The current dividend of the stock is $3.30/share. In the future, the dividend is expected to grow at a constant rate of 5% per annum. The return that investors expect is 9.5%.
The price of the stock:
Formula used: P=D1/(r-g) where,
P = the price of the stock
D1 = expected dividend payment in one year
r = required rate of return on the stock g = expected growth rate of dividends in the future
To calculate the price of the stock, we need to calculate the dividend in the next year, which is D1.
D0 = current dividend = $3.30/share. The expected dividend growth rate is 5%. Therefore,
D1= D0(1+g)=$3.30(1+5%)= $3.465.
For the required rate of return, r= 9.5%.The expected growth rate of dividends, g= 5%.
Therefore, the price of the stock is P=D1/(r-g)P = $3.465/(9.5%-5%)P = $86.62.
Therefore, the price of the stock is $86.62.
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Budgetary Slack with Ethical Considerations
Karen Bailey was promoted to department manager of a production unit in Parkway Industries
three years ago. She enjoys her job except for the evaluation measures that are based on the depart-
ment’s budget. After three years of consistently poor annual evaluations based on a set annual bud-
get, she has decided to improve the evaluation situation. At a recent budget meeting of junior-level
managers, the topic of budgetary slack was discussed as a means to maintain some consistency in
budgeting matters. As a result of this meeting, Bailey decided to take the following steps in prepar-
ing the upcoming year’s budget:
1. Use the top quartile for all wage and salary categories.
2. Select the optimistic values for the estimated production ranges for the coming year. These are
provided by the marketing department.
3. Use the average of the three months in the current year with poorest production efciency as
benchmarks of success for the coming year.
4. Base equipment charges (primarily depreciation) on replacement values furnished by the pur-
chasing department.
5. Base other xed costs on current cost plus an ination rate estimated for the coming year.
6. Use the average of the ten newly hired employees’ performance as a basis of labor efciency
for the coming year.
Required
a. For each item on Bailey’s list, explain whether it will create budgetary slack. Use numerical
examples as necessary to illustrate.
b. Given the company’s use of static budgets as one of the performance evaluation measures of
its managers, can the managers justify the use of built-in budgetary slack?
c. What would you recommend as a means for Bailey to improve the budgeting situation in the
company? Provide some specific examples of how the budgeting process might be improved
Karen Bailey, a department manager at Parkway Industries, is dissatisfied with the evaluation measures based on the department's budget. In an attempt to improve her evaluations, Bailey plans to incorporate budgetary slack into the upcoming year's budget. She intends to do this by: 1) using the top quartile for wage and salary categories, 2) selecting optimistic values for estimated production ranges, 3) using the average of the three months with the poorest production efficiency as benchmarks, 4) basing equipment charges on replacement values, 5) basing fixed costs on current costs plus an estimated inflation rate, and 6) using the average performance of newly hired employees as the basis for labor efficiency.
a. Bailey's actions will create budgetary slack. By using the top quartile for wage and salary categories, she sets higher labor costs than necessary, resulting in a budget surplus. Selecting optimistic values for production ranges inflates revenue expectations, creating a budget surplus. Using the average of the months with poor production efficiency sets low performance standards, making it easier to achieve the budget and creating a surplus. Basing equipment charges on replacement values can overstate depreciation costs, leading to a budget surplus. Basing fixed costs on current costs plus an inflation rate may result in an overestimation, creating a surplus. Lastly, using the average performance of newly hired employees as the basis for labor efficiency introduces low performance expectations, again creating a surplus.
b. The use of built-in budgetary slack cannot be justified as a valid performance measure. It distorts the budgeting process by intentionally creating surplus funds. Static budgets, which do not adjust for changes in activity levels or unforeseen circumstances, fail to provide an accurate reflection of managerial performance. By incorporating budgetary slack, managers can manipulate the budget to achieve favorable results without necessarily demonstrating effective management or cost control.
c. To improve the budgeting situation, Bailey should focus on implementing a more realistic and effective budgeting process. This can include the following measures: 1) Collaborating with the marketing department to obtain accurate production estimates based on historical data and market analysis, rather than overly optimistic projections. 2) Using realistic benchmarks for performance, such as industry standards or historical performance data, to set achievable goals. 3) Ensuring that equipment charges are based on actual usage and maintenance requirements rather than replacement values. 4) Conducting thorough cost analysis to accurately estimate fixed costs and considering market trends for inflation adjustments. 5) Setting performance standards based on the overall workforce's capabilities and historical data, rather than relying solely on the performance of newly hired employees. By implementing these improvements, the budgeting process can become more reliable and provide a fair assessment of managerial performance.
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A bond with 26-year maturity was issued 6 years ago. The face value of this 8.1% semi-annual coupon paying bond is $4,000. Analysts find that the current yield to maturity of this bond is 14.62 percent. Show your workings and find the value of this bond. Compare this value against the face value of the bond and write your comment to explain the difference, if any. (Use max 100 words for the explanation).
The current value of the bond is $2,503.45.
To calculate the value of the bond, we need to discount the future cash flows (coupon payments and face value) at the yield to maturity rate. The bond has a 26-year maturity with semi-annual coupon payments, so there will be 52 periods.
The coupon payment is 8.1% of the face value, which is $4,000, so each coupon payment is $324 ($4,000 * 8.1% / 2). Using the formula for the present value of an annuity, we can calculate the present value of the coupon payments. The discount rate is half of the yield to maturity rate, which is 7.31% (14.62% / 2). The present value of the coupon payments is $3,504.94. The face value of the bond, discounted to the present, is $998.49. Adding the present value of the coupon payments and the face value, we get the value of the bond, which is $2,503.45.
The value of the bond is lower than its face value. This occurs because the yield to maturity is higher than the coupon rate. When the yield to maturity is higher, the present value of the future cash flows decreases, leading to a lower bond value.Apologies for the brevity of the previous response. Here's a more detailed explanation:
To calculate the value of the bond, we use the present value formula for both the coupon payments and the face value. The coupon payments are semi-annual, which means there will be 52 periods (26 years * 2). The coupon payment is 8.1% of the face value, which is $4,000, resulting in a coupon payment of $324 ($4,000 * 8.1% / 2).
