Answer:
c. $19,823
Explanation:
For the computation of annual operating cash flow first we need to find out the EBIT and Tax which is shown below:-
EBIT = Revenue - Variable cost - Fixed cost - Depreciation
= $119,300 - $75,400 - $15,900 - $3,950
= $24,050
Tax = EBIT × Tax rate
= $24,050 × 34%
= $8,177
Operating cash flow = EBIT + Depreciation - Taxes
= $24,050 + $3,950 - $8,177
= $19,823
Hence, the correct option is c.
The Cash account in the ledger of Clear Windows shows a balance of $12,596 at September 30. The bank statement, however, shows a balance of $16,253 at the same date. The only reconciling items consist of a bank service charge of $16, a large number of outstanding checks totaling $6,740, and a deposit in transit.
-Cardinal Company's bank statement showed a balance at May 31 of $180,974. The only reconciling items consisted of a large number of outstanding checks totaling $51,847. At May 31, what balance should Cardinal's Cash account show?
A) $232,821.
B) $129,127.
C) $77,280.
D) Some other amount.
Answer:
1. $3,067
2. B) $129,127.
Explanation:
a. The computation of amount deposit in transit is shown below:
The amount of deposit in Transit = Balance as per Cash Book as on 30th Sept - Cheque outstanding realized - Bank charges - Balance as per Bank Book
= $12,596 + $6740 - $16 - $16,253
= $3,067
Deposit in Transit inflates the general ledger initially till it is credited in the bank book.
b. The computation of balance should Cardinal's Cash account show
Cash Account should show a balance = Bank Statement Balance as on May 31 - Outstanding Cheque on May 31
= $180,974 - $51,847
= $129,127
As we can see that the cash account balance is less because there is an outstanding
Gain is generally recognized in an asset distribution to a partner. True False
Answer:
False
Explanation:
Usually distributions reduce a partner's outside basis in a partnership, they are generally not considered income. Since most distributions are not considered income, they do not result in gains for the partner. Some distributions may result in gains, such as certain cash distributions or securities (bonds) distributions. It is uncommon for a gain to result from property being distributed.
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.75 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 11 percent on the company's stock.
Required:
a. What is the current stock price?
b. What will the stock price be in 18 years?
Answer:
(A) $26
(B) $52.67
Explanation:
The Jackson Timberlake wardrobe corporation paid a dividend of $1.75 per share
The growth rate is 4%
= 4/100
= 0.04
The rate of return is 11%
= 11/100
= 0.11
(A) The current stock price can be calculated as follows
Current price= dividend ×(1+growth rate)/required return-growth rate
= $1.75×(1+0.04)/(0.11-0.04)
= 1.75× 1.04/0.07
= 1.82/0.07
= $26
(B) The amount of stock price in 18 years can be calculated as follows
= Current price × (1+growth rate)^18
= $26 × (1+0.04)^18
= $26 × 1.04^18
= $26 × 2.0258
= $52.67
A U.S. citizen works for a U.S. company in Germany. The income earned by the citizen increases U.S. GDP.
A. True
B. False
Jurvin Enterprises recorded the following transactions for the just completed month. The company had no beginning inventories. a. $94,000 in raw materials were purchased for cash.b. $89,000 in raw materials were requisitioned for use in production. Of this amount, $78,000 was for direct materials and the remainder was for indirect materials.c. Total labor wages of $132,000 were incurred and paid. Of this amount, $112,000 was for direct labor and the remainder was for indirect labor.d. Additional manufacturing overhead costs of $143,000 were incurred and paid.e. Manufacturing overhead costs of $152,000 were applied to jobs using the company’s predetermined overhead rate.f. All of the jobs in progress at the end of the month were completed and shipped to customers.g. Any underapplied or overapplied overhead for the period was closed out to Cost of Goods Sold.
