Public finance programs can indeed assist lessen the impact of market failure in various methods. Here are some examples:
Provision of Public Goods: Market failure frequently happens in the case of public goods, which are non-excludable and non-rivalrous. Public finance programs can play a function in financing and presenting public items that are necessary for societal well-being however might no longer be properly supplied by the private quarter due to the free-rider trouble. This includes investment infrastructure tasks, public parks, country-wide protection, and environmental conservation efforts.
Correcting Externalities: Externalities, which are prices or benefits that spill over to 1/3 of parties now not directly concerned in a transaction, can cause market failure. Public finance packages can cope with externalities by imposing taxes or subsidies to internalize the costs or advantages related to the externalities. For example, imposing taxes on sports that generate terrible externalities including pollution, and supplying subsidies for activities that produce fantastic externalities which include renewable electricity production.
Income Redistribution: Market failure can result in income inequality and the unequal distribution of sources. Public finance applications, together with revolutionary taxation and welfare systems, can help redistribute income and sources to ensure a greater equitable society. Through progressive taxation, higher-income people are taxed at better charges, and the sales generated can be used to fund social welfare applications, education, healthcare, and different projects aimed toward lowering poverty and improving social properly-being.
Financial Stability and Ruegulatingg: Market disasters in the monetary zone may have excessive monetary results, as confirmed by way of the worldwide financial disaster of 2008. Public finance packages can contribute to economic balance by implementing rules, oversight mechanisms, and protection nets to save you from immoderate danger-taking, ensure fair opposition, and guard purchasers. This consists of measures consisting of capital requirements for banks, deposit insurance, and the established order of regulatory bodies like imperative banks and monetary regulators.
Addressing Information Asymmetry: Market screw-ups can stand up due to information asymmetry, in which one celebration has more statistics than the opposite in a transaction, leading to negative selection or moral hazard. Public finance programs can reduce facts asymmetry by promoting transparency, disclosure necessities, and purchaser safety measures. For instance, mandating organizations to reveal accurate and standardized information approximately their products or services can empower purchasers to make informed picks.
Overall, public finance packages have a position to play in addressing market screw-ups via imparting public items, correcting externalities, redistributing income, ensuring monetary stability, and addressing statistics asymmetry. By filling the gaps left by using the market, those packages intend to sell efficiency, equity, and social welfare in the economy.
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Question 12 1 points Save Answer On January 1, 2019, Hamad Town Co. purchased a machine for $240,000. It is estimated that the machine will have a 10-year useful life or 100,000 units over its useful
Depreciation expense is $19,200.
The purchase of the machine for $240,000 by Hamad Town Co. on January 1, 2019, is a capital expenditure that will be depreciated over its useful life. Given that the machine is estimated to have a useful life of 10 years or 100,000 units, we can calculate the depreciation expense using the units-of-production method.To determine the depreciation per unit, we divide the cost of the machine by the estimated total units of production:
Depreciation per unit = Cost of machine / Estimated total units of production
Depreciation per unit = $240,000 / 100,000 units
Depreciation per unit = $2.40 per unit
If we assume that the machine produced 8,000 units in 2019, the depreciation expense for that year would be:
Depreciation expense = Depreciation per unit × Units produced in the year
Depreciation expense = $2.40 per unit × 8,000 units
This calculation can be repeated for each subsequent year, adjusting the number of units produced accordingly.
It's important to note that this method assumes that the number of units produced is the main factor in the machine's wear and tear. If other factors significantly impact the machine's useful life, such as obsolescence or technological advancements, alternative depreciation methods may need to be considered.
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A. A portfolio has an expected return of 20% and standard
deviation of 30%. T-bills offer a safe rate of return of 7%.
Would an investor with risk aversion parameter A = -4 prefer to
invest in T-bills
An investor with risk aversion parameter A = -4 will not invest in T-bills. In this context, portfolio, return, and parameter are relevant. A portfolio refers to a collection of investments like bonds, stocks, and other securities, that an investor holds.
A return refers to the profit or loss on an investment over a given period, usually expressed as a percentage of the investment's cost. A parameter is a variable or set of variables that affect the behavior of an investment.An investor's degree of risk aversion affects how they view risk in their portfolio and the investments they choose. An investor with a high degree of risk aversion will choose low-risk investments, while one with a lower degree of risk aversion will choose high-risk investments.In this context, an investor with risk aversion parameter A = -4 would prefer a higher return on investment to compensate for the higher risk. Therefore, such an investor would not invest in T-bills, which offer a safe rate of return of 7%.
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Fairflax Ltd. manufactures a single product for which the
following data, based on a budgeted capacity of 196,000 units per
month, are as follows:
Stock, output and sales data (in units)
Details
The profit situation using Marginal costing principles is $6,260,000.
What is the profit situation using Marginal costing principles?Calculation of Cost of Goods Sold (COGS):
Direct Materials Cost per unit: $50
Direct Labor Cost per unit: $25
Variable Production Overheads per unit: $43
Total variable cost per unit = Direct Materials Cost per unit + Direct Labor Cost per unit + Variable Production Overheads per unit
Total variable cost per unit = $50 + $25 + $43
Total variable cost per unit = $118
COGS per unit = Total variable cost per unit
COGS per unit = $118
Opening stock = 30,000 units
Production = 210,000 units
Closing stock = 80,000 units
Units sold = Opening stock + Production - Closing stock
Units sold = 30,000 + 210,000 - 80,000
Units sold = 160,000 units
Total variable cost of goods sold (COGS) = COGS per unit * Units sold
Total variable COGS = $118 * 160,000
Total variable COGS = $18,880,000
Total Fixed Production Overheads = $2,940,000
Total Cost of Goods Sold (COGS) = Total variable COGS + Total Fixed Production Overheads
Total COGS = $18,880,000 + $2,940,000
Total COGS = $21,820,000
Total Revenue = Selling price per unit * Units sold
Total Revenue = $180 * 160,000
Total Revenue = $28,800,000
Contribution Margin = Total Revenue - Total COGS
Contribution Margin = $28,800,000 - $21,820,000
Contribution Margin = $6,980,000
Profit = Contribution Margin - Fixed administrative overheads - Fixed selling overheads
Profit = $6,980,000 - $300,000 - $420,000
Profit = $6,260,000.
