All of the listed participants - nonbank dealers, international banks, multinational corporations, and central banks - are major players in the FX wholesale market. However, if I had to choose which one is the least significant, it would be multinational corporations.
Nonbank dealers, also known as market makers or brokers, are financial institutions that facilitate transactions between buyers and sellers in the FX market. They provide liquidity by quoting bid and ask prices and make a profit on the spread between those prices. Some examples of nonbank dealers include EBS, Thomson Reuters, and Bloomberg.
International banks play an important role in the FX market by both trading on their own behalf and facilitating trades for their clients. They have access to large amounts of capital and can move currency prices by buying or selling in significant volumes. Some examples of international banks include Citigroup, JPMorgan Chase, and Deutsche Bank.
Central banks are key players in the FX market because they are responsible for setting monetary policy and managing their country's foreign exchange reserves. They intervene in the market by buying or selling currencies to influence exchange rates and maintain economic stability. Some examples of central banks include the Federal Reserve, the European Central Bank, and the Bank of Japan.
Multinational corporations also participate in the FX market but typically do so to manage their foreign exchange risk rather than to generate profits. They may need to convert currencies for international trade, hedge against currency fluctuations, or repatriate profits earned in foreign currencies back to their home country. While their transactions can be significant in size, they generally do not have the same impact on currency prices as nonbank dealers, international banks, or central banks.
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Attempting to motivate others is a complex task. Unfortunately, no universal motivators are available that are guaranteed to work on anyone, anywhere. That said, we do know a lot about what works and doesn’t work in terms of motivating others. The following suggestions summarize the essence of what we know is likely to be effective.74
Recognize individual differences. People have different needs. Don’t treat them all alike. Moreover, spend the time necessary to understand what’s important to each person. This will allow you to individualize goals, level of involvement, and rewards to align with individual needs.
Use goals and feedback. People prefer to have goals. If you’re in a position to assign or participate in setting goals for others, help them to set hard and specific goals. These are most likely to motivate. In addition, individuals are most likely to be motivated when they get feedback on how well they are faring in the pursuit of their goals. Allow people to participate in decisions that affect them. If you are in a position to influence the level of participation, actively seek input from the person you seek to motivate. Employees are especially likely to respond positively when allowed to participate in setting work goals, choosing their benefit packages, solving productivity and quality problems, and the like.
Link rewards to unsatisfied needs. Recommendations #2 and #3 apply most directly to managers or team leaders trying to motivate their employees or team members. Effectively linking rewards to unsatisfied needs is a more generalizable action: It applies to motivating colleagues, friends, spouses, customers—as well as employees and team members. It builds on recommendation #1 and individual differences.
Depending on your position in an organization and your resources, the rewards you control will vary. For example, senior-level executives typically can control pay increases, bonuses, promotion decisions, job assignments, and training decisions. They also can usually control job design such as allowing employees more freedom and control over their work, improving working conditions, increasing social interactions in the workplace, or modifying the workload. But everyone can offer others rewards such as recognition or providing sympathetic and sensitive help with problems. The key is identifying what needs are dominant and unsatisfied, then choosing rewards that will help satisfy those needs.
Link rewards to performance. The rewards you choose should be allocated so as to be contingent on performance. Importantly, the person you’re trying to motivate must perceive a clear linkage. Regardless of how closely rewards are actually correlated to performance criteria, it’s perception that counts. If individuals perceive this relationship to be low, motivation and performance will suffer.
Maintain equity. Rewards should be perceived by people in the organization as equating with the inputs they bring to their job. At a simplistic level, it means that experience, skills, abilities, effort, and other obvious inputs should explain differences in performance and, hence, pay, job assignments, and other obvious rewards. 1. As a manager, what will you need to know about goal-setting theory as a motivation tool?
2. What challenges do managers face in motivating today’s workforce?
1. Goal-setting theory is a valuable tool for managers to understand and apply when motivating their employees. As a manager, you will need to know the key principles of goal-setting theory, which include setting specific and challenging goals, providing feedback on progress, and ensuring that goals are accepted and commitment is fostered. By understanding these principles, you can effectively set goals for your employees that are motivating and aligned with organizational objectives. Additionally, you should be aware of the importance of goal clarity, goal difficulty, and goal specificity in driving motivation and performance. This knowledge will enable you to utilize goal-setting theory as a powerful motivator in your managerial role.
2. Managers face several challenges in motivating today's workforce. One major challenge is the increasing diversity within the workforce, including generational differences, cultural variations, and individual preferences. Motivating a diverse workforce requires managers to understand and adapt their motivational approaches to accommodate different needs, values, and expectations. Another challenge is the changing nature of work itself, with greater emphasis on flexibility, autonomy, and work-life balance. Managers need to create a work environment that fosters intrinsic motivation, promotes meaningful work, and provides opportunities for growth and development. Additionally, the rise of remote work and virtual teams adds the challenge of maintaining motivation and engagement without the traditional face-to-face interactions. Managers must find innovative ways to connect with and motivate employees in virtual settings. Lastly, the rapid pace of technological advancements and disruptive changes in industries create a need for continuous learning and adaptation. Managers should support employees' skill development, provide clear career paths, and offer opportunities for challenging and meaningful work to keep them motivated in a rapidly evolving work landscape.
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Prove the inequalities S 0
−K≤C a
−P a
≤S 0
−Ke −rT
where C a
and P a
are American call and put options on non-dividend paying stock respectively.
The inequalities
�
0
−
�
≤
�
�
−
�
�
≤
�
0
−
�
�
−
�
�
S
0
−K≤C
a
−P
a
≤S
0
−Ke
−rT
hold for American call and put options on non-dividend paying stock.
The inequality
�
0
−
�
≤
�
�
−
�
�
S
0
−K≤C
a
−P
a
represents the arbitrage-free condition for options pricing. It states that the difference between the stock price (
�
0
S
0
) and the strike price (
�
K) should be less than or equal to the difference between the call option price (
�
�
C
a
) and the put option price (
�
�
P
a
). This condition ensures that there is no opportunity for risk-free profits through arbitrage.
The second part of the inequality,
�
�
−
�
�
≤
�
0
−
�
�
−
�
�
C
a
−P
a
≤S
0
−Ke
−rT
, takes into account the time value of money. It states that the difference between the call option price and the put option price should be less than or equal to the difference between the current stock price and the discounted strike price (
�
�
−
�
�
Ke
−rT
), where
�
r is the risk-free interest rate and
�
T is the time to expiration.
