Answer:
Option B. FASB compliance with U.S. GAAP
Explanation:
Because FASB is an independent body and publishes amendmends in Accounting standards which are internationally accepted so it has nothing to do with the US GAAP. Our decision making impact can be seen on the matters that are dependent on us not on the things we don't have control of or if they independent body. So the least impacted would be FASB compliance with US GAAP.
Whereas the rest of options are controlled by the managers so they can be easily influenced by the decision making power of the managers.
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company’s total fixed costs would be reduced by 20 percent.
Segmented income statements appear as follows:
Product Original Strawberry Orange
Sales $65,200 $85,600 $102,400
Variable costs 44,000 77,200 80,200
Contribution margin $21,200 $8,400 $22,200
Fixed costs allocated to each product line 9,400 12,000 14,200
Operating profit (loss) $11,800 $(3,600) $8,000
Required:
a. Prepare a differential cost schedule.
b. Should Cotrone drop the Strawberry product line?
Answer:
Yes Strawberry line should be dropped as it reduces the overall profit by$ 3600 when the fixed costs are not 20 %
Yes Strawberry line should be dropped as it reduces the overall profit by$ 1720 even when the fixed costs are 20 %
Explanation:
Cotrone Beverages
Differential Analysis
Totals Totals Difference / Change
including (less) Without (equals)
Strawberry Strawberry
Sales 253,200 167,600 85600 Decrease
Variable costs 201,400 124,200 77200 Decrease
Fixed costs allocated 35,600 28,480 7120 Decrease
Operating profit (loss) 13,200 14,920 (1720) Increase
Working
Total Fixed Costs Reduced will be = 35,600 *20%= 7120
Here we see the profit is increased by 1720 therefore strawberry line should be dropped.
Cotrone Beverages
Differential Analysis
Totals Totals Difference / Change
including (less) Without (equals)
Strawberry Strawberry
Sales 253,200 167,600 85600 Decrease
Variable costs 201,400 124,200 77200 Decrease
Contribution margin 51,800 43,400 8,400 Decrease
Fixed costs allocated 35,600 23,600 12000 Decrease
Operating profit (loss) 13,200 16,800 (3,600) Increase
Yes Strawberry line should be dropped as it reduces the overall profit by$ 3600
Working
We find the totals with and without the strawberry product line and then subtract to find the differential costs
Cotrone Beverages
Product Original Strawberry Orange Total
Sales $65,200 $85,600 $102,400 253,200
Variable costs 44,000 77,200 80,200 201,400
Contribution margin $21,200 $8,400 $22,200 51,800
Fixed costs allocated 9,400 12,000 14,200 35,600
Operating profit (loss) $11,800 $(3,600) $8,000 13,200
If we drop the strawberry line then the new totals would be
Product Original Orange Total
Sales $65,200 $102,400 167,600
Variable costs 44,000 80,200 124,200
Contribution margin $21,200 $22,200 43,400
Fixed costs allocated 9,400 14,200 23,600
Operating profit (loss) $11,800 $8,000 16,800
A bond was issued three years ago at a price of $1,050 with a maturity of six years, a yield-to-maturity (YTM) of 6.50% compounded semi-annually, and a face value of $1,000 with semi-annualy coupons. What is the price of this bond today immediately after the receipt of today's coupon if the YTM has risen to 7.75% compounded semi-annually
Answer:
$967.20
Explanation:
the YTM formula = {coupon + [(face value - present value)/time]} / [(face value + present value)/2]
to determine the coupon rate we fill the equation with the known factors:
0.065 = {coupon + [(1,000 - 1,050)/12]} / [(1,000 + 1,050)/2]
0.065 = (coupon - 41.67) / 1,025
66.625 = coupon - 4.167
coupon = 66.625 + 4.167 = $70.792
three years later, the YTM = 7.5%, what is the PV? Again we use the YTM formula:
0.0775 = {70.792 + [(1,000 - x)/6]} / [(1,000 + x)/2]
0.0775(500 + 0.5x) = 70.792 + 166.67 - 0.1667x
38.75 + 0.03875x = 237.462 - 0.1667x
0.20545x = 198.712
x = 198.712 / .20545
x = $967.20
Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount.
Instructions
Prepare the journal entries to record the following.
A) The issuance of the bonds.
B) The payment of interest and the related amortization on July 1, 2017.
C) The accrual of interest and the related amortization on December 31, 2017.
Answer:
A) The issuance of the bonds.
