Answer:
d. Comparing different business cases about the future with multiple variables changed
Explanation:
I would start off by defining scenario analysis first. Scenario analysis can be defined as a process whereby future values of a portfolio investment can be predicted given that an event may occur or may not occur. In other words, it is a way of knowing what would happen to the values of a portfolio if a particular event occurs or if the event doesnt occur.
Given this explanation, the right answer to this question is option d, Comparing different business cases about the future with multiple variables changed
Melvin begins his retirement fund at age 30, depositing $1,000 per month until age 50. Cindy begins her retirement fund at age 20, depositing the same $1,000 per month amount until age 50. Both Melvin and Cindy earn 5 percent annual interest on their funds, and there are no tax considerations in this problem. Based on the provided information :____________
a) and assuming they retire at age 50, Cindy will have less than 50 percent more than Melvin
b) and assuming they retire at age 50. Cindy will have exactly 50 percent more than Melvin.
c) and assuming they both retire at age 60. Cindy will have less than Melvin.
d) the difference between the two will get larger with higher inflation
e) and assuming they retire at age 50. Cindy will have over 50 percent more than Melvin.
Answer: D. and assuming they retire at age 50, Cindy will have over 50% more than Melvin
Explanation:
Since Melvin begins his retirement fund at age 30, depositing $1,000 per month until age 50 while Cindy begins her retirement fund at age 20, depositing the same $1,000 per month amount until age 50 with a 5% annual interest on their funds, then we can deduce that if they retire at age 50, Cindy will have over 50% more than Melvin.
Therefore, the correct option is D.
Productivity is difficult to measure because precise units of measure are available, quality is consistent, and exogenous variables don't change. True False
Answer:
False
Explanation:
All of the statements being made are False. Productivity is measured by stats. For example, in any given month a certain number of products are produced by a fixed number of employees, the next month the same value is calculated and compared with the previous month. This lets you know if productivity is increasing or decreasing. The quality of anything depends on the time and effort being implemented in making something, if this changes then so does the quality. Exogenous variables are simply variables that are not affected by other variables in a given environment, this does not mean that they cannot change. Even though they are independent they can still change. For example, the weather is an exogenous variable but it can still change from Raining to Sunny.
Pina Colada Corp. does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $Unresolved. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes
Answer:
b. $2,616
Explanation:
Missing word "Total receipts for February amounted to $46216. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes? O $2773 O "$2616 O $2608 O It cannot be determined.
Sales tax = Total receipt * Tax rate
Sales tax = Total receipt * 6/106
Sales tax = $46,216 * 6/106
Sales tax = $2,616
So, the amount that must be remitted to the state for February's sales taxes is $2,616.
The management of Neptune Inc. creates a definite plan of action that will surely create profits for the company. It allocates and sectionalizes its machinery and personnel. The main office is moved to a prime location that helps attract customers and facilitates competitive development. This plan of action helps Neptune Inc. retain its competitive advantage and has also grow as a company.
Which of the following terms does this scenario best illustrate?
a. Strategic tools
b. Functional strategy
c. Business unit strategy
d. Strategic management process
Answer:
d. Strategic management process
Explanation:
Strategic management process is the continuous improvement process and appraisals aimed at making a business more effective than its competitors.
It covers planning activities towards achievement of an organisations' present and future objectives.
This is exemplified by Neptune Inc. when it allocated and sectionalized its machinery and personnel, the main office was moved to a prime location that helps attract customers and facilitates competitive development.
A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the :_________.
A. legal capital is $1,360,000.
B. number of shares issued are 60,000.
C. number of shares outstanding are 1,360,000.
D. average price per share issued is $22.50.
Answer:
B. number of shares issued are 60,000.
Explanation:
The computation is shown below:
Since the value of the common stock is $60,000 and the par value is $1
So, the number of common shares issued is
= $60,000 ÷ $1
= 60,000
Hence, the number of shares issued is 60,000
Therefore, the option b is correct
Describe the five factors that may limit how fast a project can be completed. Give an example of each.
Answer:
Logical order, activity duration, resource availability, imposed dates, and cash flow are the five factors that may slow down the completion of a project.
