The required reserve ratio is the proportion of deposits that banks are mandated to keep in reserve, either in their vaults or with the central bank. required reserve ratio in this scenario is 1%.
The excess reserves are any reserves that exceed the required amount that banks maintain to ensure adequate liquidity in case of sudden deposit withdrawals.The solution to the given question can be calculated in the following way;First of all, we will calculate the excess reserves, which are defined as the portion of reserves that exceed the required level.
Therefore, Excess Reserves = Total Reserves - Required ReservesAlso,Excess Reserves = Deposits x Excess Reserve RatioUsing the information given in the problem, we can compute the excess reserves as follows:Excess Reserves = 900 × 1% = 9 million dollars
Total reserves = Excess Reserves + Required ReservesGiven that the excess reserves are 1% of the total deposits, the Required Reserve Ratio is obtained as follows:Required Reserve Ratio = Required Reserves / Deposits855 million dollars is the sum of all loans made by the banks.
Because banks must maintain a certain level of reserves, which can be expressed as a percentage of their deposits, the required reserve ratio is required. As a result, the required reserve ratio can be calculated as follows.Required Reserve Ratio = Required Reserves / Deposits9 million dollars is the excess reserves.Required Reserves = Total Reserves - Excess Reserves
Total Reserves = Excess Reserves + Required Reserves900 million dollars is the amount of deposits, so the equation can be rearranged to solve for the required reserve ratio.Required Reserve Ratio = Required Reserves / Deposits Required Reserves = Total Reserves - Excess ReservesRequired Reserves = (900 × 0.01) - 9 = 0.09 million dollars
Therefore, the Required Reserve Ratio = (0.09 million dollars) / (900 million dollars) = 0.01 = 1%Thus, the required reserve ratio in this scenario is 1%.
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Early in 2010, Maley Corporation engaged Reese, Inc. to design and construct a complete modernization of Maley's manufacturing facility. Construction was begun on June 1, 2010 and was completed on December 31, 2010. Maley made the following payments to Reese, Inc. during 2010:
Date Payment
June 1, 2010 $3,600,000
August 31, 2010 5,400,000
December 31, 2010 4,500,000
In order to help finance the construction, Maley issued the following during 2010:
1. $3,200,000 of 10-year, 9% bonds payable, issued at par on May 31, 2010, with interest payable annually on May 31.
2. 1,000,000 shares of no-par common stock, issued at $10 per share on October 1, 2010.
In addition to the 9% bonds payable, the only debt outstanding during 2010 was a $750,000, 12% note payable dated January 1, 2006 and due January 1, 2013, with interest payable annually on January 1.
Instructions
Compute the amounts of each of the following (show computations) BE CAREFUL OF DATES:
1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost.
2. Avoidable interest incurred during 2010.
3. Total amount of interest cost to be capitalized during 2010.
4. Make all necessary journal entries required for this question.
1. Weighted-average accumulated expenditures is $6,685,714.29 (rounded to $6,685,714)
2. Avoidable interest incurred during 2010 is $802,285.68 (rounded to $802,286)
3. Avoidable interest incurred during 2010 is $802,286
4. The journal entries is as prepared below:
How did we get the values?To compute the required amounts and make the necessary journal entries, follow the given information and apply the relevant formulas.
1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost:
The weighted-average accumulated expenditures represent the average amount of funds invested in the construction project on which interest costs can be capitalized. To calculate this, determine the average balance of accumulated expenditures over the construction period.
Calculation:
Accumulated Expenditures on June 1, 2010 = $3,600,000
Accumulated Expenditures on August 31, 2010 = $3,600,000 + $5,400,000 = $9,000,000
Accumulated Expenditures on December 31, 2010 = $9,000,000 + $4,500,000 = $13,500,000
Number of Months from June 1, 2010, to August 31, 2010 = 3 months
Number of Months from September 1, 2010, to December 31, 2010 = 4 months
Weighted-average accumulated expenditures = [(Accumulated Expenditures on June 1, 2010 × Number of Months) + (Accumulated Expenditures on August 31, 2010 × Number of Months)] / Total Months
Weighted-average accumulated expenditures = [($3,600,000 × 3) + ($9,000,000 × 4)] / 7
Weighted-average accumulated expenditures = ($10,800,000 + $36,000,000) / 7
Weighted-average accumulated expenditures = $46,800,000 / 7
Weighted-average accumulated expenditures = $6,685,714.29 (rounded to $6,685,714)
2. Avoidable interest incurred during 2010:
Avoidable interest is the amount of interest that could have been avoided if funds were not borrowed for the construction. To calculate this, we need to determine the weighted-average accumulated expenditures and multiply it by the appropriate interest rate.
Calculation:
Weighted-average accumulated expenditures = $6,685,714 (from the previous calculation)
Interest rate = 12% (since the only debt outstanding is the $750,000, 12% note payable)
Avoidable interest incurred during 2010 = Weighted-average accumulated expenditures × Interest rate
Avoidable interest incurred during 2010 = $6,685,714 × 12%
Avoidable interest incurred during 2010 = $802,285.68 (rounded to $802,286)
3. Total amount of interest cost to be capitalized during 2010:
The total amount of interest cost to be capitalized is the sum of avoidable interest incurred during the period.
Calculation:
Total interest cost to be capitalized during 2010 = Avoidable interest incurred during 2010 = $802,286
4. Journal Entries:
a) To record the payment on June 1, 2010:
Debit: Construction in Progress $3,600,000
Credit: Cash $3,600,000
b) To record the payment on August 31, 2010:
Debit: Construction in Progress $5,400,000
Credit: Cash $5,400,000
c) To record the payment on December 31, 2010:
Debit: Construction in Progress $4,500,000
Credit: Cash $4,500,000
d) To record the issuance of bonds on May 31, 2010:
Debit: Cash $3,200,000
Credit: Bonds Payable $3,200,000
e) To record the issuance of common stock on October 1, 2010:
Debit: Cash $10,000,000
Credit: Common Stock $10,000,000
f) To record the payment of interest on the note payable on January 1, 2010:
Debit: Interest Expense $90,000
Credit: Note Payable $90,000
g) To record the capitalization of interest cost on December 31, 2010:
Debit: Construction in Progress $802,286
Credit: Interest Expense $802,286
These journal entries reflect the debit and credit transactions for each entry, providing a clear representation of the accounting effects of the respective events and transactions.
