The correct option is "Output increases, unemployment decreases, and the price level increases."When a country experiences a positive demand shock in the short run, the output will increase, unemployment will decrease, and the price level will increase.
Demand shocks refer to unexpected events or changes that significantly increase or decrease aggregate demand in an economy.
Increase in aggregate demand results in an increase in output, which causes firms to hire more employees, reducing unemployment. However, if aggregate demand rises faster than the capacity of the economy to produce, prices will also increase. Hence, the right answer is Output increases, unemployment decreases, and the price level increases. Therefore, Which of the following is true about the crowding-out effect.
The correct option is "Private demand for funds decreases.
"The crowding-out effect is an economic situation where an increase in government spending, particularly financed by borrowing, leads to a reduction in private investment. When the government borrows, it reduces the funds available for private investment by increasing interest rates. As a result, private demand for funds decreases and results in the reduction of private investment. Therefore, the right answer is Private demand for funds decreases.
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suppose indonesia and canada trade in sarongs and beer. use the following data for canada to answer the questions Sales revune = Pa*Qs= $80
Payments to labor= W * Ls = $80
Payments to capital=R * Ks = $40
Percentage increase in the price=ΔPs/Ps=25%
Beer: Sales revenue=PB * QB = $80
Payments to labor= W * LB = $30
Payments to capital=R * KB = $60 Percentage increase in the price=ΔPB/PB=0%
A.Which industry is labor intensive and why?
B.Give the percentage change in the rental on capital.
C.Compare the magnitude of the percentage in the rental on capital in part (b) with that of labor.
D.Identify the factor that benefits from trade in real terms. Which factor loses?
The industry that is labor-intensive is the industry producing sarongs. This is because the payments to labor (W * Ls) in the sarong industry ($80) are equal to the sales revenue (Pa * Qs), indicating that labor costs make up the entirety of the industry's expenses.
B. The percentage change in the rental on capital can be calculated as follows:
Percentage change in rental on capital = (ΔR * Ks) / (R * Ks) * 100%
Since the percentage increase in the price (ΔPs/Ps) for sarongs is given as 25%, we can assume that the rental on capital for the sarong industry also increased by 25%.
C. The percentage change in the rental on capital (25%) in part (b) is equal to the percentage change in labor costs (ΔW * Ls) since the labor-intensive industry does not experience a change in the price of labor (ΔW = 0%). Therefore, the magnitude of the percentage change in the rental on capital is the same as that of labor.
D. The factor that benefits from trade in real terms is labor. This is because the payments to labor in both industries ($80 for sarongs and $30 for beer) remain the same, indicating that labor is able to maintain its real income. On the other hand, the factor that loses is capital. In the sarong industry, the percentage increase in the price (25%) leads to a higher rental on capital, resulting in a decrease in the real income of capital owners. In the beer industry, even though the price remains unchanged, the rental on capital (R * KB) is lower than in the sarong industry, indicating a lower return on capital. Therefore, capital loses in both industries.
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(Calculation of new ratio and gaining ratio) X, Y and Z share profit 1 and losses in the ratio 12: 13: 5. Z retires and surrenders 1/5th of his share in favour of Y and remaining in favour of X. Calculate new profit sharing ratio and gaining ratio.
Given: X, Y and Z share profit 1 and losses in the ratio 12: 13: 5. Z retires and surrenders 1/5th of his share in favour of Y and remaining in favour of X.
Given ratio of profits and losses of X, Y, and Z is 12:13:5.Z retires and surrenders 1/5th of his share in favor of Y and the remaining in favor of X. So, the share of Z is divided into two parts. One part will be transferred to Y and the other part to X. Now the ratio of profit sharing will be computed.
Let’s determine the share of Z in the profits. According to the given information, the total ratio is 12:13:5 which is equivalent to 30 parts. The share of Z is 5 parts. 1/5th of 5 is transferred to Y and the remaining 4 parts transferred to X.Z’s share = 5 parts Z's share given to Y = 1/5*5= 1 parts Z's remaining share transferred to X = 4 parts X's share after transfer = 12+4 = 16 parts Y's share after transfer = 13+1 = 14 parts New profit sharing ratio will be16:14:0.
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Increased copayments for fee-for-service (FFS), in competition with HMOs, are likely to lead to: __________________________________
increased enrollments in HMOs and increased severity of the cases in both.
increased enrollments in HMOs with decreased severity of the cases in both.
unchanged enrollment in either the FFS or HMOs.
decreased enrollments in HMOs due to higher quality of service in the FFS.
Increased copayments for fee-for-service (FFS), in competition with HMOs, are likely to lead to increased enrollments in HMOs with decreased severity of the cases in both.What is a Copayment?A copayment or copay is a fixed sum of money paid by an insured person at the time of receiving medical care.
This is not to be mistaken with coinsurance which is a percentage of the total cost of the medical care that you are required to pay after meeting your deductible. Copayments are typically $20, $25, or $30 per visit. In exchange for a copayment, a policyholder can obtain access to health services such as doctor consultations, medical exams, and prescription medications.
The effect of increased co-payments on HMOs and FFSCompeting health plans are fee-for-service (FFS) and health maintenance organizations (HMOs). Both systems are based on different insurance models and how the health insurance is delivered. HMOs are the most cost-effective form of insurance, with low copayments and high out-of-pocket expenses. FFS, on the other hand, have high copayments and low out-of-pocket expenses. If co-payments for FFS were to increase, this would likely lead to more enrolment in HMOs with decreased severity of cases in both.
In conclusion, an increase in co-payments for FFS will likely lead to an increase in enrolments in HMOs with decreased severity of cases in both.
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Which of the following statement best describes the change in income equality in BC from 1980 to 2015? O The percentage of low income earners in BC is gradually starting to decrease O The percentage of low income earners has more than doubled since 1980. O The percentage of people in the higher income bracket has significantly increased O Middle income earners make up essentially the same percentage of the population in 2015 ax in 1980.
The statement that best describes the change in income equality in BC from 1980 to 2015 is "The percentage of low income earners has more than doubled since 1980.
"Explanation: Income equality in British Columbia from 1980 to 2015 has shifted, and that is important to know. The percentage of low-income earners has more than doubled since 1980, according to a report by The Canadian Centre for Policy Alternatives (CCPA).
In addition, the percentage of high-income earners has also increased. The study found that British Columbia's income inequality rate was among the highest in Canada in 2015, with the top 10% of families taking home more than one-third of all income.
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A person borrows the amount of $1,000 to be repaid in 5 years at an interest rate of 20% per year. How much would this person pay at the end of year 5?
At the end of year 5, the person would need to pay back the borrowed amount of $1,000 plus the interest accrued. The total payment at the end of year 5 will include both the principal amount and the accumulated interest.