Explanation:
The order in which activities should be completed is known as logical order. You wouldn't put down new carpet before removing the old one. As a result, the logical order is for the predecessor activity to come first, followed by the successor activity.The total number of work periods required to complete a scheduled activity (excluding holidays and other nonwork periods) is known as activity duration. By identifying the right people for the job and discussing the time frame of each activity with them, you can figure out how long each activity should take.The availability of resources, such as workers, to complete a project is referred to as resource availability. Obtaining commitments for equipment and workers in a project prevents days of no work from occurring. It is necessary to stick to a strict schedule.Imposed dates are deadlines for completing specific parts of a project. Perhaps your permit is only valid for 30 days. If this is the case, you must complete your project within the specified time frame. This date was not chosen; it was imposed by the permit.The term "cash flow" refers to the money that comes in from the financial backer as well as the money that goes out to the employees and subcontractors. If there is a cash flow problem on either end of the transaction, it can affect the entire project. Workers will not continue to work if they are not paid on time, and a project may be abandoned.Source:
Describe the five factors that may limit how fast a project can be completed. Give an example of each (Course Hero).The five factors that may limit how fast a project can be completed are:
Logical orderAvailability of resourcesCash flow rateActivity durationImposed dateExplanation:
The order of arrangement in which activities should be completed is known as logical order. If the logical order isn't right, this may limit how fast the project can be completed.The total number of work hours required to complete a scheduled activity is known as activity duration. Upon identifying the right people for the job and discussing the time frame of each activity with them, you can figure out how long each activity should take.The availability of resources, such as skilled and unskilled labour, to complete a project is referred to as resource availability.Imposed dates are deadlines for completing specific parts of a project. At times, the permit is only valid for 20 days.Cash flow otherwise known as working capital refers to the money that comes in from the source of finances as well as the money that goes out to the employees and subcontractors. If there is a cash flow problem on either end of the transaction, the entire project may be affected.Read more on project limiting factors:
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Which one of these is covered by a specific type of insurance policy?
A.Off grid homes
B. Condominiums
C. Home with more than two stories
D. Homes in rural areas
Answer:
A.Off grid homes
Explanation:
Specific type of insurance policy covers the most common perils except those specifically excluded perils such as earthquake, flood, nuclear disaster, landslide.
OFF GRID HOMES refer to homes which are self-sufficient without reliance on modern technology and public utilities. That means that this homes do not have access to electricity, gas, water, etc.
Therefore, these homes can be insured by a specific type of insurance policy.
The off-grid homes should be covered by a specific type of insurance policy.
The following information should be considered:
The specific insurance refers to the type of property insurance where only one person's property should be covered by the policy.It should be possible for the one property for the coverage that too is done from a specific insurance policy.Therefore the other options are incorrect.
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Which of the following is true about an opportunity cost? Multiple Choice they are recorded in the accounting records of the company. is a cost that has already been incurred and can not be changed by any decision. is the potential benefit given up when one alternative is selected over another. should never be considered in decision-making.
Answer:
potential benefit given up when one alternative
Explanation:
1. Implicit cost or opportunity cost : Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives. It is used in calculating economic profit
for example, if you start your business and earn 100,000 but you have to leave your job where you earn 10,000. opportunity cost is 10,000
Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $93 per unit, and variable expenses are $63 per unit. Fixed expenses are $830,700 per year. The present annual sales volume (at the $93 selling price) is 25,500 units.
Required:
1. What is the present yearly net operating income or loss?
2. What is the present break-even point in unit sales and in dollar sales?
3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?
Answer:
1. The present yearly net operating loss is $65,700
2. Break even point in unit sales is 27,690 units, in dollars sales $2,575,170.00
3. The maximum annual profit that the company can earn is $23,300, at 30,500 units with a selling price per unit of $91
Explanation:
At breakeven point, the cost and revenue of the company are same such that the company neither a profit nor a loss. Operating profit or loss is the difference between the revenue and the cost of the company.
The cost of the company usually consist of the fixed and variable elements.
