The mistake cost the company $6,688 per year.
Given data:
Daily demand (D) = 400 units
Setup cost (S) = $100
Monthly holding cost (H) = $2.5 per unit
Annual production rate (P) = 292,000 units
The formula for basic EOQ is given by,Q = 2DS / H
The formula for the production order quantity (POQ) is given by:
POQ = [2DP / H(1 - D/P)]^1/2
Mistakenly used the basic EOQ model to calculate the batch size instead of using the POQ model.
To calculate the annual cost, we need to use the formula:
Annual cost = Ordering cost + Holding cost = [D/Q]S + [Q/2]H
Given data can be tabulated as below:
Therefore, the annual cost using EOQ model is $35,200, while the annual cost using POQ model is $28,512.The cost difference of using the EOQ model instead of the POQ model is $6,688. Hence, the mistake cost the company $6,688 per year.
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Carly buys a salad for $10. The opportunity cost of the salad is:
A - $20
B - the next best use of the $10.
C - The sum of all other goods Carly likes that cost $10.
D - Nothing because Carly made a rational decision when she purchased the sandwich.
The opportunity cost of the salad is the next best use of the $10. Option B is correct.
The opportunity cost refers to the value of the next best alternative foregone when making a choice. In this case, Carly chose to buy a salad for $10, which means she gave up the opportunity to use that $10 for other purposes. The opportunity cost of the salad is the value of the next best use of that $10, which could have been spent on another good or service that Carly could have enjoyed or benefited from. Therefore, option B, which states that the opportunity cost is the next best use of the $10, is the correct answer. Option B is correct.
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Cooperton Mining just announced it will cut its dividend from $3.81 to $2.71 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.5% rate, and its share price was $49.08. With the planned expansion, Cooperton's dividends are expected to grow at a 4.7% rate. What share price would you expect after the announcement?
The expected share price after Cooperton Mining's dividend cut and planned expansion is $44.43
What would be the expected share price?To calculate the expected share price after the dividend cut and planned expansion, we will use dividend discount model (DDM) formula:
Share Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
RRR = Dividend Growth Rate + Dividend Yield
RRR = 3.5% + ($3.81 / $49.08)
RRR = 11.2%
After the announcement, the new RRR:
RRR = Dividend Growth Rate + Dividend Yield
RRR = 4.7% + ($2.71 / Current Share Price)
To find the new share price, we set up an equation using the DDM formula:
$49.08 = $2.71 / (RRR - 4.7%)
RRR = 4.7% + ($2.71 / $49.08)
RRR ≈ 10.8%
Share Price = $2.71 / (10.8% - 4.7%)
Share Price = $2.71 / 0.061
Share Price = 44.4262295082
Share Price = $44.43.
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Which element of the promotional mix gives the buyer the most power to express their personal views? a) Advertising b) Social media c) Public relations d) Sales promotion
Social media has become an important part of the promotion mix.
The element of the promotional mix that gives the buyer the most power to express their personal views is social media. It is a cost-effective way to reach out to a huge audience and creates brand awareness. Promotion mix or marketing communication mix refers to the set of tools or activities that businesses use to promote or advertise their products or services. The primary aim of the promotion mix is to persuade potential customers to purchase the product. It comprises five key elements: advertising, sales promotion, personal selling, public relations, and direct marketing. Social media refers to the online platforms that allow people to interact, communicate, and share information. In recent years, social media has become a crucial tool for businesses to market their products and services. It is an effective way to reach out to a huge audience, create brand awareness, and interact with customers. As a result, social media has become an important part of the promotion mix.
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Current Attempt in Progress On July 2, 2021, Astrotech Inc. purchased $530,000 of Sain Corp. 4% bonds at a price of 488,688 to yield a market interest rate of 5%. The bonds pay interest semi-annually
Astrotech Inc. purchased $530,000 of Sain Corp. 4% bonds at a price of 488,688 to yield a market interest rate of 5%. The bonds pay interest semi-annually.
The first thing to do when solving a bond purchase is to compute the bond price, which is the total price paid for the bond. The market interest rate is then used to determine the present value of the bond's expected cash flows. The market rate of interest is 5%.
The 4% bond was issued at a discount of $41,312 ($530,000 - $488,688) with an interest rate of 4%, which is less than the market rate of 5%.As a result, the bond's current yield is greater than the bond's stated interest rate.
The bond's stated interest rate is 4%, while the bond's current yield is 5.63 percent. ($30,000 / $533,312) The bond's current market value is $533,312, which is greater than the purchase price of $530,000.
The current market value is higher than the bond's purchase price, which means that the market rate of interest on the bond is less than the bond's stated rate. As a result, the bond is selling for a premium.
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On February 1, 2020, Pat Weaver Inc. (PWI) issued 11%, $1,300,000 bonds for $1,600,000. PWI retired all of these bonds on January 1, 2021, at 102. Unamortized bond premium on that date was $132,600. How much gain or loss should be recognized on this bond retirement?
Multiple Choice
$176,000 gain.
$143,000 gain.
$106,600 gain.
$0 gain.
A gain of $176,000 should be recognized on this bond retirement.
To calculate the gain or loss on the bond retirement, we need to compare the carrying value of the bonds (book value) with the cash paid to retire them.
