O a curve (not necessarily a line) connecting the lower left corner with the upper right corner. O a line connecting the lower left corner with the upper right corner. O a right angle connecting the upper left corner with the lower right corner

linking the lower left and upper right corners with a **curve **(not necessarily a line).

A trait of perfect **competition **is not product differentiation. The traits of perfect competition are price-taking, buyer freedom of entry and exit, and a sizable number of buyers and sellers.

Perfect markets are not always efficient or **productive** in the near term. But as new businesses enter the market, long-term productive efficiency is attained. Price and cost are lowered to the minimum of typical long-term costs as a result of increased competition.

To know more about **contract curve **visit:-

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The standard cost of Product B manufactured by Pharrell Company includes 3.6 units of direct materials at $5.90 per unit. During June, 26,600 units of direct materials are purchased at a cost of $5.65 per unit, and 26,600 units of direct materials are used to produce 7,300 units of Product B. (a) Compute the total materials variance and the price and quantity variances.

**Answer:**

Results are below.

**Explanation:**

**To calculate the direct material price and quantity variance, we need to use the following formulas:**

**Direct material price variance= (standard price - actual price)*actual quantity**

Direct material price variance= (5.9 - 5.65)*26,600

Direct material price variance= $6,650 favorable

**Direct material quantity variance= (standard quantity - actual quantity)*standard price**

Direct material quantity variance= (7,300*3.6 - 26,600)*5.9

Direct material quantity variance= $1,888 unfavorable

On December 31, Year 3, Alpha Company had an ending balance of $200,000 in its accounts receivable account and an unadjusted (current) balance in its allowance for doubtful accounts account of $300. Alpha estimates uncollectible accounts expense to be 1% of receivables. Based on this information, the amount of uncollectible accounts expense shown on the Year 3 income statement is:______.

a. $2.300.

b. $2200.

c. $1700.

d. $2.000.

**Answer:**

**c. $1700.
**

**Explanation:**

The computation of the uncollectible account expense is shown below:

**= Account receivable × estimated percentage - unadjusted balance **

= $200,000 ×1% - $300

= $2,000 - $300

= $1,700

hence the uncollectible account expense is $1,700

Hence, the correct option is c.

The same would be relevant

Instructions: Please make sure that you show all your work when solving the problems. Feel free to make any assumptions whenever you feel necessary. Just make sure that you clearly state your assumptions.

Analysts expect MC, Co. to maintain a dividend payout ratio of 35% and enjoy an expected growth rate of 12% per year for the next 5 years. After the fifth year, all earnings will be paid out as dividends. The required rate of return on MC, Co equity is 8%.

a. Given that the last dividend paid was $0.5 and the current market price of the stock is $15, what growth rate does the market expect for MC, Co?

b. At what price would the analysts value the stock under their own expectations?

c. Suppose 5 years have gone by and the company has to make a decision on how to move forward. It can either pay out all earnings as dividends without considering any growth opportunities, or choose a growth strategy where the company will expand into new lines of business in global markets. If the management chooses this strategy, the payout ratio will be reduced down to 20% from 35%, and the company will be able to maintain a growth rate of 7% forever. Which strategy should the management choose to maximize shareholder value?

**Answer:**

**Explanation:**

From the given information:

The current price = [tex]\dfrac{Dividend(D_o) \times (1+ Growth \ rate) }{\text{Cost of capital -Growth rate}}[/tex]

[tex]15 = \dfrac{0.50 \times (1+ Growth rate)}{8\%-Growth rate}[/tex]

[tex]15 \times (8 -Growth \ rate) = 0.50 +(0.50 \times growth \ rate)[/tex]

[tex]1.20 - (15 \times Growth \ rate) = 0.50 + (0.50 \times growth \ rate)[/tex]

[tex]0.70 = (15 \times growth \ rate) \\ \\ Growth \ rate = \dfrac{0.70}{15.50} \\ \\ Growth \ rate = 0.04516 \\ \\ Growth \ rate \simeq 4.52\% \\ \\[/tex]

2. The value of the stock

Calculate the earnings at the end of 5 years:

[tex]Earnings (E_o) \times Dividend \ payout \ ratio = Dividend (D_o) \\ \\ Earnings (E_o) \times 35\% = \$0.50 \\ \\ Earnings (E_o) =\dfrac{\$0.50}{35\%} \\ \\ = \$1.42857[/tex]

[tex]Earnings (E_5) year \ 5 = Earnings (E_o) \times (1 + Growth \ rate)^{no \ of \ years} \\ \\ Earnings (E_5) year \ 5 = \$1.42857 \times (1 + 12\%)^5 \\ \\ Earnings (E_5) year \ 5 = \$2.51763[/tex]

Terminal value year 5 = [tex]\dfrac{Earnings (E_5) \times (1+ Growth \ rate)}{Interest \ rate - Growth \ rate}[/tex]

[tex]=\dfrac{\$2.51763\times (1+0.04516)}{8\%-0.04516}[/tex]

=$75.526

Discount all potential future cash flows as follows to determine the stock's value:

[tex]\text{Value of stock today} =\bigg( \sum \limits ^{\text{no of years}}_{year =1} \dfrac{Dividend (D_o) \times 1 +Growth rate ) ^{\text{no of years}}}{(1+ interest rate )^{no\ of\ years} }[/tex]

[tex]+ \dfrac{Terminal\ Value }{(1+interest \ rate )^{no \ of \ years}} \Bigg)[/tex]

