Answer:
$232,300
Explanation:
With regards to the above information, and given that;
Actual overhead = $55,300
Applied overhead = $58,400
Over applied overhead = $58,400 - $55,300 = $3,100
Unadjusted cost of goods sold
= $53,000 + $212,500 - $30,100
= $235,400
Therefore, the adjusted cost of goods sold
= $235,400 - $3,100
= $232,300
The Eggers Corporation filed an amended Form 1120, claiming an additional $400,000 deduction for payments to a contractor for a prior tax year. The amended return was based on the entity's interpretation of a Regulation that defined deductible advance payment expenditures. The nature of Eggers's activity with the contractor did not exactly fit the language of the Regulation. Nevertheless, because so much tax was at stake, Eggers's tax department decided to claim the deduction. Eggers’s tax department estimated that there was only a 15% chance that Eggers’s interpretation would stand up to a Tax Court review.
a. What is the amount of tax penalty that Eggers is risking by taking this position?
b. What would be the result if there was a 45% chance that Eggers’s interpretation of the Regulation was correct?
Answer: See explanation
Explanation:
a. What is the amount of tax penalty that Eggers is risking by taking this position?
The amount of tax penalty that Eggers is risking by taking this position will be:
= $400,000 × 20%
= $400,000 × 20/100
= $400,000 × 0.2
= $80,000
The 20% used is the penalty charged when a claim is more than the final amount that's being allowed by the court or the IRS.
b.What would be the result if there was a 45% chance that Eggers’ interpretation of the Regulation was correct?
The result in this case if there was a 45% chance that Eggers’ interpretation of the Regulation was correct will be that Eggers will have zero tax penalty given. This is because since a reasonable cause was shown by the corporation, the penalty will be waived.
Suppose that Spain and Switzerland both produce beer and wine. Spain's opportunity cost of producing a bottle of wine is 4 brarrels of beer while Switzerland's opportunity cost of producing a bottle of wine is 10 barrels of beer.
By comparing the opportunity cost of producing wine in the two countries, you can tell that ____ has a comparative advantage int he production of wine and ___ has a comparative advantage in the production of beer.
Suppose that Spain and Switzerland consider trading wine and beer with each other. Spain can gain from specialization and trade as long as it receives mroe that ___ of beer for each bottle of wine it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than ___ of wine for each barrel of beer it exports to Spain.
Based on your answer to the last question, which of the folloiwing terms of trade ( that is, price of wine in terms of beer) would allow both Switzerland and Spain to gain from trade?
a. 6 barrels of beer per bottle of wine
b. 3 barrels of beer per bottle of wine
c. 9 barrels of beer per bottle of wine
d. 18 barrels of beer per bottle of wine
Answer:
Spain has a comparative advantage in producing wine. While, Switzerland has a comparative advantage in Beer.
Explanation:
Spain's opportunity cost of producing a bottle of wine is 4 barrels of beer while Switzerland's opportunity cost of producing a bottle of wine is 10 barrels of beer.
Spain has a lower opportunity cost of producing wine. Thus, we can say that Spain has a comparative advantage in producing wine.
Spain's opportunity cost of producing a bottle of beer is 1/4 barrels of wine while Switzerland's opportunity cost of producing a bottle of beer is 1/10 barrels of wine.
Switzerland has a lower opportunity cost of producing beer. Thus, we can say that Switzerland has a comparative advantage in producing beer.
Spain's opportunity cost of producing a bottle of wine is 4 barrels of beer. Thus, it can import more than 4 barrels of beer for each bottle of wine it produces and export to Switzerland. Thus, Spain can gain from trade as long as it receives more than 4 barrels of beer for each bottle of wine it exports to Switzerland.
Switzerland's opportunity cost of producing a bottle of beer is 1/10 barrels of wine. Thus, it can import more than 1/10 barrels of wine for each bottle of beer it produces and export to Spain. Thus, Switzerland can gain from trade as long as it receives more than 1/10 barrels of wine for each bottle of beer it exports to Spain.