Given that the company’s present selling price is $93 per unit, and variable expenses are $63 per unit. Fixed expenses are $830,700 per year with present annual sales volume (at the $93 selling price) is 25,500 units
Hence the operating profit or (loss)
= $93 * 25,500 - ($63 * 25,500 + $830,700)
= $765,000 - $830,700
= ($65,700)
A loss of $65,700
Break even point in unit sales = Fixed costs / (Selling price per unit – Variable cost per unit)
= $830,700 / ($93 - $63)
= $830,700 / $30
= 27,690 units
In dollar sales
= $93 * 27,690
= $2,575,170.00
if the marketing studies are correct then the new selling price per unit will be
= $93 - $2
= $91
The units sold will be
= 5000 + 25,500
= 30,500 units
The maximum profit to be made
= $91 * 30,500 - ($63 * 30,500 + $830,700)
= $854,000 - $830,700
= $23,300
A machine is under consideration that would cost $28,600, save $6,400 per year in cash operating costs, and have an expected life of 13 years with zero salvage value. The simple rate of return is approximately: (Round your answer to 2 decimal places.)
Answer:
22.38%
Explanation:
During the year, Wright Company sells 500 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 40 $ 68 $ 2,720 May. 5 Purchase 270 71 19,170 Nov. 3 Purchase 220 76 16,720 530 $ 38,610 Calculate ending inventory and cost of goods sold for the year, assuming the company uses specific identification. Actual sales by the company include its entire beginning inventory, 250 units of inventory from the May 5 purchase, and 210 units from the November 3 purchase.
Answer:
Wright Company
Cost of goods sold = $36,430
Ending inventory = $2,180
Explanation:
a) Data and Calculations:
Date Transaction Number of Units Unit Cost Total Cost
Jan. 1 Beginning inventory 40 $ 68 $ 2,720
May. 5 Purchase 270 71 19,170
Nov. 3 Purchase 220 76 16,720
Total available for sale 530 $ 38,610
Specific identification of Sales of 500 units:
Cost of goods sold:
Jan. 1 Beginning inventory 40 $ 68 $ 2,720
May. 5 Purchase 250 71 17,750
Nov. 3 Purchase 210 76 15,960
Total 500 $36,430
Cost of goods sold = $36,430
Ending inventory:
May. 5 Purchase 20 71 $1,420
Nov. 3 Purchase 10 76 760
Total 30 $2,180
Ending inventory = $2,180
Adel wants to get $100 immediately to pay for concert tickets. He currently has no cash or income, but he has a nice gold watch that is worth $500. He is looking for a place to loan him the $100 by using his watch as collateral. Even though it can be risky, what type of business could best meet Adel’s needs? A. rent-to-own service B. pawnshop C. check cashing business D. payday loan business
Correct Answer: pawnshop
The type of business could best meet Adel’s needs "Pawnshop" where short-term loans individuals can use valuable items like his gold watch as collateral. The correct option is B.
He repays the loan along with interest within a specified period, he can retrieve his watch. Pawnshops are designed to offer immediate cash based on the value of the pledged item.
This solution suits Adel's situation as he can secure the funds he needs for the concert tickets using his watch as collateral even though it involves some risk due to the possibility of losing the watch if he doesn't repay the loan.
Therefore, the correct option is B.
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Drew Davis goes to his local bank to get help developing a financial plan and making investment decisions. Which of the more recent services banks offer is Drew taking advantage of
Answer: b. Getting financial advice
Explanation:
As the number of banks in the world increases, banks are having to offer more products and services apart from their traditional roles as lenders in order to remain relevant and competitive. One such product is giving financial advice.
Banks now offer advice on how to make better investment decisions, develop financial plans and even organize your estate. This is what Drew Davis was taking advantage of here.
Bill’s Mechanical Devices Inc. produces robots for the automotive industry. If its average variable costs are given by AVC = 25, its fixed costs are $2,500, and it charges $75 a robot, what is Bill’s break-even level of output?