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An investor is considering an investment that will pay $2,300 at the end of each year for the next 10 years. He expects to earn a return of 12 percent on his investment, compounded annually. Required: a. How much should he pay today for the investment? b. How much should he pay if the investment returns are received at the beginning of each year? eBook (For all requirements, do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) a. Present value of ordinary annuity b. Present value of annuity due
a. The investor should pay $14,558 today for the investment.
b. The investor should pay $15,579 if the investment returns are received at the beginning of each year.
a. What is the present value of the investment if paid at the end of each year?b. How much should be paid for the investment if returns are received at the beginning of each year?The main answer to the first question is that the investor should pay $14,558 today for the investment. This calculation involves determining the present value of an ordinary annuity. In this case, the annuity consists of annual payments of $2,300 for a period of 10 years and a required return of 12 percent, compounded annually. To calculate the present value, the formula used is: PV = PMT × [(1 - (1 + r)^(-n)) / r], where PV is the present value, PMT is the payment per period, r is the interest rate per period, and n is the number of periods. Plugging in the given values, we find that the present value is $14,558.
The main answer to the second question is that the investor should pay $15,579 if the investment returns are received at the beginning of each year. This calculation involves determining the present value of an annuity due. An annuity due is similar to an ordinary annuity, but the payments are received at the beginning of each period instead of at the end. The formula used to calculate the present value of an annuity due is slightly modified: PV = PMT × [(1 - (1 + r)^(-n)) / r] × (1 + r). By applying this formula to the given values, we find that the present value of the annuity due is $15,579.
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Calculate the delta of an ATMS 6-month European call option over
a stock that does not pay dividends when the risk-free interest
rate is 10% per year and volatility 25% per year. What is the value
of
According to the question if N(0.0354) is approximately 0.5131, then 0.9614 * N(0.0354) is approximately 0.4941.
To calculate the delta [tex](\(\Delta\))[/tex] of an ATMS (At-the-Money Straddle) 6-month European call option, we need the risk-free interest rate [tex](\(r\))[/tex] and the volatility [tex](\(\sigma\)).[/tex]
Given:
Risk-free interest rate [tex](\(r\))[/tex] = 8% per year (0.08)
Volatility [tex](\(\sigma\))[/tex] = 20% per year (0.20)
Time to expiration [tex](\(T\))[/tex] = 0.5 years
Stock price [tex](\(S\))[/tex] = $50
Strike price [tex](\(K\))[/tex] = $55
To calculate the delta [tex](\(\Delta\))[/tex], we first need to calculate [tex]\(d_1\)[/tex] using the formula:
[tex]\[d_1 = \frac{{\ln\left(\frac{S}{K}\right) + \left(r + \frac{{\sigma^2}}{2}\right)T}}{{\sigma\sqrt{T}}}\][/tex]
Substituting the given values:
[tex]\[d_1 = \frac{{\ln\left(\frac{50}{55}\right) + \left(0.08 + \frac{{0.20^2}}{2}\right)0.5}}{{0.20\sqrt{0.5}}}\][/tex]
Simplifying the equation:
[tex]\[d_1 = \frac{{\ln(0.909) + (0.08 + 0.02)0.5}}{{0.20\sqrt{0.5}}}\] \\\\\\\d_1 = \frac{{-0.095 + 0.10}}{{0.20\sqrt{0.5}}}\]\\\\\d_1 = \frac{{0.005}}{{0.20\sqrt{0.5}}}\]\\\\\d_1 \approx 0.0354\][/tex]
Next, we can calculate the delta [tex](\(\Delta\))[/tex] using the formula:
[tex]\[\Delta = e^{-rT} \cdot N(d_1)\][/tex]
Substituting the given values:
[tex]\[\Delta = e^{-0.08 \cdot 0.5} \cdot N(0.0354)\][/tex]
Simplifying the equation:
[tex]\[\Delta = e^{-0.04} \cdot N(0.0354)\]\\\\\\Delta \approx 0.9614 \cdot N(0.0354)\][/tex]
Using the standard normal distribution table or a calculator, we can find the value of [tex]\(N(0.0354)\)[/tex] and multiply it by 0.9614 to obtain the final value of delta [tex](\(\Delta\)).[/tex]
0.9614 * N(0.0354) ≈ 0.9614 * 0.5131 ≈ 0.4941
Therefore, if N(0.0354) is approximately 0.5131, then 0.9614 * N(0.0354) is approximately 0.4941.
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This module discusses the budgeting process conducted in managerial accounting and how budgets are used.
Discuss all of the following and think about personal experience with the topics.
The key uses of a budget for an organization that you are a part of (manufacturing, service, nonprofit)
The ways that budgeting can be extended beyond an organization to your personal life
The best approach to making budget cuts across an organization
Budgeting is a crucial aspect of an organization that allows an entity to create a financial plan for a future period. This module discusses the budgeting process conducted in managerial accounting and how budgets are used.
A budget is used for planning, controlling, and evaluating financial performance in an organization. One of the key uses of a budget for an organization is that it helps in allocating financial resources efficiently and effectively. This ensures that the organization spends money on the activities that contribute the most to its success. Additionally, a budget provides a financial plan for an organization that aligns with its strategic goals. This helps in ensuring that the organization's resources are used to achieve the desired outcomes.
In conclusion, budgeting is a crucial aspect of an organization that allows an entity to create a financial plan for a future period. A budget is used for planning, controlling, and evaluating financial performance in an organization. Budgeting can be extended beyond an organization to personal life by creating a personal budget and setting financial goals that align with an individual's strategic plans. When making budget cuts across an organization, the best approach is to prioritize the essential activities and cut down on the non-essential activities.
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Choose five countries in which the heads of state (president, prime minister, etc.) are chosen by a vote of the people. In separate, bullet pointed format, list the countries and their requirements. Some countries will have more requirements than others.
The following are five countries in which the heads of state (president, prime minister, etc.) are elected by a vote of the people:IndiaIndia is the world's most populous democracy.
The president of India is the head of state, while the prime minister is the head of government. The president is elected by an electoral college comprising of elected members of the Indian Parliament and state legislatures. They must be a citizen of India and at least 35 years old to be elected president. The prime minister, on the other hand, is elected by the majority party in the Lok Sabha, which is the lower house of parliament.United States of AmericaThe president of the United States is the head of state and government.
FranceThe president of France is the head of state, while the prime minister is the head of government. The president is elected for a five-year term by direct universal suffrage. To become president, the candidate must be at least 18 years old and a French citizen. A candidate must also gather at least 500 sponsorships from elected officials or members of parliament.EgyptThe president of Egypt is elected for a six-year term. Candidates for the presidency must have Egyptian citizenship, be at least 40 years old, and have been born to parents who are both Egyptian.
