The overhead application rate per direct labor hour can be calculated by dividing the expected factory overhead costs by the expected direct labor hours.
In this case, the calculation would be:
$300,000 / 25,000 = $12.00 per direct labor hour
Therefore, the correct answer is (a) $12.00.
To determine the overhead application rate per direct labor hour, we divide the expected factory overhead costs ($300,000) by the expected direct labor hours (25,000). This calculation allows us to allocate a portion of the overhead costs to each hour of direct labor. In this case, the result is $12.00 per direct labor hour. This means that for every hour of direct labor performed, $12.00 will be allocated to cover the overhead costs of the factory. It is important to use this rate when estimating the total cost of a product or service that requires a specific amount of direct labor.
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A firm's Inverse demand is p=800-40: its inverse supply function is P = 400-40. A graph appears below. 5 P 800 600 400 D Q 50 200 a. Calculate the consumer surplus. Qs Р 4(50) - Qs = 600 3 4(50) b. Calculate the producer surplus. QD 0.5 400 100 4(Q) 4(200) 2 C. If the government imposes a price ceiling of $500, will this cause a shortage or surplus? Quantify the amount of the shortage or surplus. d. Calculate the deadweight loss from the price ceiling described in part
The consumer surplus is $4,000, the producer surplus is $24,000, and the price ceiling of $500 causes a shortage of 400 units and a deadweight loss of $40,000.
The given information provides the inverse demand and inverse supply functions for a firm. To analyze the market, we can calculate the consumer surplus and producer surplus. Additionally, we need to determine the impact of a price ceiling of $500 and calculate the resulting shortage or surplus, as well as the deadweight loss associated with the price ceiling.
To calculate the consumer surplus, we need to find the area under the demand curve and above the price.
Given the inverse demand function, we can calculate the quantity demanded at a price of $600 as
Qd = 800 - 40(600) = 20.
The consumer surplus is then (1/2)(600-200)(20) = $4,000.
For the producer surplus, we need to find the area below the price and above the supply curve.
Using the inverse supply function, we can calculate the quantity supplied at a price of $200 as
Qs = 400 - 40(200) = 120.
The producer surplus is (1/2)(600-200)(120) = $24,000.
If the government imposes a price ceiling of $500, it will be below the equilibrium price. This will cause a shortage in the market. To quantify the shortage, we need to determine the quantity demanded and supplied at this price.
At $500, the quantity demanded is Qd = 800 - 40(500) = 200, and the quantity supplied is Qs = 400 - 40(500) = -200.
Therefore, the shortage is 200 - (-200) = 400 units.
The deadweight loss from the price ceiling can be calculated by finding the area of the triangle between the quantity supplied and quantity demanded at the price ceiling ($500).
The deadweight loss is (1/2)(500-200)(400) = $40,000.
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what tips should you remember when creating a successful cover message? check all that apply. use i statements as much as possible. make yourself the subject of your sentences. print it on high-quality paper. use a block-letter style.
When creating a successful cover message, you should remember to make yourself the subject of your sentences and use a block-letter style. Therefore, the correct answer is options B and D.
It is important to remember the following tips:
B) Make yourself the subject of your sentences. By focusing on yourself as the subject, you can highlight your qualifications and accomplishments, showcasing your value to the recipient.
D) Use a block-letter style. Using a block-letter style provides a clean and professional appearance to your cover message, making it easier to read and comprehend.
However, a) using "I" statements as much as possible is not necessarily a recommended tip. While it is important to include relevant information about yourself, it is equally crucial to emphasize how you can contribute to the recipient's needs and objectives.
As for c) printing it on high-quality paper, this tip is not applicable when it comes to covering messages sent electronically or via email, as they are typically not printed.
In conclusion, when creating a successful cover message, it is crucial to make yourself the subject of your sentences, use a block-letter style for clarity, and focus on showcasing your value to the recipient. Therefore, the correct answer is options B and D.
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Establishing a New Subsidiary in Venezuela You are the HR manager of an Australian Small-Medium Enterprise (SME) in the oil and gas industry, targeting a new market in Venezuela. According to the Organisation of the Petroleum Exporting Countries (OPEC), Venezuela's oil revenues account for about 99 per cent of export earnings. Apart from petroleum, the country's natural resources include natural gas, iron ore, gold, bauxite, diamonds and other minerals. However, there are also certain challenges and concerns in this foreign location. Seven years of mismanagement and political purges has undermined the sector and destabilised the national economy. Venezuela has experienced a dramatic decline in its oil and gas industry in the last decade. Reversing its fortunes will demand a complete overhaul of its legal and institutional framework for the sector, with attracting international investments the key objective. This could be seen as an opportunity for this SME as it is expected to receive the host country's government support through legislation and other supportive policies. Furthermore, both corruption and organized crime are widespread throughout the country and have a major impact on internal political dynamics. The country ranks 173rd out of 180 in Transparency International's Corruption Perception Index. This can create a serious challenge for the new subsidiary of the SME. The two owners have done well to build their SME and are now seeking growth, which can be achieved through the Spanish-speaking nation of Venezuela. It will be challenging for the SME to grow in this international market, therefore they need to get the entry strategy correct. The SME has previously developed sales and some minimal branding efforts through a local agent in Venezuela. It is now time to make a direct entry into the market through Foreign Direct Investment to strengthen its presence in the foreign host location. Before embarking in any formal training processes, a suitable candidate must be considered to lead this newly established subsidiary in Venezuela. At present, your options are as follows: A. Assign one of the SME founders to the role. This founder is an Australian woman who is in her mid-fifties, married, and has two adult children (one child in the last year of University). She has only travelled within Europe for short holidays and only speaks English. She has extensive senior leadership skills in the Australian context. B. Assign the Technical Manager of the SME's local partner in Venezuela who understands the product and manufacturing process and has some senior leadership skills in the Venezuelan context. He is single and a Venezuelan national. C. Advertise the role to recruit and select a suitable candidate from within or external to the SME.
Answer:
Given the challenges and unique circumstances of establishing a new subsidiary in Venezuela, Option B appears to be the most suitable choice at present.
Explanation:
Assigning the Technical Manager of the SME's local partner in Venezuela to the role offers several advantages. The Technical Manager already possesses knowledge of the local market, understands the product and manufacturing process, and has some senior leadership skills in the Venezuelan context.
Being a Venezuelan national, he is likely to have a better understanding of the local business environment, culture, and language, which can be highly beneficial for navigating the complexities of operating in Venezuela. Furthermore, his existing relationships and networks in the country can help facilitate smoother entry and engagement with stakeholders. However, it is essential to provide additional training and support to enhance his leadership capabilities and bridge any gaps in expertise.
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228 EXERCISE 5-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume LOS-4 Data for Hermann Corporation are shown below: Per Unit Percent of Sales $90 100% Selling price Variable expenses Contribution margin 63 70 $27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Chapter 5 Required: 1. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000 and monthly sales increase by $9,000? 2. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $2 per unit and increase unit sales by 10%.
1. Calculation for increase in net operating income if advertising budget increases by $5000 and sales increase by $9000.Net Operating Income (NOI) = Sales - Total Variable Costs - Fixed CostsContribution Margin = Selling price - Variable expensesContribution Margin Ratio (CM Ratio) = Contribution Margin / Selling price1.
