to purchasing e-books as a substitute, leading to an increase in demand for e-books.
a. Three points on the market demand curve can be derived by adding the quantities demanded by Kate and Carlo at different price levels. For example:
Price: $1.25, Quantity Demanded: 3 + 5 = 8
Price: $1, Quantity Demanded: 0 + 8 = 8
Price: $0.75, Quantity Demanded: 7 + 11 = 18
b. Yes, this market demand curve satisfies the law of demand. According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases, all else being equal. In this case, as the price of chocolate bars decreases, both Kate and Carlo are demanding more chocolate bars, which is consistent with the law of demand.
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In order to check on the correctness of various operating expenses in a division, Miss Lily, the internal auditor of Ali Co., plans to use the analytical review. This technique would be a preferred approach if:
I. The auditor wants to look for large, unusual, or non-recurring transactions during the year.
II. The company’s operation has remained relatively stable over the past year.
III. The auditor notes strong indicators of a specific fraud involving this account.
IV. The operating expenses vary with other operating expenses but not with revenue.
A All of the above
B I,II AND IV
C I AND IV
D II, III AND IV
The preferred approach to use analytical review technique to check the correctness of various operating expenses in a division is if the auditor wants to look for large, unusual, or non-recurring transactions during the year.
the correct answer is C) I and IV.
the operating expenses vary with other operating expenses but not with revenue. Therefore, the correct answer is C) I and IV.What is Analytical Review?Analytical Review is a process that auditors use to compare the financial information provided in the financial statements with non-financial data, including industry information and the information generated by the company's operations. The objective is to determine the accuracy of financial information that has been reported and to find any anomalies that may require further investigation.
Analytical Review is a technique that auditors use in order to check on the correctness of various operating expenses in a division. The analytical review technique is the preferred approach for checking the correctness of operating expenses if the auditor wants to look for large, unusual, or non-recurring transactions during the year. Additionally, the operating expenses vary with other operating expenses but not with revenue, this would also be an ideal scenario to use the analytical review technique.
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If you invest $3,500 in a stock that grows at 5 percent annually, how much would it be worth in 12 years?
The investment would be worth approximately $6,284.99 in 12 years.
To calculate the future value of an investment, we can use the formula:
FV = PV * (1 + r)^n
Where FV is the future value, PV is the present value or initial investment, r is the growth rate, and n is the number of years.
Given that the initial investment (PV) is $3,500, the growth rate (r) is 5 percent (0.05), and the number of years (n) is 12, we can substitute these values into the formula:
FV = $3,500 * (1 + 0.05)^12
Calculating this expression:
FV = $3,500 * (1.05)^12
≈ $3,500 * 1.795856
≈ $6,284.99
Therefore, the investment would be worth approximately $6,284.99 in 12 years.
If you invest $3,500 in a stock that grows at 5 percent annually, it would be worth approximately $6,284.99 in 12 years. This calculation assumes that the growth rate remains constant over the entire period.
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A 1 year call option is struck ATM. Annual vol is 20%. The trade is for $100M. Using the rule of thumb, what is the approximate value of the call option?
A 3 month call option is struck ATM. Annual vol is 20%. The trade is for $100M. Using the rule of thumb, what is the approximate value of the call option?
The rule of thumb for valuing options states that a 1% change in volatility leads to a roughly 0.01 change in the option value.
In the first scenario, for a 1-year call option with an annual volatility of 20%, the approximate value of the option would be:
Approximate value = Option value - 0.01 * (20 - 16) * Option value
= Option value - 0.01 * 4 * Option value
= Option value - 0.04 * Option value
= 0.96 * Option value
Since the trade is for $100 million, the approximate value of the call option would be approximately 0.96 * $100 million = $96 million.
In the second scenario, for a 3-month call option with the same annual volatility of 20%, we can apply the same logic. However, since the time to expiration is shorter, we need to adjust for the time factor:
Approximate value = Option value - 0.01 * (20 - 16) * Option value * sqrt(3/12)
= Option value - 0.01 * 4 * Option value * sqrt(3/12)
= 0.96 * Option value * sqrt(3/12)
Using the same trade size of $100 million, the approximate value of the 3-month call option would be approximately 0.96 * $100 million * sqrt(3/12) = $41.57 million.
