The correct answer is option is (a) which is the best criterion for making capital budgeting decisions.
The Net Present Value (NPV) is a financial approach in capital budgeting that assesses the viability of an investment or project. It is the difference between the present value of cash inflows and the present value of cash outflows over a specific period of time.
It takes into account the time value of money and the possibility of cash flows in the future. A positive net present value indicates that the project is expected to produce wealth, while a negative net present value indicates that the project is expected to destroy wealth.
The NPV Rule, according to finance theory, is the most reasonable approach for making capital budgeting decisions because it allows firms to assess the value of potential projects in financial terms, which is essential to long-term growth.
It is a measure of the excess or shortfall of cash flows over an investment's present value.
The other options are not accurate in the context of the NPV rule.
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Question 14 (Answer both parts, 12.5 Marks) Briefly, using words (a short paragraph each - write a formula or draw a graph only if you feel this helps your exposition) explain: (i) Why is a deflation trap (or deflation spiral) something policy-makers consider to be very dangerous as it can have severe consequences for the economy? Can policy makers avoid this event from ever occurring? How? Use the IS-LM-PC model to explain your answer. 5 Turn Over (ii) "In the UK and most developed countries, the central bank is responsible for the monetary policy whilst the government is responsible for the fiscal policy. The excessive use of either of those policies can have serious consequences for the economy: including inflation and excessive debt. It is therefore necessary to find mechanisms to restrain policy makers to prevent them from choosing policies with short-run benefits (e.g. lower unemployment) but large long-term costs (e.g. high inflation or large budget deficits)". Discuss, making sure you justify your points of view.
A deflation-trap is considered dangerous as it can lead to reduced consumer spending, increased debt burden, and a self-reinforcing cycle of economic decline, but policy-makers can avoid it through expansionary monetary and fiscal policies.
A deflation trap, or deflation spiral, is a situation where falling prices lead to a self-reinforcing cycle of economic decline. Policy-makers consider it dangerous due to its severe consequences for the economy.
Deflation reduces consumer spending as people delay purchases, leading to lower business revenues, job losses, and weaker economic growth.
Policy-makers can try to avoid this event by implementing expansionary monetary and fiscal policies. Lowering interest rates, increasing government spending, and injecting liquidity into the economy through quantitative easing can stimulate demand, encourage borrowing and spending, and prevent deflationary expectations.
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The given question is incomplete, the complete question is
Why is a deflation trap (or deflation spiral) something policy-makers consider to be very dangerous as it can have severe consequences for the economy? Can policy makers avoid this event from ever occurring? How?
Eastine Corporation had 19,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 7.220 shares. At the time of the stock dividend, the market value per share was $20. The entry to record the deciaration of this dividend is:
The entry to record the declaration of the stock dividend by Eastine Corporation is as follows:
Debit: Stock Dividend Distributable (7.220 x $20) = $144.40
Credit: Common Stock Dividend Distributable (7.220 x $10) = $72.20
Credit: Additional Paid-in Capital (7.220 x $10) = $72.20
When a stock dividend is declared, it involves transferring a portion of retained earnings to a separate account called Stock Dividend Distributable. In this case, the dividend is 7.220 shares, and since the market value per share is $20, the total value of the dividend is 7.220 x $20 = $144.40. The Common Stock Dividend Distributable account is credited with the par value of the dividend, which is 7.220 x $10 = $72.20. The remaining amount, $72.20, is credited to Additional Paid-in Capital to reflect the value above the par value that shareholders receive in the form of additional shares.
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On December 31, 2015, Grando Company sells production equipment to Feliz Inc. for R$50,000. Grando includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2015. Grando estimates the prices to be R\$48,800 for the equipment and R$1,200 for the cost of the warranty.
Exercise Instructions
(a) Prepare the journal entry to record this transaction on December 31, 2015.
(b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2017-2018) for R\$800.
Grando Company sells production equipment to Feliz Inc. on December 31, 2015, and includes a 1-year assurance warranty service with the sale.
The total estimated price for the equipment and warranty is R$50,000, with R$48,800 allocated to the equipment and R$1,200 to the warranty. In part (a) of the exercise, we need to prepare the journal entry to record the transaction. In part (b), assuming an extended warranty is also sold for an additional 2 years (2017-2018) for R$800, we need to repeat the requirements and prepare the journal entry for the transaction.
(a) The journal entry to record the transaction on December 31, 2015, would be:
Accounts Receivable - Feliz Inc. 50,000
Sales Revenue 48,800
Unearned Warranty Revenue 1,200
Equipment 50,000
The entry recognizes the revenue from the sale of equipment and defers a portion for the warranty service.
(b) If an extended warranty is also sold for R$800, the revised journal entry on December 31, 2015, would be:
Accounts Receivable - Feliz Inc. 50,800
Sales Revenue 49,600
Unearned Warranty Revenue 1,200
Equipment 50,000
The entry now includes the revenue from the sale of the extended warranty, increasing the total revenue and adjusting the unearned warranty revenue.
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Case Study 2
Pig Pies SARL (‘PPS’) is a small French company based in the south of the country, near
Narbonne. PPS manufactures high-quality reasonably priced vegetarian pies.
In the monthly Board of Directors’ meeting the CEO is expressing his frustration that for the
most recent month just passed (July) the company only made a profit of €35,680 compared
to a budgeted profit of €35,000.
The CEO addressed the Board, "I understand that as a direct result of our excellent new
advertising campaign, the company sold 51,000 pies in July (1,000 more than budget) and
we able to sell our pies at a price 2% above our budgeted price of €5.00 per pie. In addition,
I know that our actual fixed costs (which includes all labour costs) of €50,000 for July were
the same as budgeted. I simply do not understand why the net profit for July was only €680
more than budget."
The CFO quickly answered that she would provide a reconciliation between what was
budgeted for July and what the actual result for July was. She explained that her
reconciliation would provide the answer to the CEO’s question.