These inequalities hold because if the call option price minus the put option price is greater than the difference between the stock price and the strike price, an arbitrage opportunity would exist, leading to risk-free profits. Similarly, if the call option price minus the put option price is less than the discounted difference between the stock price and the strike price, another arbitrage opportunity would arise.
In summary, the inequalities ensure that the prices of American call and put options on non-dividend paying stock are consistent with market conditions and prevent the possibility of risk-free arbitrage opportunities.
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What has been the trend in terrorist attacks in the US and which groups (broadly speaking) have been the biggest threats after 9/11? What has been the federal governments response to these two largest categories of terrorists? What are the similarities between the two leading groups?
In the years following 9/11, there has been a noticeable shift in the trend of terrorist attacks in the United States. The two largest threats, broadly speaking, have been domestic extremist groups and international jihadist organizations. The federal government has responded to these categories of terrorists with distinct approaches, focusing on law enforcement efforts and intelligence gathering.
Domestic extremist groups, such as white supremacists, anti-government militias, and other radicalized individuals, have emerged as a significant threat in recent years. These groups have carried out numerous acts of violence, including mass shootings, bombings, and targeted attacks. The federal government has responded to this threat by enhancing surveillance, investigating hate crimes, and increasing coordination between federal, state, and local law enforcement agencies.
Similarly, international jihadist organizations, primarily associated with radical Islamist ideologies, have posed a persistent threat. While the frequency of large-scale attacks by these groups has decreased compared to the immediate aftermath of 9/11, they remain a concern. The federal government has responded by bolstering counterterrorism measures, both domestically and abroad, through intelligence sharing, military operations, diplomatic efforts, and initiatives to counter extremist propaganda online.
Despite their different ideological backgrounds, there are some similarities between domestic extremist groups and international jihadist organizations. Both groups can be characterized by their potential for violence, radicalization of individuals, and the dissemination of extremist ideologies. Additionally, both types of terrorists often exploit grievances, real or perceived, to recruit individuals and justify their acts of violence.
However, it is important to note that these groups differ significantly in their motivations, organizational structures, and targets. The federal government's response to these groups reflects the need to address the unique challenges presented by each category while ensuring the safety and security of the country.
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Roger Thorpe is an African American candidate, was refused employment after revealing during an interview with L&S that he had a prior conviction for the sale of cocaine 14 years earlier. Is it standard practice for the company to require every candidate to reveal all prior criminal convictions? Is this an appropriate question? Explain?
Standard practice for companies does not typically require every candidate to reveal all prior criminal convictions. It depends on the job and legal requirements.
Depending on jurisdiction and company policy, hiring practices for disclosing prior criminal convictions differ. Companies cannot demand candidates disclose all prior criminal convictions without a valid cause connected to employment requirements or safety. Unless it's relevant to the work, many jurisdictions safeguard job candidates from criminal background discrimination. Asking about prior criminal convictions may be permissible if the conviction is relevant to the job or if legal or safety concerns mandate disclosure. A financial institution may ask about fraud or embezzlement convictions for positions managing sensitive financial data.
Roger Thorpe's prior conviction for selling cocaine may not be relevant to the job requirements or safety issues, so it may be discriminatory to deny him employment based on that information. Candidates' qualifications, skills, and experience should be evaluated based on job-related criteria.
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The distribution of grades in an introductory finance class is normally distributed, with an expected grade of 79 . If the standard deviation of grades is 12 , in what range would you expect 90.00 percent of the grades to fall?
The range within which 90% of the grades is expected to fall is between 62.24 and 95.76.
The distribution of grades in an introductory finance class is normally distributed, with an expected grade of 79.
If the standard deviation of grades is 12, then in what range would you expect 90% of the grades to fall?
Solution:
Given that
The expected grade of a finance class is 79
The standard deviation of a finance class is 12
We are to determine the range in which 90% of grades are expected to fall
We can obtain the range in which 90% of grades is expected to fall using the concept of z-score
Z-score is the number of standard deviation from the mean. It is used to calculate the number of standard deviations between any data point and the mean.
The formula for the z-score is given by
z= x-μ / σ
Where
μ is the mean
σ is the standard deviation
z is the z-score
x is the observed score
We have, z-score= 1.28 since it is the critical value for 90% of the grades to fall within one standard deviation.
The z-score can be used to find the range within which 90% of the grades fall. This can be done as follows:
x1 = μ - σz
x2 = μ + σz
x1 = 79 - 12(1.28) = 62.24x2 = 79 + 12(1.28) = 95.76
Therefore, the range within which 90% of the grades is expected to fall is between 62.24 and 95.76.
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A T-Bond with a $1000 par is quoted at a bid of 105:7 and an ask of 105:9. If you sell the bond you will receive: ________
The correct answer is $1,057.81 will be received if the bond is sold.
When a T-Bond with a $1000 par is quoted at a bid of 105:7 and an ask of 105:9 and you sell the bond, you will receive $1,057.81. T-bonds are known for their face value of $1000. The bid and ask price for the bond is known as the yield. The bid price is the price at which a buyer is willing to purchase the security. In contrast, the ask price is the price at which the seller is willing to sell the security. The difference between the bid and ask price is known as the spread.
Therefore, the bid price for this bond is 105:7, which translates to $1,057.19 (105.7% of face value), and the asking price is 105:9, which translates to $1,057.81 (105.9% of face value).
When you sell the bond, you will receive the current ask price, which is $1,057.81.
Hence, $1,057.81 will be received if the bond is sold.
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Nat and eric each own 40 percent of partnership New. Nat sold her interest to wat, a 20 percent partner. August 29, 2021, eric sold his interest to Wendy. When does the partnership terminate?
The partnership terminates on August 29, 2021.
When Nat sold her 40 percent interest to Wat, Wat became a 60 percent partner. When Eric sold his 40 percent interest to Wendy, Wendy became a 100 percent partner. Therefore, the partnership ceased to exist as of August 29, 2021.Therefore, the termination of the partnership took place on August 29, 2021. When Eric sold his interest to Wendy, Wendy became the 100 percent partner of the partnership. The partnership terminated because one partner cannot own 100 percent of a partnership.