January 1, 2017, bonds are issued
Dr Cash 612,000
Cr Bonds payable 600,000
Cr premium on bonds payable 12,000
B) The payment of interest and the related amortization on July 1, 2017.
July 1, 2017, first coupon is paid
Dr Interest expense 29,700
Dr Premium on bonds payable 300
Cr Cash 30,000
C) The accrual of interest and the related amortization on December 31, 2017.
December 31, 2017, accrued interest payable
Dr Interest expense 29,700
Cr interest payable 29,700
Explanation:
$600,000 of 10%, 20-year bonds at 102, interest is paid semiannually ($600,000 x 10% x 1/2 = $30,000)
straight line amortization method is used to amortize bond premium
bond premium = $12,000 / 40 coupons = $300 amortized with each coupon payment
upino Products provides the foundational data for this problem given that the unit product costs at a normal level of 5,000 units per month and selling price of $90 are as follows: Manufacturing costs: Direct materials............................................... $ 35 Direct labor...................................................... 12 Variable overhead............................................ 8 Fixed overhead (total for year = $300,000)...... 5 Selling and Admin costs: Variable............................................................ $ 15 Fixed (total for year = $480,000)...................... 8 This product is sold at a rate of 60,000 units per year. It is predicted that a price increase of $98 will decrease volume by 10%. An advertising campaign is proposed to support the price increase. How much can advertising expense be spent to support the price increase and without having operating income fall below the current levels?
Answer:
Available for advertizing campaing 480,000
Explanation:
First we calculate the current operating income:
sales price less all uniit operating cost
90 - 35 - 12 - 8 - 5 - 15 - 8 = 7
$7 x 60,000 units = $420,000 operating income
Now we calculate the new contribution margin and operating income
materials + labor + variable overhead + variable sale = total variable
35 + 12 + 8 + 15 = 70
new contribution margin per unit
98 - 70 = 28
sales 60,000 units less 10% = 54,000 units
contribution margin
28 x 54,000 = 1,512,000
Fixed overhead 300,000
Fixed selling and adming 480,000
operating income 732,000
Potential contribution from additional sales:
6,000 units x $28 = 168,000
Less: before raising income (420,000)
Available for advertizing campaing 480,000
Answer:
Explanation:
Statement showing calculation of current income
Particulars Amount
Sales (60000x90) $5400000
Less Material cost (60000x$35) $2100000
Less: labour cost (60000x$12) $720000
Less: Variable Overhead(60000x$8) $480000
Less: Variable selling and admin Exp.(60000x$15) $900000
Less: Fixed overhead $300000
Less: Fixed selling and admin expenses $480000
Net inome $420000
Proposed increase in Selling price = $98/unit
Resultant decrease in production = 10%X60000 = 6000 units
Revised income = 54000(98-35-12-8-15) - 300000 - 480000
= $732000
Maximum amount that can be spent on advertising so as to manitain the current level of income of $420000 is $312000 (i.e., $732000-$420000).
Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $90.37, while a 2-year zero sells at $77.15. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 9% per year. a. What is the yield to maturity of the 2-year zero?(Do not round intermediate calculations. Round your answers to 3 decimal places.)
Answer:
The yield to maturity on the 2 year-zero coupon bond is 13.85% as computed in the explanation section below
Explanation:
The yield to maturity on the 2-year-zero coupon bond can be computed using the rate formula in excel as shown thus:
=rate(nper,pmt,-pv,fv)
nper is the number of annual coupon payments which is 2
pmt is the amount of annual coupon payment which is zero since it is a zero coupon bond
pv is the current price of the bond which is $77.15
fv is the face value of the bond which is $100
=rate(2,0,-77.15,100)=13.85%
Quality Jewelers uses the perpetual inventory system. On April 2, Quality sold merchandise for $50,000 to a customer on account with terms of 3/15, n/30. The allowances and returns on this sale amounted to $3,000 and $9,000, respectively. The cost of goods sold was $20,000. On April 20, Quality received payment from the customer. Calculate the amount of gross profit.
Answer:
The Gross profit is $18,000
Explanation:
In order to calculate the amount of gross profit we would have to make the following calculation:
Gross Profit = Sale - Allowance - Sales Returns - Discount - Cost of Goods Sold
Sale=$50,000
Allowance=$3,000
Sales Returns=$9,000
Cost of Goods Sold =$20,000
Discount. As the payment is done after the expiry of 15 days is discount is 0
Gross Profit= $50,000 - $3,000 - $9,000 - 0 - $20,000
Gross Profit= $18,000
The Gross profit is $18,000
11. Which ones of the four examples below is an example of value-migration? a. No one buys typewriters anymore, but they buy PCs even to type. b. HP now produces laser printers that can accept emailed inputs as well. c. Honda used its expertise in small engines to enter the lawn-mower market d. Sony lost share in the video recorder market, but gained the camcorder market.