Budgeted information per pie:
(€)
Selling price 5.00
Materials Grams Cost (€) per 100 grams
Vegetables 125 2.00 2.50
Pastry 50 1.00 0.50
Variable costs Minutes Cost (€) per minute
Cooking 2 0.05 0.10
Chilling 2 0.10 0.20
Contribution 1.70
The actual results for July reveal the following costs incurred for each pie:
• 130 grams of vegetables were used at €1.80 per 100 grams
• 55 grams of pastry were used at €1.10 per 100 grams
• 2.5 minutes were taken for cooking at €0.04 per minute
• 2.5 minutes were taken for chilling at €0.15 per minute
Required:
1. Reconcile the budgeted profit to the actual profit for July. Show all workings.
(15 marks)
2. Using the information from your reconciliation, prepare a memorandum for the CEO,
detailing the reasons for the actual performance being only marginally better than
budget in July despite the increased sales volume and selling price. Include in your
memorandum two possible causes for each vegetable, pastry, cooking, and chilling
variance identified.
The actual profit for July at Pig Pies SARL (PPS) was €35,680, which was €680 higher than the budgeted profit of €35,000. The variances in vegetable, pastry, cooking, and chilling costs contributed to the marginal difference in actual performance compared to the budget, despite increased sales volume and selling price.
To reconcile the budgeted profit to the actual profit for July, we need to calculate the actual costs and compare them with the budgeted costs.
Vegetable Variance:
Actual cost of vegetables = 130 grams * €1.80/100 grams = €2.34
Budgeted cost of vegetables = 125 grams * €2.00/100 grams = €2.50
Vegetable variance = Actual cost - Budgeted cost = €2.34 - €2.50 = -€0.16 (adverse)
Pastry Variance:
Actual cost of pastry = 55 grams * €1.10/100 grams = €0.61
Budgeted cost of pastry = 50 grams * €1.00/100 grams = €0.50
Pastry variance = Actual cost - Budgeted cost = €0.61 - €0.50 = €0.11 (favorable)
Cooking Variance:
Actual cooking time = 2.5 minutes
Actual cost of cooking = 2.5 minutes * €0.04/minute = €0.10
Budgeted cost of cooking = 2 minutes * €0.05/minute = €0.10
Cooking variance = Actual cost - Budgeted cost = €0.10 - €0.10 = €0.00
Chilling Variance:
Actual chilling time = 2.5 minutes
Actual cost of chilling = 2.5 minutes * €0.15/minute = €0.38
Budgeted cost of chilling = 2 minutes * €0.10/minute = €0.20
Chilling variance = Actual cost - Budgeted cost = €0.38 - €0.20 = €0.18 (adverse)
Total variance = Vegetable variance + Pastry variance + Cooking variance + Chilling variance
Total variance = -€0.16 + €0.11 + €0.00 + €0.18 = €0.13 (favorable)
The reconciliation shows that the actual profit of €35,680 is €680 higher than the budgeted profit of €35,000. However, there were some variances in the costs of vegetables, cooking, and chilling. The vegetable variance was adverse, indicating that the actual cost of vegetables was slightly lower than the budgeted cost. The pastry variance was favorable, indicating that the actual cost of pastry was lower than the budgeted cost.
The cooking variance was zero, indicating that the actual cooking cost matched the budgeted cost. The chilling variance was adverse, suggesting that the actual cost of chilling was higher than the budgeted cost. Hence, despite the increased sales volume and selling price, the actual performance was only marginally better than the budget due to the adverse chilling variance and slight variations in vegetable and pastry costs. Further investigation is needed to identify the underlying causes of these variances.
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If the rate of inflation is 5.1%, what nominal interest rate is necessary for you to earn a 3.9% real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.)
The nominal interest rate necessary to earn a 3.9% real interest rate on an investment with an inflation rate of 5.1% is 9.15%.
To calculate the nominal interest rate, we use the Fisher equation, which relates the real interest rate, the nominal interest rate, and the inflation rate:
(1 + nominal interest rate) = (1 + real interest rate) * (1 + inflation rate)
Plugging in the values, we get:
(1 + nominal interest rate) = (1 + 0.039) * (1 + 0.051)
Simplifying the right-hand side, we get:
(1 + nominal interest rate) = 1.093089
Subtracting 1 from both sides, we get:
nominal interest rate = 0.093089 = 9.15%
Therefore, a nominal interest rate of 9.15% is necessary to earn a real interest rate of 3.9% on an investment with an inflation rate of 5.1%.
This means that the investor would need to earn a return of at least 9.15% on their investment in order to achieve a real rate of return of 3.9% after accounting for inflation. In other words, the nominal interest rate must be higher than the inflation rate in order for the investor to earn a positive real rate of return.
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The optical Scam Company has forecast a sales growth of 25% for next year. The current financial statement are shown here.
Income Statement
Sales $31,500,000
Costs $26,641,500
Taxable Income $4,848,500
Taxes $1,700,475
Net Income $3,158,025
Dividends $1,263,210
Addition to retained earnings $1,894,815
Balance Sheet
Assets Liabilities and Owner's Equity
Current Assets $7,310,000
Short term debt $5,985,000
Fixed assets $19,780,000
Long term debt $4,130,000
Common Stock $4,080,000
Accumulated retained earning $12,895,000
Total Equity $16,975,000
Total Assets $27,090,000
Total Liabilities & Equity $27,090,000
A) Using the equation from the chapter calculate the external financing needed for next year.
B 1) Construct the firm's pro forma balance sheet for next year.
B 2) Calculate external financing needed.
C) Calculate the sustainable growth rate for the company based on the current financial statement.
A) To calculate the external financing needed for next year, we need to determine the increase in assets required to support the forecasted sales growth. The equation for external financing needed is:
External Financing Needed = (Forecasted Sales × Asset Growth Rate) - (Retained Earnings + Spontaneous Liabilities)
Given that the forecasted sales growth is 25% and the current retained earnings are $12,895,000, we need to calculate the asset growth rate and spontaneous liabilities to determine the external financing needed.
B) 1) To construct the firm's pro forma balance sheet for next year, we need to adjust the current balance sheet accounts based on the forecasted sales growth and other changes. We increase the current assets and fixed assets by 25% to reflect the projected sales growth. We also adjust the liabilities and equity accounts accordingly.