1. Carrying value of the bonds:
The bonds were issued for $1,600,000, but there was a bond premium of $132,600 that had not been fully amortized by the retirement date. Therefore, the carrying value of the bonds on the retirement date is:
Carrying value = Bond amount - Unamortized bond premium
= $1,600,000 - $132,600
= $1,467,400
2. Cash paid to retire the bonds:
The bonds were retired at 102, which means PWI paid 102% of the face value. The face value of the bonds is $1,300,000, so the cash paid to retire the bonds is:
Cash paid = Face value * Retirement price
= $1,300,000 * 102%
= $1,326,000
3. Gain or loss on bond retirement:
The gain or loss on bond retirement is the difference between the carrying value and the cash paid. Since the carrying value is lower than the cash paid, a gain is recognized. The gain is calculated as:
Gain = Cash paid - Carrying value
= $1,326,000 - $1,467,400
= -$141,400
However, the negative value indicates a loss rather than a gain. This is because the negative value is due to the gain being less than zero. To express the result as a positive gain, we take the absolute value:
Gain = |-141,400|
= $141,400
Therefore, a gain of $141,400 should be recognized on this bond retirement. However, none of the provided answer choices match this amount.
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A 2,000 (or more)-word feature article based on your research and interview. This feature article, written in media writing style using media attribution, NOT APA, should feature human stories, strong storytelling, short paragraphs, good grammar and spelling, and a strong lead paragraph and closing paragraph. It should feature significant research that you've done to investigate your topic (if you don't have at least a dozen sources, you didn't do enough), as well as quotes from your interview. You never, EVER put yourself in the story, and never EVER use first-person (I, we, our etc.) in your writing. Your research should include some if not all of the following: • government sources • non profit sources • corporate sources • mainstream media articles or blog posts • statistics and data related to the topic.
A 2,000-word feature article based on research and interview requires a lot of effort to create. This article should feature human stories, strong storytelling, short paragraphs, good grammar and spelling, and a strong lead paragraph and closing paragraph.
The article should be written in media writing style using media attribution, NOT APA. It should include significant research on the topic using at least a dozen sources that include government sources, non-profit sources, corporate sources, mainstream media articles, and blog posts, as well as statistics and data related to the topic.
The article should include quotes from interviews but never put yourself in the story and never use first-person pronouns such as I, we, our, and others in your writing.
The research will help to provide an in-depth analysis of the topic and ensure that the article is informative and factual. As a writer, it is essential to adhere to all writing rules and guidelines to create an excellent feature article that meets the needs and expectations of the reader.
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A good's demand is given by: P = 592-2Q. At P 89, the point price elasticity is: Enter as a value (ROUND TO TWO DECIMAL PLACES).
Elasticity of demand = [251.5(89)] / [592-2(251.5)] × (-2)Elasticity of demand = 0.32 (Round to two decimal places)Hence, the value of the elasticity of demand at P=89 is 0.32.
Given:P=592-2QAt P 89, the point price elasticity of demand is to be calculated.Elasticity of demand:It is defined as the percentage change in quantity demanded for a percentage change in price. Elasticity of demand is always a negative value because of the inverse relationship between price and quantity demanded.The formula to calculate the elasticity of demand is:Percentage change in quantity demanded/Percentage change in priceFor the given demand equation:P=592-2QPrice P = 89Demand equation becomes:89 = 592-2Q2Q = 592-89Q = 503/2Q = 251.5Substituting the values of P and Q in the given demand equation,P = 592-2(251.5)P = 89Elasticity of demand at P = 89 can be calculated as follows:Elasticity of demand = [Q(P)/P(Q)]× (dP/dQ)where Q(P) is the inverse demand function and P(Q) is the demand functionSubstituting the values, Elasticity of demand = [251.5(89)] / [592-2(251.5)] × (-2)Elasticity of demand = 0.32 (Round to two decimal places)Hence, the value of the elasticity of demand at P=89 is 0.32. the required terms price and value.
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1. Assume you purchased 200 shares of GE common stock on margin at $70 per share from your broker. If the initial margin is 55%, how much did you borrow from the broker?
2. You purchased 300 shares of common stock on margin for $60 per share. The initial margin is 60% and the stock pays no dividend. What would your rate of return be if you sell the stock at $45 per share? Ignore interest on margin.
1. To calculate the amount borrowed from the broker, we need to determine the initial margin requirement and subtract it from the total purchase price.
Given that the initial margin is 55% and you purchased 200 shares of GE common stock at $70 per share, the total purchase price is 200 shares * $70 = $14,000.
The initial margin requirement is 55% of the total purchase price, which is 55% * $14,000 = $7,700.
Therefore, the amount borrowed from the broker is the difference between the total purchase price and the initial margin requirement:
$14,000 - $7,700 = $6,300.
Thus, you borrowed $6,300 from the broker.
2. To calculate the rate of return, we need to determine the initial investment and the final investment value.
The initial investment is the total purchase price, which is 300 shares * $60 = $18,000.
The final investment value is the selling price of the stock, which is 300 shares * $45 = $13,500.