Answer:
a. No one buys typewriters anymore, but they buy PCs even to type.
Explanation:
Value migration can be described as the change in the value-creating forces due to the migration of value from products or business models that are outmoded to business designs that able to give better satisfaction to the priorities of customers.
Therefore, the correct option is "no one buys typewriters anymore, but they buy PCs even to type" because typewriters are outmoded while PCs are the new designs.
You are considering an investment in a clothes distributer. The company needs $ 110 comma 000 today and expects to repay you $ 121 comma 000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your cost of capital is 17 %. What does the IRR rule say about whether you should invest?
Answer:
The IRR of this investment opportunity is 10%
The IRR rule says that you should not invest
Explanation:
To calculate the IRR of this investment opportunity we shall calculate the following:
Let the IRR be x.
Now , Present Value of Cash Outflows=Present Value of Cash Inflows
110,000 =121,000/(1.0x)
x= 10%
Hence, the IRR of this investment opportunity is 10%
Cost of Capital = 17%
The IRR rule says that one must not accept. This is because the IRR is lower than the cost of capital.
Hence you should not invest
Prince Electronics, a manufacturer of consumer electronic goods, has five distribution centers in different regions of the country. For one of its products, a highspeed modem priced at $330 per unit, the average weekly demand at each distribution center is 70 units. Average shipment size to each distribution center is 350 units, and average lead time for delivery is 2 weeks. Each distribution center carries 2 weeks' supply as safety stock but holds no anticipatory inventory.a. On average, how many dollars of pipeline inventory will be in transit to each distribution center?b. How much total inventory (cycle, safety, and pipeline) does Prince hold for all five distribution centers?
Answer:
a. $231,000
b. 2,450 units
Explanation:
a. On average, how many dollars of pipeline inventory will be in transit to each distribution center?
This is the inventory level that has to be in transit every 2 weeks in order to meet average demand. This can be calculated as follows:
Pipeline inventory = Number of distribution centers * Price per unit * Average weekly demand * Average delivery lead time = 5 * $330 * 70 * 2 = $231,000.
Therefore, the dollars of pipeline inventory that will be in transit to each distribution center is $231,000.
b. How much total inventory (cycle, safety, and pipeline) does Prince hold for all five distribution centers?
Inventory in hand = Average shipment size * Number of distribution centers = 350 * 5 = 1,750
Safety inventory = Number of distribution centers * Average weekly demand * Average delivery lead time = 5 * 70 * 2 = 700
Note: Safety inventory is the inventory held in the store for the purpose of meeting rise in demand or for overcoming delay in supply.
Inventory cycle = Inventory in hand - safety inventory = 1,750 - 700 = 1,050
Pipeline inventory = Number of distribution centers * Average weekly demand * Average delivery lead time = 5 * 70 * 2 = 700
Total inventory held = Inventory cycle + Safety inventory + Pipeline inventory = 1,050 + 700 + 700 = 2,450 units.
Therefore, the total inventory (cycle, safety, and pipeline) Prince holds for all five distribution centers is 2,450 units.
Prince Paper has budgeted the following amounts for its next fiscal year: Total fixed expenses $ 600 comma 000 Selling price per unit $ 70 Variable expenses per unit $ 45 If Price Paper spends an additional $ 12 comma 300 on advertising, sales volume should increase by 3 comma 000 units. What effect will this have on operating income?
Answer:
Operating income will increase by $63,000
Explanation:
Given:
Sales volume increase = 3,000 units
Particular Amount
Increase in Sales $210,000 ($70×3000)
Less: Increase in Variable cost $135,000 ($45×3000)
Less: Increase additional Costs $12,000
Chane in Net operating Income $63,000
Operating income will increase by $63,000
nventory records for Water Incorporated revealed the following: Date Transaction Number of Units Unit Cost July 1 Beginning inventory 520 $ 2.48 July 25 Purchase 330 2.67 Water Inc. sold 630 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.)
