A 25 percent increase in the price of hot dogs will cause the quantity of mustard purchased to fall by 62.5 percent since the goods are complements.
The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. A negative cross-price elasticity indicates that the goods are complements, meaning they are consumed together.
In this case, a cross-price elasticity of -2.50 implies that a 1 percent increase in the price of hot dogs leads to a 2.50 percent decrease in the quantity of mustard purchased. Therefore, a 25 percent increase in the price of hot dogs will result in a 25 * 2.50 = 62.5 percent decrease in the quantity of mustard purchased.
Hence, the correct statement is that a 25 percent increase in the price of hot dogs will cause the quantity of mustard purchased to fall by 62.5 percent since the goods are complements.
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Show that a monopolist facing inverse demand p(q)=q −2
+10 with constant marginal utility MC=5 will produce on the elastic segment of the demand curve.
In the given problem, the monopolist faces an inverse demand function p(q) = q − 2 + 10 and a constant marginal cost MC = 5. We need to show that the monopolist will produce on the elastic segment of the demand curve.
Elastic segment of the demand curve refers to the range of quantities where the price elasticity of demand is greater than 1. This means that a small change in price will lead to a relatively larger change in quantity demanded. Let's begin the solution by finding the expression for the price elasticity of demand (Ep).
Ep = (% change in quantity demanded) / (% change in price)The inverse demand function is given by p(q) = q − 2 + 10. Differentiating both sides with respect to q,
we get:
dp/dq = 1 - 2qPutting this in the expression for Ep,
we get:
Ep = (dq/q) / (-dp/q)Ep = (-dq/dp) * (p/q)Ep = (-1/[(1-2q)q]) * (q / (q-2+p))Ep = (2-p) / (q - 2 + p)^2
Now, we need to find the range of quantities where Ep > 1.
Let's put Ep = 1 and solve for q.1 = (2-p) / (q - 2 + p)^22 - p = q - 2 + p2p = qq = 2p
The quantity at which Ep = 1 is q = 2p.
Hence, the monopolist will produce on the elastic segment of the demand curve for q < 2p.This is because when the quantity is less than 2p, the price elasticity of demand is greater than 1.
This means that a small change in price will lead to a relatively larger change in quantity demanded, making it profitable for the monopolist to produce more. When the quantity is greater than 2p, the price elasticity of demand is less than 1.
This means that a small change in price will lead to a relatively smaller change in quantity demanded, making it unprofitable for the monopolist to produce more. Hence, the monopolist will produce on the elastic segment of the demand curve for q < 2p.
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. Suppose that two firms pollute environment and each firm's marginal cost of pollution abatement (reduction) is given by MC₁ = 16 +4, and MC₂ = 10 +42 where A is the units 2 of pollution abated. Now the government targets to reduce pollution by 30 units in total.
1) When the government uses a uniform standard that requires each firm to reduce the same amount of pollution, calculate each firm's marginal cost of pollution abatement.
2) When the government decides to charge an emissions fee for each unit of pollution, determine how many units of pollution reduction each firm can complete. What is the optimal emissions fee?
1) The marginal cost of pollution abatement is $76 for firm 1 and $40 for firm 2.
2) Optimal emissions fee = $52, firm 1 will choose to reduce pollution by 9 units and firm 2 will choose to reduce pollution by 21 units.
1. When the government uses a uniform standard that requires each firm to reduce the same amount of pollution, each firm must reduce 15 units of pollution (since the government targets to reduce pollution by 30 units in total).
The marginal cost of pollution abatement for each firm can be calculated using the given formulas:
For firm 1: MC₁ = 16 + 4A₁ = 16 + 4(15) = $76
For firm 2: MC₂ = 10 + 2A₂ = 10 + 2(15) = $40
Thus, when the government uses a uniform standard that requires each firm to reduce the same amount of pollution, the marginal cost of pollution abatement is $76 for firm 1 and $40 for firm 2.
2. When the government decides to charge an emissions fee for each unit of pollution, each firm will choose to reduce pollution until its marginal cost of pollution abatement equals the emissions fee.
Let’s denote the emissions fee as F.
Then, one can set up the following equations to determine how many units of pollution reduction each firm can complete:
For firm 1: MC₁ = F => 16 + 4A₁ = F => A₁ = (F - 16)/4
For firm 2: MC₂ = F => 10 + 2A₂ = F => A₂ = (F - 10)/2
Since the government targets to reduce pollution by 30 units in total,
A₁ + A₂ = 30.
Substituting the expressions for A₁ and A₂ from above,
(F - 16)/4 + (F - 10)/2 = 30
F-16+2F-20/4 = 30
3F-36/4 = 30
3F-36 = 120
3F = 120 + 36
3F = 156
F = $52.
Substituting this value of F back into the expressions for A₁ and A₂,
A₁ = (52 - 16)/4 = 36/4 = 9
A₂ = (52 - 10)/2 = 42/2 = 21
Thus, when the government decides to charge an emissions fee of $52 for each unit of pollution, firm 1 will choose to reduce pollution by 9 units and firm 2 will choose to reduce pollution by 21 units.
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Day M T W TH F
day
M
T
W
TH
F
SAT
SU
Number of operators
6
5
5
3
4
5
3
A company has the following weekly schedule. Find the capacity of employees.
Select one:
a. 45
b. 35
c. 40
d. 30
………... is not one of the operational responsibilities
Select one:
a. Scheduling
b. Information sharing
c. None of them
d. forecasting
………….. is not one of supply chain flow management
Select one:
a. All of the above
b. Information flow
c. Financial flow
d. Labor flow
Labor flow is not one of the supply chain flow management. Supply chain flow management includes the flow of products, information, and financial resources. The correct option is (d) Labor flow.
To find the capacity of employees, we need to determine the number of operators on each day and add them up.Day Number of operators
M 6T 5W 5TH 3F 4SAT 5SU 3
Total number of operators = 6 + 5 + 5 + 3 + 4 + 5 + 3 = 31
Therefore, the capacity of employees is 31.
The correct option is (d) 30.None of them is not one of the operational responsibilities. Information sharing, scheduling, and forecasting are operational responsibilities that are responsible for the successful execution of supply chain management.
The correct option is (c) None of them. Labor flow is not one of the supply chain flow management. Supply chain flow management includes the flow of products, information, and financial resources. The correct option is (d) Labor flow.
