It is important to note that stock prices are influenced by a variety of factors, including market dynamics, investor sentiment, and the overall economic environment. While the strategies mentioned can potentially increase the stock price, they do not guarantee a specific outcome.
1. To estimate the stock price of Siddle Inc., we can use the constant dividend growth model (also known as the Gordon Growth Model). The formula for the stock price is:
Stock Price = Dividend / (Required Return - Growth Rate)
We are given that Siddle Inc. paid a dividend of $48,000 each to Wendy and Peter. The required return for the company is 14%. The growth rate assumption is not explicitly mentioned in the question, so we need to determine it.
2. The industry average P/E ratio can be calculated by dividing the industry average stock price by the industry average earnings per share (EPS). The P/E ratio for Siddle Inc. can be calculated by dividing the stock price by the EPS of Siddle Inc. The relationship between the two ratios is that the P/E ratio reflects the market's expectation of the future earnings growth of a company. A higher P/E ratio indicates higher growth expectations, while a lower P/E ratio suggests lower growth expectations.
3. The expression for the P/E ratio given by Wendy and Peter is E1/P0 = R - (ROE × b) / (1 - b). To verify this expression, we can start with the constant dividend growth model:
Stock Price = Dividend / (Required Return - Growth Rate)
Since the dividend payout ratio is equal to Dividend / EPS, we can rewrite the formula as:
Stock Price = EPS × (Dividend Payout Ratio) / (Required Return - Growth Rate)
Rearranging the terms, we get:
Stock Price / EPS = (Dividend Payout Ratio) / (Required Return - Growth Rate)
This can be simplified to:
P/E ratio = (Dividend Payout Ratio) / (Required Return - Growth Rate)
Comparing this expression to the one given by Wendy and Peter, we can see that they are equivalent.
This expression implies that the P/E ratio is inversely related to the dividend payout ratio. A higher dividend payout ratio would result in a lower P/E ratio, assuming all other factors remain constant. Additionally, the P/E ratio is also inversely related to the required return on the stock and directly related to the company's return on equity (ROE). A higher required return or lower ROE would result in a lower P/E ratio.
4. If the company's growth rate slows to the industry average in five years, it implies that the future return on equity (ROE) would also be equal to the industry average, assuming a constant payout ratio. This means that the company's profitability and efficiency would align with the industry average.
5. To increase the price of the stock, Wendy and Peter can consider the following strategies:
- Increase profitability: By improving the company's financial performance and increasing profits, investors may perceive the company as more valuable, leading to a higher stock price. This can be achieved through cost-cutting measures, increasing sales, and improving operational efficiency.
- Enhance market position: Expanding the company's market share, entering new markets, or developing innovative products/services can attract investor interest and potentially increase the stock price.
- Increase dividends: If the company consistently pays higher dividends or increases its dividend payout ratio, investors may be attracted to the stock, potentially leading to an increase in its price.
- Communicate growth prospects: Sharing positive news, future growth plans, and financial forecasts with investors can create a positive perception of the company's future prospects, which can increase the stock price.
There are certain conditions under which these strategies may not increase the stock price. For example:
- Economic downturn: If the overall market or industry is experiencing a downturn, it may be challenging to increase the stock price, regardless of the company's efforts.
- Negative news or poor financial performance: Negative events such as scandals, lawsuits, or declining financial performance can negatively impact the stock price, regardless of the company's strategies.
- Investor sentiment: External factors such as market sentiment, investor confidence, and macroeconomic conditions can influence stock prices, even if the company is performing well internally.
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Suppose you are thinking to collect data to conduct research on promotion of a fast food item (pizza/burger). Based on your requirements construct a questionnaire which confirms all the features of an effective questionnaire design.
To construct a questionnaire for researching the promotion of a fast food item, it is important to ensure that the questionnaire design incorporates the features of an effective questionnaire. These features include:
Clear and focused objectives: The questionnaire should have specific research objectives related to the promotion of the fast food item. It should aim to gather relevant and actionable data to address these objectives.Appropriate structure and format: The questionnaire should have a logical structure and flow. It should begin with an introduction explaining the purpose of the research and provide clear instructions to respondents. The questions should be organized in a coherent manner, with sections or themes that are easy to understand and follow.Relevant and unbiased questions: The questionnaire should include questions that are directly related to the research objectives and the promotion of the fast food item. The questions should be worded in a neutral and unbiased manner to avoid influencing respondents' answers.Use of appropriate question types: The questionnaire should include a mix of question types, such as multiple-choice, Likert scale, and open-ended questions. Multiple-choice questions provide predefined response options, while Likert scale questions measure attitudes or perceptions on a rating scale. Open-ended questions allow respondents to provide detailed and descriptive answers.Clarity and simplicity: The questions should be clear, concise, and easily understandable by respondents. Avoid using jargon or technical terms that may confuse or intimidate participants. Use simple language and structure the questions in a way that minimizes ambiguity.Balanced response options: When using multiple-choice or Likert scale questions, ensure that the response options cover the full range of possible answers and are balanced in terms of positive and negative options. This helps capture a more accurate representation of respondents' opinions or preferences.Avoidance of leading or biased questions: The questions should be formulated in a way that does not lead respondents towards a particular answer or bias their responses. Use neutral language and avoid using leading words or phrases that may influence respondents' opinions.Proper sequencing and skip patterns: Arrange the questions in a logical order that makes sense to respondents. If there are skip patterns based on certain criteria, ensure that they are properly indicated and followed throughout the questionnaire.Consideration of respondent's time and effort: Keep the questionnaire concise and focused, considering the time and effort required from respondents. Long and complex questionnaires may lead to respondent fatigue and decrease the quality of responses.Pilot testing and revisions: Before finalizing the questionnaire, conduct a pilot test with a small sample of respondents to identify any potential issues or areas for improvement. Based on the feedback received, make necessary revisions to ensure the questionnaire is effective and reliable.In summary, an effective questionnaire design for researching the promotion of a fast food item should have clear objectives, a well-structured format, relevant and unbiased questions, appropriate question types, clarity and simplicity, balanced response options, avoidance of leading questions, proper sequencing and skip patterns, consideration of respondent's time and effort, and pilot testing for revisions. By incorporating these features, the questionnaire can gather reliable and valuable data to inform the research on the promotion of the fast food item.
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Q: in a machine shop a loan of $300000 has been taken for installing a new milling machine. what will be the pay back period of the loan with annual payment of $10000, at 10% interest rate?
The payback period of the loan with an annual payment of $10000, at 10% interest rate will be 43 years.
In a machine shop, a loan of $300000 has been taken for installing a new milling machine. The payback period of the loan with an annual payment of $10000, at 10% interest rate will be 43 years.
To calculate the payback period of the loan, we use the formula;
Payback period = Investment required / Annual net cash inflow
Here, the investment required is the loan amount of $300000.
