Answer: D) retained earnings
Explanation:
Incremental cost of Financing refers to the additional cost incurred when additional finance is raised.
If management is concerned with minimizing this cost then they should use their retained earnings. Retained earnings are the firm's own profits and as such using them would not have any fees attached like debt and new equity issues which a firm would have to pay interest and dividends on respectively.
Managers are important members of the organization. Within an organization, there are managers at four levels: top, middle, first-line, and team leaders. This activity is important because each of these levels has different managerial challenges and decisions to make to achieve organizational effectiveness. The goal of this exercise is to challenge your knowledge of the four levels of management.
Answer:
1. Pat is Middle Level.
Pat is trying to implement the strategic goals of the company which are set by Top Management. That would make Pat a Middle level manager.
2. Rick is Top Level.
Rick is developing the policies for the entire company which would place Rick at Top Manager level.
3. Daisy is a First-line Manager
Daisy is responsible for the loading products such that it is done effectively. This is an operational duty which would place Daisy at First-line level.
4. Ruth is a First-Line Manager
Ruth directs art staff who are non-managers which would make Ruth a first-line manager
5. Gary is Top Level
By developing projections on long term growth, that means Gary contributes to strategic decisions thereby making Gary top level.
6. Greg is Middle Level
Greg is in charge of first line managers which places him directly on top of them which means he is a middle level manager.
7. Mike is a Team Leader
Mike is in charge of the team which is the textbook role of a team leader.
8. Nancy is a Team leader
The members of the team go to Nancy when they need to resolve conflict or when they want to coordinate their activities. As the team leader is in charge of team coordination, Nancy must therefore be a team leader.
The rate that yields a net present value of zero for an investment is the: Multiple Choice Internal rate of return. Accounting rate of return. Net present value rate of return. Zero rate of return. Payback rate of return.
Answer: Internal rate of return
Explanation:
The Internal Rate of Return is a financial analysis measure that yields a net present value of zero for an investment. In so doing it can be used to determine the financial viability of a project.
It does this by telling the company which required rate of return will return a positive NPV because the logic is that if the Required Rate of Return for the project is lower than the IRR, it will yield an NPV greater than 0 which is what the IRR was able to yield because it would discount the cashflows less.
The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 20% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the market price of a share is currently $100, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a. The intrinsic value of a share of Xyrong stock is $90.91.
b. Your expected 1-year holding-period return on Xyrong stock is 5.82%.
Explanation:
Given in the question are the following:
rf = risk-free rate of return = 8%, or 0.08
rm = expected rate of return on the market portfolio = 15%. or 0.15
b = beta = 1.2
dp = Dividend payout ratio = 40%, or 0.40
e = latest earnings = $10
ROE = Return on equity = 20%, or 0.20
We therefore proceed as follows:
a. What is the intrinsic value of a share of Xyrong stock ? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
This can be calculated using the formula for calculating the intrinsic value of a share as follows:
Intrinsic value = (e * dp) / [rf + b * (rm - rf) - ROE * (1 - dp)] .......... (1)
Substituting the values into equation (1), we have:
Intrinsic value = ($10 * 40%) / [8%+ 1.2 * (15% - 8%) - 20% * (1 - 40%)]
Intrinsic value = $4 / [8% + 1.2 * 7% - 20% * 60%
Intrinsic value = $4 / (8% + 0.084 - 12%)
Intrinsic value = $4 / 0.044
Intrinsic value = $90.91
Therefore, the intrinsic value of a share of Xyrong stock is $90.91.
b. If the market price of a share is currently $100, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
To do this, we first calculate the price of the share after one year from now as follows:
p1 = Intrinsic value * (1 + ROE * (1 - dp)) ............................ (2)
Where p1 denotes the price of the share after one year from now.
