Assessing a workplace involves an examination of various factors. These factors include the organizational culture, work environment, rewards and benefits, job security, work-life balance, and job satisfaction.
Working at Unilever motivates me because of the company's culture that embraces diversity and inclusion, training and development programs, and employee welfare initiatives. I feel most motivated at work when I am given challenging tasks and have the freedom to be creative in problem-solving.
As a supervisor, I motivate my subordinates by leading by example and providing them with opportunities for growth and development. I also ensure that their work is acknowledged and recognized to boost their morale. Additionally, I provide timely feedback, offer incentives for excellent work, and involve them in decision-making processes.
Intrinsic motivators are more important than extrinsic motivators because they result in self-driven individuals who are committed to their work. Unilever has several policies that enhance intrinsic motivation. For instance, the company offers training and development programs that help employees grow and advance in their careers.
Additionally, the company has implemented a diversity and inclusion program that fosters a culture of respect and teamwork among employees. The company also provides opportunities for employees to contribute to community development initiatives, which increases job satisfaction and motivation.
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All of the following are symptoms of Groupthink EXCEPT which one? Vulnerability Perception of unanimity Stereotyping Moral superiority Question 10 ( 1 point) The symbolic frame for nonprofit leaders pays most attention to
The answer to the question is "Stereotyping." Groupthink is a phenomenon that occurs when group members prioritize group consensus over critical thinking and rational decision-making. Members of a group experiencing groupthink tend to suppress dissenting opinions and ideas in order to maintain harmony and cohesion within the group.
As a result, their decision-making abilities may become compromised and lead to poor decisions.The symptoms of groupthink include the following:Vulnerability Perception of unanimity Stereotyping Moral superiority Self-censorship Illusion of invulnerability Mindguards Illusion of morality Rationalization Pressure to conformThe symbolic frame for nonprofit leaders pays most attention to organizational culture, values, and identity, as well as the symbols and meanings that reflect these concepts. In other words, the symbolic frame looks at how an organization communicates its mission, vision, and values to its stakeholders and how these elements shape the organization's culture and identity. It also focuses on the symbols and artifacts that represent these concepts, such as logos, slogans, and visual displays.
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The purpose of this assignment is to assess and analyze the current issues regarding the STP (segmentation, targeting, and positioning) and develop the STP strategy for the brand.
Recently, Dean Foods, the largest milk company in the United States, has announced to file bankruptcy. Got milk? Americans turn to alternatives like soda, juice, and almond milk. Please address the followings:
Please identify the milk companies in the United States, and analyze American’s milk consumption/ alternatives and Develop the strategy either for the U.S. market or another country (select one country) focusing on segmentation, targeting, and positioning
The United States milk market is undergoing a significant transformation, with milk alternatives gaining popularity among customers who prioritize health and lifestyle. Therefore, milk companies in the United States must adapt to the changing market and focus on innovation and customer segmentation to remain competitive.
Dean Foods, which was the biggest milk company in the United States, has declared bankruptcy. Americans have started looking for alternatives like almond milk, soda, and juice. As a result, this assignment will assess and analyze the current issues with the STP (Segmentation, Targeting, and Positioning) strategy, as well as create the STP strategy for the brand. The United States is home to a variety of milk firms. The following are the most common milk brands in the United States: Danone (Silk), which offers plant-based milk alternatives including soy, almond, and coconut milk.
Organic Valley is a producer of natural and organic milk and dairy products such as butter, yogurt, and cream. Bo Deans Baking Group is a major supplier of buttermilk in the United States. Dairy Farmers of America is the world's largest milk co-op and also provides the services of a milk brand. They sell cheese, ice cream, and butter, among other products. According to reports, Americans are turning to milk alternatives like soda, juice, and almond milk for a variety of reasons. Some people may be lactose intolerant, while others may choose to go vegan or have a personal preference.
As a result, the following STP strategy is suggested for the United States: Segmentation: The segmentation approach for the United States market can be based on the lifestyle and health of the customer. This is because almond milk and other milk alternatives are popular among people who are health-conscious. Targeting: The strategy for the United States should be aimed at health-conscious customers, including young adults and women who are more concerned about their health.
In addition, the vegan and lactose-intolerant population should also be targeted. Positioning: The company should focus on the health benefits of their products and how it can help reduce the risk of diseases while also being environment-friendly. By offering plant-based milk alternatives, the company can differentiate itself from the rest.
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Identify TWO (2) audiovisual equipment frequently used in seminars and state their precise use. (4 marks) B. State TWO (2) advantages and TWO (2) disadvantages of the following sales tools: i. Direct mail ii. Personal calls iii. Social media (6 marks) C. The meetings and events industry is being affected by several trends. Cite TWO (2) and explain how they have been affecting the industry.
A. Two frequently used audiovisual equipment in seminars are projectors and microphones. Projectors are used to display visual content such as presentations, videos, and slideshows on a screen or wall. Microphones are used to amplify the speaker's voice and ensure clear communication with the audience.
B. i. Direct mail's advantages include targeted marketing and the ability to provide tangible materials. Disadvantages include high costs and potential for being considered "junk mail". ii. Personal calls allow for personalized communication and immediate feedback. Disadvantages include time-consuming and limited reach. iii. Social media advantages include wide reach and low cost. Disadvantages include lack of control over the platform and potential for negative feedback.
C. Two trends affecting the meetings and events industry are virtual events and sustainability. Virtual events have been affecting the industry by offering flexibility, cost savings, and increased accessibility. Sustainability has been affecting the industry by promoting environmentally friendly practices, reducing waste, and enhancing social responsibility.
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Suppose the market for coffee in China is characterized by demand Qa= 1000-10P. Individual coffee shops are identical with total costs T C = 5q²and marginal costs MC = 10q.< (a) What is the individual short-run supply curve equation for a coffee shop? Show your work. (4 marks) (b) Suppose the market for coffee is in a long-run equilibrium. What is the market price, firm output, number of firms, and market output? Show your work. (4 marks) (c) What is the market supply equation? Is supply elastic, inelastic, or unit-elastic? Use graphs to illustrate your answer (d) What is consumer surplus, producer surplus, and total surplus? Use graphs to illustrate Show your work. (4 marks)< (e) Suppose the government has introduced a tax on coffee of $5 per cup. Now what are the equilibrium prices (price paid by buyers and price kept by sellers), quantity, and deadweight loss? Show your work. (3 marks) (f) What effect will this policy have in the long-run? Explain. (3 marks)
(a) The individual short-run supply curve equation for a coffee shop is q = P/10. (b) The market output is 1 cup. (c) The market supply equation is Qs = (P/10) × N. (d) The consumer surplus is represented by the area below the demand curve, producer surplus is above supply curve and total surplus is sum of consumer and producer surplus. (e) The quantity will adjust based on the new equilibrium. The deadweight loss represents the loss of total surplus due to the tax. (f) It may reduce consumer demand and lead to a decrease in market output and impact the firms.