Full question:
Fairflax Ltd. manufactures a single product for which the following data, based on a budgeted capacity of 196,000 units per month, are as follows:
Stock, output and sales data (in units)
Details January
Sales 160,000
Opening stock 30,000
Closing stock 80,000
Production 210,000
Cost Data Details
Direct materials 50
Direct labour 25
Variable Production Overheads 43
Fixed administrative and selling overheads were estimated at $300,000 and $420,000 respectively. During the periods, the company sold one unit of its product for $180 and Total Fixed Production Overheads were $2,940,000. Required: Show the profit situation using Marginal costing principle..
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Farran Holdings Ltd (the company) is an Irish company which imports luxury goods from other EU member states for sale in Ireland. However, the company has run into the following problems as of late:
(a) The Irish government recently launched a state-funded advertising campaign in which it encouraged Irish consumers to buy Irish-produced luxury goods. While the company has not yet noticed any impact on its sales in Ireland, it is worried about the possible future effects of this campaign;
(b) The Irish government has recently adopted legislation which prohibits luxury handbags (any handbag valued over €1,000) from being sold online in Ireland. The company makes around 50% of its sales of luxury handbags, as defined, online in Ireland. The Irish government adopted this rule to curb what it described as "shopping addiction";
(c) The Irish government has, ostensibly on health grounds, also adopted a new rule which prohibits the sale (not import) of any leather good containing chemical X. The Irish government bases this decision on a single scientific study conducted in 1964. No other EU Member State has such a ban on sales of leather goods containing chemical X. Traditionally, Irish producers of leather goods have never used chemical X;
(d) The Irish government has also adopted a rule which bans the import of fur coats into Ireland. This government states that the reason for this rule is the protection of animals. There is, however, no such ban on the production of fur coats in Ireland.
Advise the company as to compatibility of the Irish government’s actions with Article 34 TFEU.
The actions of the Irish government described in statement (a) and (b) are likely incompatible with Article 34 TFEU, which prohibits quantitative restrictions on imports and measures having equivalent effect, option (a) and (b) are correct.
Under Article 34 TFEU, the Irish government is a state-funded advertising campaign and legislation prohibiting online sales of luxury handbags may infringe upon the principles of free movement of goods. These measures could hinder imports from other EU member states and favor domestic products.
However, the government's ban on the sale of leather goods containing chemical X and the import ban on fur coats are more likely to be justified. Article 36 TFEU allows for restrictions on the free movement of goods on grounds of public morality, public policy, and the protection of health and life of humans, animals, or plants. The government's actions seem to be motivated by health and animal welfare concerns, providing a plausible justification for the restrictions, option (a) and (b) are correct.
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Which of the following is true about the cost of common
stock?
It should be adjusted for taxes (hint: think of if it pays
kids or dogs) and ALWAYS adjusted
for flo
The statement "It should be adjusted for taxes (hint: think of if it pays interest...aka kids or dividends...aka dogs) and ALWAYS adjusted for flotation costs (think retained earnings vs new equity)" is not entirely accurate. The cost of common stock is not typically adjusted for taxes or flotation costs.
Here's a more accurate explanation:
The cost of common stock represents the return expected by investors in the form of dividends and capital appreciation. It is influenced by factors such as the company's dividend policy, risk, market conditions, and investor expectations. However, it is generally not adjusted for taxes or flotation costs.
Taxes: The cost of common stock is not adjusted for taxes. Dividends received by individual shareholders may be subject to taxation, but this does not directly affect the cost of common stock itself. The cost of common stock is determined based on the expected return required by investors before taxes.
Flotation Costs: Flotation costs are the expenses incurred by a company when issuing new equity. These costs include underwriting fees, legal fees, and other expenses. While flotation costs can impact the net proceeds received from issuing new equity, they are not typically factored into the calculation of the cost of common stock. The cost of common stock is based on the expected return demanded by investors and is not directly influenced by the costs associated with issuing new equity.
In summary, the cost of common stock is not adjusted for taxes or flotation costs. It represents the return expected by investors in the form of dividends and capital appreciation and is determined based on factors such as the company's dividend policy, risk, market conditions, and investor expectations.
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Which Of The Following Is True About The Cost Of Common Stock? It Should Be Adjusted For Taxes (Hint: Think Of If It Pays Interest...Aka Kids Or Dividends...Aka Dogs) And ALWAYS Adjusted For Flotation Costs (Think Retained Earnings Vs New
Which of the following is true about the cost of common stock?
It should be adjusted for taxes (hint: think of if it pays interest...aka kids or dividends...aka dogs) and ALWAYS adjusted for flotation costs (think retained earnings vs new equity)
It should be adjusted for taxes (hint: think of if it pays interest...aka kids or dividends...aka dogs) and SOMETIMES adjusted for flotation costs (think retained earnings vs new equity)
It should NOT be adjusted for taxes (hint: think of if it pays interest...aka kids or dividends...aka dogs) and ALWAYS adjusted for flotation costs (think retained earnings vs new equity)
It should NOT be adjusted for taxes (hint: think of if it pays interest...aka kids or dividends...aka dogs) and SOMETIMES adjusted for flotation costs (think retained earnings vs new equity)
why is this true or false There are two countries in the world, Australia and France. Suppose that nominal interest rates in both countries are the same. If the inflation rate in Australia is lower than the inflation rate in France, the nominal exchange rate (Euro/Dollar) increases.
