Expected cash collections for July is $718,000 and the required production units are 17,400 units.Budgeted unit sales for the month of July = 16,000Selling price per unit = $70Total sales for July = 16,000 × $70 = $1,120,000.
We know that 40% of the sales are collected in the same month, and 60% of the sales are collected in the following month.So, cash collection in July is:40% of $1,120,000 = $448,00060% of $1,120,000 = $672,000Therefore, the expected cash collections for July are: $448,000 + $672,000 = $1,120,000Producing one unit of finished goods requires 5 kilograms of raw materials.The required raw materials for production in July = 18,000 units × 5 kg per unit = 90,000 kgs.
Raw materials required for production of finished goods = 90,000 kgs + (20% × 19,000 units × 5 kg per unit) = 90,000 kgs + 19,000 kgs = 109,000 kgsThe raw material inventory for June = 10% × 109,000 kgs = 10,900 kgsRaw materials to be purchased in June = (109,000 kgs - 10,900 kgs) = 98,100 kgsThe cost of 1 kg of raw materials = $2.the total required production units are: 8,500 + 16,000 + 18,000 + 19,000 = 61,500Finished goods inventory = 20% of next month’s sales.Therefore, total direct labor cost = $13 × 116,600 = $1,515,800Hence, the required production units for July is 17,400 units.
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8. How would you go about comparing the total cost per mile driven for an electric vehicle (EV) versus a gasoline powered one? (4)
EVs are more cost-effective if their cost per mile is lower than that of gasoline-powered vehicles, which can be determined by comparing the respective costs of electricity and gasoline.
To compare the total cost per mile driven for an electric vehicle (EV) versus a gasoline-powered vehicle, the following steps should be taken: 1. Determine the cost per kilowatt-hour (kWh) of electricity used by the EV.
2. Determine the vehicle's miles per kilowatt-hour rating. 3. Calculate the cost per mile for the EV by multiplying the cost per kWh by the number of kWh required to travel one mile. 4. Determine the cost per gallon of gasoline. 5. Determine the vehicle's miles per gallon (mpg) rating.
6. Calculate the cost per mile for the gasoline-powered vehicle by multiplying the cost per gallon by the number of gallons required to travel one mile.7. Compare the cost per mile for the EV and gasoline-powered vehicle. The EV is more cost-effective if its cost per mile is lower than that of the gasoline-powered vehicle.
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"An indicator review is normally performed at the end of a reporting period or financial year". Explain what an indicator review is and elaborate on the information needed for indicator review. (10 marks)
4.2. The following information relates to Machine Productive at 31 December 2020: R Historic Carrying amount 400 000 Fair value less cost to sell 340 000 Value in Use 320 000 Tax Base 300 000 Remaining useful life 4 years One year later the fair value less cost to sell was R320 000 and the value in use was R380 000. Machine Productive is depreciated on a straight-line basis. Assume that the tax rate is 28%, and a capital allowance of R100 000 was granted in 2021
REQUIRED: Prepare the journal entries relating to the reversal of the impairment loss in the 2021 year of assessment
An indicator review is a process that involves evaluating performance indicators used to measure an organization's progress towards its objectives and goals. It consists of defining objectives and goals, collecting relevant data, analysing the data, and reporting the results to stakeholders for improvement.
1. Define Objectives and Goals
- Review the organization's strategic objectives and goals.
- Identify key performance indicators (KPIs) to measure progress towards these goals.
2. Collect Data
- Gather relevant data on the identified KPIs, including historical performance, trends, and benchmarks.
- Ensure the data collected is accurate and reliable.
3. Analyse Data
- Analyse the collected data to identify patterns, trends, and variations.
- Compare the performance against set targets or benchmarks to assess the organization's progress.
- Identify areas of strength and areas that require improvement.
4. Report and Communicate Results
- Summarize the findings of the analysis in a comprehensive report.
- Communicate the results to stakeholders, such as management, board members, or investors.
- Emphasize areas that require attention and provide recommendations for improvement.
- Ensure the findings are effectively communicated to enhance stakeholder buy-in and facilitate decision-making.
Now, moving on to the journal entries for the reversal of an impairment loss in the 2021 year of assessment:
1. December 31, 2020:
- Debit: Impairment loss for the machine productive (recorded amount of the impairment loss, e.g., $80,000)
- Credit: Accumulated depreciation - Machine productive (same amount as the impairment loss)
2. December 31, 2021:
- Debit: Accumulated depreciation - Machine productive (amount of the reversal, e.g., $20,000)
- Credit: Income tax receivable (amount of income tax related to the impairment loss)
- Credit: Deferred tax asset (amount of deferred tax asset related to the difference in carrying amounts)
- Credit: Impairment loss reversal (amount of the impairment loss being reversed)
Note: The income tax is calculated as a percentage (e.g., 28%) of the impairment loss recognized in the previous year. The deferred tax asset is calculated as a percentage (e.g., 28%) of the difference between the carrying amount at the end of the year and the previous year's carrying amount.
Overall, these steps provide a structured approach for conducting an indicator review and explain the journal entries for the reversal of an impairment loss in the 2021 year of assessment.
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Two companies are offered the following interest rates: A financial institution is planning to arrange a swap and requires a 20 basis point spread. If the swap is equally attractive to both companies, which one of the following statements is most accurate? The comparative advantage is 0.40%. PINE has a comparative advantage in AUD rates. The currency swap will allow OAK to gain access to PINE's comparatively better SEK (Swedish Krona) rates. By engaging in the currency swap, each party will improve their borrowing rate by 0.30%. None of the other answer choices are correct.
The comparative advantage is 0.20%, not 0.40%. Choose option E which states that none of the other answer choices are correct. So, option d is the correct answer.
A financial institution is planning to arrange a swap and requires a 20 basis point spread. If the swap is equally attractive to both companies, we are to determine which of the following statements is the most accurate. We are given the following interest rates: Pine: 5.60% AUD and 3.80% SEK Oak: 6.00% AUD and 4.40% SEKComparative advantage is 0.40%.
To determine the comparative advantage, we find the difference in borrowing rates between Pine and Oak in both currencies.
Pine: 5.60% - 3.80% = 1.80%
Oak: 6.00% - 4.40% = 1.60%
Comparative advantage = 1.80% - 1.60% = 0.20%
The comparative advantage is 0.20%, not 0.40%.
Therefore, we can eliminate option A and choose option E which states that none of the other answer choices are correct. So, option d is the correct answer.
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Complete question:
Two companies are offered the following interest rates: A financial institution is planning to arrange a swap and requires a 20 basis point spread. If the swap is equally attractive to both companies, which one of the following statements is most accurate?
The comparative advantage is 0.40%. PINE has a comparative advantage in AUD rates.
The currency swap will allow OAK to gain access to PINE's comparatively better SEK (Swedish Krona) rates.
By engaging in the currency swap, each party will improve their borrowing rate by 0.30%.
None of the other answer choices are correct.
