Answer:
Readers' Corner
1. Effect of each transaction on the Inventory Balance:
a. $625,000 Purchase: Inventory balance is increased
b. $11,000 Allowance: Inventory balance is decreased.
c. $614,000 Payment: Inventory balance is not affected.
2.
a. Debit Inventory $625,000
Credit Accounts Payable (New Books) $625,000
To record the purchase of new books on account.
b. Debit Accounts Payable (New Books) $11,000
Credit Inventory $11,000
To record the allowance received from New Books.
c. Debit Accounts Payable (New Books) $614,000
Credit Cash Account $614,000
To record the payment on account.
Explanation:
Readers' Corner records its transactions with New Books Inc. by initially using the journal. The entries in the journal identify the accounts involved in each transaction. During the recording, the accounts to be debited and the ones to be credited in the general ledger are identified and recorded accordingly.
Raatz Corporation's total current assets are $370,000, its noncurrent assets are $660,000, its total current liabilities are $220,000, its long-term liabilities are $410,000, and its stockholders' equity is $400,000. Working capital is: Select one: a. $370,000 b. $150,000 c. $250,000 d. $400,000
Answer:
b. $150,000
Explanation:
The computation of the working capital is shown below:
= Total current assets - total current liabilities
= $370,000 - $220,000
= $150,000
We simply applied the above formula
And, the same is to be considered
Hence, the working capital is $150,000
Therefore the correct option is b. $150,000
All the other options are wrong.
Allowance for Doubtful Accounts, showed a credit balance of $950 on January 1, 2004. During the year, the company wrote off $3,200 of uncollectible accounts, and reinstated $1,300 of previously written off accounts. The Dec 31, 2004 balance of Accounts Receivable is $97,500, and 6% of outstanding accounts receivable are assumed to be uncollectible. What will be the company's Bad Debts Expense for 2004
Answer:
Bad debts expense = $6,800
Explanation:
Estimated bad debts = $97,500 * 6%
Estimated bad debts = $5,850
Allowance for doubtful accounts
Wrote off $3,200 Opening Balance $950
Reinstated $1,300
Adjustment $6,800
Closing balance $5,850
Bad debts expense = $6,800
Ramon had AGI of $165,000 in 2020. He is considering making a charitable contribution this year to the American Heart Association, a qualified charitable organization. Determine the current allowable charitable contribution deduction in each of the following independent situations, and indicate the treatment for any amount that is not deductible currently. Identify any planning ideas to minimize Ramon's tax liability.
Answer:
the situations are missing, so I looked for similar questions:
a. A cash gift of $68,500.
In the current year, Ramon may deduct $68,500 since his charitable contribution is limited to $165,000.
b. A gift of OakCo stock worth $68,500 on the contribution date. Ramon had acquired the stock as an investment two years ago at a cost of $61,650.
The stock's value for determining the contribution is $68,500 (fair market value). The deduction for 2020 is $49,500 (30% of AGI). The remaining $19,000 for years.
c. A gift of a painting worth $68,500 that Ramon purchased three years ago for $61,650. The charity has indicated that it would sell the painting to generate cash to fund medical research.
The contribution is valued at $61,650 (the charity will sell the painting immediately). The amount deductible in the current year is $61,650.