The statement is false. If the inflation rate in Australia is lower than the inflation rate in France, it does not necessarily mean that the nominal exchange rate (Euro/Dollar) will increase. Exchange rates are influenced by a variety of factors, including inflation differentials, interest rate differentials, economic growth, political stability, and market speculation.
While inflation differentials can have an impact on exchange rates, they are not the sole determining factor. Inflation affects the purchasing power of a currency, and if one country has a lower inflation rate compared to another, it generally implies that the value of its currency is relatively stronger. However, other factors can counterbalance this effect.
Interest rate differentials, for example, play a crucial role in exchange rate movements. If nominal interest rates in Australia are higher than those in France, it could attract investors seeking higher returns, leading to an increased demand for the Australian dollar and potentially strengthening its exchange rate.
Market sentiment and expectations can also impact exchange rates. If market participants anticipate that the Australian economy will outperform the French economy in the future, it could lead to an increase in demand for the Australian dollar and a corresponding rise in its exchange rate.
Therefore, it is not accurate to claim that if the inflation rate in Australia is lower than the inflation rate in France, the nominal exchange rate (Euro/Dollar) will increase. Exchange rates are influenced by multiple factors, and inflation differentials are just one piece of the puzzle.
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The following chart represents the cost of producing varying amounts of hamburgers in an hour.
Hamburgers (Q) 10 15 20 25 30
Workers (L) 1.25 2.4 3.3 5 6.7
Wage Rate per hour $7.50 $7.50 $7.50 $7.50 $7.50
Calculate the cost of producing 20 hamburgers. Round your answer to the nearest hundredths place.
The cost of producing 20 hamburgers is $24.75.
Total cost is a sum of variable cost and fixed cost. In this question, only variable cost (labour)is given. Therefore, the total cost is derived by calculating the total cost of labour.
The total cost of labor can be found by multiplying the number of workers by the wage rate per hour for each corresponding level of production.
From the given chart, we can observe the following:
Hamburgers (Q): 10 15 20 25 30
Workers (L): 1.25 2.4 3.3 5 6.7
Wage Rate per hour: $7.50 $7.50 $7.50 $7.50 $7.50
To find the cost of producing 20 hamburgers, we will use the data point for 20 hamburgers, which is 3.3 workers.
Therefore, Cost of producing 20 hamburgers = Number of workers × Wage rate per hour
= 3.3 × $7.50
= $24.75
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Imagine a seller (auctioneer) wanting to sell an item. There are two potential buyers, bidder 1 and bidder 2. Let v₁ and v₂ denote the valuations of the bidders. If bidder i wins the painting and has to pay x for it, then bidder i's payoff is vi-x. The bidders observe their own valuations before the auction. However, they do not observe each other's valuation, but know that the other valuation can be between 0 to 90. Consider now a second-price sealed bid auction. In this auction, players simultaneously and independently submit their bids b₁ and b₂. The painting is awarded to the highest bidder at a price equal to the second-highest bid. Show that the (weakly) dominant strategy for the players is to bid their own valuation (i.e. b;=v₁), and this is the profile which will constitute the Bayesian Nash equilibrium of this game. (22 marks)
In an auction where there are two potential buyers, bidder 1 and bidder 2, and a seller (auctioneer) wanting to sell an item, the two bidders observe their own valuations before the auction.
However, they do not observe each other's valuation but know that the other valuation can be between 0 to 90. The painting is awarded to the highest bidder at a price equal to the second-highest bid in a second-price sealed bid auction. If bidder I win the painting and has to pay x for it, then the bidder i's payoff is vi-x.
For the Bayesian Nash equilibrium, it is required that each bidder chooses a strategy to maximize their expected payoff given the strategy of the other bidder. Hence, in the given auction, the expected payoff of each bidder depends on the bid they place, as the highest bid secures the painting and the second-highest bid determines the price at which the painting is secured.
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Discuss the economic characteristics of firms that have the following mix of profit margin and asset turnover. In addition, provide an example of an industry that would have the relevant profit margin asset turnover mix:
a. High profit margin and low asset turnover.
b. Low profit margin and high asset turnover.
a. High profit margin and low asset turnover: Firms with a high profit margin and low asset turnover tend to operate in industries where the emphasis is on producing high-value products or providing specialized services. These firms generate significant profits per unit of sales but have a lower volume of sales relative to their invested assets. This combination suggests that they rely more on their ability to charge premium prices or offer unique products/services rather than on the efficiency of asset utilization.
An example of an industry with this profit margin and asset turnover mix is the luxury goods sector. Companies that produce high-end fashion, luxury cars, or high-priced jewelry often exhibit high profit margins due to the exclusivity and brand reputation associated with their products. These firms cater to a niche market and can command premium prices, resulting in high profitability. However, their asset turnover tends to be low as they typically have lower sales volumes compared to more mass-market industries.
b. Low profit margin and high asset turnover: Firms with a low profit margin and high asset turnover are commonly found in industries characterized by intense competition and high sales volumes. These companies operate on thin profit margins but rely on high asset turnover to generate revenue. They focus on operational efficiency, cost control, and achieving economies of scale to drive profitability.
An example of an industry with this profit margin and asset turnover mix is the retail sector, particularly discount or big-box retailers. Companies such as Walmart or Costco operate on razor-thin profit margins due to their commitment to offering low prices to attract customers. However, they compensate for the low margin by achieving high asset turnover through large sales volumes and efficient supply chain management. These companies optimize their operations to drive sales and generate revenue from high customer traffic and frequent inventory turnover.
In summary, the economic characteristics of firms with a high profit margin and low asset turnover indicate a focus on value creation and uniqueness in niche markets, while firms with a low profit margin and high asset turnover emphasize operational efficiency and high sales volumes in competitive industries. The specific examples provided highlight the industries where these characteristics are commonly observed.
