Answer:
B. A gain on the sale of land is included in net income from operations in a multi-step income statement.
Explanation:
A multi step income statement is a detailed for of an income statement that shows the revenues, expenses, and overall position of a business. Wether it is a profit or loss.
Operational revenues and expenses are shown separately from non operational expense.
The main aim of multi step income statement bus to calculate net income.
In this scenario gain on the sale of land is supposed to be included in non operational revenue. It is not an activity that generates income from everyday operations of the business.
Torino Company has 2,700 shares of $10 par value, 6.0% cumulative and nonparticipating preferred stock and 27,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:
Answer: $2240
Explanation:
Preferred shareholders have priority over the income of a company as they're paid dividends before the common shareholders. The common stockholders are the ones that are paid last after the preferred shareholders and creditors have all been paid.
The dividend on the preferred shares will be calculated as:
= 2700 × 10 × 6%
= 2700 × 10 × 0.06
= 1620
Tge dividend in arrears fir the first year will be calculated as:
= 1620 - 1000
= 620
Dividend for the second year will be:
= 1620
Dividend that'll be paid to preferred shareholders will be:
= $620 + $1620
= $2240
You manage an equity fund with an expected risk premium of 10% and a standard deviation of 14%. The rate on Treasury bills is 6%. Your client chooses to invest $60,000 of her portfolio in your equity fund and $40,000 in a T-bill money market fund. What is the reward-to-volatility (Sharpe) ratio for the equity fund
Answer: 0.71
Explanation:
The following can be deduced from the question:
Expected risk premium = 10%
Standard deviation = 14%.
Treasury bills rate = 6%.
The expected return of equity will be:
= 10% + 6%
= 16%
The reward to voltality ratio is calculated as:
(expected return - risk free rate )/standard deviation
= (16% -6%)/14%
= 10%/14%
=0.1/0.14
= 0.71
Define the internal environments in international business for finance, production and marketing
Answer:
International business can be defined as the trade of goods and services ( e.g technology, capital, consulting, transportation, events, hospitality) globally or across national borders.
Internal environment is composed of elements within the business that can easily be controlled by the company, this include employees, financial resources, productions, management, and marketing.
Explanation:
Internal environment determines the extent to which the business can excel in international market. Internal environment like financial resources will determine the quantity and quality of products the company markets or exports to other nations.
Internal environment are factors that can be easily controlled or altered in order to adjust to the external environment. The external environment cannot be easily controlled but the internal environment can be adjusted constantly to ensure the company is archiving it targets in the international business.
In 2021, Holyoak Inc. offers a coupon for $15 off qualifying purchases of its new line of products. Holyoak sold 10,600 of these products during the year. By year-end of 2021, 7,700 coupons had been redeemed and the $15 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 80% of customers use the coupon. Holyoak recognizes coupon expense in the period coupons are issued. What is the expense that Holyoak should report for its promotional coupons in its 2021 income statement
Answer: $127200
Explanation:
Promotional codes are simply the alphanumeric strings which are offered by online stores in order to encourage purchases. It is a marketing strategy
Based in the information provided in the question, the expense that Holyoak should report for its promotional coupons in its 2021 income statement will.be calculated as:
= $10,600 × 80% × $15
= $10,600 × 0.8 × $15
= $127200
Oriole’s Electronic Repair Shop started the year with total assets of $300000 and total liabilities of $208000. During the year, the business recorded $523000 in electronic repair revenues, $319000 in expenses, and Oriole withdrew $49300. Oriole's Owner’s Capital balance changed by what amount from the beginning of the year to the end of the year?
Answer:
$154,700
Explanation:
The computation of the change in amount is shown below
But before that first find out the ending capital balance which is
= (Total assets - total liabilities) + (revenues - expenses) - drawings
= ($300,000 - $208,000) + ($523,000 - $319,000) - $49,300
= $92,000 + $204,000 - $49,300
= $92,000 + $154,700
= $246,700
Now the change in capital balance is
= Closing balance - opening balance
= $246,700 - $92,000
= $154,700
What is the most critical element in successful strategic planning?
