Answer:
If the units are rework, income will increase by $32,480 (48,720 - 16,240).
Explanation:
Giving the following information:
The previous cost will not be taken into account, because it is constant for both options.
Number of units= 2,800
Sell as-is:
Selling price= $5.8
Re-work:
Unitary cost= $5.2
Selling price= $22.6
We need to calculate the effect on the income of both options:
Sell as-is:
Effect on income= 2,800*5.8= $16,240 increase
Re-work:
Effect on income= 2,800*(22.6 - 5,2)
Effect on income= $48,720 increase
If the units are rework, income will increase by $32,480 (48,720 - 16,240).
An excellent website design delights its audience and is the product of innovation built on a foundation of
Answer:
careful site planning
Explanation:
The careful site planning permits you to create the website that contains the delightful design due to which it helps in attracting the audience also it is the foundation for building the production for an innovation purpose. In this we ca n plan about the site theme, its layout, color, design etc
On January 1, a machine with a useful life of 5 years and a salvage value of $15000 was purchased for $115000. What is the depreciation expense for year 2 under straight-line depreciation
Answer:
Annual depreciation (year 2)= $20,000
Explanation:
Giving the following information:
Purchase price= $115,000
Salvage value= $15,000
Useful life= 5 years
To calculate the annual depreciation under the straight-line method, we need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (115,000 - 15,000) / 5
Annual depreciation= $20,000
g The declaration, record, and payment dates in connection with a cash dividend of $59,400 on a corporation's common stock are July 9, August 31, and October 1. Journalize the entries required on each date.
Answer:
Dr Retained earnings $59,400
Cr Dividend payable $59,400
August 31 No entry
October 1
Dr Dividend payable $59,400
Cr Cash $59,400
Explanation:
Preparation of the journal entries required on each date.
July 9
Dr Retained earnings $59,400
Cr Dividend payable $59,400
August 31 No entry
October 1
Dr Dividend payable $59,400
Cr Cash $59,400
Question 3 4 Marks Mi Tierra Driving School charges $680 per student to prepare and administer written and driving tests. Variable costs of $408 per student include trainers’ wages, study materials, and gasoline. Annual fixed costs of $63,920 include the training facility and fleet of cars. Requirements 1. For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units by first referring to the original data provided: a. Breakeven point with no change in information. b. Decrease sales price to $544 per student. c. Decrease variable costs to $340 per student. d. Decrease fixed costs to $53,040.
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price= $680
Unitary variable cost= $408
Fixed cost= $63,920
To calculate the contribution margin and break-even point in units, we need to use the following formula:
Unitary contribution margin= selling price - unitary variable cost
Break-even point in units= fixed costs/ contribution margin per unit
a:
Unitary contribution margin= 680 - 408= $272
Break-even point in units= 63,920 / 272
Break-even point in units= 235
b:
Unitary contribution margin= 544 - 408= $136
Break-even point in units= 63,920 / 136
Break-even point in units= 470
c:
Unitary contribution margin= 680 - 340= $340
Break-even point in units= 63,920 / 340
Break-even point in units= 188
d:
Unitary contribution margin= 680 - 408= $272
Break-even point in units= 53,040 / 272
Break-even point in units= 195
Consider the following project network and activity times (in weeks): Activity A B C D E F G H Time 5 3 7 6 7 3 10 8 How much time will be needed to complete this project
Answer:
Please find the attached file of the complete question:
Explanation:
Please find the attached file of the solution:
Critical Path: ACH
Duration: 21
Because C is on the Critical Path, it cannot be postponed without causing the project to be delayed.
E is not on the critical path, thus it may also be delayed by two weeks without causing the project to be delayed.
[tex]D : ES : 6, EF : 10, LS : 7, LF : 11[/tex]
On April 1, Holton Company borrows $100,000 from West Bank by signing a 6-month, 6%, interest-bearing note.
Prepare the necessary entries below associated with the note payable on the books of Holton Company.
