Given, Small mom-and-pop retailer will sell 1, 2, 3, or 4 copies with probabilities 0.2, 0.3, 0.3, and 0.2, respectively. Suppose that the retail market price of the DVD is $15 and that the retailer must pay the studio $8 for each copy.
The studio's marginal cost is $1. The retailer's marginal profit is $7 for selling each copy, and the studio's marginal profit is $7 for each non-returned copy sold to the retailer. The cost of shipping each DVD back to the studio is $2. The studio and retailer are risk-neutral.
To calculate the expected profit and to find out the optimal quantity to order, the following formula will be used. Expected profit = Expected revenue - Expected cost expected revenue = ($15 × number of copies) × probability of sellingExpected cost = $8 × number of copies purchased by the retailer + $1 × the number of copies not returned by the retailer to the studio + $2 × the number of copies returned by the retailer to the studio. Let x be the number of DVDs the retailer order from the studio.
The expected revenue of the studio is($15 × number of copies) × probability of selling$15(x) (0.2 + 0.3 + 0.3 + 0.2) = $3xThe expected cost of the studio is$8 × number of copies purchased by the retailer + $1 × the number of copies not returned by the retailer to the studio + $2 × the number of copies returned by the retailer to the studio= $8x + $1(x)(1 - 0.2 - 0.3 - 0.3 - 0.2) + $2($15 - x)(0.2 + 0.3 + 0.3 + 0.2) = $8x + $7($15 - x) = $105 - $1xThen the expected profit of the studio is$3x - $105 + $1x = $2x - $105So the expected profit of the studio is $2x - $105
The retailer will order nothing DVDs, and the profit-maximizing quantity for the studio is nothing DVDs.
To know more about marginal profit please refer:
https://brainly.com/question/28180283
#SPJ11
Magdalo, Inc. manufactures a product that experiences the following activities: Processing (three departments): 40 hours Moving (four moves): 18 hours Waiting time: 42 hours Storage time (before delivery): 100 hours The MCE for the product is:
The MCE for the product is 20%
The manufacturing cycle efficiency (MCE) formula is a critical performance measurement tool used in business operations. It is calculated as the ratio of processing time divided by total lead time.
The given data is:
Processing (three departments):
40 hours
Moving (four moves): 18 hours
Waiting time:42 hours
Storage time (before delivery): 100 hours
The processing time (Pt) is the time taken to convert raw materials into finished products.
In this scenario, the total processing time is 40 hours.
The lead time (Lt) is the total amount of time required to complete a product. In this scenario, the total lead time is the sum of processing time, moving time, waiting time, and storage time before delivery.
Therefore, the total lead time (Lt) is:
40 hours (processing time) + 18 hours (moving time) + 42 hours (waiting time) + 100 hours (storage time before delivery) = 200 hours
The MCE formula is:
Manufacturing Cycle Efficiency (MCE) = Processing Time / Total Lead Time= 40 / 200= 0.2 or 20%
Therefore, the MCE for the product is 20%.
Learn more about MCE visit:
brainly.com/question/31858582
#SPJ11
You purchase a bond with a coupon rate of 7.1 percent and a clean price of $1,100. If the next semiannual coupon payment is due in five months, what is the invoice price? Assume a par value of $1,000.
The invoice price of a bond with a coupon rate of 7.1 percent and a clean price of $1,100, with the next semiannual coupon payment due in five months, is $1,114.78. the invoice price of the bond is $1,114.78.
Assuming a par value of $1,000, the annual coupon payment is 7.1% x $1,000 = $71. The semi-annual coupon payment is $71/2 = $35.50.The accrued interest for the bond can be calculated as follows: Accrued Interest = (Number of days since the last coupon payment / Number of days in a coupon period) x Coupon payment= (5/12) x $35.50= $14.79
Therefore, the invoice price of the bond can be calculated as follows: Invoice price = Clean price + Accrued interest= $1,100 + $14.79= $1,114.78Therefore, the invoice price of the bond is $1,114.78.
Learn more about coupon rate
https://brainly.com/question/29603283
#SPJ11
Effect of Errors in Physical Inventory Hydro White Water Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2014, Hydro White Water incorrectly counted its inventory as $778,940 instead of the correct amount of $802,310.
Physical inventory refers to the actual count of the goods and supplies in the possession of an organization. Physical inventory is conducted by companies to ascertain the actual count of the stock available and the associated value.
Effect of errors in physical inventoryThe effect of errors in physical inventory is that it can lead to inaccurate financial statements, which can lead to wrong decision-making for the company. Inaccurate inventory records, in the example given of Hydro White Water Co, can lead to an overstatement or understatement of the company's inventory and assets, which can distort the organization's financial ratios and profitability.
The impact of inventory error can affect the company's income statement, balance sheet, and cash flow statement. The difference in the actual amount of inventory ($802,310) and the recorded value ($778,940) means that the company's inventory has been understated by $23,370 ($802,310 - $778,940).
As a result of this understatement of inventory, the company will record a lower cost of goods sold (COGS) and a higher gross profit margin on its income statement.However, this understatement of inventory will also lead to an understatement of assets in the balance sheet, and consequently, the company's working capital will be understated. The company's inventory turnover ratio will also be negatively affected, and this will negatively impact its ability to secure loans from financial institutions.
To learn more about physical inventory, visit here
https://brainly.com/question/29749768
#SPJ11
Explain the impact of the following events on the money market equilibrium and equilibrium interest rates. Illustrate your answers by drawing graphs for the money market. i. Decrease in the minimum reserve requirement ratio. ii. Central Bank buys government bonds in an open market operation
iii. Invention of credit cards.
Money Market refers to a financial marketplace where institutions and individuals trade financial instruments such as short-term funds, currencies, and bills.
Equilibrium in the money market occurs when the quantity of money demanded is equivalent to the amount of money supplied. Changes in the money market equilibrium and equilibrium interest rates are determined by a number of factors.
These include an increase in demand or supply of money, changes in monetary policy, and changes in market forces.
Let us look at the impact of the following events on the money market equilibrium and equilibrium interest rates:
Decrease in the minimum reserve requirement ratio A decrease in the minimum reserve requirement ratio will lead to an increase in the supply of money in the economy.
This is because the banks will have more money to lend out to their customers.
As a result, there will be an increase in the quantity of money supplied, and this will lead to a shift in the supply curve to the right.
Learn more about interest rate at:
https://brainly.com/question/27010750
#SPJ11
Which one of the following is a vendor transaction?
Pay bills
Make deposits
Sell products to customers
Receive customer payments
The correct option among the following options is (C) Sell products to customers.
