Normal costing system is used by Company YYK which includes direct cost categories that are direct material and direct manufacturing labor and an indirect-cost category that is manufacturing overhead.
The provided information for 2020 is as follows:
Total manufacturing costs = $9,500,000Manufacturing overhead allocated = $4,200,000 (at a rate of 150% of direct manufacturing labor costs)WIP inventory 1/1/2020 = $440,000Cost of finished goods manufactured = $8,250,000(a) Calculation of the direct manufacturing labor costs in 2020:
Total manufacturing costs = Direct material + Direct manufacturing labor + Manufacturing overhead allocated$9,500,000 = Direct material + Direct manufacturing labor + $4,200,000Direct material + Direct manufacturing labor = $9,500,000 - $4,200,000Direct material + Direct manufacturing labor = $5,300,000Direct manufacturing labor = $5,300,000 - Direct materialHence, direct manufacturing labor costs in 2020 are $5,300,000 - Direct material.
(b) Calculation of the cost of direct material used in 2020:Direct material + Direct manufacturing labor = $5,300,000Direct manufacturing labor = $5,300,000 - Direct material$4,200,000 = 150% * Direct manufacturing labor costDirect manufacturing labor cost = $4,200,000 / 1.5Direct manufacturing labor cost = $2,800,000Direct material = $5,300,000 - $2,800,000Cost of direct material used in 2020 = $2,500,000(c) Calculation of the ending WIP inventory on 31/12/2020:Total manufacturing costs = Direct material + Direct manufacturing labor + Manufacturing overhead.
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It's Friday moming, work has gradually built up over the course of the week and you have an important meeting at 09:30 am. You have a number of tasks on your desk to complete and you have 30 minutes in which to prioritize and complete each of the tasks List the number in the order that you will assume the following Telephone messages Corespondence Papers such as reports, statements, briefing documents, and plans A set of emals Planner or Calendar Interview Scenario Questions involving Prioritization (Formulate an answer to the folowing. Remember, Situation, Task, Action, Result) 3. If you're reporting to more than one manager, how do you prioritize your duties? 4. Have you ever missed a deadine? If so, what happened? If not, how do you make sure you're not talling behind?
Given that you have a number of tasks on your desk to complete with 30 minutes in which to prioritize and complete each of the tasks, here is the order to assume the following:
Planner or Calendar Telephone messages Correspondence Papers such as reports, statements, briefing documents, and plans
A set of emails
Answer to Scenario Question (Situation, Task, Action, Result):
Situation:
Reporting to more than one manager.
Task:
Prioritizing your duties.
Action:
To prioritize your duties, start by having a conversation with both managers to gain clarity on each of their priorities and expectations. Next, analyze the impact of each task on the business. Finally, create a schedule that accommodates each manager's priorities and stick to the schedule.
Result:
With clear communication and an understanding of the business impact, prioritizing your duties can become an easier task without compromising on the needs of both managers.
Answer to Scenario Question (Situation, Task, Action, Result):
Situation: Missing a deadline.
Task:
To avoid missing deadlines, create a to-do list and a schedule for completing each task. Additionally, break each task into smaller, manageable parts to avoid getting overwhelmed.
Action:
Create a to-do list and a schedule for completing each task. Break each task into smaller, manageable parts to avoid getting overwhelmed. Work on the most important tasks first, and delegate if necessary. Communicate any challenges or roadblocks to your manager and renegotiate deadlines if necessary.
Result:
By planning ahead, breaking tasks into smaller parts, prioritizing tasks, and communicating any challenges or roadblocks to your manager, it is possible to avoid missing deadlines.
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Which one of the statements is false? a. Both gambling and insurance transfer risk and reward
b. Insurance transactions offer the possibility of either a loss or a gain.
c. Gambling creates losers and winners
d. Insurance transactions do not present the possibility of gain.
The false statement is d. Insurance transactions do not present the possibility of gain.
Insurance and Gambling: Both gambling and insurance involve the transfer of risk, but they differ in their nature and purpose. Gambling typically involves speculative bets and uncertain outcomes, where there are winners and losers.
Insurance, on the other hand, focuses on risk management and providing protection against potential losses.
Possibility of Gain in Insurance: While the primary purpose of insurance is to protect against losses, it does offer the potential for gain.
When an insured event occurs, policyholders can receive compensation or financial benefits from the insurance company, which can result in a gain if the amount received exceeds the losses suffered.
For example, in the case of property insurance, if a covered property is damaged, the insurance company may provide funds to repair or replace the property, resulting in a gain for the policyholder.
Investment-Linked Insurance: Certain types of insurance, such as investment-linked insurance, offer the potential for investment returns or cash value accumulation.
These policies combine insurance coverage with investment features, allowing policyholders to participate in the growth of underlying investment funds.
Here, the possibility of gain arises from the investment component of the insurance product.
Purpose of Insurance: While insurance can provide financial protection against losses, it is important to note that the main objective is not to generate a profit or gain from the insurance agreement.
Insurance aims to restore policyholders to their pre-loss financial position and protect them from excessive financial burdens resulting from unforeseen events.
In summary, statement d is false because insurance transactions can indeed present the possibility of gain, whether through compensation for losses or investment-linked insurance policies.
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Assume Gillette Corporation will pay an annual dividend of $0.68 one year from now. Analysts expect this dividend to grow at 11.7% per year thereafter until the 5th year. Thereafter, growth will level off at 2.2% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.5% ? The value of Gillette's stock is $ (Round to the nearest cent.)
The dividend-discount model is used to evaluate the price of a company's stock by estimating the present value of its future dividends. It is based on the theory that the intrinsic value of a stock is the sum of the present value of all future dividends.
As given in the question:Annual dividend to be paid next year = $0.68Analysts expect that this dividend will grow at 11.7% per year until the 5th yearThereafter, the growth will level off at 2.2% per yearThe equity cost of capital for the firm is 8.5%Using the formula of dividend-discount model, we can find out the value of Gillette's stock:
P0 = D1 / (k - g)Where,P0 = the current stock priceD1 = the expected dividend one year from nowk = the required rate of returng = the growth rate of dividendsD1 = $0.68 × (1 + 11.7%) = $0.76 (the dividend in the first year)For the next 4 years, we have to find out the expected dividends using the formula,
[tex]Di = D(i-1) × (1 + g)i = 2, 3, 4, 5[/tex]
Putting the values, we get:[
tex]D2 = $0.76 × (1 + 11.7%) = $0.85D3 = $0.85 × (1 + 11.7%) = $0.95D4 = $0.95 × (1 + 11.7%) = $1.06D5 = $1.06 × (1 + 11.7%) = $1.18[/tex]
From the 6th year, we can use the growth rate of 2.2% to find out the expected dividend payments.Now, putting all the values in the formula:
[tex]P0 = $0.76 / (0.085 - 0.117) [1 - (1 + 0.022)⁵ / (1 + 0.117)⁵] + $1.18 / (0.085 - 0.022) / (1 + 0.085)⁵P0 = $18.03[/tex]
The value of Gillette's stock is $18.03 (rounded to the nearest cent).Hence, the correct option is $18.03.
