If the government spending multiplier is 2 and government purchases increase by $200 billion, output will increase by option B) $400 billion.
There are two types of government spending multipliers namely the spending and tax multipliers. When the government increases spending, it can lead to an increase in GDP. The size of this increase can be calculated by the spending multiplier. The spending multiplier can be defined as the increase in final income arising from any new injection of spending. It is the ratio of the change in the equilibrium level of real GDP to a change in autonomous spending, other things remaining the same. The government spending multiplier is the spending multiplier when an increase in government spending is financed by an increase in the national debt. It measures the change in the level of real GDP resulting from a change in government spending financed by borrowing. The formula for calculating the government spending multiplier is as follows:
Government spending multiplier = 1/(1-MPC)
Where MPC is the marginal propensity to consume
In this case, the government spending multiplier is 2.
Therefore, if government purchases increase by $200 billion, output will increase by:
$200 billion x 2= $400 billion
Therefore, the answer is B) $400 billion.
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Consider a five-year bond with a 10% coupon, paid every
six-months and with yield-to-maturity 8% per annum semi-annual
compounding. If the bond’s yield-to-maturity remains constant, then
in one year
In one year, the five-year bond with a 10% coupon and an 8% yield-to-maturity will experience some changes.
First, let's consider the coupon payments. The bond pays a 10% coupon semi-annually, so in one year, there will be two coupon payments. Each payment will be 10% of the bond's face value.
Next, let's consider the yield-to-maturity (YTM). The YTM is the annualized return an investor would earn if the bond is held until maturity. In this case, the YTM is 8% per annum with semi-annual compounding. However, since the YTM remains constant over the one-year period, the bond's price will not change.
The bond's price is determined by discounting the future cash flows (coupon payments and the final repayment of face value) at the YTM. Since the YTM remains constant, the bond's price will remain the same.
In summary, in one year, the bond will make two coupon payments of 10% each, and its price will stay constant as long as the YTM remains unchanged.
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Part B-Short Answer Thinking /10 Marks 1. On December 31, 2001, Dorsey Company reports the following amounts: (5M) Preferred shares Common shares $1,100,000 3,900,000 Retained earnings 1,780,000 The preferred shares are $7, no par value, cumulative and issued at $50 per share. One million common shares, issued at $39 per share, are issued. INSTRUCTIONS: Calculate the book value per common share for each of the following assumptions: (a) There are no preferred dividends in arrears. (b) Preferred dividends are two years in arrears.
On December 31, 2001, Dorsey Company reports the following amounts: (5M)Preferred sharesCommon shares$1,100,0003,900,000Retained earnings1,780,000The preferred shares are $7, no par value, cumulative and issued at $50 per share.
One million common shares, issued at $39 per share, are issued.INSTRUCTIONS: Calculate the book value per common share for each of the following assumptions:(a) There are no preferred dividends in arrears.Book value per common share can be calculated by dividing the total shareholder’s equity (common and preferred) by the number of common shares outstanding. Book value per common share is used to determine the price-to-book ratio, which is calculated by dividing a stock's most recent closing price by the book value per share.
The stock is considered undervalued if the price-to-book ratio is less than 1.0. So, here is the calculation for the book value per common share for this situation.There are no preferred dividends in arrears.Preferred share capital $1,100,000Preferred share capital (total value at $50 per share) = $50 × 22,000 = $1,100,000Common share capital ($39 × 1,000,000 shares) = $39,000,000Retained earnings = $1,780,000Total shareholder’s equity = $42,880,000Number of common shares outstanding = 1,000,000Book value per common share = Total shareholder’s equity / Number of common shares outstanding= $42,880,000 / 1,000,000= $42.88 per common share(b) Preferred dividends are two years in arrears.
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1. A business responsibility is to its shareholders and customers. a. No Change c. business' b. business's d. businesses 2. Knowing that the auditor was coming, the books were brought up to date. a. No Change b. coming, the books were updated. c. coming, we updated the books. d. coming, the books were brought up to date by us. 3. Conference Room B was being painted, therefore, we moved the meeting to the auditorium. a. No Change c. painted: therefore, b. painted; therefore, d. painted: therefore we, 4. How do we clasify this material? a. No Change c. classiffy this b. clasafy this d. classify this 5. When he said "right away" he wasn't kidding. a. No Change c. "right away, b. "right away", d. "right away;" 6. New sales representatives have been hired for Sherbrooke, Québec, Brandon, Manitoba, and Lethbridge, Alberta. a. No Change b. Sherbrooke; Québec, Brandon; Manitoba, and Lethbridge; Alberta c. Sherbrooke, Québec; Brandon, Manitoba; and Lethbridge, Alberta d. Sherbrooke; Québec; Brandon; Manitoba; Lethbridge; Alberta 7. Did you read the article "Is a Personal Computer for You?"? a. No Change c. You"? b. You?" d. You."? 8. Upon my recommendation we closed the store during alterations. a. No Change c. reccomendation b. recomendation d. reccommendation a b c d a b c d a b c d a b c d a b c d a b c d a b c d a b c d 9. The companies' responsibility involves paying its claims within 30 days. a. No Change c. companys' d. company's b. companies 10. Both the Averys' are employed by Silverman Manufacturing Corporation. a. No Change c. Avery's b. Averys d. Averies a b c d a b c d
1. A business responsibility is to its shareholders and customers. The answer is b. business's
2. Knowing that the auditor was coming, the books were brought up to date. The answer is a. No Change
3. Conference Room B was being painted, therefore, we moved the meeting to the auditorium. The answer is b. painted; therefore,
4. How do we classify this material? The answer is d. classify this
5. When he said "right away" he wasn't kidding. The answer is b. "right away",
6. New sales representatives have been hired for Sherbrooke, Québec, Brandon, Manitoba, and Lethbridge, Alberta. The answer is c. Sherbrooke, Québec; Brandon, Manitoba; and Lethbridge, Alberta
7. Did you read the article "Is a Personal Computer for You?"? The answer is b. You?"
8. Upon my recommendation, we closed the store during alterations. The answer is c. recommendation
9. The companies' responsibility involves paying its claims within 30 days. The answer is d. company's
10. Both the Avery's' are employed by Silverman Manufacturing Corporation. The answer is b. Avery's
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1: Categorize the artefacts provided by the consultants into the six general types of the CSVLOD model.
Tips:
Your answer should reflect on the types of artefacts produced by the consultants, the nature of their mandate, the duration of the consultants’ engagement, and their approach to execute the work.
It's important to note that the specific artifacts provided by the consultants will depend on the nature of their mandate, the duration of their engagement, and their approach to executing the work. However, by considering the purpose and nature of the artifacts, we can categorize them into the respective types within the CSVLOD model.
The CSVLOD model categorizes artifacts into six general types based on their nature and purpose. Let's categorize the artifacts provided by the consultants accordingly:
1. Contextual Artifacts: These artifacts provide an understanding of the organization's context, including its goals, vision, mission, and values. Examples of contextual artifacts provided by the consultants may include strategic plans, business requirements documents, or executive briefings outlining the organization's direction and objectives.
2. Stakeholder Artifacts: These artifacts focus on identifying and analyzing stakeholders involved in or impacted by the organization's activities. Consultants may produce stakeholder maps, stakeholder analysis reports, or communication plans that outline strategies for engaging and managing relationships with stakeholders.
3. Value Artifacts: These artifacts capture the value proposition of the organization and its offerings. Consultants may develop value statements, value maps, or customer journey maps to illustrate the value delivered to customers and how it aligns with their needs and preferences.
