The special order will result in an increase in income of $12,000. The cost calculation only considers the variable manufacturing costs since they change with production level. Fixed costs were not considered because they do not depend on the level of output.
Explanation:The special order should result in an increase in income, not a decrease. To calculate this, consider only the variable costs tied to production. When calculating the actual cost for making the IT-54, ignore the fixed costs since they do not change with the level of output. Here, variable manufacturing cost per unit is calculated by dividing total variable manufacturing cost by the number of units which is $288,000/24,000 = $12. Now, if we sell it for $16, the contribution margin per unit becomes $16 - $12 = $4. Since Rhythm Company wants to buy 3,000 units, the increase in income will be $4 * 3,000 = $12,000.
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Bryant Co. reports net income of $20,000. For the year, depreciation expense is $7,000 and the company reports a gain of $3,000 from sale of machinery. It also had a $2,000 loss from retirement of notes. Compute cash flows from operations using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
$26,000
Explanation:
Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income
The computation of the cash flows from operations is shown below:
Cash flow from Operating activities
Net income $20,000
Adjustments made:
Add: Depreciation expense $7,000
Less: Gain on sale of machinery - $3,000
Add: Loss from the retirement of notes $2,000
Net Cash flow from Operating activities $26,000
Using the indirect method, Bryant Co.'s cash flow from operations is calculated by adjusting the net income with non-cash expenses and non-operating gains and losses. After calculating, the cash flow from operations is $26,000.
Explanation:The indirect method for calculating cash flows from operating activities starts with the net income and then adds or subtracts items to adjust to the cash amount. To compute cash flows from operations for Bryant Co., we start with a net income of $20,000. Then we add back depreciation expense, which is a non-cash expense, for $7,000. We then subtract the gain on the sale of machinery for $3,000 because it's a non-operating activity. Finally, we add back the loss from the retirement of notes because it's a non-cash loss. This gives us a total cash flow from operations of $26,000. Therefore, Bryant Co.'s operating cash flow, using the indirect method, is $26,000.
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If an investor owns less than 20% of the common stock of another corporation as an investment.
a. it is presumed that the investor has relatively little influence on the investee.
b. no dividends can be expected.
c. it is presumed that the investor has significant influence on the investee.
d. the equity method of accounting for the investment should be employed.
Answer:
The correct answer is letter "A": it is presumed that the investor has relatively little influence on the investee.
Explanation:
According to the United States Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standard (IFRS), investments between 20% and 50% of the voting stock of a different company are considered minority. Minority appears as noncurrent assets on the balance sheet.
Then, if an investor has less than 20% of the common stock of another company, it implies that investor has few to no influence on the investee.
The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity: Sales revenue $352,000 Variable costs: Cost of goods sold 282,000 Sales commissions 32,000 Fixed operating costs 92,000 If 80% of the fixed operating costs are avoidable, should the Boot Department be closed?A. Yes, Omaha would be better off by $35,600. B. Yes, Omaha would be better off by $54,000. C. No, Omaha would be worse off by $19,600. D. No, Omaha would be worse off by $38,000 E. None of the answers is correct.
We calculated that the store would be better off by $93,200 if the Boot Department were closed, so E: none of the answers is correct.
Explanation:To determine whether the Omaha Department Store should close the Boot Department, we use a series of equations to calculate the net contribution. First, let's calculate the contribution margin, which is the sales revenue minus the variable costs ($352,000 - $282,000 - $32,000) = $38,000. Next, let's determine the avoidable fixed costs, which are the fixed costs that will not be incurred if the Boot Department is closed. Here, 80% of the fixed operating costs are avoidable ($92,000 * 0.80) = $73,600. The net contribution, then, is our contribution margin plus the avoidable fixed costs. Here, that adds up to $111,600. This amount outweighs the unavoidable fixed costs (20% of $92,000) = $18,400. This would imply that the Omaha Department Store would be better off by $93,200 (net contribution minus unavoidable fixed costs) if the Boot Department were closed. Hence, exception E, none of the answers is correct.
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Who is responsible for announcing StartEx and EndEx during an operations-based exercise?
Answer:
The senior controller is responsible for announcing StartEx and EndEx during an operations-based exercise.
Final answer:
The Exercise Director is usually responsible for announcing StartEx (start of the exercise) and EndEx (end of the exercise) in operations-based exercises. These announcements mark the official beginning and end of the scenario for the participants.
