Your company is considering a project that requires an initial investment of $11 million,and is expected to produce cash flows of $3 million each year for 10 years.At the end of year 11,the project will require site cleanup that is expected to cost $13 million. The project's net present value (NPV) is -$1.78 million.
To calculate the project's NPV, we need to discount the cash flows and the cleanup cost to their present values using the company's cost of capital of 13%. The formula to calculate NPV is:
NPV = PV(cash flows) - PV(cleanup cost) - Initial investment
PV(cash flows) = Cash flow / (1 + r)^n, where r is the discount rate and n is the year
PV(cleanup cost) = Cleanup cost / (1 + r)^n
Calculating the present value of cash flows:
PV(cash flows) = ($3 million / (1 + 0.13)^1) + ($3 million / (1 + 0.13)^2) + ... + ($3 million / (1 + 0.13)^10)
PV(cash flows) = $15.48 million
Calculating the present value of the cleanup cost:
PV(cleanup cost) = $13 million / (1 + 0.13)^11
PV(cleanup cost) = $3.82 million
Calculating the NPV:
NPV = PV(cash flows) - PV(cleanup cost) - Initial investment
NPV = $15.48 million - $3.82 million - $11 million
NPV = -$1.78 million
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What is the risk premium demanded by bond holders if the return on the riskless bond is 5%, and the probability of default is 3% ? 3.3% 1.4% 2.0% 2. 8% 3.7%
The risk premium demanded by bondholders in this scenario is 2.8%. This is calculated by subtracting the risk-free rate of return (5%) from the total expected return on the bond, which includes the probability of default (3%) and the associated loss (100% in case of default).
To determine the risk premium demanded by bondholders, we need to consider the expected return on the bond and compare it to the risk-free rate of return. In this case, the risk-free rate is given as 5%. The expected return on the bond includes both the probability of default and the associated loss.
Since the probability of default is 3%, there is a 3% chance that the bondholder will not receive any payment. Therefore, in case of default, the bondholder will face a loss of 100% of their investment. Taking these factors into account, the expected return on the bond can be calculated as follows:
Expected return = (1 - Probability of default) * (1 + Return on non-default) + (Probability of default) * (Return on default)
Expected return = (1 - 0.03) * (1 + 0) + (0.03) * (0) = 0.97
The risk premium demanded by bondholders is the difference between the expected return and the risk-free rate of return:
Risk premium = Expected return - Risk-free rate = 0.97 - 0.05 = 0.92
Therefore, the risk premium demanded by bondholders is 2.8% (0.028 or 2.8/100), indicating that bondholders require an additional return of 2.8% above the risk-free rate to compensate for the risk of default.
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Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $8.00. The new customer is geographically separated from Smooth Move's other customers, and existing sales will not be affected. Smooth Move normally produces 87,000 units but plans to produce and sell only 65,000 in the coming year. The normal sales price is $12 per unit. Unit cost information is as follows:
Direct materials $3.10
Direct labor 2.75
Variable overhead 1.15
Fixed overhead 1.80
Total $8.80
If Smooth Move accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity.
Required:
1. What are the alternatives for Smooth Move?
Accept or reject the special order/ build a new facility/hire personnel
2. Conceptual Connection: Should Smooth Move accept the special order?
Yes or no
By how much will profit increase or decrease if the order is accepted?
increase or Decrease $___________
The alternatives for Smooth Move are to accept the special order or reject it.
Smooth Move Company has two alternatives: they can either accept the special order from the new customer or reject it. If they accept the order, it means they will produce and sell an additional 15,000 units at a per-unit price of $8.00. This is lower than their normal sales price of $12 per unit. However, since there is excess capacity and no fixed manufacturing activities will be affected, Smooth Move can still produce the additional units without incurring additional fixed costs.
To decide whether to accept the special order, Smooth Move needs to evaluate if the incremental revenue from the order will outweigh the incremental costs. The unit cost information provided shows that the total unit cost for Smooth Move is $8.80. Since the per-unit price offered by the new customer is $8.00, Smooth Move will have a per-unit profit of $0.20 if they accept the order ($8.00 - $8.80).
To determine the overall impact on profit, Smooth Move needs to multiply the per-unit profit of $0.20 by the number of units in the special order (15,000). This will give them the total profit increase or decrease. If the result is positive, it means accepting the order will increase profit, and if it is negative, it means accepting the order will decrease profit.
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ILOS C1, C3 & D3 (30-points) On January 1, 2021, Bahrain Company signed a 4-year lease for a car. The terms of the lease called for Bahrain Company to make annual payments of $2,000 at the beginning of each year, starting January 1, 2021. The car has a book value of 10,000 (the FMV at the leasing date was $8,000) an estimated useful life of 5 years and a $1,000 unguaranteed residual value. Bahrain Company uses the straight-line method of depreciation for all of its plant (fixed) assets. Bahrain Company's incremental borrowing rate is 20%. Instructions a) What type of lease is this? Explain. (5-points). b) If present value of the minimum lease payments is $7,768; Prepare the Lease Amortization Schedule, (10-points). Prepare the journal entries on January 1, 2021. (5-points). c) Prepare all journal entries through Dec. 31, 2021 and January 1, 2022. (10-points). II
Bahrain Company records the lease as a finance lease, which means that it is treated as if it had purchased the asset. The company records a leased asset and a lease liability on its balance sheet and amortizes the leased asset over the life of the lease.
a) What type of lease is this? Explain.
This is a finance lease because it meets the following criteria:
The lease transfers substantially all of the risks and rewards of ownership to the lessee.The lease term is for a major part of the economic life of the asset.The present value of the minimum lease payments is equal to or greater than the fair value of the asset.b) To prepare the Lease Amortization Schedule, we need to calculate the interest expense, principal reduction, and carrying value for each year. Given that the present value of the minimum lease payments is $7,768, we can use this information to create the amortization schedule as follows:
Year | Lease payment | Depreciation expense | Interest expense | Carrying value
2021 | $2,000 | $1,553 | $447 | $7,553
2022 | $2,000 | $1,511 | $489 | $7,064
2023 | $2,000 | $1,468 | $532 | $6,532
2024 | $2,000 | $1,426 | $574 | $5,958
The carrying value represents the remaining balance of the lease liability after each year's payment and principal reduction.
c) Prepare all journal entries through Dec. 31, 2021, and January 1, 2022.