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Totally focused on serving the customer by offering quick service, a good variety and low prices. A)Jeff Bezos B)Richard Branson C)Bill Gates D)Steve Jobs E)Jack Ma F)Elon Musk
The person who is totally focused on serving the customer by offering quick service, a good variety and low prices is Jeff Bezos. The correct answer is A)Jeff Bezos.
Jeff Bezos is an American entrepreneur who founded Amazon.com in 1994. Amazon.com is an online marketplace that started selling books online. Currently, Amazon.com is one of the world's largest online marketplaces offering products like electronics, clothing, and household goods. Jeff Bezos was born in Albuquerque, New Mexico in 1964. He graduated from Princeton University in 1986 with degrees in electrical engineering and computer science. He worked at a startup called Fitel and then worked for a company called Bankers Trust before founding Amazon.com in 1994. He became the CEO of Amazon.com and helped to grow the company into one of the world's largest online marketplaces. Jeff Bezos is known for his focus on customer satisfaction and his dedication to offering a wide selection of products at low prices. He has been praised for his innovative ideas and his willingness to take risks in order to grow his business.
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A commercial bank has $110 in reserves, $880 in loans, $890 in checkable deposits and $100 in capital. If the bank suffers a write down in loan asset value of $15, what is the new capital to total asset ratio (capital/assets)?
O 11.5%
O 8.7%
O 7.8%
O 5.4%
Capital to total asset ratio ≈ 4.52%
None of the provided options match the calculated result. However, if the options have been rounded, the closest option to the calculated result is:
O 5.4%
To calculate the new capital to total asset ratio after the write-down in loan asset value, we need to determine the new total assets and the new capital.
Total assets can be calculated by adding the reserves, loans, and checkable deposits:
Total assets = Reserves + Loans + Checkable deposits
Total assets = $110 + $880 + $890
Total assets = $1,880
To calculate the new capital, we subtract the write-down from the initial capital:
New capital = Initial capital - Write-down
New capital = $100 - $15
New capital = $85
Now we can calculate the new capital to total asset ratio:
Capital to total asset ratio = (New capital / Total assets) * 100
Capital to total asset ratio = ($85 / $1,880) * 100
Capital to total asset ratio ≈ 4.52%
None of the provided options match the calculated result. However, if the options have been rounded, the closest option to the calculated result is:
O 5.4%.
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COMPLETE PROBLEMS to howed news andmined a bar con mo no badme vino 21. Boussard Company, which uses normal job costing, incurred the following costs last period di (A indicates paid on account; C indicates paid in cash): sol 000,01 Emas dalkw (bandung alaotien hoibai liet Direct materials purchases $200,000 A How to desi Indirect materials purchases 12,000 A SER Direct materials used 180,000 Indirect materials used 10,000 Direct labor om yol,000, 300,000 A Misc manufacturing overhead incurred 480,000 C ava basingoon brn strypa Manufacturing overhead applied 450,000 Good units completed 875,000 Spoiled units (normal) 25,000 Spoiled units (abnormal, incomplete) 10,000 leistas furoj se 2,000 Cor Rework (normal) Rework (abnormal) 8,000 C Units sold 850,000 Period expenses 500,000 C Boussard had no beginning inventories of any kind last period. The beginning balance in the cash account was $1,000,000. Make all journal entries in the normal costing system for the period and post them to t-accounts.