The price of wine in terms of beer must be between 4 and 10. So it can be
either 6 barrels of beer per bottle of wine or 9 barrels of beer per bottle of wine.
When Volvo runs ads suggesting that its cars are the safest that money can buy, it is trying to ________. A) segment the market B) provide a service C) enter a new market D) develop brand loyalty E) position its brand
Teams often fail because
Answer:
Their chemistry, technical and tactical are weak
Answer:
they cant wok things out- commpuncation. and practices some may no know how to do someting
Explanation:
Suppose the economy of the large country of Hendrix is currently experiencing economic growth and has a trade deficit. Consider the possible effects of this economic growth on the trade balance and place them in the appropriate category. 1. Likely to occur during economic growth and increase the trade deficit 2. Likely to occur during economic growth and decrease the trade deficit 3. Not likely to occur during economic growth imports increase a. imports decrease b. government borrowing increases c. private savings decrease d. private savings increase e. government borrowing decreases
Answer:
1. Likely to occur during economic growth and increase the trade deficit - imports increase
Economic growth increases the living standard of people because it raises the average income. People often use this income to buy goods from abroad in case demand is not met by domestic firms.
2. Likely to occur during economic growth and decrease the trade deficit - d. private savings increase
Private savings increase during economic growth because people enjoy a higher disposable income. A share of this private savings are invested abroad, where foreigners use this capital to import goods from the original country, decreasing the trade deficit.
3. Not likely to occur during economic growth - c. private savings decrease
Private savings usually increase during times of economic growth for the reasons explained above.
Koczela Inc. has provided the following data for the month of May: Inventories: Beginning Ending Work in process $ 28,000 $ 23,000 Finished goods $ 57,000 $ 61,000 Additional information: Direct materials $ 68,000 Direct labor cost $ 98,000 Manufacturing overhead cost incurred $ 74,000 Manufacturing overhead cost applied to Work in Process $ 72,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. The cost of goods manufactured for May is:
Answer:
COGS= $241,000
Explanation:
First, we need to calculate the cost of goods manufactured with allocated overhead:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 28,000 + 68,000 + 98,000 + 72,000 - 23,000
cost of goods manufactured= $243,000
Now, we determine the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 57,000 + 243,000 - 61,000
COGS= $239,000
Finally, we close the under/over applied overhead to COGS:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 74,000 - 72,000
Underapplied overhead= $2,000
We need to debit COGS and credit overhead:
COGS 2,000
Manufacturing overhead 2,000
COGS= 239,000 + 2,000
COGS= $241,000
Computing Retained Earnings and Preparing a Classified Balance SheetThe following data, in no particular order, are from the accounts of Brown Corp. as of December 31, 2020, its annual year-end. All amounts are accurate, all accounts have normal balances, and total debits equal total credits.Accounts payable (trade) $28,000 Deferred revenue $7,000Debt retirement fund (long-term) 14,000 Cash dividends payable 17,500Accounts receivable 59,500 Inventory 105,000Income taxes payable 14,000 Land held for future business site 63,000Short-term investments, marketable securities(cost which approximates fair value) 35,000 Equipment and furniture 245,000Bonds payable (long-term) 178,500 Net income for 2020 122,500Accumulated depreciation, equipment and furniture 21,000 Dividends (cash) declared (a debit) 10,500Common stock, par $1 (300,000 shares authorized) 245,000 Prepaid expenses (short-term) 3,500Cash 70,000 Patent 14,000Retained earnings, December 31, 2019 59,500 Prepaid rent (long-term) 7,000Allowance for doubtful accounts 7,000 Investment in capital stock of Zinc ProductsCorporation (long-term) 91,000Premium on common stock 17,500Requireda. Compute the year-end balance of retained earnings. b. Prepare a classified balance sheet as of December 31, 2020.Do not use negative signs with any of your answers.