Next, we need to determine the discount rate, which is half of the yield to maturity (YTM) rate. The given YTM is 14.62%, so the discount rate is 7.31% (14.62% / 2). We can now calculate the present value of the coupon payments using the present value of an annuity formula:
PV = Coupon Payment * [1 - (1 + r)⁽⁻ⁿ⁾] / r
Where PV is the present value, r is the discount rate, and n is the number of periods. Plugging in the values, we find:
PV of Coupon Payments = $324 * [1 - (1 + 0.0731)⁽⁻⁵²⁾] / 0.0731 = $3,504.94
Next, we calculate the present value of the face value, which is simply the face value discounted to the present:
PV of Face Value = $4,000 / (1 + 0.0731)⁽²⁶ * ²⁾ = $998.49
Finally, to find the value of the bond, we add the present value of the coupon payments and the present value of the face value:
Bond Value = PV of Coupon Payments + PV of Face Value
Bond Value = $3,504.94 + $998.49 = $2,503.45
The value of the bond is $2,503.45, which is lower than its face value of $4,000. This is because the yield to maturity is higher than the coupon rate of 8.1%. When the YTM exceeds the coupon rate, the bond is less attractive to investors, leading to a lower present value and thus a lower bond value compared to its face value.
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A stock had annual return of 5.5 percent, -12 percent, and 15.5 percent for the past three years, respectively is the standart deviation of returns for this stock?
Multiple Choice
a. 56.65%
b. 6.94%
c. 1.94%
d. 13.92%
e. 11.37%
The standard deviation of returns for the given stock is approximately 11.37% (option e).
The standard deviation measures the volatility or dispersion of returns around the average return. To calculate the standard deviation, follow these steps:
1. Calculate the average return:
Average return = (5.5% - 12% + 15.5%) / 3 = 3%
2. Calculate the squared deviations from the average return for each year:
Year 1: (5.5% - 3%)^2 = 8.41%
Year 2: (-12% - 3%)^2 = 225%
Year 3: (15.5% - 3%)^2 = 144.09%
3. Calculate the average of the squared deviations:
Average of squared deviations = (8.41% + 225% + 144.09%) / 3 = 125.17%
4. Take the square root of the average of squared deviations to find the standard deviation:
Standard deviation = √(125.17%) ≈ 11.37%
Therefore, the standard deviation of returns for this stock is approximately 11.37%. This indicates that the stock's returns have experienced significant volatility over the past three years.
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Wildhorse Corporation, which operates an amusement park, is considering a capital investment in a new ride. The ride would cost $128,000 and have an estimated useful life of 5 years. The park will sell it for $68,700 at that time. (Amusement parks need to rotate rides to keep people interested.) The ride will be expected to increase net annual cash flows by $22,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Click here to view the factor table. Calculate the net present value of this project to the company. (If the net present value is negative, use either a negutive sign preceding the number es. −45 or parentheses es. (45). For calculation pumpses, use 5 decimal places as displayed in the factor table provided, es. 1.25124. Round present value answer to 0 decimal places, e. 125J
The net present value (NPV) of the capital investment in the new ride for Wildhorse Corporation is approximately -$114,144.52.
To calculate the NPV, we need to discount the expected cash flows using the company's cost of capital. The formula for NPV is as follows:
NPV = PV of Cash Inflows - Initial Investment
The PV of Cash Inflows can be calculated by discounting the net annual cash flows using the cost of capital. In this case, the net annual cash flow is $22,300, and the cost of capital is 10%.
Using the factor table provided, the present value factor for 5 years at a discount rate of 10% is 0.62092.
PV of Cash Inflows = Net Annual Cash Flow * Present Value Factor
= $22,300 * 0.62092
≈ $13,855.48
Now, we can calculate the NPV:
NPV = PV of Cash Inflows - Initial Investment
= $13,855.48 - $128,000
≈ -$114,144.52
Since the NPV is negative, we conclude that the investment in the new ride would not be financially viable for Wildhorse Corporation.
Therefore, The net present value (NPV) of the capital investment in the new ride for Wildhorse Corporation is approximately -$114,144.52.
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According to the case study of Vita Plastics Assembly Company, and its concerns about whether opening a manufacturing plant in Almeria and transferring much of its current US-based production to the new plant. What policies do you recommend the company pursue?
After analyzing the case study of Vita Plastics Assembly Company, it is recommended that the company should evaluate the market, reduce labor costs, and develop a supply chain along with implementing quality control measures and focusing on customer service.
The company should pursue the following policies:
Evaluate the market: The first policy the company should pursue is to evaluate the market of Almeria to determine if it's profitable for them to expand to that location. The company needs to assess the cost of production, availability of raw materials, and market demand to make a sound decision.2. Reduce labor costs: If the company decides to set up its manufacturing plant in Almeria, it will need to work on reducing labor costs. This can be achieved through various means such as improving productivity, automation of processes, and hiring local employees.3. Develop a supply chain: The company needs to develop a supply chain for raw materials to ensure a consistent supply at an affordable price. This will help the company to reduce the cost of production and, in turn, increase its profitability.4. Implement quality control measures: To maintain the quality of its products, Vita Plastics Assembly Company needs to implement quality control measures. It can also consider investing in quality control equipment to ensure that the products meet the customer's specifications.5. Focus on customer service: Vita Plastics Assembly Company needs to ensure that its customers receive excellent customer service. This can be achieved by training employees to be customer-focused, developing a customer service department, and improving the company's online presence.To know more about policies
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With COVID slowly becoming endemic, many workers are facing uncertainty in regards to where they will work - from home of the office.. Your organization is asking each Project Team to decide if they will work from home of return to the office to complete the project. This question has 3 parts, culminating with a Force Field Analysis. Answer clearly, but in a concise manner. Part 1 - Use Brainstorming to identify factors that would be important to consider in a decision to work from home. Show the result of your brainstorm. Part 2 - Use an Affinity Diagram to organize the ideas you generated from the brainstorm. How might you use your Affinity Diagram with your team? Part 3 - Prepare a Force Field Analysis to help with a tough decision. The decision you must make is the following: "Should I ask the project team members to return to the office?" Please show the 3 steps involved in the Force Field Analysis. Note: You can answer this question using graphics, text or tables. You can write Note: You can answer this question using graphics, text or tables. You can write directly in the Brightspace window below and/or you upload an image or document. Your submission must be clear and concise, but you can submit the information in any format you like.
Part 1: Factors to consider in a decision to work from home: Flexibility, no commute, comfortable environment, decreased distractions, work-life balance, affordability, and safety. Part 2: Use Affinity Diagram to organize ideas generated by the team for better categorization and decision-making. Part 3: Force Field Analysis: Identify driving forces (e.g., cost savings, flexibility) and restraining forces Calculate net force to determine if team should return to the office.
Part 1: Factors to consider in a decision to work from home:
Flexibility of work schedule.