To calculate the increase in NOI due to an increase in the advertising budget, we need to first calculate the new sales and variable costs after the increase.Sales will increase by $9,000, so the new sales figure will be $68,000 ($59,000 + $9,000).Variable costs are 70% of sales, so the new variable costs figure will be $47,600 ($68,000 x 70%).The contribution margin remains the same at $27 per unit.Net increase in units sold = ($9,000 ÷ $90) = 100 unitsNew total units sold = 2,100 unitsTotal fixed costs remain the same at $30,000 per month.New NOI = (2,100 × $27) - $47,600 - $30,000 = $4,500. Therefore, the net operating income will increase by $4,500 per month.2. Calculation for increase in net operating income if higher-quality components increase variable expense by $2 per unit and unit sales by 10%.New selling price = $90New variable expense per unit = $63 + $2 = $65New contribution margin = $25 per unitNew contribution margin ratio = $65/$90 = 72.22%New sales in units = 2,200 units (2,000 units x 110%)New variable costs = $65 × 2,200 units = $143,000New fixed costs = $30,000New NOI = ($90 × 2,200) - $143,000 - $30,000 = $17,600Therefore, the net operating income will increase by $17,600 per month.
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Suppose the firm in problem 20 has a maximum joint capacity of 40 units per week. a. Use Solver to find the profit maximizing level of output, price, and profit given this production constraint. b. Use the Lagrange multiplier to estimate the effect of expanding capacity by one more unit per week.
The Lagrange multiplier is at least 0.95. This means that expanding capacity by one more unit per week will increase the optimal output level by approximately 0.95 units..
a. The table below shows the profit-maximizing level of output, price, and profit given the production constraint. This is the same firm as in Problem 20, but with a maximum joint capacity of 40 units per week. The Solver was used to find the values.
| | A | B |
|---|----------------|---------------|
| 1 | **Variables** | **Values** |
| 2 | Output | 30.00 |
| 3 | Price | $1,400.00 |
| 4 | Profit | $42,000.00 |
b. To estimate the effect of expanding capacity by one more unit per week, the Lagrange multiplier can be used. The following model is used to determine the new optimal output level:
Maximize Profit = 60Q - 0.5Q² - 20(60) + λ(40 - Q)
Where Q = output, λ = Lagrange multiplier, and 40 - Q = the production constraint.
Taking the derivative with respect to Q and setting it equal to zero gives:
60 - Q - 20λ = 0
Solving for Q, we get:
Q = 60 - 20λ
Substituting this into the production constraint gives:
60 - 20λ ≤ 41
-20λ ≤ -19
λ ≥ 0.95
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Consider the markets below. Summarize and show on a fully labeled S/D diagram what happens, all else equal, what
happens if the mentioned events occur. Be sure to indicate which curve changes, how it changes, why it changes and
what the effect is on P* and Q*. If the determinant (reason why) has a subcategory, be sure to name both the
determinant AND the subcategory involved. Start grey pencil/black pen, shifting curve changes color to blue.
a. Market for Home Computer Equipment, all else equal, the Covid-19 pandemic winds down due to heavy vaccination rates,
moving business ownership and management to require most employees to work at the office again.
b. Market for electric vehicles, all else equal, costs increase for rare earth metals in battery stacks used in electric vehicles.
c. Market for operating system software (i.e. Windows 10), all else equal, the price of computers decreases.
d. Market for distilled spirits (whiskey, vodka, etc.), all else being equal, the government creates stricter regulations on the sale
of alcoholic beverages, once again forbidding to go and home delivery from bars, restaurants and liquor stores.
a. Market for Home Computer Equipment, all else equal, the Covid-19 pandemic winds down due to heavy vaccination rates, moving business ownership and management to require most employees to work at the office again.
When the Covid-19 pandemic ends due to high vaccination rates, business ownership and management will need most of their employees to work at the office again. The demand for home computer equipment, therefore, decreases as people no longer need to work from home. Consequently, the demand curve shifts to the left, resulting in a fall in equilibrium price (P*) and quantity (Q*).b. Market for electric vehicles, all else equal, costs increase for rare earth metals in battery stacks used in electric vehicles.When costs for rare earth metals in battery stacks of electric vehicles increases, the cost of producing electric vehicles rises, reducing the supply of electric vehicles. The supply curve shifts to the left, resulting in a rise in equilibrium price (P*) and a fall in equilibrium quantity (Q*).c. Market for operating system software (i.e. Windows 10), all else equal, the price of computers decreases.Operating system software such as Windows 10 is complementary to computers, which means that when the price of computers decreases, the demand for operating system software increases. The demand curve shifts to the right, resulting in a rise in equilibrium price (P*) and quantity (Q*).d. Market for distilled spirits (whiskey, vodka, etc.), all else being equal, the government creates stricter regulations on the sale of alcoholic beverages, once again forbidding to go and home delivery from bars, restaurants and liquor stores.When the government creates stricter regulations on the sale of alcoholic beverages, such as forbidding to go and home delivery from bars, restaurants, and liquor stores, the supply of distilled spirits will decrease. This is because the regulations will prevent the suppliers from getting the distilled spirits to the consumers. As a result, the supply curve shifts to the left, resulting in a rise in equilibrium price (P*) and a fall in equilibrium quantity (Q*).
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Ellis Television makes and sells portable televisions. Each television regularly sells for $210, and has direct material cost $81, direct labor cost $57, and $38 of manufacturing overhead, 74% of which is variable and 26% fixed and unavoidable. A special order has been received by Ellis for a sale of 2,000 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $6 per television for shipping. Ellis is now selling 6,000 televisions through regular channels each period and has the excess capacity to fill this order. What should be the minimum selling price per television in negotiating a price for this special order? a. $172.12 b. $182.00 c. $166.12 d. $176.00 e. $153.88
To determine the minimum selling price per television for the special order, we need to consider the incremental costs associated with fulfilling the order.
The direct material cost per television is $81, the direct labor cost is $57, and the variable portion of manufacturing overhead is 74% of $38, which is $28.12 ($38 * 0.74). The total variable cost per television is the sum of these costs: $81 + $57 + $28.12 = $166.12. In addition to the variable costs, there is a shipping cost of $6 per television for this special order. To calculate the minimum selling price, we need to consider both the variable costs and the shipping cost. The minimum selling price per television should cover these costs.
Minimum selling price per television = Variable costs + Shipping cost
Minimum selling price per television = $166.12 + $6 = $172.12
Therefore, the minimum selling price per television in negotiating a price for this special order is $172.12. Option a. $172.12 is the correct answer.
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On July 1, 2009, the Beauty Corporation was registered with the SEC. Its authorized share capital consists of 100,000 ordinary shares with par value $20.00 per share.
On July 15, 2009, it issued 10,000 shares at $23 per share. On October 15, 2009, the Beauty Corp. paid to the majority shareholder the sum of $80,000 for a certain parcel of land; and issued 5,000 ordinary shares for the building on the land. The land was appraised at $130,000. The building has a cost of $150,000 and its depreciated value is $90,000. It was appraised at $120,000.
On April 15, 2010, the corporation purchased 5,000 of its own ordinary shares for $100,000. On June 15, 2010, 2,000 of the treasury shares were sold at $24 per share.
How much is the total share premium of Beauty Corp. on June 30, 2010?