[tex]\implies \bigg(\dfrac{\$0.50\times (1 + 12\%)^1) }{(1+ 8\%)^{1} }+ \dfrac{\$0.50\times (1+12\%)^2 }{(1+8\% )^{2}}+ \dfrac{\$0.50\times (1+12\%)^3 }{(1+8\% )^{3}} + \dfrac{\$0.50\times (1+12\%)^4 }{(1+8\% )^{4}} + \dfrac{\$0.50\times (1+12\%)^5 }{(1+8\% )^{5}} + \dfrac{\$75.526}{(1+8\% )^{5}} \bigg )[/tex]

[tex]\implies \bigg(\dfrac{\$0.5600}{1.0800}+\dfrac{\$0.62720}{1.16640}+\dfrac{\$0.70246}{1.2597}+\dfrac{\$0.78676}{1.3605}+\dfrac{\$0.88117}{1.4693}+ \dfrac{\$75.526}{1.4693} \bigg)[/tex]

**=$ 54.1945**

As a result, the analysts value the stock at $54.20, which is below their own estimates.

3. The value of the stock

Calculate the earnings at the end of 5 years:

[tex]Earnings (E_o) \times Dividend payout ratio = Dividend (D_o) \\ \\ Earnings (E_o) \times 35\% = \$0.50 \\ \\ Earnings (E_o) =\dfrac{\$0.50}{35\%}\\ \\ = \$1.42857[/tex]

[tex]Earnings (E_5) year \ 5 = Earnings (E_o) \times (1 + Growth \ rate)^{no \ of \ years} \\ \\ Earnings (E_5) year \ 5 = \$1.42857 \times (1 + 12\%)^5 \\ \\ Earnings (E_5) year \ 5 = \$2.51763 \\ \\[/tex]

Terminal value year 5 =[tex]\dfrac{Earnings (E_5) \times (1+ Growth \ rate)\times dividend \ payout \ ratio}{Interest \ rate - Growth \ rate}[/tex]

[tex]=\dfrac{\$2.51763\times (1+ 7 \%) \times 20\%}{8\%-7\%}[/tex]

**=$53.8773**

Discount all potential cash flows as follows to determine the stock's value:

[tex]\text{Value of stock today} =\bigg( \sum \limits ^{\text{no of years}}_{year =1} \dfrac{Dividend (D_o) \times 1 + Growth rate ) ^{\text{no of years}}}{(1+ interest rate )^{no \ of\ years} }+ \dfrac{Terminal \ Value }{(1+interest \ rate )^{no \ of \ years }} \bigg)[/tex]

[tex]\implies \bigg( \dfrac{\$0.50\times (1 + 12\%)^1) }{(1+ 8\%)^{1} }+ \dfrac{\$0.50\times (1+12\%)^2 }{(1+8\% )^{2}}+ \dfrac{\$0.50\times (1+12\%)^3 }{(1+8\% )^{3}} + \dfrac{\$0.50\times (1+12\%)^4 }{(1+8\% )^{4}} + \dfrac{\$0.50\times (1+12\%)^5 }{(1+8\% )^{5}} + \dfrac{\$53.8773}{(1+8\% )^{5}} \bigg)[/tex]

[tex]\implies \bigg (\dfrac{\$0.5600}{1.0800}+\dfrac{\$0.62720}{1.16640}+\dfrac{\$0.70246}{1.2597}+\dfrac{\$0.78676}{1.3605}+\dfrac{\$0.88117}{1.4693}+ \dfrac{\$53.8773}{1.4693} \bigg)[/tex]

**=$39.460**

As a result, the price is $39.460, and the other strategy would raise the value of the shareholders. Not this one, since paying a 100% dividend would result in a price of $54.20, which is higher than the current price.

Notice that the third question depicts the situation after 5 years, but the final decision will be the same since we are discounting in current terms. If compounding is used, the future value over 5 years is just the same as the first choice, which is the better option.

The presumption in the second portion is that after 5 years, the steady growth rate would be the same as measured in the first part (1).

Waterway Industries purchased land as a factory site for $1335000. Waterway paid $120000 to tear down two buildings on the land. Salvage was sold for $8300. Legal fees of $5220 were paid for title investigation and making the purchase. Architect's fees were $46000. Title insurance cost $3900, and liability insurance during construction cost $4200. Excavation cost $15280. The contractor was paid $4500000. An assessment made by the city for pavement was $9700. Interest costs during construction were $258000. The cost of the land that should be recorded by Waterway Industries is $1479620. $1465520. $1469920. $1455820.

Answer:

$1,465,520

Explanation:

Calculation of cost of the land that should be recorded by Water ways industries

Cost of land = Purchase price + demolition of building - sales of salvage + legal fees + Title insurance cost + Payment assessment

Cost of land = $1,335,000 + $120,000 - $8,300 + $5,220 + $3,900 + $9,700

Cost of land = $1,465,520

Mary Magnolia wants to open a flower shop, the Petal Pusher, in a new mall. She has her choice of three different floor sizes, 200 square feet, 500 square feet, or 1,000 square feet. The monthly rent will be $1 a square foot. Mary estimates that if she has F square feet of floor space and sells y bouquets a month, her variable costs will be cv(y) = y^ 3/ 4F per month.

Required:

a. If she has 200 square feet of floor space, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is average cost?

b. If she has 500 square feet, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is average cost? .

c. If she has 1,000 square feet of floor space, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is average cost?