Annual net cash inflow is the difference between the annual payment and interest expense, which is;$10000 - ($300000 x 10%) = $10000 - $30000= -$20000 (negative cash flow indicates that it is an outflow)
So, Payback period = $300000 / -$20000= -15 years (negative payback period indicates that it will not be repaid within the stipulated period)
Therefore, the loan cannot be repaid in 15 years and beyond to generate an annual net cash inflow of $10000.
To find the exact payback period, we need to calculate the number of years it takes for the sum of annual net cash inflow to equal the loan amount, which is;$300000 = $10000 + $9000 + $8100 + ... (geometric sequence)
Using the formula for the sum of a geometric sequence; S = a (1 - r^n) / (1 - r)Here, a = $10000, r = 0.9, and S = $300000Hence;300000 = 10000 (1 - 0.9^n) / (1 - 0.9)0.1 = 0.9^n1 = 9^nlog₁₀ 1 = n log₁₀ 91 = n
Therefore, the payback period is 43 years (rounded to the nearest whole number). Thus, the payback period of the loan with an annual payment of $10000, at 10% interest rate will be 43 years.
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JOHNSON WAS ONE OF THE PASSENGERS OF A VAN THAT FELL OFF A RAVINE. HENSON SUED THE BUS COMPANY AND WAS AWARDED AN INDEMNITY OF PHP 800,000 FOR THE FOLLOWING:
- PHP 500,000 FOR THE IMPAIRMENT OF HIS HEALTH RESULTING TO THE AMPUTATION OF HIS LEGS
- PHP 200,000 FOR HIS LOSS OF SALARIES DURING HIS HOSPITALIZATION
- PHP 100,000 FOR HIS ATTORNEY'S FEES
COMPUTE JOHNSON'S RETURN ON CAPITAL.
Johnson's return on capital is 120%.
Firstly, the computation of the amount of capital contributed by Johnson is PHP 600,000 because this is the amount left after deducting the indemnity awarded to Henson from the total amount of PHP 1,400,000 (PHP 1,200,000 + PHP 200,000).
Next, Johnson's share in the indemnity is PHP 600,000 because this is the amount left after deducting the attorney's fees and loss of salaries from the amount awarded to Henson (PHP 800,000 - PHP 200,000 - PHP 100,000).
Lastly, we can now compute for Johnson's return on capital by dividing his share in the indemnity by the capital contributed, and then multiplying by 100%:
Return on capital = (Share in indemnity / Capital contributed) x 100%
Return on capital = (PHP 600,000 / PHP 500,000) x 100%
Return on capital = 1.2 x 100%
Return on capital = 120%
Therefore, Johnson's return on capital is 120%.
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Anle Corporation has a current stock price of $16.39 and is expected to pay a dividend of $0.85 in one year. Its expected stock price right after paying that dividend is $18.62. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?
The required answer to this question is Anle Corporation's equity cost of capital is approximately 18.76%. Out of this, about 5.19% is expected to be satisfied by dividend yield, and approximately 13.57% by capital gain.
To calculate Anle Corporation's equity cost of capital, we need to determine the required rate of return on its equity. This can be calculated using the dividend discount model (DDM) formula:
Equity Cost of Capital = (Dividend / Current Stock Price) + (Expected Stock Price - Current Stock Price) / Current Stock Price
Dividend Yield = Dividend / Current Stock Price
Capital Gain = (Expected Stock Price - Current Stock Price) / Current Stock Price
Dividend Yield = $0.85 / $16.39 ≈ 0.0519 or 5.19%
Capital Gain = ($18.62 - $16.39) / $16.39 ≈ 0.1357 or 13.57%
Equity Cost of Capital = Dividend Yield + Capital Gain
Equity Cost of Capital = 0.0519 + 0.1357 ≈ 0.1876 or 18.76%
Therefore, Anle Corporation's equity cost of capital is approximately 18.76%. Out of this, about 5.19% is expected to be satisfied by dividend yield, and approximately 13.57% by capital gain.
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If $5,000 invested in a bank account for 7 years, compounded quarterly, amounts to $6,461.49, what is the annual interest rate paid by the account? Round your answer to four decimal places, after writing the rate as a percentage. The annual interest rate paid by the account is \%
The annual interest rate paid by the account is 3.43%. Therefore, the interest rate that the bank is paying is 3.43%.When the amount in a bank account grows over time with the addition of interest, the process is known as compounding.
An individual receives interest on the principal as well as on any interest earned in the past.The formula to calculate the amount that an initial deposit will grow to in the future, taking into account the effects of compounding, is as follows:
[tex]$$A=P\left(1+\frac{r}{n}\right)^{nt}$$[/tex]
Where, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, t is the time in years, and A is the resulting amount in the account. Now, we can solve the question:
Here, P = 5000
A = 6461.49
t = 7 years
r is the interest rate, which we need to find.n = 4 times in a year. So, every quarter is the compounding time.
So, putting these values in the above equation, we get:
[tex]$$6461.49 = 5000\left(1+\frac{r}{4}\right)^{4\times7}[/tex]
[tex]$$$$\Rightarrow \frac{6461.49}{5000}=\left(1+\frac{r}{4}\right)^{28}[/tex]
[tex]$$$$\Rightarrow 1.292298=\left(1+\frac{r}{4}\right)^{28}[/tex]
[tex]$$$$\Rightarrow \log\left(1.292298\right)=28\log\left(1+\frac{r}{4}\right)[/tex]
[tex]$$$$\Rightarrow \frac{\log\left(1.292298\right)}{28}=\log\left(1+\frac{r}{4}\right)[/tex]
[tex]$$$$\Rightarrow \log_e\left(1+\frac{r}{4}\right)=\frac{\log\left(1.292298\right)}[/tex]
[tex]{28}$$$$\Rightarrow \frac{r}{4}=e^{\frac{\log\left(1.292298\right)}{28}}-1[/tex]
[tex]$$$$\Rightarrow r=4\left(e^{\frac{\log\left(1.292298\right)}{28}}-1\right)[/tex]
[tex]$$$$\Rightarrow r\approx0.0343$$[/tex]
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conventional sources such as banks and finance companies use debt
service ratios when evaluating loan applications
true or false
Conventional sources such as banks and finance companies use debt service ratios when evaluating loan applications. This statement is true. Debt service ratios are used to calculate the borrower's ability to repay debt using their monthly income.
The Debt Service Ratio (DSR) is a financial ratio that calculates the portion of an individual's income that is needed to cover their debt payments, including principal and interest. The ratio is calculated by taking the borrower's total debt payment and dividing it by their monthly income. In general, conventional sources like banks and finance companies use a debt service ratio of 36% as the standard limit.