Explanation:
The charitable contribution limit was increased to 100% of AGI for 2020 by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
g Larry recorded the following donations this year: $540 cash to a family in need $2,440 to a church $540 cash to a political campaign To the Salvation Army household items that originally cost $1,240 but are worth $340. What is Larry's maximum allowable charitable contribution if his AGI is $60,400
Answer:
$2780
Explanation:
Given the following donations by Larry:
Cash to family in need $540
Cash to political campaign = $540
Church donation = $2440
Donation to salvation Army household = $340 (worth)
The allowable charitable contribution when applied to the an individual's adjustable Gross income. These contribution must be made to qualified charitable organizations in other to become eligible for deduction. In the scenario above, the qualified charitable organization include the donation to church and the salvation Army household :
Hemce, maximum allowable charitable contribution is :
$(2,440 + 340) = $2780
Donghai transferred the following assets to Starling Corporation. Adjusted Basis Fair Market Value Cash $120,000 $120,000 Machinery 48,000 36,000 Land 108,000 144,000 In exchange, Donghai received 50% of Starling Corporation's only class of stock outstanding. The stock has no established value. However, all parties believe that the value of the stock Donghai received is the equivalent of the value of the assets she transferred. The only other shareholder, Rick, formed Starling Corporation five years ago. a.Donghai has a basis of $276,000 in the stock of Starling Corporation. b.Starling Corporation has a basis of $48,000 in the machinery and $108,000 in the land. c.Donghai has no gain or loss on the transfer. d.Starling Corporation has a basis of $36,000 in the machinery and $144,000 in the land.
Answer:
Option D
Explanation:
Starling Corporation has a basis of $36,000 in the machinery and $144,000 in the land.
Note: As Donghai transferred the assets to Starling Corporation. Option D is absolutely correct because Acquiring Company should record asset at fair value therefore Starling Corporation has to record machinery & Land at Fair value
During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2019 understated by $ 124,000 2020 overstated by 154,000 WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.
Answer:
WMC Corporation
Misstatement of Ending Inventories:
1. Effect of these errors on Retained Earnings at January 1, 2021:
a) The understated amount by $124,000 in 2019 has self-corrected in 2020 with the Beginning Inventory also understated. So, it has no effect on the Retained Earnings at January 1, 2021.
b) The overstated ending inventories by $154,000 will overstate the Retained Earnings at January 1, 2021 by the same amount. Since it has not self-corrected like (a), the correction will be to reduce the Retained Earnings and reduce the Beginning Inventories by $154,000.
2. Journal Entry:
Debit Retained Earnings $154,000
Credit Beginning Inventories $154,000
To reverse the overstated inventories.
Explanation:
a) Data:
2019 understated by $ 124,000
2020 overstated by 154,000
Inventory system = periodic
Inventory method = FIFO
What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%?
Answer:
$20,352
Explanation:
Use the time value of money techniques to find the PV as follows :
n = 10
p/yr = 1
i = 5.5%
Fv = $0
Pmt = $2,700
PV = ?
Using a financial calculator to enter the values as above the PV is $20,352
Last year, Vandalay Industries had $300,000 in taxable income from its operations before the following: $40,000 in interest expense, $10,000 in interest income, $30,000 in dividends paid and $20,000 in dividend income. Assuming that 50% of dividend income is taxable and a 25% tax rate, what was the company's tax liability for the year?
A. $70,000
B. $79,190
C. $90,890
D. $62,500
E. $84,560
Answer: A. $70,000
Explanation:
The tax liability will be computed on the total income that is taxable.
Total income = Taxable income - Interest expense + Interest income + taxable dividend income
= 300,000 - 40,000 + 10,000 + (50%* 20,000)
= 300,000 - 40,000 + 10,000 + 10,000
= $280,000
Tax liability = 25% * 280,000
= $70,000
The tax liability will be computed on the total taxable income.
Computed tax liabilityFormula of Total income is = Taxable income - Interest expense + Interest income + taxable dividend income.
Then = 300,000 - 40,000 + 10,000 + (50%* 20,000)
After that = [tex]300,000 - 40,000 + 10,000 + 10,000[/tex]
Now = $[tex]280,000[/tex]
Then the Tax liability is = 25% * 280,000 = $70,000
Thus, the correct option is "A" $70,000
Find out more in formation about Computed tax liability here:
brainly.com/question/16102904
Kayla Sampson, an antiques dealer from Mankato, Minnesota, received her monthly billing statement for April for her MasterCard account. The statement indicated that she had a beginning balance of $600, on day 5 she charged $150, on day 12 she charged $300, and on day 15 she made a $200 payment. Out of curiosity, Kayla wanted to confirm that the finance charge for the billing cycle was correct. (a) What was Kayla’s average daily balance for April without new purchases?