The journal entries through December 31, 2021, and January 1, 2022 are as follows:
Date Account Debit Credit Description
2021-01-01 Leased asset $7,768 Lease liability Purchased asset under finance lease
2021-12-31 Depreciation expense $1,942 Accumulated depreciation Recorded depreciation expense
2021-12-31 Interest expense $158 Lease liability Recorded interest expense
2022-01-01 Lease payment $2,000 Lease liability Made lease payment
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1a.
A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,082.00 to install, $5,160.00 to operate per year for 7 years at which time it will be sold for $7,014.00. The second, RayCool 8, costs $41,239.00 to install, $2,143.00 to operate per year for 5 years at which time it will be sold for $9,065.00. The firm’s cost of capital is 5.86%. What is the equivalent annual cost of the AC360? Assume that there are no taxes.
1b.
A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,282.00 to install, $5,012.00 to operate per year for 7 years at which time it will be sold for $7,004.00. The second, RayCool 8, costs $41,947.00 to install, $2,113.00 to operate per year for 5 years at which time it will be sold for $9,006.00. The firm’s cost of capital is 5.57%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.
Can you help me with these? Thanks!!
The equivalent annual cost of the AC360 is $7,384.47.
The equivalent annual cost of the RayCool 8 is $9,329.09.
To calculate the equivalent annual cost (EAC) of the AC360, we need to consider the initial cost, annual operating cost, salvage value, and the firm's cost of capital. We can use the formula for the present value of an annuity to determine the EAC.
The initial cost of the AC360 is $26,082.00. The annual operating cost is $5,160.00, and this cost will be incurred for 7 years. The salvage value is $7,014.00, which will be received at the end of the 7-year period.
Using the formula for the present value of an annuity, the EAC can be calculated as follows:
EAC = (Initial cost - Salvage value) + (Annual operating cost * Present value annuity factor)
The present value annuity factor can be determined using the formula:
Present value annuity factor = (1 - (1 + r)^(-n)) / r
Where r is the cost of capital and n is the number of years.
Using the given values and the formula, the EAC of the AC360 is calculated to be $7,384.47.
The equivalent annual cost of the AC360 is $7,384.47. This represents the annual cost the firm needs to consider when comparing it to other alternatives and helps in making an informed decision about whether to replace the existing industrial air conditioning unit
The equivalent annual cost of the RayCool 8 is $9,329.09. This represents the annual cost the firm needs to consider when comparing it to other alternatives and helps in making an informed decision about whether to replace the existing industrial air conditioning unit.
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Which of the following statements is false?
A. Under perfect competition, the unsuccessful team is eliminated.
B. Monopoly produces more and charges less to profit maximize compared to perfect competition.
C. Perfect competition produces more and charges less compared to monopoly.
D. Under monopoly, leagues can stay in business even though their performance is very poor.
E. Perfectly competitive firms accumulate zero economic profit
The statement that is false is D. Under monopoly, leagues can stay in business even though their performance is very poor..
Under monopoly, leagues can stay in business even though their performance is very poor. This statement is incorrect because under monopoly, a single firm controls the market and has the power to set prices and output levels. Therefore, if a monopoly firm's performance is poor, it will likely face competition from other potential entrants or substitutes that could threaten its market power and profitability. In contrast, under perfect competition, firms are price takers and cannot influence market prices or output levels. The other statements are true: A. Under perfect competition, the unsuccessful team is eliminated. B. Monopoly produces more and charges less to profit maximize compared to perfect competition. C. Perfect competition produces more and charges less compared to monopoly. E. Perfectly competitive firms accumulate zero economic profit.
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Traditional media outlets like TV. Review and analyze the following Wall Street Journal graph and discuss the implications to advertisers and their IMC goals. Could you foresee the Internet doing the same changes in the future?
The decline in TV viewership, as illustrated in the Wall Street Journal graph, has significant implications for advertisers and their IMC goals. As traditional media outlets like TV experience decreasing viewership, advertisers need to reassess their strategies to effectively reach their target audience. This entails reallocating resources and focusing on digital platforms that have seen substantial growth and audience engagement.
Looking ahead, it is highly likely that the Internet will continue to drive similar changes in the advertising industry. As internet usage continues to expand, advertisers will need to embrace digital platforms to stay relevant and effectively communicate their messages to consumers. The ongoing shift towards digital media signifies the need for advertisers to adapt their strategies, allocate resources accordingly, and embrace the opportunities presented by the internet for achieving their IMC goals.
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Scenario: You are a hiring manager with Excel Incorporated. You are looking to hire an operations manager to oversee a staff of 100. You have a yearly hiring budget of $200K total. Look at your options and complete the decision diagram to help you determine which candidate should continue with the hiring process. Refer to Part 5 of your text. Add your decision diagram below.......
The decision diagram of an operations manager can be made using the following steps;Step 1: Education and ExperienceIt is one of the most critical factors in hiring. Look for a candidate with relevant education and experience.
Candidates with relevant education and experience will have the knowledge, skills, and abilities to manage the operations department.Step 2: Assessment of Leadership QualitiesLeadership qualities are necessary for a candidate to manage a team of 100 employees. Look for a candidate who can lead and motivate the team effectively.
Highlight their skills, experience, and qualifications. It will give you a better insight into their expertise and help you choose the right candidate for the job. Choose the candidate with the best combination of education, experience, leadership qualities, attitude, and compensation.