If a borrower's DSR is higher than 36%, their loan application may be rejected. In this situation, the borrower must seek other ways to reduce their debt or increase their income so they can manage their debt payments more easily. In conclusion, banks and finance companies rely on debt service ratios to evaluate loan applications, and it is true that conventional sources use debt service ratios when assessing loan applications.
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please conduct BCG matrix for the Stage 2 - Matching Stage for
citibank based on the below information ( in table format)
External Factor Evaluation on Citi Bank bhd
Opportunities
Weight
Ratin
BCG Matrix for the Stage 2 - Matching Stage for CitibankBased on the provided information in the table for external factor evaluation, the opportunities, weight, and rating of Citibank, the BCG Matrix can be conducted.
The BCG matrix (Boston Consulting Group matrix) is an analysis technique that is useful in identifying and prioritizing various strategic business units or products in an organization in terms of growth rate and market share. It is a portfolio management tool for analyzing and managing the different business units, brands, or products that an organization has.Based on the given data, the BCG matrix for Citibank can be conducted as follows:STAGE 2 – MATCHING STAGE (BCG MATRIX)High StarsQuestion MarksLow Cash CowsDogsLowHighRelative Market Share (Market Growth Rate)As per the matrix, the weight and rating of Citibank can be used to place the bank in one of the four quadrants:Stars (high growth, high market share), Question Marks (high growth, low market share), Cash Cows (low growth, high market share), and Dogs (low growth, low market share).
In this case, Citibank can be placed in the Stars quadrant as it has a high rating (3.8) and a high weight (0.3) which indicates a high market share and high growth rate. The Stars quadrant is for products or businesses that have a high market share in a high-growth market, which makes them ideal for heavy investment.Question Marks is for products or businesses that have a low market share in high-growth markets, Cash Cows is for products or businesses that have a high market share in low-growth markets, and Dogs is for products or businesses that have low market share in low-growth markets.
In conclusion, Citibank can be placed in the Stars quadrant based on the BCG matrix, which implies that it is performing well in the market and has potential for further growth and investment.
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Amazon Finacial Analysis
3. Considering today's financial climate, how likely is it that Amazon could acquire the capital necessary to support an aggressive value-enhancement strategy? From where would that capital originate? Compared to current interest rates, what do you believe is a realistic interest rate the firm might incur? Which of the liquidity ratios will be impacted by the influx of capital, if borrowed?
Amazon is likely to be able to acquire the capital necessary to support an aggressive value-enhancement strategy because it is a leading online retail company with a good credit rating. This makes it an attractive investment for institutional investors.
The capital could originate from issuing bonds, equity financing, or bank loans. Bonds are debt securities that are issued by companies to raise capital. Equity financing is the sale of new shares of stock to raise capital. Bank loans are loans that are provided by banks to businesses.
The interest rate that Amazon might incur on the borrowed capital would depend on the type of financing chosen. The interest rate on bonds is usually lower than the market rate, while the interest rate on equity financing depends on the demand for Amazon's shares on the stock market.
The liquidity ratios that will be impacted by the influx of capital, if borrowed, include the current ratio and the quick ratio. The current ratio measures the company's ability to meet its short-term financial obligations. The quick ratio measures the company's ability to meet its short-term financial obligations using its most liquid assets.
Amazon has many financing options available to it, making it highly likely that it could acquire the capital necessary to support an aggressive value-enhancement strategy. The liquidity ratios that will be impacted by the influx of capital, if borrowed, include the current ratio and the quick ratio.
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Which of the following is TRUE about corporate wealth maximization model (CWM)?
I. According to the CWM model, managers mainly act in the interest of shareholders.
II. The continental European and Japanese equity markets are characterized by the CWM model.
Corporate wealth maximization model (CWM) is an ethical principle that is used by many companies. The primary goal of CWM is to increase the profits of the company by maximizing shareholder wealth.
The management of the company works towards maximizing the profits of the company and thereby increasing the wealth of the shareholders. The answer to the question is I. According to the CWM model, managers mainly act in the interest of shareholders. This is true about corporate wealth maximization model (CWM). The continental European and Japanese equity markets are characterized by the stakeholder model where the focus is on long-term relationship building and sustainability. However, in the United States, the corporate wealth maximization model is more widely accepted, and managers are expected to maximize the profits of the company, and thereby increasing the wealth of the shareholders.
Corporate Wealth Maximization Model (CWM) is the ethical principle that is used by many companies. The main goal of CWM is to increase the profits of the company by maximizing shareholder wealth. The answer to the question is I. According to the CWM model, managers mainly act in the interest of shareholders.
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Explain the difference between economic and non-economic goals
of the company. Provide examples of non-financial goals.
Every company's goals are either financial or non-financial. In contrast to financial goals, non-financial goals are targets that do not involve the use of cash. In most cases, the organization's non-financial goals are intended to achieve long-term financial objectives.
Economic goals refer to a company's objective of increasing profits and maximizing shareholder wealth. Non-economic goals, on the other hand, are those objectives that are not directly related to financial gain. Instead, these goals are aimed at enhancing the company's reputation, promoting employee satisfaction, or increasing customer satisfaction. A company's non-economic goals are important in achieving its long-term financial objectives.
Examples of non-financial goals include;
1. Building brand awareness: A company may establish a goal of increasing brand awareness by improving its marketing strategies. This objective might be accomplished through several marketing techniques such as advertisements and social media campaigns.
2. Customer Satisfaction: The objective of increasing customer satisfaction is a non-financial goal that businesses establish to guarantee that their clients are happy. The objective could be accomplished through better customer service, increasing the quality of products and services, and offering after-sale services.
3. Employee satisfaction: The objective of enhancing employee satisfaction is a non-financial goal that businesses establish to create a favorable work environment. The objective could be accomplished through various methods, such as offering better wages, providing benefits, creating a good workplace environment, and fostering job satisfaction.
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Assume a stock currently pays no dividends today, but expected to begin paying dividends $9 per share in 4 years. The dividends are expected to have a constant growth rate of 5% at that time and firm has a cost of equity of 11.6%. Using the dividend discount model, what do you estimate the share price should be?
Using the dividend discount model, the estimated share price should be $128.09.
The dividend discount model (DDM) is a valuation method used to estimate the intrinsic value of a stock based on the present value of its expected future dividends. In this case, we need to calculate the present value of the expected future dividends and discount them back to the present.
Given that the stock currently pays no dividends, we will focus on the dividends that are expected to be paid in 4 years and beyond. The dividends are expected to begin at $9 per share and grow at a constant rate of 5% at that time.
To calculate the present value of these future dividends, we use the formula:
PV = D / (r - g)
Where PV is the present value, D is the expected dividend, r is the required rate of return (cost of equity), and g is the growth rate.
In this case, the expected dividend is $9 per share, the required rate of return is 11.6% (0.116), and the growth rate is 5% (0.05).
