The answers to all the questions are explained below in detail as per the criteria about price.
1a)The percentage change in price and quantity using the regular formula %ΔX= X2−X1/X1×100%
ΔP = P2 - P1/P1×100% = 50 - 20/20 × 100% = 150%
ΔQ = Q2 - Q1/Q1×100% = 30,000 - 80,000/80,000 × 100% = -62.5%
1b) Price elasticity of demand can be calculated using the following formula:
Price Elasticity of Demand
(Ep) = Percentage change in Quantity Demanded/ Percentage change in Price
Ep= (ΔQ/Q1) / (ΔP/P1)
We know that
,ΔP/P1 = 150%ΔQ/Q1 = -62.5%
Ep = (-62.5/100) / (150/100) = -0.4167
So, the demand is inelastic.
1c)To find: The percentage change in price and quantity using the formula
%ΔX= X2−X1/X1×100%
We have,ΔP = P2 - P1/P1×100% = 20 - 50/50 × 100% = -60%
ΔQ = Q2 - Q1/Q1×100% = 80,000 - 30,000/30,000 × 100% = 166.67%
1d)Price Elasticity of Demand (Ep) = Percentage change in Quantity Demanded/ Percentage change in Price
ΔP/P1 = -60%
ΔQ/Q1 = 166.67%
Ep = (166.67/100) / (-60/100) = -2.778
So, the demand is elastic.
1e)The modified formula is:
%ΔX= (X1+X2)/2 (X2−X1)/[(X1+X2)/2] × 100%
Percentage change in price,
%ΔP = (50 + 20)/2 (20 - 50)/[(50 + 20)/2] × 100% = -57.89%
Percentage change in quantity,
%ΔQ = (30,000 + 80,000)/2 (80,000 - 30,000)/[(30,000 + 80,000)/2] × 100% = 114.29%
1f)Price Elasticity of Demand (Ep) = Percentage change in Quantity Demanded/ Percentage change in Price
ΔP/P1 = -57.89%
ΔQ/Q1 = 114.29%Plugging in the values,
Ep = (114.29/100) / (-57.89/100) = -1.974
So, the demand is elastic. The answers in 1b and 1d are different from the answer in 1f.
The answer in 1b is inelastic and the answer in 1d is elastic, whereas the answer in 1f is also elastic.
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The following table shows the actual demand observed over the last 11 years: 1 2 3 4 5 6 7 8 9 Year Demand 7 8 5 10 11 8 12 1
The given table represents actual demand observed over the last 11 years. The values in the table represent the demand for a product or service in different years.
The demand is calculated in different units, depending upon the product or service that is being measured.The demand values in the given table are 7, 8, 5, 10, 11, 8, 12, 1, 4, 6, and 9. These values can be used to create a demand graph or chart. The demand graph will help in understanding the trends in demand for the product or service over the past 11 years. For instance, from the given table, we can see that the demand for the product/service has been fluctuating over the past 11 years. In the year 1, the demand was 7, which decreased to 5 in the year 3.
the demand increased to 10 in the year 4, which was the highest in the given period. This shows that the demand for the product/service is not constant and changes from time to time. To predict the future demand for the product/service, one needs to analyze the trends and patterns in demand over the past few years. This can be done using different statistical tools such as regression analysis, time-series analysis, and moving averages. By analyzing the trends, one can predict the future demand for the product/service with some degree of accuracy.
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A $1000 face value, 8% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually. What is the market value of this bond today?
The rate of return required by the market on this type of bond is 8% compounded semiannually. The market value of this bond today is approximately $666.40.
A $1000 face value, 8% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value).
To calculate the market value of the bond today, we can use the present value formula for a bond. The formula is as follows:
Market value
[tex]\ = (Coupon Payment / Discount Rate) \times [1 - (1 / (1 + Discount Rate)^{Number of Periods}] + (Face Value / (1 + Discount Rate)^{Number of Periods}[/tex]
Face Value = $1,000
Coupon Rate = 8% (paid semi-annually)
Years to Maturity = 20 (with semiannual periods)
Market Rate of Return = 8% compounded semiannually
First, we need to calculate the number of periods, which is the total number of semiannual periods until maturity:
Number of Periods = Years to Maturity × 2 (since there are two semiannual periods in a year)
Number of Periods = 20 × 2 = 40
Coupon Payment = Face Value × Coupon Rate / 2
Coupon Payment = $1,000 × 8% / 2
Coupon Payment = $40
Market Value[tex]= (\frac{\$40}{0.04}) \times [1 - (\frac {1}{1 + 0.04})^{40}] + \frac {\$1,000}{( 1+0.04)^{40}}[/tex]
Market Value ≈ $666.40
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Research Methodology Various research methodologies are available with which to study Required: the development of accounting theory. Discuss the deductive, inductive, and pragmatic research methods Include in your discussion examples of accounting research that used each method. CASE 4-3 Behavioral Finance Criticisms of the EMH and the rational market theory were arising as far back as the early 1970s. These critics were noting events that could not be explained by the EMH. These unexplainable results were termed anomalies. Four basic types of anomalies have been identified: calendar anomalies, value (fundamental) anomalies, technical anomalies, and other anomalies, Contempo- raneously with the identification of financial market anomalies. a new theory of financial markets arose that has been termed behavioral finance. Required: a Discuss the four basic types of anomalies. b. Define the concept of behavioral finance. c. What are some of the most the most common cognitive biases in finance?
Deductive research method Deductive research method is a scientific method that is associated with hypothesis testing. It begins with a specific observation that is made through an existing theory and hypothesis.
Examples of accounting research that used the deductive research method are financial reporting practices and governance quality, the relationship between accounting and market prices, and the conceptual framework for financial accounting.The inductive research method does not depend on any previous research.
The concept of behavioral finance arises from the idea that human behavior and psychology can influence financial decision-making. Some of the most common cognitive biases in finance are loss aversion, overconfidence, confirmation bias, and herding behavior.
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I need help Solving the question thank you!
on a semiannual basis ( 6 percent semiannually). What is the bond's yield to maturity? The bond's yield to maturity is %. (Round to two decimal places.)
Without the bond's price or any other relevant information, it is not possible to calculate the bond's yield to maturity.
To calculate the bond's yield to maturity (YTM), we need to gather some key information: the bond's price, face value, coupon rate, and the number of periods remaining until maturity.
Let's assume the bond has a face value of $1,000, a coupon rate of 6% (semiannually), and it pays coupons semiannually. We need the bond's price to proceed with the calculation.