Answer:
$562
Explanation:
Date Transaction Units Unit Cost Total
July 1 Beginning inventory 520 $2.48 $1,289.60
July 25 Purchase 330 $2.67 $881.10
subtotal 850 $2.554 $2,171
Sales 630 $2.554 $1,609.09
July 31 Ending inventory 220 $2.554 $561.91
July 31's ending inventory = 220 units at $2.554 per unit, total cost $561.91
At the beginning of the month, the Forming Department of Martin Manufacturing had 23,000 units in inventory, 40% complete as to materials, and 20% complete as to conversion. During the month the department started 86,000 units and transferred 88,000 units to the next manufacturing department. At the end of the month, the department had 21,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. How many units did the Forming Department start and complete in the current month
Answer:
Units stated and completed during the month= 65,000
Explanation:
The units stated and completed in the current period is referred to as the fully worked.
Using the first in first out (FIFO) approach, the fully worked is calculated as
Fully worked = newly introduced -closing inventory
= 86,000- 21,000 = 65000
Note that out of the 86,000 that were completed in the period, it assumed that 23,000 representing the opening inventory would first be completed and the balance would from the newly introduced.
Another way to determine the fully worked is as follows
Fully worked = transferred out - opening inventory
Fully worked = 88,000- 23,000 = 65,000
Units stated and completed during the month= 65,000
On October 1, Black Company receives a 10% interest bearing note from Reese Company to settle an $21,800 account receivable. The note is due in six months. At December 31, Black should record interest revenue of:
a. $0
b. $450
c. $900
d. $1,800
Answer:
At December 31, Black should record interest revenue of: $545
Explanation:
Black Company receives a 10% interest bearing note from Reese Company to settle an $21,800 account receivable.
The amount of the interest per year = 10% x $21,800 = $2,180
At December 31, following 3 months, the interest accrual = $2,180/12 x 3 = $545
Journal entries to record the interest accrual:
Debit Interest receivable $545
Credit Interest revenue $545
The State of Idaho issued $2,000,000 of 7% coupon, 20-year semiannual payment, tax-exempt bonds 5 years ago. The bonds had 5 years of call protection, but now the state can call the bonds if it chooses to do so. The call premium would be 5% of the face amount. Today 15-year, 5%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2%. What is the net present value of the refunding? Because these are tax-exempt bonds, taxes are not relevant.
Answer:
$278,606
Explanation:
Calaculation of the net present value of the refunding:
The first step is to calculate call premium :
Call premium= 2,000,000 x 5%
= 100,000
Second step is to calculate the Flotation cost
Flotation cost = 2,000,000 x 2%
= 40,000
Calculation for Old interest = 2,000,000 x (7% / 2) = 70,000
Caluclatio fo New interest = 2,000,000 x (5% / 2) = 50,000
Therefore the Six months savings will be:
20,000 70,000 + 50,000 + 20,000 = 140,000
The PV of savings 30 periods 5% / 2 will be:
20,000 x 20.9303 = 418,606
Therefore the Net Present Value of the refunding will be:
418,606- 140,000
= $278,606
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.
Sept. 6 Purchased calculators from Blossom Co. at a total cost of $1,750, terms n/30.
9 Paid freight of $50 on calculators purchased from Blossom Co.
10 Returned calculators to Blossom Co. for $58 credit because they did not meet specifications.
12 Sold calculators costing $510 for $700 to Fryer Book Store, terms n/30.
14 Granted credit of $35 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $25.
20 Sold calculators costing $680 for $880 to Heasley Card Shop, terms n/30.
SHOW ALL WORK LIKE A JOURNAL ENTRY SHOULD LOOK.
Answer:
See the journal and the explanation underneath each transaction below.
Explanation:
The journal entry will look as follows:
Date Details Dr ($) Cr ($)
Sept. 06 Merchandise Inventory 1,750
Accounts payable 1,750
To record purchase of calculators on account.
Sept. 09 Merchandise Inventory 50
Cash 50
To record Freight paid on purchase of Merchandise Inventory.
Sept. 10 Accounts payable 58
Merchandise Inventory 58
To record calculator returned Blossom Co.
Sept. 12 Accounts Receivable 700
Sales 700
To record sale of calculators on account.
Sept. 12 Cost of goods sold 510
Merchandise Inventory 510
To transfer cost of calculators sold.
Sept. 14 Sales return and discounts 35
Accounts receivable 35
To record return of calculator sold which was not ordered.
Sept. 14 Merchandise Inventory 25
Cost of goods sold 25
To record cost of goods sold that was returned.