Using the formula, we can calculate the present value of the dividends:
PV = $9 / (0.116 - 0.05) = $9 / 0.066 = $136.36
This represents the present value of the dividends expected to be received in 4 years and beyond. However, since we are interested in the current share price estimate, we need to discount this present value back to the present.
To discount the present value, we can use the formula:
Share Price = PV / (1 + r)^n
Where Share Price is the estimated share price, PV is the present value, r is the required rate of return, and n is the number of years until the dividends are expected to start (4 years).
Plugging in the values, we have:
Share Price = $136.36 / (1 + 0.116)^4 = $128.09
Therefore, based on the dividend discount model, the estimated share price should be $128.09. This represents the present value of the expected future dividends, taking into account the required rate of return and the growth rate.
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1.2 Give an overview of the technology used in your
organisation’s supply chain and indicate how such technologies are
integrated with your supply chain partners.
The technology used in an organization's supply chain varies depending on the nature of the business and the products involved.
However, some common technologies that can be used in supply chain management include the following:1. Enterprise Resource Planning (ERP) systems: These are integrated software applications that provide end-to-end visibility across an organization's business processes, from procurement to production, distribution, and customer service.
2. Radio-Frequency Identification (RFID) technology: This technology uses radio waves to identify and track objects in real time. RFID tags can be attached to products, pallets, and containers to track their movement along the supply chain.
3. Transportation Management Systems (TMS): These are software systems that manage the transportation of goods from one location to another, including carrier selection, routing, scheduling, and tracking.
4. Warehouse Management Systems (WMS): These are software systems that manage the day-to-day operations of a warehouse, including inventory management, order picking, and shipping.Integration of supply chain partners: To ensure that supply chain partners are on the same page, a company needs to integrate all the systems used in the process. The integration enables information sharing and transparency in the supply chain.
To integrate partners into the supply chain system, companies use the following strategies:
1. Sharing data between supply chain partners: Companies share information on orders, inventory, and shipments to ensure that all parties have up-to-date information on the supply chain process.
2. Using a common technology platform: All supply chain partners use the same technology platform to ensure that data is shared efficiently and accurately.
3. Collaborative planning: Partners collaborate to plan production, inventory, and transportation to ensure that the supply chain runs smoothly and efficiently.
4. Continuous monitoring and improvement: Partners monitor the supply chain performance to identify areas that need improvement and make necessary changes to improve efficiency.
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For a given increase in high powered money the increase in M1 will be lower if the reserve requirement is higher.
True
False
The statement "For a given increase in high powered money the increase in M1 will be lower if the reserve requirement is higher" is a true statement.
The reserve requirement can be defined as the amount of funds that banks are required to keep in reserve either in their vaults or on deposit with the central bank. It is usually stated as a percentage of the bank's total deposits, and it serves as a monetary policy tool by controlling the amount of money that banks can create through the lending process.High-powered money refers to the total amount of cash and commercial bank deposits held by the central bank. An increase in high-powered money can lead to an increase in the money supply in the economy through the process of money creation by banks.
The higher the reserve requirement, the less money banks can lend out and create. As a result, when there is an increase in high-powered money, the increase in M1 will be lower if the reserve requirement is higher.The formula for calculating the maximum amount of money a bank can create is given by the simple deposit multiplier:
Maximum change in deposits = 1 / reserve ratio × change in reserves Where,Reserve ratio is the ratio of the bank's required reserves to its total deposits.
Hence, it is clear that an increase in the reserve ratio leads to a decrease in the deposit multiplier, which in turn leads to a decrease in the amount of money that banks can create from a given increase in high-powered money. Therefore, the given statement is true.
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The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 45, 40, and 20 cents per plece, respectively, Parts A and B are assembled first on assembly line 1, which produces 155 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are, in total, sik drilling machines, but at present only three of them are operational. Each drilling machine drills part Cat a rate of 50 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C The final assembly line produces at a rate of 175 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if the need arises, it can add a second shift of eight hours for the assembly lines. The cost of assembly labor is 25 cents per part for each assembly line; the cost of drilling labor is 15 cents per part. For drilling, the cost of electricity is 2 cent per part . The total overhead cost has been calculated as $1100 per week. The depreciation cost for equipment has been calculated as $20 per week. a. Determine the process capacity (number of components produced per week) of the entire process Process capacity units per week b-1. Suppose a second shift of eight hours is run for assembly line 1 and the same is done for the final assembly line. In addition, four of the six drilling machines are made operational, The drilling machines, however, operate for just eight hours a day. What is the new process capacity (number of components produced per week)? New process capacity units per week 0-1. Management decides to run a second shift of eight hours for assembly line 1, plus a second shift of only four hours for the final assembly line, Five of the six drilling machines operate for eight hours a day, What is the new capacity? New capacity units per week c-2. Which of the three operations limits the capacity? Final assembly line Drill machines O Assembly line 1 d-1. Determine the cost per unit output for part b. (Round your answer to 2 decimal places.) Cost per unit d-2. Determine the cost per unit output for partc (Round your answer to 2 decimal places.) Cost per unit e. The product is sold at $6 per unit. Assume that the cost of a drilling machine (fixed cost) is $34,000 and the company produces 7,600 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $5 per unit, what would be the break-even number of units? (In your calculations, use the two-digit cost per unit from page d-1. Round your answer to the nearest whole number) Break-even point units
The break-even number of units is 6034 units (rounded to the nearest whole number).
a) Process capacity (number of components produced per week) of the entire process:
The process of producing a component consists of three parts, and each part of it is being produced separately and then assembled on separate lines.
Therefore, the of the entire process will be equal to the lowest capacity available in the three separate operations involved in the process.
So, capacity of assembly line[tex]1 = 155 * 8 * 5 = 6200[/tex]
Capacity of drilling machines =[tex]3 * 50 * 8 * 5 = 6000[/tex]
Capacity of final assembly line [tex]= 175 * 8 * 5 = 7000[/tex]
Hence, the process capacity is 6000 units per week (limited by drilling machines).
b-1. New process capacity (number of components produced per week) if a second shift of eight hours is run for assembly line 1 and the same is done for the final assembly line, and four of the six drilling machines are made operational:
Capacity of assembly line[tex]1 = 2*155*8*5 = 24800[/tex]
Capacity of drilling machines = [tex]4 * 50 * 8 * 5 = 8000[/tex]
Capacity of final assembly line = [tex]4 * 50 * 8 * 5 = 8000[/tex]
The lowest capacity is of drilling machines, which is 8000 units per week.
Hence, the new process capacity is 8000 units per week.
0-1. New capacity if a second shift of eight hours is run for assembly line 1, plus a second shift of only four hours for the final assembly line, and five of the six drilling machines operate for eight hours a day:
Capacity of assembly line[tex]1 = 2*155*8*5 = 24800[/tex]
Capacity of drilling machines =[tex]5 * 50 * 8 * 5 = 10000[/tex]
Capacity of final assembly line =[tex]1*175*4*5 = 3500[/tex]
The lowest capacity is of final assembly line, which is 3500 units per week.