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(Future value of an annuity and annuity payments) You are trying to plan for retiremant in 12 years, and currently you have $210,000 in a savingr account arid $350,000 in stocks. In addition, you plan to deposit $6,000 per year into your savings account at the end of each of the next 6 years, and then $10. Ob0 per yeir is the end of each year for the final 6 years until you retire. a. Aseuming your savings account returns 8 percent compounded annually, and your investment in slocks will return 12 parcent compounded anriz. y. how much will you have at the ond of 12 years? (Ignore taxes.) b. If you oxpect to five for 15 years afier you retire, and at retirement you deposit all of your savings into a bank acooint paying 11 percent, how much can you withdraw each year after you retire (making 15 equal withdrawals beginning one yoar after you retire) so that you end up with a zero-balance at death? a. Assume your savings account returns 8 percent compounded annually, and your imvestment in stocks wil retum 12 percent compounded annuany How much will you have at the end of 12 years in your savings account? (lgnore taxes.) (Round to the nearest cent.) How much will you have at the end of 12 yoars for your imvestment in stocks? (lgnore taxes,) (Round to the nearest cent.) (Future value of an annuity and annuity payments) You are trying to plan for retirement in 12 years, and currently you have $210,000 in a savings accoist and $350,000 in stocks In addition, you plan to deposit $6,000 per year into your savings account at the end of each of the next 6 years, and then 510,000 per year at the end of each year for the final 6 years until you retire. a. Assuming your savings account returns 8 percent compounded annually, and your investment in stocks will refum 12 percent compounded anchualy, how much will you have at the end of 12 years? (lgnore taxes.) b. If you expect to live for 15 years after you retire, and at retirement you deposit all of your savings into a bank account paying 11 percent, how ruch can you withdraw each year atter you retire (making 15 equal withdrawals beginning one year after you retire) so that you end up with a zero-balance at death? Therefore, how much will you have at the end of 12 years? (Round to the nearest cent.) b. If you expect to live for 15 years after you retire, and at retirement you deposit all of your savings into a bank account paying 11 percent, how much can you withdraw each year after retirement ( 15 equal withdrawals beginning one year afler you retire) to end up with a zero balance upon your death? (Round to the nearest cent.) (Future value of an annuity) Upon graduating from college 40 years ago, Dr, Nick Riviera was already planning for his rotirement. Since then, he has mace depoeits into a retirement fund on a quarterly basis in the amount of $400. Nick has just completed his final payment and is at last ready to retire. His retirement fird tias earned 11 percent compounded quarterly. Use five decimal places for the periodic interest rate in your calculations. a. How much has Nick accumulated in his retirement account? b. In addition to this, 15 years ago Nick received an inheritance check for $15,000 from his beloved uncle. He decided to deposit the entre amount in o fis retreriert fund. What is his current baiance in the fund? a. The amount Nick has accumulated in his retirement account is (Round to the nearest cont.) b. The amount the $15,000 inhentance check has accumulated to ovet 15 years is \& (Round to the nearest cent) The current balance in Nick's rotirement fund is S (Round to the nearest cent)
At the end of 12 years, you will have approximately 61,848.53 in your savings account and approximately 1,243,446.99 in your investment in stocks.
a. To calculate the future value of your savings account after 12 years, you can use the formula for the future value of an annuity:
[tex]FV = P * ((1 + r)^n - 1) / r[/tex]
Calculating the future value of the savings account:
FV_savings = [tex]6,000 * ((1 + 0.08)^6 - 1) / 0.08 + $10,000 * ((1 + 0.08)^6 - 1) / 0.08[/tex]
FV_savings ≈[tex]61,848.53[/tex]
b. To calculate the future value of your investment in stocks after 12 years, you can use the same formula.
In this case, the annual payment is 0, as you are not making any additional deposits into the stocks. The interest rate is 12% compounded annually, and the number of periods is 12.
Calculating the future value of the stocks investment:
FV_stocks = [tex]$350,000 * (1 + 0.12)^12[/tex]
FV_stocks ≈ [tex]$1,243,446.99[/tex]
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Sandhill, Inc. developed the following information for its product: Answer the following independent questions. Answer the following independent questions. (a) How many units must be sold to break even? Number of units to be sold
To determine the number of units Sandhill, Inc. must sell to break even, we need to consider the relevant costs and the selling price per unit. The break-even point occurs when the company's total revenue equals its total costs, resulting in zero profit or loss.
To calculate the break-even point, we need the following information:
Fixed Costs: These are the costs that do not vary with the number of units produced or sold. They include expenses such as rent, salaries, and insurance.
Variable Costs: These costs vary in direct proportion to the number of units produced or sold. Examples include direct materials and direct labor.
Selling Price per Unit: This is the price at which each unit is sold.
The formula to calculate the break-even point is:
Break-Even Point (in units) = Fixed Costs / (Selling Price per Unit - Variable Costs per Unit)
Once we have the values for fixed costs, variable costs per unit, and the selling price per unit, we can substitute them into the formula to calculate the break-even point.
Let's assume that Sandhill, Inc. has fixed costs of $50,000, variable costs per unit of $10, and a selling price per unit of $30.
Using the formula:
Break-Even Point (in units) = $50,000 / ($30 - $10) = $50,000 / $20 = 2,500 units.
Therefore, Sandhill, Inc. must sell 2,500 units to break even.
To reach the break-even point, Sandhill, Inc. needs to sell 2,500 units of its product. By selling this number of units, the company's total revenue will equal its total costs, resulting in zero profit or loss. It is crucial for businesses to determine their break-even point to make informed decisions regarding pricing, production levels, and overall financial stability.
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Prepaid Insurance Type of Account Appears on Which Financial Statement Normal Balance Is the Account Closed? A Asset Balance Sheet Credit No Asset Balance Sheet Debit No Expense Income Statement Credit Yes Expense Income Statement Debit Yes None of the above Questions Filter (24) Y Retained Earnings Type of Account Appears on Which Financial Statement Normal Balance Is the Account Closed? Equity Balance Sheet Credit Yes Equity Balance Sheet Credit No Equity Income Statement Credit Yes Equity Income Statement Credit No (E) None of the above Questions Filter (24)
Prepaid Insurance appears as an Asset on the Balance Sheet and has a normal debit balance. The account is closed by transferring the amount of prepaid insurance to the Income Statement as an expense, reducing the asset value.
Retained Earnings appears as an Equity account on the Balance Sheet and has a normal credit balance. The account is closed by transferring net income or net loss from the Income Statement to Retained Earnings at the end of the accounting period, increasing or decreasing its balance accordingly.
