Answer:
Price of stock = $53.73
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
The model is given as
P = D×(1+g)/(r-g)
P- price, D- dividend payable now , r -cost of equity, g - growth rate in dividend
DATA:
P= ?
D- 3.20
g- 4.1%
r-10.3%
Price of stock = 3.20× 1.041/(0.103-0.041) = 53.73
Price of stock = $53.73
Delaney takes out a $500,000 loan to open a new bar. He will repay the loan in 200 monthly installments, beginning 1 month from now. If he pays equal amounts of principal every month, what will be his third payment
Answer:
the question is incomplete, since you need an APR rate. I looked for similar question and the effective interest rate was 15%:
Delaney will pay $500,000 / 200 = $2,500 in principal every month.
His first payment will be = ($500,000 x 15% x 1/12) + $2,500 = $6,250 + $2,500 = $8,750His second payment will be = ($497,500 x 15% x 1/12) + $2,500 = $6,218.75 + $2,500 = $8,718.75His third payment will be = ($495,000 x 15% x 1/12) + $2,500 = $6,187.50 + $2,500 = $8,687.50Sparks Corporation has a cash balance of $9,300 on April 1. The company must maintain a minimum cash balance of $7,500. During April, expected cash receipts are $51,000. Cash disbursements during the month are expected to total $56,500. Ignoring interest payments, during April the company will need to borrow:________
a) $3,800
b) $5,500
c) $3,700
d) $7,500
Answer:
c) $3,700
Explanation:
Excess balance after minimum cash balance = $9,300 - $7,500 = $1,800
Excess cash disbursement=$56,500 - $51,000 = $5,500
In April the company will need to borrow =$5,500- $1,800 = $3,700
David, Chris and John formed a partnership on July 31, 2019. They decided to share profits equally, but inserted a clause in the partnership agreement where any losses would be allocated in the ratio of ::, respectively. For the year ended December 31, 2019, the firm earned a net income of . However, for the year ended December 31, 2020, the firm incurred a loss of . Assuming that John had an initial capital contribution of and made no withdrawals, what is the balance of John's Capital account as of December 31, 2020? (Assume that none of the partners made any further contributions to their capital accounts. Do not round any percentage calculations. Round all monetary calculations to the nearest dollar.)
Answer:
$37,833
Explanation:
Calculation for the balance of John's Capital account as of December 31, 2020.
Using this formula
Balance as of December 31, 2020= Initial contribution + Profit for December 31, 2019 - Loss for December 31, 2020
Let plug in the formula
Balance as of December 31, 2020= $39,000 + ( $46,000/3) - ( $55,000/10×3)
Balance as of December 31, 2020= $39,000 + $15,333 - $16,500
Balance as of December 31, 2020= $37,833
Therefore the balance of John's Capital account as of December 31, 2020 will be $37,833
An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is
Complete Question:
An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is:
Group of answer choices
A) the safety of the principal invested.
B) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.
C) the yield is always higher than mortgage yields.
D) the yield is always higher than bond yields.
Answer:
B) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.
Explanation:
An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.
Generally, common stocks are considered by financial experts or broker-dealers to be a suitable type of investment of variable annuities because the prices of common stocks in the market are not fixed and as such they are affected by economical changes such as inflation or recession.
Refer to Exhibit 9.3, which shows the cost and revenue curves for a non-discriminating monopolist. The total cost incurred by the monopolist for producing the profit-maximizing output is _____ Group of answer choices $16,500. $24,200. $16,200. $19,800. $30,800.
Answer: $19,800
Explanation:
The Monopolist will produce at a quantity where Marginal Revenue equals Marginal cost.
From the exhibit, that quantity is shown to be 1,100.
At that quantity, the average total cost incurred is $18.
Total Cost
= Average total cost * quantity
= 18 * 1,100
= $19,800
Cabell Products is a division of a major corporation. Last year the division had total sales of $10,400,000, net operating income of $540,800, and average operating assets of $2,392,000. The company's minimum required rate of return is 16%. The division's residual income is closest to:
Answer:
$158,080
Explanation:
The division's residual income is calculated as;
= Net operating income - ( Average operating assets × Minimum required rate of return)
= $540,800 - ( $2,392,000 × 16% )
= $540,800 - $382,720
= $158,080
Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $33 per pound and costs $28 per pound to produce. Product C would sell for $58 per pound and would require an additional cost of $25 per pound to produce. What is the differential cost of producing Product C?
Answer:
Differential cost of producing Product C = $0
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point (the cost of crushing) are irrelevant to the decision to process further .
$
Sales revenue after the split off point (Product C) 58
Sales revenue at the split-off point (Product B 33
Additional sales revenue per unit 25
Further processing cost (25)
Differential cost of Product C 0
Differential cost of producing Product C = $0
Note that the cost incurred up until the split off point was not included because it is Irrelevant to the decision to process further. It has already been incurred , hence it is a sunk cost
Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters, Nicole and Naomi, respectively, to attend the University of Nevada. Nicole is a sophomore and Naomi is a freshman. Nick and Katelyn's AGI is $202,000. What is their allowable American opportunity tax credit?
Answer: $0
Explanation:
From the question, we are informed that Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters, Nicole and Naomi, respectively, to attend the University of Nevada and that Nicole is a sophomore and Naomi is a freshman.