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The decedent is a married man with a surviving spouse. He died on January 20, 2019. He left the following:
Conjugal real properties P8,000,000
Conjugal family home 1,500,000
Exclusive properties 2,500,000
Claims against the estate from conjugal properties 500,000
Transfers for public use from conjugal properties 500,000
1. How much is the gross estate?
2. How much is the family home deduction?
3. How much is the taxable net estate?
4. How much is the deduction as share of surviving spouse?
5. When is the last day to file and pay the Estate Tax Return?
The decedent's gross estate is P12.5 million, with a family home deduction of P1.5 million. The taxable net estate is P11 million, and the deduction for the surviving spouse is also P11 million. The deadline to file and pay the Estate Tax Return is January 20, 2024.
The gross estate of the decedent is P12,500,000. The family home deduction is P1,500,000. The taxable net estate is P11,000,000. The deduction as a share of the surviving spouse is P11,000,000. The last day to file and pay the Estate Tax Return is January 20, 2024.
To calculate the gross estate, we add the conjugal real properties (P8,000,000), conjugal family home (P1,500,000), exclusive properties (P2,500,000), claims against the estate from conjugal properties (P500,000), and transfers for public use from conjugal properties (P500,000). The sum of these amounts is P12,500,000.
To determine the family home deduction, we consider that the family home is part of the gross estate. In this case, the family home is valued at P1,500,000, so the deduction will be equal to that amount.
The taxable net estate is calculated by subtracting the family home deduction from the gross estate. Therefore, P12,500,000 - P1,500,000 = P11,000,000.
The deduction as a share of the surviving spouse is equal to the taxable net estate, which is P11,000,000 in this case.
The last day to file and pay the Estate Tax Return is within one year from the decedent's death. Since the decedent died on January 20, 2019, the deadline for filing and paying the Estate Tax Return would be January 20, 2024.
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the operating budget covers a specific period, called a _____ year.
The operating budget covers a specific period, called a fiscal year.
What is an operating budget?
An operating budget is a company's yearly budget, outlining projected expenditures and income for a specified period. The operating budget is a component of a corporation's larger budget plan, which includes budget projections for capital expenditures, revenue, and other investments.
The budgeting process starts with the development of a strategic plan, which helps to outline the business's overarching goals and vision, as well as long-term plans for achieving these objectives.
The operating budget covers a specific period, known as a fiscal year. The fiscal year refers to the 12-month period during which the organization's financial activities are tracked and recorded. The fiscal year may correspond to the calendar year or begin on a date specific to the organization's business operations.
However, the operating budget is a critical component of an organization's fiscal year because it identifies how much money will be allocated for the year's expenses and projected revenue.
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Use the information below to calculate the firm's return on common equity. (State your answer as a percentage with two decimal places.) Net profit margin = 10.89%; Debt ratio 56.85% ; Fixed asset turnover = 5.08; Total asset turnover = 2.70; = Inventory turnover = 16.72. 68.14% 29.40% 46.84% 22.73% 27.49%
The return on common equity for the firm will be calculated based on the given information.
The return on common equity (ROCE) is a measure of the profitability and efficiency with which a company generates profits from its equity investment. It can be calculated using the formula:
ROCE = Net Profit Margin × Total Asset Turnover × Equity Multiplier
Given the information provided, we have the following values:
Net profit margin = 10.89% (0.1089)
Total asset turnover = 2.70 (2.70 times)
Equity multiplier = 1 + Debt ratio = 1 + 56.85% = 1 + 0.5685 = 1.5685
Now, we can calculate the return on common equity:
ROCE = 0.1089 × 2.70 × 1.5685
ROCE ≈ 0.4117 or 41.17%
Therefore, the firm's return on common equity is approximately 41.17%. This indicates that for every dollar of common equity invested in the company, it generates a return of 41.17 cents.
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All of the following managerial roles can be supported by information systems except:
negotiator.
disseminator.
resource allocator.
nerve center
liaison.
The correct answer is a. negotiator. All of the following managerial roles can be supported by information systems except negotiator.
Information systems can support various managerial roles by providing timely and accurate information, facilitating decision-making processes, and enhancing communication and coordination. However, the role of negotiator is not directly supported by information systems.
1. Negotiator: The role of negotiator involves engaging in discussions, bargaining, and reaching agreements with other parties. While information systems can provide relevant data and information that inform negotiation strategies, the negotiation process itself typically relies on interpersonal skills, communication, and the ability to assess and respond to dynamic situations.
2. Disseminator: Information systems support the role of disseminator by enabling managers to collect, process, and distribute relevant information to stakeholders within the organization. Disseminators play a crucial role in sharing important updates, reports, and insights with appropriate individuals or teams.
3. Resource Allocator: Information systems assist managers in the role of resource allocator by providing visibility into resource availability, utilization, and demand. This helps managers make informed decisions regarding resource allocation and optimization.
4. Nerve Center: The concept of a "nerve center" refers to the central hub where information is collected, analyzed, and disseminated within an organization. Information systems play a critical role in serving as the nerve center by facilitating the flow of information and supporting decision-making processes.
5. Liaison: Information systems can support managers in their role as liaisons by facilitating communication and collaboration among different individuals, teams, departments, or external stakeholders. Tools such as email, messaging platforms, and collaborative software enable effective communication and coordination.
While information systems can support various managerial roles, such as disseminator, resource allocator, nerve center, and liaison, the role of negotiator primarily relies on interpersonal skills and interactive decision-making processes rather than direct support from information systems.
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A loan is charged at 18.99 per cent, with an expected probability of default of 8.81 per cent. In the event of default, this bank expects a recovery rate of 27.6 per cent through the sale of collateral. Calculate the expected return on this loan.
The expected return on a loan with a 18.99% interest rate, an expected probability of default of 8.81%, and a recovery rate of 27.6% can be calculated by considering the probability-weighted returns in both the default and non-default scenarios.
To calculate the expected return on the loan, we need to consider the returns in both the default and non-default scenarios, weighted by their respective probabilities.
In the non-default scenario, the return is the interest rate of 18.99%. Since the probability of default is 8.81%, the probability of the non-default scenario is 100% - 8.81% = 91.19%.
In the default scenario, the recovery rate is 27.6%. This means that in the event of default, the bank expects to recover 27.6% of the loan amount through the sale of collateral. However, since the probability of default is 8.81%, the probability of the default scenario is 8.81%.
To calculate the expected return, we multiply the return in each scenario by its probability and sum the results:
Expected Return = (Non-default return * Non-default probability) + (Default return * Default probability)
= (18.99% * 91.19%) + (27.6% * 8.81%)
Evaluating the expression, we find that the expected return on this loan is approximately 18.36%.
