the answer is not here the answer is deficit but I will pick depreciated
Blackwell, Inc. has a $125,000 liability it must pay five years from today. The company is opening a savings account so that the entire amount will be available when this debt needs to be paid. The plan is to make an initial deposit today and then deposit an additional $30,000 each year for the next three years, starting one year from today. The account pays a 5 percent rate of return. How much does the firm need to deposit today
Answer:
Initial investment= $23,838.78
Explanation:
Giving the following information:
Future Value (FV)= $125,000
Number of periods (n)= 5
Interest rate (i)= 5%
First, we need to calculate the future value of the three deposits using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {30,000*[(1.05^3) - 1]} / 0.05
FV= $94,575
Difference= 125,000 - 94,575= $30,425
Now, the initial investment today:
FV= PV*(1 + i)^n
Isolating PV:
PV= FV / (1 + i)^n
PV= 30,425 / (1.05^5)
PV= $23,838.78
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $48,400. The machine's useful life is estimated at 10 years, or 394,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 33,400 units of product.
Required:
Determine the machineâs second-year depreciation and year end book value under the straight-line method.
Answer:the machine’s second-year depreciation and year end book value under the straight-line method is $3,990 and$40,420 respectively.
Explanation:
Straight line depreciation is calculated as
Depreciation= Initial value – salvage value / useful life
Depreciation=($48,400- $9,000)/10=$3,990
The depreciation expense each year would be $3990
Book value = Cost of asset- accumulated deprecation
Book value = Cost of asset - (2 years x depreciation)
= $48,400- (2 x $3,990)
= $40,420
Therefore, the machine’s second-year depreciation and year end book value under the straight-line method is $3,990 and$40,420 respectively.
Del Monty will receive the following payments at the end of the next three years: $8,000, $11,000, and $13,000. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of $14,000 per year. At a discount rate of 12 percent, what is the present value of all three future benefits
Answer: $$70,643
Explanation:
The payment from the 4th year to the 10th year is an annuity because it is constant.
The present value of an annuity is:
= Annuity * Present value interest factor of annuity, 12%, 7 years
= 14,000 * 4.5638
= $63,893.20
Present value of these:
= 8,000 / 1.12 + 11,000 / 1.12² + 13,000/1.12³ + 63,893.20 / 1.12³
= $70,643
Elm Corporation is a merchandising company. The year began with inventory of $21,000, Purchases for the year were $46,000, and the Ending Inventory was $8,000. What is the Cost of Goods Sold that would be reported on the income statement
Answer:
$59,000
Explanation:
Calculation to determine the Cost of Goods Sold that would be reported on the income statement
Using this formula
Cost of Goods Sold=Purchases for the year+beginning Inventory)-Ending Inventory
Let plug in the formula
Cost of Goods Sold=($46,000+$21,000) - $8,000
Cost of Goods Sold=$67,000-$8,000
Cost of Goods Sold=$59,000
Therefore the Cost of Goods Sold that would be reported on the income statement is $59,000
Macrozine Inc. provides support for employees faced with ethical dilemmas. An ethics compliance officer is available in the Human Resources office or through an employee hotline. This is an example of ethical:_________
a. reasoning
b. awareness
c. whistle-blowing
d. action
Answer:
d. action
Explanation:
In Business, this would be an example of ethical action. These are actions that companies take in order to prove that they are committed to their employees. Especially making sure that they are safe, respected, and mentally/emotionally good within the work environment. By providing such services such as an employee hotline and a HR department they are providing resources for the employees to voice their concerns and needs in case of any dilemma in the company.
How much increase in net worth (equity) would a market basis balance sheet show over a cost basis if Land was purchased for $1,000,000, is currently valued at $5,500,000 and capital gains taxes are 10%
Answer: $4,050,000
Explanation:
Increase in net worth shows the after tax gain that the person got after the land in question increased in value.
= (Current value - Purchase price) * ( 1 - tax rate)
= (5,500,000 - 1,000,000) * (1 - 10%)
= 4,500,000 * 0.90
= $4,050,000
United States exports soybean oil to China. However, to protect the Chinese soybean oil market, Chinese government has high tariff in place for U.S. soybean oil exports. Explain how United States can make plant location decisions to avoid paying high tariffs and still sell soybean oil in China.