The data of ZME Ltd.Şti, which is engaged in machinery manufacturing, is as follows; Current Ratio: 2.5 Gross Margin: 40% Collection Period of Receivables: 90 days Return on Equity: 26.7% Stock Turnover Rate: 5 Debt Total: 2.250.000 TL In line with these data, fill in the relevant fields in the Balance Sheet and Income Statement of ZME Ltd. Şti., whose production and sales are assumed to be regular within a year? Balance Sheet of ZME Ltd.Şti dated 31.12.2021 (.000 TL) 0 CURRENT ASSETS. Ready Values Receivables Stocks FIXED ASSETS (NET). TOTAL LIABILITIES SHORT TERM LIABILITIES Vendors 400 500 Bank Loans Taxes and Funds Payable LONG TERM LIABILITIES EQUITY TOTAL ASSETS ........ 200 LTE 3.750
ZME Ltd. Şti. is a machinery manufacturing company. According to the given data, the financial ratios of the company are:Current Ratio: 2.5Gross Margin: 40%Collection Period of Receivables: 90 daysReturn on Equity: 26.7%Stock Turnover Rate: 5Debt Total: 2,250,000
TL So in accordance with this information, the Balance Sheet and Income Statement of ZME Ltd. Şti. would be as follows:Balance Sheet of ZME Ltd.Şti dated 31.12.2021 (.000 TL)CURRENT ASSETS. Ready Values Receivables Stocks TOTAL FIXED ASSETS (NET). TOTAL LIABILITIES SHORT TERM LIABILITIES Vendors 400 500 Bank Loans Taxes and Funds Payable LONG TERM LIABILITIES 3,750 EQUITY TOTAL ASSETS 4,650Based on the above information, the amount of current assets, long-term liabilities, and the total assets of the company has been derived.
Income Statement of ZME Ltd.Şti for the year ending 31.12.2021 (.000 TL)Sales Revenue (5 x Stocks) 20000 Cost of Goods Sold (60% of Sales) 12000 Gross Margin 8000 Operating Expenses 5,864.40 EBIT 2135.6 Interest Expenses 1,080.00 Earnings Before Taxes 1055.60 Taxes (Corporate Tax Rate: 22%) 232.23 Net Income 823.37Calculation of each item on the income statement:Sales Revenue: Given Stock Turnover Rate = 5. Therefore, Sales Revenue = 5 x Stocks = 5 x 4,000 = 20,000.Taxes: Given Corporate Tax Rate = 22%.
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Data collected on the yearly registrations for a Six Sigma seminar at the Quality College are shown in the following table: a) Develop a 3-year moving average to forecast registrations from year 4 to year 12. b) Estimate demand again for years 4 to 12 with a 3-year weighted moving average in which registrations in the most recent year are given a weight of 2 , and registrations in the other 2 years are each given a weight of 1 . c) Graph the original data and the two forecasts. Which of the two forecasting methods seems better?
a) 3-year moving average (to forecast registrations from year 4 to year 12):
A moving average is used to forecast trends. A moving average is an arithmetic average that shifts as new data becomes available. It's crucial to choose a period that is both manageable and appropriate for the pattern's complexity.
For Year 4, the moving average will be calculated as follows:
moving average = (Q1 + Q2 + Q3) / 3
= (155 + 170 + 180) / 3
= 168.33
For Year 5, the moving average will be calculated as follows:
moving average = (Q2 + Q3 + Q4) / 3
= (170 + 180 + 200) / 3
= 183.33
Similarly, a moving average is determined for the remaining years, as shown in the table below:
Year Moving Average= 4145+50+60/3
=5185.3352150+60+75/3
=6288.3353155+170+180/3
=168.3354180+200+225/3
=201.3355170+180+210/3
=186.3356180+215+240/3
=211.3357200+225+260/3
=228.3358200+220+245/3
=221.3359180+190+220/3
=196.3321/3
b) 3-year weighted moving average:
In a 3-year weighted moving average, the most recent year's data is given a weight of 2, while the other two years' data are each given a weight of 1.
To forecast the registrations from Year 4 to Year 12, the 3-year weighted moving average can be calculated as follows:
Year Registration Weighted Average=4215(1) + 50(1) + 60(2)
= 1954220(1) + 60(2) + 75(1)
= 2154235(2) + 170(1) + 180(1)
= 7652240(1) + 200(1) + 225(2)
= 8902250(1) + 180(2) + 210(1)
= 5702265(2) + 215(1) + 240(1)
= 8902275(1) + 225(1) + 260(2)
= 1000220(2) + 245(1) + 200(1)
= 6652285(1) + 220(2) + 190(1)
= 620
c) The given table and both forecasts were graphed below:
In comparison to the original data, the 3-year moving average seems to smooth out the fluctuations in the data and provides a moderate forecast of future registrations. The 3-year weighted moving average takes into account more recent data, resulting in a forecast that fluctuates more in response to changes in registration patterns. Since the 3-year moving average seems to be more consistent in predicting registrations, it appears to be the better method for predicting registration.
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For the current tax year, Fannie Corporation, an Accrual Basis calendar year corporation, had the following information: Net Income Per Books (after-tax) $608,750 Premiums On Life Insurance Policy On Its Key Employees * 14,000 Excess Capital Losses 9,000 Excess Tax Depreciation 21,000 (MACRS Depreciation in excess of Financial Accounting (Book) Depreciation) Life Insurance Proceeds On Life Of Its Key Employees * 450,000 Rental Income Received In Current Tax Year 100,000 ($20,000 Is Prepaid (Unearned Revenue) And Relates To Next Tax Year) Tax-Exempt Interest Income On Municipal Bonds 19,500 Expenses Related To Tax-Exempt Interest Income 7,500 Prepaid Rent (Unearned Revenue) Received And Properly Taxed In Prior Tax Year But Not Earned For Financial Accounting 70,000 Purposes Until Current Tax Year Federal Income Tax liability For Current Tax Year 26,250 * - Fannie Corporation is the beneficiary of this Life Insurance Policy. REQUIRED: Using the Schedule M-1 format, determine the Taxable Income for Fannie Corporation for the current tax year. (Show computations)
The Taxable Income for Fannie Corporation for the current tax year is $66,750.
The given data can be tabulated as follows: Particulars Amount ($)Net income per books 608,750 Add: Excess capital losses 9,000 Add: Excess tax depreciation 21,000 Add: Prepaid rent (unearned revenue) received and properly taxed in prior tax year but not earned for financial accounting purposes until current tax year 70,000 Subtract: Premiums on life insurance policy on its key employees(14,000)
Expenses related to tax-exempt interest income (7,500) Subtract: Rental income received in current tax year (80,000)Subtract: Life insurance proceeds on life of its key employees(450,000)Add: Tax-exempt interest income on municipal bonds 19,500 Taxable Income 66,750
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Describe two important points you learn from an organization's marketing and sales force and explain your reasoning
Discuss the concepts of Apple and explain how its marketing and sales are getting its message or idea out to customers and how they are creating loyalty toward its products or services
Two important points that can be learned from an organization's marketing and sales force are the importance of customer feedback and the significance of developing a strong brand image.
Firstly, feedback from customers is important as it allows the organization to understand the needs and preferences of their target audience. This knowledge can be used to develop new products or refine existing ones to better suit the customers' needs and preferences. Secondly, a strong brand image is crucial as it helps to differentiate the organization's products or services from those of competitors, and also helps to build customer loyalty and trust towards the organization.
Apple is a leading technology company known for its innovative products such as iPhones, iPads, and Macs. Apple's marketing and sales are effective in getting its message or idea out to customers and creating loyalty towards its products or services.
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Market capitalization is a measure of firm size, and is equal to: (share price * the number of shares outstanding). It represents the public opinion of a firm's net worth, and can be easily found for most companies by Googling "Market capitalization of [name of firm]." Now, look at Interbrand's Top 100 brands, (http://www.interbrand.com/best-brands/). For two brands of your choosing, calculate what % of the firm's net worth the brand accounts for. Discuss your findings. Refer to the syllabus for word length, etc.
Market capitalization is a measure of firm size that represents the public opinion of a firm's net worth. It can be calculated by multiplying the share price with the number of shares outstanding. The Interbrand's Top 100 brands provide the ranking of the world's most valuable brands.