Answer:
top management's support and participation
Explanation:
the most critical or important element for successful strategic planning is the support and participation of top management.
Strategic planning has to do with the management situation that involves the creation and maintenance of a fit that involves a firms goals and resources and also rising market opportunities. it's goal is profitability and growth in the long term.
Vulnerability assessment is a curvey of a system to identify:_____.
Answer:
Threats and the risks they pose.
Explanation:
Vulnerability assessment is the identification, evaluation, classification, quantification and also the prioritization of the risks or vulnerabilities in a system. One main importance of carrying out this assessment is to find out the potential risks in a system before attackers find them. Through this assessment future risks can also be averted.
Answer:
Specific risks
Explanation:
Vulnerability assessment is defined as a process used to identifying, quantifying, and ranking vulnerabilities or weaknesses in a given system.
It has been applied in various fields like engineering, psychology, and economics.
There are different variables that gives rise to system vulnerability, and vulnerability asses helps identify specific risks.
The formula for Vulnerability is
Vulnerability = Risk + Response
Vulnerability assessment helps reduce effects of risks and also to avoid future risks
Item 4Item 4 You’ve collected the following information from your favorite financial website. 52-Week Price Stock (Div) Div Yld % PE Ratio Close Price Net Chg Hi Lo 64.60 47.80 Abbott 1.12 1.9 235.6 62.91 −.05 145.94 70.28 Ralph Lauren 2.50 1.8 70.9 139.71 .62 171.13 139.13 IBM 6.30 4.3 23.8 145.39 .19 91.80 71.96 Duke Energy 3.56 4.9 17.6 74.30 .84 113.19 96.20 Disney 1.68 1.7 15.5 ?.10 According to your research, the growth rate in dividends for IBM for the next 5 years is expected to be 5 percent. Suppose IBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 3.5 percent indefinitely. Assume investors require a return of 10 percent on IBM stock.
Answer:
P₀ = $106.96
Explanation:
the current dividend paid by IBM was $6.30 per stock
Div₀ = $6.30
Div₁ = $6.615
Div₂ = $6.94575
Div₃ = $7.2930375
Div₄ = $7.657689375
Div₅ = $8.040573844
Div₆ = $8.321993928
we must first determine the terminal value at year 5 = Div₆ / (rrr - g) = $8.321993928 / (10% - 3.5%) = $128.0306758
now we must discount the future values using the 10% discount rate:
P₀ = $6.615/1.1 + $6.94575/1.1² + $7.2930375/1.1³ + $7.657689375/1.1⁴ + $8.040573844/1.1⁵ + $128.0306758/1.1⁵ = $6.013 + $5.740 + $5.479 + $5.230 + $4.993 + $79.50 = $106.96
ake’s Cabins is a small motel chain with locations near the national parks of Utah, Wyoming, and Montana. The chain has a total of 500 guest rooms. The following operating data are available for June: Number of Guests Nights per Visit Guest Nights 4,400 1 4,400 1,800 2 3,600 750 3 2,250 600 4 2,400 20 5 100 a. Determine the guest nights for June.
Answer: 12750
Explanation:
From the question, we are informed that Jake’s Cabins is a small motel chain with locations near the national parks of Utah, Wyoming, and Montana and we are given the data for the guests nights in June as:
4400, 3600, 2250, 2400 and 100.
To determine the guests night for June, we add the total guests nights together. This will be:
= 4400 + 3600 + 2250 + 2400 + 100
= 12750
The guest nights for June is 12750
Which of the following statements is true of a target market? Question 8 options: Uncontrollable elements continually evolve and create changes in a target market. Managers can control the external environment that molds and reshapes a target market. Environmental scanning is performed by firms in order to prevent changes in a target market. Unlike uncontrollable variables, controllable variables do not affect a target market.
Answer:
The correct answer is the first option: Uncontrollable elements continually evolve and create changes in a target market.