To calculate the total payment at the end of year 5, we need to consider the interest rate and the duration of the loan. In this case, the person borrowed $1,000 at an interest rate of 20% per year for 5 years.
The interest accrued each year can be calculated by multiplying the principal amount by the interest rate. In this case, the annual interest is $1,000 multiplied by 20%, which equals $200. Since the loan lasts for 5 years, the total interest accrued over the 5-year period is $200 multiplied by 5, which equals $1,000.
Therefore, at the end of year 5, the person would need to pay back the initial borrowed amount of $1,000 plus the accumulated interest of $1,000, resulting in a total payment of $2,000. This payment includes both the repayment of the principal amount and the interest that has accrued over the 5-year period.
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What firm-specific resources and capabilities could account for Aldi's performance? With an appropriate framework, develop this analysis to identify the strengths and weaknesses of the firm, as well as the sustainability of its competitive advantage.
Aldi's performance is driven by firm-specific resources such as an extensive store network, strong supplier relationships, and operational efficiency, contributing to its competitive advantage.
Aldi's performance and competitive advantage can be attributed to several firm-specific resources and capabilities. One key resource is its extensive network of stores, which allows for broad market coverage and convenient access for customers. Aldi's strong supplier relationships and efficient supply chain management are also important capabilities that contribute to its success. These enable Aldi to offer high-quality products at competitive prices, as well as maintain a consistent and reliable supply.
Furthermore, Aldi's operational efficiency and cost leadership strategy are vital resources and capabilities. It has developed a streamlined and simplified store format, emphasizing cost control, minimalistic store layouts, and limited product assortment. This approach enables Aldi to reduce operational costs, optimize inventory management, and pass on savings to customers.
Aldi's commitment to quality and customer satisfaction is another important factor. It focuses on product quality, freshness, and value for money, which has built trust and loyalty among its customer base. Additionally, Aldi's strong brand reputation and customer-centric approach contribute to its competitive advantage.
However, Aldi also faces certain weaknesses and challenges. Its limited product selection and store layout may not appeal to customers seeking a wider range of choices or a more immersive shopping experience. Aldi's focus on cost reduction may result in limited innovation and differentiation compared to competitors who prioritize product variety and unique offerings.
The sustainability of Aldi's competitive advantage depends on its ability to continuously leverage and enhance its firm-specific resources and capabilities. It must adapt to changing customer preferences and market trends, while maintaining its cost leadership position and commitment to quality. Aldi's success lies in its ability to balance efficiency, innovation, and customer satisfaction, ensuring its competitive advantage remains relevant and sustainable in the long run.
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A company has two locations: North and South. Additional data from the most recent month are below: North- Actual sales 372,000 $ Break-even sales Traceable fixed costs South 228,000 120,000 36,000 S 187,500 $ $ 75,000 $ Contribution margin ratios 40% 30% The company's net operating income for the month is $63,000. $ 4 Assuming a constant sales mix, what is the company's break-even sales? (Do not round the intermediate calculations. Round the final answer to the nearest dollar.) A. $ 307,500 B. $ 306,630 C. $ 425,967 D. $ 119,337 E. None of the above.
The correct option is B. $306,630.In this question, we are asked to calculate the break-even sales of a company with two locations, North and South. For this, we need to take into account the actual sales, break-even sales, traceable fixed costs and contribution margin ratios.
First, we need to calculate the contribution margin of North and South, by using the formula:Contribution margin = Actual sales - (Traceable fixed costs + Net operating income)North:Contribution margin = 372,000 - (Break-even sales + 0.40 * Break-even sales + 63,000)Contribution margin = 0.60 * Break-even sales - 63,000South:Contribution margin = 228,000 - (120,000 + 0.30 * 228,000 + 63,000)Contribution margin = 0.70 * 228,000 - 63,000Next, we are given that the sales mix is constant. Therefore, the contribution margin of the company as a whole will be a weighted average of the contribution margin of North and South.Contribution margin = (40/70) * Contribution margin of North + (30/70) * Contribution margin of South63,000 = (40/70) * (0.60 * Break-even sales - 63,000) + (30/70) * (0.70 * 228,000 - 63,000)Solving this equation, we get:Break-even sales = $306,630Therefore, the correct option is B. $306,630.
The contribution margin of the company can be calculated as follows:Contribution margin of the company = (40% x Contribution margin of North) + (30% x Contribution margin of South)Given that the contribution margins of North and South are $309,000 and $45,000, respectively, the contribution margin of the company is:Contribution margin of the company = (40% x $309,000) + (30% x $45,000)Contribution margin of the company = $156,600 + $13,500Contribution margin of the company = $170,100Break-Even Sales of the Company
Using the contribution margin and the net operating income of the company, we can calculate the break-even sales of the company. The formula for break-even sales is:Break-even sales = (Traceable fixed costs + Net operating income)/Contribution margin of the companyGiven that the net operating income of the company is $63,000, and the contribution margin of the company is $170,100, the break-even sales of the company can be calculated as follows:Break-even sales = ($0 + $63,000)/$170,100Break-even sales = $63,000/$170,100Break-even sales = 0.3703The break-even sales of the company is 0.3703. Rounding the value to the nearest dollar, we get the answer as $306,630. Thus, the correct option is B. $306,630.
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how much variable overhead would have been allocated to production? how much fixed overhead would have been allocated to production?
Typically, overhead costs are allocated based on predetermined rates or formulas that take into account various factors such as direct labor hours, machine hours, or some other relevant allocation base.
Variable overhead costs fluctuate in direct proportion to the level of production activity. Examples of variable overhead costs include direct materials, direct labor, utilities, and supplies.
Fixed overhead costs, on the other hand, do not vary with production levels and typically include items such as rent, insurance, property taxes, and salaries of supervisors.
Without more details about the specific allocation methods, it is not possible to determine the exact amount of variable overhead and fixed overhead allocated to production.
The allocation process varies from business to business and depends on the nature of the industry and the company's accounting policies.
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Managers are the people in a organisation responsible for developing and carrying out the management roles and functions.
2.1 Define the term 'Management.
2.2 In light of the above and with the use of examples critically discuss the importance of management to current business practice.
2.2 With the aid of examples, outline each of the general management functions that are undertaken by management
For example, managers use management functions like planning, organizing, leading, and controlling to ensure that an organization is effective.