Explanation:
The individual responsible for announcing StartEx and EndEx during an operations-based exercise is typically the Exercise Director or the person in charge of the exercise control. StartEx marks the beginning of the exercise scenario, signaling to all participants that the exercise has commenced. EndEx is the announcement that signifies the end of the exercise, indicating to participants that the scenario has concluded and the operations should cease. It is very important for the smooth execution of the exercise that these announcements are clearly communicated to ensure that all participants are aware of the start and end times, allowing for accurate evaluation and feedback.
Dana has a portfolio of 8 securities, each with a market value of $5,000. The current beta of the portfolio is 1.28 and the beta of the riskiest security is 1.75. Dana wishes to reduce her portfolio beta to 1.15 by selling the riskiest security and replacing it with another security with a lower beta. What must be the beta of the replacement security? a. 1.21 b. 0.91 c. 0.73 d. 1.62
Answer:
Option c. 0.73
Explanation:
Data provided in the question:
Market value of securities = $5,000
Current beta of the portfolio = 1.28
Beta of the riskiest security = 1.75
Required beta = 1.15
Now,
let the beta of the other security be 'x'
Portfolio beta = weighted average of individual betas in the portfolio
or
1.28 × 8 × $5000 = [ x × (8 - 1) × $5000 ] + [ 1.75 × $5000 ]
or
$51,200 = $35,000x + $8750
or
$35,000x = $42,450
or
x = 1.21
Thus,
If she wishes to reduce the beta to 1.15, by replacing the riskiest security,
let the beta of the replacement security be 'y'
Therefore,
1.15 × 8 × $5000 = [ 1.21 × (8 - 1 ) × $5000 ] + [ y × $5000 ]
or
$46,000 = $42,350 + $5,000y
or
$5,000y = $3,650
or
y = 0.73
Hence,
Option c. 0.73
Suppose a firm has two types of customers but cannot tell which type of buyer a customer is before a purchase is made. One group of customers has an inverse demand of P = 100 – 10Q, while another group of customers has an inverse demand curve of P = 110 – 22.5Q. If the firm wanted to use a quantity discount pricing scheme, what prices should it set? Assume that the marginal cost of production is constant at $20.
A) The firm could charge $65 per unit for any quantity purchased or $60 per unit if buying 4 or more units.
B) The firm could charge $50 per unit for any quantity purchased or $40 per unit if buying 8 or more units.
C) The firm could charge $25 per unit for any quantity purchased or $20 per unit if buying 2 or more units.
D) The firm could charge $85 per unit for any quantity purchased or $75 per unit if buying 6 or more units.
I know the answer is A but do not understand how to get there. thanks!
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Libre, Inc. has experienced bad debt losses of 5% of credit sales in prior periods At the end of the year, the balance of Accounts Receivable is $121,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,550 Net credit sales during the year were $192,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year? Multiple Choice $6,050 $9100 $9,600
Answer:
debit Bad debt Expense = $9,600
so correct option is $9,600
Explanation:
given data
bad debt losses = 5%
Accounts Receivable = $121,000
unadjusted credit balance = $1,550
Net credit sales = $192,000
to find out
estimated Bad Debt Expense for the year
solution
first we get here Bad debt expense by percentage of credit sales method that is
Bad debt expense = credit Sales × percentage of bad debt losses
Bad debt expense = $192,000 × 5%
Bad debt expense = $9,600
so here we can say $9,600 will be recorded as
debit Bad debt Expense = $9,600
and credit Allowance for doubtful debts = $9,600
so here revised balance in Allowance for doubtful debts is $9,600 + $1,550 = $11150
so correct option is $9,600
Taco Casa is considering installing touch screen terminals for patrons to place their food orders. A terminal can typically accommodate the placement of 15 orders each hour while a human can process 20 orders each hour. If employee costs are $7.50/hour in wages and $4.50/hour in taxes, benefits and insurance, what is the per order opportunity cost of a touch screen?
