Answer:
It is wrong to use the same advertising message and it is right to delegate the pricing decisions to local managers who have wide experience.
Explanation:
First of all, it is strongly wrong to think that the advertising message that has been effective in the U.S. will suffice in Brazil and mostly due to the fact that every country has its very own culture and population that tend to see products in a very particular way depending on their beliefs and values. Once said that, the message in the adversiting campaign will have to be unique and made specilly for target customers in Brazil because they will find the product good or bad depending on the culture they rely on.
Secondly, it is also important to delegate the decisions about pricing strategy to managers who have local experience in the subject due to the fact that as said before target customers vary from country to country and even there from regions to regions too. Therefore that it is important to establish a price that feels comfortable to the people inside that economy and that will the make the value of the product high enough so the people will buy it, and for that it is necessary to have an experienced local manager who will understand his own people.
Adapting advertising messages and pricing strategies for the Brazilian market is crucial due to cultural differences, consumer behaviors, and local market conditions, which can greatly influence the success of a U.S. disposable diaper brand's entrance into the country.
The assumption that the advertising message effective in the United States will suffice in Brazil overlooks critical cultural differences and consumer behavior. Examples of advertising failures when not considering local culture have been numerous, indicating the importance of understanding and adapting marketing strategies for local audiences. Additionally, consumer preferences, legal regulations, and advertising standards can vary greatly across countries, posing potential issues both ethically and in terms of brand reception.
Pricing decisions are heavily dependent on local factors such as purchasing power, competition, taxation, and cost structure. Delegating these decisions to local managers without due consideration of the global brand strategy and economic variances can lead to inconsistencies, misaligned brand positioning, or missed profit opportunities.
Therefore, adaptations of both advertising messages and pricing strategies are crucial to address the various local market conditions and consumer expectations, align with ethical standards, and consequently ensure the success of the brand in the Brazilian market.
Situation 1 Bridgeport Cosmetics acquired 10% of the 184,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Martinez declared and paid $69,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $113,000 for the year. At December 31, the market price of Martinez Fashion was $14 per share.
Situation 2 Indigo, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 31,400 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $39,100 to all stockholders. On December 31, Seles reported a net income of $85,000 for the year.
Required:
1. Prepare all necessary journal entries in 2020 for both situations.
Answer:
Please see find the answer in the explanation!
Explanation:
Situation 1:
First entry:
Bridgeport acquired 10% of shares of Martinez Fashion, the double entry would reduce the cash of Bridgeport and increase the asset, see as follows:
Shares Dr $239200 (18400× $13)
Cash Cr $239200
On June 30, Martinez declared and paid $69400 cash to all stockholders, Bridgeport will be entitled to 10% of the declared and paid dividend, therefore, dividend income will have to be recorded as follows:
Cash/bank Dr $6940
Dividend Income Cr $6940
Situation 2:
Indigo Inc obtained significant influence over Seles corporation (making her an Associate). In a group situation, an associate is equity accounted and is recorded as an investment in the statement of financial position and is also entitled to the profits with the proportion of their ownership. First entry would be to record the associate as an investment, see as follows:
Investment in Associate Dr $84780
Bank/Cash Cr $84780
On june 15 Seles declared and paid cash dividend, Indigo Inc will be entitled to 30% of the dividend, see as follows:
Dividend income= $39100× 30%
Dividend income= $11730
Entry:
Cash/Bank Dr $11730
Dividend income Cr $11730
Unlike Bridgeport Corporation, Indigo Inc will be entitled to 30% of the reported net income as well. The entry is as follows;
Cash/Bank Dr $ 25500 ($85000× 30%)
Income Cr $ 25500
Describe the meaning and the components of a financial reporting system. Explain the budget process. Describe a budget contingency plan. Give an example of financial guidelines that ICBI should follow to successfully plan for finance management. Identify and describe at least 5 basic financial guidelines.
Answer:
Consider the following explanation
Explanation:
Financial Reporting System is the means of guidance by which the management team can have an idea about the financial standings in the near future or current state. usually with the help of an excel.
Budget Process
Processing of the required spending over a future time by each department inside a company with justifiable proof based on past spending and future inflation. It will presented to the top level and needs to approved to have a budget. Usually it will be have once a year in a detailed way and 5 year plan in a brief.
Budget Contingency plan
the best way to have a foolproof is to considered more than one financial ratio. The available ratios includes IRR, EBIT, EBITDA,P/E,ROCE,NPV. Based on the size of the company and the nature of the product, we should carefully select the ratios required.
i would suggest to refer IRR and EBITDA for ICBI, IRR should be 10% or more, which ensure the return of the investments done and combined with EBITDA 15% or above, this needs to be referred to have the knowledge about the profit which the ICBI will have before spending on the Interest,tax and depreciation.
