Answer:
Explanation:
Given the following :
Portfolio - - - - - - Expected return - - - Std
Risk-free - - - - - - - - 6.0% - - - - - - - - - - 0%
Market - - - - - - - - - 10.2 - - - - - - - - - - - - 21
A - - - - - - - - - - - - - 8.2 - - - - - - - - - - - - 10
Calculate the sharpe ratios for the market portfolio and portfolio A.
Sharpe Ratio = (Expected portfolio return - Risk-free rate of return) / standard deviation of portfolio return
Sharpe ratio of market portfolio:
(10.2 - 6) / 21
4.2 / 21 = 0.20
Sharpe ratio of portfolio A:
(8.2 - 6) / 10
2.2 / 10 = 0.22
B) NO
If simple CAPM is valid, the above situation is Not possible, BECAUSE, according to the simple Capital Asset Pricing Model, the market portfolio is the most efficient, however with a Sharpe ratio of 0.20, which is lower than the sharpe ratio obtained for portfolio A, 0.22 then, portfolio A is more efficient.
During the year, ABC had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000, payment to workers, $2,000; payment for machinery, $8,000. What amount would be reported for net financing cash flows on the Statement of Cash Flows?
Answer:
$5,000
Explanation:
The computation of the amount that should be reported for net financing cash flows is shown below:
Cash flows from financing activities
Receipt from the bank for long-term borrowing $6,000
Less: dividend paid -$1,000
Net cash flows from financing activities $5,000
The positive amount represents the cash inflow and the negative amount represent the cash outflow and the same is to be considered
In 2008 approximately what percent of the world's population lived in Asia? PROVIDE/EXPLANATION PROOF FOR YOUR ANSWER. INCOMPLETE, UNRELATED, SELF - PROMO and NONSENSE ANSWERS WILL BE REPORTED!!!
Answer:
We can infer from the graph, that about two thirds (around 60%) of the world's population lived in Asia in 2008.
Asia is by far the most populated continent in the world. The two most populous countries of the globe are located in Asia: India, and China, each with over 1 billion people.
Debt: 5,000 7.2 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 440,000 shares outstanding, selling for $62 per share; the beta is 1.05. Market: 11 percent market risk premium and 5.2 percent risk-free rate. What is the company's WACC?
Answer:
the company's WACC is 15.07 %.
Explanation:
WACC = ke × (E/V) + kd × (D/V)
kd = cost of debt
Pv = $1,000 × 108% = - $1,080
n = 30 × 2 = 60
pmt = ($1,000 × 7.2 %) ÷ 2 = $36
p/yr = 2
Fv = $1,000
r = ?
Using a Financial Calculator, the Pre-tax cost of debt, r is 6.5852 or 6.59 %
After tax cost of debt = Interest × (1 - tax rate)
I will use the pre-tax cost of debt for now since i do not have the tax rate on this question.
ke = cost of equity
= Return on Risk free security + Beta × Market Risk Premium
= 5.20 % + 1.05 × 11.00 %
= 16.75 %
E/V = Market Weight of Equity
= (440,000 × $62) / (440,000 × $62 + 5,000 × $1,080) × 100
= 83.48 %
D/V = Market Weight of Debt
= (5,000 × $1,080) / (440,000 × $62 + 5,000 × $1,080) × 100
= 16.52 %
WACC = 16.75 % × 83.48 % + 6.59 % × 16.52 %
= 15.07 %
Which of the following is designed to partially remedy the problem of excessive insurance? Baumol’s cost disease
Answer:
The Cadillac tax
Explanation:
The benefit for health case sponsored by the employer in the case when the defined limits that should be legal will be 40% of excise tax also the taxes are paid by the insurance companies but the same is to be borne by an individual also it determines who has to receive the benefit of the insurance. It also restricts the limit of private health insurance
So here in the given situation, it is a Cadillac tax
Find a numerical equation relating planned aggregate expenditure to output and to the real interest rate. [i.e. write down the PAE equation]
Answer:
The answer is below
Explanation:
Aggregate expenditure is the current value of finished products in an economy, it is gotten by summing all expenditures spent over a period of time in an economy. It is given by the formula:
PAE = [tex]C^d+I^p+G+X[/tex]
Where PAE is the planned aggregated demand, C is the household consumption, X is the difference between exports and imports, I is the investments while G is government expenditures
assume the fixed overhead per unit was $1.50 for both the beginning and ending inventory. what is net income under absorption costing
Answer:
Net income under absorption costing is $904,370.