**Answer:**

a-1. We have:

MC = 3y^2 / 800 <=== Marginal cost (MC) function

AC = (200 / y) + (y^2 / 800) <=== Average cost (AC) function

a-2. The amount of output is **43.09** bouquets.

a-3. Average cost at this level is $6.96 per unit.

b-1. We have:

MC = 3y^2 / 2,000 <=== Marginal cost (MC) function

AC = (500 / y) + (y^2 / 2,000) <=== Average cost (AC) function

b-2. The amount of output is **79.37** bouquets.

b-3. Average cost at this level is **$9.45** per unit.

c-1. We have:

MC = 3y^2 / 4,000 <=== Marginal cost (MC) function

AC = (1,000 / y) + (y^2 / 4,000) <=== Average cost (AC) function

c-2. The amount of output is **125.99** bouquets.

c-3. Average cost at this level is **$11.91** per unit.

**Explanation:**

Given:

cv(y) = y^3/ 4F ………………… (1)

cf = fixed cost = F

Therefore, total cost (C) per month is as follows:

C(y) = cf + cv(y) = y^ 3/ 4F

C(y) = F + y^3 / 4F ……………………… (2)

**a-1. If she has 200 square feet of floor space, write down her marginal cost function and her average cost function.**

This implies that:

F = 200

Marginal cost (MC) function is obtained by taking the first derivative of equation (1) and substituting F = 200 as follows:

MC = cv’(y)

MC = 3y^2 / (4 * 200)

MC = 3y^2 / 800 ………………. (3) <= Marginal cost (MC) function

Average cost (AC) function can be obtained by dividing equation (2) by y, substituting F = 200 and solve as follows:

AC = C’(y) = (200 / y) + (y^3 / 4F) / y

AC = (200 / y) + (y^3 / (4 * 200)) / y

AC = (200 / y) + (y^2 / 800) …………………. (4) <= Average cost (AC) function

**a-2. At what amount of output is average cost minimized?**

Since average cost is minimized when MC = AC, we therefore equate equations (3) and (4) and solve for y as follows:

3y^2 / 800 = (200 / y) + (y^2 / 800)

0.00375y^2 = (200 / y) + 0.00125y^2

0.00375y^2 - 0.00125y^2 = 200 / y

0.0025y^2 = 200 / y

(0.0025y^2)y = 200

0.0025y^3 = 200

y^3 = 200 / 0.0025

y^3 = 80,000

y = 80,000^(1/3)

y = 43.09

Therefore, the amount of output at which is average cost minimized is 43.09 bouquets.

**a-3. At this level of output, how much is average cost?**

Substituting y = 43.09 into equation (4), we have:

AC = (200 / 43.09) + (43.09^2 / 800)

AC = 6.96

Therefore, average cost at this level is $6.96 per unit.

**b-1. If she has 500 square feet, write down her marginal cost function and her average cost function.**

This implies that:

F = 500

Marginal cost (MC) function is obtained by taking the first derivative of equation (1) and substituting F = 500 as follows:

MC = cv’(y)

MC = 3y^2 / (4 * 500)

MC = 3y^2 / 2,000 ………………. (5) <= Marginal cost (MC) function

Average cost (AC) function can be obtained by dividing equation (2) by y, substituting F = 500 and solve as follows:

AC = C’(y) = (500 / y) + (y^3 / (4 * 500)) / y

AC = (500 / y) + (y^3 / (4 * 500)) / y

AC = (500 / y) + (y^2 / 2,000) …………………. (6) <= Average cost (AC) function

**b-2. At what amount of output is average cost minimized?**

Since average cost is minimized when MC = AC, we therefore equate equations (5) and (6) and solve for y as follows:

3y^2 / 2,000 = (500 / y) + (y^2 / 2,000)

0.0015y^2 = (500 / y) + 0.0005y^2

0.0015y^2 - 0.0005y^2 = 500 / y

0.001y^2 = 500y

0.001y^2 * y = 500

0.001y^3 = 500

y^3 = 500 / 0.001

y^3 = 500,000

y = 500,000^(1/3)

y = 79.37

Therefore, the amount of output at which is average cost minimized is 79.37 bouquets.

**b-3. At this level of output, how much is average cost?**

Substituting y = 79.37 into equation (6), we have:

AC = (500 / 79.37) + (79.37^2 / 2,000)

AC = 9.45

Therefore, average cost at this level is $9.45 per unit.

**c-1. If she has 1,000 square feet, write down her marginal cost function and her average cost function.**

This implies that:

F = 1,000

Marginal cost (MC) function is obtained by taking the first derivative of equation (1) and substituting F = 1,000 as follows:

MC = cv’(y)

MC = 3y^2 / (4 * 1,000)

MC = 3y^2 / 4,000 ………………. (7) <= Marginal cost (MC) function

Average cost (AC) function can be obtained by dividing equation (2) by y, substituting F = 1,000 and solve as follows:

AC = C’(y) = (1,000 / y) + (y^3 / (4 * 1,000)) / y

AC = (1,000 / y) + (y^3 / (4,000)) / y

AC = (1,000 / y) + (y^2 / 4,000) …………………. (8) <= Average cost (AC) function

**c-2. At what amount of output is average cost minimized?**

Since average cost is minimized when MC = AC, we therefore equate equations (7) and (8) and solve for y as follows:

3y^2 / 4,000 = (1,000 / y) + (y^2 / 4,000)

0.00075y^2 = (1,000 / y) + 0.00025y^2

0.00075y^2 - 0.00025y^2 = 1,000 / y

0.0005y^2 = 1,000 / y

0.0005y^2 * y = 1,000

y^3 = 1,000 / 0.0005

y^3 = 2,000,000

y = 2,000,000^(1/3)

y = 125.99

Therefore, the amount of output at which is average cost minimized is 125.99 bouquets.