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TRANSACTION ANALYSIS
Dallas Fire began operations on March 1, 2021, and completed these transactions during its first month:
a) Issued shares to shareholders in exchange for $50,000 cash.
b) Purchased office equipment for $2,500, paying $800 cash and agreeing to pay the rest in one month.
c) Rented office space and paid $1,200 for two months' rent in advance.
d) Purchased office supplies on credit for $50.
e) Completed services for a client on credit for $2,500.
Dallas Fire began operations on March 1, 2021, and completed the following transactions during its first month:
a) Issued shares to shareholders in exchange for $50,000 cash.
Effect of the transaction: There is an increase in both the assets and owner's equity by $50,000.
b) Purchased office equipment for $2,500, paying $800 cash and agreeing to pay the rest in one month.Effect of the transaction: There is a decrease in cash of $800 and an increase in office equipment by $2,500. Also, accounts payable increase by $1,700.
c) Rented office space and paid $1,200 for two months' rent in advance.Effect of the transaction: There is a decrease in cash of $1,200, and prepaid rent increases by the same amount.
d) Purchased office supplies on credit for $50.Effect of the transaction: There is no change in cash, and accounts payable increase by $50.
e) Completed services for a client on credit for $2,500.Effect of the transaction: There is an increase in accounts receivable by $2,500, and revenue also increases by the same amount. Hence, there is no effect on cash.
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You are provided with the following data:
Required reserve ratio = 7%
Currency in circulation = £750 billion
Checkable deposits = £910 billion
Excess reserves = £20 billion
Calculate the monetary base, currency deposit ratio and the money multiplier. Show all working. If the currency deposit ratio increases, does the money multiplier increase or decrease?
The correct answer are- the monetary base- £139.7 billion, the currency deposit ratio- 0.8242 and the money multiplier- 14.29. If the currency deposit ratio increases, the money multiplier decreases is the answer.
The monetary base, currency deposit ratio and money multiplier calculation:
Monetary base can be calculated as the sum of currency in circulation and total reserves.
Thus, the monetary base is calculated as below: Monetary base = Currency in circulation + Reserves= £750 billion + (Required reserve ratio * Checkable deposits)= £750 billion + (0.07 * £910 billion)= £139.7 billion
Currency deposit ratio is the ratio of currency in circulation to checkable deposits.
Currency deposit ratio = Currency in circulation / Checkable deposits= £750 billion / £910 billion= 0.8242
Money multiplier indicates the multiple by which the money supply can expand with every unit increase in monetary base.
Money multiplier = 1 / Reserve ratio= 1 / 0.07= 14.29
If the currency deposit ratio increases, the money multiplier decreases because the higher ratio indicates that a greater portion of money is being held in currency than in deposits, which in turn reduces the amount of checkable deposits and the size of the money multiplier.
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ABC plc has a quick (liquidity) ratio (receivables plus cash divided by payables) equal to two. The directors believe that the cash balance is too low and have decided to extend the company's payment terms to suppliers from one month to two months.
What would be the effect (if any) on the company's cash operating cycle and quick (liquidity) ratio?
Operating cycle will
A.increase
B. decrease
C. not change
Quick (liquidity) ratio will
D. increase
E. decrease
F. not change
Therefore, the effect on the company's cash operating cycle would be an increase, while the effect on the quick (liquidity) ratio would be no change.
Extending the payment terms to suppliers from one month to two months would have the following effects:
Operating cycle: A. Increase
The operating cycle is the time it takes for a company to convert its resources, such as inventory and receivables, into cash. By extending the payment terms to suppliers from one month to two months, the company effectively delays its cash outflows for a longer period. This means the company will take longer to convert its resources into cash, resulting in an increase in the operating cycle.
Quick (liquidity) ratio: F. Not change
The quick ratio, also known as the liquidity ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets (receivables plus cash) without relying on inventory. In this case, extending the payment terms to suppliers does not directly impact the quick ratio since it only considers receivables and cash relative to payables. The change in payment terms does not affect the current liquidity position of the company as measured by the quick ratio, as long as the receivables and cash balances remain the same.
Therefore, the effect on the company's cash operating cycle would be an increase, while the effect on the quick (liquidity) ratio would be no change.
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Which of the following is not true about managing project risks: Managing project risks is primarily responsibility of BAU staff. Managing project risks is one of the the responsibilities of project managers. Managing project risks is one of the responsibilities of organizational leaders. one of the responsibilities of project staff.
Managing project risks is not primarily the responsibility of BAU staff. One of the responsibilities of project staff is to manage project risks.
Risk management is a significant part of project management and is not the sole responsibility of BAU staff. Project managers, project staff, and organizational leaders all share responsibility for identifying, analyzing, and mitigating project risks.Managing project risks is one of the main responsibilities of project managers. They must work with their team members to identify potential risks, assess their impact, and develop strategies to minimize or mitigate them. Project managers are also in charge of creating a risk management plan and ensuring that it is implemented correctly. They must be proactive in monitoring the project for risks and making adjustments as necessary.Organizational leaders are responsible for overseeing the project and ensuring that it aligns with the organization's goals. They must also ensure that the project is adequately resourced and that the risks are being managed correctly. Leaders must provide guidance and support to the project team, as well as communicate any risks or issues to stakeholders.The project staff are also responsible for managing project risks. They are the ones who are working on the project and have an in-depth understanding of the risks that could arise. Staff members must report any risks to their manager and work collaboratively to develop strategies to manage them.In conclusion, managing project risks is not solely the responsibility of BAU staff. Project managers, organizational leaders, and project staff all share responsibility for identifying, analyzing, and mitigating project risks.
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Visit the Web sites for your state and local governments. Do some looking around and make a list of what services, information deliveries, and transaction processing they offer that you previously could handle only by visiting a physical building. at least 300 words
In the past, the government was seen as an entity that was notorious for bureaucratic red-tape and time-consuming processes, with many services and transactions requiring in-person visits. With technological advancement, however, there has been a shift towards a more streamlined and efficient delivery of government services.
The Internet has provided a platform for governments to deliver their services, provide information, and process transactions without the need for physical visits. In this regard, local governments across the United States have leveraged the Internet to provide citizens with a range of services and transaction processing, including the following:
1. Paying Taxes and Fines: One of the services that local governments have provided online is paying taxes and fines. Citizens can now pay their local taxes, fees, and fines online without the need to visit physical locations. This has made it easier and more convenient for citizens to make payments while also saving time.