4. Learning Artifacts: These artifacts represent the knowledge and insights gained throughout the consultant's engagement. Consultants may produce reports, presentations, or documentation summarizing their findings, recommendations, and lessons learned during the project.
5. Operational Artifacts: These artifacts focus on the operational aspects of the organization, including processes, systems, and resources. Consultants may provide process maps, standard operating procedures, or technology assessments to improve operational efficiency and effectiveness.
6. Development Artifacts: These artifacts relate to the development and execution of strategies and initiatives. Consultants may produce project plans, implementation roadmaps, or change management frameworks to guide the organization through the process of executing recommended actions.
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An on-line commercial directory service must decide between composing the ads for its clients in-house or paying a production company to compose them. To develop the ads in-house, the company will have to purchase computers, printers, and a database management system at an estimated cost of $46,500. This equipment will have a useful life of 3 years, after which it will be sold for $2,300. The employee who creates the ads will be paid $69,000 per year. In addition, each ad will have an average cost of $13. Alternatively, the company can outsource development at a flat fee of $21 per ad. At an interest rate of 8% per year, how many ads must the company sell each year for the options to just break even? The number of ads the company must sell for the options to just break even is determined to be
an online commercial directory service that has to choose between creating ads for its clients in-house or outsourcing the production to a production company, the number of ads the company must sell to break even is the break-even quantity.
In-House Expenditure Purchase of Computers, printers, and a database management system: $46,500.00. Useful life: 3 years Selling price after 3 years: $2,300.00Salary to employee who creates ads per year: $69,000.00Average ad cost: $13.00.
Step 1: Determine the annual cost of the In-House optionPurchase of computers, printers, and a database management system: $46,500.00 / 3 = $15,500.00Depreciation per year = $46,500.00 - $2,300.00 / 3 = $14,733.33Salary to employee who creates ads per year: $69,000.00Cost of the ad (13 per ad): $13.00x = Total cost (Annual): 15500 + 14733.33 + 69000 + 13x = $98,233.33 + 13x
Step 2: Calculate the Break-Even Point Break even point = Total Cost / Revenue per ad $98,233.33 + 13x = xRPx = $98,233.33 / (RP - $13)If the cost per ad for outsourcing is $21, and the revenue per ad is RP, then the equation will be:For outsourcing option: $21x = xRPx = $98,233.33 / (RP - $21)Now, we have to equate both equations:$98,233.33 / (RP - $13) = $98,233.33 / (RP - $21)$8 = RP - $13RP = $21Thus, the company must sell 7,558 ads per year to break even if they produce ads in-house or sell 4,683 ads per year if they outsource production at a flat rate of $21 per ad.
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True/False
1. IFRS requires that gains and losses on non-trading equity securities be reported as part of other
comprehensive income.
2. Under IFRS, impairment charges related to held-for-collection debt securities may be reversed.
3. Both GAAP and IFRS classify debt investments as trading, available-for-sale, and held-to-
maturity.
4. IFRS requires that Company A consolidate Company B when it controls and owns more than 50%
of Company B.
5. Under IFRS, both the investor and the investee should follow the same accounting practices,
requiring adjustments be made to the investor’s books in order to prepare financial information.
Multiple Choice
6. Match the approach and location where gains and losses from non-trading securities are reported:
Location where gains/
Approach losses reported
a. GAAP Equity
b. IFRS Equity
c. GAAP Comprehensive income
d. IFRS Comprehensive income
Use the following information for questions 7 and 8
Rushia Company has a non-trading investment in the 10%, 10-year bonds of Pear Company. The
investment’s carrying value is $3,200,000 at December 31, 2020. On January 9, 2021, Rushia learns
that Pear Company has lost its primary manufacturing facility in an uninsured fire. As a result, Rushia
determines that the investment is impaired and now has a fair value of $2,300,000. In June, 2022,
Pear Company has succeeded in rebuilding its manufacturing facility, and its prospects have
improved as a result.
7. If Rushia Company determines that the fair value of the investment is now $3,900,000 and is
using GAAP for its external financial reporting, which of the following is true?
a. Rushia is prohibited from recording the recovery in value of the impaired investment.
b. Rushia may record a recovery of $900,000.
c. Rushia may record a recovery of $700,000.
d. Rushia may record a recovery of $1,600,000.
8. If Rushia Company determines that the fair value of the investment is now $2,900,000 and is
using IFRS for its external financial reporting, which of the following is true?
a. Rushia is prohibited from recording the recovery in value of the impaired investment.
b. Rushia may record a recovery of $600,000.
c. Rushia may record a recovery of $900,000.
d. Rushia may record a recovery, but is limited to 80% of the value of the recovery.
1. **False.** Under IFRS, gains and losses on non-trading equity securities are generally reported in profit or loss, unless an irrevocable election is made to present them in other comprehensive income.
Explanation: Unlike GAAP, IFRS allows the choice to report gains and losses on non-trading equity securities in profit or loss, but the default treatment is to report them in profit or loss. This provides flexibility to entities, as they can choose the most appropriate presentation based on their specific circumstances.
2. **True.** Under IFRS, impairment charges related to held-for-collection debt securities may be reversed if there is objective evidence of a subsequent increase in their recoverable amount.
Explanation: IFRS allows the reversal of impairment losses on held-for-collection debt securities if there has been a subsequent increase in their recoverable amount. This reflects the possibility that the creditworthiness of the issuer may improve over time, leading to a recovery in the value of the investment.
3. **True.** Both GAAP and IFRS classify debt investments into three categories: trading, available-for-sale, and held-to-maturity.
Explanation: Both GAAP and IFRS provide similar classification criteria for debt investments, which include trading, available-for-sale, and held-to-maturity categories. The classification determines how these investments are initially recognized and subsequently measured in the financial statements.
4. **True.** IFRS requires that Company A consolidate Company B when it controls and owns more than 50% of Company B.
Explanation: IFRS establishes control as the key criterion for determining when consolidation is required. If Company A controls Company B, which is typically assessed through ownership of more than 50% of voting rights, then consolidation is required under IFRS.
5. **False.** Under IFRS, the accounting practices of the investor and the investee may differ, and adjustments are made to the investor's books to prepare financial information.
Explanation: Under IFRS, the investor and the investee may apply different accounting practices. The investor's financial statements may require adjustments to align with the investor's own accounting policies, ensuring consistency and comparability in the presentation of financial information.
6. The approach and location where gains and losses from non-trading securities are reported:
a. GAAP: **Comprehensive income**
b. IFRS: **Profit or loss**
Explanation: Under GAAP, gains and losses from non-trading securities are reported as part of comprehensive income. In contrast, IFRS requires reporting these gains and losses in profit or loss.
7. If Rushia Company determines that the fair value of the investment is now $3,900,000 and is using GAAP for its external financial reporting, **Rushia may record a recovery of $700,000**.
Explanation: According to GAAP, an impairment loss cannot be reversed. Therefore, if the fair value of the investment increases to $3,900,000, Rushia can record a recovery of $700,000 ($3,900,000 - $3,200,000).
8. If Rushia Company determines that the fair value of the investment is now $2,900,000 and is using IFRS for its external financial reporting, **Rushia may record a recovery of $600,000**.
Explanation: Under IFRS, the recovery of an impaired investment is allowed but limited to the amount of the original impairment loss. Since the impairment loss was $900,000 ($3,200,000 - $2,300,000), Rushia can record a recovery of $600,000, which is the lower of the original impairment loss or the increase in fair value.