(a) Prepare the entry on April 1 when the note was issued.
(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made.
Answer:
A. Dr Cash $100,000
Cr Notes Payable $100,000
B. Dr Interest expense $1,500
Cr Interest Payable $1,500
Explanation:
a Preparation of the entry on April 1 when the note was issued.
Dr Cash $100,000
Cr Notes Payable $100,000
(To record note issued)
B. Preparation of any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements
Dr Interest expense $1,500
Cr Interest Payable $1,500
($100,000 x .06 x 3/12)
Outsourcing of jobs from large corporations to domestic subcontractors has been one reason job have been become more insecure in the U.S. recently.
a. true
b. false
Answer:
a. true
Explanation:
In Business management, outsourcing can be defined as a process which involves an agreement between two companies that allows for the provision of services or job functions by another.
When a company is outsourced, it engages the service of another company (third-party) to perform some of its duties rather than the use of an in-house department or employees to handle them. The outsourcing firm is saddled with the responsibility of physically distributing the goods or services of the outsourced company.
Hence, outsourcing simply means the use of supply chain partners of a large corporation to provide products or services for the end users or consumers.
In the United States of America, outsourcing of jobs and services from large corporations to domestic subcontractors (outsourcing companies) is one of the main reason job have become more insecure recently.
Suppose Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows:
Year Cash Flow
Year 1 $325,000
Year 2 $500,000
Year 3 $400,000
Year 4 $475,000
Cute Camel Woodcraft Company's weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)?
Answer:
$996,267.41
Explanation:
The Net Present Value of Alpha`s project can be determined by using the CFj Function of a Financial Calculator as follows :
- $400,000 CF0
$325,000 CF1
$500,000 CF2
$400,000 CF3
$475,000 CF4
I/YR = 8%
Then, SHIFT NPV gives $996,267.41
Thus, Alpha's net present value (NPV) is $996,267.41.
During the current calendar year, Bowman Corporation purchased $660,000 of inventory. The beginning inventory balance was $84,000, and the inventory balance at year-end was $120,000. The inventory turnover for the current year was:
Answer:
6.12 times
Explanation:
Cost of Goods Sold = $84,000 + $660,000 - $120,000
Cost of Goods Sold = $624,000
Average inventory = ($84,000 + $120,000) / 2
Average inventory = $102,000
Inventory Turnover = Cost of Goods Sold / Average inventory
Inventory Turnover = $624,000 / $102,000
Inventory Turnover = 6.117647059
Inventory Turnover = 6.12 times
First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $17,000 in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $6 per unit of average inventory. Every time an order is placed for more of item X, it costs $12. a. Whenever item X is ordered, what should the order size be
Answer:
80 quantities
Explanation:
to get the order size of the item, we have to use this formula
[tex]optimal quantity = \sqrt{\frac{2DS}{H} }[/tex]
From this formula above,
D = annual demand = 1600
s = set up cost= 12
h = holding cost = 6
[tex]\sqrt{\frac{2*1600*12}{6} }[/tex]
[tex]\sqrt{6400} \\=80[/tex]
from this solution above, the order size should be 80 quantities
thank you
The forecasted sales pertain to Arrow Corporation: Month Sales September $400,000 October 320,000 Finished Goods Inventory (August 31): 28,000 Arrow Corporation has a selling price of $5 on all units and expects to maintain ending inventories equal to 25 percent of the next month's sales. How many units does Arrow expect to produce in September
Answer:
68,000 units
Explanation:
The computation of the number of units that produced in september is given below;
The sales units at September is
= $400,000 ÷ 5
= 80,000 units
And, the october sales units is
= $320,000 ÷ 5
= 64,000 units
So, the production should be
= Ending finished units + sales units - beginning finished units
= (25% of 64,000 units) + 80,000 units - 28,000 units
= 16,000 units + 80,000 units - 28,000 units
= 68,000 units
Green Thumb Nursery has 32,000 shares outstanding at a market price of $62.15 per share. The earnings per share are $3.15. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm announced a share repurchase for $75,000 of its stock. What is the earnings per share after the repurchase?