**c-3. At this level of output, how much is average cost?**

Substituting y = 125.99 into equation (8), we have:

AC = (1,000 / 125.99) + (125.99^2 / 4,000)

AC = 11.91

Therefore, average cost at this level is $11.91 per unit.

is Company uses an ABC system. Which of the following statements is/are correct with respect to ABC? I. All cost allocation bases used in ABC systems are cost drivers. II. ABC systems are useful in manufacturing, but not in merchandising or service industries. III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a cause-and-effect relationship with the activities performed.

**Answer:**

I. All cost allocation bases used in ABC systems are cost drivers.

III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a cause-and-effect relationship with the activities performed.

**Explanation:**

I. is TRUE since the basis of ABC costing is determining, quantifying, and using cost drivers to allocate overhead costs.

III, is TRUE since the advantage of ABC costing is allocating costs based on cause and effect relationships.

II. ABC systems are useful in manufacturing, but not in merchandising or service industries. ⇒ FALSE

ABC costing can also be used for merchandising and service industries, although, it is mostly used in manufacturing businesses.Gibson Company makes fine jewelry that it sells to department stores throughout the United States. Gibson is trying to decide which of the two bracelets to manufacture. Cost data pertaining to the two choices follow. Bracelet A Bracelet B Cost of materials per unit $ 29 $ 45 Cost of labor per unit 33 33 Advertising cost per year 8,100 6,000 Annual depreciation on existing equipment 6,000 5,600 Required Identify the fixed costs and determine the amount of fixed cost for each product. Identify the variable costs and determine the amount of variable cost per unit for each product. Identify the avoidable costs and determine the amount of avoidable cost for each product.

**Answer:**

Gibson Company

Fixed costs for each product:

Bracelet A Bracelet B

Advertising cost per year 8,100 6,000

Annual depreciation on

existing equipment 6,000 5,600

Total fixed costs $14,100 $11,600

Variable costs:

Bracelet A Bracelet B

Cost of materials per unit $ 29 $ 45

Cost of labor per unit 33 33

Variable cost per unit $ 62 $ 78

Avoidable costs:

Bracelet A Bracelet B

Variable cost per unit $ 62 $ 78

**Explanation:**

a) Data and Calculations:

Bracelet A Bracelet B

Cost of materials per unit $ 29 $ 45

Cost of labor per unit 33 33

Advertising cost per year 8,100 6,000

Annual depreciation on

existing equipment 6,000 5,600

NB:

Advertising cost can be avoided if production did not take place, just as all variable costs can be avoided without production.

Job 412 was one of the many jobs started and completed during the year. The job required $9,500 in direct materials and 35 hours of direct labor time at a total direct labor cost of $10,400. If the job contained four units and the company billed at 70% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer

**Answer:**

The appropriate answer is "**$8,457,50**".

**Explanation:**

The given values are:

**Direct material cost,**

= $9,500

**Direct labor cost,**

= $10,400

**Units completed in job 412,**

= 4

Now,

**The total cost for completion of job 412 will be:**

= [tex]Direct \ materials \ cost + Direct \ labor \ costs[/tex]

On substituting the values, we get

= [tex]9,500 + 10,400[/tex]

= [tex]19,900[/tex]** ($)**

**Unit produced cost will be:**

= [tex]\frac{19,900}{4}[/tex]

= [tex]4,975[/tex] ($)

**70% of unit produced cost will be the profit margin, then**

= [tex]70 \ percent\times 4,975[/tex]

= [tex]3,482.50[/tex] ($)

hence,

**The price charged to the customer will be:**

= [tex]Unit \ product \ cost + Profit \ margin[/tex]

On substituting the values, we get

= [tex]4,975 + 3,482.50[/tex]

= [tex]8,457,50[/tex]** ($)**

Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Variable overhead spending variance $1,300 Unfavorable Variable overhead efficiency variance $182 Unfavorable Budgeted machine hours allowed for actual output 608 machine hours Actual cost per machine hour $28 Budgeted cost per machine hour $26Calculate the variable overhead flexible-budget variance. $1,118 favorable $1,118 unfavorable $1,482 unfavorable $1,482 favorable

Answer:

$1,482 unfavorable

Explanation:

Calculation to determine the variable overhead flexible-budget variance

Using this formula

Variable overhead flexible-budget variance=Variable overhead spending variance Unfavorable + Variable overhead efficiency variance Unfavorable

Let plug in the formula

Variable overhead flexible-budget variance=$1,300 (U) + $182 (U)

Variable overhead flexible-budget variance= $1,482 (U)

Therefore the variable overhead flexible-budget variance is $1,482 unfavorable

On January 1, 2021, Vacation Destinations issues $35 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

(1) (2) (3) (4) (5)

Cash Paid Interest Increase in Carrying

Date for Interest Expense Carrying Value Value

1/1/2021 $ 32,512,829

6/30/2021 $ 1,050,000 $ 1,137,949 $ 87,949 32,600,778

12/31/2021 1,050,000 1,141,027 91,027 32,691,805

1. Were the bonds issued at face amount, a discount, or a premium?

2. What is the original issue price of the bonds? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)

Issue Price: ___

3. What is the face amount of the bonds? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)

Face Amount: ___

4. What is the stated annual interest rate?

5. What is the market annual interest rate? (Round your answer to the nearest whole percent.)

6. What is the total cash paid for interest assuming the bonds mature in 10 years? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)

