The expected loss before any new internal control procedures are implemented is $2,100.
The details of these internal control procedures and their costs are as follows: Procedure A: Cost $100 and reduces the likelihood to 5%.
The Catch Fish restaurant has an internal control system that is facing some serious issues. An auditor has uncovered these issues during an audit. The estimated impact of this issue is $30,000, with a likelihood of 7%.
Before any new internal control procedures are implemented, we need to calculate the expected loss.
Expected loss is the product of likelihood and impact. Therefore, Expected Loss = Likelihood × Impact Expected Loss = 7% × $30,000
= $2,100
Therefore,
Now, there are three different internal control procedures recommended by the auditor to address the risk.
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Suppose you were offered a 12 -year, 15% coupon, $1,000 par value bond at a price of $1,298.68. What rate of interest (yield to maturity) would you earn if you bought the bond and held it to maturity (at semiannual interest)?
To calculate the yield to maturity (YTM) or the rate of interest earned on the bond if held to maturity, we can use the present value formula and solve for the interest rate.
The present value of a bond can be calculated as:
Price = (Coupon Payment / (1 + r/2)^1) + (Coupon Payment / (1 + r/2)^2) + ... + (Coupon Payment + Par Value / (1 + r/2)^n)
Where:
Price = Price of the bond
Coupon Payment = Periodic coupon payment
Par Value = Face value or par value of the bond
r = Interest rate or yield to maturity
n = Number of periods or years
Given that the bond has a 12-year maturity, a 15% coupon rate, a $1,000 par value, and a price of $1,298.68, we can calculate the yield to maturity (r).
Price = (75 / (1 + r/2)^1) + (75 / (1 + r/2)^2) + ... + (75 + 1000 / (1 + r/2)^24)
1298.68 = 75(1 - (1 + r/2)^-24) / (r/2) + 1000 / (1 + r/2)^24
To solve for the yield to maturity, we can use numerical methods or financial calculators. However, let's simplify the process by using an approximation method. We can start by assuming an interest rate and iterate until we find a rate that approximately matches the bond price.
Using an iterative approach, the approximate yield to maturity (YTM) for this bond would be around 7.64%.
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How can a poor SWOT analysis affect strategic planning?
Please dont copy off another answer! thank you
A poor SWOT analysis can affect strategic planning in various ways by causing a company to miss opportunities or underestimate potential threats, may also result in a company overemphasizing certain aspects of its business, could lead to unrealistic strategic goals and can also lead to a lack of commitment and alignment among stakeholders.
A poor SWOT analysis can affect strategic planning in various ways. Firstly, a poorly executed SWOT analysis could cause a company to miss opportunities or underestimate potential threats. The SWOT analysis should be performed with care and precision, with emphasis on data gathering, accuracy, and evaluation. If done poorly, a company might fail to identify emerging trends or might overestimate the strength of its competitors.
A poor SWOT analysis may also result in a company overemphasizing certain aspects of its business, such as strengths or weaknesses. A balanced SWOT analysis is necessary for a successful strategic planning process. If the analysis is skewed or incomplete, the company may develop a strategic plan that is misaligned with its actual capabilities or opportunities.
Furthermore, a poor SWOT analysis could lead to unrealistic strategic goals. A SWOT analysis is used to inform strategic goals and objectives, and a poorly executed analysis may result in unrealistic or overly ambitious goals that cannot be achieved. Unrealistic strategic goals could also lead to unattainable objectives and the misallocation of resources, time, and money.
Finally, a poor SWOT analysis could lead to a lack of commitment and alignment among stakeholders. If a SWOT analysis is not executed with care and precision, stakeholders may not fully understand the rationale behind certain decisions, and therefore, may be less likely to support the strategic plan.
In conclusion, a SWOT analysis is a critical component of strategic planning, and a poorly executed SWOT analysis could have severe consequences. They can cause a company to miss opportunities or underestimate potential threats, may also result in a company overemphasizing certain aspects of its business, could lead to unrealistic strategic goals and can also lead to a lack of commitment and alignment among stakeholders. Companies should ensure that they conduct a balanced, accurate, and precise SWOT analysis to inform their strategic planning process.
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CA2-8 (Expense Recognition Principle) Daniel Barenboim sells and erects shell houses, that is, frame
structures that are completely finished on the outside but are unfinished on the inside except for flooring,
partition studding, and ceiling joists. Shell houses are sold chiefly to customers who are handy with tools
and who have time to do the interior wiring, plumbing, wall completion and finishing, and other work
necessary to make the shell houses livable dwellings.
Barenboim buys shell houses from a manufacturer in unassembled packages consisting of all lumber,
roofing, doors, windows, and similar materials necessary to complete a shell house. Upon commencing
operations in a new area, Barenboim buys or leases land as a site for its local warehouse, field office, and
display houses. Sample display houses are erected at a total cost of $30,000 to $44,000 including the cost of
the unassembled packages. The chief element of cost of the display houses is the unassembled packages,
inasmuch as erection is a short, low-cost operation. Old sample models are torn down or altered into new
models every 3 to 7 years. Sample display houses have little salvage value because dismantling and
moving costs amount to nearly as much as the cost of an unassembled package.
Instructions
(a) A choice must be made between (1) expensing the costs of sample display houses in the periods in
which the expenditure is made and (2) spreading the costs over more than one period. Discuss the
advantages of each method.
(b) Would it be preferable to amortize the cost of display houses on the basis of (1) the passage of time
or (2) the number of shell houses sold? Explain.
(a) Advantages of expensing the costs of sample display houses in the periods in which the expenditure is made are as follows:This accounting method has the advantage of allowing the company to accurately report its expenses for a particular accounting period.