Explanation:
Note: This question is not complete and it contains an error in the only available data. The complete correct question is therefore provided before the question is answered as follows:
Kluber, Inc. had net income of $908,000 based on variable costing. Beginning and ending inventories were 55,800 units and 53,600 units, respectively. Assume the fixed overhead per unit was $1.65 for both the beginning and ending inventory. What is net income under absorption costing?
The explanation to the answer is now given as follows:
Variable costing is a costing technique that takes only the variable cost into consideration and exclude the fixed manufacturing overhead from the production production cost of a product.
Absorption costing is a costing technique in which the fixed overhead cost of production is allocated to products produced.
For this question, net income under absorption costing can be determined as follows:
Net income based on variable costing = $908,000
Total beginning fixed overhead = Beginning inventories * Fixed overhead per unit = 55,800 * $1.65 = $92,070
Total ending fixed overhead = Ending inventories * Fixed overhead per unit = 53,600 * $1.65 = $88,440
Adjustment for fixed overhead for the period = Total ending fixed overhead - Total beginning fixed overhead = $88,440 - $92,070 = -$3,630
Net income under absorption costing = Net income based on variable costing + Adjustment for fixed overhead for the period = $908,000 + (-$3,630) = $908,000 - $3,630 = $904,370
Therefore, net income under absorption costing is $904,370.
Last year, when the stock of Waldo, Inc., was selling for $28 a share, the dividend yield was 3.5 percent. Today, the stock is selling for $35 a share. What is the required return on this stock if the company maintains a constant dividend growth rate of 5 percent?
Answer:
The required rate of return on the stock is 8.087%
Explanation:
The constant growth model of DDM is used to calculate the price of a stock whose dividends are expected to grow at a constant rate forever. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of the stock under this model can be calculated as,
P0 = D0 * (1+g) / (r - g)
Where,
P0 is price of the stock todayD0 * (1+g) is the dividend expected from the stock for the next periodr is the required rate of returng is the constant growth rate in dividendsTo calculate the r or required rate of return, we first need to determine the dividend that was paid last year. Then we will apply the constant growth rate to that dividend to calculate the dividend today or D0. We will them input the value of stock price, the current dividend and the dividend growth rate in the formula above to calculate the required rate of return.
Dividend per share - Last year
Dividend yield = Dividend per share / Price per share
0.035 = Dividend per share / 28
0.035 * 28 = Dividend per share
Dividend per share = $0.98
The dividend per share today (D0) is,
D0 = 0.98 * (1+0.05)
D0 = $1.029
35 = 1.029 * (1+0.05) / (r - 0.05)
35 * (r - 0.05) = 1.08045
35r - 1.75 = 1.08045
35r = 1.08045 + 1.75
r = 2.83045 / 35
r = 0.08087 or 8.087%
An investor has 15 thousand dollars to invest among 3 possible investments A, B, C. Each investment must be in units of a thousand dollars. Not all the money need be invested. He must invest at least 3 thousand dollars on the investment A and at least 5 thounsand dollars on the investment B. How many different investment strategies are possible
Answer:
36 ways
Explanation:
There are 3 possible investments A, B and C.
If x represents the amount of money to be invested in the ith opportunity, it is given as:
[tex]x_1+x_2+x_3=15 \\[/tex]
Let y be the minimum investment to be made, therefore:
[tex]y_1=x_1-3\\y_2=x_2-5\\y_3=x_3\\\\Therefore:\\\\y_1+y_2+y_3+3+5=15\\\\y_1+y_2+y_3+8=15\\\\y_1+y_2+y_3=7\\[/tex]
The number of possible combinations is:
C(n + k - 1, k - 1)
Where k is the number of investment = 3 and n = 7. Therefore:
The number of possible combinations is = C(n + k - 1, n - 1) = C(7 + 3 -1, 3 - 1) = C(9, 2) = [tex]\frac{9!}{(9-2)!2!}=\frac{9!}{7!2!}=36\ ways[/tex]
Suppose a firm is the exclusive supplier of Painite, the world's rarest gemstone. Output is sold in two markets, A and B. Assume consumers in the markets are unable to sell gemstones to one another and can only purchase directly from the firm. Market A has a more inelastic demand than market B. What can be said about the prices the firm charges in each market?