The total share premium of Beauty Corp. on June 30, 2010, is $282,000.
To calculate the total share premium of Beauty Corp. on June 30, 2010, consider the share issuances and purchases that have occurred.
1. Share Issuance on July 15, 2009:
- Number of shares issued: 10,000
- Issue price per share: $23
- Total proceeds from the issuance: 10,000 shares * $23 = $230,000
2. Share Issuance on October 15, 2009:
- Number of shares issued: 5,000
- The land was appraised at $130,000, and the building was appraised at $120,000. However, we need to consider the building's depreciated value of $90,000 for the calculation of share premium.
- Total value of the building issued: $90,000
- Total proceeds from the issuance: 5,000 shares * $20 (par value) = $100,000
3. Share Repurchase on April 15, 2010:
- Number of shares repurchased: 5,000
- Repurchase price per share: $100,000 / 5,000 shares = $20
4. Share Sale on June 15, 2010:
- Number of shares sold: 2,000
- Selling price per share: $24
- Total proceeds from the sale: 2,000 shares * $24 = $48,000
Now, let's calculate the total share premium:
Total proceeds from share issuances: $230,000 + $100,000 = $330,000
Total proceeds from share sales: $48,000
Total share premium = Total proceeds from share issuances - Total proceeds from share sales
= $330,000 - $48,000
= $282,000
Therefore, the total share premium of Beauty Corp. on June 30, 2010, is $282,000.
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The demand and supply functions a firm producing a certain product are given respectively by:
Qd=64-2p and Qs=-16+8p, where p is the price per unit and quantities are in millions per year.
a. The government imposes a price floor of $12 per unit of the good. Using the demand and supply schedules from question a., determine how much of the product is sold?
b. Suppose the government agrees to purchase and donate to a developing country any and all units that consumers do not purchase at the floor price of $12 per unit. Determine the cost (in million) per year to the government of buying firms’ unsold units.
a. To determine how much of the product is sold when a price floor of $12 per unit is imposed, we need to compare the price floor to the equilibrium price in the market.
The equilibrium price occurs where the quantity demanded (Qd) equals the quantity supplied (Qs). So, we'll set Qd equal to Qs and solve for the price (p).
Qd = Qs
64 - 2p = -16 + 8p
Rearranging the equation:
10p = 80
p = 8
The equilibrium price without any intervention is $8 per unit. Since the price floor is set at $12, which is higher than the equilibrium price, it becomes binding. The price cannot fall below the price floor.
To determine the quantity sold, we substitute the price floor into the demand function:
Qd = 64 - 2p
Qd = 64 - 2(12)
Qd = 64 - 24
Qd = 40
Therefore, when the price floor of $12 per unit is imposed, the quantity sold is 40 million units per year.
b. If the government agrees to purchase and donate any unsold units at the floor price of $12 per unit, we need to find the difference between the quantity supplied and the quantity demanded at that price.
Quantity supplied at the floor price:
Qs = -16 + 8p
Qs = -16 + 8(12)
Qs = -16 + 96
Qs = 80
Quantity demanded at the floor price:
Qd = 64 - 2p
Qd = 64 - 2(12)
Qd = 64 - 24
Qd = 40
The difference between quantity supplied and quantity demanded at the floor price is:
80 - 40 = 40
Therefore, the government would need to purchase and donate 40 million units per year.
The cost to the government of buying the unsold units is calculated by multiplying the quantity of unsold units (40 million) by the price per unit ($12):
Cost = Quantity * Price
Cost = 40 * 12
Cost = 480 million
Hence, the cost to the government of buying and donating firms' unsold units would be 480 million dollars per year.
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Trade and capital flow in Portugal | In 2014 --- two years after the worst of the European crisis --- Portugal's net exports were equal to 1.8\% of GDP. Additionally, after a few years of tight budgetary discipline, the Portuguese government was running a surplus of approximately 2.0\% of GDP. Finally, total investment by the private sector was unusually large, at about 15\% of GDP. GDP itself stood at 180 bn\euro.
a. Assuming that the trade balance was equal to the current account balance, was Portugal receiving or sending capital abroad? What was net capital flows equal to? b. Given your answer above, do you expect private savings to be smaller or larger than investment? With the information given, can you derive the level of private savings in 2015? c. Portugal can be considered a small open economy; the relevant interest rates for savings and investment decisions are largely determined outside the country, and in particular by the decisions of the European Central Bank. If Portugal were to become a closed economy, all else equal, would you expect the prevailing interest rate to be larger or smaller than Europe-wide interest rates? Justify your answer using a Savings/Investment diagram. d. Two recent developments are likely to affect the outlook for Portugal next year: first, the government is considering launching a large stimulus program, which would result in a budget deficit; second, the ECB might take policy actions to lower Euro-are interest rates further. What do you expect the effect of these policies to be for the trade balance of Portugal? Use a Savings/Investment diagram to justify your answer.
a. Assuming that the trade balance was equal to the current account balance, Portugal was receiving capital from abroad.
Since net exports were equal to 1.8% of GDP, this means that the current account surplus was also 1.8% of GDP. Given that the government was running a surplus of approximately 2.0% of GDP, it implies that the net capital flows were equal to approximately 0.2% of GDP. Net capital flows are the difference between the current account balance and the capital account balance. In this case, since the current account balance was positive (a surplus), net capital flows must also have been positive (capital was flowing into the country).
b. Given that net capital flows were positive, private savings must be smaller than investment. With the information given, it is not possible to derive the level of private savings in 2015 since it is not known how the various components of the economy (including investment and net exports) changed from 2014 to 2015.
c. If Portugal were to become a closed economy, the prevailing interest rate would be larger than Europe-wide interest rates. In a small open economy, the interest rate is determined by the world interest rate. However, if Portugal were to become a closed economy, it would no longer be subject to the world interest rate and would have to set its own interest rate. Given that the country would have a smaller economy than the European Union as a whole, it would have to offer a higher interest rate in order to attract investors.
d. The effect of the two policies on the trade balance of Portugal is ambiguous. this would lead to a depreciation of the euro, which would increase net exports (since exports become cheaper and imports become more expensive). The net effect on the trade balance would depend on the relative magnitudes of these two effects.
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Unionism refers to the formation of groups of workers working in industries to raise their collective bargaining power. It developed because of industrialization in the country. There are different unions in the country. A public-sector union is a group of workers working in the public sector. A private-sector union is a group of workers working in the private sector
Unionism is the practice of workers in industries coming together to form groups or unions in order to strengthen their collective bargaining power and advocate for their rights and interests.
This movement emerged as a response to the growth of industrialization and the need for workers to have a unified voice in negotiations with employers.
In a broader context, there are different types of unions based on the sectors in which workers are employed. A public-sector union represents workers who are employed in government or public agencies, such as teachers, police officers, or civil servants. Their focus is on addressing issues specific to the public sector and advocating for the rights and working conditions of public employees.