2. Applying for Permits: Another service that has been made available online is the application process for permits. Citizens can now apply for permits such as building permits, parking permits, and business licenses online. This has eliminated the need for physical visits and has streamlined the application process.
3. Online Bill Pay: Local governments have also made it possible for citizens to pay their bills online. This service allows citizens to view their bills and make payments without the need for physical visits to government offices. This has made it easier for citizens to keep track of their bills and has also eliminated the need for paper bills.
4. Court Proceedings: Local governments have also made it possible for court proceedings to be conducted online. This includes the filing of cases, scheduling of hearings, and delivery of court documents. This has made the court process more accessible and efficient for citizens.
5. Information Services: Local governments have also provided online information services to citizens. This includes information on local government services, tax information, and community events. This has made it easier for citizens to access information and stay informed. Overall, the Internet has provided local governments with a platform to deliver services, process transactions, and provide information in a more streamlined and efficient manner. Citizens can now access government services without the need for physical visits, making it more convenient and saving them time.
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Torres Company accumulates the following summary data for the year ending December 31, 2020, for its Water Division, which it operates as a profit center: sales—$2,047,700 budget, $2,282,800 actual; variable costs—$1,015,700 budget, $1,048,500 actual; and controllable fixed costs—$295,000 budget, $304,900 actual.
Prepare a responsibility report for the Water Division for the year ending December 31, 2020.
The Water Division of Torres Company had actual sales of $2,282,800, actual variable costs of $1,048,500, and actual controllable fixed costs of $304,900, resulting in a profit contribution of $929,400 for the year ending December 31, 2020.
How did the Water Division of Torres Company perform in terms of sales and profitability in 2020?Responsibility Report
Water Division
Year Ending December 31, 2020
Sales:
Budget: $2,047,700
Actual: $2,282,800
Variable Costs:
Budget: $1,015,700
Actual: $1,048,500
Controllable Fixed Costs:
Budget: $295,000
Actual: $304,900
Profit Contribution:
Actual Sales - Actual Variable Costs - Actual Controllable Fixed Costs
Profit Contribution = $2,282,800 - $1,048,500 - $304,900
Profit Contribution = $929,400
Responsibility Report for the Water Division, Year Ending December 31, 2020:
Sales:
- Budget: $2,047,700
- Actual: $2,282,800
Variable Costs:
- Budget: $1,015,700
- Actual: $1,048,500
Controllable Fixed Costs:
- Budget: $295,000
- Actual: $304,900
Profit Contribution:
- Actual Sales: $2,282,800
- Actual Variable Costs: $1,048,500
- Actual Controllable Fixed Costs: $304,900
- Profit Contribution: $929,400
Please note that this responsibility report focuses on the sales, variable costs, controllable fixed costs, and profit contribution for the Water Division for the year ending December 31, 2020. Other financial and non-financial information may be included in a comprehensive report for a complete evaluation of the division's performance.
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Mafube Ltd is considering selling on credit and will require customers to pay within 90 days. The company has been selling on a cash basis up to now. The company expects to increase sales from 6 000 units to 8 000 units per month. The variable cost is R100 per unit and the selling price is R140 per unit. These will not change. Variable costs are payable in the same month as the sale. The cost of financing is 1% per month. Bad debts are expected to be zero as the company has only a few customers who have very strong credit ratings. The current date is 1 May 20x5 and cash receipts and sales occur at the end of each month. Set out the cash flows for the months of May, June, July and August. What is the NPV of changing its credit policy? If the company has an opening bank balance of R900 000, indicate the expected closing bank balance or overdraft financing required by the company over the next four months. (20 Marks)
The NPV of changing the credit policy is R73 100. The company will need to finance R320 000 in May and June and will have excess cash of R368 400 in July, R454 400 in August, and R483 200 at the end of August.
Mafube Ltd is considering a change in their credit policy. They currently sell on a cash basis, but want to move to selling on credit where customers will be required to pay within 90 days.
The company expects to increase sales from 6 000 to 8 000 units per month. The variable cost is R100 per unit and the selling price is R140 per unit. The company has no bad debts and variable costs are payable in the same month as the sale.
The cost of financing is 1% per month. The expected cash flows for May, June, July, and August are:
May cash receipts = R840 000,
cash payments = R600 000,
financing costs = R0;
June cash receipts = R1 120 000,
cash payments = R800 000,
financing costs = R5 600;
July cash receipts = R1 120 000,
cash payments = R800 000,
financing costs = R11 200;
August cash receipts = R1 120 000,
cash payments = R800 000,
financing costs = R16 800.
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Suppose that the government imposes a proportional labor tax, where agents have to pay TwN (and assume that T = 0) to government.
(a) Write down the budget constraint (BC) and show in a graph how the BC shifts after the labor tax is imposed.
(b) Does the slope of the BC change? Explain.
(a) The budget constraint shifts downward parallel to the original BC by the amount of the labor tax.
(b) No, the slope of the budget constraint does not change.
(a) The budget constraint (BC) can be written as C = (1 - Tw)N + Y, where C represents consumption, N represents labor supply, Y represents non-labor income, and Tw represents the labor tax rate. After the labor tax is imposed, the BC shifts downward parallel to the original BC by the amount of the tax (TwN), indicating a reduction in disposable income available for consumption.
In the graph, the BC shifts downward by the distance TwN along the N-axis, indicating a decrease in the maximum level of consumption given a specific level of labor supply. This shift represents the reduction in disposable income due to the labor tax.
(b) The slope of the BC does not change after the labor tax is imposed. The slope of the BC is determined by the relative prices of consumption (the marginal rate of substitution) and the wage rate (the opportunity cost of leisure). The labor tax does not directly affect these relative prices or the trade-off between consumption and leisure, so the slope of the BC remains unchanged. However, the intercept of the BC shifts due to the reduction in disposable income caused by the tax.
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The book value of equipment is equal to which of the following? On December 31, 2022, interest of $700 is owed on a bank loan that will not be paid until June 30, 2023. What is the necessary adjusting journal entry on December 31, 2022?
The book value of equipment is equal to its original cost less accumulated depreciation to date. The necessary adjusting journal entry on December 31, 2022, is given below:Interest expense: $700 Interest Payable: $700 (To record interest for six months)
To recognize the interest payable at December 31, 2022, the adjusting entry requires a debit to interest expense and a credit to interest payable. The accounting record for the bank loan, which accrues interest at an annual rate of 12%, has interest due on June 30, 2023, of $700.
The amount of interest due from January 1, 2022, to June 30, 2023, is six months, with $700 representing interest on that loan for six months. At December 31, 2022, the financial statements must show the interest accrued for six months that will not be paid until June 30, 2023, with an interest payable liability recorded in the books.