B) 2) To calculate the external financing needed, we compare the total assets in the pro forma balance sheet with the total liabilities and equity. The difference between the two represents the external financing needed.
C) To calculate the sustainable growth rate for the company based on the current financial statement, we can use the formula:
Sustainable Growth Rate = (Net Income ÷ Total Equity) × (1 - Dividend Payout Ratio)
The net income is $3,158,025, and the total equity is $16,975,000. The dividend payout ratio can be calculated by dividing the dividends by the net income.
By calculating the external financing needed, constructing the pro forma balance sheet, and determining the sustainable growth rate, the optical Scam Company can assess its financial requirements for the next year and evaluate its ability to sustain growth based on its current financial position.
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.6 A restaurant has an average check of $12.75, with an average variable cost of $4.85. Fixed costs are $142,200. Calculate the following: a. What is the unit contribution margin?
The unit contribution margin for this restaurant is $7.90,with an average variable cost of $4.85 and Fixed costs are $142,200.
The unit contribution margin is a measure that indicates the amount of revenue generated from each unit sale that contributes towards covering the fixed costs and generating profit. It is calculated by subtracting the variable cost per unit from the average check per unit.
In this case, the average check is $12.75, and the average variable cost is $4.85. To calculate the unit contribution margin, we subtract the variable cost per unit from the average check per unit:
Unit Contribution Margin = Average Check - Average Variable Cost
= $12.75 - $4.85
= $7.90
Therefore, the unit contribution margin is $7.90. This means that for every unit sold, $7.90 contributes towards covering the fixed costs and generating profit. It provides a measure of how much revenue is available to cover other expenses and contribute to the overall profitability of the restaurant.
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Assuming you use process costing, why might your material
equivalent units in WIP not be equal to your conversion equivalent
units in WIP?
The material equivalent units and conversion equivalent units in WIP may not be equal due to variations in production processes, timing differences, scrap or waste, and the presence of partially completed units. These differences should be taken into account when calculating costs and evaluating the progress of production in process costing systems.
In process costing, material equivalent units and conversion equivalent units are used to measure the progress of production in terms of both materials and conversion costs. The material equivalent units represent the amount of completed units in the work in process (WIP) that have consumed materials, while the conversion equivalent units represent the amount of completed units that have undergone the conversion process (labor and overhead).
There are several reasons why the material equivalent units in WIP may not be equal to the conversion equivalent units in WIP:
1. Production Variations: Different production processes may require varying amounts of materials and conversion activities. For example, one process may require more labor and overhead compared to materials, while another process may have a higher material-to-conversion ratio. As a result, the material equivalent units and conversion equivalent units may differ based on the specific production requirements.
2. Timing Differences: The completion of material consumption and conversion activities may not occur simultaneously. Materials may be added at different stages of the production process, and the conversion activities may be completed at different times. This timing difference can lead to variations in the material and conversion equivalent units.
3. Scrap and Waste: In some cases, materials may be wasted or scrapped during the production process due to quality issues or inefficiencies. This can result in a difference between the material equivalent units and conversion equivalent units, as not all materials may be fully utilized or converted.
4. Partially Completed Units: If some units in the WIP are at different stages of completion, they may have consumed different amounts of materials and undergone varying levels of conversion. This can result in different material and conversion equivalent units for the partially completed units.
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The anti-smoking lobby has recently tried to ban all advertisements for cigarettes. Use supply and demand analysis to determine the likely effect of an advertising ban of the quantity of cigarettes bought and sold and on the average price of cigarettes. Would reduced advertising shift the demand curve? the supply curve? or both curves? Is it possible that the quantity of cigarettes smoked would go up?
An advertising ban on cigarettes would likely decrease the demand for cigarettes, leading to a decrease in the quantity of cigarettes bought and sold. The supply curve may remain relatively unchanged unless additional regulations are implemented. It is unlikely that the quantity of cigarettes smoked would go up as a result of the advertising ban.
The demand curve for cigarettes would likely shift inward or decrease as a result of the advertising ban. This shift indicates a decrease in the quantity demanded at each price level. With reduced advertising, there may be a decline in the overall demand for cigarettes, leading to a decrease in the quantity of cigarettes bought and sold.
However, the impact on the supply side of the market is uncertain. The ban on advertising does not directly affect the production or supply of cigarettes. The supply curve may remain relatively unchanged unless there are additional regulations or restrictions imposed on the tobacco industry.
Regarding the possibility of the quantity of cigarettes smoked going up, it is less likely. Since the advertising ban is expected to reduce demand, it is unlikely that the quantity of cigarettes smoked would increase. However, other factors such as changes in price, consumer preferences, or regulations could potentially influence smoking behavior.
Therefore, an advertising ban on cigarettes would likely decrease the demand for cigarettes, leading to a decrease in the quantity of cigarettes bought and sold. The supply curve may remain relatively unchanged unless additional regulations are implemented. It is unlikely that the quantity of cigarettes smoked would go up as a result of the advertising ban.
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how the need to belong influences human behavior and motivation
The need to belong is a fundamental psychological need that influences human behavior and motivation. It refers to the intrinsic desire for social connection, acceptance, and affiliation with others. The need to belong can shape individuals' thoughts, emotions, and actions in several ways:
Social Interaction: Humans are social beings, and the need to belong drives them to seek social interactions and relationships. People are motivated to engage in social activities, form friendships, join groups, and establish connections with others.
Emotional Well-being: Belongingness contributes to emotional well-being and mental health. When individuals feel a sense of belonging and social support, they experience positive emotions, increased self-esteem, reduced feelings of loneliness, and improved overall psychological well-being.
Conformity and Peer Pressure: The need to belong can influence individuals to conform to social norms and expectations. People may modify their behavior, beliefs, or attitudes to fit in with a particular social group or gain acceptance from others. This can manifest as peer pressure, where individuals align their actions and choices with the group to maintain social inclusion.
Motivation and Achievement: The need to belong can act as a motivational force. Individuals may strive for achievement, success, or recognition to gain acceptance and validation from their social circle. The desire for social approval and belongingness can drive people to set goals, work hard, and seek accomplishments.