Answer: $493.3
Explanation:
Kayla's average daily balance for April without new purchases will be:
We should note that she has opening balance of $600 for 14 days without purchase, $400 balance for 16 days from April 15-30. This will be:
= [($600 × 14) + ($400 × 16)]/2
= ($8400 + $6400)/30
= $14800/30
= $493.3
Suppose that Congress passes legislation making it more difficult for firms to fire workers. One example might be a law requiring severance pay for fired workers. The goal of this legislation is to reduce the rate of job separation without affecting the rate of job finding. Use this information to answer the following three questions. (Assume the size of the labor force remains constant.) If this legislation reduces the rate of job separation (s) without affecting the rate of job finding (f), how would the natural rate of unemployment change
Answer:
If the new law reduces the rate of job separation without affecting the rate of job finding, then, the natural rate of unemployment will fall.
This is because of the formula
U / L = s / (s + f)
Where U is unemployment, L is labor force, s is rate of separation, and f is rate of job finding.
The reason why the rate of natural unemployment will fall is because if employees are harder to fire, companies will be more careful when hiring workers, since the cost of firing a worker is now higher.
Bambi Company manufactures fast-baking ovens in the United States at a production cost of $500 per unit and sells them to uncontrolled distributers in the United States and a wholly owned sales subsidiary in Canada. Bambi’s U.S. distributors sell the ovens to restaurants at a price of $1,000 and its Canadian subsidiary sells the ovens at a price of $1,100. Other distributors of similar ovens to restaurants in Canada can earn a gross profit (i.e., markup) of 25% of selling price. Bambi’s main U.S. competitor sells ovens at an average 50% markup on cost. Bambi’s Canadian subsidiary incurs operating costs (other than COGS), that average $250 per oven sold. The average operating profit margin earned by Canadian oven distributors is 5% (of sales). Sales $1,100 - cost 250 5%*1,100 = 55 profit Cost of goods sold = $795 1. Which of the following would be an acceptable transfer price under the resale price method? Show your calculations a. $700 b. $750 c. $795 d. $825 2. Which of the following would be an acceptable transfer price under the cost-plus method? Show your calculations a. $700 b. $750 c. $795 d. $825 3. Which of the following would be an acceptable transfer price under the comparable profits method? Show your calculations a. $700 b. $750 c. $795 d. $825
Answer:
1. d. $825
2. b. $750
3. c. $795
Explanation:
1. Transfer price under the resale price method
Acceptable price under resale method = Selling price of Subsidiary - Profit%
= $1,100 - 25%*$1,100
= $1,100 - $275
= $825
2. Transfer price under the cost-plus method
Cost plus method = Cost+Markup
= $500 + $500*50%
= $500 + $250
= $750
3. Transfer price under the comparable profits method
Comparable profits method = Selling price - Profit - Other costs
= $1,100 - $1,100*5% - $250
= $1,100 - $55 - $250
= $795
Required information Problem 17-3A Applying activity-based costing LO P1, P3, A1, A2, C3 [The following information applies to the questions displayed below.] Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Production Activity Indirect Labor Indirect Materials Other Overhead Grinding $ 320,000 Polishing $ 135,000 Product modification 600,000 Providing power $ 255,000 System calibration 500,000 Additional information on the drivers for its production activities follows. Grinding 13,000 machine hours Polishing 13,000 machine hours Product modification 1,500 engineering hours Providing power 17,000 direct labor hours System calibration 400 batches Job 3175 Job 4286 Number of units 200 units 2,500 units Machine hours 550 MH 5,500 MH Engineering hours 26 eng. hours 32 eng. hours Batches 30 batches 90 batches Direct labor hours 500 DLH 4,375 DLH Problem 17-3A Part 5 Required: 5. If the company uses a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? (Do not round intermediate calculations. Round "OH Cost per unit" answers to 2 decimal places.)