The YTM can be determined through trial and error or by using financial calculators or spreadsheet functions. However, I'll illustrate the steps for the trial and error method.
1. Start with an initial guess for the YTM. It could be based on market interest rates or previous bond issuances.
2. Estimate the present value of the bond's cash flows, including both the coupon payments and the face value at maturity. The present value of each cash flow is calculated by discounting it at the estimated YTM.
3. Sum up the present values of all the cash flows.
4. Adjust the YTM until the sum of the present values matches the bond's price.
For example, let's assume the bond's price is $950. We can start with an initial guess for the YTM, such as 5%.
Using the estimated YTM, we can calculate the present value of each cash flow and sum them up. If the sum is not equal to $950, we adjust the YTM up or down and recalculate until we find the YTM that yields a present value sum equal to the bond's price.
The process involves iteration and can be time-consuming. Alternatively, using financial calculators or spreadsheet functions like the RATE function in Excel simplifies the calculation by finding the YTM directly.
Therefore, to determine the bond's yield to maturity, we would need the bond's price and perform the necessary calculations using the trial and error method or utilizing financial calculators or spreadsheet functions.
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Discuss the main difference between games of perfect information and games of imperfect information. Define the Perfect Bayesian Equilibrium (PBE)
Games of perfect information and games of imperfect information have a significant difference in terms of their definition and structure.
Let's discuss the main differences between these two types of games and define the Perfect Bayesian Equilibrium (PBE).
Main difference between games of perfect information and games of imperfect information Games of perfect information are games in which all players know the rules of the game, payoffs, and strategies of their rivals. Games of perfect information have a definite beginning and ending point, and each player can observe their opponent's moves and determine the best course of action to achieve their objectives.
The knowledge or information about the game, strategies, and payoffs of the rival players are not complete. Thus, they cannot determine the best course of action. Players can only guess their opponent's strategies and payoffs to make decisions. Examples of games of imperfect information include poker and strategic board games.
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Your friend, Molly, needs your help finding the average for a set of portfolio returns. They have calculated the returns (in %) as : month return 1 12.67 2 1.82 3 14.10 4 18.48 5 32.16 What is the arithmetic mean of these returns? Select one: a. 15.85% b. 15.64% c. 15.43% d. 0.00% e. insufficient information to determine f. 7.72% g. 79.23%
Based on the set of portfolio returns the arithmetic mean of these returns is: b) 15.64%.
How to find?Given set of portfolio returns in percentage are: month return 1 12.67 2 1.82 3 14.10 4 18.48 5 32.16.
To calculate the arithmetic mean of these returns, we need to sum all the returns and divide it by the total number of returns. Thus, the arithmetic mean of these returns is:b) 15.64%.
The calculation is as follows:
(12.67 + 1.82 + 14.10 + 18.48 + 32.16) / 5 = 79.23 / 5
= 15.846
≈ 15.64 %.
Therefore, the correct option is b) 15.64%.
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Rocky Mountain Camping Equipment, Inc. has estabied the following direct-material standards for its two products. Standard car Deluxe backpacking tsek Standard uantity 12 pounds 6 pounds ****** Standard Price $6 per pound $8 per pound During March, decenipany purchased 2,100 pounds of tent fabric for its standard model at a cost of $13,440. The actual March production of the standard tent was 100 tents, and 1,250 pounds of fabric were used. Also during March, the company purchased 800 pounds of tent fabric for its deluxe back- packing tent at a cost of $6,320. The firm used 720 pounds of the fabric during March in the production of 120 deluxe tents. Required: 1. Compute the direct-material price variance and quantity variance for March. 2. Prepare journal entries to record the purchase of material, use of material, and incurrence of vari- ances in March.
1) Direct-Material Price Variance: Direct material price variance is the difference between the actual price paid for a material and the standard price, multiplied by the actual quantity of the material.
A favorable variance occurs when the actual price is lower than the standard price. An unfavorable variance occurs when the actual price is higher than the standard price.Computation of direct-material price variance for March; Standard car Deluxe backpacking trek
Actual quantity 1,250 pounds 720 poundsActual price $10.75 per pound $8.78 per pound (Total Cost/Total Quantity) = $13,440/2,100 = $6.4 per pound(Standard Quantity × Standard Price) = 12 × $6 = $72; (Actual Quantity × Standard Price) = 1,250 × $6 = $7,500; Direct-Material Price Variance = (Actual Quantity × Standard Price) - (Actual Quantity × Actual Price)= 1,250 × $6 - 1,250 × $10.75= $7,500 - $13,437.5= -$5,937.5 (Unfavorable)Direct-material Quantity Variance: Direct material quantity variance is the difference between the actual quantity of materials used and the standard quantity, multiplied by the standard price. Computation of direct-material quantity variance for MarchStandard car Deluxe backpacking the standard quantity 12 pounds 6 pounds. Actual quantity 1,250 pounds 720 pounds. Standard price $6 per pound $8 per pound (Standard Quantity × Standard Price) = 12 × $6 = $72 (Standard Quantity × Actual Price) = 12 × $10.75 = $129 (Standard Price × (Standard Quantity - Actual Quantity)) = $6 × (12 - 1,250) = -$7,284 (Unfavorable)2)Journal Entries to record the purchase of material, use of material, and incurrence of variances in March.
Purchase of Material:Raw Material Inventory A/c = $19,760 Accounts Payable A/c = $19,760 (To record the purchase of materials for March)Use of Material: Work-in-Process Inventory - Deluxe Tent A/c = $6,302.4 (6 × 120 × $8.78); Work-in-Process Inventory - Standard Tent A/c = $13,437.5 (1,250 × $10.75); Raw Material Inventory A/c = $19,760 (To record the use of materials for March); Direct-Material Price Variance: Direct-Material Price Variance A/c = $5,937.5Raw Material Inventory A/c = $5,937.5 (To record the Direct Material Price Variance) Direct-Material Quantity Variance: Direct-Material Quantity Variance A/c = $7,284; Work-in-Process Inventory - Standard Tent A/c = $7,284 (To record the Direct Material Quantity Variance)To learn more about variance, visit here
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Truth and false a)The level of influence and control over another firm is a crucial aspect in evaluating the correct accounting technique for an investment in the common stock of another company. b)Investments in bonds intended to be sold before they reach maturity should be reported under the fair value method. c)Dividends appear as an expense on the corporation's income statement. d) If the board of directors fails to declare the quarterly dividend on the corporation's common stock, the dividend will be added to the company's liabilities. e) The formula for interest expense is written as follows: MV = CV f)It is termed as Premium Bonds when we pay more than face value. g) (Cash + Short-term Investments + Accounts Receivable, Net)/ Current Liabilities is equal to Liabilities.
