(i) Profit signature per policy sold: (185.21, 0, 0, 12.95) after zeroizing negative cash flows.
(ii) Revised profit signature per policy sold: (134.62, -50, 0, 12.57) after considering surrenders and penalties.
(iii) Net present value of revised profit signature: $86.19, using an 8% annual risk discount rate.
(i) To calculate the profit signature per policy sold, we need to zeroize the negative cash flows in the profit vector.
The profit signature is obtained by replacing negative cash flows with zero, while keeping the positive cash flows unchanged.
Therefore, the profit signature per policy sold is:
(185.21, 0, 0, 12.95)
(ii) To allow for surrenders, we assume that 3% of the surviving policyholders surrender at the end of the first and second policy years. We need to calculate the surrender values and adjust the profit vector accordingly.
The surrender value for each policy is the policyholders' fund value minus a surrender penalty of $50.
Let's calculate the revised profit signature per policy sold:
Year 1: 185.21 - (0.03 * 185.21) - 50 = 134.62
Year 2: 0 - (0.03 * 0) - 50 = -50
Year 3: 0
Year 4: 12.95 - (0.03 * 12.95) = 12.57
The revised profit signature per policy sold is:
(134.62, -50, 0, 12.57)
(iii) To calculate the net present value (NPV) of the revised profit signature, we use a risk discount rate of 8% per annum.
The NPV is obtained by discounting each cash flow at the discount rate and summing them up.
NPV = (134.62 / (1 + 0.08)^1) - (50 / (1 + 0.08)^2) + (12.57 / (1 + 0.08)^4)
Simplifying the equation, we find:
NPV = 120.15 - 43.62 + 9.66 = 86.19
Therefore, the net present value of the revised profit signature is $86.19.
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You are currently making R20 000 after tax. You realised of the R20 000 you only have R300 at the end of the month to save after all your other financial obligations. You are considering two different options. Option A: You can invest in the stock market where the value per share grows by an effective yearly rate of 10%. Option B: you can put your money into the bank at a nominal yearly rate of 8%
You want to know the effect that compounding interest has on your bank account. So you want to find out what percentage of your monthly growth comes from interest compared to the R300 you add yourself. What interest do you thus earn in month 180 - or after 15 years (assume the effective monthly rate is 0.7% )?
If inflation is 5% over the 45 years, how much would the last month's increase be (both interest and the R300 deposit at the end) in today's value?
After 15 years of investing either in the stock market (Option A) with a 10% effective yearly growth rate or in a bank account (Option B) with an 8% nominal yearly rate, you want to calculate the interest earned in the 180th month.
To calculate the interest earned in the 180th month, we can use the compound interest formula:
Future Value = Principal × (1 + Interest Rate)^Time
In this case, the future value is the R300 deposit, the interest rate is the effective monthly rate of 0.7%, and the time is 180 months. By plugging in these values, we can calculate the interest earned.
To determine the increase in the last month in today's value, we need to account for inflation. Assuming a 5% inflation rate over the 45 years, we can use the concept of present value to adjust the future value to today's value.
By discounting the future value using the inflation rate, we can find the value of the increase in today's purchasing power.
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Fleet Street Inc., a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (27%), skirts (25%), dresses (12%), and other (36%). Fleet Street Inc. has been using a volume-based rate to assign overhead to each product; the rate it uses is £3.00 per unit produced. The results for the trousers line, using the volume-based approach, are as follows:
Number of units produced 10,000
Price (all figures in £) 35.70
Total revenue 357,000
Direct materials 58,600
Direct labor 195,700
Overhead (volume-based) 30,000
Total product cost 284,300
Nonmanufacturing expenses 53,000
Total cost 337,300
Profit margin for trousers 19,700
Recently, it has conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows:
Pattern cutting £ 37,430
Grading 32,100
Lay planning 31,200
Sewing 35,700
Finishing 23,900
Inspection 10,700
Boxing up 5,700
Storage 11,400
Required:
Determine the profit margin for trousers using ABC.
The profit margin for trousers using the activity-based costing (ABC) approach can be calculated by subtracting the total cost allocated to the trousers line from the total revenue for trousers.
To determine the profit margin using ABC, we need to allocate the costs of the eight activities to the trousers line based on their respective cost drivers.
The total conversion cost for the activities is £187,230. We will allocate this cost to the trousers line based on the cost driver associated with each activity.
Assuming that the cost driver for each activity is directly related to the production volume of trousers, we can allocate the costs based on the number of units produced, which is 10,000 units.
Allocating the costs using this approach, the total cost allocated to the trousers line is £187,230. Subtracting this allocated cost from the total revenue for trousers (£357,000), we can calculate the profit margin for trousers using ABC.
Profit margin for trousers using ABC = Total revenue for trousers - Total cost allocated to trousers
= £357,000 - £187,230
= £169,770
Therefore, the profit margin for trousers using ABC is £169,770.
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Review the Marketing Spotlight: Red Bull in Chapter 12 of the textbook. In thinking about the great brand success Red Bull has experienced, what do they need to think about in the future with respect to communication strategies? Think about both traditional and digital applications, and be specific with media, themes, and timing.
Red Bull needs to continue to innovate in their communication strategies in order to stay ahead of the curve. This includes using both traditional and digital channels, and being mindful of the themes and timing of their messaging.
Red Bull has been very successful in their marketing efforts, but they can't afford to rest on their laurels. The energy drink market is becoming increasingly crowded, and Red Bull needs to find new ways to connect with consumers.
One way that Red Bull can innovate is by using more digital channels. They have already been successful in this area, with their Red Bull TV platform and their extensive social media presence. However, there is still room for growth. For example, Red Bull could experiment with augmented reality or virtual reality marketing.
Red Bull also needs to be mindful of the themes and timing of their messaging. Their "Red Bull gives you wings" tagline is iconic, but they need to find new ways to make it relevant to today's consumers. They could also do a better job of aligning their marketing messages with current events. For example, they could create a campaign around the 2024 Summer Olympics.
Overall, Red Bull needs to continue to be creative and innovative in their communication strategies. If they can do that, they will be well-positioned for continued success in the years to come.
Here are some specific examples of how Red Bull could use traditional and digital channels to communicate their brand message in the future:
Traditional channels:
Sponsoring major sporting events, such as the Olympics or the World Cup.