Answer:
$0.8
Explanation:
Data provided in the question:
Number of orders each hour = 15
Number of orders processed each hour = 20
Wages = $7.50/hr
Taxes = $4.50/hr
Now,
Total cost per hour = $7.50 + $4.50 = $12
Therefore,
By installing touch screen, Taco Casa can save $12 per hour
but touch screen can accommodate only 15 orders
Thus,
Per order opportunity cost of a touch screen
= Total amount saved ÷ Number of Orders accommodated by touch screen
= $12 ÷ 15
= $0.8
A manufacturer of industrial sales has production capacity of 1,000 units per day. Currently, the firm sells production capacity for $10 per unit. At this price, all production capacity gets booked about one week in advance. A group of customers have said that they would be willing to pay $15 per unit if capacity was available on the last day. About ten days in advance, demand for the high-price segment is normally distributed with a mean of 250 and a standard deviation of 100. How much production capacity should the manufacturer reserve for the last day
Answer:
The production capacity the manufacturer should reserve for the last day = 206.00 units.
Explanation:
Normal production = 1000 X $ 10
Normal production = $ 10,000
Spot production = 1,000 X $ 15
Spot production = $ 15,000
p* = 15,000 - 10,000 / 15,000
p* = 0.33
Q = norminv(0.33,250,100)
The production capacity the manufacturer should reserve for the last day = 206.00 units
Waterway Industries signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $499900 of inventory. The face value of the note was $512500. Waterway used a "Discount of Note Payable" account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include a
a. debit to Discount on Note Payable for $1,300.
b. debit to Interest Expense for $2,600.
c. credit to Discount on Note Payable for $1,300.
d. credit to Interest Expense for $2,600.
Answer:c. credit to discount on note payable of $1300
Explanation:
The total three months debit on the transaction has been recognized in the month of November of which is to be spread for three months period. As at December the three months debit is still in the account but it's supposed to be two months. The correction is to credit the account for one month installment to reduce the debits to two. This is why thier i is need for a credit of $1300 to discount on note payable account.
If your procurement budget request did not provide for buying a whole number of useable end items, this would be a violation of which funding policy?
Answer:
Full funding policy.
Explanation:
This would be a violation of Full funding policy.
Full funding strategy is a federal budgeting requirement implemented by Congress in the 1950s on the Department of Defense (DOD) that mandates all acquisition expenses of a weapons or piece of military equipment to be financed in the year the object is procured. Hence in the above example there is violation of Full funding strategy.
There are two types of drivers on the road today: Speed Racers have a 5% chance of causing an accident per year, and Low Riders have a 1% chance of causing an accident per year. There are equal numbers of Speed Racers and Low Riders in the population. The cost of an accident is $12,000.
(a) Suppose an insurance company knows with certainty each driver's type. What premium would the insurance company charge each type of driver if prices are actuarially fair?
(b) Now suppose that there is asymmetric information so that the insurance company does not know with certainty the driver's type. Describe the insurance contracts that would be offered if no information at all is known about individual driver's types.
(c) What if drivers self-reported their types to the insurance company?
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Actuarially fair premiums are $600 for Speed Racers and $120 for Low Riders. With no individual risk data, an average premium of $360 would likely lead to adverse selection. Self-reporting requires careful contract design to maintain honesty and manage risks.
Explanation:Premium Calculation for Actuarially Fair InsuranceIf insurance prices are actuarially fair, the premium charged will equal the expected payout for each group. For Speed Racers, with a 5% chance of causing an accident, the fair premium would be 0.05 × $12,000 = $600 annually. For Low Riders, with a 1% chance, it would be 0.01 × $12,000 = $120 annually.
Insurance Contracts with Asymmetric InformationWith asymmetric information and no knowledge of individual driver types, the insurance company might charge an average premium reflecting the combined risk of both groups, which would be equal to the sum of the individual expected losses divided by the number of types. Thus, the premium would be ($600 + $120) / 2 = $360, not considering overhead and profit. However, this leads to adverse selection where only higher risk drivers would buy the insurance, leading to potential losses for the insurer.
Self-Reporting Driver TypesIn case drivers self-reported their types, the insurer must create incentives for truthful reporting. This might involve making the lower premium attractive enough for Low Riders while being unattractive to Speed Racers, who would then opt for a different contract designed for higher risks.
Prairie Partnership has four equal partners, Dodd, Crank, Pick, and Mack. Each of the partners had a tax basis of $320,000 as of January 1, 20X5. Prairie’s 20X5 ordinary business income was $152,000 before deducting any guaranteed payments to the partners. During 20X5, Prairie paid Mack guaranteed payments of $4,000 for deductible services rendered. During 20X5, each of the four partners took a distribution of $50,000. What is Mack’s tax basis in Prairie on December 31, 20X5?