5 Basic Financial guidelines.
1, Know all the costs, and record all, don't ignore any while budgeting
2. Have a standard rule, and never deviate
3. Keep check on the interest rate, and tax
4. Have a monitoring system on the spending, least a monthly report on the performance
5. Track your net worth, and see the performance and compare it with the market
The marginal product of labor is the:
a. additional amount of output that can be produced from hiring one more worker.
b. additional amount of inputs a firm demands based on a change in consumer demand for the output.
c. decreasing amount of output that can be produced from hiring one more worker.
d. value of production from the last worker hired.
e. additional amount of consumer goods that can be bought from an additional hour’s worth of work.
Answer:
Option (a) is correct.
Explanation:
The Marginal product of labor is defined as the extra units of output produced from hiring one more labor. The formula for marginal product of labor is as follows:
Change in output per unit change in labor:
[tex]MP_{L}=\frac{Change\ in\ o/p}{change\ in\ Labor}[/tex]
Graphically, the marginal product of labor is the slope of the production function for a particular firm and it is calculated by differentiating production function with respect to labor.
When multiple performance obligations exists in a contract, they should be accounted for as a single performance obligation when
the product is distinct within the contract.
determination cannot be made.
each service is interdependent and interrelated.
both performance obligations are distinct but interdependent.
Answer: each service is interdependent and interrelated.
Explanation:
An interdependent and interrelated service means the service cannot be separated, one cannot be said to have been concluded without concluding the other, invariably they will be accounted for as a single performance obligation.
The product cannot be distinct for a distinct product means the performance can be separated and it must be determinable for this an obligatory attribute of a contract.
A distinct performance obligation means it's not a multiple performance obligation.
Business-to-consumer companies are more likely to emphasize a ________ promotion strategy, while business-to-business companies are more likely to emphasize a ________ promotion strategy.
A) pull; pushB) push; pullC) pulse; pullD) blitz; pullE) push; blitz
Answer:
Letter A is correct. Pull; Push.
Explanation:
The pull strategy is most emphasized by business-to-consumer companies because it is used to attract consumers through intense marketing and advertising communication, whose primary goal is to create brand value through customer loyalty.
The push strategy is more commonly used in business-to-business as it means pushing and bringing the products or services to the customer, is a strategy that involves direct selling usually exposed to the potential customer in showrooms and involves negotiations with retailers for example, offering discounts and special conditions to sell your products at your points of sale.
B2C companies usually employ a pull promotion strategy, creating direct consumer demand. B2B companies often use a push strategy, where products are promoted along the supply chain. The correct answer is option A) pull; push
Business-to-consumer (companies) are more likely to emphasize a pull promotion strategy, where the aim is to attract consumers directly, often through methods that make the product appealing and easy for consumers to acquire, such as e-commerce platforms. This aligns with the modern trend of giving power to the consumers, allowing them to direct their demand toward manufacturers. On the other hand, business-to-business companies usually utilize a push promotion strategy, where products are pushed through the marketing channel from manufacturers to wholesalers, and then retailers. In this type of strategy, the goal is to create demand at the supplier or retailer level, pushing the products toward the end user through the supply chain.
1. The Cozy Company manufactures slippers and sells them at $ 10 a pair. Variable manufacturing cost is $ 5.75 a pair, and allocated fixed manufacturing cost is $ 1.75 a pair. It has enough idle capacity available to accept a one-time-only special order of 25,000 pairs of slippers at $ 7.50 a pair. Cozy will not incur any marketing costs as a result of the special order.
What would the effect on operating income be if the special order could be accepted without affecting normal sales:
(a) $0,
(b) $ 43,750 increase,
(c) $ 143,750 increase, or
(d) $ 187,500 increase?
Show your calculations.
The effect on operating income be if the special order could be accepted without affecting normal sales:(b) $ 43,750 increase.
Effect on operating incomeSales $187,500
(25,000×$ 7.50)
Less Variable manufacturing ($143,750)
(25,000× $ 5.75)
Net Income/(loss) $43,750
($187,500-$143,750)
Inconclusion the effect on operating income be if the special order could be accepted without affecting normal sales:(b) $ 43,750 increase.
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Upon accepting a special order of 25,000 pairs of slippers at $7.50 per pair, The Cozy Company would see an increase in operating income of $43,750. This is calculated by subtracting the additional variable costs from the special order revenue and noting that fixed costs and marketing costs do not change.
The question from The Cozy Company relates to evaluating the impact of accepting a special order on operating income. The company sells slippers for $10 per pair with variable manufacturing costs of $5.75 per pair and allocated fixed manufacturing costs of $1.75 per pair. For a special order of 25,000 pairs at $7.50 a pair, we need to compare the additional revenue from the special order against the additional variable costs of producing the slippers, since fixed costs remain unchanged and no marketing costs are incurred.
Special Order Revenue: 25,000 pairs x $7.50/pair = $187,500
Additional Variable Costs: 25,000 pairs x $5.75/pair = $143,750
Additional Operating Income: $187,500 - $143,750 = $43,750
Therefore, the effect on operating income if the special order is accepted would be an increase of $43,750.