Answer:
a. Retained Earnings:
Retained earnings, December 31, 2019 $59,500
Net income for 2020 122,500
Dividends (cash) declared (a debit) (10,500)
Retained earnings, December 31, 2020 $171,500
b. Classified Balance Sheet as of December 31, 2020
Assets
Current Assets:
Cash $70,000
Accounts receivable 59,500
Allowance for doubtful accounts 7,000 52,500
Inventory 105,000
Prepaid expenses (short-term) 3,500
Short-term investments 35,000 $266,000
Long-term Investments:
Investment (long-term) 91,000
Prepaid rent (long-term) 7,000
Debt retirement fund (long-term) 14,000 $112,000
Long-term Assets:
Land held for future business site 63,000
Equipment and furniture 245,000
Accumulated depreciation,
equipment and furniture 21,000 224,000
Patent 14,000 $301,000
Total assets $679,000
Liabilities and Equities
Current Liabilities:
Accounts payable (trade) $28,000
Deferred revenue 7,000
Income taxes payable 14,000
Cash dividends payable 17,500 $66,500
Long-term Liabilities:
Bonds payable (long-term) $178,500
Total liabilities $245,000
Equities:
Common stock, par $1
(300,000 shares authorized) $245,000
Premium on common stock 17,500
Retained earnings, December 31, 2020 171,500 $434,000
Total liabilities and equity $679,000
Explanation:
a) Data and Calculations:
Accounts payable (trade) $28,000
Deferred revenue $7,000
Cash dividends payable 17,500
Income taxes payable 14,000
Bonds payable (long-term) 178,500
Common stock, par $1
(300,000 shares authorized) 245,000
Premium on common stock 17,500
Retained earnings, December 31, 2020 $171,500
Cash 70,000
Accounts receivable 59,500
Allowance for doubtful accounts 7,000
Inventory 105,000
Prepaid expenses (short-term) 3,500
Short-term investments 35,000
Investment (long-term) 91,000
Prepaid rent (long-term) 7,000
Debt retirement fund (long-term) 14,000
Land held for future business site 63,000
Equipment and furniture 245,000
Accumulated depreciation,
equipment and furniture 21,000
Patent 14,000
You are evaluating investments in U.S. equities and Mexican equities. Your stock analysts anticipate that U.S. equities will appreciate 9% over the next year. Mexican equities are expected to rise by 15%. Your foreign exchange analyst expects the exchange rate for Mexican pesos, MP, to change from $0.14286/MP to $0.142015/MP. In U.S. dollar terms, what rate of return do you expect to earn on your Mexican equity investment
Answer:
14.32%
Explanation:
We have the investment sum of 100 dollars
We convert to mexican pesos
100x0.14286
= 700 MP
700 mexican pesos invested on equities gets 25% return
Redeemable amount after a year = 700 x (1+15%)
= 805
After a year money gotten back in dollars
805 x 0.142015
= 114.32 dollars
Net return = 114.32 - 100 = 14.32
Expressed in percent = 14.32%
Vince says that the present value of $500 to be received one year from today if the interest rate is 8 percent is more than the present value of $500 to be received two years from today if the interest rate is 4 percent. Terri says that $500 saved for two years at an interest rate of 3 percent has a larger future value than $500 saved for one years at an interest rate of 6 percent. a. Both Vince and Terri are correct. b. Only Vince is correct. c. Only Terri is correct. d. Neither Vince nor Terri is correct.
Answer:
A
Explanation:
To determine if Vince is right, we have to determine the present value of the amounts
Present value is the sum of discounted cash flows
Present value of $500 to be received one year from today500 / 1.08 = $462.96
Present value of $500 to be received two years from today500 / (1.04^2) = $462.28
$462.96 > $462.28 Vince is right
To determine if Terri is right, we have to determine the future value of the amounts
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
500 x (1.03)^2 = $530.45
500 x (1.06) = $530
$530.45 > $530 Terri is right
they are both correct
Assume that you are your friends are starting a small business painting houses in the summertime. You need to buy a software package that handles the financial transactions of the business. Create an alternatives matrix that compares three packaged systems (e.g., Quicken, Microsoft Money, Quickbooks). Which alternative appears to be the best choice
Answer:
Quicken, Microsoft Money and Quick books all of them are business software's which help the user to record and maintain all financial transactions. The alternative matrix for the comparison of these software's is given below:
Quicken : Remote accessibility, It is an online interface and user friendly software, Quick online is much like mobile applications.