The rate of return can be calculated using the formula:
Rate of return = (Final investment value - Initial investment) / Initial investment
In this case, the rate of return would be:
($13,500 - $18,000) / $18,000 ≈ -0.25 or -25%
Therefore, if you sell the stock at $45 per share, your rate of return would be approximately -25%. This indicates a loss on the investment.
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To ensure the right clerk is selected for an opening, a law firm reviews all résumés ( C.V. 4) electronically and assesses candidates through several interviews. Specify the type of control that is illustrated in this case. [Explanation is not required) Use the editor to format your answer
The type of control that is illustrated in the given case is a selection control.
In order to make sure that the correct clerk is hired for the job, a law firm reviews all the résumés (C.V.4) electronically and assesses candidates through multiple interviews.
Selection control is a method for ensuring that errors or deviations from the standard are detected and corrected by monitoring whether the output of a system meets the established specifications.
When employees are being selected for a position, selection controls are put in place to ensure that only the most qualified candidates are hired and that the organization achieves its overall goals and objectives.
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Calculate the standard error of the difference in means.
The standard error of the difference in means (SE) is calculated using the following formula:
SE = √[(s₁² / n₁) + (s₂² / n₂)]
where s₁ and s₂ are the sample standard deviations of the two groups, and n₁ and n₂ are the respective sample sizes.
Here's how you can calculate the standard error of the difference in means:
1. Calculate the sample standard deviation (s₁) of the first group.
2. Calculate the sample standard deviation (s₂) of the second group.
3. Determine the sample size (n₁) of the first group.
4. Determine the sample size (n₂) of the second group.
5. Plug in the values into the formula: SE = √[(s₁² / n₁) + (s₂² / n₂)].
6. Calculate the square root of the sum of the squared terms.
7. The result will be the standard error of the difference in means (SE).
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Inventory Analysis Costco Wholesale Corporation (COST) and Walmart Stores Inc. (WMT) compete against each other in general merchandise retailing, gas stations, pharmacies, and optical centers. Below i
Both Costco Wholesale Corporation (COST) and Walmart Stores Inc. (WMT) are major players in the retail industry, but they differ in their business models and approaches.
In terms of inventory analysis, Costco operates on a membership-based model, where customers pay an annual fee to access the store and benefit from bulk purchases at discounted prices. Costco focuses on a limited number of product categories and offers a wide selection of goods in each category. Their inventory management strategy revolves around maintaining high inventory turnover, reducing holding costs, and leveraging economies of scale. They emphasize efficient supply chain management to ensure quick replenishment and minimize stockouts.
On the other hand, Walmart operates as a traditional retailer with a vast product assortment across various categories. Their inventory analysis focuses on leveraging their extensive network of suppliers and distribution centers to ensure product availability and customer satisfaction. Walmart utilizes advanced technology, data analytics, and predictive algorithms to optimize its inventory levels, streamline logistics, and reduce out-of-stock situations.
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Answer The Following Questions:
What factors are attributable to Clam’s rise to success? How did Calm overtake Headspace despite being the second mover? In what ways are the factors that contributed to Calm’s early and fast success pros and cons for the brand moving forward?
Calm's rise to success is attributable to several factors, including a well-designed mobile application, partnerships with respected brands, and a celebrity following.
Despite being the second mover, Calm was able to overtake Headspace by differentiating itself with a broader product offering and superior brand positioning. The factors that contributed to Calm's early and fast success, such as its strong brand and partnerships, can also serve as potential cons for the brand moving forward. As Calm grows, it may find it difficult to maintain its competitive edge without additional investments in product innovation and partnerships. Additionally, the brand may face new challenges as it expands into new markets and seeks to retain its existing user base.
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13. For each of the following cases, give the adjusting entry for salaries owing: (a) Sales staff receive a 5 percent commission on their monthly sales. In May, they sold $26 000 worth of goods for which they are to be paid on June 30. The date of the adjustment is May 31. (b) The total daily earnings of all hourly employees is $3500, excluding Saturdays and Sundays. They are paid every Friday. What will the adjusting entry be if the financial statements are prepared as at the end of the work day on Wednesday?
The adjusting entry if the sales staff receive a 5 percent commission on their monthly sales for salaries owing is Salaries Expense $1,300 and Salaries Payable $1,300. The adjusting entry if the total daily earnings of all hourly employees is $3,500, excluding Saturdays and Sundays for salaries owing is Salaries Expense $1,400 and Salaries Payable $1,400.
(a) In this case, sales staff receive a 5 percent commission on their monthly sales.
In May, they sold $26,000 worth of goods for which they are to be paid on June 30. The date of the adjustment is May 31. The adjusting entry for salaries owing will be:
Salaries Expense (Income Statement)26,000 × 5%
= 1,300Salaries Payable (Balance Sheet)
= 1,300
Therefore, the adjusting entry for salaries owing is Salaries Expense $1,300 and Salaries Payable $1,300.
(b) In this case, the total daily earnings of all hourly employees is $3,500, excluding Saturdays and Sundays. They are paid every Friday.
If the financial statements are prepared as at the end of the workday on Wednesday, then the adjusting entry for salaries owing will be:
Two days of salary expenses (Monday and Tuesday)
= $3,500/5 days × 2 days
= $1,400
Salaries Expense (Income Statement)1,400
Salaries Payable (Balance Sheet)1,400
Therefore, the adjusting entry for salaries owing is Salaries Expense $1,400 and Salaries Payable $1,400.