Answer:
$3.27
Explanation:
Earnings = Earnings per share * Number of stock outstanding
Earnings = $3.15 * 32,000 shares
Earnings = $100,800
Number of shares repurchased = $75,000 / $62.15
Number of shares repurchased = 1206.75784393
Number of shares repurchased = 1,207
Number of stock outstanding = 32,000 - 1,207
Number of stock outstanding = 30,793
Earnings per share after the stock repurchase = Earnings / Number of stock outstanding
Earnings per share after the stock repurchase = $100,800 / 30,793
Earnings per share after the stock repurchase = $3.2734712435
Earnings per share after the stock repurchase = $3.27
Bloom Corporation purchased $1,450,000 of Taylor Company 5% bonds, at their face amount, with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies its investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $960,000 during 2021.
Required:
For each of the following scenarios, prepare appropriate entry(s) at December 31, 2018, and indicate how the scenario will affect the 2018 income statement (ignoring income taxes).
a. Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $490,000 decline in fair value, Bloom attributes $295,000 to credit losses, and $195,000 to noncredit losses.
b. Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $490,000 decline in fair value, Bloom attributes $295,000 to credit losses, and $195,000 to noncredit losses.
Answer:
a. Dr OTT impairment loss $490,000
Cr Discount on bond investment $490,000
Income statement -$490,000
B.Dr OTT impairment loss $295,000
Cr Discount on bond investment $295,000
Dr OTT impairment loss - other comprehensive income $195,000
Cr Fair value adjustment - non credit losses $195,000
Income statement-$295,000
Explanation:
a. Prepare of the appropriate entry(s) at December 31, 2018 and indication for how the scenario will affect the 2018 income statement
31.12.21
Dr OTT impairment loss $490,000
Cr Discount on bond investment $490,000
(To record impairment loss of investment)
Effect on net income : Earnings are reduced by $490,000
INCOME STATEMENT
Other than temporary impairment loss - $490,000
b. Prepare of the appropriate entry(s) at December 31, 2018 and indication for how the scenario will affect the 2018 income statement
31.12.2021
Dr OTT impairment loss $295,000
Cr Discount on bond investment $295,000
(To record credit losses of impairment of investment)
31.12.2021
Dr OTT impairment loss - other comprehensive income $195,000
Cr Fair value adjustment - non credit losses $195,000
(To record non - credit losses of impairment loss of investment)
Effort net income : Earnings are reduced by
INCOME STATEMENT
Other than temporary impairment loss -$490,000
Less : Portion recognized in other comprehensive income $195,000
Other than temporary recognized in earnings -$295,000
Axis Pvt. Ltd., an international financial services firm, assigns projects to employees in different nations. Since these multinational projects and careers provide employees with global exposure, they are more than willing to cooperate. With regard to organizing a multinational company, which of the following internal factors has been covered in this example?
A. Structure.
B. People.
C. Culture.
D. Management.
Answer: B. People
Explanation:
The people who work in a company are a very important internal factor because their work makes or breaks a company. When the company does something that can be expected to improve the efficiency of its workers, it is said to be investing in its people.
In the above, Axis is sending workers around the world which is giving these workers much needed exposure. In this day and age where globalization is everything, skills gained from being exposed to different nations are very important and can make workers more efficient.
To determine the net cash provided (used) by operating activities, it is necessary to analyze Group of answer choices the current year's income statement. a comparative balance sheet. additional information. all of these.
Answer:
All of these.
Explanation:
All of these are the correct answer because to determine the net cash from the operating activities, there is a requirement of the current year's income statement, additional information such as depreciation and amortization and a comparative balance sheet. In order to get cash from operating activities, the changes and non-cash capital, other non-cash adjustments, depreciation is added to the net income.