Microsoft Money : It is a licensed software for a minimum of three years, It offers tech support to its users, It is user friendly personal finance program.
Quick books : It is suitable for small business, It is popular software and easy to use, It is comprehensive software which can handle data of many customers,
Explanation:
Alternative matrix helps the person to easily compare feature of different software's. The best and most suitable software among the three is quick books because it is most suitable for start up businesses. It does not have license fee and also it is user friendly so there do not need any special training to run the software.
4. Which of the following is a factor of production for a firm?
A. Natural Resources
O B. Company Reputation
C. Customers
O D. Legal Consultants
Answer:
A.
Explanation:
Not too sure but I hope that is right.
Suppose that you have found the optimal risky combination using all risky assets available in the economy, and that this optimal risky portfolio has an expected return of 0.2 and standard deviation of 0.2. The T-bill rate is 0.05. If your risk-return preferences are best described by the utility function in this class, with a risk-aversion coefficient of 4.6. What is the expected return on your optimal complete portfolio
Answer:
d
Explanation:
A monopolistic competitor wishing to maximize profit will select a quantity where marginal cost equals demand. marginal revenue equals marginal cost. marginal cost equals average cost. marginal revenue equals average cost. If a firm is producing a quantity where marginal revenue exceeds marginal costs, the firm should existing levels of production in order to
Answer:
marginal revenue equals marginal cost.expand; increase profitabilityExplanation:
A monopoly would seek to maximize its profit at a point where marginal revenue will equal marginal cost because at this point, resources are being fully and efficiently utilized. If more cost was incurred to produce then marginal cost would exceed marginal revenue and lead to losses.
The same goes for the firm producing at a quantity where marginal revenue is larger than marginal cost. They should expand their production levels so that their marginal cost equals marginal revenue as this will increase profitability.
The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:
1. Cash balance according to the company's records at August 31, $16,760.
2. Cash balance according to the bank statement at August 31, $17,460.
3. Checks outstanding, $3,400.
4. Deposit in transit, not recorded by bank, $2,730.
5. A check for $340 in payment of an account was erroneously recorded in the check register as $430.
6. Bank debit memo for service charges, $60.
Required:
a. Prepare a bank reconciliation.
b. If the balance sheet were prepared for Creative Design Co. on August 31 what amount should be reported for cash?
c. Must a bank reconciliation always balance (reconcile)?
Answer:
Part a
Creative Design Co.
Bank reconciliation as at August 31
Balance as per Bank Statement $17,460
Add Outstanding Checks $2,730
Less Unpresented Checks ($3,400)
Balance as per Cash Book $16,790
Part b
$16,790
Part c
Yes
Explanation:
Creative Design Co.
Bank reconciliation as at August 31
Balance as per Bank Statement $17,460
Add Outstanding Checks $2,730
Less Unpresented Checks ($3,400)
Balance as per Cash Book $16,790
Pension data for Coda Corporation included the following for the current calendar year: Service cost $ 112,000 PBO, January 1 810,000 Plan assets, January 1 860,000 Amortization of prior service cost 6,600 Amortization of net loss 2,600 Discount rate, 8% Expected return on plan assets, 10% Actual return on plan assets, 12% Required: Determine pension expense for the year. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Pension expense $100,000
Explanation:
The computation of the pension expense for the year is shown below:
Service cost $112,000
Interest cost $64,800 ($810,000 × 8%)
Amortization of prior service cost $6,600
Amortization of net loss $2,600
Less: Expected return on plan assets -$86,000 ($860,000 × 10%)
Pension expense $100,000
Proofread the sentence below. Look for up to three errors in grammar, punctuation, capitalization, the use of numbers, and business writing style. Rewrite the sentence, making corrections where necessary. If the sentence is correct as written, write "correct."