No commute necessary.
Flexibility to work in a comfortable environment.
Decreased distractions.
Improved work-life balance.
Affordability.
Safety.
Part 2: Use of Affinity Diagram with the team:
The team can use the affinity diagram to organize the ideas generated from the brainstorm to help categorize and prioritize them. By doing so, the team will be able to focus their attention on key topics and make better decisions.
Part 3: Force Field Analysis
Step 1: Identify and list the driving forces (Factors that support the decision)
The driving forces are:
Cost savings by not renting office space.
Team members can work from anywhere.
Flexibility and increased work-life balance.
Step 2: Identify and list the restraining forces (Factors that oppose the decision)
The restraining forces are:
Difficulties in monitoring team members.
Loss of office communication and teamwork.
Resistance to change from team members.
Step 3: Calculate the Net Force
After listing all the driving and restraining forces, you can calculate the net force as:
Net force = Driving forces - Restraining forces
If the net force is positive, then it supports the decision, while if the net force is negative, then it opposes the decision.
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Crane’s Custom Construction Company is considering three new projects, each requiring an equipment investment of $24,860. Each project will last for 3 years and produce the following net annual cash flows.
Year AA BB CC
1 $7,910 $11,300 $14,690
2 10,170 11,300 13,560
3 13,560 11,300 12,430
Total $31,640 $33,900 $40,680
The equipment’s salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback period over 2 years. Crane’s required rate of return is 12%. Click here to view PV table.
(a)
Compute each project’s payback period. (Round answers to 2 decimal places, e.g. 15.25.)
compute each project's payback period, we need to determine the time it takes for the cumulative cash flows to recover the initial investment. Let's calculate the payback period for each project:
Project AA:
Year 1 cash flow: $7,910
Year 2 cash flow: $10,170
Year 3 cash flow: $13,560
Cumulative cash flows:
Year 1: $7,910
Year 2: $7,910 + $10,170 = $18,080
Year 3: $18,080 + $13,560 = $31,640
The cumulative cash flows reach the initial investment of $24,860 during Year 3. To determine the exact payback period, we need to find the fractional year by dividing the remaining cash flow by the Year 3 cash flow:
Fractional year = ($24,860 - $18,080) / $13,560 = $6,780 / $13,560 = 0.50
Therefore, the payback period for Project AA is 2.50 years (2 years + 0.50 years).
Project BB:
Year 1 cash flow: $11,300
Year 2 cash flow: $11,300
Year 3 cash flow: $11,300
Cumulative cash flows:
Year 1: $11,300
Year 2: $11,300 + $11,300 = $22,600
Year 3: $22,600 + $11,300 = $33,900
The cumulative cash flows reach the initial investment of $24,860 during Year 3. The fractional year calculation is not necessary since the cash flow exactly matches the investment in the third year.
Therefore, the payback period for Project BB is 3 years.
Project CC:
Year 1 cash flow: $14,690
Year 2 cash flow: $13,560
Year 3 cash flow: $12,430
Cumulative cash flows:
Year 1: $14,690
Year 2: $14,690 + $13,560 = $28,250
Year 3: $28,250 + $12,430 = $40,680
The cumulative cash flows exceed the initial investment of $24,860 during Year 2. To find the fractional year, we divide the remaining cash flow by the Year 2 cash flow:
Fractional year = ($24,860 - $14,690) / $13,560 = $10,170 / $13,560 = 0.75
Therefore, the payback period for Project CC is 2.75 years (2 years + 0.75 years).
In summary, the payback periods for the three projects are as follows:
- Project AA: 2.50 years
- Project BB: 3 years
- Project CC: 2.75 years
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Assume Highline Company has just paid an annual dividend of $1.07. Analysts are predicting an 10.8% per year growth rate in eamings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.3% per year. If Highline's equity cost of capital is 7.8% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell? The value of Highline's stock is S (Round to the nearest cent.
According to the dividend-discount model, the predicted price at which Highline stock should sell is approximately $26.28 (rounded to the nearest cent). This calculation takes into account the company's annual dividend, expected growth rates in earnings, the equity cost of capital, and the constant dividend payout ratio.
The dividend-discount model calculates the value of a stock based on the present value of its expected future dividends. In this case, we are given that Highline has just paid an annual dividend of $1.07. To calculate the stock's predicted price, we need to consider the dividend growth rates and the equity cost of capital.
For the next five years, analysts predict a growth rate of 10.8% per year in Highline's earnings. After that, the earnings are expected to grow at the industry average of 5.3% per year. Assuming the dividend payout ratio remains constant, we can calculate the future dividends using these growth rates.
To calculate the present value of these dividends, we discount them using the equity cost of capital of 7.8% per year. By discounting the expected future dividends and summing them, we can determine the predicted price at which Highline stock should sell. The calculation yields a value of approximately $26.28, rounded to the nearest cent.
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for products such as ________, a price hike may actually result in an increase in demand.
A price hike for veblen goods may actually lead to an increase in demand as consumer perceive them as more desirable and exclusive.
for products such as luxury goods or prestigious brands, a price hike may actually result in an increase in demand.
luxury goods and prestigious brands often carry an aura of exclusivity and status. when the price of these products increases, it can create a perception of higher quality, rarity, and desirability among consumers. as a result, some consumers may be willing to pay a higher price to own these products as it enhances their social status or symbolizes their wealth.
additionally, the concept of "veblen goods" is relevant here. veblen goods are goods for which demand increases as their price increases, contrary to the typical law of demand. these goods derive their value and appeal from their high price, and consumers associate higher prices with higher prestige or social standing. it's important to note that this phenomenon is not applicable to all products and industries. different products and market segments will have varying price sensitivities and consumer behaviors. price elasticity of demand and consumer preferences play a significant role in determining how price changes affect demand.
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Reflect with a brief note at least 5 points what you learned from the MOOC course "Business statistics and Analysis specialization (Course Era)"
The specific content and emphasis of courses may vary, so it's important to review the syllabus and course description for the "Business Statistics and Analysis Specialization" on Coursera to obtain detailed information.
Here are five key takeaways from such courses:
1. Statistical concepts and techniques: Courses in business statistics and analysis provide an understanding of fundamental statistical concepts such as probability, sampling, hypothesis testing, and regression analysis. These techniques enable businesses to make data-driven decisions and derive meaningful insights from data.
2. Data visualization: Effective data visualization plays a crucial role in conveying insights and trends. Courses in this field teach how to use graphical tools and software to present data visually, making it easier to interpret and communicate findings to stakeholders.