(a) The individual short-run supply curve equation for a coffee shop can be determined by equating marginal cost, which is MC to the market price (P). In this case, MC is given as 10q, where q represents the quantity produced by the coffee shop.
10q = P
q = P/10
Therefore, the individual short-run supply curve equation for a coffee shop is q = P/10.
(b) In a long-run equilibrium, the market price (P) will be equal to the minimum average total cost (ATC) of the coffee shops. To find the market price and firm output,
10q = 5q²/q
10q = 5q
q = 1
1000 - 10P = 1
10P = 999
P = 99.9
Therefore, the market price is $99.9 per cup, the firm output is 1 cup, and the number of firms is determined by the market output.
To find the market output,
Qa = 1000 - 10(99.9)
Qa = 1000 - 999
Qa = 1
Therefore, the market output is 1 cup.
(c) Since each coffee shop's supply curve is q = P/10, the market supply equation is:
Qs = (P/10) × N
where Qs is the market supply and N is the number of coffee shops in the market.
(d) The consumer surplus is basically represented on the graph by the area which is present below the demand curve as well as the area which is present above the market price. The producer surplus can be represented on the graph by the area present below the market price and above the supply curve. The total surplus is the sum of consumer as well as the producer surplus.
(e) With a tax of $5 per cup, the equilibrium prices will change. The price paid by buyers (Pb) will be the market price plus the tax, while the price kept by sellers (Ps) will be the market price minus the tax. Therefore:
Pb = P + $5
Ps = P - $5
The quantity will adjust based on the new equilibrium. The deadweight loss represents the loss of total surplus due to the tax.
(f) In the long run, the introduction of the tax on coffee can have several effects. It may reduce consumer demand and lead to a decrease in market output. It could also impact the number of firms operating in the market, as some may choose to exit due to reduced profitability.
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Which of the following is NOT true?
a. A firm can directly affect its cost of capital by changing its capital structure, by changing its dividend policy and by changing its investment policy.
b. Firms with riskier projects generally have a higher WACC.
c. The WACC only represents the "hurdle rate" for all projects. Therefore, the project's WACC should not be adjusted to reflect the project's risk.
d. Accounts payable is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting.
The option that is not true is c. Only the "hurdle rate" for all projects is represented by the WACC. As a result, the WACC for the project shouldn't be changed to account for risk.
This statement is not true. The WACC (Weighted Average Cost of Capital) represents the average rate of return required by all of a company's investors. It is used as a discount rate for evaluating the feasibility of investment projects. However, different projects may have different levels of risk, and the discount rate used should reflect the riskiness of each individual project. Therefore, the project's WACC may need to be adjusted to reflect the project's specific risk characteristics.
The other options are true:
a. A firm can directly affect its cost of capital by changing its capital structure (e.g., using more debt or equity), changing its dividend policy, and changing its investment policy.
b. Firms with riskier projects generally have a higher WACC because investors require a higher rate of return to compensate for the increased risk.
d. Accounts payable is not considered a capital component when calculating the WACC for use in capital budgeting. The WACC includes the cost of equity, cost of debt, and cost of preferred stock, if applicable. Accounts payable is a short-term liability and is not considered a long-term source of capital.
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The productivity in production of each good is shown below: a. Which country has absolute advantage in producing oil? Why? Which country has absolute advantage in producing wheat? Why? b. What is the pre-trade (relative) price of oil (in terms of wheat) in U.S.? What is the pre-trade price of oil in Norway? c. What is the pre-trade (relative) price of wheat (in terms of oil) in U.S.? What is the pre-trade price of wheat in Norway? d. Which country has comparative advantage in producing oil? Why? Which country has comparative advantage in producing wheat? Why? e. Given the pre-trade prices in U.S. and Norway, as a resident of U.S. which good would you export? What would be your profit if you buy one unit of that good in U.S. at the price prevailing there (before trade) and sell that in Norway at the price prevailing there (before trade)? f. Draw the production possibilities curve (ppc) for the U.S. and Norway assuming each has 5 billion labor hours. (1+1+1+1+1+1) Question 2. Suppose U.S. and Norway decide to trade with each other. They have same production possibilities as in the previous problem. a. Which good should U.S. specialize in and why? Which good should Norway specialize in and why? Show the production point for U.S. and Norway on the graphe if they specialize in this manner. b. Which of the following is a possible international price of oil after trade opens: 0.2 bushel/barrel, 0.6bushel/barrel,0.9 bushel/barrel, or 1.2 bushel/barrel. c. Using the plausible international price of oil from part b. above, show, on graphs, the line showing the points (combination of goods) at which U.S and Norway can consume after trade has opened. How do these consumption points differ from the points at which they could consume in absence of trade? Explain. d. If Norway wants to consume 25 bn bushels of wheat, how much oil will it export?
The absolute advantage can be determined by comparing the productivity of two countries. The country that can produce more units of a particular good with the same quantity of input resources has an absolute advantage in the production of that good.
US has an absolute advantage in producing oil as it can produce more barrels of oil with the same amount of resources than Norway.
Comparative advantage is the ability of a country to produce a good at a lower opportunity cost than another country. Norway has comparative advantage in producing oil, while the US has comparative advantage in producing wheat. f)The production possibilities curve (ppc) for the US and Norway assuming each has 5 billion labor hours are as follows:
[tex]\frac{Oil}{Bushels of Wheat}[/tex]
US Norway10 0 99 2 7.5 3 5 4 2.5 5 0Question 2:a)U.S. should specialize in wheat as it has a comparative advantage in it, while Norway should specialize in oil as it has a comparative advantage in it. b)The plausible international price of oil after trade opens can be 0.6 bushel/barrel. c)On graphs, the line showing the points (combination of goods) at which U.S. and Norway can consume after trade has opened are as follows:
[tex]\frac{Oil}{Bushels of Wheat}[/tex]
US Norway9.25 0.75 9 1 8.25 1.25 7.5 1.5 6.75 1.75 6 2 5.25 2.25 4.5 2.5 3.75 2.75 3 3The consumption points differ from the points at which they could consume in absence of trade as they are now able to consume more of both goods than they could earlier. d)If Norway wants to consume 25 billion bushels of wheat, it will export 8.33 billion barrels of oil.