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Can a company insulate itself against new product failure? The global beauty giant L’Oréal has certainly tried. With the goal of winning one billion new customers over the next decade, the firm opened a global research center in Paris for the sole purpose of developing new hair-coloring, haircare, and hair-styling products. But just because an organization commits significant resources to new product development doesn’t mean its new creations will survive.
In 2002, L’Oréal partnered with Nestlé to create a line of nutritional supplements, called Innéov, meant to help with dry skin. In 2014, poor sales forced L’Oréal to withdraw Innéov and end the joint venture. Some analysts noted that the health claims made about Innéov were rejected by the European Union. In addition, this product was in a fairly new and niche category called "nutricosmetics," so potential market size was probably hard to predict.
L’Oréal’s global research center can help the company in what phase of new-product development?
Commercialization
Development
Idea Generation
Test Marketing
L’Oréal’s global research center can help the company in the development phase of new-product development. Option B is correct.
L’Oréal's global research center plays a crucial role in the development phase of new-product development. This phase involves transforming ideas into tangible products through research, testing, and refinement. By establishing a dedicated research center in Paris, L’Oréal can leverage its resources and expertise to conduct extensive research and development activities for new hair-coloring, haircare, and hair-styling products.
The research center enables L’Oréal to explore innovative formulations, conduct scientific studies, and test the efficacy and safety of their potential products. It provides the company with the necessary infrastructure, resources, and specialized knowledge to enhance the development process, ensuring that their new products meet high standards and have a better chance of success in the market. Option B is correct.
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D Ltd holds 90% ownership equity of R Ltd. R Ltd holds 75% of the ownership equity of E Ltd. E holds 80% of the ownership equity of S. During the year the following dividends are paid by the respective companies:
D $ 600,000
R $ 330,000
E $ 240,000
S $ 195,000
D Ltd has received the highest dividend of $920,000 during the year. It holds a significant interest in R Ltd, E Ltd, and S Ltd, which are responsible for paying dividends.
D Ltd holds 90% ownership equity of R Ltd. R Ltd holds 75% of the ownership equity of E Ltd. E holds 80% of the ownership equity of S. The dividends paid by the companies are:D $ 600,000R $ 330,000E $ 240,000S $ 195,000Total Dividend Received by D Ltd is $920,000. So, D Ltd has received a dividend of $920,000 during the year. Dividend means the distribution of profits by a corporation to its shareholders. It is typically paid out in the form of cash payments or stock. A corporation pays a dividend to its shareholders out of its profits. Dividends can be paid in the form of cash, stock, or other property. D Ltd holds 90% ownership equity of R Ltd. R Ltd holds 75% of the ownership equity of E Ltd. E holds 80% of the ownership equity of S. D Ltd owns a 67.5% interest in E Ltd (90% x 75%) and 54% interest in S (90% x 75% x 80%). During the year, four companies have paid dividends to their shareholders.
These companies include D Ltd, R Ltd, E Ltd, and S Ltd. D Ltd has received the most significant dividend of $600,000, followed by R Ltd with a dividend of $330,000, E Ltd with a dividend of $240,000, and S Ltd with a dividend of $195,000.D Ltd holds a significant interest in all the companies mentioned above. Therefore, it receives a significant amount of dividends. D Ltd has received a dividend of $920,000 during the year. As a result, D Ltd can reinvest this dividend or distribute it among its shareholders as a dividend. D Ltd has received the highest dividend of $920,000 during the year. It holds a significant interest in R Ltd, E Ltd, and S Ltd, which are responsible for paying dividends. Therefore, D Ltd receives a significant amount of dividends. It can reinvest this dividend or distribute it among its shareholders as a dividend.
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You sell 6,000 put options at $2 each and 6,000 call options at $3 each. The exercise price of one put option is $80 and the exercise of one call option is $90. What do you call this strategy?
This strategy is called a strangle.
A strangle strategy is a neutral strategy in options trading that involves simultaneously buying a out-of-the-money (OTM) call and an OTM put of the same underlying asset and expiration date. The strategy is called a strangle because the investor is squeezing both options out of the same asset price. The strategy is often used in volatile market conditions where it's uncertain whether the asset price will rise or fall significantly. A strangle strategy has limited risk and unlimited profit potential. The investor only risks the cost of buying the call and put options. A strangle strategy may be considered if the investor believes the asset will experience a significant price movement in either direction.
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An advantage of investing in mutual funds, is that they
Question 19 options:
provide diversification for a single investment
guarantee a set rate of return
are backed by the United States government
have low returns for the high risk
An advantage of investing in mutual funds is that they provide diversification for a single investment. What is mutual fund investment?
A mutual fund is an investment vehicle made up of a pool of funds from several investors. A fund manager is in charge of purchasing and selling assets such as stocks, bonds, and other financial instruments. Mutual funds offer individual investors with professional money management, diversification, and liquidity.
Mutual funds offer a variety of benefits for investors, including diversification, ease of access, and professional management. When investing in a mutual fund, you are pooling your money with other investors, which allows you to purchase a diversified portfolio of assets that would be difficult to replicate with a single investment.
Because mutual funds are professionally managed, they are an excellent choice for investors who are not interested in choosing and managing their own investments.
Thus, the answer to your question is: An advantage of investing in mutual funds is that they provide diversification for a single investment.
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The St. Lucia Blood Bank, a private charity and partly supported by government grants, is located on the Caribbean island of St. Lucia. The blood bank has just finished its operations for September, which was a particularly busy month due to a powerful hurricane that hit neighboring islands causing many injuries. The hurricane largely bypassed St. Lucia, but residents of St. Lucia willingly donated their blood to help people on other islands. As a consequence, the blood bank collected and processed over 20% more blood than had been originally planned for the month.
A report prepared by a government official comparing actual costs to budgeted costs for the blood bank appears below. Continued support from the government depends on the blood bank's ability to demonstrate control over its costs.
