The average variable cost is falling when marginal cost is lower than average variable cost. It is untrue to say that "the average cost can never be equal to the marginal cost."
When the average cost is constant and at its lowest level, the average cost and marginal cost are identical. The marginal cost is lower than the average cost as the average cost drops. The marginal cost is higher than the average cost when the average cost rises. The marginal cost is equal to the average cost when the average cost remains the constant (at a minimum or maximum).
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how much should new parents invest now at 8% per year compounded quarterly to have $20,000.00 towards their child's college education in 9 years?
New parents should invest $7,570 at 8% per year compounded quarterly to have $20,000 towards their child's college education in 9 years.
What is investment and how much should new parents invest now at 8% per year compounded quarterly ?Investment is the money put on some asset either or to save it in account in order to keep it to buy some asset .Investments could be in the form of shares, property and investment funds that people generally put money onto .Here the question is asked of how much new parents invest now at 8% per year compounded quarterly to have $ 20,000 towards their child's college education in 9 years.Hence the new parents should invest $7,570 at 8% per year compounded quarterly to have $20,000 towards their child's college education in 9 years.The investment of new parents at 8% per year would approximately be $7,570 compounded quarterly to have $20,000 towards their child's college education.To know more about college education visit:
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taxes cause deadweight losses because taxes a. reduce the sum of producer and consumer surpluses by more than the amount of tax revenue. b. prevent buyers and sellers from realizing some of the gains from trade. c. cause marginal buyers and marginal sellers to leave the market, causing the quantity sold to fall. d. all of the above are correct.
Taxes cause deadweight losses because taxes prevent buyers and sellers from realizing some of the gains from trade.
The outcome is the same whether the taxes on a good apply to the consumers or sellers of that good. When purchasers pay the tax, the demand curve shifts downward by the same percentage as the tax; when sellers pay the tax, the supply curve shifts upward by the same percentage as the tax. When a tax is implemented, the price that purchasers pay rises and the price that sellers receive falls in both situations. How the taxes burden is split between producers and consumers is ultimately determined by the elasticities of supply and demand. No matter who pays the tax, the distribution is the same.
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a treasury bill with 119 days to maturity is quoted at 97.630. what are the bank discount yield, the bond equivalent yield, and the effective annual return?
The effective annual return is 7.64%, the bond equivalent yield is 2.37%, and the bank discount yield is 2.37.
Discount yield = 7.17%
Bond equivalent yield = 7.34%
Effective annual yield = 7.64%
Discount yield = discount/face value × 360/t
Where t is the time until maturity.
Discount = face value - face value
Discount = 100 - 97.63
Discount = 2.37
Discount yield = 2.37/100 × 360/119
Discount yield = 7.17%
Bond equivalent yield = (1 + periodic yield)^360/t - 1
Periodic yield = discount/face value
= 2.37 ÷ 100 = 2.37%
Bond equivalent yield = [tex](1 + 2.37)^{(\frac{360}{119})} - 1[/tex]
Bond equivalent yield = 7.34%
Effective annual yield = (1 + HPY)^365/t - 1
Holding period yield (HPY) = Discount/Price
= 2.37 ÷ 97.63
Holding period yield = 2.43%
Effective annual yield = [tex](1 + 2.43)^{\frac{365}{119} } - 1[/tex]
Effective annual yield = 7.64%
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suppose a firm has had the historical sales figures shown as follows. what would be the forecast for next year's sales using the average approach? year20172018201920202021 sales$ 500,000$ 750,000$ 700,000$ 750,000$ 775,000
The forecast for next year's sales, using the average approach, is $ 695, 000
How to find the forecast for sales?When using the average approach to forecast sales, the average sales figure of the sales from the previous years, are averaged, and the average will be the forecasted sales figure for the next year .
The average of the sales from 2017 to 2021 is:
= (500, 000 + 750, 000 + 700, 000 + 750, 000 + 775, 000 ) / 5 years
= 3, 475, 000 / 5
= $ 695, 000
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the entry that includes a debit to allowance for doubtful accounts and a credit to accounts receivable is a(n) . multiple choice question. adjusting entry to allow for estimated bad debts net realizable entry to report the amount expected to be collected write-off of a specific customer's account subsidiary entry to increase a customer's account for credit sales
The entry that includes a debit to allowance for doubtful accounts and a credit to accounts receivable is "adjusting entry to allow for estimated bad debts''.