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I'm due a paycheck of $1,235.00 in 7 days. A payday lender has offered to advand me money against this paycheck, or, in other words, to make me a loan today whic would be paid off by my paycheck. Their fee is 2.5%. What rate of simple interest would this amount to? Your Answer:
The rate of simple interest amounts to 16.85% when rounded off to two decimal places.
Given that:
A payday lender has offered to advance you money against this paycheck
Their fee is 2.5%
Time, n = 7 days
We are to determine the rate of simple interest it amounts to.
To calculate the rate of simple interest we will use the formula for simple interest which is given by;
I = Prt
Where: I is the interest
P is the principal amount
r is the rate of interest (per annum)
t is the time period
Let's calculate the amount that will be deducted by the payday lender as their fee;
2.5% of $1,235 = 0.025 × 1,235
= $30.875
Now, the amount that will be advanced to you is given by;
A = P - IA
= $1,235 - $30.875A
= $1,204.125
Now that we have calculated the amount advanced to you, we can use the simple interest formula to determine the rate of interest;
r = I / Pt
Where: I = 30.875
P = 1,204.125t = 7 days
Since the time period is given in days, we will convert it to years by dividing by 365.25 days (to account for leap years) so that the units are consistent;
t = 7/365.25 years
Therefore;
r = I / Pt
= 30.875 / (1,204.125 × 7/365.25)
= 0.1685
Answer: 16.85% of simple interest.
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Pharoah Inc. issued $3,780,000 of 9%,10-year convertible bonds on June 1,2020 , at 98 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1 . Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,417,500 of these bonds were converted into 30,000 shares of $19 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5.125.)
The entry to record the interest expense is as follows: Date | Account | Debit ($) | Credit ($). October 1 | Interest Expense | 53,550 | | Accrued Interest Payable (Liability) | | 53,550 .
(a) To record the interest expense at October 1, 2020, we need to calculate the amount of interest based on the bond's face value, interest rate, and the time period. The bonds have a face value of $3,780,000 and an annual interest rate of 9%. Since interest is payable semiannually, the periodic interest rate is 4.5% (9% / 2). The time period from June 1 to October 1 is 4 months. Interest expense = Face value of bonds × Periodic interest rate × Time period. Interest expense = $3,780,000 × 4.5% × (4/12). Interest expense = $53,550. The entry to record the interest expense is as follows: Date | Account | Debit ($) | Credit ($). October 1 | Interest Expense | 53,550 | | Accrued Interest Payable (Liability) | | 53,550 .(b) To record the conversion on April 1, 2021, we need to determine the carrying value of the converted bonds and the related accounts affected. The carrying value of the converted bonds is calculated by subtracting the unamortized bond discount from the face value of the bonds.
Carrying value of converted bonds = Face value of bonds - Unamortized bond discount. The unamortized bond discount is calculated by multiplying the bond discount per bond by the number of bonds outstanding. Bond discount per bond = (Issue price - Face value) / Number of bonds. Bond discount per bond = (98% - 100%) / Number of bonds. Bond discount per bond = -2% / Number of bonds. Unamortized bond discount = Bond discount per bond × Number of bonds outstanding. Unamortized bond discount = (-2% / Number of bonds) × Number of bonds outstanding. Since $1,417,500 worth of bonds were converted, the number of bonds outstanding is the face value of the converted bonds divided by the face value of each bond. Number of bonds outstanding = Face value of converted bonds / Face value per bond. Number of bonds outstanding = $1,417,500 / $3,780,000. Carrying value of converted bonds = $3,780,000 - Unamortized bond discount. The entry to record the conversion is as follows: Date | Account | Debit ($) | Credit ($); April 1 | Bonds Payable | | $1,417,500; | Unamortized Bond Discount | | $ (unamortized bond discount); | Common Stock ($19 par value) | $570,000 |; | Paid-in.
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Susan puts 9% of her pay in a Traditional 401(k) plan administered by her employer. She earns $90,000 per year and her average tax rate is 17% and her marginal tax rate is 24%. What tax savings does she get from her contribution?
A. $1,377
B. $8,100
C. $15,300
D. $0
E. $1,944
The correct answer is option E. To calculate the tax savings from Susan's contribution to her Traditional 401(k) plan, we need to determine the amount of her contribution and then calculate the tax savings based on her tax rates.
Susan contributes 9% of her pay to her Traditional 401(k) plan. Her annual income is $90,000, so her contribution would be 9% of $90,000, which is $8,100.
The tax savings from this contribution can be calculated by multiplying the contribution amount by Susan's marginal tax rate. Her marginal tax rate is 24%, so the tax savings would be 24% of $8,100, which is $1,944.
Therefore, the correct answer is E. $1,944.
It's important to note that the tax savings from contributing to a Traditional 401(k) plan come from the fact that the contributions are made on a pre-tax basis, meaning they are deducted from Susan's income before taxes are applied. This reduces her taxable income, resulting in a lower tax liability and generating tax savings.
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ABC Ltd. Is 100 percent owned by XYZ Ltd. The company has been profitable in the past. However, it has incurred a loss in the current year ended December 31, 2018. The parent company has indicated it is considering selling ABC Ltd. If it incurs another loss. in response, ABC is looking into producing private label beverages, which have a higher gross margin than its regular product line, for the supermarket chain, ValueMart Inc. In order to produce ValueMart's private label products, ABC needs to expand its packaging facility. To finance the expansion, the company has applied to the Canada Business Bank. The bank has indicated that before it will approve the loan application it requires audited financial statements for the year 2018. It also wants to ensure that the entity has a current ratio of 2:1. This is the first year the firm, Peters and Peters, has audited ABC. Graves and Collins, LLP, had been ABC 's auditors for many years; however, due to a disagreement over the revenue recognition method, ABC did
Required: A. Based upon the case facts, which benchmark will be most appropriate for overall materiality: 1. Current year's assets. 2. Current year's net income. 3. Previous year's net income. 4. Current year's revenue. 5. An average of the current year's net assets and net income. B. Provide an explanation for your choice. C. What benchmark percentage is most appropriate? Use case facts to support your choice.
Based upon the given case, the benchmark that will be most appropriate for overall materiality is current year's revenue.
The most appropriate benchmark for overall materiality is current year's revenue because it will be used in determining the amount of the bank loan that ABC Ltd is applying for and is likely to get approved. C. The benchmark percentage that is most appropriate is 5% of the current year's revenue. Use the case facts to support your choice. Factors to consider for overall materiality include: Overall materiality is a term used in financial auditing to determine the accuracy of a financial statement by comparing it to the overall financial performance of the company.
In order to achieve overall materiality, the auditor considers several factors, including:1. Current year's assets: The value of assets held by the company in the current year.2. Current year's net income: The total income received in the current year less any deductions or expenses.3. Previous year's net income: The total income received in the previous year less any deductions or expenses.
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Question 1: According to Waide, what negative effect does participation in producing and promoting associative advertising have on the advertisers?