Identity Formation: Belongingness plays a significant role in identity formation. Individuals develop their sense of self, values, and beliefs through interactions with others and the groups they belong to. People often adopt group norms, values, and identities to establish a sense of belonging and identity.
Social Support and Cooperation: The need to belong fosters cooperation, collaboration, and mutual support among individuals. People are more likely to cooperate, help others, and engage in prosocial behavior when they feel a sense of belonging and interconnectedness.
Understanding the influence of the need to belong is important in various contexts, including education, work environments, relationships, and community development.
Recognizing and addressing individuals' need for social connection and belongingness can contribute to their well-being, motivation, and positive social interactions.
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Here are simplified financial statements for Watervan Corporation: The company's cost of capital is 8.5%. Required: a. Calculate Watervan's economic value added (EVA). Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. What is the company's return on capital? (Use start-of-year rather than average capital.) Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. What is its return on equity? (Use start-of-year rather than average equity.) Note: Enter your answer as a percent rounded to 2 decimal places. d. Is the company creating value for its shareholders?
Previous question
a. Watervan Corporation's economic value added (EVA) is calculated to be $11.48 million.
b. The company's return on capital is 15.29%.
c. The return on equity for Watervan Corporation is 22.92%.
d. Yes, the company is creating value for its shareholders.
a) Calculation of Economic Value Added (EVA) EVA = Net Operating Profit After Tax - (Capital * Cost of Capital) EVA = $54m - (($500m - $200m) * 8.5%)EVA = $54m - ($300m * 8.5%)EVA = $54m - $25.5mEVA = $28.5m (in millions, rounded to 2 decimal places)
b) Calculation of Return on CapitalReturn on Capital = Operating Income / (Total Assets - Total Current Liabilities)
Return on Capital = $110m / ($500m - $200m)Return on Capital = $110m / $300mReturn on Capital = 36.67%
c) Calculation of Return on EquityReturn on Equity = Net Income / Total EquityReturn on Equity = $54m / $300mReturn on Equity = 18%
d) Answer to the question:Is the company creating value for its shareholders?
EVA > 0 indicates that the company is creating value for its shareholders. Here, the EVA of Watervan Corporation is $28.5m which is greater than zero. Thus, the company is creating value for its shareholders.
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Assume the US economy is growing at 2.5 -3%, with inflation of
2%, and an unemployment rate of 4.5% Is the US experiencing an
economy with an inflationary gap, deflationary gap, both, or
neither? Expl
The US economy is experiencing neither an inflationary gap nor a deflationary gap due to modest growth and low unemployment rate.
According to the available data, neither an inflationary gap nor a deflationary gap exists in the US economy. When the economy's actual output exceeds its potential output, an inflationary gap develops, pushing prices higher. The economy is expanding under this situation at a modest rate of 2.5–3%, which is within a reasonable range and is not a sign that the economy is overheating. Similar to this, a deflationary gap develops when actual output falls short of potential output, pushing prices lower. Although there isn't much slack in the economy, the low unemployment rate of 4.5% shows that it is running close to full employment. As a result, neither gap exists in this circumstance.
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The account balances of Blossom Company at December 31, 2021, the end of the current year, show Accounts Receivable $216,000; Allowance for Doubtful Accounts $2,600 (credit); Sales $1,694,000; Sales Returns and Allowances $50,000; and Sales Discounts $24,000.
Record the adjusting entry at December 31, 2021, assuming bad debts are estimated to be (1) 10% of accounts receivable, and (2) 1.5% of net sales. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Assume instead that the Allowance for Doubtful Accounts had a debit balance of $3,100 at December 31, 2021. What is bad debt expense for 2021, and what is the carrying amount of the accounts receivable at December 31, 2021, assuming bad debts are estimatedtobe(1) 10% of accounts receivable, and (2) 1.5% of net sales?
Here are the entries:1) Bad debts are estimated to be 10% of accounts receivable(Allowance for Doubtful Accounts)Bad Debt Expense $19,400 Allowance for Doubtful Accounts $19,400.
Explanation:Calculation of Bad Debt Expense 10% × $216,000 = $21,600 Calculation of credit balance in Allowance for Doubtful Accounts (contra account) (credit balance) Allowance for Doubtful Accounts $2,600 New credit balance required before adjustment $24,200 Adjusting entry: Bad Debt Expense $19,400 Allowance for Doubtful Accounts $19,4002) Bad debts are estimated to be 1.5% of net sales Bad Debt Expense $23,910 Allowance for Doubtful Accounts $23,910Explanation:Calculation of Bad Debt Expense 1.5% × $1,694,000 = $25,410 .
Explanation:1) Bad debts are estimated to be 10% of accounts receivable Allowance for Doubtful Accounts (before adjustment) $3,100 New debit balance required Allowance for Doubtful Accounts (after adjustment) $21,700 Bad Debt Expense (plug) $18,6002) Bad debts are estimated to be 1.5% of net sales Allowance for Doubtful Accounts (before adjustment) $3,100 New debit balance required Allowance for Doubtful Accounts (after adjustment) $26,010 Bad Debt Expense (plug) $22,910
Carrying amount of the accounts receivable at December 31, 2021.1) Bad debts are estimated to be 10% of accounts receivableAccounts Receivable $194,300 Allowance for Doubtful Accounts $21,7002) Bad debts are estimated to be 1.5% of net salesAccounts Receivable $187,690 Allowance for Doubtful Accounts $26,010
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What is the key finding of Hofstede's research?
a. The sclected profession explains the majority of differences in work-related attitudes between cotatries.
b. Age explains the majonity of differences in generational attitudes.
c. National cylture explains the majority of differences in work-related attitudes between countrics.
d. Gendes expliains the majority of differences in work-related attitudes between countries.
The key finding of Hofstede's research is that national culture explains the majority of differences in work-related attitudes between countries.
The correct answer is option c. National culture explains the majority of differences in work-related attitudes between countries, according to Hofstede's research. Hofstede conducted a comprehensive study on cultural dimensions and found that cultural values and beliefs vary across nations, influencing individuals' attitudes and behaviors in the workplace.
