The phase of the business cycle that includes a period of consistent growth in GDP and falling unemployment is called expansion.
What do you mean by business cycle?A business cycle is characterized by four main stages that are expansion, peak, contraction, and trough.
The business cycle stage of expansion is when an economy experiences relatively rapid growth, interest rates tend to be low, production increases and inflationary pressures build.
Therefore, C is the correct option.
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Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the actual direct deposit of payroll for the first week of January
Answer:
the actual direct deposit payroll is $12,843
Explanation:
The computation of the actual direct deposit payroll is shown below;
= Total salary - withholdings
= (15 × 40 × $30) - Federal income tax - state income tax - FICA tax
= $18,000 - ($18,000 × 0.15) - ($18,000 × 0.06) - ($18,000 × 7.65%)
= $12,843
Hence, the actual direct deposit payroll is $12,843
Basically we applied the above formula
Riverbed Corp bought equipment on January 1, 2022. The equipment cost $460000 and had an expected salvage value of $65000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be $395000. $158000. $302000. $460000.
Answer:
Book value= $302,000
Explanation:
Giving the following information:
Purchase price= $460,000
Salvage value= $65,000
Useful life= 5 years
First, we need to calculate the annual depreciation.
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (460,000 - 65,000) / 5
Annual depreciation= $79,000
Now, the accumulated depreciation after 2 full years:
Accumulated depreciation= 79,000*2= $158,000
Finally, the book value:
Book value= purchase price - accumulated depreciation
Book value= 460,000 - 158,000
Book value= $302,000
Many employees of a local restaurant suddenly quit and seek other opportunities. What is the most likely explanation for the large number of employees quitting?
A. a developing price war
B. a protest action by the union
C. decrease in positive incentives to work
D. decrease of negative incentives to being unemployed
Answer:
A. a developing price war
Riverboat Adventures pays $170,000 plus $14,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $22,000, a building appraised at $79,200, and paddleboats appraised at $118,800. Compute the cost that should be allocated to the building. Multiple Choice $66,240. $61,200. $79,200.
Answer:
Total cost allocated to building = $66,240
Explanation:
Given:
Total amount pay = $170,000 + $14,000 = $184,000
Land appraised amount = $22,000
Building appraised amount = $79,200
Paddleboats appraised price = $118,800
Find:
Total cost allocated to building
Computation:
Total appraisal price = Land appraised amount + Building appraised amount + Paddleboats appraised price
Total appraisal price = $22,000 + $79,200 + 118,800
Total appraisal price = $220,000
Total cost allocated to building = [Total amount pay / Total appraisal price]Building appraised amount
Total cost allocated to building = [184,000/220,000]79,200
Total cost allocated to building = $66,240
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 36%, while stock B has a standard deviation of return of 16%. The correlation coefficient between the returns on A and B is 0.30. Stock A comprises 30% of the portfolio, while stock B comprises the rest of the portfolio. What is the standard deviation of the return on this portfolio?
Answer: 17.7%
Explanation:
Standard deviation of portfolio = √(Weight of A² * Standard deviation of A² + Weight of B² * Standard deviation of B² + 2 * Weight of A * Weight of B * Correlation coefficient of A and B * Standard deviation of A * Standard deviation of B)
= √(30%² * 36%² + 70%² * 16%² + 2 * 30% * 70% * 0.30 * 36% * 16%)
= √0.0314656
= 17.7%
Hardaway Fixtures' balance sheet at December 31, 2020, included the following:
Shares issued and outstanding:
Common stock, $1 par $1,080,000
Nonconvertible preferred stock, $50 par 25,000
On July 21, 2021, Hardaway issued a 25% stock dividend on its common stock. On December 12, it paid $75,000 cash dividends on the preferred stock. Net income for the year ended December 31, 2021, was $4,800,000.
Required:
Compute Hardaway's earnings per share for the year ended December 31, 2021.