**Answer:**

Vacation Destinations

1. The bonds were issued at a **discount.**

2. The original issue price of the bonds is: **$32,512,829** ($9,28.94 per $1,000).

3. Face Amount is: **$35,000,000**

4. The stated annual interest rate is **6%.**

5. The market annual interest rate is **7%.**

6. The Total cash paid for interest, assuming the bonds mature in 10 years is **$21,000,000.**

**Explanation:**

a) Data and Calculations:

Face value of bonds = $35,000,000

Interest rate = 6% ($1,050,000/$35,000,000 * 100) x 2

Discounted value $32,512,829

Discounts = $2,487,171

Amortization of discounts during the first interest payment = $87,949

Amortization of discounts during the December 31, 2021 interest payment = $91,027

Original issue price = $9,28.94 ($32,512,829/35,000)

Market annual interest rate = ($1,137,949/$32,512,829 * 100) * 2 = 7%

Total cash paid for interest = $1,050,000 * 10 * 2 = $21,000,000

Portions of the bond amortization schedule appear below:

Date Cash Paid Interest Expense Increase Carrying amount

1/1/2021 $ 32,512,829

6/30/2021 $ 1,050,000 $ 1,137,949 $ 87,949 32,600,778

12/31/2021 1,050,000 1,141,027 91,027 32,691,805

What is price discrimination and how do movie theaters and restaurants practice price discrimination?

Price discrimination is the action of selling the same product at different prices to different buyers, in order to maximize sales and profits. Movie theaters practice it by giving discounts on certain night. Example: senior citizens discount. Restaurants practice price discrimination by menu pricing.

What kind of report is a summary of a company's total sales over a five-year period?

a product list

a market research report

a sales volume report

a customer list

I think sales volume report

Possible misstatements that may occur during the cash receipts process result from cash receipts being received, but not recorded (which could facilitate embezzlement). A control technique that is used to mitigate the risk of such misstatements is to segregate the duties of the accounts receivable department, general ledger accounting records, and cash receipts. The employee who completed each duty is required to sign his/her initials, and evidence of this has been provided for you in the Accounts_Receivable file. In each transaction, proper segregation of duties is accomplished when no two duties have been completed by the same person. Use IDEA and the information from Roger Company Accounts_Receivable file to determine in which transactions segregation of duties was not properly implemented.

**Answer:**

There should be strong internal controls implemented and segregation of duties in the finance department.

**Explanation:**

There is lack of internal controls present in the company which may lead to fraud or errors. The employees assigned to record the transaction are not recording all the cash receipts and are missing some of the cash receipts which can cause errors during reconciliation. The sub divisions of finance department must be segregated and there should be a supervisor who should be responsible to review all the work done by these departments.

Suppose two types of firms wish to borrow in the bond market. Firms of type A are in good financial health and are relatively low risk. The appropriate premium over the risk-free rate for lending to these firms is 2%. Firms of type B are in poor financial health and are relatively high risk. The appropriate premium over the risk-free rate for lending to these firms is 6%. As an investor, you have no other information about these firms except that type A and type B firms exist in equal numbers.

A. At what interest rate would you be willing to lend if the risk-free rate were 6%?

B. Would this market function well? What type of asymmetric information problem does this example illustrate?

**Answer:**

A. I would be willing to lend at average rate of 10%

B-1. No, this market will not function well.

B-2. This example illustrates an adverse selection problem.

**Explanation:**

**A. At what interest rate would you be willing to lend if the risk-free rate were 6%?**

Appropriate interest rate for type A firm bond = Premium over the risk-free rate of Type A firm + Risk-free rate = 2% + 6% = 8%

Appropriate interest rate for type B firm bond = Premium over the risk-free rate of Type B firm + Risk-free rate = 6% + 6% = 12%

Average rate = (Appropriate interest rate for type A firm bond + Appropriate interest rate for type B firm bond) / 2 = (8% + 12%) / 2 = 10%

Since the probability of any of the two firms is equal and I do not have the knowledge of which type of firm they are dealing with, **I would be willing to lend at average rate of 10%**.

**B-1. Would this market function well? **

No, this market will not function well.

The reason is that the average rate of 10% is higher than the Appropriate interest rate for type A firm bond of 8%. This would make the type A firm to withdraw from the market and only type B firm will be left in the market.

**B-2. What type of asymmetric information problem does this example illustrate?**

This example illustrates an adverse selection problem. This is because after type A firm which is a desirable leaves the market, only type B firm which is the less desirable firms will be willing to borrow. This makes the quality of the market to detoriorate.

Neville is a lawyer at a large law firm where he earns a salary of $170,000 per year. He is thinking of leaving the firm to set up his own law office. To do this, he would need to invest $140,000 of his savings, which currently earns 5% in interest each year. He estimates that if he starts a law office, his annual revenue will be $510,000, and his explicit financial costs will be $300,000. How much would Neville earn in economic profits or losses if he starts his own law office

**Answer:**

$33,000

**Explanation:**

Economic profit = accounting profit - implicit cost

Accounting profit= total revenue - explicit cost

Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials

Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

Accounting profit = $510,000 - $300,000 = $210,000

Implicit costs = amount he would forgo as salary in the large law firm and interest he would lose on his investment

Interest he would lose on his investment = 0.05 x 140,000 = $7000

Implicit cost = $170,000 + $7000 = $177,000

Economic profit = $210,000 - $177,000 = $33,000

A firm is operating in the United States with only two other competitors in the industry. a. It is likely this industry would be characterized as: multiple choice 1 monopolistically competitive. perfectly competitive. oligopoly. pure monopoly. b. Firms in this industry will likely earn: multiple choice 2 a normal profit. an economic profit. an economic loss. c. If foreign firms begin supplying the product, increasing the number of competitors, it is likely that: multiple choice 3 economic profits will fall.