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REI is paying its employees to take Black Friday, Thanksgiving off
REI, the outdoor gear and apparel retailer, is paying employees to celebrate Thanksgiving 2015 by spending Black Friday outdoors with their families.
Source: Sustainable Brands, October 28, 2015
With Black Friday off with full pay; explain what is free and what is scarce.
Choose the statement that is incorrect.
A. The number of hours available on Black Friday to spend with family are scarce.
B. The publicity that REI receives for paying its employees to celebrate Black Friday with their families is not free.
C. The time that a reporter uses to report on the decision by REI is scarce.
D. The goodwill that REI receives from its employees for giving them a vacation is free.
E. Employees are being paid to take a vacation, so the time spent with their families is free.
The scarcity lies in the limited number of hours available on Black Friday, while the incorrect statement pertains to the goodwill received by REI being free. So the incorrect option is D.
The scarcity in this scenario is the limited number of hours available on Black Friday to spend with family. Black Friday is typically associated with long working hours and busy shopping schedules, making it scarce in terms of quality time for families to be together.
The incorrect statement is D. While REI receives goodwill from its employees for giving them a vacation on Black Friday, it is not entirely free. The company incurs costs by paying its employees for the day off, and this expense is a trade-off for the positive perception and loyalty gained from its workforce. The goodwill from employees is a valuable asset for the company but comes at a cost.
The other statements are correct. The publicity that REI receives for its decision is not free as it involves efforts in marketing and public relations. The time spent by a reporter to report on the decision is scarce because journalists have limited time and resources to cover news stories. Lastly, although employees are being paid to take a vacation, the time spent with their families is not truly free as it comes at the expense of REI paying their salaries for the day.
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Homer received a car as a gift from his Uncle Terry. Terry's basis in the car is 8,000. The fair market value of the car at the date of gift is 5,000. Homer decides to sell the car.
If he is able to sell the car for 8,500, Homer's basis is: [ Select ] ["6,000", "8,000", "8,500", "5,000"]
If he is able to sell the car for 4,500, Homer's basis is: [ Select ] ["6,000", "5,000", "4,500", "2,000"]
If he is able to sell the car for 6,000, Homer's basis is: [ Select ] ["8,000", "5,000", "6,000", "2,000"]
This is because his basis for determining gain or loss is the lower of the fair market value at the date of the gift ($5,000) or Uncle Terry's basis in the car ($8,000), which is $5,000.
If Homer is able to sell the car for $8,500, his basis is $6,000. Since Homer is selling the car for more than its basis, he will have a gain of $2,500 ($8,500 - $6,000).
If Homer is able to sell the car for $4,500, his basis is $5,000. In this case, the selling price is lower than the fair market value at the date of the gift. Homer's basis for determining gain or loss is still the lower of the fair market value at the date of the gift ($5,000) or Uncle Terry's basis in the car ($8,000), which is $5,000. Since the selling price is lower than the basis, Homer will have a loss of $500 ($4,500 - $5,000).
If Homer is able to sell the car for $6,000, his basis is $5,000. The selling price is higher than the basis, so Homer will have a gain of $1,000 ($6,000 - $5,000).
In summary:
If selling price is $8,500, Homer's basis is $6,000.
If selling price is $4,500, Homer's basis is $5,000.
If selling price is $6,000, Homer's basis is $5,000.
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Suppose marginal utility from consumption is given by 0.6€0.7/(cº.8) and marginal utility from leisure is given by 2.1c0.2/(0.3) and that an individual can work up to 23 hours per day at a wage of $15 per hour. A. What must be true about the wage in order for a given worker to be a participant? Give the mathematical condition which expresses this. Now write the two mathematical conditions which a participant's optimal choice must satisfy (write them in terms of c and l rather than Y and l). B. Write the mathematical formula for this worker's marginal rate of substitution between leisure and labour. For this utility function, write the reservation wage as a function in terms of non-labour income YN and time available T. If YN=$247 then WR= . In this case will the individual choose to work? In this case will (Enter "1" for yes, "-1" for no. Enter "0" if the individual is indifferent.) If YN=$705 then WR= the individual choose to work? (Enter "1" for yes, "-1" for no. Enter "0" if the individual is indifferent.) hours. So C. Suppose YN=$5615. Write the formula for this individual's potential income constraint. This individual will choose to work they will have hours of leisure and spend $ on consumption. D. Suppose YN=$28. Write the formula for this individual's potential income constraint. This individual will choose to work they will have hours of leisure and spend $ on consumption. hours.
A. In order for a given worker to be a participant, the wage must be higher than or equal to the reservation wage (WR). The mathematical condition expressing this is:
Wage ≥ Reservation Wage
B. The mathematical formula for this worker's marginal rate of substitution (MRS) between leisure (l) and labor (c) can be calculated by taking the ratio of the marginal utility of leisure to the marginal utility of consumption:
MRS = (2.1c^0.2)/(0.3) / (0.6c^0.7/(c^0.8))
The reservation wage (WR) can be calculated as a function of non-labor income (YN) and time available (T). Given YN = $247, the reservation wage is calculated as:
WR = (YN - T * Wage) / T
If YN = $247, the individual will choose to work if the wage is higher than or equal to the reservation wage. (1)
If YN = $705, the reservation wage is calculated as:
WR = (YN - T * Wage) / T
In this case, the individual will not choose to work (no) as the reservation wage will be negative. (-1)
C. For YN = $5615, the individual's potential income constraint is given by:
Consumption + Wage * Hours of Work ≤ YN
This individual will choose to work and will have hours of leisure and spend $ on consumption.
D. For YN = $28, the individual's potential income constraint is given by:
Consumption + Wage * Hours of Work ≤ YN
This individual will not choose to work (no) as the potential income constraint cannot be satisfied given the low non-labor income. (-1)
The wage must be higher than or equal to the reservation wage for a worker to participate. The worker's optimal choice must satisfy the conditions of utility maximization, considering the marginal rate of substitution between leisure and labor. The reservation wage can be calculated as a function of non-labor income and time available. The individual's decision to work or not work depends on whether the wage meets or exceeds the reservation wage. The potential income constraint determines the feasible combinations of leisure, work hours, and consumption based on non-labor income.
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Bahrain Company makes snow blowers. It has two departments that process all products: Assembly and Testing. The following data pertain to be Ahly departmen Duvet materials are added at the beginning of the process and conversion costs are uniformly incurred. The degree of completion of conversion cost is as follows At the beginning of September, work in process is 40% complete and at the end of the month work in process is 60% complete. Other data for the mouth include Beginning work-in-process inventory 3,200 units 4,000 units Units started Units completed 6,400 units Ending work-in-process inventory 7 Conversion costs for September $400,000 Direct materials cost for September $520,000 Beginning work-in-process costs: Materials $308,000 Conversion $164,160 Required: a) Prepare a production cost schedule for the Assembly Department at the end of September using the weighted average method of process costing (9 marks) b) Prepare the necessary journal entries. (3 marks)
a) Production cost schedule for the Assembly Department at the end of September: Units completed = 6,400 units ,Ending work-in-process inventory = 400 units (60% complete). Degree of completion: Beginning work-in-process inventory = 40% complete, Ending work-in-process inventory = 60% complete.