Answer:
Craft Pro Machining
The overhead cost for each unit of the jobs:
Job 3175 Job 4286
Number of units 200 units 2,500 units
Direct labor hours 500 DLH 4,375 DLH
Plantwide overhead rate = $371.28205
Overhead allocation $185,641.03 $1,624,358.97
Unit overhead cost $928.21 $649.74
Explanation:
a) Data and Calculations:
Production Activity Indirect Labor Indirect Materials Other Overhead Grinding $ 320,000
Polishing $ 135,000
Product modification 600,000
Providing power $ 255,000
System calibration 500,000
Total overhead cost $1,810,000
Additional information on the drivers for its production activities follows.
Grinding 13,000 machine hours
Polishing 13,000 machine hours
Product modification 1,500 engineering hours
Providing power 17,000 direct labor hours
System calibration 400 batches
Job 3175 Job 4286
Number of units 200 units 2,500 units
Machine hours 550 MH 5,500 MH
Engineering hours 26 eng. hours 32 eng. hours
Batches 30 batches 90 batches
Direct labor hours 500 DLH 4,375 DLH 4,875 DLH
Plantwide overhead rate based on direct labor hours:
= Total overhead costs/Total direct labor hours
= $1,810,000/4,875
= $371.28205
A buyer always wants to pay a price that is as _____ as possible, but never _____ than the buyer's willingness to pay.
Answer: low: higher
Explanation:
A buyer always wants to pay a price that is as low as possible, but never higher than the buyer's willingness to pay.
As a way to save costs, a buyer will always seek to pay the lowest price they can possibly pay for a good or service. This is why some buyers negotiate prices and seek trade discounts.
Buyers will however have in mind a maximum price that they would be willing to pay. This is called their willingness to pay and it is a threshold that they would not want to exceed. If a good's price is higher than their willingness to pay, they will not buy the good.
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.55 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 14 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 7 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
(A) 20.54
(B) 24.46
(C) 30.88
Explanation:
(A) The current stock price can be calculated as follows
Po= 1.55(1+6/100)/(14/100-6/100)
= 1.55(1+0.06)/(0.14-0.06)
= 1.55(1.06)/0.08
=1.643/0.08
= 20.54
(B) The stock price after 3 years can be calculated as follows
Po = 1.55(1+6/100)^4/(14/100-6/100)
= 1.55(1+0.06)^4/(0.14-0.06)
= 1.55(1.06)^4/0.08
= 1.55(1.2624)/0.08
= 1.9567/0.08
= 24.46
(C) The stock price after 7 years can be calculated as follows
Po= 1.55(1+6/100)^8/(14/100-6/100)
= 1.55(1+0.06)^8/(0.14-0.06)
= 1.55(1.06)^8/(0.08)
= 1.55(1.5938)/0.08
= 2.470/0.08
= 30.88
Early in the current year, Amazon Co. purchased the Rio Silver Mine at a cost of $30,000,000. The mine was estimated to contain 400,000 tons of ore and to have a residual value of $7,500,000 after mining operations are completed. During the year, 115,000 tons of ore were removed from the mine. At year-end, the book value of the mine is: Multiple Choice $22,500,000. $6,468,750. $23,531,250. $30,000,000.
Answer:
Book value= $23,531,250
Explanation:
Giving the following information:
Purchased price= $30,000,000.
Residual value= $7,500,000
The mine was estimated to contain 400,000 tons of ore.
During the year, 115,000 tons of ore were removed from the mine.
First, we need to calculate the depletion for the year:
Annual depletion= [(original cost - salvage value)/useful life of production]*production for the year
Annual depletion=[(30,000,000 - 7,500,000) / 400,000]*115,000
Annual depletion= 6,468,750
Now, the book value:
Book value= purchase price - annual depletion
Book value= 30,000,000 - 6,468,750
Book value= $23,531,250
Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: Cash collections in April are budgeted to be:
January February March April
$200,000 $300,000 $350,000 $250,000
Required:
What are the budgeted Cash collections for April?