The percentage of a firm's net worth accounted for by a brand can be calculated using the following formula: (Brand value/Market capitalization)*100. In this assignment, two brands will be analyzed, and the percentage of their net worth that the brand accounts for will be discussed.The two brands selected for analysis are Apple and Microsoft. Apple is one of the world's most popular brands and has been ranked number one in the Interbrand's Top 100 brands for several years.
Microsoft, on the other hand, is a leading technology company that has made significant contributions to the computer industry.Apple has a market capitalization of $2.14 trillion, while its brand value is estimated at $234.2 billion. Therefore, the percentage of Apple's net worth accounted for by its brand is (234.2/2.14 trillion)*100 = 10.9%. This suggests that Apple's brand is worth approximately 10.9% of its market capitalization.
Meanwhile, Microsoft has a market capitalization of $2.21 trillion and a brand value of $143.2 billion. As a result, the percentage of Microsoft's net worth accounted for by its brand is (143.2/2.21 trillion)*100 = 6.5%. This implies that Microsoft's brand is worth roughly 6.5% of its market capitalization.
In conclusion, Apple's brand accounts for about 10.9% of its net worth, while Microsoft's brand accounts for approximately 6.5% of its net worth. This means that Apple's brand has a more significant impact on its overall net worth than Microsoft's brand.
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real-life example that violates the assumption (or
definition) of Rationality in consumer preference theory.
2. one real-life example that violates the assumption (or definition)
of Continui
Consumer preference theory is based on the assumption that consumers are rational and make decisions that maximize their satisfaction.
There are instances in real life where this assumption may not hold. One such example is impulse buying.Impulse buying refers to the unplanned purchases made by consumers that are not based on rational decision making.
Instead, it is often driven by emotions or situational factors. For example, a consumer may see a pair of shoes on sale and buy them, even if they don't need them or have a limited budget. This decision is not based on rationality but rather on a spur-of-the-moment desire.
Another example of a violation of the assumption of rationality in consumer preference theory is addiction. Addiction to substances such as drugs, alcohol, or tobacco can lead to irrational decision making when it comes to consumption. An addicted person may continue to consume these substances even when it is harmful to their health or financial well-being.
This decision is not based on rationality as it goes against the consumer's best interests.Continuity assumption is another key assumption in consumer preference theory, which suggests that consumers prefer small changes in their consumption patterns rather than large and sudden changes.
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1) One real-life example that violates the assumption of Rationality in consumer preference theory is impulsive buying behavior.
2) One real-life example that violates the assumption of Continuity in consumer preference theory is the phenomenon of preference reversals.
1) Rationality assumes that consumers make decisions based on a careful evaluation of available options and choose the one that maximizes their utility. However, impulsive buying occurs when consumers make unplanned and spontaneous purchases without rational decision-making. They may be driven by emotions, social influences, or the desire for instant gratification. This behavior often leads to buying items that are not essential or align with long-term preferences, contradicting the rationality assumption.
2) Continuity assumes that consumer preferences are consistent and do not change based on irrelevant factors or the way choices are presented. However, preference reversals occur when the relative ranking or preference for two options changes depending on the context or framing of the decision. For instance, in the context of pricing, consumers may prefer a higher-priced option when considering the quality, but switch to a lower-priced option when presented with discounts or promotions. This inconsistency in preferences challenges the assumption of continuity in consumer preference theory.
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Probably the full question is:
1) One real-life example that violates the assumption (or definition) of Rationality in consumer preference theory.
2) One real-life example that violates the assumption (or definition) of Continuity in consumer preference theory.
Solve the problems and show your defalled solution. 1. If Beth makes an initial investment of $1,000, how much will it be worth after three years if ber average return is 8.25 percent (compounded monthly)? 2. How much money does Ted need to invest each month in order to accumulate S10,000 over a five-year period, if he expects to get a retarn of 5.625 percent per year?
Ted needs to invest $132.19 each month in order to accumulate $10,000 over a five-year period, if he expects to get a return of 5.625 percent per year.
How to find?Solution1. Monthly rate of return= Annual return/ 12
= 8.25/12
=0.6875%
2. Total number of periods= 12*3
=363.
Future Value= P*(1+r)n
FV=1000*(1+0.006875)36
FV= $1,266.7645.
Hence, Beth's initial investment of $1,000 will be worth $1,266.7645 after three years if her average return is 8.25 percent compounded monthly.
Solution1.
Monthly rate of return= Annual return/ 12
= 5.625/12
=0.46875%
2. Total number of periods= 12*5
=603.
Future Value= PMT*[((1+r)n-1)/r)]+PV
Where,
PMT= Payment amount
PV= Present Value
FV= Future Value
N= number of periods
R= rate of return
FV= $10,000
PV= $0N
= 60R
=0.0046875
PMT*[((1+0.0046875)60-1)/0.0046875]+0= 10,000PMT*75.703
=10,000
PMT= $132.19.
Hence, Ted needs to invest $132.19 each month in order to accumulate $10,000 over a five-year period, if he expects to get a return of 5.625 percent per year.
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One writer asked: "Given an open road, a sports car and the assurance no law enforcement would be present, how fast would you drive?"[24] He then noted the relative lack of enforcement by MLB, despite widespread rumors and complaints about the Astros’ (and perhaps some other clubs’) illegal sign-stealing. Would more surveillance, of the type MLB used in the 2018 and 2019 playoffs when watchdogs were placed in baseball clubhouses during the games, have made a difference? Why or why not?
Additional surveillance in the form of watchdogs in baseball clubhouses during games would have acted as a deterrence, making it more difficult for teams to engage in illegal sign-stealing.
He then draws a parallel between the relative lack of enforcement by MLB despite rumors of illegal sign-stealing by the Astros and the benefits of additional surveillance.
Would more surveillance, of the type MLB used in the 2018 and 2019 playoffs when watchdogs were placed in baseball clubhouses during the games, have made a difference? Yes, additional surveillance of the type used by MLB in the 2018 and 2019 playoffs when watchdogs were placed in baseball clubhouses during the games would have made a difference because it would have acted as a deterrence to the teams engaging in illegal sign-stealing.
A baseball team typically has its own dugout, and it is responsible for the equipment and the players. Some managers and coaches also keep a stash of snacks, water, and any other essentials in the dugout. The catcher and pitcher use signs to communicate with one another, indicating what type of pitch to throw and where.
A team may try to decode the other team's signals if they know what signs to look for. By stealing signals, one team can gain an advantage over the other. To do so, they may use cameras and other electronic equipment.
Additional surveillance would make it more difficult for teams to engage in illegal sign-stealing because they would know that watchdogs are keeping an eye on them. As a result, the benefits of additional surveillance in terms of deterring illegal sign-stealing by MLB teams would have been very high.
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Surveillance in the form of watchdogs in baseball clubhouses during games would have acted as a deterrence, making it more difficult for teams to engage in illegal sign-stealing.
He then draws a parallel between the relative lack of enforcement by MLB despite rumors of illegal sign-stealing by the Astros and the benefits of additional surveillance.
Would more surveillance, of the type MLB used in the 2018 and 2019 playoffs when watchdogs were placed in baseball clubhouses during the games, have made a difference? Yes, additional surveillance of the type used by MLB in the 2018 and 2019 playoffs when watchdogs were placed in baseball clubhouses during the games would have made a difference because it would have acted as a deterrence to the teams engaging in illegal sign-stealing.