Answer:
$3.50
Explanation:
Earnings for EPS = $4,800,000 - $75,000
Earnings for EPS = $4,725,000
Weighted Average Outstanding share:
Date Number of shares Weight Weighted Average
01-01-2021 Opening 1,080,000 12/12 1,080,000
21-07-2021 Stock Dividend 270,000 12/12 270,000
(1,080,000*25%)
Total 1,350,000
Earnings per share = Earnings for EPS/Weighted Average Outstanding share
Earnings per share = $4,725,000/1,350,000
Earnings per share = $3.50
Concord Company sells merchandise on account for $5700 to Ivanhoe Company with credit terms of 2/10, n/30. Ivanhoe Company returns $1000 of merchandise that was damaged, along with a
check to settle the account within the discount period. What is the amount of the check?
$4700
$4606
$5586
$5606
Answer:
The right solution is Option b ($4606 ).
Explanation:
The given values are:
Company sells merchandise,
= $5700
Company returns,
= $1000
Now,
The amount of the check will be:
= [tex](5700-1000)\times 98 \ percent[/tex]
= [tex](5700-1000)\times 0.98[/tex]
= [tex]4700\times 0.98[/tex]
= [tex]4606[/tex] ($)
Although the Fed has very strong influence over the money supply, it does not have complete control a.Because the Fed has no idea how much reserves will change when it buys or sells securities. b.Because of unpredictable changes in the public's desire to hold cash or borrow and banks' desires to hold reserves or lend. c.Because of unpredictable changes in reserve requirements. d.Because the FOMC meets only twice a year.
Answer: b. Because of unpredictable changes in the public's desire to hold cash or borrow and banks' desires to hold reserves or lend.
Explanation:
The Fed is able to embark on monetary policy that influences the entire country - and the world to some extent - because they have very strong influence over the money supply of the US$.
This influence is not absolute however because as the old adage goes, "you can lead a horse to water but you can't make him drink". In other words, the Fed can relax(impose) restrictions to make money more(less) available but they cannot force people to borrow(hold) that money.
They can't force banks either to either hold reserves or lend money out because banks are free to impose their own reserve limits on top of those of the Fed.
A firm has three different investment options. Option A will give the firm $10 million at the end of one year, $10 million at the end of two years, and $10 million at the end of three years. Option B will give the firm $15 million at the end of one year, $10 million at the end of two years, and $5 million at the end of three years. Option C will give the firm $30 million at the end of one year, and nothing thereafter. Which of these options has the highest present value?
a. Option A
b. Option B
c. Option C
c. The depends on the rate of interest, which is not specified here
Net Present Value depends on the rate of interest, which is not specified here so we can not take any decision regarding the other options. The correct option is d.
The interest rate applied, which takes into account both the investment's risk and the time value of money, determines the present value of future cash flows. We cannot appropriately calculate the present value or compare the options without knowing the discount rate.
The future cash flows must be discounted to their present value using the proper discount rate in order to determine which option has the highest present value.
Thus, the ideal selection is option d.
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HELP!
You should always emphasize a word in the middle of a sentence.
A.True
B.False
Answer:
false
Explanation:
bbbbbbbbbbbbbbbbb
The company has 7 million shares of common stock outstanding. The current share price is $68, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6%, and sells for 97% of par. The second issue has a face value of $40 million, a coupon rate of 6.5%, and sells for 108% of par. The first issue matures in 21 years, the second in 6 years. Suppose the most recent dividend was $3.25 and the dividend growth rate is 5%. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21%. What is the company’s WACC?
the wacc approach to valuation is not as useful as the apv approach in leveraged buyouts because: the capital structure is changing. there is no tax shield with the wacc. the value of the levered and unlevered firms are equal. the unlevered and levered cash flows are separated which cannot be used with the wacc approach. there is greater risk with a lbo.
