Null hypothesis: There is no significant relationship between the cause being investigated and youth unemployment.
Alternate hypothesis: There is a significant relationship between the cause being investigated and youth unemployment.
In hypothesis testing, the null hypothesis is the assumption of no relationship or no effect, while the alternate hypothesis suggests that there is a relationship or effect between the variables being studied. In the context of the cause of youth unemployment, the null hypothesis states that there is no significant relationship between the cause under investigation (such as education, economic conditions, government policies, etc.) and the level of youth unemployment. The alternate hypothesis, on the other hand, posits that there is a significant relationship between the cause being investigated and youth unemployment.
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The before-tax income for Hawks Corp. for 2019 was $101,000; for 2020, it was $77,400. However, the accountant noted that the following errors had been made:
1. Sales for 2019 included $38,200 that had been received in cash during 2019, but for which the related products were delivered in 2020. Title did not pass to the purchaser until 2020.
2. Ending inventory on December 31, 2019, was understated by $8,640. The December 31, 2020 ending inventory has not yet been adjusted to the Inventory account. Assume that Hawks has a periodic inventory system and that no adjustment has been made to the opening balance of the Inventory account.
3. The bookkeeper, in recording interest expense for both 2019 and 2020 on bonds payable, made the following entry each year:
Interest Expense 15,000 Cash 15,000
4. The bonds have a face value of $250,000 and pay a stated interest rate of 6%. They were issued at a discount of $15,000 on January 1, 2019, to yield an effective interest rate of 7%. (Use the effective interest method.)
5. Ordinary repairs to equipment had been charged in error to the Equipment account during 2019 and 2020. In total, repairs in the amount of $8,500 in 2019 and $9,400 in 2020 were charged in this way. The company uses the declining balance method and applies a rate of 10% in determining its depreciation charges.
Assume that Hawks Corp. applies IFRS.
I'm looking for
i. A schedule showing the calculation of corrected income before tax for 2019 and 2020.
ii. The journal entries that the company's accountant would prepare in 2020, assuming the errors are discovered while the 2020 books are still open. Ignore income tax effects.
i. Corrected Income Before Tax for 2019: $84,710; Corrected Income Before Tax for 2020: $77,400. ii. Journal Entries in 2020: Adjust Sales, Ending Inventory, Interest Expense, and Depreciation.
i. Calculation of Corrected Income Before Tax for 2019 and 2020:
1. Adjust sales for products delivered in 2020:
Sales in 2019: $38,200
Deduct: Products delivered in 2020
Corrected Sales for 2019: $38,200 - $38,200 = $0
2. Adjust ending inventory on December 31, 2019:
Understated ending inventory on December 31, 2019: $8,640
3. Adjust interest expense on bonds payable:
Interest expense for 2019: $15,000
Deduct: Corrected interest expense for 2019
Corrected Interest Expense for 2019: $15,000 - $15,000 = $0
4. Adjust depreciation expense for ordinary repairs charged to the Equipment account:
Repairs charged to Equipment account in 2019: $8,500
Deduct: Corrected depreciation expense for 2019
Corrected Depreciation Expense for 2019: $8,500 - (0.10 * $8,500) = $7,650
5. Calculate Corrected Income Before Tax for 2019:
Income Before Tax for 2019: $101,000
Deduct: Adjustments (Sales, ending inventory, interest expense, and depreciation)
Corrected Income Before Tax for 2019: $101,000 - $0 - $8,640 - $0 - $7,650 = $84,710
6. Calculate Corrected Income Before Tax for 2020:
Income Before Tax for 2020: $77,400
ii. Journal Entries in 2020:
1. To adjust the Sales account:
Debit: Sales $38,200
Credit: Deferred Revenue $38,200
2. To adjust the ending inventory on December 31, 2019:
Debit: Inventory $8,640
Credit: Retained Earnings $8,640
3. To adjust the interest expense on bonds payable:
Debit: Interest Expense $15,000
Credit: Bonds Payable $15,000
4. To adjust the depreciation expense for ordinary repairs charged to Equipment account:
Debit: Depreciation Expense $9,400
Credit: Accumulated Depreciation $9,400
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Which of the following is an important belief found in Lean cultures? Question 9 options: 1) Inventory is to be reduced 2) Cost must be reduced 3) Management must be done through the use of appropriate tools and procedures 4) Waste is a symptom
Inventory reduction is an important belief in Lean cultures, as it helps eliminate waste, streamline processes, and improve efficiency by minimizing excess inventory levels in organizations.
An important belief found in Lean cultures is that inventory is to be reduced.
Lean principles advocate for the elimination of waste and the creation of streamlined, efficient processes.
Excessive inventory is seen as a form of waste because it ties up resources, increases lead times, and incurs additional storage costs.
By reducing inventory levels, organizations can improve flow, respond to customer demands more quickly, and minimize waste in their operations.
Lean culture promotes just-in-time inventory management, where materials are acquired and used as needed, reducing the need for excessive stockpiling.
This approach helps organizations optimize their operations and achieve greater efficiency and productivity.
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What did you find to be the biggest challenges when working on your Wealth Management Analyst Project? What did you learn or experience that was useful for you? In what ways did this project help you develop? With peers, discuss your overall thoughts about the project.
The challenges that could be encountered when working on a Wealth Management Analyst project: and these were the things to be learnt and to be developed :
1. Data management and analysis, 2. Market volatility, 3. Regulatory compliance, 4. Client relationships
.
Some of the biggest challenges when working on a Wealth Management Analyst project include:
Data management and analysis: Gathering and analyzing large amounts of financial data can be time-consuming and challenging, especially if the data is incomplete or inaccurate.
Market volatility: The financial market can be unpredictable, which makes it difficult to develop long-term investment strategies.
Regulatory compliance: Wealth management analysts need to stay up-to-date with regulations and ensure their recommendations comply with all relevant laws and guidelines.
Client relationships: Building and maintaining strong relationships with clients is critical to success in wealth management.
Technology adoption: Implementing new technologies and integrating them into existing workflows can be challenging, particularly for firms with legacy systems.
Despite these challenges, working on a Wealth Management Analyst project can provide valuable experience in financial analysis, asset allocation, risk management, and client relationship management. The project can also help individuals develop skills in communication, teamwork, problem-solving, and decision-making. Overall, the project can be a great learning opportunity for individuals interested in pursuing a career in finance or wealth management.