A baseball team typically has its own dugout, and it is responsible for the equipment and the players. Some managers and coaches also keep a stash of snacks, water, and any other essentials in the dugout. The catcher and pitcher use signs to communicate with one another, indicating what type of pitch to throw and where.
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You purchase an asset for $1800. At the end of the year, you sell the asset for$1950. The asset does not have any income stream attached to it. What is theasset's return (%)?
a)16.22%
b)12.15%
c)6.17%
d)8.33%
e)7.55%
Question 2 An investor is thinking about buying a discount bond with a $1000 face value andholding on to it until it matures. The purchase price of the discount bond isdetermined in the bond market. If the purchase price of the bond rises, the bond's
return will...a)fall.b)rise.
To calculate the asset's return percentage, we can use the formula:
Return percentage = ((Selling price - Purchase price) / Purchase price) * 100
Given:
Purchase price = $1800
Selling price = $1950
Return percentage = (($1950 - $1800) / $1800) * 100
= ($150 / $1800) * 100
= 0.0833 * 100
= 8.33%
Therefore, the asset's return is 8.33%.
2.
If the purchase price of the discount bond rises, the bond's return will rise.
When a bond is purchased at a discount, it means the purchase price is lower than the face value. The return on a bond is calculated as the difference between the face value and the purchase price, divided by the purchase price.
If the purchase price of the bond rises, it means the bond is being sold at a higher price than before. As a result, the difference between the face value and the purchase price increases, leading to a higher return percentage.
When the purchase price of a discount bond rises, the bond's return will also rise. This is because the bond is being sold at a higher price, resulting in a larger return when compared to the initial purchase price.
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Decreasing a resource's utilization will increase both the cost per customer and customer satisfaction. True False
The statement "Decreasing a resource's utilization will increase both the cost per customer and customer satisfaction" is false. When resources utilization decreases, it leads to a decrease in the cost per customer, while customer satisfaction may remain the same or increase.
Therefore, the decrease in resource utilization does not affect customer satisfaction in any way. In general, the cost per customer is calculated as the cost of the resources utilized divided by the total number of customers served. For example, if a manufacturing company produces 1,000 units of a product with 100 labor hours, the cost of labor per unit is 100/1,000 = 0.1 labor hours per unit. If the company reduces labor hours to 50, the cost of labor per unit becomes 50/1,000 = 0.05 labor hours per unit. Therefore, by decreasing labor hours, the company reduces the cost per unit. By extension, the cost per customer is also reduced when the cost per unit decreases. On the other hand, customer satisfaction may depend on various factors such as quality, service, delivery time, and price. Decreasing resource utilization can potentially affect some of these factors, such as delivery time.
In conclusion, the statement that decreasing a resource's utilization will increase both the cost per customer and customer satisfaction is false. Decreasing resource utilization reduces the cost per customer, while customer satisfaction may remain the same or increase.
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84. Sam signed and issued a negotiable promissory note whereby Sam promised to pay $1,000 to the order of Martha. To induce Martha to accept the note and to strengthen the likelihood of payment, Rick also signed the note. The note was then delivered to Martha. Under these facts: a. Sam is a drawer. b. Same is a drawee. c. Sam is a payee. d. Rick is an accommodation party
A negotiable promissory note is a legal agreement in which the borrower promises to pay a fixed amount of money to the lender.
In the above scenario, Sam signed and issued a negotiable promissory note promising to pay $1,000 to the order of Martha, and Rick also signed the note to induce Martha to accept the note and to strengthen the likelihood of payment. Based on the given facts, the correct option is d. Rick is an accommodation party. The definition of each term is as follows:
- Drawer: The person who creates and issues the negotiable promissory note is called the drawer.
- Drawee: The person who receives the negotiable promissory note and is responsible for making the payment is called the drawee.
- Payee: The person who receives the payment from the drawee is called the payee.
- Accommodation party: An accommodation party is one who signs a negotiable instrument for the purpose of lending his or her name as a credit reference and thereby guarantees payment to the lender.
Therefore, Sam is the drawer and Rick is an accommodation party.
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You've collected the following information from your favorite financial website. 52-Week Price Div PE Close Net Lo Stock (Div) Yld % Ratio Price Chg 64.60 47.80 Abbott 112 1.9 235.6 62.91 -05 Ralph Lauren 145.94 70.28 1.8 70.9 139.71 62 171.13 139.13 IBM 6.30 4.3 23.8 145.39 19 Duke Energy 91.80 71.96 4.9 176 74.30 84 113.19 96.20 Disney 1.68 1.7 15.5 ?? 10 According to your research, the growth rate in dividends for IBM for the next 5 years is expected to be 5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 3.5 percent indefinitely. Assume investors require a return of 10 percent on IBM stock. a. According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued? a. Current stock price b. Valuation Overvalued 2.50 3.56
According to the dividend growth model, the stock price today should be $189.50b. Based on these assumptions, the stock is currently undervalued.Let us first calculate the dividends for the next five years for IBM.
IBM's current dividend per share is $6.30.Dividend Growth Rate = 5%Year Dividend Growth Rate Dividend 1 5% 6.615 2 5% 6.946 3 5% 7.293 4 5% 7.659 5 5% 8.041We can calculate the price of IBM stock today using the dividend discount model:$62.45 = ($6.615 / (1 + 0.1)^1) + ($6.946 / (1 + 0.1)^2) + ($7.293 / (1 + 0.1)^3) + ($7.659 / (1 + 0.1)^4) + ($8.041 / (1 + 0.1)^5) + ($8.443 / (0.1 - 0.035) * (1 + 0.1)^5)
Thus, the stock price today should be $189.50. The stock is currently undervalued because the current stock price is less than the fair stock price obtained using the dividend growth model.
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Mark contributes 7% of his $120,000 salary to a Traditional 401(k). His employer, ABC Corp., matches 50% of his contributions up to 10% of his salary. His average tax rate is 14% and his marginal tax rate is 25%.
A. How much does Mark contribute to his 401(k)
B. How much does the company contribute to his 401(k)
C. How much would Mark save in taxes in the year of the contribution?
A. Mark contributes $8,400 to his 401(k) (7% of $120,000).
B. The company contributes $6,000 to his 401(k) (50% of 10% of $120,000).
C. Mark would save $2,352 in taxes in the year of the contribution. To calculate this, we first determine Mark's tax savings on his contribution by multiplying his contribution by his marginal tax rate: $8,400 * 25% = $2,100. Then we calculate his tax savings on the employer match by multiplying the employer match amount by his average tax rate: $6,000 * 14% = $840. Adding these two amounts together, Mark would save $2,100 + $840 = $2,940 in taxes.
However, since his contribution is made with pre-tax dollars, the amount of taxable income is reduced by the contribution amount. The tax savings is equal to the contribution amount multiplied by the average tax rate: $8,400 * 14% = $1,176. Therefore, Mark's net tax savings would be $2,940 - $1,176 = $2,352.
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Public Procurement sector in Kenya is by and large characterized with corruption and fraud. Identify the key causes and measures to Prevent such. Use relevant public procurement law to support your answer.
Public procurement is the process by which the government purchases goods, works, and services from the private sector. In Kenya, public procurement has been largely characterized by corruption and fraud. To prevent this, several measures need to be taken. In this answer, we shall look at the key causes of corruption in public procurement and measures to prevent them.
Key causes of corruption in public procurement sector in Kenya
1. Non-transparent procurement process: In most cases, the procurement process is not transparent. The public is not informed about the process and the criteria used to select the bidders. This leads to the perception that the process is biased and favors some bidders.
2. Lack of accountability: There is a lack of accountability in the procurement process. There are no clear mechanisms to hold the procurement officers accountable for their actions.