Answer:
United States can set up plants in China to avoid high tariffs
Davidson was recently promoted to the position of Manager of the IT Department of his company. Because of Davidson's lack of prior experience in a management role, the management of the company appointed a consultant to help Davidson improve his interpersonal skills and to provide effective decision-making strategies that Davidson could use to resolve conflicts within his team. In this scenario, Davidson's consultant can be best described as an:_________
a. expatriate
b. arbitrator
c. leadership coach
d. boomerang employee
Answer:
c. leadership coach
Explanation:
It is correct to say that in this scenario, Davidson's consultant can best be described as a leadership coach, who is a professional hired by a company to help managers develop their skills in order to exercise effective leadership in the company.
A leadership coach will help to improve a manager's abilities to know how to communicate assertively, to motivate, train and help his subordinates so that organizational goals and objectives are achieved as planned and so that there is an organizational culture based on cooperation, productivity and development.
The assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year follow. The capital of the owner was $185,200 at April 1, the beginning of the current year. Mr. Thompson invested an additional $15,200 in the business during the year.
Accounts payable $1,200 Miscellaneous expense $470
Accounts receivable 9,860 Office expense 690
Cash 32,300 Supplies 1,670
Fees earned 82,110 Wages expense 34,330
Land 47,500 Drawing 5,400
Building 151,490
Required:
Prepare a statement of owner's equity for Thompson Computer Services for the current year ended March 31.
Answer:
Thompson Computer Services
Thompson Computer Services
Statement of Owner's Equity for the current year ended March 31
Capital, Thompson $185,200
Additional investment 15,200
Total Capital, Thompson $200,400
Net income 46,620
Drawing 5,400
Retained earnings $41,220
Owner's Equity $241,620
Explanation:
a) Data and Calculations:
Beginning balance:
Capital, Thompson $185,200
Additional investment 15,200
Total Capital, Thompson $200,400
Cash 32,300
Accounts receivable 9,860
Supplies 1,670
Land 47,500
Building 151,490
Accounts payable $1,200
Capital, Thompson 200,400
Drawing 5,400
Fees earned 82,110
Wages expense 34,330
Miscellaneous expense 470
Office expense 690
Fees earned $82,110
Wages expense 34,330
Miscellaneous expense 470
Office expense 690
Total expenses $35,490
Net income $46,620
Drawing 5,400
Retained earnings $41,220
This may also be asked as "Why are you looking for a job?" This question can make the most seasoned interviewee squirm a little because of the first word; why. A question starting with "why" immediately places you on the defensive.
Answer:
Starting a question in a job interview with the word "why" can be a little intimidating and put even a more experienced interviewee on the defensive because communication has been established directly, which occurs when the sender conveys the main message of clearly and objectively, and when it is asked in the form of a question, such as in a job interview, this can generate increased expectations and consequently put a candidate on the defensive, which can make the interviewer not able to actually capture the real motivation of the candidate in the interview.
In order for a job interview to be effective, and for the best candidate to be selected for the job vacancy, it is necessary that it be carried out indirectly, with the interviewer being cordial and not intimidating, gaining the candidate's trust and the make you feel comfortable and safe to share your professional experiences and demonstrate your personality more spontaneously.
(Ignore income taxes in this problem.) Your Company has a truck that needs a new engine that would cost $35,000. This will extend the useful life of the truck by 5 years. As an alternative, Your Company could buy a brand new truck for $120,000. The new truck would also last 5 years. The annual operating expenses of the old truck are $8,500. The annual operating expenses of the new truck will only be $5,000. The old truck has a salvage value of $12,000 now and $3,500 in 5 years. The new truck is expected to have a $10,000 salvage value in 5 years. Your Company discount rate is 6%. What is the net present value of the decision to buy the new truck instead of repairing the old truck
Answer:
Hence the net cost to the company is 68,160.