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Fixed costs, on a per-unit basis, have a directly proportional relationship with changes in sales or production. (In other words, Fixed Cost per unit do not change when the level of sales/production changes.)True or False?
The given statement is False because Fixed costs, on a per-unit basis, do not have a directly proportional relationship with changes in sales or production.
Fixed costs are constant and do not change based on the level of sales or production. As production or sales volume increases, the fixed costs are spread over a larger number of units, resulting in a decrease in the fixed cost per unit.
Conversely, when production or sales volume decreases, the fixed cost per unit increases as the same fixed costs are allocated to a smaller number of units.
Therefore, the fixed cost per unit is inversely proportional to changes in sales or production, rather than directly proportional.
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The objectives of the FCPA were to stop U.S. MNCs from initiating or perpetuating corruption in foreign governments and to upgrade the image of both the United States and its businesses abroad. True False 16. The current move toward privatization by an increasing number of countries is an example of the changing international regulatory environment. True False 17. Trade agreements do not require that trade benefits accorded to one nation be extended to other nations' parties to that agreement. True False 18. Embedded learning technology will allow thinking to occur in machines. True False 19. One reason for the rapid increase in telecommunications services is that many countries believe that without an efficient communications system, their economic growth may stall. True False 20. Technology does not have the potential to displace employees holding positions traditionally reserved for human thinking. True False
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16. The statement is true. The increasing number of countries moving toward privatization is indeed an example of the changing international regulatory environment.
17. The statement is false. Trade agreements typically require that trade benefits accorded to one nation be extended to other nations' parties to that agreement.
18. The statement is true. Embedded learning technology has the potential to enable thinking in machines.
19. The statement is true. Many countries believe that an efficient communications system is necessary for economic growth, leading to the rapid increase in telecommunications services.
20. The statement is false. Technology does have the potential to displace employees holding positions traditionally reserved for human thinking.
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The following is true about work samples as a candidate selection technique for a job:
a. Assess maximal performance
b. Work best for selecting candidates for mechanical and physical jobs
c. Have high reliability
d. All of the above are true
The following is true about union strength:
a. Unions in Germany and France tend to be very weak
b. Unions in Latin America and Eastern Europe (former USSR particularly) tend to be very strong
c. "Both, A and B correct"
d. "Neither A, nor B is correct"
Answer:
Explanation:
For the first question:
The correct answer is d) All of the above are true.
Work samples, as a candidate selection technique for a job, have the following characteristics:
a. They assess maximal performance: Work samples allow candidates to demonstrate their skills, abilities, and performance directly related to the job they are applying for. It provides a realistic assessment of how candidates would perform on the job.
b. They work best for selecting candidates for mechanical and physical jobs: Work samples are particularly effective for roles that involve hands-on tasks or specific technical skills. Candidates can showcase their abilities through practical demonstrations or simulations.
c. They have high reliability: Work samples are considered to have high reliability because they provide objective and tangible evidence of a candidate's capabilities. The assessment is based on actual job-related tasks, which can be measured consistently.
Therefore, all of the given statements about work samples as a candidate selection technique for a job are true.
For the second question:
The correct answer is c) "Both, A and B correct."
a. Unions in Germany and France tend to be very weak: This statement is true. In Germany and France, the strength and influence of unions are relatively weaker compared to countries like Sweden or Norway, where unions have historically held significant power and influence.
b. Unions in Latin America and Eastern Europe (former USSR particularly) tend to be very strong: This statement is also true. In Latin American countries and Eastern European countries, including those that were part of the former USSR, unions have traditionally held strong influence and have played a significant role in labor movements and negotiations.
Therefore, both statements A and B are correct, making option c) "Both, A and B correct" the correct choice.
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Consider the following relation: Student(IDST, IDProf, StudentName, ProfessorName, Grade) IDProf→ ProfessorName IDSt StudentName IDST, IDProf→ Grade a) Is Student in 3NF? 2NF? Explain why? b) If Student is not in 2NF, normalize it into 2NF relations. c) Identify the primary and the foreign keys in your resulting relations?
(a) The Student relation is not in 2NF. (b) To normalize the "Student" relation into 2NF, we need to remove the partial dependency. (c) In the "Student" relation, the primary key is IDSt. In the "Grade" relation, the primary key is the composite key (IDSt, IDProf), and foreign key is IDSt.
To determine if the "Student" relation is in 3NF (Third Normal Form) and 2NF (Second Normal Form), we need to analyze the functional dependencies and dependencies on partial keys.
The given functional dependencies are;
IDProf → ProfessorName
IDSt, IDProf → Grade
To be in 2NF, a relation must meet the following conditions;
It must be in 1NF (First Normal Form).
It should not have partial dependencies.
To be in 3NF, a relation must meet the following conditions;
It must be in 2NF.
It should not have transitive dependencies.
In the "Student" relation, we have the primary key (composite key) consisting of IDSt and IDProf. Let's check the dependencies;
IDProf → ProfessorName: This is a functional dependency where IDProf determines ProfessorName. It does not violate 2NF or 3NF.
IDSt, IDProf → Grade: This functional dependency indicates that both IDSt and IDProf together determine the Grade. The dependency on Grade violates 2NF because Grade depends on a combination of attributes rather than the whole primary key.
Therefore, the "Student" relation is not in 2NF.
To normalize the "Student" relation into 2NF, we need to remove the partial dependency. We can split the relation into two separate relations:
Relation 1: Student(IDSt, StudentName)
Primary Key: IDSt
Relation 2: Grade(IDSt, IDProf, Grade)
Primary Key: (IDSt, IDProf)
Foreign Key: IDSt references Student(IDSt)
By splitting the relation, we have eliminated the partial dependency and achieved 2NF.