Therefore, the expected return on this loan, taking into account the interest rate, probability of default, and recovery rate, is approximately 18.36%.
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ADCO Ltd purchased a plant at a cost R897 000 (VAT inclusive) on 1st May 2021. The residual value of the plant is estimated to be R90 000 (excluding vat). Depreciated on the plant is calculated at 20% per annum. ADCO Ltd financial year end is 28Th February. The company is registered for VAT.
Calculate the depreciation for the plant for the financial year ended 2022 (Assume a diminishing balance method of depreciation-20%).
Select one:
a. R179 000
b. R156 000
c. R149 000
d. R130 000
ADCO Ltd purchased a plant at a cost R897 000 (VAT inclusive) on 1st May 2021. The depreciation for the plant for the financial year ended 2022 is R156,000.
To calculate the depreciation, we use the diminishing balance method. First, we need to calculate the depreciable cost, which is the cost of the plant minus the estimated residual value. In this case, it is R897,000 - R90,000 = R807,000.
Next, we calculate the annual depreciation by multiplying the depreciable cost by the depreciation rate of 20%: R807,000 * 20% = R161,400.
Since the financial year ends on 28th February, and the plant was purchased on 1st May 2021, the plant was in use for 10 months in the financial year ended 2022. Therefore, we need to prorate the annual depreciation for those 10 months.
The depreciation for the financial year ended 2022 is calculated as follows: R161,400 * (10/12) = R134,500.
However, since ADCO Ltd is registered for VAT and the purchase price is VAT inclusive, we need to calculate the depreciation amount excluding VAT. If we assume a VAT rate of 15%, the depreciation excluding VAT is R134,500 / 1.15 = R116,957.
Therefore, the depreciation for the plant for the financial year ended 2022 is R116,957.
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in brain development, the period of asymmetrical division lasts about ___ months.
In brain development, the period of asymmetrical division lasts about 5 months.
Asymmetrical division refers to the type of cell division that occurs when the cells are reproducing. Asymmetrical cell division generates two daughter cells, one of which is identical to the mother cell, while the other has acquired new characteristics.
The neuroblast, a cell that can create many diverse neurons, undergoes a lot of this division. Brain development is the process by which the brain grows and changes during infancy and childhood. The process starts with the fertilization of the egg, which grows into an embryo.
The neural tube develops into the brain and spinal cord as a result of this process. The neurons migrate to their final positions and develop into the appropriate types of cells after the formation of the brain regions.
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What is the percentage of accumulated depreciation to the total plant assets? Can you use it to approximate whether assets will need to be replaced soon? Does the company have accounts receivable and/or notes receivable? Why or why not?
The percentage of accumulated depreciation to the total plant assets is a measure of how much of the company's plant assets have been depreciated. A high percentage of accumulated depreciation suggests that the company's plant assets are old and may need to be replaced soon.
The percentage of accumulated depreciation to the total plant assets can be calculated as follows:
Percentage of accumulated depreciation = Accumulated depreciation / Total plant assets
For example, if a company has accumulated depreciation of $100,000 and total plant assets of $200,000, the percentage of accumulated depreciation would be 50%.
A high percentage of accumulated depreciation does not necessarily mean that the company's plant assets are in poor condition. It is possible that the company has been using accelerated depreciation methods, which depreciate assets more quickly than straight-line depreciation. However, a high percentage of accumulated depreciation can be a sign that the company's plant assets are old and may need to be replaced soon.
Does the company have accounts receivable and/or notes receivable? Why or why not?
The company may have accounts receivable and/or notes receivable because it sells goods or services on credit. Accounts receivable are amounts owed to the company by its customers, while notes receivable are formal agreements between the company and its customers to repay a debt at a future date.
The company may have accounts receivable and/or notes receivable because it offers its customers a variety of payment options, such as credit cards, debit cards, and installment plans. By offering these payment options, the company can attract more customers and increase sales.
However, the company must also be careful to manage its accounts receivable and notes receivable effectively. If the company does not collect its receivables in a timely manner, it may experience cash flow problems. Additionally, if the company's receivables are too high, it may be a sign that the company is having trouble selling its goods or services.
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Some people say that if marketers can differentiate a simple
product like water you can differentiate
anything...Do you think this is true? Do you think this is a good
thing or not? Discuss.
It is true that marketers have the power to differentiate a simple product like water and make it appear unique and appealing to customers.
They can do this by emphasizing factors such as the source of the water, the packaging, and the brand name, among other things. This ability to differentiate basic products like water can be beneficial to marketers, as it helps them stand out in a crowded market. However, the question of whether this is a good thing or not is subjective. On one hand, it can be seen as a positive thing, as it encourages creativity and innovation among marketers.
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Which of the following statements is FALSE regarding the functional currency?
a The functional currency is the currency of the primary economic environment in which an entity operates
b Once determined, the functional currency cannot change unless there is a change in underlying transactions, events and conditions
c Management needs to make an informed assessment based on the entity’s operations and activities when determining the functional currency
d IAS 21 does not include practical indicators to assist entities in identifying their functional currency
The statement that is FALSE regarding the functional currency is "IAS 21 does not include practical indicators to assist entities in identifying their functional currency". Option D.
What is functional currency?Functional currency is defined as the currency of the primary economic environment in which an entity operates. An entity must keep its books and generate its financial statements in its functional currency as it has the most significant economic relationship with its environment.
Functional currency determination involves the assessment of several factors such as currency of financing, sales revenue, purchases, cash resources, and expenses. Management needs to make an informed assessment based on the entity’s operations and activities when determining the functional currency.
IAS 21: The effects of changes in foreign exchange rates explain the principles for identifying the functional currency. The standard does include practical indicators to assist entities in identifying their functional currency, including the currency that mainly influences sales prices and the currency that primarily influences labor, material, and other costs. Once determined, the functional currency cannot change unless there is a change in underlying transactions, events, and conditions.
Hence, the statement "IAS 21 does not include practical indicators to assist entities in identifying their functional currency" is False as IAS 21 does include practical indicators to assist entities in identifying their functional currency.
Therefore, the correct answer is option D.
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A company is investing in a new project that requires a $250,000 increase in current liabilities today. The current liability is in the form of short-term debt. You propose to include this amount as -$250,000 in the 'Cash Flows at the Start'. Is your proposal correct? Explain
The proposal to include a $250,000 increase in current liabilities as -$250,000 in the 'Cash Flows at the Start' is not correct.