A. It leads them to neglect non-market means of satisfying non-market desires—which includes a range of virtues necessary for acquiring such goods.
B. By making money a priority, one’s conception of the good life becomes distorted
C. It desensitizes them to the well-being of others, including reduced compassion, concern, and sympathy
D. It influences them to spend money in a way that fails to satisfy desires fostered by advertising
The correct answer is D. According to Waide, participation in producing and promoting associative advertising influences advertisers to spend money in a way that fails to satisfy desires fostered by advertising.
Associative advertising refers to a marketing technique that associates a product or brand with specific positive emotions, experiences, or lifestyle attributes. Instead of directly promoting the product's features or benefits, associative advertising aims to create an emotional or psychological connection between the product and the consumer. This is often done by incorporating imagery, narratives, or themes that evoke certain emotions or desires.
Associative advertising seeks to tap into consumers' desires for social status, personal fulfillment, happiness, love, or other positive experiences. It relies on the belief that consumers will be more inclined to purchase a product if they associate it with the desired emotional or lifestyle outcomes.
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what is level 5 leadership?what is the role of leadership in converting a good company into great.?(good to great by jim collins book)
Level 5 leadership is a key concept discussed in Jim Collins' book "Good to Great," referring to leaders who possess a unique combination of personal humility and professional will.
Level 5 leaders have a paradoxical blend of humility and determination, which distinguishes them from other leadership styles. They are humble in their approach, giving credit to others and focusing on the success of the organization rather than personal recognition. At the same time, they demonstrate unwavering determination and ambition to drive the company towards greatness.
The role of leadership in converting a good company into a great one is crucial. Collins' research found that companies that achieved sustained greatness had Level 5 leaders at the helm. These leaders create a culture of excellence by setting high standards, hiring and developing exceptional talent, and fostering a climate of continuous improvement.
Level 5 leaders also possess the ability to make tough decisions when necessary. They are not afraid to confront brutal realities and make difficult choices that may be unpopular in the short term but beneficial for long-term success. Their commitment to the company's mission and values guides their decision-making, ensuring the organization remains on the path to greatness.
Examples from the book "Good to Great" include leaders like Darwin E. Smith of Kimberly-Clark, who transformed the company from a mediocre paper mill to a global consumer products giant. Smith displayed Level 5 leadership qualities, leading with humility, and driving the company's transformation through strategic decisions and a relentless focus on performance.
In summary, Level 5 leadership is characterized by a unique blend of humility and determination. The role of leadership in converting a good company into a great one is to foster a culture of excellence, make tough decisions, and align the organization's efforts towards a common vision. Level 5 leaders, as described by Collins, have demonstrated these qualities and have been instrumental in driving sustained greatness in organizations.
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Rent Revenue Income Summary (To close revenue accounts) Income Summary 76700 Depreciation Expense 6500 Salaries and Wages Expense Utilities Expense (To close expense accounts) 14500 luly 31 Retained Earnings 7700 Income Summary (To close net income / (loss)) July 31 Retained Earnings 15500 Dividends 15500
The Rent Revenue Income Summary is used to close revenue accounts while the Utilities Expense is used to close expense accounts. The purpose of the Income Summary is to record a summary of all the revenue and expenses that the business has accrued during the accounting period.
At the end of the accounting period, all of the revenue and expense accounts are closed by transferring their balances to the Income Summary account. The Income Summary account is then closed by transferring the net income or net loss to the Retained Earnings account. If the net income is positive, it increases the Retained Earnings account, while a net loss decreases it.
In the given question, the closing entries are as follows:
1. Close revenue accounts:
The Rent Revenue Income Summary is credited with $76700, which represents the total revenue earned during the period.
2. Close expense accounts:
The Depreciation Expense, Salaries and Wages Expense, and Utilities Expense accounts are all debited with their respective amounts to close them.
3. Close net income / (loss):
The Income Summary account is debited with $6500 (Depreciation Expense), $14500 (Utilities Expense), and credited with $76700 (Rent Revenue Income Summary). Therefore, the balance in the Income Summary account is $55700 (76700 - 6500 - 14500). Since this is a credit balance, it indicates a net income.
To close the Income Summary account, a credit entry of $55700 is made, and it is debited to the Retained Earnings account. This increases the balance in the Retained Earnings account by $55700.
4. Close dividends:
The Dividends account is debited with $15500 to close it.
Overall, the purpose of these entries is to close all temporary accounts and transfer their balances to the permanent Retained Earnings account.
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A development has a Land Cost of $805,200, a Total Development Cost (TDC) of $1333974, and a Net Development Value (NDV) of $1531405. What is the development margin? O a. 87.11% O b. 14.80% O c. 12.89% O d. 13.30% O e. 14.05% Question 2
The development margin is 14.80% which corresponds to option(b)
The development margin is a financial metric that measures the profitability of a development project. It is calculated by dividing the net development value (NDV) by the total development cost (TDC) and expressing it as a percentage.
In this case, the given net development value (NDV) is $1,531,405, and the total development cost (TDC) is $1,333,974. To calculate the development margin, we divide the NDV by the TDC and multiply by 100 to convert it to a percentage.
Development Margin = (NDV / TDC) * 100
= ($1,531,405 / $1,333,974) * 100
= 1.148 * 100
= 14.80%
Therefore, the development margin for this project is 14.80%. This indicates that the project is generating a profit of 14.80% of the total development cost. It reflects the efficiency and profitability of the development in converting the investment into net value.
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Provide examples of at least 3 types of unearned privilege, and why (from society's view) the privilege is unearned. For example, in the U.S., being a Christian is an unearned privilege since Christianity is the dominent religion in the country.
Privilege is defined as an advantage or benefit given to a particular group of people that is not extended to other groups. These benefits or advantages may be social, economic, or political in nature.
Here are three types of unearned privilege:1. White PrivilegeWhite privilege refers to the societal privilege that benefits people who are White. This privilege is unearned as it is not something that White people have worked for or deserve. White privilege is the result of centuries of oppression and discrimination against people of color. White privilege is seen in many aspects of life, including education, employment, and the criminal justice system.
Heterosexual privilege is seen in many aspects of life, including marriage, adoption, and employment.These privileges are unearned because they are not something that people have worked for or deserve. They are the result of centuries of oppression and discrimination against marginalized groups. It is important to recognize these privileges and work towards creating a more equitable and just society.
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A business plan is defined as a document that outlines the basic concept underlying a business. Specifically, business plans foc
A business plan is a written document that outlines the basics and concepts underlying a business. The document is used to describe the company, product or service, marketing strategies, operational procedures, financial aspects, and objectives and goals of the organization.
This document is written in a clear and concise manner to enable the stakeholders to understand the business and its operations. The key purpose of a business plan is to provide a framework for an entrepreneur to map out the critical elements of a business. Business plans are essential tools for business owners to assess the feasibility of their business idea. The business plan outlines the strategies that will be used to achieve business success, including marketing strategies and sales projections.