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The utility function is: ⋃(x,y)=x 11
2 y 11
9
Maximize utility subject to the budget constraint: 3x+1y=132 (a.) What is the Marginal Rate of Substitution (i.e. the slope of the ind Select an answer and submit. For keyboard navigation, use the up/down arrow k 6x
−2y
b 9x
−4y
c 9x
2y
d 9x
−2y
Copied and pasted from part (a.) for your convenience The utility function is: U(x,y)=x 11
2
y 11
9Maximize utility subject to the budget constraint: 3x+1y=132 (b.) What is the slope of the budget constraint line? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a − 1
2
b − 1
3
The given utility function is: U(x, y) = x^(11/2) y^(11/9)Let's write down the equation for the budget constraint:3x + y = 132Or,y = 132 - 3x
The Marginal Rate of Substitution (MRS) is calculated by taking the derivative of the utility function with respect to y divided by the derivative of the utility function with respect to x. MRS = -(M U x/MU y)
The partial derivative of U with regard to x in this instance is MU x. The partial derivative of U with regard to y is called MU y. Calculate the following partial derivatives now: MU x = (11/2)x^(9/2) y^(11/9)MU y = (11/9)x^(11/2) y^(-8/9)
The required slope of the indifference curve is:9x/2 y^(8/9))The given equation of the budget constraint is:3x + y = 132Let's write it in slope-intercept form: y = -3x + 132The slope of this line is -3.
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suppose you are considering an investment into HiCorp stock. This stock has a beta of 1.1. The return to a treasury bill is 3% and we expect the stock market to have an 8% rate of return in the next year. Given this information, the value of the risk premium you would need for the CAPM model is... 5% 5.5% 8% 13% None of these. Question 12 "The CAPM model requires that we know the expected overall market rate of return for a class of assets." Is this statement true or false? True False
The value of the risk premium needed for the CAPM model can be calculated by subtracting the risk-free rate of return from the expected rate of return on the stock market. In this case:
Risk premium = Expected market rate of return - Risk-free rate of return
Given:
Risk-free rate of return = 3%
Expected rate of return on the stock market = 8%
Risk premium = 8% - 3% = 5%
Therefore, the value of the risk premium needed for the CAPM model is 5%.
Regarding the statement "The CAPM model requires that we know the expected overall market rate of return for a class of assets," the statement is TRUE. The CAPM model utilizes the expected market rate of return as a key component in calculating the expected return of an individual asset. The model assumes that the market as a whole represents the systematic risk that cannot be diversified away, and the expected market rate of return serves as a benchmark for evaluating the risk and return of the asset being considered.
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an existing asset of 20000 with a corresponding liability and equity of 140000 and 60000 respectively. they borrowed money from the bank worth 40000 what is the new amount of liability
The new liability amount after borrowing $40,000 from the bank is $180,000.
To determine the new amount of liability after borrowing money from the bank, we need to add the borrowed amount to the existing liability.
Existing liability: $140,000
Borrowed amount: $40,000
New liability = Existing liability + Borrowed amount
New liability = $140,000 + $40,000
New liability = $180,000
Therefore, the new amount of liability after borrowing $40,000 from the bank is $180,000.
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Using your own needs as a "standard" instead of trying to empathize with your coworker's needs would best illustrate which critical thinking barrier? Self-Centered Focus Gut Feelings Unreliable Sources Blind Spots
The critical thinking barrier that best illustrates using your own needs as a "standard" instead of empathizing with your co-worker's needs is Self-Centred Focus.
Self-Centred Focus is a critical thinking barrier that hinders our ability to think critically. It arises when we struggle to separate our own feelings, emotions, and beliefs from the topic being discussed. When we rely solely on our own experiences, we are more likely to make poor decisions and overlook important facts or alternative perspectives.
For instance, in a collaborative project with a co-worker, succumbing to Self-Centred Focus means prioritizing our own needs and viewpoints over understanding and addressing our co-worker's needs. This mindset can be detrimental to effective teamwork and communication, as it disregards the importance of considering multiple perspectives and finding mutually beneficial solutions.
Overcoming the barrier of Self-Centred Focus requires conscious effort to empathize with others, actively listen to their concerns, and be open to different viewpoints. By doing so, we enhance our ability to think critically, promote better collaboration, and make more informed decisions that benefit everyone involved.
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Below is the customer-related information for Maximus Ltd. Calculate the total costs of the order-level activities.
Delivery products to customers
$ 2735
Advertising on national TV
$ 4895
Handling customer complaints
$ 4283
Processing sales orders
$ 1632
Packing products $ 1508
Supplying regular free gifts to customers
$ 5284
Maximus Ltd. is a company that specializes in delivering products to customers. In order to calculate the total costs of the order-level activities, we need to take into account all of the different expenses incurred by Maximus Ltd. in the process of delivering products to customers.
Some of the major expenses that Maximus Ltd. faces include advertising on national TV, handling customer complaints, processing sales orders, packing products, and supplying regular free gifts to customers.
To calculate the total costs of these order-level activities, we need to add up all of the expenses associated with each activity. For example, the cost of delivering products to customers is $2,735, the cost of advertising on national TV is $4,895, the cost of handling customer complaints is $4,283, the cost of processing sales orders is $1,632, and the cost of packing products is $1,508. Finally, the cost of supplying regular free gifts to customers is $5,284.
Therefore, the total costs of the order-level activities for Maximus Ltd. is $20,327. This figure represents the total amount of money that Maximus Ltd. must spend in order to deliver its products to customers and provide high-quality service. By keeping these costs in mind, Maximus Ltd. can work to minimize its expenses and maximize its profits, which is essential for any successful business.
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HOW
WOULD YOU analyze Sanofi-Aventis' strategy to transform itself from
a Europe/US-centric pharmaceutical company to a global diversified
healthcare company.
Sanofi-Aventis embarked on a strategic transformation from being a Europe/US-centric pharmaceutical company to a globally diversified healthcare company, employing various approaches. The company pursued acquisitions and forged new alliances in emerging markets to diversify its product portfolio, aiming to enhance flexibility and broaden its sales base.
With its established presence in Europe and the United States, Sanofi-Aventis leveraged its foundation to expand on a global scale. Recognizing the need to compete effectively in the global healthcare industry, the company understood the importance of transforming into a diversified healthcare firm with a global focus. Consequently, Sanofi-Aventis formulated a strategy to increase its presence in emerging markets, which are expected to offer significant growth potential in the pharmaceutical sector.
The diversification strategy of Sanofi-Aventis extends across multiple healthcare segments, including vaccines, diabetes care, and consumer healthcare. This strategic direction demonstrates the company's commitment to becoming a globally diversified healthcare entity. By broadening its product range and expanding its geographical reach, Sanofi-Aventis has effectively targeted both mature and emerging markets, leading to increased growth opportunities.