Substituting the relevant values into equation (2), we have:
p1 = 90.91 * (1 + 20% * (1-40%))
p1 = 90.91 * (1 + 20% * 60%)
p1 = 90.91 * 1.12
p1 = 101.8192
We can now calculate the expected 1-year holding-period return on Xyrong stock as follows:
Expected 1-year holding-period return = (p1 + e * dp) / 100 - 1 ............ (3)
Substituting the relevant values into equation (3), we have:
Expected 1-year holding-period return = [(101.8192 + 10 * 40%) / 100] - 1
Expected 1-year holding-period return = [105.8192 / 100] - 1
Expected 1-year holding-period return = 1.058192 - 1
Expected 1-year holding-period return = 0.058192, or 5.82%
Therefore, your expected 1-year holding-period return on Xyrong stock is 5.82%.
Luke is considering the various options available to him to promote an energy drink, Turbozade, that has decreasing sales volumes after having peaked some time back. Which of the following marketing communications tools should Luke focus marketing efforts on to keep the sales volume up?
A) advertising
B) direct marketing
C) events and experiences
D) sales promotions
E) publicity
Answer:
D) sales promotions.
Explanation:
Since Luke seeks options available to him to promote an energy drink, Turbozade, that has decreasing sales volumes after having peaked some time back. The marketing communications tool that Luke should focus marketing efforts on to keep the sales volume up is the use of sales promotions.
A sales promotion can be defined as a marketing strategy which is used by manufacturers to promote a product through the application of various short-term attractive incentives, in order to stimulate the demand and purchase of such products. Basically, it involves all short-term techniques and tactics developed by a manufacturer used to persuade customers into buying its products and consequently boosting the sales of such products.
Hence, Luke should initiate a sales promotions so as to keep the sales volume up.
When the opportunity cost of producing a good rises as you produce more of it, you experience:_______.
a. increasing marginal utility.
b. inferior goods.
c. normative economics.
d. downward-sloping demand.
e. increasing relative costs.
Answer:
e. increasing relative costs.
Explanation:
The law of increasing relative costs is a principle in economics which states that, the opportunity cost of producing a good would always increase as more of the product is being produced.
Hence, when the opportunity cost of producing a good rises as you produce more of it, you experience increasing relative costs because the factors of production (capital, labor and land) are now at a maximum level of output.
Furthermore, the opportunity cost, also known as the alternative forgone, can be defined as the value, gains or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, gains or value associated with the alternative forgone or best alternative choice available.
The effectiveness of _____ as an influence tactic depends on characteristics of the power holder, message content, communication medium, and the audience.
Answer:
persuasion.
Explanation:
Persuasion is an influence tactic used to convince someone to do something.
In the workplace it can be a very effective tool for managers and salespeople.
Therefore, to be effective, your content must be aligned to your audience. It is necessary that the agent who will carry out the persuasion knows his audience to then identify what are his main characteristics and then develop an appropriate message.
For a manager, making a persuasive speech can convince employees to accept changes implemented in the organization, but the speech must be well thought out and delivered in a way that contains elements that justify the reason for what is being explained, in addition to being a clear communication and honest.
For salespeople, a persuasive speech can convince the customer to buy a product or service offered according to their rational and emotional motivations, if the persuasion agent knows how to analyze them and shape their speech according to the customer.
Of the variables in the Black-Scholes OPM, the __________ is not directly observable. Group of answer choices variance of the underlying asset return risk-free rate of interest price of the underlying asset time to expiration
Answer:
variance of the underlying asset return
Explanation:
The Black-Scholes is the most widely used model to predict the value of call/put options. It is mostly used for European style options and only works for stocks that do not pay dividends. It is based on five variables that must be inputted in the formula:
underlying stock pricestrike pricetime until maturity risk-free interest rate volatility of the underlying stock
Which of the following scenarios would be included in GDP? Pam buys a new 40-inch television at Walmart. Sandra is a waitress at Morton’s Steakhouse. She receives a cash tip of $50 that she pockets and does not report. Miguel won $100 in his office fantasy football league. Darius unclogs the drain in his sink using the plunger he owns.
Answer:
A. Pam buys a new 40-inch television at Walmart.
Explanation:
Gross Domestic Product is the sum monetary value of goods and services purchased in a country within a specific length of time. It can be calculated on an annual or quarterly basis. It helps economists in making decisions. The GDP has to be recorded so that it can be accounted for. The GDP is calculated based on income, expenditure, or production.