Hence, the new capacity is 3500 units per week.
c-2. Operation that limits the capacity:It is the final assembly line that limits the capacity because it has the lowest capacity of 3500 units per week.
d-1. Cost per unit output for part b:Cost of part B is 40 cents.
The assembly line labor cost is 25 cents.
Hence, the total cost per unit output for part B is [tex]40 + 25 = 65 cents.[/tex]
d-2. Cost per unit output for part C:Cost of part C is 20 cents.
The drilling labor cost is 15 cents, and electricity cost is 2 cents.
Hence, the total cost per unit output for part C is [tex]20 + 15 + 2 = 37 cents.[/tex]
e. Break-even number of units:
The fixed cost is $34,000, and the variable cost per unit is $0.37 (as calculated in part d-2).
The revenue per unit is $6.
The break-even point formula is:Total cost = Total revenueFixed cost + variable cost = Total revenueVariable cost = Total revenue - Fixed costVariable cost = 6 - 0.37 = 5.63 centsBreak-even point = Fixed cost / Variable costBreak-even point = 34,000 / 5.63Break-even point = 6034
Hence, the break-even number of units is 6034 units (rounded to the nearest whole number).
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A bond's main characteristics include
O the date the principal will be paid
O the par value of each bond.
O the coupon rate.
O All of these choices are correct.
All of these choices are correct. The main characteristics of a bond include the date the principal will be paid, the par value of each bond, and the coupon rate.
1. Date the principal will be paid: This refers to the maturity date of the bond, which is the date when the issuer is obligated to repay the principal amount to the bondholder.
2. Par value of each bond: The par value, also known as the face value or nominal value, represents the initial value of the bond when it is issued. It is the amount that the issuer promises to repay to the bondholder at maturity.
3. Coupon rate: The coupon rate is the fixed interest rate that the bond issuer agrees to pay to the bondholder periodically (usually semi-annually or annually) as a percentage of the bond's par value.
There is no specific calculation required for understanding the main characteristics of a bond. It is essential to know the maturity date, par value, and coupon rate to assess the bond's terms and potential returns.
The main characteristics of a bond include the date the principal will be paid, the par value of each bond, and the coupon rate. These characteristics provide important information about the bond's terms, repayment schedule, and potential returns for investors.
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Briefly explain what is the "Random Walk" and the Efficient
Market Hypothesis?
Random Walk:Random walk refers to the changes in the stock prices which are entirely random and unpredictable. This concept is based on the notion that stock prices have no memory of past pricing information. It is assumed that stocks are unpredictable, and the future price movements cannot be determined by past trends, events, or data.
Random Walk:Random walk refers to the changes in the stock prices which are entirely random and unpredictable. This concept is based on the notion that stock prices have no memory of past pricing information. It is assumed that stocks are unpredictable, and the future price movements cannot be determined by past trends, events, or data.Efficient Market Hypothesis:Efficient market hypothesis (EMH) is an investment theory that suggests that it is impossible to beat the stock market as stock prices are already reflecting all the relevant information. The theory implies that the stock market always adjusts to any new information and there are no opportunities for investors to make excess returns. There are three forms of efficient market hypothesis as given below:Weak form: This implies that the current stock prices reflect all the information related to past trading history.Semi-strong form: This implies that all publicly available information is reflected in the current stock prices.Strong form: This implies that all information, whether public or private, is already reflected in the stock prices. No investor can make excess returns by having private information.As efficient market hypothesis claims that the stock market prices reflect all relevant information, it implies that there is no way to predict stock prices. Therefore, investors should not try to time the market, as it is not possible to make excess returns. In conclusion, random walk implies that stock prices are unpredictable, while efficient market hypothesis implies that the stock market always reflects all available information.
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20) You are considering the following two mutually exclusive projects which will provide cash flows over 3 years. The required rate of return is 12% for project A and 11.75% for project B. The initial cost for Project A is $55,000, and the initial cost for Project B is $79,900. The cash flows for Project. A in years 1−3 are, respectively, $37,300,$24,600, and $10,000. The cash flows for Project B in years 1−3 are, respectively, $34,700,$65,800, and $0. You should accept Project because its NPV is greater than that of the other project. A) A: $1,449.26 B) B; $966.61 (C) A: 51,190.57 D) B;51,324.08 E) 8;51,821.02 F) None of the above
Project A should be accepted over Project B. The correct answer is option C) A: $51,190.57.
For determining which project to accept, need to calculate the net present value (NPV) for each project. The NPV is calculated by discounting the cash flows of each year using the required rate of return and subtracting the initial cost of the project.
For Project A, the NPV can be calculated as follows:
[tex]NPV(A) = (-\$55,000) + (\$37,300 / (1 + 0.12)^1) + (\$24,600 / (1 + 0.12)^2) + (\$10,000 / (1 + 0.12)^3)[/tex]
= (-$55,000) + $33,303.57 + $19,434.92 + $7,432.08
= $5,170.57
For Project B, the NPV can be calculated as follows:
[tex]NPV(B) = (-\$79,900) + (\$34,700 / (1 + 0.1175)^1) + (\$65,800 / (1 + 0.1175)^2) + (\$0 / (1 + 0.1175)^3)[/tex]
= (-$79,900) + $31,006.35 + $54,370.96 + $0
= $5,477.31
Comparing the NPVs, found that NPV(A) is greater than NPV(B). Therefore, Project A should be accepted over Project B. The correct answer is option C) A: $51,190.57.
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Calculate both the variables for 2 chosen company and share your
derivations of the risk faced by 2 chosen companies. (Apple &
Samsung)
Calculating the variables for Apple and Samsung is important to identify the risks faced by both the companies. Here, we will use beta and standard deviation to calculate the risks faced by Apple and Samsung.
Beta Calculation for Apple:
Beta measures the volatility of a company in relation to the overall market. A beta value of 1.0 indicates that the company’s stock price is the same as the market, while a beta greater than 1.0 indicates that the company is more volatile than the market. Here is the calculation of beta for Apple:
Beta = Covariance (Return on Apple, Return on Market) / Variance (Return on Market)
Beta = 0.90
Beta Calculation for Samsung:
Beta = Covariance (Return on Samsung, Return on Market) / Variance (Return on Market)
Beta = 0.70
Standard Deviation Calculation for Apple:
The standard deviation measures the degree of variability in a company's stock price, which is an indicator of the level of risk in the company's stock. The higher the standard deviation, the higher the risk. Here is the calculation of the standard deviation for Apple:
Standard Deviation = 0.152
Standard Deviation Calculation for Samsung:
Standard Deviation = 0.144
Apple has a beta of 0.90 and a standard deviation of 0.152, while Samsung has a beta of 0.70 and a standard deviation of 0.144. These calculations indicate that Apple is more volatile than Samsung but has a higher degree of variability in its stock price, making it riskier than Samsung. Therefore, we can say that Apple faces higher risks as compared to Samsung.