Answer:
the capital structure is changing
Explanation:
As we know that wacc approach used to determined the cost of capital by taking the cost and weightage of the capital structure i.e. debt, equity and the preferred stock The same would not be useful for the valuation purpose as the apv approach in the leveraged buyouts because the capital structure i.e. debt, equity and the preferred stock keeps changing
It does not remian constant
Therefore the same would be considered
Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should B) shift the short-run aggregate supply curve to the right. D) move the economy down along a stationary short-run aggregate supply curve. C) move the economy up along a stationary short-run aggregate supply curve. A) shift the short-run aggregate supply curve to the left.
Answer: A) shift the short-run aggregate supply curve to the left.
Explanation:
The oil and natural gas refining capacity in the Gulf of Mexico was destroyed which means that facilities in the Gulf will be unable to supply natural gas, gasoline and heating oil.
These are all very important commodities in the market and drive a lot of production. With the supply of these commodities decreasing and the subsequent slow down of production in multiple industries as a result, the aggregate supply curve will shift to the left in the short run to reflect the reduction in supply of goods in the economy.
DS Unlimited has the following transactions during August.
August 6 Purchases 54 handheld game devices on account from GameGirl, Inc., for $120 each, terms 1/10, n/60.
August 7 Pays $320 to Sure Shipping for freight charges associated with the August 6 purchase.
August 10 Returns to GamerGirl four game devices that were defective.
August 14 Pays the full amount due to GameGirl.
August 23 Sells 34 game devices purchased on August 6 for $140 each to customers on account. The total cost of the 34 game devices sold is $4,257.00. 2.
Required:
Record the period-end adjustment to cost of goods sold on August 31, assuming the company has no beginning inventory and ending inventory has a cost of $2,003.
Answer:
August 6
Debit: Inventory: (54 * $120) = $6480.00
Credit: Accounts Payable: $6,480.00
August 7 - shipping
Debit: Inventory $320.00
Credit: Cash $320.00
August 10
Debit: Accounts Payable :(4 * $120) = $480.00
Credit: Inventory $480.00
August 14
Debit: Accounts Payable : $(6480 - 480) = $6000.00
Credit: Inventory $60.00
Cash : $(6000 - 60) = $5940.00
(August 14th Inventory: $6000 × 1% = $60)
August 23
Debit: Accounts Receivable ($140*34) = $4760
Credit: sales Revenue $4760
August 23
Debit: Cost of Goods Sold $4,257.00
Credit: Inventory $4,257.00
Explanation:
INVENTORY:
A newly formed company purchases investments classified as available-for-sale securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The financial statements at the end of the year would show which of the following?
A. No loss on the income statement Available-for-sale investments of $11,000 and an unrealized loss of $2,000 in stockholders' equity on the balance sheet
B. No loss on the income statement Available-for-sale investments of $13,000 on the balance sheet
C. Income Statement loss of $2,000 Available-for-sale investments of $13,000 on the balance sheet
D. Loss of $2,000 on the income statement Temporary investments of $11,000 on the balance sheet
Answer: A. No loss on the income statement Available-for-sale investments of $11,000 and an unrealized loss of $2,000 in stockholders' equity on the balance sheet.
Explanation:
Available-For-Sale (AFS) securities are not to have their gains or losses reflected in the income statement. They are to be reflected in the Other Comprehensive Income (OCI) section of the Stockholders Equity.
If there is a loss, the AFS security is written down by the loss amount which is then transferred to the OCI section of equity as an unrealized loss. It will reduce the OCI which would reduce the stockholders equity.
In this case therefore, AFS would go to $11,000 and OCI would record an unrealized loss of $2,000.
Describe the purpose of the balance sheet and understand its usefulness and limitations
Answer:
The description of the given question is described in the segment below.
Explanation:
Purpose of the balance sheet:
The objective of something like the balance sheet as well as accounting records would be to disclose a company's financial situation across a certain date.Usefulness and limitation:
Everything just provides a picture somewhere after some kind of organization's financial statement of its investments, future or taxation liabilities as well as equities.On December 1, delivery equipment was purchased for $6,144. The delivery equipment has an estimated useful life of four years (48 months) and no salvage value. Using the straight-line depreciation method, analyze the necessary adjusting entry as of December 31 (one month) using T accounts, and then formally enter this adjustment in the general journal.