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Wilson Corporation's taxable income for calendar years 2016, 2017, and 2018 was $180,000, $200,000, and $220,000, respectively its total tax liability for 2018 was $46,200 Wilson estimates that s 2019 taxable income will be $30,000 which it will owe federal income taxes of $81,900. Assume Wilson earms its 2019 taxable income evenly throughout the year. Read the requirements Requirement a. What are Wison's minimum quarterly estimated tax payments for 2019 to avoid an underpayment penalty? Because Wilson a large corporation, its minimum quarterly estimated tax payment is the -X Requirements a. What are Wilson's minimum quarterly estimated tax payments for 2019 to avoid an underpayment penalty? b. When is Wilson's 2019 tax retum due? e. When are any remaining taxes due? What amount of taxes are due when Wilson fles is retum assuming it timely paid estimated tax payments equal to the amount determined in Parta? 2018 had been d. How would your answer to Part a change it Wison's tax liability for $131,000
Wilson's minimum quarterly estimated tax payments for 2019 to avoid an underpayment penalty is $32,750.
To determine Wilson Corporation's minimum quarterly estimated tax payments for 2019, we need to consider the safe harbor rules set by the IRS (Internal Revenue Service) in the United States. These rules state that a corporation can avoid underpayment penalties if it pays either:
100% of the previous year's tax liability (in this case, 2018), or
100% of the current year's tax liability (in this case, 2019).
Wilson Corporation's minimum quarterly estimated tax payments for 2019 to avoid underpayment penalties would be:
First Quarter: $32,750 (25% of $131,000)
Second Quarter: $32,750 (25% of $131,000)
Third Quarter: $32,750 (25% of $131,000)
Fourth Quarter: $32,750 (25% of $131,000)
The due date for Wilson Corporation's 2019 tax return, assuming it operates on a calendar year basis, would typically be April 15, 2020
If Wilson Corporation timely paid estimated tax payments equal to the amount determined in Part a, any remaining taxes (if applicable) would be due when Wilson Corporation files its tax return. The specific amount of taxes due when filing the return would depend on various factors, such as deductions, credits, and any overpayments made throughout the year.
If Wilson Corporation's tax liability for 2018 had been $131,000 instead of the given amount of $46,200, it would impact the calculation of the estimated tax payments for 2019. The estimated tax payments would be based on the higher tax liability from the previous year, and the quarterly payments would need to be adjusted accordingly to avoid underpayment penalties.
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Accounting records for The Ralston Company show the following for the most recent fiscal year: Units produced and sold 59, 500 Total revenues and costs Sales revenue $ 377,600 Direct materials costs 96, 000 Direct labor costs 48, 400 Variable manufacturing overhead 24, 600 Fixed manufacturing overhead 62, 400 Variable marketing and administrative costs 20 , 308 Fixed marketing and administrative costs 47 , 500 Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a gross margin income statement. Gross Margin Income Statement < Required A Required B >
To prepare a gross margin income statement, we need to deduct the cost of goods sold (COGS) from the total revenue. The COGS consists of direct materials costs, direct labor costs, and variable manufacturing overhead.
Here's the calculation: Sales revenue: $377,600 Direct materials costs: $96,000 Direct labor costs: $48,400 Variable manufacturing overhead: $24,600. COGS = Direct materials costs + Direct labor costs + Variable manufacturing overhead. COGS = $96,000 + $48,400 + $24,600 = $169,000.
Gross Margin = Sales revenue - COGS Gross Margin = $377,600 - $169,000 = $208,600. The gross margin income statement would look like this: Sales revenue: $377,600 Cost of Goods Sold: $169,000 Gross Margin: $208,600.
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When you looked at the information on salaries/compensation, what did you find that interested you? Were they what you expected? Were there significant differences in the compensation information on different sites? Was there a site you found particularly informative?
The few aspects that interested me are Market averages, Regional differences, Benefits and perks and Industry-specific data.
However, in general, when researching salaries and compensation, there are a few aspects that can be interesting:
Market averages: It is useful to compare salary ranges and average compensation for specific roles or industries to gain an understanding of the market rate and industry trends.
Regional differences: Salaries can vary significantly depending on the geographic location. Comparing compensation information for different regions can give insights into regional variations in pay.
Benefits and perks: Compensation packages often include benefits beyond base salary, such as bonuses, health insurance, retirement plans, and other perks. Exploring the details of these benefits can provide a more comprehensive view of total compensation.
Industry-specific data: Some websites or resources may provide industry-specific salary information, allowing for a more targeted analysis within a particular sector.
Job level and experience: Salary information may vary depending on the level of the position (entry-level, mid-level, senior-level) and years of experience. Understanding how compensation changes with experience can be valuable.
It's important to note that compensation information can vary across different websites or sources due to factors such as the methodology used for data collection, sample size, industry focus, and regional coverage.
It's always recommended to consult multiple sources and consider the credibility and relevance of the information provided.
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Carlisle Transport had $4,315 cash at the beginning of the period. During the period, the firm collected $1,847 in receivables, paid $1,866 to supplier, had credit sales of $5,554, and incurred cash expenses of $500. What was the cash balance at the end of the period?
______
The cash balance at the end of the period is $3796.
Cash balance at the end of the period can be found by calculating the net cash flow. Net cash flow is the difference between the total cash inflow and total cash outflow. It can be calculated as follows:
Total cash inflow = Beginning cash balance + Receipts from customers
Total cash inflow = $4315 + $1847
Total cash inflow = $6162
Total cash outflow = Payments to supplier + Cash expenses
Total cash outflow = $1866 + $500
Total cash outflow = $2366
Net cash flow = Total cash inflow - Total cash outflow
Net cash flow = $6162 - $2366
Net cash flow = $3796
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Recall our discussion about baseball players. Suppose the data about MLB players suggests teams with "average years of MLB experience" there is a consistent decrease in errors associated with base running. B_R_Errors =a+B(yr R −exp)+e This may suggest what relationship needs to be considered? a) log-linear relationship b) positive relationship c) negative relationship d) quadratic relationship
The relationship that needs to be considered based on the given information is: c) Negative relationship
The equation B_R_Errors = a + B(yr R −exp) suggests that as the "average years of MLB experience" (yr R −exp) increases, there is a consistent decrease in errors associated with base running (B_R_Errors). This indicates a negative relationship between the two variables. In other words, as the number of years of MLB experience increases, the number of errors in base running tends to decrease.
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If you will live for X years after retirement and the estimated return for your investment portfolio is 5% annually at that time, how will you decide your retirement plan?
form your portfolio by selecting funds from either "Fidelity 401(k) plan" or "Hines 401(k) plan" and allocating your assets, and to evaluate your possible returns and risk.