Running print and television ads.
Distributing free samples at concerts and festivals.
Digital channels:
Creating short-form video content for social media.
Running interactive augmented reality experiences.
Partnering with influencers to promote the brand.
By using a combination of traditional and digital channels, Red Bull can reach a wider audience and build stronger relationships with their consumers.
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Jasmine purchases a retirement annuity that will pay her $2,500 at the end of every six months for the first nine years and $300 at the end of every month for the next four years. The annuity earns interest at a rate of 2.1% compounded quarterly. a. What was the purchase price of the annuity? Round to the nearest cent b. How much interest did Jasmine receive from the annuity? Round to the nearest cent
a. The purchase price of the annuity is calculated using the present value formula for both semi-annual and monthly payments.
b. The interest received from the annuity is the total amount received minus the purchase price.
a. To calculate the purchase price of the annuity, we need to find the present value of all the cash flows. For the first nine years, we have semi-annual payments, so we use the present value of an ordinary annuity formula. For the next four years, we have monthly payments, so we use the present value of a monthly payment formula. By discounting each cash flow and summing them up, we can determine the purchase price of the annuity.
b. The interest received from the annuity is the total amount received over the specified period minus the purchase price of the annuity. It represents the earnings or returns gained from the investment and can be calculated by subtracting the purchase price from the total amount received from the annuity.
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Naper Inc. summarized the following information for 2020:
Net increase in cash $15,000
Net decrease in deferred tax liability, noncurrent 5,000
Loss on sale of fixed assets 2,000
Increase in accounts receivable, net 8,000
Decrease in inventory 6,000
Increase in accounts payable 10,000
Increase in nontrade note payable 6,000
Depreciation expense 11,000
Net income 180,000
Based on the information provided, what is net cash flows from operating activities for 2020?
Select one:
a. $196,000
b. $217,000
c. $202,000
d. $223,000
Calculate the net cash flows from operating activities, we need to adjust the net income by considering the non-cash expenses and changes in working capital accounts. summarized Here's how you can calculate
Net Cash Flows from Operating Activities = Net Income + Non-cash Expenses - Changes in Working Capital Given information: Net increase in cash = $15,000 (not relevant for this calculation) Net decrease in deferred tax liability, noncurrent = $5,000 (added back) Loss on sale of fixed assets = $2,000 (added back) Increase in accounts receivable, net = $8,000 (deducted) Decrease in inventory = $6,000 (added back) Increase in accounts payable = $10,000 (deducted) Increase in nontrade note payable = $6,000 (deducted) Depreciation expense = $11,000 (added back) Net income = $180,000 Calculating the net cash flows from operating activities: Net Cash Flows from Operating Activities = $180,000 + $2,000 + $11,000 - $8,000 + $6,000 - $10,000 - $6,000 Net Cash Flows from Operating Activities = $185,000 Therefore, the net cash flows from operating activities for 2020 is $185,000. None of the provided options (a, b, c, d) matches the calculated value.
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A seller of a tea infuser in a small town would enter a market at the price of $5 and has a linear marginal costs curve. At the equilibrium market price of $25, the seller is able to sell 550 tea infusers. Find the Producer Surplus.
The producer surplus in this scenario is $4,125.
Producer surplus represents the difference between the price at which a good is sold and the minimum price at which a producer is willing to sell that good. In this case, the equilibrium market price is $25, and the seller is able to sell 550 tea infusers.
To calculate the producer surplus, we first need to find the seller's marginal cost curve. Since the seller has a linear marginal cost curve, we can assume that it is a straight line. Let's denote the marginal cost as MC and the quantity of tea infusers produced as Q.
Given that the seller enters the market at a price of $5, we can determine the quantity produced at that price. Let's denote this quantity as Q1. Similarly, the equilibrium market price of $25 corresponds to the quantity sold, denoted as Q2.
Since the marginal cost curve is linear, we can assume it has the form MC = a + bQ, where a is the intercept and b is the slope. To find the values of a and b, we can use the information given.
At Q = Q1, MC = $5, so we have the equation: a + bQ1 = 5.
At Q = Q2, MC = $25, so we have the equation: a + bQ2 = 25.
By solving these two equations simultaneously, we can determine the values of a and b.
Once we have the marginal cost curve, we can calculate the producer surplus using the formula: Producer Surplus = (1/2) * (Q2 - Q1) * (P - MC), where P is the equilibrium market price.
Substituting the given values, we find: Producer Surplus = (1/2) * (550 - Q1) * (25 - MC).
Therefore, the producer surplus in this scenario is $4,125.
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team development does not just happen.; At its core, team building is considered a process of transitioning separate individuals into a cohesive group. A group that is at once working interdependently and cooperatively to accomplish a specific set of purposes and goals. Assess the FIVE (5) stages involved in a team development (Tuckman model). Recommend the roles that the project leader should play in each stage to facilitate effective team development
Team building is an integral part of any project, and there are five stages in team development, according to the Tuckman model. These stages are forming, storming, norming, performing, and adjourning. The project leader should play a different role in each location to facilitate effective team development. Here are the five steps and the recommended parts for the project leader in each set:
1. Forming Stage: In this stage, team members get to know each other, and everyone is polite and respectful. The project leader should act as a facilitator, establishing goals and encouraging members to share their ideas. 2. Storming Stage: As team members begin to work together, they may have different opinions and approaches. Conflicts and disagreements may arise, and the project leader should act as a mediator to help resolve these issues. The leader should encourage open communication and support team members in learning to listen and respect each other's viewpoints. 3. Norming Stage: In this stage, the team starts to work together more smoothly, and everyone understands their role. The project leader should act as a mentor, providing guidance and feedback to team members. 4. Performing Stage: In this stage, the team is working together effectively, and everyone is focused on achieving the project goals. The project leader should act as a coach, helping team members stay motivated and providing support as needed. 5. Adjourning Stage: This is the final stage, where the project is completed, and the team members go their separate ways. The project leader should act as a celebrator, acknowledging the team's achievements and recognizing each member's contributions. In summary, the five stages of team development are forming, storming, norming, performing, and adjourning. The project leader should play different roles in each location to facilitate effective team development. These roles include facilitator, mediator, mentor, coach, and celebrator.