Sept. 20 Accounts Receivable 880
Sales 880
To record calculators sold on account.
Sept. 20 Cost of goods sold 680
Merchandise Inventory 680
To record cost of goods sold.
Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8.5%. How much should you be willing to pay for Bond X today
Answer:
$954.54
Explanation:
The price of the bond today is the present value of the promised cash inflows of coupon payment and repayment of face value which is computed using fv formula in excel below:
Price in 5 years time:
=-pv(rate,nper,pmt,fv)
rate is 8.5% in 5 years' time
nper is 15 years in 5 years' time
pmt is the annual coupon=$1000*9%=$$90
fv is the face value of $1000
=-pv(8.5%,15,90,1000)=$ 1,041.52
Price today:
=-pv(8%,20,90,1,041.52)=$954.54
State Street Beverage Company issues $805,000 of 9%, 10-year bonds on March 31, 2017. The bonds pay interest on March 31 and September 30. Which of the following statements is true?
A) If the market rate of interest is 10%, the bonds will issue at a premium.
B) If the market rate of interest is 10%, the bonds will issue at a discount.
C) If the market rate of interest is 10%, the bonds will issue at par.
D) If the market rate of interest is 10%, the bonds will issue above par.
Answer:
Option (B) If the market rate of interest is 10%, the bonds will issue at a discount
Explanation:
Interest rate risk is defined as the risk changing which, interest rates will affect bond prices. When current interest rates are greater than a bond's coupon rate, the bond will be sold below its face value at a discount. When interest rates are less than the coupon rate, the bond can be sold at a premium--higher than the face value.
When a worker calls in sick, a temporary replacement is hired to operate his machine. During the week in which the replacement is working, scrap increases significantly, to the point that almost all points plotted on the control chart used to monitor the machine, fall well above the central tendency. Management is frustrated because it cannot understand why the process has deteriorated so rapidly. However, when the original worker returns, scrap decreases to the original level. Management is satisfied it has fixed the problem somehow once and for all although it doesn’t have any idea how the high rate of scrap occurred. According to Deming, this is an example of management: I incorrectly identifying common cause variation present as special cause variation. II under controlling the process by not reacting to special cause variation occurring. III correctly identifying special cause variation. IV correctly identifying common cause.
Answer:
II. under controlling the process by not reacting to special cause variation occurring.
Explanation:
Note the fact that Edwards Deming see such a scenario as one that is not previously observed, but that could be reacted to.
The special cause variation in this scenario refers to the increase in scrap value significantly when a worker who falls sick was replaced by another to operate his machine. The negligence of Management is evident from the fact even after the original worker returns, and the scrap decreases to the original level, the Management feels satisfied it has fixed the problem without any idea how the high rate of scrap occurred.
In 2021, the Marion Company purchased land containing a mineral mine for $1,150,000. Additional costs of $448,000 were incurred to develop the mine. Geologists estimated that 310,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $110,000.
To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $102,300. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $51,500 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $5,000 after the mining project is completed.
In 2021, 41,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 310,000 to 397,500. During 2019, 71,000 tons were extracted, of which 51,000 tons were sold.
Required:
a. Compute depletion and depreciation of the mine and the mining facilities and equipment for 2018 and 2019. Marion uses the units-of-production method to determine depreciation on mining facilities and equipment.
b. Compute the book value of the mineral mine, structures, and equipment as of December 31, 2019.
Answer:
Marion Company
a1) Depletion of the Mine for two years:
2018: 41,000/310,000 * $1,488,000 = $196,800
2019: 51,000/397,500 * $1,488,000 = $190,913
a2) Depreciation of Mining Facilities:
2018: 41,000/310,000 *$102,300 = $13,530
2019: 51,000/397,500 * $102,300 = $13,125
a3) Depreciation of Mining Equipment
2018: 41,000/310,000 *$46,500 = $6,150
2018: 51,000/397,500 * $46,500 = $5,966
b) Book Values December 31, 2019:
1) Mineral Mine:
Cost = $1,598,000
Accumulated Depletion $387,713 (2018 & 2019)
Book Value = $1,210,287
b2) Structures:
Cost = $102,300
Accumulated Depreciation $26,655 (2018 & 2019)
Book Value = $75,645
b3) Equipment:
Cost = $51,500
Accumulated Depreciation $12,116
Book Value = $39,384
Explanation:
a) Cost of Mine:
Land $1,150,000
Development $448,000
Less Resale ($110,000)
Total cost = $1,488,000
b) Cost of Facilities or Structure:
Building cost = $102,300
c) Cost of Equipment = $51,500 - $5,000 = $46,500
d) Depletion is an accrual accounting technique used to allocate the cost of extracting natural resources. It is like depreciation and amortization, which lower the cost value of an asset incrementally through periodic charges to income.
e) Depreciation is an accounting method for allocating the cost (the value used up) of a tangible or physical asset over its useful life.