From the options given, only Pam has performed an activity that can be rightly included in GDP. This is because she purchased an item (expenditure) that would be recorded by the supermarket and eventually accounted for in the country's GDP.
Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The present value of the lease payments discounted at 8% was $61,600. Ten annual lease payments of $8,500 are due each year beginning July 1, 2021. Smith Co. had constructed the equipment recently for $53,500, and its retail fair value was $61,600. The total decrease in earnings (pretaxed) in daltons december 31, 2021 income statement would be (ignore taxes):_____.
a. $3,296.
b. $6,376.
c. $4,928.
d. $5,204.
Answer:
d. $5,204
Explanation:
Interest expenses up to December 31, 2020 = (Total present value of lease payment - Lease payment on July 2021) * 8% * 6/12
= $61,600 - $8,500 * 8% * 6/12
= $53,100 * 8% * 6/12
= $2,124
Depreciation Expenses up to December 31, 2021
= Fair value of equipment / Useful life * 6/12
= ($61,600 / 10) *6/12
= $6,160 * 6/12
= $3,080
Therefore, the total decrease in earnings (Pretax) in Larlas December 31, 2021 Income statement would be
= Interest expenses + Depreciation Expenses
= $2,124 + $3,080
= $5,204
Night shades inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.70 per unit, and the variable labor costs is $6.30 per unit.
A. What is the variable cost per unit?
B. Suppose NSI incurs fixed costs of $660,000 during a year in which total production is 280,000 units. What are the total costs for the year?
C. If the selling price is $44.50 per unit, what is the cash break-even point? If depreciation is $460,000 per year, what is the accounting break-even point?
Answer and Explanation:
A. The computation of variable cost per unit is shown below:-
Variable cost = Variable material cost + Variable labor cost
= $10.70 + $6.30
= $17
B. The computation of total costs for the year is shown below:-
Total cost = Variable cost + Fixed cost
= $280,000 × $17 + $660,000
= $5,420,000
C. The computation of cash break-even point and accounting break-even point is shown below:-
Contribution = Selling price - Variable cost
= $44.50 - $17
= $27.5
Cash break even point = Fixed cost ÷ Contribution per unit
= $660,000 ÷ $27.50
= 24,000 units
Break even point = (Fixed cost + Depreciation) ÷ Contribution per unit
= ($660,000 + $460,000) ÷ $27.5
= $1,120,000 ÷ $27.5
= 40,727.27 units
or
= 40,728 units
Differentiate between cash-basis accounting and accrual-basis accounting. Why is accrual-basis accounting the preferred method for most businesses? The Internal Revenue Service requires all companies with sales over $5,000,000 to use the accrual-basis of accounting for income tax reporting purposes. Why
Answer:
Reason : To ensure constant flow of cash
Explanation:
Accrual Basis of accounting records transactions when they meet definition and recognition criteria of Assets, Liabilities,Equity, Expense and Incomes.
This is different from cash-basis accounting which records transactions at the receipt or payment of cash.
Because of timing difference, the cash transactions (cash basis) can happen a late than the day of recognition of the elements (accrual basis).
Hence Revenue services demand that income tax be calculated on accrual basis to ensure a constant flow of cash whenever an entity transact.
Suppose that each 0.1-percentage-point increase in the equilibrium interest rate induces a $3 billion decrease in real planned investment spending by businesses. In addition, the investment multiplier is equal to 5, and the money multiplier is equal to 3. Furthermore, every $10 billion decreases in the money supply bring about a 0.1-percentage-point increase in the equilibrium interest rate. Use this information to answer the following questions under the assumption that all other things are equal.
Calculate by how much the real planned investment must decrease if the Federal Reserve desires to bring about a $60 billion decrease in the money supply level.
Answer and Explanation:
(1) Decrease in investment = Decrease in money supply / Investment multiplier
= $60 billion / 5 = $12 billion
Real planned investment will decrease by $12 billion
The Federal Reserve decreased money supply by 60 billion and we wish to determine by how much this would affect real planned investment. We have therefore applied the investment multiplier to determine decrease in real planned investment. This is based on Keynes' theory of investment multiplier
Credit collections are % two months following the sale, % in the month following the sale, and % in the month of sale. The remaining % is expected to be uncollectible. What is the total cash received in April from the April sales at Feeney Furniture?