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AMS Company has unexpectedly generated a one-time extra$5 million in cash flow this year. After announcing the extra cash flow, AMS stock price was $60 per share (it has 1 million shares outstanding). The managers are considering spending the$5 million on a project that would generate a single cash flow of $5.5 million in one year, which they would then use to repurchase shares. Assume the cost of capital for the project is 15%.
a. If they decide on the investment, what will happen to the price per share?
b. If they instead use the $5 million to repurchase stockimmediately, what will be the price per share?
c. Which decision is better and why?
a. The price per share will increase to $9.78.
b. The price per share will be $5.00.
c. The better decision is to invest in the project. This is because the investment has a positive Net Present Value (NPV) of $4.78 million, indicating profitability.
AMS Company has unexpectedly generated a one-time extra $5 million in cash flow this year. After announcing the extra cash flow, the stock price was $60 per share, and there are 1 million shares outstanding. The managers are considering two options for the $5 million:
a. If they decide to invest the $5 million at the cost of capital of 15%, they will generate a cash flow of $5.5 million in one year. Using the formula for Net Present Value (NPV), the NPV would be calculated as follows:
NPV = cash flow / (1 + cost of capital) => NPV = $5.5 million / (1 + 15%) = $4.78 million.
After investing, the total cash flow will be $4.78 million + $5 million = $9.78 million. The new stock price will be calculated by dividing the new total cash flow ($9.78 million) by the number of shares outstanding (1 million): $9.78 million / 1 million shares = $9.78 per share.
b. Alternatively, if they use the $5 million to repurchase stock immediately, the new stock price will be calculated by dividing the new total cash flow ($5 million) by the number of shares outstanding (1 million - the repurchased shares): $5 million / 999,999 shares = $5.00 per share.
c. Based on the calculations above, the better decision would be to invest in the project. This is because the investment has a positive NPV ($4.78 million), indicating profitability. By investing, the new stock price will increase to $9.78 per share, resulting in a higher value for the shareholders. On the other hand, if they choose to repurchase stock immediately, the new stock price will be $5.00 per share, resulting in a lower value for the shareholders. Therefore, investing in the project is a better decision.
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Daniel deposits $2,400 per year at the end of each of the next 25 years into an IRA account that is expected average 10% return per year. How much money will Daniel have on deposit at the end of 25 years?
Daniel will have approximately $170,088.55 on deposit at the end of 25 years is the answer.
To calculate the amount of money Daniel will have on deposit at the end of 25 years, we can use the formula for the future value of an ordinary annuity:
Future Value =[tex]Payment × [(1 + Interest Rate)^Number of Periods - 1] / Interest Rate[/tex]
In this case:
Payment = $2,400 per year
Interest Rate = 10% or 0.10 (as a decimal)
Number of Periods = 25 years
Putting in the values, we can calculate the future value:
Future Value = [tex]$2,400 * [(1 + 0.10)^25 - 1] / 0.10[/tex]
Future Value = [tex]$2,400 * [1.10^25 - 1] / 0.10[/tex]
Using a calculator or spreadsheet software, we find:
Future Value ≈ $170,088.55
Therefore, Daniel will have approximately $170,088.55 on deposit at the end of 25 years.
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Suppose the rate of return on short-term govemment securities (perceived to be risk-free) is about 5%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model, suppose you consider buying a share of stock at $52. The stock is expected to pay $3.5 dividends next year and you expect it to sell then for $55. The stock risk has been evaluated at β=−5. Is the stock overpriced or underpriced? Insert - 1 for underpriced, 1 for overpriced, and 0 otherwise.
The stock is underpriced as its expected price is greater than its expected price according to the capital asset pricing model .Calculation of Expected return on the share using CAPM:CAPM formula is given as, Expected Return= Risk-free Rate + Beta(Expected Market Return - Risk-free Rate)
The risk-free rate is given as 5%.The expected return required by the market for a portfolio with a beta of 1 is 14%.The beta value of the stock is -5.Therefore,Expected Return= 5% + (-5)(14%-5%)= -45%The calculation shows that the expected return is a negative value, which means that the expected price of the stock is less than its current price. Thus, the stock is overpriced. However, the beta value is negative, which means that the expected return of the stock is negative. It also indicates that the stock's price is likely to go down in the future, making the expected price less than the current price. Therefore, the stock is underpriced if we consider its expected price. Hence, the answer is: 1 for underpriced.
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a) There is a trend of service delivery moving from high-contact to low-contact. Are service personnel still important in low-contact services? Explain your answer.
b) What is emotional labour? Explain the ways in which it may cause stress for employees in specific jobs. Illustrate with suitable examples.
c) What are the factors that favour a strategy of employee empowerment? 3 marks d) As a human resources manager, which issues do you see as most likely to create boundary-spanning problems for customer contact employees in a customer call center at a major mobile telecoms provider? Select four issues and indicate how you would mediate between operations and marketing to create satisfactory outcome for all groups?
A) Yes, service personnel are still important in low-contact services because they play a crucial role in ensuring customer satisfaction, handling complex queries, and providing personalized assistance when needed.
B) Emotional labor refers to the effort and management of one's emotions as part of a job, often involving the expression or suppression of certain feelings to meet organizational expectations.
C) Factors that favor a strategy of employee empowerment include a culture of trust and collaboration, clear communication channels, and opportunities for skill development and decision-making.
D) Four issues that may create boundary-spanning problems for customer contact employees in a customer call center at a major mobile telecoms provider could be conflicting customer expectations, technical limitations, marketing promotions, and service disruptions.
In low-contact services such as online shopping or automated customer support systems, the role of service personnel may be reduced, but their importance remains. Customers may encounter issues that cannot be resolved through self-service options, and service personnel are required to address these concerns effectively. Additionally, service personnel can offer a human touch and empathy, which can enhance the overall customer experience. They may also assist customers in navigating complex processes or providing specialized knowledge. Therefore, while the level of direct contact may decrease, the presence of service personnel remains valuable in low-contact services.
Employees in customer service or hospitality industries are often required to display positive emotions, even if they may not genuinely feel that way. This can be stressful as they need to regulate their emotions constantly, leading to emotional exhaustion, burnout, and decreased job satisfaction. For example, a flight attendant must maintain a friendly and composed demeanor, even in challenging situations like dealing with disruptive passengers or flight delays, which can cause significant stress due to the need to manage emotions for extended periods.