Answer:
50 units
Explanation:
The computation of the break even level of output is given below:
TVC = AVC × Q
= 25 × Q
Total cost is
= TVC + FC
= 25Q + $2,500
Total revenue is
= P × Q
= 75Q
Now in Break even
TR = TC
75Q = 25Q + $2,500
Q = $2,500 ÷ 50Q
= 50 units
Daphne has received job offers in six different cities across the United States. The table below shows the nominal wage she is being offered in each city and the average monthly rent for an apartment in each city. a. Calculate Daphne’s real wage in terms of how many months of rent her wage could purchase in each city and complete the “Real Wage” column in the table below.
Suppose that a Country Club is considering what price to charge for adults. They know that if they charge a price of $100 then 70 adults will join and if they charge a price of $120 then 50 adults will join. What is the absolute value of the price elasticity of demand for adults at this Country Club
Answer:
1.43
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
Price =120 /100 - 1 = 0.2
Quantity = 50/ 70 - 1 = 0.2857
0.2857 / 0.2 = 1.43
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price
p = 0,2
=0.2857
While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only _________ of the regional bank presidents are members of the FOMC. Which of the following contributes to making the Federal Reserve an independent policymaking body?
a. Its role is written into the U.S. Constitution.
b. There are 12 Federal Reserve banks.
c. Members of the Board of Governors are appointed for 14-year terms.
Answer: See explanation
Explanation:
While all members of the Federal Reserve Board of Governors vote at Federal Open Market Committee (FOMC) meetings, only (5) of the regional bank presidents are members of the FOMC.
The option that contributes to making the Federal Reserve an independent policymaking body is that members of the Board of Governors are appointed for 14-year terms.
Suppose Jacques and Kyoko are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Jacques chooses Right and Kyoko chooses Right, Jacques will receive a payoff of 5 and Kyoko will receive a payoff of 3.
Kyoko
Left Right
Jacques Left 4, 4 6, 3
Right 5, 4 5, 3
The only dominant strategy in this game is for ___________ to choose ______________. The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses _______________ and Kyoko chooses ______________.
Answer:
The only dominant strategy in this game is for Kyoko to choose Left. The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses Right and Kyoko chooses Left.
Explanation:
A dominant strategy is strategy that makes a player better off regardless of the strategy of his opponents in a game.
From the payoff matrix, it can be observed that, when Jacques plays Left, Kyoko will also play Left because 4 > 3. But, when Jacques plays Right, Kyoko will still play Left because 4 > 3. This indicated that Kyoko will always play Left no matter what Jacques plays. As a result, the dominant strategy for Kyoko is Left.
On the other hand, when Kyoko plays Left, Jacques will play Right because 5 > 4. But when Kyoko plays Right, Jacques will play Left because 6 > 5. This shows that Jacques does not have any particular strategy that make him better off. As a result, Jacques does not have a dominant strategy.
Based on the above analysis, we have:
The only dominant strategy in this game is for Kyoko to choose Left. The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses Right and Kyoko chooses Left.
If the efficient market hypothesis is true, price changes are independent and biased. Group of answer choices
Answer:
Price changes are independent but not biased in efficient market hypothesis.
Explanation:
In simple words, the efficient-market hypothesis asserts that asset prices represent all relevant knowledge. Because market rates must only respond to fresh knowledge it is difficult to continuously "beat the market" on something like a risk-adjusted approach.
Thus the given statement is partially true.
When Kimberly finds out that members of her team are using unethical practices to make sales and obtain information, her solution is to hold a Code of Ethics workshop. Is this an appropriate response for her to have?a. Yes; as the manager of these two employees, she is responsible for making sue they know what the expectations of behavior are. b. Yes; she is not allowed to take any disciplinary actions. c. No; she should fire both of them immediately. d. No; it is not her responsibility to educate these employees. They should be in charge of deciding their own ethical behavior.
Answer:
The answer is "Option a".
Explanation:
If Kimberly discovers if her team members use immoral techniques in sales and information, then can organize a workshop on the code of ethics. It is responsible for making sure that he knows the standards of conduct, which is the proper answer for her supervisor of the 2 employees. This code of ethics focuses on people and organizations' values and standards for governing their decisions, as well as on distinguishing the difference between right and wrong.