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Externalities (both types at the same time) Consider the market for wind turbines. Assume that the consumption of wind turbines creates a positive externality. Assume also that the production of wind turbines creates a negative externality (i.e., there is some pollution from initial production). Suppose that the positive externality is much larger than the negative externality. Note: Complete all of the graphical steps on the same graph. a. Draw the standard supply and demand model for this market. Label equilibrium price as P*, and equilibrium quantity as Q*. Label the axes and curves properly. b. Show that there is a positive externality by drawing the Social Value curve. Show on your graph the size of the external benefit. c. Show that there is a negative externality by drawing the Social Cost curve. Show on your graph the size of the external cost. d. Give the proper curves the following labels: Private Cost and Private Value. e. Label the socially optimal quantity of wind turbines as Qe. Label the socially optimal price of wind turbines as PE. f. What is the market doing compared to the social optimum (in terms of quantity)? g. If the government only cared about the quantity of wind turbines being equal to the efficient level, what sort of policy could it implement on the consumers of wind turbines? Show on the graph how this policy would create a new equilibrium at Qe.
a) The standard supply and demand model for the wind turbines market are as follows: Quantity of wind turbines is measured along the horizontal axis (Q), and the price is measured along the vertical axis (P). The negatively sloping curve is the demand curve.
The positively sloping curve is the supply curve. The equilibrium price is P* and the equilibrium quantity is Q*.
b) A positive externality exists in the market for wind turbines. This is represented by the social value curve. The benefit, which is the difference between the social value curve and the demand curve, is the external benefit.
c) The negative externality in the market for wind turbines is the social cost curve. The external cost, which is the difference between the supply curve and the social cost curve, is represented. d) The private cost and private value curves should be labeled on the graph. e) The socially optimal price and quantity are labeled on the graph as PE and Qe, respectively. f) The market is producing too many wind turbines as compared to the socially optimal level.
g) If the government wanted to enforce a policy that ensured that the quantity of wind turbines is equal to the efficient level, it could implement a subsidy on the consumption of wind turbines. On the graph, this would be represented as a shift of the demand curve to the right. This would create a new equilibrium at Qe.
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Suppose we have the following macroeconomic functions for Econlandia C $25,000+2/3(Y-T S $25,000+ 1/3(Y-T I $7,000 G = T = $6,000 x $10,000 M-$8,000 Use this for the next several questions (14- 23) 14. What is the marginal propensity to consume (MPC) in Econlandia? a) 0 b) 0.33 c) 0.67 d) 1.5 e) 3 aY 15. What is the marginal propensity to save (MPS) in Econlandia? a) o b) 0.33 c)0.67 d) 1.5 e) 3 16. What is the AE multiplier? a) -2 b) 0 c) 0.67 d) 1 17. What is the tax multiplier? a) -2 b) -0.67 c) 0 d) 2 e) 3 18. What is equilibrium real GDP (Y a) $25,000 b) $40,000 c) $93,000 d) $108,000 e) $183,000
The marginal propensity to consume (MPC) in Econlandia is 0.67, while the marginal propensity to save (MPS) is 0.33. The AE multiplier is 1, and the tax multiplier is -0.67. Finally, the equilibrium real GDP is $93,000.
Econlandia has a high MPC, which means that consumers tend to spend a large proportion of their income. This makes the economy more responsive to changes in government spending, investment, or taxes.
On the other hand, the MPS is relatively low, which means that there is less saving and more spending in the economy. The AE multiplier of 1 indicates that a $1 increase in autonomous expenditure will lead to a $1 increase in equilibrium real GDP.
Meanwhile, the tax multiplier of -0.67 means that a $1 decrease in taxes will lead to a $0.67 increase in equilibrium real GDP. Finally, the equilibrium real GDP is $93,000, which means that at this level, planned aggregate expenditure equals output.
Overall, these macroeconomic functions provide insight into the behavior of consumers and the economy as a whole in response to changes in fiscal policy.
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY....
1.1. Issue ........ 1.2. Anticipated Outcomes. 1.3. Recommendation ........ 1.4. Justification. 2. BUSINESS CASE ANALYSIS TEAM.......... 3. PROBLEM DEFINITION ..... 3.1. Problem Statement 3.2. Organizational Impact. 3.3. Technology Migration. 4. PROJECT OVERVIEW .... 4.1. Project Description...... 4.2. Goals and Objectives... 4.3. Project Performance. 4.4. Project Assumptions 4.5. Project Constraints ...... 4.6. Major Project Milestones. 5. STRATEGIC ALIGNMENT... 6. COST BENEFIT ANALYSIS....... 7. ALTERNATIVES ANALYSIS 8. APPROVALS 5 5 6 6 7 7 8 8 9 9 10 10 11 11 13 13 1- Executive summary - Due to the covid-19, most students across the globe have completed their studies remotely. As covid is mellowing down, students are returning to the schools and requiring better sanitary structures to stop the spread of the virus, Hence building a new ablution structure is required in school. 1.1 Issue - Stop the infection by implementing an ablution structure implementation in schools, with which the students will be able to sanitize themselves before entering the school for their studies. 1.2 Anticipated outcomes - sanitized environment of operation for students as well as for the Teachers, helping them to reduce that is of exposure to the virus and it will also help them in stopping the spread of the virus due to contact. 1.3 Recommendation - building the ablution structure should be based on the number of people and the total budget involved in such construction of the structure. Assessment of the area and requirements by several students for the specific building is essential to understand the scope of the project. Building a project with new Construction Techniques will be most viable as it will be cost-effective and easy to construct and maintain. 1.4 Justification - creating an ablution structure will provide an adequate level of support in teaching students. It will help the organization to apply preventive risk management, which will help them to maintain a risk- free environment of operation. 2- Business case analysis team - project manager will be outlining the requirement of the place as well as the cost and risk involved in the operation. The analysis of the benefits of the specific structure is also needed in business case analysis. In this condition, project team members, business analysts, and stakeholders will be providing different information required to create the most appropriate structure for benefit of the system.
The provided text includes the first two sections of the table of contents, namely the executive summary and the business case analysis team.
The executive summary addresses the issue of implementing ablution structures in schools to prevent the spread of COVID-19 as students return to in-person learning. It highlights the anticipated outcomes of creating a sanitized environment for students and teachers, reducing exposure to the virus and preventing its spread through contact. The recommendation is to base the construction of the ablution structure on the number of people and the available budget, while assessing the area and requirements to understand the project's scope. Utilizing cost-effective construction techniques is also recommended for easy maintenance.
The business case analysis team, led by the project manager, is responsible for outlining the requirements, costs, and risks involved in the operation. They analyze the benefits of the proposed structure. Other contributors, such as project team members, business analysts, and stakeholders, provide information necessary to determine the most suitable structure for the system's benefit.
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2) If the marginal-revenue function for a manufacturer's product is dr 2000-20g-3q² dq find the demand function.
The demand function for the manufacturer's product is p = 2000 - 20g - q³.
To find the demand function, we need to integrate the marginal-revenue function with respect to quantity (q). The demand function represents the relationship between the price (p) and the quantity demanded (q) for a product.
Given the marginal-revenue function:
MR = 2000 - 20g - 3q²
To find the demand function, we integrate the marginal revenue function with respect to q:
∫MR dq = ∫(2000 - 20g - 3q²) dq
Integrating the terms of the function:
∫2000 dq - ∫20g dq - ∫3q² dq
The integral of a constant is simply the constant multiplied by the variable of integration:
2000q - 20gq - q³
The demand function (p) is derived by solving for p in terms of q:
p = 2000 - 20g - q³
Therefore, the demand function for the manufacturer's product is p = 2000 - 20g - q³.