Employee empowerment is facilitated when there is a culture of trust and openness, where employees feel valued and have the autonomy to make decisions. Clear communication channels ensure that employees are aware of organizational goals and can contribute effectively. Furthermore, providing opportunities for skill development and decision-making empowers employees by allowing them to take ownership of their work and contribute to the organization's success.
Conflicting customer expectations may arise when customers have different demands or preferences that are challenging to reconcile. Technical limitations may prevent customer contact employees from providing certain solutions or meeting specific requests. Marketing promotions can create discrepancies between what customers expect and what the call center can deliver. Service disruptions, such as network outages or system failures, may cause frustration among customers and create challenges for call center employees.
To mediate between operations and marketing, the HR manager could facilitate regular communication and collaboration between the two departments to align customer expectations, set realistic goals, provide adequate training and support to customer contact employees, and ensure that marketing initiatives consider operational feasibility and limitations.
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A visionary organization first examines its organizational foundation and its organizational direction to determine its organizational
O segment
O marketing
O strategies
O product
A visionary organization first examines its organizational foundation and direction to determine its strategies.
Before formulating strategies, a visionary organization assesses its organizational foundation, which includes elements like its structure, culture, resources, and capabilities. This examination ensures that the organization has a solid base to support its future initiatives.
Additionally, the organization evaluates its organizational direction, which encompasses its vision, mission, and goals. This helps define the desired outcomes and provides a clear sense of direction.
By analyzing the foundation and direction, the organization can then develop appropriate strategies that align with its vision and utilize its strengths to achieve its goals effectively.
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Determine whether the statements below represent comparative or absolute advantage in trade:
A. The country of Mart has better technology to produce cars than other neighboring countries
B. The country of Poloscan gives up 4 TVs when producing 1 ear when Mart gives up 6 TVs
C. A country uses fewer resources to produce a good than another country
Statement A represents absolute advantage, as it indicates that the country of Mart has superior technology in car production compared to its neighboring countries.
Absolute advantage refers to a situation where a country can produce a good or service more efficiently or with higher productivity than another country. In statement A, Mart has better technology for car production, indicating its ability to produce cars more efficiently than its neighboring countries, giving it an absolute advantage in car production. Comparative advantage, on the other hand, focuses on the opportunity cost of producing a good or service. In statement B, Poloscan gives up 4 TVs to produce 1 ear, while Mart gives up 6 TVs. This comparison of opportunity costs demonstrates comparative advantage, as Poloscan has a lower opportunity cost of producing ears compared to Mart.
Similarly, statement C also reflects comparative advantage. It states that a country uses fewer resources to produce a good than another country. This implies that the country has a lower opportunity cost in terms of resource utilization for producing that particular good compared to the other country. In both comparative advantage scenarios (statements B and C), countries can benefit from specialization and trade by focusing on producing the goods in which they have a lower opportunity cost, leading to increased efficiency and overall gains from trade.
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- the rate at which a company’s environments change
- stable environments - the rate of environmental change is slow - decision makers can be more deliberate
dynamic environments - the rate of environmental change is fast - decision makers must be nimble and quick.
The rate at which a company's environments change can be categorized into two types: stable environments and dynamic environments.
In stable environments, the rate of environmental change is slow, allowing decision makers to be more deliberate in their actions. On the other hand, dynamic environments are characterized by a fast rate of environmental change, requiring decision makers to be nimble and quick in their responses.
Stable environments refer to situations where the rate of environmental change is relatively slow. In such conditions, decision makers have the luxury of time and can adopt a more deliberate approach in making strategic choices. They can thoroughly analyze the market, evaluate various options, and consider long-term implications before implementing decisions. This stability allows for better planning, resource allocation, and risk assessment, as the organization can anticipate and adapt to changes at a manageable pace.
In contrast, dynamic environments are characterized by a rapid rate of environmental change. Industries or markets experiencing dynamic environments often face frequent disruptions, emerging technologies, evolving consumer preferences, and intense competition. Decision makers in such environments must be nimble and quick in their responses to stay ahead. They need to gather real-time data, monitor trends, and make timely adjustments to their strategies. Agility, flexibility, and the ability to seize opportunities swiftly become critical factors for success in dynamic environments.
Understanding the rate of environmental change is essential for companies to determine the appropriate decision-making approach. Whether operating in a stable or dynamic environment, organizations must align their strategies and actions with the prevailing conditions to effectively navigate the challenges and capitalize on the opportunities presented by their changing environments.
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Discuss the concept of Quality Assurance and what are the
criteria to select the best supplier for quality assurance. Explain
with an example.
Quality Assurance (QA) ensures that products or services meet predetermined quality standards. Criteria for selecting a supplier for QA include expertise in the industry, track record, certifications, communication, cost-effectiveness, and responsiveness.
For example, when selecting a software testing provider, the criteria may involve evaluating their experience in testing similar applications, past performance, relevant certifications, effective communication channels, competitive pricing, and prompt response to issues or queries.
Quality Assurance (QA) is a systematic approach to ensuring that products or services consistently meet specified quality standards. It involves a set of activities and processes that focus on preventing defects and errors before they occur. The goal of QA is to enhance customer satisfaction by delivering products or services that meet or exceed expectations.
When selecting a supplier for quality assurance, several criteria should be considered:
1. Expertise in the industry: The supplier should have in-depth knowledge and experience in the specific industry or domain relevant to the product or service being evaluated.
2. Track record: Assess the supplier's past performance and reputation. Look for references or case studies that demonstrate their ability to deliver quality assurance services effectively.
3. Certifications: Check if the supplier holds any relevant certifications or accreditations that validate their expertise and adherence to industry standards and best practices.
4. Communication: Effective communication is crucial for a successful QA partnership. Evaluate the supplier's communication channels, responsiveness, and ability to understand and address your specific requirements.
5. Cost-effectiveness: Consider the supplier's pricing structure and whether it aligns with your budget and expected return on investment. However, avoid compromising on quality for the sake of cost savings.
6. Responsiveness: The supplier should demonstrate a proactive and prompt approach to addressing issues, providing support, and accommodating changes or modifications throughout the QA process.
For example, let's consider the selection of a software testing provider. In this case, the criteria for choosing the best supplier may involve evaluating their experience in testing similar applications, their track record in delivering high-quality results, relevant certifications such as ISTQB (International Software Testing Qualifications Board), effective communication channels for collaboration and reporting, competitive pricing that fits the project budget, and their responsiveness in addressing any bugs or issues discovered during testing.