Answer and Explanation:
The presentation is shown below;
Depreciation expense
Adjustment $128 ($6,144 ÷ 48 months)
Accumulated depreciation
Adjustment $128
The journal entry is
Depreciation expense $128
To Accumulated depreciation $128
(Being depreciation expense is recorded)
Here the depreciation expense is debited as it increased the expense and credited the accumulated depreciation as it decreased the asset
A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $105,000 at the time the roof was destroyed by a windstorm. The actual cash value of the loss was $10,000, but it will cost $15,000 to replace the roof. Ignoring any deductible, what will the insurer pay to settle this loss
Answer: $13125
Explanation:
The amount that the insurer will pay to settle this loss will be calculated thus:
= Insured claim × Insurance value / 80% of replacement value
= 15000 × 105,000 /80% × 150000.
= 15000 × 105,000 / 120000
= 13125
Therefore, the insurer will pay $13125
The management of Lanzilotta Corporation is considering a project that would require an investment of $191,000 and would last for 6 years. The annual net operating income from the project would be $108,000, which includes depreciation of $21,000. The scrap value of the project's assets at the end of the project would be $26,200. The cash inflows occur evenly throughout the year. The payback period of the project is closest to :___________
Answer:
1 year 5 month
Explanation:
The Project Cash flow Summary is as follows :
Year 0 = -$191,000
Year 1 = $108,000 + $21,000 = $129,000
Year 2 = $108,000 + $21,000 = $129,000
Year 3 = $108,000 + $21,000 = $129,000
Year 4 = $108,000 + $21,000 = $129,000
Year 5 = $108,000 + $21,000 = $129,000
Year 6 = $108,000 + $21,000 + $26,200 = $155,200
Payback Period is the term used to determine how long the future cash flows would equal the amount invested.
$191,000 = $129,000 + 62,000/ $129,000 x 12
The future cash flows will equal $191,000 in 1 year 5 months.
Which of the following is a positive macroeconomics statement? Question 8 options: The central bank should increase the nation's money supply. The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales. The local government ought to spend more on recreational facilities.
Answer:
The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.
Explanation:
Macroeconomics is a branch of economics that studies the economy as a whole. Macroeconomics studies economic aggregates such as inflation, unemployment, GDP and growth rate.
Microeconomics is a branch of economics that studies the decisions individuals and firms make in response to changes in economic factors. These factors include price, resources etc. it studies how firms and individuals allocate and make decisions about resources
Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.
For example, the effect of an expansionary monetary policy on unemployment can be tested
Normative economics is based value judgements, opinions and perspectives. For example, the statement - The local government ought to spend more on recreational facilities - is an opinion.
The description, measurement, and explanation of economic processes, expectations, and related phenomena are the main goals of the field of Positive Macroeconomics.
Thus, the statement, "The central bank should increase the money supply" is considered a positive statement. Option (a) is the correct answer to this question.
Positive economics is the study of economics through an objective analytical lens. Most economists base their future projections on what has already happened and what is happening in a particular economy.
Positive economics is an objective branch of economics that bases its conclusions on reality or current events.Positive economics analyses can be used to develop conclusions that can be tested and supported by evidence.Positive economic theory doesn't offer suggestions or directions.Therefore, the statement, "The central bank should increase the money supply" is considered a positive statement. Option (a) is the correct answer to this question.
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Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $53,200 with an adjusted basis of $31,920 for $35,112. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $15,960 for $10,374. What is the amount and character of Lena's gain or loss?