The human resources manager made a decision to hire 3 administrative assistants to finish the important essentials.
A Rhode Island company produces communion wafers for churches around the country and the world. The little company produces a lot of wafers, several hundred million per year. When in production, the process produces wafers at the rate of 48 per second. During this production process the wafers must spend 5 minutes in an oven and then 10 minutes passing through a cooling tunnel.
Required:
How many wafers does the cooling tube hold on average when in production?
Answer: 28,800 wafers
Explanation:
Number of wafers held on average in cooling tube during production:
= Rate of production for one wafer * Time in cooling tube
= 48 seconds * (10 minutes * 60 secs)
= 48 * 600
= 28,800 wafers
Grib Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The predetermined overhead rates for the year are 200% of direct labor cost for Department A and 50% of direct labor cost for Department B. Job 436, started and completed during the year, was charged with the following costs: Department A Department B Direct materials $50,000 $10,000 Direct labor ? $60,000Manufacturing overhead $80,000 ?The total manufacturing cost assigned to Job 436 was:_________A) $360,000B) $390,000C) $270,000D) $480,000
Answer:
$270,000
Explanation:
Calculation of total manufacturing cost assigned to Job 436
Direct Materials
Dept A $50,000
Dept B $10,000
Direct Labor
Dept A ($80,000 x 1/2) $40,000
Dept B $60,000
Manufacturing Overheads
Dept A $80,000
Dept B ($60,000 x 50%) $30,000
Total $270,000
Therefore,
The total manufacturing cost assigned to Job 436 was $270,000.
Because education has spillover benefits, the private market will: a. underallocate resources to education. b. overallocate resources to education. c. produce too much education. d. produce the socially optimum amount of education.
Answer: produce the socially optimum amount of education
Explanation:
Spillover benefits simply refers to the free benefits which are gotten by third parties due to the actions of other people.
In this case, because education has spillover benefits, the private market will produce the socially optimum amount of education. This is the equilibrium achieved based on the spillover effects from the education.
The output level that reflects all the costs and benefits associated with a transaction i.e. it is the equilibrium that would be achieved if the market outcome reflects the effect of externalities.
If D0 = $2.00, g (which is constant) = 6%, and P0 = $40, what is the stock's expected dividend yield for the coming year?
Leroy ordered a DVD player for his son's birthday. While the manufacturer guaranteed that it would ship the player within ten business days, the player was not shipped until three months after Leroy placed his order. By the time the DVD player arrived, Leroy's son's birthday had long since passed. When the player arrived, Leroy refused to sign for it. Under these circumstances:
A. Leroy holds title to the DVD player.
B. The manufacturer can only regain title if it sues Leroy.
C. Leroy and the manufacture have joint title.
Answer:
C. Leroy and the manufacturer have joint title
The Carter Corporation makes products A and B in a joint process from a single input, R. During a typical production run, 50,000 units of R yield 20,000 units of A and 30,000 units of B at the split-off point. Joint production costs total $90,000 per production run. The unit selling price for A is $4.00 and for B is $3.80 at the split-off point. However, B can be processed further at a total cost of $60,000 and then sold for $7.00 per unit. In a decision between selling B at the split-off point or processing B further, which of the following items is not relevant:a. $10,000) per production run b. $96,000 per production run c. ($42,000) per production run d. $36,000 per production run
Answer: $54,000 per production run
Explanation:
As we are dealing with the decision of whether or not to process the good further, the irrelevant cost would be the cost of producing product B from input R.
This is because this cost has already been incurred to produce product B and so is a sunk cost. Sunk costs are irrelevant to the decision to process further.
30,000 units of B were made from 90,000 units R so the cost of B is:
= 30,000 / 50,000 * 90,000
= $54,000
The options here are probably for a variant of this question.