Answer:
d. Market A will have a higher price than market B
Explanation:
As we know that in the non elastic market, the seller could charge the high price while on the other hand in the elastic market it can charge a smaller price
as if there is an inelastic demand than it would leads to 1% rise in price that decrease the quantity demanded by smaller than 1%. Also if the price increased the total revenue also rises
And if there is an elastic demand than it would leads to 1% rise in price that decrease the quantity demanded by more than 1% and the price increased the total revenue is decreased
As it is given that the Market A contains more inelastic demand than market B so the seller charged a high price in market A than in Market B
Hence, the last option is correct
C&A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges C&A $30 per order and $50 per bottle. C&A's annual holding cost percentage is 40%. Assume C&A operates 50 weeks in a year. What is C&A's total ordering and holding cost per year if C&A orders 500 bottles at a time? $11,800 $5036 $6800 $10,036
Answer: c---$6,800
Explanation:
Annual Demand = Weekly Demand x Number of weeks in operation
= 600bottles x 50 = 30,000 Bottles
a)Annual ordering cost = (Annual Demand /Quantity) X Ordering cost= (30000/500)*30 = $1,800
B) Holding cost per unit = Purchase Price per bottle x Holding cost percentage
= $50 x 40% = $20 per unit
Annual Holding cost = Average Inventory x Holding cost per unit per annum
But Average Inventory = Size of order / 2 = 500 / 2 = 250 Bottles
Annual Holding cost =250 x $20 = $5,000
Therefore, total ordering and holding cost per year
= $1,800 + $5,000
= $6,800
Thomsen Computer Company produces three products: Earth, Wind, and Fire. Earth requires 80 machine setups, Wind requires 60 setups, and Fire requires 180 setups. Thomsen has identified an activity cost pool with allocated overhead of $360000 for which the cost driver is machine setups. How much overhead is assigned to each product?
Answer:
Earth = $90,000
Wind = $67,500
Fire = $202,500
Explanation:
Activity based costing is a costing system that assigns the cost of identified activities , mostly overhead and indirect cost to all products and services produced according to the respective volume of the activities consumed by each of the products and services , using cost drivers.
Workings.
The cost driver in the scenario is Machine set up
Earth = 80 set up
Wind = 60 set up
Fire = 180 set up
Total = 320 set up
General Overhead = 360,000
Earth = 80/320 *360,000 = 90,000
Wind = 60/320*360,000 = 67,500
Fire = 180/320*260000 = 202,500
Southport industries company has current assests of $610000 and a current ratio is 4.1. Assume that the company prepays rent for 9 months in the amount of $34,000. The current ratio after this transaction is closest to:_____.
A) 5.03.
B) 3.90.
C) 3.68.
D) 4.12.
Answer: D. 4.12
Explanation:
From the question, we are informed that Southport industries company has current assests of $610000 and a current ratio is 4.1 and that the company prepays rent for 9 months in the amount of $34,000.
It should be noted that the current ratio is calculated as:
= Current assets/Current liabilities
4.1 = $610,000/current liabilities
Current liabilities = $610,000/4.1
= $148,781
The current ratio will still be close.to 4.1 based on the above analysis.
A radio transceiver is
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In radio communication, a transceiver is a device that is able to both transmit and receive information through a transmission medium. It is a combination of a transmitter and a receiver, hence the name transceiver. Transmission is usually accomplished via radio waves, but communications satellites, wired connections, and optical fiber systems can also be used.
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Job rotation is a system where an employee is moved from one specialization to another in order to discipline the employee.