Peterson Corporation wanted to run an ad campaign that featured popular songs sung by the original singer. The aim was to make an emotional connection with people who remembered the songs. When Bette was approached to sing for the commercial, she refused saying she did not "do" commercials. Peterson Corporation still wanted to use the song, so they hired a backup singer for Bette and she was told to "sound as much as possible like the Bette record." The backup singer did the commercial, and people, even close acquaintances of Bette, thought it was her. Bette sued Peterson Corporation for wrongfully appropriating her likeness.
Required:
Is this a valid example of misappropriation. Why or why not.
Answer:
Misappropriation refers to the use of another person's intellectual property including their name or likeness without prior permission from the person which can then cause harm to that person.
This is indeed an example of misappropriation because the company tried to use Bette's likeness in the commercial. After being rebuffed by Bette saying that she does not do commercials for whatever business or personal reasons known to her, they still sought to use her popularity and image to make their products more popular.
To do so they hired a backup singer and told her to sing as much like Bette as she could so much so that even Bette's close acquaintances thought that it was Bette. If her close acquaintances could think it was her, imagine the general public.
They therefore made it seem as though Bette did their commercial which then would mean that Bette does in fact do commercials which would do damage her assertion that she does not do same. This would bring harm to her business relationships if for instance she had rebuffed other companies in the past when they sought her to do their commercials.
This is a case of Misappropriation and Bette should sue.
George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50, he sold only 4,000 T-shirts. Which of the following best approximates the price elasticity of demand? -2.2 -1.8 -2 -2.6 Suppose George's marginal cost is $5 per shirt. Before the price change, George's initial price markup over marginal cost was approximately . George's desired markup is . Since George's initial markup, or actual margin, was than his desired margin, raising the price was .
Answer: George's initial price markup over marginal cost was approximately 41.2% George's desired markup is 45% Since George's initial markup, or actual margin, was Less than his desired margin, raising the price was profitable
Explanation:
a) Price Elasticity of Demand = [(Q1-Q2)/(Q1+Q2)] / [(P1-P2)/(P1+P2)]
= 5000- 4000/4000+ 5000) / 8.50- 9.50 /8.50 ₊9.50 =
1000/8000 / -1/ 18 = 0.125/-0.055 = -2.2
George's initial price markup over marginal cost was approximately
when Marginal cost = $5
b)initial price markup = Price - marginal cost / price = 8.50 - 5.00/ 8.50 = 0.412= 41.2%
C) George's desired margin = 1/absolute value of price elasticity = 1/ 2.2= 0.45= 45%
.
D)Since George's initial markup or actual margin was less than his desired margin, raising the price is profitable.
This is because When the markup is lower than the margin, business is running on a loss, so it is nessesary to increase price.
On day 51 a project has an earned value of $600, an actual cost of $650, and a planned cost of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the project on day 51
Answer and Explanation:
The computation is shown below:
a. Schedule variance (SV)
= Earned value - planned cost
= $600 - $560
= $40
b. Cost variance (CV)
= Earned value - actual cost
= $600 - $650
= -$50
c. Consumer price index (CPI)
= Earned value ÷ actual cost
= $600 ÷ 650
= 0.92
As we can see from the above calculation, the project showed negative CV i.e overbudgeted but at the same time, it also showed Positive SV i.e the project is on schedule.
And, the CPI determines that the completing cost is more than the planned cost that reflects the bad condition
Match the term within the parantheses that best matches each of the following description.
1. Expenditure on research and development
2. A bank loan
3. Listed on a stock exchange
4. Has limited liability
5. Responsible for bank relationships
6. Agency Cost
A. Investment decision
B. Financial asset
C. Public corporationd
D. Corporatione
E. The treasure
F. The cost resulting from conflicts of interest between managers and shareholders.
Answer:
The answer is
1. Expenditure on research and development (A. Investment decision)
2. A bank loan (B. Financial asset)
3. Listed on a stock exchange (C. Public corporation)
4. Has limited liability ( D. Corporation)
5. Responsible for bank relationships ( E. The treasure)
6. Agency Cost (F. The cost resulting from conflicts of interest between managers and shareholders)
Explanation:
1. Expenditure on research and development. (A. Investment decision. Investment decision relates to expenditure on a long-term goal.)