In the accounts, the purpose of the allowance for doubtful accounts is to estimate how many customers out of the 100 will not pay the full amount they owe and to see exactly how payments work out, the company will debit a bad debt expense and credit allowance for doubtful accounts.
To record adjusting entry for doubtful accounts are assuming that the allowance for doubtful accounts has a credit balance, subtract the amount of the credit balance from the amount estimated to be uncollectible to get the amount of the adjusting entry in the accounts.
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if the market price of bicycle frames is $500, and frame welders earn a wage of $50, how many welders will be hired?
Hiring will stop when the market value of bicycle frames is $500 and frame welders earn $50.
Market value, also known as OMV (Open Market Valuation), is the price at which an asset would trade in a competitive auction environment. Market value is sometimes used interchangeably with open market value, fair value, and fair market value, despite the fact that these terms have different definitions in different standards and differ in some instances. Market value is distinct from market price, which is "the price at which one can transact," but market value is "the genuine underlying value" according to theoretical standards. The notion is most typically used in inefficient markets or disequilibrium circumstances where current market prices do not reflect genuine underlying market worth.
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your employer uses a career average formula to determine retirement payments to its employees. you have 20 years of service at the company and are considering retirement at some time in the next 10 years. your average salary over the 20 years has been $50,000 and you expect this to increase at a rate of 1% a year. your employer uses a career average formula by which you receive an annual benefit payment of 5% of your career average salary times the number of years of service. calculate the annual benefit if you retire now, in 2 years, in 5 years, 8 years, and 10 years.
The average income of a person in a given profession is referred to by this phrase. This is intended to provide readers a broad notion of how much money someone in that profession may expect to make. "Median" salary is a comparable phrase that serves the same function.
The following is the annual benefit if you retire right away, in two years, five years, eight years, or ten years:
Years worked = Y; Salary: S; Average: S; Benefit annually = Y x S x 5%
1) 28, 69000, 96600
2) 31, 71500, 110825
3) 33, 73,000, 120450
The average compensation given to employees in a position reflects both the position's internal value to an organization and its market value. Average salary refers to the member's yearly earnings on average that were received or believed to have been received during the time frame.
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which of the following are included in the net tax flows between businesses and the government? multiple select question. sales taxes low-interest government loans income taxes federal employee salaries
Include income taxes, low-interest government loans, and sales taxes in the net tax flows between businesses and the government.
What is an illustration of a tax expense?Tax expenditures include, for instance, individual itemized deductions for charitable contributions, mortgage interest, and state and local taxes.
Which method of taxation generates more revenue for the government?According to the Income Tax Act of 1962 (the Act), income tax is the primary source of revenue for the government.
What is the taxation system?There are numerous tax forms in the system, each of which is unique. This framework is a bunch of establishments and instruments accessible to burden experts for accomplishing specific financial, monetary, social and political objectives inside the monetary framework.
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what factors make capital appreciation bonds (can) a controversial method for local governments to finance projects?
Without raising taxes, they enable local governments to finance new initiatives.
A taxes is a mandatory financial charge or other sort of levy that is placed on a taxpayer by an administrative body to pay for various public expenditures, taxes, and administrative costs. A government organization collects taxes from people or businesses as mandated contributions. A tax credit is a sum of money that taxpayers are allowed to deduct, dollar for dollar, from the income taxes they must pay. Since tax credits lower the total amount of tax owed rather than simply the amount of taxable income, they are preferable to tax deductions. A nation's customs officials collect import duty, which is a tax, on both imports and some exports. The import duty will often be determined by a product's worth. Customs duties, tariffs, import taxes, and import tariffs are other names for import duties that depend on the context.
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assume that ken will receive $4,000 in 3 years. what is the present value of that asset if it earns 4%? question 24 options: 1) $3,674 2) $3,556 3) $3,400 4) $4,520
The present value in 3 years will be $3,556. So, the answer is option 2.
Present value (PV) can be described as the future value of a future sum of money or stream of cash flows given a specified rate of return. Present value takes the future value and applies the discount rate or interest rate that can be obtained if invested.