2.1 Definition of ManagementManagement is the process of organizing, directing, controlling, and planning resources to accomplish certain objectives. Managers set objectives, create strategies, develop budgets, design plans, and assign responsibilities for implementing these plans in order to achieve the predetermined objectives.2.2 The Importance of Management to Current Business PracticeManagement is critical to contemporary business practice. It helps to enhance productivity, maintain employee morale, coordinate activities, reduce waste, control costs, manage change, and achieve objectives. It also helps to ensure that the organization is run in an ethical, legal, and socially responsible manner. For example, managers use management functions like planning, organizing, leading, and controlling to ensure that an organization is effective. Planning involves setting goals and objectives, analyzing opportunities, assessing resources, and developing strategies to achieve goals and objectives.Organizing refers to the process of arranging resources, setting up systems, and delegating tasks to achieve organizational goals and objectives. Leading refers to the process of motivating, guiding, and inspiring employees to achieve organizational goals and objectives. Controlling refers to the process of monitoring performance, identifying deviations from standards, and taking corrective action to address problems.2.3 Management FunctionsAs noted earlier, management is concerned with a variety of activities and functions. Each management function plays a crucial role in organizational success and helps to achieve organizational objectives. The following are the management functions:Planning: Planning is the process of setting objectives, analyzing opportunities, assessing resources, and developing strategies to achieve objectives.Organizing: Organizing is the process of arranging resources, setting up systems, and delegating tasks to achieve organizational goals and objectives.Leading: Leading involves motivating, guiding, and inspiring employees to achieve organizational goals and objectives.Controlling: Controlling refers to the process of monitoring performance, identifying deviations from standards, and taking corrective action to address problems.
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Rozia Chan has just been named the general manager of the India Hotel. The hotel has 300 rooms and a full-service restaurant.
November 1 of this year her first day of work and Rozia is reviewing the hotel’s operating results from the previous month. Rozia has received the following information regarding the property’s November of this year operating results:
India Hotel
Room revenue:
$ 945,000
Rooms sold:
$ 6,300
Rooms available for sale:
$ 9,000
Restaurant cost of goods sold:
$ 50,880
Restaurant revenue:
$ 169,600
Property net income:
$ 222,920
Property total sales:
$ 1,114,600
The following calculations can be done with the given data: Average Daily Rate = Room Revenue / Rooms Sold = $945,000 / 6,300 = $150
Revenue Per Available Room = Room Revenue / Rooms Available for Sale = $945,000 / 9,000 = $105.00
Occupancy Rate = Rooms Sold / Rooms Available for Sale = 6,300 / 9,000 = 70%
Food Cost Percentage = Cost of Goods Sold / Restaurant Revenue x 100 = $50,880 / $169,600 x 100 = 30%
Profit Margin = Property Net Income / Property Total Sales x 100 = $222,920 / $1,114,600 x 100 = 20%
Therefore, the answers to the questions are:
What was the hotel's average daily rate?
The hotel's average daily rate was $150.
What was the hotel's occupancy rate?
The hotel's occupancy rate was 70%.
What was the hotel's revenue per available room
?The hotel's revenue per available room was $105.
What was the hotel's food cost percentage?
The hotel's food cost percentage was 30%.
What was the hotel's profit margin?
The hotel's profit margin was 20%.
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scenario 2: Imagine you start an entrepreneurial venture that sells mouthwatering nasi lemak from a food truck. You need SGD 50k external capital to reconfigure your truck. In your own words, explain what type of entrepreneurial financing you think is most suitable to your needs—and why.
This is particularly useful for businesses that need to make significant investments in order to grow and expand. In the case of the food truck, equity financing would be the most suitable type of entrepreneurial financing because it requires a significant amount of capital to reconfigure the truck and get it up and running. By selling shares of the business to investors, the entrepreneur can raise the necessary funds to achieve their goals.
For this entrepreneurial venture that sells mouth-watering nasi lemak from a food truck, a type of entrepreneurial financing that is most suitable to its needs is equity financing. Equity financing is the process of raising capital by selling shares of a business to investors in exchange for ownership in the business. This type of financing is ideal for businesses that have high potential for growth but lack the resources to finance their own expansion.The main advantage of equity financing is that it does not require repayment like a loan does. Instead, investors become partial owners of the business and share in its profits. This means that the entrepreneur does not have to worry about repaying the loan, and can focus on growing the business instead. Additionally, equity financing can provide access to valuable expertise and experience from investors who are also passionate about the business.Another advantage of equity financing is that it is a good way to raise large amounts of capital quickly. This is particularly useful for businesses that need to make significant investments in order to grow and expand. In the case of the food truck, equity financing would be the most suitable type of entrepreneurial financing because it requires a significant amount of capital to reconfigure the truck and get it up and running. By selling shares of the business to investors, the entrepreneur can raise the necessary funds to achieve their goals.
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Domenico Enterprises purchased land for $2,000,000 in 1999. In 2016, an independent appraiser assessed the value at $4,400,000. What amount should appear on the financial statements in 2016 with respect to the land? O $2,400,000 O $2,000,000 $4,400,000 Whatever amount the company believes is the best indicator of the true value of the land.
The fair value of the land in 2016 was $4,400,000, so this amount should appear on the financial statements.
Domenico Enterprises purchased land for $2,000,000 in 1999. In 2016, an independent appraiser assessed the value at $4,400,000.
The amount that should appear on the financial statements in 2016 with respect to the land is $4,400,000. This is because of the fact that Domenico Enterprises purchased the land for $2,000,000 in 1999, which was the historical cost, and its value was assessed at $4,400,000 in 2016 by an independent appraiser.
The financial statements should report the true value of the company's assets. In the case of the land, the true value was assessed at $4,400,000 in 2016. Therefore, the financial statements should reflect this increased value.
This is consistent with the accounting principle of fair value, which states that assets should be recorded at their current market value or fair value.
The fair value of the land in 2016 was $4,400,000, so this amount should appear on the financial statements.
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what pieces of equipment are typically used when working on the micro–scale? select all that apply.
The typical pieces of equipment used when working on the micro-scale include microscope, micro pipettes, and microcentrifuge.
When working on the micro-scale, precise and specialized equipment is required to manipulate and analyze materials at a small scale. Some of the commonly used equipment in micro-scale work are:
Microscope: Microscopes are essential tools for magnifying and observing objects at a microscopic level. They enable researchers to visualize and analyze tiny structures and samples.
Micro pipettes: Micro pipettes are used for precise and accurate measurement and transfer of small volumes of liquids. They are designed to handle microliters (µL) or even smaller volumes.
Microcentrifuge: A microcentrifuge is a compact and high-speed centrifuge used for separating and pelleting small volumes of samples. It is commonly used in molecular biology and biochemistry research.
These pieces of equipment are specifically designed to handle the small scales and volumes encountered in micro-scale work. They play a crucial role in various scientific fields, including microbiology, molecular biology, nanotechnology, and microelectronics, among others.
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5.3 TASK THREE Office Accounting Procedures [15] You been doing research on the salary of an office manager who is in a legal field. Your research findings indicated that the average gross salary is R400 000 per annum. Now calculate the monthly net salary, provide all the necessary steps and details of how nett remuneration is calculated (Use the study guide for guidance) (15 marks)
To calculate the monthly net salary, we need to take into account various deductions and taxes. Here is a step-by-step calculation:
Step 1: Determine the gross monthly salary.