Explanation:
To begin with, in the marketing field the term of target market refers to the audience that the company is looking for to capture in order to be the primary group of client to whom the product will be launched with the purpose of getting the most sales as possible and with that the major amount of profits from those customers. Moreover, that audience will be affected by controllable and uncontrollable variables that the company must be aware of. The second ones are the competition, the technology, the social environment (like culture), the economy and the regulations from the government. And those variables are the ones that affect the most to the target audience because are impossible to control from the company's point of view.
On January 12, 2021, Jefferson Corporation purchased bonds of Rose Corporation for $52 million at par and classified the securities as available-for-sale. On December 31, 2021, these bonds were valued at $46 million. Nine months later, on October 3, 2022, Jefferson Corporation sold these bonds for $62 million. As part of the multistep approach to record the 2022 transaction, Jefferson Corporation should finally take the third step of recording a sales transaction with a gain of:
Answer:
Transaction gain = $16 million
Explanation:
Given:
Purchase amount = $52 million
December 31, 2021, bonds value = $46 million
October 3, 2022, bonds sold = $62 billion
Computation:
Using multi-step approach
Transaction gain = October 3, 2022, bonds sold - December 31, 2021, bonds value
Transaction gain = $62 million - $46 million
Transaction gain = $16 million
One of the most important assumptions behind the calculation of quick ratio is that: The firm’s accounts receivables can be collected and converted into cash within the time period for which credit was granted The firm’s inventories are highly liquid and can be sold quickly with minimal loss of value to assist in the settlement of the firm’s financial obligations The firm’s accounts receivables will be collected late (after the expiration of the credit period) or are uncollectible
Answer:
The firm’s accounts receivables can be collected and converted into cash within the time period for which credit was granted
Explanation:
The calculation of the Quick Ratio is done with this formula:
Quick Ratio = ( Current Assets - Inventories ) / Current liabilities.
As we can see, inventories are substracted from the calculation, because, despite being classified as a current asset, they are not so easy to sell off (in other words, inventories are not that liquid).
Accounts receivable are included in the calculation. This is because the formula assumes that receivables can be collected in the same period that the liabilities are due.
The quick ratio is also known as the Acid Test.
You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, with the first occurring today. The bank pays 7% interest, compounded annually. You expect to receive annual raise of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than the second, etc.). How much must your first deposit be if you are to meet your goal
Answer:
First deposit will be $11,213.87
Explanation:
To derive how much the first deposit must be, the deposit can be derived by using payment formula for growing annuity
P = FV x (r - g) / [(1 + r)^n - (1 + g)^n]
When FV = $1,000,000
r = 7%
g = 3%
n = 25
Hence, First payment will be:
P = 1,000,000 * (7% - 3%) / (1.07^25 - 1.03^25)
P = 1,000,000 * 4% / 5.427433 - 2.093778
P = 40,000 / 3.333655
P = 11998.842
P = $11,998.84
However, this formula is applicable when the payments are made at the end of the year. In this case the payments are upfront, occurring today. We need to adjust this first payment to reflect the early payment.
Hence, first payment = $11,998.84 / (1 + 7%)
First payment = $11,998.84 / (1 + 0.07)
First payment = $11,998.84 / 1.07
First payment = 11213.8691588785
First payment = $11,213.87
Annuities are a series of constant cash flows that have been received over a certain period of time. However, not all annuities are created equal. Some annuities adjust the payments based on certain macroeconomic factors. Growing annuities are a series of payments that grow at aconstant rate. You invested in an aggressive growth fund and expect to earn 14.84% annually over the next five years. However, due to strong growth, inflation is expected to be 7.35%. What should be your expected real rate of return
Answer:
Real interest rate= 0.0749= 7.49%
Explanation:
Giving the following information:
You invested in an aggressive growth fund and expect to earn 14.84% annually over the next five years. However, due to strong growth, inflation is expected to be 7.35%.
The inflation rate provokes the opposite effect than the interest rate. It decreases the value of money through time, reducing the purchasing price of the nominal value of money.