Answer
Option D.
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
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Cheetah Copy purchased a new copy machine. The new machine cost $140,000 including installation. The company estimates the equipment will have a residual value of $35,000. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,000 2 2,000 3 2,000 4 2,000 Required: 1. Prepare a depreciation schedule for four years using the straight-line method.
Answer:
Depreciation Expense for year 1 = $26,250
Depreciation Expense for year 2 = $26,250
Depreciation Expense for year 3 = $26,250
Depreciation Expense for year 4 = $26,250
Explanation:
Cheetah Cop use the straight-line method depreciation, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of machine − Residual Value )/Useful Life = ($140,000 - $35,000)/4 = $105,000/4 = $26,250
Depreciation Expense for year 1 = $26,250
Depreciation Expense for year 2 = $26,250
Depreciation Expense for year 3 = $26,250
Depreciation Expense for year 4 = $26,250
The question deals with business accounting, focusing on the calculation of yearly depreciation for an asset using the straight-line method. In this case, Cheetah Copy should record $26,250 in depreciation for their new copy machine each year for 4 years.
Explanation:The subject you are asking about is depreciation in accounting for a business's equipment purchase. Depreciation is used to account for the reduction in value of an asset over time due to use, wear and tear, obsolescence etc.
Let's calculate the depreciation using the straight-line method:
Determine the initial cost of the asset. In this case, it's $140,000.Next, calculate its residual (salvage) value. For Cheetah Copy, this is $35,000.Determine the lifespan of the asset or how long it will be useful. Here, it's 4 years.Calculate the total depreciation over the lifespan of the asset by subtracting the residual value from the initial cost. That's $140,000 - $35,000 = $105,000 total depreciation.Depreciation per year (using the straight-line method) is equal to the total depreciation divided by the lifespan of the asset. Therefore, $105,000 / 4 = $26,250 annual depreciation.So, Cheetah Copy should record $26,250 in depreciation for their copy machine each year for 4 years.
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Following are the transactions of a new company called Pose-for-Pics.Aug. 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company in exchange for common stock.2 The company paid $2,100 cash for an insurance policy covering the next 24 months.5 The company purchased office supplies for $880 cash.20 The company received $3,331 cash in photography fees earned.31 The company paid $675 cash for August utilities.Prepare an August 31 trial balance for Pose-for-Pics.a. Debit Creditb. Cashc. Officesd. Prepaid insurancee. Photography equipmentf. Common stockg. Photography fees earnedh. Utilities expensei. Totals
Answer and Explanation:
Journal Entries:
Cash 6500
Photography equipment 33500
Capital 40000
Prepaid Insurance 2100
Cash 2100
Office Supplies 880
Cash 880
Cash 3331
Revenue 3331
Utilities Expense 675
Cash 675
Cash account = 6500 - 2100 - 880 + 3331 - 675 = 6176
POSE-FOR-PIC
Trial Balance
Debit Credit
Cash 6176
Prepaid Insurance 2100
Supplies 880
Revenue 3331
Utilities Expense 675
Capital 40000
Photography Equipment 33500
Total 43331 43331
A trial balance for Pose-for-Pics for August 31 is created by listing every account and calculating the debit or credit balances after considering all transactions for the month. After calculating all balances, the company's debit and credit totals should be equal, in this case, $42,731.
Explanation:To prepare a trial balance for Pose-for-Pics for August 31, start by listing every account that has a balance. Then, calculate their respective balances, as per debits or credits, based on all the transactions of the month. Here is a step-by-step process for the transactions:
August 1: Cash increases (debit) by $6,500 and Photography equipment increases (debit) by $33,500. These increasements are balanced by a credit of $40,000 (= $6,500 + $33,500) in the Common stock account.August 2: Insurance expense decreases (credit) cash by $2,100 and increases (debit) Prepaid insurance by the same amount.August 5: Office supplies expenditure decreases (credit) cash by $880.August 20: Photography fees earned increased (credit) by $3,331, which is balanced by a similar increase (debit) in cash.August 31: Payment of utilities decreases (credit) cash by $675, and increases (debit) utility expense by the same amount.Finally, prepare the balance of each account:
Cash: $6,500 (Aug 1) - $2,100 (Aug 2) - $880 (Aug 5) + $3,331 (Aug 20) - $675 (Aug 31) = $6,176Office supplies: $880Prepaid Insurance: $2,100Photography Equipment: $33,500Common stock: $40,000Photography fees earned: $3,331Utilities expense: $675The trial balance total whether debit or credit should be equal, which in this case is $42,731.