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Suppose the interest rate is 6.5% APR with monthly compounding. What is the present value of an annuity that pays $85 every six months for five years? (Note: Be careful not to round any intermediate steps less than six decimal places.) The present value of the annuity is $ (Round to the nearest cent.)
The present value of the annuity is $7,733.26 (rounded to the nearest cent). Therefore, the present value of an annuity that pays $85 every six months for five years with an interest rate of 6.5% APR with monthly compounding is $7,733.26
To solve this problem, we will make use of the present value of an annuity formula. The present value of an annuity formula is given as; PV = A[(1 - (1 + r)-n) / r], where
PV = Present valueA = Paymentr = rate of interestn = number of periodsSuppose the interest rate is 6.5% APR with monthly compounding, we can find the monthly interest rate as; R = (6.5 / 12) / 100R = 0.00541
The present value of an annuity that pays $85 every six months for five years can be calculated using the present value of an annuity formula as;
PV = $85[(1 - (1 + 0.0054166666666667)-10) / 0.0054166666666667]PV = $85[(1 - 0.9398429024) / 0.0054166666666667]PV = $85[90.9837762107]PV = $7,733.262320995The present value of the annuity is $7,733.26 (Rounded to the nearest cent). Therefore, the present value of an annuity that pays $85 every six months for five years with an interest rate of 6.5% APR with monthly compounding is $7,733.26.
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whag is thedefinition of competitive strategy within the context of
insustry structure?
Competitive strategy within the context of industry structure refers to the planned actions and decisions taken by a company to gain a competitive advantage over rivals and achieve long-term success in a specific industry.
Competitive strategy in the context of industry structure entails formulating a clear plan of action to position a company ahead of its competitors within a particular industry. It involves analyzing the industry's dynamics, identifying opportunities and threats, and making strategic choices to differentiate the company's offerings, lower costs, target specific customer segments, or adopt other approaches to outperform rivals. By effectively implementing a competitive strategy, a company can strengthen its market position and create sustainable advantages that lead to long-term success.
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You will deposit 16,343 at 10% compound interest for 6 years, and then move the amount you would receive to an investment account at 13% simple interest for another 3 years. How much money would you have at the end of the entire period?
Answer:
To calculate the total amount of money at the end of the entire period, we need to calculate the compound interest for the initial 6 years and then add the simple interest for the next 3 years.
Explanation:
To calculate the total amount of money at the end of the entire period, we need to calculate the compound interest for the initial 6 years and then add the simple interest for the next 3 years.
Compound Interest:
Principal (P) = $16,343
Rate of interest (R) = 10%
Time (T) = 6 years
Compound Interest Formula:
A = P * (1 + (R/100))^T
A = $16,343 * (1 + (10/100))^6
A = $16,343 * (1.10)^6
After calculating the compound interest for 6 years, we can then calculate the simple interest for the next 3 years.
Simple Interest:
Principal (P) = Amount received from the compound interest
Rate of interest (R) = 13%
Time (T) = 3 years
Simple Interest Formula:
I = (P * R * T) / 100
Finally, we can add the amount received from the compound interest to the simple interest to find the total amount at the end of the entire period.
Total Amount = Amount from Compound Interest + Simple Interest
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The total amount at the end of the entire period is found by calculating compound interest for the first 6 years and adding simple interest for the following 3 years. This approach considers the principal, rate of interest, and time to determine the final amount.
To calculate the total amount of money at the end of the entire period, we need to calculate the compound interest for the initial 6 years and then add the simple interest for the next 3 years.
Compound Interest:
Principal (P) = $16,343
Rate of interest (R) = 10%
Time (T) = 6 years
Compound Interest Formula:
A = P * (1 + (R/100))^T
A = $16,343 * (1 + (10/100))^6
A = $16,343 * (1.10)^6
After calculating the compound interest for 6 years, we can then calculate the simple interest for the next 3 years.
Simple Interest:
Principal (P) = Amount received from the compound interest
Rate of interest (R) = 13%
Time (T) = 3 years
Simple Interest Formula:
I = (P * R * T) / 100
Finally, we can add the amount received from the compound interest to the simple interest to find the total amount at the end of the entire period.
Total Amount = Amount from Compound Interest + Simple Interest
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38. The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the
A. cost-based approach
B. market-based approach
C. negotiated price approach
D. time-and-material pricing approach E. none of the above
39. The cost is $20, and the selling prices is $30. The markup is
A. $10
B. $20
C. $30
D. $50
E. none of the above
40. Transfers between divisions located in different countries with varying tax rates
A. can more simply determine the appropriate transfer price B. are decreasing in number as more companies "localize" operations
C. encourage companies to report more income in countries with
low tax rates
D. all of the above
E. none of the above
The option is:
38. The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the market-based approach (option B).
39. The markup for a product with a cost of $20 and a selling price of $30 is $10 (option A).
40. Transfers between divisions located in different countries with varying tax rates can more simply determine the appropriate transfer price (option d).
The transfer price approach that is often considered the best approach because it generally provides the proper economic incentives is the market-based approach (B). This approach sets the transfer price based on the prevailing market prices for similar goods or services. By using market-based prices, divisions within a company have the incentive to make efficient decisions and compete with external market forces.
For question 39, the cost is $20 and the selling price is $30, so the markup is $10 (A). Markup is calculated by subtracting the cost from the selling price.
Regarding question 40, transfers between divisions located in different countries with varying tax rates (D) can have several effects. They may complicate the determination of appropriate transfer prices due to tax considerations. Companies may strategically adjust transfer prices to optimize their tax liabilities. Localization of operations (B) aims to minimize such complexities and streamline operations within specific countries or regions. Additionally, companies may be encouraged to report more income in countries with low tax rates (C) to minimize their overall tax burden. Therefore, option D, "all of the above," best describes the effects of transfers between divisions in different countries with varying tax rates.
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Pioneer Chicken advertises "lite" chicken with 30 percent fewer calories. (The pieces are 33 percent smaller.) The process average distribution for "lite" chicken breasts is 420 calories, with a standard deviation of the population of 25 calories. Pioneer randomly takes samples of six chicken breasts to measure calorie content.
a. Design an X-Chart using the process standard deviation. Use three sigma limits.
b. The product design calls for the average chicken breast to contain 400 ± 100 calories. Calculate the process capability index (target = 1.33) and the process capability ration. Interpret the results.
a. X-Chart using the process standard deviation. Use three sigma limits The formula for the X-bar chart is given by: $$\bar{X}=\frac{\sum_{i=1}^{n} X_{i}}{n}$$Where, $$\bar{X}$$ is the mean of the sample and n is the sample size.