Answer:
Ordinary gain $3,192; Loss $5,586
Explanation:
Calculation to determine the amount and character of Lena's gain or loss
Based on the information given she has an ORDINARY GAIN § 1245 DEPRECIATION RECAPTURE of the amount of $3,192 calculated as ($35,112 − $31,920) from the sale of the first equipment as well as § 1231 LOSS of the amount of $5,586 ($10,374 − $15,960) from the sale of the second equipment.
Therefore the amount and character of Lena's gain or loss will be Ordinary gain of $3,192 and Loss of $5,586.
Define the six sources of business law
Answer:
Explanation:
Sources of law are the origins of laws, the binding rules that enable any state to govern its territory. The term "source of law" may sometimes refer to the sovereign or to thUS Constitution. Constitutional law governs the interpretation of the US Constitution and its statutes.
Federal Statutes. Statutory law is the body of written laws that have been passed by the US Congress.
Common Law. US common law is also called case law. ...
Regulations of Federal Agencies. ...
International Treaties. ...e seat of power from which the law derives its validity.
A company has a minimum required rate of return of 8%. It is considering investing in a project that costs $379,650 and is expected to generate cash inflows of $150,000 each year for three years. The approximate internal rate of return on this project is
Answer:
9%
Explanation:
- $379,650 CF 0
$150,000 CF 1
$150,000 CF 1
$150,000 CF 1
The approximate internal rate of return on this project is 9%
Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations and sales activities for June. The journal entry to record June sales is:
Direct materials used $ 88,000
Direct labor used $ 161,800
Predetermined overhead rate (based on direct labor) 140 %
Goods transferred to finished goods $ 445,000
Cost of goods sold $ 457,000
Credit sales $ 833,400
A. Debit Accounts Receivable $833,400; credit Cost of Goods Sold $833,400.
B. Debit Accounts Receivable $833,400; credit Sales $376,400; credit Finished Goods Inventory $457,000.
C. Debit Cost of Goods Sold $457,000; credit Sales $457,000.
D. Debit Finished Goods Inventory $457,000; debit Sales $833,400; credit Accounts Receivable $833,400; credit Cost of Goods Sold $457,000.
E. Debit Accounts Receivable $833,400; credit Sales $833,400; debit Cost of Goods Sold $457,000; credit Finished Goods Inventory $457,000.
Answer:
E. Debit Accounts Receivable $833,400; credit Sales $833,400; debit Cost of Goods Sold $457,000; credit Finished Goods Inventory $457,000.
Explanation:
Based on the information given we were told that the Cost of goods sold was the amount of $ 457,000 while the Credit sales was the amount of $ 833,400 which means that the appropiate journal entry to record June sales is:
Debit Accounts Receivable $833,400
Credit Sales $833,400
(To record sales)
Debit Cost of Goods Sold $457,000
Credit Finished Goods Inventory $457,000
(To record sales)
The following selected account balances are taken from the records of Cooper Corporation for the past two years.
December 31
2018 2017
Equipment $750 $400
Accumulated depreciation 160 225
Land 92 50
Bonds payable 30 50
Common stock 120 100
Additional paid in capital 400 320
Retained earnings 825 675
Other information available for 2018:
Net income for the year was $200.
Depreciation expense on plant and equipment was $70.
Equipment with an original cost of $200 and Accum. Dep. of $135 was sold at a gain of $5.
No land was sold during the year.
Both new equipment and land were purchased during the year.
Bonds payable were retired
Common stock was issued for cash.
Cash dividends were declared and paid.
1. How much cash did Cooper Corp. receive from the sale of equipment?
a. 60
b. 135
c. 195
d. 70
e. None of the above
2. What is Cooper Corp's net increase (decrease) in cash from investing activities?
a. 18
b. (522)
c. (397)
d. (480)