To know how much the present value we can calculate it by the equation below:
PV = Fv/ (1+r)ⁿ
Based on the scenario, we know that
Fv = face value = $4,000
r = rate of return = 4% = 0.04
n = time = 3 years
Hence,
PV = Fv/ (1+r)ⁿ
PV = $4,000/(1+0.04)³
PV = $4,000/1.125
PV = $3,556
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when new and/or improved goods become available, people change the types of goods and services they consume. this challenge to accuracy in cpi measurement is called multiple choice question. substitution. input-output inversion. institutionalization. innovation.
When new and/or improved goods become available, people's consumption patterns shift. This challenge to accuracy in cpi measurement is known as innovation.
A water footprint depicts the amount of water used in relation to human consumption. The water footprint of an individual, community, or business is defined as the total amount of fresh water needed to generate the goods and services consumed by the individual, community, or business. Water consumption is measured in terms of water volume consumed and/or contaminated per unit of time. A water footprint can be calculated for any well-defined group of consumers (e.g., an individual, family, village, city, province, state, or nation) or producers (e.g., a public organization, private enterprise, or economic sector), for a single process (such as rice cultivation), or for any product or service.
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if the company marks up its unit product costs by 40% then the selling price for a unit in job t687 is closest to:
If the company marks up its unit product costs by 40% then the selling rate for a unit in job t687 is closest to $336.
We must first determine the predefined overhead rate:
Whole expected periodical overhead expenses divided by the total amount of the allocation basis gives the predetermined manufacturing overhead rate.
(252,000/30,000) + 2.1 is the predetermined manufacturing overhead rate.
$10.5 per machine hour is the predetermined manufacturing overhead rate.
Job T687:
Units in the position: 10
30 machine hours total
$675 for direct materials
Cost of labor directly $1,050
We must now distribute overhead and calculate the overall cost:
Estimated manufacturing overhead rate* Actual amount of allocation basis = Allocated MOH
MOH allotted = 10.5 * 30 = $315
Total cost: 675 plus 1,050 plus 315 equals $2,040
The unitary cost and selling price are the following:
Cost per unit = 2,040/10 = $240
Selling price is 240 * 1.4, or $336.
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what are project deliverables? multiple choice a temporary endeavor undertaken to create a unique product or service the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project any measurable, tangible, verifiable outcome, result, or item that is produced to complete a project or part of a project key dates when a certain group of activities must be performed
Any measurable, tangible, verifiable outcome, result, or item that is produced to complete a project brief or part of a project are project deliverables.
A project brief is an clean-to-digest record that outlines the crucial additives of a undertaking for your crew and stakeholders.
Whilst a venture plan details how a mission will get executed, a undertaking brief defines the who, what, while, in which, and why.
The project brief is a way to deliver this records in a summary to be able to outline the targets of the undertaking, its scope, the main deliverables, milestones and the timeline. Taking the time to create an intensive challenge quick enables deliver anyone collectively to higher satisfy the mandate of the venture.
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the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale?
Impacts of economic integration are the general development on the lookout and the effect on an organization brought about by growing creation and by the organization's capacity to accomplish more prominent economies of scale.
What is the impact of an expansion in the degree of creation by firms?
Expansions in efficiency permit firms to deliver more noteworthy result for a similar degree of info, procure higher incomes, and at last create higher GDP.
What are the reasons for economies of scale?
Economies of scale happen when an organization's creation expansions in a manner that lessens per-unit costs. Inner economies of scale can result from specialized enhancements, administrative proficiency, monetary capacity, monopsony power, or admittance to enormous organizations
What are the sorts of economy of scale?
There are two sorts of economies of scale: inside and outside economies of scale.
Inner economies of scale are firm-explicit or caused inside while outer economies of scale happen in light of bigger changes outside the firm.Learn more about economic integration here:
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which of the following is(are) not a correct description of the long run in economics: question 37 options: 1) period over which some inputs are variable. 2) all of these 3) period over which all inputs can be changed. 4) period over which all inputs are variable.
The long run in finance is not properly described as a period during which all inputs are changeable.
The Long Run: What Is It?It long run is indeed a time frame during which all cost and production parameters are erratic .Businesses can alter all costs over the long term, but in the short term, they can only change pricing by altering output levels.
What is an example of a long run?When all inputs are variable, this is known as the long run. Consider the case of Best Bats, a business that manufactures wooden baseball bats. Best Bats has both fixed and variable inputs in the short term. The size of the company's factory and equipment is one fixed input.
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your current $115,000 mortgage calls for monthly payments over 30 years at an annual interest rate of 7 percent. if you pay an additional $50 each month beginning with the first payment, how much interest expense do you save by prepaying?