A vendor transaction is a financial exchange that occurs between a company and a supplier, also known as a vendor. Companies pay vendors for goods and services provided, while vendors supply goods and services to companies. The accounting system should record vendor transactions in accounts payable, which is a liability account.
Pay Bills: Pay bills can be defined as a vendor transaction in which you pay vendors for products or services received. This vendor transaction falls into the account payable category. It is necessary to keep track of when bills are due to ensure on-time payment and avoid late fees.Make Deposits: Deposits may be made to your account by a customer or client. It's a type of transaction that falls into the category of cash inflow. Deposits are not vendor transactions because they are not payments to suppliers.Sell Products to Customers: Selling goods to customers is a vendor transaction. It's a cash inflow that reduces inventory and generates revenue. When a customer pays for a product, a vendor transaction occurs. The transaction should be entered into the system and recorded as revenue.Receive Customer Payments: Receiving customer payments is a cash inflow that reduces the accounts receivable account. When a vendor receives payment from a customer, a vendor transaction occurs. The transaction should be recorded in the system and applied to the appropriate customer account.To know more about customers visit:
https://brainly.com/question/31192428
#SPJ11
Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations.
May 1 G. Gram invested $40,000 cash in the company in exchange for its common stock.
1 The company rented a furnished office and paid $2,200 cash for May’s rent.
3 The company purchased $1,890 of office equipment on credit.
5 The company paid $750 cash for this month’s cleaning services.
8 The company provided consulting services for a client and immediately collected $5,400 cash.
12 The company provided $2,500 of consulting services for a client on credit.
15 The company paid $750 cash for an assistant’s salary for the first half of this month.
20 The company received $2,500 cash payment for the services provided on May 12.
22 The company provided $3,200 of consulting services on credit.
25 The company received $3,200 cash payment for the services provided on May 22.
26 The company paid $1,890 cash for the office equipment purchased on May 3.
27 The company purchased $80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.
28 The company paid $750 cash for an assistant’s salary for the second half of this month.
30 The company paid $300 cash for this month’s telephone bill.
30 The company paid $280 cash for this month’s utilities.
31 The company paid $1,400 cash in dividends to the owner (sole shareholder).
8.
value:
0.36 points
Required information
Required:
2.
Enter the amount of each transaction on individual items of the accounting equation. Do not determine new account balances after each transaction. (Enter the transactions in the given order. Enter reductions to account balances with a minus sign.)
Following is the tabular representation of each transaction in individual items of the accounting equation. All the given transactions are recorded under the cash basis of accounting as each transaction is either an inflow or outflow of cash.
Transaction Items of Accounting Equation Cash + Accounts Receivable = Equipment + Office Supplies=Accounts Payable + G. Gram, Capital + Revenue - Expenses Invested $40,000 cash in the company in exchange for its common stock+40,000=+40,000. Rented a furnished office and paid $2,200 cash for May’s rent.-2,200=+2,200,
Purchased $1,890 of office equipment on credit.-1,890=+1,890Paid $750 cash for this month’s cleaning services.-750=Provided consulting services for a client and immediately collected $5,400 cash.+5,400=+5,400Provided $2,500 of consulting services for a client on credit.+2,500=+2,500Paid $750 cash for an assistant’s salary for the first half of this month.-750=Received $2,500 cash payment for the services provided on May 12.+2,500=Provided $3,200 of consulting services on credit.+3,200=+3,200 Received $3,200 cash payment for the services provided on May 22.+3,200=Paid $1,890 cash for the office equipment purchased on
May 3.-1,890=+1,890 Purchased $80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.-80=+80Paid $750 cash for an assistant’s salary for the second half of this month.-750=Paid $300 cash for this month’s telephone bill.-300=Paid $280 cash for this month’s utilities.-280=Paid $1,400 cash in dividends to the owner (sole shareholder).-1,400=+1,400
Gabi Gram started The Gram Co., a new business that began operations on
May 1. Gabi invested $40,000 cash in the company in exchange for its common stock. This increases the cash balance and common stock account balance. The company rented a furnished office and paid $2,200 cash for May’s rent. This reduces the cash balance and increases the rent expense account balance. The company purchased $1,890 of office equipment on credit. This increases the equipment account balance and accounts payable balance.
The company paid $750 cash for this month’s cleaning services. This reduces the cash balance and increases the cleaning services expense account balance.
The company provided consulting services for a client and immediately collected $5,400 cash. This increases the cash balance and consulting revenue account balance.
The company provided $2,500 of consulting services for a client on credit. This increases the account receivable account balance and consulting revenue account balance.
The company paid $750 cash for an assistant’s salary for the first half of this month. This reduces the cash balance and increases the salary expense account balance.
The company received $2,500 cash payment for the services provided on May 12. This increases the cash balance and reduces the accounts receivable account balance.
The company provided $3,200 of consulting services on credit. This increases the account receivable account balance and consulting revenue account balance.
The company received $3,200 cash payment for the services provided on May 22. This increases the cash balance and reduces the accounts receivable account balance.
The company paid $1,890 cash for the office equipment purchased on May 3. This reduces the cash balance and increases the equipment account balance.
The company purchased $80 of advertising in this month’s (May) local paper on credit. The cash payment for this transaction is due on June 1. This increases the advertising expense account balance and accounts payable account balance.
The company paid $750 cash for an assistant’s salary for the second half of this month. This reduces the cash balance and increases the salary expense account balance.
The company paid $300 cash for this month’s telephone bill. This reduces the cash balance and increases the telephone expense account balance.
The company paid $280 cash for this month’s utilities. This reduces the cash balance and increases the utilities expense account balance. The company paid $1,400 cash in dividends to the owner (sole shareholder). This reduces the cash balance and reduces the owner's equity balance.
Thus, all the given transactions of The Gram Co. for the month of May are recorded under the cash basis of accounting. By using the accounting equation, the amount of each transaction is entered on individual items of the accounting equation without determining new account balances after each transaction.
To learn more about common stock visit
brainly.com/question/11453024
#SPJ11
A company manufactures washing machines. The budgeted output is 1,500 washing machines each accounting period. The standard cost of each washing machine includes 0.25 hours of direct labour at £16 an hour.
The following information is available for a particular accounting period:
• 1,350 washing machines were made
• 340 hours of labour were worked at the cost of £5,100
What are the labour rate and labour efficiency variances?
A Labour rate £340 favourable; labour efficiency £40 favourable.
B Labour rate £1,360 favourable; labour efficiency £160 favourable.
C Labour rate £1,360 favourable; labour efficiency £160 adverse.