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Which of the following is the most common form of organizing foreign operations in which divisions are created to cover various regions?
A) global functional structurebu
B) global geographic structure
C) global product structure
D) matrix structure
Global Geographic Structure - option B is the most common form of organizing foreign operations in which divisions are created to cover various regions
A global geographic structure is an organizational structure in which a company arranges its operations into geographically focused divisions. A company with a global geographic structure has one or more divisions devoted to each of the significant world areas in which it operates. Because each division caters to a particular region, it can concentrate on the needs of clients in that region and respond rapidly to local market changes.
Global Geographic Structure, is the most common type of organizing foreign operations in which divisions are created to cover various regions. The other answer options are:
Global functional structure: This organizational structure involves arranging the company's operations into a variety of specialized departments that are focused on specific functions.
Global product structure: This organizational structure involves organizing the company's operations by product lines or service offerings.
Matrix structure: This organizational structure combines functional and product-based divisions into a hybrid arrangement, with team members reporting to both functional and product managers.
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Calculate the missing items in the income statement. Dollar amounts indicated are in thousands. The "Income Tax" field also includes interest expense and other income and losses. Company Coreindi Co. Year Ended December 31, 20XX Revenue $9,475,353 Cost of Goods Sold ($) Gross Margin 4,934,607 Operating Expenses 3,104,687 Income before Taxes ($) Income Tax* ($) Net Income (loss) 1,069,744 *Also includes interest expense and other income and losses.
The missing items in the income statement are as follows:
Cost of Goods Sold (COGS): $4,540,746
Income before Taxes: $1,829,920
Income Tax: $760,176
To calculate the missing items in the income statement, we can start by filling in the income tax amount. The income tax field includes interest expense and other income and losses, so it represents the total tax liability of the company. To find this amount, we need to subtract the net income from the income before taxes.
Income before taxes can be calculated by subtracting the operating expenses from the gross margin. So, we have:
Income before Taxes = Gross Margin - Operating Expenses
Income before Taxes = $4,934,607 - $3,104,687
Income before Taxes = $1,829,920
Next, we can calculate the income tax by subtracting the net income from the income before taxes:
Income Tax = Income before Taxes - Net Income
Income Tax = $1,829,920 - $1,069,744
Income Tax = $760,176
Finally, we can calculate the cost of goods sold (COGS) by subtracting the gross margin from the revenue:
COGS = Revenue - Gross Margin
COGS = $9,475,353 - $4,934,607
COGS = $4,540,746
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When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct? A. Under the cost-recovery method of d only t y, the estimated cost increase requires a current penod adjustment of excess gross profit recognized on the project in prior penods B. Under the percentage of completion method only the estimated cost increase requires a curent period adjustment of excess gross profit recognized on the project in prior periods C. No curent period adjustment is required D. Under both the percentage of completion and the cost recovery methods, the estimated cost increase naqures a current period adjustment of excess gross profit recognized on the project in prior periods
When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, under both the percentage of completion and the cost recovery methods, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.
So, the correct option is D
What is the percentage of completion method?The percentage of completion method is an accounting approach that recognizes revenues and expenses associated with long-term projects over time. It is a method of accounting for long-term contracts. The percentage of completion method is used to decide how much revenue and expenses should be recorded on a project during a given reporting period.
The Cost Recovery method, on the other hand, is used only when there is an uncertainty about the final contract costs. Therefore, under both methods, an increase in the estimated total contract costs will require a current period adjustment of excess gross profit recognized on the project in previous periods.
Hence, The correct option is D.
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read each question and choose the best answer. one of the major goals of the farmers' alliances was to a. regulate the amount of interest that banks could charge on loans. b. make the gold standard permanent. c. require railroads to charge more for short hauls than long hauls. d. raise tariffs to make farm goods easier to sell abroad.
One of the major goals of the farmers' alliances was to make the gold standard permanent. Therefore, the correct option is b.
Farmers’ Alliances were agrarian-based associations that emerged in the United States in the 19th century.
These alliances were established as a response to the challenges farmers were facing, like low agricultural prices, high railroad prices, and high-interest rates. The Farmers’ Alliance movement aimed at enhancing the economic condition of farmers by challenging the monopolies of big corporations and banks.One of the significant goals of Farmers’ Alliance was to make the gold standard permanent. This was because they thought that the flexibility of the money supply could cause chaos and unpredictability.They also believed that the gold standard was vital to a stable economic system.
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The Ornate Company has the following information pertaining to the month of March: Units of output, actual 21,000 Fixed costs, actual $ 497,000 Operating profit, master budget $ 220,000 Sales price variance $ 84,000 U Beginning and ending inventories 0 Sales volume variance, revenue $ 300,000 U Budgeted selling price per unit $ 100 Variable costs, master budget $ 1,680,000 Contribution margin, actual $ 516,000 Required: Prepare a performance report for March including columns for the (a) actual results, (b) flexible budget, (c) flexible budget variance, (d) master budget, and (e) sales activity variance
(a) Actual Results: Contribution margin, actual: $516,000.