$32,764 interest expense can be saved by prepaying
Mortgage amount = $115,000
Annual Interest rate = 7%
Term of mortgage = 30 years
Additional monthly payment = $50
Initial monthly payment = $765
New monthly payment = 765 + 50 = $815
New term (months) = 298
Total of payments (original) = $275,435
Total of payments (new) = $242,671
An interest expense is a cost incurred by a business for borrowing money. On the income statement, interest expense is a non-operating expense. It denotes the interest payable on all borrowings, including bonds, loans, convertible debt, and lines of credit. It is calculated by multiplying the interest rate by the outstanding principal amount of the debt. On the income statement, interest expense represents interest accrued during the period covered by the financial statements, not interest paid during that period.
Mortgage interest is the single-largest category of interest expense for most people over their lifetimes, as it can total tens of thousands of dollars over the course of a mortgage, as illustrated by online calculators.
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the management had asked all store managers to check with their customers which cheese they preferred and thought was popular. when customers were asked this question, they quickly said kraft because they thought it has a huge market share. kraft cheese has created a(n) .
Even though she buys the same brand repeatedly, it's a low-involvement purchase.
Purchasing is the procedure a business or company makes use of to accumulate items or services to accomplish its goals. Although there are numerous corporations that try and set standards inside the shopping procedure, tactics can range greatly among agencies. Purchasing is a part of the broader procurement system, which usually also includes expediting, supplier fines, transportation, and logistics. Buying managers/administrators, and procurement managers/directors manual the company’s acquisition tactics and standards. Maximum corporations use a 3-manner check as the foundation of their shopping programs.
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judy nicely, cfa, works for a large brokerage firm managing portfolios for individuals. in a meeting with patty owen, a client, nicely suggests moving a portion of owen's portfolio to u.s. bank certificates of deposit. nicely states that the principal is guaranteed up to federal deposit insurance corporation limits. nicely has:
Complied with CFA Institute Standards of Professional Conduct.
A bank certificate is only a letter from the bank that details how much money the account holder has on the date the certificate is sought, among other information. The Bank Statement, on the other hand, details all transactions made by the account holder from one certain date to another.
What is Bank certificates ?A certificate of deposit (CD) is a type of savings account where the issuing bank pays interest in exchange for holding a specified sum of money for a predetermined length of time, such as six months, a year, or five years. You will receive the amount you initially invested plus any interest when you cash in or redeem your CD.
What is federal deposit insurance corporation limits ?For each category of account ownership, the usual insurance amount is $250,000 per depositor, each insured bank. For deposits held in various account ownership types, the FDIC offers different levels of coverage.
Deposits are insured by the FDIC, which also oversees receiverships, makes huge and complicated financial institutions resolvable, and inspects and supervises financial institutions for safety, soundness, and consumer protection.
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complex and expensive technology is needed to develop products at feel-better pharmaceuticals based in austin, texas. for this reason, the company plans to have a plant built in portugal that is ready for full operation and will be used for products sold in europe. what type of entry mode is feel-better pharmaceuticals using?
Using medications to make you feel better is a turnkey project sort of entrance mode. At Austin, Texas-based feel-better medicines, developing drugs requires sophisticated and pricey equipment.
What does a brief definition of technology mean?Technology, or as it is sometimes referred to, the modification and modification of the human environment, is the application of practical application of such new goals of human life.
What makes technology so crucial?Information technology is crucial in our lives because it makes managing with the uncertain facets of life easier. Technology offers a variety of methods to promote development and information exchange. IT intends to implement both of these objectives in simplifying tasks and find solutions to lots of issues.
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in the normalization process, if you find a candidate key that is not a determinant then you should:
If a candidate key is not determinant then you should:
Place the columns of the functional dependency in a new relation. Make the determinant of the functional dependency the primary key of the new relation. Leave a copy of the determinant as a foreign key in the original relation.What is the normalization process?Normalization is the process of reorganizing data in a database so that it meets two basic requirements:
There is no redundancy of data, all data is stored in only one place.Data dependencies are logical, all related data items are stored together.Normalization is important for many reasons, but chiefly because it allows databases to take up as little disk space as possible, resulting in increased performance.
Normalization is also known as data normalization. It is a pre-processing stage of any type of problem statement.
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Supply chain management describes the coordination of all supply chain activities, starting with _______ and ending with _______.