D Labour rate £340 favourable; labour efficiency £40 adverse.
The Labour rate £340 favourable; labour efficiency £40 adverse (option D).
The standard cost of washing machine includes direct labour of 0.25 hours at £16 an hour.
Therefore, standard cost of direct labour per washing machine = 0.25 × 16 = £4 per machine.
The actual direct labour cost per machine = 5100/1350 = £3.78 per machine.
Labour Rate Variance = (Actual hours worked × Actual wage rate) - (Actual hours worked × Standard wage rate)
= 340 × 15.6 - 340 × 16 = £340 Adverse Labour
Efficiency Variance = (Actual hours worked - Standard hours for actual output) × Standard wage rate = (340 - 1350 × 0.25) × 16 = £40 Adverse
Hence, the correct option is D Labour rate £340 favourable; labour efficiency £40 adverse.
For more about Labour rate variance:
brainly.com/question/29813861
#SPJ11
What is the difference between fixed and variable expenses?
(Explain with example)
Explain the Decision-making method (High and low Methods) with
examples.
Fixed expenses refer to expenses that do not change, regardless of the level of production or sales volume of a company. They remain constant and do not change. Examples of fixed expenses include rent, salaries, insurance, and property taxes.
Variable expenses, on the other hand, refer to expenses that are influenced by the level of production or sales volume of a company. Variable expenses increase or decrease depending on how much output or sales a company generates. Examples of variable expenses include raw materials, labor, and direct sales commissions. The higher the sales or production volume, the higher the variable expenses will be, and vice versa.
Decision-making method (High and low Methods):The high-low method is a tool that can be used to calculate the fixed and variable components of a mixed cost.
The high-low method entails identifying the highest and lowest activity levels and their corresponding expenses and then calculating the cost equation.
The steps involved in the high-low method are as follows:Step 1: Gather data for the relevant activity and cost levels. Step 2: Choose the highest and lowest activity levels.
Step 3: Calculate the variable cost per unit of activity. Step 4: Calculate the total fixed cost. Step 5: Formulate the cost equation.
The following is an example of the high-low method:Assume that the cost of producing 4,000 units is $90,000, while the cost of producing 8,000 units is $120,000. Determine the fixed and variable costs by using the high-low method.
Step 1: Gather data for the relevant activity and cost levels.Cost of producing 4,000 units = $90,000Cost of producing 8,000 units = $120,000
Step 2: Choose the highest and lowest activity levels.Highest activity level = 8,000 unitsLowest activity level = 4,000 units
Step 3: Calculate the variable cost per unit of activity.Variable cost = Change in cost/Change in activity= (120,000 – 90,000)/(8,000 – 4,000)= $7.50 per unit
Step 4: Calculate the total fixed cost.Fixed cost = Total cost – Total variable cost= $90,000 – ($7.50 * 4,000)= $60,000
Step 5: Formulate the cost equation.Total cost = Fixed cost + (Variable cost per unit x Number of units produced)Total cost = $60,000 + ($7.50 x Number of units produced)Hence, the cost equation is: Total cost = $60,000 + ($7.50 x Number of units produced)
For more questions on: Fixed expenses
https://brainly.com/question/30767784
#SPJ11
(a) How is a strategic move differentiated from a Nash
equilibrium? (b) What is a credible threat?
Strategic move, Nash equilibrium, and credible threat, they are related to the game theory.
A strategic move and a Nash equilibrium have differences as described below:
Strategic move: It refers to the decision or action taken by one player in a game theory to achieve the desired outcome. In other words, a strategic move is a premeditated action taken by one of the players in a game theory.
Nash Equilibrium: It refers to a stable outcome of a game where no player has an incentive to change their move or decision given the moves of other players. In other words, it is a condition where all players in a game theory are making optimal decisions based on the available information.Basically, a strategic move is made by a player to achieve the desired outcome and alter the game's results. On the other hand, Nash Equilibrium occurs when no player has an incentive to change the move. Nash Equilibrium is often viewed as an optimal solution to a game theory problem.
A credible threat refers to a threat made in a way that the party to which the warning is addressed perceives it as an actual threat. In other words, a credible threat is a warning or promise made by one party to another, which is backed up with the ability to carry out the threat or promise. A credible threat in game theory occurs when a player makes a move or takes an action that would hurt both parties if implemented. The primary objective of a credible threat is to create incentives for a party to choose the optimal outcome that is best for the other party.
Therefore, a credible threat in game theory is a commitment that is difficult or expensive to renege on that enables one player to achieve a better outcome in the game.
To know more about the Game Theory visit:
https://brainly.com/question/31827926
#SPJ11
5. Define employee relations and industrial
relations? Explain the elements involved in an industrial relations
system. Provide examples. (300 words)
Employee relations refers to the relationship between the employees and the employer. It is about managing the expectations and concerns of employees and how their rights are maintained.
Industrial relations, on the other hand, refers to the relationship between the employers and employees in an industry. It deals with matters of communication, negotiation, and conflict resolution.
The elements involved in an industrial relations system include:
The environment - includes the legal and social factors that affect the employment relationship. It includes laws and regulations set by the government, social
norms and values, economic policies, among others
.The actors - these are the parties involved in the employment relationship.
They include the employer, employees, trade unions, and the government.Each of these parties has a unique role to play in the employment relationship. Employers provide employment opportunities, remuneration, and working conditions.
Employees provide their labor in exchange for remuneration, benefits, and a safe working environment. Trade unions advocate for the interests of the employees, negotiate with employers, and help resolve disputes.
One example of an industrial relations system is the auto industry. The United Auto Workers (UAW) union represents workers at various automakers, including General Motors and Ford. The UAW negotiates employment contracts and collective bargaining agreements with management on behalf of workers.
Another example is the airline industry, where pilots, flight attendants, and other workers are represented by labour unions in their negotiations with management.
Learn more about employees relations at;
https://brainly.com/question/31655798
#SPJ11
Part 2: Question 1 (9 points) The production function of a good is given by: Q=K0.5 10.5 Where K is capital and L is labor. The wage rate of labor is denoted by w and the rental rate of capital is denoted by r. 1. Assume the wage rate is $2 and the capital rental rate is $1. Derive the short-run total cost function STC(Q) at K = 100. 2. Derive the equation of the short-run supply function in a perfect competition market. 3. Assume the output's unit price is $10. Find the optimal quantity which maximizes profit in the short-run.