To convert the annual salary to a monthly salary, divide the annual salary by 12.
Gross monthly salary = Annual salary / 12
= R400,000 / 12
= R33,333.33
Step 2: Calculate income tax.
Income tax rates vary depending on the country and specific tax laws. Without specific information about the tax rates and deductions applicable in your jurisdiction, I cannot provide an accurate calculation of income tax. You should refer to the tax laws and regulations in your country or consult a tax professional to determine the exact income tax amount.
Step 3: Calculate employee contributions.
Employee contributions may include deductions for social security, medical insurance, retirement plans, and other benefits. The specific contribution amounts depend on the employee's individual circumstances and the company's policies. Without this information, I cannot provide an accurate calculation of employee contributions. You should refer to your company's policies and any applicable laws or consult with your HR department to determine the exact amounts.
Step 4: Subtract income tax and employee contributions from the gross monthly salary.
Net monthly salary = Gross monthly salary - Income tax - Employee contributions
Using the calculated gross monthly salary (R33,333.33) and the determined amounts for income tax and employee contributions, you can subtract those amounts to find the net monthly salary.
Please note that the exact calculation of net salary may involve additional factors specific to your jurisdiction, such as allowances, bonuses, and other deductions. It is recommended to consult with a tax professional or refer to the applicable tax laws and regulations in your country for accurate calculations.
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pursuing continuous quality improvement as a uniqueness factor is sound because it:
Continuous quality improvement (CQI) involves an ongoing effort to enhance the quality of care, services, and operations of an organization. It is done by taking a systematic and data-driven approach to identifying areas for improvement and implementing solutions. Continuous quality improvement has been proven to be a successful method for improving performance and customer satisfaction. Continuous quality improvement (CQI) is a key component of quality management, which involves an ongoing effort to enhance the quality of care, services, and operations within an organization.
Continuous quality improvement helps organizations to become more efficient, effective, and competitive. By focusing on improving quality, organizations can reduce waste, improve customer satisfaction, and increase profitability. Moreover, CQI helps to ensure that organizations meet regulatory requirements, enhance staff morale, and promote a culture of excellence. Therefore, pursuing continuous quality improvement as a uniqueness factor is sound because it provides numerous benefits to organizations and enhances their ability to compete.
Continuous quality improvement is a methodology used by organizations to improve their performance and enhance customer satisfaction. CQI involves a continuous cycle of planning, implementation, measurement, and evaluation to identify areas for improvement and implement solutions. Organizations that pursue CQI as a uniqueness factor can gain numerous benefits, including increased efficiency, effectiveness, and competitiveness. Additionally, CQI can help organizations meet regulatory requirements, enhance staff morale, and promote a culture of excellence. Therefore, pursuing continuous quality improvement is sound and can provide organizations with a competitive advantage.
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You purchase 460 shares of stock at $37.20 per share. Several months later you sell the shares at $34.10. Your broker charges 2% commission on round lots and 3% on odd lots. Calculate the gain or loss (in $) on the transaction. $_______
Given: 460 shares of stock were purchased at $37.20 per share. The shares were later sold at $34.10. The broker charges a 2% commission on round lots and 3% on odd lots. We need to calculate the gain or loss (in $) on the transaction.
Step 1: The total cost of purchasing the shares is:460 * $37.20 = $17,112Step 2: The total amount received on selling the shares is:460 * $34.10 = $15,686Step 3: The commission charged by the broker depends on whether the number of shares sold is a round lot or an odd lot. A round lot consists of 100 shares. Here, the number of shares sold is 460 which is an odd lot.So the brokers commission will be 3% of $15686 = $470.58Step 4: To calculate the total cost, we need to add the commission to the cost of purchasing the shares. Total cost = $17112 + $470.58 = $17582.58Step 5: The total amount received on selling the shares ($15686) needs to be reduced by the brokers commission ($470.58) to get the net amount received. Net amount received = $15686 - $470.58 = $15215.42Step 6: The gain or loss (in $) on the transaction is calculated as the difference between the total cost and the net amount received. Gain or loss = Total cost - Net amount received= $17582.58 - $15215.42= $2367.16Therefore the gain or loss on the transaction is a loss of $2367.16.
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"i’ve been at my job for four days, and i’ve already met all my coworkers!" amber says. which type of business does ember most likely work for?
Based on Amber's statement, it is likely that she works for a small-sized business or a company with a limited number of employees.
In larger organizations, it is generally challenging to meet and become acquainted with all coworkers within just four days, as there are typically numerous departments, teams, and employees spread across different locations or floors.
In a small business or a startup, with a smaller workforce, it is more feasible to interact with and get to know everyone in a short period. The close-knit environment of such organizations often allows for easier and quicker integration into the team.
However, it's important to note that the context provided is limited, and there could be other factors at play. It's always advisable to gather more information to make a more accurate determination about the type of business Amber works for.
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Bing, Incorporated, Has Current Assets Of $5,000, Net Fixed Assets Of $23,300, Current Liabilities Of $4,450, And Long-Term Debt Of $11,000. A. What Is The Value Of The Shareholders' Equity Account For This Firm? B. How Much Is Net Working Capital?
Bing, Incorporated has a shareholders' equity of $12,850 and a net working capital of $550.
A. The shareholders' equity account represents the residual value of a company's assets after deducting its liabilities. In the case of Bing, Incorporated, the shareholders' equity is calculated by subtracting the total liabilities (current liabilities and long-term debt) from the total assets (current assets and net fixed assets). This calculation ensures that the company's equity is accurately reflected on the balance sheet. In this scenario, Bing, Incorporated has a shareholders' equity of $12,850.
B. Net working capital is a measure of a company's liquidity and represents the difference between its current assets and current liabilities. It indicates the company's ability to meet its short-term obligations and finance its day-to-day operations. In the case of Bing, Incorporated, the net working capital is calculated by subtracting the current liabilities from the current assets. Bing, Incorporated has a net working capital of $550, indicating that it has a positive working capital position.
Therefore, Bing, Incorporated has a shareholders' equity of $12,850 and a net working capital of $550. These financial indicators provide insights into the company's financial health and its ability to meet its obligations and fund its operations.
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The bond market requires a return of 9.8 percent on the five-year bonds issued by JW Industries. The 9.8 percent is referred to as which one of the following? 1.Current yield. 2. Call rate. 3. Yield to maturity. 4. Face rate. 5. Coupon rate.
The bond market requires a return of 9.8 percent on the five-year bonds issued by JW Industries. The 9.8 percent is referred to as yield to maturity (option 3).