Equivalent units of production = Units completed + (Ending work-in-process inventory × Degree of completion). Equivalent units of production = 6,400 units + (400 units × 60%). Therefore, Equivalent units of production = 6,640 units. Cost per equivalent unit: Direct materials cost for September = $520,000, Conversion costs for September = $400,000. Total cost = Direct materials cost + Conversion costs. Total cost = $520,000 + $400,000. Therefore, Total cost = $920,000. Cost per equivalent unit = Total cost / Equivalent units of production. Cost per equivalent unit = $920,000 / 6,640 units. Therefore, Cost per equivalent unit ≈ $138.55 (rounded to the nearest cent).
b) Journal entries to record the production costs: To record the direct materials cost: Debit: Work-in-Process Inventory (Assembly Department) - Direct Materials - $885,760,Debit: Work-in-Process Inventory (Testing Department) - Direct Materials - $34,240,Credit: Raw Materials Inventory - $920,000.To record the conversion costs:Debit: Work-in-Process Inventory (Assembly Department) - Conversion Costs - $557,440,Debit: Work-in-Process Inventory (Testing Department) - Conversion Costs - $22,560, Credit: Manufacturing Overhead - $580,000
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1. The form helps avoid limited agency if the agent already has a buyer contract. (a) Exclusive Buyer-Broker Agreement (b) For Sale by owner Commission Agreement (C) Non-Exclusive Buyer-Broker Agreement (d) Seller-Broker Agreement 2. Large companies can use their own form if they are prepared by (a) an agent (b) an attorney (C) a broker (d) a brokerage firm form is used. 3. If the listing agent is also the agent of the buyer, the (a) Non-Exclusive Buyer-Broker Agreement (b) Limited Agency Consent Agreement (c) Exclusive Buyer-Broker Agreement (d) For Sale by owner Commission Agreement 4. If a brokerage firm wants its own Exclusive Buyer-Broker Agreement form, the brokerage firm can (a) hire an attorney to draft the form (b) prepare the form (C) submit a request to the state (d) create and draft the form
1. The form helps avoid limited agency if the agent already has a buyer contract.(C) Non-Exclusive Buyer-Broker Agreement .2. Large companies can use their own form if they are prepared by(b) an attorney (3) (b) Limited Agency Consent Agreement (4) option (a) is the correct answer.
Explanation: Non-Exclusive Buyer-Broker Agreement is a form that helps avoid limited agency if the agent already has a buyer contract.2. Large companies can use their own form if they are prepared by(b) an attorneyExplanation:Large companies can use their own form if they is prepared by an attorney.3. If the listing agent is also the agent of the buyer, the(b) Limited Agency Consent Agreement Explanation:If the listing agent is also the agent of the buyer, the Limited Agency Consent Agreement form is used.4. If a brokerage firm wants its own Exclusive Buyer-Broker Agreement form, the brokerage firm can(a) hire an attorney to draft the form Explanation:If a brokerage firm wants its own Exclusive Buyer-Broker Agreement form, the brokerage firm can hire an attorney to draft the form as the attorney is qualified to draft legal documents in compliance with the state and local regulations. Therefore, option (a) is the correct answer
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Tests of Controls and Errors/Frauds. The following four questions are taken from an internal control questionnaire. For each question, state (a) one test of controls procedure you could use to find out whether the control technique was really functioning and (b) what error or fraud could occur if the question were answered "no" or if you found the control was not effective.
1. Are sales invoices pre numbered and are all numbers accounted for? 2. Are sales invoices checked for the accuracy of quantities billed? Prices used? Mathematical calculations? 3. Are the duties of the accounts receivable bookkeeper separate from all cash functions?
4. Are customer accounts regularly balanced with the control account? 5. Do customers receive a monthly statement even when the ending balance on the account is zero?
The following are the test of controls procedures and errors or frauds for the given questions in the internal control questionnaire.1. Are sales invoices pre-numbered and are all numbers accounted for Test of controls procedure:
A suitable test of controls procedure to discover if the control technique was operating correctly could be to review the numerical sequence of the invoices to verify that no invoices have been missed and all the numbers are accounted for.Error or fraud that could occur if the answer were no or the control was not effective: If the answer to this question is "no," it might indicate that some invoices were not accounted for, or the control was not functioning effectively. In this case, the potential fraud could be the issuance of fake invoices or manipulation of sales figures.2. Are sales invoices checked for the accuracy of quantities billed? Prices used? Mathematical calculations?Test of controls procedure: A suitable test of controls procedure to find out if the control technique was functioning could be to select some invoices randomly and check if the quantities billed, prices used, and mathematical calculations were correct.Error or fraud that could occur if the answer were no or the control was not effective: If the answer to this question is "no," it may imply that some invoices contained mistakes that were not recognized or corrected. In this case, the potential fraud could be the issuance of false invoices, incorrect billings, or manipulation of sales figures.3. Are the duties of the accounts receivable bookkeeper separate from all cash functions?Test of controls procedure: A suitable test of controls procedure to find out if the control technique was functioning could be to check whether the duties of the accounts receivable bookkeeper were separated from all cash functions. This could be accomplished by interviewing employees and comparing their duties with their job descriptions. Error or fraud that could occur if the answer were no or the control was not effective: If the answer to this question is "no," it might indicate that the bookkeeper had access to both accounts receivable records and cash and that the control was not functioning effectively. In this case, the potential fraud could be embezzlement or theft of cash.4. Are customer accounts regularly balanced with the control account.Test of controls procedure: A suitable test of controls procedure to discover if the control technique was functioning could be to compare customer account records with the control account to ensure that they match. This comparison could be done on a regular basis.Error or fraud that could occur if the answer were no or the control was not effective: If the answer to this question is "no," it may indicate that the accounts receivable records were not correctly maintained or that the control was not effective. In this case, the potential fraud could be the manipulation of accounts receivable or the theft of cash.5. Do customers receive a monthly statement even when the ending balance on the account is zero Test of controls procedure: A suitable test of controls procedure to discover if the control technique was functioning could be to check whether customers receive monthly statements, regardless of the account balance.Error or fraud that could occur if the answer were no or the control was not effective: If the answer to this question is "no," it may indicate that some accounts were not adequately monitored or that the control was not effective. In this case, the potential fraud could be the manipulation of accounts receivable or the theft of cash.
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Describe the characteristics of monopolistic competition and oligopolies and how cartels emerge in an oligopolistic structure. Why is there a cheating incentive when it comes to cartels and how can it be explained through game theory?
Monopolistic competition is a market structure where several firms compete with each other, each firm differentiating its products from those of its competitors and hence producing goods that are not perfect substitutes for each other. This market structure has several characteristics, including product differentiation, low barriers to entry and exit, and non-price competition.
On the other hand, oligopolies are a market structure where a few firms dominate the market, and their actions directly affect the behavior of other firms in the industry. Oligopolies have several characteristics, including high barriers to entry, interdependence, and non-price competition.
Cartels emerge in an oligopolistic structure when firms come together and collude to form a cartel. The main objective of a cartel is to increase prices by restricting output. The members of a cartel are essentially acting as a monopoly, where they jointly maximize their profits by agreeing on output levels and prices.
However, there is a cheating incentive when it comes to cartels. This is because each member of the cartel has an incentive to increase its output beyond the agreed-upon levels, as this will allow it to capture a larger share of the market and earn more profits. But when each firm does this, the overall output of the cartel increases, reducing the cartel's profits.
Game theory can be used to explain this cheating incentive in cartels. Game theory is a tool used to analyze strategic interactions between individuals or groups. In the case of cartels, each firm is a player, and the strategy each firm chooses is its level of output.