Real interest rate= nominal interest rate - inflation rate
Real interest rate= 0.1484 - 0.0735
Real interest rate= 0.0749= 7.49%
What are some of the reasons businesses fail?
Answer:
The most common reasons businesses fail include a lack of capital or funding, retaining an inadequate management team, a faulty infrastructure or business model, and unsuccessful marketing initiatives.
Some of the reasons businesses fail are lack of knowledge, lack of planning, lack of management of resources effectively.
What is business?An economic activity that involves the exchange of goods and services with the help of buying and selling with the objective to gain some profit is called Business.
A business can possibly fail when there is no planning of things like what to do and how to do it. For a business, to be effective, there should be a plan or roadmap which needs to be followed step by step in order to succeed.
A business will fail when it is unable to manage the capital as well as the workforce effectively and make optimum utilization of it in order to produce and achieve productivity in abundance.
When a business does not have expertise or knowledge about the field as well as current market trends and competitors it will go to fail as it is unable to cope with the trend
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g If oil executives read in the newspaper that massive new oil supplies have been discovered under the Pacific Ocean but will likely only be useful in 10 years, what is likely to happen to the supply of oil today? What is the likely equilibrium impact on the price and quantity of oil today?
Answer:
a. What is likely to happen to the supply of oil today?
The supply of oil will increase today because the oil executives will no longer be worried about limiting supply on account of the current reserves running out because the oil reserves discovered that will be ready in 10 years will become the new supply source when the current reserves run out.
b. What is the likely equilibrium impact on the price and quantity of oil today?
As the supply oil will increase in the present, the Equilibrium quantity will increase.
With an increase in the equilibrium quantity, prices will decrease as oil will no longer be as scarce.
Record the following process costing transactions in the general journal
a. Purchase of raw materials on account, $9,000
b. Requisition of direct materials to Assembly Department, $4,200 Finishing Department, $2,400
c. ncurrence and payment of direct labor, $10,800. (Assume all c labor is for the Assembly Department.)
d. Incurrence of manufacturing overhead costs: Property taxes ant, $1,700 Utilities-plant, $4,800 Insurance plant, $1,100 Depreciation plant, $3,900
e. Assignment of conversion costs to the Assembly Department: Direct labor, $4,700 Manufacturing overhead, $2,100
f. Assignment of conversion costs to the Finishing Department: Direct labor, $4,400 Manufacturing overhead, $6,300
g. Cost of goods completed and transferred out of the Assembly department to the finished goods depatment 10300
h. Cost of goods completed and transferred out of the finished goods depatment tp finished goods inventory 15100
Answer:
a.Dr Raw Materials Inventory 9,000
Accounts Payable 9,000
b. Dr Work in Process Inventory-Assembly 4,200
Cr Raw Materials Inventory 4,200
Dr Work in Process Inventory-Finishing2,400
Cr Raw Materials Inventory 2,400
c.Dr Work in Process Inventory-Assembly10,800
Cr Cash10,800
d.Dr Manufacturing Overhead 11,200
Cr Property Taxes Payable-Plant 1,700
Cr Utilities Payable 4,800
Cr Prepaid Insurance-Plant 1,100
Cr Accumulated Depreciation-Plant 3,600
e.Dr Work in Process Inventory-Assembly 6,800
Cr Wages Payable 4,700
Cr Manufacturing Overhead 2,100
f.Work in Process Inventory-Finishing 10,700
Cr Wages Payable 4,400
Cr Manufacturing Overhead 6,300
g.Dr Work in Process Inventory-Finishing 10,300
Cr Work in Process Inventory-Assembly10,300
h.Dr Finished Goods Inventory15,100
Cr Work in Process Inventory-Finishing15,100
Explanation:
To Record process costing transactions in the general journal
a. Based on the information given we were told that the Purchase of raw materials of the amount of $9,000 was made which means that the transaction will be recorded as:
Dr Raw Materials Inventory 9,000
Accounts Payable 9,000
b. Based on the information given we were told that the Requisition of direct materials to Assembly Department was the amount of $4,200 while the Finishing Department amount was $2,400 which means that the transaction will be recorded as:
Dr Work in Process Inventory-Assembly 4,200
Cr Raw Materials Inventory 4,200
Dr Work in Process Inventory-Finishing 2,400
Cr Raw Materials Inventory2,400
c. Based on the information given we were told that payment of direct labor was the amount of $10,800 which means that the Journal entry will be:
Dr Work in Process Inventory-Assembly 10,800
Cr Cash10,800
d. Journal entry to record the incurrence of manufacturing overhead costs
Dr Manufacturing Overhead 11,200
(1,700+4,800+1,100+3,600)
Cr Property Taxes Payable-Plant 1,700
Cr Utilities Payable 4,800
Cr Prepaid Insurance-Plant 1,100
Cr Accumulated Depreciation-Plant 3,600
e. Based on the information given we were told that the conversion costs to the Assembly Department include both Direct labor of the amount of $4,700 and Manufacturing overhead of the amount of $2,100 which means that the Journal entry will be:
Dr Work in Process Inventory-Assembly 6,800
(4,700+2,100)
Cr Wages Payable 4,700
Cr Manufacturing Overhead 2,100
f. Based on the information given we were told that conversion costs to the Finishing Department were: Direct labor, $4,400 Manufacturing overhead, $6,300, which means that the transaction will be recorded as:
Work in Process Inventory-Finishing10,700
(6,300+4,400)
Cr Wages Payable4,400
Cr Manufacturing Overhead6,300
g. Based on the information given we were told that the Cost of goods that was completed and transferred out of the Assembly department to the finished goods depatment was the amount of 10,300 which means that the transaction will be recorded as:
Dr Work in Process Inventory-Finishing 10,300
Cr Work in Process Inventory-Assembly10,300
h. Based on the information given we were told that the Cost of goods that was completed and transferred out of the finished goods depatment to finished goods inventory was the amount of 15,100 which means that the Journal entry will be:
Dr Finished Goods Inventory 15,100
Cr Work in Process Inventory-Finishing15,100
Last year there was no change in either the raw materials or the work in process beginning and ending inventories. However, finished goods, which had a beginning balance of $25,000, increased by $15,000. If the manufacturing costs incurred totaled $600,000 during the year, the cost of goods available for sale must have been:
Answer:
cost of goods available for sale= $625,000
Explanation:
Giving the following information:
Finished goods beginning balance= $25,000
Total manufacturing costs= $600,000
To calculate the cost of goods available for sale, we need to use the following formula:
cost of goods available for sale= finished goods beginning balance + total manufacturing goods
cost of goods available for sale= 25,000 + 600,000
cost of goods available for sale= $625,000
Use the following two links to answer the following questions: Nominal Wages (W) Price index CPI (P) a) (5 points) Calculate the real wage (W/P) the first month of the recession 12/07 and compare it to the last month of the recession 6/09. What is the percent change in the real wage during this most recent recession
Answer:
3.45%
Explanation:
the real wage at the beginning of the recession (12/07) = nominal wage / price index Dec. 2007 = $17.70 / 2.1141 = $8.3721
the real wage at the end of the recession (6/09) = nominal wage / price index June 2009 = $18.53 / 2.14527= $8.6609
% change in real wage = [($8.6609 - $8.3721) / $8.3721] x 100 = 3.44955% = 3.45%
Due to the recession, the price index changed less than the nominal wages since the inflation rate was very low. It is normal that during recessions, specially severe ones, the inflation rate decreases or even turns negative (what happened in Europe in those years).
A large corporation has accrued a lot of debt over the last two years in an
effort to expand its business. While they have gained new customers, they
still aren't making enough money to pay off their debt. Which type of
bankruptcy would this company likely want to file?