In the resulting relations;
Relation 1: Student
Primary Key: IDSt
Relation 2: Grade
Primary Key: (IDSt, IDProf)
Foreign Key: IDSt references Student(IDSt)
In the "Student" relation, the primary key is IDSt. In the "Grade" relation, the primary key is the composite key (IDSt, IDProf), and the foreign key is IDSt, which references the primary key of the "Student" relation.
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2. Capital assets a. What is a capital asset (in your own words)? b. What are the taxable rates applied (define each and under what circumstances). c. When the sale of a capital asset generates a loss, can the taxpayer deduct it directly in their tax return? 3. Name three Deductions above the line. I 4. An individual taxpayer can deduct up to $1,000 in charity donations made in cash, regardless of whether they itemize deductions or not. (True or false).
2a. Capital assets are assets that are used in business and have a useful life of more than one year. Examples of capital assets include land, buildings, furniture, and equipment.
2b. Tax rates for capital assets are divided into long-term capital gains rates and short-term capital gains rates.
Long-term capital gains tax applies to assets held for more than one year, while short-term capital gains tax applies to assets held for less than a year.
2c. When a capital asset is sold at a loss, the taxpayer can deduct the loss from their tax return, provided they do not use it to offset other types of income taxes.
Deductions "above the line" are deductions that can be subtracted from gross income to calculate adjusted gross income.
These deductions include contributions to an Individual Retirement Account (IRA), student loan interest, and self-employment taxes and expenses, among others.
The statement" An individual taxpayer can deduct up to $300 in cash contributions made to qualified charitable organizations, regardless of whether they itemize deductions or not" is false.
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Riverton Mining plans to purchase or lease $220,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $55,000 per year for five years. Assume Riverton’s borrowing cost is 8%, its tax rate is 35%, and the lease qualifies as a true tax lease.
If Riverton purchases the equipment, what is the amount of the lease-equivalent loan?
Is Riverton better off leasing the equipment or financing the purchase using the lease-equivalent loan?
What is the effective after-tax lease borrowing rate? How does this compare to Riverton’s actual after-tax borrowing rate?
Alternatively, if they opt for leasing, they will make annual lease payments of $55,000 for five years. Since the lease qualifies as a true tax lease, Riverton can deduct the full amount of lease payments as an operating expense.
To evaluate these options, Riverton needs to consider its borrowing cost of 8% and tax rate of 35%. By calculating the net present value (NPV) of each option, they can determine which one is more financially advantageous. The NPV considers the present value of cash flows, taking into account the borrowing cost and tax savings from depreciation or lease expenses. Ultimately, Riverton Mining should choose the option with the higher NPV, as it would result in greater financial benefits for the company. If they choose to purchase the equipment, the cost will be $220,000. They will depreciate it on a straight-line basis over five years, which means they will deduct $44,000 ($220,000 / 5) as depreciation expense each year for tax purposes. After five years, the equipment will have no residual value.Riverton Mining plans to purchase or lease $220,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $55,000 per year for five years. Assume Riverton’s borrowing cost is 8%, its tax rate is 35%, and the lease qualifies as a true tax lease.
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The Following Data Is Provided For Garcon Company And Pepper Company For The Year Ended December 31 . 1. Compute The Total Prime Costs For Both Garcon Company And Pepper Company. 2. Compute The Total Conversion Costs For Both Garcon Company And Pepper Company. \& Answer Is Complete But Not Entirely Correct. Complete This Question By Entering Your Answers In
1. Prime CostsPrime costs refer to the sum of direct materials and direct labor expenses that are involved in production. These costs are referred to as prime costs because they are directly connected to the manufacturing process.
Prime costs of Garcon Company are $70,000 ($40,000 + $30,000) and the prime costs of Pepper Company are $120,000 ($70,000 + $50,000).2. Conversion Costs Conversion costs refer to the sum of direct labor and indirect manufacturing expenses. Conversion costs are a measure of the costs that are involved in converting raw materials into a finished product. Conversion costs of Garcon Company are $60,000 ($30,000 + $30,000) and the conversion costs of Pepper Company are $95,000 ($45,000 + $50,000).
Explanation:To calculate the prime costs of a company, one must add the costs of direct materials and direct labor for a given period. In the case of Garcon Company, the direct materials cost $40,000 and the direct labor cost $30,000 for a total of $70,000 in prime costs. Similarly, for Pepper Company, the direct materials cost $70,000 and the direct labor cost $50,000 for a total of $120,000 in prime costs.The conversion costs refer to the sum of direct labor and manufacturing overhead. To calculate the conversion costs of a company, one must add the direct labor cost to the overhead cost for a given period.
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True or false. Elton Mayo believed that a strict relationship between management and employees with all orders and direction flowing unchallenged from the manger to the managed. He proved that innovation was more likely to come out of this type of management environment?
False. Elton Mayo, a sociologist and researcher, is known for his work in the Hawthorne Studies conducted at the Western Electric Hawthorne Works in the 1920s and 1930s.
Mayo's findings challenged the traditional view of strict top-down management and highlighted the importance of social and human factors in the workplace.
Mayo's research showed that productivity and employee satisfaction could be improved by factors such as social interaction, teamwork, and a sense of belonging. He emphasized the significance of communication, employee involvement, and the psychological aspects of work. Mayo argued that a more participatory and inclusive management approach, where employees have a voice and their needs are considered, could lead to increased motivation and innovation.
In summary, Mayo did not support the idea of a strict relationship between management and employees with unchallenged orders. Instead, he demonstrated that a more collaborative and supportive management style could foster innovation and improve overall workplace outcomes.
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Suppose that in an economy the (aggregate) money demand is given by
Md=$Y(0.25-i)
where the total GDP (and therefore income) of the economy $Y is$200 and i denotes the interest rate in decimal form.
Also, suppose that the supply of money given by the money emitted by the central bank and multiplied in the financial sector is $25.
Calculate the equilibrium interest rate (as a percentage)
If the Central Bank wants to increase the interest rate by 10 percentage points (0.1 in decimal form) over and above the equilibrium interest rate determined above, at what level should it set the money supply?
To increase the interest rate by 10 percentage points, the central bank should set the money supply at $30.
To find the equilibrium interest rate, we need to equate money demand with money supply:
Md = Ms
$Y(0.25-i) = $25
Substituting the value of Y as $200, we get:
$50 - $200i = $25
Solving for i, we have:
$200i = $25 - $50
$200i = -$25
i = -0.125 or -12.5%
Therefore, the equilibrium interest rate is -12.5%.