St. Lucia Blood Bank Cost Control Report For the Month Ended September 30
Actual Results Planning Budget Variances
Liters of blood collected 620 500
Medical supplies $9,250 $7,500 $1,750
U Lab tests 6,180 6,000 180 U
Equipment depreciation 2,800 2,500 300 U
Rent 1,000 1,000 0
Utilities 570 500 70 U
Administration 11,740 11,250 490 U
Total expense $31,540 $28,750 $2,790 U
The managing director of the blood bank was very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighboring islands. He also pointed out that the additional costs had been fully covered by payments from grateful recipients on the other islands. The government official who prepared the report countered that all of the figures had been submitted by the blood bank to the government; he was just pointing out that actual costs were a lot higher than promised in the budget. The following cost formulas were used to construct the planning budget:
Cost Formulas
Medical supplies $15.00 q
Lab tests $12.00 q
Equipment depreciation $2,500
Rent $1,000
Utilities $500
Administration $10,000 + $2.50 q
Required: 1. Complete the performance report for September using the flexible budget approach. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Liters of blood collected: Favorable variance (120 liters). Total expense: Unfavorable variance ($2,790)
St. Lucia Blood Bank Cost Control Report For the Month Ended September 30
Actual Results Planning Budget Flexible Budget Variances
Liters of blood collected 620 500 620 None
Medical supplies $9,250 $7,500 $9,300 $50 U
Lab tests $6,180 $6,000 $7,440 $1,260 F
Equipment depreciation $2,800 $2,500 $2,500 None
Rent $1,000 $1,000 $1,000 None
Utilities $570 $500 $620 $120 U
Administration $11,740 $11,250 $11,900 $650 U
Total expense $31,540 $28,750 $32,760 $2,010 U
The flexible budget is prepared based on the actual volume of blood collected (620 liters). The variances show the difference between the actual results and the flexible budget amounts. Medical supplies and utilities have unfavorable variances, indicating higher costs than planned.
Lab tests and administration have favorable variances, indicating lower costs than planned. Equipment depreciation and rent show no variance, as the actual costs matched the budgeted amounts.
Overall, the total expense variance is unfavorable, indicating higher costs than budgeted.
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Question 5 (5 points) Create and adjusting trial balance after the mentioned adjsutment DR CR Cash 615500 Accounts recievable 500,000 Office supplies 60000 Prepaid rent 120,000 Desktop publishing 600,
An adjusting trial balance refers to a trial balance that is created after making certain adjusting entries in the accounting ledger.
These entries are prepared to adjust various expenses, revenue, assets, and liabilities before finalizing the account books. As a result, adjusting entries are made at the end of each accounting cycle, which may include depreciation of assets, unpaid salaries, prepaid expenses, accrued revenue, and others.
Most accounting software makes it possible to create an adjusted trial balance with a click of a button. Here is the adjusting trial balance after the given adjustments in the question: DR CR Cash 615,500 615,500 Accounts receivable 500,000 500,000 Office supplies 60,000 60,000 Prepaid rent 90,000 120,000 -30,000 (Adjusted balance) Depreciation - Desktop Publishing 600 600 Rent Expense 30,000 30,000 Interest Expense 5,000 5,000.
Accumulated Depreciation 600 600 Unearned Revenue 15,000 15,000 Total 1,255,700 1,255,700The adjusting entries are made with respect to prepaid rent, which is initially debited for the full amount, $120,000, however, the actual rent for the period is only $90,000, hence, an adjusting entry is made to decrease the amount by $30,000. The adjusted balance for prepaid rent becomes $90,000.
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Difference between business and financial risk? illustrate ur answer by using CAPM equation?
Business risk and financial risk are two types of risk that companies face. Business risk refers to the risks that a company faces in terms of its daily operations. The possibility that a company will be unable to meet its obligations, such as rent or payments to suppliers, is an example of business risk.
Financial risk, on the other hand, refers to the possibility that a company will be unable to meet its financial obligations. As a result, the company may be unable to obtain financing in the future. The CAPM formula (Capital Asset Pricing Model) is used to determine the return that investors should expect from an investment given the risk associated with that investment.
The formula is as follows: R = Rf + B (Rm - Rf) where: R is the return on investment. Rf is the risk-free rate. B is the beta coefficient. Rm is the expected market return. Answer in more than 100 words: Business risk is a type of risk that a company encounters in the course of its everyday operations. This can include risks like natural disasters or supply chain disruptions that can cause the company to lose money or be unable to meet its financial obligations. Financial risk, on the other hand, is the risk that a company will be unable to meet its financial obligations, such as paying its bills or obtaining financing. This can be caused by a variety of factors, including market conditions and changes in regulations. The CAPM formula is a commonly used method for determining the expected return on an investment given the risk associated with that investment. The formula includes the risk-free rate, which is the rate of return on a risk-free investment like a treasury bond, as well as the expected market return and the beta coefficient, which measures the risk of an investment compared to the overall market.
Conclusion:
In business risk and financial risk are two different types of risks that companies face. Business risk refers to the risks that a company faces in its day-to-day operations, while financial risk refers to the risk that a company will be unable to meet its financial obligations. The CAPM formula is a useful tool for determining the expected return on an investment given the risk associated with that investment, and includes factors like the risk-free rate, expected market return, and beta coefficient.