Bourne Incorporated reports a cash balance at the end of the month of $2,395. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($76), an NSF check from a customer ($260), a customer’s note receivable collected by the bank ($1,000), and interest earned ($26).Required:Record the necessary entries the balance of cash. Transaction #1 record the entries that increase cash. Transaction #2 record the entries that decrease cash.
Answer:
Increase in Cash/bank = $1000+ $26 = $1026
Decrease in Cash/bank = $76+$260 = $336
Explanation:
The entries for each transaction is as follows:
1- Bank service charges:
Service charges exp Dr $76
Bank Cr $76
(Note: Bank has provided us with banking services, the charges of which is an expense for Bourne incorporated and the settlement of which will reduce our bank balance, a credit.)
2- NSF check from a customer:
Entry:
Acc receivable Dr $260
Bank Cr $260
(Note: A NSF check is a non-sufficient funds check which implies that the customer doesn't have sufficient funds to pay for whatsoever services rendered by us. Upon receipt of such a check we must have increased our bank and decreased our receivable but since it has been dishonored we need to reverse the entry by decreasing our bank and increasing our receivable balance until it's settled by the customer.)
3- Customer's note receivable collected by the bank:
Entry:
Bank Dr $1000
Receivable Cr $1000
(Note: Bank has received a note against a receivable which results in an increase in our bank balance and decrease in or respective customer account and/or receivable.)
4- Interest earned:
Entry:
Bank Dr $26
Interest income Cr $26
(Note: The money deposited by Bourne Incorporated has earned interest which by nature is an income for Bourne. So Bank is debited and interest income is credited to increase both bank and income simultaneously.)
Bourne Incorporated debits Cash by $1,000 and $26 for the notes receivable collected and the interest earned, respectively, and credits matching accounts. For the NSF check and the service fee, they debit respective expense and account receivable accounts by $260 and $76, respectively and credit Cash.
Explanation:In accounting, when Bourne Incorporated records its cash transactions, it must consider both increases and decreases in cash balance. Let's take a look at these transactions separately:
Entries that increase cash:For Bourne Incorporated, the cash transactions that increase their balance is the customer's note receivable collected by the bank. Thus, they would debit Cash by $1,000 and credit Notes Receivable by $1,000. Additionally, they earned $26 of interest, thus they would debit Cash by $26 and credit Interest Revenue by $26.
Entries that decrease cash:The bank service fees and the NSF check from a customer are cash transactions that decrease their balance. For the bank service fees of $76, they would debit Bank Service Expense by $76 and credit Cash by $76. For the NSF check, they would debit Accounts Receivable by $260 and credit Cash by $260.
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Being undecided on what to do with $100,000 just received on F's policy, decides to leave the proceeds on deposit with the insurer at interest. The rate being paid is 5%. In one year, what amount will be taxable?
Answer:
$5,000
Explanation:
If these are death benefit funds then it must be noted that tax is not applicable on the lump sum amount of death benefit but the interests paid on the amount left on deposit with the insurer is taxable. In simple terms, if dividends are left on deposit to earn interest then this interest is taxable!
Interest rate= 5%
Amount= $100,000
Tax= 0.05x100,000
Tax= $5,000
Bonita Cosmetics acquired 10% of the 218,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2017. On June 30, Martinez declared and paid $71,300 cash dividend to all stockholders. On December 31, Martinez reported net income of $118,000 for the year. At December 31, the market price of Martinez Fashion was $14 per share. Situation 2 Windsor, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 32,300 outstanding shares of common stock at a total cost of $8 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,200. On December 31, Seles reported a net income of $82,000 for the year.
Answer:
See explanation section
Explanation:
Req. A: Situation 1
Mar 18 Available for sale of stocks of MF Debit $283,400
Cash Credit $283,400
Note: As Bonita acquired 10% of Martinez shares at $13, total cash has to be paid to Martinez Fashion = (218,000*10%) × $13 = 21,800 shares × $13 = $283,400.
Jun 30 Cash Debit $7,130
Dividend Revenue Credit $7,130
Note: As Martinez declared $71,300 to all stockholders, Bonita will receive 10% of those dividends as they acquired 10% of the total stocks. The cash received from the MF is = $71,300 × 10% = $7,130.
Securities Fair Value
Dec 31 Adjustment Debit $21,800
Unrealized holding gain (loss)- Equity Credit $21,800
Note: As the market price of the share increased to $14-$13 = $1, Bonita would gain from the increased market price. Total gain = $1 × (218,000 shares × 10%) = $21,800.
Req. B Situation 2
Investment in Seles
Jan 1 Common stock of Seles Corp. Debit $77,520
Cash Credit $77,520
Note: As Windsor, Inc. obtained 30% of Martinez shares at $8, total cash has to be paid to Martinez Fashion = (32,300*30%) × $8 = 9,690 shares × $8 = $77,520.