A. Chapter 13
B. Chapter 7
C. Chapter 1
D. Chapter 11
Someone help plz
Answer:
D. Chapter 11
Explanation:
Apex
pes
Here is some basic data for Honey Dukes Corporation:
Beginning raw materials inventory
Beginning finished goods inventory
Cost of direct materials requisitioned
Actual manufacturing overhead
Cost of goods sold
$37,000 Beginning work in process inventory
59,000 Cost of materials purchased
87,000 Direct labor incurred
195,000 Completed goods
255,000 Manufacturing overhead rate (% of
direct labor)
68,000
188,000
195,000
287,000
125%
The journal entry to record the cost of jobs sold would include a
O credit to Finished Goods Inventory account for $255,000.
debit to Finished Goods Inventory account for $255,000.
O credit to Finished Goods Inventory account for $287,000.
debit to Cost of Goods Sold account for $287,000.
For Honey Dukes Corporation, a debit of $287,000 from the Cost of Goods Sold account and a credit of the same amount to the Finished Goods Inventory account would be the appropriate journal entry to reflect the cost of jobs sold.
Record the journal entry.For Honey Dukes Corporation, the correct journal entry to represent the cost of jobs sold would be a debit of $287,000 from the Cost of Goods Sold account and a credit of the same number to the Completed Products Inventory account. This is because the cost of products sold, which accounts for the price of all things sold during the time and includes the cost of direct material and direct, direct labour, and manufacturing overhead. The finished products inventory account reflects the cost of all produced goods available for sale but not yet purchased. The cost is thus transferred from the finished products inventories account to the cost of goods sold column when the goods are sold.
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During the current year, Elk Company incurred the following direct labor costs: January $40,000 and February $60,000. Elk uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months, respectively, totaled $39,000 and $71,400. Actual overhead for the 2 months, respectively, totaled $50,000 and $67,000. Was overhead under- or overapplied during January and by how much?
Answer:
January Overheads are under-applied by $2,000.
Explanation:
When,
Actual overheads > Applied overheads we say overheads are under-applied.
Actual overheads < Applied overheads we say overheads are over-applied.
Where,
Applied overheads = Predetermined overhead rate × Actual Activity
Therefore,
Applied overheads (January) = 120% × $40,000
= $48,000
Actual overheads (January) = $50,000.
Conclusion
It can be seen that from the above : Actual overheads : $50,000 > Applied overhead : $48,000, therefore overheads were under-applied.
Amount of under-applied overheads = $50,000 - $48,000
= $2,000
Pinterest is a website where you collect ideas, images, and videos and organize them by creating boards. On its website Pinterest describes itself as “A few (million) of your favorite things” and pictures its cross-platform capability of a computer screen and a cell phone. Pinterest effectively communicates the benefit of its product to a visitor through the description and the images. What has Pinterest conveyed clearly on its website?
Answer:
Its Value Proposition
Explanation:
Exercise 1-8A Prepare a balance sheet (LO1-3) Wolfpack Construction has the following account balances at the end of the year. Accounts Balances Equipment $ 26,000 Accounts payable 3,000 Salaries expense 33,000 Common stock 11,000 Land 18,000 Notes payable 20,000 Service revenue 39,000 Cash 6,000 Retained earnings ? Required: Use only the appropriate accounts to prepare a balance sheet.
Answer:
Please see balance sheet below.
Explanation:
Wolfpack construction balance sheet.
Dec 31
Assets $
Cash 6,000
Land 18,000
Equipment 26,000
Total assets 50,000
Liabilities.
Accounts payable 3,000
Notes payable 20,000
Total liabilities 23,000
Equity
Common stock 11,000
Retained earnings 16,000
Total stockholders equity. 27,000
Total liabilities and stockholder's equity(23,000 + 27,000) 50,000
The Balance Sheet of Wolfpack Construction has shown the total assets and total liabilities of $50,000 each. A balance sheet is a financial statement that lists the assets, liabilities, and shareholder equity of a corporation at a certain point in time.
Given,
Accounts Balances Equipment $ 26,000 Accounts payable 3,000 Salaries expense 33,000 Common stock 11,000 Land 18,000 Notes payable 20,000 Service revenue 39,000 Cash 6,000 Retained earnings ? Required to prepare a balance sheet of Wolfpack Construction has the following account balances at the end of the year.