If the mean of the sample is outside of the control limits, it suggests that the process has been shifted out of control. Here, the mean of "lite" chicken breast calorie content is 420, and the standard deviation is 25 calories. The sample size is 6. We need to design an X-chart with 3 sigma limits.
This means that the process is not capable of producing the required calorie content, as the target process capability index is 1.33 which is greater than the calculated value. The process capability ratio is given as;$$C_{p}=\frac{500-300}{6 \times 25}=1$$This shows that the process is capable of producing the required range of calorie content. Therefore, the process needs to be improved to achieve the desired product specifications.
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COMMISSION EARNINGS Penny works for TSX in Ontario where she is a commissioned salesperson. TSX pays their commissioned salespeople on a straight commission of sales method at 0.35%. Penny is owed her semi-monthly commission payment based on $600,000.00 of products sold in the pay period. She did not receive an advance. Penny's TD1 federal and provincial are claim code 3. She will not reach the CPP, and Employment Insurance annual maximums this pay period. Use this information to calculate questions 8-13. Use 2022 rates. Calculate Penny's gross earnings
Here are the calculations for Penny's gross earnings: Code snippet Commission rate = 0.35%
Sales = $600,000
Commission = Sales * Commission rate
= $600,000 * 0.35%
= $21,000
Use code with caution. Learn more
Penny's gross earnings are $21,000.
Here are the detailed calculations for each of the items:
Commission rate = 0.35%
This is the percentage of sales that Penny earns as commission.
Sales = $600,000
This is the amount of sales that Penny generated in the pay period.
Commission = Sales * Commission rate
This is the amount of commission that Penny earned in the pay period.
Gross earnings = Commission
This is the total amount of money that Penny earned in the pay period, including her commission and base salary.
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Natalina and Eric owned 40% of the partnership NEW. On August 15, 2021 Nataliina sold her interest to Walter a 20% partner. On August 29, 2021 , Eric sold his interest to Wendy . When does the partnership terminate. August 15, 2021 August 29, 2021 December 31 2021 or The partnership does not terminate.
The sale of a partner's interest does not automatically terminate a partnership. Therefore, the partnership between the remaining partners (i.e., Walter and Wendy) will continue until it is terminated through mutual agreement or for other reasons such as bankruptcy or withdrawal of all partners.
In this case, Natalina sold her 20% interest to Walter on August 15, 2021, which means that Walter now owns 40% of the partnership. Eric sold his 20% interest to Wendy on August 29, 2021, which means that Wendy now owns 20% of the partnership.
After these transactions, the partnership still exists with 60% ownership split between Walter (40%) and Wendy (20%). Therefore, the partnership does not terminate as a result of these two sales.
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Josh Enterprises (JE) is an all-equity firm with $50 million in excess cash this year. Currently, it has 10 million shares in issue. Other firms with similar business risk have an unlevered cost of capital of 10%. From next year, JE will be generating additional free cash flows of $40 million per year in perpetuity which it intends to distribute as regular dividends. JE’s board of directors are considering whether to distribute the current $50 million in excess cash as a special dividend or to use it to repurchase JE's shares.
Assume that you own 2500 shares of JE’s stock and JE uses the entire $50 million to pay a special dividend. Suppose you are unhappy with JE’s decision and would prefer that JE used the excess cash to repurchase shares. Would you have to buy or sell shares to undo the effect of the payment of special dividend? How many shares would you have to buy or sell?
To undo the effect of the special dividend, you would need to sell a certain number of shares, but the exact number cannot be determined without knowing the current market price per share.
If JE pays a special dividend of $50 million, the value of the firm will decrease by that amount. As a result, the value of each share will also decrease. To undo the effect of the special dividend and maintain the same value of your shares, you would have to sell a portion of your shares.
To calculate the number of shares you would need to sell, we can divide the total amount of the special dividend ($50 million) by the current market price per share. However, the current market price per share is not provided in the given information. Therefore, it is not possible to determine the exact number of shares you would need to sell without knowing the current market price per share.
In conclusion, to undo the effect of the special dividend, you would need to sell a certain number of shares, but the exact number cannot be determined without knowing the current market price per share.
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totaled $390,000 Affanta sold 120,000 units ol product at $39 per unit. Road the feadiemnints: caiculations. Begin by selecling the labels used in the absorption costing calculation of operating incorme and onter the supporting amounts Perform the calrulatians in this step, bet seloct the correct operating income in the next step. (For amounts with a 50 balance, make nure to onter "0" in the appropriate ceth) Requirements 1. Atlanta's 2020 operating income using absorption costing is (a) $810,000, (b) $450,000, (c) $840,000, (d) $1,200,000, or (e) none of these. Show supporting calculations. 2. Atlanta's 2020 operating income using variable costing is (a) $1,290,000, (b) $810,000, (c) $450,000, (d) $840,000, or (e) none of these. Show supporting calculations. totaled $390,000. Atlanta sold 120,000 units of product at $39 per unit. Read the requirements.
Atlanta's 2020 operating income using absorption costing is $4,290,000, and the operating income using variable costing is also $4,290,000.
To calculate Atlanta's 2020 operating income using absorption costing and variable costing, we need to determine the variable and fixed costs and allocate them to the units sold. From the given information, we have:
Total costs: $390,000
Units sold: 120,000
Selling price per unit: $39
To calculate Atlanta's operating income using absorption costing:
Calculate the cost per unit (variable and fixed costs combined):
Cost per unit = Total costs / Units sold
Determine the variable cost per unit:
Variable cost per unit = Cost per unit - Fixed cost per unit
Calculate the total variable costs:
Total variable costs = Variable cost per unit × Units sold
Determine the fixed costs:
Fixed costs = Total costs - Total variable costs
Calculate the operating income using absorption costing:
Operating income = (Selling price per unit × Units sold) - (Variable cost per unit × Units sold) - Fixed costs
To calculate Atlanta's operating income using variable costing:
Calculate the variable cost per unit:
Variable cost per unit = Total variable costs / Units sold
Calculate the operating income using variable costing:
Operating income = (Selling price per unit × Units sold) - (Variable cost per unit × Units sold)
Now let's perform the calculations:
Absorption costing:
Cost per unit = $390,000 / 120,000
= $3.25
Variable cost per unit = $3.25 - $0
= $3.25 (assuming no variable costs)
Total variable costs = $3.25 × 120,000
= $390,000
Fixed costs = $390,000 - $390,000
= $0
Operating income = ($39 × 120,000) - ($3.25 × 120,000) - $0
= $4,680,000 - $390,000 - $0
= $4,290,000
Variable costing:
Variable cost per unit = $390,000 / 120,000
= $3.25
Operating income = ($39 × 120,000) - ($3.25 × 120,000)
= $4,680,000 - $390,000
= $4,290,000
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6. What type of innovation are electric cars? 7. How does the adoption curve apply to the diffusion of new products in the marketplace? 8. What are the main reasons that new products fail? 9. What occurs in the screening and evaluation step of the new product development process?