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Accounts receivable need not be confirmed if they are immaterial
to the financial statements? true or false
The given statement "Accounts receivable need not be confirmed if they are immaterial to the financial statements" is False because accounts receivable are an essential component of a company's financial reporting since they represent cash flow that is anticipated to be received in the future.
Accounts receivable refers to the sum of money that clients or customers owe to an organization. It is a part of the current assets of the organization and is classified as an account in the balance sheetAs a result, organizations are required to confirm their accounts receivable as a crucial component of their financial statements. The objective of confirming the accounts receivable is to check if they are accurate and that the organization has the necessary amount of cash flow on hand.
The reason for confirming the accounts receivable is to identify any discrepancies between the anticipated cash inflow and the actual cash inflow. If accounts receivable are immaterial to the financial statements, it does not imply that the organization should not confirm them. The organization must verify accounts receivable and any discrepancies found must be addressed accordingly.
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XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk.
The following exchange rates were in effect throughout the term of the loan:
January 1, 2019 US $1 = CDN $1.1500
December 31, 2019 US $1 = CDN $1.1490
December 31, 2020 US $1 = CDN $1.1485
December 31, 2021 US $1 = CDN $1.1483
December 31, 2022 US $1 = CDN $1.1487
The average rates in effect for 2019 and 2020 were as follows:
2019: US $1 = CDN $1.1493
2020: US $1 = CDN $1.1487
What is the amount of interest expense (in Canadian Dollars) recorded for 2019?
The amount of interest expense recorded for 2019 in Canadian Dollars is $287,250.
To calculate the interest expense for 2019, we need to determine the outstanding loan amount at the beginning of the year and multiply it by the interest rate. The loan amount is $5,000,000, and the interest rate is 5%.
The exchange rate on January 1, 2019, is US $1 = CDN $1.1500. Therefore, the outstanding loan amount in Canadian Dollars is $5,000,000 multiplied by 1.1500, which equals CDN $5,750,000.
To calculate the interest expense, we multiply the outstanding loan amount in Canadian Dollars by the interest rate: CDN $5,750,000 multiplied by 5% is CDN $287,500. However, we need to consider the average exchange rate for 2019, which is US $1 = CDN $1.1493.
Hence, the interest expense recorded for 2019 in Canadian Dollars is CDN $287,250 (CDN $287,500 divided by 1.1493).
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Shadee Corp. expects to sell 630 sun visors in May and 400 in June. Each visor sells for $25. Shadee's beginning and ending finished goods inventories for May are 70 and 45 units, respectively. Ending finished goods inventory for June will be 55 units. Required: 1. Determine Shadee's budgeted total sales for May and June.
Shadee Corp.'s budgeted total sales for May is $15,750, and for June is $10,000.
Available information:
Number of sun visors expected to be sold in May: 630Number of sun visors expected to be sold in June: 400Selling price per visor: $25Budgeted total sales for May:
Budgeted total sales for May = Number of units sold in May * Selling price per unitBudgeted total sales for May = 630 units * $25/unitBudgeted total sales for May = $15,750Therefore, Shadee Corp.'s budgeted total sales for May is $15,750.
Budgeted total sales for June:
Budgeted total sales for June = Number of units sold in June * Selling price per unitBudgeted total sales for June = 400 units * $25/unitBudgeted total sales for June = $10,000Therefore, Shadee Corp.'s budgeted total sales for June is $10,000.
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Provide an example for each of the following types of bias. Use newspaper clippings or magazine articles where possible.
Sampling bias
Measurement bias
Loaded questions
Leading questions
Response bias
Non-response bias
There are different types of bias. Some examples of these types of bias are the sampling bias, measurement bias, loaded questions, leading questions, response bias, and non-response bias. Each type of bias has its own characteristics and is used in different situations.
Below are the examples of each type of bias:
A sampling bias occurs when a sample is selected in a way that it does not represent the population. An example of this is when a survey of the views of Americans on healthcare is conducted but only the views of people from one political party are asked. This would produce a biased result as only the views of a small proportion of Americans are represented.
Measurement bias occurs when the way a question is phrased or the way a study is designed, affects the results. For example, a study designed to show that smoking is dangerous might include only people who already have lung cancer. This would produce a biased result, as it is not representative of the general population.
A loaded question is a question that is phrased in a way that is likely to elicit a particular response. An example of this is the question "Do you think it's okay to kill people who disagree with you?" This is a loaded question, as it implies that someone who disagrees with the respondent should be killed.
A leading question is a question that is phrased in a way that suggests a particular answer. For example, a pollster might ask, "Don't you think that the president's tax plan is unfair to the middle class?" This question suggests that the respondent should agree that the president's tax plan is unfair to the middle class.
Response bias Response bias occurs when people who respond to a survey or study are not representative of the population as a whole. For example, if a survey about job satisfaction is conducted online, it is likely that the people who respond are more likely to be those who are unhappy with their jobs, rather than those who are satisfied.
Non-response bias occurs when people who do not respond to a survey or study are not representative of the population as a whole. For example, if a survey about voting intentions is conducted but only those who are registered to vote are included, it is likely that the results will be biased as it does not represent the views of those who are not registered to vote.
The different types of bias are used in different situations and they affect the outcome of the study or survey conducted. It is important to be aware of the types of bias when conducting a survey or study to ensure that the results are representative of the population.
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Greetings ,
I need help with this question.
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
• 44 units at $56
• 74 units at $107
• 172 units at $79
Sales for the year totaled 273 units, leaving 17 units on hand at the end of the year.
Ending inventory using the LIFO method is:
1102
1183.31724
952
1819
The ending inventory using the LIFO method is $952. Option C
To determine the ending inventory using the LIFO (Last-In, First-Out) method, we assume that the most recently acquired units are sold first. In this case, we need to calculate the cost of the remaining 17 units.
Let's calculate the cost of each unit:
First, we have 172 units acquired at $79 per unit. The cost of these units is 172 * $79 = $13,588.
Next, we have 74 units acquired at $107 per unit. The cost of these units is 74 * $107 = $7,918.
Finally, we have 44 units acquired at $56 per unit. The cost of these units is 44 * $56 = $2,464.
Now, let's calculate the ending inventory using the LIFO method:
Since we assume that the most recently acquired units are sold first, the cost of the remaining 17 units will be based on the most recent purchase of 44 units at $56 per unit. Therefore, the cost of the remaining 17 units is 17 * $56 = $952.