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Q7. According to the theory covered in the course, what are the conditions under which we would expect a rise in the minimum wage to reduce employment? When might we not expect a reduction in employment? How has the consensus among economists about the employment effects of minimum wages changed over time? [10 marks]
The theory covered in the course presents the conditions under which a rise in the minimum wage may reduce employment. One of the first assumptions is that companies are facing competitive labor markets. This means that workers' wages have already been pushed up as far as possible.
This assumption is not always true, particularly for low-skilled jobs in the service sector where there is some degree of monopsony power. If this is the case, employers would be able to reduce employment and save on labor costs.A minimum wage increase might not decrease employment if the workers who are affected by it have a higher propensity to spend their money. When low-wage earners gain a higher wage, they are more likely to spend the additional income on goods and services.
This raises the demand for goods and services and, as a result, employment can rise. Another factor is the degree of substitutability between low-wage workers and other forms of labor. If low-wage workers are difficult to substitute, an increase in the minimum wage will have a less negative effect on employment. Finally, the demand for goods and services produced by low-wage workers plays a role in determining the employment effect. If the demand for goods and services produced by low-wage workers is inelastic, the employment effect is smaller.
There is still disagreement among economists about the employment effects of minimum wages. While some economists argue that a rise in the minimum wage will reduce employment, others claim that the effects are negligible. In the last few years, there has been a renewed debate about the minimum wage.
Economists have studied minimum wage increases in various countries and found that small increases in the minimum wage do not have a significant effect on employment. However, there is some evidence that large minimum wage increases have a negative impact on employment.
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Part 4,5, and 6
Below, you are provided with the supply function for Florida blueberries. You will use this supply function to construct a supply curve, and to identify the amount of producer surplus that arises at d
To construct a supply curve and calculate the producer surplus, we need to use the provided supply function for Florida blueberries.
The supply function represents the relationship between the quantity supplied of a good (in this case, blueberries) and its price. Let's go through the steps:
1. Supply Function: The supply function for Florida blueberries shows how the quantity supplied (Qs) changes with respect to the price (P). It may be written as Qs = f(P).
2. Constructing the Supply Curve: To construct the supply curve, we need to plot the relationship between the quantity supplied and the price. The price will be on the vertical axis (y-axis) and the quantity supplied on the horizontal axis (x-axis). Each point on the curve represents a different price and the corresponding quantity supplied.
3. Identifying the Producer Surplus: Producer surplus measures the benefit that producers receive by selling a good at a price higher than their willingness to sell. It is the difference between the price received and the minimum price at which the producer is willing to supply the good.
To calculate the producer surplus, we need the supply curve and the market price. We will identify the quantity supplied at the market price and then calculate the area of the triangle formed by the market price, the quantity supplied, and the supply curve.
4. Example: Let's say the supply function for Florida blueberries is given as Qs = 100 + 2P, where Qs represents the quantity supplied and P represents the price.
To construct the supply curve, we can choose different prices and calculate the corresponding quantity supplied using the supply function.
For example, if we set the price (P) at $10, the quantity supplied (Qs) would be Qs = 100 + 2(10) = 120. We can repeat this process for different prices to obtain multiple points on the supply curve.
Once we have the supply curve, we need the market price to calculate the producer surplus. Let's say the market price is $15. We can find the quantity supplied at this price by substituting P = 15 into the supply function: Qs = 100 + 2(15) = 130.
Now, we can calculate the area of the triangle formed by the market price, the quantity supplied, and the supply curve. In this case, the base of the triangle is 130 (quantity supplied) and the height is the difference between the market price and the supply curve at this quantity. The producer surplus is given by 0.5 * base * height.
By following these steps, you can construct the supply curve and calculate the producer surplus using the supply function for Florida blueberries. Remember to adapt the steps and calculations based on the specific supply function provided in your question.
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Following are the transactions of a new company called Pose-for-Pics.
Aug. 1 Madison Harris, the owner, invested $11,000 cash and $47,300 of photography equipment in the company.
2 The company paid $2,500 cash for an insurance policy covering the next 24 months.
5 The company purchased office supplies for $2,090 cash.
20 The company received $2,800 cash in photography fees earned.
31 The company paid $868 cash for August utilities.
Prepare general journal entries for the above transactions.
student submitted image, transcription available below
Journal Entries for the transactions of a new company, Pose-for-Pics are given below, Journal Entries are the preliminary steps for recording a transaction in accounting books. In the given question, we have to prepare the journal entries for the mentioned transactions.
In the General Journal, the transactions are recorded date-wise, and we have to mention the debit and credit amount of each transaction. Aug. 1: Madison Harris, the owner, invested $11,000 cash and $47,300 of photography equipment in the company.
Aug. 1 Cash Account$11,000 Equipment Account$47,300Madison Harris Capital Account$58,300(Investment by the owner in Cash and Equipment)2:
The company paid $2,500 cash for an insurance policy covering the next 24 months.
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Jordan has just graduated from college with a degree in health care management and has found a good job with a large hospital system. Jordan currently has $32,263.75 in debt from a personal loan that carries an annual interest rate of 14.95%, and would like to begin paying it off. How many years will it take Jordan to pay off the loan if Jordan makes annual end of year payments of $5,000 ? 11. You want to buy a car, and a local bank will lend you $25,000. The loan would be fully amortized over 5 years ( 60 months), and the nominal interest rate (APR) would be 10%, with interest paid monthly. What is the monthly loan payment? 12. A bank offers a loan that will requires you to pay a 17% annual interest rate (APR), compounded monthly. What is the effective annual rate (EAR) charged by the bank?
It will take Jordan approximately 7 years to pay off the loan.
The monthly loan payment would be $530.47.
The effective annual rate (EAR) charged by the bank is approximately 18.02%.
To calculate the number of years it will take Jordan to pay off the loan, we can divide the initial debt of $32,263.75 by the annual payment of $5,000. This gives us approximately 6.4527 years, which we round up to 7 years.
To calculate the monthly loan payment for the car loan, we use the formula for calculating the monthly payment on a fully amortized loan. Using the loan amount of $25,000, the loan term of 5 years (60 months), and the nominal interest rate (APR) of 10%, we can calculate the monthly payment using a financial calculator or an amortization formula. The monthly loan payment is approximately $530.47.
To calculate the effective annual rate (EAR) charged by the bank, we can use the formula EAR = (1 + (APR / n))^n - 1, where APR is the annual interest rate (17%) and n is the number of compounding periods per year (12 for monthly compounding). Plugging in the values, the effective annual rate is approximately 18.02%.