3. Conflict of interest: Procurement officers have been found to be conflicted. Some procurement officers have been found to have personal interests in some of the contracts they award.
4. Poor governance: The procurement process is not governed by clear policies and regulations. This has led to the abuse of the procurement process.
Measures to prevent corruption in public procurement sector in Kenya
1. Transparency: The procurement process should be transparent. The public should be informed about the process and the criteria used to select the bidders. This will reduce the perception that the process is biased.
2. Accountability: The procurement officers should be held accountable for their actions. This can be achieved by setting up mechanisms to monitor their activities.
3. Conflict of interest: Procurement officers should be required to declare their interests in any contract they are involved in. This will help to avoid conflicts of interest.
4. Good governance: The procurement process should be governed by clear policies and regulations. This will help to prevent abuse of the procurement process.
5. Procurement law: The Public Procurement and Disposal Act (PPDA) is the law that governs public procurement in Kenya. The law provides for the establishment of the Public Procurement Oversight Authority (PPOA) to oversee the procurement process. The law also provides for the establishment of the Public Procurement Administrative Review Board (PPARB) to handle disputes arising from the procurement process. These institutions should be strengthened to ensure that they carry out their mandate effectively.
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Xenun Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Profits of $1,200,000 recognized for books in 2020 will be collected in the following years:
Collection of Profits
2021 $200,000
2022 $400,000
2023 $600,000
The enacted tax rate is 30% for 2020 and 2021. The enacted tax rate is 35% for 2022 and 2023.
Prepared the necessary journal entries for 2020, 2021, 2022, and 2023.
Xenun Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes.
Profits of $1,200,000 recognized for books in 2020 will be collected in the following years: Collection of Profits2021 $200,0002022 $400,0002023 $600,000The enacted tax rate is 30% for 2020 and 2021. The enacted tax rate is 35% for 2022 and 2023.To calculate the necessary journal entries for 2020, 2021, 2022, and 2023, follow these steps below:2020 journal entry Profit received by the company = $1,200,000.The enacted tax rate for 2020 = 30%The tax amount for 2020 = 30% × $1,200,000 = $360,000 Revenue$1,200,000 Tax expense$360,000 Profit receivable $840,0002021 journal entry
Profit received by the company = $200,000The enacted tax rate for 2021 = 30%The tax amount for 2021 = 30% × $200,000 = $60,000Profit receivable $200,000Tax receivable$60,000 Revenue$140,0002022 journal entryProfit received by the company = $400,000The enacted tax rate for 2022 = 35%.
The tax amount for 2022 = 35% × $400,000 = $140,000 Profit receivable $400,000 Tax receivable$140,000Revenue $260,0002023 journal entry Profit received by the company = $600,000The enacted tax rate for 2023 = 35%.
The tax amount for 2023 = 35% × $600,000 = $210,000 Profit receivable $600,000Tax receivable$210,000 Revenue$390,000.Therefore, the necessary journal entries for 2020, 2021, 2022, and 2023 are given below: 2020 journal entry Revenue$1,200,000 Tax expense$360,000 Profit receivable $840,000.
2021 journal entry Profit receivable $200,000 Tax receivable $60,000 Revenue $140,000. 2022 journal entry Profit receivable $400,000 Tax receivable$140,000 Revenue$260,0002023 journal entry.
Profit receivable$600,000 Tax receivable$210,000 Revenue$390,000
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EFG, an accrual basis calendar year corporation, reported $607,000 net income before tax on its financial statements prepared in accordance with GAAP. EFG’s records reveal the following information: The allowance for bad debts as of January 1 was $61,750. Write-offs for the year totaled $17,400, and the addition to the allowance for the year was $15,700. The allowance as of December 31 was $60,050. EFG paid a $21,245 fine to the state of Delaware for a violation of state pollution control laws. EFG was sued by a consumers' group for engaging in false advertising practices. Although EFG’s lawyers are convinced that the suit is frivolous, its independent auditors insisted on establishing a $60,700 allowance for contingent legal liability and reporting a $60,700 accrued expense on the income statement. EFG received a $200,310 advanced payment for 10,000 units of inventory on October 20. EFG reported the payment as revenue the following February when the units were shipped.
After making the necessary adjustments, the adjusted net income before tax for EFG is $625,545.
Based on the information provided, EFG reported a net income before tax of $607,000 on its financial statements. However, certain adjustments need to be made to arrive at the correct net income figure.
First, the allowance for bad debts decreased from $61,750 to $60,050 during the year. This indicates that $1,700 ($61,750 - $60,050) of bad debt expense was recognized. This expense should be deducted from the reported net income.
Secondly, EFG incurred a fine of $21,245 for a violation of state pollution control laws. Fines and penalties are generally not deductible expenses for tax purposes, so this amount should be added back to the reported net income.
Thirdly, EFG established an allowance for the contingent legal liability of $60,700 and recorded it as an accrued expense on the income statement. This is a non-cash expense and should not be included in the calculation of net income.
Lastly, the advanced payment of $200,310 received for inventory should not be recognized as revenue until the units are shipped. Since the units were shipped in February of the following year, this amount should not be included in the current year's net income.
To calculate the adjusted net income, we need to make the following adjustments:
Reported net income before tax: $607,000
Bad debt expense: -$1,700
Fine for violation: +$21,245
Accrued legal liability (non-cash): $0
Advanced payment for inventory (deferred revenue): $0
Adjusted net income before tax: $625,545
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Gabriela Marco, a former regional manager for the Chipotle restaurant chain. On January 2, 2008 (but it might be 2009 due to an error on the medical records from, understandably, forgetting to use the new year, right after December 31), Gabriela underwent surgery in Eyeowah with Dr. Wright to donate a kidney to her cousin Scott Connolly. The surgery was successful and there were no reported complications. The same day, in a separate surgery, Dr. Maccabee transplanted Gabriela's donated kidney into Scott. In the subsequent days, Scott experienced some complications with the donated kidney. Additional surgical procedures were required. On January 10, Dr. Maccabee performed an exploratory surgery on Scott and apparently mistakenly stitched the renal artery which supplied blood to the donated kidney. On January 12, Dr. Daly performed yet another surgery on Scott. Dr. Daly observed Dr. Maccabee's sutures transgressing the renal artery and determined that the donated kidney could not be saved. Dr. Daly ordered the kidney to be removed. The true cause of the issues with the kidney are never disclosed to Scott or Gabriela.
EMMC is a non-profit hospital and Scott qualifies for their Charity Care Policy, but the hospital has indicated that they will not allow him to avail himself of the Charity Care Policy because transplants are not included under the policy.
At the time, Gabriela was obviously disappointed that her organ donation was unable to help Scott. But it was only a few months ago, when she returned to EMMC for some tests, that she learned this was due to surgical error. She is now not just disappointed but really disgusted that she subjected herself to serious risks from surgery for Scott, and it was all for nothing. Gabriela has some physician friends.
You are a hospital administrator at EMMC and you have this case reviewed by the following experts. Dr. Lucy is a cardiologist at Johns Hopkins in Baltimore. She opined that it was negligent to stitch the renal artery during the exploratory surgery. Dr. Apple is a surgeon at the Mayo Clinic in Rochester, MN. Dr. Apple also opined that it was negligent to stitch the renal artery during the exploratory surgery. Dr. Apple further opined that both Dr. Maccabee and Dr. Daly were negligent for failing to monitor and supervise Scott properly and detect the decreased blood flow to his transplanted kidney after the exploratory surgery. Dr. Apple said that if the decreased flow had been detected, there would have been a "good chance" the kidney could have been saved.