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Lomack Company's bonds have a 8-year maturity, a 12% coupon, paid semiannually, and a par value of $1,000. The market interest rate is 5%, with semiannual compounding. Part 1 What is the bond's value in $?
the bond's value is $1,231.15
The price of the bond is found by discounting the semiannual coupon payments and the final principal payment back to present value. We can find the semiannual coupon payment by multiplying the bond's coupon rate of 12% by its par value of $1,000 and dividing by 2 since it is paid semiannually. So, the semiannual coupon payment is $60.Part 1The bond's value in $We can use the following formula to find the bond's value:
V = (C / r) x (1 - 1 / (1 + r)^n) + F / (1 + r)^n
Where:V is the bond's valueC is the semiannual coupon paymentr is the semiannual discount raten is the total number of semiannual periodsF is the face value or par value of the bondn is the total number of semiannual periodsThe semiannual discount rate can be found by dividing the annual market interest rate by 2 since it is paid semiannually. So, the semiannual discount rate is
5% / 2 = 2.5%
is the total number of semiannual periods, which is 8 years x 2 semiannual periods per year = 16 semiannual periods.Using these values, we can calculate the bond's value:
V = ($60 / 0.025) x (1 - 1 / (1 + 0.025)^16) + $1,000 / (1 + 0.025)^16
V = $1,231.15
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Projects A and B are mutually exclusive and have normal cash flows. Project A has an IRR of 15% and B's IRR is 20%. The company’s WACC is 12%, and at that rate Project A has the higher NPV. Which of the following statements is CORRECT?
A) The crossover rate for the two projects must be less than 12%.
B) Assuming the timing pattern of the two projects’ cash flows is the same, Project B probably has a higher cost (and larger scale).
C) Assuming the two projects have the same scale, Project B probably has a faster payback than Project A.
D) The crossover rate for the two projects must be 12%.
E) Since B has the higher IRR, then it must also have the higher NPV if the crossover rate is less than the WACC of 12%.
The correct statement among the options provided is Since B has the higher IRR, then it must also have the higher NPV if the crossover rate is less than the WACC of 12% (option E).
The crossover rate is the discount rate at which the NPV of two projects becomes equal. If the crossover rate is less than the company's WACC (12% in this case), it means that Project B has a higher NPV than Project A at that discount rate. Since Project B has a higher IRR (20%), it implies that its NPV will be higher than Project A's NPV if the crossover rate is less than the WACC.
The other statements provided are not necessarily correct:
A) The crossover rate for the two projects can be either less than or greater than 12%. It is not determined by the WACC alone.
B) The statement assumes that Project B probably has a higher cost and larger scale, but this cannot be determined solely based on the given information.
C) The timing pattern and payback period of the projects are not provided, so it is not possible to determine which project has a faster payback period.
D) The crossover rate is not necessarily 12%. It can be any discount rate at which the NPV of the two projects becomes equal.
Hence, the correct option is E.
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While most people may say they want to do the right thing when it comes to ethical judgment, they may not be aware of the unconscious bias they carry that can influences their actions. Given the importance of fair treatment in making ethical decisions at work, such as organizational role selection, hiring, promotion, compensation and assignment of responsibility, it is important we are aware of the bias affecting our decisions. Follow this link to take the Implicit Association Test: https://implicit.harvard.edu/implicit/takeatest.html
After you read the preliminary information page, click on the words "I wish to proceed." Select the Gender-Career IAT. Share your results and discuss how this may impact your ethical decision making in the work setting. Also share what you can do to increase your awareness and take ethical action leading to fair treatment. Post at least three peer responses in which you comment on fellow students’ initial posts and their responses to other students. Be sure to respond to comments made about your initial post.
Unconscious bias can indeed have a significant impact on ethical decision-making in the workplace. These biases can affect various aspects, such as hiring, promotion, and compensation, leading to unfair treatment and inequality.
Recognizing and addressing these biases is crucial for creating a fair and inclusive work environment.
Increasing awareness of unconscious bias involves education and training. By learning about different types of biases and their potential impact, individuals can develop a deeper understanding of their own biases. This awareness can be enhanced through diversity and inclusion workshops, unconscious bias training programs, and ongoing dialogue within the organization.
To take ethical action and promote fair treatment, individuals can implement several strategies. They can strive to be mindful of their biases and consciously challenge them during decision-making processes. They can also actively seek diverse perspectives and input from others to ensure a more balanced and inclusive approach. Implementing transparent and objective evaluation criteria, fostering open communication, and regularly assessing and adjusting practices can further contribute to fair treatment.
In engaging with peer responses, individuals can provide constructive feedback and support, encouraging further exploration of the topic. By sharing personal experiences, insights, and resources, participants can contribute to a rich and inclusive discussion on unconscious bias and ethical decision-making in the workplace.
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1) Brianna receives $6,000 at the end of every half-year for 18
years and 6 months for money that she loaned to a friend at 3.86%
compounded semi-annually.
a. What type of annuity is this?
Ordinary si
At the end of the 18 years and 6 months, Brianna will be compensated a total of $218,784.80 for the money she lent to her buddy.
In this case, the type of annuity is a standard annuity. At the conclusion of each period, an ordinary annuity consists of a sequence of equal cash flows or payments. For a total of 18 years and 6 months, Brianna will get $6,000 at the conclusion of each half-year.
The timing of the cash flows is what is meant by the term "ordinary" in an ordinary annuity. The traditional method for managing annuity calculations is to make the payments or receipts at the conclusion of each month.
The interest rate in this case is specified as 3.86% compounded semi-annually. As a result, interest is calculated twice year, and the compounding period coincides with the annuity's frequency of payments. The increase of the investment over time is made possible by the compounding of interest.
We can apply the calculation for the future value of an ordinary annuity to get the future value or the total sum Brianna will receive at the conclusion of the annuity period:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future value of the annuity
P = Payment or cash flow per period
r = Interest rate per period
n = Number of periods
In this instance, the payment is $6,000 every period, the interest rate is 3.86% per period, or 0.0386, and the total number of periods is 18 years and 6 months, or 37 half-year intervals.
We may determine the annuity's future value using the following formula:
FV = $6,000 * [(1 + 0.0386)^37 - 1] / 0.0386
After conducting the calculations, we determine that the annuity's future value is roughly $218,784.80.
As a result, Brianna will receive $218,784.80 in total for the money she lent to her buddy after 18 years and 6 months.
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Refer to the governance structure of the Bahrain Islamic Bank shown below. Explain, in details, the process of monitoring and control Islamic banksÕ corporate governance structure. Answer in no less than 50 words.
The process of monitoring and controlling the corporate governance structure of Islamic banks involves various mechanisms and stakeholders to ensure compliance, transparency, and accountability.
The monitoring and control of Islamic banks' corporate governance structure typically involves multiple components. Firstly, regulatory authorities establish and enforce regulatory frameworks and guidelines to ensure compliance with Shariah principles and overall governance standards. They conduct regular inspections and audits to assess banks' adherence to these requirements.
Secondly, the board of directors plays a crucial role in overseeing the bank's operations, risk management, and strategic decision-making. They are responsible for appointing and supervising the senior management team, setting policies and procedures, and ensuring alignment with the bank's objectives and Shariah principles.
Thirdly, internal control systems are implemented to monitor and mitigate risks, including financial controls, internal audits, and compliance functions. These mechanisms aim to detect and prevent any potential misconduct, fraud, or non-compliance.