The government of Egalitariania wants to favor firms and is considering implementing a maximum wage. Assume the maximum wage is both binding and less than the equilibrium wage. What happens to the employment of workers
Answer: It will increase
Explanation:
A maximum wage means that companies do not have to pay more than a certain wage limit. If this wage limit is less than the equilibrium wage, companies would be able to spend less on wages than they are normally supposed to.
Their cost will therefore reduce and they will be able to hire more workers with the money they would have spent to pay the workers the equilibrium wage thereby increasing the number of people employed in the country.
Which of the following statements correctly describe properties of an economic model? Check all that apply.
A) An economic model requires a complex set of assumptions.
B) An economic theory can be expressed in the form “If X, then Y, all other things held constant.”
C) An economic model requires simplified assumptions.
D) The purpose of an economic model is to depict the real world as accurately as possible.
Answer:
A) An economic model requires a complex set of assumptions.
D) The purpose of an economic model is to depict the real world as accurately as possible.
Explanation:
The following statements that correctly describes properties of an economic model are:
A) An economic model requires a complex set of assumptions.
D) The purpose of an economic model is to depict the real world as accurately as possible.
An economic model requires a complex set of assumptions.The purpose of an economic model is to depict the real world as accurately as possible.
Are the properties of economic model.
What is Economics?Economics is a social science which base on how human needs are met or satisfied through the allocation of scarce resources .
What is an Economic Model?Economic model is a theoretical processes which consist of variables and how this set of logical variables relate within them.
Therefore,
An economic model requires a complex set of assumptions.The purpose of an economic model is to depict the real world as accurately as possible.Are the properties of economic model.
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Many business leaders today give up having a private office, and instead work at a desk or cubicle in the middle of the work area to be among other employees. What effect do you think this work area placement has on their power
Answer:
Napoleon once ordered his men on a near suicidal charge against the Austrians and they did exactly what he told them to because they were so inspired by him. This inspiration came from the fact that even though he was their commander, he was on the front lines with them and personally overseeing the artillery bombardment of the enemy.
This is the kind of effect that the business leader staying in the middle of the work area can have. The leader would be amongst their subordinates and by working hard, could inspire them to work hard themselves. This would increase the respect that the employees have of the leader and by extension, the leader's power over them.
Should the leader turn out to be lazy however, an opposite situation could result where the leader's power is diminished as their laziness would be on full display for the workers. who would then lose respect for the leader.
PH produces many electronics products for the USA, Europe, and the UK. The plugs required for each of these geographical areas are different, so originally PH had produced three different versions of each product. Recently, they decided to create one version, and then ship these with three different plugs (i.e., of which two are redundant for the customer). The demands for a particular item for each market are normally distributed with the following parameters: USA – average of 10,000 with a standard deviation of 1,000, Europe – average of 5,000 with a standard deviation of 1,000, and the UK – average of 5,000 with a standard deviation of 500. If PH wants a 90% service level, then how much should their safety stock be according to the new system with one version?
A: Approximately 1,900
B: Approximately 2,500
C: Approximately 3,200
D: Approximately 5,750
Answer:
safety stock=1900
Explanation:
Formula used:
Safety stock= Normsinv(service level) x standard deviation of demand
Solution:
On calculating standard deviation of combined demand using high school maths
standard deviation =[tex]\sqrt{1000^2+1000^2+500^2}[/tex]
Here on calculating the safety stock
Safety stock = Normsinv(0.90)x [tex]\sqrt{1000^2+1000^2+500^2}[/tex]
On simplifying,
Safety stock = 1922
Therefore,
The answer is 1900 units
Option is the correct answer
A. approximately 1900
The difference in the answer may be due to the rounding of standard normal deviation
Which of the following statements about inflation is true? A. Inflation is not a problem because it is just another way for the government to collect revenuelong dash an alternative to the income tax or the sales tax. B. Inflation is a tax on spending money. C. Inflation is a tax on holding money. D. Inflation occurs when real GDP grows more rapidly than the quantity of money.