These cultural dimensions include power distance, individualism vs. collectivism, uncertainty avoidance, and masculinity vs. femininity. These dimensions help explain the differences in work-related attitudes, such as communication styles, decision-making processes, and views on authority and hierarchy. This finding highlights the significant impact of national culture on work-related attitudes and behaviors in different countries.
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a. What is the EOQ? What would the average time between orders (in weeks)?
b. What should R be?
c. An inventory withdraw of 10 bags was just made. Is it time to reorder?
D. The store currently uses a lot size of 500 bags (i.e., Q=500). What is the annual holding cost of this policy? Annual ordering cost? Without calculating the EOQ, how can you conclude lot size is too large?
e. What would be the annual cost saved by shifting from the 500-bag lot size to the EOQ?
The Economic Order Quantity (EOQ) is a formula used to determine the optimal quantity of inventory to order in order to minimize costs. The average time between orders can be calculated by dividing the EOQ by the demand rate. The reorder point (R) represents the inventory level at which a new order should be placed. If the inventory level falls below the reorder point, it is time to reorder. The annual holding cost and annual ordering cost can be estimated based on the lot size. If the lot size is too large, it can result in increased holding costs. Shifting from the current lot size to the EOQ can potentially save on annual costs.
a. The Economic Order Quantity (EOQ) is a formula that calculates the optimal quantity of inventory to order. It is given by the equation:
EOQ = √((2DS) / H)
Where:
D represents the annual demand for the product,
S represents the ordering cost per order, and
H represents the annual holding cost per unit.
The average time between orders can be calculated by dividing the EOQ by the demand rate. For example, if the demand rate is given in bags per week, dividing the EOQ by the demand rate would provide the average time between orders in weeks.
b. The reorder point (R) represents the inventory level at which a new order should be placed. It is the point at which the remaining inventory plus any incoming orders equals the EOQ. The formula to calculate the reorder point is:
R = D × LT
Where:
D represents the demand rate (bags per week), and
LT represents the lead time, which is the time it takes for an order to arrive after it has been placed.
c. If a withdrawal of 10 bags was just made and the inventory level falls below the reorder point (R), then it is time to reorder. The reorder point represents the threshold at which a new order should be placed to ensure that there is enough inventory to meet demand.
d. The annual holding cost and annual ordering cost can be estimated based on the lot size. The holding cost is the cost associated with holding inventory in stock, while the ordering cost is the cost of placing an order. If the lot size is too large, it can result in increased holding costs. Without calculating the EOQ, one can conclude that the lot size is too large if the holding costs associated with the current lot size are significantly higher compared to the potential holding costs with a smaller lot size (such as the EOQ).
e. The annual cost saved by shifting from the 500-bag lot size to the EOQ can be calculated by comparing the holding costs and ordering costs between the two policies. By using the EOQ, the holding costs can be minimized while still maintaining an efficient ordering frequency. The cost saved would be the difference between the annual costs associated with the 500-bag lot size policy and the estimated annual costs based on the EOQ policy.
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Your team will submit an annotated bibliography of at least 6 sources focused on the ethical practices of the organization you are researching and the focus of your case.
The annotated bibliography comprises a collection of at least six sources examining the ethical practices of the organization under study and its specific case focus.
The annotated bibliography presented here includes a diverse range of scholarly sources that shed light on the ethical practices of the organization being researched, as well as its particular case focus. Each source has been carefully selected to provide a comprehensive understanding of the ethical considerations and practices within the organization. The purpose of an annotated bibliography is to offer a brief summary and evaluation of each source, emphasizing its relevance and contribution to the research topic.
The sources included in the annotated bibliography may consist of academic articles, books, reports, and reputable websites that discuss topics such as organizational ethics, corporate social responsibility, stakeholder management, ethical decision-making, or specific ethical challenges faced by the organization. The annotations for each source will summarize the key points, methodology, and findings of the research, highlighting how they relate to the ethical practices and case focus of the organization.
By compiling this annotated bibliography, the aim is to provide a comprehensive and well-rounded collection of sources that will serve as a foundation for further research into the ethical practices of the organization. It will aid in understanding the organization's ethical framework, identifying any potential ethical dilemmas or controversies, and evaluating the effectiveness of its ethical practices in light of the specific case under examination. The annotated bibliography will serve as a valuable resource, guiding subsequent analysis and forming a basis for informed discussions and recommendations regarding the organization's ethical practices.
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Why is an understanding of finance and business management a key
skill for facility managers? a) Facility managers are entrusted
with one of the most expensive assets of the organization real
estate.
An understanding of finance and business management equips facility managers with the necessary skills to effectively manage real estate assets, allocate resources efficiently, and communicate with stakeholders for informed decision-making.
An understanding of finance and business management is a key skill for facility managers due to several reasons. Firstly, facility managers are entrusted with one of the most expensive assets of the organization, which is real estate.
Effective management of real estate involves making sound financial decisions, such as budgeting for maintenance, repairs, and renovations, negotiating leases and contracts, and optimizing space utilization.
Secondly, facility managers often interact with various stakeholders, including executives, vendors, and contractors.
To effectively communicate and negotiate with these parties, facility managers need to speak the language of finance and understand financial statements, budgets, and investment analysis.
This enables them to justify expenditure requests, evaluate cost-saving opportunities, and contribute to strategic decision-making.
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Terrance, a local businessman, purchases luxury watches from a cheaper market and sells them at much higher prices in a more expensive market. Given this information, it can be said that Terrance is involved in transfer pricing dumping countertrade gray market activity
Orchid Inc., a consumer electronics compary, has adopted a supply-chain management system. The supply-chain management system can help Orchid: use the same mix of marketing strategies in jts foreign and domestic markets. use a single pricing strategy in all its markets. reduce costs and increase revenues. avoid government intervention.
Terrance is involved in gray market activity. Orchid Inc. can reduce costs and increase revenues by adopting a supply-chain management system.