2. A bank loan (B. Financial asset. Businesses that obtain bank loans owns and controls it and makes the decision on how to use it)
3.Listed on a stock exchange( C. Public corporation. Companies that have their stocks traded on exchange are public companies.)
4. Has limited liability (D. corporation/partnership. No distinct separation between the owner and the business)
5. Responsible for bank relationships (E. The treasurer. This person maintains the relationship between the bank and business)
6. Agency Cost ( F. The cost resulting from conflicts of interest between shareholders and managers of the business. The managers of the business are known as the agents)
g Depreciation refers to which one of the following? The amount of money that is lost over a period when services are underutilized. An estimate of how much of a tangible asset has been used during an accounting period: considered an expense that requires the use of cash deducted from the operations revenue. The amount of money still owed on a tangible asset, minus the amount of expenses spent to facilitate the utilization of the asset (utilities, personnel, enabling assets, etc.). An estimate of how much of a tangible asset has been used during an accounting period: considered an expense that does not require any cash outflow under the accrual basis accounting.
Answer:
The answer is D
Explanation:
Depreciation is best described as An estimate of how much of a tangible asset has been used during an accounting period: considered an expense that does not require any cash outflow under the accrual basis accounting.
Depreciation reduces the value of an asset and it reduces it over the life span of an asset. Depreciation is a non cash reduction. Depreciation tells us how much the value of an asset has reduced.
The formula is (cost of the asset - any residual value) ÷ the number of useful life span
Personal Selling is :
a. The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision.
b. A nonpersonal, indirectly paid presentation of an organization, product, or service.
c. A short-term inducement of value offered to arouse interest in buying a product or service.
d. Promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.
Answer:
Option A. The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision.
Explanation:
The reason is that the personal selling is the face to face selling which means two way flow of communication is necessary. The seller will use his marketing exprience to influence the buyer which results in greater sales and customer satisfaction. So it is the face to face selling method which most of the companies opt and this way of selling is known as personal selling.
Paragraph coherence occurs when the ideas in a paragraph are linked and there is a logical flow from one idea to the next. Which of the following are techniques that you can use to help the reader follow your ideas?
A) Place prepositions near the end of the sentence.
B) Show connections with transitional expressions.
C) Avoid repetition of words and phrases.
D) Use pronouns to refer to previous nouns.
E) Use bullets and lists to connect similar ideas.
Answer:
B) Show connections with transitional expressions.
Explanation:
When paragraphs are formed there needs to be a smooth flow so the reader can clearly understand what is being communicated. Paragraph coherence is used to achieve this.
An important method in achieving paragraph coherence is the use of transitions.
Transitions are words or a set of word that connects sentences and ideas together in a paragraph. It makes the relationship between ideas clear and understandable.
Coherence is used to make the ideas expressed flow smoothly and logically.
Culver Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,100 and the following divisional results. Division I II III IV Sales $250,000 $198,000 $499,000 $446,000 Cost of goods sold 198,000 191,000 298,000 254,000 Selling and administrative expenses 74,900 63,000 63,000 46,000 Income (loss) from operations $ (22,900) $ (56,000) $138,000 $146,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 69 % 90 % 80 % 74 % Selling and administrative expenses 41 62 52 58 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.
Answer:
Income after discontinuing operations from both departments 1 and 2 is greateri.e. $ 207 444 than income after discontinuing operations from department 1 . i.e. $ 172964
Explanation:
Option 1:
If the 1st division is discontinued. 50 % of the fixed costs and expenses will continue and included in irrelevant costs.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $198,000 $499,000 $446,000
Cost of G. Sold 191,000 298,000 254,000
V. COGS 90 % 80 % 74 %
V.COGS 171,900 238,400 187960
FIxed COGs 19,100 59600 66,040 30690
Selling &
Administrative Exps 63,000 63,000 46,000
Var. S& Admin Exps. 62% 52% 58%
Var. S& Admin Exps. 39060 32760 26,680
Fixed S.& Admin Exps 23940 30240 19320 24346
Income (loss) $ (56,000) $138,000 $146,000
Total Income = $ (56,000)+$138,000+$146,000-30690- 24346
Total Income= $ 172964
Option 2:
If both the 1st and 2nd division are discontinued. 50 % of the fixed costs and expenses are added under the section II.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $499,000 $446,000
Cost of G. Sold 298,000 254,000
V. COGS 80 % 74 %
V.COGS 238,400 187960
FIxed COGs 9,550 59600 66,040 30690
Selling &
Administrative Exps 63,000 46,000
Var. S& Admin Exps. 52% 58%
Var. S& Admin Exps. 32760 26,680
Fixed S.& Admin Exps 11970 30240 19320 24346
Income (loss) $138,000 $146,000
Total Income = $138,000+$146,000-30690- 24346- 9,550 - 11970
Total Income= $ 207 444
We calculate the fixed and variable costs by multiplying with the given percentages and subtracting it from the total .