Answer:
C
Explanation:
Inflation is a persistent rise in the general price levels
Inflation occurs when quantity of money grows faster than real GDP
Types of inflation
1. demand pull inflation – this occurs when demand exceeds supply. When demand exceeds supply, prices rise
2. cost push inflation – this occurs when the cost of production increases. This leads to a reduction in supply. Higher prices are the resultant effect
Shoe leather cost is when people try to spend money immediately so they would not be holding money for a long time. This is because money loses its value in an inflation.
Because inflation causes money to lose its value, it can be viewed as a form of tax on holding money This is because, tax reduces the amount of money a person has. Also, does inflation reduce the value of money a person has
Assume that the labor market for retail workers is generally unskilled. If a minimum wage is set in the labor market for retail workers and that this minimum wage is above the equilibrium wage in this particular labor market, then __________ .
Answer:
there will be a surplus of retail workers in this labor market.
Explanation:
Here we presume that the labor market is not skilled. Now in the case when the minimum wage i.e. set and this wage should be more than the equilibrium wage so that means there is the surplus in the labor market
So as per the given situation, the above statement should be considered and fit to the given scenario
Hence the same is to be considered
You have contracted to buy a house for $300,000, paying $50,000 as a down payment and taking a fully amortizing mortgage for the balance at a 5.5% annual interest rate for 30 years. What will your monthly payment (covering principal and interest) be if you make monthly installments over the next 30 years (round to the nearest dollar)
Answer:
The monthly payment (covering principal and interest) to be over the next 30 years is:
= $1,419.
Explanation:
a) Data and Calculations:
Home Price $300,000
Down Payment 16.666667 % ($50,000/$300,000 * 100)
Loan Term 30 years
Interest Rate 5.5%
Results:
Monthly Pay: $1,419.47
House Price $300,000.00
Down Payment $50,000.00
Loan Amount $250,000.00
Total of 360 Mortgage Payments $511,010.10
Total Interest $261,010.10
When you show property: Ask questions that will sell the home’s specific features. Never show more than 4 homes in one day. Never cancel a scheduled appointment. Be sure to show the prospects at least one home beyond their means to peak their interest.
Answer:
Ask questions that will sell the home's specific features.
Explanation:
Professionals do not state obvious facts about the property they are showing to buyers. Instead, show property by asking questions about features that will interest the buyer. Leave opinions behind. Personal opinions are not meant for the home buyer. Couch questions so that they will get positive responses and help the buyer to make comparisons. For example, this room with its overview of the greenfield will interest the children, isn't it?
Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 17,000 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows:
Direct materials $ 8.20
Direct labor 8.30
Variable manufacturing overhead 1.20
Fixed manufacturing overhead 4.30
Unit product cost $ 22.00
Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 70% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $7.00 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component?
A) $20.71 per unit.
B) $22.00 per unit.
C) $25.50 per unit.
D) $24.21 per unit.
On January 1, Year 1, Jing Company purchased office equipment that cost $15,200 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $1,300. The equipment had a five-year useful life and a $5,700 expected salvage value. Assume that Jing Company earned $17,400 cash revenue and incurred $11,000 in cash expenses in Year 3. The company uses the straight-line method. The office equipment was sold on December 31, Year 3 for $8,900. What is the company's net income (loss) for Year 3?
a. $4,752 and $12,672
b. $2,200 and $12,760
c. $2,851 and $16,151
d. $0 and $13,300
Answer:
$3,120
Explanation:
First and foremost, annual depreciation expense is determined using the below straight-line method formula:
annual depreciation=total cost of equipment-salvage value/useful life
total cost of equipment=purchase price+ transportation cost
total cost of equipment=$15,200+$1,300
total cost of equipment=$16,500
salvage value=$5,700
useful life =5 years
annual depreciation=($16,500-$5,700)/5
annual depreciation=$2,160
net income=cash revenue-cash expenses-annual depreciation+profit/(loss) on disposal
profit or(loss)=sales proceeds-book value
book value=cost-accumulated depreciation for 3 years
book value=$16,500-($2160*3)=$10,020
profit/(loss) on disposal=$8,900-$10,020=-$1,120
net income= $17,400-$11,000-$2,160-$1,120
net income=$3,120