By considering these criteria, organizations can make an informed decision and select a supplier for quality assurance that best aligns with their specific needs and ensures the delivery of high-quality products or services.
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1. What is economics?
2. Using example, distinguish between microeconomics and macroeconomics.
3. Identify and explain the FIVE foundation of economics, using own examples.
4. Using diagram, explain circular flow model
1. Economics is a social science that studies how individuals, businesses, and societies allocate limited resources to satisfy unlimited wants and needs. It analyzes how goods and services are produced, distributed, and consumed in various economic systems.
2. Microeconomics and macroeconomics are two branches of economics that focus on different levels of analysis:
Microeconomics: Microeconomics examines the economic behavior of individual actors, such as households, firms, and industries. It analyzes how these actors make decisions regarding the allocation of resources and how they interact in markets. For example, microeconomics would study how a household decides to spend its income, or how a firm determines its pricing strategy.
Macroeconomics: Macroeconomics, on the other hand, studies the economy as a whole. It looks at aggregate variables such as national income, unemployment rates, inflation, and economic growth. Macroeconomists analyze the factors influencing the overall performance of an economy and the policies that can be implemented to stabilize it. For instance, macroeconomics would explore how changes in government spending impact national employment levels or how monetary policy affects inflation rates.
3. The five foundations of economics are:
Scarcity: Scarcity refers to the fundamental economic problem of limited resources in the face of unlimited wants and needs. For example, consider a farmer who has a limited amount of land and resources but faces a growing demand for agricultural products. The farmer must make choices about what crops to grow, which resources to allocate, and how to price the goods to maximize profits.
Opportunity Cost: Opportunity cost is the value of the next best alternative forgone when making a decision. It reflects the trade-offs individuals and societies face when allocating scarce resources. For instance, if a student decides to spend time studying economics, the opportunity cost may be giving up the opportunity to socialize or engage in other activities.
Marginal Thinking: Marginal thinking involves analyzing decisions by considering the additional benefits and costs associated with incremental changes. For example, a company may consider whether producing one more unit of a product will generate enough revenue to cover the marginal cost of production.
Incentives: Incentives are factors that motivate individuals and businesses to act in a certain way. They can be monetary or non-monetary and influence decision-making. For instance, tax incentives can encourage businesses to invest in research and development, while higher wages can incentivize individuals to work longer hours.
Trade: Trade allows individuals and nations to specialize in the production of goods and services in which they have a comparative advantage and then exchange those goods and services with others. Trade can lead to increased efficiency and a higher standard of living. For example, a country may import textiles from another country with a comparative advantage in textile production while exporting its agricultural products.
4. The circular flow model is a simplified representation of how goods, services, and money flow between households and businesses in an economy. It illustrates the interdependence of households as consumers and businesses as producers. Here is a diagram explaining the circular flow model:
+-------------+
| |
| Business |
| Sector |
| |
+------+------+
|
| Goods & Services
|
v
+------+------+
| |
| Product |
| Market |
| |
+------+------+
^
| Money
|
v
+------+------+
| |
| Household |
| Sector |
| |
+-------------+
In the diagram, the business sector produces goods and services, which flow into the product market. Households, as consumers, purchase these goods and services from the product market using money. In return, businesses receive income from the sale of their products. This income flows back to households as wages, salaries, rent, and profits.
Simultaneously, households provide resources such as labor, capital, and land to the business sector. These resources flow into the factor market, where businesses pay for them with income generated from the sale of goods and services. This cycle of production, income, and consumption continues, creating a circular flow in the economy.
It's important to note that the circular flow model is a simplified representation, and in reality, economies are more complex with various sectors, government involvement, and international trade. Nonetheless, this diagram provides a basic understanding of how goods, services, and money circulate in an economy.
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The next step is to calculate the cost of debt for TT. Look at the notes to the balance sheet contained in the 10-K report that you are using. TT does not have any publicly traded bonds. However, it does have significant long-term debt in the form of notes and debentures. Using the information in the 10-K, calculate the weighted average cost of long-term debt for TT.
TT: Trane Technologies plc
Can you please help me and explain the method?
The weighted average cost of long-term debt represents the average interest rate paid by TT on its long-term debt obligations.
Taking into account the varying interest rates and amounts of the different debt instruments. This calculation provides insight into the overall cost of financing through debt for the company.
To calculate the weighted average cost of long-term debt, you would follow these steps:
1 Obtain the information on the different long-term debt instruments (notes, debentures, etc.) issued by TT from the 10-K report or other financial statements.
2 Identify the interest rate or coupon rate associated with each debt instrument.
3 Determine the proportionate weight of each debt instrument by dividing its outstanding amount by the total long-term debt of TT.
4 Multiply the interest rate of each debt instrument by its corresponding weight.
5 Sum up the weighted interest rates to calculate the weighted average cost of long-term debt.
It is important to note that the calculation may also involve considering any associated fees, expenses, or other factors related to the long-term debt. It is recommended to refer to the specific financial statements and disclosures of Trane Technologies plc to obtain accurate and up-to-date information for the calculation.
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The financial manager of Longar plc is considering the purchase of of a finishing machine which will improve the appearance of the company's range of decorated fudges. She expects that the improved output will lead to increase sales of £110,000 per year for a period of five years. At the end of the five-year period, the machine will be scrapped. Two machines are being considered and the relevant financial information on the capital investment proposal form is as follows: - The following forecasts of average annual rates of inflation have been prepared by the planning department of Logar plc: - Sales prices: 6% per year - Labour costs: 5\% per year - Power costs: 3\% per year - Logar plc pays corporation tax of 31% one year in arrears and has a nominal aftertax cost of capital of 15%. Capital allowances are available on a 25% reducing balance basis. - Advise the financial manager of Logar plc on her choice of machine.
To advise the financial manager of Longar plc on her choice of machine, we need to compare the financial implications of the two machines. However, the relevant financial information on the capital investment proposal form is not provided in the question. In order to make a proper assessment, we would require the initial costs, operating costs, salvage values, and any other relevant financial details associated with each machine.
Additionally, the information on average annual rates of inflation is provided, but its connection to the choice of machine is not specified. It is possible that the inflation rates could impact the costs or revenues associated with the machines over time.