1. STC(Q) = 2 * (100[tex]^{0.5}[/tex]) + 1 * (10.5) * Q[tex]^{0.5}[/tex].
2. QS = STC(Q) + VMC * Q.
3. Set MR = MC and solve for Q to find the optimal quantity.
1. The short-run total cost function, STC(Q), at K = 100 is STC(Q) = 2 * (100[tex]^{0.5}[/tex]) + 1 * (10.5) * Q[tex]^{0.5}[/tex].
In the given production function, Q represents the quantity of output, K represents the capital input, and L represents the labor input. The short-run total cost function represents the cost of producing a given quantity of output, considering the fixed input (capital) at a specific level (K = 100) and the variable input (labor) at the given wage rate ($2) and capital rental rate ($1). By plugging in the values into the production function, we can derive the short-run total cost function.
2. The equation of the short-run supply function in a perfect competition market is QS = STC(Q) + VMC * Q, where QS represents the quantity supplied, STC(Q) represents the short-run total cost function derived in part 1, and VMC represents the variable marginal cost.
In a perfect competition market, firms aim to maximize profit by equating their marginal cost to the market price. The short-run supply function represents the quantity that a firm is willing to supply at different price levels. It is derived by adding the short-run total cost function (STC(Q)) to the variable marginal cost (VMC) multiplied by the quantity (Q). The variable marginal cost represents the additional cost incurred for producing an additional unit of output.
3. To find the optimal quantity that maximizes profit in the short-run when the output's unit price is $10, we need to equate the marginal cost to the marginal revenue. MR = MC. From the production function, we can derive the marginal cost (MC) as MC = (w * 0.5 * K^(0.5-1)) + (r * 0.5 * Q[tex]^{-0.5}[/tex]). By setting MR equal to MC, we can solve for the optimal quantity (Q) that maximizes profit.
Maximizing profit requires balancing the additional revenue earned from selling an additional unit (marginal revenue, MR) with the additional cost incurred in producing that unit (marginal cost, MC). In the short-run, with a fixed level of capital (K), the marginal cost equation considers the variable inputs (labor) and the wage rate (w) and capital rental rate (r). By setting MR equal to MC and solving for Q, we can determine the optimal quantity that maximizes profit in the short-run.
To learn more about production function, here
https://brainly.com/question/13755609
#SPJ4
The IS-LM model is considered. Autonomous consumption equals 100, autonomous investment equals 100, government spending equals 100, marginal propensity to consume equals 0.9, income tax rate equals 0.1, investment sensitivity parameter equals 10, autonomous speculative demand equals 200, speculative demand sensitivity parameter equals 4, transactions demand sensitivity parameter equals 1, precautionary demand equals 200, nominal money supply equals 500 and general level of prices equals 1. Using these values solve following problems: a) Find IS curve and interpret its slope b) Derive IS curve graphically c) Find LM curve and interpret its slope d) Derive LM curve graphically e) Find equilibrium income and equilibrium interest rate f) Present IS-LM model graphically and show how fiscal contraction affects economy.
a) The IS curve represents the equilibrium in the goods market and shows the relationship between the equilibrium level of income and the interest rate. To find the IS curve, we equate total spending (Y) to total output (Y) in the goods market.
Y = C + I + GSubstituting the given values:
Y = 100 + 100 + 100 + 0.9(Y - T) + 10rY = 300 + 0.9Y - 0.1Y + 10r0.2Y = 300 + 10rThe slope of the IS curve is determined by the coefficient of the interest rate (r), which is 10 in this case. This means that for every 1% increase in the interest rate, the equilibrium income decreases by 10 units.
b) Graphically, the IS curve represents the combinations of income (Y) and the interest rate (r) that satisfy the equilibrium condition in the goods market. It is downward sloping, indicating an inverse relationship between income and the interest rate.
c) The LM curve represents the equilibrium in the money market and shows the relationship between the interest rate and the level of real money supply (M/P). To find the LM curve, we equate the demand for real money balances (Md) to the supply of real money balances (M/P).
Md = L(Y, r) = kY - hrSubstituting the given values:
Md = 200 + 4Y - rThe slope of the LM curve is determined by the coefficient of the interest rate (r), which is -1 in this case. This means that for every 1% increase in the interest rate, the real money supply decreases by 1 unit.
d) Graphically, the LM curve represents the combinations of the interest rate (r) and income (Y) that satisfy the equilibrium condition in the money market. It is upward sloping, indicating a positive relationship between the interest rate and the level of real money supply.
e) To find the equilibrium income and interest rate, we need to find the intersection of the IS and LM curves. Equating the equations of the IS and LM curves:
300 + 10r = 200 + 4Y - rSolving for Y, we get:
5Y = 100 + 11rY = (100 + 11r) / 5Substituting this back into the IS equation, we can solve for the equilibrium interest rate (r).
f) The IS-LM model can be presented graphically by plotting the IS and LM curves on the same graph. The equilibrium income and interest rate are determined by the intersection of these two curves.
When there is a fiscal contraction, such as a decrease in government spending, the IS curve shifts inward. This leads to a decrease in the equilibrium income and a decrease in the equilibrium interest rate. The exact magnitude of the effects depends on the slopes of the IS and LM curves.
Please note that the numerical calculations and graphical representation can vary based on the specific values and equations used in the model.
About SubstitutionSubstitution is a method for finding integrals by substituting one of the variables and turning it into a simpler form.
Learn More About Substitution at https://brainly.com/question/26094713
#SPJ11
Please use the following information for the next two questions.
Meryl is 30 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,500 per year, and her financial advisor advises her to invest in the stock market, which the financial advisor expects to provide an average return of 10% in the future.
If Meryl follows her financial advisor's advice, how much money will she have at 65?
a. $4,726,821.57
b. $2,303,707.13
c. $3,400,309.42
d. $1,378,819.34
Meryl expects to live for 20 years after she retires at 65. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after her retirement at 65?
a. $270,592.58
b. $399,387.32
c. $161,955.60
d. $555,210.69
Here is a basic rule of thumb: Correct answers to questions one and two are B and C, respectively. Most experts advise setting a yearly retirement savings goal of 10% to 15% of your pre-tax income while preparing for retirement.
A retirement savings account is the ideal approach to save for retirement. We don't intend to be sly. Simply be very literal. Although there are many various types of investment accounts, retirement accounts like IRAs and 401(k)s were designed particularly to encourage people to save for their later years.
You should have three times your yearly wage in savings by the time you are 40. You should have six times your annual wage saved up by the time you turn 50. You should have eight times your current wealth by the age of 60.