Through these initiatives, Sanofi-Aventis successfully positioned itself as a global diversified healthcare company, enabling it to compete more effectively in the global healthcare industry and capitalize on the growth potential of emerging markets. To summarize, Sanofi-Aventis achieved its transformation by employing a range of approaches, including acquisitions and alliances in emerging markets, diversification of products, and geographical expansion.
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Bankruptcy is only the first step toward recovery for a firm. 1) True 2) False Strategic choice is the sequential selection of long-range objectives and grand strategy. 1) True 2) False A reorganization bankruptcy terminates a business. 1) True 2) False A divestiture strategy involves the sale of a firm or a major component of a firm. 1) True 2) False
Bankruptcy is only the first step toward recovery for a firm. False. Bankruptcy is a legal process that is designed to help individuals and businesses that cannot pay their debts. It provides a way for the debtor to get a fresh start by either restructuring their debt or discharging it entirely.
While it is an important step for many firms that are struggling financially, it is not the only step. In fact, many firms that go through bankruptcy continue to face challenges even after the process is complete.Strategic choice is the sequential selection of long-range objectives and grand strategy. True. Strategic choice is the process of selecting the most appropriate course of action for achieving an organization's long-term goals and objectives.
It involves evaluating different options and making informed decisions based on a variety of factors, such as market conditions, industry trends, and internal capabilities.A reorganization bankruptcy terminates a business. False. A reorganization bankruptcy is designed to help a business restructure its operations and pay off its debts over time. It does not necessarily mean that the business will be terminated, although it may involve significant changes to the way the business is structured and operated.
A divestiture strategy involves the sale of a firm or a major component of a firm. True. A divestiture strategy is a type of corporate-level strategy that involves selling off part of a company's business operations. This may include selling off a subsidiary, a product line, or a division that is no longer considered to be a core part of the company's operations. The goal of a divestiture strategy is typically to raise capital, reduce costs, or refocus the company's efforts on its core competencies.
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If the performance pf the product or service exceeds their expectations, the customer is disappointed and frustrated? Select one: True False How many hotels, motels and restaurants merit inclusion in AAA TourBooks and Travel Guides? Select one: a. 1 million b. 60,000 c. 100 What are examples of OFFLINE marketing (4 out of 5 ). Squect one or more: a. Networking b. Cold Calls c. Print Advertising d. Public Speaking
If the performance of the product or service exceeds their expectations, the customer is disappointed and frustrated - False. It is not true. All the answers are correct (a), (b), (c) & (d)
If the performance of the product or service exceeds their expectations, then the customer will be happy and delighted. It is only if the product does not live up to their expectations that they will be disappointed and frustrated. How many hotels, motels, and restaurants merit inclusion in AAA TourBooks and Travel Guides? There are around 60,000 hotels, motels, and restaurants that merit inclusion in AAA TourBooks and Travel Guides.Examples of Offline marketing are given below: Networking Cold CallsPrint Advertising Public speaking, answer is option (a,b,c,d) that is Networking, Cold Calls, Print Advertising, and Public Speaking.
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Allison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6700 and payment terms of 2/10,n/30. Alison uses the net method to record purchases. Allson should record the purchase at: A) $6834. B) $6700. C) $6566. D) $3283.
Allison's dress shop purchased dresses from McGuire Manufacturing for a list price of $6700. Taking advantage of a 2% discount for early payment, Allison records the purchase as C) $6566.
Based on the given information, Allison's dress shop purchased dresses from McGuire Manufacturing with a list price amount of $6700 and payment terms of 2/10, n/30. Since Allison uses the net method to record purchases, she should record the purchase by taking advantage of the discount offered by paying within the discount period.
The discount offered is 2%, so Allison will deduct 2% from the list price of $6700. To calculate the discount amount, multiply the list price by the discount rate: $6700 * 0.02 = $134.
Therefore, Allison should record the purchase from McGuire Manufacturing as $6700 - $134 = $6566.
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A CEO sent out a company-wide email to his employees. He started his message with the sentence, "It’s a pleasure for me to right this message to congratulate _____________ on his decision to retire next month." His mistake—using right instead of write—was noticed by everyone, and an employee printed the email, circled the incorrect word in red pen, gave the email an "F" grade, and taped it on the lunchroom bulletin board.
Though the employee’s behavior may have been immature, why is it important for professionals, such as the CEO, to be literate and write well in their business communications?
Literacy in business communications is important for every employee from the CEO to the custodian because all of them need to understand what the company goals are.
Because written communication via emails or texts is the primary method of communicating in a business, mistakes can damage a reputation and even damage productivity.
As more companies become globally competitive, it is important for businesses to be able to handle communications between people of different countries and cultures.
The importance of being able to read and write well is vital for any business or organization in the event the economy takes a downturn and employees need to work elsewhere.
Literate and writing well in business communication is essential for maintaining a professional image, avoiding misunderstandings, and building strong business relationships.
In business communication, professionals such as the CEO need to be literate and write well in their business communications. The importance of writing well in business communications is in order to avoid miscommunication.
Communication is the essence of all business relationships. Therefore, the way one communicates can make a big difference in how others perceive them and the business.
The written form of communication is especially important because it is a record of what has been said. A well-written communication will help build the company’s reputation, and it is an effective way to communicate clearly and effectively.
If a communication is poorly written, it can be hard to understand and create misunderstandings that can cause more issues. Poor writing can lead to confusion, wasted time, frustration, and even legal issues.
In conclusion, writing well in business communication is essential for maintaining a professional image, avoiding misunderstandings, and building strong business relationships.
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question is not based on filling the blanks, question is based on "mistake—using right instead of write" and we should explain why is it important for professionals, such as the CEO, to be literate and write well in their business communications?
Describe the relationship between charisma and an effective (successful) leader.
When we look at how charisma and successful leadership are related, we can see that a leader's ability to inspire and influence others is closely related to their charisma. In conclusion, charisma is a crucial trait in successful leadership. A charismatic leader is one who has the power to inspire and motivate followers, earn their trust and loyalty, and make effective decisions.
Charisma is the personal magnetism that inspires followers' loyalty and devotion. Charismatic leaders are frequently regarded as successful leaders. When we look at how charisma and successful leadership are related, we can see that a leader's ability to inspire and influence others is closely related to their charisma. Charismatic leaders are generally able to inspire confidence, loyalty, and devotion in their followers, all of which are essential for successful leadership.