Answer:

a. oligopoly.

b. an economic profit.

c. economic profits will fall.

Explanation:

An oligopoly can be defined as a market structure comprising of a small number of firms (sellers) offering identical or similar products, wherein none can limit the significant influence of others.

Hence, it is a market structure that is distinguished by several characteristics, one of which is either similar or identical products and dominance by few firms.

The characteristics of an oligopolistic market structure are;

I. Mutual interdependence between the firms.

II. Market control by many small firms.

III. Difficult entry to new firms.

Hence, a firm operating in the United States of America with only two other competitors in the industry is likely to be an industry that would be characterized as oligopoly.

Additionally, business firms operating in this industry (oligopolistic market) will likely earn an economic profit. Also, if foreign business firms begin supplying the product, increasing the number of competitors, it is likely that economic profits will fall because the industry is now being competitive and controlled by other business firms.

In **economics**, market structure refers to how **different** industries are distinguished depending on the **degree **and form of product and services rivalry. It's based on the** features** that influence the outcomes and behaviors of businesses in a given **market**.

a) An** ****oligopoly** is a business that operates in the United States with only two other competitors in the same industry.

**Reason:**

An oligopoly is a market structure with a** small** number of enterprises and **high **entry barriers. A** competitive** environment in which there are just a few vendors reveals to be Oligopoly because there are only **two** competitors available in the business.

b) **Oligopolistic **businesses will almost certainly make an **economic** profit.

**Reason:**

In an oligopoly, all firms would have to work **together** to raise prices and make a **bigger** profit. The **bulk **of oligopolies form in industries where goods are essentially **homogeneous** and give essentially the same **advantage** to customers.

c) Economic **earnings** are expected to diminish or **fall** if international enterprises begin to supply the product,** increasing** the number of competitors.

**Reason:**

As the **supply **curve changes to the right, the market **price** begins to fall, and as a result, existing and new enterprises' economic earnings fall. Due to the entry of **new** enterprises, which pulls down the market price, economic profit is **zero **in the long term.

For more information regarding the **oligopoly** market, refer to the** **link: https://brainly.com/question/14285126?referrer=searchResults

Ramirez's adjusted basis in a passive activity is $45,000 at the beginning of the year. His loss from the activity for the current year is $14,200. Ramirez has wages of $65,000 and dividend income of $300. At year-end, Ramirez has the following:

1. Adjusted basis in the passive activity: $______

2. At-risk amount in the passive activity: $________

3. A suspended passive loss: $_______

Answer:

1. $30,800

2. $30,800

3. $14,200

Explanation:

1. Calculation to determine the Adjusted basis in the passive activity

Using this formula

Adjusted basis in the passive activity=Beginning adjusted basis in a passive activity-Loss activity for the current year

Adjusted basis in the passive activity=$45,000-$14,200

Adjusted basis in the passive activity=$30,800

Therefore Adjusted basis in the passive activity is $30,800

2. Calculation to determine At-risk amount in the passive activity

Using this formula

At-risk amount=Beginning adjusted basis in a passive activity-Loss activity for the current year

Let plug in the formula

At-risk amount=$45,000-$14,200

At-risk amount=$30,800

Therefore At-risk amount in the passive activity is $30,800

3. Based on the information given we were told that His loss amount from the activity for the current year was the amount of $14,200 which means that the suspended PASSIVE LOSS will be $14,200.

Two law firms in a community handle all the cases dealing with consumer suits against companies in the area. The Abercrombie firm takes 40% of all suits, and the Olson firm handles the other 60%. The Abercrombie firm wins 70% of its cases, and the Olson firm wins 60% of its cases.

a. Develop a probability tree showing all marginal, conditional, and joint probabilities.

b. Develop a joint probability table.

c. Using Bayes’ rule, determine the probability that the Olson firm handled a particular case, given that the case was won.

**Answer:**

Part A: Diagram

Psrt B:

*Joint Probability Table*

**Firms Success Failure **

**Abercrombie ** 0.28 0.12

**Oslon ** 0.36 0.24

Part C : P (O/S) =0.5625

**Explanation:**

The probability tree can be drawn as follows

**Part A:**

║⇒⇒P (A) = 0.4⇒⇒⇒⇒║⇒⇒⇒⇒P (S/A)= 0.7⇒⇒⇒⇒ P (A∩S)= 0.28

║ ║

║ ║⇒⇒⇒⇒ P (F/A)= 0.3⇒⇒⇒ P (A∩F)= 0.12

║

║⇒⇒⇒P (O)= 0.6⇒⇒⇒⇒║⇒⇒⇒⇒P (S/O)= 0.6⇒⇒ P (O∩S)= 0.36

║

║⇒⇒⇒P (F/O)= 0.4⇒⇒ P (O∩F)= 0.24

The marginal Probability of the two firms

P (A)= 0.4

P (O)= 0.6

Where P (A) is the probability of Abercrombie firm

P (O) is the probability of Olson firm

The conditional probabilities are given by

P (S/A)= 0.7

P (F/A)= 0.3

Where P (S/A) is the conditional probability of Success of Abercrombie firm

P (F/A) is the conditional probability of failure of Abercrombie firm

Similarly

P (S/O)= 0.6

P (F/O)= 0.4

P (S/O) is the conditional probability of Success of Oslon firm

P (F/O) is the conditional probability of failure of Oslon firm

The probability table is given by

Firms Marginal Conditional Joint

Abercrombie 0.4 0.7 0.28

0.3 0.12

Oslon 0.6 0.6 0.36

0.4 0.24

*Joint Probability Table*

**Firms Success Failure **

**Abercrombie ** 0.28 0.12

**Oslon ** 0.36 0.24

Part C :

*Using Bayes Rule: *

P (O/S) = P ( O) P( S/O)/ P ( O) P( S/O)+ P (A) P(S/ A)

= 0.6*0.6/ 0.6*0.6+0.4*0.7

=0.36/ 0.36+0.28

=0.5625

ways in which they can create an environment that promotes

creative thinking in the workplace

The correct answer to this open question is the following.