Answer:
Total sales collection= $313,000
Explanation:
Giving the following information:
Cash collection:
20% of a month's sales in the month of sale
70% in the month following sale
6% in the second month following sale.
January February March April
$200,000 $300,000 $350,000 $250,000
Cash collection April:
Cash from sales in Arpil= (250,000*0.2)= 50,000
Sales on account March= (350,000*0.7)= 245,000
Sales on account February= (300,000*0.06)= 18,000
Total sales collection= $313,000
The Lexington Partnership has a depreciable business asset (personal property) that it originally purchased for $81,800. The asset now has an adjusted basis of $49,080 and a market value of $98,160. The partnership has no other potential hot assets. Ambroz sells his 25% interest in the partnership. a. How much is Lexington's depreciation recapture potential
Answer:
Question b: How much ordinary income does Ambroz recognize when he sells this partnership interest?
a. Since the market value is more than its original cost, therefore, the completed depreciation can be potentially recaptured
Lexington's depreciation recapture potential = $81,800 - $49,080
Lexington's depreciation recapture potential = $32,720
b. Ambroz recognizes Ordinary income of: $32,720*25% = $8180
Sandersen Inc. sells minicomputers. During the past year, the company's sales were million. The cost of its merchandise sold came to $ million, and cash operating expenses were $; depreciation expense was $, and the firm paid $ in interest on its bank loans. Also, the corporation paid $ in the form of dividends to its own common stockholders. Calculate the corporation's tax liability by using the corporate tax rate structure in the popup window,
Question Completion:
Sandersen Inc, sells minicomputers. During the past year, the company's sales were 3.00 million. The cost of its merchandise sold came to 2.00 million, and cash operating expenses were 400,000; depreciation expense was 100,000, and the firm paid 150,000 in interest on its bank loans. Also, the corporation paid 25,000 in the form of dividends to its own common stockholders.
Calculate the corporation tax liability.
The corporate tax rates are listed here:
15% $0-$50,000
25% $50,001-$75,000
34% $75,001-$10,000,000
35% over $10,000,000
Answer:
Sandersen Inc.
Computation of the Corporation's Tax Liability:
Taxable profit = $350,000
15% $0-$50,000 $7,500 ($50,000 * 15%)
25% $50,001-$75,000 6,250 ($25,000 * 25%)
34% $75,001-$10,000,000 93,500 ($275,000 * 34%)
35% over $10,000,000 0
Total Tax Liability = $107,250
Explanation:
Data and Calculations:
Sales Revenue $3,000,000
Cost of goods sold 2,000,000
Gross profit $1,000,000
Operating expenses 400,000
Depreciation expense 100,000
Operating profit $500,000
Interest expense 150,000
Profit before taxes $350,000
Income Taxes 107,250
Profit after taxes $242,750
Dividend 25,000
Retained Earnings $217,750
The following data is for the coming year. FinCorp's Net Income is reported as $195 million. Depreciation Expense is $20 million, accounts receivable decreased by $20 million, accounts payable decreased by $10 million, and inventories increased by $10 million. The firm's interest expense is $22 million. Assume the tax rate is 35% and the net debt of the firm increases by $3 million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of equity is 11%?
Answer:
Net Income = $195 million
Depreciation Expense = $20 million
Decrease in Accounts receivable = $20 million
Decrease in accounts payable = $10 million,
Increase in inventories = $10 million
Increase in Net debt = $3 million
Increase/Decrease in working capital = Increase in inventory + Decrease in Account payable - Decrease in Account Receivables
= $10 milliion + $10 million - $20 million
= $0 million
Free Cashflow for equity calculation
Net Income $195 million
Add: Depreciation $20 million
Less: Capital expenditure ($0 million)
Less: Increase in working capital ($0 million)
Add: Increase in Net debt $3 million
Free Cash flow for Equity (FCFE) $218 million
Given FCFE growth rate (g) = 3%
Cost if equity (RE) = 11%
Market value of equity (VE) = FCFE / Re - g
Market value of equity = 218 million / 0.11 - 0.03
Market value of equity = 218 million / 0.08
Market value of equity = $2,725 million
Tyler wants to brand the new location with the service-oriented environment, providing timely and quality service for its customers. He believes that the use of technology would not only create that environment, but also show customers a well-managed business using technology. What alternatives could fulfill this branding for a restaurant? Should they use handheld devices to process customer orders at the tables? Would this be an efficient method of entering orders? What types of devices could be used?