Electric cars are an example of disruptive innovation. They have created a new market and disrupted the traditional automobile market. Disruptive innovation is a type of innovation that creates a new market and value network and eventually disrupts the existing market by replacing the traditional technologies or products with new ones.
The adoption curve is a model that describes how new products are adopted by consumers over time. It has five stages: innovators, early adopters, early majority, late majority, and laggards. Innovators are the first to adopt new products, followed by early adopters, who are more cautious but still willing to take risks.
New products fail for a variety of reasons. Some of the main reasons include poor product design, lack of market research, inadequate marketing, and intense competition.
The screening and evaluation step is an important part of the new product development process. In this step, new product ideas are evaluated based on a variety of criteria, such as market potential, technical feasibility, and financial viability.
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Which of the following are key advantages of a financial bidder over a strategic bidder?
Select one:
a.
More aggressive financing
b.
Avoidance of ACCC issues
c.
Short-term exit strategies
d.
Optimisation in a non-public setting
e.
All of the options are correct
The following are some key advantages of a financial bidder over a strategic bidder: -Optimisation in a non-public setting. The answer is d.
Key advantages of a financial bidder over a strategic bidder- Financial bidders and strategic bidders are two of the most well-known forms of acquisition. A financial bidder is a buyer who acquires a company for financial gain, while a strategic bidder is a buyer who acquires a company for strategic gain. A financial buyer, unlike a strategic buyer, is not interested in the company's underlying strategic worth; instead, they are solely interested in the potential cash flows that can be obtained from the company.
The financial bidder has several key advantages over a strategic bidder, one of which is optimization in a non-public setting. Because financial bidders are less concerned with the long-term strategic value of the company, they can optimize the company's financial performance without worrying about the impact on the company's future strategic direction. Financial bidders also have more aggressive financing and short-term exit strategies, allowing them to move more quickly and efficiently through the acquisition process.
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The company in part (a) is planning to invest an additional $50 million to expand its production. With the additional production line, it is expecting a return of $200 million next year.
Its current asset is $800 million which is all financed by equity and valued at $10 per share. The market interest rate is 10%.
The company is having three options to finance the $50 million investment:
Option 1: fully financed by equity
Option 2: 50% financed by equity and 50% by debt
Option 3: fully financed by debt.
Calculate the earnings per share (EPS) for each option and identify the best option for its shareholders.
The company should fully finance the $50 million investment through equity only.
(a) The given information is:Current asset is $800 millionEquity is $800 millionMarket interest rate is 10%Planning to invest $50 million to expand its production.Expected return from additional production line is $200 million next year.Using the given information, let's calculate the Earnings per share for each option.Option 1: Fully financed by equityEarnings after investment = $200 million - $50 million = $150 millionThe equity capital will remain unchanged and hence the earnings per share will be:EPS = $150 million / $800 million = $0.1875 per shareOption 2: 50% financed by equity and 50% by debtThe amount of equity = $50 million / 0.5 = $100 millionDebt = $50 millionEarnings after investment = $200 million - $50 million = $150 millionThe interest on debt (10%) = $50 million * 10% = $5 millionNet earnings = $150 million - $5 million = $145 millionEPS = $145 million / $900 million = $0.1611 per shareOption 3: Fully financed by debtEarnings after investment = $200 million - $50 million = $150 millionThe interest on debt (10%) = $50 million * 10% = $5 millionNet earnings = $150 million - $5 million = $145 millionEPS = $145 million / $800 million = $0.18125 per shareThe best option for its shareholders will be the one with the highest EPS. As we can see from the calculations above, option 1 has the highest EPS of $0.1875 per share.
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Explain how the inflation measured according to the CPI and GDP
deflator may differ.
The inflation measured according to the CPI and GDP deflator may differ because the CPI is based on consumer goods and services, while the GDP deflator is based on all goods and services produced domestically.
The CPI (Consumer Price Index) is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. It measures inflation by tracking the changes in prices of goods and services purchased by households over time, including housing, food, clothing, and transportation. The CPI measures price changes for a specific market basket of goods and services. The GDP deflator, on the other hand, is an index of the overall level of prices of goods and services in an economy. It is calculated by dividing the nominal GDP by the real GDP and multiplying it by 100.
The GDP deflator measures inflation by comparing the prices of all goods and services produced domestically, including exports and imports. It measures the difference between the nominal GDP and the real GDP. In general, the CPI is considered to be a better measure of inflation for households, while the GDP deflator is considered to be a better measure of inflation for the entire economy. The CPI provides information on the cost of living for consumers, while the GDP deflator provides information on the overall level of prices in the economy.
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Len Kumar started his own consulting firm, Kumar Consulting, on June 1, 2022. The trial balance at June 30 is as follows.Kumar Consulting Trial Balance June 30, 2022 Debit Credit Cash $6,850 Accounts Receivable 7,000 Supplies 2,000 Prepaid Insurance 2,880 Equipment 15,000 Accounts Payable $4,230 Unearned Service Revenue 5,200 Common Stock 22,000 Service Revenue 8,300 Salaries and Wages Expense 4,000 Rent Expense 2,000 $39.730 $39,730In addition to those accounts listed on the trial balance, the chart of accounts for Kumar also contains the following accounts: Accumulated Depreciation—Equipment, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.
Other data:
1. Supplies on hand at June 30 total $720.
2. A utility bill for $180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. Services were performed for $4,100 of unearned service revenue by the end of the month.
5. Salaries of $1,250 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7. Invoices representing $3,900 of services performed by Kumar during the month have not been recorded as of June 30.
---------------------------
a. Prepare the adjusting entries for the month of June.
b. Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. (Use T-accounts.)