Question Completion:
1. Post the above transactions to T-Accounts
2. Determine the adjusted costs of good sold for the period.
Answer:
Jurvin Enterprises
1. T- Accounts:
Date Description Debit Credit
Raw Materials Account
a. Cash $94,000
b. Work in Process Account $89,000
Balance 5,000
Cash Account
a. Raw Materials Account $94,000
c. Wages Account 132,000
d. Manufacturing Overhead Account 143,000
Work in Process Account
b. Raw Materials $89,000
c. Wages Account 132,000
e. Manufacturing Overhead 152,000
f. Cost of Goods Sold $373,000
Wages Account
c. Cash Account $132,000
c. Work in Process Account $132,000
Manufacturing Overhead Account
d. Cash Account $143,000
e. Work in Process Account $152,000
g. Cost of Goods Sold 11,000
Cost of Goods Sold Account
f. Work in Process Account $373,000
g. Overapplied Overhead $11,000
Explanation:
a) Data is as given in the question.
b) The Cost of Goods Sold totals $373,000 being the value of Work in Process that is transferred when all the jobs in progress at the end of the month were completed and shipped to customers.
c) The overapplied overhead arises from the difference between the overhead applied to work in process and the actual manufacturing overhead incurred.
Any put additional that holds securities, cash, or other commodities serves as a brokerage account. A day dealer's principal fund is commonly referred to as a trading account.
Assets stored in a trading account are kept distinct from all those maintained in a long-term purchase and hold plan.
The T-Account has been attached below.
b) The overall cost of goods sold equals $373,000, which shows the value of Work in Process that is transferred when all tasks in progress at the end of the month are finished and sent to customers.
c) The discrepancy between both the excess applied to work in progress and the actual manufacturing overhead incurred is the basis of the overapplied overhead.
To know more about the calculation of the cost of goods sold or T-Accounts, refer to the link below:
https://brainly.com/question/13296920
What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity? Ehrhardt, Michael C.. Corporate Finance: A Focused Approach (p. 187). Cengage Learning. Kindle Edition.
Answer:
As the interest rate doubles, the present value is the half.
Explanation:
Giving the following information:
Cf= $100
i= 0.07
i= 0.14
To calculate the present value of a perpetuity, we need to use the following formula:
PV= Cf/i
PV= present value
Cf= cash flow
i= interest rate
First perpetuity:
PV= 100/0.07
PV= $1,428.57
Second perpetuity:
PV= 100/0.14
PV= $714.286
As the interest rate doubles, the present value is the half.
TYR just announced yesterday that its fourth-quarter earnings will be 35% lower than last year's fourth quarter. You observe that TYR had an abnormal return of 3.7% yesterday. This suggests that
Answer: Investors expected the earnings increase to be smaller than what was actually announced.
Explanation:
Abnormal return on an asset such as stock refers to the difference between actual returns and expected returns. As such, if it is positive, that would mean that the actual returns are/ will be higher than the expected/anticipated returns.
TYR had an abnormal return of 3.7% which would mean that the the 35% lower fourth-quarter earnings was higher than investors expected from TYR.
In which of the following statements are the terms "demand" and "quantity demanded" used correctly?
A) When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell.
B) When the price of ice cream rose, the quantity demanded of ice cream fell and the demand for ice cream topping fell.
C) When the price of ice cream rose, the demand for ice cream fell and the quantity demanded of ice cream toppings fell.
D) None of these statements uses the terms correctly.
Answer:
B) When the price of ice cream rose, the quantity demanded of ice cream fell and the demand for ice cream topping fell.
Explanation:
A rise in the price of a good would lead to a fall in the quantity demanded of the good.
So, a rise in the price of ice-cream would lead to fall in the quantity demanded of ice cream.
A rise in the price of ice-cream would lead to a fall in the demand for ice cream toppings.
Young people need about
hours of sleep every night.
A. six to eight
B. seven to nine
C. eight to ten
D. nine to eleven
Answer:
B
I think seven to nine is the answer.
How does context influence your communication? Consider the language and culture people grew up with, and the role these play in communication styles.
Answer with Explanation:
The context of communication adds value in the communication as now the listener would be more engaged and attentive to what the person is conveying in his message. It also helps listener to interpret communication.