In cash flow analysis, the 'Cash Flows at the Start' section typically represents the initial investment or cash outflow required to start a project. It includes expenditures such as equipment purchases, construction costs, and other capital investments. Current liabilities, on the other hand, represent short-term debts and obligations that the company owes to its creditors.
When determining the cash flows at the start of a project, only cash outflows related to capital expenditures should be included. An increase in current liabilities, such as short-term debt, does not involve a cash outflow at the start of the project. Instead, it represents an obligation that will be settled over time.
To properly account for the $250,000 increase in current liabilities, it should be reflected in the cash flow projections as a cash outflow in the appropriate period when the debt is actually repaid. This could be included as a cash outflow under the operating activities section when the debt is settled or as part of financing activities if it involves borrowing funds to meet the obligations.
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Which of the following would be considered a major limitation of markets at the macro level? O a. Gas prices are higher in the summer. O b. Market competition forced your business to close. Oc. A one week shortage of wrapping paper the day after Thanksgiving. Od. The market wants to employ 158 million people but 164 million are looking for a job.
The correct option is D: The market wants to employ 158 million people but 164 million are looking for a job. One of the main limitations of markets at the macro level is the existence of market failures.
Market failures occur when the market fails to allocate resources efficiently, resulting in an inefficient allocation of resources.Market failures result in an inefficient allocation of resources because markets may not account for all of the externalities that affect production and consumption. Additionally, market failures may occur when firms have market power, which allows them to restrict output and charge higher prices. This results in a suboptimal allocation of resources because too few goods and services are being produced at too high a price.In the given question, option D states that the market wants to employ 158 million people but 164 million are looking for a job.
This scenario is a classic example of a market failure. It means that there is a surplus of labor in the market, which means that there are more people willing to work than there are jobs available. This inefficient allocation of labor resources leads to high levels of unemployment and underemployment, which can have significant economic and social costs.In conclusion, the existence of market failures is one of the major limitations of markets at the macro level. Market failures can lead to an inefficient allocation of resources and can have significant economic and social costs. The scenario described in option D is a classic example of a market failure that can lead to high levels of unemployment and underemployment. The correct option is D.
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"For the above problem Whole Foods determines the annual demand
standard deviation is 6,742 packages and the fixed supply lead time
from Kaiser is 4.5 weeks. For a target service level of 77% what is
t"
T is approximately equal to 2.63
The formula to calculate T is given below:ZσLT = T + µ, whereZ is the number of standard deviations for the given service level (z-score), σLT is the standard deviation of demand during lead time, µ is the average demand per time unit and T is the lead time.The value of Z for a target service level of 77% is 0.7580 (found using a standard normal distribution table).As per the question,σLT=6,742 packagesand the fixed supply lead time from Kaiser is 4.5 weeks.Now, substituting these values, we get:0.7580 × 6,742 packages × T = 4.5 × µWe don't have the value of µ to solve the above equation. Therefore, we need to assume a value for µ and calculate the value of T. The value of µ can be assumed to be the average demand per week.The annual demand is unknown in the given problem, so it can be found by multiplying the average weekly demand by 52 (the number of weeks in a year). For instance, if we assume that the average weekly demand is 1500 packages, then the annual demand would be:52 × 1500 = 78,000 packagesSubstituting this value into the above equation, we get:0.7580 × 6,742 packages × T = 4.5 × (78,000 / 52)0.7580 × 6,742 packages × T = 6,750 packagesT = 6,750 packages / (0.7580 × 6,742 packages)T ≈ 2.63Therefore, T is approximately equal to 2.63.
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Suppose that a college student receives an offer for a summer internship with a stock brokerage firm. Unfortunately for the student, the internship is unpaid. Is it ever economically beneficial to accept an unpaid job? Yes, because the experience gained during the internship would increase the student'Shuman capital. No, because the opportunity cost is too high. No, because the student is signaling to future employers that he or she is willing to accept low wages. Yes, because accepting an unpaid job signals to future employers that the student has stable personal finances.
The correct answer is A. Yes, it can be economically beneficial to accept an unpaid job, particularly in the case of a summer internship.
Internships provide students with an opportunity to develop skills, network with professionals in their field, and gain practical knowledge that can be valuable for their future careers. Although unpaid, the experience and knowledge gained during the internship can increase the student's marketability and improve their chances of securing better-paid positions in the future.
While there may be an opportunity cost associated with accepting an unpaid job, such as foregoing potential income from a paid job, the long-term benefits of gaining experience and enhancing one's skills and qualifications can outweigh the immediate monetary compensation.
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Using the cash flow information in the table below for the month of December, determine the cash balance for Studio Two as of December 31. The cash balance at the start of December 1 was $10,000. Cash received from customers $ 345,000 Cash paid for equipment Cash paid for truck Cash paid for expenditures $25,000. $85,000. $75,000. $15,000. $65,000.
The cash balance for Studio Two as of December 31 is $110,000.
To determine the cash balance for Studio Two as of December 31, we need to consider the cash inflows and outflows for the month.
Starting cash balance (December 1): $10,000
Cash received from customers: $345,000
Cash paid for equipment: -$25,000
Cash paid for truck: -$85,000
Cash paid for expenditures: -$75,000
Cash paid for other expenses: -$15,000
Cash paid for taxes: -$65,000
To calculate the cash balance, we add the cash inflows and subtract the cash outflows:
Starting cash balance + Cash inflows - Cash outflows
$10,000 + $345,000 - $25,000 - $85,000 - $75,000 - $15,000 - $65,000 = $110,000
Therefore, the cash balance for Studio Two as of December 31 is $110,000.
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The cash balance for Studio Two as of December 31 is $90,000. This is derived by deducting total cash outflows ($265,000) from total cash inflows ($345,000), resulting in a net cash flow of $80,000 which is then added to the initial cash balance of $10,000.
Explanation:The subject of this question revolves around understanding and calculating the cash balance of a business based on their cash flow information. In the case of Studio Two, you need to calculate the net cash flow, which is cash inflow minus cash outflow. Once you have the net cash flow, you add it to the initial cash balance at the beginning of the period to get the ending balance.
To calculate, we have:
Cash received from customers: $345,000Cash paid for equipment, truck and expenses: $25,000 + $85,000 + $75,000 + $15,000 + $65,000 = $265,000Therefore, the net cash flow is $345,000 - $265,000 = $80,000. Since the cash balance at the start of December 1 was $10,000, the cash balance for Studio Two as of December 31 will be $10,000 + $80,000 = $90,000.