Additionally, it provides a platform for entrepreneurs to communicate their vision and goals to potential investors or lenders. A well-written business plan should cover all the essential aspects of a business and be comprehensive enough to enable investors to make informed decisions about the investment. Business plans are critical documents that entrepreneurs use to demonstrate their understanding of their industry, competitors, and customer needs. In conclusion, a business plan is a vital document that outlines the concept and basics of a business, and it is necessary to have a comprehensive business plan to achieve business success.
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You are provided some data about the market: The expected return of the market portfolio is 11.19%, the market's volatility is 20.3%, and the risk-free rate is 1.3%. If the beta of ROKU is 1.11, according to the CAPM, what is the expected return of ROKU?
The expected return of the market portfolio is 11.19%, the market's volatility is 20.3%, and the expected return of ROKU is 12.27%. According to the Capital Asset Pricing Model (CAPM), the anticipated return of a resource can be calculated utilizing the taking after equation:
Anticipated Return = Risk-Free Rate + Beta * (Advertise Return - Risk-Free Rate)
Risk-Free Rate = 1.3%
Market Return = 11.19%
Beta of ROKU = 1.11
Let's calculate the expected return of ROKU:
Expected Return = 1.3% + 1.11 * (11.19% - 1.3%)
Expected Return = 1.3% + 1.11 * 9.89%
Expected Return = 1.3% + 10.97%
Expected Return = 12.27%
Therefore, according to the CAPM, the expected return of ROKU is 12.27%.
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Requirements 1. Prepare the joumal entry (entries) to record manufacturing ovethead costs incurred 2. Prepare the journal entry to record the manufacturing overhead allocated to jobs in production. 3. Use a T-account to determine whether manufactuning overhead is underallocated or overallocated and by how much 4. Record the entry to close out the underallocated or overaliocated manufactuning overtead 5. What is the adpusted ending balance of Cost of Goods Sold? Data table At the end of the year, the company had actually incurred the following:
Manufacturing overhead costs:
Rent and property taxes $102,000
Indirect labor $29,000
Depreciation of factory equipment $24,000
Insurance $8,000
Total $163,000
Manufacturing overhead allocation base: Machine hours 20,000
Actual machine hours used 18,000
Direct materials used $95,000
Direct labor $70,000
Cost of goods manufactured $245,000
The required steps in the journal entries to record the manufacturing overhead costs incurred, manufacturing overhead allocated to jobs in production, determining whether manufacturing overhead is under allocated or overallocated and by how much, recording the entry to close out the under allocated or overallocated manufacturing overhead, and the adjusted ending balance of cost of goods sold can be defined as follows:
1. To record manufacturing overhead costs incurred:
Manufacturing overhead account $163,000
Rent and property taxes payable $102,000
Accumulated depreciation $24,000
Prepaid insurance $8,000
Salaries and wages payable $29,000
2. To record manufacturing overhead allocated to jobs in production:
Work in process inventory $X
Manufacturing overhead $X
3. To use a T-account to determine whether manufacturing overhead is underallocated or overallocated and by how much:
Total manufacturing overhead costs incurred $163,000
Manufacturing overhead allocated (18,000 machine hours x $8 per hour) $144,000
Manufacturing overhead under allocated (overallocated) $19,000
4. To record the entry to close out the under allocated or overallocated manufacturing overhead:
Cost of goods sold $19,000
Manufacturing overhead $19,000
5. The adjusted ending balance of cost of goods sold would be calculated as follows:
Cost of goods manufactured $245,000
Add: Manufacturing overhead overallocated $19,000
Total cost of goods $264,000
Deduct: Beginning inventory ($20,000) and Ending inventory ($40,000)
Adjusted ending balance of Cost of Goods Sold $204,000.
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The following information, taken from records in the Circle Restaurant, provides the results of butcher tests on 10 legs of veal, U.S. Choice, purchased over the last several weeks from Middletown Meats, Inc. Veal legs are purchased to produce 5-ounce portions of veal cutlet. The restaurant paid $814.28 for the 10 legs, which weighed a total of 247 pounds 8 ounces as purchased. Breakdown: Fat: 41 lbs. 8 oz.; value per lb.: $0.10. Bones: 56lbs.8 oz.; value per lb.: $0.38 Shanks: 19 lbs. 12 oz.; value per lb.: \$1.49 Trimmings: 47 lbs. 4 oz.; value per lb.: $1.89 Loss in cutting: 2lbs.8oz. Veal cutlets: 80lbs.0oz. a. Given the preceding information, complete butcher test calculations to determine standard cost of the 5-ounce portion, as well as yield factor, portion cost factor, and pound cost factor. b. Find the cost of the standard 5-ounce portion at each of the following dealer prices: 1. $3.19 per lb. 2. $3.39 per lb
a) Standard 5 ounce portion is $878.65, Yield factor =3.0596 ; b) the cost of the standard 5-ounce portion at the dealer prices of $3.19 per pound and $3.39 per pound are $0.94 and $1.02, respectively.
a) Fat= 41 lbs. 8 oz
value per lb.: $0.10
Cost of fat = (41 lbs. 8 oz/16) × $0.10 = $0.27 per poundBones= 56 lbs. 8 oz.; value per lb.: $0.38
Cost of bones = (56 lbs. 8 oz/16) × $0.38 = $1.33 per pound
Shanks= 19 lbs. 12 oz.; value per lb.: $1.49Cost of shanks = (19 lbs. 12 oz/16) × $1.49 = $2.97 per pound
Trimmings= 47 lbs. 4 oz.; value per lb.: $1.89Cost of trimmings = (47 lbs. 4 oz/16) × $1.89 = $5.55 per pound
Total weight= 247 lbs. 8 oz.; Loss in cutting= 2 lbs. 8 oz.; Veal cutlets= 80 lbs. 0 oz.
Total weight (pounds and ounces): 247 lb 8 oz-Loss in cutting (pounds and ounces): 2 lb 8 oz= Net weight (pounds and ounces): 245 lb 0 oz.
Total weight = net weight + fat + bones + shanks + trimmings= 245 + 41.5 + 56.5 + 19.75 + 47.25= 409 pounds
Yield factor = weight of veal cutlets / net weight= 80/245= 0.3265Portion cost factor= 1/ yield factor= 1/0.3265= 3.0596
Standard cost of 5-ounce portion: Net cost = 814.28 + (41.5 × 0.10) + (56.5 × 0.38) + (19.75 × 1.49) + (47.25 × 1.89)= $878.65
Cost per pound= $878.65 / 80= $10.98 per pound
Pound cost factor= cost per pound / dealer price= $10.98 / dealer price
b)
Pound cost factor = $10.98 / $3.19 = 3.44Portion cost = $3.19 / 16 × 5 × 3.44 = $0.94Standard cost of 5-ounce portion at $3.39 per pound: Pound cost factor = $10.98 / $3.39 = 3.23Portion cost = $3.39 / 16 × 5 × 3.23 = $1.02Therefore, the cost of the standard 5-ounce portion at the dealer prices of $3.19 per pound and $3.39 per pound are $0.94 and $1.02, respectively.