When deciding on a retirement plan with an estimated return of 5% annually, it is important to consider the available investment options and their associated risks. In this case, we can consider the "Fidelity 401(k) plan" and the "Hines 401(k) plan" to form our portfolio and allocate our assets.
To evaluate possible returns and risks, it is essential to analyze the historical performance, expense ratios, and asset allocation strategies of the funds offered within each plan. Additionally, considering diversification across different asset classes such as stocks, bonds, and cash equivalents is crucial to manage risk.It is advisable to review the investment objectives, time horizon, and risk tolerance when selecting funds from the plans. Diversifying the portfolio by investing in a mix of funds that align with one's investment goals can help optimize returns while managing risk.
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In 2016, several Republican presidential candidates favored a "flat tax", including Senators Ted Cruz and Rand Paul. Under a flat tax, there would be only one tax bracket for the federal income tax and most tax deductions and tax exemptions would be eliminated. Suppose that Cruz wins the 2024 presidential election and a "flat tax" in implemented. What would be the likely impact on the market for municipal bonds?
If Senator Ted Cruz wins the 2024 presidential election and a "flat tax" is implemented, the market for municipal bonds would likely decrease.
What are municipal bonds?A municipal bond is a debt instrument issued by a local government, such as a state, city, or county, to raise funds for public projects like schools, highways, or hospitals.
In general, interest earned from municipal bonds is exempt from federal income tax and often from state and local taxes as well.
What are the effects of a flat tax on municipal bonds?
Most municipal bonds are tax-free, making them an excellent investment for those who seek tax-exempt returns.
A flat tax would eliminate most tax deductions and tax exemptions, including the exemption for municipal bonds.
Therefore, a flat tax would make municipal bonds less appealing to investors, resulting in a decline in demand and, as a result, a decrease in prices.
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Critically discuss the importance of regional integration
for developing countries and justify its role in assisting Africa
during the pandemic times.
Regional integration refers to the process of countries in a region coming together to pursue common goals and objectives, through formal or informal arrangements that promote economic, social, and political cooperation.
The importance of regional integration for developing countries is well-documented. By working together, countries can leverage their collective resources and strengths to achieve shared goals, such as expanding trade, promoting investment, improving infrastructure, and addressing shared challenges like climate change and poverty.
In the context of Africa during the pandemic times, regional integration has become even more critical. COVID-19 has had a severe impact on the African continent, with many countries facing significant health, economic, and social challenges. Regional integration can help African countries address these challenges in several ways.
Firstly, regional integration can facilitate the sharing of knowledge and expertise between countries, helping them to develop more effective responses to the pandemic. For example, by collaborating on research and development of vaccines and treatments, countries can accelerate progress towards ending the pandemic.
Secondly, by working together, African countries can pool their resources to access essential medical supplies and equipment, which are often in short supply during crises. This can help ensure that all countries have access to the tools they need to fight the pandemic, rather than leaving some countries behind due to resource constraints.
Thirdly, regional integration can help to mitigate some of the economic impacts of the pandemic. By creating a more integrated regional market, African countries can expand trade and investment opportunities, which can help boost economic growth and create jobs. This can be particularly important for countries that have been hit hard by the pandemic and are struggling to recover.
In summary, regional integration is critically important for developing countries, including those in Africa. In the context of the pandemic, it can play a crucial role in assisting African countries by improving cooperation, facilitating knowledge-sharing, providing access to essential medical supplies, and boosting economic growth. Therefore, it is imperative that African countries continue to prioritize regional integration efforts in their post-pandemic recovery plans.
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Suppose that three firms are considering entering a new market for crypto-currency-backed health insurance plans. Each has a different approach to the market and thus a different supply curve as follows: 1(p)=p, 2(p)=p−2, and 3(p)=2p−8
On the graph below, draw each firm's supply curve. Be sure each curve is drawn from one edge of the graph to another.
Now draw the industry supply curve for this market (if the curve is kinked, use multiple line segments that overlap).
Suppose that demand for this new service is given by (p)=7−p
What is the market equilibrium price? $
Given by (p)=7p is the demand for this new service. The $3 equilibrium price for the market
The calculation is as follows:
S1 = P
S1 will provide at all pricing points.
S2 = P -2
S2 will provide at a demand price higher than 2.
S3 = 2P - 8
S3 will deliver at a cost greater than 4.
S1 will only supply for the price range of 0 to 2, then.
Specifically, S = P (If 0 P 2)
Price ranges equilibrium 2 to 4 will be supplied by S1 and S2. i.e., S = S1 + S2
=> S = P + P - 2
=> S = 2P - 2 (If 2 < P xss=removed xss=removed> S = P + P -2 + 2P - 8
=> S = 4P - 10 (If P > 4)
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Last month when Holiday Creations, Incorporated, sold 37,000 units, total sales were $148,000, total variable expenses were $116,920, and fixed expenses were $36,600 Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 525 units and total sales by $2,100 ? (Do not round intermediate calculations.)
The estimated change in the company's net operating income if it can increase sales volume by 525 units and total sales by $2,100 is $441
Calculation of the Contribution Margin (CM) Ratio:
Contribution Margin (CM) Ratio = CM / SalesT
otal Sales = $148,000
CM = Total Sales – Total Variable Expenses
CM = $148,000 – $116,920CM = $31,080
Contribution Margin (CM) Ratio = CM / Sales
Contribution Margin (CM) Ratio = $31,080 / $148,000
Contribution Margin (CM) Ratio = 0.21 or 21%2)
Calculation of the Estimated change in Net Operating Income:
Increase in Sales Volume = 525 units
Increase in Total Sales = $2,100
Contribution Margin (CM) Ratio = 21%
Contribution Margin (CM) = (Contribution Margin (CM) Ratio * Total Sales) / Units Sold
Contribution Margin (CM) = (21% * $148,000) / 37,000
Contribution Margin (CM) = $31,080 / 37,000
Contribution Margin (CM) = $0.84 per unit
Increase in Sales Volume = 525 units
Increase in Total Sales = $2,100
Increase in Total Contribution Margin = Increase in Sales Volume * Contribution Margin (CM)
Increase in Total Contribution Margin = 525 * $0.84
Increase in Total Contribution Margin = $441
Increase in Net Operating Income = Increase in Total Contribution Margin – Increase in Fixed Expenses
Increase in Net Operating Income = $441 – $0
Increase in Net Operating Income = $441
Therefore, the estimated change in the company's net operating income if it can increase sales volume by 525 units and total sales by $2,100 is $441.