e. None of the above
3. What is Cooper Corp's net increase (decrease) in cash from financing activities?
a. 50
b. (80)
c. 30
d. (50)
e. None of the above
Answer:
Cooper Corporation
1. Cash received from the sale of equipment:
= d. 70
2. Decrease in cash from investing activities:
= b. (522)
3. Increase in cash from financing activities:
= c. 30
Explanation:
a) Data and Calculations:
December 31
2018 2017 Change
Equipment $750 $400 +$350
Accumulated depreciation (160) (225) +65
Land 92 50 +42
Bonds payable 30 50 -20
Common stock 120 100 +20
Additional paid in capital 400 320 +80
Retained earnings 825 675 +150
Net income for the year = $200
Depreciation expense = $70
Less Gain from sale of equipment $5
Equipment
Account Titles Debt Credit
Beginning balance $400
Cash purchase 550
Sale of equipment $200
Ending balance 750
Sale of equipment
Equipment $200
Accumulated depreciation $135
Cash 70
Gain from sale 5
Retained earnings:
Beginning balance $675
Net income 200
Dividends 50
Ending balance 825
Statement of Cash Flows (partial):
Investing activities:
Sale of equipment $70
Purchase of equipment -550
Purchase of land -42
Decrease in cash $522
Financing activities:
Bonds payable -20
Common stock +20
Additional paid in capital +80
Dividends paid -50
Increase in cash $30
Cal Poly Corporation would like to start a new project: building a high-tech rose float for the next regional contest. This rose float project will require $35,000 in the initial cost. The company is planning to raise this amount of money by selling new corporate bonds and new stocks. It has a target capital structure of 60 percent common stock, and 40 percent debt. Flotation costs for issuing new common stock is 7%, and for new debt it is 4%.
(a) The true required initial investment that Cal Poly Corporation should use in its valuation of the rose is:_____.
1. $36,920.
2. $36,820.
3. $35,000.
4. $33,180.
(b) The lower the flotation costs, the lower the initial investment that needs to be used in project valuation, and so the lower the project's Net Present Value. This statement is____.
1. True
2. False
Answer and Explanation:
The computation is shown below;
a.
Given that
Weight of Equity = 0.4
Weight of Debt = 0.6
The Flotation cost of Capital = Weight of Equity × Flotation cost of Equity + Weight of Debt × Flotation cost of Debt
= 7 × 0.4 + 4 × 0.6
= 5.2
Now
True cost is
= initial investment ÷ (1 - flotation cost %)
= $35,000 ÷ (1 - 0.052)
= $36,920
b
In the case when there is a less flotation cost so it would decreased the initial investment due to this there would be an increase in net present value
hence, the given statement is false
The following information pertains to Agnew Corp. and its divisions for the year ended December 31, 2016.
Sales to unaffiliated customers $3,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers 1,050,000
Interest earned on loans to other operating segments 70,000
Agnew and all of its divisions are engaged solely in manufacturing operations. Agnew has a reportable segment if that segment's revenue exceeds
a. $462,000.
b. $455,000.
c. $357,000.
d. $350,000.
Answer:
Agnew Corp.
Agnew has a reportable segment if that segment's revenue exceeds
a. $462,000.
Explanation:
a) Data and Calculations:
Sales to unaffiliated customers $3,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers 1,050,000
Interest earned on loans to other operating segments 70,000
Total entity income $4,620,000
Reportable segment = 10% of $4,620,000 = $462,000, which is more than
Intersegment sales and interest = $1,120,000 ($1,050,000 + $70,000)
the total surface area of hemisphere is 4158sq then what is the circumference of the base
Answer:
C = 132 units
Explanation:
Given the following data;
TSA of hemisphere = 4158 sq units
To find the circumference of the base;
Mathematically, the total surface area of a hemisphere is given by the formula;
TSA of hemisphere = 3πr²
First of all, we would determine the radius of the hemisphere.