Supply chain management describes the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer.
In the field of business, supply chain management can be described as a management process through which the raw materials required for making a product are converted into a finalized product that satisfies the customers.
Supply chain management includes a proper assessment of all the steps that are required for converting raw materials into finalized products. If the processes of making a product are not managed or coordinated then several mistakes can arise in the making of the product risking the quality of the product.
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a payday loan only charges $35 for a one month loan for $650. (that is, you must pay back the $650 plus $25 in one month.) what annual interest rate is this rate equivalent to? (extend this one month to twelve months)
7.50 percent is annual interest rate which is equivalent to a payday loan interest .
What is meant by Annual interest rate ?
The annual interest produced by an amount that is paid to investors or levied to borrowers is referred to as the annual percentage rate (APR). APR is a percentage that expresses the real annual cost of borrowing money throughout the course of a loan or the revenue from an investment. This does not account for compounding and includes any fees or other expenditures related to the transaction. Consumers can evaluate lenders, credit cards, or investment goods using the APR as a benchmark figure.
An interest rate is written as an annual percentage rate. It accounts for factors like monthly payments and fees to determine what proportion of the principal you'll pay annually. APR is another term for the yearly rate of interest paid on investments that does not take into account the annual compounding of interest.
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in the most recent collective bargaining agreement (cba) the nfl/nflpa agreed to a 17-game season. the length of the season falls under which provision of the cba?
The NFL Players Association and the league were able to agree on the extra game in part because of what was taken away. The 17th game will result in the elimination of one preseason game.
How long is the season according to the CBA?The current collective bargaining agreement was approved in 2020 and runs through the 2030 season. It makes adjustments to how league revenue is distributed, increases in player benefits and health and safety enhancements, increases in active roster and practice squad limits, and increases in regular-season game play.CBAs frequently include clauses addressing pay, leave, working conditions, and employee benefits. The labor union enforces these rules to guarantee that workers are treated properly.On February 21st, 1968, the first Basic Agreement was signed. After a 99-day lockout, the most recent Agreement, which will remain in effect until December 2026, was finally signed on March 10, 2022.To learn more about CBA refer to:
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assume hudson has a target income of $162,000. what amount of sales dollars is needed to produce this target income? 2. if hudson achieves its target income, what is its margin of safety (in percent)? (round your answer to 1 decimal place.)
Sales to achieve targeted profit of $162,000 is: $2,430,000.
The margin of safety: 33%
Contribution = sales - variable cost / sales
= $ 2,430,000 - $ 1,728,000 / $ 2,430,000
= $ 0.28
Targeted sales = fixed cost + targeted profit / contribution
= $ 324,000 + $ 162,000 / 0.28
= $ 2,430,000
Break even point = fixed cost / contribution
= $ 324,000 / $ 0.28
= $ 1,620,000
Margin of safety = actual sales - Break even point / actual sales
= $ 2,430,000 - $ 1,620,000 / $ 2,430,000
= 0.33
Targeted income is the income that a corporate entity expects to receive from its operations. Based on prior sales and profits, this income is projected.
In order to reach a specific goal income, managers may plan a company's expenses. This necessitates routine budgeting and in-depth planning for expenditure levels. The target income figure could be determined by a number of variables, including the required cash flow level, the desired rate of return on capital, or the required earnings per share.
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assume disposable income increased by $2,500 and consumption spending increased by $2,000. what is the marginal propensity to consume (mpc)?
The marginal propensity to consume (MPC) was 0.2 .
The marginal propensity to save (MPS) is an economic measure of how savings change as income changes. It is simple to calculate by dividing the change in savings by the change in income. A higher MPS suggests that small changes in income result in large changes in savings, and vice versa.
The Master Production Schedule (MPS) is a comprehensive timetable of our future production. It specifies what product will be manufactured, when it will be manufactured, and in what quantity.
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if i high tech firm wanted to set up operations in iran, what steps could it take to ensure that the subsidiary would not be expropriated? identify and describe three strategies that would be particularly helpful. how can you approach potential future changes in the political environment strategically? (ch.10)
This can entail finding a partner that depends on the parent company for crucial aspects of the business, like funding, research, and technology, so that there is no real motivation to keep the partner.
The company could, for example, find some Iranian allies in the area. The government would see the company more favorably as a result.