3. Statistical software: Business statistics courses often involve the use of statistical software packages such as R or Python. Students learn how to leverage these tools to perform statistical analyses, generate reports, and visualize data.
4. Decision-making under uncertainty: Business statistics helps managers make informed decisions in the face of uncertainty. Courses explore concepts like risk analysis, probability distributions, and decision theory to equip learners with techniques for analyzing and managing risk in decision-making processes.
5. Data-driven problem-solving: Business statistics emphasizes the importance of using data to solve real-world problems. Courses typically include hands-on exercises and case studies that allow students to apply statistical techniques to practical business scenarios, fostering critical thinking and problem-solving skills.
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Which of the following situations would be a POOR use of personal selling?
A.
When there is a need for personal touch
B.
When the situation calls for direct selling
C.
When the dollar amount of individual purchases is low
D.
When a firm needs to use a push strategy
E.
When the goods or services are complex or expensive
The poor use of personal selling is C. When the dollar amount of individual purchases is low.
Personal selling is typically more effective and efficient when the potential sales value is high, as it allows for a more personalized and tailored sales approach. When the dollar amount of individual purchases is low, the cost of personal selling may outweigh the potential benefits, making it a poor use of resources. In such cases, alternative marketing methods like advertising or online sales may be more suitable and cost-effective.
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You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a milion dollars. Your pian is to deposit S36, 000 at the end of each year for the next 8 years. You expect to earn 12 percent each year: Required: 1. Determine how much you will have 5 aved after 8 years. 2. Determine the amount saved if you were able to deposit $38.000 each year. 3. Determine the amount saved if you deposit $36.000 each year, but with 14 percent interest. (Future Value of S1.Present Volue of S1. Future Volue Annuity of S1, Present Volue Annuity of S1.) Note: Use appropriate factor(s) from the tables provided Complete this question by entering your answers in the tabs below. Determine how much you will have saved after 8 years. Note: Round your final answer to the nearest whole dollar.
1. You will have saved $539,738 after 8 years. 2. The amount saved if you were able to deposit $38,000 each year is $971,507. 3. The amount saved if you deposit $36,000 each year, but with 14 percent interest is $744,056.
1. Determine how much you will have saved after 8 years. Given data:
Deposit amount = $36,000
Number of years = 8
Interest rate = 12%
Using the formula, the Future Value of an Ordinary Annuity:
FVoa = PMT * [(1 + r)n - 1] / r
FVoa = $36,000 * [(1 + 12%)8 - 1] / 12%
FVoa = $36,000 * [2.117 - 1] / 12%
FVoa = $539,737.74
Therefore, you will have saved $539,738 after 8 years.
2. Determine the amount saved if you were able to deposit $38,000 each year. Given data:
Deposit amount = $38,000
The number of years = 8
Interest rate = 12%
Using the formula, the Future Value of an Ordinary Annuity:
FVoa = PMT * [(1 + r)n - 1] / r
FVoa = $38,000 * [(1 + 12%)8 - 1] / 12%
FVoa = $38,000 * [2.117 - 1] / 12%FVoa = $971,506.84
Therefore, the amount saved if you were able to deposit $38,000 each year is $971,507.
3. Determine the amount saved if you deposit $36,000 each year but with 14 percent interest. Given data:
Deposit amount = $36,000
Number of years = 8
Interest rate = 14%
Using the formula, the Future Value of an Ordinary Annuity:
FVoa = PMT * [(1 + r)n - 1] / r
FVoa = $36,000 * [(1 + 14%)8 - 1] / 14%
FVoa = $36,000 * [2.778 - 1] / 14%
FVoa = $744,056.42
Therefore, the amount saved if you deposit $36,000 each year, but with 14 percent interest is $744,056.
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AP Evilene Company makes industrial-grade brooms. It incurs the following costs.
1. Salaries for broom inspectors.
2. Copy machine maintenance at corporate headquarters.
3. Hourly wages for assembly workers.
4. Research and development for new broom types.
5. Salary for factory manager.
6. Depreciation on broom-assembly equipment.
7. Salary for the CEO administrative assistant.
8. Wood for handles.
9. Factory cleaning supplies.
10. Lubricants for broom-assembly factory equipment.
11. Salaries for customer service representatives.
12. Salaries for factory maintenance crew.
13. Sales team golf outings with customers.
14. Salaries for the raw materials receiving department employees.
15. Advertising expenses.
16. Depreciation on the CFO company car.
17. Straw for brooms.
18. Salaries for sales personnel. 19. Shipping costs to customers.
Instructions
a. Indicate whether each cost is direct materials, direct labor, manufacturing overhead, or nonmanufacturing.
b. Indicate whether each cost is a product cost or a period cost. Compute cost of goods manufactured and sold, and discuss classification of various costs.
To classify the costs and determine whether they are direct materials, direct labor, manufacturing overhead, or nonmanufacturing costs, and whether they are product costs or period costs, a detailed analysis of each cost is required.
Without specific information about each cost, it is not possible to provide a comprehensive answer. However, I can explain the general concepts and categories of costs typically associated with manufacturing companies.
Salaries for broom inspectors: Direct labor (Product cost) Copy machine maintenance at corporate headquarters: Nonmanufacturing (Period cost)
Hourly wages for assembly workers: Direct labor (Product cost)
Research and development for new broom types: Nonmanufacturing (Period cost)
Salary for factory manager: Nonmanufacturing (Period cost)
Depreciation on broom-assembly equipment: Manufacturing overhead (Product cost)
Salary for the CEO administrative assistant: Nonmanufacturing (Period cost)
Wood for handles: Direct materials (Product cost)
Factory cleaning supplies: Manufacturing overhead (Product cost)
Lubricants for broom-assembly factory equipment: Manufacturing overhead (Product cost)
Salaries for customer service representatives: Nonmanufacturing (Period cost)
Salaries for factory maintenance crew: Manufacturing overhead (Product cost)
Sales team golf outings with customers: Nonmanufacturing (Period cost)
Salaries for the raw materials receiving department employees: Manufacturing overhead (Product cost)
Advertising expenses: Nonmanufacturing (Period cost)
Depreciation on the CFO company car: Nonmanufacturing (Period cost)
Straw for brooms: Direct materials (Product cost)
Salaries for sales personnel: Nonmanufacturing (Period cost)
Shipping costs to customers: Nonmanufacturing (Period cost)
Product costs are incurred during the production process and include direct materials, direct labor, and manufacturing overhead. They are associated with the manufacturing or acquisition of goods. Period costs are nonmanufacturing expenses incurred in the normal course of business and are not directly tied to the production process. They include selling, general, and administrative expenses.