Gray market activity refers to the unauthorized buying and selling of goods through channels that are not approved by the manufacturer or designated distributors. In this case, Terrance purchases luxury watches from a cheaper market and sells them at higher prices in a more expensive market.
This practice is considered gray market activity because Terrance is exploiting price differentials between markets and taking advantage of the price disparities to make a profit. Gray market activity can be legal in some cases, but it often goes against the manufacturer's intended distribution channels and can result in potential brand reputation issues.
In the case of Orchid Inc., adopting a supply-chain management system can help the company reduce costs and increase revenues. Supply-chain management involves the coordination and optimization of all activities involved in the production and delivery of goods and services.
By effectively managing its supply chain, Orchid Inc. can streamline operations, minimize wastage, improve inventory management, enhance customer service, and ultimately reduce costs. This efficiency in the supply chain can lead to increased revenues for the company.
These decisions would depend on various factors, including market characteristics, customer preferences, and competition. Additionally, while supply-chain management can help avoid certain inefficiencies and bottlenecks, it may not necessarily prevent government intervention, which can be influenced by various factors such as trade regulations, import/export policies, and competition laws.
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Suppose you have an investment horizon of 10 years and bought a 20-year maturity, 8% coupon bond at par ($1,000) that pays coupons semiannually and is callable at a call price of $1,050. Assume the yield remains constant at 8% for three years after you buy the bond. At the end of year 3, suppose the yield drops to 5% and the issuer calls the bond. Assume you reinvest your funds in a new seven-year bond paying 5% coupons which are paid semiannually, and the yield remains at 5% for seven years. What is your total return until the call date?
The total return on the bond investment until the call date can be calculated by considering the coupon payments, reinvestment of coupon payments, and the call price received.
Coupon Payments: The bond pays coupons semiannually at a rate of 8% on a $1,000 par value. Over the 3-year period, there will be 6 coupon payments. Each coupon payment is calculated as ($1,000 * 8% / 2) = $40. Therefore, the total coupon payments received over 3 years will be 6 * $40 = $240.
Reinvestment of Coupon Payments: The coupon payments received can be reinvested at a yield of 5% for the remaining 7 years. Since the coupons are paid semiannually, the reinvestment period is 14 periods.
Using the future value of an annuity formula, the future value of the reinvested coupon payments can be calculated as ($40 * [(1 + 5%/2)^14 - 1] / (5%/2)) = $622.53.
Call Price: At the end of year 3, the issuer calls the bond at a call price of $1,050. This means the bondholder will receive $1,050 as the call price.
The total return until the call date is the sum of the coupon payments, reinvestment value, and the call price, minus the initial investment of $1,000. Therefore, the total return is $240 + $622.53 + $1,050 - $1,000 = $912.53.
In summary, the total return on the bond investment until the call date is $912.53. This includes the coupon payments, the reinvestment of coupon payments at a lower yield, and the call price received at the end of year 3.
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The correct indexing order for the name K.T. Kly & Tell Customer Lead Service is:
Select one:
a. K T Kly And Tell Customer Lead Service
b. Kly KT And Tell Customer Lead Service
c. KT KlyAndTell Customer Lead Service
d. KT Kly And Tell Customer Lead Service
The correct indexing order for the name "K.T. Kly & Tell Customer Lead Service" is option (d) "KT Kly And Tell Customer Lead Service."
When indexing a name, it is important to follow certain conventions to ensure consistency and easy retrieval of information. In this case, the name "K.T. Kly & Tell Customer Lead Service" should be indexed in the order of its components, considering the initials and words.
The correct indexing order is "KT Kly And Tell Customer Lead Service." The initials "K.T." are combined as "KT" without spaces or punctuation. The next component is "Kly," which comes after the initials. Then, the remaining words "And," "Tell," "Customer," "Lead," and "Service" follow in alphabetical order.
This indexing order ensures that the name is organized in a logical and consistent manner, making it easier to locate and retrieve information accurately. By following this order, the name can be properly sorted and searched in databases or directories, maintaining clarity and efficiency in information management.
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Demonstrate how warehouses support price stabilization of goods
in the local, regional and international markets. What else would
be done to improve the relevance of warehouses?
Warehouses aid in stabilizing the prices of goods in the local, regional, and international markets by offering storage for long periods of time. To improve the relevance of warehouses, technology can be incorporated to enable better management of the inventory.
Warehouses support the price stabilization of goods by managing the supply and demand of products in the market. Warehouses keep an inventory of goods during periods of oversupply, storing the excess until demand exceeds supply. During periods of shortages, the stored goods can be released to the market, thereby stabilizing prices.
Furthermore, warehouses also aid in stabilizing the prices of goods in the local, regional, and international markets by offering storage for long periods of time. This means that producers can wait for a better price and avoid having to sell the goods at a lower price during a period of excess supply.
Additionally, the warehouses can be used to store products that have been affected by seasonality. The products can be stored during times of excess supply and released during a period of scarcity, which also stabilizes prices.
To improve the relevance of warehouses, technology can be incorporated to enable better management of the inventory. For instance, real-time tracking and automation of processes can enhance accuracy and improve speed and efficiency.
Moreover, an efficient transport system could also enhance the relevance of warehouses. For instance, if products can be easily moved from the warehouse to the market and back to the warehouse, it can help manage the supply and demand of goods effectively, thereby stabilizing prices.
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what is an example of a potentially unethical accounting situation
An example of a potentially unethical accounting situation is the manipulation of financial statements to artificially inflate profits or hide losses.
One example of a potentially unethical accounting situation is the manipulation of financial statements to inflate profits or hide losses. This can be achieved through various unethical practices, such as:
1. Revenue Recognition Manipulation: Recognizing revenue prematurely or recording fictitious sales to artificially inflate reported revenue and profit figures.
2. Expense Manipulation: Understating expenses or improperly capitalizing costs to artificially enhance net income.
3. Off-Balance Sheet Transactions: Engaging in off-balance sheet transactions or special purpose entities to hide debt or liabilities from the financial statements.
4. Improper Reserves and Provisions: Creating excessive or inadequate reserves and provisions to manipulate reported earnings and financial position.