NPV to buy a new truck instead of repairing
NPV = -65390
Explanation:
Step 1:-
P.V. of Old Truck Repaired
Given
Discount rate = 6%
New engine = 35000
Life = 5 years
Annual operating expenses = 8500
Salvage (after 5 years)= 3500
Step 2:-
Repair
Net Cost to company = Cost + Annual operating expenses x P.V. Annuity
Factor (6%, 5) - Salvage value x P.V. Intrinsic
Factor (6%, 5)
P.V.A.F. (6%, 5)= [tex]\sum_{5}^{1}1 / (1.06)^{n} = 4.21[/tex]
n = 4.21
P.V.I.F. (6%, 5) = [tex]1/ (1.06)^{5} =0.75[/tex]
Net Cost to company: = 35000 + 8500 x 4.21 - 3500 x 0.75
= 35000 + 35785 - 2625
= 68,160
P.V. of New truck purchased
New Truck
Cost = 120000
Discount rate = 6%
Life = 5 years
Annual operating expenses = 5000
Salvage (after 5 years)= 10000
Net Cost to company: = Cost + Annual operating expenses x P.V. Annuity
Factor (6%, 5) - Salvage value x P.V. Intrinsic
Factor (6%, 5)
= 120000 + 5000 x 4.21 - 10000 x 0.75
= 120000 + 21050 - 7500
= 133550
NPV to buy a new truck instead of repairing
NPV = Net cost of repairing - Net cost of new truck
= 68160 - 133550
= -65390
Identify a new product that is based on an innovation in technology, and draw up a strategic technical plan for its development. Be sure to discuss the risk factors at each stage, and indicate how you would deal with each.
"An electric car" is a new product that depends upon technological innovation.
Its progress is guided by a strategic technology plan:
The production of new ideas:
The lithium-ion battery throughout the electric vehicle will provide the energy needed to run its engine. Installation of the battery would ensure it can do all the functions which the consumer would expect from a typical vehicle.The idea is evaluated:
The lithium-ion battery-powered electric car ought to be able to equal the speed of a gasoline or diesel-powered vehicle.Analysis of the business environment:
Due to its reduced mileage, such a car would be perfect for customers who are unable to pay the rising cost of oil for the vehicles. Thus, electric vehicles would've been ideal to clients with fundamental part from middle income to high class. Its car would attract a huge number of customers, as consumers are looking for vehicles that may help them save cash on gasoline prices.Development:
The fuel or diesel cylinder and batteries would be fitted in the car's bonnet. The rest of the car assembly process will proceed normally usual.Commercialization:
Customers will be able to buy cars through a countrywide dealer network.The car's battery plays a significant role in each step of the process. Whereas if a car's batteries run out while it was on the road, it could be recharged using another energy source. During a crisis, solar plates will absorb the sun and power a battery. As a result, the vehicle will keep running smoothly.Learn more:
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XYZ expects to sell 28,000 pools in 2019. It budgets the beginning inventory of Direct Materials, Work-in-process, and Finished goods to be 26,000; 0; 1,300 units; AND ending inventory to be 26,000; 0; 2,800 units. How many pools need to be produced
Answer:
the no of pools need to be produced is 29,500 units
Explanation:
The computation of the no of pools need to be produced is given below:
= Ending finished goods inventory units + number of units sold - beginning finished goods inventory units
= 2800 + 28000 - 1300
= 29500 units.
Hence, the no of pools need to be produced is 29,500 units
A plant asset can be defined by which of the following statements?
a. Its original cost is expensed in the period in which it was purchased.
b. It is a tangible long-term asset.
c. It is reported on the balance sheet.
d. Its cost (minus any salvage value) is gradually reported as expenses over its useful life.
Answer:
it's a tangible long-term asset
Answer:all of them
Explanation:
Got it right
Positive Messages and the Writing Process
Organizations exchange information internally and externally. External messages go to customers, vendors, the government, and other business partners. Internal messages travel upward to supervisors, downward to employees, and horizontally among workers. Understanding the different types of business messages and following the 3-x-3 writing process will help you write more effective professional messages. Match the message content area with the correct types of messages.
1. Sales pitches, requests for favors
2. Replies, goodwill messages, direct claims
3. Bad news, refusals
a. persuasive
b. positive
c. negative
Consider the scenario about a positive message:
Gilberto is composing an e-mail that explains the terms of a recent business transaction. He has determined the purpose of the message, analyzed his audience, and determined its reactions.
According to the 3-x-3 writing process, what actions make up his next steps?
a. Make a list of points to cover.
b. Plan for feedback.
c. Check for mechanical problems.
d. Collect information.
e. Compose the first draft.
While most business communication is now done electronically, there remain situations in which a business letter is most appropriate.
Messages delivered through business letters are less likely to reach_____than messages delivered through_____. Thus, business letters are more_____.