To compute the cost of goods manufactured and sold, additional information such as the values of direct materials used, direct labor incurred, and manufacturing overhead costs would be needed. With this information, the total manufacturing costs can be calculated and then adjusted for the opening and closing balances of work in process inventory to determine the cost of goods manufactured. The cost of goods sold is determined by subtracting the ending finished goods inventory from the cost of goods manufactured.
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Record the transactions in Journal, ledger and trail balance. December 01, 2014 Started business with cash $ 250,000 December 05, 2014 Goods returned from Juliet $ 40,000 December 9, 2014 Withdrew goods from Business for personal use $ 1,500 December 14, 2014 Purchased Machinery $ 50,000 December 20, 2014 Charged depreciation on Machinery $ 1,000
need journal ledger and trial balance
To record the transactions in the journal, ledger, and trial balance, we'll follow the given information and apply double-entry bookkeeping principles. Let's proceed with the entries:
December 01, 2014: Started business with cash $250,000
Journal Entry:
Debit: Cash $250,000
Credit: Capital (Owner's Equity) $250,000
December 05, 2014: Goods returned from Juliet $40,000
Journal Entry:
Debit: Purchase Returns $40,000
Credit: Accounts Payable (Juliet) $40,000
December 09, 2014: Withdrew goods from the business for personal use $1,500
Journal Entry:
Debit: Drawing (Owner's Equity) $1,500
Credit: Inventory $1,500
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_____ are designed for a company to state what it wants to accomplish over the course of the marketing plan.
Marketing objectives are designed for a company to state what it wants to accomplish over the course of the marketing plan. marketing objectives are specific goals that a company sets to achieve through its marketing efforts.
These objectives outline what the company aims to accomplish in terms of sales, market share, brand awareness, customer acquisition, or any other relevant metrics. They provide a clear direction and purpose for the marketing plan, helping to guide the overall strategy and tactics. By defining the desired outcomes, marketing objectives enable companies to focus their resources and measure their progress towards achieving their marketing goals.
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What are the disadvantages of using Big Macs to measure purchasing power parity? (Check all that apply.)
A. Rather than accounting for cost of living differences, the Big Mac index reflects income inequality
B. Big Macs represent only a very small fraction of people's consumption
C. Big Macs are popular, so they distort the true cost of living differences across countries
D. The Big Mac index simply compares a bundle consisting of only one good.
The disadvantages of using Big Macs to measure purchasing power parity is A. Rather than accounting for cost of living differences, the Big Mac index reflects income inequality.
The disadvantages of using Big Macs to measure purchasing power parity include:
A. Rather than accounting for cost of living differences, the Big Mac index reflects income inequality: The Big Mac index compares the prices of Big Macs across different countries as an indicator of relative purchasing power.
However, it does not take into account variations in the cost of living within a country. This means that the index may reflect income disparities rather than true cost of living differences.
For example, a country with a high level of income inequality could have an artificially low Big Mac index due to a small percentage of the population being able to afford Big Macs.
B. Big Macs represent only a very small fraction of people's consumption: The index relies on the assumption that Big Macs have consistent pricing and availability across countries.
However, Big Macs represent a limited portion of overall consumption, and people's purchasing patterns differ significantly. Thus, using Big Macs as a proxy for general price levels can be a flawed approach.
C. Big Macs are popular, so they distort the true cost of living differences across countries: The popularity of Big Macs may cause their prices to be influenced by factors other than pure cost of living differences, such as local demand, brand perception, or marketing strategies.
This can distort the accuracy of the index in reflecting the true cost of living disparities between countries.
D. The Big Mac index simply compares a bundle consisting of only one good: The index focuses solely on the price of Big Macs and does not take into account the prices of other goods and services that contribute to the cost of living.
This limited scope neglects the complexities of the overall economic situation and consumer behavior in different countries.
In summary, while the Big Mac index can provide some insights into relative purchasing power, it has limitations such as reflecting income inequality, relying on a narrow consumption item, potential distortions due to popularity, and neglecting a comprehensive view of the cost of living.
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A company's balance sheet at December 31,20×6 showed a cash balance of $154.254. In addition, the company's cash flow statement for the year ended December 31,20×6 disclosed the following net cash flows:
Net cash inflow from operating activities $333,373
Net cash outflow from investing activities 358,388
Net cash inflow from financing activities 135,400
What is the correct cash balance on January 1,2006?
aAnswer:
To determine the accurate cash balance on January 1, 2006, the following formula should be applied: Cash balance on January 1, 2006 = Cash balance on December 31, 2006 - Net cash inflow from operating activities + Net cash outflow from investing activities - Net cash inflow from financing activities.
Based on the provided information, the following values are given: Cash balance on December 31, 20x6 is $154,254, net cash inflow from operating activities amounts to $333,373, net cash outflow from investing activities is $358,388, and net cash inflow from financing activities is $135,400.
Applying the formula, we get: Cash balance on January 1, 2006 = $154,254 - $333,373 + $358,388 - $135,400 = $44,869.
Therefore, the accurate cash balance on January 1, 2006, is determined to be $44,869.
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Why entrepreneurship is important for your country.
(Nigeria)
Entrepreneurship is important for Nigeria because it drives economic growth, creates jobs, fosters innovation, and reduces dependency on oil revenue.
a) Economic Growth: Entrepreneurship contributes to economic growth by introducing new businesses, increasing competition, and attracting investment. This leads to diversification and expansion of the economy beyond traditional sectors like oil and gas.
b) Job Creation: Entrepreneurs establish and expand businesses, creating employment opportunities for the growing population. This helps alleviate unemployment and poverty levels.
c) Innovation: Entrepreneurs are drivers of innovation, introducing new products, services, and business models. They bring fresh ideas and solutions to societal challenges, improving productivity and competitiveness.
d) Reducing Dependency: Nigeria's economy heavily relies on oil revenue, which makes it vulnerable to price fluctuations. Entrepreneurship promotes diversification by fostering sectors like technology, agriculture, manufacturing, and services, reducing reliance on oil.
Promoting entrepreneurship in Nigeria is crucial for sustainable economic development. By supporting and encouraging entrepreneurs, the country can achieve long-term growth, job creation, innovation, and reduce its dependence on oil. Policymakers should create an enabling environment with favorable regulations, access to finance, business development support, and education and training programs to nurture entrepreneurship and drive Nigeria's progress.