By expensing the costs of sample display houses, the company ensures that its profit and loss statement reflects the actual expenses of the business, which leads to more accurate financial statements. This is also a simpler and more straightforward method than the alternative of spreading the costs over more than one period. Advantages of spreading the costs over more than one period are as follows:By spreading the costs over more than one period, the company can minimize the impact on its income statement in any one period.
This method can smooth out fluctuations in income and expenses and provide a more stable picture of the company's finances over time. Additionally, this method can help match expenses with the revenue they generate, which can lead to more accurate financial statements. (b) It would be preferable to amortize the cost of display houses on the basis of (2) the number of shell houses sold. The reason for this is that the cost of the display houses is directly related to the revenue they generate.
By spreading the cost over the number of shell houses sold, the company can more accurately match expenses with revenue. This leads to more accurate financial statements and provides a more complete picture of the company's finances. Additionally, this method can help smooth out fluctuations in income and expenses and provide a more stable picture of the company's finances over time.
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BT Green, Inc. is a small high-tech business operating in Brine, Nevada. The owner began it seven years ago with two associates in a rented office space just outside of town. In three years it doubled its revenue to $850K, and expanded its customer base in the local commercial market as well as in the adjacent state. This year, it submitted a bid on a federal government contact. In preparation for that contract, to demonstrate in its proposal that the company had sufficient capacity, BT Green hired three new employees. Last week, the company learned that it did not win; so, without the new revenue stream, it decided to let one of the new people go. The other two would be retained to find new business. Kyle Reeder, who coordinates HR functions, began Monday morning with a voice mail from Terell Banks, the employee that was terminated on the preceding Friday. Mr. Banks said: "I’ve thought about our conversation last week. I don’t think it was fair that I was fired. It seems pretty fishy to me that the only black man in the department was let go. I would like you to review the matter to see what else can be done."
Disciplinary Policy
The Company expects all employees to adhere to company policies, procedures, and standards. The company has the right to discipline employees for any violations of those rules and standards in a legal manner which it views as appropriate. The Company may use a progressive method to enable employees to improve; but, immediate termination is also possible, especially for dangerous infractions. The Company strives to be fair and corrective, but "just cause" per se and multiple corrective opportunities are not needed for termination. The disciplinary policy does not alter in any way the at-will status of employment. Receipt of Employee Handbook I have received BT Green’s Employee Handbook. I understand that management may change it and that it is my responsibility to stay current with the provisions.
I understand that I am an at-will employee and that no company communication shall change that status. The company may terminate me without reason at any time, and I can terminate my employment at any time. I understand that only the CEO has authority to change the employment-at-will status. Such a change must be in writing and officially signed by the company. ____Terell Banks_____________________ Employee’s Name in Print ____Terell Banks___________ Employee’s Signature _____3/6/17__________________ Date Signed by Employee TO BE PLACED IN EMPLOYEE’S PERSONNEL FILE
1) what legal risk the company has regarding Mr. Banks’ complaint. In doing this,
a. Identify the specific laws that may pertain to this situation.
b. State the key legal criteria for each law.
c. Analyze whether the details of the case meet the legal criteria, then explain how they do or do not fit.
d. State your conclusion about the legal risk.
The specific laws that may pertain to this situation are Title VII of the Civil Rights Act of 1964, Equal Employment Opportunity Commission (EEOC) regulations, and the company's own anti-discrimination policy.
Title VII of the Civil Rights Act of 1964: This law makes it illegal for an employer to discriminate against any individual on the basis of race, color, religion, sex, or national origin. Under Title VII, discrimination is prohibited in any aspect of employment, including hiring, firing, promotion, compensation, and other terms and conditions of employment.The company's own policy on discrimination must comply with all applicable federal and state laws. It should outline the company's commitment to providing a workplace free from discrimination and harassment and include information on how to report incidents of discrimination or harassment.The details of this case meet the legal criteria for discrimination based on race. Mr. Banks alleges that he was terminated because he was the only black man in the department.
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Offer 3 tips and suggestions for how EMB can incorporate
accounting and financial knowledge into daily practice.
Here are three tips and suggestions for how EMB can incorporate accounting and financial knowledge into daily practice:
Track expenses and revenue: EMB should keep an accurate record of all expenses and revenue to help identify any inefficiencies or areas where they can reduce costs. This can be achieved by maintaining a system of bookkeeping that includes recording all financial transactions, organizing receipts, and invoices.
Create and follow a budget: Developing a budget can help EMB manage cash flow, anticipate future expenses, and make informed business decisions. By setting spending limits and tracking expenditures against the budget, EMB can stay on track financially and avoid overspending.
Regularly review financial statements: EMB should regularly review financial statements such as the income statement, balance sheet, and cash flow statement to understand their financial position and performance. These statements provide valuable information about revenue, expenses, assets, liabilities, and cash flow, which can help inform decision-making and identify areas for improvement.
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The journal entry to record indirect materials used consists of a debit to Finished Goods Inventory and a credit to Raw Materials Inventory. True or False
The journal entry to record indirect materials used consists of a debit to Finished Goods Inventory and a credit to Raw Materials Inventory is a False statement.Indirect materialsIndirect materials are materials used in the production process that aren't directly involved in the finished product.
The following are some examples of indirect materials: cleaning supplies, oil, or lubricants, which are used to keep machines running. Indirect materials are an expense on the income statement, whereas direct materials are included in the cost of goods sold.The following is the journal entry to record indirect materials used:Debit:
Manufacturing OverheadCredit: Raw Materials InventoryTo reflect the decrease in the Raw Materials Inventory, the credit entry is made. Manufacturing Overhead is debited to reflect the indirect material's value in production. Manufacturing Overhead is the allocation of all indirect costs that are incurred in the production of a commodity. Manufacturing overhead includes a wide range of indirect expenses, such as rent and utilities for the manufacturing plant and machinery.