Additionally, by limiting the use of advanced technology, the company could make it less profitable for the Iranian government to seize its assets (since they would not have the option to copy any significant cutting edge advancements). The company may now create dependencies at last.
Project dependencies deal with managing and scheduling project tasks while taking their sequences and requirements into consideration. Task B will be referred to as dependent on Task A if it is necessary for Task A to be completed. This may seem easy now, but things can get complicated in projects with many interconnected tasks.Learn more about Dependencies, here
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which accounting type allows for accounts receivable (ar) to be recorded at the time of service delivery rather than
Accounting type that allows for Account Receivable (AR) to be recorded at the time of service of delivery rather than when the money is received called Accrual Basis of Accounting.
Accrual Basis of Accounting is one of 2 basis on accounting which records revenues when earner and expenses as it incurred. This approach does not relay on the cash existence in every transaction. This approach will impact the balance sheet because the receivable or payables would be recorded even in the absence of a related cash receipt or payment.
Accrual Basis of Accounting provides more accurate picture of the company's performance and finances. Decision making process could be easily done because this type of accounting allows company to predicts the future condition and long-term of their financial statement.
However, doing accrual basis of accounting maybe confusing because we not only have to focus on our invoices but also on the company's bank accounts. The company may also be taxed by the services or works they've not been paid for.
Another type of accounting is Cash Basis of Accounting. Cash Basis of Accounting recognizes every transaction based on the existence of the cash receipt or payment. Cash basis of accounting will only record and recognize income and expenses when money do change hands.
Cash Basis of Accounting is more simple and show clearly about the amount of money on hand. A company who is using this kind of accounting type only have to pay tax based on the money they have received.
However recording the transaction mainly based on the cash movement is not accurate. Some works may have been done but not yet received the payment, or many expenses and bills may already take place but haven't been paid. When making management decision, this type of accounting could hinder the decision making process because the company only have a day-to-day finance informations.
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what is the overall management of the availability, usability, integrity, and security of company data?
Data governance is the overall management of a company's data availability, accessibility, integrity, and security (DG).
It is the system in charge of making sure that information is accurate, dependable, high-quality, and secure.
It is a component of business software, which is built on internal data standards and laws governing the usage of data.
The provision of accurate, reliable information and prevention of information misuse are achieved by effective data management in this procedure.
Data governance is the general management of an enterprise's data availability, usability, integrity, and security. Global organizations have had to update their data management systems due to the enormous growth in data volume and sources.
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a farmer wants to save on farming costs by cutting his farming staff in half. he is currently using a mix of flood and furrow irrigation. (5 points) propose a new irrigation solution that will meet the needs of the farmer. explain the reason for your selection. describe the unintended consequences for the potential solution.
The border irrigation approach will be a fine alternative for this.
What is border irrigation in agriculture?Border irrigation is a kind of floor irrigation the location the field is divided into strips separated via the use of border ridges running down the gradient of the field.
The place between the ridges is flooded for the length of irrigation
What is the gain of border irrigation?
If border irrigation can be used on self-discipline that is typically flood-irrigated, it can provide sure advantages: Less manufacturing area misplaced with border than with levees.
Improved capacity to irrigate small crops.
No want to repair or rebuild the border between irrigations.
The specific 5 types of irrigation include- sprinkler irrigation, surface irrigation, drip irrigation, sub-irrigation, and manual irrigation.
Therefore, the border irrigation approach will be a fine alternative for this.
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zoe company reports the following for its overhead cost for the year. activity budgeted cost budgeted activity usage engineering support $ 98,000 70 design changes electricity 136,000 3,400 machine hours setup 210,000 350 setups compute the activity rate for engineering support using activity-based costing.
The activity rate for engineering support using activity-based costing is $1400.
What is an activity-based costing rate?An activity-based costing rate is calculated by allocating indirect costs to a cost pool, totaling the costs in that cost pool, and then dividing the total cost pool by the cost driver. Activity rates are the allocation rates used in activity-based costing to assign overhead costs to the product manufactured.
For each activity cost pool, an activity rate is calculated using an appropriate activity driver as an allocation base. ABC is a costing method that identifies an organization's activities and assigns the cost of each activity to all services and products based on their actual consumption. As a result, when compared to traditional costing, this model assigns more indirect costs (overhead) to direct costs.
Activity rate for engineering support will be:
= Budgeted cost / Budgeted activity usage
= 98000 / 70
= 1400
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