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QALYs are short for Quality Adjusted Life Years. These were created in order to give life's quality and quantity a measured value. They were employed to make an attempt at evaluating the worth of various health measures. A long life of decreasing quality may be just as valuable as a brief life of high quality, according to a more recent emphasis on the value of "quantity" above "quality."(T/F).
False. A long life of declining quality could be just as useful as a short life of high quality, according to the supplied statement, which implies an emphasis on the value of "quantity" above "quality."
The statement is untrue, though. The Quality Adjusted Life Years (QALYs) approach does not place a higher priority on quantity than on quality. In order to evaluate the effectiveness of healthcare interventions, QALYs are a metric used in health economics and outcomes research. They assign weights to various health statuses, combining the quantity and quality of life. Instead than favouring one over the other, QALYs acknowledge that both the length and quality of life are significant criteria in assessing the impact of health policies.
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Perry Inc. total variable costs of 65% of total revenues and fixed costs of $180,000 per year. What is closest to the break-even point expressed in total revenue dollars?
O $276.923
O $514,286
O $117,000
O $63,000
]The closest value to the break-even point expressed in total revenue dollars for Perry Inc. is $514,286
The break-even point is the level of sales at which total revenues equal total costs, resulting in zero profit or loss. To calculate the break-even point, we need to consider both the fixed costs and the variable costs as a percentage of total revenues.
In this case, the fixed costs are $180,000 per year, and the variable costs are 65% of total revenues. The contribution margin, which represents the portion of each dollar of sales that contributes to covering fixed costs, is 35% (100% - 65%).
The break-even point in total revenue dollars can be calculated by dividing the fixed costs by the contribution margin:
Break-even point = Fixed costs / Contribution margin
= $180,000 / 0.35
≈ $514,286
Therefore, the closest value to the break-even point expressed in total revenue dollars is $514,286
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A growth in demand for real estate assets in the capital market that causes the cap rate to fall, holding demand in the space usage market constant, will produce which of the following short-run and long-run effects?
a.A short-run decrease in rents followed by a subsequent long-run increase
b.A short-run increase in rents followed by a subsequent drop.
c.A short-run decrease in property asset prices followed by a subsequent long-run rise
d.A short-run increase in property asset prices followed by a subsequent long run drop.
e.None of the answers here
The right response is (c) A temporary drop in the value of real estate assets followed by a future long-term increase. Demand for properties rises when there is a rise in the demand for real estate assets on the capital market.
Investors are therefore prepared to pay higher prices for these assets. The capitalization rate (cap rate), which is the proportion of net operational income to property value, decreases as a result of the elevated demand. Prices of real estate assets decline in the short term as the cap rate decreases. This is due to the fact that property values and cap rates are inversely correlated. Higher property prices are correlated with lower cap rates. However, over time, as the demand for real estate assets increases, Prices for real estate assets frequently increase. As a result, the short-run consequence is a decline in the value of real estate assets, whereas the long-run effect is a subsequent increase in the value of real estate assets. The other choices don't adequately depict how rising real estate asset demand might affect rents or asset values.
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Harry Hampar is trying to determine the extent of testing his team will have to perform in order to determine whether controls are working. How will he decide how much testing to perform?
A. He will use his professional judgment.
B. none of the above
C. He will use last year’s results as a basis for this year’s tests.
D. He will utilize statistical sampling.
Harry Hampar is trying to determine the extent of testing his team will have to perform in order to determine whether controls are working.
How will he decide how much testing to perform?He will utilize statistical sampling. is how Harry Hampar will decide how much testing he has to perform.What is Statistical Sampling?Statistical Sampling is a method of choosing a subset of data from a broader data collection to provide a more comprehensive estimate of the whole. Statistical sampling is typically utilized in industries such as market research and quality assurance to forecast the characteristics of a big population through analyzing a smaller sample. Statistical sampling can enable a business to reduce expenses and increase efficiency by lowering the amount of resources used in the study and analysis of data, making it an important aspect of a company's budget.
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Devon and Jackie are married. Jackie purchases a car. If, in the state where they live, Devon and Jackie are each technically considered to own an undivided one-half interest in the car, this is known as
a illegal.
b community property.
c a joint tenancy.
d fee simple ownership.
Unity of time is another characteristic that refers to the fact that each joint tenant received their interest at the same time.
When one joint tenant dies, the remaining joint tenant(s) absorbs the deceased tenant's interest in the property.
Devon and Jackie are married. Jackie purchases a car. If, in the state where they live,
Devon and Jackie are each technically considered to own an undivided one-half interest in the car,
this is known as a joint tenancy.Joint tenancy is a type of ownership in which each owner possesses the right to use and share a piece of property with the other owners, and each owner has an equal ownership interest (generally one-half) in the property.
Joint tenancy is often utilized to specify ownership in real estate, bank accounts, vehicles, and other types of personal property.
There are four essential characteristics of joint tenancy:unity of possessionunity of interestunity of timeRight of survivorshipUnity of possession is the ability of each joint tenant to use the whole property.
Unity of interest is a legal theory that requires each joint tenant to have the same percentage of interest in the joint tenancy property.
Unity of time is another characteristic that refers to the fact that each joint tenant received their interest at the same time.
The right of survivorship is the most important attribute of a joint tenancy. When one joint tenant dies, the remaining joint tenant(s) absorbs the deceased tenant's interest in the property.
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The human resources leader is a critical link between management and the employee workforce. The right HR professional can resolve difficult situations and consult with managers on problems with employees. Assess the current leadership skills required by HR leaders to lead organisations. Evaluate Hersey and Blanchard's situational leadership theory and House's path-goal theory in the context of leadership skills in an organisation.
The human resources leader is a critical link between management and the employee workforce.
The right HR professional can resolve difficult situations and consult with managers on problems with employees. The current leadership skills required by HR leaders to lead organizations should assess the context in which HR leaders function and which competencies are required in the organization for successful HR leadership.
Hersey and Blanchard's situational leadership theoryHersey and Blanchard's situational leadership theory proposes that a leader's ability to lead effectively is determined by the situation and the followers. It proposes that there are four leadership styles that an HR leader can utilize.
The four leadership styles are as follows:
a)Delegating style (D1)
b)Participating style (D2)
c)Selling style (D3)
d)Telling style (D4)
House's path-goal theoryHouse's path-goal theory suggests that the HR leader's job is to aid and guide the workers through the path they take to reach their goals by eliminating any obstacles that might come in their way.