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You are analyzing a company that has cash of $11,880, accounts receivable of $17,380, fixed assets of $100,000, accounts payable of $54,405, and inventory of $51,590. What is the quick ratio? Muniple Choice
The company has a quick ratio of approximately 1.487, indicating its ability to cover immediate liabilities using quick assets like cash, accounts receivable, and inventory.
To calculate the quick ratio, we need to determine the company's quick assets and liabilities. Quick assets include cash, accounts receivable , and inventory, while quick liabilities consist of accounts payable. Given the information provided:
Quick assets = Cash + Accounts Receivable + Inventory
= $11,880 + $17,380 + $51,590
= $80,850
Quick liabilities = Accounts Payable
= $54,405
Now, we can calculate the quick ratio by dividing quick assets by quick liabilities:Quick Ratio = Quick Assets / Quick Liabilities
= $80,850 / $54,405
≈ 1.487
Therefore, the quick ratio is approximately 1.487.
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For this assignment you should find a short news article that talks about an event that has affected the supply OR the demand for a specific good or service. If you find an article that has multiple things going on, please just choose one of the events to model. You will provide a copy of the article itself or the link so I can read it as well as a well-developed paragraph that talks about the event and how it impacts the market you have chosen. Beneath your paragraph, you will draw a completely and correctly labeled market model (as shown in class) with the event clearly demonstrated. You will also demonstrate how the equilibrium price and quantity of the good/service has changed or will change as a result of the event you chose
Apple warns that a global chip shortage will impact iPhone supply, causing delays in production and an increase in price. This shortage has affected the supply and demand for iPhones, resulting in higher prices and reduced quantities.
In a news article by the BBC, titled "Apple warns chips shortage will hit iPhone," it is noted that Apple is warning that its iPhone supply could be affected by a global shortage of computer chips. The report highlights that a shortage of semiconductors is hitting electronics manufacturers globally, leading to delays in the production of products that use the chips. The shortage has been attributed to various factors such as the COVID-19 pandemic, changes in supply chains, and the effects of climate change.
This, in turn, has led to a decline in the supply of semiconductors to the market. As a result, Apple has been forced to delay the launch of its iPhone 12 range in some areas due to the chip shortage. This has affected the demand for the iPhone as consumers have been forced to wait for longer periods to purchase the product. The reduced supply of the iPhone has also led to an increase in its price, as consumers compete for the limited available supply. In this way, the shortage of semiconductors has affected the supply and demand for the iPhone.
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For Mortenson Company, the following information is available:
Cost of goods sold
$ 130,000
Dividend revenue
5,000
Income tax expense
12,000
Operating expenses
46,000
Sales revenue
200,000
In Mortenson's multiple-step income statement, gross profit:
a) should not be reported
b) should be reported at $75,000.
c) should be reported at $17,000.
d) should be reported at $70,000.
In Mortenson Company's multiple-step income statement, gross profit should be reported at $70,000.
To calculate the gross profit, we subtract the cost of goods sold (COGS) from the sales revenue. In this case, the COGS is given as $130,000 and the sales revenue is $200,000. Therefore, the gross profit is $200,000 - $130,000 = $70,000.
Gross profit represents the amount of revenue remaining after deducting the direct costs associated with producing or delivering the goods sold. It reflects the profitability of the company's core operations before considering other operating expenses and income tax.
By reporting a gross profit of $70,000, Mortenson Company indicates that it has earned $70,000 in revenue above the direct costs of producing the goods sold. This figure is an important indicator of the company's ability to generate profits from its primary business activities.
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Explain the endowment effect with respect to winning a ticket to the World Series of baseball
Use behavioral economics concept to explain why a consumer (or you) will buy 2 units of product x, when seeing a sign that says 2 for $10
The endowment effect refers to the tendency of individuals to value an item they already possess higher than the potential value they would assign to acquiring the same item.
The endowment effect suggests that once individuals possess an item, they attribute a higher value to it compared to the value they would assign if they didn't own it. In the context of winning a ticket to the World Series of baseball, the endowment effect may lead the individual to perceive the ticket as highly valuable, even if they had no intention of attending the event initially. This effect is driven by the emotional attachment and sense of ownership associated with the ticket.
In behavioral economics, this behavior can be explained by the concept of loss aversion, which states that individuals experience stronger negative emotions from losing something compared to the positive emotions they experience from gaining the same thing. As a result, the individual may be reluctant to part with the ticket, even if it means receiving a price equal to or greater than its market value.
In the case of buying two units of product x when seeing a sign that says "2 for $10," the consumer's decision can be influenced by the concept of perceived value. The consumer may perceive getting two units for $10 as a better deal compared to buying a single unit for $5, even though the price per unit is the same. This perception is influenced by the framing effect, which highlights the importance of how options are presented to individuals. The consumer may feel that they are getting a bargain or experiencing a special promotion by purchasing two units, leading to a higher likelihood of making the purchase.
Overall, the endowment effect and concepts from behavioral economics shed light on how individuals assign value to possessions and make purchasing decisions based on subjective perceptions of value, emotional attachments, and framing effects.
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Runner Industrial has estimated that production for the next five quarters will be:
1st quarter,2020 40,500 units
2nd quarter, 2020 36,800 units
3rd quarter, 2020 44,200 units
4th quarter, 2020 34,400
1sr quarter, 2021 42,100 units
Finished units of production require 6 pounds of raw material per unit. The raw material cost is $7 per pound. There is $255,150 of raw material on hand at the beginning of the first quarter, 2020. Runner desires to have 15 percent of next quarter's material requirements on hand at the end of each quarter.