Culver Company
Income Statement
For the 1st Quarter 2017
Division I II III IV
Sales $250,000 $198,000 $499,000 $446,000
Cost of G. Sold 198,000 191,000 298,000 254,000
V. COGS 69 % 90 % 80 % 74 %
V.COGS 136,620 171,900 238,400 187960
FIxed COGs 61,380 19,100 59600 66,040
Selling &
Administrative Exps 74,900 63,000 63,000 46,000
Var. S& Admin Exps. 41% 62% 52% 58%
Var. S& Admin Exps. 30,709 39060 32760 26,680
Fixed S.& Admin Exps 48691 23940 30240 19320
Income (loss) $ (22,900) $ (56,000) $138,000 $146,000
When the relationship between government and interest groups becomes entangled and tight with some groups having formal government sponsorship and/or special access, the system is labeled_________.
Answer: Neo-Corporatism.
Explanation:
Neo- Corporatism emerged in resent times as a successor to State Corporatism. State Corporatism was a system whereby interest and labor groups were supposed to work together for the good of society. These were most prevalent in authoritarian regimes like Nazi Germany and post communist Lithuania.
Recently though, in some Democratic countries, interest groups have chosen to work with the Government to improve the lives of the people and enable the Government reach out deeper. These Peak Associations as they are often called help the Government compete economically and are very prevalent in countries and regions such as, Germany, Switzerland, Austria and Scandinavia.
Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash. Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model.
Answer:
Elegant Limited
Depiction of the Association and Cardinality for the Sales of Cars based on the REA Model:
1. Association: This is about the relationships that exist among the economic elements involved in the REA model. They are Economic Resources, Economic Events, and Economic Agents. These elements interact during each business transaction in such interconnected processes that business transactions cannot be complete without any element.
For example, the economic resources during the sale of a car at Elegant Limited are 1) a car and 2) money. These are exchanged between Elegant Limited and the customer and vice versa. In the same light, an economic event takes place during the exchange of either a car or money. While a car is a physical resource (asset), money is a financial resource (asset). For each of these two events, the economic agents who must interact are the workers at Elegant Limited and the customer whether private buyers or investors.
2. Cardinality: This refers to the elements that are involved in the REA model. They are three as already described. They are Economic Resources, Economic Events, and Economic Agents. No business transaction is complete where any element is not present. So, these elements are cardinal in the relationship.
Explanation:
The REA model is an accounting system re-engineering model originally proposed by William E. McCarthy as a generalized accounting model. It contains the concepts of resources, events and agents (McCarthy 1982).
The model views accounting data collection as a system to collect data about the resources, events, and agents within business processes, thereby suggesting that the basic data collected should be about the resources, events, and agents involved in an exchange.
J-Chron's board of directors periodically meets with the CFO of the company. The CFO reports on the financial status of a company project. The board asks whether the project is compliant with legally-required accounting principles, but asks no other questions about the project, such as how the project supports the company's mission and strategy. Which of the following is true? 1. The board is meeting legal requirements but not its duty of care to shareholders. 2. The board is fully meeting its duty of care to shareholders. 3. The board is not legally required to meet any duty of care requirements. 4. The board is not meeting its duty of care to shareholders.
Answer:
1. The board is meeting legal requirements but not its duty of care to shareholders.
Explanation:
During a Board of Directors meeting with CFO all conversations will be about strengthening the company and the organization's shareholders. Shareholders are also considered the entity's owners, so it is very important to comply with all the legal provisions in addition to increasing shareholders.
In this given situation, the board meets with CFO and asks in compliance with accounting standards, but asks little more about how the project aims to achieve the company's mission and strategy. Mission and plan describe the company's vision alongside the company's owners(shareholders) vision and benefits.
hence, the correct option is 1.