Answer: See explanation
Explanation:
1a. Sales pitches, requests for favors: In this case, persuasive message should be used to convince the receiver to agree with the sender's viewpoint.
b. Replies, goodwill messages, direct claims: The positive message should be used as the main idea can be communicated directly before any other supporting information are provided.
c. Bad news, refusals: This scenario involves a negative messages and should therefore be written in an indirect manner. It should also be noted that a supporting message us given before the main message us written.
2. According to the 3-x-3 writing process, the actions that make up Gilberto next steps include
a. Make a list of points to cover.
d. Collect information.
e. Compose the first draft.
3. Messages delivered through business letters are less likely to reach (unintended recipients) than messages delivered through (email). Thus, business letters are more (confidential).
Geoffrey is looking for a safe investment for $3,000 he received as a bonus. He is looking for an investment that will also help him deal with the effects of inflation. Which of the following options would you recommend that Geoffrey invest in?
a. Series EE bonds.
b. Series I bonds.
c. Commercial paper.
d. Junk bonds.
Answer:
Hence the correct option is option b. Series I bonds.
Explanation:
Series I bonds are going to be completing a fixed-rate Plus and adjustable-rate which can be adjusted with the inflation so if he's trying to find investment into a bond he should be choosing with series I Bonds, which can be adjusted with inflation effect.
The correct option is b) Series I bonds.
Series I bonds will have a fixed interest rate plus an interest on the outstanding that will be adjusted without inflation, thus if he is searching for a bond to participate in, he will have to go with series I bonds, which will then be modified with inflation.
All of the other possibilities are untrue.
Alternative (B) Series I bonds is the correct answer.
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Suddeth Corporation has entered into a 6 year lease for a building it will use as a warehouse. The annual payment under the lease will be $2,468. The first payment will be at the end of the current year and all subsequent payments will be made at year-ends. If the discount rate is 5%, the present value of the lease payments is closest to :___________
Answer:
$12,528
Explanation:
The computation of the present value of the lease payment is given below:
= annual payment × PVIFA factor for 6 years at 5%
= $2,468 × 5.0757
= $12,528
We simply multiply the annual payment with the pVIFA factor so that the present value of the lease payment could come
A company must repay the bank $10,000 cash in three years for a loan. The loan agreement specifies 8% interest compounded annually. The present value factor for three years at 8% is 0.7938. How much cash did the company receive from the bank on the day they borrowed this money?
A. $12,400.
B. $9,200.
C. $7,938.
D. $7,600.
E. $10,000.
Answer: C. $7,938
Explanation:
This is a straightforward question. From the question, we are informed that a company must repay the bank $10,000 cash in three years for a loan and that the loan agreement specifies 8% interest compounded annually and we are given the present value factor for three years at 8% is 0.7938.
Therefore, the amount of cash that the company receive from the bank on the day they borrowed this money will be:
= $10000 × Present value factor at 8%
= $10000 × 0.7938
= $7938
4. Problems and Applications Q4 Many observers believe that the levels of pollution in our society are too high. True or False: If society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with lower costs reduce greater amounts of pollution than those with higher costs.
Answer: True
Explanation:
Firms with lower costs would also incur a lower cost when they try to reduce pollution so they should reduce more pollution because of this reduced cost that they will incur.
Firms with higher costs would then reduce less pollution because this would ensure that they do not spend too much on pollution reduction and incur even more costs.
What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, and scientists discovered that lattés lead to a longer life expectancy? Group of answer choices The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous. Both the equilibrium price and quantity would increase. Both the equilibrium price and quantity would decrease. The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
Answer:
The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
Explanation:
The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous.
The increase in the cost of production will decrease the supply so the supply curve will shift leftward and simultaneously the research by scientists says the consumption of lattes will increase the life expectancy so many people will start consuming t os demand curve will shift rightwards. That means equilibrium price will increase but change in quantity can not be determined.
Morales Corporation produces microwave ovens. The following per unit cost information is available: direct materials $30, direct labor $20, variable manufacturing overhead $16, fixed manufacturing overhead $42, variable selling and administrative expenses $18, and fixed selling and administrative expenses $24. Its desired ROI per unit is $27.00. Compute its markup percentage using a total-cost approach. (Round answer to 2 decimal places, e.g. 10.50%.)