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A serious problem develops in some organizations when the personnel planning process becomes connected to the overall business goals of the organization. True False
A serious problem develops in some organizations when the personnel planning process becomes connected to the overall business goals of the organization. - False
When the organization's overarching business objectives are linked to the people planning process, there is no real issue. In fact, for an organisation to succeed, people planning should be in line with business objectives. The organization will have the right people with the necessary skills and competencies to meet the goals when personnel planning is linked to the overall business goals.
It aids in talent management, strategic workforce planning, and ensuring that an organisation has the essential people resources to successfully carry out its strategies. Therefore, for organisations to function effectively and perform well, the process of planning their human resources must be linked to their overall business objectives.
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The statement "A serious problem develops in some organizations when the personnel planning process becomes connected to the overall business goals of the organization" is FALSE.
Step 1: Understand the statement
The statement suggests that when the personnel planning process becomes connected to the overall business goals of the organization, it can lead to serious problems in some organizations.
Step 2: Analysis
Connecting the personnel planning process to the overall business goals of an organization is generally considered a best practice. When the personnel planning process aligns with the business goals, it ensures that the organization has the right people with the right skills and competencies to achieve its objectives. It helps in effective workforce management, talent acquisition, and development.
Step 3: Conclusion
Contrary to the statement, connecting the personnel planning process to the overall business goals is not a problem. In fact, it is beneficial for organizations as it enables strategic alignment and enhances overall performance. Therefore, the statement is FALSE.
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Can someone verify that these formulas are correct?
Formula Sheet
CH 1
Assets = Liabilities + Equity
Income = Revenues – Expenses
Gross Profit (Gross Margin) = Revenues - COGS
Return on equity = Net Income/Stockholders' Equity
Average Stockholders' Equity= Beg SE + End SE2
Debt-to-equity ratio= Total liabilities/Total SE
CH 2
Beginning Retained Earnings
+ Net Income (or – Net Loss)- Dividends= Ending Retained Earnings
Net Working Capital = Current Assets – Current Liabilities
Current Ratio=Current assets/Current liabilities
Quick Ratio=Cash+Short term securities + Accounts receivable/Current liabilities
CH 4
Convert Sales Revenues to Cash Received from Customers
Cash Flow = Net Income (Sales Revenue) – Change in(Δ) A/R + Unearned Revenue
Convert Cost of Goods Sold to Cash Paid for Merchandise Purchased
Cash Flow = Net Income (COGS Expense) - ΔInventory + ΔA/P
Convert Wages Expense to Cash Paid to Employees
Cash Flow = Net Income (Wage Expense) + ΔWages Payable
Other Adjustments
Cash Flow = Net Income (Insurance Expense) - ΔPrepaid Insurance
Cash Flow = Net Income Income Item - ΔOther Receivables
Cash Flow = Net Income (Interest Expense) - ΔInterest Payable
Cash Flow = Net Income (Tax Expense) - ΔTax Payable
Eliminate Depreciation Expense and other Noncash Operating Expenses
Cash Flow = Net Income + Depreciation Expense
Net Income + Adjustments = Cash from Operations
Net Income + Depreciation Expense - ΔOperating Assets + ΔOperating Liabilities =Cash from Operations
Indirect Method
Net Income Adjustments = Cash flow from operating activities
Operating Cash Flow to Current Liabilities=Operating Cash Flow/ Current Liabilities
Operating Cash Flow to Capital Expenditures=Operating Cash Flow/Annual Capital
Expenditures
Free cash flow = Operating Cash Flow – Net Capital Expenditure
Δ Cash = Δ Liabilities + Δ SE - Δ Noncash Assets
CH 5
Return Measures:
ROE=Net Income/ Stockholders' equity
ROE=Net Profit Margin x Asset Turnover x Financial Leverage
Net Profit Margin=Net Income/Sales
Financial Leverage=Avg Total Assets/Avg SE
Avg Stockholders’ Equity=Beg SE + End SE2
ROA=Earnings without interest expense EWI/ Total Assets
ROA = Profit Margin x Asset Turnover
Avg Total Assets=Beg Total Assets + End Total Assets2
EWI=Net Income + [Interest expense x (1 – Statutory Tax Rate)]
Return on Financial Leverage (ROFL) = ROE – ROA
Profitability Measures:
Profit Margin=EWI/Sales Revenue
Gross Profit Margin (GPM)=Sales Revenue – COGS/Sales Revenue
Expense-to-sales (ETS)=Individual expense items/Sales Revenue
Turnover Ratios
Asset Turnover (AT)=Sales Revenue/Avg Total Assets
Accounts receivable turnover (ART)=Sales Revenue/ Accounts Receivable
Days-Sales-Outstanding=365ART
Inventory turnover (INVT)=COGS/ Inventory
Days-Inventory=365INVT
Property, plant and equipment turnover (PPET)=Sales Revenue/ PP&E
Liquidity Ratios:
Current Ratio=Current assets/Current liabilities
Quick Ratio=Cash+Short term securities + Accounts receivable/Current
liabilities
Operating Cash Flow to Current Liabilities (OCFCL)=Cash Flow from Operations/
Current Liabilities
Cash Burn Rate=Free Cash flow in the period/Number of days in the period
Solvency Analysis:
Debt-to-equity ratio=Total Liabilities/Total Stockholders' Equity
Times Interest Earned=Earnings before interest expense and taxes (EBIT)Interest
Expense
EBIT= Net Income + Interest + Taxes
Yes, all the given formulas are correct and they are used in different financial aspects. The formulas are used to derive different financial ratios that are used to interpret and analyze the financial position of a company. Financial statements are created to show the financial health of a business or organization.
These statements include the balance sheet, income statement, and cash flow statement. These formulas are used to calculate different ratios that are commonly used to analyze a company’s financial statements and determine its financial health. These formulas are divided into different chapters that include different financial ratios that are used to analyze different financial aspects of the company such as liquidity, profitability, solvency, and turnover ratios.The formulas in chapter 1 are used to determine the assets, liabilities, and equity of the company.
The income statement and gross profit are used to analyze the profitability of the company while the return on equity formula is used to determine the returns that shareholders can expect from their investments.The formulas in chapter 2 are used to calculate the net working capital and ratios such as the current ratio and quick ratio. These ratios are used to determine the liquidity position of the company. The formulas in chapter 4 are used to calculate cash flow from operations, adjustments, and free cash flow.
Finally, the liquidity and solvency ratios are used to analyze the company’s ability to meet its short-term and long-term financial obligations.
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please show me how to calculate the amount to borrow, buy and short for the arbitrage opportunity.
thank you
QUESTION 4
Assume:
• current stock price = $20
• stock price changes by +/-10% each 3 months with equal probability
• European call option, strike $21, maturity 6 mths
• constant riskfree rate of 12% p.a.
• 2 time periods (of equal length) to maturity
• the current price of call option is $1.50
What hedging strategy should be used to lock in an arbitrage profit if the stock price falls in both periods?