Units to be produced ( Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year)
Cost of raw material per unit
Cost of raw material needed for production
Add: Desired ending inventory of raw material
Total material needed
Less: Beginning inventory of raw material
Required raw material purchases
Runner Industrial needs to calculate the required raw material purchases based on the units to be produced and the desired ending inventory of raw material. The cost of raw material per unit is given, and the beginning inventory of raw material is also provided. The calculation involves determining the total material needed and subtracting the beginning inventory to obtain the required raw material purchases.
To calculate the required raw material purchases, we multiply the units to be produced in each quarter by the cost of raw material per unit ($7 per pound). This gives us the cost of raw material needed for production. Next, we add the desired ending inventory of raw material, which is 15 percent of the next quarter's material requirements. This gives us the total material needed. Then, we subtract the beginning inventory of raw material from the total material needed to determine the required raw material purchases.
By performing these calculations for each quarter, we can determine the required raw material purchases for Runner Industrial.
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rate is assumed to be s1 2.000 The equipment has an expected useful life of five years. Which is an entry that would be recorded in the fund financial statements? Multipe aroloe Right of Use Asset - Equipment 200000 \begin{tabular}{l|l} Lease Payable & 160,000 \\ 405h & 4000 \end{tabular} cash 40000 Expenditures Loase cantrace 121000 Cash 121,000 Expenditures-Lease corntract 121,000 Other Financing Sources 121,000
The entry that would be recorded in the fund financial statements is: Right of Use Asset - Equipment $200,000; Lease Payable $160,000; Cash $40,000.
Based on the given information, the entry to be recorded in the fund financial statements would be:
Debit: Right of Use Asset - Equipment $200,000
This represents the recognition of the right of use asset for the equipment, which has a value of $200,000.
Credit: Lease Payable $160,000
This represents the liability associated with the lease payable for the equipment, which is $160,000.
Credit: Cash $40,000
This represents the cash payment made in relation to the lease agreement for the equipment, amounting to $40,000.
These entries reflect the recognition of the right of use asset, the corresponding lease liability, and the cash outflow associated with the lease contract. These entries are important for accurately reporting the financial position and transactions related to the equipment lease in the fund financial statements.
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One of the red flags in strategy implementation is:
Select one:
a. High level of staff absenteeism
b. Low profitability despite high productivity
c. Board members do not meet frequent enough
d. None of the above
One of the red flags in strategy implementation is low profitability despite high productivity. B. Low profitability despite high productivityis the correct option.
A red flag is a warning signal that is raised in response to something alarming that has been detected. It warns that a risk or potential problem might be on the horizon and that one should take action to avert it. In the field of strategy execution, several red flags can occur. This query is focused on identifying one of the most frequent strategy implementation red flags, and the answer is provided above.
Option (a) and (c) are irrelevant. Staff absenteeism and board members' frequent meetings are essential but not the red flags that a company must pay attention to when implementing a strategy. Low productivity, even though high productivity, is the red flag that the organization needs to focus on, as it is necessary to ensure that the company is profitable. Therefore, option (b) is incorrect.
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MC algo 14-15 D/E And Capital Structure Weight the firm's equity if the firm's tax rate is 21 percent? Multiple Choice .4350 5650 5372 .6103 .6368
The capital structure weight of the firm's equity is approximately 1.01%. However, none of the provided options (a, b, c, d, e) matches this result.
To calculate the capital structure weight of the firm's equity, we need to first determine the weight of debt and equity in the firm's capital structure.
Given:
Debt-equity ratio = 77Cost of equity (Ke) = 11.7%Pretax cost of debt = 6.7%Tax rate = 21%The weight of debt can be calculated as follows:
Weight of debt = Debt / (Debt + Equity)
Since the debt-equity ratio is given as 77, we can express it as a fraction:
Debt-equity ratio = Debt / Equity
77 = Debt / Equity
Solving for Debt:
Debt = 77 * Equity
Substituting the value of Debt in the weight of debt formula:
Weight of debt = 77 * Equity / (77 * Equity + Equity)
Weight of debt = 77 * Equity / (78 * Equity)
Weight of debt = 77 / 78
The weight of equity can be calculated as follows:
Weight of equity = Equity / (Debt + Equity)
Substituting the value of Debt in the weight of equity formula:
Weight of equity = Equity / (77 * Equity + Equity)
Weight of equity = Equity / (78 * Equity)
Weight of equity = 1 / 78
Now, we can calculate the capital structure weight of the firm's equity by taking into account the tax rate:
Capital structure weight of equity = Weight of equity * (1 - Tax rate)
Capital structure weight of equity = (1 / 78) * (1 - 0.21)
Capital structure weight of equity = (1 / 78) * (0.79)
Capital structure weight of equity ≈ 0.0101282
To convert it into a percentage, multiply by 100:
Capital structure weight of equity ≈ 1.01%
Therefore, the capital structure weight of the firm's equity is approximately 1.01%.
None of the given options (a, b, c, d, e) matches the calculated result.
The proper format of the question should be:
Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt-equity ratio of 77. The cost of equity is 11.7 percent and the pretex cost of debt is 6.7 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 21 percent?
a. 4350
b. 5650
c. 5372
d. 6103
e. 6368
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Defined and Explain the following
The internal environment
A. Internal Environment Defined
A.1. Government
A.2. Culture
A.3. Stakeholders
A.4. Competitors
A.5. Customers
A.6. Suppliers
A.7. Community
A. Internal Environment: The internal environment is the environment that is present within the business. It is made up of several elements. These elements could be the resources, management style, organization culture, and employees that are all present within the organization.
A.1. Government: The government is one of the factors that form the internal environment of an organization. Government policies and regulations impact the operations of the business.
A.2. Culture: Culture is an integral part of the internal environment of an organization. It refers to the shared beliefs, values, norms, and customs of an organization.
A.3. Stakeholders: Stakeholders are a critical element of the internal environment of an organization. They include investors, customers, suppliers, and employees who have an interest in the business.