Answer:
111%
Explanation:
Computation to determine its markup percentage using a total-cost approach
First step
Variable cost per unit= Direct materials+Direct labor+Variable manufacturing overhead+Variable selling and administrative expenses
Variable cost per unit= $30+20+16+18
Variable cost per unit= $84
Second step
Fixed cost per unit= Fixed manufacturing overhead+Fixed selling and administrative expenses
Fixed cost per unit= $42+24
Fixed cost per unit= $66
Now let determine the Variable costing markup percentage
Variable costing markup percentage= (Desired ROI+Fixed cost per unit)*100/Variable cost per unit
Variable costing markup percentage= ($27+66)*100/84
Variable costing markup percentage=110.7 %
Variable costing markup percentage=111% (Approximately)
Therefore its markup percentage using a total-cost approach is 111%
Fender Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10% of total sales each month. Historically, sales on account have been collected as follows: 50% in the month of the sale, 35% in the month after the sale, and the remaining 15% two months after the sale. Sales for the quarter are projected as follows:
January: $60,000
February: $30,000:
March: $90,000.
Accounts receivable on December 31 were $45,000. The expected cash collections of Fender Manufacturing Company for March are:_________
Answer:
Fender Manufacturing Company
The expected cash collections of Fender Manufacturing Company for March is:
= $58,050
Explanation:
a) Data and Calculations:
Cash sales = 10% of total sales
Credit sales = 90% (100% - 10%)
Cash collections from credit sales:
Month of the sale (50%)
Month after the sale (35%)
Two months after (15%)
Accounts receivable on December 31 = $45,000
January February March
Projected sales $60,000 $30,000 $90,000
Cash sales $6,000 $3,000 $9,000
Credit sales $54,000 $27,000 $81,000
Cash collections from credit sales:
Month of the sale (50%) $27,000 $13,500 $40,500
Month after the sale (35%) 31,500 18,900 9,450
Two months after (15%) 13,500 8,100
Cash collections from credit sales $58,050
The expected cash collections of Fender Manufacturing Company for March =
Cash collections from credit sales $58,050
Cash sales 9,000
Total cash receipts for the month $67,050
The primary purpose of using short-term budgets is to: Multiple choice question. keep employees uncomfortable about missing budgetary projections evaluate performance and take necessary corrective action plan for plant asset purchases and disposals
Answer:
evaluate performance and take necessary corrective action plan for plant asset purchases and disposals
Explanation:
A budget is an estimate of the revenue and expenditure of a company over a specified period.
The primary purpose of using short-term budgets is to evaluate performance and take necessary corrective action plan for plant asset purchases and disposals.
A budget is an estimate of the revenue and expenditure of a company over a specified period.
The goal of a short-term budget is to ensure that the company has adequate cash on hand to pay off obligations before they go past due. Short-term budgeting is viewed as a company survival technique since if they do not have enough money to pay off debts, they risk losing the firm.
Therefore, evaluate performance and take necessary corrective action plan for plant asset purchases and disposals is the primary purpose for short-term budgets.
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This Question: 1 pt
The law of demand
shown graphically by a
demand curve
When the price of a good drops, consumers purchase more of it because of
O A. the substitution effect only.
OB. neither the income nor the substitution effect.
O C. the income effect only
OD. both the income and substitution effect.
Click to select your answer
Type here to search
о
Answer:
C. the income effect only
Explanation:
In microeconomics, the income effect is the change in demand for a good or service caused by a change in a consumer's purchasing power resulting from a change in real income. This change can be the result of a rise in wages etc., or because existing income is freed up by a decrease or increase in the price of a good that money is being spent on
Given the following data for Scurry Company, what is the cost of goods sold? Beginning inventory of finished goods $100,000 Cost of goods manufactured 700,000 Ending inventory of finished goods 200,000 Beginning work-in-process inventory 300,000 Ending work-in-process inventory 50,000 Select one: a. $600,000 b. $950,000 c. $500,000 d. $800,000
Answer:
Scurry Company
The cost of goods sold is:
= a. $600,000
Explanation:
a) Data and Calculations:
Beginning inventory of finished goods $100,000
Cost of goods manufactured 700,000
Ending inventory of finished goods (200,000)
Cost of goods sold = $600,000
Beginning work-in-process inventory 300,000
Ending work-in-process inventory 50,000
b) The cost of goods sold includes the beginning inventory of finished goods and the cost of goods manufactured within the period, less the ending inventory of finished goods. It does not include inventories of work-in-process.