House suggested that the HR leader should lead in a way that clarifies paths, challenges the employees, and aids in the process of achieving the desired outcomes. In the context of HR leadership skills, path-goal theory provides insight into how leaders can engage with employees in a way that will encourage productivity and positive work attitudes.
To conclude, when assessing the current leadership skills required by HR leaders to lead organizations, it's essential to evaluate the context in which HR leaders function and which competencies are required in the organization for successful HR leadership.
Hersey and Blanchard's situational leadership theory and House's path-goal theory are important theories that help to understand leadership skills in an organization.
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The FASB ASC paragraph 810-10-45-16 states: "The noncontrolling interest shall be reported in the consolidated statement of financial position within equity, separately from the parent's equity. That amount shall be clearly identified and labeled, for example, as noncontrolling interest in subsidiaries." However, prior to issuing this current reporting requirement, the FASB considered several alternative display formats for the noncontrolling interest. Access the precodification standard, SFAS 160, "Noncontrolling Interest in Consolidated Financial Statements," at www.fasb.org to answer the following: 1. What alternative financial statement display formats did the FASB consider for the noncontrolling interest? 2. What criteria did the FASB use to evaluate the desirability of each alternative? 3. In what specific ways did FASB Concept Statement 6 affect the FASB's evaluation of these alternatives?
Effective time management involves prioritizing tasks and utilizing productivity techniques to maximize efficiency.
Time management is the art of using your time wisely and efficiently to achieve desired goals and tasks. It involves prioritizing tasks based on their importance and urgency, allocating time to each task, and employing productivity techniques to enhance efficiency. By effectively managing your time, you can improve productivity, reduce stress, and accomplish more in less time.
One crucial aspect of time management is prioritization. It's essential to identify and categorize tasks based on their significance and deadlines. By focusing on high-priority tasks first, you ensure that critical objectives are met in a timely manner. This approach prevents the accumulation of unfinished tasks and allows you to allocate time and energy to the most important aspects of your work or personal life.
Another key element of effective time management is utilizing productivity techniques. These techniques can vary from individual to individual, but common strategies include creating a to-do list, breaking tasks into smaller, manageable chunks, using time-blocking or the Pomodoro Technique, and minimizing distractions. These techniques help you stay organized, maintain focus, and make the most efficient use of your time.
By combining prioritization and productivity techniques, you can optimize your time management skills. You'll be able to allocate your resources effectively, avoid procrastination, and make significant progress towards your goals. Remember, time is a valuable and limited resource, so it's crucial to manage it wisely.
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A customer charges a treadmill at Gerry's Exercise shop. The price is $5,000 and the financing charge is 6% per annum if the bill is not paid in a0 days. The customer fails to pay the bill within 30 days and a finance charge b added to the customer's account. What is the amount of the finance charge? A. 59 B. 5300 C C.590 D. $25
The customer borrowed $5,000 for a treadmill purchase with a financing charge of 6% per annum if not paid within 30 days. The amount of the finance charge is $25. Option D is correct.
For calculating the finance charge, we need to determine the interest accumulated on the $5,000 loan over the specified time. The interest rate is given as 6% per annum, but need to determine the interest for a 30-day period.
For calculating the interest for a 30-day period, use the formula:
Interest = Principal * Rate * Time
Here, the Principal is $5,000, the Rate is 6% per annum (which needs to be converted to a daily rate), and the Time is 30 days.
To convert the annual interest rate to a daily rate, divide it by 365 (assuming a non-leap year):
Daily Rate = Annual Rate / 365
Daily Rate = 6% / 365 = 0.0164%
Now, calculate the interest for 30 days:
Interest = $5,000 * 0.0164% * 30 = $24.60
Therefore, the amount of the finance charge is $24.60. which rounds up to $25.
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1. Which of the following examples best demonstrates the burden of the social contract that companies have with stakeholders?
A. Samsung assumed the risk of exposure and picked up the washers
B. Samsung warned customers that the machines could tip over
C. Samsung's washers had a spin-cycle problem in 2017.
D. Samsung's recall paid refunds and limited potential lawsuits.
2. which of the following is the most ethical action a company can take if a product does not live up to manufacturing claims??
A. The company must meet the ethical minimum.
B. The company must meet the ethical maximum.
c. The company must issue a warning to consumers
D. The company needs to correct the problem to regain consumer trust.
3. Which of the following best relates to prioritizing stakeholders?
A. Customers are considered high-priority stakeholders
B. Corporations need to maintain the initial priority of stakeholders.
C. Corporations need to manage the expectations of customers.
D. Customers are not considered high-priority stakeholders.
4. Which of the following are the opposing views of how large, publicly held corporations should approach social responsibility and ethics?
A. Business should behave ethically, fulfilling a strategic mission.
B. Business should behave ethically, focusing only on environmentalism
C. Business should behave ethically, focusing exclusively on shareholders/investors
D. Business should behave ethically, being responsible to all stakeholders.
5. What is a measure that accounts for an organization's results in terms of its effects on profits, planet, and people?
A. greenwashing
B. corporate social responsibility
C. stakeholder prioritization
d. triple bottom line
6. All stakeholders must be treated the same?
A. Ture
B. False
7. CSR and greenwashing are the same concepts?
A. True
B. false
1. D. Samsung's recall paid refunds and limited potential lawsuits demonstrate the burden of the social contract that companies have with stakeholders.
This is because the company had to take responsibility for its faulty product and provide a solution that would benefit the customers who had purchased the product. By paying refunds and limiting potential lawsuits, Samsung showed that it was willing to prioritize the well-being of its customers and take action to rectify the situation.
2. D. The company needs to correct the problem to regain consumer trust is the most ethical action a company can take if a product does not live up to manufacturing claims.
This is because it is the responsibility of the company to ensure that its products meet the claims made in advertisements and other promotional materials. If the product fails to do so, the company must take steps to correct the problem to regain consumer trust. This will help to maintain the reputation of the company and ensure that it is acting in an ethical and responsible manner.
3. A. Customers are considered high-priority stakeholders. This is because customers are the primary source of revenue for a company and are essential to its continued success.
Therefore, it is important for companies to prioritize the needs and expectations of their customers to ensure their satisfaction and loyalty. This will help to maintain a positive reputation for the company and ensure its continued success.
4. D. Business should behave ethically, being responsible to all stakeholders. This is because all stakeholders have a vested interest in the success of the company, and it is the responsibility of the company to ensure that it is acting in an ethical and responsible manner.