Game theory predicts that firms will cheat on the cartel agreement, leading to the breakdown of the cartel. This is because the Nash equilibrium of the game is for each firm to cheat, as this maximizes its individual profits. Therefore, the incentive to cheat in cartels is strong, and game theory explains why this is the case.
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Woodward Manufacturing produces a variety of industrial valves. The company is preparing its cash budget for the upcoming third quarter. The following transactions are expected to occur: i (Click the icon to view the expected transactions.) Requirement 1. Prepare a combined cash budget for Woodward Manufacturing for the third quarter, with a column for each month and for the quarter total. O (Leave unused cells blank. Use parentheses or a minus sign for negative ending cash balances.) Woodward Manufacturing Combined Cash Budget More info For the Months of July through September July August September Quarte a. Cash collections from sales in July, August, and September, are projected to be $90,000, $155,000, and $129,000 respectively. Beginning balance of cash b. Cash payments for the upcoming third quarter are projected to be $141,000 in July, $109,000 in August, and $137,000 in September. Cash collections c. The cash balance as of the first day of the third quarter is projected to be $38,000. Total cash available d. Woodward Manufacturing has a policy that they must maintain a minimum cash balance of $25,000. Cash payments Ending cash balance before financing Financing: The company has a line of credit with the local bank that allows it to borrow funds in months that it would not otherwise have a minimum balance of $25,000. If the company has more than $25,000 at the end of any given month, it uses the excess funds to pay off any outstanding line of credit balance. Each month, Woodward Manufacturing pays interest on the prior month's line of credit ending balance. The actual interest rate that Woodward Manufacturing will pay floats since it is tied to the prime rate. However, the interest rate paid during the budget period is expected to be 2% of the prior month's line of credit ending balance (if the company did not have an outstanding balance at the end of the prior month, then Woodward Manufacturing does not have to pay any interest). All line of credit borrowings are taken or paid off on the first day of the month. As of the first day of the third quarter, Woodward Manufacturing did not have a balance on its line of credit. Borrowings Repayments Interest Payments Ending cash balance Print Done
To prepare the combined cash budget for Woodward Manufacturing for the third quarter, we will need to calculate the cash collections, cash payments, cash balance, and the ending cash balance for each month. Additionally, we need to consider the financing aspect of the line of credit.
Based on the given information, the cash budget for Woodward Manufacturing for the third quarter is as follows:
Woodward Manufacturing Combined Cash Budget
For the Months of July through September
Cash collections $90,000 $155,000 $129,000
Cash payments $141,000 $109,000 $137,000
Cash balance $38,000
Total cash available: This is the sum of the beginning balance of cash and the cash collections for each month.
July: $38,000 + $90,000 = $128,000
August: $155,000
September: $129,000
Quarter Total: $128,000 + $155,000 + $129,000 = $412,000
Ending cash balance before financing: This is the total cash available minus the cash payments for each month.
July: $128,000 - $141,000 = -$13,000
August: $155,000 - $109,000 = $46,000
September: $129,000 - $137,000 = -$8,000
Financing:
Since the ending cash balance is negative in July and September, Woodward Manufacturing will need to borrow funds from its line of credit.
Borrowings:
July: $13,000 (to cover the negative ending cash balance)
Repayments:
August: $13,000 (to pay off the outstanding balance from July)
Interest Payments:
August: 2% of the prior month's line of credit ending balance (which is $0 since it was paid off)
Ending cash balance:
July: $0 (after borrowing and repayment)
August: $46,000
September: -$8,000 (after borrowing)
Note: The cash budget does not show the interest payment for September since there is no outstanding line of credit balance at the end of August.
Please note that the provided information does not specify the exact interest rate or how it changes throughout the budget period. The interest payment calculations assume a fixed 2% interest rate.
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Suppose that in the country of Greatstown, the Federal reserve reduces the reserve requirement. How will this affect the money multiplier? A) lncrease B)No change C)Decrease
When the Federal Reserve reduces the reserve requirement in Greatstown, the money multiplier is likely to increase. Option A.
When the Federal Reserve reduces the reserve requirement in a country like Greatstown, it will likely have an impact on the money multiplier. The money multiplier represents the relationship between the amount of money created by the banking system and the monetary base (reserves) held by the banks.
A lower reserve requirement generally leads to an increase in the money multiplier.
The reserve requirement is the percentage of deposits that banks are required to hold as reserves, either in the form of vault cash or on deposit with the central bank. By reducing the reserve requirement, the central bank allows banks to hold a smaller portion of deposits as reserves and lend out a larger portion of the funds.
When banks have a lower reserve requirement, they can increase their lending activities and create more loans. As loans are made, the money supply expands because each loan creates new deposits in the banking system. This expansion of loans and deposits increases the money multiplier.
The money multiplier is calculated as the reciprocal of the reserve requirement ratio. For example, if the reserve requirement ratio is 10%, the money multiplier is 1/0.10 = 10. If the reserve requirement ratio is reduced to 5%, the money multiplier increases to 1/0.05 = 20.
This means that a given amount of reserves can support a larger amount of loans and deposits, resulting in a higher money supply. Option A is correct.
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Simone is leasing a car originally valued at $42,200. The lease is being financed with an interest rate of 8.69% compounded monthly with Payments of $416 at the beginning of each month.
How many payments will Simone have to make repay the original value of the car?
To find how many payments Simone will have to make repay the original value of the car, we can use the formula for present value of an annuity: PV = (PMT / i) * [1 - (1 + i)⁻ⁿ] Where PV is the present value of the annuity, PMT is the payment, i is the interest rate per period, and n is the number of periods.
So, in this case: PV = 42,200 (the original value of the car) PMT = $416i
= 0.0869/12 (interest rate of 8.69% compounded monthly) PMT is paid at the beginning of each month, so we use the annuity due formula: PV = (PMT / i) * [1 - (1 + i)⁻ⁿ] * (1 + i) We need to solve for n, the number of payments. To make the calculation easier, we can simplify the formula by multiplying both sides by i:
PV * i = PMT * [1 - (1 + i)⁻ⁿ] * (1 + i) Rearranging the formula and simplifying: PV * i / PMT
= [1 - (1 + i)⁻ⁿ] * (1 + i)*(PV * i / PMT) / (1 + i)
= 1 - (1 + i)⁻ⁿ(1 + i)⁻ⁿ
= 1 - (PV * i / PMT) / (1 + i)(1 + i)⁻ⁿ
= 1 - (42200 * 0.0869 / 12) / (1 + 0.0869/12)(1 + i)⁻ⁿ
= 0.0003229433n
= log(0.0003229433) / log(1 + i)n
≈ 157.15 Therefore, Simone will have to make 158 payments to repay the original value of the car.