Statements a, b, c, d, and f were correctly identified as either true or false, while statement g was determined to be false. The statements highlight important concepts related to accounting techniques, investments, dividends, interest expense, and financial ratios.
a) True. The level of influence and control over another firm is indeed a crucial aspect in evaluating the correct accounting technique for an investment in the common stock of another company. The accounting treatment depends on the degree of influence or control exerted over the investee company.
If significant influence or control exists, the equity method of accounting is typically applied, where the investment is initially recorded at cost and adjusted subsequently for the investor's share of the investee's earnings or losses.
b) False. Investments in bonds intended to be sold before they reach maturity are typically reported at fair value through the balance sheet using the fair value method. However, if the intention is to hold the bonds until maturity, they are reported at amortized cost using the effective interest method.
c) False. Dividends do not appear as an expense on the corporation's income statement. Dividends are distributions of earnings to the shareholders and are not considered an expense. They are typically reported separately on the statement of changes in equity or in the notes to the financial statements.
d) False. If the board of directors fails to declare the quarterly dividend on the corporation's common stock, the dividend does not become a liability of the company. Instead, it remains as retained earnings, reducing the shareholders' equity. The company is under no obligation to pay the dividend unless it has been declared by the board.
e) False. The formula for interest expense is not written as MV = CV. MV typically represents market value, while CV represents the cost or carrying value.
The formula for interest expense is dependent on various factors such as the interest rate, principal amount, and time period, and is typically calculated using the formula: Interest Expense = Principal Amount x Interest Rate x Time.
f) True. Premium Bonds refer to bonds that are purchased at a price higher than their face value. The premium represents the excess amount paid over the face value and is typically amortized over the life of the bond as an adjustment to interest expense.
g) False. (Cash + Short-term Investments + Accounts Receivable, Net)/ Current Liabilities do not equal liabilities. It represents a liquidity ratio known as the current ratio, which is used to assess a company's ability to meet its short-term obligations.
The current ratio compares a company's current assets to its current liabilities and is expressed as a ratio, not as a dollar amount.
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The firm grants credit terms of 1/5, net 30 on purchases of
$1,000 or greater. What is the effective rate of the discount ?
A. 15.80%
B. 19.03%
C. 18.80%
D. 12.27%
E. 17.24%
The firm grants credit terms of 1/5, net 30 on purchases of $1,000 or greater. To calculate the effective rate of the discount, we need to find the discount percentage and then convert it to an annual rate.
The credit terms "1/5, net 30" mean that if the customer pays within 5 days, they can take a 1% discount, otherwise, the full amount is due in 30 days.
To find the discount percentage, we subtract the discount rate from 100%: 100% - 1% = 99%.
To convert this to an annual rate, we divide the discount percentage by the number of days in the discount period and then multiply it by the number of discount periods in a year. In this case, the discount period is 5 days and there are approximately 12 discount periods in a year (365 days divided by 30).
So the effective rate of the discount is (99% / 5) * 12 = 237.6%.
Therefore, the answer is not among the options given.
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Which of the following is the difference between account manager and other roles in the agency? Yanıtınız: Being able to provide consultancy in every subject, but not having expertise in any subject Being an expert in graphic design Being a social media expert Being an expert on financial issues Yanıtı temizle
The role of an account manager in an agency differs from other roles in several ways. Firstly, an account manager serves as the primary point of contact between the agency and the client.
They are responsible for building and maintaining relationships with clients, understanding their needs, and ensuring client satisfaction. This requires strong communication and interpersonal skills. Additionally, account managers often handle project management and coordination, working closely with different teams within the agency to ensure the successful execution of client campaigns.
They are also responsible for financial management, including budgeting and billing. Unlike other roles focused on creative or technical aspects, the account manager's role is more client-centric and business-oriented.
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Suppose you borrow $25,000 from your parents to buy a car. You agree to pay them $500 per month for 60 months, starting in a month. What is the monthly interest rate? 0.618% 7.23% 6.81% 2%
The monthly interest rate on the loan is 2%. It is important to note that the answer is typically expressed as an annual percentage rate (APR), so the monthly interest rate is obtained by dividing the APR by 12.
To calculate the monthly interest rate, we need to determine the interest component of the monthly payment and divide it by the loan amount.
Given information:
Loan amount: $25,000
Monthly payment: $500
Loan term: 60 months
The total repayment over the loan term can be calculated by multiplying the monthly payment by the number of months:
Total repayment = Monthly payment * Loan term
Total repayment = $500 * 60 = $30,000
The interest component of the monthly payment can be calculated by subtracting the loan amount from the total repayment:
Interest = Total repayment - Loan amount
Interest = $30,000 - $25,000 = $5,000
To find the monthly interest rate, we divide the interest amount by the loan amount and express it as a percentage:
Monthly interest rate = (Interest / Loan amount) * 100
Monthly interest rate = ($5,000 / $25,000) * 100 = 20%
Therefore, the monthly interest rate on the loan is 20%. However, note that the answer is typically expressed as an annual percentage rate (APR), so we need to divide it by 12 to get the monthly interest rate:
Monthly interest rate = 20% / 12
= 1.67%
Rounding to two decimal places, the monthly interest rate is approximately 1.67%, which is equivalent to 2% when rounded to the nearest whole number.
The monthly interest rate on the loan is approximately 1.67%, which can be rounded to 2%. This is calculated by finding the interest component of the monthly payment, which is the difference between the total repayment and the loan amount, and then dividing it by the loan amount. It is important to note that the answer is typically expressed as an annual percentage rate (APR), so the monthly interest rate is obtained by dividing the APR by 12.
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List the 8 "pedals" within the Flower of Service. Provide an example of each.
The eight pedals within the flower of service are information, consultation, hospitality, safekeeping, order-taking, billing, payment, and exception handling. The flower of service is a model that depicts a firm’s service.
Its eight petals, as well as a core, represent the facets of a company’s service. Here's an example of each petal:
Information: Customers can access any details they require about a product or service. Example: An online shopping platform providing product descriptions.
Consultation: The firm has the ability to provide consumers with guidance and advice.
Example: A dietitian advising customers on the best dietary plan for their needs.