The independent operational test and evaluation agency is responsible for the establishment of Critical Technical Parameters (CTPs).
A. True
B. False
Answer:
B. False
Explanation:
The given statement is false as the management office regarding the program created the system to be responsible for the Criticial technical parameter establishment not the independent operational test and the evaluation agency.
So the option b is correct
Hence, the option a is wrong
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,300 and will produce cash flows as follows:
End of Year Investment
A B
1 $8,300 $0
2 8,300 0
3 8,300 24,900
The present value factors of $1 each year at 15% are: __________
Cape Corp. will pay a dividend of $3.00 next year. The company has stated that it will maintain a constant growth rate of 4.5 percent a year forever.
a. If you want a return of 15 percent, how much will you pay for the stock?
b. If you want a return of 8 percent, how much will you pay for the stock?
Answer:
a.
$27.27
b.
$75
Explanation:
Use the following formula to calculate the value of the stock
Value of Stock = Expected Dividend / ( Rate of return - Growth rate )
a.
Where
Expected Dividend = $3.00
Rate of return = 15%
Growth rate = 4.5%
Placing values in the formula
Value of Stock = $3.00 / ( 15% - 4% )
Value of Stock = $3 / 11%
Value of Stock = $27.27
b.
Where
Expected Dividend = $3.00
Rate of return = 8%
Growth rate = 4.5%
Placing values in the formula
Value of Stock = $3.00 / ( 8% - 4% )
Value of Stock = $3 / 4%
Value of Stock = $75
The resource-based view of competitive advantage states that for something to yield competitive advantage it must be ______.
Answer:
"Rare, hard to duplicate, as well as non-substitutable" is the correct response.
Explanation:
Assesses as well as interprets companies' financial capabilities as well as stresses capacities and knowledge throughout the formulation of strategy to provides provision tangible benefits, is considered as RBV.Inputs that always encourage employees to exercise their business might be viewed as significant commodities.A(n) ______ cost requires a future outlay of cash and is relevant for current and future decision making. Multiple choice question. opportunity sunk historical out-of-pocket
Answer:
out-of-pocket
Explanation:
In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
Cost pool is simply the amount of money spent by a firm on a particular activity.
Generally, an activity-based costing uses numerous cost pools such as manufacturing cost or customer services and numerous cost drivers such as direct labor hours worked, number of changes used in engineering department, etc.
Generally, an out-of-pocket cost requires that an individual or business outlay their future cash-flow and it must be relevant for current and future decision making.
Mabel is a single 40-year-old who has borrowed money on numerous occasions. Her payment record has been good, except she has been delinquent in paying a few bills. Which of the following is true regarding credit information gathered on Mabel?
a. Since Mabel has been delinquent, she waives her right to see the credit files.
b. If Mabel is rejected for a loan because of the consumer report, the lender must tell her the source of the report.
c. Mabel has a right to have the information regarding her delinquency in paying a few loans stricken from her credit record because her record has generally been good.
d. Mabel's only legal remedy, if there is erroneous information in her credit file, is to report the problem to the FTC for enforcement.
Answer:
b. If Mabel is rejected for a loan because of the consumer report, the lender must tell her the source of the report.
Explanation:
The best answer to this question is option b, given that it gives the best description of the situation at hand. If she is turned down for a loan due to the fact that she has been delinquent in paying bills, the the agency from which she seeks this loan has to tell her the source of the report. A credit report gives a summarized statement of a persons financial state. It has such important information like the particulars of the person , address as well as the person SSN,
A statement of cash flows helps answer all of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) check all that apply What explains the changes in the cash account?unanswered Where does a company spends its cash?unanswered How can the company improve its operations?unanswered How does a company receives its cash?unanswered What are the changes in the non-cash accounts?
Answer:
What explains the changes in the cash account?Where does a company spends its cash?How does a company receive its cash?Explanation:
The Statement of Cash Flows shows the actual cash that a company has by showing the various places that cash comes in from and how cash leaves. It therefore shows how the cash account changes.