A.4. Competitors: Competitors are a crucial part of the internal environment of an organization. They influence the company's decision-making process, and their actions could have a significant impact on the business.
A.5. Customers: Customers are a vital element of the internal environment of an organization. The business must understand and meet the needs of its customers to remain relevant and successful.
A.6. Suppliers: Suppliers are also a critical element of the internal environment of an organization. They supply the organization with the necessary raw materials and goods for production.
A.7. Community: The community is a critical element of the internal environment of an organization. Organizations must maintain good relationships with the communities they operate in.
A. Internal Environment: The internal environment of an organization is made up of several elements such as government, stakeholders, culture, competitors, customers, suppliers, and the community. These elements influence the operations, decisions, and management of the organization. These elements influence the operations, decisions, and management of the organization. Organizations must establish a good internal environment that will enhance productivity, retain employees, and increase efficiency.
A.1. Government: The internal environment of an organization is influenced by government regulations, as businesses are expected to comply with all rules and regulations that apply to their industry or sector.
A.2. Culture: It is important to establish and maintain an organization's culture as it helps to motivate employees, improve employee satisfaction and increase productivity. An organization culture helps to create a sense of unity among employees, promotes teamwork, and ensures that all employees work towards achieving the same goals.
A.3. Stakeholders: The organization's primary goal is to keep the stakeholders happy. Therefore, it is crucial for the business to have a good internal environment to have efficient operations that fulfill stakeholders needs and meet their expectations.
A.4. Competitors: Businesses must understand their competitors, their strengths, weaknesses, and market share to make informed decisions that will give them a competitive advantage.
A.5. Customers: An organization should offer high-quality products or services, provide excellent customer service, and have a good reputation to retain customers and attract new ones.
A.6. Suppliers: Organizations must maintain a good relationship with their suppliers to ensure a steady flow of raw materials.
A.7. Community: Companies that are socially responsible and engage in corporate social responsibility activities are more likely to be accepted and supported by the communities they operate in.
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Please explain why, I will give you a thumb up Which of the following shows the reason why inflation Is a major macroeconomic concern? Multiple Choice the cost of inflation is obvious to the general public reducing inflation is desirable to the general public inflation reduces the efficiency of the price system inflation reduces wealth among groups inflation increases unemployment
The answer that best demonstrates why inflation is a significant macroeconomic worry is "Inflation reduces the efficiency of the price system."
The general price level rises over time as a result of inflation, which reduces the purchasing power of money. This lowers the price system's effectiveness, which is important for allocating resources and organising economic activity. It becomes difficult for consumers and businesses to determine the genuine value of goods and services when inflation takes place. It becomes challenging to make wise choices about spending, saving, and investing when prices are distorted.Inflation can also lead to economic unpredictability and instability. Planning for the future is difficult when prices are growing quickly, for both individuals and businesses. Financial arrangements and long-term contracts
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Professor Wendy Sirith has been offored the following doat: A law frm would like to retain her for an uptront gayment of $54,000. In return, for the next year, the firm would have access to elght hours of ther time every month. Smith's rate is 5572 per hour, and her opportunity cost of capital is 17 . (equivabent annual rate, EAR). What is the IRR (annus)? What does the IRR rule edvise regarting this opportunity? What is the NPV? What does the NPV nule say about this opportunity? What is the iRR (annual)? The IRR (annual) is 6. (Round to two decimal plsces)
The IRR (Internal Rate of Return) for Professor Wendy Sirith's opportunity is approximately 6% per year. The Net Present Value (NPV) of the opportunity is negative, indicating that the project is not financially favorable. Therefore, based on the NPV rule, the opportunity should be rejected.
To calculate the IRR, we need to find the discount rate that makes the present value of the cash flows equal to the initial investment. In this case, the initial investment is $54,000, and the monthly cash flow is $572 (8 hours * $72/hour).
Using a financial calculator or spreadsheet software, we can calculate the IRR, which is approximately 6% per year.
The IRR rule advises that the opportunity should be accepted if the IRR is higher than the opportunity cost of capital.
In this case, the opportunity cost of capital is 17% per year (EAR). Since the IRR (6%) is lower than the opportunity cost of capital (17%), the project should be rejected.
The NPV is calculated by discounting the cash flows at the opportunity cost of capital and subtracting the initial investment. In this case, the NPV can be calculated as follows:
NPV = -Initial Investment + PV of Cash Flows
= -$54,000 + ($572 * 12) / (1 + 0.17/12)^12
≈ -$4,336.67
The NPV rule states that an investment should be accepted if the NPV is positive and rejected if the Net Present Value is negative. In this case, the NPV is negative, indicating that the opportunity is not financially favorable and should be rejected.
Therefore, the IRR is approximately 6% per year, and both the IRR and NPV rules advise against accepting the opportunity.
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The effects of inflation A Does inflation impact borrowers and savers the same way?
No, inflation does not impact borrowers and savers in the same way. Inflation affects borrowers and savers differently due to the changing purchasing power of money over time.
Borrowers, such as individuals with loans or mortgages, can benefit from inflation. When prices rise, the value of money decreases, but the value of the debt remains the same. This means that borrowers are repaying their debts with money that is worth less than when they initially borrowed it. Inflation erodes the real value of their debt, effectively reducing the burden of repayment. On the other hand, savers are negatively affected by inflation. When prices rise, the purchasing power of money decreases. If the interest earned on savings does not keep pace with inflation, savers may experience a loss in the real value of their savings. For example, if the inflation rate is higher than the interest rate earned on savings, the purchasing power of the savings diminishes over time. This can lead to a decrease in the ability to afford goods and services in the future.
It's important to note that the impact of inflation on borrowers and savers can vary depending on the specific terms of loans or investments, as well as the inflation rate itself. For instance, borrowers with fixed-rate loans may experience a greater benefit from inflation compared to those with adjustable-rate loans. Similarly, savers who invest in assets that have higher returns or are linked to inflation, such as certain bonds or stocks, may be able to mitigate the negative effects of inflation.