Answer: $49,120
Explanation:
Given the collection strategy listed, the total cash received in April would be
= Cash sales for April + (30% * March credit sales) + ( 62% of April credit sales)
= 39,000 + ( 0.3 * 11,000 ) + ( 0.62 * 11,000)
= 39,000 + 3,300 + 6,820
= $49,120
The natural rate of unemployment is the unemployment rate at which the inflation rate has no tendency to increase or decrease. However, the natural rate of unemployment is not fixed. What causes changes in the natural rate of unemployment?
Answer:
The natural rate of unemployment = frictional unemployment + structural unemployment. it doesn't include cyclical unemployment because the natural rate of unemployment can only occur when the economy is growing while the cyclical unemployment happens when the economy stops growing or falls in a recession.
The factors that affect the natural rate of unemployment are imperfections in the labor market (e.g. minimum wages or taxes associated to employment), or employees that cannot adjust to changes in the economy, the labor market or even our normal daily lives (e.g. it is extremely difficult for someone that doesn't know how to use a computer to find a job nowadays, and this is a permanent change that applies almost everywhere).
There is no such thing as 0 unemployment, because people are always looking for better jobs and the skills necessary for performing certain jobs keep changing. Some abnormal events like the current health pandemic also increase the natural rate of unemployment, at least temporarily. Other factors that may decrease the natural rate of unemployment are wars, e.g. with WWII there was a labor shortage.
The major components of a time series are all of the following EXCEPT: trend. seasonality. random variations. inflation. cycles.
Answer: inflation
Explanation: Inflation is an increase in the general level of prices or in the cost of living and is not a part of the major components of a time series which is defined as a set of data points, each of which represents the value of the same variable at different times, normally at uniform intervals. It consists of: seasonal variations (repeats over a specific period), trend variations (moves up or down in a reasonably predictable pattern), cyclical variations (corresponds with economic cycles or which sometimes follow their own peculiar cycles), and random variations that do not fall under any of the above classes.
In which of the following ways does Zappos achieve organizational control?
A.
It continually changes the organizational values that guide its employees.
B.
It refrains from monitoring its employees' calls.
C.
It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience.
D.
It enforces that each group member's compensation depends in part on the group's overall productivity.
Answer:
D.
It enforces that each group member's compensation depends in part on the group's overall productivity.
Explanation:
Zappos is an online company that retails shoes and clothes. They have an extremely flat organisational structure that promotes employee involvement in major business decisions.
For example it allows its customer service employees attend to customers in their own way rather than following a script.
One way Zappos has maintained organisational control is by each group member's compensation depending in part on the group's overall productivity.
This strategy ties the employee compensation to the company's performance, so they are motivated to put in their best.
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows:
a. Issued 15,000 shares of $20 par common stock at $30, receiving cash.
b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.
c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.
d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.
Required:
Journalize the selected transactions.
Answer:
part a.
Cash $450,000 (debit)
Common Stock $300,000 (credit)
Share Premium $150,000 (credit)
part b.
Cash $400,000 (debit)
Preferred Stock $320,000 (credit)
Share Premium $80,000 (credit)
part c.
Cash $500,000 (debit)
Bonds Payable $500,000 (credit)
part d.
Dividend Declared - common stock $50,000 (debit)
Dividend Declared - preferred stock $20,000 (debit)
Shareholders for Dividends $70,000 (credit)
Explanation:
For par value stock, any price paid in excess of the par value of that stock is accounted for in the share premium reserve of that stock.
When a dividend is declared, recognize the equity element - dividend declared for the class of equity that is entitled to the dividend to the extent of the stocks outstanding on the date the dividend is declared.Also recognize a liability - Shareholders for Dividends arising from the obligation that the entity has created (through the declaration) to its stockholders
Division X makes a part with the following characteristics:
Production capacity in units 33,500
Selling price to outside customers $23
Variable cost per unit $17
Fixed cost, total $100,400
Division Y, another division of the same company would like to purchase 14,300 units of the part each period from Division X. Division Y is now purchasing these parts from an outside supplier at a price of $19 each.