Service Revenue $16,300
c. Prepare an adjusted trial balance at June 30, 2022.
Total Trial Balance $45,310
To post the adjusting entries, make the necessary journal entries and transfer them to the appropriate T-accounts. Then, prepare an adjusted trial balance by adding the adjusted amounts from the T-accounts to the trial balance totals.
Let's go through the adjustments step by step:
1. Accumulated Depreciation—Equipment: Calculate the depreciation expense for the month of June and record it as an adjusting entry. Debit the Depreciation Expense account and credit the Accumulated Depreciation—Equipment account.
2. Salaries and Wages Payable: Determine the amount of salaries and wages earned but not yet paid at the end of June. Record this as an adjusting entry by debiting the Salaries and Wages Expense account and crediting the Salaries and Wages Payable account.
3. Insurance Expense: Determine the portion of the prepaid insurance that has expired during June. Debit the Insurance Expense account and credit the Prepaid Insurance account for this amount.
4. Utilities Expense: Calculate the amount of utilities expense for June and record it as an adjusting entry. Debit the Utilities Expense account and credit the Utilities Payable account.
5. Supplies Expense: Determine the amount of supplies used during June and record it as an adjusting entry. Debit the Supplies Expense account and credit the Supplies account.
Once you have made these adjusting entries, transfer the amounts to the respective T-accounts. For example, debit the Depreciation Expense account and credit the Accumulated Depreciation—Equipment account in their respective T-accounts.
To prepare an adjusted trial balance, add the adjusted amounts from the T-accounts to the trial balance totals. The adjusted trial balance should include the adjusted balances of all accounts, including the adjustments made above.
In summary, to post the adjusting entries, make the necessary journal entries and transfer them to the appropriate T-accounts. Then, prepare an adjusted trial balance by adding the adjusted amounts from the T-accounts to the trial balance totals.
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To prepare the adjusting entries for Kumar Consulting's trial balance, adjust entries for supplies, prepaid insurance, depreciation, salaries, service revenue, unrecorded service revenue, and utilities expenses must be made. These entries will need to be posted to the appropriate ledger accounts. Finally, an adjusted trial balance is prepared using the updated account balances after posting the adjusting entries.
Explanation:a. Adjusting entries for the month of June:
Debit Supplies Expense and credit Supplies to record the use of supplies during the month. The amount is $2,000 - $720 = $1,280.Debit Insurance Expense and credit Prepaid Insurance to record the expired portion of the insurance policy. The amount is $2,880 / 12 = $240.Debit Depreciation Expense and credit Accumulated Depreciation—Equipment to record the monthly depreciation expense. The amount is $250.Debit Salaries and Wages Expense and credit Salaries and Wages Payable to accrue the salaries expenses for June. The amount is $1,250.Debit Service Revenue and credit Unearned Service Revenue to recognize the services performed during the month. The amount is $4,100.Debit Accounts Receivable and credit Service Revenue to record the invoices for services performed but not yet recorded. The amount is $3,900.Debit Utilities Expense and credit Accounts Payable to record the utility bill that has not been recorded. The amount is $180.b. Posting the adjusting entries to the ledger accounts:
To post the adjusting entries, you will need to update the T-accounts for the impacted accounts with the amounts from the adjusting entries.
c. Adjusted trial balance at June 30, 2022:
The adjusted trial balance will include the updated account balances after posting the adjusting entries. The totals should match the Total Trial Balance of $45,310.
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Which of the following is not a feature of Rawls’ view:
a) A social contract
b) The original position
c) Rules of acquisition
d) The veil of ignorance
c) Rules of acquisition is not a feature of Rawls’ view.
Rules of acquisition are not a feature of Rawls' view. This term is actually associated with the Ferengi species in the fictional universe of Star Trek, who have a set of rules that govern their capitalist society.
Rawls' view, on the other hand, is based on the concept of a social contract, which is a hypothetical agreement that individuals make with one another to form a just and fair society. Rawls also proposed the idea of the original position, which is a hypothetical state in which individuals are placed behind a veil of ignorance, meaning that they are unaware of their own characteristics or circumstances, and must come up with principles for a just society without knowing how these principles will affect them personally. The veil of ignorance is a key component of this concept as it ensures that the principles developed are impartial and fair.
Thus, options A, B, and D are all features of Rawls' view while option C is not.
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The leadership process includes the leader, context, and followers.
True
False
True. The leadership process does include the leader, context, and followers.
The leadership process is a complex and dynamic interaction between leaders, their followers, and the surrounding context. It is not solely about the actions and qualities of the leader but also involves understanding the context in which leadership takes place and the dynamics of the followers.
The leader plays a central role in the leadership process. They are responsible for guiding and influencing the followers towards a common goal. Leaders provide direction, make decisions, inspire, motivate, and support their followers. They possess certain traits, skills, and behaviors that enable them to effectively lead others.
The context in which leadership occurs is another critical factor. The context includes the organizational culture, structure, values, external environment, and other situational factors that influence the leadership process.
Different contexts may require different leadership approaches or styles. For example, leading a team in a crisis situation would require a different approach compared to leading a team during times of stability.
Lastly, the followers are an integral part of the leadership process. Followers are individuals who are influenced by the leader and voluntarily choose to follow them.
They contribute to the overall success of the leadership process by carrying out tasks, providing feedback, and engaging in the goals and objectives set by the leader. The effectiveness of a leader is often determined by the support and engagement of their followers.
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Explain why it helps in tracing existing paths of movement for incorporating necessary modifications if any. [3] 12. Why it is prefixed when movements are not regular as far as frequency and distance moved are concerned?
Tracing existing paths of movement helps in incorporating necessary modifications, and it is prefixed when movements are irregular in terms of frequency and distance.
Tracing existing paths of movement is beneficial for incorporating necessary modifications because it provides a clear understanding of the current patterns and routes taken.
By analyzing the existing paths, it becomes easier to identify areas that require improvements or adjustments. This process allows for informed decision-making and strategic planning, ensuring that any modifications made align with the existing movement patterns and optimize efficiency.
When movements are not regular in terms of frequency and distance, it becomes even more important to prefix the tracing process. Irregular movements can indicate unpredictable patterns or variations in the routes taken.
By proactively tracing and documenting these irregular movements, it becomes possible to gain insights into the underlying factors causing the irregularities and identify opportunities for optimization.
Prefixing the tracing process helps capture the existing irregularities and provides a baseline for future analysis and comparison, enabling organizations to identify trends, patterns, and potential areas for improvement.