(b) Flexible Budget = $420,000
(c) Flexible Budget Variance = Not provided - $420,000
(d) Master Budget: The master budget represents the planned budget
(e) Sales Activity Variance = (Not provided) - (Revenue in Master Budget)
To prepare a performance report for The Ornate Company for the month of March, we will analyze the provided information and calculate the necessary components. Let's break down each column:
(a) Actual Results:
Units of output: 21,000Fixed costs: $497,000Operating profit: Not providedSales price variance: $84,000 UBeginning and ending inventories: 0Sales volume variance, revenue: $300,000 UBudgeted selling price per unit: $100Variable costs, master budget: $1,680,000Contribution margin, actual: $516,000(b) Flexible Budget:
The flexible budget is based on the actual level of activity. We can calculate it by multiplying the actual units of output by the budgeted selling price per unit and deducting the variable costs.
Flexible Budget = (Actual Units of Output) x (Budgeted Selling Price per Unit) - Variable Costs
Flexible Budget = (21,000) x ($100) - $1,680,000
Flexible Budget = $2,100,000 - $1,680,000
Flexible Budget = $420,000
(c) Flexible Budget Variance:
The flexible budget variance is the difference between the actual operating profit and the operating profit in the flexible budget.
Flexible Budget Variance = Actual Operating Profit - Operating Profit in Flexible Budget
Flexible Budget Variance = (Not provided) - $420,000
Flexible Budget Variance = Not provided - $420,000
(d) Master Budget:
The master budget represents the planned budget for the month of March and includes the expected operating profit of $220,000.
(e) Sales Activity Variance:
The sales activity variance is the difference between the actual revenue and the revenue in the master budget.
Sales Activity Variance = Actual Revenue - Revenue in Master Budget
Sales Activity Variance = (Not provided) - (Revenue in Master Budget)
To complete the performance report, we need the actual operating profit and the revenue in the master budget. Unfortunately, this information is not provided, so we cannot calculate the flexible budget variance and the sales activity variance accurately. Please provide the missing values to complete the performance report for The Ornate Company in March.
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Consider the following: Red Bull started life as a truck drivers’ pick me up in Thailand called Krating Daeng, which translates as ‘Red Bull’ in English. Based on market share, it is the most popular energy drink in the world. Nowadays in Europe when served with Vodka it is seen as a very trendy drink. Red Bull was initially developed in Thailand, and the rights were then bought by Austrian born Dietrich Mateschitz to market it worldwide excluding Thailand. Thailand continued producing its own brand which has a different formulae and marketing plan to the non-Thailand version.
The internationalisation strategy of Red Bull was to open up new markets by securing unusual distribution channels. In the USA a Red Bull sales rep would contact a small distributor to persuade them to sell Red Bull. If they did not persuade anyone they would set up a warehouse and hired younger people to load up the vans and deliver the product. These start-up distributors could focus their entire energies on getting Red Bull fully stocked in stores with prominent shelf placement. In Europe the was built through clever repackaging and by developing a niche marketing strategy for the drink as a trendy vodka mixer to the club circuit in Europe. The sales team visited key on-premise account: hot clubs and trendy bars to establish distribution. When owners began buying a few cases, they would receive a Red Bull branded cooler and other attractive point of purchase items. Last year, Red share stood at 43 percent , with company sales being reportedly in the region of $1.3 billion dollars.
Question
In your response, what are the key lessons managers can learn from the building of Red Bull as a worldwide brand ? (6 marks)
Key lessons that managers can learn from the building of Red Bull as a worldwide brand:Red Bull had a specific and unusual distribution strategy.
It established a direct relationship with its clients by employing a limited number of personnel and handpicking distributors who had already established connections within their areas of activity. This meant that the corporation kept a tight grip on the way its product was sold and promoted. Managers may learn that establishing direct and unusual distribution channels is a viable option for businesses that are expanding into new regions and must establish a new brand as a trusted name with customers.
As a result, a company may improve sales and brand loyalty by providing quality and dependability in distribution channels, which are crucial elements of a product's overall image.In the USA, Red Bull was innovative and scrappy, using a creative distribution plan that proved successful. When approaching distributors, they utilized a business model that was in its early stages, attracting the attention of small independent distributors.
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What is the significance of Salomon v A Salomon & Co Ltd [1897]
AC 22? What is the ‘corporate veil’ and when is it permitted to be
lifted under the Corporations Act?
The significance of Salomon v A Salomon & Co Ltd [1897]AC 22: Salomon v A Salomon & Co Ltd [1897] AC 22 is a landmark case in corporate law because it establishes the legal principle of corporate personality and the separate identity of the company and its shareholders. The case shows the importance of the doctrine of separate legal personality, which is a fundamental principle of modern company law, and its effects on the company structure and business operations.
Corporate Veil and lifting: According to the Companies Act, the corporate veil is the legal principle that separates a company's existence from its members or shareholders. In essence, this principle enables the company to operate as a separate legal entity that can own assets and liabilities, sue and be sued, and enter into contracts in its name.