In summary, borrowers can potentially benefit from inflation as it reduces the real value of their debts, while savers may face a decrease in the purchasing power of their savings if the interest rate earned does not keep up with inflation. The impact of inflation on borrowers and savers depends on various factors, including the terms of loans and investments, as well as the inflation rate itself.
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Lin Corporation has a single product whose selling price is $136 per unit and whose variable expense is $68 per unit. The company's monthly fixed expense is $32.000 Required: 1. Calculate the unit sales needed to attain a target profit of $7,100. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,200. (Round your intermediate calculations to the nearest whole number.)
Calculation of unit sales needed to attain a target profit of $7,100Variable expense per unit = $68Selling price per unit = $136Contribution margin per unit = Selling price - Variable expense= $136 - $68= $68Contribution margin ratio = Contribution margin per unit / Selling price per unit= $68/$136= 0.5
Fixed expenses = $32,000Target profit = $7,100Contribution margin ratio = Target profit + Fixed expenses/Total sales- 0.5 = ($7,100 + $32,000)/Total sales- 0.5Total sales = ($7,100 + $32,000) / 0.5= $78,200Unit sales needed to attain a target profit of $7,100= Total sales / Selling price per unit= $78,200 / $136= 575 units
Therefore, 575 units of product must be sold to attain a target profit of $7,100.2.
Calculation of dollar sales needed to attain a target profit of $9,200Target profit = $9,200Fixed expenses = $32,000Contribution margin per unit = Selling price - Variable expenses= $136 - $68= $68Contribution margin ratio = Contribution margin per unit / Selling price per unit= $68/$136= 0.5Fixed expenses = $32,000Contribution margin ratio = Target profit + Fixed expenses / Total sales- 0.5 = ($9,200 + $32,000) .
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Restricting output below the competitive equilibrium output will
A. raise the price above the marginal cost of the last unit produced.
B. eliminate the deadweight loss from underproduction.
C. lower the price below the competitive equilibrium.
D. lead to an improved allocation of resources under monopolies.
Restricting output below the competitive equilibrium output will raise the price above the marginal cost of the last unit produced (option A).
In a competitive market, the equilibrium output is determined by the intersection of the market demand and supply curves. This equilibrium output maximizes social welfare by balancing the benefits to consumers (as reflected in their willingness to pay) and the costs to producers (as reflected in their marginal costs).
When output is restricted below the competitive equilibrium, it means that production is intentionally reduced or limited. This restriction leads to a decrease in the quantity supplied, resulting in a scarcity of the product. As a result, the price of the product increases because the demand remains the same or may even exceed the limited supply. This increase in price above the marginal cost of the last unit produced is referred to as a "price markup" or "price premium."
Option A accurately describes the outcome of restricting output below the competitive equilibrium. It highlights that the price will be raised above the marginal cost of the last unit produced, indicating a departure from the efficient allocation of resources. Restricting output in this manner can lead to higher prices for consumers and may result in allocative inefficiency. Hence, option A is the correct choice as it correctly identifies the impact of restricting output below the competitive equilibrium.
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Suppose that at the current $15 price of a large Domino's pizza, 150 pizzas are demanded per day from the Kahala Mall location. Based on the law of demand, which of the following could be a *possible* daily quantity of Domino's pizzas demanded if the Kahala Mall location runs a special for $10 pizzas? Select all that apply. A. 125 pizzas B. 75 pizzas C. 200 pizzas D. 250 pizzas
The possible daily quantity of Domino's pizzas demanded if the Kahala Mall location runs a special for $10 pizzas could be 300 pizzas. Thus, the option C (200 pizzas) is correct.
How to find?Suppose that at the current $15 price of a large Domino's pizza, 150 pizzas are demanded per day from the Kahala Mall location.
We have to find the possible daily quantity of pizzas at $10 price. We can solve this problem by drawing the demand curve. We know that when price falls from $15 to $10, demand will increase (based on the law of demand).
Assuming a linear demand curve, we can find the slope by using the formula:
Slope of the demand curve = (Change in quantity demanded) / (Change in price)
The current price is $15 and the corresponding quantity demanded is 150 pizzas.
The new price is $10 and we want to find the corresponding quantity demanded.
Slope of the demand curve = (150 - Qd) / (15 - 10)
= (150 - Qd) / 5
Solving for Qd, we get:
Qd = 150 - 5 x slope
Qd = 150 - 5 x (-30)
Qd = 150 + 150
= 300
Therefore, the possible daily quantity of Domino's pizzas demanded if the Kahala Mall location runs a special for $10 pizzas could be 300 pizzas. Thus, the option C (200 pizzas) is correct.
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Demand and Supply 100pts Minjie Huang Sep 4, 2022 at 11:33 AM Part 1 (80 pts): Some years ago Utah annually sold 27 licenses to hunt buffalo in a 1,500square-mile area of the state. The fee was $200 for residents and $1,000 for nonresidents. Because the state received more than a thousand applications each year, it held a drawing to decide who will get the 27 licenses. (a) Why do you suppose Utah didn't sell the licenses to the highest bidder? (b) Do you think people who receive a license should be allowed to sell it to someone else? (c) What effects do you think a lottery system with freely transferable licenses would have? Carefully evaluate this statement in no less than 200 words.
(a) The state of Utah did not sell the licenses to hunt buffalo to the highest bidder because that would have created unequal opportunities for hunting buffalo.
Instead of a high-earning person, a person with a low income but exceptional hunting skills would have been more deserving of the license, and the aim of selling licenses is to distribute them equitably among people. Thus, Utah did not sell the licenses to the highest bidder.(b) People who receive a license should not be allowed to sell it to someone else because it will lead to an unequal distribution of licenses.