As I mentioned, in September 2013, Gabriela went to EMMC for some tests. She had been experiencing fatigue and urination problems. Dr. Sean diagnosed Gabriela with kidney disease. While medicine cannot reverse chronic kidney disease, it is often used to help treat symptoms and complications and to slow further kidney damage. Since Gabriela only has only one remaining kidney, Dr. Sean prescribed Soobent, a drug that has proven effectiveness for her condition. But apparently because of the $4000 per month cost, Gabriela's health insurer, Medicare, denied coverage. Medicare, explained that Soobent is still a new drug and has only significant proven effectiveness with patients who have kidney disease more serious and more advanced than Gabriela. Therefore, using it with someone like Gabriela is "experimental" and falls within the insurance contract's coverage exclusion for "experimental therapies." Dr. Sean appealed the denial by adding some additional false information into her medical record that makes Gabriela's appear sicker than she is. Her insurance company approves the drug, along with some other additional treatments based on the falsified documents in her medical record.
The CEO at EEMC hears about everything that has happened with both Gabriela and Scott. The CEO asks you as the hospital administrator to evaluate the risks for the organization based on the facts that you currently have. The CEO also asks you to come up with a corrective action plan so something like this doesn't happen again in the future. The CEO would like the risks and associated corrective action plan laid out in a memo so that he can present it to the Board. He would also like your opinion on whether EEMC should self-disclose the fraud by Dr. Sean to Medicare.
The hospital administrator should evaluate the risks associated with Gabriela and Scott's cases and develop a corrective action plan to prevent similar incidents in the future.
Memo
To: CEO, EEMC
From: Hospital Administrator
Date: [Date]
Subject: Risk Evaluation and Corrective Action Plan
I have evaluated the risks associated with the cases of Gabriela Marco and Scott Connolly and prepared a corrective action plan to prevent similar incidents in the future. Additionally, I will provide my opinion on self-disclosing the fraud by Dr. Sean to Medicare.
1. Risk Evaluation:
a) Surgical Negligence: The negligence in stitching the renal artery during the exploratory surgery resulted in the loss of the transplanted kidney.
b) Failure to Monitor and Supervise: The failure to detect decreased blood flow to the transplanted kidney after the exploratory surgery indicates a lapse in monitoring and supervision.
c) Insurance Fraud: Dr. Sean's falsification of Gabriela's medical records to secure coverage for Soobent and other treatments poses legal and ethical risks to EEMC if discovered.
2. Corrective Action Plan:
a) Surgical Protocols: Review and enhance surgical protocols to ensure thorough monitoring and supervision during and after procedures, with specific attention to vascular surgeries.
b) Quality Assurance: Strengthen quality assurance processes to identify and address surgical errors promptly. This includes regular performance evaluations, peer reviews, and implementing a culture of reporting and learning from adverse events.
c) Compliance and Ethics: Strengthen compliance and ethics programs to prevent and detect insurance fraud. This includes regular training, monitoring of medical record documentation, and robust internal reporting mechanisms.
d) Patient Education and Advocacy: Enhance patient education programs to ensure they understand their rights, treatment options, and how to address any concerns or grievances.
3. Self-disclosure to Medicare:
It is strongly recommended that EEMC self-disclose the fraud committed by Dr. Sean to Medicare. Falsifying medical records violates ethical standards and legal requirements.
This comprehensive approach will mitigate risks, enhance patient safety and satisfaction, and safeguard the hospital's reputation. By implementing these measures, EEMC can ensure the delivery of high-quality care while maintaining compliance with regulatory and ethical standards.
Please let me know if you require any additional information or clarification.
Thank you.
Sincerely,
[Your Name]
Hospital Administrator
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Is Purchasing a key component of SCM, or is it the other way around?
Purchasing is a key component of Supply Chain Management (SCM). Supply Chain Management encompasses the end-to-end coordination and integration of various activities involved in delivering products or services to customers. Purchasing, on the other hand, focuses specifically on the acquisition of goods or services from external suppliers.
Purchasing plays a vital role within SCM as it involves activities such as supplier selection, negotiation, order placement, and managing supplier relationships. It is responsible for ensuring that the right materials or services are procured at the right time, in the right quantities, and at the right cost.
Effective purchasing practices are essential for optimizing the overall supply chain performance. By strategically managing the purchasing function, organizations can achieve cost savings, ensure timely availability of materials, maintain quality standards, and mitigate risks associated with the supply of goods or services.
Therefore, while purchasing is a key component of SCM, it is just one part of the broader supply chain management framework that encompasses other functions such as logistics, inventory management, demand planning, and customer relationship management.
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The security characteristic line is A) the trend line representing the security's tendency to advance or decline in the market over some period of time B) the "best fit" line representing the regression of the security's excess returns on market excess returns over some period of time C) another term for the capital allocation line representing the set of complete portfolios that can be constructed by combining the security with T-bill holdings D) None of the above answers is correct
The Security Characteristic Line (SCL) is a graph of the excess returns of a security against the excess returns of the market over a specific time frame.
The slope of the SCL, which reflects the sensitivity of the security's returns to changes in the market returns, is referred to as the beta coefficient. The SCL can aid in determining a stock's expected return and comparing it to the actual return to evaluate the stock's performance.
Furthermore, the SCL aids in the identification of over- and underpriced stocks. The option B is the correct answer. Thus, the Security Characteristic Line (SCL) is the "best fit" line representing the regression of the security's excess returns on market excess returns over some period of time. The SCL is often used to determine the security's beta, which reflects its sensitivity to market fluctuations.
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Boulderstan is a country that produces only granola and tofu. Denverstan is also a country that produces only granola and tofu.
A. Assuming that producing these goods involves an increasing opportunity cost, draw a fully labeled Production Possibility Curve graph that illustrates Boulderstan’s possible production.
b. On the same graph, show how Boulderstan could move from producing an equal amount of granola and tofu to producing more granola. Assume that Boulderstan continues to produce at peak efficiency.
c. On the same graph, show how increased education would affect Boulderstan’s production’s over the long run.
d. Assume that Boulderstan and Denverstan produce according to the chart below. If the countries each specialized in one product and then traded, which country should specialize in granola and which in tofu? Why? Explain.
e. What are the terms of trade for a unit of granola, according the information in the chart below?
A. To draw a fully labeled Production Possibility Curve graph for Boulderstan's possible production, you would need to use the two goods, granola, and tofu, as the graph's axes. The x-axis represents the quantity of granola produced, and the y-axis represents the quantity of tofu produced. Start by plotting points on the chart corresponding to different combinations of granola and tofu that Boulderstan can pay. Connect these points to form a curve representing the production possibilities for Boulderstan. Label the curve as the Production Possibility Curve.
B. To show how Boulderstan could move from producing an equal amount of granola and tofu to producing more granola, you would need to shift the production point along the Production Possibility Curve toward granola. This can happen if Boulderstan reallocates some of its resources from producing tofu to producing granola while maintaining peak efficiency. Plot the new production point on the graph, reflecting the increase in granola production. C. To show how increased education would affect Boulderstan's production in the long run, you would need to shift the entire Production Possibility Curve outward. This is because increased education can improve technology, skills, and productivity, allowing Boulderstan to produce more granola and tofu with the same resources. Plot the new Production Possibility Curve on the graph, showing the increased production possibilities for Boulderstan. D. To determine which country should specialize in granola and which in tofu, compare the opportunity costs of producing these goods in Boulderstan and Denverstan. The country with a lower opportunity cost for a particular good should specialize in that good. The opportunity cost of producing one unit of granola is the amount of tofu that could have been produced instead, and vice versa. Compare the opportunity costs of granola and tofu production in both countries and identify the country with the lower opportunity cost for each good. That country should specialize in the good with the lower opportunity cost. E. The terms of trade for a unit of granola can be determined by comparing the opportunity costs of granola and tofu production in Boulderstan and Denverstan. The terms of trade represent the rate at which the two countries can exchange one good for another. In this case, the terms of trade for a unit of granola can be determined by comparing the opportunity cost of producing granola in Boulderstan to the opportunity cost of producing tofu in Denverstan. The exact terms of trade would depend on the specific opportunity costs in each country, which need to be provided in the question.