Suppose Division X has ample idle capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $19 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be:_________.
a. worse off by $85,800 each period.
b. better off by $57,200 each period.
c. worse off by $28,600 each period.
d. worse off by $114,400 each period.
Answer:
If Division X refuses to accept the $19 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be:_________.
c. worse off by $28,600 each period.
Explanation:
The $28,600 loss the company incurs is from the lost contribution that Division Y's purchase of Division X's parts could have brought to the company if it buys parts inhouse. This is calculated as follows:
Division X's variable cost per unit = $17
Division X's selling price to outside customers = $23
Division Y's offered buying price = $19
The contribution = $2 ($19 - $17)
You own a portfolio that has $2,800 invested in Stock A and $3,900 invested in Stock B. Assume the expected returns on these stocks are 9 percent and 15 percent, respectively. What is the expected return on the portfolio
Answer:
12.5%
Explanation:
A portfolio has $2,800 invested in stock A
$3,900 is invested in stock B
The expected return of stock A is 9%
= 9/100
= 0.09
The expected return of stock B is 15%
= 15/100
= 0.15
The first step is to calculate the total value
= $2,800+$3,900
= $6,700
Therefore, the expected return on the portfolio can be calculated as follows
= (2,800/6,700)×0.09 + (3,900/6,700)×0.15
= 0.4179×0.09 + 0.5820×0.15
= 0.03761 + 0.0873
= 0.1249×100
= 12.5%
Hence the expected return on the portfolio is 12.5%
The assumption that the cash flows from an investment project are reinvested at the company's discount rate applies to:
Answer:
Only the net present value method
Explanation:
The net present value is the lies between the initial amount and the present value of cash inflows after considering the discount factor
If the initial investment is more than the present value of all year cash inflows so it comes in negative due to which the project is not accepted else the project should be accepted
Therefore in the given case, it only applied to the net present value method
In newspaper advertising, ________ advertising includes copy, illustrations or photos, headlines, coupons, and other visual components.
Answer: Display
Explanation: Display advertising is a form of commercial solicitation that is made to sell some commodity, service or similar and is typically designed as an image or a photo. As such, it employs the use of visuals like images, copy, illustrations or photos, headlines, coupons, videos and other visual components on the networks of publishers.
"A corporation has issued $1,000 par, 8% convertible bonds, callable at par. The bonds are convertible into 20 shares of common stock. Currently, the bond is trading at 100 1/2 while the common stock is trading at $51. The corporation calls the bonds at par plus accrued interest of $10 per bond. A customer holds 100 bonds, purchased at par. The customer wishes to liquidate the position at the greatest profit. The BEST recommendation is to (ignoring commissions):"
Answer:
Convert the bonds into 20 common stocks.
Explanation:
the investor has 3 options:
sell the bond at $1,000 x 1.005 = $1,005sell the bond to the corporation at $1,000 + $10 = $1,010convert the bond into 20 common stocks = 20 x $51 = $1,020the option that yields the highest return is to convert the bonds into common stocks.
Amble Inc. exchanged a truck with a book value of $12,000 and a fair value of $20,000 for a truck and $5,000 cash. The exchange has commercial substance. At what amount should Amble record the truck received
Answer:
$20,000
Explanation:
Based on the information given about Amble Inc the amount that Amble should record the truck received should be $20,000 because the book value is the amount of $12,000.
Secondly since we were told that the exchange has commercial substance which means that the amount of $20,000 which is the fair value of the truck which the buyer is willing to buy from the seller should be the amount that Amble should record the truck received .
Therefore Amble should record the truck received at the amount of $20,000
Lough Company prepared the following purchases budget: Month Budgeted Purchases June July August September October All purchases are paid for as follows: % two months after purchase, % in the following month, and % in the month of purchase. What are the cash disbursements in October to account for the September purchases at Lough Company?
Answer: $21,150
Explanation:
The company pays 45% of the purchases amount in the month after the purchase. This will therefore apply to October for the month of September.