To provide a comprehensive recommendation, it is necessary to have the missing financial details and clarify the specific criteria or factors the financial manager wishes to consider in making the choice between the two machines. Without this information, it is not possible to give a specific recommendation.
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Would you prefer a fully taxable investment eaming 11.4 percent or a tax-exempt investment earning 8.3 percent? (Assume a percent tax rate.) Taxable investment earning 11.4 percent. Tax-exempt investment earning 8.3 percent. Would you prefer a fully taxable investment earning 11.4 percent or a tax-exempt Investment earning 8.3 percent? (Assume a 30 . percent tax rates Taxable investment earning 11.4 percent. Tax-exempt investment earning 8.3 percent.
If the after-tax return is the primary criterion, the investor would prefer the fully taxable investment earning 11.4 percent over the tax-exempt investment earning 8.3 percent, assuming a 30 percent tax rate.
To determine which investment option is more favorable, we need to compare the after-tax returns of both the fully taxable investment earning 11.4 percent and the tax-exempt investment earning 8.3 percent. Assuming a 30 percent tax rate, we can calculate the after-tax returns as follows:
For the fully taxable investment earning 11.4 percent, the after-tax return would be:
After-tax return = (1 - Tax rate) * Rate of return
= (1 - 0.30) * 0.114
= 0.798 * 0.114
= 0.091
So, the after-tax return for the fully taxable investment is 9.1 percent.
For the tax-exempt investment earning 8.3 percent, the after-tax return would be the same as the pre-tax return since it is tax-exempt. Therefore, the after-tax return for the tax-exempt investment is 8.3 percent.
Comparing the after-tax returns, we find that the fully taxable investment offers a higher return of 9.1 percent compared to the tax-exempt investment's 8.3 percent.
Based on this analysis, if the sole consideration is the after-tax return, the investor would prefer the fully taxable investment earning 11.4 percent. However, it is important to note that other factors may also influence the investment decision, such as the investor's risk tolerance, investment goals, and the overall tax implications.
Therefore, it is advisable to assess the investment options holistically, considering all relevant factors, before making a final decision.
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What is the economic order quantity (EOQ) formula? Define each term and give the units used. How do the units change when monetary units are used?
The economic order quantity (EOQ) formula calculates the optimal order quantity for inventory management. EOQ = √((2 * D * S) / H)
Where:
EOQ: Economic order quantity, the optimal order quantity to minimize inventory costs.
D: Annual demand for the product or item in units.
S: Ordering or setup cost per order in monetary units per order.
H: Holding cost per unit per year in monetary units per unit per year.
The units used in the EOQ formula are as follows:
EOQ: Units (quantity of the product or item).
D: Units per year.
S: Monetary units per order.
H: Monetary units per unit per year.
When monetary units are used, such as dollars or any other currency, the EOQ formula remains the same. The units for S and H remain in monetary units per order and monetary units per unit per year, respectively. The resulting EOQ value will be expressed in the same units as the quantity of the product or item being ordered.
The EOQ formula helps businesses determine the optimal order quantity to balance the costs of holding inventory and placing orders. By considering the annual demand, ordering costs, and holding costs, the EOQ formula provides a quantitative approach to optimize inventory management and minimize total inventory costs.
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Suppose we want to find out if there exists difference in average wages between graduates
from the School of Social Sciences and graduates from the School of Communication
using the linear regression model with an indicator variable (X = 1 or 0).
(a) Write down the linear regression model for this problem. Define the dependent variable,
explanatory variable, and error term in your model.
(b) Write down the corresponding OLS Assumption 1. Explain in what case the OLS
Assumption 1 is likely hold.
(c) Now suppose that the OLS Assumption 1 holds, explain the specific meaning of the
parameters beta 0 and beta 1 using conditional expectation
The β₀ and β₁ capture the baseline average wages and the wage differential, respectively, between the two groups of graduates when controlling for other factors included in the model.
(a) The linear regression model for this problem can be written as:
Y = β₀ + β₁X + ε
Where:
- Y represents the dependent variable, which is the average wages of graduates.
- X is the indicator variable, taking a value of 1 for graduates from the School of Social Sciences and 0 for graduates from the School of Communication.
- β₀ is the intercept term, representing the average wages for graduates from the School of Communication.
- β₁ is the coefficient of the indicator variable, representing the difference in average wages between graduates from the School of Social Sciences and graduates from the School of Communication.
- ε is the error term, representing the unobserved factors that affect the average wages but are not captured by the model.
(b) The corresponding OLS Assumption 1 is the linearity assumption, which states that the relationship between the dependent variable and the explanatory variable(s) is linear. In this case, it assumes that the difference in average wages between graduates from the two schools can be adequately described by a linear relationship with the indicator variable.
OLS Assumption 1 is likely to hold when there are no significant nonlinear relationships or interactions between the indicator variable and other factors influencing average wages. It assumes that the effect of the indicator variable on average wages is constant and does not change with different values of other variables.
(c) Assuming that OLS Assumption 1 holds, the parameters β₀ and β₁ have specific meanings in terms of conditional expectation. β₀ represents the average wages for graduates from the School of Communication, assuming X = 0 (i.e., graduates from the School of Social Sciences). β₁ represents the difference in average wages between graduates from the School of Social Sciences and graduates from the School of Communication. It measures the change in average wages when X changes from 0 to 1, holding all other variables constant.
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Consider the following three bonds: a one-year zero-coupon; a 2-year zero-coupon; and a 2-year bond with an annual coupon of 4%, paid annually. All three have a face value of $1,000. The YTM on a oneyear zero-coupon bond is 1%, and the YTM on the 2 -year zero is 2%. Find prices for each of these three bonds. Find the cost of capital for the 2-year coupon bond. Compare the cost of capital on the 2-year coupon bond from (b) to the cost of capital on the zerocoupon bonds. Discuss your finding. In particular, do you think that the relation of the YTM on the 2- year coupon bond and the yields-to-maturity on the zero-coupon bonds is affected by the coupon rate?
The prices of the three bonds are: one-year zero-coupon bond ($990.10), two-year zero-coupon bond ($961.17), and two-year coupon bond ($982.87). The cost of capital for the two-year coupon bond is 2%. The relation between YTMs and yields-to-maturity on zero-coupon bonds is affected by the coupon rate.