Hence, the ending inventory using the LIFO method is $952.
Therefore, the correct answer is C) $952.
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QUESTION 1 Sales revenue is $750,200, actual manufacturing overhead is $120,500, allocated manufactuning overhead is $06,000; and cost of goods sold before adjustment is $380,800 What is the actual gr
Gross profit = Sales revenue - Cost of goods sold after adjustment= $750,200 - $366,300= $383,900Therefore, the actual gross profit is $383,900.
Given information: Sales revenue = $750,200Actual manufacturing overhead = $120,500Allocated manufacturing overhead = $106,000Cost of goods sold before adjustment = $380,800
We have to calculate the actual gross profit. Gross profit is calculated by subtracting the cost of goods sold from sales revenue. Then, we will subtract the actual manufacturing overhead from the obtained result to get the actual gross profit.
Let's calculate step by step. Cost of goods sold = $380,800Allocated manufacturing overhead = $106,000 Actual manufacturing overhead = $120,500Total manufacturing overhead = $106,000 + $120,500= $226,500Cost of goods sold after adjustment = $380,800 + $106,000 - $120,500= $366,300 Now, Gross profit = Sales revenue - Cost of goods sold after adjustment= $750,200 - $366,300= $383,900Therefore, the actual gross profit is $383,900.
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Give a brief example about the effect of social media on
customer service.
Social media has revolutionized customer service, enabling businesses to connect with their customers in new ways. It allows for quick and direct communication, leading to faster response times and enhanced customer satisfaction.
Social media platforms provide a convenient channel for customers to voice their concerns or ask questions, and companies can promptly respond, addressing their needs in real-time. This improves customer engagement and builds stronger relationships.
Additionally, social media platforms allow for public interactions, giving businesses an opportunity to showcase their excellent customer service and resolve issues transparently, which can have a positive impact on their brand reputation.
However, it's important for companies to have effective social media management strategies in place to monitor and respond to customer feedback consistently. Overall, social media has significantly influenced the customer service landscape, empowering both businesses and customers to engage in more efficient and satisfying interactions.
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Klump Co. uses a perpetual inventory system and had the following inventory transactions for the month of June.
Jun. 1 On hand, 50 units at $18 each, $900
Jun. 4 Purchases 115 units at $18.20 each, $2,093
Jun. 5 Sold 100 units
Jun. 10 Purchased 75 units at $18.25 each, $1,368.75
Jun. 24 Sold 40 units. The total cost of goods available for sale is $4,361.75
Jun. 30 On hand, 100 units
Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, the cost of goods sold for the month of June is:
A. $2,539.52
B. $2,544.35
C. $2,541.89
D. $2,555.00
The correct option is B, $2,544.35, which is the closest value to the calculated cost of goods sold using the Average Cost method
To calculate the cost of goods sold using the Average Cost method, we need to determine the average cost per unit at the time of each sale. Here's how it is calculated:
Calculate the total cost of goods available for sale:
$900 (50 units on hand on June 1) +
$2,093 (115 units purchased on June 4) +
$1,368.75 (75 units purchased on June 10) =
$4,361.75
Calculate the weighted average cost per unit:
The total cost of goods available for sale / Total units available for sale
$4,361.75 / (50 + 115 + 75) = $4,361.75 / 240 = $18.17479 per unit
Calculate the cost of goods sold for each sale:
$18.17479 (average cost per unit) * 100 (units sold on June 5) = $1,817.48
$18.17479 * 40 (units sold on June 24) = $726.99
Calculate the total cost of goods sold for the month of June:
$1,817.48 + $726.99 = $2,544.47
Therefore, the correct option is B, $2,544.35, which is the closest value to the calculated cost of goods sold using the Average Cost method.
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Zainab, is the Customer Service Manager at WestComm Corporation. She is complaining about the delays in implementing changes as every decision has to be approved by WestComm's Top Management. Specify WestComm's type of distribution of power.
WestComm Corporation has a centralized power distribution structure, which is why every decision must be approved by the top management before it is implemented. Zainab, the Customer Service Manager, is complaining about the delays in implementing changes because of this.
The power is mainly focused on the top management, as they are the ones who are responsible for making the decisions.The WestComm Corporation has a centralized power distribution structure. This means that all decisions must be approved by the top management before they are implemented. This has caused delays in implementing changes, as every decision must go through the top management first. The power is mainly focused on the top management, as they are responsible for making all of the decisions. This can be a good thing because it ensures that decisions are made with the best interests of the company in mind. However, it can also be a bad thing because it can cause delays and make it difficult for lower-level employees to make changes when they are needed. WestComm Corporation has a centralized power distribution structure, and all decisions must be approved by the top management before they are implemented. This has caused delays in implementing changes, but it ensures that decisions are made with the best interests of the company in mind.
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Wildhorse Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $214,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations I $249,000 199,000 76,000 || Division $200,000 192,000 63,000 $ (26,000) $ (55,000) ||| $504,000 $450,000 296,000 64,000 $144,000 IV Analysis reveals the following percentages of variable costs in each division. 249,000 50,000 $151,000 Cost of goods sold Selling and administrative expenses I (a) 74 % 39 || 88 % 60 ||| 79 % 51 IV 74 % 61 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) (a) Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin $ Division I $ Division II Prepare an incremental analysis concerning the possible discontinuance of Division I. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ Continue $ $ Eliminate $ $ Net Income Increase (Decrease) Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ Continue $ $ Eliminate $ tA $ Net Income Increase (Decrease) (b3) What course of action do you recommend for each division? Division I Division II > Prepare a columnar condensed income statement for Wildhorse Company, assuming Division II is eliminated. Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Cost of goods sold Selling and administrative Total variable costs $ | WILDHORSE COMPANY CVP Income Statement For the Quarter Ended March 31, 2022 Divisions $ ||| $ IV Contribution margin Fixed costs Cost of goods sold ◄ Selling and administrative Total fixed costs Income (loss) from operations $ $ Total
(a) The contribution margin for Divisions I and II is:Division I:Sales revenue - Cost of goods sold - Selling and administrative expenses= $249,000 - $199,000 - $76,000= $ (26,000)Division II:Sales revenue - Cost of goods sold - Selling and administrative expenses= $200,000 - $192,000 - $63,000= $ (55,000)
(b1) Incremental analysis concerning the possible discontinuance of Division I.Contribution margin= $ (26,000)Fixed costs= $50,000 + $151,000= $201,000Contribution margin - Fixed costs= $ (26,000) - $201,000= $ (227,000)Discontinuing Division I would result in an increase in net income by $227,000.(b2) Incremental analysis concerning the possible discontinuance of Division II.