Something might be funny in one culture and not in another. This means if you are adding something that is culturally correct then it is more probable that the message conveyed was effective. Hence contexts must be according to the culture, norms, stories of people whom they know, etc. Hence cultural differences are of immense importance when we are setting up contexts for our communication.Level of Formality. The communication must be as per the occasion and level of formality of the occasion. In simple words, I would say that "When in Rome, do as the Romans do". If you are in a Formal occasion then your presentation must reflect use of formal language and when you aren't attending a formal occasions then you must be very relaxed and easy with the people (Usually friends) and of-course the dressing would be very casual.The reality of consumer optimum means making choices in countless purchases in order to enjoy:______.
a. roughly the same utility per dollar spent.
b. the same level of satisfaction in each.
c. the same standard of living.
d. increasing degrees of satisfaction.
e. a balanced budget.
Answer:
a. roughly the same utility per dollar spent.
Explanation:
A consumer optimum can be defined as the combination of finished goods and services which typically maximizes satisfaction (utility) for the consumers of various goods and services at a specific income and product prices.
The reality of consumer optimum means making choices in countless purchases in order to enjoy roughly the same utility per dollar spent.
For example, a customer who wishes to obtain maximum satisfaction, utility or value for his or her money (dollar spent) may decide to buy a variety of goods such as milk, donuts, biscuits, chocolate, cheese etc
From a cash receipts standpoint, mandating that a single designated employee is authorized to handle cash receipts (at the counter or via the mail) is an example of the control activity:___________
A) Human resource controls
B) Independent internal verification
C) Establishment of responsibility
D) Segregation of Duties
Answer: C) Establishment of responsibility
Explanation:
Establishment of responsibility is an internal control method that works by assigning one person the role and responsibility of mangling an activity.
This way it is easier to monitor the way that activity is done and the resources attached to it because with only one person having access, any unexplained events can be queried from the person who's sole responsibility it was to look after the activity the event occurred in.
In this scenario for instance, if the cash receipts are found to be missing in any way, the first person that will be questioned is the employee who was solely authorized to handle cash receipts (at the counter or via the mail).
Your client holds 1 listed XYZ August 50 call. A cash dividend of $2.50 per share is declared. On the ex-date, the terms of the call are: (A) Exercise Price: $47.50, Number of Underlying Shares per Contract of XYZ: 102 (B) Exercise Price:$50.00, Number of Underlying Shares per Contract of XYZ: 100 (C) Exercise Price: $52.50, Number of Underlying Shares per Contract of XYZ: 97 (D) Exercise Price: $52.50, Number of Underlying Shares per Contract of XYZ: 102
Answer:
(B) Exercise Price:$50.00, Number of Underlying Shares per Contract of XYZ: 100
Explanation:
The declaration of the dividends will not affect the exercise price of the call, it will still be $50 per stock. Also, the number of stocks included in the call will not change because a cash dividend is declared, they will still be 100 stocks included in the call contract. The cash dividend affects the market price of the stock, but not the call or put options.
Fifty percent of an HIM department’s staff have a nationally recognized credential. This is an example of what type of indicator: A. Structure B. Process C. Outcome D. Internal
Answer: A. Structure
Explanation:
Structure Indicators provide information about the ability and capacity of a Health care provider to be able to give health care services that are of high quality.
They focus on the processes the Health Care provider uses, the systems in place and their capacity to provide certain types of care.
Some indicators include; How many providers do they have versus the number of patients they have and the number of certified physicians that they have.
Having a HIM department with 50% of staff accredited is therefore a Structure indicator.
What is the mean 2019E EV/Revenue multiple in the Online Direct Sales comps group in 2019?
a) 1.1x
b) 1.2x
c) 0.8x
d) 0.6x
Answer:
The question is not clear and complete.
Let me explain how you can calculate Enterprise Value (EV) to Revenue Multiple
Explanation:
A Enterprise Value (EV) to Revenue Multiple is used to value a business by dividing its enterprise value by its annual revenue. The formula to calculate the Enterprise Value (EV) to Revenue Multiple is EV/Revenue
EV = Enterprise Value
EV can be denoted as (Equity Value + All Debt + Preferred Shares) – (Cash and Equivalents)
While Revenue = Total Annual Revenue
This can be calculated when we have a share price, shares outstanding, debt, and cash or its equivalence.
1. A Letter of Credit (or LC) is one of the major pillars on which International Trade stands. a) What is a Letter of Credit? b) With the aid of a diagram, explain the LC procedure. c) Explain to the CEO of Mbo Limited (a company in Ghana) which wants to buy large quantities of White Refined Granulated Sugar from Tiffany Anderson Group Ltd (a company in Brazil) why the LC is the most acceptable method to both the exporter and importer in a transaction such as he is about to undertake.