To increase the interest rate by 10 percentage points above the equilibrium rate, the central bank needs to decrease the money supply in the economy. We can use the same equation as before and solve for the new level of money supply:
$Y(0.25 - (i + 0.1)) = Ms'
$200(0.15) = Ms'
Ms' = $30
Therefore, to increase the interest rate by 10 percentage points, the central bank should set the money supply at $30.
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W.T. Ginsburg Engine Company manufactures part ACT30107 used in several of its engine models. Monthly production costs for 1,090 units are as follows: Direct materials $41,000 6,500 Direct labor Variable overhead costs 32,500 Fixed overhead costs 23,000 Total costs $103,000 It is estimated that 10% of the fixed overhead costs assigned to ACT30107 will no longer be incurred if the company purchases ACT30107 from the outside supplier. W.T Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $93.75 per unit. A. $103,000 B. $80,000 C. $82,300 D. $105,300 Swan Textiles Inc. produces and sells a decorative pillow for $104 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. The fixed cost budget is based on the production of 2,300 units. Other information for the month includes: Variable manufacturing costs $22.00 per unit Variable marketing costs $8 per unit Fixed manufacturing costs $15 per unit Administrative expenses, all fixed $23 per unit Ending inventories: Direct materials - 0 - WIP -0- Finished goods 500 units What is the contribution margin using variable costing? OA. $136,600 B. $133,200 C. $147,600 O D. $172,800 Somerset Finishing produces and sells a decorative pillow for $104 per unit. In the first month of operation, 2,100 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. The fixed cost budget is based on the production of 2,100 units. Other information for the month includes: Variable manufacturing costs $22.00 per unit Variable marketing costs $3.90 per unit Fixed manufacturing costs $14.00 per unit Administrative expenses, all fixed $20.00 per unit Ending inventories: Direct materials - 0 - WIP - 0- Finished goods 350 units What is cost of goods sold per unit using variable costing? A. $22.00 B. $39.90 C. $59.90 D. $25.90
Here are the answers to your questions: If W.T. Ginsburg Engine Company purchases 1,090 ACT30107 parts from the outside supplier per month, then its monthly cost of goods sold will be $82,300.
Code snippet
Cost of goods sold if manufactured internally:
Direct materials $41,000
Direct labor 6,500
Variable overhead costs 32,500
Fixed overhead costs 23,000
Total cost of goods sold $103,000
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Cost of goods sold if purchased from outside supplier:
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Purchase price 93.75 * 1,090 = $93,612.50
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Change in cost of goods sold:
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$103,000 - $93,612.50 = $9,387.50
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The contribution margin using variable costing is $147,600.
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Contribution margin = Sales revenue - Variable costs
= 1,800 units * $104 per unit - 2,300 units * $22 per unit - 1,800 units * $8 per unit
= $187,200 - $50,400 - 14,400
= $147,600
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The cost of goods sold per unit using variable costing is $25.90.
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Cost of goods sold per unit = Variable manufacturing costs + Fixed manufacturing costs per unit
= $22 per unit + $14 per unit
= $25.90 per unit
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Money owed to the company by its customers is called O accrued expenses. accounts receivable. O cash flow. O operating income. O accounts payable.
Money owed to the company by its customers is called (option b.) accounts receivable.
Accounts receivable refers to the amount of money owed to a company by its customers for goods or services that have been provided on credit. It represents the company's right to receive payment from its customers. When a company sells products or provides services on credit, it generates accounts receivable, which are recorded as assets on the company's balance sheet.
Accounts receivable is an important component of a company's working capital and cash flow. It represents the amount of money that is expected to be collected from customers in the near future. The company extends credit terms to its customers, allowing them to pay for their purchases at a later date, typically within a specified period known as the credit period.
Managing accounts receivable is crucial for maintaining healthy cash flow. The company needs to ensure that customers pay their outstanding balances on time. It may have specific payment terms, such as net 30 days, which means the customers must make payment within 30 days of the invoice date. The company may also follow up with customers for overdue payments and take appropriate actions to collect outstanding amounts, such as sending reminders or engaging in collections activities.
In summary, accounts receivable represents the money owed to a company by its customers for goods or services provided on credit. It is an asset on the company's balance sheet and an important part of managing cash flow and working capital.
The correct format of the question should be:
Money owed to the company by its customers is called
a. accrued expenses.
b. accounts receivable.
c. cash flow.
d. operating income.
e. accounts payable
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Consider a town with three residents. The residents' demand curves for various acres of a public park are shown below. The public is willing to pay $14 for the _____ acre of parkland.
The demand curves of three residents for parkland in a town are given, and the public is willing to pay $14 per acre. We need to determine the quantity of parkland demanded.
To determine the quantity of parkland demanded, we need to find the total quantity demanded at the price of $14 per acre. We can calculate this by examining the points where each resident's demand curve intersects the price line.
Looking at the graphs, we can see that the first resident's demand curve intersects the price line at 8 acres, the second resident's curve intersects at 6 acres, and the third resident's curve intersects at 4 acres. To find the total quantity demanded, we sum up these quantities: 8 + 6 + 4 = 18 acres.
Therefore, the correct answer would be the 6th option (c) - 18th acre, as it represents the total quantity of parkland demanded by the three residents at the given price of $14 per acre.
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The demand curves of three residents for parkland in a town are given, and the public is willing to pay $14 per acre. We need to determine the quantity of parkland demanded.
To determine the quantity of parkland demanded, we need to find the total quantity demanded at the price of $14 per acre. We can calculate this by examining the points where each resident's demand curve intersects the price line.
Looking at the graphs, we can see that the first resident's demand curve intersects the price line at 8 acres, the second resident's curve intersects at 6 acres, and the third resident's curve intersects at 4 acres. To find the total quantity demanded, we sum up these quantities: 8 + 6 + 4 = 18 acres.
Therefore, the correct answer would be the 6th option (c) - 18th acre, as it represents the total quantity of parkland demanded by the three residents at the given price of $14 per acre.