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Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $20. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?
a. There is insufficient information to answer this question.
b. $20
c. $40
d. $10
Answer:
option (c) $40
Explanation:
Data provided in the question:
The marginal cost of installing a tire = $20
The marginal productivity of the last worker = 2 tires per hour
Now,
The maximum hourly wage that Diane was willing to pay the last worker hired
= marginal cost of installing a tire × marginal productivity of the last worker
= $20 × 2
= $40
Hence,
The answer is option (c) $40
The maximum hourly wage Diane would pay is equal to the marginal revenue product of the worker, which is 2 tires at a marginal cost of $20 each, totaling $40 per hour.
Explanation:The maximum hourly wage that Diane was willing to pay the last worker hired to install tires, given that Diane's Auto World operates in a competitive market and the marginal cost of installing a tire is $20, can be determined by the marginal productivity of that worker. This productivity was 2 tires per hour, which implies that the value generated by this worker for the firm is the sale price of these two tires. As a profit-maximizing business owner, Diane would pay up to, but no more than, the value of the marginal product of the last worker. Knowing that the marginal cost of installing one tire is $20, and considering that each worker installs 2 tires per hour, the marginal revenue product is 2 tires times $20 per tire, equal to $40 per hour. Therefore, the maximum hourly wage Diane would pay is the marginal cost of the output produced by the worker, which in this case would be answer option c. $40.
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On Friday Huron Investments stock closes at $5.35. The Huron Investments 8.125% Convertible debenture maturing September 13, 2044 closes at 239.320. After the closing bell Huron Investments announces that the debenture will be called at 111.250. The debenture is convertible into common stock at $5 per share. A $1,000 bond is now worth?
Solution:
Investment stock price = $5.35
Debenture is convertible at $5 per share
The worth of $1000 bond = (1000/5)*5.35 = $1070
What if Jennifer were to invest $2.750 today, compounded semiannually, with an annual interest rate of 5.25%. What amount of interest will Jennifer earn in one year? a. $2,896.27 b. $84.27 c. $525.27 d. $146.27
Answer:
d. $146.27
Explanation:
For computing the interest earned, first we have to calculate the future value which is shown below:
Future value = Present value × (1 + rate)^number of years
where,
Present value = $2,750
Rate = 5.25% ÷ 2 = 2.625%
Number of years = 1 year × 2 = 2 years
So, the future value
= $2,750 × (1 + 2.625%)^2
= $2,750 × 1.0531890625
= $2,896.27
Now the interest earned would be
= $2,896.27 - $2,750
= $146.27
You invent a new pet care product – a rubber mat that keeps dogs from flying off the center console when their owner hits the brakes. You successfully file for a patent and bring the product to market. You can get as many of the units produced as you’d like at a cost of $8 each. In other words, the cost function is given by ????(????) = ????????. You pay for a market research firm to estimate the market demand for your product. The econometricians there estimate that the demand for your product is given by ???? = ????, ???????????? − ????????. Your partner says that demand seems really high, and suggests that you charge $75 per unit. You aced managerial economics but your partner didn’t – you are skeptical that she is guessing at a price and not maximizing profits.
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Single linkage is a measure of calculating dissimilarity between clusters by
a. considering the distance between the cluster centroids.
b. considering only the two most similar observations in the two clusters.
c. computing the average dissimilarity between every pair of observations between the two clusters.
d. considering only the two most dissimilar observations in the two clusters
Answer:
Single linkage is a measure of calculating dissimilarity between clusters by
b. considering only the two most similar observations in the two clusters.
Explanation:
Single Linkage:
It is a type of hierarchical clustering which is used to measure the dissimilarity between clusters by considering the only two observations that are closest in the clusters.
So, according to above point the option b is correct.The option a is not correct as we don't consider the distance between the cluster centroids.The option c is not correct as computing the average dissimilarity between every pair of observations between the two clusters is not done rather we consider the two closest similar observations in the cluster so that's why the option d is also incorrect.Final answer:
Single linkage measures dissimilarity between clusters by considering the distance between the two most similar observations in the two clusters.