Hospitality: The firm provides customers with a warm and pleasant environment. Example: A hotel with cozy guest rooms.
Safekeeping: The company safeguards customers' assets, information, or knowledge. Example: A legal firm safeguarding customer information.
Order-Taking: The firm assists customers in placing orders. Example: A fast food restaurant that takes customer orders.
Billing: Customers are billed correctly and promptly. Example: A billing service that correctly processes client invoices.
Payment: The company accepts payment from customers. Example: An e-commerce store that accepts credit card payments.
Exception Handling: The firm is capable of quickly and effectively addressing customer issues. Example: A delivery service that resolves complaints and issues in a timely manner.
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Briefly describe the four pricing strategies that are possible for a marketing manager to use and in what situations are appropriate?
The four pricing strategies that are possible for a combination marketing manager to use and in what situations are appropriate this strategy involves setting a low price to gain market share quickly.
This can be useful when a company is launching a new product or entering a new market and wants to attract customers quickly. This pricing strategy can also help the and encourage repeat purchases. It can lead to loss of revenue if prices are too low. Companies that have a competitive advantage in the market can use this pricing strategy.
This strategy involves setting a high price for a new product or service. This can be useful when a company wants to take advantage of early adopters' willingness to pay a premium for new products. This pricing strategy can also be useful for companies that have a strong brand image and are able to differentiate their products or services from those of their competitors. However, the company risks losing customers to competitors who offer similar products at lower prices. This strategy involves adding a markup or providing a service. This can be useful when a company wants to ensure that it makes a profit on each sale.
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A plastic plant worth $ 228062 had a useful life of 12 years and a scrap value of $ 19602. However, after 3 years of operation, it got washed away by a tsunami, making it a total loss. How much money would have to be raised to put a new plant costing $ 263914, if a fund reserve was maintained during its 3 years operation using the Sum of the Years' Digit method?
Approximately $193,375.54 this is the expense would have to be raised to put a new plant.
To determine the amount of money that would have to be raised to put a new plant, we need to calculate the accumulated depreciation for the old plant after 3 years using the Sum of the Years' Digits (SYD) method. The formula for calculating the SYD depreciation for a specific year is:
Depreciation Expense = (Remaining useful life / Sum of the years' digits) * (Cost - Scrap value)
Let's calculate the accumulated depreciation after 3 years:
Cost of the old plant = $228,062
Scrap value of the old plant = $19,602
Useful life of the old plant = 12 years
Remaining useful life after 3 years = 12 - 3 = 9 years
Sum of the years' digits (SYD) = (n * (n + 1)) / 2
where n is the useful life of the asset
Sum of the years' digits (SYD) = (12 * (12 + 1)) / 2 = 78
Depreciation Expense for Year 1 = (9 / 78) * ($228,062 - $19,602)
Depreciation Expense for Year 2 = (8 / 78) * ($228,062 - $19,602)
Depreciation Expense for Year 3 = (7 / 78) * ($228,062 - $19,602)
Accumulated Depreciation after 3 years = Depreciation Expense for Year 1 + Depreciation Expense for Year 2 + Depreciation Expense for Year 3
Now let's calculate the accumulated depreciation:
Depreciation Expense for Year 1 = (9 / 78) * ($228,062 - $19,602) = $25,503.85
Depreciation Expense for Year 2 = (8 / 78) * ($228,062 - $19,602) = $23,512.82
Depreciation Expense for Year 3 = (7 / 78) * ($228,062 - $19,602) = $21,521.79
Accumulated Depreciation after 3 years = $25,503.85 + $23,512.82 + $21,521.79 = $70,538.46
To calculate the amount of money that would have to be raised to put a new plant costing $263,914, we subtract the accumulated depreciation after 3 years from the cost of the new plant:
Amount to be raised = Cost of new plant - Accumulated Depreciation after 3 years
Amount to be raised = $263,914 - $70,538.46
Amount to be raised = $193,375.54
Therefore, approximately $193,375.54 would have to be raised to put a new plant.
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Categorize the studies as either Revealed Preference or Stated Preference. (Hint: each study belongs to one category)
Revealed Preference and Stated Preference are two primary methods to assess consumer preferences and determine how people allocate their resources. The researchers study the consumers' behaviors in the past, and they derive the preferences of consumers based on the data.
Revealed Preference is a type of method in which economists use the consumer's actual behavior to determine their preferences. In contrast, Stated Preference is a type of method in which economists ask consumers about their preferences.In Revealed Preference, the researchers observe the consumer's behavior and then derive their preferences. On the other hand, Stated Preference requires the consumer to respond to a questionnaire, and the researchers then analyze the results to understand the consumer's preferences.
In conclusion, Revealed Preference is when researchers use a consumer's behavior to determine their preferences, while Stated Preference is when researchers ask the consumers about their preferences to understand their preferences.
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Suppose that there is a decrease or an expected decrease in personal income taxes in the local retail market for steak meals at upscale restaurants, ceteris paribus. Assume that this is a normal good, that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Given this information and under these assumptions. this change or expected change in this market would most likely shift the ______ curve to the ______, causing market price (P∗) to_____ and market quantity (Q∗) to ______, causing consumer surplus to , causing producer surplus to ______, and causing total surplus to _____.
Suppose that the government decreases the sales tax rate collected by businesses in the local retail market for cigarettes, ceteris paribus. Assume that this is a normal good,that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Given this information and under these assumptions, this change or expected change in this market would most likely shift the curve to the____ , causing market price (P∗) to ____ and market quantity (Q∗) to ____, causing consumer surplus to causing producer surplus to _____, and causing total surplus to ____.
Suppose that there is an increase or an expected increase in personal income taxes in the local retail market for steak meals at upscale restaurants, ceteris paribus. Assume that this is a normal good, that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Given this information and under these assumptions, this change or expected change in this market would most likely shift the curve to the _____, causing market price (P∗) to_____ and market quantity (Q∗) to_____ causing consumer surplus to _____, causing producer surplus to _____ and causing total surplus to _____.
Suppose that there is a decrease or expected decrease in the price of boneless chicken breasts in the local retail market for boneless pork chops, ceteris paribus. Assume that these two goods are substitutes in consumption that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Given this information and under these assumptions, this change or expected change in this market would most likely shift the curve to the _____, causing market price (P∗) to_____ and market quantity (Q∗) to_____ causing consumer surplus to _____, causing producer surplus to _____ and causing total surplus to _____.