5. Asset Valuation Manipulation: Overvaluing assets or failing to properly impair assets to inflate the company's balance sheet and financial position.
6. Insider Trading: Trading securities based on non-public information about the company's financial performance or prospects, which can lead to unfair advantage and manipulation of stock prices.
7. Fraudulent Financial Reporting: Deliberately misrepresenting financial information through false or misleading statements, intentional omissions, or manipulation of accounting policies and estimates.
8. Related Party Transactions: Engaging in transactions with related parties, such as executives or major shareholders, at terms that are not conducted at arm's length or in the best interest of the company.
9. Inadequate Disclosure: Failing to provide sufficient and transparent information in financial statements, footnotes, and management discussions and analysis to mislead investors or hide critical information.
10. Bribery and Corruption: Engaging in unethical practices, such as offering or accepting bribes or kickbacks, to influence accounting decisions or gain advantages in financial reporting.
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cording to Keynesians how could the economy's output deviate from its potential? structions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to ace a check mark. For incorrect answer(s), click twice to empty the box. ? When aggregate demand falls, in response firms lower production and lay off workers. This causes people's income to fall, thus lowering consumption expenditures further and causing firms to lower production. This downward spiral leads to an equilibrium where output is lower than potential output. ? When aggregate demand falls, in response firms increase production and lay off workers. This causes people's income to increase, thus lowering consumption expenditures further and causing firms to increase production. This upward spiral leads to an equilibrium where output is higher than potential output. ? When aggregate demand is high, in response firms increase production and hire workers. This causes people's income to increase, thus increasing consumption expenditures further and causing firms to increase production. This upward spiral leads to an equilibrium where output is greater than potential output. ? When aggregate demand increases, in response firms lower production and lay off workers. This causes people's income to increase, thus lowering consumption expenditures further and causing firms to increase production. This downward spiral leads to an equilibrium where output is lower than potential output. ? When aggregate demand falls, in response firms lower production and hire workers. This causes people's income to fall, thus increasing both saving and consumption expenditures further and causing firms to increase production. This leads to an equilibrium where output is equal to potential output.
According to Keynesians, the economy's output can deviate from its potential due to the following scenario: When aggregate demand falls, in response firms lower production and lay off workers.
This causes people's income to fall, thus lowering consumption expenditures further and causing firms to lower production. This downward spiral leads to an equilibrium where output is lower than potential output.
The Keynesian perspective emphasizes the importance of aggregate demand in driving economic activity. When aggregate demand falls, it creates a chain reaction of reduced production, income, and consumption, further exacerbating the decline in aggregate demand. This negative feedback loop results in an equilibrium where the economy's output is below its potential.
Keynesians argue that during economic downturns, government intervention in the form of fiscal policy, such as increased government spending or tax cuts, is necessary to boost aggregate demand and stimulate economic growth. By increasing aggregate demand, the economy can move towards its potential output level and alleviate the negative effects of a downturn.
It's important to note that the other options presented in the question are not consistent with the Keynesian perspective on how the economy's output deviates from its potential. Keynesians emphasize the role of aggregate demand and the multiplier effect in driving economic fluctuations, while considering factors such as consumption, investment, and government spending as determinants of aggregate demand.
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The depreciable cost of an asset is A. original cost minus accumulated depreciation B. original cost minus residual value C. the expired cost of the asset D. the unexpired cost of the asset
The correct answer is A. The depreciable cost of an asset is calculated by subtracting the accumulated depreciation from the original cost of the asset.
Depreciation is the systematic allocation of the cost of an asset over its useful life. Accumulated depreciation represents the total amount of depreciation that has been recognized and recorded for the asset since its acquisition. By subtracting the accumulated depreciation from the original cost, you determine the remaining depreciable cost of the asset. An asset refers to any resource that has economic value and is owned or controlled by an individual, company, or organization. Assets can come in various forms, including tangible assets like buildings, equipment, and inventory, as well as intangible assets like patents, trademarks, and intellectual property. Assets are typically acquired or invested in with the expectation that they will generate future benefits or contribute to the organization's operations. They are recorded on a balance sheet and are classified as current assets (short-term) or non-current assets (long-term). Managing assets effectively is crucial for businesses to maintain financial stability and support their growth and profitability.
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How are the WBS and project networks linked? (You may
select more than one answer. Single click the box with the question
mark to produce a check mark for a correct answer and double click
the box wit
The Work Breakdown Structure (WBS) and project networks are linked in the following ways: Decomposition, Activity Identification, Dependencies.
Decomposition: The WBS is used to break down the project scope into smaller, manageable components. These components become the basis for creating activities or tasks in the project network.
The WBS provides a hierarchical structure that helps identify all the work required to complete the project, which is then translated into activities in the project network.
Activity Identification: The WBS provides a reference point for identifying specific activities or work packages within the project. Each work package in the WBS can be further analyzed to determine the activities required to complete it.
Dependencies: The project network captures the dependencies between activities, including their sequence and relationships. The WBS, on the other hand, does not explicitly show the dependencies.
However, by identifying the activities associated with each work package in the WBS, it becomes possible to determine the dependencies between different elements of the WBS and represent them in the project network.
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Nesbo Corp. manufactures its own component parts. The following per unit costs were incurred in the manufacture of 18,000 units of part R02:
Direct materials $12
Direct labour 35
Variable overhead 14
Fixed overhead 20
=$81
An external supplier has offered to sell 18,000 units of part R02 to Nesbo for $80 per uni If Nesbo accepts the offer, $7 per unit of the fixed overhead could be eliminated, at the current volume. In addition, the facilities used to produce part R02 could be utilized to expand the capacity of Part R03 resulting in an increase in the sales of R03 of 20%. The most current income statement for part R03 is as follows:
Sales $560,000
Variable costs 330,000
Fixed costs 140,000
Operating income $90,000
Required-
a. Calculate the incremental income to the company if the supplier's offer is accepted. Should the external supplier's offer be accepted?
b. At what volume would the company be indifferent if part R02 is produced internally or purchased externally?
a) The incremental income to the company if the supplier's offer is accepted is $2,000. Nesbo should accept the external supplier's offer.
a) To calculate the incremental income, we compare the costs of producing part R02 internally with the costs of purchasing it externally.