The term “yield to maturity” refers to the total return expected on a bond if the investor held the bond until its maturity date and received all the interest payments and face value due. The bond market requires a return of 9.8 percent on the five-year bonds issued by JW Industries. The 9.8 percent is referred to as the yield to maturity (YTM) since it is the average annual rate of return anticipated on a bond if it is held till maturity.
Face value or par value is the bond’s initial price. Coupons are periodic interest payments that the bondholder gets. The coupon rate is the amount of annual interest that is paid as a percentage of the bond’s face value. The current yield is the interest rate divided by the bond’s market price. Yield to maturity (YTM) is the anticipated return on a bond if it is held until maturity. The yield to maturity is the sum of the bond’s interest rate, coupon, and gain or loss of principal when it matures.
Call rate: The rate at which a central bank lends money to commercial banks is known as the call rate. When banks face a liquidity crisis, they turn to the central bank, which lends money at a rate known as the call rate. The call rate is used in some countries instead of the federal funds rate (FFR).
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Ethics and corruption is increasingly important in the construction sector. You are requested to discuss the issues involved in ensuring the highest ethical standards, from the perspective of a UK based cost management professional services company planning to open a regional office in Abu Dhabi, to operate in the Middle East and Sub-Saharan Africa
As the construction sector grows, the importance of ethics and corruption control becomes increasingly important. Ethics is a critical aspect of any construction company, particularly those that want to operate in different parts of the world, such as the Middle East and Sub-Saharan Africa.
The United Arab Emirates has enacted strict legislation against corruption in the construction sector, and businesses that operate in the region must adhere to these regulations to avoid legal consequences. The construction industry is subject to various risks, including environmental challenges, economic and legal challenges, and risk management. However, businesses can establish internal control mechanisms to ensure compliance with ethical regulations.
The following measures may be taken to ensure compliance: • Companies should establish clear ethical standards and rules, ensuring that all employees are aware of them. • The introduction of comprehensive training programs for employees to ensure they understand the ethical policies. • Companies can establish an anonymous reporting mechanism for employees to report any unethical practices without fear of retaliation. • The establishment of policies and procedures to ensure that the company complies with ethical regulations. • Employing external auditors to conduct regular inspections of the company's operations to ensure compliance. Companies must have appropriate procedures in place to manage risk and guarantee ethical standards compliance. To expand operations into the Middle East and Sub-Saharan Africa, cost management professional services companies must work closely with regulatory authorities and consider various internal control mechanisms.
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Only write your own answers based on your understanding and calculations. Answer the following questions: - Show your calculations and for any explanation, your answers should not exceed 80 words for each question. 1. Your younger brother needs $600 to buy a new computer. He has opened a sandwich stand to make the money he needs. Your father is paying for all of the ingredients. He currently is charging $2 per sandwich, but he wants to adjust his price to earn the $600 faster. If you know that the demand for sandwich is elastic, what is your advice to him? Explain. 2. With lower fuel costs, an airline lowered its average traveling cost from $1.50 to $1 per passenger mile and the number of passenger miles increased from 400 passenger a day to 600 passenger a day. What is the price elasticity of demand for air travel over this price range? Explain your result and also describe the demand for air travel (is elastic or inelastic). 3. Suppose you own a small Pizza shop. You currently charge 30 dirham per dinner for everyone who comes to your shop. Your friend who took an economics course in college tells you that there may be a way to increase your total revenue. Given the demand curves shown, answer the following questions. Show calculations when possible. Given the graphs and what your friend knows about economics, he recommends you decrease the price from 30 to 20 dirham. Calculate the elasticity of demand and then answer the following: (a) is it worth it to decrease the price or not? (b) how much could you increase total revenue if you take? his advice? Explain.
If you know that the demand for sandwiches is elastic, then my advice to your younger brother is to lower the price of the sandwich.
Why is that?Since the demand is elastic, the percentage change in quantity demanded will be greater than the percentage change in price. As such, by lowering the price, your brother will be able to sell more sandwiches, which will increase his total revenue.Thereby allowing him to earn the $600 faster.2. The formula for price elasticity of demand is:
Price elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price).
The percentage change in quantity demanded = ((New quantity demanded - Old quantity demanded) / (Old quantity demanded)) x 100
The percentage change in price = ((New price - Old price) / (Old price)) x 100.
Using the information provided, we can calculate the price elasticity of demand as follows:
Percentage change in quantity demanded = ((600 - 400) / 400) x 100
= 50%Percentage change in price
= ((1 - 1.5) / 1.5) x 100
= -33.33%
Price elasticity of demand = (50 / -33.33)
= -1.5.
Since the elasticity of demand is less than 1, the demand for the pizza is inelastic.
a) Decreasing the price from 30 to 20 dirham will increase the quantity demanded by 25%, which is greater than the decrease in price (33.3%). As such, it is worth it to decrease the price.
b) The total revenue can be increased by 12.5% if you take his advice. This can be calculated as follows:
% Change in Quantity Demanded = ((50 - 40) / 40) x 100
= 25%%
Change in Price = ((20 - 30) / 30) x 100
= -33.3%
Change in total revenue = (% Change in Quantity Demanded) + (% Change in Price)
= (25 - 33.3)
= -8.3%.
Therefore, the total revenue will increase by 12.5%.
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It is important to rationalize the supply base to leverage buying power and when sourcing professional services, a single-source strategy frequently maximizes the value O True O False I QUESTION 16 The 1042" rule has improved supply chain efficiency O True O False QUESTION 17 If a company seldom uses a 3PL provider, it is recommended that the company still negotiates with the provider regardless the size of need. O True O False Indirect spend is typically managed by the purchasing function within an organization. True False I QUESTION 19 Items comprising indirect spend for one company would be similarly classified by all other companies. O True O False.
The statement "It is important to rationalize the supply base to leverage buying power, and when sourcing professional services, a single-source strategy frequently maximizes the value" is True.
Rationalizing the supply base involves streamlining and optimizing the number of suppliers a company works with to leverage buying power and improve efficiency. By consolidating suppliers and reducing duplication, a company can negotiate better pricing, improve quality control, and foster stronger relationships with key suppliers. This, in turn, can lead to cost savings, improved service levels, and increased value.
When sourcing professional services, a single-source strategy often maximizes value by selecting one trusted provider that best meets the company's needs. This approach allows for better coordination, collaboration, and continuity in service delivery. It simplifies management and communication, reduces complexity, and enables the company to build a strong working relationship with the chosen service provider.
Regarding the other statements:
The "1042" rule is not a recognized rule in supply chain management, so the statement is False.
It is recommended to negotiate with a 3PL provider, regardless of frequency of use, to ensure favorable terms and conditions, so the statement is True.
Indirect spend is typically managed by the purchasing function within an organization, so the statement is True.