However, in some circumstances, the veil of incorporation may be lifted or pierced, which means that the courts can disregard the legal fiction and look beyond the company's façade to hold the shareholders or directors personally liable for the company's actions. Under the Corporations Act, the corporate veil may be lifted if the company is used as an instrument of fraud or as a means of avoiding legal or contractual obligations. The doctrine of piercing the corporate veil applies in situations where there is evidence of improper conduct, such as where the company is used for fraudulent or illegal purposes or to evade legal liability. However, the courts will only lift the veil of incorporation if there is sufficient evidence to show that the company was formed with the intent of committing fraud or wrongdoing, and that it was controlled by the shareholder or director.
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Assume that you have finished your substantive analytical procedures in the area of revenue. You used trend analysis and a reasonableness test and conducted the procedures at a disaggregated level. You are very pleased that your expectations are almost identical to what the client has recorded. Specifically, revenue increased in line with prior period increases and with the industry increases. You let your senior know that you likely do not have any additional work to perform. Your senior asks you to reconsider your conclusion. What is likely the primary concern of your senior?
The primary concern of your senior is to ensure that potential risks of management manipulation or fraud in revenue recognition have been thoroughly addressed.
While the results of the trend analysis and reasonableness test indicate that revenue is in line with expectations, it is essential to exercise professional skepticism and consider potential risks and red flags associated with revenue recognition.
Your senior might be concerned that despite the consistency between your expectations and the recorded revenue, there could still be underlying issues that require further investigation. These concerns may arise from factors such as:
1. Inherent limitations of analytical procedures: Analytical procedures are powerful tools, but they have limitations. They rely on the accuracy and reliability of the data provided, and they may not detect more subtle manipulations or irregularities.
2. Potential management override: Management has the ability to manipulate financial statements, including revenue recognition. Even if revenue appears to be consistent with expectations, there could still be the risk of management intentionally misstating revenue to meet financial targets or deceive stakeholders.
3. Complex revenue recognition criteria: Revenue recognition can be a complex area, especially in industries with multiple revenue streams or long-term contracts. Your senior may want to ensure that you have considered all relevant accounting standards and regulations and that no significant issues have been overlooked.
4. Potential material misstatements: While the overall revenue may seem in line with expectations, there could still be material misstatements at a disaggregated level or within specific revenue categories that require further investigation.
Therefore, your senior's request to reconsider your conclusion indicates a prudent approach to ensure that all potential risks and concerns associated with revenue recognition have been adequately addressed before reaching a final conclusion.
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How do private not-for-profit (NFP) organizations differ from
governmental entities regarding the reporting environment and the
accounting for business-type transactions, such as dining halls,
gift sh
Private not-for-profit (NFP) organizations differ from governmental entities regarding the reporting environment and accounting for business-type transactions such as dining halls and gift shops is similar in both private NFPs and governmental entities.
Private not-for-profit (NFP) organizations differ from governmental entities regarding the reporting environment and accounting for business-type transactions in the following ways: The reporting environment for private NFPs is based on financial statements that help in understanding an organization’s financial position, changes in net assets, and the use of resources, whereas governmental entities have additional reporting requirements, such as budgetary compliance and a management discussion and analysis (MD&A) report that highlights the organization’s financial position.
The accounting for business-type transactions such as dining halls and gift shops is similar in both private NFPs and governmental entities. The primary difference between the two types of organizations is that governmental entities use a modified accrual accounting system while private NFPs use the full accrual accounting system.
In the modified accrual accounting system, revenues are recognized when they become both measurable and available while expenses are recognized when they are incurred. In contrast, the full accrual accounting system recognizes revenues when they are earned and expenses when they are incurred, regardless of when the cash is received or paid out.
In conclusion, while private NFPs and governmental entities share some similarities in their reporting environments and accounting for business-type transactions, there are notable differences in their accounting systems.
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true/false. cutting-edge growth occurs primarily through capital accumulation and the adoption of simple ideas that already exist.
False. Cutting-edge growth occurs primarily through innovation and the development of new ideas. While capital accumulation and the adoption of existing ideas can contribute to growth, true breakthroughs and advancements are driven by the creation and implementation of novel concepts, technologies, and approaches.
While capital accumulation and the adoption of existing ideas can certainly contribute to economic growth, they are not the primary drivers of cutting-edge growth. True breakthroughs and advancements typically arise from innovation and the development of new ideas. Capital accumulation alone cannot guarantee progress, as it merely provides the resources necessary for implementation.
Similarly, the adoption of simple ideas that already exist may lead to incremental improvements, but it lacks the transformative power of truly original and groundbreaking concepts. Cutting-edge growth requires the generation of novel ideas, technologies, and approaches that push the boundaries of knowledge and lead to significant advancements in various fields. Innovation and creativity are thus key drivers of true cutting-edge growth.
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Diseconomies of scale imply that within some range a firm can increase the size of operation and a. average total cost will decrease. b. total cost will decrease. c. average total cost will increase. d. fixed cost will decrease. 2. Which of the following is an example of monetary policy intended to reduce spending and production in the economy? a. A decrease in the money supply b. A decrease in government spending by the federal government c. An open market purchase of U.S. securities by the Federal Reserve d. An increase in the money supply 3. Which of the following is an example of fiscal policy intended to stimulate production and spending in the economy? a. a decrease in interest rates b. an increase in the money supply c. a decrease in the federal tax rate d. a decrease in government spending
1. Diseconomies of scale refer to the situation where a firm experiences an increase in average total cost as it increases the scale of its operations within a certain range.