Explanation:
For a restaurant, there are many technology options available to improve the quality of services for customers. Some interesting strategies to achieve Tyler's goal could be the development of a restaurant-specific application, where the customer can make reservations quickly, access the menu, place an order in advance or leave feedback on the products and services offered by the restaurant.
Using portable devices to process customer orders at tables could also be an efficient alternative for order entry, such as tablets or some software spread around the restaurant that would allow the customer to choose whether they prefer automated or personal service.
To be successful strategies, Tyler should conduct a survey and analyze the tastes and preferences of his potential audience, as there are more traditional restaurants frequented by an audience that still prefers personalized service by an employee who gives him tips and recommendations on the dishes served and wines for example.
It is also ideal to train the team so that new technologies are used well and the quality of service is faster and quality.
A semiannual coupon bond with face value of $1,000 has a coupon rate of 6% and matures in 16 years. The market-determined discount rate on this bond is 14%. What is the price of the bond?
Answer:
$1,125.30
Explanation:
The Price of the Bond is its Current/Trading price also known as the Present Value (PV). This is determined as follows :
Fv = $1,000
Pmt = $1,000 × 6% = $160
P/yr = 1
n = 16
i = 14%
PV = ?
Using the Financial calculator to enter the values as above, the Pv is $1,125.30.
Thus, the price of the bond is $1,125.30.
Bowen Corporation owns 70 percent of Roan Corporation’s voting common stock. On March 12, 20X2, Roan sold land it had purchased for $140,000 to Bowen for $185,000. Bowen plans to build a new warehouse on the property in 20X3. Required: a. Prepare the worksheet consolidation entries to remove the effects of the intercompany sale of land in preparing the consolidated financial statements at December 31, 20X2 and 20X3. (If no entry is
Answer: Check attachment
Explanation:
The worksheet consolidation entries to remove the effects of the intercompany sale of land in preparing the consolidated financial statements at December 31, 20X2 and 20X3 has been prepared and attached.
Note:
Gain on land sale = 185,000 - $140,000
= $45,000
Investment in Roan Corporation:
= 70% × $45,000
= 0.7 × $45,000
= $31,500
Non controlling interest of Roan Corporation = $45,000 - $31,500
= $13,500
Check the attachment for further explanation.
Ben and Carla Manchester plan to buy a condominium. They will obtain a $210,000, 20-year mortgage at 8.0 percent. Their annual property taxes are expected to be $2,676. Property insurance is $1,296 a year, and the condo association fee is $305 a month. Based on these items, determine the total monthly housing payment for the Manchesters. Use Exhibit 9-9. (Round time value factor to 2 decimal places and final answer to the nearest whole number.)
Answer:
$2,393
Explanation:
Property taxes and insurance can be added to the Manchester's monthly mortgage payment.
The mortgage payment without the property taxes or insurance expense = $210,000 / 119.5546 PV annuity factor, 0.667%, 240 periods) = $1,756.52
monthly installment for property taxes = $2,676 / 12 = $223
monthly installment for insurance expense = $1,296 / 12 = $108
condo association fee = $305
total monthly payment = $2,392.52 ≈ $2,393
The demand for tickets to an Ethiopian Camparada film is given by D(p)= 200,000-10,000p, where p is the price of tickets. If the price of tickets is 12 birr, calculate price elasticity of demand for tickets and draw the demand curve
Answer:
a. The price elasticity of demand for tickets -1.50.
b. See the attached pdf file for the demand curve.