A. True
B. False
Whats the total Late Fee Interest charged to the customers based on the policy below? Vittorla's Furniture Bazaar Accounts Receivable Aging Summary As of June 30, 2015 Customer Current 1-30 Days 31-60 Days 61-90 Days 90 Days Total Bull and Bear Café $750 $750 Eckhardt Design $1,000 $1,000 Halifax Sporting Goods $500 $500Walker Studios $1,500 $1,500TOTAL $2,250 $500 $1,000 $0 $0 $3,750 Late Fee Interest Policy Age Interest Current 0%1-30 Days 0%31-60 Days 5% 61-90 Days 10% >90 Days 20% a. $0 b. $50 c. $75 d. $100 e. $200
Answer:
b. $50
Explanation:
Vittorla's Furniture Bazaar Accounts Receivable
Aging Summary As of June 30, 2015
Customer Current/1-30 Days/31-60 Days/61-90 Days/>90 Days
Total B&B Café $750
Eckhardt Design $1,000
Halifax Sporting $500
Walker Studios $1,500
Late Fee Interest Policy
Age Interest
Current 0% x ($750 + $1,500) = $0
1-30 Days 0% x $500 = $0
31-60 Days 5% x $1,000 = $50
61-90 Days 10%
>90 Days 20%
total interest charged = $0 + $0 + $50 = $50
If a firm has a strong set of innovation skills and capabilities, it should pursue entrepreneurial opportunities through acquisitions. joint ventures. strategic alliances. internal innovation.
Answer: Internal innovation.
Explanation:
If a firm is blessed with a strong set of innovation skills and capabilities then they should look in-house to come up with new entrepreneurial ventures and opportunities that can make them grow.
They could establish a Research and Development department to come up with various ways to grow the company. The key talent that R&D departments need to succeed is to be able to be innovative which is something that the company apparently has. If they can leverage these skills inwardly then they can grow from within like Apple did in its early days.
An organizational role is a set of task-related behaviors required of a person by his or her position in an organization.
a) true
b) false
Answer:
True
Explanation:
because it is a method of providing service entitlements to a person within the system
The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense.
Accounts receivable $ 438,000 Debit
Allowance for Doubtful Accounts 1,280 Debit
Net Sales 2,130,000
Credit All sales are made on credit. Based on past experience, the company estimates 1.0% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
A) Debit Bad Debts Expense $20,020; credit Allowance for Doubtful Accounts $20,020.
B) Debit Bad Debts Expense $22,580; credit Allowance for Doubtful Accounts $22,580.
C) Debit Bad Debts Expense $21,300; credit Allowance for Doubtful Accounts $21,300.
D) Debit Bad Debts Expense $4,380; credit Allowance for Doubtful Accounts $4,380.
E) Debit Bad Debts Expense $5,660; credit Allowance for Doubtful Accounts $5,660.
Answer:
C) Debit Bad Debts Expense $21,300; credit Allowance for Doubtful Accounts $21,300.
Which of the following priority rule will minimize the average flow time of jobs and also perform well in other measures such as average lateness
A) STR
B) CR
C) SOT
D) LCFS
E) EDD
CR always minimizes mean job flow times.
What priority rule is being used when jobs are processed according to the lowest ratio of the due date to the remaining processing time?A priority index is computed using the components: CR = (due date—cutting-edge date)/(production lead time final). Jobs with a smaller crucial ratio are given precedence over people with larger critical ratios. FOR(fewest operations ultimate). that is a version of the SPT rule.
What's the minimum Cr for the primary task in the sequence?If this rule is used for sequencing, the activity with the lowest CR is scheduled first. A CR less than 1 indicates that the task will be overdue, and a CR greater than 1 shows that the process may be finished beforehand of the due date if no unexpected postponement occurs.
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W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity?
A. An extremely formalized organizational structure
B. A highly organic organizational structure
C. A low degree of centralization
D. A flat organization structure
Answer: An extremely formalized organizational structure
Explanation:
From the question, we are informed that W.L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings.
The most likely to hinder its intention of fostering employee satisfaction, retention, and creativity will be an extremely formalized organizational structure. This is because the top level managers and those at the helm of affair typically make decisions.
Answer: A. An extremely formalized organizational structure
Suppose that in 1984 the total output in a single-good economy was 10,000 buckets of chicken. Also assume that in 1984 each bucket of chicken was priced at $10. Finally, assume that in 2005 the price per bucket of chicken was $16 and that 22,000 buckets were produced.
Required:
a. What is the GDP price index for 1994, using 2005 as the base year?
b. By what percentage did the price level, as measured by this index rise between 1984 and 2005?
c. What were the amounts of real GDP in 1984 and 2005?