This proactive approach allows for better adaptability and responsiveness to changes in movement patterns, ultimately leading to more effective modifications and enhancements in the overall process.
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Assume the book value of an ocean liner is $288 and the tax rate is 22%. Also assume that the firm has lots of profits from other parts of its business. If the ocean liner is sold for $324, what is the free cash flow from the sale? $0 $316 −$36 $332
The free cash flow from the sale of the ocean liner is $332.
To calculate the free cash flow from the sale, we need to consider the book value, tax rate, and sale price. The formula for free cash flow is:
Free Cash Flow = Sale Price - Tax on Sale - Book Value
Given that the book value is $288 and the tax rate is 22%, we can calculate the tax on the sale:
Tax on Sale = (Sale Price - Book Value) * Tax Rate
Substituting the given values, we have:
Tax on Sale = ($324 - $288) * 0.22 = $7.92
Finally, we can calculate the free cash flow:
Free Cash Flow = $324 - $7.92 - $288 = $332
Therefore, the free cash flow from the sale of the ocean liner is $332.
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1) Do you suggest Balance sheet or Going rate approach compensation system for Disneyland employees? Why? Write pros and cons of those systems. Your answer should be in the context of Disneyland case study. (1000 words)
Compensation system can be defined as a collection of policies and practices that a firm utilizes to administer and organize its pay program.
In general, there are two common approaches that organizations adopt when designing a compensation system. These approaches are the going rate approach and the balance sheet approach.
In this context, this essay will discuss which compensation approach is suitable for Disneyland employees.
Disneyland is a theme park that is located in Anaheim, California. The company has been operating since 1955. Disneyland’s main purpose is to provide the public with a recreational and entertainment venue that will offer high-quality services.
The company has employed around 31,000 employees from different regions. The majority of Disneyland's employees are hired on a seasonal basis and are not entitled to receive fringe benefits, such as health insurance or paid vacation.
It is important to note that Disneyland's employees are essential in ensuring that the company achieves its objectives and mission statement. As such, it is vital for Disneyland's management to adopt a compensation system that will motivate employees to provide high-quality services to the customers.The balance sheet approach and the going rate approach are the two most common approaches that a company can adopt in a compensation system. The balance sheet approach is a compensation system that aims to provide employees with a fair and equitable salary package. In this approach, the company looks at the employees' financial needs, such as housing, taxes, cost of living, etc. The company then adjusts the salary package to ensure that the employee is not worse off after moving to a new location or role. In general, the balance sheet approach is best suited for expatriates, who are employees that are moved from one country to another.On the other hand, the going rate approach is a compensation system that aims to provide employees with a competitive salary package that is in line with the industry's average. In this approach, the company looks at what other companies in the same industry and region are paying their employees for similar roles. The company then sets the salary package to ensure that it is competitive and attractive to prospective employees.In general, the going rate approach is best suited for employees that work in a particular industry and region.
Pros of Going Rate Approach Compensation System:
The following are the benefits of adopting the going rate approach compensation system:
1. Competitive salary packages: The going rate approach ensures that employees are paid competitive salaries. This approach is essential in attracting and retaining high-quality employees.
2. Easy to implement: The going rate approach is easy to implement, and it does not require a lot of resources or time.
3. Flexibility: The going rate approach is flexible, and it can be adjusted to meet changing industry trends.
4. Comparable to industry standards: The going rate approach ensures that the company is comparable to other companies in the same industry and region.
Cons of Going Rate Approach Compensation System:
The following are the drawbacks of adopting the going rate approach compensation system:
1. May not be fair: The going rate approach may not be fair to employees that work in regions that have a higher cost of living.
2. May not motivate employees: The going rate approach may not motivate employees that are not interested in the salary package.
3. May not consider other benefits: The going rate approach may not consider other benefits, such as health insurance or paid vacation.
In conclusion, Disneyland should adopt the going rate approach compensation system for its employees. This approach will ensure that the employees are motivated to provide high-quality services to the customers.
However, Disneyland's management should ensure that the salary package is adjusted to cater to the employees' financial needs and the cost of living in the region.
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Assignment on Chapter 6 - Elasticity Use mid-point formula to calculate elasticities. 1. 1. Calculate own price elasticity of rice flour. What is the implication of this value? 2. Calculate cross-price elasticity between rice flour and wheat flour. What does the value indicate? 3. Calculate the income elasticity of rice flour. What does this value tell you? 4. Calculate total revenues from rice flour at different prices. Comparing these revenues, can you predict whether rice flour is elastic or inelastic? How? 5. Explain why the elasticity of agricultural products is less than that of manufacturing or industrial products? What is the impact of this difference on the volatility of these two types of goods?
1. Own price elasticity measures rice flour's price responsiveness.
2. Cross-price elasticity measures rice-wheat flour substitutes.
3. Income elasticity indicates rice flour's sensitivity to income changes.
4. Compare total revenues to predict rice flour's elasticity.
5. Agricultural products have lower elasticity due to limited substitutes.
1. The own price elasticity of rice flour can be calculated using the mid-point formula:
Own Price Elasticity = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2))
Given: P1 = $540
P2 = $550
Q1 = 100 kg
Q2 = 80 kg
Own Price Elasticity = ((80 - 100) / ((100 + 80) / 2)) / (($550 - $540) / (($540 + $550) / 2))
2. The cross-price elasticity between rice flour and wheat flour can be calculated using the mid-point formula:
Cross-Price Elasticity = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2))
Given:
P1 (Rice flour) = $540
P2 (Rice flour) = $550
Q1 (Wheat flour) = 200 kg
Q2 (Wheat flour) = 250 kg
Cross-Price Elasticity = ((250 - 200) / ((200 + 250) / 2)) / (($550 - $540) / (($540 + $550) / 2))
3. The income elasticity of rice flour can be calculated using the mid-point formula:
Income Elasticity = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((I2 - I1) / ((I1 + I2) / 2))
Given:
I1 = $53,000
I2 = $54,000
Q1 = 100 kg
Q2 = 80 kg
Income Elasticity = ((80 - 100) / ((100 + 80) / 2)) / (($54,000 - $53,000) / (($53,000 + $54,000) / 2))
4. Total revenue from rice flour at different prices can be calculated using the formula: Total Revenue = Price * Quantity
Calculate total revenue at different price points and compare them.