Omar Industries manufactures two products: Regular and Super. The results of operations for 20x1 follow. Regular Super Total Units 10,000 3,700 13,700 Sales revenue $ 240,000 $ 740,000 $ 980,000 Less: Cost of goods sold 180,000 481,000 661,000 Gross Margin $ 60,000 $ 259,000 $ 319,000 Less: Selling expenses 60,000 134,000 194,000 Operating income (loss) $ 0 $ 125,000 $ 125,000 Fixed manufacturing costs included in cost of goods sold amount to $3 per unit for Regular and $20 per unit for Super. Variable selling expenses are $4 per unit for Regular and $20 per unit for Super; remaining selling amounts are fixed. Omar Industries wants to drop the Regular product line. If the line is dropped, company-wide fixed manufacturing costs would fall by 10% because there is no alternative use of the facilities. What would be the impact on operating income if Regular is discontinued
Answer:
Omar Industries
If Regular product line is dropped, the operating income will be reduced by $31,600 to $93,400.
Explanation:
a) Data and Calculations:
Regular Super Total
Units 10,000 3,700 13,700
Sales revenue $ 240,000 $ 740,000 $ 980,000
Less: Cost of goods sold 180,000 481,000 661,000
Gross Margin $ 60,000 $ 259,000 $ 319,000
Less: Selling expenses 60,000 134,000 194,000
Operating income (loss) $ 0 $ 125,000 $ 125,000
Fixed manufacturing costs $3 per unit $20 per unit
Variable selling expenses $4 per unit $20 per unit
Variable manufacturing 150,000 407,000 557,000
Variable selling expenses 40,000 74,000 114,000
Total variable costs 190,000 481,000 671,000
Fixed manufacturing costs 30,000 74,000 104,000
Fixed selling expenses 20,000 60,000 80,000
Total fixed costs 50,000 134,000 184,000
Income Statement, using contribution margin approach:
Regular Super Total
Units 10,000 3,700 13,700
Sales revenue $ 240,000 $ 740,000 $ 980,000
Variable costs 190,000 481,000 671,000
Contribution margin 50,000 259,000 309,000
Fixed costs 50,000 134,000 184,000
Operating income/(loss) $0 $125,000 $125,000
Elimination of Regular:
Super
Units 3,700
Sales revenue $ 740,000
Variable costs 481,000
Contribution margin 259,000
Fixed costs 165,600
Operating income/(loss) $93,400
Ivan Knobel holds a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. He is in the process of buying 1,000 shares of Syngine Corp at $10 a share and adding it to his portfolio. Syngine has an expected return of 13.0% and a beta of 1.50. The total value of Ivan's current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Syngine stock? a. 11.76%; 1.29 b. 10.64%; 1.17 c. 12.97%; 1.42 d. 12.35%; 1.36 e. 11.20%; 1.23
Answer:
e. 11.20%; 1.23
Explanation:
The computation of the expected return and the beta is shown below
For expected return
= ($10,000 ÷ ($10,000 + $90,000) × 13%) + (0.9 × 11%)
= ($10,000 ÷ $100,000 × 13%) + (0.9 × 11%)
= (0.1 × 13%) + (0.9 × 11%)
= 11.20%
And, the beta is
= ($10,000 ÷ 100,000 × 1.50) + ($90,000 ÷ 100,000 × 1.20 )
= 1.23
Which of the following defines core competency?