Explanation:
Single linkage is a measure of calculating dissimilarity between clusters by b. considering only the two most similar observations in the two clusters. This method involves identifying the closest (or most similar) pair of observations where one member of the pair is from each cluster and calculating the distance between this pair as the measure of dissimilarity between the two clusters.
This approach is different from other clustering measures such as the centroid method (which considers the distance between cluster centroids) or the complete linkage method (which considers the distance between the most dissimilar observations in clusters). Single linkage can lead to a chaining effect where clusters may be joined together due to single close pairs, even though the remaining elements in the clusters may be far from each other.
American expansionism after the 1890s:
Select one:
a. was largely driven by the desire for expanded overseas trade.
b. was hampered by the continued U.S. observance of the Monroe Doctrine.
c. had little to do with American consumer demand for foreign products.
d. severely depressed the nation's agricultural and industrial production.
e. was not affected by the development of the railroad.
Answer:
American expansionism after the 1890s: a. was largely driven by the desire for expanded overseas trade.
Explanation:
The 1890 was the age when America faced a number of factors which converged together to give the State its desire to pursue imperial policy. Years that followed the Civil War helped the economy of the United States to expand. The conflict between the nations helped the Industrialization.
The mechanization and mass production helped the industries to find a potential market place for the consumer goods, and this on the other hand helped the growth of the business and the rise of a new modern America. The transportation in this picture was nothing less than a boon which allowed the moving of the finished products with ease.
American expansionism after the 1890s was primarily driven by the desire for expanded overseas trade, during an era known as the Age of Imperialism. This was motivated by increased consumer demand and the opportunities for American businesses in new markets overseas.
Explanation:The correct answer to your question about American expansionism after the 1890s is that it a. was largely driven by the desire for expanded overseas trade. This period of American history, often referred to as the Age of Imperialism, saw the US expand its interests abroad, largely as a result of increased consumer demand at home and the opportunities that new markets overseas offered to American businesses. The desire to expand trade and access resources played a significant role in driving American foreign policy and contributed to the country’s involvement in several conflicts, including the Spanish-American War.
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A sample of 1500 computer chips revealed that 27% of the chips do not fail in the first 1000 hours of their use. The company's promotional literature states that 25% of the chips do not fail in the first 1000 hours of their use. The quality control manager wants to test the claim that the actual percentage that do not fail is different from the stated percentage. Is there enough evidence at the 0.02 level to support the manager's claim?
Final answer:
The question concerns a hypothesis test at the 0.02 significance level to ascertain if the actual percentage of computer chips not failing in 1000 hours is different from the company's claim. A two-tailed Z-test for proportions can be used to determine if there is enough statistical evidence to support the quality control manager’s claim, with the p-value indicating the strength of the evidence.
Explanation:
The question involves determining whether there is enough evidence at the 0.02 level to support the quality control manager's claim that the actual percentage of computer chips that do not fail in the first 1000 hours is different from the stated percentage by the company. This scenario calls for a hypothesis test of a proportion. The observed proportion of non-failing chips is 0.27, while the company claims a proportion of 0.25. We would use a two-tailed test because the manager's claim is that the actual percentage is different, not specifically higher or lower, from the claimed 25%.
To perform the hypothesis test, we would set the null hypothesis as the proportion of non-failing chips being 0.25, and the alternative hypothesis as the proportion not being 0.25. The test statistic could be calculated using the Z-test for proportions. Once the test statistic is calculated, it is then compared to the critical values for a 0.02 significance level (or a confidence level of 98%). If the test statistic falls outside the range of values that correspond to the central 98% of the standard normal distribution, we would reject the null hypothesis, showing that there is enough evidence to support the manager's claim.
In terms of evidence and hypothesis testing, the situation is similar to other problems where a p-value is used to determine the strength of the evidence against the null hypothesis. For example, a p-value of 0.0067 indicates strong evidence against the null hypothesis, as it is well below the threshold of 0.02, justifying the rejection of the null hypothesis.