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Grandma is worried about her kids and grandchildren. She has two sons, Charles and Tyler. Each is married and has children. Charles has three kids, Tyler has one. She wants to know what will happen if Charles and/or Tyler pass on (they both are in very high-risk jobs) and she leaves her bounty (her wealth) as to her sons (a) per stirpes or (b) per capita. As part of your explanation, please also explain exactly what the terms mean. Assume for fun Grandma has an estate of $2,000,000.
If Grandma leaves her wealth to her sons per stirpes, and if either son passes away before her, their children will receive a portion of their father's share.
Per Stirpes is a Latin term that means "by roots or stocks." This method of estate distribution is used to distribute an estate equally among the descendants of a person who has died. Each branch of the family is considered a "branch," and each branch will receive an equal share of the estate.
The shares are then divided among the heirs of the branch who have survived. In the event that an heir predeceases the testator, his or her share is divided equally among his or her descendants.
Per capita is a Latin phrase that means "by the head." This method of distributing an estate entails dividing the estate equally among each of the descendants. This is accomplished regardless of whether they are part of the same family branch or generation.
The number of living beneficiaries in each generation is considered equal to the number of shares distributed. In the event that a descendant dies before the testator, the deceased's share is not divided equally among his or her descendants. The descendants of the deceased are not entitled to any part of the estate's distribution.
If she leaves her bounty to her sons per capita, then her grandchildren will not receive a share of the estate if their parent dies before Grandma.
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Suppose that in a market with perfect competition, the market demand function is given by Qd = 1200 − 50p. Every firm in the industry has a short-run opportunity cost of production given by Csr(q) = 2q^2.
(a). Compute each firm’s short-run supply curve.
(b). If there are 600 firms, what is the short-run equilibrium price and quantity in this market?
(c). If each firm’s long-run opportunity cost function is given by Clr(q) = 2q^2 + 2 + q, and there are an unlimited number of firms available with this cost function, what is the long-run equilibrium price in the market? How many firms will be producing?
(a) Each firm's short-run supply curve: q = p/4.
(b) Short-run equilibrium price: $24; quantity: 0.
(c) Long-run equilibrium price: $5; unlimited number of firms producing.
(a) Each firm's short-run supply curve can be determined by equating the marginal cost (MC) with the market price. The short-run marginal cost is the derivative of the short-run cost function, which is given as Csr(q) = 2q^2.
MC = dCsr(q)/dq = 4q
Equating MC to the market price (p), we have:
4q = p
Therefore, the short-run supply curve for each firm is q = p/4.
(b) In the short-run equilibrium, the market quantity supplied (Qs) is equal to the market quantity demanded (Qd). Given that there are 600 firms, we can calculate the equilibrium price and quantity.
Qs = q * number of firms
Qs = (p/4) * 600
Qd = 1200 - 50p
Setting Qs equal to Qd:
(p/4) * 600 = 1200 - 50p
Simplifying and solving for p:
150p = 1200 * 4 - 50p
200p = 4800
p = 24
Substituting p back into the demand function to find the quantity:
Qd = 1200 - 50(24)
Qd = 1200 - 1200
Qd = 0
Therefore, in the short-run equilibrium, the price is $24 and the quantity demanded and supplied is zero.
(c) In the long-run equilibrium, the market price will be equal to the minimum long-run average cost (LRAC). Each firm's long-run average cost function is given by Clr(q) = 2q^2 + 2 + q.
LRAC = Clr(q)/q = (2q^2 + 2 + q)/q = 2q + 2/q + 1
To find the long-run equilibrium price, we need to find the minimum point of the LRAC function. Taking the derivative of LRAC with respect to q and setting it equal to zero:
dLRAC/dq = 2 - 2/q^2 = 0
Solving for q:
2/q^2 = 2
q^2 = 1
q = ±1
Since the quantity cannot be negative, q = 1. Substituting q back into the LRAC function:
LRAC = 2(1) + 2/(1) + 1
LRAC = 5
Therefore, in the long-run equilibrium, the price in the market is $5, and the number of firms producing is unlimited.
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Read the paragraph below, taken from full an article from The Star, 29 March 2014. Is the MIA's latest report a clear snapshot of audit quality in Malaysia? It's easy to be sceptical about self-assessment exercises. How many people can be wholly critical and objective when evaluating what they see in the mirror? And surely fewer still are secure and honest enough to share the full results with the rest of the world. So how should we view the Practice Review Report released this week by the Malaysian Institute of Accountant (MIA)? The tricky element here is that the institute is a regulator as well as a professional body. Is the report an authoritative, warts-and-all survey of the profession that the institute oversees, or is it something that promotes the interests of MIA members? Then again, these objectives don't have to be mutually exclusive. When steps are taken to elevate the standards of the profession-starting with identification of problems - the accountants have much to gain. In his message in the report, MIA president Johan Idris (who also chairs the institute's Practice Review Committee) wrote, "The findings of practice review have significant educational content and are beneficial to practitioners. They serve to guide our practitioners in training their staff and alerting them to many pitfalls that may derail them in the course of carrying out the policies and procedures of the firm." The institute's media release expanded this point: "This quality assessment programme will drive consistency and raise the bar on audit quality, thereby underpinning public confidence in the accountancy profession." Required: Who are the responsible parties that involved with the practice review and why? (i) (ii) (iii) What is the objective of practice review? Findings from practice review are beneficial to practitioners. How do you think practitioner may benefit from it? (vi) Identify at least three (3) challenges audit firms faced in practicing audits in Malaysia and solutions to the challenges. (Total: 15 marks) (Total Question 1: 35 marks)
(i) The Malaysian Institute of Accountants (MIA) and the Practice Review Committee are responsible for conducting the practice review.
(ii) The objective of the practice review is to identify problems and issues in the accounting profession and to promote consistency in the quality of audits. The quality assessment program drives consistency and raises the bar on audit quality, thereby underpinning public confidence in the accountancy profession.
(iii) The findings from the practice review are beneficial to practitioners. They serve as a guide for practitioners to train their staff and alert them to many pitfalls that may derail them in the course of carrying out the policies and procedures of the firm. It helps practitioners to improve their quality of work and to maintain their professional skills and knowledge.
(vi) Three challenges audit firms faced in practicing audits in Malaysia and solutions to the challenges are:
Lack of technical skills and knowledge: The lack of technical skills and knowledge can be solved by providing training and education to the employees. The audit firms can also hire experienced and knowledgeable professionals to guide and mentor the employees.Time constraints: The time constraints can be addressed by planning and scheduling the audits effectively. Audit firms can use technology and software tools to automate the audit process, which will save time and increase productivity.Pressure from clients: The pressure from clients can be handled by maintaining independence and objectivity in the audit process. Audit firms should have clear policies and procedures in place to deal with such situations. They should communicate effectively with their clients and manage their expectations to ensure a smooth audit process.Learn more about audits:
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Mack Industries just paid a dividend of $3 per share (DO=$3 ). Analysts expect the company's dividend to grow 7 percent this year (D1=$3.21) and 6 percent next year. After two years the dividend is expected to grow at a constant rate of 6 percent. The required rate of return on the company's stock is 11 percent. What should be the company's current stock price? $64,20 $62.20 $60.20 $66.20 $68.20
Based on the given information and using the dividend discount model, the current stock price for Mack Industries is calculated to be $210.27.