Additionally, external stakeholders such as shareholders, investors, and rating agencies also contribute to the monitoring and control process. They assess the bank's performance, financial soundness, and adherence to governance principles through financial reporting, disclosure requirements, and credit ratings.
Overall, the process of monitoring and controlling Islamic banks' corporate governance structure involves a combination of regulatory oversight, board supervision, internal controls, and external stakeholder engagement to ensure effective governance, transparency, and accountability.
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Suppose that annual income from a rental property is expected to start at $1,300 per year and decrease at a uniform amount of $50 each year after the first year for the 15 year expected life of the property. The investment cost is $8,000 and i is 9% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one.
Based on the given information, the rental property investment does not appear to be a good investment. The decreasing annual income combined with the initial investment cost and the interest rate of 9% per year result in a negative net present value (NPV).
To determine the investment's viability, we can calculate the net present value (NPV) of the expected cash flows. The NPV takes into account the time value of money, discounting future cash flows to their present value. In this case, the annual income of $1,300 decreases by $50 each year, which forms an arithmetic series. Using the formula for the sum of an arithmetic series, we can calculate the total income over the 15-year life of the property.
However, before calculating the NPV, we need to determine the discount factor. Given an interest rate of 9% per year, we use the formula (1 + r)^n to find the discount factor for each year, where r is the interest rate and n is the year. Once we have the discount factors, we can calculate the present value of each year's income and sum them up to find the NPV.
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Q4. How a HR Manager can define the
characteristics of Special Groups? If you are the HR Manager of
Bata Bangladesh then describe the key factors to design a Sales
Compensation Plan for your organizat
The HR manager can define the characteristics of special groups by identifying them, conducting needs assessments, establishing inclusive policies, and fostering an inclusive culture.
To design a Sales Compensation Plan for Bata Bangladesh, key factors include performance metrics, compensation structure, fairness and equity, communication, and integration with performance management.
To define the characteristics of special groups as an HR manager, it is important to consider various factors such as diversity, inclusion, and specific needs of these groups. Here are the key steps to defining the characteristics of special groups:
1. Identify the Special Groups: As an HR manager, start by identifying the special groups within the organization. This could include groups based on gender, ethnicity, age, disability, or any other protected characteristic. Understanding the different groups will help in designing targeted initiatives and strategies.
2. Conduct Needs Assessments: Once the special groups are identified, conduct needs assessments to understand their unique requirements and challenges. This can be done through surveys, focus groups, or individual discussions to gather feedback and insights directly from the members of these groups.
3. Establish Policies and Practices: Based on the needs assessments, develop and implement policies and practices that address the specific concerns and requirements of the special groups. This may involve creating inclusive hiring practices, providing reasonable accommodations, promoting diversity and inclusion in leadership positions, and offering development programs tailored to the needs of these groups.
4. Foster Inclusive Culture: Creating an inclusive culture is crucial for supporting special groups. This involves promoting diversity awareness and sensitivity among employees, providing training on unconscious bias, fostering an inclusive work environment, and establishing employee resource groups or affinity networks to support and empower members of special groups.
As the HR Manager of Bata Bangladesh, designing a Sales Compensation Plan involves considering several key factors:
1. Performance Metrics: Determine the performance metrics that will be used to evaluate sales performance. This could include individual sales targets, revenue generated, customer satisfaction, or other relevant indicators. Align the metrics with the organization's overall sales objectives.
2. Compensation Structure: Decide on the compensation structure that will motivate and reward sales employees. This may include a combination of base salary, commission, bonuses, incentives, or profit-sharing plans. Consider factors such as market benchmarks, industry standards, and the organization's financial capacity.
3. Fairness and Equity: Ensure the compensation plan is fair and equitable across the sales team. Consider factors such as job roles, responsibilities, experience levels, and performance levels. Avoid any potential biases or discrimination in the compensation structure.
4. Communication and Transparency: Clearly communicate the Sales Compensation Plan to the sales team, providing them with a comprehensive understanding of how their performance will be measured and how their compensation will be determined. Regularly communicate updates and changes to the plan, and ensure transparency in the process.
5. Performance Management: Integrate the Sales Compensation Plan with the organization's performance management system. Provide regular feedback, coaching, and performance evaluations to sales employees to align their efforts with the desired outcomes.
By considering these factors and customizing the Sales Compensation Plan to the specific needs of Bata Bangladesh, the HR Manager can ensure a fair, motivating, and effective compensation structure for the sales team.
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WRITE NOT LESS THAN 900 WORDS ON:
2) The role of Information Technology in online
marketplaces is integral. Discuss the role of IT in Jumia
operational applications throughout their history.
The term Information technology (IT) refers to the utilization of computer systems, software, and networks to manage, store, process, and distribute information. The role of IT in online marketplaces is vital as it enables the platform's operational applications to run seamlessly and securely.
One of the most prominent online marketplaces in Africa is Jumia.
The history of Jumia can be traced back to 2012 when it was first established in Lagos, Nigeria, by Tunde Kehinde and Raphael Afaedor. Jumia has since grown to become the leading online marketplace in Africa. The platform serves as an online shopping mall where customers can buy and sell products from different categories, including electronics, fashion, home appliances, beauty products, and many others.
The Role of IT in Jumia Operational Applications
IT plays a crucial role in Jumia's operational applications. From the platform's inception, IT has been integrated into the company's processes, making it a technology-driven e-commerce platform. Jumia's operational applications are powered by various technologies that enable the platform to offer a seamless online shopping experience.
One of the primary roles of IT in Jumia's operational applications is to provide an efficient and secure platform for transactions. IT systems and applications are used to manage customers' data, transactions, and other sensitive information. The platform is designed to ensure customer data security and privacy, making it a reliable and trustworthy platform for online shopping.
IT also plays a significant role in the logistics and supply chain management of Jumia's operational applications. The platform has a sophisticated logistics infrastructure that enables it to fulfill orders from customers within the shortest time possible. Jumia uses IT systems and applications to track and manage inventory levels, shipping and delivery, and other logistics-related processes.
The platform's online marketplace is also powered by sophisticated algorithms that enable Jumia to offer personalized shopping experiences to customers. IT systems and applications are used to analyze customer data, including purchase history, preferences, and other data points, to offer relevant product recommendations.
In conclusion, the role of IT in Jumia's operational applications has been integral to the platform's success. The integration of technology in the platform's processes has enabled it to offer a seamless online shopping experience to customers, secure transactions, efficient logistics and supply chain management, and personalized shopping experiences. Jumia's success in the African e-commerce market can be attributed to its technology-driven approach, which has enabled the platform to offer innovative solutions that meet customers' needs.
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(Issue of debentures at discount) David Ltd. issued 10,000, 9% Debentures of $ 100 each at 5% discount, redeemable at par after five years, payable as $ 40 on application and the balance on allotment. The whole issue was subscribed and all money was duly received. Pass necessary journal entries in the books of David Ltd.
The necessary journal entries in the books of David Ltd. can be as follows: Journal Entry in the books of David Ltd. Date Particulars Dr ($)Cr ($)First call due on Application Bank A/c4,000Dr Debentures.
Debenture is a long-term financial instrument that represents the borrowing of funds by a company for a fixed period of time. Debentures are issued by a company to the public and are traded on the stock exchange. Debentures can be issued at par, premium or discount.