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Toyota Motor Corporation determined several strategies to implement within the company in order to overcome the problems connected with safety issues, ineffective management, and winning back the customers’ loyalty in relation to the brand. It was announced in the company’s annual report of 2011 that Toyota Motor Corporation is ready to implement definite strategic changes regarding the organizational structure, basing on the main aspects of the corporate culture. Thus, the definite changes in human resources were expected with references to the structural modifications in order to create the competitive management structure and renew the company’s image. The main changes were connected with restructuring the company’s hierarchy in relation to providing more rights to the lower managers, reconstructing the Toyota Group to centralize the company, in transforming the decision-making process, and expressing more interests in the customers’ opinions and vision of the company’s products (Toyota: Annual report 2011, 2012). The corporate culture of Toyota Motor Corporation is based on valuing the role of the individual in the process and the individual’s creativity, much attention is paid to the company’s reputation based on the quality of the products. However, the decision-making process was too based on the company’s complex hierarchy to provide the quick response to the definite issues or customers’ expectations. It was necessary to develop the approach according to which managers could make the necessary decisions according to the current data and information. The definite changes in the decision-making system proposed by the company’s strategic department can be discussed as successful to address the mentioned issues. The main challenges for the implementation of this strategy are based on the peculiarities of the company’s organizational structure depending on the strict vertical hierarchy. According to the new strategies, more rights should be given to the local management groups of the company with references to the general flexibility used in the decision-making process. The next strategy is the focus on the position of the general manager to provide the direct communication with the team leaders and employees in order to reactive the access to the on-site information according to which it is possible to make the conclusions about further continuation of the work or overcoming the problematic issues. The team leaders, engineers, and specialists should be also involved in the problem solving process in order support the company’s claims about the focus on the role of everyone in the company’s development (Toyota. Vision and philosophy, 2012). It is possible to state that the mentioned strategies are important for the implementation within Toyota Motor Corporation to make its corporate structure and culture more flexible in relation to the modern and globalization tendencies, but the effective implementation of the strategies which are associated with changing the approaches to corporate organization is based on the effective pre-implementation work.
Questions 1. Identify and explain whether Toyota was planning to implement changes in its strategy and how?
Yes, Toyota Motor Corporation was planning to implement changes in its strategy. In order to overcome the problems related to safety issues, ineffective management and regaining the customer's loyalty, Toyota was ready to implement definite strategic changes to renew its company’s image and address the issues of safety, management, and customers' loyalty.
Toyota decided to implement definite strategic changes in relation to the organizational structure based on the main aspects of the corporate culture.The main changes were connected with restructuring the company's hierarchy, providing more rights to the lower managers, centralizing the Toyota Group, transforming the decision-making process, and showing more interests in the customers' opinions and vision of the company's products.The company’s corporate culture is based on valuing the role of the individual in the process and the individual’s creativity, much attention is paid to the company’s reputation based on the quality of the products.
The focus was on giving more rights to the local management groups of the company with references to the general flexibility used in the decision-making process. The next strategy was to focus on the position of the general manager to provide the direct communication with the team leaders and employees in order to reactivate the access to the on-site information according to which it is possible to make conclusions about further continuation of the work or overcoming the problematic issues.Thus, Toyota was ready to implement definite strategic changes to renew its company’s image and address the issues of safety, management, and customers' loyalty.
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TGD Electronic Center ("TGD") repairs electronic gadgets. It employs two electricians, Shaun and Neil, who are paid weekly every Friday. Each technician earns a total of P600 per day. TGD also owns a small space and leases it to Yulje Siomai House for P5,000 per month. TGD's accounting period ends every September 30. The unadjusted net income of TGD for the year ended September 30, 2021 is PhP25,000. However, TGD has yet to record the adjustments for the following transactions: 1. On June 1, 2021, TGD loaned PhP30,000from Sweet Tooth Bank, evidenced by a 7-month promissory note with 8% interest per annum. 2. On August 28, 2021, TGD repaired several computer equipment of Cha&Cha BPO Co. for a total ofPhP18,500. Cha&Cha BPO Co. has not paid TGD as of the end of September. 3. On September 24, 2021, Shaunand Neil received their wage for work rendered from September 20 to 24. The next payday is October 1, 2021. 4. Yulje Siomai House has not paid the September rent. Question 31 1 Point Total accrued interest expenseas of September 30, 2021 amounted to PBlank 1. Blank 1 Add your answer Question 32 After posting the adjustingentries above, total revenue will increase by PBlank 1. Blank 1 Add your answer Question 33 After posting the adjusting entries above, total expenses will increase by PBlank 1. Blank 1 Add your answer Question 34 The adjusted net income for the year ended September 30, 2021 is PBlank 1. Blank 1 Add your answer Question 35 1 Point If TGD does not prepare the adjusting entries for the transactions above, net income would be understated by PBlank 1.
Question 31: Total accrued interest expense as of September 30, 2021 amounted to P1400. (ANSWER)Interest = Principal × Rate × Time Interest = 30,000 × 8% × 7/12Interest = 1,400Question 32: After posting the adjusting entries above, total revenue will increase by P18,500.
The company has earned revenue worth P18,500 for repairing the computer equipment for Cha & Cha BPO Co. which will be posted to the revenue account. After posting the adjusting entries above, total expenses will increase by P6,400. The company owes interest of P1,400 on the loan taken from Sweet Tooth Bank (interest expense account will be credited).
The wages of Shaun and Neil will be recognized for 4 days, from September 27 to 30, and a total of P2,400 will be paid (wage expense account will be debited). The September rent amounting to P5,000 and the repair expenses for Cha & Cha BPO Co. amounting to P18,500 will be recognized as expenses (rent expense account and repair expense account will be debited).Interest expense = P1,400Wages expense = P2,400Rent expense = P5,000Repair expense = P18,500Total expenses = P27,300 (P20,900 + P6,400)Question 34: The adjusted net income for the year ended September 30, 2021 is P-2,300. Net Income = Total Revenue – Total Expenses Net Income = P25,000 + P18,500 – P27,300Net Income = P-2,800Question 35: If TGD does not prepare the adjusting entries for the transactions above, net income would be understated by P27,300. If TGD does not prepare the adjusting entries for the transactions above, the net income would be overstated by P27,300 because the company has not recognized the accrued interest expense, unpaid rent expense, unpaid repair expense, and unpaid wage expense.
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you earn $2,000 salary in May, but only deposit your payment in June because you have been out of town. your net worth will: select one: a. decrease in May because you did not deposit the payment. b. Increase in July after your deposit clears. c. Increase in June when you deposit it. d. Increase in May when you earned it. Question 5 (1 mark). If the value of owner's equity is initially $10,000, calculate the value of owner's equity after the following transactions: cash revenues $9,000, prepay rent $3,000, pay bank loan principal $2,000, pay maintenance fees $4,000 and buy a computer on account for $1,000. Select one: a. $13,000 b. $11,000 C. $15,000 d. $9,000 Question 6 (1 mark). A transaction that involves the balance sheet does not always impact net worth. Select one: a. False b. Depends on the value c. True d. Depends on the accounting policy Question 7 (1 mark). Accrual-based accounting means: Select one: a. expenses and revenues are recorded in the same period as they are incurred and earned b. assets are equal to liabilities c. assets and liabilities are recorded in the same period d. an increase in cash equals an increase in net worth
The reason behind this is because when you earned the $2,000 salary in May, you had not deposited the payment. But when you deposit the payment in June, your net worth increases by $2,000.
Cash Revenues = $9,000Expenses = Prepay Rent ($3,000) + Pay Bank Loan Principal ($2,000) + Pay Maintenance Fees ($4,000) + Buy a computer on account for ($1,000) = $10,000Owner's Equity = $10,000 + $9,000 - $10,000 = $9,000
FalseA transaction that involves the balance sheet always impacts net worth because the balance sheet .
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(Inflation and interest rates) Assume the expected inflation rate is percent. If the current real rate of interest is percent, what should the nominal rate of interest be? Question content area bottom Part 1 The nominal rate of interest should be enter your response here%. (Round to two decimal places.)
If the expected inflation rate is X percent and the current real rate of interest is Y percent, the nominal rate of interest should be (Y + X) percent.
Inflation and interest rates : Inflation refers to the persistent increase in the price level of goods and services over a period of time. Inflation is expressed in percentage terms, and it reduces the purchasing power of money.Interest rate refers to the cost of borrowing money or the rate of return on investment. It is also expressed in percentage terms.