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Charlie Co. opened their doors on January 1. 20×α, with the intention of selling widgets to customers in their are. The following events occurred during the first year of operation. Complete the accounting cycle for year I for Charlie Co. I/I Charlie Co. acquired $35,000 cash in exchange for common stock 1/2 Charlie Co. purchased widgets from its supplier for $10,000. I/3 The purchase made on I/2 had shipping terms of FOB Shipping Point and the responsible party paid $250 cash. 2/10 Charlie Co. sold widgets that costed $5,000 to customers at a price of $10,000. 2/15 Charlie Co, paid $5,000 cash for land they planned to use as a future store. 3/15 Charlie Co. purchased $15,000 of widgets on account. The credit terms for the purchase was 2/15,n/30. 3/18 Charlie Co returned $2,000 worth of the widgets purchased on 3/15 because of defects. 3/28 Charlie Co. paid the balance due on accounts payable. 5/4 Charlie Co. sold on account widgets with a list price of $20,000. The widgets had cost Charlie Co. $10,000. The shipping terms of this sale is FOB Destination. Charlie Co. offered a discount to the customer with terms 1/10,n/30. 5/5 The responsible party paid $300 for shipping costs in regards to the sale on 5/4. 5/9 Customers from the 5/4 sale returned $2,000 of the widgets. The widgets cost Charlie Co. $1,000 5/14 Charlie Co. $9,900 cash as a received a partial settlement (A/P value of $10,000 ) for the sale o 5/4. 6/1 Charlie Co. received the remaining accounts payable payment due from the sale on 5/4. 7/15 Charlie Co. paid $3,000 for selling and administrative expenses. 8/31 Charlie Co. sold the land it purchased on 2/15 for $7,500. 9/1 Charlie Co. borrowed $10,000 from the bank 12/31 Charlie Co. paid $250 for interest on the notes payable from 9/1. 12/31 Charlie Co. completed their end-of-year inventory count and found they had $8,890 of inventory on hand.
Here is the completed accounting cycle for Charlie Co. for year I:
Journal Entry: Cash (assets) increases and Common Stock (equity) increases
Debit: Cash $35,000
Credit: Common Stock $35,000
Journal Entry: Inventory (assets) increases and Cash (assets) decreases
Debit: Inventory $10,000
Credit: Cash $10,000
Journal Entry: Shipping Expense (expenses) increases and Cash (assets) decreases
Debit: Shipping Expense $250
Credit: Cash $250
Journal Entry: Accounts Receivable (assets) increases, Sales Revenue (revenues) increases, Cost of Goods Sold (expenses) increases, and Inventory (assets) decreases
Debit: Accounts Receivable $10,000, Cost of Goods Sold $5,000
Credit: Sales Revenue $10,000, Inventory $5,000
Journal Entry: Land (assets) increases and Cash (assets) decreases
Debit: Land $5,000
Credit: Cash $5,000
Journal Entry: Inventory (assets) increases and Accounts Payable (liabilities) increases
Debit: Inventory $15,000
Credit: Accounts Payable $15,000
Journal Entry: Accounts Payable (liabilities) decreases and Inventory (assets) decreases
Debit: Accounts Payable $2,000
Credit: Inventory $2,000
Journal Entry: Accounts Payable (liabilities) decreases and Cash (assets) decreases
Debit: Accounts Payable $13,000
Credit: Cash $13,000
Journal Entry: Accounts Receivable (assets) increases and Sales Discount (revenues) increases
Debit: Accounts Receivable $18,800
Credit: Sales Revenue $20,000, Sales Discount $200
Journal Entry: Shipping Expense (expenses) increases and Cash (assets) decreases
Debit: Shipping Expense $300
Credit: Cash $300
Journal Entry: Sales Returns and Allowances (revenues) increases, Accounts Receivable (assets) decreases, Cost of Goods Sold (expenses) decreases, and Inventory (assets) increases
Debit: Sales Returns and Allowances $2,000, Inventory $1,000
Credit: Accounts Receivable $2,000, Cost of Goods Sold $1,000
Journal Entry: Cash (assets) increases, Sales Discounts (revenues) decreases, and Accounts Receivable (assets) decreases
Debit: Cash $9,900
Credit: Accounts Receivable $18,800, Sales Discounts $200
Journal Entry: Cash (assets) increases and Accounts Receivable (assets) decreases
Debit: Cash $17,100
Credit: Accounts Receivable $17,100
Journal Entry: Selling and Administrative Expenses (expenses) increase and Cash (assets) decreases
Debit: Selling and Administrative Expenses $3,000
Credit: Cash $3,000
Journal Entry: Cash (assets) increases and Land (assets) decreases
Debit: Cash $7,500
Credit: Land $5,000, Gain on Sale of Land $2,500
Journal Entry: Cash (assets) increases and Notes Payable (liabilities) increases
Debit: Cash $10,000
Credit: Notes Payable $10,000
Journal Entry: Interest Expense (expenses) increases and Notes Payable (liabilities) increases
Debit: Interest Expense $250
Credit: Notes Payable $250
Journal Entry: Inventory (assets) decreases and Cost of Goods Sold (expenses) increases
Debit: Cost of Goods Sold $x
Credit: Inventory $8,890
Note: The amount for the Cost of Goods Sold in the last journal entry cannot be calculated without additional information about the cost of goods sold during the year, including any purchases, returns, and allowances.
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Within-firm risk and beta risk Understanding risks that affect projects and the impact of risk consideration Yatta Net International has manufacturing, distribution, retail, and consulting divisions. Projects undertaken by the manufacturing and distribution divisions tend to be low-risk projects, because these divisions are well established and have predictable demand. The company started its retail and consulting divisions within the last year, and it is unknown if these divisions will be profitable. The company knew that opening these new divisions would be risky, but its management believes the divisions have the potential to be extremely profitable under favorable market conditions. The company is currently using its WACC to evaluate new projects for all divisions. If Yatta Net International does not risk-adjust its discount rate for specific projects properly, which of the following is likely to occur over time? Check all that apply. The firm will accept too many relatively risky projects. The firm will become less valuable. The firm will accept too many relatively safe projects. Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets. If this correlation is, stand-alone risk will be a good proxy for within-firm risk. Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets. If this correlation is, stand-alone risk will be a good proxy for within-firm risk. high low Consider the case of another company. Kim Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVS of Consider the case of another company. Kim Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVS of $200,000. Management conducted a full risk analysis of these two projects, and the results are shown below. Risk Measure Standard deviation of project's expected NPVS Project beta Correlation coefficient of project cash flows (relative to the firm's existing projects) Project A Project B $80,000 $120,000 0.7 1.0 0.5 Which of the following statements about these projects' risk is correct? Check all that apply. Project A has more market risk than Project 8. Project B has more market risk than Project A. Project B has more stand-alone risk than Project A. Project A has more corporate risk than Project B
If Yatta Net International does not risk-adjust its discount rate for specific projects properly, the following are likely to occur over time:
1. The firm will accept too many relatively risky projects.
2. The firm may become less valuable.
By using the same WACC to evaluate new projects across all divisions, the company fails to differentiate the risk profiles of the projects. This can lead to the acceptance of projects with higher risk levels, which may not be adequately compensated for by their expected returns. Over time, this can increase the overall risk exposure of the firm and potentially lead to financial difficulties.
Regarding the statement "Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets," if this correlation holds true, stand-alone risk (individual project risk) may be a good proxy for within-firm risk. However, it does not directly relate to the consequences of not risk-adjusting the discount rate for specific projects.
In the case of Kim Printing's projects:
1. Project A has more stand-alone risk than Project B since it has a higher standard deviation of expected NPVs.
2. Project B has more market risk than Project A since it has a higher project beta.
3. Project A has more corporate risk than Project B based on the correlation coefficient of project cash flows, which indicates how closely the project's cash flows align with the firm's existing projects.
It's important to note that market risk refers to the sensitivity of a project's returns to overall market fluctuations, while stand-alone risk captures the variability of the project's cash flows independently. Corporate risk reflects the correlation of a project's cash flows with the existing projects of the firm.
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Calculate the approximate, annual, after-tax cost of debt for a 10 -year, 10 percent coupon, $1,000 par value Not yet bond, selling at $950, if a corporation has an average tax rate of 40 percent a. 6.0 percent
b. 6.5 percent c. 10.84 percent d. 7.6 percent
To calculate the approximate, annual, after-tax cost of debt, we need to consider the coupon payment, the price of the bond, and the tax rate. The correct option is (A)
Given:
Coupon rate (CR) = 10%
Par value (PV) = $1,000
Bond price (BP) = $950
Tax rate (TR) = 40%
a) Calculate the coupon payment:
Coupon Payment = Coupon Rate * Par Value
Coupon Payment = 10% * $1,000
Coupon Payment = $100
b) Calculate the after-tax coupon payment:
After-tax Coupon Payment = Coupon Payment * (1 - Tax Rate)
After-tax Coupon Payment = $100 * (1 - 0.40)
After-tax Coupon Payment = $60
c) Calculate the annual after-tax cost of debt:
Annual After-tax Cost of Debt = After-tax Coupon Payment / Bond Price
Annual After-tax Cost of Debt = $60 / $950
Annual After-tax Cost of Debt ≈ 0.06316
d) Convert the annual after-tax cost of debt to a percentage:
Annual After-tax Cost of Debt ≈ 0.06316 * 100%
Annual After-tax Cost of Debt ≈ 6.316%
Therefore, the approximate, annual, after-tax cost of debt is approximately 6.316%. Round to one decimal place, this corresponds to option a) 6.0 percent.
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Let y be a random variable. In a population, μy = 139 and do= In a random sample of size n = 142, find Pr(Y <140). = 50. Use the central limit theorem to answer the following questions. (Note: any intermediate results should be rounded to four decimal places) Pr (Y <140) = (Round your response to four decimal places)
Using the central limit theorem, we can approximate the probability Pr(Y < 140) in a random sample of size n = 142 when the population mean (μy) is 139 and the population standard deviation (σy) is unknown.
The central limit theorem states that for a large enough sample size, the distribution of the sample mean approaches a normal distribution regardless of the shape of the population distribution. In this case, with n = 142, we can assume that the sample size is large enough for the central limit theorem to be applicable.
To calculate Pr(Y < 140), we need to standardize the sample mean using the formula:
Z = (X - μ) / (σ / √n)
Here, X is the sample mean, μ is the population mean, σ is the population standard deviation, and n is the sample size.
Since the population standard deviation (σy) is unknown, we can approximate it using the sample standard deviation (s) and assume that they are approximately equal. Given that we only know the probability Pr(Y < 140) = 0.50, we can infer that this corresponds to the 50th percentile of the standard normal distribution.
Using the standard normal distribution table or a calculator, we can find the corresponding z-score for the 50th percentile, which is 0.00.
Plugging in the values into the formula, we have:
0 = (140 - 139) / (s / √142)
Solving for s, we find:
s ≈ 4.485
Now, we can approximate the probability using the standardized value and the standard normal distribution table:
Pr(Y < 140) = Pr(Z < (140 - 139) / (4.485 / √142))
Pr(Y < 140) ≈ Pr(Z < 0.4458)
Consulting the standard normal distribution table, we find that Pr(Z < 0.4458) is approximately 0.6737.
Therefore, Pr(Y < 140) ≈ 0.6737 (rounded to four decimal places).
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Is a normal distribution a reasonable approximation for a binomial distribution with n-30 and p=0.75? Explain your reasoning.
A binomial distribution under certain conditions, such as when both n (the number of trials) and np (the expected number of successes) are sufficiently large. In this case, with n = 30 and p = 0.75,
A binomial distribution describes the probability of obtaining a specific number of successes in a fixed number of independent trials. When n (the number of trials) is large and np (the expected number of successes) is also large, the distribution tends to be symmetric and bell-shaped, resembling a normal distribution.
In this case, n = 30 and p = 0.75. While n is relatively small, np = 30 * 0.75 = 22.5, which is not a large enough expected number of successes to ensure a good approximation with a normal distribution. Generally, a rule of thumb suggests that both n and np should be greater than 5 for a normal approximation to be reasonable.
Given the small sample size and the fact that np is not sufficiently large, a normal distribution may not provide an accurate approximation for the binomial distribution with n = 30 and p = 0.75. Other methods, such as using the exact binomial distribution or specialized approximations for small sample sizes, would be more appropriate in this case.
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There are 2 consumers (Schwoz and Jasper) and 2 goods (item 1 is coffee and item 2 is
muffins). Schwoz has an endowment of 8 units of good 1 and 30 units of good 2 (s = (8,30)),
while Jasper has an endowment of 10 units of each good (j = (10,10)).