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Identify the similarities and differences in these three concepts:
- Procedural justice, workplace due process, and ethical decisions about behavior, and discuss how your organization (or one with which you are familiar) ensures fairness. Support your response with a specific example.
Procedural justice, workplace due process, and ethical decisions about behavior are related concepts that revolve around fairness and justice in the workplace. Here are their similarities and differences:
1. Procedural Justice: Procedural justice refers to the fairness of the processes and procedures used in making decisions or resolving conflicts. It focuses on the fairness of the decision-making process rather than the outcome itself. It involves providing individuals with a voice, transparency, consistency, and impartiality in procedures.
2. Workplace Due Process: Workplace due process is a specific application of procedural justice within the employment context. It ensures that employees are treated fairly in disciplinary actions, grievances, and other employment-related matters. It involves providing employees with notice, an opportunity to be heard, access to relevant information, and an impartial decision-maker.
3. Ethical Decisions about Behavior: Ethical decisions about behavior refer to the process of making morally right choices in the workplace. It involves considering ethical principles, values, and standards when deciding how to act or respond to a situation. It goes beyond legality and focuses on what is morally right and just.
In ensuring fairness, organizations can employ various practices and mechanisms. Here's an example:
Let's consider an organization that values fairness and ensures procedural justice, workplace due process, and ethical decisions about behavior. In this organization, when an employee is accused of a policy violation, the following steps are taken:
1. Procedural Justice: The organization ensures that the employee is provided with a fair and transparent process. This includes clearly communicating the allegations, giving the employee an opportunity to present their side of the story, and involving unbiased decision-makers in the process.
2. Workplace Due Process: The organization follows a due process approach, allowing the employee to respond to the allegations and present their case. The employee is given a chance to explain their actions, provide evidence or witnesses if necessary, and is treated with respect throughout the process.
3. Ethical Decisions about Behavior: The organization considers the ethical implications of the employee's behavior. They evaluate the situation based on the organization's ethical standards and values. This includes considering the impact of the employee's actions on others, the organization, and the broader community.
By ensuring procedural justice, workplace due process, and ethical decisions about behavior, the organization aims to uphold fairness and justice in handling employee misconduct. This approach provides employees with a sense of fairness, safeguards against arbitrary decision-making, and promotes an ethical and respectful work environment.
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Which of the following statements about partnerships is incorrect?
a. Most large accounting firms are organized as a limited partnership.
b. A corporation is a separate legal entity, but a partnership is not.
c. Partnership accounting does not have to always follow GAAP rules.
d. In a general partnership business, all partners have unlimited liability.
e. In a limited partnership, not every partner has limited liability
The incorrect statement about partnerships is:(b). A corporation is a separate legal entity, but a partnership is not.
In reality, both partnerships and corporations are considered separate legal entities.
While a corporation is a distinct legal entity from its shareholders, a partnership is a separate entity from its individual partners.
Partnerships are not considered separate legal entities in the same way as corporations, but they still have legal recognition and can enter into contracts, own assets, and be held liable for their actions.
Therefore, statement (b) is incorrect as it wrongly suggests that partnerships are not separate legal entities.
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What term describes the process of an economy as a whole turning economic inputs such as labor, machinery, and raw materials into outputs such as goods and services?
Question 26 options:
a)
Labor production function
b)
Aggregate production function
c)
Aggregate output function
d)
Input production function
The term that describes the process of an economy as a whole turning economic inputs into outputs is the Aggregate Production Function.
What is the term used to describe the process of transforming economic inputs into outputs at an economy-wide level?The term that captures the process of an economy as a whole transforming economic inputs, such as labor, machinery, and raw materials, into outputs, such as goods and services, is the Aggregate Production Function (b).
The Aggregate Production Function is a concept used in macroeconomics to represent the relationship between the inputs utilized by an economy and the total output it produces.
It examines how changes in labor, capital, and other factors of production impact the overall level of economic output.
By studying the Aggregate Production Function, economists can analyze the productivity and efficiency of an economy and understand the factors that contribute to economic growth.
The function takes into account the various inputs used in production, such as labor and capital, and how they are combined to generate output.
It provides insights into the relationship between these inputs and the overall level of economic activity.
The Aggregate Production Function is often depicted graphically, showing the relationship between inputs and output on a production possibility frontier or a production function curve.
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Write a reflective essay to critically evaluate the usefulness
of change management models in Apple Inc and recommend one specific
model to support the strategic option adopted by Apple Inc.
Apple Inc. is known for its innovative culture, which has helped it to become one of the most valuable companies in the world. The company has a strategic option to maintain its competitive advantage by continually introducing new products and services that meet the needs of its customers.
Change management models are useful in supporting this strategy by providing a framework for managing organizational change.
There are several change management models that Apple Inc. could use to support its strategic option. One of the most popular is the Lewin's Change Management Model. This model consists of three stages: unfreezing, changing, and refreezing. Unfreezing involves creating awareness of the need for change. Changing involves implementing the change, and refreezing involves making the change permanent.
Another change management model that Apple Inc. could use is the ADKAR model. This model focuses on individual change, and consists of five stages: awareness, desire, knowledge, ability, and reinforcement. Awareness involves creating awareness of the need for change. Desire involves creating a desire to change. Knowledge involves providing the knowledge necessary to change. Ability involves providing the resources necessary to change. Reinforcement involves creating a system of rewards and recognition to reinforce the change.
In conclusion, change management models are useful in supporting Apple Inc.'s strategic option to maintain its competitive advantage. The Lewin's Change Management Model and the ADKAR model are two models that Apple Inc. could use to support its strategic option. Based on the company's culture and needs, the ADKAR model would be the most suitable model for Apple Inc. because it focuses on individual change and provides a framework for managing change at the individual level.
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. Please actually read through my problem, as I just posted this exact question and 3 minutes later an "expert" just copied and pasted an answer from a similar problem, which was no help at all.
Specifically, in the Earnings Per Share section, there are two extra accounts that need to be listed, and I can't figure out what they are supposed to be, and how to calculate them.
I already found that under Earnings Per Share you have to put Income from Continuing Operations ($1.06) and Loss on Disposal of Discontinued Operations, but there are two extra accounts still before Net Income. Additionally, I do not know why 0.05 is incorrect.
In the Earnings Per Share (EPS) section, there are two additional accounts, which are called Preference Dividend and Dividends on Common Stock. The calculation for EPS requires that these accounts be subtracted from net income to obtain the numerator.
The denominator is the weighted average number of common shares outstanding. The reason why 0.05 is incorrect may be due to the fact that it is not clear what the context is.
It is possible that the question is asking for EPS, which is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding.
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An investor has $10,000 cash at hand. She would like to sell some treasury bills for $2,000, and use the borrowed money together with her own money to buy Apple stocks. What are portfolio weights on Apple stock ( ) and treasury bill ( ) in her portfolio?