To lock in an arbitrage profit if the stock price falls in both periods, you can use a combination of borrowing, buying, and shorting. Here's the calculation:
1. Borrow: Calculate the amount you need to borrow by finding the present value of the strike price at the risk-free rate for the time to maturity. In this case, it is 6 months, or 0.5 years. The present value of $21 at a 12% p.a. rate for 0.5 years is:
PV = $21 / (1 + 0.12)^0.5
2. Buy: Purchase the call option at its current price, which is $1.50.
3. Short: Short sell the stock. The amount to short sell is calculated by dividing the present value of the stock price at the risk-free rate for the time to maturity. In this case, it is 6 months, or 0.5 years. The present value of $20 at a 12% p.a. rate for 0.5 years is:
PV = $20 / (1 + 0.12)^0.5
By using these three components, borrowing, buying the call option, and shorting the stock, you can create a hedging strategy to lock in an arbitrage profit if the stock price falls in both periods.
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A) Identify one market or sector in the economy and analyze one Shift Factor currently affecting the Demand Curve for that market, based on the considerations provided during this week's Lecture on the Demand Curve Model
B) Identify one market or sector in the economy and analyze one Shift Factor currently affecting the Supply Curve for that market, based on the considerations provided during this week's Lecture on the Supply Curve Model
A) Market or sector: Automobiles industryShift Factor affecting the Demand Curve: Income of the consumersThe automobiles industry has a substantial impact on the economy of a country. Income of consumers is a vital shift factor that affects the demand curve of the automobiles market.
If the income of the people increases, they tend to purchase more automobiles. As a result, the demand curve shifts to the right. It happens because of the increment in disposable income and also because automobiles are considered a luxury item. If consumers' income decreases, they may not purchase an automobile or consider a low-priced automobile. Hence, the demand curve will shift to the left. The company would then have to reduce the prices of its automobiles to boost the demand. In conclusion, the income of consumers is an essential shift factor that influences the demand curve of the automobiles industry.
B) Market or sector: Oil and gas industryShift Factor affecting the Supply Curve: TechnologyTechnology is a significant shift factor that affects the supply curve of the oil and gas industry. The oil and gas industry's primary goal is to produce oil and gas as efficiently and cheaply as possible. Innovations and technology improvements reduce the cost of producing oil and gas, which increases the supply of oil and gas in the market. Companies invest in technology to extract and drill oil and gas, making the production more efficient and cost-effective.
They employ technology to minimize waste, reducing the cost of extraction and exploration. As a result, the supply curve shifts to the right, increasing the supply of oil and gas. In contrast, if technology fails to increase the efficiency of production, the supply curve shifts to the left, reducing the supply of oil and gas. In conclusion, technology is an important shift factor that affects the supply curve of the oil and gas industry.
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You are given the following information about Cullumber Plumbing Company. Revenues in 2020 totaled $960.00, depreciation expenses $92.00, costs of goods sold $397.00, and interest expenses $57.00. At the end of the year, current assets were $124.00 a current liabilities were $102.00. The company has an average tax rate of 29.00 percent. Calculate its net income by setting up an income statement. (Round answers to 2 decimal places, e.g. 15.25.)
An income statement is a financial statement that provides information about the performance of a company over a specific period of time. It shows a company’s revenues, costs, and expenses and net income (or loss) for a particular time frame.
In order to calculate Cullumber Plumbing Company’s net income, we need to set up an income statement using the provided information.
The income statement format is as follows:
Revenues - Cost of Goods Sold = Gross Profit - Operating Expenses - Depreciation Expense - Interest Expense = Taxable Income - Taxes = Net Income
Now, let's fill in the income statement using the information provided in the problem:
Revenues: 960.00Cost of Goods Sold: 397.00Gross
Profit: 563.00Operating
Expenses: 0Depreciation
Expense:92.00Interest
Expense: 57.00Taxable
Income: 414.00Taxes (29% of Taxable Income):
120.06
Net Income: 293.94
Therefore, Cullumber Plumbing Company’s net income for the year 2020 is 293.94.
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commit to an inflation rate before inflation expectations are formed. The equilibrium with commitment can be found by assuming that the policy maker chooses the expected inflation (presumably by announcing future inflation) but is restricted to set the realized inflation equal to the expected inflation. In other words, the policy maker's problem is: minπ{(Uˉ−b(π−π)−U∗)2+a(π−π∗)2} It is immediate that the optimal inflation is now π=π∗. The equilibrium unemployment rate is the same as in the case without commitment. However, in contrast to the previous case without commitment, inflation now equals the target inflation rate. Hence, the policy maker achieves higher welfare (smaller loss) with commitment than without it.
Policy makers must commit to an inflation rate before inflation expectations develop to ensure better outcomes.
Inflation expectations refer to people's anticipations of the future inflation rate. Policy makers need to commit to an inflation rate before inflation expectations form. They can choose the expected inflation rate by announcing it but are constrained from setting the realized inflation equal to the expected inflation.
The problem of the policy maker can be expressed as:
Minimize π [(U - b(π - π) - U*)^2 + a(π - π*)^2]
Where:
π is the actual inflation rate.
π* is the target inflation rate.
a is a positive parameter.
b is a positive parameter.
U is the natural rate of unemployment.
U* is the level of unemployment when π = π*.
With commitment, the equilibrium is reached by assuming that the policy maker selects the expected inflation rate but is restricted to setting the realized inflation equal to the expected inflation. In this case, the optimal inflation is π = π*. The equilibrium unemployment rate remains the same as in the case without commitment. However, unlike the previous case, inflation now matches the target inflation rate. Consequently, the policy maker achieves higher welfare (smaller loss) with commitment than without it.
The policy maker's problem becomes more complex when there is less commitment, making it challenging to achieve the desired inflation rate. The equilibrium between the unemployment rate and the inflation rate becomes unstable, making it difficult for policy makers to achieve their inflation goals.
Therefore, policy makers must commit to an inflation rate before inflation expectations develop to ensure better outcomes.
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Mobiles Co sells computers and allows customers two months from the date of purchase to return computers if they are dissatisfied with the product for any reason. On 31 May 20X8, the company included a provision of $18,000 in the financial statements relating to the expected return of computers which had been sold before the year‐end date. On 31 May 20X9, the Company estimated that the amount of the provision should be changed to $24,500. How should this information be accounted for in the financial statements for the year ended 31 May 20X9?
The change in the provision for expected returns should be accounted for as an adjustment in the financial statements for the year ended 31 May 20X9. Here's how the information should be reflected:
Increase in Provision: The provision for expected returns is initially recorded at $18,000 in the financial statements for the year ended 31 May 20X8. However, on 31 May 20X9, the company estimates that the amount of the provision should be increased to $24,500.Adjusting Entry: To reflect the updated provision amount, an adjusting entry should be made in the financial statements for the year ended 31 May 20X9. This entry will increase the provision for the account of the expected return by the difference between the initial provision and the updated estimate, which is $6,500 ($24,500 - $18,000).Income Statement: The increase in the provision for expected returns will be reflected as an expense in the income statement for the year ended 31 May 20X9. It will reduce the company's net income for the period.Balance Sheet: The provision for expected returns will be reported as a liability on the balance sheet as of 31 May 20X9. The updated provision amount of $24,500 will be recorded in the provision for the expected returns account.It's important to note that specific accounting standards and policies may vary, and it's advisable to consult the applicable accounting principles and regulations in your jurisdiction for the exact treatment and disclosure requirements for provisions for expected returns.