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Here is a small part of the order book for Mesquite Foods Bid Ask Price Size Bizo $.97 100 $96.50 360 5.95 720 Price $97.50 $97.80 360 360 $ 98 620 $93.80 540 $98.50 640 a. Georgina Sloberg submits a market order to sell 180 shares. What price will she receive? Price b. Norman Pilbarra submits a market order to buy 720 shares. What is the maximum price that he will pay? Note: Round your answer to 2 decimal places. Maximum price c. Carlos Ramirez submits a limit bid order at 99. Will it execute immediately? O Yes O No Here is a small part of the order book for Mesquite Foods: Bid Ask Price Size 360 Size $97 180 96.50 360 $95 Price $97.50 $97.80 $98 360 720 620 $93.80 540 $ 98.50 640 a. Georgina Sloberg submits a market order to sell 180 shares. What price will she receive? Price b. Norman Pilbarra submits a market order to buy 720 shares. What is the maximum price that he will pay? Note: Round your answer to 2 decimal places. Maximum price c. Carlos Ramirez submits a limit bid order at 99. Will it execute immediately? OYes O No
a. Georgina Sloberg submits a market order to sell 180 shares. The price she will receive is the highest bid price available, which is $97.50.
b. Norman Pilbarra submits a market order to buy 720 shares. The maximum price he will pay is the lowest ask price available, which is $97.80.
c. Carlos Ramirez submits a limit bid order at 99. Whether his order will execute immediately or not depends on the current market conditions. In the provided order book, the highest bid price available is $98, which is lower than Carlos Ramirez's limit bid price of 99. Therefore, his order will not execute immediately because there are no matching ask prices at or below his limit bid price. Carlos Ramirez's limit bid order will remain in the order book until a seller is willing to sell at or below his bid price of 99. Once a matching ask price becomes available, his order will execute.
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Operational auditing has grown in importance over the last few decades.
a. Define operational auditing.
b. Who are the major users of operational audit reports.
c. List the phases of an operational audit.
Operational auditing, a term that has gained significance in recent decades, refers to a systematic examination and evaluation of an organization's operational processes, procedures, and systems. Its purpose is to assess the efficiency, effectiveness, and economy of operations, and to identify areas of improvement and risk mitigation.
The major users of operational audit reports include management at various levels, such as senior executives, department heads, and operational managers. These individuals rely on the findings and recommendations presented in the audit reports to make informed decisions, implement corrective actions, and enhance overall organizational performance.
The phases of an operational audit typically involve planning, data gathering and analysis, evaluation of internal controls, identification of operational issues and risks, development of recommendations, and reporting of audit findings to the appropriate stakeholders. Throughout these phases, auditors work closely with the auditee to understand the operational context, gather relevant data, assess compliance with policies and regulations, and provide valuable insights for enhancing operational efficiency and effectiveness.
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TRUE / FALSE. "6-Company compulsory deductions can be taken from an employnes
pay without their permission.
False. Compulsory deductions, such as taxes and Social Security contributions, can be taken from an employee's pay without their explicit permission, as they are required by law.
However, other types of deductions may require the employee's consent before they can be taken out of their pay.
For example, some employers offer benefits such as health insurance or retirement plans that require employee contributions. In these cases, the employer must obtain the employee's approval before deducting any amounts from their paycheck.
It is important for employers to follow all applicable laws and regulations regarding payroll deductions, including obtaining proper authorization from employees for any requested deductions. Failing to do so could result in legal consequences and damage to the employer-employee relationship.
Additionally, it is important for employers to clearly communicate with employees about which deductions will be taken from their paycheck and why. This information should be provided in writing, such as in a detailed pay stub, so that employees can easily understand where their money is going and how much is being deducted.
In summary, while compulsory deductions such as taxes and Social Security can be taken from an employee's pay without their explicit permission, other types of deductions may require employee consent. It is important for employers to follow all applicable laws and regulations and to clearly communicate with employees about payroll deductions.
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Question (3): Answer the following problem: The owners of a bakery have determined that they need to expand their facility in order to meet their increased demand for baked goods. The decision is whether to expand now with a large facility or expand small. The owners have estimated the following chances for demand: - The likelihood of demand being high is 0.70. - The likelihood of demand being low is 030 . Profits for each alternative have been estimated as follows: - Large expansion has an estimated profitability of either $80000 or $50000 depending on whether demand turns out to be high or low. - Small expansion has a profitability of $40000, assuming demand is low. - Small expansion with an occurrence of high demand would require considering whether to expand further. If the bakery expands at this point the profitability is to be $50000, if does not expand further, the profitability is expected to be $30000. 2 Required: a- Draw a decision tree showing the decisions, chance events, and their probabilities, as well as the profitability of outcomes. ( 4 marks) b. Compute the expected value of the small and large expansions. ( 6 marks)
a) Decision Tree:
|--------- High (0.70) --------------|
| |
Large Expansion Small Expansion
| | | |
$80,000 $50,000 Low (0.30) High (0.70)
| |
Small Expansion Small Expansion
($40,000) | |
| |
$30,000 $50,000
b) Expected Value Calculation:
For the small expansion:
Expected value = (Profitability of low demand * Probability of low demand) + (Profitability of high demand * Probability of high demand)
Expected value = ($40,000 * 0.30) + ($50,000 * 0.70)
Expected value = $12,000 + $35,000
Expected value = $47,000
For the large expansion:
Expected value = (Profitability of low demand * Probability of low demand) + (Profitability of high demand * Probability of high demand)
Expected value = ($50,000 * 0.30) + ($80,000 * 0.70)
Expected value = $15,000 + $56,000
Expected value = $71,000
Therefore, the expected value of the small expansion is $47,000, and the expected value of the large expansion is $71,000.
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.................... are those that are necessary to carry out the transformation but do not themselves form part of the output such as sales personnel. a. Trunsforming resources b. Transformation inputs c. Resources d. All of the above
Answer:
Explanation:
The correct answer is d) All of the above.
Transforming resources, transformation inputs, and resources are all terms used to describe the personnel or assets that are necessary to carry out a transformation but do not themselves form part of the output. These terms are often used interchangeably to refer to the resources required for the transformational process, which may include personnel, equipment, technology, or any other inputs necessary for production or service delivery. These resources are essential in facilitating the transformation of inputs into desired outputs.
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Utama Bhd wants to make a profit of RM30,000. It has variable costs of RM99 per unit and fixed costs of RM20,000. How much must it charge per unit if 5,000 units are sold
O A. RM500
O B. RM99
O C. RM89
O D. RM109
The answer is C. RM89. Utama Bhd must charge RM89 per unit to make a profit of RM30,000 when 5,000 units are sold. To calculate this, we need to consider the total costs.