Marigold Corp. has 493000 shares of $10 par value common stock outstanding. During the year Marigold declared a 14% stock dividend when the market price of the stock was $36 per share. Three months later Marigold declared a $0.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by
Answer: $2,821,932
Explanation:
No. of shares outstanding before stock dividend = 493,000
Price per share = $36
Stock dividend issued (shares issued) = 493,000 x 14% = 69,020
Value of stocks issued as stock dividend = 69,020 x $36 = $2,484,720
No. of shares outstanding after stock dividend = 493,000 +69,020 = 562,020
Cash dividend = 562,020 x 0.60 = 337,212
Total reduction in retained earnings = total value of dividend issued
= $2,484,720+$337,212
= $2,821,932
An irrigation project costs $1000 to build and will last for 5 years. It will double farmers’ crop yields and increase their sales by $500 a year. The pumps used in the irrigation system use 100 gallons of gasoline a year to operate and require $50 a year to maintain. The domestic price of gasoline is 50 cents a gallon, but it is heavily subsidized and costs the government $2 a gallon to import. Assume that for political reasons the government cannot charge farmers for the water. a. If the government’s discount rate is 10%, what is the present value of this project? Should the government build it? Show and explain all your calculations. b. If the discount rate is 5%, what is the present value? Should the government build it? Now suppose a private firm can charge $400 per year for the water and can borrow at 10% to finance the project. Is it profitable for the private firm to build it?
Answer:
a. * The government should not invest because it yields a lower than 0 NPV which is -$52.30 . Please see calculations in the explanation part.
b. * If the discount rate is 5%, the government should invest because it yields a higher than 0 NPV which is $82.37. Please see calculations in the explanation part.
* The private firm should take the project because the profitability or the NPV is $137.24
Explanation:
Because the government is responsible for the increase in common goods of the society while the private firm is not; when calculating NPV for the Government, increase in farmers' sales of corp should be included while it is excluded when doing so for private firm.
Gasoline price should be used domestic price for private firm while for Government, the actual price paid ( import price) is used.
a.
We have the cash flow for the project as followed:
Y0: -1,000; Y1-Y5: Increase in corp sales - Increase in gasoline consumption with price per gallon is calculated at import price - Maintenance cost = 500 - 2 x 100 - 50 = $250
=> NPV = -1,000 + 250/10% x ( 1-1.1^(-5)) = -$52.30
=> Project should not be taken.
b.
* Discount rate for the government is 5%; cash flow in part (a) is remained the same for this scenario:
=> NPV = -1,000 + 250/5% x ( 1-1.05^(-5)) = $82.37
=> Project should be taken.
* The private firm's cash flow is as below:
Y0: -1,000; Y1-Y5: Water charge - Increase in gasoline consumption with price per gallon is calculated at domestic price - Maintenance cost = 400 - 0.5 x 100 - 50 = $300.
=> NPV = -1,000 + 300/10% x ( 1-1.1^(-5)) = $137.24
=> Project should be taken.
You are considering adding a microbrewery on to one of your firm's existing restaurants. This will entail an increase in inventory of $8,000, an increase in Accounts payable of $2,500, and an increase in property, plant, and equipment of $40,000. All other accounts will remain unchanged. What the change in net working capital resulting from the addition of the microbrewery is?
Answer:
The change in net working capital resulting from the addition of the microbrewery is $5,500 (decrease)
Explanation:
There are 3 key elements of working capital. These are;
InventoryAccounts payableAccounts receivableGiven;
increase in inventory = $8,000
increase in Accounts payable = $2,500
Change in net working capital resulting from the addition of the microbrewery = -$8,000 + $2,500
= -$5,500
Question 4: FastFit and Capital One are two very different organizations but both rely on information technology to enable business processes. What are the mission, goals, and representative strategies for these two organizations and how are they IT-enabled?
Answer and Explanation:
FastFit:
Mission: FastFit is an IT enabled company that thrives to meet quality and customer satisfaction
Goals:
To exceed customer satisfaction
Performing timely and quality services
Providing the best IT services. Ensuring complete compliance and privacy.
Representative Strategies: Use of internet medium to penetrate and reach customers
Capital One:
Mission: Capital One is an IT oriented company that provides quality service.
Goals:
Providing top performance and quality customer support.
Ensuring efficiency and providing detailed service information to users.
Providing support and privacy to clients.
Representative Strategies:
Using network based platform to engage with customers and suppliers.
Worthington Chandler Company purchased equipment for $12,000. Sales tax on the purchase was $800.
Other costs incurred were freight charges of $200, repairs of $350 for damage during installation, and installation costs of $225.