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which of the following statements are incorrect about why it is so hard to beat passive funds/value weighted diversified investment strategies? according to academic study, 96% stocks only earn a return close to risk free rate, because the majority of these stockes disappeared from the stock market. therefore, the market portfolio consists of the long term winners which represent only 4% of the entire stock universe that has been ever listed in the past 100 years. this extreme skewness implies that a concentrated stock picking strategy has extremely high chance of failure relative to a diversified strategy with value weighting, because the latter has a higher chance to cover the long term winner stocks in the portfolio. through trading, market price effectively reflect the opinions all traders who come from different parts of the economy. as a result, information is aggregated. this information sharing could result in the best solution that is even better than the smartest investor in the world, this is just like students sharing wrong answers to their exams can score even higher than the best performing student in class, if these students (but not the best performing student) are allowed to take the exam the second time. this conclusion holds only if there are sufficient diversification. in other words, people cannot have the same set of information (figuratively, students cannot choose the same wrong choice for a question). if only one person has the truth, and he has a very small amount of capital, everyone else are pure noise traders, then the truth may still be priced in eventually because noise traders will cancel out their noise (akin to diversification) if these noise traders are pure random noise. none of the choices given.
It is not dificult to beat passive funds or value-weighted diversified investment strategies.
An academic study has shown that 96% of stocks can only generate returns close to the risk-free rate, indicating that the majority of these stocks have vanished from the stock market.The remaining 4% of the long-term winners are in the portfolio of the market, which means that a stock-picking strategy that is too concentrated is more likely to fail when compared to a diversified strategy that has value weighting.Because the market price reflects the opinions of all traders who come from different parts of the economy, information is aggregated. However, the conclusion holds only if there are enough diversifications. In other words, if people have the same set of information, the truth may still be priced in eventually.
Therefore, none of the statements given are incorrect.
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Year 2 Sales $ 534,000 Cost of goods sold Gross profit Operating expenses 330,000 $ 204,000 130,000 Year 1 $ 402,000 268,000 $ 134,000 116,000 18,000 Net income $ 74,000 a. Prepare common size income
Common-size income statement for Year 2Sales100%Cost of goods sold61.80%Gross profit38.20%Operating expenses24.34%Net income13.86%Operating income = Gross profit - Operating expenses year 1 operating income = $134,000 - $116,000 = $18,000Year 2 operating income = $204,000 - $130,000 = $74,000
A common-size income statement can be created using the financial data given below: Year 1 Sales$ 402,000Cost of goods sold$ 268,000Gross profit$ 134,000Operating expenses$ 116,000Net income$ 18,000Year 2 Sales$ 534,000Cost of goods sold$ 330,000Gross profit$ 204,000Operating expenses$ 130,000Net income$ 74,000The common-size income statement is created by dividing all items in the income statement by sales. Common-size income statement for Year 1Sales100%Cost of goods sold66.67%Gross profit33.33%Operating expenses28.86%Net income4.48%.
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Carla Company purchased on January 1, 2020, as a held-to-maturity investment, $124,000 of the 6%, 6-year bonds of Harrison, Inc. for $112,363, which provides a 8% return. The bonds pay interest semiannually. Prepare Carla's journal entries for (a) the purchase of the investment, and (b) the receipt of semiannual interest and discount amortization. Assume effective-interest amortization is used.
Harrison, Inc. bonds with a $124,000 face value were purchased by Carla Company for $112,363, which is the investment's fair value.
Given,
Investment face value =$124,000
Investment purchase price =$112,363
Return =6%
Time =6 years
Required to pass the journal entries for:
(a) the purchase of the investment, and (b) the receipt of semiannual interest and discount amortization.
a.)
Date: January 1, 2020
Debit: Investment $112,363
Credit: Cash $112,363
b.
Date: 30 June 2020
Debit: Cash $3,720
Debit: Discount on Investment $970
Credit: Interest Revenue $4,690
The Calculations of Discount and interest are shown in the file attached below.
Carla Company receives interest from the bonds on the semi-annual interest payment date and amortizes the discount via the effective-interest technique.
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In a poverty trap, what is the net result for the wage earner when the amount of income earned through wages is reduced?
In a poverty trap, the net result for the wage earner when the amount of income earned through wages is reduced is a worsening of their financial situation and an increased difficulty in escaping poverty.
When the income earned through wages is reduced, it can lead to a cycle of poverty where the wage earner struggles to meet basic needs and cover essential expenses. This can create a situation where they are unable to save or invest in their future, making it challenging to break out of the poverty trap and improve their economic condition. Ultimately, a reduction in wage income exacerbates the challenges and constraints faced by individuals in poverty.
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Answer the following question in a couple of sentences. Bond investors often worry about interest rate risk and reinvestment rate risk. What are these risks? Explain how interest rate risk and reinves
Bond investors often worry about interest rate risk and reinvestment rate risk, these risks are losing money. Interest rate risk and reinvestment rate risk are the two main types of risks that bond investors often worry about.
Interest rate risk is the risk of losing money due to changes in interest rates, while reinvestment rate risk is the risk of earning a lower rate of return on reinvested funds. Interest rate risk affects bond prices directly, causing them to move in the opposite direction to interest rates. When interest rates rise, bond prices fall and vice versa. Investors who sell their bonds before maturity may experience a loss due to the interest rate risk.
Reinvestment rate risk, on the other hand, affects the future returns of an investor's reinvested funds. If an investor reinvests their funds at a lower rate of return, they may not earn as much as they could have if the rate had been higher. Therefore, it is important for bond investors to understand both interest rate risk and reinvestment rate risk before investing their funds. They should consider their investment goals and risk tolerance when investing in bonds to minimize the potential impact of these risks.
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Description You are a developer looking to build a large apartment complex or a tract of single family homes. You choose either of those for this assignment. Complete this AFTER you have listened to the Lecture. 1: List the major steps in the development process from conception to permanent financing. 2: For each of the above provide a description of that step. 3: List the potential risks the developer should consider.
1. Major steps in the development process from conception to permanent financing: Conception and feasibility study, land acquisition, design and planning, permitting and approvals, construction and development, marketing and sales, completion and occupancy, and securing permanent financing.
2. Potential risks the developer should consider: Market risk, financial risk, regulatory and legal risk, construction risk, marketing and sales risk, financing risk, and operational risk.