Cash Disbursement in October for September Purchase = 45% * September purchases
= 45% * 47,000
= $21,150
How would economists go about analyzing the likely influence of a forecast of heavy snow on the quantity of tickets sold for the Nutcracker ballet
Answer and Explanation:
Learning of a snow storm on the day of the ballet will definitely affect ticket sales. Economists should consider the distance, history of attendance and demographics of people attending (young, old or married people) in analyzing turn out for the ballet. Influencing the ticket sales in this situation could also be helped by lower prices for tickets and aggressive promotion and campaigning. This are all under assumption that people will react positively to adverts/promotions and lower prices
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1. Health maintenance organizations, or HMOs, differ from the indemnity insurance system by: A. Reimbursing either the provider or member for the costs of care but taking no responsibility for providing care B. Not requiring providers to share financial risk C. Developing cost-based premiums for their beneficiaries D. Taking responsibility for both financing and delivering health care services to a defined group of beneficiaries
Answer:
Health Maintenance Organizations or HMOs
How different from the indemnity insurance system?
D. Taking responsibility for both financing and delivering health care services to a defined group of beneficiaries.
Explanation:
HMOs are healthcare maintenance organizations which coordinate the provision of health services and care to registered patients. They provide health insurance services to their patients for a monthly fee. They ensure cost-effectiveness in healthcare delivery through their coordination efforts.
On the other hand, indemnity insurance system involves some contractual agreements in which one party (the insurer or insurance company) guarantees compensation for actual or potential losses or damages sustained by another party (the insured).
The Retained Earnings balance was $24,100 on January 1. Net income for the year was $19,900. If Retained Earnings had a credit balance of $26,200 after closing entries were made for the year, and if additional stock of $6,400 was issued during the year, what was the amount of dividends declared during the year?
Please see attachment as well there is a problem that I need help as well....Thank You!
Answer: $17800
Explanation:
The opening balance of Retained earnings = $24,100
Net Income for the year = $19,900
Closing balance of Retained earnings = $ 26,200
The, the amount of dividends declared during the year = (opening balance) +(Net Income) -( Closing balance)
= $ (24100+19900-26200)
= $17800
Hence, the amount of dividends declared during the year is $17800.
In the maturity stage, competitors compete on price and product features. They also attempt to differentiate their product to satisfy different segments of the market. An example of a product in the maturity stage is
Answer:
Probably the product that has been on its maturity state the longest is Coke. Coke has been on its maturity stage for almost a century now. the Coca Cola company is the king of marketing and even though they have made mistakes in the past, e.g. Coke II, you can find Coke everywhere in the world. Even the countries where it is not sold legally, e.g. Cuba and North Korea, you can still find it.
Occasionally different versions of Coke appear since the company must try to differentiate themselves and it is continuously competing against other beverages.
Which of these statements about the production order quantity model is FALSE? The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. Average inventory is more than one-half of the production order quantity. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. None of these is false.
Answer:
Question is written again to add options:
A. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous.
B. Average inventory is more than one-half of the production order quantity.
C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory.
D. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.
E. None of these is false.
The correct answer is option B "Average inventory is more than one-half of the production order quantity."
Explanation:
With an inventory, it is possible to separate parts of the production process , to separate assets from goods are yet to be produced or are already produced that could serve as a source of income for a company.
An average inventory is less than one-half of the production order quantity.
The production order quantity model doesn't make it possible for the ordered quantity to be received at one time.
The production order quantity model helps a company on how to manage inventory holding costs and the average fixed ordering cost, thereby making it possible for a company to check and minimize its inventory cost and to have a guide on what quantity to produce at every point in time.
Is the cost of an off-airport warehouse considered to be a unit-level, batch-level, product-level, or facility-level cost as it relates to:_______
a) The airport store
b) An individual bottle of water
Answer:
a. Facility Level
b. Facility Level
Explanation:
Facility level costs are costs incurred to maintain the company in its entirety. It is not directly ascribable to any specific products or product lines.
In the case of the Airport store, the off-airport warehouse will be used to store all their storable products so this relates to an activity that benefits the entire store.
For the individual bottle of water, this is also a facility level cost as the off-airport warehouse will be used to store a number of bottles and as such is for the benefit of the entire company producing the bottles.