Assets:
Equipment $26,000
Land $18,000
Cash $6,000
Total Assets $50,000
Liabilities:
Accounts payable $3,000
Notes payable $20,000
Common Stock $11,000
Retained earnings (see working note) $16,000
Total Liabilities $50,000
Working Note for Retained Earnings:
Retained earnings = Total Assets - Accounts payable - Notes payable - Common Stock
Retained earnings = $50,000 - $3,000 - $20,000 - $11,000 =$16,000
Therefore, the balance sheet of Wolfpack Construction has a value total of $50,000.
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The National Income and Product Accounts identity states:__________A) Expenditure Production Income.B) Production Expenditure Income.C) Production Expenditure Income.D) Expenditure Production Income.E) Production Expenditure Income.
Answer:
I. National Income Accounting:
National income accounts are an accounting framework is useful in measuring economic activity.
A. Three approaches—all produce the same measurement of the production of the economy.
1. product approach: how much output is produced
2. income approach: how much income is created by production
3. Expenditure approach: how much purchasers spend
B. Why all three approaches are the same: Assumes no unsold goods (at this point) then the market values of goods and services produced must equal the amount buyers spend to purchase them (product approach=expenditure approach). What the seller receives (income) must equal what is spent (expenditure).
II. Gross Domestic Product (GDP)
A. GDP vs. GNP
GNP= output produced by domestically owned factors or production. (By our people)
GDP= includes production produced by foreign owed factors of production within the countries border and excludes domestically owned production in foreign countries. (On our soil)
1. GDP = GNP – net factor payment from abroad (NFP)
2. How big is the difference?
B. Product approach: The market value of all final goods and services produced within a nation during a fixed period of time.
1. Market value: allows comparison between different goods. Has some problems – ignores some goods. underground economy, and government services.
2. Final goods and service: Treatment of inventories; Capital goods; Avoids double counting; Value added.
3. New production: Ignores goods produced in previous periods
C. Expenditure approach: Total spending on final goods and services produced within a nation during a specified period of time.
1. Income expenditure identity and four categories of spending: Consumption (C), Investment (I), government purchases of goods and services (G) and net exports (NX)
Y = C + I + C + NX
2. Consumption(C): Spending by domestic households on final goods and services
a. Consumer durable goods: Long lasting goods
b. Nondurable goods used up quickly
c. Services
3. Investment (I): Spending on new capital goods by business
a. Business fixed investment
b. Residential fixed investment
c. Inventory investment: Changes in the amount of unsold goods, goods in progress and new materials
4. Government purchases of goods and services (G):
a. State and local vs. Federal spending
b. Transfers and interest payments on debt are not counted. They are counted in total government expenditure which is not the same as government purchases of goods and services.
5. Net exports (NX): exports minus imports
a. Need to subtract imports since they are counted in C. I and G can add goods produced within the country purchased by foreign interests (exports).
D. Income approach adds up income received by producers, including profits and taxes paid to the government
1. Income generated by production
a. National income =
compensation of employees
+ proprietors income
+ rental income of persons
+ corporate profits
+ net interest
+ taxes on production
+ business transfers
+ surplus of gov enterprises
b. National income + statistical discrepancy = Net National Product (NNP)
Note: This changed a couple years ago. If you have an old addition, you may see the indirect business tax. It is no long used in this equation!