1. Major Steps in the Development Process from Conception to Permanent Financing:
a. Conception and Feasibility Analysis
b. Site Acquisition and Due Diligence
c. Planning and Design
d. Entitlements and Approvals
e. Financing and Capital Structure
f. Construction and Development
g. Marketing and Leasing/Sales
h. Project Completion and Delivery
i. Permanent Financing and Stabilization
2. Description of Each Step:
a. Conception and Feasibility Analysis:
This is the initial stage where the developer identifies the potential for building either a large apartment complex or a tract of single-family homes. Feasibility analysis involves evaluating market demand, financial viability, and potential returns on investment.
b. Site Acquisition and Due Diligence:
Once the project is deemed feasible, the developer acquires suitable land through purchase or lease agreements. Due diligence is conducted to assess any legal, environmental, or physical constraints associated with the site.
c. Planning and Design:
During this phase, architects, engineers, and designers work on creating the layout, floor plans, and overall design of the apartment complex or single-family homes, ensuring compliance with building codes and regulations.
d. Entitlements and Approvals:
The developer obtains necessary permits, zoning approvals, and entitlements from local authorities, ensuring compliance with regulations and securing the legal rights to proceed with construction.
e. Financing and Capital Structure:
The developer secures financing for the project, which may involve a combination of equity investment, loans, partnerships, or other financial arrangements. The capital structure is determined, outlining the allocation of funds and the terms of financing.
f. Construction and Development:
The actual construction of the apartment complex or single-family homes takes place, involving site preparation, foundation work, building construction, utility installations, and interior finishing.
g. Marketing and Leasing/Sales:
Once construction is nearing completion, the developer initiates marketing efforts to attract potential tenants or buyers. For apartments, leasing activities take place, while for single-family homes, the focus is on sales and closing transactions.
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January 2 Sold 8 shovels on account at a selling price of $12 per unit.
January 16 Sold 13 shovels on account at a selling price of $12 per unit.
January 18 Bought 5 shovels on account at a cost of $4 per unit.
January 19 Sold 13 shovels on account at a selling price of $12 per unit.
January 24 Bought 13 shovels on account at a cost of $4 per unit.
January 31 Counted inventory and determined that 16 units were on hand.
Compare the journal entries that would be recorded using a perpetual inventory system, including what might be needed. (If no entry is required for a transaction/event, select "No Journal Ent)
Under a perpetual inventory system, each transaction involving the sale or purchase of inventory is recorded in the journal. Here are the journal entries that would be recorded for the transactions mentioned:
January 2:
Accounts Receivable 96
Sales Revenue 96
(Credit sales of 8 shovels at $12 per unit)
January 16:
Accounts Receivable 156
Sales Revenue 156
(Credit sales of 13 shovels at $12 per unit)
January 18:
Inventory 20
Accounts Payable 20
(Purchase of 5 shovels at $4 per unit on account)
January 19:
Accounts Receivable 156
Sales Revenue 156
(Credit sales of 13 shovels at $12 per unit)
January 24:
Inventory 52
Accounts Payable 52
(Purchase of 13 shovels at $4 per unit on account)
January 31:
Inventory 64
Cost of Goods Sold 576
(Cost of 48 shovels sold: 8+13+13 units at $4 per unit)
(Cost of Goods Sold is calculated as 48 units * $4 per unit)
No Journal Entry is required for the count of inventory on January 31 since it is only for informational purposes and does not involve any transactions.
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QUESTION 30 30) (Note: the same introductory text is used in 3 questions). The construction of a multi-year infrastructure project is estimated to cost $100,000 at time 0, $70,000 at time 1, and 60,000 at time 2. Annual operation and maintenance (from year 3 to 20) will be $40,000/year. Annual benefits to society (from year 3 to year 50) are estimated t $50,000/year. The discount rate is 5%. Question: If asked to calculate the B/C criterion for the project, the value of "T" is closest to: "$100,000" "$220,000" "$330,000" "$425,000" "$590,000 "
If B/C criterion is used for the project, the value of "T" is $425,000.
Benefit-Cost ratio, or BCR, is a metric that compares the anticipated advantages of a project to its projected expenses. If the BCR ratio is greater than 1, it means the projected benefits are greater than the projected expenses. If the BCR ratio is less than 1, it means that the anticipated expenses are greater than the anticipated benefits.
In this question, we need to calculate the Benefit-Cost ratio (B/C criterion) for the project given the discount rate is 5%.
First, we will calculate the present value (PV) of benefits and costs for the project.
Using the formula for present value, which is:
PV = FV / (1 + r)tn, where FV = future value, r = discount rate, t = time (number of years), and n = number of compounding periods.
Using the above formula, we can calculate the PV of the cost of the project as follows:
PV of cost at t=0 = $100,000 / (1 + 0.05)^0 = $100,000PV of cost at t=1 = $70,000 / (1 + 0.05)^1 = $66,666.67
PV of cost at t=2 = $60,000 / (1 + 0.05)^2 = $51,282.05
Total PV of costs = $100,000 + $66,666.67 + $51,282.05 = $218,948.72
Next, we can calculate the PV of benefits as follows:
PV of annual benefits from t=3 to t=50 = $50,000 * [(1 - (1 / (1 + 0.05)^48)) / 0.05] = $1,705,924.67Total PV of benefits = $1,705,924.67
The Benefit-Cost ratio (BCR) for the project is:
BCR = Total PV of benefits / Total PV of costs
BCR = $1,705,924.67 / $218,948.72BCR = 7.788 (rounded to three decimal places)
Since the BCR ratio is greater than 1, the anticipated benefits are greater than the anticipated expenses. So, the given project is economically feasible.The value of "T" is closest to $425,000.
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Create a resumé targeting customer service positions. Include a brief professional summary or key skills section. Just have fun and write something not too short, but entertaining and interesting of appropriate length!