5. The elasticity of agricultural products is generally lower than that of manufacturing or industrial products due to factors such as limited substitutes and inelastic demand for essential food items. Agricultural products are often necessities with fewer alternatives, resulting in a lower responsiveness of demand to price changes. This lower elasticity reduces the volatility in demand and price fluctuations compared to manufacturing or industrial products, which often have more substitutes and elastic demand. The impact of this difference is that agricultural products tend to have more stable prices and demand patterns, while manufacturing or industrial products may experience more price volatility and demand fluctuations.
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What is detinue?
A. When personal property is used for a different purpose than what is intended.
B. When personal property is taken without permission.
C. When personal property is damaged.
Detinue refers to the wrongful withholding or retention of someone else's personal property.
Detinue is not specifically related to using personal property for a different purpose or damaging it (options A and C). Instead, it pertains to the situation where personal property is unlawfully held or detained by someone who does not have the right to possess it. This could occur when someone fails to return borrowed property, refuses to release goods after a contract has ended, or retains possession of property without legal justification.
In detinue cases, the rightful owner of the property can bring a legal action seeking the return of the property or compensation for its value. The legal remedy in detinue is typically focused on the return of the specific property rather than monetary damages.
Detinue is an area of law that addresses disputes over possession and wrongful withholding of personal property. It is separate from other legal concepts like trespassing, theft, or damage to property. The key element in detinue is the wrongful retention or withholding of property without lawful authority, which distinguishes it from other actions related to personal property.
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Matunga Mining Company is considering purchasing an equipment which has an initial investment of Rs. 600000 which has a useful life of 5 years. The annual net cash flows (after tax) are Rs. 272000. The discount rate is 11 per cent. What is the profitability index of the equipment? a. 1.68 b. 1.85 c. 1.51 d. 2.016
The profitability index (PI) of the equipment can be calculated by dividing the present value of the net cash flows by the initial investment. The formula is:
PI = Present Value of Net Cash Flows / Initial Investment
To calculate the present value of net cash flows, we need to discount each annual cash flow to its present value using the discount rate of 11%. The present value factor can be calculated using the formula:
Present Value Factor = 1 / (1 + Discount Rate)^n
where 'n' represents the number of years.
Using the formula, the present value factor for each year is as follows:
Year 1: 1 / (1 + 0.11)^1 = 0.9009
Year 2: 1 / (1 + 0.11)^2 = 0.8116
Year 3: 1 / (1 + 0.11)^3 = 0.7312
Year 4: 1 / (1 + 0.11)^4 = 0.6595
Year 5: 1 / (1 + 0.11)^5 = 0.5943
Next, we multiply each annual net cash flow by its respective present value factor:
Year 1: Rs. 272,000 * 0.9009 = Rs. 244,908.80
Year 2: Rs. 272,000 * 0.8116 = Rs. 220,715.20
Year 3: Rs. 272,000 * 0.7312 = Rs. 197,958.40
Year 4: Rs. 272,000 * 0.6595 = Rs. 179,324.00
Year 5: Rs. 272,000 * 0.5943 = Rs. 161,437.60
Now, we sum up the present values of the net cash flows:
Present Value of Net Cash Flows = Rs. 244,908.80 + Rs. 220,715.20 + Rs. 197,958.40 + Rs. 179,324.00 + Rs. 161,437.60 = Rs. 1,004,344.00
Finally, we can calculate the profitability index:
PI = Rs. 1,004,344.00 / Rs. 600,000.00 = 1.6739
Therefore, the profitability index of the equipment is approximately 1.67, which is closest to option (a) 1.68.
The profitability index of the equipment is 1.67, indicating that the investment is expected to generate positive returns and is considered financially viable.
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The following data is provided for Garcon Company and Pepper Company for the year ended December 31. Garcon Company $ 12,200 Pepper Company $ 16,150 18,500 Finished goods inventory, beginning Work in process inventory, beginning Raw materials inventory, beginning Rental cost on factory equipment Direct labor 22,050 11,400 10,200 27,250 24,850 24,000 36,200 19,700 15,300 26,800 19,200 Finished goods inventory, ending Work process inventory, ending Raw materials inventory, ending Factory utilities 7,800 8,200 12,900 15,500 32,500 51,000 General and administrative expenses Indirect labor 13,750 11,800 Repairs-Factory equipment 4,700 2,850 44,000 Raw materials purchases Selling expenses 58,000 53,600 46,600 Sales 279,660 374,200 Cash 31,000 21,700 Accounts receivable, net 14,600 19,450 1. Prepare income statements for both Garcon Company and Pepper Company. 2. Prepare the current assets section of the balance sheet for each company. Complete this question by entering your answers in the tabs below. Req 1 Garcon Req 1 Pepper Req 2 Garcon Req 2 Pepper Prepare the income statement for Garcon Company. GARCON COMPANY Income Statement For Year Ended December 31 Cost of goods sold: Goods available for sale Cost of goods sold < Req 1 Garcon 0 0 $ Req 1 Pepper >
Here is the income statement for Garcon Company
The income statementGARCON COMPANY
Income Statement
For Year Ended December 31, 2023
Sales $279,660
Cost of goods sold:
* Goods available for sale $325,100
* Less: Ending finished goods inventory (12,200)
* Cost of goods sold $312,900
Gross profit 66,760
Operating expenses:
* Selling expenses $58,000
* General and administrative expenses $32,500
Net income 24,260
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Rogers Services, Inc., has $8,600 cash on hand on January 1. The company requires a minimum cash balance of $7,100. January cash collections are $548,300. Total cash payments for January are $574,400. Prepare a cash budget for January. How much cash, if any, will Rogers need to borrow by the end of January?
Complete the cash budget below. (Use parentheses or a minus sign for negative ending cash balances or deficiencies.) Rogers Services, Inc.
Combined Cash Budget For the Month Ended January 31
Beginning cash balance Plus: Cash collections Total cash available Less: Cash payments Ending cash balance before financing Minimum cash balance desired Cash excess (deficiency)
Rogers Services, Inc.
Combined Cash Budget For the Month Ended January 31
Beginning cash balance: $8,600
Plus: Cash collections: $548,300
Total cash available: $556,900
Less: Cash payments: $574,400
Ending cash balance before financing: ($17,500)
Minimum cash balance desired: $7,100
Cash excess (deficiency): ($24,600)
The cash budget shows the company's cash inflows and outflows for the month of January. The beginning cash balance on January 1 is $8,600. The cash collections for January are $548,300, which is the total amount of cash received from various sources.