Jun 15 Cash Debit $10,560
Dividend Revenue Credit $10,560
Note: As Seles declared $32,300 to all stockholders, Windsor, Inc. will receive 30% of those dividends as they acquired 30% of the total stocks. The cash received from the MF is = $32,300 × 30% = $10,560.
Investment in Seles
Dec 31 Cash Debit $24,600
Revenue Credit $24,600
Note: As Seles reported a net income of $82,000, due to acquiring 30% of Seles stock, Windsor, Inc. will receive 30% of its net income. The revenue is = $82,000 × 30% = $24,600.
Almora, a developing open economy, is experiencing an economic boom since it discovered oil reserves off its coast two years ago. Bill Hudson, an economist with the Finance Ministry of Almora, said in an interview that the oil boom has improved the average standard of living in the economy. Robin Peters is an industry analyst who does not agree with Hudson's view. In one of his recent articles in the country's leading business daily, Robin claimed that the high rate of inflation following the boom has actually weakened the expansionary impact on the economy.Which of the following, if true, will support Robin's argument?A.Employment in the country's oil industry reported an annual growth of 15 percent this year.B.The construction sector has expanded by 20 percent in the last two years.C.Almora reduced its petroleum imports this year.D.Almora's agriculture and manufacturing sectors have become less competitive in the world market.E.The government of Almora is expected to have a budget surplus of $2 billion in the current financial year.
Answer:D. Almora agriculture and manufacturing sectors have become less competitive in the world market.
Explanation:
In increased standard of living means the populace can afford more essential commodities, an expansionary economy means more investment which has lead to more employment. An inflation is the continuous rise in price of goods and services which is as a result of large volume of money in circulation used in exchange for the few available goods and services.
In the above scenario the huge revenue from the oil boom as surpassed the agriculture and manufacturing outputs and this has lead to increase in price and hitherto a fall in demand and which have made them less competitive.
The increase in employment in the oil industry and expansion of the construction industry are positive development. The surplus budget means goverments expected revenue is greater than is expenditures, this will invariably increase savings and threafter investment.
Suppose on January 1 Adam's Tavern prepaid rent of $ 20 comma 400 for the full year. At March 31, how much rent expense should be recorded for the period January 1 through March 31?
Answer:
$5,100
Explanation:
Assuming a constant monthly rent rate throughout the year, the amount that should be recorded as rent expense, per month, is:
[tex]M = \frac{\$20,400}{12}\\M=\$1.700[/tex]
From January 1st through March 31st there are three full months. Therefore, the amount that should be recorded is:
[tex]A = 3*\$1,700\\A = \$5,100[/tex]
With regard to the OIP,Multiple Choice
the composition of the optimal international portfolio is identical for all investors, regardless of home country.
the OIP has more return and less risk for all investors, regardless of home country.
the composition of the optimal international portfolio is identical for all investors of a particular country, whether or not they hedge their risk with currency futures contracts.
none of the options
Answer:
D: None of the options
Explanation:
All the three options are not true with regards to OIP
What is the difference between a callable bond and a convertible bond?
Explanation:Convertible bonds. Are corporate bonds that can be converted by the holder into the common stock of the issuing company.
Callable bonds. Called provision option held by the company to repurchase the bond at specific price. Is also called redeemable bonds, jump up etc. While most callable bonds are coupon bonds.
There are no big differences between the two, convertible bonds are often callable, eg corporate bonds can be convertible/callable or the both.
A callable bond is a bond that can be called back in by the issuer prior to maturity. For example, a 10 year bond issued today could be called back in 8 years.
A convertible bond is a bond that converts into the equity of the underlying company. For example, the bond of XYZ company can be converted into the stock of XYZ company under certain conditions.
A convertible bond has the advantage in that there is upside when the owner converts into stock.
Based on Modigliani and Miller's Propositions I and II in a perfect world without taxes nor distress costs, if the original unlevered firm value is $100 million and the CFO is planning to carry out a leveraged recapitalization to a debt equity ratio of 1:2. What’s the levered firm value? If the unlevered equity requires 11% annual return and the debt requires a 5% of annual return, what’s the required return for the levered equity? Please show all steps and equations.
Answer:
Consider the following calculations
Explanation:
Value of levered firm = Value of unlevered firm + debt*tax rate
As tax rate = 0
Value of levered firm = Value of unlevered firm =100m
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Levered cost of equity = 11+0.5*(11-5)*(1-0)
Levered cost of equity = 14
The levered firm value is the same as the unlevered firm value, which is $100 million. The required return for the levered equity is calculated to be 14% using MM Proposition II.
Based on Modigliani and Miller's Propositions I and II in a perfect world (no taxes or distress costs), the value of an unleveled firm remains constant irrespective of its debt-equity structure. Hence, the levered firm value is the same as the unlevered firm value, which is $100 million.