In showing how cash leaves the company, the statement shows how the company spends its cash and in showing how money comes in, the statement shows how the company receives its cash as well such as through investments in other companies and net income.
The Statement of Cash Flows depicts a company's actual cash flow by displaying where the money originates from and where it goes. As a result, it depicts the movement of the cash account.
The statement indicates how money left the company and how it gets in, such as through investments in other companies and net income.
So, Option A, B, and D are correct.
The other Options are incorrect as:
Option C is incorrect as a cash flow does not show how a company improves its operation it only shows the transactions.
Option E is incorrect as cash flow does not represent changes in noncash accounts as cash flow represents only cash transactions.
A cash flow is a physical or digital transfer of capital: a payment, notably from one central bank fund to another, is a cash flow in its restricted sense; the word 'cash flow' is primarily used to denote the transfer of funds from one central bank account to another.
Thus Options A, B, and D are correct statements for cash flow.
For more information about Cash Flow refer to the link:
https://brainly.com/question/10714011
Exercise 4-7 Recording sales, purchases, shipping, and returns—buyer and seller LO P1, P2 Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 11 Sydney accepts delivery of $30,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $20,100. Sydney pays $400 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,300 of the $30,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $871. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. (Both Sydney and Troy use a perpetual inventory system and the gross method.) 1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. 2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
Answer:
Sydney Retailing (buyer) and Troy Wholesalers (seller)
Journal Entries:
For the Buyer (Sydney):
May 11 Debit Inventory $30,000
Credit Accounts Payable $30,000
To record the purchase of goods on account with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Debit Freight-in $400
Credit Cash $400
To record the freight-in expense.
May 12 Debit Accounts Payable $1,300
Credit Inventory $1,300
To record the return of goods to Troy.
May 20 Debit Accounts Payable $28,700
Credit Cash $27,839
Credit Cash Discounts $861
To record the payment on account, including discounts.
For the seller (Troy Wholesalers):
May 11 Debit Accounts Receivable $30,000
Credit Sales Revenue $30,000
To record the sale of goods on credit with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Debit Cost of goods sold $20,100
Credit Inventory $20,100
To record the cost of goods sold.
May 12 Debit Sales Returns $1,300
Credit Accounts Receivable $1,300
To record the sales returns on account.
Debit Inventory $871
Credit Cost of goods sold $871
To record the cost of goods returned.
May 20 Debit Cash $27,839
Debit Cash Discounts $861
Credit Accounts Receivable $28,700
To record the receipt of cash on account, including discounts.
Explanation:
a) Data and Analysis:
For the Buyer (Sydney):
May 11 Inventory $30,000 Accounts Payable $30,000
with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Freight-in $400 Cash $400
May 12 Accounts Payable $1,300 Inventory $1,300
May 20 Accounts Payable $28,700 Cash $27,839 Cash Discounts $861
For the seller (Troy Wholesalers):
May 11 Accounts Receivable $30,000 Sales Revenue $30,000
with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Cost of goods sold $20,100 Inventory $20,100
May 12 Sales Returns $1,300 Accounts Receivable $1,300
Inventory $871 Cost of goods sold $871
May 20 Cash $27,839 Cash Discounts $861 Accounts Receivable $28,700
Promotional expenses at the maturity stage of the product life cycle are often designed to Multiple Choice maintain market share. create a sense of nostalgia. attract more price-conscious consumers. thwart the growing number of competitors that have entered the market. convince those who have abandoned the brand to try it again.
Answer:
maintain market share.
Explanation:
A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.
A product life cycle can be defined as the stages or phases that a particular product passes through, from the period it was introduced into the market to the period when it is eventually removed from the market.
Generally, there are four (4) stages in the product-life cycle;
1. Introduction.
2. Growth.
3. Maturity.
4. Decline.
Maturity is the stage in which product experiences a peak in sales growth and then eventually slows as the product reaches more customers, and lastly price competition is fierce.