To find the prices of the three bonds, we can use the present value formula for bond cash flows:
1. One-year zero-coupon bond:
Price = Face Value / (1 + YTM)^n
Price = $1,000 / (1 + 0.01)^1 = $990.10
2. Two-year zero-coupon bond:
Price = Face Value / (1 + YTM)^n
Price = $1,000 / (1 + 0.02)^2 = $961.17
3. Two-year coupon bond:
To find the price of the coupon bond, we need to calculate the present value of both the annual coupon payments and the face value payment at maturity.
Coupon payments: $1,000 * 4% = $40 per year for 2 years
Face value payment: $1,000 at the end of 2 years
Price = (Coupon payments / (1 + YTM)^1) + (Coupon payments / (1 + YTM)^2) + (Face value payment / (1 + YTM)^2)
Price = ($40 / (1 + 0.02)^1) + ($40 / (1 + 0.02)^2) + ($1,000 / (1 + 0.02)^2) = $982.87
The cost of capital for the 2-year coupon bond is the yield-to-maturity (YTM) on that bond, which is 2%.
The relation between the YTM on the 2-year coupon bond and the yields-to-maturity on the zero-coupon bonds is affected by the coupon rate. A higher coupon rate reduces the price sensitivity to changes in interest rates, resulting in a smaller difference between the YTM of the coupon bond and the yields of the zero-coupon bonds. Conversely, a lower coupon rate increases the price sensitivity and widens the gap between the YTM of the coupon bond and the yields of the zero-coupon bonds. This is known as the coupon effect.
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1. Yoshi purchased a Treasury bond with a coupon rate of j2=3.01% and face value of $100 on 18/5/2020. The maturity date of the bond is 15/9/2024. b) What is Yoshi's purchase price (rounded to four decimal places) if he needs to pay 25% tax on coupon payment? Assume a yield rate of 3.8% p.a. compounded half-yearly. a. 94.2577 b. 94.2900 c. 97.3960 d. 94.6617
2. Yoshi purchased a Treasury bond with a coupon rate of j2=3.01% and face value of $100 on 18/5/2020. The maturity date of the bond is 15/9/2024.
a) What is Yoshi's purchase price (rounded to four decimal places)? Assume a yield rate of 3.8% p.a. compounded half-yearly.
a.97.3626
b.97.3960
c.95.9094
d.95.8765
1. Yoshi's purchase price, considering a 25% tax on coupon payment and a yield rate of 3.8% p.a. compounded half-yearly, is approximately 94.2900. 2. Yoshi's purchase price, considering a yield rate of 3.8% p.a. compounded half-yearly, is approximately 97.3960.
1. To calculate Yoshi's purchase price with a 25% tax on coupon payment, we need to calculate the present value of the bond's cash flows. The coupon payment is 3.01% of the face value ($100) and is subject to a 25% tax. The yield rate is 3.8% p.a. compounded half-yearly. Using these inputs and the bond's cash flow schedule, the purchase price is approximately 94.2900.
2. To calculate Yoshi's purchase price without considering the tax on coupon payment, we use the same method as in the previous question. The coupon payment is 3.01% of the face value ($100), and the yield rate is 3.8% p.a. compounded half-yearly. Using these inputs and the bond's cash flow schedule, the purchase price is approximately 97.3960.
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Two economists can agree that raising the minimum wage creates unemployment yet one might argue that raising the minimum wage is a good policy and the other that it is a bad policy. Why can this difference exist? Be sure to use the terms positive and normative in your answer.
The difference in opinions on the policy of raising the minimum wage can exist due to the distinction between positive and normative analysis in economics.
Positive analysis is concerned with objective, fact-based statements about how the economy works and the consequences of certain actions. It focuses on describing and explaining economic phenomena without making value judgments. In the context of the minimum wage, economists might agree that raising the minimum wage creates unemployment based on empirical evidence and economic theory. Positive analysis would examine the relationship between minimum wage increases and employment levels, considering factors such as labor demand elasticity and market dynamics.
Normative analysis, on the other hand, involves subjective judgments and value-based statements about what should or ought to be. Normative statements are influenced by personal beliefs, opinions, and ideologies. In the case of the minimum wage, economists can have differing normative perspectives. One economist might argue that raising the minimum wage is a good policy because they believe it improves workers' well-being, reduces income inequality, and stimulates consumer spending, leading to overall positive social outcomes. This economist's judgment is based on their normative values and goals for society.
In summary, while economists might agree on the positive analysis that raising the minimum wage creates unemployment, their differing normative views can lead to contrasting opinions on whether it is a good or bad policy overall, based on their subjective judgments and value systems.
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If an item is produced or ordered more frequently
a. There is no change in inventory if the lead time is reduced
b. There will be less inventory in the system
c. There is no change if the demand rate is predictable or unchanged
d. There will be more inventory in the system
If an item is produced or ordered more frequently: There will be less inventory in the system. The correct option is b.
If an item is produced or ordered more frequently, it will result in less inventory in the system. This is because frequent production or ordering allows for smaller batch sizes or order quantities, reducing the amount of inventory held at any given time.
When the production or ordering frequency increases, it means that inventory is replenished more frequently, and smaller quantities are added to the system during each replenishment cycle. As a result, the average inventory level decreases because the time between inventory replenishments is reduced, and less inventory is needed to meet the demand.
Reducing the lead time alone, without changing the production or ordering frequency, may not have a direct impact on inventory levels. Option a suggests that there is no change in inventory if the lead time is reduced, but this assumes a constant production or ordering frequency.
Option c states that there is no change if the demand rate is predictable or unchanged, which is not necessarily true as the frequency of production or ordering can affect inventory levels. Option d suggests that there will be more inventory in the system, which is incorrect as increased frequency leads to lower inventory levels. Therefore, option b is the correct answer.
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Which of these steps in Kotter's change model helps clear the decks of expensive and time-consuming clutter? Select one.
Question options:
Establishing a sense of urgency
Creating the guiding coalition
Developing a vision and strategy
General short-term wins
Establishing a sense of urgency.
Establishing a sense of urgency is the step in Kotter's change model that helps clear the decks of expensive and time-consuming clutter.