To determine the required return for the levered equity, we use the following formula based on MM Proposition II:
rE = rU + (rU − rD) × D/E
Where:
rE = Required return on levered equity
rU = Required return on unleveled equity = 11%
rD = Return on debt = 5%
D/E = Debt/Equity ratio = 1/2 = 0.5
Plugging in the values:
rE = 11% + (11% − 5%) × 0.5
rE = 11% + 6% × 0.5
rE = 11% + 3%
rE = 14%
Thus, the required return for the levered equity is 14%.
IE 11-1 ... AS/AD Model – Assume this economy has now moved from Year 3 back to Year 2 as a result of too much "monetary contraction" by the FED. With the Price Level having fallen to $1.90 and employment down to _______ million, the Nominal Production GDP will be only $3800 billion. In the PPF Model the economy will be at Point _________ ..
Answer:
110 million. Point U.
Explanation:
This economic system is referred to as a depression and it is a downturn that has occurred over a long period of time. It is a sustained downturn that is more worse than a recession. This normally affects the economic activities. In the economic system above, the employment decreased to 10 million while the economic system is at Point U.
Fighting Irish Incorporated pays its employees $3,640 every two weeks ($260/day). The current two-week pay period ends on December 28, 2018, and employees are paid $3,640. The next two-week pay period ends on January 11, 2019, and employees are paid $3,640.1. Record the adjusting entry on Dec. 31, 20182. Record the payment of salaries on Jan. 11, 20193. Calculate the 2018 year-end adjusted balance of Salaries Payable (assuming the balance of Salaries Payable before adjustment in 2018 is $0)
Answer:
1. Salaries expense A/c $780
To Salaries payable A/c $780
(Being adjusting salary is recorded)
2. Salaries expense A/c Dr $2,860 ($260 × 11 days)
Salary payable A/c Dr $780
To Cash A/c $3,640
(Being the payment is recorded)
3. $780
Explanation:
1. The adjusting entry is presented below:
Salaries expense A/c $780
To Salaries payable A/c $780
(Being adjusting salary is recorded)
The salaries expense is calculated below:
= Salary per day × number of days
= $260 × 3 days
= $780
The number of days is calculated from Dec 28 to Dec 31
2. The entry would be
Salaries expense A/c Dr $2,860 ($260 × 11 days)
Salary payable A/c Dr $780
To Cash A/c $3,640
(Being the payment is recorded)
3. The year-end adjusting balance would be
= Salaries Payable before adjustment + adjustment balance
= $0 + $780
= $780
As the owner of a small business, Sally would like to move the sale of her candles from storefronts to the Internet. Why is it possible for her to so easily make that move for the success of her business?a. The Internet and the World Wide Web are not for everyone. Small companies struggle to get started and move slower.b. The Internet and the World Wide Web allow almost anyone to be global, with two varying results: Small companies can get started more easily but move slower.c. The Internet and the World Wide Web allow almost anyone to be global, with two important results: Small companies can get started more easily and can maneuver faster.d. The Internet and the World Wide Web allow few to be global. Small companies struggle to get started but once started can maneuver faster.e. The Internet and the World Wide Web allow almost anyone to be global, with differing important results: Small companies struggle to get started yet, they can maneuver faster.
Answer:
The answer is: letter c. The Internet and the World Wide Web allow almost anyone to be global, with two important results: Small companies can get started more easily and can maneuver fast.
Explanation:
Sally, as a small business owner, would have an easier time to sell on the Internet and the World Wide Web because anyone can access it. This will make her online store more global since anyone can visit her site or can see her online advertisement.
For small business owners like her, it will be easier to display her items according to their own styles. This can also become readily available for anyone to buy. It will then allow her to maneuver fast because she can connect with her customers easily at the touch of her fingers.
Selling via Internet and the web will largely depend on her skill in advertising her products.
Thus, this explains the answer.
Answer:
C. The Internet and the World Wide Web allow almost anyone to be global, with two important results: Small companies can get started more easily and can maneuver faster
Explanation:
Internet is a global platform which allows people and businesses to connect with each other efficiently. If small businesses like Sally shift towards internet instead of store display, it would save her a lot of physical cost. She would be able to expose her candles to buyer from all around the globe due to increased access and visibility on the internet.
Her business would be expected to grow faster due to increased outreach around the globe.
Managers can monitor __________ to track progress toward goal achievement.a.action plans and their implementationb.proximal and distal goalsc.one-way and two-way evaluative techniquesd.framing and non-framing goalse.open-ended and close-ended techniques
Answer: (B) Proximal and distal goals
Explanation:
According to the given question, the proximal and the distal goals are basically monitor by the manager for the purpose of tracking the overall progress in terms of goal achievement.
The main objective of the proximal goal is that it is the short term goal with some specific and the detailed information. It motivate for increase in the productivity and receiving the feedback.