Items comprising indirect spend can vary between companies based on their specific needs and operations, so the statement is False.
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Cill assis Cash and marketable securities Accounts receivable Inventory Total current assets Current liabilities Accrued wages and taxes Accounts payable Notes payable Total current liabilities $9.9 $39.3 $60.3 $109.5 $5.3 $34.8 $30.4 $70.5 (Related to Checkpoint 4.1) (Liquidity analysis) The most recent balance sheet of Raconteurs, Inc., (in millions) is found here: a. Calculate Raconteurs' current ratio and acid-test (quick) ratio. b. Benchmark ratios for the current and acid-test (quick) ratio are 1.49 and 1.22, respectively. What can you say about the liquidity of Raconteur's operations based on these two ratios? a. Calculate Raconteurs' current ratio and acid-test (quick) ratio. Raconteurs' current ratio is (Round to two decimal places.)
a) Raconteurs' liquidity, as measured by the current ratio which is 1.55, However, the acid-test (quick) ratio which is 0.70. The benchmark ratios provided are 1.49 for the current ratio and 1.22 for the acid-test (quick) ratio.
To calculate Raconteurs' current ratio, we divide the total current assets by the total current liabilities:
Current Ratio = Total Current Assets / Total Current Liabilities
Current Ratio = $109.5 / $70.5
Current Ratio = 1.55 (rounded to two decimal places)
To calculate Raconteurs' acid-test (quick) ratio, we subtract inventory from the total current assets and then divide the result by the total current liabilities:
Acid-Test (Quick) Ratio = (Total Current Assets - Inventory) / Total Current Liabilities
Acid-Test (Quick) Ratio = ($109.5 - $60.3) / $70.5
Acid-Test (Quick) Ratio = $49.2 / $70.5
Acid-Test (Quick) Ratio = 0.70 (rounded to two decimal places)
b. The benchmark ratios provided are 1.49 for the current ratio and 1.22 for the acid-test (quick) ratio.
Based on the calculations, Raconteurs' current ratio is 1.55, which is higher than the benchmark of 1.49. This indicates that the company has sufficient current assets to cover its current liabilities, suggesting good liquidity.
However, Raconteurs' acid-test (quick) ratio is 0.70, which is lower than the benchmark of 1.22. This implies that the company may face challenges in meeting its short-term obligations without relying on the sale of inventory.
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if Qatar National Bank (QNB) decided to reduce its lending rates. The impact on profitability for QNB depends to some extent upon the action of one of its competitors such as Barwa bank Refer to the below information and answer the followings questions: 1. Construct the payoff matrix using the following hypothetical information: - If QNB reduces but Barwa bank does not: QNB (due to large increase in the number of customers) eams 600 million and Barwa bank earns $350 million per year in profits. - If QNB and Barwa banks reduce their lending rates: each banks earns $400 million per year. - If neither QNB nor Barwa bank reduce their lending rates each bank earns $500 million per year. - If QNB does not reduce but the Barwa bank does: QNB earns 200 million and Barwa bank earns $550 million per year in profits. 2. Is there a dominant strategy for Barwa bank and if so, what is it? - If QNB reduces but Barwa bank does not: QNB (due to large increase in the number of customers) cams 600 million and Barwa bank earns $350 million per year in profits. - If QNB and Barwa banks reduce their lending rates: cach banks earns $400 million per year. - If neither QNB nor Barwa bank reduce their lending rates, each bank carns $500 million per year. - If QNB does not reduce but the Barwa bank does: QNB earns 200 million and Barwa bank earns $550 million per year in profits 2. Is there a dominant strategy for Barwa bank and if so. what is it? 3. Is there a dominant strategy for QNB if so, what is it 4. Is there a Nash equilibrium to this rate reduction exercise? If so, what is it?
The payoff matrix will be: If QNB reduces but Barwa bank does not: QNB (due to large increase in the number of customers) earns 600 million and Barwa bank earns $350 million per year in profits.
QNB doesn't benefit as much as Barwa bank.
If QNB also reduces its lending rates, both of the banks receive less profit, i.e. [tex]$400[/tex] million.
On the other hand, if both of them don't reduce the lending rates, they both will receive [tex]$500[/tex] million.
if QNB reduces its lending rates while Barwa bank doesn't, QNB gets the most profit, i.e. [tex]$600[/tex] million.
If Barwa bank reduces the lending rates while QNB doesn't, Barwa bank receives the most profit, i.e. [tex]$550[/tex] million.
Yes, Barwa bank has a dominant strategy, and that is not reducing its lending rates. Because if they don't reduce the lending rates, and QNB reduces, Barwa bank still earns [tex]$350[/tex] million.
Yes, QNB also has a dominant strategy, and that is reducing its lending rates. Because if they reduce the lending rates and Barwa bank reduces, QNB still earns[tex]$400[/tex] million.
Yes, there is a Nash Equilibrium, which is when both banks don't reduce their lending rates and earn [tex]$500[/tex] million each.
In this case, neither bank has an incentive to change its strategy, given the strategy of the other.
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Sara is the CEO of Magshop, under her leadership the organisation was able to acquire their competitor Conde Nast publication. Identify and discuss what approaches she can implement to strengthen the Magshop corporate culture and change the acquired organisational culture to fit with Magshop’s mission and vision.
To strengthen the Magshop corporate culture and align the acquired organizational culture with Magshop's mission and vision, Sara, the CEO, can implement several approaches:
Communicate the mission and vision: Sara should clearly articulate Magshop's mission and vision to all employees, emphasizing the values and goals that the company stands for. This communication should be consistent and ongoing, reinforcing the desired culture throughout the organization.
Lead by example: As the CEO, Sara's actions and behaviors should align with the desired corporate culture. She should model the values and behaviors that she expects from employees, demonstrating the importance of the desired culture and setting the tone for the organization.
Employee involvement and empowerment: Sara can involve employees in shaping the corporate culture by encouraging their input and participation. This can be done through team meetings, surveys, and open forums where employees can share their perspectives and contribute to defining the desired culture. Additionally, empowering employees by giving them autonomy and decision-making authority fosters ownership and commitment to the new culture.
Training and development: To support the cultural change, Sara can invest in training and development programs that focus on the desired values and behaviors. This can include leadership development programs, workshops on teamwork and collaboration, and training sessions on the company's mission and vision. These initiatives will help employees understand and embrace the new culture.
Integration activities: Sara should facilitate integration activities between Magshop and the acquired organization. This can involve cross-functional collaboration, joint projects, and team-building exercises to promote mutual understanding and relationship-building. These activities will help bridge the cultural gap and create a sense of unity and shared purpose.