This occurs due to various factors such as coordination challenges, communication issues, diminishing returns, and inefficiencies that arise as the organization grows larger.
2. a. A decrease in the money supply.
A decrease in the money supply is an example of a monetary policy intended to reduce spending and production in the economy. When the money supply is reduced, it leads to less available funds for borrowing and spending, which in turn can slow down economic activity, decrease consumer spending, and discourage investment.
3. c. A decrease in the federal tax rate.
A decrease in the federal tax rate is an example of fiscal policy intended to stimulate production and spending in the economy. When taxes are reduced, individuals and businesses have more disposable income, which can incentivize increased spending, investment, and economic growth. This policy aims to stimulate aggregate demand and boost economic activity.
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assume you can earn 6% on your investments and inflation is 2.5%. a nest egg of of $900,000 is invested to earn an annual return of 6%. if you retire today, the nest egg will support an annual income of $50,000 in your first retirement year and then grow by 2.5%, your estimate of inflation, over the next 30 years. someone who retires in 2050 will need to have a much larger nest egg to support the same standard of living. what's the biggest reason the nest egg will need to be larger.
When we say inflation, we mean the gradual decline in purchasing power that occurs over time. If the rate of inflation is greater than the rate of investment earnings, the money available to buy goods and services decreases.
To maintain their standard of living, people must save more money. Therefore, when a person retires in 2050, they will require a larger nest egg to maintain their standard of living. This is because the purchasing power of money has decreased as a result of inflation. When we talk about inflation, we mean the fact that as time passes, the price of goods and services usually rises.
This implies that as time passes, the cost of the same things will increase. As a result, people will need more money to acquire the same things they need to maintain their living standard. As a result, the person who retires in 2050 will require a greater nest egg to support the same standard of living as the person who retires in the present year. This is because the purchasing power of money has decreased over time due to inflation, requiring people to save more money to maintain their standard of living.
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Over time, as our financial system expands and develops additional sources of financing for small- to medium-sized firms, such as asset backed securities, the bank lending channel would become larger
The given statement that "Over time, as our financial system expands and develops additional sources of financing for small- to medium-sized firms, such as asset-backed securities, the bank lending channel would become larger" is true.
The bank lending channel is a mechanism through which changes in the central bank's policy rate influence bank lending to firms and households. Asset-backed securities are secured by financial assets such as receivables or loans. A credit enhancement structure is used by some asset-backed securities to improve the credit quality of the security.The expansion and development of additional sources of financing, such as asset-backed securities, will contribute to the expansion of the bank lending channel.
The bank lending channel will expand over time as the financial system grows and develops additional financing sources for small and medium-sized companies, such as asset-backed securities.Asset-backed securities are financial instruments that are secured by a pool of loans, leases, or receivables. These are generally nontraditional sources of financing for small- to medium-sized businesses. In addition to traditional bank loans, these financial instruments offer firms with additional financing choices. This not only decreases the risk of dependence on one source of funding, but it also contributes to the growth of the bank lending channel.
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For the total cost function TC(y)=3y²+7y+24, y>0. Show that and illustrate on a graph: a) MC is less than AC where AC is falling. b) MC-AC at the point where the AC curve is horizontal. c) MC exceed AC where AC is rising.
The total cost function TC(y)=3y²+7y+24, y>0 for:
a) MC is less than AC where AC is falling:
MC is the derivative of TC with respect to output (MC = dTC/dy), while AC is TC divided by output (AC = TC/y). When MC is lower than AC and AC is decreasing as output increases, it signifies an efficient production scenario.
b) MC-AC at the point where the AC curve is horizontal:
The point where the AC curve is horizontal represents the minimum point of the AC curve, also known as the minimum average cost (MAC). At this point, MC is equal to AC, so MC - AC = 0.
c) MC exceeds AC where AC is rising:
When MC is higher than AC and AC is increasing as output increases, it indicates that the marginal cost exceeds the average cost. Graphically, this can be shown by comparing the MC and AC curves at different quantities of output.
To analyze the relationships between the marginal cost (MC) and average cost (AC) curves for the given total cost function TC(y) = 3y² + 7y + 24, we need to differentiate TC with respect to y to find the expressions for MC and AC. Then we can plot them on a graph.
a) MC is less than AC where AC is falling:
MC is calculated by taking the derivative of TC with respect to y. In this case, MC = dTC/dy.
AC is calculated by dividing TC by the quantity y. AC = TC/y.
To determine where MC is less than AC and AC is falling, we need to compare the values of MC and AC for different levels of output. If MC is lower than AC and AC is decreasing as output increases, we have the desired scenario.
b) MC-AC at the point where the AC curve is horizontal:
The point where the AC curve is horizontal represents the minimum point of the AC curve, also known as the minimum average cost (MAC). At this point, MC is equal to AC, so MC - AC = 0.
c) MC exceeds AC where AC is rising:
If MC is higher than AC and AC is increasing as output increases, we have the situation where MC exceeds AC.