To learn more about retirement savings , click here.
https://brainly.com/question/29744370
#SPJ4
B 2 Solar Company is considering the purchase of a machine for $30,000 that would reduce operating costs by $6,000 per year for 10 years. The machine will have no salvage value (residual value) at the
B2 Solar Company is contemplating the acquisition of a $30,000 machine that will save $6,000 per year for ten years and will have no residual worth (residual value) at the end of that period.
Given the costs and the savings, the payback period is calculated as follows:
Payback Period = Cost of Investment / Annual Savings= $30,000 / $6,000 = 5 years
Therefore, the payback period for the acquisition of the machine is 5 years.
B2 Solar Company is contemplating the acquisition of a $30,000 machine that will save $6,000 per year for ten years and will have no residual worth (residual value) at the end of that period.
To know more about Solar visit:
https://brainly.com/question/3077154
#SPJ11
Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. a. A project's MIRR is always greater than its regular IRR. b. If a project's IRR is greater than its WACC, then the MIRR will be less than the IRR. c. If a project's IRR is greater than its WACC, then the MIRR will be greater than the IRR. d. A project's MIRR is always less than its regular IRR. e. To find a project's MIRR, we compound cash inflows at the IRR and then discount the terminal value back to that the WACC
The correct statement is if a project's IRR is greater than its WACC, then the MIRR will be greater than the IRR. Option c is correct.
Modified internal rate of return (MIRR) is a financial metric used to assess the attractiveness of an investment. It is used in capital budgeting to estimate the potential profitability of a project. The MIRR assumes that all cash flows are reinvested at the company's cost of capital and that the project will be paid out over time.
A project's MIRR is greater than its regular IRR if it has a normal cash flow and is made up of one outflow followed by a series of inflows. Similarly, if the project's IRR is greater than its WACC, the MIRR will be greater than the IRR.
Therefore, c is correct.
Learn more about IRR https://brainly.com/question/31393609
#SPJ11
Littleton Inc is considering expanding its operations outside of the United States. Littleton has a strong U.S. brand, allowing it to earn to a high PM. Littleton’s management knows its international PM will be significantly lower but believes it can operate more efficiently abroad. Currently, Littleton has $220 million in NOA and $440 million in annual sales, generating a NOPAT of $33 million. Littleton’s management group believes expanding international would result in incremental sales of $90 million, requiring an investment in additional NOA, including pates its international operating income, after-tax, to be $6 million. Based solely on the above financial consideration, explain whether you would recommend management to expand internationally.
Based solely on the above financial consideration, management should expand internationally.
We must calculate Littleton Inc’s incremental operating profit by taking the difference in incremental sales and incremental NOA and multiplying it by incremental PM. NOA is calculated as the difference between assets and liabilities, which can be found by deducting liabilities from assets.
The incremental operating profit can be calculated as follows:
Incremental Sales = $90 million
NOA required to generate incremental sales = Incremental sales / Sales = $90 million / $440 million = 0.2045
Incremental NOA = Incremental sales × Incremental NOA = $90 million × 0.2045 = $18.405 million
Incremental Operating Profit = (Incremental Sales - Incremental NOA) × Incremental PM= ($90 million - $18.405 million) × 5.5% = $3.6085 million
NOPAT is net operating profit after taxes. Therefore, international operating income (after-tax) can be calculated as follows:
International Operating Income (after-tax) = Incremental Operating Profit × (1 - Tax Rate)= $3.6085 million × (1 - 0.4) = $2.1651 million
Therefore, based solely on the above financial consideration, it is recommended that management expand internationally as Littleton Inc can earn an incremental operating income of $2.1651 million by investing $18.405 million in additional NOA, thereby expanding its sales by $90 million.
Learn more about incremental cost at;
https://brainly.com/question/29567211
#SPJ11
On December 31, 2020, Searle Company sells production equipment to Transformer Inc. for $75,000. Searle includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2020. Searle estimates the prices to be $73,200 for the equipment and $1,800 for the cost of the warranty. In addition to the assurance warranty, Searle sold an extended warranty (service-type warranty) for an additional 2 years (2022-2023) for $1,200. Instructions (a) Prepare the journal entry to record this transaction on December 31, 2020. (5 Points) (b) What will be Searle's warranty revenue in 2022 and 2023? (1 Point)
The Warranty revenue for 2022 = $ 600 for the year 2022 and 2023
How to solve for the revenueWhen a company offers warranty services in addition to the sale of a product, the transaction price needs to be evaluated to account for these warranty services.
There are two types of warranties: assurance type and service type.
Assurance type warranty is provided to ensure that the product meets the agreed-upon specifications. It is not considered a separate performance obligation.
Service type warranty, on the other hand, is considered a separate performance obligation because it involves providing additional services to the customer.
Based on the above information, the question involves two performance obligations:
PO 1: Sale of production equipment and assurance warranty.
PO 2: Sale of service type warranty for 2 years.
(a) Journal entries in December 2020:
To record revenue and contract liability for Performance Obligation 1:
Debit Bank A/c $76,200
Credit Revenue $75,000
Credit Contract Liability $1,200
Performance Obligation 1 is completed, so the related revenue is recognized. Performance Obligation 2 is still pending, so the related amount received is recorded as a contract liability. It will be transferred to revenue upon completion of Performance Obligation 2.
(b) Warranty revenue in 2022 = $600 ($1,200 ÷ 2):
To recognize warranty revenue for 2022:
Debit Contract Liability $600
Credit Revenue $600
Upon completion of one year, 50% of the service type warranty amount is recognized as revenue.
Warranty revenue for 2022 = $600
To record warranty revenue for 2022:
Debit Contract Liability $600
Credit Revenue $600
These entries reflect the recognition of warranty revenue and the transfer of amounts from the contract liability account to revenue as performance obligations are fulfilled.
Read more on revenue here:https://brainly.com/question/16232387
#SPJ4
Use the following data to find P₂₅, P₅₀, P₇₅
5 7 8 9 33 22 14 12 10 0
Given data: 5 7 8 9 33 22 14 12 10 0We are asked to find P25, P50, P75, which represent the first, second, and third quartiles, respectively.
The first quartile, Q1, is the value that separates the lowest 25% of the data from the other values. The second quartile, Q2, is the value that separates the lowest 50% from the highest 50%. The third quartile, Q3, is the value that separates the lowest 75% from the highest 25%.P25.
First, we need to calculate the rank of the first quartile:n = 10Q1 = (n + 1) × 0.25 = 2.75This gives a rank of 2.75, which means we need to average the values of the second and third items in the data set to find P25:P25 = (7 + 8) / 2 = 7.5P50:To find the median, which is also the second quartile, we use the same formula:n = 10Q2 = (n + 1) × 0.5 = 5.5This gives a rank of 5.5, which means we need to average the values of the fifth and sixth items:P50 = (22 + 14) / 2 = 18P75.