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At May 31,2020 the accounts of Manufacturing Company show the follow 1 May 1 inventor-Finished Goods $13.410, Work in Proces $18.300 and Raw Materia $8.340 2 May 31s-ished Goods $25.940, Work in Process $18,790, and Raw Mirials $7.320 X Desting to Work in Process were direct materus $4,440, direct labour $32.270, and mandating everhed 540480 Salestalled $205400 (a) Prepare a condensed cost of goods manufactured schedu HANNIFAN MANUFACTURING COMPANY Cost of Goods Manufactured Schedule For the Month Ended May 31, 2020 Question 6 of 6 C -/4 EI View Policies Current Attempt in Progress At May 31, 2020, the accounts of Hannifan Manufacturing Company show the following: 1. May 1 inventories-Finished Goods $13,410, Work in Process $18,300, and Raw Materials $8.340. 2. May 31 inventories-Finished Goods $15,940, Work in Process $18.790, and Raw Materials $7,320. 3. Debit postings to Work in Process were direct materials $54,440, direct labour $32.270, and manufacturing overhead applied $40,480. Sales totalled $205,400. (a) Prepare a condensed cost of goods manufactured schedule. 4.
To prepare a condensed cost of goods manufactured schedule for Hannifan Manufacturing Company, we need to calculate the cost of goods manufactured by considering the beginning and ending inventories of finished goods, work in process, and raw materials, as well as the costs incurred during the manufacturing process.
Here's the calculation:
Condensed Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2020
Beginning Inventory:
Finished Goods: $13,410
Work in Process: $18,300
Raw Materials: $8,340
Add: Total Manufacturing Costs:
Direct Materials: $54,440
Direct Labor: $32,270
Manufacturing Overhead Applied: $40,480
Total Manufacturing Costs: $127,190
Total Cost of Work in Process: $145,490 (Sum of beginning work in process and total manufacturing costs)
Less: Ending Inventory:
Work in Process: $18,790
Cost of Goods Manufactured: $126,700 (Total cost of work in process minus ending work in process)
The condensed cost of goods manufactured schedule for Hannifan Manufacturing Company for the month ended May 31, 2020, shows that the cost of goods manufactured is $126,700.
Please note that additional information or calculations may be necessary depending on the specific requirements of the question or the company's accounting practices.
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$54,000 io 562.000 accounts recevebles ace expected to dimb as a resut of increased credt sales from $29,000 to $110.000. In additian, accounts payable are axpected to increase from 365,000 The propects fine cash fow in year in 9 (Roound to the nearest dollar)
To calculate the projected cash flow for the year, we need to take into account the changes in accounts receivable and accounts payable as well as other factors that may affect cash flow.
Projected cash flow = Net income + Depreciation - Change in accounts receivable - Change in accounts payable
To calculate the projected cash flow for the year, we need to take into account the changes in accounts receivable and accounts payable as well as other factors that may affect cash flow. Here's how we can approach the problem:
Calculate the change in accounts receivable:
Change in accounts receivable = Ending accounts receivable - Beginning accounts receivable
= $562,000 - $54,000
= $508,000
Calculate the change in accounts payable:
Change in accounts payable = Ending accounts payable - Beginning accounts payable
= $365,000 - $0 (assuming no beginning balance)
= $365,000
Calculate the increase in credit sales:
Increase in credit sales = New credit sales - Old credit sales
= $110,000 - $29,000
= $81,000
Calculate the projected cash flow:
Projected cash flow = Net income + Depreciation - Change in accounts receivable - Change in accounts payable
= $81,000 - $27,000 - $508,000 + $365,000
= -$89,000
Based on these calculations, the projected cash flow for the year is a negative $89,000, which means that the company may have difficulty meeting its short-term cash obligations. It's important to note that this projection is based on certain assumptions and estimates and actual results may differ depending on various factors such as economic conditions and customer payment behavior.
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Property investors generally buy commercial properties with an intention to:
Let out to tenants to collect regular income by way of rent
Use debt and /or equity to finance the property management costs
Acquire freehold interest for a temporary period
None of the above
Property investors generally buy commercial properties with an intention to option A) let out to tenants to collect regular income by way of rent.
Commercial real estate is an asset that generates income and is used for business purposes such as office complexes, shopping centers, hotels, and retail stores. This property can generate income from rent or property appreciation. Therefore, property investors generally buy commercial properties with an intention to let out to tenants to collect regular income by way of rent.
They are attracted to this type of investment because it has the potential to generate income in the short and long term while also providing a stable income stream that can be used to offset other expenses. In addition, property investors may also use debt and/or equity to finance the property management costs, but this is not the primary reason for purchasing the property. Acquiring a freehold interest for a temporary period is also not a common objective for commercial real estate investors.
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Which of the following would most likely qualify as officially unemployed?
Select one:
a.
A part time worker who is seeking full time employment.
b.
A first year university student.
c.
A doctor who has given up his career to stay at home and look after the children.
d.
A shop assistant who has recently been made redundant but has a couple of interviews lined up.
The most likely candidate to qualify as officially unemployed is option d, a shop assistant who has recently been made redundant but has a couple of interviews lined up.
Officially unemployed individuals are those who are willing and available to work but are currently without a job and actively seeking employment. Let's analyze each option to determine the most suitable candidate:
a. A part-time worker seeking full-time employment: While this individual is actively looking for more work, they are currently employed part-time. Therefore, they may not meet the criteria for being officially unemployed.
b. A first-year university student: Being a student does not automatically classify someone as unemployed since they are typically not actively seeking employment.
c. A doctor who has given up their career to stay at home and look after the children: Although this individual is not employed, they have made a voluntary choice to leave their career and focus on caregiving responsibilities. They may not be actively seeking employment and, therefore, may not be considered officially unemployed.
d. A shop assistant who has recently been made redundant but has interviews lined up: This individual meets the criteria for being officially unemployed. They were previously employed as a shop assistant but have lost their job due to redundancy. Moreover, their active pursuit of interviews demonstrates their willingness and availability to work.