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Evolution of Sustainability in the Canadian Hospitality Industry?
The Canadian hospitality industry is becoming increasingly aware of the importance of sustainability.
What is sustainability ?The term "sustainability" refers to the concept of meeting current needs without sacrificing the ability of future generations to meet their own needs.
The hotel industry in Canada has realized the need to improve the sustainability of its operations, and it has taken a number of steps in this direction.
Evolution of Sustainability in the Canadian Hospitality Industry:
One of the primary objectives of the hospitality industry's sustainability efforts is to reduce energy consumption. Many hotels have adopted energy-saving strategies such as installing energy-efficient lighting, reducing heating and cooling usage, and promoting responsible water use. Sustainable practices, such as replacing single-use items with reusable items, recycling, and composting, are also becoming increasingly popular.In the Canadian hospitality industry, there is a growing trend towards sustainable food sourcing. Hotels and restaurants are becoming more aware of the importance of sourcing food from local farms, reducing food waste, and using sustainable packaging. They are increasingly adopting a "farm-to-table" approach, which involves sourcing food from local farmers and suppliers, and a "zero-waste" approach, which involves reducing food waste and diverting waste from landfills.In conclusion, the Canadian hospitality industry is making strides towards sustainability. As consumers become more environmentally conscious, it is important for hotels and restaurants to keep pace with the changing demands of their customers.
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m doing a research paper on The role of contracts in protecting information assets.
What are some role of contracts in protecting information assets I can research on?
Please include research article sources I can read about.
Contracts are important tools for protecting information assets. They set out the terms of use for information, including who has access to it, under what circumstances, and what can be done with it.
The following are some key roles of contracts in protecting information assets: Protecting intellectual property rights Contracts can be used to protect the intellectual property rights of information owners. For instance, a contract can be used to specify the conditions under which information can be used, reproduced, or distributed by other parties. This can help to prevent unauthorized use of the information and protect the rights of the information owner. Protecting confidential information Contracts can also be used to protect confidential information.
For example, a contract can be used to specify the types of information that are considered confidential, how it is to be handled and protected, and who has access to it. This can help to prevent unauthorized access to confidential information and protect the privacy of individuals or organizations. Protecting against data breaches Contracts can help to protect against data breaches by setting out the procedures for handling sensitive information.
For instance, a contract can specify how information is to be stored, who has access to it, and what procedures are to be followed in the event of a breach. This can help to minimize the risk of data breaches and ensure that sensitive information is handled in a secure and responsible manner.
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Consider a mutual fund with $100 million in assets at the start of the year. If the gross return on assets is 10% and total expense ratio is 5% of the year-end value, what is the return of the fund? A. 3.5% NAV=5100mil B. 4.0% C. 4.5% D. 5.0% 15. Suppose the weights for the optimal risky portfolio (for 2 risky securities), are 60% in asset A and 40% in asset B. For an investor with a particular risk-aversion, the optimal allocation in the risky portfolio is 50%(y=0.5). Based on this information, what is the final allocation for the complete portfolio for this particular investor in each risky security? A. 60% and 40% B. 50% and 30% C. 40% and 20% D. 30% and 20%
The final allocation for the complete portfolio for this particular investor in each risky security is 30% in asset A and 20% in asset B. Therefore, option (D) 30% and 20% is correct.
If the gross return on assets is 10% and total expense ratio is 5% of the year-end value, we need to calculate the return of the fund as follows:
Formula for the return of a fund:
Return = Gross return - Expense Ratio
Let's first calculate the expense ratio of the fund:
Expense ratio = 5% of year-end value
Expense ratio = 5% of ($100 + 10) million (as gross return is 10%)
Expense ratio = 5% * $110 million
Expense ratio = $5.5 million
Now let's calculate the return of the fund:
Return = Gross return - Expense Ratio
Return = 10% - 5.5%Return = 4.5%
Hence, the return of the fund is 4.5%.
Now, let's move on to the second part of the question which states that the weights for the optimal risky portfolio (for 2 risky securities) are 60% in asset A and 40% in asset B. For an investor with a particular risk-aversion, the optimal allocation in the risky portfolio is 50%(y=0.5).
Therefore, the final allocation for the complete portfolio for this particular investor in each risky security is calculated as follows:
Final allocation for the complete portfolio = y * weight in optimal risky portfolio
Asset A = 0.5 * 60% = 30%
Asset B = 0.5 * 40% = 20%
Hence, the final allocation for the complete portfolio for this particular investor in each risky security is 30% in asset A and 20% in asset B. Therefore, option (D) 30% and 20% is correct.
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Which of the following is a positive economic statement? A. The government should revamp its immigration policies. B. Raising the tax on gasoline raises the selling price of gasoline. C. U.S. citizens should only buy products which are produced in the United States. D. The government should ban the production and sale of incandescent light bulbs
A positive economic statement is a statement that reflects fact and avoids opinions or judgments. Thus, among the options given, the answer that is a positive economic statement is B. Raising the tax on gasoline raises the selling price of gasoline.
Positive economics refers to the aspect of economics that emphasizes facts and quantitative analysis instead of subjective opinions and value judgments. It involves statements that can be tested or proven to be correct or incorrect. On the other hand, normative economics is a branch of economics that involves subjective judgments and value judgments rather than positive economics' objective and quantifiable analysis. A positive economic statement does not involve value judgments or subjective opinions. It reflects a fact that can be proven true or false. Thus, among the options given, the main answer that is a positive economic statement is B. Raising the tax on gasoline raises the selling price of gasoline. Option A is an opinion. It reflects a subjective view and value judgment. Option C is a value judgment that reflects a normative economic view. Option D is also a value judgment, and not a positive economic statement.
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Why do you suppose that the 5th Circuit Court of Appeals adopted the "wholly groundless" exception in the first place? Could the exception prevent frivolous arbitration claims?
Why was it important to Schein’s argument that the contract expressly incorporated the American Arbitration Association’s rules?
Focus on Critical Thinking: Why did the Court interpret the Federal Arbitration Act so strictly in this case? Should courts have more leeway when interpreting statutes?
To stop spurious arbitration claims, the Fifth Circuit Court of Appeals originally developed the entirely groundless exclusion.
The exception allows the courts to skip the process of ordering parties to arbitrate if a claim is evidently beyond the scope of the arbitration agreement. This saves parties time and money. Hence, it makes it more beneficial for the parties to use arbitration, as they will not waste time and money when a claim is hopeless.
Additionally, the adoption of the wholly groundless exception provides clarity to parties when deciding whether or not to agree to an arbitration clause. They will know that even if a claim falls within the scope of the arbitration agreement, it will not proceed if it is wholly groundless, hence reducing their risks.