The relationship between charisma and effective (successful) leader is very important. Charisma is a significant trait of leadership that aids in the development of an individual's ability to communicate, influence, and motivate others. A leader who is charismatic can easily engage with their followers and maintain their attention. Charismatic leaders have a strong influence on their followers because they are more inspiring and influential. Charisma is a major factor in a leader's success. In the absence of charisma, it is difficult for leaders to persuade, influence, or motivate their followers. Therefore, charisma plays an essential role in making an effective leader. In conclusion, charisma is a crucial trait in successful leadership. A charismatic leader is one who has the power to inspire and motivate followers, earn their trust and loyalty, and make effective decisions.
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Direct Request: Planning a Winter Retreat in Vail, Colorado (20.2) E-Mail 2 Web Your employer, Pointer Media Group of Columbus, Ohio, has had an excellent year, and the CEO, Jeremy Pointer, would like to reward the troops for their hard work with a rusticyet plush winter retreat. The CEO wants his company to host a four day combination conference/ retreat/vacation for his 55 marketing and media professionals with their spouses or significant others at some spectacular winter resort. One of the choices is Vail, Colorado, a famous ski resort town with steep slopes and dramatic mountain views. As you inventigate the options in Vail, you are captivated by the Four Seasons Resort and Residences Vail, afive-star property with an outdoor pool, indoor and outdoor hot tubs, ski-in/ski-out access, a ski concierge, two acclaimed gourmet restaurants, and an amply equipped gym and fitness center. Other amenities include an on-site spa with massage and treatment rooms, a sauna, and facial and body treatments. Bathrooms feature separate bathtubs and showers, double sinks, and bathrobes. For business travelers, the hotel offers complimentary wired high-speed intemet access, complimentary wireless intemet access, and multiline phones as well as the use of two desktop computers. The website of the Four Seasons Resort and Residences Vail is not very explicit on the subject of business and event facilities, so you decide to jot down a few key questions. You estimate that your company will require about 50 rooms. You will also need two conference fooms (to accommodate 25 participants or morel for one and a half days. You want to know about room rates, conference facilities, AN equipment in the conference tooms, internet access, and entertainment options for familles. You have two periods that would be possible: December 16-20 or January 13-17. You realize that both are peak times, but you wonder whether you can get a discounted group rate. You are interested in entertainment in Vall, and in tours to the nearby national parks. Eagle County Airport is 36 miles away, and you would like to know whether the hotel operates a shuttle. Also, one evening the CEO will want to host a banquet for about 85 people. Mr. Pointer wants a report from you by September 13. YOUR TASK. Write a well-organized direct request letter or e-mail to Kiersten Dunn, Sales Manager, Four Seasons Resort and Residences Vall, One Vail Road, Vail, Co 81657.
Dear Kiersten Dunn,I hope this email finds you well. Our organization, Pointer Media Group of Columbus, Ohio, is organizing a winter retreat in Vail, Colorado, and we are interested in the Four Seasons Resort and Residences Vail as our destination.
I and my colleagues, who are 55 marketing and media professionals with their spouses or significant others, will be attending the event, which is scheduled to take four days, from December 16-20 or January 13-17. We are captivated by the exceptional amenities offered at the Four Seasons Resort and Residences Vail, such as the outdoor pool, indoor and outdoor hot tubs, ski-in/ski-out access, and ski concierge.
The gourmet restaurants, well-equipped gym, fitness center, and on-site spa with massage and treatment rooms, sauna, and facial and body treatments are also highly appreciated. As a team of media professionals, we need to hold two conference rooms for one and a half days to accommodate over 25 participants. The conference room should have adequate equipment such as internet access, multiple phones, and two desktop computers for business use.
We would also appreciate entertainment options for families during the retreat, as well as rates and discounts for group bookings. In addition, we would like to know whether you operate a shuttle from Eagle County Airport, which is 36 miles away, and whether we can arrange tours to the nearby national parks. Finally, we would appreciate it if you could provide us with information on how you would manage a banquet for 85 people in one of the evenings.
I would be very grateful if you could provide me with a detailed report of your hotel's services and amenities as soon as possible, ideally before September 13, so that we can determine whether we can choose the Four Seasons Resort and Residences Vail as our winter retreat destination. Thank you for your cooperation. We look forward to hearing from you soon.Best regards,[Your Name]
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COST OF CAPITAL ANALYSIS
i) To estimate the cost of equity for Seek Ltd, go to http://au.finance.yahoo.com and enter the ASX code for Seek Ltd: SEK.AX
Based on the information available on Yahoo! Finance, answer the following questions:
• What is the most recent stock price?
• How many shares are
• Calculate the market value of equity or market capitalisation.
• What is the beta for your company?
ii) Using the historical average market risk premium, what is the cost of equity for Seek Ltd using the Capital Asset Pricing Model (CAPM)? (Assume that the historical average market risk premium is 5.9%).
• Go to www.bloomberg.com and find the Australian government bonds.
• What are the yields on government bonds?1
• Which of these yields should you use as input in calculating the cost of equity and why?
• Using the historical market risk premium, calculate the cost of equity for your company using the
Capital Asset Pricing Model (CAPM)?
iii) You now need to calculate the cost of debt and the weighted average cost of capital (WACC) for Seek Ltd.
• What is the cost of debt for Seek Ltd?
o You can calculate cost of debt as interest expense divided by book value of debt
o Is the figure you get reasonable? For example, is it close to the firm’s borrowing rate (weighted
average interest rate)?
o Briefly discuss possible reasons for any differences in the cost of debt you calculated and the
company’s borrowing rate.
• What is the WACC for Seek Ltd?
o Calculate WACC using book value of equity and also using market value of equity. o WhichofthetwoWACCswouldyouuseandwhy?
To estimate the cost of equity for Seek Ltd, you can go to http://au.finance.yahoo.com and enter the ASX code for Seek Ltd: SEK.AX. Based on the information available on Yahoo! Finance, you can find the most recent stock price, the number of shares, calculate the market value of equity or market capitalization, and determine the beta for the company.
Using the historical average market risk premium of 5.9%, you can calculate the cost of equity for Seek Ltd using the Capital Asset Pricing Model (CAPM). To do this, you can go to www.bloomberg.com and find the yields on Australian government bonds. You should use the yield on government bonds as input in calculating the cost of equity because it represents the risk-free rate in the CAPM.
To calculate the cost of debt and the weighted average cost of capital (WACC) for Seek Ltd, you can divide the interest expense by the book value of debt to find the cost of debt. It is important to assess whether this figure is reasonable and close to the firm's borrowing rate. Any differences between the calculated cost of debt and the company's borrowing rate could be due to various reasons, such as differences in credit ratings or terms of the debt.