Contribution margin= $ (55,000)Fixed costs= $296,000 + $64,000= $360,000Contribution margin - Fixed costs= $ (55,000) - $360,000= $ (415,000)Discontinuing Division II would result in an increase in net income by $415,000.(b3) Recommendation for each division:Discontinue Division II. It has a larger negative contribution margin than Division I.(c) Condensed income statement for Wildhorse Company, assuming Division II is eliminated.
Sales: Division I = $249,000; Division III = $504,000; Division IV = $144,000Total sales= $897,000Variable costs: Division I = $149,260; Division III = $371,840; Division IV = $106,960; Unavoidable cost = $92,000Total variable costs= $720,060
Contribution margin: Division I = $99,740; Division III = $132,160; Division IV = $37,040Total contribution margin= $269,940 Fixed costs: Division I = $100,000; Division III = $200,000; Division IV = $60,000; Unavoidable cost = $92,000
Total fixed costs= $452,000 Income (loss) from operations: Division I = $ (260); Division III = $ (67,840); Division IV = $ (22,960)Total income (loss) from operations= $ (91,060)Therefore, the condensed income statement for Wildhorse Company assuming Division II is eliminated is: |
WILDHORSE COMPANY CVP Income Statement For the Quarter Ended March 31, 2022 Divisions I ||| IV Total Sales $249,000 $504,000 $144,000 $897,000 Variable costs 149,260 371,840 106,960 720,060 Contribution margin 99,740 132,160 37,040 269,940 Fixed costs 100,000 200,000 60,000 452,000 Income (loss) from operations $ (260) $ (67,840) $ (22,960) $ (91,060)
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a. in cell e10, enter a formula that uses the sum function to total the regional sales data for the northeast region (the range b10:d10) to calculate the year-to-date sales.
To total the regional sales data for the northeast region (the range b10:d10) and calculate the year-to-date sales, use the SUM function to add up all of the sales for that region.
To do this, enter a formula in cell E10 that references the range B10:D10, which contains the sales data for the Northeast region. Here's how to do it:In cell E10, type the following formula: =SUM(B10:D10)This formula uses the SUM function to add up the sales data for the Northeast region, which is stored in cells B10, C10, and D10.
The result of this formula will be the total sales for the Northeast region, which represents the year-to-date sales for that region. Once you've entered the formula, press Enter on your keyboard to calculate the result.
The total sales for the Northeast region should now be displayed in cell E10.
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There are two periods, time 1 and time 2. Assume that the market rate of interest is 10%.
Suppose that a manager faces an operating plan for the transformation curve of 3.3K₁ + K₂ =
22 where K₁ is funds sold and utilised in time I and K2 is funds sold and utilised in time 2.
a. Solve the manager's maximization problem.
b. Graphically show the solution you obtain for part a.
The manager's maximization problem is solved by utilizing all funds in time 2 to achieve the maximum total funds sold and utilized.
a. To solve the manager's maximization problem, we need to set up the objective function and the constraints. The objective is to maximize the total funds sold and utilized, which can be represented as:
Maximize Z = K₁ + K₂
subject to the transformation curve constraint:
3.3K₁ + K₂ = 22
Considering the constraint, we can solve for one variable in terms of the other:
K₂ = 22 - 3.3K₁
Substituting this expression into the objective function, we have:
Z = K₁ + (22 - 3.3K₁)
Z = 22 - 2.3K₁
To maximize Z, we differentiate it with respect to K₁ and set the derivative equal to zero:
dZ/dK₁ = -2.3 = 0
Solving this equation, we find that K₁ = 0. This implies that all funds should be utilized in time 2 (K₂ = 22) to maximize the total funds sold and utilized.
b. Graphically, the solution obtained in part a can be represented as follows:
On the horizontal axis, we plot K₁ (funds sold and utilized in time 1), and on the vertical axis, we plot K₂ (funds sold and utilized in time 2). The transformation curve is represented by the equation 3.3K₁ + K₂ = 22.
Plotting this equation on the graph, we find that the curve is downward sloping. However, since K₁ = 0 maximizes the total funds sold and utilized, the solution lies at the point where K₁ = 0 and K₂ = 22. This point represents the maximum value of Z on the graph.
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Examine the concept cross-price elasticity and justify the
importance of this concept to business owners in the food
industry.
Cross-price elasticity of demand is a measure of how the quantity demanded of one product responds to a change in the price of another related product. It helps to understand the relationship between two goods and how changes in the price of one affect the demand for the other.
The formula for cross-price elasticity is:
Cross-price elasticity = (% change in quantity demanded of Good A) / (% change in price of Good B)
The importance of cross-price elasticity to business owners in the food industry is significant for several reasons:
1. Pricing Strategies: Cross-price elasticity provides insights into how changes in the price of one food product impact the demand for related products. By analyzing cross-price elasticities, businesses can determine the appropriate pricing strategies for their products. For example, if the cross-price elasticity between two substitute products is high, lowering the price of one product may attract customers from the other product, thereby increasing overall sales.
2. Product Differentiation: Understanding cross-price elasticities helps businesses identify substitutes and complements for their food products. By analyzing which products have high cross-price elasticities, businesses can adjust their marketing and product differentiation strategies to position their offerings more effectively in the market. They can also identify potential opportunities for product bundling or promotional activities that capitalize on the relationships between different food items.
3. Market Analysis and Expansion: Cross-price elasticity analysis provides valuable insights into market dynamics and competitive behavior. Businesses can assess the impact of pricing changes by competitors on their own product demand and adjust their strategies accordingly. It can also help identify new market segments or product categories with high cross-price elasticities, enabling businesses to expand their offerings or target specific consumer groups more effectively.
4. Revenue and Profit Optimization: By understanding cross-price elasticities, businesses can optimize their revenue and profit margins. They can determine the price levels and adjustments that maximize overall revenue, taking into account the interplay between different food products. Businesses can also identify opportunities for product differentiation or innovation based on the relationships between goods and their elasticities.
Overall, cross-price elasticity is a crucial concept for business owners in the food industry as it provides insights into pricing strategies, market analysis, product differentiation, and revenue optimization. By understanding the relationships between different food products and their price sensitivities, businesses can make informed decisions to stay competitive, attract customers, and maximize their profitability.
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TRUE/FALSE. a car company tests its safety features by crashing cars into barriers in its testing facility the cars are the same size and shape but are moving at different speeds rank them
The statement "a car company tests its safety features by crashing cars into barriers in its testing facility the cars are the same size and shape but are moving at different speeds rank them" is false because its testing facility would not rank them solely based on their size and shape.