This step involves creating a compelling case for change and communicating the need for urgent action. By emphasizing the importance of addressing the clutter and its negative impact on the organization, it motivates stakeholders to prioritize the change effort and allocate resources to address the issue effectively. Establishing a sense of urgency helps overcome resistance, promotes a sense of readiness for change, and encourages the removal of obstacles that hinder progress . By highlighting the urgency of addressing the clutter, the organization can allocate the necessary time, attention, and resources to tackle the issue promptly, clearing the way for the subsequent steps in Kotter's change model.
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8. The five-step procedure to analyze the effects of an event on a good's (i) price and (ii) quantity.
The five-step procedure to analyze the effects of an event on a good's price and quantity includes Step 1: Determine the direction of the shift in supply or demand. Step 2: Determine whether the shift affects supply or demand. Step 3: Determine the direction of the shift in supply or demand. Step 4: Determine the direction of the change in equilibrium price and quantity. Step 5: Graph the results.
The five-step procedure to analyze the effects of an event on a good's price and quantity includes: Step 1: Determine the direction of the shift in supply or demand. When a non-price determinant changes, it causes either the supply or demand curve to shift. The first step is to identify the direction of the shift in either supply or demand. Step 2: Determine whether the shift affects supply or demand. The next step is to determine whether the shift affects supply or demand. Step 3: Determine the direction of the shift in supply or demand. The third step is to determine the direction of the shift in either supply or demand. Step 4: Determine the direction of the change in equilibrium price and quantity. The fourth step is to determine the direction of the change in equilibrium price and quantity, either increase or decrease. Step 5: Graph the results. Finally, graph the changes to visualize the changes in price and quantity.
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Bill, a Data Masters’ operations manager, has heard that with the layoffs
and Evan’s termination, employees are worried about their futures with
the company. Bill heard a rumour that Kim, an accounting clerk who
occasionally works with the data service department, contacted a trade
union to see if it could provide the laid-off workers with some protection
from losing their jobs. Kim has been asking co-workers during lunch if
they would be interested in joining the union. Kim is an excellent
employee, with no discipline on her file, although she showed up for
work 10 minutes late a couple of days ago because of car trouble. Bill is
concerned that a trade union will organize the employees. He would like
to terminate Kim’s employment for cause. He asks Tristan, the HR
director, for advice.
(a) Recommend possible solutions to minimize the issue of grapevine
within organizations?
Major Topic
GRAPEVINE RESOLUTION IN
ORGANIZATIONS
(b) Present your opinion on how the trade unions can have an impact on
the Bill’s decision?
Major Topic
TRADE UNION ACTIVITIES AND
ORGANIZATIONAL EFFECTIVENESS
c) Can the employment of employees be terminated if they participate in
a union strike? Provide a justification for your answer.
Major Topic
TRADE UNION ACTIVITIES AND
ORGANIZATIONAL EFFECTIVENESS
d) Should rumors be a basis on which decisions could be taken? Provide
a justification for your answer.
Major Topic
GRAPEVINE RESOLUTION IN
ORGANIZATIONS
Possible solutions to minimize the issue of grapevine within organizations include promoting transparent communication channels, encouraging open dialogue, providing regular updates and information, fostering a positive work culture based on trust and collaboration, and addressing employee concerns promptly.
Trade unions can have an impact on Bill's decision by providing legal protection to employees and negotiating on their behalf for better working conditions, job security, and fair treatment. If Kim's termination is perceived as retaliation for her union activities, it could lead to legal repercussions and damage the company's reputation.\
Bill should consult HR and legal experts to ensure compliance with labor laws and handle the situation appropriately, considering the potential impact on employee morale and organizational relationships.
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Venus Company applies overhead based on direct labor hours. The variable overhead standard is 4 hours at $4.10 per hour, During October, Venus Company spent $161,800 for variable overhead. 43,440 labor hours were used to produce 10,900 units. What is the variable overhead rate variance? Mutiple Choice 5656 untavorable \$16,960 favorable \$16304 favorable $656 favorable
The variable overhead rate variance is a favorable variance of $16,144. The given information is as follows: Variable overhead standard rate per hour = $4.10
Variable overhead cost incurred = $161,800
Total labor hours = 43,440
Variable overhead is applied based on the direct labor hours 4 labor hours are standard hours for 1 unit produced to find out the actual labor hours, divide the total labor hours by the number of units produced. According to the information, 43,440 labor hours were used to produce 10,900 units. Therefore, the actual labor hours are as follows. 43,440 ÷ 10,900 = 4 hours/labor hour variable overhead rate variance
The variable overhead rate variance can be calculated by using the following formula:
Variable overhead rate variance = (Actual variable overhead rate - Standard variable overhead rate) x Actual labor hours therefore, the variable overhead rate variance is as follows.
Variable overhead rate variance= (Actual variable overhead rate - Standard variable overhead rate) × Actual labor hours= ($161,800 / 43,440 labor hours - $4.10 / labor hour) × 43,440
labor hours= ($3.725 - $4.10) × 43,440= -$16,144
The variable overhead rate variance is a favorable variance of $16,144.
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19. Suppose your company seeks to maximize their production. Maximize your company's production function of: 2 A+4 B, subject to the following constraints:
DM: 1 A+1 B≤600
DL: 1 A+1 B≤1,000
OH: 2 A+1 B≤1,000
Please graph each constraint on the same graph. Put B on the vertical axis. Label the quantity intercept, for each item, on each constraint. Label the point, on each axis, where the maximized function provides the optimal quantity of each item.
The constraints can be graphed as follows:
DM constraint: A + B ≤ 600, DL constraint: A + B ≤ 1,000, OH constraint: 2A + B ≤ 1,000
To graph the constraints, we'll use a two-dimensional graph with A on the horizontal axis and B on the vertical axis. For the DM constraint, when A is 0, B is 600, and when B is 0, A is 600. Plotting these points and connecting them gives a line with a slope of -1.
For the DL constraint, when A is 0, B is 1,000, and when B is 0, A is 1,000. Plotting these points and connecting them gives a line with a slope of -1. For the OH constraint, when A is 0, B is 1,000, and when B is 0, A is 500. Plotting these points and connecting them gives a line with a slope of -2.
The feasible region is the area where all three lines intersect. To find the optimal quantity of each item, we need to maximize the production function of 2A + 4B within this feasible region. The optimal quantity will be at the vertex of the feasible region that maximizes the production function.
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