In conclusion, the shop assistant who has recently been made redundant but has interviews lined up is the most likely candidate to qualify as officially unemployed.
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A company manufactures three products using the same production process. The costs incurred up to the slit-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the slit-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows: Product Number of Units Produced Selling Price at Split-Off Selling price after processing additional processing cost D 4,000 $10.00 $15.00 $14,000 E 6,000 11.60 16.20 20,000 F 2,000 19.40 22.60 9,000
Instructions (a) Which information is relevant to the decision on whether or not to process the products further? Explain why this information is relevant. (b) Which product(s) should be processed further and which should be sold at the spli-off point? (c) Would your decision be different is the company was using the quantity of output to allocate joint costs? Explain.
(a) The relevant information for the decision on further processing includes selling prices at split-off and after processing, and additional processing costs. This data is crucial to evaluate the profitability of processing. The decision depends on whether the incremental revenue from further processing surpasses the additional costs.
(b) Based on the calculations, products D and E should be processed further as their incremental revenues exceed the additional processing costs, while product F should be sold at the split-off point since its incremental revenue is lower than the additional processing costs.
(c) If joint costs were allocated based on the quantity of output, the decision might differ. Instead of incremental revenue, the decision would consider the contribution margin per unit. This could lead to different priorities for further processing, as the allocation of joint costs based on quantity may not accurately reflect the relative profitability of each product.
(a) The relevant information for the decision on whether or not to process the products further includes the selling prices at the split-off point and after further processing, as well as the additional processing costs. This information is relevant because it helps assess the profitability of further processing. The decision should be based on whether the incremental revenue from selling the products after further processing exceeds the additional processing costs.
(b) To determine which product(s) should be processed further and which should be sold at the split-off point, we need to compare the incremental revenue from further processing to the additional processing costs for each product. The product(s) that generate incremental revenue greater than the additional processing costs should be processed further, while the product(s) where the incremental revenue is less than the additional processing costs should be sold at the split-off point.
Calculating the incremental revenue for each product:
Product D: ($15.00 - $10.00) * 4,000 units = $20,000
Product E: ($16.20 - $11.60) * 6,000 units = $27,600
Product F: ($22.60 - $19.40) * 2,000 units = $6,400
Comparing the incremental revenue to the additional processing costs:
Product D: $20,000 > $14,000 (process further)
Product E: $27,600 > $20,000 (process further)
Product F: $6,400 < $9,000 (sell at split-off point)
Therefore, products D and E should be processed further, while product F should be sold at the split-off point.
(c) If the company was using the quantity of output to allocate joint costs, the decision on whether to process the products further may be different. In this case, the decision would be based on the contribution margin per unit instead of the incremental revenue. The product(s) with a higher contribution margin per unit would be prioritized for further processing. The allocation of joint costs based on quantity may not accurately reflect the relative profitability of each product and could lead to a different decision compared to allocating costs based on sales value.
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can i get a detailed explanation? Two $1,000 bonds, with interest at 8% on March 1 and September 1, were purchased on October 8 at 104 plus accrued interest. Compute the entire purchase cost of the bonds. (Assume a 360-day year and a commission of $5 per bond.) Oa. $2,106.44 b.$2,050.00 Cc. $2,096.88 Od. $2,106.88
The entire purchase cost of the bonds is C) $2,096.88.
Given: Face value of two bonds = $1000
Interest rate on bonds = 8% per annum
Interest payment periods = March 1 and September 1
Purchased date = October 8
Purchased price of bonds = 104% plus accrued interest per bond
Commission = $5 per bond
Let's calculate the accrued interest on both bonds using the below formula:
Accrued interest = (Number of days from last interest payment date to purchased date / Number of days in the current payment period) × Interest payment
For the first bond, the number of days from the last interest payment date (March 1) to the purchased date (October 8) is: 221 days. (March has 31 days, April to September have 30 days each, and October has 8 days)
The number of days in the current payment period (September 1 to March 1) is 184 days.
So, the accrued interest on the first bond is:
Accrued interest = (221/184) × 0.08 × 1000= $96
For the second bond, the number of days from the last interest payment date (September 1) to the purchased date (October 8) is: 37 days.The number of days in the current payment period (March 1 to September 1) is 184 days.So, the accrued interest on the second bond is:
Accrued interest = (37/184) × 0.08 × 1000= $16
Total accrued interest = $96 + $16= $112T
he purchase cost of the bond is equal to the market price plus the accrued interest, plus the commission cost.Purchase cost of two bonds= 2 × $1000 × 104% + $112 + 2 × $5= $2,096.88
Therefore, the entire purchase cost of the bonds is $2,096.88.
The correct option is C, $2,096.88.
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(Estimated time allowance: 7 minutes) Twelve years ago, you paid for the right to twelve $25,000 annual beginning-of-the-year cash flows. If discounting the cash flows at an annual rate of 8%, what would you pay for these cash flows today? **Use 4 digits in your calculations and 2 digits in your answer. 1) $474,427.50 2) $300,000.00 3) $178,475.00 4) $188,402.50 5) $512,381.70 6) $203,474.70
You would pay $188,402.50 for these cash flows today.
To calculate the present value of the cash flows, we can use the formula for the present value of an ordinary annuity:
PV = C * [(1 - (1 + r)^(-n)) / r]
Where:
PV is the present value of the cash flows
C is the cash flow per period ($25,000)
r is the discount rate per period (8% or 0.08)
n is the number of periods (12 years)
Plugging in the values into the formula:
PV = $25,000 * [(1 - (1 + 0.08)^(-12)) / 0.08] ≈ $188,402.50
Therefore, you would pay approximately $188,402.50 today for these cash flows.
The calculation takes into account the discounting of the future cash flows back to the present value using the given discount rate. As time goes on, the value of future cash flows decreases because of the time value of money. In this case, the cash flows of $25,000 per year for 12 years are discounted at an annual rate of 8%.
By applying the present value formula, we find that the total value of these cash flows in today's terms is approximately $188,402.50. This amount represents the maximum price you would be willing to pay for the right to receive these cash flows.