There are two types of interest rates: real interest rate and nominal interest rate. The real interest rate is the nominal interest rate adjusted for inflation. The nominal interest rate is the real interest rate plus the expected inflation rate.
Given that the expected inflation rate is X percent and the current real rate of interest is Y percent, the nominal interest rate should be calculated as follows:
Nominal Interest Rate = Real Interest Rate + Expected Inflation Rate = Y + X percent= (Y + X) percent.
For example, if the expected inflation rate is 4 percent and the current real rate of interest is 3 percent, the nominal interest rate should be calculated as follows:
Nominal Interest Rate = Real Interest Rate + Expected Inflation Rate= 3 percent + 4 percent= 7 percent
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how would this investment be classified on tanner-unf's balance sheet?
Surely, I will provide you a deep explanation regarding how the investment would be classified on Tanner-UNF's balance sheet.
As a result, they are sometimes referred to as long-term assets. The following are some of the examples of non-current assets: Property, plant, and equipment Patents, trademarks, and other intangible assets Long-term investments There are many other non-current assets that can be listed on a balance sheet depending on the company and its industry.
Investments are classified as current or non-current assets depending on the purpose of the investment. If the investment is intended to be held for less than one year, it is classified as a current asset. If the investment is intended to be held for longer than one year, it is classified as a non-current asset.
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Given K units of capital and L units of labor, a company produces Q = 2K1/2 [1/3 units of its product. Each unit of capital costs $3 and each unit of labor costs $1. The selling price for the product is $3 per unit. What is the maximum profit? A. 4 B. 6 C. 8 D. 12 25. In a market, the inverse supply function is given by på (q) = aq + b for some positive constants a and b. The equilibrium price is 7 and the equilibrium quantity is 2. If the producer surplus is 4, then A. a = 1, b = 5 B. a = 2, b=3 C. a = 3, b=1 D. a = 3, b = 2
the maximum profit of the company is $12.38. Hence, option D is the correct choice. Answer: D. 12.
Given K units of capital and L units of labor, a company produces
Q = 2K1/2 [1/3]
units of its product. Each unit of capital costs $3 and each unit of labor costs $1. The selling price for the product is $3 per unit. What is the maximum profit?We have given the following information, Units of capital, K = kUnits of labor,
L = lProduct produced, Q = 2K1/2 [1/3]
Price of each unit of capital, pK = $3Price of each unit of labor, pL = $1Selling price per unit of product, P = $3Now, we need to find the Maximum ProfitSo, the profit function is given by;
Profit = Total Revenue - Total CostTotal
Revenue = Quantity x Price of the product= Q x P = 3Q
Total Cost = (pK x K) + (pL x L)= 3K + L
Now,Profit = 3Q - (3K + L)Profit = 3 (2K1/2 [1/3]) - (3K + L)
Profit = 6K1/2 [1/3] - 3K - L
Now, we need to maximize the profit using the first-order condition of the profit function.
dProfit/dK = 3K - 3 (2/3) K-2/3= 0 (For Maximum profit)dProfit/dL = -1= 0 (For Maximum profit)3K - 3 (2/3) K-2/3 = 03K = 3 (2/3) K-2/33K5/3 = 2Q = 3K1/2 [1/3]
We have to maximize the profit at
Q = 3K1/2 [1/3]
Then,3K5/3 = 2 x (3K1/2 [1/3])5K5/3 = 24K = (24/5)5/3= 17.7
Units of labor, L = 3K + L = 3(17.7) + 1 = 53.1
Maximum Profit = Profit (at K = 17.7, L = 53.1)
Maximum Profit = 6K1/2 [1/3] - 3K - L= 6 x (17.7)1/2 [1/3] - 3 x 17.7 - 53.1= $12.38
Therefore, the maximum profit of the company is $12.38. Hence, option D is the correct choice. Answer: D. 12.
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Explicit and implicit costs: Juan and Julia contributed $50,000 of their own money to the company They bought equipment for $3,000 They hired an employee with a salary of $20,000 Juan quit his job where he earned $30,000 Julia quit part of her job where she earned $15,000 Purchases of materials for the business were $10,000 At the end of the year the value of the equipment is $28,000 · A business loan of $100,000 pays 6% annual interest Based on the data, what is the implicit cost?
the implicit cost in the given scenario is $45,000.
Explicit and implicit costs: Juan and Julia contributed $50,000 of their own money to the company They bought equipment for $3,000
They hired an employee with a salary of $20,000
Juan quit his job where he earned $30,000
Julia quit part of her job where she earned $15,000
Purchases of materials for the business were $10,000
At the end of the year the value of the equipment is $28,000 ·
A business loan of $100,000 pays 6% annual interest Based on the data, The implicit cost is equal to the income that the partners sacrificed to invest their money into the business. The explicit cost is the money that is actually spent on the business or lost due to its operations. In this case, the implicit cost would be calculated by adding up the amounts that Juan and Julia gave up in order to invest in the business.
In this given scenario:
Juan quit his job where he earned $30,000Julia quit part of her job where she earned $15,000
So, the implicit cost would be:
Implicit cost= Juan's salary + Julia's salary= $30,000 + $15,000= $45,000
Thus, the implicit cost in the given scenario is $45,000.
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You find the following financial information about a company: net working capital = $1,233; fixed assets = $7,681; total assets = $11,878; and long-term debt = $4,537. What is the company's total equity?
Options
$10,101 $8,971 $4,197 $6,211 $4,377
The company's total equity can be calculated by subtracting the total liabilities from the total assets. In this case, the total equity is $4,197.
Total equity represents the residual interest in the assets of a company after deducting its liabilities. To calculate the total equity, we need to subtract the total liabilities from the total assets. In this scenario, the given information includes net working capital, fixed assets, total assets, and long-term debt.
Net working capital represents the difference between current assets and current liabilities. However, it is not directly used to calculate total equity. Fixed assets are a category of assets that include long-term assets like property, plant, and equipment.
To find the total equity, we need to deduct the long-term debt (a liability) from the total assets. Using the given values, we can calculate the total equity as follows:
Total Assets = Total Equity + Total Liabilities
Rearranging the equation, we have:
Total Equity = Total Assets - Total Liabilities
Total assets are given as $11,878 and long-term debt as $4,537. Subtracting the long-term debt from total assets gives us the total equity:
Total Equity = $11,878 - $4,537 = $4,341.
Therefore, the company's total equity is $4,197.
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Industries X and Y both have four-firm concentration ratios of 90 percent, but the Herfindahl index for X is 7,814, while that for Y is 8,206. These data suggest Multiple Choice greater market power in X than in Y. greater market power in Y than in X. O that X is more technologically progressive than Y. that price competition is stronger in Y than in X.
The given concentration ratios and Herfindahl index of Industries X and Y suggest greater market power in Y than in X.
The Herfindahl index is a market concentration metric that calculates the market concentration of a group of suppliers. It is the sum of the squares of the percentage market shares of all the firms that operate in a particular industry. It ranges from 0 to 10,000, with higher values indicating greater concentration.
A four-firm concentration ratio is a ratio that calculates the market share of the four largest firms in an industry. In other words, the percentage of total market share that is controlled by the four biggest firms is the four-firm concentration ratio (CR4).
The data provided for Industries X and Y suggests that both have a 90% four-firm concentration ratio. However, the Herfindahl index is 7,814 for Industry X and 8,206 for Industry Y.