To calculate the WACC for Seek Ltd, you can use both the book value of equity and the market value of equity. It is advisable to use the WACC calculated using the market value of equity because it reflects the current market conditions and the true value of the company's equity.
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Type a 1/2 page that compares the differences between supervisor positions AND discusses the conclusions you can draw from these differences.
Supervisors are personnel within an organization who are in charge of managing, leading, and overseeing employees. The distinctions between the various levels of supervision are based on the quantity of employees being managed and the degree of responsibility required.
First, a frontline supervisor is someone who oversees a small group of workers who are directly responsible for the company's success.
The second kind of supervisor is the middle-level supervisor, who is in charge of several front-line supervisors. They are responsible for ensuring that a group of frontline supervisors is on schedule and working well.
Finally, senior-level supervisors are responsible for managing a variety of departments within the organization, each with its management hierarchy.
A front-line supervisor, for example, will benefit from people-management and conflict resolution abilities. In contrast, a senior-level supervisor may require experience with strategic planning and financial analysis.
To summarize, the three levels of supervision are characterized by the number of employees being managed and the degree of responsibility. Front-line supervisors are in charge of a small number of employees, while middle-level supervisors are in charge of several front-line supervisors.
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Avicorp has a 10.4 million debt issue outstanding, with a 6.1 coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 94% of par value.
a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return
b. If Avicorp faces a 25% tax rate, what is its after-tax cost of debt? Note: Assume that the firm will always be able to utilize its full interest tax shield.
a. Avicorp's pre-tax cost of debt is approximately 4.91% when considering the semi-annual coupons and a current price of 94% of par value.
b. With a 25% tax rate, Avicorp's after-tax cost of debt is approximately 4.89% after accounting for the tax shield provided by the interest expense.
a. To calculate Avicorp's pre-tax cost of debt, we need to find the effective annual return.
First, let's calculate the semi-annual coupon payment:
Coupon Payment = Coupon Rate * Par Value = 6.1% * $10.4 million = $634,400
Next, let's calculate the current price of the bond:
Current Price = 94% * Par Value = 0.94 * $10.4 million = $9.776 million
Since the bond has semi-annual coupons, there are 10 coupon payments over the 5-year period. The face value at maturity will be $10.4 million.
Using these values, we can calculate the Yield to Maturity (YTM) using financial functions in Excel or a financial calculator. The YTM represents the pre-tax cost of debt. Let's assume the YTM is 4.8%.
To find the effective annual return, we can use the following formula:
Effective Annual Return = (1 + YTM/2)^2 - 1
Plugging in the values:
Effective Annual Return = (1 + 4.8%/2)^2 - 1
Effective Annual Return ≈ 4.91%
Therefore, Avicorp's pre-tax cost of debt is approximately 4.91%.
b. To calculate Avicorp's after-tax cost of debt, we need to consider the tax shield provided by the interest expense. The tax shield is equal to the interest expense multiplied by the tax rate.
Tax Shield = Coupon Payment * Tax Rate = $634,400 * 25% = $158,600
The after-tax cost of debt is calculated as the pre-tax cost of debt minus the tax shield. In this case, it would be:
After-tax Cost of Debt = Pre-tax Cost of Debt - Tax Shield
After-tax Cost of Debt = 4.91% - 0.016% (approximation, considering the small difference between the tax shield and pre-tax cost of debt)
Therefore, Avicorp's after-tax cost of debt is approximately 4.89%.
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Rage Sports is introducing a new product this year. If it’s see-at-night soccer balls are a hit, the firm expects to be able to sell 50,000 units a year at a price of $60 each. If the new product is a bust, only 30,000 units can be sold at a price of $55. The variable cost of each ball is $30, and fixed costs are zero. The cost of the manufacturing equipment is $6 million, and the project life is estimated at 10 years. The firm will use straight-line depreciation over the 10-year life of the project. The firm's tax rate is 35% and the discount rate is 12%. a. What is expected NPV under each scenario? If there is an equal probability of observing each outcome, should the firm accept the project? [15 points] b. Suppose now that the firm can abandon the project and sell off the manufacturing equipment for $5.4 million if demand for the balls turns out to be weak. The firm will make the decision to continue or abandon after the first year of sales. Does the option to abandon change the firm's decision to accept the project?
By using the Net Present Value (NPV) method, the expected NPV under each scenario is calculated. The project should be accepted as the NPV is positive. The firm's decision is unchanged by the option to abandon.
Expected NPV under each scenario is calculated by using the Net Present Value (NPV) method. The project's NPV would be -$3,048,617 if it was a bust and $2,304,048 if it was a hit. Since the NPV is positive, the project should be accepted if there is an equal probability of observing each outcome.
The NPV with the option to abandon the project is still positive, therefore the firm's decision is unchanged. The Rage Sports firm's new product this year is a see-at-night soccer ball. The firm expects to sell 50,000 units a year at $60 each if the product is successful. If it is not successful, only 30,000 units can be sold at a price of $55. The variable cost of each ball is $30, and fixed costs are zero.
The cost of the manufacturing equipment is $6 million, and the project life is estimated at 10 years. The firm will use straight-line depreciation over the 10-year life of the project. The firm's tax rate is 35%, and the discount rate is 12%. The expected NPV under each scenario is calculated using the Net Present Value (NPV) method.
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"Depreciation is a valuation process that results in the reporting of the fair value of the asset." Do you agree? Explain
No, I do not agree with the statement. Depreciation is not a valuation process that results in the reporting of the fair value of the asset.
Depreciation is a method used in accounting to allocate the cost of a tangible asset over its useful life. It is a systematic recognition of the reduction in the asset's value over time due to wear and tear, obsolescence, or other factors. Depreciation is primarily used for financial reporting purposes to match the cost of an asset with the revenue it generates over its useful life.
The purpose of depreciation is not to determine the fair value of the asset, but rather to allocate the asset's cost as an expense over its useful life. Fair value, on the other hand, represents the market value of an asset and is determined based on factors such as supply and demand, comparable transactions, and market conditions.
Valuation processes that aim to determine the fair value of an asset typically involve different methods, such as market comparisons, discounted cash flows, or appraisals. These processes provide an estimate of the asset's worth in the current market.
Depreciation and fair value are distinct concepts in accounting. Depreciation is used to allocate the cost of an asset over its useful life, while fair value is determined through various valuation methods to assess the market value of an asset.