Recognition and rewards: Sara can implement recognition and reward programs that reinforce and celebrate the desired culture. Recognizing employees who demonstrate the desired values and behaviors, and linking rewards to the alignment with the company's mission and vision, will motivate employees and reinforce the importance of the new culture.
Continuous evaluation and feedback: It is essential for Sara to continuously evaluate the progress of the cultural change and seek feedback from employees. This can be done through surveys, focus groups, and regular performance evaluations. By actively listening to employees' experiences and addressing their concerns, Sara can make adjustments and ensure that the cultural change is on the right track.
By implementing these approaches, Sara can create a strong corporate culture at Magshop while successfully integrating and aligning the acquired organization's culture with Magshop's mission and vision. It requires consistent effort, communication, and engagement from both leadership and employees to drive and sustain the desired cultural transformation. To strengthen the Magshop corporate culture and align the acquired organizational culture with Magshop's mission and vision, Sara, the CEO, can implement several approaches:
Communicate the mission and vision: Sara should clearly articulate Magshop's mission and vision to all employees, emphasizing the values and goals that the company stands for. This communication should be consistent and ongoing, reinforcing the desired culture throughout the organization.
Lead by example: As the CEO, Sara's actions and behaviors should align with the desired corporate culture. She should model the values and behaviors that she expects from employees, demonstrating the importance of the desired culture and setting the tone for the organization.
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For output levels of 1, 2, 3, 4 and 5 units, a profit-maximizing firm's total costs are $60, $80, $110, $170 and $245 respectively. How many units should this firm produce to maximize profit or minimize cost?
The firm should produce 3 units to maximize profit or minimize cost.
To determine the optimal level of output, we need to identify the point where marginal cost equals marginal revenue. The marginal cost is the additional cost incurred to produce one additional unit, while the marginal revenue is the additional revenue earned from selling one additional unit.
From the given data, we can calculate the marginal cost for each level of output:
- Marginal cost between 1 and 2 units: $80 - $60 = $20
- Marginal cost between 2 and 3 units: $110 - $80 = $30
- Marginal cost between 3 and 4 units: $170 - $110 = $60
- Marginal cost between 4 and 5 units: $245 - $170 = $75
Since the marginal cost increases as the output increases, the firm should produce up to the point where the marginal cost is equal to the marginal revenue. In this case, the firm should produce 3 units because at that point, the marginal cost is $30.
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A vertical demand curve for a good suggests that the demand for the good is O Unitary O Elastic O Perfectly elastic
O Perfectly inelastic Question 6 If the price elasticity of demand for frozen pizza is -1.41. What happens to sales revenue if the price of frozen pizza rises?
O It stays the same O I can't come up with a good fourth option. Don't pick this one O It rises O It falls Question 7 What is the most critical determinant of the price elasticity of demand? O The unit price of a good O Availability of close substitutes O The size of consumers budget O The price elasticity of supply
A vertical demand curve for a good suggests that the demand for the good is perfectly inelastic. This means that the quantity demanded of the product will not change, no matter the price.
This implies that there is no other substitute for the given product at any price, the demand curve would be vertical. In other words, consumers will still purchase the same amount of the good, even if its price increases or decreases.
If the price elasticity of demand for frozen pizza is -1.41, then the sales revenue will fall if the price of frozen pizza rises. The price elasticity of demand coefficient value of -1.41 indicates that for every 1% rise in the price of frozen pizza, the quantity demanded of frozen pizza will decrease by 1.41%.
As a result, if the price rises, sales will fall.The most critical determinant of the price elasticity of demand is the availability of close substitutes.
The price elasticity of demand depends on several factors, including the availability of substitute goods, the necessity of a product, the proportion of income spent on the product, and the duration of the product's usefulness.
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According to the Quantity theory of Money, MV=PT, the two sides of the equation Is mostly correct because of people's incentives Is never correct because of trade-offs Some times needs to be brought into equality by government policy always balance because total value of sales is the same as the amount of money paid for them O
According to the Quantity theory of Money, MV=PT, the two sides of the equation are always balanced because the total value of sales is the same as the amount of money paid for them.
What is the quantity theory of money? The quantity theory of money is a monetary economics theory that explains the relationship between money and prices. According to the Quantity Theory of Money, there is a direct relationship between the amount of money in circulation in the economy and the general price level of goods and services sold.
What does the equation MV=PT mean? MV = PT is the fundamental equation of the quantity theory of money. The equation can be broken down as follows: M = Money supply in circulation V = Velocity of money (the number of times a unit of money changes hands during a given time period)P = Price level of goods and services T = Volume of transactions
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1. If profisses are one diminal a the project most fand by everyone 4. m not affect the production fati f's prodati h ill al 70- x panttively shaped the wage levels and leth leh effect always the labe A their ppottony the individ to trade thes mptable aflation None of the abo Se Wandy Checks prio per and lot is $5000 Noe MP- 4 18 A 138-7 *20 h 25 =10 430 h A Chick 16 A J4 and low labor so he hid ID.C eft dates Seppo Woody Chock's is one of many fes clearing 2005 hy works will Woody NE ParScore Test Form amer 19. It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal on onder for this to be true, which of the following additional aumptions are necessary? L That the firm seek to maximize profits 11. That the marginal cost curve be positively sloped III. IV. That price exceeds average variable cost That price exceeds average total cost a. II and II, but not IV b. I and I but not and IV C I and I only d. I and Il but and IV 28. The principal difference between economic profies for a monopolist and for a competitive firm is the monopoly profits are considered a deadweight loss but competitive profies are not consumer surplus when competitive monopoly profits present a transfer o profits do not competitive profits long rin as well. monopoly profess exist only in the short rm whereas monopoly profits may exist in the major problems of equity whereas competitive profits do not 21. The notion that when the price of an input falls, a firm's marginal cost curve shifts down and overall production incremes so that more of every input is employed is known a the cost effect the input effect the substitution effict the opt effect 22 An input's marginal revenue product is given by the input's marginal physical productivity times marginal revenus of the firm's output the inputs marginal expense times marginal marginal revenue times the number of units employed the input's marginal expense times the inputs marginal physical productivity. 23. The accountant's cost of producing a bicycle refers to a the out of pocket payments made to produce the bicycle b the bicycle's retail price the marginal cost of the last bicycle produced the value of the goods that were given up to produce the bicycle 24 For any given output level, a firm's long-un costs are always greater than or equal to its short bare always less than or equal to its short run costs cont really greater than or equal to its shon-except in the case of diminishing return to scale dare ally less than or equal to its short rum cots except in the case of diminishing returns to scale Name: ID: C 25. The shape of a firm's expansion path depends upon the cost of labor input. 1. b. the cost of capital input. the shape of the firm's production function. all of these factors. 26. If the market for hula-hoops is characterized by a very inclastic supply curve and a very elastic demand curve, an inward shift in the supply curve would be reflected primarily in the form of 8. lower output. e b. higher prices. c. higher output. d. lower prices. LH Q 27. In the monopolistic competition model barriers to entry maintain some monopoly "rents" in the long run. b. firms are price takers C. one dominant firm acts as the monopolist that is followed by the fringe of competitors. none of these. d. 28. For the practice of price discrimination to be successful, the monopoly must have a downward sloping marginal cost curve. face similar demand curves for various markets. have similar costs among markets. be able to prevent resale of its product. 29. If an unregulated (because it produces electricity from hydroelectric power) electric company is a monopolist and faces demand of Q-50-10P. TC-10 MR-5-30 The profit maximizing output is a. 25 b. 10 C. 50 d. 5 30. If a monopoly is maximizing profits price will always be greater than marginal cost. b. price will always equal marginal cost. e. price will always be greater than average cost. d. price will always equal marginal revenue.