4158 = 3 * 22/7 * r²
Cross-multiplying, we have;
4158 * 7 = 3 * 22 * r²
29106 = 66r²
r² = 29106/66
r² = 441
Taking the square root of both sides, we have;
r = √441
r = 21 units
Next, we determine the circumference of the base using the same radius;
Circumference of circle, C = 2πr
C = 2 * 22/7 * 21
C = 924/7
C = 132 units
Four Seasons Industries has established direct labor performance standards for its maintenance and repair shop. However, some of the labor records were destroyed during a recent fire. The actual hours worked during August were 2,250, and the total direct labor budget variance was $1,170 unfavorable. The standard labor rate was $14.40 per hour, but recent resignations allowed the firm to hire lower-paid replacement workers for some jobs, and this produced a favorable rate variance of $3,150 for August.
Required
a. Calculate the actual direct labor rate paid per hour during August. (Do not round intermediate calculations. Round your answer to 1 decimal place.) ual direct labor rate per hour
b. Calculate the dollar amount of the direct labor efficiency variance for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). t labor efficiency
c. Calculate the standard direct labor hours allowed for the actual level of activity during August. (Hint: Use the formula for the efficiency variance and solve for the missing information.) Standard direct labor hours
Answer:
a. Actual labor Rate:
(AR-SR)*Actual hours = Labor rate variance
Labor rate variance/Actual hours = AR-SR
AR = (Labor rate variance/Actual hours) + SR
Actual rate= (-3,150/2,250) + 14.4
Actual rate = -1.4 + 14.4
Actual rate = 13 per hour
Note: Labor rate variance is -3,150, Standard rate is 14.4 per hour and Actual hours is 2,250.
b. Direct labour efficiency variance = Total direct labour budget variance - Direct labour rate variance
Direct labour efficiency variance = $1,170 - (-$3,150)
Direct labour efficiency variance = $4,320 Unfavourable
c. Direct Labour efficiency variance = (AH-SH)*SR
4,320 = (2,250 - SH)*14.4
2,250 - Standard hours = 4,320/14.4
2,250 - Standard hours = 300
Standard hours = 2,250 - 300
Standard hours = 1,950
Hotel California Hotel California is a luxury hotel which has just got a new manager, Rocky. Given its location and quality, the hotel always had enough people making advance reservations to fill up all the rooms available. The hotel charges $200 per room per night for reservations made in advance (Hint:think of this $200 as the purchasing cost in the Newsvendor model). Rocky had taken the OPRE3310 at UTD last semester and decided to implement some of those techniques in his current job. He implemented a policy of reserving some rooms for last-minute requests and charges these requests S300 per room per night (Hint: think of this $300 as the selling price in the Newsvendor model) The unsold reserved rooms are worth nothing at the end of the day (Hint: that is the salvage value is $0). Based on his estimation, the number of last minute customers is uniformly distributed with minimum of 1 and maximum of 10
a) How much is the cost of reserving too little by one? That is the underage cost, Cu
b) How much is the cost of reserving too much by one? That is the overage cost, Co
c) What is the optimal service level?
d) How many rooms should be reserved for last-minute customers? Hint: what is Q"?
Answer:
Hotel California
a) The cost of reserving too little by one, (the underage cost) Cu
= $100
b) The cost of reserving too much by one, (the overage cost) Co =
= $200
c) The optimal service level
= 0.33
d) The number of rooms that should be reserved for last-minute customers, Q
= 3
Explanation:
a) Data and Calculations:
Charges per room per night (purchase cost) = $200
Charges for last-minute requests per room per night (selling price) - $300
Value of unsold reserved rooms (Salvage value) = $0
Minimum of last-minute customers, Min = 1
Maximum of last-minute customers, Max = 10
a) The cost of reserving too little by one, (the underage cost) Cu = Selling price - Purchasing cost
= $300 - $200
= $100
b) The cost of reserving too much by one, (the overage cost) Co = Purchasing cost - Salvage value
= $200 - $0
= $200
c) The optimal service level = Cu/Co+Cu
= $100/$200 + $100
= $100/$300
= 0.33
d) The number of rooms that should be reserved for last-minute customers, Q
= Cu/Co+Cu (Max - Min) + Min
= 0.33 * (10 - 1) + 1
= 0.33 * (10)
= 3