To solve this problem, we need to analyze the given information and prepare journal entries for the various transactions. Here are the journal entries for Boussard Company:
1. Direct Materials Purchases (A indicates paid on account):
Debit: Raw Materials Inventory - Direct Materials Purchases ($200,000)
Credit: Accounts Payable ($200,000)
2. Indirect Materials Purchases (A indicates paid on account):
Debit: Raw Materials Inventory - Indirect Materials Purchases ($12,000)
Credit: Accounts Payable ($12,000)
3. Direct Materials Used:
Debit: Work in Process Inventory ($180,000)
Credit: Raw Materials Inventory - Direct Materials Purchases ($180,000)
4. Indirect Materials Used:
Debit: Work in Process Inventory ($10,000)
Credit: Raw Materials Inventory - Indirect Materials Purchases ($10,000)
5. Direct Labor (A indicates paid in cash):
Debit: Work in Process Inventory ($300,000)
Credit: Cash ($300,000)
6. Miscellaneous Manufacturing Overhead Incurred (C indicates paid in cash):
Debit: Manufacturing Overhead ($480,000)
Credit: Cash ($480,000)
7. Manufacturing Overhead Applied:
Debit: Work in Process Inventory ($450,000)
Credit: Manufacturing Overhead ($450,000)
8. Spoiled Units (Normal):
Debit: Cost of Goods Sold ($2,000)
Credit: Work in Process Inventory ($2,000)
9. Rework (Normal):
Debit: Work in Process Inventory ($8,000)
Credit: Cost of Goods Sold ($8,000)
10. Units Sold:
Debit: Accounts Receivable ($850,000)
Credit: Sales Revenue ($850,000)
11. Period Expenses (C indicates paid in cash):
Debit: Period Expenses ($500,000)
Credit: Cash ($500,000)
12. Work in Process Inventory Closing Entry:
Debit: Work in Process Inventory ($850,000)
Credit: Cost of Goods Sold ($850,000)
13. Cost of Goods Sold Closing Entry:
Debit: Cost of Goods Sold ($2,000)
Credit: Finished Goods Inventory ($2,000)
14. Finished Goods Inventory Closing Entry:
Debit: Finished Goods Inventory ($875,000)
Credit: Work in Process Inventory ($875,000)
15. Cash Closing Entry:
Debit: Cash ($850,000)
Credit: Accounts Receivable ($850,000)
16. Closing Entry for Manufacturing Overhead (Underapplied):
Debit: Cost of Goods Sold ($30,000)
Credit: Manufacturing Overhead ($30,000)
Please note that the t-accounts can be constructed by summarizing the journal entries and posting the debits and credits to the respective accounts.
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On June 1, 2020, JetCom Inventors Inc issued a $470,000 9%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020 Required: a. Calculate the issue price of the bond assuming a market interest rate of 10%. (Do not round Intermediate calculations. Round the final answer to the nearest whole dollar.) los pobe of the bond b. Using the effective interest method, prepare an amortization schedule. (Do not round Intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)
a. To calculate the issue price of the bond, we need to determine the present value of the bond's future cash flows. The bond has a face value of $470,000, a stated interest rate of 9%, and a maturity period of three years. The market interest rate is 10%.
Using the present value formula for a bond, the bond issue price can be calculated as follows:
PV = C × [1 - (1 + r)^(-n)] / r + M / (1 + r)^n
Where:
PV = Present value or bond issue price
C = Periodic interest payment
r = Market interest rate per period
n = Number of periods
M = Face value of the bond
In this case, the periodic interest payment is calculated as $470,000 × 9% / 2 = $21,150 (since interest is payable semiannually), the market interest rate is 10% / 2 = 5% per period, and the number of periods is 3 years × 2 = 6 periods.
Plugging in the values, we have:
PV = $21,150 × [1 - (1 + 5%)^(-6)] / 5% + $470,000 / (1 + 5%)^6
Calculating this expression will give us the bond issue price.
PV = $104,415 + $383,864
PV = $488,279
Therefore, the bond issue price is $488,279.
b. The amortization schedule can be prepared using the effective interest method. Here's the schedule:
Period Interest Payment Interest Expense Amortization Carrying Value
1 $21,150 $24,414 -$3,264 $491,936
2 $21,150 $24,597 -$3,447 $495,383
3 $21,150 $24,786 -$3,636 $498,747
4 $21,150 $24,981 -$3,831 $502,018
5 $21,150 $25,181 -$4,031 $505,187
6 $21,150 $25,388 -$4,238 $508,249
Note: The negative amortization indicates a decrease in the carrying value of the bond.
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