Licenses are awarded to individuals based on their skills, and they are required to fulfill certain terms and conditions when hunting, such as complying with state rules and regulations. Allowing people to sell their licenses will put such terms and conditions at risk and may encourage fraudulent activities.(c) A lottery system with freely transferable licenses would have negative effects.
The free transferability of licenses would lead to a concentration of licenses in the hands of wealthy individuals, as they would be the only ones capable of purchasing and holding large numbers of licenses. It would not benefit the common man, as the licenses would become more costly. As a result, the government will receive fewer profits, and licenses will be concentrated in the hands of a few individuals.
The lottery system would be a fair and equitable approach to distributing the licenses. It would give all eligible individuals an equal opportunity to receive the license. However, free transferability of licenses would lead to an unequal distribution of licenses, which would eventually lead to the failure of the licensing system, as it would no longer be equitable. Thus, a system of transferable licenses should be avoided. I hope this helps.
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Explain a situation that
proves that the velocity of money may increase with the nominal interest rate.
Explain with a suitable diagram
or numerical example.
The velocity of money refers to the rate at which money circulates in an economy, indicating how quickly money changes hands as people engage in transactions. The relationship between the velocity of money and the nominal interest rate is complex and can vary depending on various factors. However, there are situations where an increase in the nominal interest rate can lead to an increase in the velocity of money.
One such situation occurs when there is an expectation of higher inflation. When people anticipate that prices will rise, they may spend their money sooner rather than later to avoid the erosion of purchasing power. This increased spending can lead to a higher velocity of money. Additionally, higher nominal interest rates can incentivize people to invest their money or seek higher returns, which can result in increased economic activity and transactions, further driving up the velocity of money. To illustrate this relationship, consider a scenario where the central bank raises the nominal interest rate in response to expected inflation. As a result, individuals expect higher borrowing costs and higher returns on their savings. This expectation prompts people to spend their money now rather than later, as the purchasing power of money is expected to decline with rising prices. This increased spending increases the velocity of money. In a diagram, this relationship can be depicted by an upward-sloping velocity of money curve. As the nominal interest rate increases, the velocity of money also increases, indicating a faster circulation of money in the economy. This relationship reflects the dynamic interplay between interest rates, inflation expectations, and the decision-making behavior of individuals in an economy. It is important to note that this relationship is not universal and can be influenced by other factors, including the overall economic conditions and individuals' confidence in the future.
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Which of the following statements about the Securities Act of 1933 is not true? A. The auditor will not be liable if he or she can demonstrate due diligence in performing the audit. B. The third-party user does not have the burden of proof that he or she relied on the financial statements. C. The third-party user does not have the burden of proof that the loss was caused by the misleading financial statements. D. The third party has the burden of proof that the auditor was either negligent or fraudulent in doing the audit.
The statement that is not true about the Securities Act of 1933 is D. The third party has the burden of proof that the auditor was either negligent or fraudulent in doing the audit.
The Securities Act of 1933 is a federal law that regulates the offering and sale of securities to the public. It aims to protect investors by requiring companies to provide accurate and complete information about the securities being offered. Regarding the statements provided:
A. This statement is true. The Securities Act of 1933 includes a "due diligence" defense, which means that an auditor may not be held liable if they can demonstrate that they performed the audit with due care and reasonable professional judgment.
B. This statement is true. Under the Securities Act of 1933, the burden of proof is not on the third-party user to demonstrate reliance on the financial statements. The act imposes liability on the issuer of the securities for any material misstatements or omissions.
C. This statement is true. The burden of proof is not on the third-party user to prove that the loss was caused by misleading financial statements. If the financial statements were found to be misleading, the issuer can be held liable for any resulting losses.
D. This statement is not true. The burden of proof is not on the third party to prove negligence or fraud on the part of the auditor. The Securities Act of 1933 primarily focuses on the responsibility of the issuer to provide accurate information, rather than placing the burden on the third party to prove auditor misconduct.
In conclusion, statement D is the one that is not true about the Securities Act of 1933.
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Select two technologies that have advanced the efficiency of inventory management systems. Check All That Apply radio frequency identification (RFID) universal product codes (UPC) magnetic resonance i
Two technologies that have significantly advanced the efficiency of inventory management systems are radio frequency identification (RFID) and universal product codes (UPC).
RFID is a technology that uses electromagnetic fields to automatically identify and track tags attached to objects.
By using RFID tags on inventory items, businesses can easily and accurately track their location and movement within the supply chain.
RFID eliminates the need for manual scanning, allowing for real-time updates and improved accuracy in inventory management.
Universal product codes (UPC) are barcodes that contain product information and are widely used in retail.
By scanning UPC codes, inventory systems can quickly identify and track products, enabling efficient stock management, pricing, and sales tracking.
UPC codes streamline the process of capturing product data, reducing human errors and saving time in inventory management.
Both RFID and UPC technologies have revolutionized inventory management systems by enhancing automation, accuracy, and speed, ultimately improving overall efficiency.
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What is an efficiency wage and how does it relate to
unemployment?
Answer:
In more modern contexts, efficiency wages refer to the fact that many employers do not slash wages to the minimum wage, even in the face of competition from other firms or during periods of recession when an eager supply of unemployed labor is abundant.
A $1000-face-value 10 -year bond has a 3% coupon rate, its current price is $980. If future interest rate (YTM) stays the same, calculate price after one year and after two year
The price of the bond after one year is estimated to be $981.90, and after two years, it is estimated to be $984.79.
To calculate the price of the bond after one year and after two years, we need to discount the future cash flows, which include coupon payments and the final maturity payment, at the yield to maturity (YTM).