Although you did not provide further context or reference, we can comment on the following.

The ways in which they can create an environment that promotes

creative thinking in the workplace are the following.

-Promoting open communication at any time. People in the company have to know that the leader's doors are always open. This is crucial.

-Respect diversity and cultural differences. This way people of diverse backgrounds are going to feel trusted and would express themselves freely and creatively.

-Invite people to collaborate. Do it on a daily basis, encouraging them to express their ideas, although they considered strange or crazy. You never know when a crazy idea will be a great idea in the corporate world.

-Foster a culture of change and innovation. Welcome any suggestion and never criticize it.

-Offer continual education programs and training so employees have always something to think of and learn.

At the beginning of 2020, Beerbo acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value (the remaining portion was ascribed to the mine). Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. Beerbo incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use (when all of the minerals have been removed) is $40,000. During 2020, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. What is the amount extracted in 2020

**Answer:**

$225,000

**Explanation:**

Depletion rate = [Mine cost - Land value + Obligation to prepare the land for an alternative + Development cost] / Total number of ore extracted

Depletion rate = [$970,000 - $100,000 + $40,000 + $170,000] / $12,000,000

Depletion rate = $1,080,000/$12,000,000

Depletion rate = $0.09

Amount extracted in 2020 = Unit of ore extracted in 2020 / Depletion rate

Amount extracted in 2020 = 2,500,000 units * $0.09

Amount extracted in 2020 = $225,000

JoeFit, Inc. is using the basic FOQ model to manage its inventory for K2 microprocessors. The setup cost per order is $200 and the inventory carrying cost is $0.05 per chip per year. Suppose the company is placing the optimal order quantity in each order and the resulting total annual setup and carrying costs are $32,000. What is the annual demand of the K2 microprocessors

**Answer:**

**51.2 million**

**Explanation:**

The computation of the annual demand is shown below:

As we know that the total annual setup cost and the carrying cost would be equivalent to EOQ

Since the total annual setup cost & carrying cost is $32,000

So, for each it would be $16,000

Now

Total number of orders is

= $16000 ÷ $200

= 80 orders

And, Total inventory carrying cost = 0.05 × (EOQ ÷ 2)

$16000 = 0.05 × EOQ ÷ 2

$32000 ÷ 0.05 = EOQ

EOQ = 640000 units

Now

Total demand = 640000 × 80

= 51200000

= **51.2 million**

The **annual demand for **the K2 microprocessors is **51.2 million.**

The total **annual setup** and **carrying costs** are $32,000, therefore, the value of each will be:

= $32000/2

**= $16000.**

The total number of **orders** will be:

= 16000/200 = **80 orders**

The **economic order quantity** will be:

16000 = 0.05 × (EOQ/2)

EOQ = 32000/0.05

**EOQ = 640000**

The **total demand **will be:

= 640000 × 80 = **51.2 million**

In conclusion, the **annual demand** of the K2 microprocessors is** 51.2 million.**

Read related link on:

https://brainly.com/question/19542745

In January of the current year, Dora made a gift of stock to her granddaughter. At the time of the gift, the stock was worth $15,000. Several months later in the same year after the gift, a $500 dividend was declared on the stock and paid to Dora's granddaughter. What amount must Dora's granddaughter include in her gross income for the current year

Answer:

$500

Explanation:

Based on the information given we were told that the DIVIDEND of the amount of $500 which was declared on the stock was paid to Dora's granddaughter Several months later, which means that the amount that Dora's granddaughter must include in her GROSS INCOME for the current year will be the dividend amount of $500 that was paid to Dora's granddaughter.

Therefore the amount that Dora's granddaughter must include in her gross income for the current year is $500

Which of the following is a disadvantage of incentive compensation plans? Group of answer choices Employees are taxed heavily on their income from incentive plans. Employers are taxed heavily on their expenditure incurred through incentive plans. Employees know that rise in productivity will have no impact on their compensation. Employers are unable to increase employee productivity while following incentive plans. Employees don't develop loyalty to their employers when incentive plans are practiced.

Answer:

Employees don't develop loyalty to their employers when incentive plans are practiced.

Explanation:

Incentive compensation plan can be regarded as strategic that is been utilized by using incentives in driving a better business outcomes together with alignment of sales rep behavior to go with the goals of the organization. It is a compensation plan which can appear in different forms such as commissions as well as bonuses and prizes. It should be noted that one of the disadvantage of incentive compensation plans is that Employees don't develop loyalty to their employers when incentive plans are practiced.