Answer:
A Letter of Credit (or LC)
There are various types of letter of credit (LC) that prevail in export/import trade transactions. These include Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC. We can explain it by using the following illustrated examples:
a) Mbo Limited's bank can issue a letter of credit to Tiffany Anderson Group Ltd.'s bank a credit guarantee by which Mbo's bank guarantees that Mbo Limited will settle Tiffany Anderson Group Ltd in full for the amount involved in their trade relationship. It is usually used by importers and exporters to settle trade credit. It is the most acceptable means of settling debts across national boundaries.
b) A diagram is attached to show how a letter of credit works. The procedures are detailed below:
A. A Sales Contract is established between the seller (exporter) and the buyer(importer).
B. The importer makes a request to its bank for issuance of letter of credit.
C. The importer’s bank issues a letter of credit to the exporter’s bank.
D. The exporter’s bank advises on the letter of credit to the exporter.
E. The exporter presents export documents (bill of lading and invoice) to its bank.
F. The exporter’s bank delivers the documents to the importer’s bank.
G. The importer’s bank debits the account of the importer for the stated amount after confirming that the documents are in order.
H. The importer’s bank pays the purchase price to the exporter’s bank.
I. The exporter’s bank credits the exporter’s bank to show payment. This ends the transaction.
c. The letter of credit guarantees both the Mbo Limited and Tiffany Anderson Group Ltd. It guarantees and ensures that payment for goods are not paid to Tiffany Anderson Group Ltd until there is evidence that the correct goods and quantity have been shipped by Tiffany Anderson Group Ltd (through the bill of lading). It also assures Tiffany Anderson Group Ltd of payment for shipped goods since the documents cannot be released to Mbo Limited unless Mbo Limited's account had been debited and the money transmitted to Tiffany Anderson Group Ltd through its bank.
Explanation:
As explained above.
Problem 16-17 Firm Value [LO2] Change Corporation expects an EBIT of $25,000 every year forever. The company currently has no debt, and its cost of equity is 12 percent. The corporate tax rate is 22 percent. a. What is the current value of the company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-1. Suppose the company can borrow at 6 percent. What will the value of the firm be if the company takes on debt equal to 50 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. Suppose the company can borrow at 6 percent. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-1. What will the value of the firm be if the company takes on debt equal to 50 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c-2. What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer and Explanation:
The computation is shown below:
a. The current value of the company is
As it is mentioned that the company has no debt that means it is unlevered firm that is equivalent to unlevered value of the company
Unlevered value of the firm = Vu
Vu = EBIT × (1 - tax rate ) ÷ unlevered Cost of Equity
= EBIT × (1 - tax rate ) ÷ R0
= $25,000 × (1 - 0.22 ) ÷ 12%
= $162,500
b-1.
The computation of the value of the firm in the case when the value of the firm is equivalent to 50% of unlevered value
VL = Vu + Borrowing × tax rate
where,
Debt = borrowing = 50% × unlevered value of company
Debt = borrowing = 50% x Vu
So,
VL = Vu + Borrowing x tax rate
VL = $162,500 + ($162,500 × 50%) × 22%
= $162,500 + $17,875
= $180,375
b-2.
The computation of the value of the firm in the case when the value of the firm is equivalent to 100% of unlevered value
Levered value of the firm VL
VL = Vu + Borrowing × tax rate
Debt = borrowing = 100% × unlevered value of company
Debt = borrowing = 100% × Vu
So,
VL = Vu + Borrowing x tax rate
= $162,500 + ($162,500 × 100%) × 22%
= $162,500 + 35,750
= $198,250
C.1.
The computation of the value of the firm in the case when the value of the firm is equivalent to 50% of the levered value
VL = Vu + Borrowing × tax rate
= Vu + (VL × 50%) × tax rate
VL = Vu + (VL × 50%) × 22%
VL = Vu + 0.11 VL
VL - 0.11 VL = 162,500
0.89 VL = 162,500
VL= 182,584.27
C.2.