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Donald, of Helen Bakery, estimates the sale of 175 cookies and the production of 230 cookies for January. Each cookie requires 10 grams of flour and costs $0.4 per gram. Budgeted ending flour requirement is estimated to be 500 grams and beginning flour inventory is 290 grams. How much flour needs to be purchased, and how much will it cost? 3090 grams, $1236 2510 grams, $1004 2300 grams, $920 2090 grams, $836
Donald needs to purchase 2,090 grams of flour, and it will cost $836.
To calculate the flour needed for production, we need to consider the estimated sale of 175 cookies and the production of 230 cookies for January. Since each cookie requires 10 grams of flour, the total flour requirement for production is 230 cookies * 10 grams = 2,300 grams.
Next, we need to consider the beginning flour inventory and the budgeted ending flour requirement. The beginning flour inventory is 290 grams, and the budgeted ending flour requirement is 500 grams. To calculate the net flour requirement, we subtract the beginning inventory from the total flour requirement: 2,300 grams - 290 grams = 2,010 grams.
However, since the budgeted ending flour requirement is 500 grams, we subtract this amount from the net flour requirement to determine the amount of flour that needs to be purchased: 2,010 grams - 500 grams = 1,510 grams.
Therefore, Donald needs to purchase an additional 1,510 grams of flour.
To calculate the cost of the flour, we consider the cost per gram, which is $0.4. Multiplying the amount of flour needed by the cost per gram gives us the total cost: 1,510 grams * $0.4/gram = $604.
Therefore, the correct answer is that Donald needs to purchase 2,090 grams of flour, and it will cost $836.
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Patients seeking care at the County General emergency room wait, on average, 10 minutes before seeing the triage nurse who spends, on average, 4 minutes assessing the severity of their problem. The most serious cases are seen first and the less serious often have to wait. On average, the wait time before being taken to the examination room is 24 minutes. In the examination room, a nurse spends about 9 minutes taking vitals and making notes on the patient's condition. The patient then waits for the doctor. This wait averages 15 minutes. Treatment times by the doctor average 30 minutes. Following treatment, patients wait 14 minutes for the nurse to come to discuss the post treatment instructions. It takes about 4 minutes to review with the patient these instructions before they leave. Considering any time spent interacting with a nurse or doctor as value-added time. What is the precent value-added time in a trip to the emergency room?
The percentage value-added time in a trip to the emergency room is 44.3%.
The total time for a trip to the emergency room comprises of waiting time, time with the triage nurse, examination room time, doctor’s treatment time and post-treatment time. The value-added time in a trip to the emergency room is the time spent with the triage nurse, examination room time, doctor’s treatment time and post-treatment time.
This excludes waiting time for the patient.According to the given data, wait time before seeing the triage nurse is 10 minutes. Time spent by the triage nurse is 4 minutes. The wait time before being taken to the examination room is 24 minutes. Time spent in the examination room is 9 minutes.
The average time a patient waits for the doctor is 15 minutes, and the average time a doctor takes for treatment is 30 minutes. The patient then waits 14 minutes for the nurse to come to discuss the post-treatment instructions. It takes about 4 minutes to review with the patient these instructions before they leave.
The time spent on value-added activities is calculated as follows:
Time spent with triage nurse + Examination room time + Doctor’s treatment time + Post-treatment time= 4 + 9 + 30 + 4 = 47 minutes
Total time of a trip to the emergency room = Time spent with triage nurse + wait time before the examination room + Examination room time + wait time for the doctor + Doctor’s treatment time + wait time for the nurse + Post-treatment time= 10 + 24 + 9 + 15 + 30 + 14 + 4 = 106 minutes
Therefore, the percentage of value-added time is given by;
Percent value-added time = (Value-added time/Total time) × 100= (47/106) × 100= 44.3%
Thus, the percentage value-added time in a trip to the emergency room is 44.3%.
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A large law firm uses an average of 10 packages of copier paper a day. Each package contains 500 sheets. The firm operates 260 days a year. Holding cost for the paper is $1 per year per package, and ordering cost is $10 per order. (10 points)
Hint: As the holding cost is annual, you need to convert the daily demand to annual demand
a) What order quantity would minimize total annual ordering and holding cost? (Round the final answer to the nearest whole number.)
b) Calculate the total annual inventory control cost using your order quantity from part a. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
c) Except for rounding, are annual ordering and holding costs equal at the EOQ?
d) The office manager is currently using an order quantity of 100 packages. The partners of the firm expect the office to be managed in a cost-efficient manner. Would you recommend that the office manager use the optimal order quantity instead of 100 packages? Hint: convert the daily demand to annual demand
e) If lead time is 3 days, calculate the Re-order point.
Rounding the total annual inventory control cost to 2 decimal places, it is approximately 227.16.
To find the order quantity that minimizes total annual ordering and holding cost, we can use the Economic Order Quantity (EOQ) formula. The EOQ formula is given by:
[tex]EOQ = √((2 * Demand * Ordering Cost) / Holding Cost)[/tex]
Here, the daily demand is 10 packages, so the annual demand is 10 * 260 = 2600 packages. The ordering cost is 10 and the holding cost is 1 per package per year.
Substituting these values into the formula:
[tex]EOQ = √((2 * 2600 * 10) / 1)[/tex]
[tex]= √(52000) ≈ 227.72[/tex]
Rounding the EOQ to the nearest whole number, the order quantity that minimizes total annual ordering and holding cost is approximately 228 packages.
b) To calculate the total annual inventory control cost using the order quantity from part a, we need to consider both the ordering cost and the holding cost.
Total annual ordering cost = (Annual Demand / EOQ) * Ordering Cost
[tex]= (2600 / 228) * 10 ≈ $113.16[/tex]
Total annual holding cost = (EOQ / 2) * Holding Cost
[tex]= (228 / 2) * 1 = 114[/tex]
Total annual inventory control cost = Total annual ordering cost + Total annual holding cost = 113.16 + 114
= 227.16
c) No, annual ordering and holding costs are not equal at the EOQ. The holding cost is calculated based on the average inventory level, while the ordering cost is based on the number of orders placed.
d) Yes, I would recommend that the office manager use the optimal order quantity of 228 packages instead of 100 packages. This will help minimize the total annual inventory control cost, which is more cost-efficient for the firm.
e) The re-order point is the level of inventory at which a new order should be placed to replenish the stock. It is calculated by multiplying the lead time by the daily demand.
Re-order point = Lead time * Daily demand
= 3 * 10
= 30 packages.
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