Break-even sales and sales to realize operating incomeFor the current year ended March 31, Cosgrove Company expects fixed costs of $465,000, a unit variable cost of $62, and a unit selling price of $92.a. Compute the anticipated break-even sales (units).fill in the blank 1 unitsb. Compute the sales (units) required to realize operating income of $108,000.fill in the blank 2 units

**Answer:**

**Break even point in units=15,500 units**

**Units to achieve target profit=19,100 units**

**Explanation:**

*Break-even point is the level of activity at which a firm must operate such that its total revenue will equal its total costs. At this point, the company makes no profit or loss because the total contribution exactly equals the total fixed costs*

Break-even point (in units) is calculated using this formula:

**Break even point in units = Total general fixed cost/ (selling price - Variable cost)
**

Break even point in units= $465,000/(92-62)=15,500 units**
**

**
**

**Units to achieve target profit = (Total general fixed cost for the period + target profit)/ contribution per unit**

Units to achieve target profit of 108,000 = ($465,000+ 108,000)/ (92-62)=19,100 units

**Break even point in units=15,500 units**

**Units to achieve target profit=19,100 units**

2. The poor quality of selection will mean extra cost on ... and supervision

a Training

b. Recruitment

Work quality

d. None of the above

**Answer:**

A training

**Explanation:**

This is the correct answer you want

**p****lease**** follow**** me****.**** ****and**** ****m****ake**** ****me**** brainlist****.**

It will means extra cost of **training **and **supervision**.

**Hiring process **is a process that requires careful and thorough observation from the hiring company.

Wrong

In conclusion, this **poor quality **of selection will lead to having a pool of both unqualified and qualified applicant which will result to extra cost on Training and Supervision.

Learn more about **Hiring processes** here

*brainly.com/question/3725599*

Brooks Corporation has a Food Services department that provides food for employees in all other departments of the company. For September, variable food costs were budgeted at $4 per meal, based on 14,000 meals served during the month. At the end of the month, it was determined that 15,000 meals had been served at a total cost of $70,000. What is the amount of the variable food costs that should be charged to the other departments of the company at the end of the month

**Answer:**

**the amount that should be charged for the other department is $60,000**

**Explanation:**

The computation of the amount that should be charged for the other department is shown below:

**= Variable cost per meal × number of meals**

= $4 × 15,000 meals

= $60,000

hence, **the amount that should be charged for the other department is $60,000**

So the same would be relevant

You run a construction firm. You have just won a contract to build a government office building Building it will require an investment of $10 million today and $5 million in one year. The government will pay you $20 million in one year upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today?

**Answer:**

$3.64 million

The Npv can be turned into cash by borrowing $18.18 million today and paying back in one year time with the $20 million that would be paid

**Explanation:**

Net present value is the present value of after-tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator

Cash flow in year 0 = $-10 million

Cash flow in year 1 = $20 million - $5 million = 15 million

I = 10%

NPV = 3.63 million

The Npv can be turned into cash by borrowing $18.18 million today as the present value of 20 million is 18.18 million

20 million / 1.10 = 18.18 million

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

Rachel's Designs has 2,000 shares of 7%, $50 par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The company plans to pay total dividends of $23,000 in 2021. How much of the $23,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders

**Answer:**

**the dividend paid to preferred stockholders and paid to common stockholders is $21,000 and $2,000 respectively**

**Explanation:**

The computation of the dividend paid to preferred stockholders and paid to common stockholders is shown below:

For preferred stockholders

= (2,000 × 7% × $50) × 3 years (2019,2020 and 2021)

= $7,000 × 3 years

= $21,000

And, for common stockholders

= $23,000 - $21,000

= $2,000

Hence, **the dividend paid to preferred stockholders and paid to common stockholders is $21,000 and $2,000 respectively**

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Plus Max Units produced 200 16,000 Batch size (units) 10 400 Number of setups 20 40 Direct labor hours per unit 5 5 Total direct labor hours 1,000 80,000 Cost per setup$1,080 Total setup cost$64,800 Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:Multiple Choice$21.60; $.54.$60.00; $60.00.$108.00; $2.70.$54.00; $27.00.$200.00; $16,000.00

**Answer:**

**Apportioned set-up cost**

**Plus =$21,600
**

**Max=$43,200**

**Explanation:**

Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.

*Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers. *

*The cost driver in this scenario is the number of set-ups*

Activity rate per driver is calculated as:

**Activity overhead for the period / Total cost drivers for the period**

So, we can apply this formula to the scenario above:

Set-up overhead= $64,800

Total set-ups for the period = 20 + 40 = 60

Overhead cost per set-up = $64,800/60=1,080

Set-up cost allocation:

Plus - 20 × 1,080=$21,600

Max- 40 × 1,080=$43,200

**Apportioned set-up cost**

**Plus =$21,600
**

**Max-=$43,200**

Epsilon currently pays $76 per unit to buy a part for a product it sells. Epsilon has excess capacity, and estimates that making the part would incur variable costs of $8 for direct materials and $40 for direct labor. Epsilon's normal predetermined overhead rate is 150% of direct labor cost, but management computes an incremental overhead rate of $16.00 per unit to make this part. Epsilon should choose to:___.

A. Buy since the relevant cost to make it is $82 per unit.

B. Make since the relevant cost to make it is $61.20 per unit.

C. Buy since the relevant cost to make it is more than $74.00 per unit.

**Answer:**

If the company males the unit,** it will save** $12 per unit.

**Explanation:**

Giving the following information:

Buying price= $76

Make in-house:

Direct material= $8

Direct labor= $40

Incremental Overhead= $16

**The total cost of production is:**

Total unitary cost of production= 8 + 40 + 16

Total unitary cost of production= $64

If the company males the unit, it will save $12 per unit.

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