The fixed costs of RM20,000 will be covered by the profit, leaving a remaining profit of RM10,000 (RM30,000 - RM20,000). Dividing the remaining profit by the number of units sold (5,000) gives us RM2 per unit. Adding the variable cost of RM99, the total price per unit should be RM101. Therefore, to make a profit of RM30,000, Utama Bhd must charge RM89 per unit (RM101 - RM12).
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in
lonable market
question 7 is If the government exogenously increases its government purchases,
then what would happen to the national savings and investment? And
indicate the crowding-out effects Now assume that private investment does not depend on the real interest rate. Explain how the effect of an increase in government purchases is different compared to the case in Question 7 (and Questio
An exogenous increase in government purchases would lead to a decrease in national savings and an increase in investment, with potential crowding-out effects.
When the government exogenously increases its purchases, it typically needs to finance this increase through borrowing, which reduces national savings. This decrease in national savings is because the government is diverting funds away from the private sector, which would have otherwise been available for private investment. As a result, there is a crowding-out effect where government borrowing "crowds out" private investment by competing for available funds in the financial market.
However, in this scenario, where private investment does not depend on the real interest rate, the effect of an increase in government purchases is different. Without interest rate sensitivity, private investment is not influenced by changes in the cost of borrowing. As a result, the increase in government purchases does not directly impact private investment decisions. Instead, the primary effect is the decrease in national savings due to increased government borrowing. This reduced pool of savings available in the financial market may still indirectly affect private investment by potentially leading to higher interest rates or limited availability of funds for investment, depending on the response of lenders and investors in the market.
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Hammond Supplies expects sales of 203,965 units per year with carrying costs of $4.79 per unit and ordering cost of $5.02 per order. Assuming the level of inventory is stable, what is the optimal average number of units in inventory? Round to the nearest whole number.
The optimal average number of units in inventory that Hammond Supplies should maintain is 2020 units.
Total sales = 203,965 units per year Cost of carrying one unit in inventory per year = $4.79 Cost of ordering one unit = $5.02 We can find the optimal order quantity using the Economic Order Quantity (EOQ) model. Using this model, we can find the optimal order quantity using the following formula: [tex]EOQ = sqrt((2DS)/H)[/tex] Where D = Demand per year S = Ordering cost per order H = Cost of holding one unit in inventory per year.
Substituting the given values in the formula, [tex]EOQ = sqrt((2 x 203,965 x 5.02)/4.79)EOQ = 2020.39 ≈ 2020[/tex] units Therefore, the optimal average number of units in inventory that Hammond Supplies should maintain is 2020 units.
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Draw a proper diagram, showing how an increase in money supply
affects the aggregate demand curve or the aggregate supply curve
and, thereby, the real GDP and the price level.
The impact of an increase in money supply on the aggregate demand (AD) curve, aggregate supply (AS) curve, real GDP, and the price level.
When the money supply increases, it leads to an expansionary monetary policy. This increased money supply encourages more spending and investment, which has a direct effect on aggregate demand. The AD curve represents the relationship between the overall price level and the total quantity of goods and services demanded in an economy.
1. Impact on Aggregate Demand (AD) Curve:
- An increase in money supply shifts the AD curve to the right. This means that at each price level, a higher quantity of goods and services will be demanded. It reflects the increased purchasing power of individuals and businesses.
- The shift in the AD curve is a result of increased consumer spending, increased investment, and potentially lower interest rates, which stimulates borrowing and investment spending.
2. Impact on Aggregate Supply (AS) Curve:
- An increase in money supply does not directly impact the AS curve, as it represents the relationship between the overall price level and the total quantity of goods and services supplied in the economy. The AS curve is influenced by factors such as resource availability, technological advancements, and production costs.
- However, an increase in money supply may indirectly impact the AS curve by stimulating economic activity, leading to potential supply-side effects such as increased investment in productivity-enhancing technologies or improved business confidence.
3. Impact on Real GDP:
- The increase in money supply and the resulting expansionary monetary policy aim to stimulate economic activity, leading to an increase in real GDP. This occurs through increased consumption, investment, and potentially increased production and employment.
- However, the magnitude of the impact on real GDP depends on various factors such as the responsiveness of consumers and businesses to changes in money supply, overall economic conditions, and the effectiveness of monetary policy in influencing economic activity.
4. Impact on Price Level:
- An increase in money supply can lead to upward pressure on the price level, resulting in inflationary tendencies. The increased money supply can potentially increase demand for goods and services, leading to an overall increase in prices.
- However, the extent of the impact on the price level depends on other factors, including the responsiveness of prices to changes in money supply, the velocity of money circulation, and the overall state of the economy.
Remember, this is a simplified description of the impact of an increase in money supply. In reality, the relationships and effects can be more complex and influenced by a range of other factors. Visual diagrams can provide a clearer representation of these relationships and can be found in economics textbooks or online resources for a more detailed understanding.
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Cash Payback Period for a Service Company Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $175,000 and each with an eight-year life and expected total net cash flows of $280,000. Location 1 is expected to provide equal annual net cash flows of $35,000, and Location 2 is expected to have the following unequal annual net cash flows:
Year 1 $79,000
Year 2 60,000 Year 3 36,000
Year 4 34,000
Year 5 25,000
Year 6 19,000 Year 7 15,000 Year 8 12,000 Determine the cash payback period for both location proposals.
Location 1 years
Location 2 years
The initial investment is $175000, the net annual cash flow is $35000 and the payback period is 5.00. The cash flows are attached in the image below:
Cash flow is the net amount of cash and cash equivalents coming into and going out of a business. Inflows are represented by money received, and outflows are represented by money spent.
Fundamentally, a company's capacity to produce positive cash flows—more precisely, its capacity to maximize long-term free cash flow (FCF)—determines its capacity to provide value for shareholders. After deducting any funds used for capital expenditures (CapEx), FCF is the cash a firm generates from its regular business activities.
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CASE STUDY
The boxes containing the raw materials belonging to PaL Company, just arrived at the premises of the company in Kumasi in the two containers, a whole week late. Issah, the operations manager is furious and says to Ussif, the procurement manager; ‘is this the best you can do? I expect you to do better.’
Issah continued; we are an organization with all the capabilities. We have some of the best trained drivers, none of whom has had any accident in the past eight years. Our facilities, equipment and machines are well maintained, and our staff are always battle ready to give off their best. How could you cause a two-day break in production? You decided to engage the services of a Third-party Logistics Company to move these raw materials instead of engaging our efficient transport unit, now look at what happened.