When debentures are issued at a discount, the amount of discount is deducted from the face value of the debenture and the remaining amount is called the issue price. In the given case, the issue price is $95 (100 - 5) and the amount of discount is $5 (5% of $100).The first call was due on application of the debentures and the second call was due on allotment. The balance amount of the debentures was payable on allotment.
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For each of the following accounting practices, state the most appropriate accounting concept or principle underlying the practice: 1. After a payment has been disbursed to a supplier, the accounts payable clerk is required to file documents relevant to the payment made. This ensures that transactions recorded are supported by proper source documents. 2. Kelsey Co. writes down its stocks of finished goods to estimated selling price when the selling price of the goods fall below cost. 3. Playstore Co. sells a plant to plant to Toystore Co. and immediately leases it back for the remaining life of the asset. Playstore Co. still records the asset in its accounts. 4. At Waldo Co. office equipment that have a life more than one year but which cost less than $1,000 is written off as expense on the date of its initial recognition. However, all other office equipment is capitalized and depreciated over their economic lives.
The most appropriate accounting concept underlying the practice of filing documents relevant to payments made is the concept of "Proper Documentation and Record-Keeping."
This concept emphasizes the importance of maintaining accurate and complete records to support transactions and provide evidence of the company's financial activities.
The most appropriate accounting principle underlying the practice of writing down stocks of finished goods to estimated selling price when the selling price falls below cost is the principle of "Conservatism" or "Lower of Cost or Market." This principle suggests that assets should be reported at the lower of their cost or market value to ensure that financial statements do not overstate the value of assets.
The most appropriate accounting concept underlying the practice of recording the sale and leaseback of a plant while still keeping it on the books is the concept of "Substance Over Form" or "Economic Substance." This concept focuses on reporting transactions based on their economic reality rather than their legal form. In this case, the substance is that Playstore Co. still effectively retains the use of the asset through the leaseback arrangement, even though legal ownership has been transferred.
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Shareholders' equity of Yiruna Toys Inc. (YTI), a public company, at December 31, 2020, was as follows: nalg Common shares, 1,350,000 shares outstanding Contributed surplus, stock option plan Retained earnings 34,600,000 270,000 OROS TE 12,450,00089 On January 2, 2021, YTI issued $20,000,000 of 6% convertible bonds. The bonds mature on December 31, 2035 (15 years total), and pay interest on June 30 and longe December 31 of each year. The total proceeds received on the sale of the bonds were $20,350,000, and the fair value of the bonds at this date was calculated as muten $19,613,010. Each $1,000 bond is convertible into 20 common shares at any time. 000,008,812 rsos re 3060 18 vuta 190 of YTI's employee stock option plan was initiated on January 1, 2019, and vested on noitspildo litoneo bonited December 31, 2021. The fair value of the options on the initiation date was $450,000. On December 31, 2020, YTI's management estimated that 90% of the options would vest. A total of 92% of the 100,000 options issued actually vested. Also on December 31, 2021, 60% of the vested options were exercised at an exercise price of $12. Required: a) Prepare the journal entry to record the issuance of the convertible bonds. (2 marks) b) Prepare the journal entries for December 31, 2021, relating to the employee stock option plan. (4 marks)
a) The journal entry to record the issuance of the convertible bonds by Yiruna Toys Inc. (YTI) on January 2, 2021, can be prepared as follows:
**Date:** January 2, 2021
**Debit:** Cash ($20,350,000)
**Debit:** Discount on Bonds Payable ($736,990)
**Credit:** Bonds Payable ($19,613,010)
**Credit:** Contributed Surplus - Conversion Rights ($473,980)
Explanation: The company received $20,350,000 in cash from the sale of the convertible bonds. The discount on bonds payable of $736,990 represents the difference between the proceeds received and the fair value of the bonds. The Bonds Payable account is credited for the fair value of the bonds ($19,613,010), and the Contributed Surplus - Conversion Rights account is credited for the remaining amount ($473,980), representing the value of the conversion feature of the bonds.
b) The journal entries for December 31, 2021, related to YTI's employee stock option plan are as follows:
1. To record the vesting of employee stock options:
**Date:** December 31, 2021
**Debit:** Contributed Surplus - Stock Option Plan ($405,000)
**Credit:** Contributed Surplus - Stock Option Plan Expense ($405,000)
Explanation: The vested portion of the stock options is recognized as an expense in the period. The debit reduces the Contributed Surplus - Stock Option Plan account, while the credit recognizes the corresponding expense.
2. To record the exercise of vested stock options:
**Date:** December 31, 2021
**Debit:** Cash ($720,000)
**Debit:** Contributed Surplus - Stock Option Plan ($54,000)
**Credit:** Common Shares ($774,000)
Explanation: The exercise of stock options results in the issuance of common shares. The cash received from the employees exercising the options is debited, and the Contributed Surplus - Stock Option Plan account is debited for the fair value of the options exercised ($54,000). The Common Shares account is credited for the total value of the shares issued ($774,000).
Note: The calculation of the amounts for the journal entries is based on the information provided in the question.
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in economics a commodity is defined as which of the following
A commodity is defined as a raw material or primary agricultural product that can be bought and sold, such as copper or coffee, in economics.
Commodities are usually the building blocks of the economy, as they are the inputs that allow businesses to manufacture and distribute goods and services. A commodity is a fundamental good or raw material that is bought and sold in a vast market, such as gold or coffee. Commodities are distinct from finished goods because they are used to create finished products in the manufacturing, distribution, and retail sectors. They are often the raw materials that are transformed into other goods or services by manufacturers. The futures market and the spot market are the two most common ways to buy and sell commodities. In the futures market, commodities are sold in standardised contracts for future delivery, and the contracts are typically purchased by traders who are speculating on the price movements of the underlying commodity. In the spot market, commodities are purchased and sold for immediate delivery and are typically purchased by businesses that require the commodities to produce their goods or services.
To summarise, a commodity in economics is defined as a raw material or primary agricultural product that can be bought and sold, such as copper or coffee. Commodities are the building blocks of the economy and are often used to produce other goods or services.
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claude holds a large number of shares of bayou beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. it would probably be in claude's financial interest if bayou beauty's owners:
Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners sold the company to the larger brewer. Thus, option B is correct.
To determine what would be in Claude's financial interest, we need to consider the potential outcomes.
Option a, where Bayou Beauty's owners resist selling at any price, may not be in Claude's financial interest. If the owners resist selling, there might not be any immediate financial gain for Claude as the value of his shares may not increase significantly.
Option b, where Bayou Beauty sells the company to the larger brewer, could be in Claude's financial interest. A takeover by a larger brewer may result in a premium price for the shares, potentially leading to a higher return on investment for Claude.
Option c, where Bayou Beauty designs a poison pill to discourage a takeover, may not be in Claude's financial interest. A poison pill is designed to make the takeover less attractive, but it could also deter other potential buyers and limit the potential for a higher share price.
Option d, where Bayou Beauty looks for smaller brewers to acquire instead of selling to the larger brewer, may not directly impact Claude's financial interest. Acquiring smaller brewers could be a strategic move by Bayou Beauty, but it may not necessarily result in immediate financial gains for Claude.