Promotional expenses that are incurred at the maturity stage of the product life cycle are often designed by marketers to maintain market share. This is usually achieved through further product differentiation and finding new buyers (consumers).
XYZ Corporation manufactures air conditioners and has the capacity to manufacture and sell 80,000 units each year. It is currently only manufacturing and selling 60,000 units. The following per unit numbers relate to annual operations at 60,000 units: Per Unit Selling price $ 125 Manufacturing costs: Variable $ 25 Fixed $ 40 Selling and administrative costs: Variable $ 10 Fixed $ 15 A customer would like to purchase 3,000 air conditioners from XYZ but only if they can get them for $75 each. Variable selling and administrative costs on this special order will drop down to $2 per unit. This special order will not affect the 60,000 regular sales and it will not affect the total fixed costs. The annual financial advantage (disadvantage) for the company as a result of accepting this special order from this customer should be:
Answer:
The annual financial advantage is $147000
Explanation:
Which increases GDP the most: 1 pound of dried beans or one pound of New York strip steak?
Answer:
To determine which increases GDP the most, 1 pound of dried beans or one pound of New York strip steak, the value of each of these foods must be considered. Thus, knowing that in general meat has a much higher market value than beans (in supermarkets, 1 pound of beans costs about $ 2 or $ 3, while 1 pound of New York strip steak costs about $ 13), 1 pound of New York strip steak increases GDP the most.
Since graduating from college years ago, Dr. Nick Riviera has made deposits into his retirement fund on a basis in the amount of $. If his retirement fund has earned % interest compounded , how much has Nick accumulated in his retirement account?
Answer:
$280,971.79
Explanation:
Calculation to determine How much has Nick accumulated in his retirement account
Using Financial calculator
Amount Nick accumulated in his retirement account = FV(rate, nper, pmt, pv, type)
Where,
Monthly deposit = $130
Number of months = 40 * 12
Number of months= 480
Monthly interest rate = 6.3% /12
Let plug in the formula
Amount Nick accumulated in his retirement account = FV (6.3%/12, 480, -130, 0, 0)
Amount Nick accumulated in his retirement account = $280,971.79
Therefore the Amount Nick accumulated in his retirement account is $280,971.79
The June 1 work in process inventory consisted of 4,100 units with $14,700 in materials cost and $12,300 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 60% complete with respect to conversion. During June, 36,600 units were started into production. The June 30 work in process inventory consisted of 9,400 units that were 100% complete with respect to materials and 50% complete with respect to conversion. 3. How many units were completed and transferred to finished goods during the period
Answer:
Units completed and transferred to finished goods during the period are:
= 31,300 units.
Explanation:
a) Data and Calculations:
Units Materials Conversion
Work in process inventory, June 1 4,100 $14,700 $12,300
Degree of completion of WIP 100% 60%
Units started into production, June 36,600
Total units available in production 40,700
Work in process inventory, June 30 9,400 100% 50%
Units completed and transferred 31,300 (40,700 - 9,400)
Maximum diversification benefit can be achieved if one were to form a portfolio of two stocks whose returns had a correlation coefficient of:
Answer:
-1.0
Explanation:
Diversification in a portfolio can be regarded as spreading of investments by investors so that risk can be minimized. The correlation coefficient "r" that exist between two securities allows us to know how return that's gotten from one security is related to returns from another security. For instance, it is possible for two securities within same sector to move in the same direction, i.e it is possible to be positively correlated, in this sense when price of one goes up , the other price also goes up this might not be with the same margin.
As regards negative correlation, there is movement of security returns in opposite directions, in this sense there is least relationship between the securities. Hence with r= 1 there is movement of the two stocks in opposite direction hence Maximum diversification.
It should be noted that Maximum diversification benefit can be achieved if one were to form a portfolio of two stocks whose returns had a correlation coefficient of -1.0