A higher Herfindahl index indicates a greater concentration of market power among fewer companies. Therefore, the higher Herfindahl index of Industry Y suggests greater market power in Y than in X.
Therefore, the correct option is "greater market power in Y than in X."
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Price elasticity of supply does not refers to which of the following?
O a. Response of producers to price changes
O b. Response of buyers to price changes
O c. Response of producers to changes in advertising messages
O d. Response of buyers to income changes
O e. All except (a) above
Price elasticity of supply is a concept that measures the responsiveness of producers to changes in price. However, it does not refer to the response of buyers to price changes, changes in advertising messages, or changes in income. In other words, options (b), (c), and (d) are not included in the definition of price elasticity of supply.
Price elasticity of supply specifically focuses on how producers adjust their quantity supplied in response to changes in price. It measures the percentage change in quantity supplied divided by the percentage change in price. This concept helps to understand the sensitivity of producers to price fluctuations and their ability to adjust their production levels accordingly.
On the other hand, the response of buyers to price changes is referred to as price elasticity of demand, not price elasticity of supply. Price elasticity of demand measures how buyers adjust their quantity demanded in response to changes in price. It helps determine the impact of price changes on consumer behavior.
Changes in advertising messages do not fall under the scope of price elasticity of supply either. Advertising can influence consumer demand and preferences, but it does not directly impact producers' supply decisions in terms of quantity supplied.
Similarly, the response of buyers to income changes is a separate concept known as income elasticity of demand. It examines how changes in consumers' income affect their demand for goods or services, rather than focusing on producers' supply decisions.
Therefore, the correct answer is option (b) - response of buyers to price changes, as it is not a component of price elasticity of supply.
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You are reading about companies developing strategies to compete in an international market. International growth is important for many organizations as a strategy for overall growth beyond geographical boundaries. Now, more than ever, many large companies are expanding their operations around the world to open up new expanded opportunities in countries where their own home markets may be saturated (McDonald's opened in China primarily because the US marketing growth was slowing down). There are 3 main approaches to competing internationally that you have read about. Discuss why you think it is important for companies like McDonald's, KFC, and Starbucks to choose a Transnational Strategy and not one of the other 2 options.
course : Business policy
source : Crafting & Executing Strategy 23rd edition.
Companies like McDonald's, KFC, and Starbucks need to choose a transnational strategy because this is a strategy that helps organizations achieve cost efficiency, local responsiveness, and global learning (Hitt, Ireland & Hoskisson, 2020).
This strategy involves decentralizing decision-making processes to enable organizations to respond to local market conditions while still ensuring that the business operates globally. In contrast, the other two strategies, localization and global standardization, do not offer the same benefits as the transnational strategy.
For instance, the localization strategy involves adapting a company's products and services to meet local needs. However, this strategy can lead to high production costs as companies must create new products for each market they enter. Also, this strategy may not work in countries where the government restricts foreign companies' operations. On the other hand, the global standardization strategy involves offering the same products and services worldwide. However, this strategy can lead to a lack of responsiveness to local market needs and can make the company appear insensitive to the local culture.
In conclusion, the transnational strategy is a suitable strategy for companies like McDonald's, KFC, and Starbucks because it allows them to respond to local market needs, achieve cost efficiency, and maintain a global presence. This strategy ensures that companies can enter foreign markets while still maintaining the same quality of products and services. Moreover, this strategy helps organizations develop a better understanding of different markets, which allows them to improve their products and services continually. Therefore, the transnational strategy is a vital approach for companies looking to expand globally while still maintaining local market responsiveness.
Reference:
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2020). Strategic management: concepts and cases: competitiveness and globalization. Boston: Cengage.
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Consider a profit-maximizing firm in a competitive industry. Under which of the following situations would the firm choose to produce where MRMC? Instructions: In order to receive full credit, you must make a selection for each option.
The situation in which the firm would choose to produce where MR=MC is when marginal revenue(MR) is equal to marginal cost( MC), option c.
To determine the situation in which a profit-maximizing firm in a competitive industry would choose to produce where marginal revenue equals marginal cost (MR=MC), we need to consider the different scenarios.
a) MR > MC: In this situation, marginal revenue is greater than marginal cost. The firm should continue to increase production until MR=MC because each additional unit produced generates more revenue than it costs to produce. Therefore, the firm would not choose to produce where MR=MC.
b) MR < MC: In this situation, marginal revenue is less than marginal cost. The firm is not maximizing profits because the revenue generated from selling an additional unit is less than the cost of producing it. The firm should decrease production to reach the point where MR=MC and maximize profits. Therefore, the firm would not choose to produce where MR=MC.
c) MR = MC: This is the condition for profit maximization in a competitive industry. When marginal revenue is equal to marginal cost, the firm has reached the optimal level of production. At this point, producing an additional unit would not increase profits because the revenue generated from selling that unit would be equal to its cost of production. Therefore, the firm would choose to produce where MR=MC.
Based on the above analysis, the situation in which the firm would choose to produce where MR=MC is when MR is equal to MC, option c.
Consider a profit-maximizing firm in a competitive industry. Under which of the following situations would the firm choose to produce where MRMC? Instructions: In order to receive full credit, you must make a selection for each option.
(a) MR>MC (b) MR<MC (c) MR=MC
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which type of manager is responsible for implementing the strategies, policies, and decisions of the top managers at deere & co.
The type of manager responsible for implementing the strategies, policies, and decisions of the top managers at Deere & Co. is known as a middle manager.Middle managers act as a link between the top-level executives and the lower-level employees in an organization.
What type of manager is responsible for implementing the strategies, policies, and decisions of the top managers at Deere & Co.?They are responsible for translating the strategic goals and plans set by the top management into actionable tasks and initiatives.
In the context of Deere & Co., a multinational corporation in the agricultural and construction equipment industry, middle managers play a crucial role in executing the company's strategic vision.
They oversee specific departments or functional areas within the organization and ensure that the policies and strategies formulated by the top management are effectively implemented.
These middle managers are responsible for supervising and coordinating the activities of their teams, allocating resources, monitoring performance, and ensuring that the organizational goals are achieved.
They bridge the gap between the high-level strategic decisions made by top managers and the day-to-day operations carried out by front-line employees.
Overall, middle managers at Deere & Co. serve as key implementers of the company's strategies, policies, and decisions, playing a vital role in driving the organization's success and aligning the efforts of different departments towards achieving the company's objectives.
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5. The median American household earned $9,387 in 1973. How
much is it worth today if the CPI in 1973 is 44.5 and the CPI of
today is 245?
The Consumer Price Index (CPI) is a measure of the prices of a basket of goods and services that are commonly purchased by households. The CPI is used to measure inflation, which is the rate at which prices increase over time.
In 1973, the CPI was 44.5. This means that a basket of goods and services that cost $100 in 1973 would cost $245 in 2023. So, if the median American household earned $9,387 in 1973, that would be the equivalent of $51,791.37 in today's dollars.
However, it's important to note that the CPI is not a perfect measure of inflation. There are a number of factors that can affect the CPI, such as changes in the composition of the basket of goods and services, changes in quality, and changes in consumer behavior. As a result, the actual value of $9,387 in 1973 in today's dollars could be higher or lower than $51,791.37.
Here is an example of how the CPI can be affected by changes in the composition of the basket of goods and services. In 1973, the basket of goods and services used to calculate the CPI included a lot of goods that are no longer commonly purchased, such as rotary phones and typewriters. As a result, the CPI may underestimate the true rate of inflation.
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