Answer:
a. 62.5
b. 60%
c. $160,000; $352,000
Explanation:
a. Price Index = (Price in year of interest/ Price in Base year) * 100
= (10/16) * 100
= 62.5
b. Rose from 62.5 in 1984 to 100 in 2005
= (100 - 62.5)/62.5
= 60%
c. Using 2005 as the Base year means that the Real GDP will be based on 2005 prices.
Real GDP 1984
= 10,000 buckets * 16
= $160,000
Real GDP 2005
= 22,000 * 16
= $352,000
An operating budget is a prediction of expected revenues and expenses and other operating and financing transactions for a future period. true or false
Answer:
True
Explanation:
An operating budget is a budget that forecasted the expected revenues, expenses, and other operating & financing transactions for a future period so that the company get to know how much revenues to be earned and how much the expenses to be incurred during the particular year
Hence, the given statement is true
hen considering whether a holder took the negotiable instrument in good faith, the court looks only at the
Answer:
Explanation:
nsei kkkkkkkkkkkkkkkkkkkkkkkkkkao
Answer:
holder's preceding claims
Explanation:
A portfolios is composed of two stocks, A and B. Stock A has a standard deviation of return of 19%, while stock B has a standard deviation of return of 25%. Stock A comprises 70% of the portfolio, while stock B comprises 30% of the portfolio. If the variance of return on the portfolio is .034, the correlation coefficient between the returns on A and B is_____.
a. 536.
b. 375.
c. 161.
d. 134.
Answer:
0.536
Explanation:
The computation of the correlation coefficient is shown below:-
[tex]\sigma^2_A \times w^2_A + \sigma^2_B \times w^2_B + 2\times w_A \times w_B \times \rho_{AB} \times \sigma_A \times \sigma_B = 0.034[/tex]
[tex]0.19^2 \times 0.70^2 + 0.25^2\times 0.30^2 + 2*0.70 \times 0.30 \times \rho_{AB} \times 0.19\times 0.25 = 0.034[/tex]
[tex]0.023314 + 0.01995 \times \rho_{AB} = 0.034[/tex]
[tex]0.01995 \times \rho_{AB} = 0.010686\\\\\rho_{AB} = 0.536[/tex]
Therefore for computing the correlation coefficient between the returns on A and B we simply applied the above formula.
So, according to the question the option is not available. The right answer is 0.536 and the same is not considered
Describe the main differences for revenue spending between ""for profit"" companies and ""not for profit"" companies. Describe how the main financial documents of Goodwill are similar to those companies that are ""for profit"". Describe how the main financial documents of Goodwill are difference to those companies that are ""for profit"".
Answer with Explanation:
The analysis includes the assessment of Non profit organization's efficiency both in fundraising and spending, economy of operations and the effectiveness of the operations. This can be explained with an example. For example if the non profit organization has an objective to increase the book reading habit because it believes that the people who read more are not violent personalities and in this way they can reduce the crime rate. So it has established number of libraries in different communities. Now we will look at at what cost it has acquired these libraries (Economy), how much people have visited these libraries (Efficiency) and whether the crime rate in the community has sufficiently fallen or not (Effectiveness). So this helps in understanding whether the objective was met or not.
However when we analyze the financial statement of profit making organizations then we use many profit and efficiency ratios to assess the performance of the organization. These ratios can also be helpful if the NGO is in business as well. But most of the NGOs rely on grants and these grants are subjective to their previous performance.
The NGOs are also required to publish reports according to the grant provider's enforced accounting principles, rules and guidelines. Just take the example of US-AID program that requires the Non profit organization to publish financial reports in specific format and enforces different Generally Acceptable Principles to be used in preparing these financial reports. So yes it is much more different in analyzing the financial statements of Non profit organization and profit making organization.
When the federal government changes purchases and/or taxes to stimulate the economy or rein in inflation, such policy is:_______.
a. active monetary policy
b. discretionary fiscal policy
c. active federal policy
d. sutomatic focal policy
Answer:
B. discretionary fiscal policy
Explanation:
Discretionary fiscal policy is used to stimulate an economy or rein in inflation. The government does this by making changes to it's expenditure, that is it's spending and also taxes. Such a policy can either expand or shrink the economy based on what the government is trying to achieve.
Government spending alongside taxation are used to influence aggregate demand. This would help to close deflationary gap
In an efficient market, professional portfolio management can offer all of the following benefits except which of the following?