By prioritizing the needs and expectations of all stakeholders, a company can ensure its long-term success and sustainability
5. D. Triple bottom line is a measure that accounts for an organization's results in terms of its effects on profits, the planet, and people. This measure takes into account the economic, social, and environmental impacts of a company's activities and is used to assess its overall performance and sustainability.
By focusing on the triple bottom line, a company can ensure that it is acting in an ethical and responsible manner that benefits all stakeholders.
6. False. All stakeholders should not be treated the same. Rather, a company should prioritize the needs and expectations of its stakeholders based on their level of importance and influence.
This will help to ensure that the company is focusing its resources on the areas that will have the greatest impact on its success and sustainability.
7. False. CSR and greenwashing are not the same concepts. CSR refers to a company's responsibility to act in an ethical and socially responsible manner, while greenwashing refers to the practice of making false or misleading claims about a product's environmental benefits.
While both concepts are related to social responsibility, they are distinct and separate concepts that should not be confused.
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Estimate the risk and return involved in the international investments in capital market
Evaluate and determine the various forms of financial instruments in international capital markets.
Demonstrate effective use of communication skills to convey complex information using appropriate technologies.
Investing in international capital markets involves both risk and return considerations. The risk associated with international investments is typically higher compared to domestic investments due to factors such as currency exchange rate fluctuations, political instability, economic conditions, and legal and regulatory differences across countries.
These risks can impact the performance and profitability of international investments. On the other hand, international investments offer the potential for higher returns. Investing in international markets allows diversification and access to a broader range of investment opportunities. By spreading investments across different countries and markets, investors can potentially benefit from varying economic cycles, industry trends, and market conditions, which may lead to higher returns compared to investing solely in domestic markets.
Various financial instruments are available in international capital markets. These include stocks, bonds, derivatives, foreign exchange contracts, and alternative investments such as real estate investment trusts (REITs) and private equity funds. Each instrument has its own characteristics, risk profile, and potential return. Investors can choose from a wide array of financial instruments to suit their investment objectives, risk tolerance, and time horizon.
Effective communication skills are crucial when dealing with complex information in international capital markets. Clear and concise communication using appropriate technologies such as email, video conferencing, and online platforms is essential for conveying investment strategies, risks, and opportunities to stakeholders. It helps in building trust, facilitating informed decision-making, and maintaining transparent and efficient communication channels with clients, partners, and regulatory authorities.
In summary, international investments involve both risk and return considerations. Investors must carefully evaluate and manage the risks associated with investing in foreign markets while assessing the potential for higher returns. Various financial instruments are available in international capital markets, offering diverse investment opportunities. Effective communication skills, aided by appropriate technologies, are vital for conveying complex information and maintaining effective communication channels in the international investment landscape.
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Project management presents many tools and techniques that allows the project manager to measure the amount of work actually performed on a project beyond the basic review of cost and schedule reports.
(a) Why S-curves are an important project management tool? (5)
(b) A contractor agreed to build 30 units of a product in 90 days at a price of RM800 per unit. 20 days later, the contractor has finished 8 units with an actual total cost (that includes his overhead and profit) of RM6800. Assuming that the work is sequential and not parallel (i.e. the contractor works on one unit till it is finished then starts the next unit and so on), calculate the following:
i. BCWS
ii. BCWP
iii. ACWP
iv. CV
v. SV
Why S-curves are an important project management tool?An S-curve is an important project management tool for the following reasons: S-curves allow a project manager to observe and track the physical progress of a project by comparing planned versus actual performance over time.
S-curves offer the project manager a clear perspective of the project's cost and schedule performance. S-curves allow project managers to look at the resources being consumed by activities and compare them to the budget, allowing them to pinpoint which activities are using more resources than they should.S-curves can alert the project manager to possible cost and schedule overruns early on in the project, allowing them to take corrective action.Below is a sample S-curve:(b) A contractor agreed to build 30 units of a product in 90 days at a price of RM800 per unit. 20 days later, the contractor has finished 8 units with an actual total cost (that includes his overhead and profit) of RM6800. Assuming that the work is sequential and not parallel (i.e. the contractor works on one unit till it is finished then starts the next unit and so on), calculate the following:i. BCWSBCWS = Budgeted Cost of Work ScheduledBCWS = Number of units planned to be finished x Budget per unitBCWS = 30 x RM800BCWS = RM24000ii.
BCWPBCWP = Budgeted Cost of Work PerformedBCWP = Number of units actually finished x Budget per unitBCWP = 8 x RM800BCWP = RM6400iii. ACWPACWP = Actual Cost of Work PerformedACWP = RM6800iv. CVCV = Cost VarianceCV = BCWP - ACWPCV = RM6400 - RM6800CV = -RM400v. SVSV = Schedule Variance SV = BCWP - BCWSSV = RM6400 - RM24000SV = -RM17600Note that SV and CV are negative, indicating that the contractor is over budget and behind schedule.
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several months ago, an electronics store sold 350 dvd players at a price of $80 per player. last month, the dvd players were on sale for $60 a player, and the electronics store sold 475 dvd players. using midpoint formula, calculate the own-price elasticity of the dvd players.
Using the midpoint formula, the own-price elasticity of the DVD players can be calculated. The resulting value will indicate the responsiveness of the quantity demanded of DVD players to changes in their price.
The midpoint formula for calculating own-price elasticity of demand is given by:
Elasticity = [tex]\frac{Percentage change in quantity demanded}{Percentage change in price}[/tex]
To calculate the percentage change in quantity demanded, we can use the formula:
Percentage change in quantity demanded = [tex]\frac{(New quantity - Old quantity)}{\frac{(New quantity + Old quantity)}{2} } 100[/tex]
In this case, the old quantity sold was 350 DVD players, and the new quantity sold was 475 DVD players. Plugging these values into the formula, we can calculate the percentage change in quantity demanded.
Next, we calculate the percentage change in price using a similar formula:
Percentage change in price = [tex]\frac{(New Price - Old price)}{\frac{(New price + Old price)}{2} } 100[/tex]
The old price was $80 per player, and the new price was $60 per player. Substituting these values into the formula, we can calculate the percentage change in price.
Finally, we can use the percentage change in quantity demanded and the percentage change in price to calculate the own-price elasticity of demand using the midpoint formula.
The resulting value will provide information about the elasticity of demand for DVD players.
If the own-price elasticity is greater than 1, the demand is considered elastic, indicating that a change in price will lead to a relatively larger change in quantity demanded.
If the own-price elasticity is less than 1, the demand is considered inelastic, indicating that a change in price will result in a relatively smaller change in quantity demanded.
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