On the other hand, the distal goals is refers as the long term goals and it takes longer time for attain its specific tasks. The main benefit of the distal goals is that it helps in boost the self confidence.
Therefore, Option (B) is correct.
The Chief Marketing Officer of the Kimberly-Clark Company will be using a percentage of sales method to set the advertising budget for the year. Historically, the company uses 7% of sales for promoting their brand of toilet paper each year. Based on market data, the company estimates to achieve $2.8 million dollars in sales this coming year. What will their budget be for promoting the brand?
Answer:
The budget for promoting the brand
= 7% x $2.8 million
= $0.196 million
Explanation:
Since the budget for promoting the brand is estimated at 7% of sales, thus, the budget for promoting the brand is 7% x $2.8 million.
Final answer:
To calculate the advertising budget for Kimberly-Clark's brand of toilet paper using the percentage of sales method, multiply 7% by the estimated sales of $2.8 million, resulting in an advertising budget of $196,000 for the year.
Explanation:
The question at hand requires applying the percentage of sales method to calculate the advertising budget for a specific product within the Kimberly-Clark Company. With historical data indicating that the company spends 7% of its sales on advertising for their brand of toilet paper, and projected sales of $2.8 million for the upcoming year, the calculation is straightforward. By multiplying 7% (or 0.07 in decimal form) by the projected sales amount of $2.8 million, we can determine the advertising budget allocated for the brand.
Calculating this gives us: 0.07 x $2,800,000 = $196,000. Therefore, the budget for promoting the Kimberly-Clark brand of toilet paper will be $196,000 for the coming year.
Stockholders' equity is generally classified into two major categories:
a. contributed capital and appropriated capital.
b. appropriated capital and retained earnings.
c. retained earnings and unappropriated capital.
d. earned capital and contributed capital.
Answer:
d. earned capital and contributed capital.
Explanation:
The statement of stockholder's equity comprises common stock, preferred stock , and retained earnings.
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
And, the ending balance of the common stock = Beginning balance of common stock + issued shares
The contributed capital comprises of common stock and the preferred stock whereas the earned capital includes retained earnings
Stockholders' equity is classified into two major categories: contributed capital and retained earnings, corresponding to the money from share investments and reinvested profits, respectively.
Explanation:Stockholders' equity is typically divided into two major categories: contributed capital and retained earnings. Therefore, the correct answer is letter d: earned capital and contributed capital. Contributed capital represents the money that shareholders invest directly in the company by purchasing shares of stock, which can be described as a firm's claim on partial ownership divided into individual portions. Retained earnings, on the other hand, are the cumulative profits that a corporation has earned and reinvested in the business rather than paid out as dividends to shareholders. Retained earnings can be accumulated through several means, including early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock in the form of an initial public offering (IPO).
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Craig bought a new boat. He made a 18% down payment. He financed the rest through his bank for 4 years. His bank charged 4% per year compounded monthly and his monthly payments were $500. What was the original price of the boat?
Answer:
$27,005.62
Explanation:
Data provided in the question:
Down payment made = 18%
Monthly payment = $500
Interest rate, i = 4% per year compounded monthly
Time = 4 years
Now,
Present value of annuity = Monthly payment × [tex]\left[ \frac{1-(1+i)^{-n}}{i} \right][/tex]
n = number of periods
Here,
number of periods , n = 4 × 12 = 48 months
Interest rate per period, i = 0.04 ÷ 12 = 0.003333
on substituting the values
Present value of annuity = $500 × [tex]\left[ \frac{1-(1+0.003333)^{-48}}{ 0.003333 } \right][/tex]
or
Present value of annuity = $500 × [tex]\left[ \frac{1 - 1.003333^{-48}}{ 0.003333} \right] [/tex]
or
Present value of annuity = $500 × [tex]\left[ \frac{1 - 0.852384}{ 0.003333} \right][/tex]
or
Present value of annuity = $500 × 44.289229
or
Present value of annuity = $22,144.61
also,
Present value of annuity is (100% - Down payment) i.e (100% - 18%) 82% of the original price
Therefore,
Original price of the boat = $22,144.61 ÷ 82%
= $22,144.61 ÷ 0.82
= $27,005.62
The original price of Craig's boat is approximately $26,065.21.
Explanation:Craig's problem can be solved using the formula for an amortizing loan, which is expressed as:
PV = PMT / [(1 - (1 + r)^-n) / r]
, where PV is the loan amount, PMT is the monthly payment, r is the monthly interest rate, and n is the number of payments. Since Craig's monthly payment was $500 and the interest rate was 4% compounded monthly (hence, r=4/12/100=0.00333) for 4 years, or 48 months (hence, n=48). Substituting these values into the formula, we get the loan amount for the boat that Craig financed:
PV = $500 / [(1 - (1 + 0.00333)^-48) / 0.00333]
= $21,375.67. Remember, Craig made an 18% down payment, so the original price of the boat is the loan amount divided by 82% (100% - 18%) = $21,375.67 / 0.82 = $26,065.21.