Schwoz’s utility curve is given by:
Us = xs1xs2 + 12xs1 + 3xs2
Jasper’s utility curve is given by:
Uj = xj1xj2 + 8xj1 + 9xj2.
a) Write out the first order conditions
(Hints: Remember that you want to
M aximize
x1,x2,λ U (x1, x2) subject to the constraint that p1x1 + p2x2 ≤ Income
Income here would be the value of their endowments).
b) Determine the demand functions for the two consumers .
(Hints: Get functions in terms of xs1, xs2, xj1, xj2.
Example: → to get xs1 isolate xs2 using (1) (FOC for xs1) and (2) (FOC for xs2) (either sub
(1) into (2); or isolate λ and set the two equations equal to each other) and then sub xs2
into (3) (FOC for λ))
c) Find an equilibrium price ratio for this economy
(Hint: First get the excess demand functions for each person for each good (zs1, zs2, zj1, zj2).
These are equivalent to the given demand function minus the given endowment for the good).
At the equilibrium zs1 + zj1 = zs2 + zj2 = 0
d) How many units of each good would Schowz and Jasper consume at these prices?
e) Sketch the situation in an Edgeworth Box Make sure to show the starting endowments and where they would end up at the equilibrium.
To find the first order conditions, we need to maximize the utility functions of Schwoz and Jasper subject to their budget constraints.
Schwoz's utility function:
[tex]Us = xs1 * xs2 + 12 * xs1 + 3 * xs2[/tex]
Jasper's utility function:
[tex]Uj = xj1 * xj2 + 8 * xj1 + 9 * xj2[/tex]
The budget constraint for both Schwoz and Jasper is:
[tex]p1 * x1 + p2 * x2 ≤ Income[/tex]
where p1 and p2 are the prices of goods 1 and 2 respectively, and Income represents the value of their endowments.
b) To determine the demand functions for the two consumers, we need to find the optimal values of x1 and x2 that maximize their utility functions subject to their budget constraints.
To find Schwoz's demand functions, we can solve the following equations:
[tex]1) ∂Us/∂xs1 = λ * p1
2) ∂Us/∂xs2 = λ * p2[/tex]
3) p1 * xs1 + p2 * xs2 = Income
To find Jasper's demand functions, we can solve the following equations:
1) ∂Uj/∂xj1 = λ * p1
2) ∂Uj/∂xj2 = λ * p2
3) p1 * xj1 + p2 * xj2 = Income
c) To find the equilibrium price ratio for this economy, we need to find the values of p1 and p2 that satisfy the excess demand functions for each person for each good, which are equivalent to the given demand functions minus the given endowment for the good.
At equilibrium, zs1 + zj1 = zs2 + zj2
= 0.
d) To determine how many units of each good Schwoz and Jasper would consume at these prices, we need to substitute the equilibrium price ratio into their demand functions.
e) To sketch the situation in an Edgeworth Box, we need to plot the starting endowments of Schwoz and Jasper (represented as points in the box) and indicate where they would end up at the equilibrium (represented as another point).
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Given the following data, calculate EAC based on Cumulative Cost performance Index as the performance factor. Round to the nearest dollar. BAC-1000; BCWS -500; BCWP-325, ACWP-500 1250 1429 1000 1111 Mark for follow up Back Summary Save/ Return Later
The Estimate at Completion (EAC) based on the Cumulative Cost Performance Index (CPI) is approximately $1538.46.
To calculate the Estimate at Completion (EAC) based on the Cumulative Cost Performance Index (CPI) as the performance factor, we can use the following formula:
EAC = ACWP + (BAC - BCWP) / CPI
Given the following data:
BAC (Budget at Completion) = $1000
BCWS (Budgeted Cost of Work Scheduled) = $500
BCWP (Budgeted Cost of Work Performed) = $325
ACWP (Actual Cost of Work Performed) = $500
CPI (Cumulative Cost Performance Index) = BCWP / ACWP
First, let's calculate the CPI:
CPI = BCWP / ACWP = $325 / $500 = 0.65
Now, we can calculate the EAC:
EAC = ACWP + (BAC - BCWP) / CPI
EAC = $500 + ($1000 - $325) / 0.65
EAC = $500 + $675 / 0.65
EAC = $500 + $1038.46
EAC = $1538.46
Therefore, the Estimate at Completion (EAC) based on the Cumulative Cost Performance Index (CPI) is approximately $1538.46.
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Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per machine-hour Required: 1. Compute the plantwide predetermined overhead rate 2. During the year, Job 400 was started and completed. The following information was available with respect to this job. Direct materials Direct labor cost Machine-hours used 320 240 Compute the total manufacturing cost assigned to Job 400 3. If Job 400 includes 60 units, what is the unit product cost for this job? 159,000 3.653,000 $5.00 4. if Moody uses a markup percentage of 110% of its total manufacturing cost, then what selling price per unit would it have established for Job 400? Complete this question by entering your answers in the tabs below. 3 Required 1 Required 2 Required 3 Required 4 Compute the plantwide predetermined overhead rate. (Round your answer to 2 décimal places.) Preitetermined overhead rate 3.51 per MH Required 2 >
Answer:
The plantwide predetermined overhead rate for Moody Corporation is $20 per machine-hour.
To compute the plantwide predetermined overhead rate for Moody Corporation, we need the following information:
Machine-hours required to support estimated production
Fixed manufacturing overhead cost
Variable manufacturing overhead cost per machine-hour
Compute the plantwide predetermined overhead rate:
The plantwide predetermined overhead rate is calculated by dividing the total estimated manufacturing overhead costs by the estimated total machine-hours.
Plantwide predetermined overhead rate = (Fixed manufacturing overhead cost + (Variable manufacturing overhead cost per machine-hour × Machine-hours required to support estimated production)) / Machine-hours required to support estimated production
For example, if the estimates are as follows:
Machine-hours required to support estimated production = 10,000 hours
Fixed manufacturing overhead cost = $100,000
Variable manufacturing overhead cost per machine-hour = $10
Plantwide predetermined overhead rate = ($100,000 + ($10 × 10,000)) / 10,000
Plantwide predetermined overhead rate = $100,000 + $100,000 / 10,000
Plantwide predetermined overhead rate = $200,000 / 10,000
Plantwide predetermined overhead rate = $20 per machine-hour
Therefore, the plantwide predetermined overhead rate for Moody Corporation is $20 per machine-hour.
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