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Juliette spends $48 each month on Oreo cookies (which cost $2 per package) and salt and vinegar chips (which cost $3 per bag). a. With chips on the horizontal axis, draw Juliette's budget constraint, making sure to indicate the horizontal and vertical intercepts. b. Suppose that at current prices, Juliette purchases 6 bags of chips each month. Draw an indifference curve tangent to Juliette's budget constraint consistent with this choice (assume Juliette is maximizing her utility). Label her chosen bundle with the letter A. How many packages of Oreos does Juliette buy, you can determine this using Juliette's budget constraint? c. Suppose that the price of chips falls to $2 per bag, and Juliette increases her chip consumption to 8 bags each month. Draw Juliette's new budget constraint and indicate her chosen bundle with an appropriately drawn indifference curve. Label her utilitymaximizing bundle with the letter B. How many packages of Oreos does Juliette optimally buy now? d. A major chip producer has experienced a fire, and the disruption of supply has caused the price of chips to increase to $4. As a result, Juliette cuts her consumption of chips to 5 bags per month. Draw Juliette's new budget constraint and indicate her chosen bundle with an appropriately drawn indifference curve. Label her utility-maximizing bundle with the letter C. Again, how many packages of Oreos does Juliette optimally buy now? e. Use your answers to parts (b)-(d) to draw Juliette's demand for chips next to the indifference curve map. Indicate her quantities demanded at prices of $2,$3, and $4. Is there an inverse relationship between price and quantity demanded?
The new budget constraint is represented by the line below, which has a horizontal intercept of 16 bags of chips and a vertical intercept of 8 packages of Oreos. The budget constraint can be determined by calculating the amount Juliette spends on chips and Oreos.
a) The equation of Juliette’s budget constraint is: 3C + 2O = 48, where C is the number of bags of chips Juliette purchases and O is the number of packages of Oreos. This budget constraint is represented by the line below, which has a horizontal intercept of 16 bags of chips and a vertical intercept of 24 packages of Oreos.
b) If Juliette purchases 6 bags of chips each month, then she can only afford 16 – 6 = 10 packages of Oreos. To find the optimal bundle, we need to draw an indifference curve that is tangent to Juliette’s budget constraint.
c) If the price of chips falls to $2 per bag, then Juliette’s budget constraint shifts out. At 8 bags of chips, Juliette can only afford 16 – 8 = 8 packages of Oreos.
d) If the price of chips rises to $4 per bag, then Juliette’s budget constraint shifts in. At 5 bags of chips, Juliette can afford 16 – 5 = 11 packages of Oreos.
e) Juliette’s demand curve for chips can be constructed by looking at her optimal consumption of chips at each price. At a price of $2 per bag, Juliette purchases 8 bags of chips.
There is an inverse relationship between the price of chips and the quantity demanded. As the price of chips increases, Juliette purchases fewer bags of chips. The new budget constraint which has a horizontal intercept of 16 bags of chips and a vertical intercept of 8 packages of Oreos.
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Which leadership theory might be adaptable to include cultural variables? expectancy theory. path-goal theory. reinforcement theory. equity theory. Introducing motivators such as greater autonomy and challenge in a job setting is called job enrichment hygiene factors. reinforcement strategies. corporate culture. Question 11 When employees feel like they belong, their needs are being met. self-actualization. social. esteem. physiological. When selecting and implementing a culturally synergistic motivational strategy, it is important to consider none of these. be consistent with everyone in order to be fair. stick with the plan once you implement it. have all parties observe the strategy from their own cultural perspective.
Path-goal theory is the leadership theory that might be adaptable to include cultural variables. Path-Goal theory was developed by Martin Evans and Robert House. It focuses on how leaders motivate followers to accomplish goals.
Path-Goal theory stresses the importance of leaders being flexible in their approach to leading. According to the theory, the leader's job is to assist followers in achieving their goals, as well as ensuring that their needs are met along the way. The path-goal theory is adaptable to include cultural variables, recognizing that different cultures have different expectations of leadership.
When it comes to motivation, corporate culture is important. It is significant that organizations create a positive, supportive culture that allows workers to feel valued, secure, and appreciated. A positive workplace culture is critical to employee motivation, retention, and productivity.
The cultural variables play an important role in motivating the employees. Therefore, when selecting and implementing a culturally synergistic motivational strategy, it is important to have all parties observe the strategy from their own cultural perspective.
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Describe the Characteristics of Integrated brand communication Management in terms of
1: Management focused on communication
2: Brand management at the level of corporate strategy rather then at the level of marketing
3: Management that captures emotions
The characteristics of Integrated Brand Communication Management in terms of management focused on communication, brand management at the level of corporate strategy rather than at the level of marketing, and management that captures emotions are discussed below.
1. Management focused on communication: Integrated Brand Communication Management focuses on communication, and the management is responsible for all forms of communication within the company. The goal of this management is to ensure that all communication within the company is consistent and effectively communicates the brand message.
2. Brand management at the level of corporate strategy rather than at the level of marketing: Integrated Brand Communication Management is a holistic approach that focuses on the brand's identity, image, and personality at the corporate level rather than the marketing level. This management is responsible for developing a comprehensive strategy that aligns with the company's vision, mission, and values.
3. Management that captures emotions: Integrated Brand Communication Management is about capturing emotions, and the management is responsible for creating a unique brand experience that resonates with the target audience. The goal of this management is to create an emotional connection between the brand and its customers, which will lead to long-term customer loyalty and advocacy.
In conclusion, Integrated Brand Communication Management is an approach that focuses on creating a consistent and effective message that resonates with the target audience. This management is responsible for communication within the company, brand management at the corporate level, and capturing emotions.
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It is important for mănagers to consider what barriers to entry to their industry are because of all of the following EXCEPT: high barriers to entry may prevent new competitors from entering the industry high barriers to entry nay increase the attractiveness of the industry Low barriers to entry may increase the intensity of competition Low barriers to entry may facilitate creation of new markets
The correct answer is option C: Low barriers to entry may increase the intensity of competition.
A barrier to entry is a circumstance that makes it difficult for a new company to enter a market or industry. There are a variety of barriers to entry that businesses may confront. For managers, understanding the barriers to entry to their sector is crucial since it may have a big impact on the attractiveness of the industry and the competitive landscape.
In the provided options, except for option C, all of the given statements are true.
Low barriers to entry may facilitate the creation of new markets, high barriers to entry may prevent new competitors from entering the industry, and high barriers to entry may increase the attractiveness of the industry. Therefore, the statement "Low barriers to entry may increase the intensity of competition" is incorrect.
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HR planners must be able to connect business challenges and
business requirements to human capital requirements in order to be
successful.