c. NNP + depreciation = GNP
d. GNP – NFP = GDP
2. Income of private sector and government
a. Private disposable income = income of private sector = private sector income earned at home (Y or GDP) and abroad (NFP) + payments from the government sector (transfers TR and interest on debt INT) – taxes paid to government (T) = Y + NFP + TR + INT – T
b. Government net income = T- TR – INT
III. Saving and Wealth
A. Wealth Difference between assets and liabilities
B. Measures of aggregate savings
1. Saving = current income – current spending; saving rate = saving/current income
2. Private saving (Spvt) Spvt = Y + NFP – T + TR + INT – C
3. Government Saving (Sgovt) Sgovt = T – TR- INT – G
a. Government saving = Government budget surplus (deficit = -Sgovt)
4. National Saving= private saving + government saving
S = Spvt + Sgovt = Y + NFP - C – G = GNP - C – G
C. The uses of private saving
1. S = I + (NX + NFP) = I + CA
CA = NX + NFP = current account balance
2. The use of savings identity
Spvt = I – Sgovt + CA
If the budget deficit increases one or a combination of the following happen
1) private saving must rise
2) investment must fall
3) the current account balance must fall
IV. Prices Indexes, Inflation and Interest Rates
A. Nominal vs. Real variables
Nominal Variables – Measures the economic variable in terms of the current market value.
Real Variable—Measure the variable valued at the prices in a base year.
B. Real vs. Nominal: Calculation the differences
Examples Small country only produces base balls and baseball bats
Explanation:
On 3/15/20, Robertson Corp. bought land from Lear, Inc. for $248,000. Lear had carried the land on its books at $240,000. Robertson paid $50,000 in cash and signed a note payable for the balance. On 12/19/20, Davis Co. offered to buy the land from Robertson for $252,000. On its 12/31/20 balance sheet, Robertson should show the land account at:
Answer:
$248,000
Explanation:
According to the historical cost principle, the fixed assets should be recorded at the purchase price or the acquired price.
Since in the question it is mentioned that the land is purchased from Lear inc for $248,000 and the other transactions are also there
So here the land should be recorded at the purchase price i.e. $248,000
Give one advantage and one disadvantage for a Market Economy.
Answer:
Advantage: Variety
Disadvantage: Poor work conditions
Explanation:
Here are selected data for Boston Bracing Company: Estimated manufacturing overhead $236,800 Factory utilities $30,200 Estimated labor hours 35,000 Indirect labor $22,400 Actual direct labor hours 36,000 Sales commissions $53,700 Estimated direct labor cost $320,000 Factory rent $47,700 Actual direct labor cost $320,200 Factory property taxes $28,100 Factory depreciation $66,000 Indirect materials $33,000 If the company allocates manufacturing overhead based on direct labor cost, what are the allocated manufacturing overhead costs?
Answer:
Allocated MOH= $236,948
Explanation:
Giving the following information:
Estimated manufacturing overhead $236,800
Estimated direct labor cost $320,000
Actual direct labor cost $320,200
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 236,800/320,000
Predetermined manufacturing overhead rate= $0.74 per direct labor dollar
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 0.74*320,200
Allocated MOH= $236,948
Marci is trying to determine the predetermined overhead rate for her company. She knows that the estimated annual overhead costs for the company are $255,000. The Work in Process inventory has amounted to $35,000 for March and April, and the overall estimated direct labor cost is $300,000. If overhead is applied based on direct labor cost, what is the predetermined overhead rate?
Answer:
Predetermined manufacturing overhead rate= $0.85 per direct labor dollar
Explanation:
Giving the following information:
She knows that the estimated annual overhead costs for the company are $255,000.
The estimated direct labor cost is $300,000.
To calculate the predetermined overhead rate, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 255,000/300,000
Predetermined manufacturing overhead rate= $0.85 per direct labor dollar
(A) What makes Blue Ocean strategy imperative in planning your business start-up?
(B) Identify a real company that has successfully created a Blue Ocean & explain your response
(C) Are Blue Oceans only relevant for start-ups? Why or why not?
Answer and Explanation:
Nowadays start-ups ate driven by innovation which is termed blue ocean strategy. With blue ocean strategy there is low competition and low prices and a sort of monopoly as the business is able to open a new market space through product differentiation, uniqueness and innovation
Airbnb is an example of a blue ocean strategy startup that has attained Unicorn level. They have been able to do this because of their innovative business model that connects people that wish to rent a home or space with people who are renting
Blue ocean strategies are not only relevant for start-ups as they could be applied to other businesses too since any business can create market space using innovation. However they are crucial for start-ups who wish to create market and survive