N = 10Q3 = (n + 1) × 0.75 = 8.25This gives a rank of 8.25, which means we need to average the values of the eighth and ninth items:P75 = (12 + 10) / 2 = 11So, P25 = 7.5, P50 = 18, and P75 = 11.
In case the rank of a quartile is not a whole number, take the average of the values of the items whose ranks are the integer part of the rank and the next item.
To know more about quartile visit:-
https://brainly.com/question/29809572
#SPJ11
Your submission should include the following: • Part A - Argument for the continued supply of medical products to Russia so Brief overview of the key tenets of the ethical theory you will apply in Part A (150-300 words) • Application of the ethical theory to support an argument for the continued supply of medical products to Russia (600-800 words)
Part A - Argument for the continued supply of medical products to Russia: Brief overview of ethical theory Utilitarianism is a moral theory that takes into account the benefits and drawbacks of all possible courses of action when making moral decisions.
Utilitarianism is a philosophical theory that attempts to create the greatest good for the greatest number of people. Utilitarianism is a utilitarian approach that examines the consequences of an action to determine whether it is ethical or not. Utilitarianism emphasizes the importance of maximizing benefits and minimizing harms to achieve a good outcome.
Utilitarianism can be utilized to justify the continued supply of medical products to Russia by analyzing the potential benefits and drawbacks of discontinuing medical supply to Russia. There are several arguments for continuing the supply of medical products to Russia that can be supported by a utilitarian perspective.
Firstly, Russia has a significant population that requires access to medical supplies. If medical supplies are discontinued, Russia's population will suffer significant consequences. Medical supply shortages could result in deaths, illnesses, and other medical problems for people who rely on medical supplies.
Secondly, cutting off medical supplies to Russia would result in severe economic consequences for countries that produce medical supplies. Medical supply producers could suffer significant losses and job losses as a result of the cessation of medical supply to Russia.
A utilitarian approach emphasizes the importance of creating the greatest good for the greatest number of people, and it is clear that the cessation of medical supply to Russia would be detrimental to both Russia's population and the economies of countries that produce medical supplies.
In conclusion, utilitarianism provides a strong moral argument for continuing the supply of medical products to Russia. Despite Russia's political actions, the wellbeing of Russia's population and the economies of medical supply-producing countries are at stake. Utilitarianism is a valuable ethical framework to use when considering the potential consequences of an action on a global scale.
For more questions on: Utilitarianism
https://brainly.com/question/14453548
#SPJ11
In the first fiscal quarter of 2017 Dell Computer showed total debt of €1.98mil and total equity of €3.55mil. Assume Dell's beta is 2.2, the cost of debt is 7%, and Dell's effective income tax rate is 0.35. What is the Weighted Average Cost of Capital (WACC)? (1.5 point)
The Weighted Average Cost of Capital (WACC) for Dell Computer is 13.13%.
How to calculate the Weighted Average Cost of Capital (WACC)?To calculate the Weighted Average Cost of Capital (WACC), we need to consider the cost of both debt and equity, weighted by their respective proportions in the capital structure.
First, we calculate the proportion of debt and equity:
Debt proportion = Total Debt / (Total Debt + Total Equity) = €1.98mil / (€1.98mil + €3.55mil) = 0.358
Equity proportion = Total Equity / (Total Debt + Total Equity) = €3.55mil / (€1.98mil + €3.55mil) = 0.642
Next, we calculate the cost of equity using the Capital Asset Pricing Model (CAPM):
Cost of equity = Risk-free rate + Beta * Equity risk premium
Assuming a risk-free rate of 3% and an equity risk premium of 5%, the cost of equity would be:
Cost of equity = 3% + 2.2 * 5% = 13%
Now, we can calculate the WACC:
WACC = (Debt proportion * Cost of debt * (1 - Tax rate)) + (Equity proportion * Cost of equity)
Assuming a cost of debt of 7% and a tax rate of 35%, the WACC would be:
WACC = (0.358 * 7% * (1 - 0.35)) + (0.642 * 13%) = 0.04786 + 0.08346 = 0.13132 or 13.13%
Learn more about Weighted Average Cost of Capital (WACC) on:
https://brainly.com/question/28042295
#SPJ4
Draw the distinctions among exploratory, descriptive, and causal research. What conditions are most appropriate for each of the three major research purposes?
Exploratory research is focused on identification of any patterns or trends. Descriptive research is focused on explaining and defining the topic or problem. Causal research is focused on identifying the cause-and-effect relationship between variables.
Exploratory research, descriptive research, and causal research are the three major types of research designs. Exploratory research aims to examine the research subject to identify any patterns or trends. The aim of this type of research is to identify a topic for further research. Exploratory research is commonly conducted when researchers are not entirely sure what they are searching for. Such research can involve extensive literature research, case studies, interviews, and focus groups.
Descriptive research, on the other hand, aims to explain and define the topic or problem being investigated. This research seeks to identify and describe the various characteristics and behavior of a population. This type of research is useful for identifying patterns and trends, and it can be quantitative or qualitative.
Causal research is designed to identify the cause-and-effect relationship between variables. Causal research is often conducted when researchers want to establish whether one variable affects another. It often involves the manipulation of independent variables to observe their impact on the dependent variable.
The appropriate condition for each of the three major research purposes are:
Exploratory research: It is most appropriate when there is a need to investigate a new area of research where little or no prior knowledge exists. For instance, it can be used to investigate new consumer trends, the launch of a new product or service, or a change in consumer behavior.Descriptive research: It is most appropriate when the aim is to describe the characteristics of a particular group, situation or phenomenon. It can be used to describe consumer demographics, the level of awareness or perception of a brand or product, or the level of satisfaction of consumers with a product or service.Causal research: It is most appropriate when there is a need to understand how one variable influences another. For instance, it can be used to investigate how the price of a product influences the purchasing behavior of consumers, how an advertising campaign affects sales, or how an increase in salary impacts employee performance.Learn more about Exploratory research:
https://brainly.com/question/28317518
#SPJ11
TRUE / FALSE. 1) The marginal rate of substitution for strictly convex utility functions is constant.
True or False?
2) X1 is a normal good. If the price of X1 decreases, the income effect will cause the quantity of X1 purchased to decrease.
True or False?
3) My preference relation is I prefer students with higher SAT scores or higher ACT scores. This preference satisfies the transitivity requirement.
True or False?