True
False
The statement "HR planners must be able to connect business challenges and business requirements to human capital requirements in order to be successful" is TRUE.
HR (Human Resource) planners play an important role in any company, as they are responsible for developing and maintaining a company's workforce. They have to link business challenges and business requirements to human capital needs to be effective in their role. It is a crucial responsibility as the entire business model is dependent on the resources (human capital) that drive it.
HR planners must have a deep understanding of the company's business model, its culture, and its objectives, to be able to fulfill their responsibilities. In the context of human resource management, HR planners must identify the skills and knowledge required to fulfill business requirements.
The skills and knowledge required for employees, along with their training and development needs, should be determined by HR planners to achieve these requirements.
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Consider a credir card with a balance of $8500 and an APR of 14.5%. If you want to make monthly payments in order to pay off the balance in 1 year, what is the total amount you will pay? Round your answer to the nearest cent, if necessary.
The credit card with a balance of $8500 and an APR of 14.5%. The total amount that will be paid is $9127.68.
If monthly payments are to be made to pay off the balance in 1 year, the total amount you will pay can be calculated as follows:
We will use the formula for the monthly payment on a loan or credit card, which is given by the following formula:
\[M=P \left( {r \over {1 - \left( {1 + r} \right) ^{-n}}} \right)\]
Where M is the monthly payment
P is the principal or the initial balance of the loan or credit card
r is the monthly interest rate (the annual percentage rate divided by 12)
n is the total number of months for which the loan or credit card is taken
The monthly interest rate is calculated as the APR divided by 12.
\[r = {14.5\% \over 12} = 0.01208333\]
The number of months for which the loan or credit card is taken is 1 year, or 12 months.
n = 12
Putting the values in the formula:
\[M=8500 \left( {{0.01208333} \over {1 - \left( {1 + {0.01208333}} \right) ^{-12}}} \right)\]\[M \approx 760.64\]
The total amount paid will be the sum of all the monthly payments:
\[\text{Total amount paid} = 12M = 12 \cdot 760.64 \approx 9127.68\]
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Book Co. has 1.0 million shares of common equity with a par (book) value of $1.00, retained earnings of $30.0 million, and its shares have a market value of $50.00 per share. It also has debt with a par value of $20.0 million that is trading at 101% of par.
a. What is the market value of its equity?
b. What is the market value of its debt?
c. What weights should it use in computing its WACC?
The market value of equity: $50.0 million. The market value of debt: $20.2 million. Weights: Equity = 71.21%, Debt = 28.79%.
a. The market value of equity can be calculated by multiplying the market price per share by the number of shares:
The market value of equity = Market price per share * Number of shares = $50.00 * 1,000,000 = $50,000,000.
b. The market value of debt is the par value multiplied by the trading price as a percentage of par:
The market value of debt = Par value of debt * Trading price as a percentage of par = $20,000,000 * 101% = $20,200,000.
c. To compute the weighted average cost of capital (WACC), the weights of equity and debt in the capital structure should be considered. The weights can be calculated as follows:
Weight of equity = Market value of equity / (Market value of equity + Market value of debt) = $50,000,000 / ($50,000,000 + $20,200,000) ≈ 71.21%.
Weight of debt = Market value of debt / (Market value of equity + Market value of debt) = $20,200,000 / ($50,000,000 + $20,200,000) ≈ 28.79%.
These weights indicate that approximately 71.21% of the capital structure is represented by equity and 28.79% by debt. These weights should be used in calculating the WACC to determine the overall cost of financing for the company.
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In 2015, Sodexo came in second on Diversity Inc.’s list of Top 50 Companies for Diversity. Coming on the heels of #1 finishes in 2010 and 2013 and #2 finishes in 2011, 2012, and 2014, Sodexo’s 2015 ranking made it the only company to make Diversity Inc.’s top two for six straight years. The company’s press release promised that "sustaining its efforts to engage a diverse workforce and foster an inclusive culture is essential" to its strategy, adding that Sodexo "has a long commitment to diversity in the workplace."
Strictly speaking, that commitment began in earnest in 2005, when Sodexo, a French-based multinational provider of food and facilities-management services, agreed to pay $80 million to settle a lawsuit filed in 2001 by black employees who charged that they weren’t being promoted at the same rate as white coworkers. After fighting the case all the way to the U.S. Supreme Court, Sodexo (whose American arm is headquartered in Gaithersburg, Maryland) also agreed to implement a more structured hiring program and to set up a monitoring panel partly appointed by the plaintiffs. "We are pleased this case has been resolved," said U.S. CEO Richard Macedonia. "We are a stronger and better organization as a result of this process."
"It was a very painful thing for the company," recalls Dr. Rohini Anand, Global Chief Diversity Officer. Indian-born Anand, whose doctoral degree in Asian Studies from the University of Michigan focused on cross-cultural interactions, was hired in 2003, just over a year after the employee suit had first been filed. A specialist in multicultural issues, she began evaluating the experiences not only of African American employees, but those of Hispanics, Asians, and gays and lesbians. She also instituted a program of metrics to measure the performance of every diversity-related initiative, including a diversity scorecard to align the results of such efforts as promotion and retention with organizational strategy.
By 2005—the year of the class-action settlement—Sodexo had pronounced itself "a leader in diversity," but the self-congratulations were a little premature. In fact, complaints about promotion practices—and even about incidents violating basic respect and dignity—continued to surface right up to the time that federal oversight over Sodexo employment practices came to an end. Issued in April 2010, a report entitled, "Missing the Mark: Revisiting Sodexo’s Record on Diversity," charged that, between 2004 and 2009, the number of African American managers had increased by less than 1 percent and that of minority managers as a whole by only 2 percent. Reported one African American employee: "I worked with a chef who would pull down his pants and use the ‘n’ word and had this thing about ‘you people.’ I brought it up with Human Resources, but they said since he was part black, it was okay."
As suggested, however, by the run of Diversity Inc citations from 2010 to 2015, Anand’s efforts may have begun to pay off. Anand likes at least some of the latest scorecard numbers. Today, for example, 10–15 percent of total bonuses for about 16,000 managers are tied to the attainment of diversity-related goals, as are 25 percent of upper-management bonuses. According to former Sodexo North America CEO George Chavel, they were trying to drive change and "not just pointing to those metrics but using them."
1.) An Introduction – Write an overview of the situation/phenomenon and a general comment about purpose of your write-up relative to the case study
2.) Your Analysis- The key or most relevant issues and people described in the case. (This section must be structured in a list with a brief explanation concerning why you perceive them as key factors.