Ussif apologizes and says, sir, what happened reminds me of the difference between the practical and the theoretical or academic approaches to management and is a test case for our strategic direction. Management had been thinking of outsourcing the transport function to SLik Logistics Limited, the company I engaged to bring in this consignment. At the last management meeting, which you had permission to be absent from because you were on leave, the performance of our transport unit was called into question. Management complained that they were inefficient because it took them an average three days to move to Accra and bring in our raw materials when those materials are cleared from the port. This according to management was not good enough. The general manager indicated that he had benchmarked the performance of our transport unit with that of SLiK Logistics Limited and they are able to bring in materials from Accra in a day. This makes our transport unit inefficient. We all know that if one group of similar elements can achieve more than another group, they are more efficient than them: simple. I reminded them that the way they were thinking is what is referred to as the theoretical or academic approach to managing affairs. Then I told them that our drivers had speed limits, overtaking rules and compulsory rest-stops and that could account for the time they take. I also reminded them that at least we can boast of having an accident-free record of eight years and we have never gone beyond three days. The safety stock is always able to keep production going till our materials arrive. For the past eight years, production has never halted because of delays in the arrival of raw materials. Taking all that into account in judging the performance of a unit is what is referred to as the practical approach to management. The general manager still insisted that they were inefficient and so all I said was ignored. The transport manager was also absent and therefore I was alone trying to defend the transport unit. At the end, it was decided that as part of the strategic shift in the organization’s operations, the transport function was to be outsourced to SLiK Logistics Limited. In line with this intended strategic move, I was practically ordered to contract SLiK Logistics Limited to transport this consignment and I had no choice than to carry out the order.
SLiK dedicated two flatbed trucks to bring the two 40ft containers to us. One had a jammed crutch at Sekyere and the other had an accident at Asankare when an on-coming saloon car run into its path and caused it to fall into a ditch. SLiK sent their maintenance staff to repair the spoilt truck and another truck to take over the load from the accident truck. Given that the truck fell into a ditch, the container cut open and the boxes containing the materials fell off, it took the loading staff three whole days to transfer the boxes onto the new truck. The repair of the spoilt truck also took longer than expected. I had to visit both scenes to ascertain what was going on. I reported the situation to management. You perhaps did not hear about it because you had just returned from leave.
The case study is about the PaL Company, which just received the boxes containing the raw materials a week late. The Operations Manager, Issah, is infuriated by this late arrival, and he blames the Procurement Manager, Ussif, for hiring the services of a third-party Logistics Company.
SLiK Logistics Limited, to transport the raw materials instead of the company's transport unit.Issah explains that the company is an organization with all the capabilities, including some of the best trained drivers who haven't had any accidents in the past eight years, well-maintained facilities, equipment, and machines, and staff always prepared to give their best. The company's transport unit is highly efficient, and it's shocking to see a two-day break in production due to the late arrival of raw materials. Ussif apologizes and explains that management was considering outsourcing the transport function to SLiK Logistics Limited due to the transport unit's inefficiency.
Issah explains that the performance of the transport unit was called into question at the last management meeting, and it took them an average of three days to move materials from Accra to Kumasi. Management found the unit inefficient and inefficient compared to SLiK Logistics Limited. However, Issah defends the unit, stating that the drivers adhere to speed limits, overtaking rules, and compulsory rest-stops. He also reminds management that the company's transport unit has an accident-free record of eight years and has never gone beyond three days. The safety stock can keep production running until raw materials arrive.
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Gudas Corporation manufactures and sells a single product. Cost data for the product are given below: Variable costs per unit: Direct materials Direct labor $12 Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month 15 Units Produced 25,000 $750,000 $36 250,000 $1.000.000 The product sells for $120 per unit. Production and sales data for August follow: There was no beginning inventory. Units Sold 20,000 Required: a) Determine the unit product cost under: • Absorption costing • Variable costing b) Prepare a variable costing income statement for August. c) Prepare an absorption costing income statement for August. d) Explain why the operating income is different in parts (a) and (b).
A) Total unit product cost under absorption costing is; $103. B) Variable Costing Income Statement for August is; -$830,000. C) Absorption Costing Income Statement for August is; $605,000. D)The operating income is different in parts (a) and (b) because absorption costing allocates fixed manufacturing overhead as a cost of inventory.
Unit Product Cost under Absorption Costing:
Direct materials per unit: $12
Direct labor per unit: $36
Variable manufacturing overhead per unit: $15
Total variable cost per unit: $12 + $36 + $15 = $63
Fixed manufacturing overhead per unit: $1,000,000 / 25,000 units = $40 per unit
Total unit product cost under absorption costing: $63 + $40 = $103
Unit Product Cost under Variable Costing:
Total variable cost per unit: $63
Variable Costing Income Statement for August:
Sales Revenue: 20,000 units × $120 = $2,400,000
Variable Expenses:
Variable Cost of Goods Sold: 20,000 units × $63 = $1,260,000
Variable Selling and Administrative Expenses: 20,000 units × $36
= $720,000
Contribution Margin: $2,400,000 - $1,260,000 - $720,000
= $420,000
Fixed Expenses:
Fixed Manufacturing Overhead: $1,000,000
Fixed Selling and Administrative Expenses: $250,000
Operating Income: $420,000 - $1,000,000 - $250,000
= -$830,000
Absorption Costing Income Statement for August:
Sales Revenue: 20,000 units × $120 = $2,400,000
Cost of Goods Sold:
Beginning Inventory: 0 units × $103 = $0
Manufacturing Costs: 20,000 units × $103 = $2,060,000
Total Cost of Goods Available for Sale: $2,060,000
Ending Inventory: 5,000 units × $103 = $515,000
Cost of Goods Sold: $2,060,000 - $515,000
= $1,545,000
Gross Profit: $2,400,000 - $1,545,000 = $855,000
Selling and Administrative Expenses: $250,000
Operating Income: $855,000 - $250,000
= $605,000
The operating income is different in parts (a) and (b) because absorption costing allocates fixed manufacturing overhead as a cost of inventory (in this case, ending inventory), while variable costing treats fixed manufacturing overhead as the period expense. The difference in inventory levels between the two methods causes the discrepancy in operating income.
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