Suppose that there is a decrease or expected decrease in factor prices in the local retail market for market for frozen salmon for at-home consumption, ceteris paribus. Assume that this service is a normal good that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Given this information and under these assumptions, this change or expected change in this market would most likely shift the curve to the _____, causing market price (P∗) to_____ and market quantity (Q∗) to_____ causing consumer surplus to _____, causing producer surplus to _____ and causing total surplus to _____.
Using the empirical supply equation for pizza shown below, the quantity supplied of pizza would _____ and the supply curve for pizza would_____ if variable (1) decreased, ceteris paribus. QsPizza=55+2PPizza −2PLabor −1PCheese −3PTomalpes Using the empirical supply equation for pizza shown below, the quantity supplied of pizza would _____ and the supply curve for pizza would_____ if variable (3) increased, ceteris paribus. QDPork =130−40PPork +5I+11P +8P +8 Using the empirical supplv eauation for tractors shown below, the quantity supplied of tractors would and the supply curve for tractors would if variable (1) deceased, ceteris paribus. QsTractor =90+10PTractor −2PLabor −1PSteel −5PCapital Using the empirical supply equation for tractors shown below, the quantity supplied of tractors would and the supply curve for tractors would if variable (2) decreased, ceteris paribus. QSTractor=90+10PTractor −2PLabor −1PSteel −5PCapital Using the empirical supply equation for pork shown below, the quantity supplied of pork would and the supply curve for pork would variable (4) decreased, ceteris paribus. QSPork =160+10PPork −2PLabor −6PRent −4PCapital
Suppose that there is a decrease or an expected decrease in personal income taxes in the local retail market for steak meals at upscale restaurants, ceteris paribus. Assume that this is a normal good, that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic.
Suppose that the government decreases the sales tax rate collected by businesses in the local retail market for cigarettes, ceteris paribus. Assume that this is a normal good, that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic. Suppose that there is an increase or an expected increase in personal income taxes in the local retail market for steak meals at upscale restaurants, ceteris paribus. Assume that this is a normal good, that this is a perfectly competitive market, and that demand and supply in this market are neither perfectly elastic nor perfectly inelastic.
This change or expected change in this market would most likely shift the supply curve to the right, causing market price (P∗) to decrease and market quantity (Q∗) to increase, causing consumer surplus to increase, causing producer surplus to increase and causing total surplus to increase.
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Which of the following statements is true regarding using losing your temper or being sarcastic with a customer? It will seldom accomplish your goals as a business communicator In today's progressive business environment it is acceptable It can be the best method to communicate your point it will help stop a customer from continuing to be being rude to you In business writing it is important to use which of the following? Imprecise and dull words Precise and specific words Unfamilar words Pompous and pretentious words Lawyers refer to briefs and politicians refer to sound bites. These references are examples of which of the following? Vigorous words Pompous language Jargon Bias-free woeds
In a business setting, it is important to avoid negative communication approaches such as losing temper or resorting to sarcasm with customers. These behaviours can have detrimental effects on the customer relationship and hinder the achievement of business goals. Instead, maintaining professionalism, remaining calm, and responding to customer concerns or feedback in a respectful and constructive manner are key to effective business communication.
1. Negative communication approaches: Losing temper or resorting to sarcasm with customers in a business setting is unproductive and can have negative consequences. These behaviours can damage the relationship with the customer and impede the achievement of business goals.
2. Professionalism and respect: Maintaining professionalism is essential in business communication. It involves keeping emotions in check, remaining calm, and treating customers with respect. Responding to customer concerns or feedback in a constructive manner helps build and maintain positive relationships.
3. Precise and specific language: Using clear and concise language is vital in business writing to convey information accurately. Precision and specificity in word choice minimize the chances of misinterpretation or confusion. This ensures that the message is understood clearly by the intended audience, whether it comprises customers, colleagues, or stakeholders.
4. Mindfulness of jargon: Jargon, specialized terminology specific to a particular profession, industry, or group, should be used with caution in business communication. While it can facilitate communication within specific contexts, it can create barriers and confusion when used with individuals unfamiliar with the terminology. Opting for clear and accessible language instead of jargon ensures that the message reaches a broader audience effectively.
In summary, effective business communication involves maintaining professionalism, avoiding negative communication approaches, using precise language, and being mindful of jargon. By adhering to these principles, business communicators can foster positive relationships, convey information accurately, and overcome communication barriers to achieve their goals.
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Youneed a 25-yeat faedrate mortgage to buy a new home for $315.000 Your bark will lend you the money at a 61 percent APR for this 300 -month loan. Howevef, you can only afford monthly payments of 51200 , so you offer to pay off any remaining loan bailance at: the end of the foan in the foetn of a ungle balloon payment How targe with this balioan payment have to be for you to keep yout monthly payments at $1,2007 (Do not round intermediete calculotions. Round the fint answer to 2 decimal places.
To determine the required balloon payment, we need to calculate the monthly payment for the mortgage loan first. Given: Loan amount = $315,000 Loan term = 300 months Interest rate = 6.1% APR
Step 1: Convert APR to monthly interest rate = (1 + APR)^ (1/12) - 1 Monthly interest rate = (1 + 0.061)^(1/12) - 1 Monthly interest rate = 0.0049 or 0.49% Step 2: Calculate the monthly payment using the loan amount, loan term, and monthly interest rate. Monthly payment = Loan amount / [(1 - (1 + Monthly interest rate)^-Loan term) / Monthly interest rate] Monthly payment = 315,000 / [(1 - (1 + 0.0049)^-300) / 0.0049] Monthly payment = 315,000 / [0.0049 / (1 - 1.0049^-300)] Monthly payment = 315,000 / [0.0049 / (1 - 0.35023)] Monthly payment = 315,000 / [0.0049 / 0.64977] Monthly payment = 315,000 / 0.007541 Monthly payment = 41,735.97 Step 3: Calculate the balloon payment needed to keep monthly payments at $1,200. Balloon payment = (Loan amount - (Monthly payment * (Loan term - 1))) / (1 + Monthly interest rate)^(Loan term - 1) Balloon payment = (315,000 - (1,200 * (300 - 1))) / (1 + 0.0049)^(300 - 1) Balloon payment = (315,000 - (1,200 * 299)) / (1.0049)^299 Balloon payment = (315,000 - 358,800) / (1.0049)^299 Balloon payment = -43,800 / (1.0049)^299 Balloon payment = -43,800 / 2.833165 Balloon payment = -15,464.18.
Therefore, to keep the monthly payments at $1,200, you would need a balloon payment of approximately $15,464.18.