Therefore, Schein relied on the delegation clause and the inclusion of the American Arbitration Association's rules to argue that the courts should defer to the arbitrator, and the arbitrator should decide the issue of whether the wholly groundless exception applies. The Court interpreted the Federal Arbitration Act strictly in this case because it has consistently supported arbitration as an alternative dispute resolution mechanism.
Moreover, the Supreme Court has consistently held that courts should enforce arbitration agreements according to their terms, hence the strict interpretation of the Federal Arbitration Act.
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sparring over which had greater power, better fuel efficiency, more durability, or a smoother ride. Now, they are sending the combustion engine to the scrap heap and are pouring billions of dollars into electric motors and battery factories. Instead of powertrain specialists, they are hiring thousands of software engineers and battery experts. The transition is upending the automotive workplace, from the engineering ranks and supply chain to the factory floor. Parts makers that for generations have made the same pieces for engines and transmissions are jockeying to supply electrical components. Unions in the U.S. and Europe fear a steep loss of jobs tied to making engines and transmissions. The UAW has warned that the move to EVs, which require fewer parts and 30% less manpower to produce, could jeopardize tens of thousands of U.S. jobs. A Morgan Stanley report estimates full transition to EVs could lead to 3 million lost automotive jobs globally. EVs are simpler mechanically than gas-powered ones. Their drivetrains employ fewer than 20 moving parts, compared to hundreds for the gas-powered version. "It's been a fun ride," said an engineer with 40 years in the industry. "But I think we're coming into the homestretch for the conventional engine." Auto executives have concluded that they can't meet tougher tailpipe-emissions rules globally by continuing to improve gas or diesel engines. And they don't intend to develop any new gas engines. "I don't know where to spend money on them anymore," said GM's President. Developing a new gas engine can cost $1 billion and involves hundreds of suppliers. Over the past several decades, auto makers rolled out 20−70 new engines annually. That number will fall below 10 this year, and then essentially go to zero. The industry's rapid shift in focus has left suppliers that have long made parts for gas engines hustling to reinvent themselves. "We don't want to be left making the best buggy whips," said one Michigan auto supplier. Source: The Wall Street Journal (July 24-25, 2021). Critical Thinking Questions 1. The transition to electric vehicles A. is inevitable. B. is dependent on auto union cooperation. C. could mean the loss of 10 million U.S. jobs. D. has taken place already. E. can be stopped if more efficient gas engines are developed soon. 2. Auto parts makers A. will all go out of business. B. are pleased that this transition is taking place quickly. C. prefer a move to more diesel engine autos. D. have more invested in batteries than gas engine components. E. need to develop new strategies.
The correct option is A. The transition to electric vehicles is inevitable.
The correct option is E. Auto parts makers need to develop new strategies. Auto executives have concluded that they can't meet tougher tailpipe-emissions rules globally by continuing to improve gas or diesel engines. They also do not intend to develop any new gas engines. Thus, the transition to electric vehicles is inevitable.
Auto parts makers need to develop new strategies as the industry's rapid shift in focus has left suppliers that have long made parts for gas engines hustling to reinvent themselves. Parts makers that for generations have made the same pieces for engines and transmissions are jockeying to supply electrical components.
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MODULE 2:
The Martins know that setting up some projected Income Statements are important. They need to look at what the first year of operations might look like and if possible they will need to look at the years thereafter to get an impression of what the long term might look like.
RM Purchases: $132,000* (Raw Material Purchases is a part of COGS)
Sales Salaries: 80,000
Advertising: 3,000
Travel: 2,000
Revenue: 360,000
Financing Costs: 10,000
Office Lease: 13,000
Depreciation: 38,000
Income Taxes: 22,000
Admin Salary: 40,000
A second financial statement that is key to understanding a business is the Balance Sheet. The Martins have estimated the following accounts to be a part of their initial Balance Sheet.
Trade Receivables: $35,000
Cash: 15,000
Short Term Loan: 30,000
Share Capital: 100,000
Long Term Liabilities: 60,000
Property, Plant: 170,000
Prepaid Expenses: 5,000
Yearly LTD Retirement: 5,000
Retained Earnings: 25,000
Accumulated Dep’n: 38,000
Current Payables: 17,000
Inventories: 50,000
Q1: With the above accounts, prepare CompuTech’s Income Statement for the year ended, December 31, 2021.
Q2: With the above accounts, prepare CompuTech’s Balance Sheet as at December 31, 2021.
Q3: Which of the above accounts are FIXED, and which are VARIABLE?
Q4: What is the COGS for the year 2021?
The gross profit margin for CompuTech in 2021 is 63.33%, and the net profit margin is 20.28%.
Q1: CompuTech's Income Statement for the year ended December 31, 2021:
Revenue: $360,000
Cost of Goods Sold (COGS): $132,000
Gross Profit: $228,000
Sales Salaries: $80,000
Advertising: $3,000
Travel: $2,000
Total Operating Expenses: $85,000
Operating Profit (EBIT): $143,000
Depreciation: $38,000
Interest Expense: $10,000
Income Before Taxes: $95,000
Income Taxes: $22,000
Net Income: $73,000
In the given Income Statement, the revenue is $360,000, and the COGS is $132,000, resulting in a gross profit of $228,000. After deducting operating expenses and accounting for depreciation and interest expenses, the company's net income for the year 2021 is $73,000.
Q2: CompuTech's Balance Sheet as at December 31, 2021:
Assets:
Cash: $15,000
Trade Receivables: $35,000
Inventories: $50,000
Property, Plant: $170,000
Accumulated Depreciation: $38,000
Prepaid Expenses: $5,000
Total Assets: $277,000
Liabilities and Equity:
Current Payables: $17,000
Short-Term Loan: $30,000
Long-Term Liabilities: $60,000
Yearly LTD Retirement: $5,000
Share Capital: $100,000
Retained Earnings: $25,000
Total Liabilities and Equity: $277,000
CompuTech's Balance Sheet presents the company's financial position as of December 31, 2021. The assets include cash, trade receivables, inventories, property, plant, accumulated depreciation, and prepaid expenses, totaling $277,000. The liabilities consist of current payables, short-term loan, long-term liabilities, and yearly LTD retirement, while the equity is represented by share capital and retained earnings, resulting in a total of $277,000.
Q3: Among the above accounts, the fixed accounts include Property, Plant, Accumulated Depreciation, Long-Term Liabilities, Yearly LTD Retirement, Share Capital, and Retained Earnings. These accounts represent long-term assets, long-term liabilities, and equity, which tend to remain relatively stable over time. On the other hand, the variable accounts consist of Trade Receivables, Cash, Short-Term Loan, Current Payables, and Inventories. These accounts can fluctuate in the short term based on business activities, such as sales, purchases, and financial transactions.
Q4: The Cost of Goods Sold (COGS) for the year 2021 is $132,000. COGS represents the direct costs associated with producing the goods or services sold by a company. In this case, it includes Raw Material Purchases. By subtracting the COGS from the revenue of $360,000, we can determine the gross profit margin and evaluate the efficiency of the company's operations.
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