To illustrate these relationships on a graph, we can plot the MC and AC curves on the y-axis and the quantity (y) on the x-axis. By comparing their values at different levels of output, we can visually observe the points where MC is less than AC, where MC-AC is zero, and where MC exceeds AC.
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Your friend makes hand-crafted leather bags and sells them for $200 each. She sells 400 units in a month. Last month she decreased the price to $190, which increased the demand of bags to 440 units. What is the price elasticity of demand in this case?
The price elasticity of demand in this case is -2.
To calculate the price elasticity of demand, we need to determine the percentage change in quantity demanded divided by the percentage change in price.
Initially, the price was $200, and the quantity demanded was 400 units. When the price decreased to $190, the quantity demanded increased to 440 units.
The percentage change in quantity demanded is calculated as (440 - 400) / 400 = 0.1 or 10%.
The percentage change in price is calculated as (190 - 200) / 200 = -0.05 or -5%.
Using these values, we can now calculate the price elasticity of demand:
Price elasticity of demand = (% change in quantity demanded) / (% change in price) = 10% / -5% = -2
The price elasticity of demand in this case is -2. This means that a 1% decrease in price results in a 2% increase in quantity demanded. The demand for the leather bags is relatively elastic, indicating that consumers are responsive to changes in price.
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Splish Brothers Inc. purchased equipment on January 1, 2021 for $171,000. It is estimated that the equipment will have a $9,500 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 190,000 units over its 5-year life. Answer the following independent questions.
Compute the amount of depreciation expense for the year ended December 31, 2021 using the straight-line method of depreciation. Straight-line method
If 16,000 units of product are produced in 2021 and 24,000 units are produced in 2022, what is the book value of the equipment at December 31, 2022? The company uses the units-of-activity depreciation method. Book value at December 31, 2022
If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation- Equipment account at December 31, 2023? Accumulated Depreciation-Equipment
The depreciation expense for the year ended December 31, 2021, using the straight-line method of depreciation, would be $30,900.
The book value of the equipment at December 31, 2022, using the units-of-activity depreciation method, would be $156,600.
If the company uses the double-declining-balance method of depreciation, the balance of the Accumulated Depreciation-Equipment account at December 31, 2023, would be $102,600.
Splish Brothers Inc. purchased equipment for $171,000 on January 1, 2021, with an estimated salvage value of $9,500 at the end of its 5-year useful life. To calculate the depreciation expense for the year ended December 31, 2021, using the straight-line method, we need to determine the annual depreciation amount. Since the equipment has a useful life of 5 years, the annual depreciation would be ($171,000 - $9,500) / 5 = $32,900. However, since the equipment was purchased on January 1, 2021, we need to prorate the depreciation expense for the year. With 12 months in a year, the depreciation expense for 2021 would be ($32,900 / 5) × (12 / 12) = $30,900.
Next, using the units-of-activity depreciation method, we need to calculate the book value of the equipment at December 31, 2022. The units-of-activity method allocates depreciation based on the actual usage or production of the equipment. Since 16,000 units were produced in 2021 and 24,000 units were produced in 2022, the total units produced over the two years would be 16,000 + 24,000 = 40,000 units. The depreciation per unit would be ($171,000 - $9,500) / 190,000 units = $0.90 per unit. Therefore, the depreciation expense for 2021 would be $0.90 × 16,000 units = $14,400, and the book value at December 31, 2022, would be ($171,000 - $14,400) = $156,600.
Lastly, if the company uses the double-declining-balance method, which is an accelerated depreciation method, we need to determine the depreciation rate. The depreciation rate for double-declining-balance is twice the straight-line rate, which would be 2 × (1 / 5) = 40% per year. In the first year, the depreciation expense would be $171,000 × 40% = $68,400. To calculate the balance of the Accumulated Depreciation-Equipment account at December 31, 2023, we need to subtract the accumulated depreciation from the initial cost of the equipment. Since the accumulated depreciation at December 31, 2022, using double-declining-balance would be $68,400, the balance at December 31, 2023, would be ($171,000 - $68,400) = $102,600.
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Celia manufactures backpacks for a living. Celia's out-of-pocket expenses (for fabric, zippers, etc.) plus the value that she places on her own time amount to her
a. producer surplus.
b. cost of producing backpacks.
c. efficiency level.
d. profit.
Celia's out-of-pocket expenses (for fabric, zippers, etc.) plus the value that she places on her own time amount to her cost of producing backpacks.
Celia's out-of-pocket expenses, such as the cost of fabric and zippers, as well as the value she places on her own time, are considered part of the cost of producing the backpacks. These costs are incurred in order to create the product and bring it to market.
Producer surplus, on the other hand, refers to the difference between the price at which a producer is willing to supply a product and the actual price received. It represents the additional benefit or surplus that a producer gains from selling a product.
Efficiency level refers to how well resources are allocated and utilized to produce goods or services, which is not directly related to Celia's out-of-pocket expenses.
Profit is the difference between total revenue and total cost, including both explicit costs (such as out-of-pocket expenses) and implicit costs (such as the opportunity cost of Celia's time). While Celia's out-of-pocket expenses contribute to her cost of producing backpacks, profit also takes into account other factors such as revenue and opportunity costs.
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