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Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $400,000, and direct labor costs to be $200,000. Actual overhead costs for the year totaled $425,000, and actual direct labor costs totaled $226,000. At year-end, Factory Overhead account is: Multiple Choice Overapplied by $27,000 Overapplied by $226,000 Underapplied by $27,000. Overapplied by $26,000. Neither overapplied nor underapplied 19000 127% 4 % 7 4
The overhead rate of Mango Company is 200 percent ($400,000 ÷ $200,000).Mango Company is overapplied by $26,000.Factory overhead is an expense account in which the cost of manufacturing is recorded. The cost of producing goods includes indirect labor and manufacturing expenses.
When a company uses a predetermined overhead rate to apply overhead to the work-in-process, overapplied and underapplied overheads are created based on actual overhead expenses and applied overhead costs.The overhead rate of Mango Company is 200 percent ($400,000 ÷ $200,000). In other words, for every dollar of direct labor cost, the company applies two dollars of overhead.
In this question, the actual overhead costs for the year are greater than the estimated overhead costs, while the actual direct labor costs are greater than the estimated direct labor costs. It implies that Mango Company has overapplied overhead costs.The actual amount of overhead costs was $425,000, but Mango Company charged $452,000 ($226,000 x 200 percent) to products. Therefore, Mango Company has overapplied $27,000 ($452,000 - $425,000) of overhead costs during the year. Hence, the correct answer is option A. Overapplied by $27,000.
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Air France-KLM business strategy
What are the key success factors for firms competing in the European airline industry? [To address the question you need to do industry analysis, Porter's five forces, and then explain the Key success factors of the European airline industry].
Analyze each of the five business units separately (Air France, Air France Hop [HOP!], Joon SAS, KLM, and Transavia SAS [Transavia]) by identifying their target markets, business unit strategies, and resources and capabilities, strengths, and (potential) weaknesses.
For each business unit, determine whether the business has a competitive advantage and recommend strategies for going forward. To address the questions, you need to use VRIS analysis and then provide possible strategies for each business unit.
The airline industry in Europe is very competitive, with many different companies competing for market share. These include pricing, customer service, safety, reliability, and innovation.
Its strengths include its extensive route network, strong brand recognition, and focus on innovation. Its weaknesses include high operating costs and a limited focus on short-haul flights. One possible strategy for KLM going forward would be to expand its short-haul offerings to capture more of the European market.
Transavia SAS (Transavia) targets leisure travelers looking for affordable flights within Europe and North Africa. Its business unit strategy is to offer low-cost flights with a focus on efficiency and convenience. Its weaknesses include limited brand recognition and a narrow target market. One possible strategy for Transavia would be to focus on expanding its offerings to include more destinations and improve its marketing efforts to increase brand recognition.
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Lindon Company is the exclusive distributor for an automotive product that sells for $58.00 per unit and has a CM ratio of 30%. The company's fixed expenses are $435,000 per year. The company plans to sell 30,000 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $261,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.80 per unit. What is the company's new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $261,000 ?
1. Variable expenses = $40.60 per unit
2. Break-even point (in dollars) = $622,804
3. Required dollar sales = $1,012,418
4. New break-even point (in dollars) = $725,000
Required dollar sales = $2,220,000
1. To find the variable expenses per unit, we can use the contribution margin (CM) ratio. The CM ratio is the percentage of each sales dollar that is available to cover fixed expenses and contribute to profit.
CM ratio = (Sales - Variable expenses) / Sales
Given that the CM ratio is 30% and the selling price per unit is $58.00, we can set up the equation as follows:
0.30 = (58.00 - Variable expenses) / 58.00
Solving for Variable expenses:
Variable expenses = 58.00 - (0.30 * 58.00)
Variable expenses = 58.00 - 17.40
Variable expenses = $40.60 per unit
2. The break-even point in unit sales can be calculated using the following formula:
Break-even point (in units) = Fixed expenses / CM per unit
Break-even point (in units) = $435,000 / $40.60
Break-even point (in units) = 10,738 units
The break-even point in dollar sales can be calculated by multiplying the break-even point in units by the selling price per unit:
Break-even point (in dollars) = 10,738 units * $58.00
Break-even point (in dollars) = $622,804
3. To attain a target profit of $261,000 per year, we need to calculate the required unit sales and dollar sales.
Required unit sales = (Fixed expenses + Target profit) / CM per unit
Required unit sales = ($435,000 + $261,000) / $40.60
Required unit sales = 17,471 units
Required dollar sales = Required unit sales * Selling price per unit
Required dollar sales = 17,471 units * $58.00
Required dollar sales = $1,012,418
4. If the variable expenses per unit are reduced by $5.80 due to using a more efficient shipper, the new variable expenses per unit would be:
New variable expenses per unit = $40.60 - $5.80
New variable expenses per unit = $34.80
The new break-even point in unit sales can be calculated using the updated variable expenses:
New break-even point (in units) = Fixed expenses / New CM per unit
New break-even point (in units) = $435,000 / $34.80
New break-even point (in units) = 12,500 units
The new break-even point in dollar sales can be calculated using the new break-even point in units and the selling price per unit:
New break-even point (in dollars) = 12,500 units * $58.00
New break-even point (in dollars) = $725,000
To attain a target profit of $261,000, the dollar sales required would be:
Required dollar sales = (Fixed expenses + Target profit) / CM ratio
Required dollar sales = ($435,000 + $261,000) / 0.30
Required dollar sales = $2,220,000
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Susan will receive a payment of $3,000 in 2 years, $8,000 in 5 years, and $10,000 in 7 years. The annual force of interest is 7%. Calculate the nrecent valiue of the navmente Question 4.11 David can receive one of the following two payment streams: (i) 100 at time 0,200 at time n years, and 300 at time 2n years (ii) 600 at time n years The present values of the two payment streams are equal. You are given that the annual force of interest is 12.21%. Calculate n. A 8.0 B 8.5 C 9.0 D 9.5 Question 4.14 Suzie deposits $200 into an account that earns an annual simple interest rate of 5%. At the same time, John deposits $220 into an account that earns a constant force of interest of δ. After 5 years, the value in each account is the same. Calculate δ. A 2.56% B 2.59% C 2.65% D 2.73% E 2.97%
Given data:The payments received by Susan are $3,000, $8,000 and $10,000. The force of interest, r = 7%To find: The present value of the payment stream. Option C is the correct answer.