The computation of the value of the firm in the case when the value of the firm is equivalent to 100% of the levered value
Levered value of the firm VL
VL = Vu + Borrowing x tax rate
VL = Vu + (VL × 100%) × tax rate
= Vu + (VL × 100%) × 22%
= Vu + 0.22 VL
VL - 0.22 VL = 162,500
0.78 VL = 162,500
VL= $208,333.33
The holders of ZZZ Corporation's bonds with a face value of $1,000 can exchange that bond for 35 shares of stock. The stock is selling for $25.00. What is the conversion price
Answer:
$28.57
Explanation:
The holders of ZZZ corporation bonds with a face value of $1000
It can be exchanged for 35 share of the stock
The stock is being sold for $25.00
Therefore, the conversion price can be calculated as follows
= $1000/35
= $28.57
Hence the conversion price is $28.57
Jackson company recorded the following cash transactions for the year:
Paid 135,000 for salaries
Paid $60,000 to purchase office equipment.
Paid $15,000 for utilities.
Paid $6,000 in dividends.
Collected $245,000 from customers.
What was Jackson’s net cash provided by operating activities?
Answer:
$95,000
Explanation:
Jackson's net cash provided by operating activities is calculated below;
Cash collected from customers
$245,000
Less : Salaries paid. ($135,000)
Less utilities ($15,000)
Net cash provided. $95,000
"The current source format of a data file and the desired database file structure are specified to a utility, which then automatically reformats the data and stores it in the database." Which database utility performs the given function?
Answer:
Backup utility of the database
Explanation:
The backup utility of the database performs this function. A copy of data from a database that can be used to remake this data is what is referred to as a backup. It can be logical or physical. Using backup can help in the recovery of files and other documentations. Backup can be done on disk or offline on tape.
A_____is a course of study that prepares students for careers in specific trades and occupations that need skilled workers
Answer:
Skilled Trades Education
Explanation:
These skilled trades education equips students with highly demanded skills which the companies requires its job applicant to posses so that he least guided and more productive than an newly trained employee. The students are trained at school and college level to get skilled so that they get better jobs or pays in coming future. There are many industry specific skills that a student can learn that are associated with manufacturing, construction, telecommunication, transportation, automobile, etc.
Which of the following is true regarding the payback method: 18 8 01:02:53 a. When a company is 'cash poor', a project with a short payback period but a low rate of return may be preferable to a project with a long payback period and a high rate of return b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows. c. A payback period of 35 means a company will earn 35 times its initial investment, d. The payback period increases as the cost of capital increases
Answer:
b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows.
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows
payback period decreases as cost of capital increases
A payback period of 35 means a company will recover the amount invested in a project in 35 years
A relational database can be defined as a self-describing collection of non-integrated relations.
a) true
b) false
Answer:
False
Explanation:
The definition above for a relational database is false. The relational database is majorly based on the relational model of data. The data item collected are organized and arranged in a set of tables with rows and columns.
This type of database provides access to data points which are related. The tables in which these data are arranged and organized can be knowm as "relations". They are divided into rows (records) and columns (fields).
During 2019, Jerry is a self-employed therapist, and his net earned income is $121,000 from his practice. Jerry's SEP Plan, a defined contribution plan, states that he will contribute the maximum amount allowable. Calculate Jerry's contribution.
Answer:
Jerry's SEP Plan
Maximum Allowable Contribution
= $30,250.
Explanation:
a) Data and Calculation:
Net earned income = $121,000
SEP IRA Plan = 25% of $121,000 = $30,250
The value of the above calculation is less than the $57,000 maximum.
b) Jerry, as a self-employed therapist, can make contributions to his SEP-IRA each year. These contributions cannot exceed the lesser of 25% of compensation or $57,000 for 2020 ($56,000 for 2019 and subject to annual cost-of-living adjustments for later years), according to the information published by the Internal Revenue Service.
c) Jerry's simplified employee pension (SEP or SEP IRA) is a retirement plan that Jerry can establish as a self-employed therapist or individual.
What is the rationale for governments to issue monopoly-promoting licenses to firms providing services such as trash collection
Answer: d. economies of scale
Explanation:
Trash Collection can be a costly business because it includes going around the city, paying workers, high vehicle input costs and the like. These costs would need to be recovered and have less chances of doing so if the firms had to compete amongst themselves for customers.