Explanation:
a. Calculate price elasticity of demand for tickets
Given;
p = 12
D(p) = D = 200,000 - 10,000p .................................................................... (1)
Substituting p = 12 into equation (1) to find the value of D, we have:
D = 200,000 – (10,000 * 12) = 200,000 - 120,000 = 80,000
Differentiating equation (1) with respect to p, we have:
dD/dp = -10,000
To calculate elasticity of demand, we use the formula for calculating the elasticity of demand as follows:
E = Elasticity of demand = (p / D) * (dD/dp) ................... (2)
Substituting the relevant values into equation (2), we have:
E = (12 / 80,000) * (-10,000) = 0.00015 * (-10,000) = -1.50
Therefore, the price elasticity of demand for tickets -1.50.
Note: Since the absolute value of E i.e. |-1.50| is greater one, it therefore implies that the demand for tickets is elastic.
b. Draw the demand curve.
Note: See the attached pdf file for the demand curve
To draw the demand curve, we need to obtain the new price and the new quantity demanded as follows:
We start by assuming that the price of tickets decreases from 12 birr to 11 birr. Therefore, the percentage change in price is obtained as follows:
Percentage change in price = ((New price – Old price) / Old price) * 100 = ((11 - 12) / 12) * 100 = -8.33%
To calculate the percentage change in demand for tickets, we use the following formula for calculating the elasticity of demand:
E = Percentage change in demand / Percentage change in price ............. (3)
Since from part a above, E = -1.50
And, as calculated here, Percentage change in price = -8.33%, or 0.0833
Substituting the values into equation (3) and solve for Percentage change in demand, we have:
-1.50 = Percentage change in quantity demanded / -0.0833
Percentage change in quantity demanded = (-0.0833) * (-1.50) = 0.12495, or 12.495%
Approximating to 2 decimal places, we have:
Percentage change in quantity demanded = 12.50%
Since the answer is positive, this implies that the demand for tickets D increases by 12.50% when price for tickets decreases by 8.33%. This confirms that the demand for tickets is truly elastic as the percentage change in demand for ticket of 12.50% is greater than the percentage change in price of -8.33%.
The new D can therefore be calculated as follows:
New D = D + (D * Percentage change in demand demanded) = 80,000 + (80,000 * 12.50%) = 90,000
From the calculations above, we have:
Initial price = 12 birr
New price = 11 birr
Initial quantity = D = 80,000
New quantity = New D = 90,000
The values above are then used to draw the demand curve in the attached pdf file.
Since there is a negative relationship between price and quantity demanded in economics, the curve in the attached excel file shows the effect of a decrease in the price of tickets from 12 birr to 11birr (as shown by the arrow) on the quantity demanded for tickets that increases from 80,000 to 90,000 (as shown by the arrow).
Since the demand for tickets is elastic as obtained in part a above, it implies that the percentage change in the quantity demanded for ticket is greater than the percentage change in the price of tickets. This makes the demand curve to be flatter as shown in the attached pdf file
From the demand curve in the attached pdf file; the demand curve for tickets is flatter, and the gap between the initial quantity demanded 80,000 and the new quantity demanded 90,000 is wider than the gap between the initial price 12 birr and the new price 11 birr. This indicated that the percentage change in the quantity demanded of 12.50% which is an increase from 80,000 to 90,000 is higher than the percentage n the price for tickets of 8.33% which is a decrease from 12 birr to 11 birr.
Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled, while maintenance and utilities are allocated per square feet of the classrooms. Based on the information below, what is the total amount of administrative cost to the Accounting Department (rounded to the nearest dollar) if administrative costs for the school were $58,000, maintenance fees were $12,800, and utilities were $6,400
Answer: $10,357
Explanation:
Details were missing so I used details from a similar question.
Administrative costs are allocated based on the number of students enrolled.
There are 280 students enrolled and of these, Accounting has 50 students.
Administrative costs are $58,000.
Administrative cost to the Accounting Department is;
= 50/280 * 58,000
= $10,357
A cover letter should _____ a résumé. replace complement contradict be sent separately from
Answer:
complement
Explanation:
A cover letter or a Job application letter and the resume are sent together to potential employers. The cover letter details the position being applied for and the applicant's specific skills and experiences for that position. The letter allows the applicant to elaborate on why they are the best candidate for the job.