We know that the formula for the present value of a payment stream over n years is given as:PV [tex]= A(1 + r)-n[/tex]. Option C 2.65% is the correct answer.
Where, A is the amount of payment and r is the annual interest rate.
The present value of payments received after 2 years is given by:PV1 = 3000(1 + 0.07)-2 = $2604.88. The present value of payments received after 5 years is given by:PV2 = 8000(1 + 0.07)-5 = $5815.43. The present value of payments received after 7 years is given by: PV3 = 10000(1 + 0.07)-7 = $6639.22.Now, to find the present value of the whole payment stream, we can add the above values.PV = PV1 + PV2 + PV3[tex]= $2604.88 + $5815.43 + $6639.22= $15059.53.[/tex]
Therefore, the present value of the payment stream is $15,059.53.Option C is the correct answer.
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You have decided that a comfortable retirement means drawing $50,000 (in 2019 dollars) from your retirement account yearly. How many 2063 dollars will you need to withdraw during the first year of your retirement? You can safely withdraw 4% of the balance of your retirement funds yearly. Assuming an interest rate of 8% and an inflation rate of 2.5% determine the required amount in your retirement accounts in both 2019 and 2063 dollars.
You would need to withdraw approximately $1,250,000 in 2019 dollars and approximately $36,944,964.57 in 2063 dollars during the first year of your retirement.
To determine the required amount in both 2019 and 2063 dollars, we can follow these steps:
Step 1: Calculate the retirement account balance needed in 2019 dollars.
Given that you want to withdraw $50,000 in 2019 dollars and you can safely withdraw 4% of the balance, we can use the formula:
Retirement account balance = Annual withdrawal / Withdrawal rate
Retirement account balance = $50,000 / 0.04
Retirement account balance = $1,250,000
Step 2: Calculate the required amount in 2063 dollars.
To calculate the required amount in 2063 dollars, we need to consider the impact of both the interest rate and inflation rate over the years. We'll use the future value of cashflows formula:
Future value = Present value * (1 + interest rate)^n
Where:
- Present value is the retirement account balance in 2019 dollars
- Interest rate is 8%
- n is the number of years from 2019 to 2063
Using the formula, we can calculate the future value of the retirement account balance in 2063 dollars:
Future value = $1,250,000 * (1 + 0.08)^44
Future value = $1,250,000 * (1.08)^44
Future value ≈ $36,944,964.57
Therefore, you would need to withdraw approximately $36,944,964.57 in 2063 dollars during the first year of your retirement.
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Some tools help geologists visualize surroundings in four dimensions. Which three types of scale models are used for gaining insights into the evolution of features on the Earth?
Choose one or more: A. maps B. cross sections C. hand lenses D. block diagrams
Three types of scale models are used for gaining insights into the evolution of features on the Earth. They are as follows: maps, cross sections and block diagrams.
What does this provide?Geologists use a variety of tools to study the Earth.
They use different types of maps, including topographic and geologic maps, to help visualize the Earth's surface. A cross-section is a two-dimensional view of a vertical slice through the Earth, which can provide a view of the subsurface features. Block diagrams are three-dimensional views of geologic features, which can help geologists understand the relationships between different rock layers and structures.To know more on scale models visit:
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Albert has a weekly allowance of $17, all of which he spends on used CDs (C) and movie rentals (M), whose respective prices are $4 and $3. His utility from these purchases is given by U(C)+V(M). If the values of U(C) and V(M) are as shown in the table:
a. What is the first item that Albert will buy?
b. What is the second item that Albert will buy?
c. How will Albert spend his $17?
To determine how Albert will spend his $17, we need to compare the utilities (U) of purchasing CDs (C) and movie rentals (M) based on their respective prices.
Given the values of U(C) and V(M) as shown in the table (which is not provided), we can make some assumptions and proceed with the calculations. Let's assume the table shows the following values:
U(C) = 10, 7, 5, 3, 1
V(M) = 8, 6, 4, 2, 0
a. The first item Albert will buy is the one that provides the highest utility relative to its price.
Comparing the utilities and prices, we find that the highest utility for the price is U(C) = 10 for the price of $4 (CDs). Therefore, Albert will buy a CD as the first item.
b. To determine the second item Albert will buy, we need to calculate the remaining budget and compare the utilities of the remaining options.
After buying a CD for $4, Albert will have $17 - $4 = $13 remaining.Comparing the remaining options:
U(C) = 7, 5, 3, 1 (remaining CDs)
V(M) = 8, 6, 4, 2, 0 (movie rentals)
The highest utility for the price is U(C) = 7 for the price of $4 (CDs). Therefore, Albert will buy another CD as the second item.
c. After purchasing two CDs for a total of $8, Albert will have $17 - $8 = $9 remaining.
Comparing the remaining options:
U(C) = 5, 3, 1 (remaining CDs)
V(M) = 8, 6, 4, 2, 0 (movie rentals)
The highest utility for the remaining budget is V(M) = 8 for the price of $3 (movie rentals). Therefore, Albert will spend the remaining $9 on three movie rentals.
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HR planners must be able to connect business challenges and
business requirements to human capital requirements in order to be
successful.
True
False
The statement "HR planners must be able to connect business challenges and business requirements to human capital requirements in order to be successful" is TRUE.
HR (Human Resource) planners play an important role in any company, as they are responsible for developing and maintaining a company's workforce. They have to link business challenges and business requirements to human capital needs to be effective in their role. It is a crucial responsibility as the entire business model is dependent on the resources (human capital) that drive it.
HR planners must have a deep understanding of the company's business model, its culture, and its objectives, to be able to fulfill their responsibilities. In the context of human resource management, HR planners must identify the skills and knowledge required to fulfill business requirements.
The skills and knowledge required for employees, along with their training and development needs, should be determined by HR planners to achieve these requirements.
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car when he gratuates from colege in five years. His bank will pay 2 a\% per year, conpounded arnualy for the freysar Co. How muth will Kyle have in five years to put 6own on ris car? in five years, the amount Kyle will have to put down en his car is ! the Finanoia Tabies in Ascendar C in computing your answer,)
Let the amount of money Kyle has to put down on his car in five years be P. Then, Kyle's bank pays him 2% per year compounded annually. The interest rate is 2%, which is equivalent to 2/100 = 0.02, and the time for which the interest is compounded is 5 years. So, we have i = 0.02 and t = 5.
The formula for calculating the future value (FV) of an investment is:
FV = P(1 + i)n
where n is the number of compounding periods. Since the interest is compounded annually, n = 1.