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It is estimated that there are 34 deaths for every 10 million people who use airplanes. A company that sells flight insurance provides $100,000 in case of death in a plane crash. A policy can be purchased for $1. Calculate the expected value and thereby determine how much the insurance company can make over the long run for each policy that it sells.
Answer:
Explanation:
The probablility of having to pay a death claim on the policy is
[tex]\frac{34}{10,000,000}[/tex]
insurance companys loss = $1 - $100,000 = -$99,999
Consider the outcome in which there is no death claim on the policy.
1 − Probability of death claim = Probability of no death claim
1 - [tex]\frac{34}{10,000,000} = 0.9999966[/tex]
If the insurance company does not need to pay a death claim, its gain is:
Profit − Cost = Gain or Loss
The expected value is calculated by multiplying the gain or loss for each possible outcome by its probability, and then adding these products together.
-$99,999 [tex]\frac{34}{10,000,000}[/tex]+$1(0.9999966) = $0.66
Over the long run, the insurance company can expect to make $0.66 on each policy that it sells.
Final answer:
The expected value for each policy sold by the insurance company is $1,000,000.4, meaning that the insurance company can make approximately $1,000,000.4 for each policy sold.
Explanation:
To determine the expected value, we need to multiply the probability of each outcome by its associated value and sum them up. In this case, we have two outcomes: death and no death.
Since 34 out of 10 million people die, the probability of death is 34/10,000,000. The value associated with death is $100,000. The probability of no death is 1 - (34/10,000,000). The value associated with no death is $0.
The expected value is calculated as follows:
Expected Value = (Probability of death * Value of death) + (Probability of no death * Value of no death)
= (34/10,000,000 * $100,000) + (1 - (34/10,000,000) * $0)
= $3.4 + $999,997
= $1,000,000.4
Therefore, the expected value for each policy sold by the insurance company is $1,000,000.4. This means that over the long run, the insurance company can make approximately $1,000,000.4 for each policy sold.
The island country of Mauritius is small but has lowered its barriers for international trading partners. Its location in the Indian ocean is close to Madagascar and the African continent. Mauritius trades between countries close by, and larger countries such as India. How does Mauritius benefit from lowering its trading barriers?
1)
Workers and companies can now specialize in competitive areas because other goods and services are imported through international trade.
2)
Its economy produces all the goods and services the country requires and thus helps the local business grow.
3)
It maintains a very high standard of living because of the domestic dominance over other products and services.
Answer:
Workers and companies can now specialize in competitive areas because other goods and services are imported through international trade.
Explanation:
The countries trade through comparative advantage as they produce the goods in which they have a specialization in and exports them in exchange for goods in which they don't have a comparative advantage in.
Final answer:
Mauritius benefits from lowered trading barriers by allowing workers and companies to specialize, expanding market access beyond nearby countries to larger economies like India, and fostering economic growth through Special Economic Zones that offer tax advantages for international trade.
Explanation:
The island country of Mauritius benefits from lowering its trading barriers in several ways:
Workers and companies can specialize in areas where they have a competitive advantage, allowing other goods and services to be imported, which promotes economic efficiency.
By being open to international trade, Mauritius can tap into larger markets such as India, allowing for a diverse range of trade partnerships beyond nearby countries.
Mauritius has experienced above-average economic growth, significant due to its government-supported Special Economic Zones (SEZ), which offer tax advantages and encourage international trade.
Through policies like these, Mauritius has seen more economic opportunities and a reduction in the pressures that domestic firms might face if they only served a local market. This has culminated in overall growth and diversification of its economy.
Correct identification of the underlying root cause is the desired outcome of the ________________ approach to problem solving.
A. Cause-oriented
B. Symptom-oriented
C. Historical
D. Regression analysis
Answer:
Letter A is correct. Cause-oriented.
Explanation:
A cause-oriented approach to problem solving is a method characterized by focusing on the history of the problem and then thereafter finding the root cause that originated it.
It is a very effective method when used to find solutions to various organizational problems that are apparently unsolved.
In January, 2020, Yager Corporation purchased a mineral mine for $5,100,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $300,000 after the ore has been extracted. The company incurred $1,500,000 of development costs preparing the mine for production. During 2020, 600,000 tons were removed and 480,000 tons were sold. What is the amount of depletion that Yager should expense for 2020?
Yager Corporation should expense $1,890,000 for mineral depletion in 2020. This is calculated using the units of production method, where the depletion rate per ton is determined and then multiplied by the number of tons removed during the year.
Explanation:To calculate the amount of depletion expense for Yager Corporation for the year 2020, we need to apply the units of production method. This method allocates the cost of the natural resource based on the proportion of total estimated units extracted during the period.