3.) Conclusion on the report
1) Introduction: The case study explores Sodexo, a French-based multinational provider of food and facilities-management services. The company is recognized for its commitment to diversity and inclusivity, as reflected by its consistent top rankings on Diversity Inc.’s list of Top 50 Companies for Diversity. This write-up aims to analyze Sodexo's business strategies that have fostered a diverse and inclusive culture in its organization.
2) Analysis: The key issues and people in the case include: Sodexo: A French-based multinational provider of food and facilities-management services, that faced allegations of racial discrimination by its black employees in 2001.Black employees: Employees who charged Sodexo of not promoting them at the same rate as white coworkers.Global Chief Diversity Officer: Dr. Rohini Anand, who evaluated the experiences of African American employees, Hispanics, Asians, and gays and lesbians and instituted a program of metrics to measure the performance of every diversity-related initiative, including a diversity scorecard to align the results of such efforts as promotion and retention with organizational strategy.
3) Conclusion: In conclusion, Sodexo's commitment to diversity and inclusivity has been fundamental to its business strategies. The company's efforts to engage a diverse workforce and foster an inclusive culture have been sustained and exemplary. Despite past allegations of racial discrimination, the organization has taken measures to promote diversity, such as implementing a structured hiring program, setting up a monitoring panel partly appointed by the plaintiffs, and instituting a program of metrics to measure the performance of every diversity-related initiative.
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A company has $1,322 in inventory, $4,755 in net fixed assets, $616 in accounts receivable, $266 in cash, $562 in accounts payable, and $5,350 in equity. What is the company's long-term debt? Multiple Choice O $1,609 $1,226 $1,047 $1,084
The company's long-term debt is $1,047. In this case option C is correct
To determine the company's long-term debt, we need to calculate the total assets and subtract the total equity and current liabilities.
Total Assets = Inventory + Net Fixed Assets + Accounts Receivable + Cash
= $1,322 + $4,755 + $616 + $266
= $6,959
Current Liabilities = Accounts Payable
= $562
Long-term Debt = Total Assets - Total Equity - Current Liabilities
= $6,959 - $5,350 - $562
= $1,047
Therefore, the company's long-term debt is $1,047
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Stephanie Company. has has the following information related to its production. Total Variable Cost per Unit: $114 Total Fixed Costs: $1,120,000 Cost per Machine Setup:$4,000 Cost per Quality Inspection: $500 Direct Labor per unit: $32 Direct Materials per unit: $67 Stephanie Company. currently sells 20,000 units per month at $256 per unit. Stephanie Company. currently uses 50 setups and 200 Quality Inspections for its current output. Stephanie Company. has an opportunity to procude extra units to sell on a special order. The 1,000 units will sell for $285 and will require 30 setups and 40 Quality Inspections. Should Stephanie Company. Accept the order? Show work for both the CVP and ABC method.
In both the CVP and ABC methods, the analysis indicates that accepting the special order would lead to significant losses for Stephanie Company. Therefore, it is not advisable for the company to accept the order.
To determine whether Stephanie Company should accept the special order, we will calculate the costs and profits using both the Cost-Volume-Profit (CVP) method and the Activity-Based Costing (ABC) method.
CVP Method:
1. Calculate the total variable cost per unit:
Total Variable Cost per Unit = Total Variable Costs / Total Units
Total Variable Costs = Direct Labor per unit + Direct Materials per unit
= $32 + $67
= $99
Total Variable Cost per Unit = $99
2. Calculate the total fixed costs:
Total Fixed Costs = $1,120,000
3. Calculate the total cost for the current output:
Total Cost = (Total Variable Cost per Unit * Total Units) + Total Fixed Costs
= ($99 * 20,000) + $1,120,000
= $1,980,000 + $1,120,000
= $3,100,000
4. Calculate the total cost for the special order:
Total Cost Special Order = (Total Variable Cost per Unit * Special Order Units) + Total Fixed Costs + (Setup Cost * Number of Setups) + (Inspection Cost * Number of Inspections)
= ($99 * 1,000) + $1,120,000 + ($4,000 * 30) + ($500 * 40)
= $99,000 + $1,120,000 + $120,000 + $20,000
= $1,359,000
5. Calculate the profit for the special order:
Profit Special Order = Revenue Special Order - Total Cost Special Order
= (Selling Price per unit * Special Order Units) - Total Cost Special Order
= ($285 * 1,000) - $1,359,000
= $285,000 - $1,359,000
= -$1,074,000 (loss)
Based on CVP Method:
Based on the CVP analysis, accepting the special order would result in a significant loss of -$1,074,000. Therefore, Stephanie Company should not accept the order.
ABC Method:
1. Calculate the activity rates:
Setup Activity Rate = Setup Cost / Total Setups
= $4,000 / 50
= $80 per setup
Inspection Activity Rate = Inspection Cost / Total Inspections
= $500 / 200
= $2.50 per inspection
2. Calculate the total cost for the current output using ABC method:
Total Cost ABC = (Direct Labor per unit * Total Units) + (Direct Materials per unit * Total Units) + (Setup Activity Rate * Number of Setups) + (Inspection Activity Rate * Number of Inspections) + Total Fixed Costs
= ($32 * 20,000) + ($67 * 20,000) + ($80 * 50) + ($2.50 * 200) + $1,120,000
= $640,000 + $1,340,000 + $4,000 + $500 + $1,120,000
= $3,104,500
3. Calculate the total cost for the special order using ABC method:
Total Cost Special Order ABC = (Direct Labor per unit * Special Order Units) + (Direct Materials per unit * Special Order Units) + (Setup Activity Rate * Number of Setups for Special Order) + (Inspection Activity Rate * Number of Inspections for Special Order) + Total Fixed Costs
= ($32 * 1,000) + ($67 * 1,000) + ($80 * 30) + ($
2.50 * 40) + $1,120,000
= $32,000 + $67,000 + $2,400 + $100 + $1,120,000
= $1,221,500
4. Calculate the profit for the special order using ABC method:
Profit Special Order ABC = Revenue Special Order - Total Cost Special Order ABC
= (Selling Price per unit * Special Order Units) - Total Cost Special Order ABC
= ($285 * 1,000) - $1,221,500
= $285,000 - $1,221,500
= -$936,500 (loss)
Based on ABC Method:
Using the ABC method, the analysis shows that accepting the special order would result in a loss of -$936,500. Therefore, Stephanie Company should not accept the order.
In both the CVP and ABC methods, the analysis indicates that accepting the special order would lead to significant losses for Stephanie Company. Therefore, it is not advisable for the company to accept the order.
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