1. False Strictly convex utility functions have a decreasing marginal rate of substitution. This is because the MRS, or marginal rate of substitution, is the slope of an indifference curve and is equivalent to the ratio of the marginal utilities of two goods.
2. False The income effect and the substitution effect are two distinct effects that occur when the price of a good changes
3. True The preference relation "I prefer students with higher SAT scores or higher ACT scores" is transitive because it is a complete and transitive ordering.
As more of a good is consumed, its marginal utility declines, so the slope of the indifference curve decreases as it moves downward to the right. A normal good is one for which the quantity demanded increases as income increases. If the price of a normal good decreases, the income effect will cause the quantity of the good purchased to increase.
Therefore, It means that if A is preferred to B and B is preferred to C, then A must be preferred to C.
Learn more about convex utility functions from the given link.
https://brainly.com/question/30340316
#SPJ11
Which of the following lists the steps of liquidating a partnership in the correct order? cm) OA. 1) Pay cash to the partners based on their capital balances, 2) Sell the assets of the partnership, 3) Pay all the liabilities of the partnership OB. 1) Pay all the liabilities of the partnership, 2) Sell the assets of the partnership, 3) Pay the remaining cash to the partners OC. 1) Sell the assets of the partnership, 2) Pay all partnership liabilities, 3) Pay the remaining cash to the partners D. 1) Pay cash to the partners based on their capital balances, 2) Pay all the liabilities of the partnership, 3) Sell the assets of the partnership
The correct order of steps for liquidating a partnership is 1) Sell the assets of the partnership, 2) Pay all partnership liabilities, and 3) Pay the remaining cash to the partners. Option C is the correct option.
The correct order of steps for liquidating a partnership is as follows: first, the assets of the partnership are sold to generate cash. This involves assessing and valuing the assets, finding buyers, and completing the sales.
Once the assets have been sold, the partnership uses the proceeds to pay off all the liabilities, including debts, outstanding payments, and obligations. Finally, after settling all liabilities, any remaining cash is distributed among the partners based on their capital balances or ownership percentages. This ensures a fair distribution of the partnership's remaining funds. Following this sequence of steps helps ensure an orderly and equitable dissolution of the partnership.
Learn more about liquidating a partnership at
https://brainly.com/question/28261253
#SPJ4
2. Describe and discuss the underlying reasons for the collapse of Luna Blockchain and UST stable coin.
The cryptocurrency and blockchain industry can be highly volatile and subject to various risks including,
Technological vulnerabilities, regulatory challenges, market fluctuations, and potential fraud or mismanagement.
Collapse of Luna Blockchain or issues with the UST stable coin, some potential underlying reasons and discussions could include,
Technological Vulnerabilities,
Blockchain networks and stable coins rely on robust and secure technological infrastructure.
If there were any significant technical vulnerabilities or flaws in the Luna Blockchain or the underlying smart contracts of UST stable coin.
It could lead to instability and loss of confidence in the system.
Regulatory Challenges,
The cryptocurrency industry operates in a complex regulatory landscape.
If Luna Blockchain or UST stable coin faced regulatory scrutiny, legal challenges, or compliance issues in certain jurisdictions.
It could impact their operations and stability.
Market Fluctuations,
The value and stability of stable coins are dependent on the underlying assets or mechanisms that support their pegged value.
If there were significant market fluctuations or disruptions in the underlying assets or markets related to UST stable coin.
It could lead to a collapse or loss of confidence in the stability of the coin.
Mismanagement or Fraud,
Poor management, financial mismanagement, or fraudulent activities within Luna Blockchain or UST stable coin could undermine trust and lead to a collapse.
Lack of transparency, inadequate audits, or misrepresentation of reserves or assets backing stable coin could contribute to such issues.
Learn more about Blockchain here
brainly.com/question/30166261
#SPJ4
Scenario 3: Mr. Ratu Epeli is a General Manager at Pacifica group of companies, Fiji. The pay details are as follows: Annual income - $68,000 Normal working hours - 37 hours per week He is a resident of Fiji Payroll process monthly wages. Deductions o FNPF o PAYE (if applicable) o Health Insurance $125.00 fortnightly o Housing loan $445.00 monthly Required: Calculate net monthly income of Mr. Ratu Epeli and determine his hourly wage rate. Show all necessary working. (8 marks)
The net monthly income of Mr. Ratu Epeli is $4,970.64 and his hourly wage rate is $33.40.
To calculate the net monthly income of Mr. Ratu Epeli and determine his hourly wage rate, we need to follow the below steps:
1: Determine the fortnightly health insurance contribution amount
Annual contribution of health insurance = 125 * 26 = $3,250
2: Determine the monthly housing loan contribution amount
Contribution of housing loan = $445
3: Calculate the gross monthly income
Gross monthly income = (Annual income / 12) = (68,000 / 12) = $5,667
4: Calculate the FNPF contribution
The FNPF rate of contribution by the employee is 8% of gross pay.
Contribution to FNPF = Gross monthly pay * rate of contribution= $5,667 * 8% = $453.36
5: Calculate the PAYE contribution
There is no need to calculate the PAYE deduction because it is not applicable to Mr. Ratu Epeli as he is a resident of Fiji.
6: Calculate the total deductions
Total Deductions = Housing Loan + Health Insurance + FNPF= $445 + ($3,250 / 12) + $453.36 = $696.36
7: Calculate the Net monthly income
Net monthly income = Gross monthly pay - Total deductions= $5,667 - $696.36= $4,970.64
8: Calculate the hourly wage rate
To calculate the hourly wage rate, we will divide the gross monthly pay by the number of hours in a month.
Hourly wage rate = Gross monthly pay / (Normal working hours * Number of weeks in a month)= $5,667 / (37 * 4.345) = $33.40
Learn more about net income at:
https://brainly.com/question/16748095
#SPJ11
Sal Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.88 every year in perpetuity. If the required return is 4.69 percent, what is the current stock price? A) $93.65 B) $108.93 C) $104.05 D) $99.39 E) $97.11
The required current stock price of the preferred stock of Sal Co. is $104.05.
We can use the formula for the present value of perpetuity to calculate the current stock price, where PV is the present value of the preferred stock, D is the annual dividend, and r is the required return.
PV = D/r
Given:Annual dividend = $4.88Required return = 4.69% = 0.0469Using the above formula:PV = $4.88/0.0469PV = $104.05
Therefore, the current stock price of the preferred stock of Sal Co. is $104.05.Option (C) is correct.
Explanation:To calculate the current stock price of the preferred stock of Sal Co., we need to calculate the present value of perpetuity.