Question 19: It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost. In order for this to be true, the additional assumption necessary is that the price exceeds average variable cost. Therefore, the correct answer is (D) I and II, but not IV.
Question 20: The principal difference between economic profits for a monopolist and for a competitive firm is that monopoly profits are considered a deadweight loss but competitive profits are not. Consumer surplus is present when competitive profits are present, but not when monopoly profits are present.
Competitive profits exist in the long run as well, while monopoly profits may exist only in the short run. One of the major problems of equity is that monopoly profits exist only in the short term, whereas competitive profits do not.
Therefore, the correct answer is (B) monopoly profits present a transfer of profits.
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Carla Vista Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $1,000, and the Flat, a new model, which sells for $1,420. Based on the following income statement for 2022, the CFO at Carla Vista has decided to concentrate the marketing resources on the Flat model and to begin to phase out the Deluxe model. CARLA VISTAELECTRONICS COMPANY Income Statement Year Ended December 31, 2022 Flat Deluxe Total Sales $ 5,112,000 $ 20,000,000 $ 25,112,000 Cost of goods sold 3,067,200 12,880,000 15,947,200 Gross margin 2,044,800 7,120,000 9,164,800 Selling and administrative expenses 810,000 2,960,000 3,770,000 Net profit $1,234,800 4,160,000 $ 5,394,800 Units produced and sold 3,600 20,000 Net profit per unit sold $343 $208 $ The standard unit costs for the Flat and Deluxe models are as follows: Flat Deluxe Direct materials $590 $230 Direct labour: Flat (3.5 hrs. × $20/hr.) 70 Deluxe (1.5 hrs. * $20/hr.) 30 Machine usage: Flat (4 hrs. * $24/hr.) 96 Deluxe (8 hrs. × $24/hr.) 192 Manufacturing overhead 96 192 Standard cost $852 $644 Manufacturing overhead was applied on the basis of machine hours at a predetermined rate of $24 per hour. Carla Vista's CFO is in favour of using an activity-based costing system and has gathered the following information about the company's manufacturing overhead costs for 2022: Units of the Cost Driver Activity Costs Activity Centres and Cost Drivers Soldering (number of solder joints) Flat 270,000 4,300 Total 1,370,000 $ 822,000 Shipments (number of shipments) 738,000 18,000 Quality control (number of inspections) 1,080,000 19,000 72,000 Purchase orders (number of orders) 576,000 99,000 144,000 Machine power (machine hours) 86,000 14,400 174,400 Machine set-ups (number of set-ups) 900,000 3,500 9,000 Total traceable costs $ 4,202,000 Deluxe 1,100,000 13,700 53,000 45,000 160,000 5,500 Using activity-based costing, calculate the gross margin for Flat model and Deluxe model. (Round per machine hour to 5 decimal places, e.g. 15.21156, other intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 2 decimal places, e.g. 15.25%.) Flat Deluxe Gross margin % % Using activity-based costing, determine whether Carla Vista Electronics should continue to emphasize the Flat model and phase out the Deluxe model. B & B Electronics with its plans to emphasize the Flat model and phase out the Deluxe model.
Flat Deluxe Sales $5,112,000 $20,000,000Cost of goods sold $3,338,000 $14,562,000Direct material $2,124,000 $4,600,000Direct labour $252,000 $60,000Manufacturing overhead $822,000 $1,560,000Gross margin $1,774,000 $5,438,000Gross margin percentage 34.73% 27.19%
Activity-based costing is an accounting system that assigns costs to individual activities. This method assigns more indirect costs (overhead) into direct costs (products or services) as compared to conventional costing. Carla Vista Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $1,000, and the Flat, a new model, which sells for $1,420.Flat Deluxe Sales $5,112,000 $20,000,000Cost of goods sold 3,067,200 12,880,000 Gross margin 2,044,800 7,120,000 Selling and administrative expenses 810,000 2,960,000 Net profit $1,234,800 $4,160,000 Units produced and sold 3,600 20,000Net profit per unit sold $343 $208 Standard unit costs for the Flat and Deluxe models are as follows:Flat Deluxe Direct materials $590 $230 Direct labor: Flat (3.5 hrs. × $20/hr.) 70 Deluxe (1.5 hrs. * $20/hr.) 30 Machine usage: Flat (4 hrs. * $24/hr.) 96 Deluxe (8 hrs. × $24/hr.) 192 Manufacturing overhead 96 192Standard cost $852 $644The CFO of Carla Vista's Company has decided to use activity-based costing, and the following is the information about the company's manufacturing overhead costs for 2022 using this method. Units of the Cost Driver Activity Costs Activity Centres and Cost Drivers Soldering (number of solder joints) Flat 270,000 4,300 Total 1,370,000 $ 822,000 Shipments (number of shipments) 738,000 18,000 Quality control (number of inspections) 1,080,000 19,000 72,000 Purchase orders (number of orders) 576,000 99,000 144,000 Machine power (machine hours) 86,000 14,400 174,400 Machine set-ups (number of set-ups) 900,000 3,500 9,000 Total traceable costs $ 4,202,000 Deluxe 1,100,000 13,700 53,000 45,000 160,000 5,500We need to calculate the gross margin and the percentage for Flat and Deluxe models using activity-based costing.Flat Deluxe Sales $5,112,000 $20,000,000Cost of goods sold $3,338,000 $14,562,000Direct material $2,124,000 $4,600,000Direct labour $252,000 $60,000Manufacturing overhead $822,000 $1,560,000Gross margin $1,774,000 $5,438,000Gross margin percentage 34.73% 27.19%The gross margin percentage for Flat model is 34.73% and for Deluxe model is 27.19%. Carla Vista Electronics should continue to emphasize the Flat model and phase out the Deluxe model as it generates more gross margin and hence profit. Therefore, B & B Electronics should continue with its plans to emphasize the Flat model and phase out the Deluxe model.
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