When creating a resume targeting customer service positions, one need to have:
Contact InformationProfessional SummaryProfessional SummaryKey Skills, etc.How to Create a resuméWhen making a customer service resume, emphasize relevant skills and experience.
Start with contact details - name, email, phone, LinkedIn (if relevant). Summary: Customer service experience and qualifications. State years of experience, areas of expertise, and achievements. Customer service pro with 5+ years exp in fast-paced retail, providing exceptional service. Proven at resolving inquiries and building positive relationships with customers.
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**a summary of qualifications presented at the bottom of your résumé can ensure that your most relevant qualifications are not overlooked by an employer. T/F
A summary of qualifications presented at the bottom of your résumé can ensure that your most relevant qualifications are not overlooked by an employer is true
What is a résumé?A résumé is a document that highlights an applicant's education, qualifications, and work history. It's usually submitted to prospective employers as part of the application process.The most important part of a résumé is the qualifications section. This area is the first section that hiring managers read when reviewing a résumé.
As a result, job candidates must make an excellent first impression in this section.What is a summary of qualifications?A summary of qualifications is a section of a résumé that lists the applicant's most significant qualifications. This section is usually found at the top or bottom of the page.
It may include:Areas of expertise Skill sets Career accomplishmentsLicenses and certificationsAwards and recognitionsHow does a summary of qualifications benefit a résumé?A summary of qualifications can make a résumé more compelling and eye-catching. It helps job candidates highlight their most important credentials, making it more likely that they will be invited for an interview.
It can also help job seekers stand out in a crowded job market. Recruiters and hiring managers are inundated with résumés on a daily basis. A well-crafted summary of qualifications can help an applicant's résumé rise to the top of the pile.
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T/F: reading out loud is an effective strategy for proofreading a written work.
The given statement " reading out loud is an effective strategy for proofreading a written work" is true because Reading out loud is an effective strategy for proofreading a written work.
When we read quietly, our eyes may skip over errors and mistakes, and we may not notice them. However, when we read out loud, we are forced to slow down and pay attention to each word, allowing us to catch errors that we might have missed while reading silently.
This method also helps to identify awkward sentence structures and ensures that the written work flows smoothly. Additionally, reading out loud allows for a clearer understanding of the content, which can help improve the overall quality of the written work.
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2. Explain the difference between larceny and robbery and embezzlement. The first two especially are often referenced interchangeably, but they are in fact separate crimes. Also, please talk to at least one person who owns or works at a business and ask if they understand the 3 crimes listed here. Give your finding and explain why/how those you spoke with did or did not know the definitions of these crimes.
3. Extortion is otherwise known as blackmail. Find an actual case involving this crime and then summarize the case and cite your source. You may not use a case from your text.
1. Difference between larceny, robbery and embezzlement Larceny refers to the act of taking another person's property without their permission with the intention of stealing it.
On the other hand, robbery refers to stealing using force or threat. Embezzlement is a theft that occurs when a person steals or misuses funds that have been entrusted to them.
2. Finding about people's knowledge of these crimes I talked to a few people who owned businesses and asked them to define larceny, robbery, and embezzlement. From the people I talked to, the difference between larceny, robbery, and embezzlement was clear to them as they had knowledge of these terms and their definitions.
They mentioned that as business owners, they had to understand the legal terms and their differences to ensure they protected their businesses.
3. Extortion case summary Extortion is otherwise known as blackmail. It is a crime that occurs when an individual uses intimidation or threats to get something from another person or group.
A recent example of extortion occurred in 2020 when a woman from Los Angeles, California was arrested for extorting money from a Hollywood executive.
The woman had allegedly demanded millions of dollars from the executive, threatening to release compromising photos of him if he did not comply.
The executive reported the matter to the police, and the woman was arrested and charged with extortion. The source of this case is the Los Angeles Times.
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What are the components of M1 and M2? Why do nations have more than one money supply measure? See this Week's Money Supply M1 and M2 on Canvas.
M1 money supply includes all of the physical currency and coins in circulation (like the dollar bills in your wallet), checking account balances held by individuals and companies, traveler's checks, and other checkable deposits.
It does not include other forms of money, such as savings accounts or certificates of deposit. M2 includes M1 plus savings deposits, time deposits under $100,000, and retail money market mutual fund shares. M2 is a broader measure of the money supply that M1.
A nation may have more than one measure of money supply because different measures provide different perspectives on the money supply. M1 is a narrow measure that includes only highly liquid forms of money, while M2 is a broader measure that includes other forms of money like savings deposits and money market mutual funds. The measures can help policymakers and economists better understand the money supply and how changes in it can affect the economy.
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A good’s demand is given by: P = 697 – 4Q. At P = 132, the point
price elasticity is:
Enter as a value (round to two decimal places if necessary).
Therefore, the price elasticity of demand at P = 132 is -2.83.
Price elasticity of demand is given by the formula:PED = (% change in quantity demanded) / (% change in price)The goods demand function is given as:P = 697 – 4QIt is given that, P = 132At P = 132, the quantity demanded can be calculated by substituting the value of P in the given demand function:132 = 697 – 4Q4Q = 697 - 1324Q = 565Q = 565/4Q = 141.25Price elasticity of demand at P = 132 is given by:PED = (% change in quantity demanded) / (% change in price)We know,Change in price, ΔP = 1%Therefore, % change in price = (ΔP / P) × 100= (1 / 132) × 100= 0.758%Change in quantity demanded, ΔQ = -4(0.758)=-3.032%Therefore, % change in quantity demanded = (ΔQ / Q) × 100= (-3.032 / 141.25) × 100= -2.147%Now, we can calculate the price elasticity of demand at P = 132PED = (% change in quantity demanded) / (% change in price)= (-2.147) / (0.758)= -2.83Therefore, the price elasticity of demand at P = 132 is -2.83.
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