Answer:b
Explanation:
none
At Blossom Company, events and transactions during 2020 included the following. The tax rate for all items is 20%. (1) Depreciation for 2018 was found to be understated by $148000. (2) A strike by the employees of a supplier resulted in a loss of $124000. (3) The inventory at December 31, 2018 was overstated by $199000. The effect of these events and transactions on 2020 income from continuing operations net of tax would be
Answer:
$99,200
Explanation:
Calculation to determine The effect of these events and transactions on 2020 income from continuing operations net of tax would be
Using this formula
Effect income from continuing operations net of tax=Strike loss amount-(Strike loss amount*Tax rate )
Let plug in the formula
Effect income from continuing operations net of tax=$124,000 - ($124,000 × .20)
Effect income from continuing operations net of tax=$124,000-$24,800
Effect income from continuing operations net of tax=$99,200
Therefore The effect of these events and transactions on 2020 income from continuing operations net of tax would be $99,200
At UPS, a 12-step process prescribes how drivers should park their trucks, locate the package they are about to deliver, and step off the truck. UPS corporate manual carefully detail rules and routines and dictates where drivers should stop to get gas, how they should hold their keys in their hands, and how to lift and lower packages. What best describes the 12-step procedures at UPS?
Answer:
Programmed decision making
Explanation:
A programmed decision is one that is done by following already laid down rules and procedures. They are Carried out using formal patterns and the goals here are both clear and specific. These rules and routines in UPS are are a good example of how programmed decisions are done. As it can be seen on every aspect of their day to day business activities.
Suppose the price is $6 per sheet of plywood. Suppose the price falls to $4 per sheet of plywood.How much of the increase in consumer surplus was additional consumer surplus for the people who would have bought plywood at $6 anyway.
Answer:
"$2,500" is the appropriate answer.
Explanation:
The question given seems to be incomplete. Below there is a attachment of full question is provided.
The given values are:
Plywood's price,
= $6 per sheet
Price falls,
= $4
Now,
At price $6, the consumer surplus will be:
= [tex]0.5\times 1000\times (10-6)[/tex]
= [tex]0.5\times 1000\times 4[/tex]
= [tex]2,000[/tex] ($)
When price falls, the consumer surplus will be:
= [tex]0.5\times 1500\times (10-4)[/tex]
= [tex]0.5\times 1500\times 6[/tex]
= [tex]4,500[/tex] ($)
Hence,
The increase in consumer surplus will be:
= [tex]4500-2000[/tex]
= [tex]2,500[/tex] ($)
Chris Ellis newsstand, just outside the Smithsonian subway station in Washington, DC, usually sells 120 copies of the Washington Post each day. Chris believes the sale of the Post is normally distributed, with a standard deviation of 15 papers. He pays 60 cents for each paper, which sells for $1.25. The Post gives him a 30-cent credit for each unsold paper. According to this given information optimal stocking out probability is:_______
Answer:
31.58%
Explanation:
We have the following information
Daily number = 120
Standard deviation = 15
Amount paid = 60 cents = 0.60dollars
What he gets for the unsold = 0.30 dollars
Undercoverage = Cu = 1.25-0.60 = 0.65
Over coverage = Co = 0.60 - 0.30 = 0.30
In stock probability = Cu/Cu + Co
= 0.65/0.65+0.30
= 0.65/0.95
= 0.6842
The optimal stocking out probability = 1- 0.6842
= 0.3158
= 31.58%
On December 1, 2021, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2022. Keenan purchased a foreign currency put option with a strike price of $0.97 (U.S.) on December 1, 2021. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow:
Date Spot Rate Option Premium
1-Dec-18 $0.97 $0.05
31-Dec-18 $0.95 $0.04
1-Feb-19 $0.94 $0.03
Required:
Compute the fair value of the foreign currency option at February 1.
Answer:
Keenan Company (U.S.) and Velez Company (Canada)
The fair value of the foreign currency option at February 1 = $4,500.
Explanation:
a) Data and Calculations:
Value of merchandise sold to Velez Company = CAD 150,000
Collection date of the receivable = February 1, 2022
Strike price of foreign currency put option purchased by Keenan = US$0.97
Relevant exchange rates follow:
Date Spot Rate Option Premium
1-Dec-21 $0.97 $0.05
31-Dec-21 $0.95 $0.04
1-Feb-22 $0.94 $0.03
The fair value of the option is based on the the change that has occurred in the Spot Rates from December 1, 2021 to February = $0.03 ($0.97 - $0.94)
Therefore, the fair value = 150,000 * $0.03 = $4,500