A resume provides the technical aspects of the applicant, but the cover letter show shows their personality. The applicant demonstrates their passion, interest, and why hiring them is the best decision in the cover letter. Therefore, a cover letter complements the resume.
Baltimore Company uses aging to estimate uncollectibles. At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance that consists of: Dollar Value Age of Account Estimated Collectible $165,000 < 30 days old 98% 75,000 30 to 60 days old 90% 40,000 61 to 120 days old 79% 11,000 > 120 days old 18% The current unadjusted Allowance for Uncollectible Accounts balance is a debit balance of $2,000 and the Bad Debt Expense accounts has an unadjusted balance of zero. After the adjusting entry is made, what will be the dollar balances in the Allowance for Doubtful Accounts? Round to nearest whole dollar.
Answer:
Baltimore Company
After the adjustment is made, the dollar balances in the Allowance for Doubtful Accounts will be $26,220 ($28,220 - $2,000) credit.
Explanation:
a) Data and Calculations:
Dollar Value Age of Account Estimated Collectible
$165,000 < 30 days old 98% $161,700
75,000 30 to 60 days old 90% 67,500
40,000 61 to 120 days old 79% 31,600
11,000 > 120 days old 18% 1,980
$291,000 $262,780
Uncollectible expense = $28,220 ($291,000 - $262,780)
Adjustment to the Allowance for Uncollectible accounts:
Unadjusted balance (debit) ($2,000)
Uncollectible expense $28,220
Adjusted balance (credit) $26,220
If someone drank a six pack beer ($10) everday for ten years what would the opportunity cost be relative to putting that same money in a stock fund earning 7%
The operations of Bridgeton Corporation are divided into the Adams Division and the Carter Division. Projections for the next year are as follows: Adams Division Carter Division Total Sales $ 560,000 $ 336,000 $ 896,000 Variable costs 196,000 154,000 350,000 Contribution margin $ 364,000 $ 182,000 $ 546,000 Direct fixed costs 168,000 140,000 308,000 Segment margin $ 196,000 $ 42,000 $ 238,000 Allocated common costs 84,000 63,000 147,000 Operating income (loss) $ 112,000 $ (21,000 ) $ 91,000 Operating income for Bridgeton Corporation as a whole if the Carter Division were dropped would be:
Answer:
$49,000
Explanation:
Operating Income = Sales - Variable Cost - Direct Fixed cost - Common Unavoidable Cost
Operating Income = $560,000 - $196,000 - $168,000 - ($84,000+$63,000)
Operating Income = $560,000 - $196,000 - $168,000 - $147,000
Operating Income = $49,000
Therefore, the operating income for Bridgeton Corporation when Carter Division was dropped is $49,000.
Sophia's Restaurant served 5,000 meals last quarter. Sophia recorded the following costs with those meals. Variable costs: Ingredients used $ 14,000 Direct labor 10,500 Indirect materials and supplies 5,300 Utilities 1,700 Fixed costs: Managers' salaries 22,000 Rent 18,000 Depreciation on equipment (straight-line, time basis) 2,000 Other fixed costs 3,000 Required: Unit variable costs and total fixed costs are expected to remain unchanged next quarter. Calculate the unit cost and the total cost if 4,500 meals are
Answer:
The answer is below
Explanation:
Total Variable cost = Ingredients used + Direct labor + Indirect materials and supplies + Utilities = $14,000 +$10,500 + $5,300 + $1,700 = $31,500
Total Fixed cost = Managers' salaries + Rent + Depreciation on equipment (straight-line, time basis) + Other fixed costs = $22,000 + $18,000 + $2,000 + $3,000 = $45,000
Total cost = Total Variable cost + Total fixed cost + $31500 + $45000 = $76500
Unit costs = Total cost / Number of meals = $76500 / 4500 meals = $15.30 per meal