After one year, there will be one remaining coupon payment of $30 and the final maturity payment of $1000. Assuming the YTM remains the same, we discount these future cash flows back to the present value.
Using the present value formula, the price after one year can be calculated as:
Price after one year = $30/(1 + YTM) + $1000/(1 + YTM) = $981.90
Similarly, after two years, there will be no more coupon payments, and only the final maturity payment of $1000 will be received. Discounting this future cash flow back to the present value gives:
Price after two years = $1000/(1 + YTM)^2 = $984.79
These calculations assume that the future interest rate (YTM) remains the same throughout the bond's remaining life.
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A5.10% coupon bond with 11 years left to maturity can be called in 6 years; The call premium is 1 year of coupon payments; The bond is currently offered for sale at $882.32 (Assume interest payments are semiannual) What is the bond's yield to maturity?
O 12.17%
O 13.28%
O 7.58%
O 6.78%
O 3.31%
O 6.62%
O 7.77%
To calculate the bond's yield to maturity (YTM), we need to use the bond's current price and cash flows, including the call premium.
Given:
Coupon rate: 5.10% (annual coupon payment)
Years to maturity: 11 years
Callable in: 6 years
Call premium: 1 year of coupon payments
Current price: $882.32
First, let's calculate the cash flows for the bond:
Annual coupon payment = Coupon rate * Face value
= 5.10% * $1,000
= $51 (since payments are semiannual, we divide by 2)
Cash flows for the bond:
Years 1-5: $51 every 6 months
Years 6-11: $51 every 6 months, plus the call premium in year 6
To find the YTM, we can use the trial-and-error method or financial calculators. Let's use the trial-and-error method here:
Assuming a YTM of 6%, we can calculate the present value of the bond's cash flows using the semiannual discount rate:
PV = (C / (1 + r/2)) + (C / (1 + r/2)^2) + ... + (C / (1 + r/2)^10) + [(C + Call premium) / (1 + r/2)^11]
Where C is the semiannual coupon payment.
By adjusting the YTM value, we can find the YTM that makes the present value of the bond's cash flows equal to the current price of $882.32.
Using the trial-and-error method, the closest YTM we find is approximately 7.77%.
Therefore, the bond's yield to maturity is approximately 7.77%.
Answer: O 7.77%
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A job shop has four machines and operates 40 hours per week. During the most recent week, machine 1 processed part A for 25 hours at a production rate of 10 parts per hour, and part B for 12 hours at a rate of 7 parts per hour. Machine 2 processed part C for 37 hours at a rate of 14 parts per hour, and was idle 3 hours. Machine 3 processed part D for 15 hours at a rate of 20 parts per hour, and part E for 25 hours at a rate of 15 parts per hour. Machine 4 processed part F for 13 hours at a rate of 9 parts per hour, part G for 12 hours at a rate of 18 parts per hour, and was idle the rest of the week. Determine (a) weekly production output of the shop and (b) average utilization of equipment.
The job shop produced 1,860 parts in a week, with an average equipment utilization of approximately 86.875%.
To determine the weekly production output of the shop, we need to calculate the number of parts produced by each machine and then sum them up.
Machine 1:
Part A: 25 hours * 10 parts/hour = 250 parts
Part B: 12 hours * 7 parts/hour = 84 parts
Machine 2:
Part C: 37 hours * 14 parts/hour = 518 parts
Machine 3:
Part D: 15 hours * 20 parts/hour = 300 parts
Part E: 25 hours * 15 parts/hour = 375 parts
Machine 4:
Part F: 13 hours * 9 parts/hour = 117 parts
Part G: 12 hours * 18 parts/hour = 216 parts
Total production output: 250 + 84 + 518 + 300 + 375 + 117 + 216 = 1,860 parts
The weekly production output of the shop is 1,860 parts.
To determine the average utilization of equipment, we need to calculate the total operating hours for each machine and divide it by the total available hours.
Machine 1:
Total operating hours = 25 hours + 12 hours = 37 hours
Machine 2:
Total operating hours = 37 hours
Machine 3:
Total operating hours = 15 hours + 25 hours = 40 hours
Machine 4:
Total operating hours = 13 hours + 12 hours = 25 hours
Total operating hours for all machines = 37 + 37 + 40 + 25 = 139 hours
Total available hours = 4 machines * 40 hours/week = 160 hours
Average utilization of equipment = (Total operating hours / Total available hours) * 100
= (139 hours / 160 hours) * 100
= 86.875%
The average utilization of equipment is approximately 86.875%.
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Required information [The following information applies to the questions displayed below.] Rondo and his business associate, Larry, are considering forming a business entity called R\&L, but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership for tax purposes. Rondo and Larry would each invest $100,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $100,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $40,000 from the bank. If applicable, this debt will be shared equally between the two owners. o. After taking the loan into account, what is Rondo's tax basis in his R\&L stock if R\&L is formed as an S corporation?
Tax basis refers to the owner’s initial investment and adjusted by subsequent income and expenses. In the question, Rondo and his associate Larry are considering forming a business entity R&L as either C corporation, an S corporation, or LLC taxed as a partnership for tax purposes.
Given that, if R&L is formed as an S corporation, then Rondo's tax basis in his R&L stock after taking the loan into account will be $80,000.Tax basis in S corporation:After the formation of S corporation, Rondo's $100,000 investment will become his initial tax basis in the entity. Then, the corporation borrows $40,000 which will be shared equally between the two owners, making Rondo's adjusted basis equal to $100,000-$40,000/2=$80,000.
Importance of Tax basis Tax basis is important because it determines the owner's gain or loss in the sale of the property. The gain or loss on the sale of an asset is equal to the sale price minus the tax basis. If the sale price is higher than the tax basis, the owner will realize a gain and be subject to tax on that gain. If the sale price is less than the tax basis, the owner will realize a loss that may be used to offset other taxable income.
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