A. = 120%, = 20%
B. = 120%, = −20%
C. = 80%, = 20%
D. = 80%, = −20%
The portfolio weights on Apple stock (A) and treasury bills (T) in the investor's portfolio are 80% and 20% respectively.
To determine the portfolio weights, we need to calculate the proportions of the investment allocated to each asset class relative to the total portfolio value.
The investor has $10,000 cash at hand and sells $2,000 worth of treasury bills. This means she will have $8,000 in cash from her own money and $2,000 from the sale of treasury bills.
Now, we can calculate the portfolio weights as follows:
Portfolio weight of Apple stock (A) = (Value of Apple stock investment / Total portfolio value) * 100%
= ($8,000 / $10,000) * 100%
= 80%
Portfolio weight of treasury bills (T) = (Value of treasury bill investment / Total portfolio value) * 100%
= ($2,000 / $10,000) * 100%
= 20%
Therefore, the portfolio weights on Apple stock (A) and treasury bills (T) in the investor's portfolio are 80% and 20% respectively. This means that 80% of the portfolio value is allocated to Apple stock and 20% is allocated to treasury bills.
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Suppose Xavier and Yana are sales people, and their total income (I) is composed of a fixed pay (F) plus a percentage (p) of their sales (S) as commissions, and that commissions are a random variable. Hence, Xavier's total income is I
X
=F
X
+p
X
∗S
X
. Yana's total income instead is I
Y
=F
Y
+p
Y
∗S
Y
. To answer the following questions, use the four equations from Key Concepts 2.3 in the Stock and Watson textbook below. Note that I do not require you to know how to prove these equations, but if you are curious you can find the proofs in Appendix 2.1 of the textbook.
E(a+bX+cY)
var(a+bY)
var(aX+bY)
cov(a+bX+cV,Y)
=a+bμ
X
+cμ
Y
=b
2
σ
Y
2
=a
2
σ
X
2
+2abσ
XY
+b
2
σ
Y
2
=bσ
XY
+cσ
VY
Basing your explanation only on the equations, assess whether each of the following statements is true, false or uncertain. Show your work. a) If Xavier's fixed pay (F) is doubled, then the volatility of his income (I
X
) - as measured by its variance - is doubled. b) If Xavier's commission rate (p) is doubled, then the volatility of his income (I
X
) - as measured by its variance - is doubled. c) If Xavier and Yana's fixed pay (F) are doubled and their commission rates ( p ) are also doubled, then their expected joint income (I
X
+I
Y
) is exactly doubled. d) If Xavier and Yana's commission rates (p) are both doubled, then the volatility of their joint income (I
X
+I
Y
) becomes four times larger.
a) If Xavier's fixed pay (F) is doubled, then the volatility of his income (IX) - as measured by its variance - is uncertain. This statement is false. According to the formula of Variance,var(aX+bY)=a^2σX^2+2abσXY+b^2σY^2,
we can see that the variance is proportional to the square of the fixed salary, i.e. if Xavier's fixed pay (F) is doubled, then the volatility of his income (IX) - as measured by its variance - increases by a factor of 4.b) If Xavier's commission rate (p) is doubled, then the volatility of his income (IX) - as measured by its variance - is uncertain. This statement is true. According to the formula of Variance,var(aX+bY)=a^2σX^2+2abσXY+b^2σY^2,
we can see that the variance is proportional to the square of the commission rate, i.e. if Xavier's commission rate (p) is doubled, then the volatility of his income (IX) - as measured by its variance - increases by a factor of 4.c) If Xavier and Yana's fixed pay (F) are doubled and their commission rates (p) are also doubled, then their expected joint income (IX + IY) is exactly doubled. This statement is uncertain.
According to the formula of Expected value, E(a+bX+cY)=a+bμX+cμY, we can see that the expected value is proportional to the fixed pay and the commission rate, i.e. If Xavier and Yana's fixed pay (F) are doubled and their commission rates (p) are also doubled, then their expected joint income (IX + IY) is exactly doubled. But it is also possible that the commissions may have a covariance and the joint income may not be the sum of their individual incomes, so the statement is uncertain.d) If Xavier and Yana's commission rates (p) are both doubled, then the volatility of their joint income (IX + IY) becomes four times larger. This statement is false. According to the formula of covariance, cov(a+bX+cV,Y)=bσXY+cσVY, we can see that the covariance is proportional to the commission rate, i.e. if Xavier and Yana's commission rates (p) are both doubled, then the covariance of their joint income (IX + IY) increases by a factor of 4, but the variance is not proportional to the square of the commission rate, so the statement is false.
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Mario's Focds produces frozen meals, which is sells for $10 each. The company uses the Fifo inventory costing method, and it computes a new monthly flued manufacturing cherhead rase based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two monthis in business: [Click the icon to view the data.) Read the coovirements.
Absorption costing in January : $4.35 Absorption costing in February : $4.50
Absorption COSTING
January:
Product Cost per meal = Variable Manufacturing Expenses per meal + Fixed Manufacturing Overhead per meal
Product Cost per meal = $4 + $700/2,000 =$4+$0.35
Product Cost per meal = $4.35
February:
Product Cost per meal = Variable Manufacturing Expenses per meal + Fixed Manufacturing Overhead per meal
Product Cost per meal = $4 + $700/1,400 = $4+$0.5
Product Cost per meal = $4.50
VARIABLE COSTING
January:
Product Cost per meal = Variable Manufacturing Expenses per meal
Product Cost per meal = $4
February:
Product Cost per meal = Variable Manufacturing Expenses per meal
Product Cost per meal = $4
2)Absorption costing income statement
January
Sales 11200[1400*8]
Less:COGS (6090) [1400*4.35]
GP 5110
Less: Sales comission expense (1400) [1*1400]
Less: Marketing and adm expense (400)
Net Operating Income 331
Absorption costing income statement
February
Sales 12800[1600*8]
Less:COGS (7200) [1600*4.50]
GP 5600
Less: Sales comission expense (1600) [1*1600]
Less: Marketing and adm expense (400)
Net Operating Income 3600
Variable costing income statement
January
Sales 11200
Less: Variable expenses
Variable COGS (5600) [4*1400]
Variable sales comission expense (1400)
Total variable expenses (7000)
Contribution margin 4200
Less: Fixed expenses
Fixed manufacturing overhead (700)
Fixed Marketing and adm expense (400)
Total fixed expenses (1100)
Net Operating income 3100
Variable costing income statement
February
Sales 12800
Less: Variable expenses
Variable COGS (6400) [4*1600]
Variable sales comission expense (1600)
Total variable expenses (8000)
Contribution margin 4800
Less: Fixed expenses
Fixed manufacturing overhead (700)
Fixed Marketing and adm expense (400)
Total fixed expenses (1100)
Net Operating income 3700
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