The Commissioner is empowered to examine the records of any person transacting insurance in the State as an agency, an agent or broker of record. If the Commissioner does examine a person, the expense of that examination will be paid by
Answer:
The person examined.
Explanation:
The California insurance code
This Insurance Code is known as a set of statutes set up by the state legislature and is responsible for the regulation of the business of insurance in California. The Commissioner does not have the authority to change the Insurance Code and only the state legislature has the authority to write or amend the Insurance Code.
The Insurance Commissioner
This office is elected by the people and usually serve up to two 4-year terms. The Commissioner's term runs concurrently with that of the Governor. The Commissioner has the authority to conduct examinations of an agent or insurer's books and records at any time.
The Insurance Commissioner's Duties and Responsibilities
1. File and keep all books and papers as required by law
2. Responsible for the Issue of Certificates of Authority to companies that meet the requirements of state law
3. Issue, refuse, revoke or suspend licenses or Certificates of Authority etc.
Suppose a market is initially in equilibrium and demand decreases. The producer surplus will:_____.
a. be higher since the price is lower and equilibrium moves down along the supply curve.
b. be higher since the price is lower and equilibrium moves up along the supply curve.
c. be lower since the price is lower and equilibrium moves down along the supply curve.
d. be lower since the price is lower and equilibrium moves up along the supply curve.
Answer:
c. be lower since the price is lower and equilibrium moves down along the supply curve.
Meyer Company reported the following for its recent year of operation:
From Income Statement:
Depreciation Expense $1,000
Loss on the Sale of Equipment (3,000)
From the comparative balance sheet:
Beginning balance, equipment $12,500
Ending balance, equipment 8,000
Beginning balance, accumulated depreciation 2,000
Ending balance, accumulated depreciation 2,600
No new equipment was purchased during the year. What was the selling price of the equipment?
Answer:
$900
Explanation:
Calculation to determine the selling price of the equipment
First step
Cost of equipment sold = Beginning balance - Ending balance
Cost of equipment sold=$12,500-$8,000
Cost of equipment sold=$4,500
Second step
Ending balance= Beginning balance + Depreciation expense - Accumulated depreciation on equipment sold
Ending balance=$2,000+$1,000-$600
Ending balance=$2,400
Third step
Book value = Cost of equipment sold - Accumulated depreciation on equipment sold
Book value=$4,500-$600
Book value=$3,900
Now let determine the selling price of the equipment
Selling price=$3,000-$3,900
Selling price=$900
Therefore the selling price of the equipment.is $900
The maximum price that can be asked for the new jPad model is $2,000 at which point they would sell 0 units. It costs Pear $600 to manufacturer and deliver these jPads to their stores. Determine the optimal price for this new jPad, which can be assumed to operate in a monopoly (at least upon introduction).
Answer: $700
Explanation:
Based on the information given in the question, the optimal price for this new jPad, which can be assumed to operate in a monopoly will be calculated thus:
P = 2000+Q
TR = P × Q
TR = (2000 + Q) × Q
TR = 2000Q + Q²
MR = 2000 + 2Q
MC = 600
Since marginal revenue equals to marginal cost, this will be:
MR = MC
2000+2Q = 600
2Q = 2000 - 600
2Q = 1400
Q = 1400/2
Q = 700
Imagine that you are operating a Chinese clothing retail chain and you wish to enter the Italian market in order to access the latest fashion designs and trends from Italy. To meet this goal, it is important to have strong control and coordination of your Italian operations and to be able to easily transfer tacit knowledge back to China. Based on this information what entry mode would you choose to enter Italy?
a. Wholly owned subsidiary
b. Exporting
c. Franchising
d. Strategic alliance
e. Licensing
Answer: a. Wholly owned subsidiary
Explanation:
The only method listed that would give you strong control and coordination of the new business in Italy is that of a wholly owned subsidiary. You would have a 100% control over such a company and could do what you wanted with it including transferring knowledge back to China without impediment.
Exporting provides little control. Franchising provides limited control. Strategic alliance means that you have to share control with another entity and licensing provides only limited control as well.