A monopoly-promoting license giving a firm significant control would lead to Economies of scale that would ensure that they had enough customers for their costs to reduce as they offer services to the people as their costs would then reduce as they service more people without having to worry about competition.
Suppose you are about to buy a car and ask to see a vehicle history report to check previous accidents or problems reported for that car. When you are told that this information is not available, you decide not to buy the car.
A) Do ypu think this illustrates an adverse selection or moral hazard problem?
B) What is the connection between the lack of information and the probability that a transaction will occur?
Answer:
A) Do you think this illustrates an adverse selection or moral hazard problem?
This situation represents an adverse selection problem since the seller probably has access to more information about the car than you. Since the seller is hiding the information, it might mean that it is negative and would certainly affect your purchase decision. A moral hazard problem happens when someone takes unusually high risks because he/she has nothing to lose with the transaction.
B) What is the connection between the lack of information and the probability that a transaction will occur?
In perfect markets, information is perfect and therefore, the number of transactions maximizes. It is just common sense, imagine you want to buy a house, you will at least want to see the house and check all the documents. No one will buy a house just because a real estate agent tells them it is a nice house and it is located on a nice neighborhood.
Dave says that most brands of eyeglasses are owned by the same company. This illustrates which type of competition?
Answer:
The correct approach will be "monopoly ".
Explanation:
Monopolistic competition seems to be a real economy discipline that organizes monopoly components as well as market mechanisms. In essence, a competitive monopoly market would be one with individual liberty of entering and exiting, but companies can promote their business. Even though they have artificially cheap curvature of capital investment as well as and then they can fix prices.Wayne Enterprises declared annual cash dividends of $10 million, $12 million, and $50 Million in its first three years of operation-2017, 2018, and 2019 respectively. Wayne also had $200 million of outstanding, cumulative and nonparticipating, preferred shares that yield 10%. How much in dividends did the common stock shareholders receive in 2019
Answer:
the dividend to be paid to the common stock shareholder is $30 million
Explanation:
The computation of the dividend to be paid for the common stock shareholder received is shown below:
= Total dividend for the year 2019 - (Number of outsanding cumulative shares × yield percentage)
= ($50 million - $200 million × 10%)
= $50 million - $20 million
= $30 million
hence, the dividend to be paid to the common stock shareholder is $30 million
Campbell Clothing produces men's ties. The following budgeted and actual amounts are for 2016:
Cost Budget at 5,000 Units Actual Amounts at 5,800 Units
Direct materials $60,000 $71,000
Direct labor 75,000 86,500
Equipment depreciation 5,000 5,000
Indirect labor 7,500 8,600
Indirect materials 9,000 9,600
Rent and insurance 12,000 13,000
Instructions:
Prepare a FLEXIBLE performance budget report for Campbell Clothing for the year.
Answer:
Campbell Clothing
Manufacturing Performance budget Report
For the year ended December 31, 2016
Budget Actual Difference
Direct materials $69,600 $71,000 $1,400 U
Direct labor $87,600 $86,500 $500 F
Equipment depreciation $5,000 $5,000 $0 Nil
Indirect labor $8,700 $8,600 $100 F
Indirect materials $10,440 $9,600 $840 F
Rent and insurance $12,000 $13,000 $1000 U
Total Costs $192,740 $193,700 $960 U
Workings
Planning budget
Direct materials 60,000 * $12 = $69,600
Direct labor 75,000 * $15,000 = $87,600
Equipment depreciation 5,000
Indirect labor 7,500 * $1.50 = $8,700
Indirect materials 9,000 * $1.80 = $10,440
Rent and insurance $12,000
Suppose that the election of a popular presidential candidate suddenly increases people’s confidence in the future. Use the model of aggregate demand and aggregate supply to analyze the effect on the economy
Answer:
The aggregate demand will increase.
Explanation:
The increase in people’s confidence that the future return will be good or higher then the people will increase their current spending. Thus, an increase in the current spending will result in the rise of aggregate demand. consequently, the aggregate demand curve will shift rightwards, and this forms a new equilibrium at a higher position. Resulting in increased price and increased quantity. Thus, in future, people will see faster economic growth.