Instead, the cars would be ranked based on their performance in crash tests, which involve evaluating their ability to protect occupants and mitigate injuries in various impact scenarios.
Crash tests conducted by car manufacturers typically involve standardized procedures, such as frontal impact, side impact, and rollover tests.
These tests assess factors such as structural integrity, airbag effectiveness, seatbelt performance, and overall crashworthiness. The cars are subjected to controlled collisions at different speeds to simulate real-world scenarios and measure their crash performance.
Ranking the cars based on their crash test results allows the car company to identify which models provide better protection and safety features. The results help inform improvements in vehicle design, engineering, and safety technology to enhance occupant safety in future models.
In conclusion, when a car company tests its safety features by crashing cars into barriers, the cars are evaluated and ranked based on their performance in standardized crash tests, not solely on their size and shape.
This approach ensures that safety features are rigorously tested and vehicles are designed to provide optimal protection for occupants in real-world crash scenarios.
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ABC Company had the following inventory transactions during the year: Purchases: Date Comment # of Units Unit Cost Jan 1 Beg. Inventory 107 $13.00 Apr 14 Purchase 410 $14.00 Sep 30 Purchase 660 $15.00 Sales: Date Comment # of Units Sold Jan 15 Sale 86 Apr 15 Sale 340 Oct 27 Sale 610 Required: Show all supporting calculations and label your answers clearly. a) Calculate the cost of goods sold and ending inventory values assuming a perpetual inventory system and a FIFO cost flow assumption. b) Calculate the cost of goods sold and ending inventory values assuming a perpetual inventory system and a moving weighted average cost flow assumption.
a) In step 1 the cost of goods sold (COGS) using the FIFO cost flow assumption is $13,522.00.
step 2 the ending inventory value using the FIFO cost flow assumption is $15,640.00.
b) In step 1 the cost of goods sold (COGS) using the moving weighted average cost flow assumption is approximately $12,594.20.
step 2 the ending inventory value using the moving weighted average cost flow assumption is $14,766.00.
To calculate the cost of goods sold (COGS) and ending inventory values using the FIFO (First-In, First-Out) cost flow assumption, we need to follow the order in which the inventory was purchased. Let's calculate it step by step.
a) FIFO Cost Flow Assumption:
Step 1: Calculate the cost of goods sold (COGS):
Jan 15 Sale:
- We use the units from the beginning inventory first, which were purchased at $13.00 per unit.
COGS = 86 units * $13.00 per unit = $1,118.00
Apr 15 Sale:
- We still have units remaining from the beginning inventory, so we use those first.
COGS = COGS from Jan 15 + (340 units - 86 units) * $13.00 per unit = $1,118.00 + 254 units * $13.00 per unit = $4,322.00
Oct 27 Sale:
- All units from the beginning inventory have been sold, so we move to the next purchase.
COGS = COGS from Apr 15 + 610 units * $14.00 per unit = $4,322.00 + 610 units * $14.00 per unit = $13,522.00
Therefore, the cost of goods sold (COGS) using the FIFO cost flow assumption is $13,522.00.
Step 2: Calculate the ending inventory value:
To calculate the ending inventory value, we need to determine the remaining units and their respective costs.
Remaining units:
- Apr 14 Purchase: 410 units
- Sep 30 Purchase: 660 units
Ending inventory = Remaining units * Unit Cost
Ending inventory = (410 units * $14.00 per unit) + (660 units * $15.00 per unit)
Ending inventory = $5,740.00 + $9,900.00
Ending inventory = $15,640.00
Therefore, the ending inventory value using the FIFO cost flow assumption is $15,640.00.
b) Moving Weighted Average Cost Flow Assumption:
In a moving weighted average cost flow assumption, the cost per unit is recalculated after each purchase based on the weighted average of the previous and current costs.
Step 1: Calculate the cost of goods sold (COGS):
Jan 15 Sale:
COGS = 86 units * $13.00 per unit = $1,118.00
Apr 15 Sale:
COGS = COGS from Jan 15 + (340 units - 86 units) * Average Cost
To calculate the average cost:
Average Cost = [(Beginning Inventory Units * Beginning Inventory Cost) + (Purchase Units * Purchase Cost)] / Total Units
Average Cost = [(107 units * $13.00 per unit) + (410 units * $14.00 per unit)] / (107 units + 410 units)
Average Cost = ($1,391.00 + $5,740.00) / 517 units
Average Cost = $7,131.00 / 517 units ≈ $13.80 per unit
COGS = $1,118.00 + (254 units * $13.80 per unit) ≈ $4,031.20
Oct 27 Sale:
COGS = COGS from Apr 15 + 610 units * Average Cost
COGS = $4,031.20 + 610 units * $13.80 per unit = $12,594.20
Therefore, the cost of goods sold (COGS) using the moving weighted average cost flow assumption is approximately $12,594.20.
Step 2: Calculate the ending inventory value:
To calculate the ending inventory value, we use
the weighted average cost.
Ending inventory = Remaining units * Average Cost
Ending inventory = (410 units * $13.80 per unit) + (660 units * $13.80 per unit)
Ending inventory = $5,658.00 + $9,108.00
Ending inventory = $14,766.00
Therefore, the ending inventory value using the moving weighted average cost flow assumption is $14,766.00.
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In the kinked demand model of oligopoly firms
O face a demand which is less elastic above than below the current price
O face the downward sloping market demand
O face a demand which is more elastic above than below the current price
O none of these answers is correct
O face a demand which is more elastic than the market demand
In the kinked demand model of oligopoly, firms face a demand that is less elastic above the current price compared to below the current price. So, the first option is correct.
This means that the demand curve is kinked, or has a bend, at the current price level. The kinked demand curve assumes that rival firms will match price decreases but not price increases.
The reasoning behind this model is that when a firm lowers its price, it expects competitors to follow suit to maintain their market share. As a result, the demand for the firm's product becomes more elastic, meaning that a price decrease leads to a proportionally larger increase in quantity demanded.
On the other hand, if the firm increases its price, it anticipates that rivals will not match the price increase, causing the demand to become less elastic. This implies that a price increase results in a smaller decrease in quantity demanded.
Overall, the kinked demand model reflects the idea that in an oligopolistic market, firms face asymmetric demand responses to price changes.
The less elastic demand curve above the current price reinforces the notion that oligopolistic firms often engage in price stability, as attempting to raise prices may lead to a significant loss in market share.
So, the first option is correct.
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