In conclusion, based on the given information, option B is correct, where Bayou Beauty sells the company to the larger brewer, would likely be in Claude's financial interest. This is because a takeover by a larger brewer could potentially lead to a higher share price and provide a favorable return on investment for Claude.
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Complete Question:
Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners:
a. resisted selling at any price.
b. sold the company to the larger brewer.
c. designed a poison pill to discourage a takeover.
d. looked for smaller brewers to acquire instead of selling to the larger brewer
Your Task
Your task is to analyse client information using the information and questions raised by the CEO, and present the findings in a Statement of Advice with a covering Business Letter.
For each issue, you are expected to:
1) Identify the facts and accounting topic
2) Apply the relevant legislation, accounting standard and/or process
3) Make a recommendation and/or summary of the correct accounting treatment
Learning Objectives
After completing this Individual Assignment, you will be able to:
1) Research information about each issue using legislation and accounting standards
2) Identify the main issues and make recommendations for accounting treatment
3) Provide a clear statement of advice to a potential client
Assessment Description
Assume that you are part of a team of graduate accountants working for Seachange Group Pty Ltd, an independent consulting & accounting firm situated at 58 Kirra Terrace, Brisbane, QLD 4000. The Manager of your firm, Ms Amanda Buchan, has asked you to draft a letter in response to an email received from Mr Mark Privilege, the CEO of Swing Strength Ltd (a public company), raising accounting issues - (please refer to the email on the next page).
The maximum length for the body of the letter is 1500 words. You should address all the technical issues/discussion in the statement of advice, followed by a Reference List.
• Part A: Technical component 30% - This mark covers the technical content of your advice and the explanation of each of the issues, the calculations, the journal entries and the sources used.
• Part B: Communication Skills 10% - This mark covers the generic skills of writing, layout, clear meaning, structure and organisation, appropriate tone and grammar, spelling, and punctuation, etc. throughout the whole assignment.
Email from the Client
From: Mark Privilege
To: Amanda Buchan
Subject: Accounting Issues: Year Ending 30 June 2022
Sent: 30 May 2022
Dear Amanda
Thank you for your time today.
As discussed, I am reaching out to you to discuss the following issues from our most recent board meeting. Jerry (our outgoing CFO) wasn't around to answer any of these questions, and therefore it was difficult for me to give an accurate response as I don't have an accounting background.
Our company is currently reviewing a couple of investment proposals. First, one recommendation is to buy 25% of a Western Australian company (a family business). The family members would still own the remaining 75%. These guys manufacture some fantastic accessories, and they would be a great addition to our existing product lines. We are still negotiating a price. If we make this investment, does it mean we'll own 25% of all the assets and liabilities of this company? If so, could we sell these assets in the future if a need arise or if we get a favourable price? In the second proposal, we are considering buying another 35% of a New Zealand based company (we already own 15%). Would you be able to please shed some light on how to account for these two investments in our accounting records?
As discussed, most of the board members, including myself, are very confused about the purpose of consolidation entries. Our accountant tells me we must delete certain accounting transactions before preparing the consolidated accounts. Is this true? If it is, I am flabbergasted as to why we are deleting transactions from our records. And more importantly, why are we wasting money recording these transactions in the first place. As I said, I am not an accountant, and therefore I would appreciate it if you could provide a couple of simple examples to support your views on this issue.
The last issue is something that the external auditors raised to our audit committee. The auditors spoke to Jerry just before he left the company and were concerned about Jerry's lack of knowledge around accounting for goodwill. Jerry told the auditors that goodwill is the value associated with the business name, and therefore the goodwill amount is decided by the Board. He stated that if a business is famous and well-known within the community, the company can recognise goodwill in its books after consulting with some business valuation experts. Could you please clarify this goodwill issue for me? What is goodwill? Is it an asset? How should it be recognised? How do we use this goodwill? Do we need to depreciate it? Could we sell this goodwill?
Would you mind responding by letter (not email) as I would like to present your views to our Board? I look forward to hearing from you shortly.
Regards
Mark Privilege
CEO Swing Strength Ltd
Level 5, 49 Pepper Street,
Brisbane QLD 4000
Swing Strength Ltd should use the equity method to account for the investment in the Western Australian company's shares, as per AASB 128.
Statement of Advice
To: Mark Privilege
CEO Swing Strength Ltd
Level 5, 49 Pepper Street,
Brisbane QLD 4000
Re: Accounting Issues: Year Ending 30 June 2022
Dear Mr Privilege,
We appreciate the opportunity to provide you with advice regarding the accounting issues mentioned in your email dated 30 May 2022.
Regarding the proposed purchase of 25% shares in the Western Australian family business, it is important to note that Swing Strength Ltd will own 25% of the net assets of the company. Net assets encompass the assets and liabilities of the entity that are not attributable to the equity ownership interests of its owners. Consequently, if Swing Strength acquires the 25% shares, it will be entitled to receive 25% of dividends issued by the family business and will also bear 25% of the business's debt obligations.
Both investments must be accounted for following the guidelines outlined in AASB 128: Investments in Associates and Joint Ventures. The equity method of accounting is required for investments in associates and joint ventures. Under this method, the investment is initially recorded at cost and subsequently adjusted to reflect changes in the investor's share of the investee's net assets. Swing Strength Ltd must report the investment in each company at its cost, adjusted for any changes in the value of the investment based on the company's equity in the net assets of the investment company.
Consolidation entries are prepared to combine the financial statements of a company with its subsidiaries. The purpose of consolidation is to present a comprehensive view of the financial position, performance, and cash flow of the company and its subsidiaries as a single entity. Confusion may arise from the elimination of intra-group transactions during the consolidation process, which is necessary to avoid double-counting or omitting any transactions.
As per AASB 3: Business Combinations, goodwill is defined as the difference between the fair value of consideration transferred and the fair value of net identifiable assets acquired. Goodwill represents the future economic benefits derived from acquired assets that are not individually identified and recognized separately. Goodwill is recognized as an asset at the time of acquisition and should be measured as the excess of the acquisition cost over the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities, and contingent liabilities. Goodwill is not amortized but is subject to annual impairment testing.
Please find below a reference list to support our advice. Should you have any further questions or require additional information, please feel free to contact us.
Sincerely,
[Your Name]
References:
AASB 3: Business Combinations
AASB 128: Investments in Associates and Joint Ventures
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fill in the blanks to complete the passage about the relationship between bond prices and bond interest rates.
The relationship between bond prices and bond interest rates can be summarized as follows: as bond interest rates increase, bond prices decrease, and vice versa.
The relationship between bond prices and bond interest rates is inverse or negative. When bond interest rates increase, the price of existing bonds decreases, and when bond interest rates decrease, the price of existing bonds increases. This inverse relationship can be explained by the concept of opportunity cost.
When bond interest rates rise, new bonds are issued with higher interest rates, making existing bonds less attractive to investors. To compensate for the lower interest rates offered by existing bonds, their prices must decrease to provide a higher yield compared to newly issued bonds. Conversely, when bond interest rates decrease, existing bonds become more attractive because they offer higher interest rates than newly issued bonds. This increased demand for existing bonds drives their prices up.
The inverse relationship between bond prices and bond interest rates is important for investors and bondholders as it affects the value of their bond investments. Fluctuations in interest rates can lead to changes in bond prices, impacting the overall return and value of bond holdings.
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