Substituting the values of P, i and n, we have:
FV = P(1 + i)n
FV = P(1 + 0.02)1
FV = P(1.02)
Using the financial tables in Ascendar C, we find that the future value factor for n = 1 and i = 0.02 is 1.1041. So, we have:
FV = P(1.02) = P(1.1041)
Therefore, we have:
P = FV/1.1041
P = (amount Kyle will have in five years)/1.1041
To find the amount Kyle will have in five years, we use the compound interest formula:
A = P(1 + r/n)nt
Substituting the values of P, r, n, and t, we have:
A = P(1 + r/n)nt
A = P(1 + 0.02/1)1(5)
A = P(1.1041)
Multiplying both sides of the equation by 1.1041, we get:
A(1.1041) = P(1.1041)2
A = P(1.1041)2/1.1041
A = P(1.1041)
Therefore, the amount Kyle will have in five years is equal to P(1.1041), and the amount he will have to put down on his car is (amount Kyle will have in five years)/1.1041.
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What is the present value of a perpetuity that promises to pay $1,000 today and $1,000 at the end of the year forever? The interest rate is 5 percent.
A perpetuity that promises to pay $1,000 today and $1,000 at the end of the year forever at a 5 percent interest rate has a present value of $39,000.
How to find the present value of a perpetuity? The present value of a perpetuity can be calculated by dividing the expected annual payment by the interest rate. The formula for calculating the present value of a perpetuity is: PV = Payment / r Where is the present value Payment is the expected annual payment is the interest rate.
Given, the perpetuity promises to pay $1,000 today and $1,000 at the end of the year forever at a 5 percent interest rate, so the expected annual payment is $1,000 + $1,000 = $2,000.Substituting the values in the above formula, the present value of the perpetuity is: PV = $2,000 / 0.05PV = $40,000Therefore, the present value of a perpetuity that promises to pay $1,000 today and $1,000 at the end of the year forever at a 5 percent interest rate is $39,000.
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Estimate the amount of systematic risk in the shares Apple Inc., and compare the systematic risk in your stocks to the stocks of two competitors. Your discussion should include an explanation of which factors could possibly explain the differences and similarities in systematic risk of these shares.
The systematic risk of shares in Apple Inc. is estimated to be high compared to the systematic risk of its two competitors.
Systematic risk, also known as market risk, measures the volatility of a stock's returns in relation to the overall market. One commonly used measure of systematic risk is beta (β), which indicates the stock's sensitivity to market movements. A beta of 1 implies the stock moves in line with the market, while a beta greater than 1 suggests the stock is more volatile than the market, and a beta less than 1 indicates the stock is less volatile than the market.
Let's assume the beta of Apple Inc. is 1.2, while its competitors have betas of 0.8 and 1.0. This implies that Apple's stock is more volatile than the market, while its competitors' stocks are less volatile.
The differences in systematic risk among these stocks can be attributed to several factors, including:
1. Business Model and Industry: Apple operates in the technology sector, which tends to be highly dynamic and subject to rapid changes. This volatility can contribute to increased systematic risk compared to competitors in less volatile industries.
2. Market Position: Apple is a well-established and highly recognized brand with a large market capitalization. Its size and market dominance may contribute to higher systematic risk due to the increased market sensitivity to its performance and news events.
3. Product Diversification: The product portfolio of Apple is diverse, including iPhones, iPads, Macs, and services like Apple Music and iCloud. This diversification can lead to fluctuations in different segments, resulting in higher systematic risk.
In summary, the systematic risk of shares in Apple Inc. is estimated to be high compared to its competitors due to factors such as its business model, industry dynamics, market position, and product diversification. It is important for investors to consider these differences in systematic risk when evaluating investment opportunities in the stock market.
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Rafa Company prepares quarterly financial statements. Each of the following items may require Rafa to make an adjusting entry. If so, determine the effect the adjustment has on net income for the quarter ended March 31, 2019 (i.e., January 1 through March 31). Note: Enter your answers in digits without $ signs or commas, entering 0 (zero) if no adjustment is necessary. Use a minus sign (-) for negative income effects (i.e., all expenses have a negative effect on income, -xox). 1. Rafa borrowed $30,000 on January 1,2019 . The annual interest rate is 7%, and the loan must be repaid on June 30,2019. 2. Rafa purchased $2,000 of inventory on March 31,2019 , paying cash. 3. Rafa purchased machinery during 2018. The monthly depreciation on the machinery is $600. 4. Rafa received $2,400 cash on December 24,2018 . This cash was to provide services for a customer. The services were provided proportionately (i.e., in equal monthly amounts) over the months of January, February, March, and April of 2019. 5. Rafa purchased insurance on December 31, 2018, paying cash of $3,600. The insurance policy covers all of calendar year 2019 .
The effect of the adjustments on net income for the quarter ended March 31, 2019, is -$2,100.
Rafa Company prepares quarterly financial statements. Each of the following items may require Rafa to make an adjusting entry. If so, determine the effect the adjustment has on net income for the quarter ended March 31, 2019 (i.e., January 1 through March 31).
1. Rafa borrowed $30,000 on January 1,2019. The annual interest rate is 7%, and the loan must be repaid on June 30,2019. No adjusting entry is needed since the interest payment will be made at the end of June, and the loan will be repaid then.
2. Rafa purchased $2,000 of inventory on March 31,2019, paying cash.No adjusting entry is required because it has already been recorded as an expense.
3. Rafa purchased machinery during 2018. The monthly depreciation on the machinery is $600.The adjusting entry to record three months of depreciation is:
Depreciation Expense = 3 × $600 = $1,800
Accumulated Depreciation = 3 × $600 = $1,8004. Rafa received $2,400 cash on December 24,2018. This cash was to provide services for a customer. The services were provided proportionately (i.e., in equal monthly amounts) over the months of January, February, March, and April of 2019.
The adjusting entry on March 31,2019 is:
Unearned Revenue = (4 - 3) × ($2,400/4) = $600
Revenue = (4 - 3) × ($2,400/4) = $6005. Rafa purchased insurance on December 31, 2018, paying cash of $3,600. The insurance policy covers all of the calendar year 2019.
The adjusting entry for the quarter ended March 31, 2019, is:
Insurance Expense = 3/12 × $3,600 = $900
Prepaid Insurance = $3,600 - $900 = $2,700
$0 - $0 - $1,800 + $600 - $900 = -$2,100
Therefore, the net income is reduced by $2,100.
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