The current stock price of Mack Industries can be calculated using the dividend discount model (DDM). The DDM values a stock based on the present value of its expected future dividends. In this case, we have information about the dividends for the next three years and a constant growth rate thereafter.
To calculate the current stock price, we can use the following formula:
P0 = D0 × (1 + g1) / (r - g1) + D1 × (1 + g2) / (r - g2) + D2 × (1 + g3) / (r - g3)
Where:
P0 = Current stock price
D0 = Dividend just paid
g1, g2, g3 = Dividend growth rates for the corresponding years
r = Required rate of return
Let's plug in the given values:
P0 = $3 × (1 + 0.07) / (0.11 - 0.07) + $3.21 × (1 + 0.06) / (0.11 - 0.06) + $3.21 × (1 + 0.06) / (0.11 - 0.06)
Simplifying the equation:
P0 = $3 × 1.07 / 0.04 + $3.21 × 1.06 / 0.05 + $3.21 × 1.06 / 0.05
P0 = $75.75 + $67.26 + $67.26
P0 = $210.27
Therefore, the company's current stock price should be $210.27.
Based on the given information and using the dividend discount model, the current stock price for Mack Industries is calculated to be $210.27. This value takes into account the dividends expected over the next three years and the constant growth rate beyond that period, as well as the required rate of return of 11 percent.
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Household Problem 2 In this problem you will study the representative household. Suppose that the utility function is given by max ε,l
U(c,l)=ln(c)+γln(l) where c is consumption, l is leisure, and γ is a parameter that determines how much the representative household values leisure versus consumption (a higher γ means a higher weight on leisure). Assume that γ>0. Let h be the total time endowment, ω the wage, π the dividend payments, and T the lump sum tax. 1. Write down the household optimization problem (don' forget taxes and dividends in the budget constraint) 2. Find the optimal trade-off condition or equation between consumption and leisure. 3. Find the optimal c ∗
,l ∗
, and N ∗
(back out N ∗∗
from l ∗
and the time constraint). The optimal solutions must depend on h,γ,ω, and π−T 4. How does N ∗
change when wage rises? Explain this result using income and substitution effects. 5. How does N ∗
change when taxes fall? Explain this result using income and substitution effects. 6. Let's calibrate the model to the US household. Keep π−T=0. In US data we observe that households enjoy 3
2
of their time endowment in leisure, i.e. l= 3
2
h. Given this fact derive a realistic value for the parameter γ. 7. Let's simulate a recession. For this question set ω=1 (initially) also set h=1,π−T=0.1 and use the value of γ calculated in the previous calibration step. Suppose the wages decrease by 10% under a recession. How do N s∗
change? What happens to c ∗
? Explain in terms of income and substitution effect. (Hint: Be careful not to mix leisure with hours worked. Also π−T is now different from zero!)
The household optimization problem is to maximize the utility function subject to the budget constraint:
Maximize U(c, l) = ln(c) + γln(l)
subject to the budget constraint:
c = ωN - (π - T)
where c is consumption, l is leisure, N is the number of hours worked, ω is the wage rate, π is the dividend payments, and T is the lump sum tax.
The optimal trade-off condition or equation between consumption and leisure is obtained by taking the derivative of the utility function with respect to both c and l and setting them equal to each other:
∂U/∂c = 1/c = γ/((1 - l)/h)
Simplifying, we get:
c = γ(1 - l)/h
To find the optimal values of c*, l*, and N*, we need to solve the optimization problem by substituting the trade-off condition into the budget constraint. Substituting c = γ(1 - l)/h into the budget constraint, we have:
γ(1 - l)/h = ωN - (π - T)
Solving for N, we get:
N* = [(γ(1 - l)/h) + (π - T)]/ω
Substituting the given leisure value l = 3/2h, we can solve for the optimal values of c*, l*, and N*.
When the wage rises, N* increases. This can be explained by the income and substitution effects. The income effect suggests that as the wage increases, the household's income rises, allowing them to consume more and potentially work less. The substitution effect suggests that as the wage increases, the opportunity cost of leisure increases, leading the household to substitute leisure with work and increasing the number of hours worked.
When taxes fall, N* increases. This can also be explained by the income and substitution effects. The income effect suggests that as taxes decrease, the household's disposable income increases, allowing them to consume more and potentially work less. The substitution effect suggests that as taxes decrease, the opportunity cost of leisure decreases, leading the household to substitute leisure with work and increasing the number of hours worked.
Given l = 3/2h, we can substitute this into the utility function to derive a realistic value for the parameter γ. The utility function becomes:
U(c, l) = ln(c) + γln(3/2h)
By observing US data and assuming a reasonable level of utility, we can estimate the value of γ that would produce this leisure level.
Under a recession scenario with ω = 1, h = 1, π - T = 0.1, and a 10% decrease in wages, N* would decrease. This can be explained by the income and substitution effects. The income effect suggests that as wages decrease, the household's income decreases, leading to a decrease in consumption and potentially an increase in leisure. The substitution effect suggests that as wages decrease, the opportunity cost of leisure decreases, leading the household to substitute work with leisure and decreasing the number of hours worked. The net effect of these effects would result in a decrease in N*. The change in c* would depend on the relative magnitude of the income and substitution effects and the specific utility function parameters.
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A company with a stable growth of 1% has net income of $50 million. The company decides to increase its dividend payout ratio by 2%. What will most likely happen to the company's price to earnings ratio?
A. P/E ratio will increase
B. P/ ratio will remain unchanged
C. P/E ratio will decrease
The most likely effect of increasing the dividend payout ratio by 2% on the company's price-to-earnings (P/E) ratio would be: C. P/E ratio will decrease.
The P/E ratio is calculated by dividing the market price per share by the earnings per share (EPS).
Increasing the dividend payout ratio means that a larger portion of the earnings is being distributed to shareholders as dividends, resulting in a lower retained earnings. This reduction in retained earnings can lower the equity value of the company and consequently decrease the earnings per share (EPS). As a result, the P/E ratio, which is the ratio of the market price to the earnings per share, would likely decrease.
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Steps were taken to improve productivity by sysdoc:
Scenario: Sysdoc has implemented a hybrid approach because productivity is declining. so we need solutions for that.
Sysdoc, an information and business process management firm, has implemented a hybrid approach in response to a decline in productivity.
This strategy was implemented to ensure that Sysdoc's processes are more efficient and effective, resulting in an improvement in productivity.The hybrid approach is a method that combines various methodologies, including Agile, Lean, and Six Sigma. This approach aims to reduce the time and effort needed to achieve goals, while also enhancing the quality of the results. As a result, Sysdoc is well-positioned to identify any inefficiencies in the process and promptly resolve them to enhance productivity. Sysdoc also took additional steps to enhance productivity.
The firm implemented a variety of changes, including the use of automation to reduce repetitive processes, the streamlining of procedures, and the provision of additional resources to staff. The implementation of these changes necessitated significant training and development initiatives for staff to ensure that they were equipped with the necessary skills to adapt to the changes. Finally, Sysdoc also sought to enhance communication and transparency among staff to ensure that everyone was aware of the changes being made and how they would impact the company.
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