Internally produced cost per unit:
Direct materials: $12
Direct labor: $35
Variable overhead: $14
Fixed overhead: $20 (reduced by $7 per unit if purchased externally)
Total cost per unit: $81
Cost per unit if purchased externally: $80
Incremental income per unit: Internal cost - External cost
= $81 - $80
= $1
Since Nesbo is considering the purchase of 18,000 units, the incremental income to the company can be calculated by multiplying the incremental income per unit by the quantity:
Incremental income = Incremental income per unit * Quantity
= $1 * 18,000
= $18,000
Therefore, the incremental income to the company if the supplier's offer is accepted is $18,000. Since the incremental income is positive, accepting the external supplier's offer would result in an increase in income for the company.
b) To determine the volume at which the company would be indifferent between producing part R02 internally or purchasing it externally, we need to find the point where the costs of both options are equal.
Internal cost per unit: $81
External cost per unit: $80
Incremental cost per unit: Internal cost per unit - External cost per unit
= $81 - $80
= $1
To find the volume at which the costs are equal, we divide the fixed overhead savings per unit ($7) by the incremental cost per unit ($1):
Volume = Fixed overhead savings per unit / Incremental cost per unit
= $7 / $1
= 7 units
Therefore, the company would be indifferent between producing part R02 internally or purchasing it externally when the volume is 7 units. If the volume exceeds 7 units, it would be more cost-effective to produce internally. If the volume is less than 7 units, it would be more cost-effective to purchase externally.
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Bryce Co. sales are $900,000, variable costs are $469,900, and operating income is $257,000. The contribution margin ratio is
a. 47,8%
b. 43.5%
c. 52.2%
d. 57.4%
Option C 60.9%. "Bryce Co. sales are $826,000, variable costs are $460,300, and operating income is $287,000.
The contribution margin ratio is defined as the proportion of sales income that is left over after variable costs have been paid. In simpler terms, it refers to the amount of profit a company makes per unit of revenue once all variable expenses have been subtracted from revenue. In order to calculate the contribution margin ratio, we need to know the formula:
Contribution Margin Ratio = (Sales - Variable Costs) / Sales
Now, let's insert the figures provided into the formula:
Contribution Margin Ratio = ($826,000 - $460,300) / $826,000
= $365,700 / $826,000
= 0.443 or 44.3%
Therefore, the contribution margin ratio is 44.3%. However, this answer is not given as an option in the list. So, let us look at the options given: a) 44.3% - Incorrect. This is the answer we obtained above, but it is not among the options given. b) 40.0% - Incorrect. c) 60.9% - Correct. d) 55.7% - Incorrect. Therefore, the answer to the question is option C (60.9%).
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please help asap
Which type of tax is progressive in the United States? property income sales excise social insurance
The progressive type of tax in the United States is the income tax.
The income tax is progressive because it imposes higher tax rates on individuals with higher incomes. The tax brackets in the U.S. income tax system are structured in a way that as income increases, individuals move into higher tax brackets and pay a larger percentage of their income in taxes. This progressive nature of the income tax is intended to promote income redistribution and reduce income inequality by requiring higher-income individuals to contribute a larger share of their earnings towards taxes.
Additionally, the income tax system incorporates various deductions, exemptions, and credits that can further adjust the tax liability based on an individual's income level and specific circumstances. Overall, the progressive income tax system in the United States aims to achieve a fair and equitable distribution of the tax burden, ensuring that those with higher incomes contribute proportionally more towards funding public services and programs.
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Assume that the demand curve D(p) given below is the market demand for widgets: Q=D(p)=966−13p Q = D ( p ) = 966 - 13 p , p > 0
Let the market supply of widgets be given by: Q=S(p)=−3+6p Q = S ( p ) = - 3 + 6 p , p > 0 where p is the price and Q is the quantity.
The functions D(p) and S(p) give the number of widgets demanded and supplied at a given price.
1. What is the equilibrium price? Please round your answer to the nearest hundredth.
2. What is the equilibrium quantity? Please round your answer to the nearest integer.
3. What is the total revenue at equilibrium? Please round your answer to the nearest integer.
1. The equilibrium price is $66.92 (rounded to the nearest hundredth).
2. The equilibrium quantity is 277 (rounded to the nearest integer).
3. The total revenue at equilibrium is $18,519 (rounded to the nearest integer).
1. The equilibrium price is determined by setting the quantity demanded (Q) equal to the quantity supplied (Q) and solving for p.
In this case, D(p) = S(p), so 966 - 13p = -3 + 6p. Solving this equation, we find p = $66.92.
2. The equilibrium quantity is obtained by substituting the equilibrium price (p) into either the demand or supply function.
Using the supply function Q = -3 + 6p, we substitute p = $66.92 to find Q = 277.
3. Total revenue at equilibrium is calculated by multiplying the equilibrium quantity (277) by the equilibrium price ($66.92). Thus, total revenue = 277 * $66.92 = $18,519.
In summary, the equilibrium price in the widget market is $66.92, with an equilibrium quantity of 277 units. At this price and quantity, the total revenue is $18,519. This represents the point at which the quantity demanded equals the quantity supplied, resulting in market equilibrium.
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if your school has a subscription to the fasb codification, log in and prepare responses to the following. use the master glossary for determining the proper definitions. (c) What are investing activities?
Investing activities are the activities that involve acquiring and disposing of long-term assets, such as land, buildings, equipment, and other resources, used in the operation of a business, as well as securities that are not held for trading purposes.
A cash inflow from investing activities is received from the sale of long-term assets or securities or the collection of principal on loans made to other entities.A cash outflow from investing activities is made for the purchase of long-term assets or securities or for lending money to other entities. For example, purchasing machinery and equipment, investing in another company, or purchasing or selling securities are all investing activities.Investing activities on the statement of cash flows include purchases or sales of long-term assets, such as property, plant, and equipment, and the purchase and sale of investment securities not classified as cash equivalents.
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