This is given by the formula:PV = D/r Where,PV = Present value of Perpetuity and D = Annual dividen
dr = Required rate of return
On substituting the given values, we get:PV = $4.88/0.0469PV = $104.05
Therefore, the current stock price of the preferred stock of Sal Co. is $104.05.
Learn more about current stock price here,
https://brainly.com/question/31165809
#SPJ11
Why is there a greater emphasis on the detection of fraud in
tests of details of cash balances than for other balance sheet
accounts? Could you provide two specific examples that demonstrate
how this
The emphasis on fraud detection in tests of cash balances is greater compared to other balance sheet accounts due to the high liquidity and vulnerability of cash, as well as its materiality and importance to financial statements.
Detection of fraud in cash balance and balance sheetThere are a few reasons why there is often a greater emphasis on the detection of fraud in tests of details of cash balances compared to other balance sheet accounts:
High Liquidity and Vulnerability: Cash is one of the most liquid assets a company possesses. It can be easily misappropriated or stolen without leaving a clear audit trail. Due to its high liquidity, cash is more susceptible to fraudulent activities such as skimming, lapping, or unauthorized disbursements.Materiality and Importance: Cash balances are typically considered material to the financial statements of a company. Even a relatively small misstatement in cash can have a significant impact on the overall financial position and profitability of an organization.Here are two specific examples that demonstrate how the emphasis on fraud detection in tests of cash balances is implemented:
Bank Reconciliation: Auditors often perform bank reconciliations as part of their testing procedures for cash balances. This involves comparing the company's cash records with the bank's records to identify any discrepancies.Segregation of Duties: Auditors pay close attention to the segregation of duties related to cash handling and recording. They assess whether appropriate controls are in place to prevent a single individual from having too much control over cash-related activities.Learn more on fraud detection here https://brainly.com/question/28484894
#SPJ4
You want to calculate the depreciation and then record the depreciation on a piece of equipment using the straight-line depreciation method. Knowing that a depreciation entry doesn’t impact any of your bank accounts directly, which QuickBooks window(s) do you use to enter this information?
A Chart of Accounts
B Expense
C Account
D Journal Entry
To calculate the depreciation and then record the depreciation on a piece of equipment using the straight-line depreciation method, the QuickBooks window that is used to enter this information is the journal Entry. Option d is correct.
Depreciation is an accounting technique that reduces the worth of an asset over time. Depreciation can be calculated utilizing one of the four methodologies available in QuickBooks: straight-line, declining balance, sum-of-years-digits, and income.
Straight-line depreciation is the most basic method for computing depreciation and is the most commonly used method. In QuickBooks, journal entries are used to record depreciation because depreciation entries do not have a direct impact on any bank accounts.
Therefore, option d is correct.
Learn more about journal Entry https://brainly.com/question/30499005
#SPJ11
When studying a project, the following variable costs were estimated for a normal production capacity
of 140,000 units, with a maximum capacity of 200,000 units:
Materials $120,000
Labor $300,000
Other $80,000
Fixed costs are estimated, according to the level of production, in:
Production
Fixed Cost
0 – 40,000
$320,000
40,001 – 130,000
$380,000
130,001 – 180,000
$420,000
180,001 – 200,000
$500,000
If the selling price of each unit is $15 and the expected production is 100,000 units per year, what is
the minimum number of additional units that need to be sold at the price of $11 per unit to show a
profit of $762,000 per year? To raise sales to 120,000 units per year, how much could be spent
additionally in advertising (fixed cost) so that by maintaining a price of $15, a profit of
20% on sales?
To raise sales to 120,000 units per year, $431,160 Could be spent additionally on advertising (fixed cost) so that by maintaining a price of $15, a profit of 20% on sales
Materials $120,000
Labor $300,000
Other $80,000
Fixed Cost 0 – 40,000 $320,00040,001 – 130,000 $380,000130,001 – 180,000 $420,000180,001 – 200,000 $500,000
The selling price of each unit is $15
Expected production is 100,000 units per year
Expected Profit per year = $762,000For the first part of the question
Calculate the variable cost per unit:
Variable cost per unit = Materials + Labor + Other
Variable cost per unit = $120,000 + $300,000 + $80,000
Variable cost per unit = $500,000/140,000Variable cost per unit = $3.57
Minimum number of additional units required to show a profit of $762,000 = 20,663
Therefore, to show a profit of $762,000, an additional 20,663 units need to be sold at $11 per unit. For the second part of the question:
Expected production is 120,000 units per year
Additional sales required = 120,000 - 100,000
Additional sales required = 20,000 units
Fixed cost = (Units sold * Contribution per unit) - Profit
Fixed cost = (120,000 * 11.43) - (0.20*120,000*15)
Fixed cost = $791,160 - $360,000
Fixed cost = $431,160
Therefore, an additional fixed cost of $431,160 could be spent to raise sales to 120,000 units per year while maintaining a price of $15, a profit of 20% on sales.
Learn more about profit from the given link.
https://brainly.com/question/31117493
#SPJ11
Which of the following is a disadvantage of the departmental overhead rate method? a. It may fail to accurately assign many overhead costs that are not driven by production volume. b. Allows each department to have its own overhead rate.
c. Allows each department to have its own allocation base, d. The departmental overhead rate is usually more accurate in overhead allocations than the plantwide overhead rate. e. The departmental overhead rate is consistent with GAAP and can be used for external reporting.
A disadvantage of the departmental overhead rate method is that it may fail to accurately assign many overhead costs that are not driven by production volume.
The departmental overhead rate method involves assigning overhead costs to different departments within an organization based on each department's specific activities or cost drivers. While this method offers advantages such as allowing each department to have its own overhead rate (option b) and allocation base (option c), it also has its limitations.
One major disadvantage is that the departmental overhead rate method may fail to accurately assign many overhead costs that are not driven by production volume (option a). Some overhead costs, such as administrative expenses or research and development costs, may not be directly related to production volume and may not be properly allocated to the departments based on their activities. This can result in distorted departmental cost allocations and potentially inaccurate decision-making.
The remaining options, d and e, are not disadvantages of the departmental overhead rate method. Option d suggests that the departmental overhead rate is more accurate than the plantwide overhead rate, which is not necessarily true. The accuracy of the overhead allocation depends on various factors and cannot be generalized. Option e states that the departmental overhead rate is consistent with Generally Accepted Accounting Principles (GAAP) and can be used for external reporting, which does not relate to its disadvantage.
Therefore, the correct answer is option a: It may fail to accurately assign many overhead costs that are not driven by production volume.
To learn more about production click here:
brainly.com/question/31859289
#SPJ11