A. A superior risk-return trade-off
B. Low-cost diversification
C. A targeted risk level
D. Low-cost record keeping
Answer:
A. A superior risk-return trade-off
Explanation:
In a normal and efficient market a professional portfolio management service is able to offer Low-cost diversification, A targeted risk level, and even a Low-cost record keeping. What they cannot offer is a superior risk-return trade-off, this is because risk-return holds a very correlated trade-off in which the higher amount of risk your portfolio holds the higher returns you can get from it, but this does not get rid of the risk which can cause you to lose all of your money. Therefore "superior" is unnachievable.
Norman Bates is considering opening a motel. He estimates that the following costs will be incurred during his first month of operations: Rent $9,200, Wages $16,400, Laundry service 7,000, Occupancy taxes $10.00 per night. Soap & Shampoo will cost $3.00 per night. He must also pay a management company a management fee of $1.10 per night, since he will not be able to manage all aspects of the motel. In addition, cleaning costs are expected to behave in relation to the number of nights as follows: Number of nights Cleaning Costs 40 $ 600 60 $ 730 90 $ 960 120 $1260 140 $1500 Norman anticipates that he can charge $90 per night for each room. Instructions (a) Using the high-low method, determine the variable and fixed cost components of the cleaning costs. (b) Calculate the total variable costs and total fixed costs (c) Determine the break-even point in number of nights and sales dollars.
Answer:
Fixed costs:
Rent $9,200
Wages $16,400
Laundry service $7,000
Variable costs:
Soap & Shampoo $3.00
Management fee $1.10
Mixed costs (cleaning):
40 $600
60 $730
90 $960
120 $1,260
140 $1,500
a) variable cost = ($1,500 - $600) / (140 - 40) = $900 / 100 = $9
fixed costs = $600 - ($9 x 40) = $240
b) total fixed costs = $32,840
total variable costs per night = $13.10
c) contribution margin = $90 - $13.10 = $76.90
break even point = $32,840 / $76.90 = 427 nights
sales dollars = $427 x $90 = $38,430
Without the cost concept, accounting reports would become unstable and unreliable.
a. true
b. false
Without the cost concept, accounting reports would become unstable and unreliable. It is true. Thus option (a) is correct.
What are accounting reports ?Accounting reports are financial documents that provide information about the financial performance and position of a business. These reports summarize the financial transactions that have taken place within a given period, typically a fiscal year or a quarter.
Accounting reports are essential tools for businesses of all sizes. They provide a detailed view of a company's financial performance, helping stakeholders make informed decisions about investments, credit, and other financial matters.
It is true to say that without the cost concept, accounting reports would become unstable and unreliable. Thus option (a) is correct.
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Neptune Rentals operates a boat rental service. Consider the following costs of the company over the relevant range of 5,000 to 8,000 hours of operating time for its boats:
Hours of Operating Time
5,000 6,000 7,000 8,000
Total costs:
Variable costs ............... $ 20,000 $ ? $ ? $ ?
Fixed costs ................... 168,000 ? ? ?
Total costs ....................... $188,000 $ ? $ ? $ ?
Cost per hour:
Variable cost ................. $ ? $ ? $ ? $ ?
Fixed cost ..................... ? ? ? ?
Total cost per hour ........... $ ? $ ? $ ? $ ?
Required:
Compute the missing amounts, assuming that cost behavior patterns remain unchanged within the relevant
range of 5,000 to 8,000 hours.
Answer and Explanation:
The computation of the missing amount is shown below:
Operating hours
Particulars 5,000 6,000 7,000 8,000
Total cost:
Variable cost $20,000 $24,000 $28,000 $32,000
($20,000 × 6 ÷ 5) ($20,000 × 7 ÷ 5) ($20,000 × 8 ÷ 5)
Fixed cost $168,000 $168,000 $168,000 $168,000
Total cost $188,000 $192,000 $196,000 $200,000
Cost per hour:
Variable cost $4 $4 $4 $4
($20,000 ÷ 5,000) ($24,000 ÷ 6,000) ($28,000 ÷ 7,000) ($32,000 ÷ 8,000)
Fixed cost $33.60 $28 $24 $21
($168,000 ÷ 5,000) ($168,000 ÷ 6,000) ($168,000 ÷ 7,000) ($168,000 ÷ 8,000)
Total cost per hour $37.60 $32 $28 $25