The total cost of the mine less the residual value gives us the depletable cost basis:
Purchase price: $5,100,000Residual value: $300,000Development costs: $1,500,000Total depletable cost: ($5,100,000 - $300,000) + $1,500,000 = $6,300,000The depletion rate per ton is calculated by dividing the total depletable cost by the total estimated reserves:
Depletion rate per ton = $6,300,000 / 2,000,000 tons = $3.15 per ton
The depletion expense for the tons removed in 2020 is:
Depletion expense = 600,000 tons removed x $3.15 depletion rate per ton = $1,890,000
Therefore, Yager Corporation should expense $1,890,000 for mineral depletion in 2020.
In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $38 million (FIFO). CPS’s records indicated that the inventories would have totaled $28.6 million at December 31, 2020, if determined on an average cost basis. Required: 1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)
CPS Company changed its inventory valuation method, resulting in decrease of inventory value from $38 million to $28.6 million. To record this change, debit a loss on change in inventory valuation method by $9.4 million and credit inventory for the same amount, to reflect the new lower average cost basis.
Explanation:In this case, CPS Company is changing its inventory valuation method from the FIFO (First In First Out) method to the Average Cost method. This change resulted in a decrease in the value of the inventory from $38 million to $28.6 million. To record this change in the company's accounting system, we would need to make an adjustment entry.
Here is how to prepare the journal entry:
Debit a loss on change in inventory valuation method account by $9.4 million (which is the difference between the FIFO and average cost amounts). Credit inventory for the same amount, $9.4 million, thus reducing the inventory account to reflect the lower average cost basis.In journal entry form:
Loss on change in inventory valuation $9.4 million
To Inventory $9.4 million
This reflects the decrease in company’s assets due to valuation method change.
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On January 1, you sold one February maturity S&P 500 Index futures contract at a futures price of 2,422. If the futures price is 2,505 at contract maturity, what is your profit? The contract multiplier is $50. (Input the amount as positive value.)
Answer:
The loss will be $4,150.
Explanation:
As the investor sold S&P 500 futures contract, the investor has taken a short position in S&P 500 indexes.
At time of maturity, because the S&P index is higher than the future price ( 2,505 >2,422), the Investor has made a loss from the future contract.
The loss from the future contract is calculated as:
( S&P index at future maturity - S&P future price ) x contract multiplier = ( 2,422 - 2,505) x 50 = $(4,150)
Thus, the loss is $4,150.
All of the following are characteristics of long-run equilibrium for firms in a monopolistically competitive market except:
A. price equals marginal cost.
B. price equals average total cost.
C. price exceeds the minimum of average total cost.
D. marginal cost equals marginal revenue.
Answer:
C. price exceeds the minimum of average total cost.
Explanation:
In a monopolistic competitive market, the firm makes profit when MC (Marginal Cost) equals MR (Marginal Revenue). Price also equal average total cost.
Write a journal entry about your imagined investment. Answer the following questions as you write.
1. What stock did you buy?
Answer:
Common Stock $80,000 (debit)
Cash. $80,000 (credit)
Shares of an American Airline AAL
Explanation:
Imagined buying AAL shares
In a journal entry, the student imagined buying stock in an innovative tech company after researching using reputable sources and investment tools. They learned the value of portfolio diversification and utilized an online brokerage for the purchase, gaining insights into market dynamics and investment strategies.
Explanation:Journal Entry on Imagined InvestmentToday, I made the decision to buy shares of a company known for its innovative technology and potential for growth. After conducting comprehensive research through reliable sources such as Fortune, The Wall Street Journal, and Business Week, along with investment tools like Moody's and Standard & Poor's, I settled on purchasing the stock of XYZ tech company. I believe that the company's recent developments and expansion plans indicate a bright future, aligning with my strategy to invest in firms with products that cater to the future needs of consumers.
In the process, I learned the importance of diversifying a portfolio to mitigate risk. To purchase the stock, I utilized an online brokerage platform which allowed me to execute trades swiftly. While reflecting on my investment, I considered how fluctuations in stock prices can compare to those in housing markets, and the different types of risk associated with each investment.
Through this hypothetical exercise, I gained valuable insights into the dynamics of the stock market and the analytical skills needed to make informed decisions. My goal throughout this process has been to understand how to build a robust portfolio that thrives over time, taking into account various economic factors and market trends. This exploratory phase has been enriching, and it certainly adds a practical layer to my theoretical understanding of finance and investments.
A classified balance sheet:____________.A. Measures a company's ability to pay its bills on time. B. Organizes assets and liabilities into important subgroups that provide more information. C. Broadly groups items into assets, liabilities and equity. D. Reports operating, investing, and financing activities. E. Reports the effect of profit and dividends on retained earnings.
Answer:
The correct answer is B
Explanation:
Classified balance sheet is the one which provides or presents the information regarding the assets, shareholder's equity and the liabilities of the entity which is further segregated or classified into the sub- categories of the accounts.
The most common is the Long-term investments and Current Assets.
So, it organizes the assets and the liabilities into vital sub- groups which provide more information.