What is the cost of the equipment?
a. $12,000
b. $12,800
c. $13,225
d. $13,575
Answer:
d. $13,575
Explanation:
The entirety of the costs incurred during the purchase of the asset, that are used to make it functional are generally capitalized. This involves the freight expense paid to bring the asset to the premises of operation, the installation costs and all other costs that are paid for the asset to be functional and hence a total of $13,575 are capitalized in this case.
Total cost of equipment = 12,000 + 800 + 200 + 350 + 225 = $13,575
Hope that helps.
Mirrlees Furniture earned $750,000 last year and had a 30% payout ratio. How much did the firm add to its retained earnings?
Answer:
It is $525,000.
Explanation:
If the payout ratio is 30% ,then retention rate will be 70%
Additional Retention = $750,000* 70%
=$525,000
Additional amount retained can be used for future business expansion and can also be used to buy back shares provided there is no available profitable investment project to invest in.
Here, the retention rate is very high which implies that the company has prospective investment to put the money into to generate additional returns.
Investors will therefore settle for capital appreciation resulting from increase in share price as result of additional earnings from profit plouged back into the business.
Final answer:
Mirrlees Furniture paid out $225,000 in dividends from its $750,000 earnings since it has a 30% payout ratio. The remaining $525,000 was added to its retained earnings.
Explanation:
Mirrlees Furniture earned $750,000 last year and had a 30% payout ratio. This means that the firm paid out 30% of its earnings as dividends. To calculate the amount added to retained earnings, we first need to determine the dividend paid and then subtract that from the total earnings.
The calculation for the dividends paid is as follows: $750,000 ×30% = $225,000. Consequently, the amount added to retained earnings is the earnings minus the dividends: $750,000 - $225,000 = $525,000. Therefore, Mirrlees Furniture added $525,000 to its retained earnings.
Pearson Collections (PC) sells one-pound cans of coffee for $25 each. The variable cost to produce each can is $17.50, and fixed operating costs are $1,500. PC normally sells 30,000 pounds of coffee each year, has an interest expense equal to $300, and its marginal tax rate is 40 percent. Given this information, what is PC’s operating breakeven point?
Answer:
200 cans
Explanation:
Given that,
Selling price per can = $25
Variable cost = $17.50 each can
Fixed operating costs = $1,500
Marginal tax rate = 40 percent
Profit per unit = Selling price - Variable cost
= $25 - $17.50
= $7.50
PC’s operating break-even point:
= Fixed cost ÷ Profit per unit
= $1,500 ÷ $7.50
= 200 cans
Final answer:
Pearson Collections' operating breakeven point is reached when 200 one-pound cans of coffee are sold, which is calculated by dividing the total fixed costs by the difference between the price per unit and the variable cost per unit.
Explanation:
To calculate Pearson Collections' (PC) operating breakeven point, we need to find the level of output at which the company's total revenues equal its total fixed and variable costs, without considering interest expense or taxes, since operating breakeven focuses on operations alone. The formula for the operating breakeven in units is given by total fixed costs divided by the price per unit minus the variable cost per unit. In this case, the price per unit is $25, and the variable cost per unit is $17.50.
The calculation for PC's breakeven point would be:
Operating Breakeven Point in Units = Total Fixed Costs / (Price per Unit - Variable Cost per Unit)
Operating Breakeven Point in Units = $1,500 / ($25 - $17.50) = $1,500 / $7.50 = 200 Units
Therefore, PC needs to sell 200 one-pound cans of coffee to reach its operating breakeven point.
Suppose the following data describe output in two different years:
Item Year 1 Quantity Year 1 Price Year 2 Quantity Year 2 Price
Oranges 15,000 $ 0.20 20,000 $ 0.25
Computers 600 $750.00 700 $ 840.00
Video Games 8,000 $ 0.75 10,000 $ 1.00
Compute nominal GDP in year 2 (Enter as a numeric value e.g. 100000)
Answer:
$603,00
Explanation:
Nominal GDP is the addition of current year prices multipled by quantity produced.
Gross domestic product is the sum of all final goods and services produced in an economy within a given period.
Nominal GDP = ($20,000 × $ 0.25) + (700 × $ 840.00) + (10,000 $ 1.00) = $5,000 + $588,000 + $10,000 = $603,000
I hope my answer helps you