The total cash available is calculated by adding the beginning cash balance to the cash collections, resulting in $556,900. The cash payments for January, which include all the cash outflows, are $574,400. These payments represent various expenses and liabilities the company needs to settle during the month.
The ending cash balance before financing is determined by subtracting the cash payments from the total cash available. In this case, it results in a negative value of ($17,500), indicating a cash deficiency.
The minimum cash balance desired by the company is $7,100.
The cash excess (deficiency) is calculated by subtracting the minimum cash balance desired from the ending cash balance before financing. In this case, it shows a cash deficiency of ($24,600).
Based on the cash budget, Rogers Services, Inc. will need to borrow $24,600 by the end of January to cover the cash deficiency and meet its minimum cash balance requirement. This cash deficiency indicates that the company's cash outflows exceed its cash inflows for the month, highlighting the need for external financing to maintain adequate liquidity.
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How would you describe two price elasticities of demand of 1.80 & 5.20? Select an answer.
a: Both are inelastic, but the second is more elastic.
b: Both are elastic, but the second is more elastic
c: Both are elastic, but the first is more inelastic.
d: The first is inelastic, but the second is elastic.
e: The first is elastic, but the second is inelastic.
The correct answer is e: The first is elastic, but the second is inelastic. Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.
A price elasticity of demand greater than 1 indicates elasticity, meaning that a change in price will result in a proportionally larger change in quantity demanded. Therefore, a price elasticity of 1.80 is elastic. On the other hand, a price elasticity of 5.20 is inelastic because it is less than 1, indicating that a change in price will result in a proportionally smaller change in quantity demanded.
Economists use price elasticity to understand how supply and demand for a product change when its price changes. Like demand, supply also has an elasticity, known as price elasticity of supply. Price elasticity of supply refers to the relationship between change in supply and change in price. It’s calculated by dividing the percentage change in quantity supplied by the percentage change in price. Together, the two elasticities combine to determine what goods are produced at what prices.
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The price elasticities 1.80 and 5.20 are both considered elastic as they are greater than 1. This means the demand for both goods is sensitive to changes in price with the second even more elastic, implying a greater sensitivity to price changes.
Explanation:In economic demand theory, the price elasticity of demand measures the sensitivity of the demand for a good to a change in its price. In general, if the elasticity is greater than 1, the demand is considered elastic, meaning that consumers are relatively sensitive to price changes. If the elasticity is less than 1, the demand is inelastic.
Given the price elasticities of 1.80 and 5.20, both can be described as elastic - the demand for these goods is significantly responsive to price changes. However, the second case with an elasticity of 5.20 is more elastic than the first, as a change in price will have a more substantial effect on demand. This implies that consumers of the second good are more sensitive to price changes compared to consumers of the first good. Therefore, the correct answer is: b: Both are elastic, but the second is more elastic.
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For the following problems, this information is necessary: The discussion of EFN in the chapter implicitly assumes that the company was operating at full capacity. Often, this is not the case. For example, assume the Rosengarten was operating at 90% capacity. Full-capacity sales would be $1,000 / 0.90 = $1, 1111.11. The balance sheets shows $1,800 in fixed assets. The capital intensity ratio for the company is:
Capital intensity ratio = fixed assets / full-capacity sales = $1,800 / $1,111.11 = 1.62 (rounded).
The means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, it needs $1,250 * 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So EFN is only $565 - $225 = $340.
Problem #19 (Full-Capacity Sales): Thorpe Mfg., Inc., is currently operating at only 90 percent of fixed asset capacity. Current sales are $680,000. How much can sales increase before any new fixed assets are needed?
Sales can increase by up to $494,444.44 before any new fixed assets are needed for Thorpe Mfg., Inc.
Thorpe Mfg., Inc. is currently operating at 90% of fixed asset capacity, with current sales amounting to $680,000. To determine the full-capacity sales, we divide the current sales by 0.90: $680,000 / 0.90 = $755,555.56 (rounded). This represents the sales level the company would achieve if it were operating at full capacity.
Next, we calculate the additional sales that can be achieved before new fixed assets are needed. The projected sales level is given as $1,250,000.
By subtracting the projected sales level from the full-capacity sales, we can determine the increase in sales that can be accommodated without requiring new fixed assets: $755,555.56 - $1,250,000 = -$494,444.44 (rounded).
The negative value indicates that the company's current fixed asset capacity is sufficient to handle the projected sales level without the need for new fixed assets.
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Thorpe Mfg., Inc. can increase sales by $75,555.56 before any new fixed assets are needed.
Explanation:To determine how much sales can increase before any new fixed assets are needed, we need to consider the concept of full-capacity sales. Full-capacity sales represent the maximum sales a company can achieve when operating at full capacity. In this case, the company, Thorpe Mfg., Inc., is currently operating at 90% of fixed asset capacity.
Given that current sales are $680,000, we can calculate the full-capacity sales by dividing the current sales by the capacity utilization rate (0.90 in this case).
Therefore, full-capacity sales would be -
$680,000 / 0.90 = $755,555.56.
To determine how much sales can increase before new fixed assets are needed, we subtract the current sales from the full-capacity sales. Therefore, the increase in sales before new fixed assets are needed is -
= $755,555.56 - $680,000
= $75,555.56.
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According to the basic EOQ model, when the annual demand quadruples, the EOQ will: O remain the same O double
O decrease by a factor of two
O increase slightly, but not double
The EOQ or Economic Order Quantity is a model that determines the quantity of inventory that should be ordered for minimizing total inventory costs. The model is based on the costs of ordering, holding, and purchasing the inventory. According to the basic EOQ model, when the annual demand quadruples, the EOQ will decrease by a factor of two.
The EOQ is calculated with the help of the following formula: EOQ = √(2DS/H) Where D is the annual demand, S is the cost of placing one order, and H is the holding cost per unit per year.
According to the EOQ model, when the annual demand quadruples, the EOQ will decrease by a factor of two. This means that the optimal order quantity will be half of what it was before. The reason for this is that as the demand increases, the ordering cost will remain the same, but the holding cost will increase. This means that it will be more expensive to hold larger quantities of inventory, and hence the optimal order quantity will be smaller.
Therefore, the EOQ will not remain the same, double, or increase slightly, but instead will decrease by a factor of two. An EOQ model can be used for determining the ideal order size that a business can use to minimize inventory costs.
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