We are further told that Nick and Katelyn's AGI is $202,000. Based on the above scenario, their allowable American opportunity tax credit will be $0. This is because when AGI is more than $180,000 for such taxpayers, the credit is being phased out.
You want to buy a new sports car 3 years from now and you want to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5% annual compounding interest rate. How much will you have at the end of three years
Answer:
FV= $12,810
Explanation:
Giving the following information:
Annual deposit= $4,200
n= 3
i= 5% annual compounding
To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {4,200*[(1.05^2) - 1]}/0.05
FV= 8,610 + 4,200
FV= $12,810
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: Coca-cola
Explanation:
Coca-cola as a soft drink has dominated the world since the 20th century but faces competition against drinks from other companies such as Pepsi and RC Cola.
In other to keep up their competitive edge and sell to more customers, the embark on extensive marketing campaigns that are catchy and memorable.
Coca-cola has also been differentiated over the years by introducing various flavors that are meant to appeal to different segments in the market such as Diet Coke, Coca-Cola Zero Sugar, Coca-Cola Cherry and Coca-Cola Vanilla.
We are evaluating a project that costs $560,400, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 80,000 units per year. Price per unit is $38, variable cost per unit is $24, and fixed costs are $680,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. a-1. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a-2. What is the degree of operating leverage at the accounting break-even point
Answer:
a -1. 48,572 units
a -2 2.56
Explanation:
Break even point is the level of activity where a firm neither makes a profit or loss.
Break Even point (units) = Fixed Costs ÷ Contribution per unit
Where,
Contribution per unit = Sales per unit - Variable Cost per unit
= $38 - $24
= $14
Therefore,
Break Even point (units) = $680,000 ÷ $14
= 48,572 units
Degree of operating leverage = Contribution ÷ Earnings Before Interest and Tax
= 80,000 units × $14 ÷ (80,000 units × $14 - $680,000)
= $1,120,000 ÷ $440,000
= 2.56
Which of the following would not be classified as a material particiapant in an activity?
A. Short-term capital gains.
B. Charitable contributions.
C. MACRS depreciation expense.
D. Guaranteed payments.
Answer:
C. MACRS depreciation expense.
Explanation:
Material participation in an income-producing activity. That is, an activity that is regular, continuous, and substantial leading to income-producing actions, in which the taxpayer materially participates is an active income or loss.
Why did Lauren's mother suggest she change her
password?
o It could be easily guessed.
O It contained personal information.
O It contained only one number.
It contained too many letters.
Answer:
o It could be easily guessed.
Explanation:
Staying safe while surfing the web or making accounts in the virtual world is an act that needs careful consideration and planning. There have been many instances of cyber thefts that steal people's details and even personal information and used for other dangerous acts.
Lauren's act of making "Computer1" as her password makes it so easy to predict or guess. Passwords are meant to secure one's details from such cyber attacks. And so, if Lauren used a simple and easy "lock" to secure her account, then there is a high chance that her account will be hacked and information stolen. So, Lauren's mother's suggestion of changing her password for all of her online accounts is because she feared that her current password is too easy to be guessed.
Answer:
it could be easily guessed
Explanation:
i took the assignment and got it right
During January, Ajax Co. incurs 1,850 hours of direct labor at an hourly cost of S11 output is t 100 units of its finished product. Ajax standard labor cost per unitor (2 hours x $11.00). Instructions
Compute the total, price, and quantity labor variances for Ajax Co. for January.
Answer and Explanation:
The computation is shown below:
For the labor price variance
= Actual Hours × (Actual rate - standard rate)
= 1,850 × ($11.80 per hour - $11 per hour) ,
= 1.850 × $0.80 per hour
= $1,480 unfavorable
For labor quantity variance
= Standard Rate × (Actual hours - Standard hours)
= $11 × (1,850 hours - 2,000 hours)
= $11 per hour × - 150hours
= $1,650 favorable
Now total would be
= Labor price variance + labor quantity variance
= $1,480 unfavorable + 1,650 favorable
= $170 favorable
Moorcroft Company’s budgeted sales and direct materials purchases are as follows:
Budgeted Sales Budgeted D.M. Purchases
April $299,000 $44,000
May 337,000 55,000
June 384,000 55,000
Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.
Prepare a schedule of expected collections from customers for June.
Moorcroft Company
Schedule of Expected Collections from Customers
Sales April May June
April $ $ $ $
May
June
Total Collections $ $ $
Prepare a schedule of expected payments for direct materials for June.
Moorcroft Company
Schedule of Expected Payment for Direct Materials
Purchases April May June
April $ $ $ $
May
June
Total Collections $ $ $
Moorcroft’s assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible.
Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections?
Moorcroft Company
Schedule of Expected Collections from Customers
Sales April May June
April $ $ $ $
May
June
Total Collections $ $ $
Would it be worth paying the collector $1,000 per month?
It would bewould not be worth paying the collector $1,000 per month to improve the cash collections of the company.
The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company’s payment pattern.
Prepare a schedule of expected payments for direct materials for June.
Moorcroft Company
Schedule of Expected Payment for Direct Materials
Purchases April May June
April $ $ $ $
May
June
Total Collections $ $ $
How did these changes impact the cash payments for June?
Cash payments increaseddecreased by $ .
Answer:
1) Month Sales
April $299,000
May $337,000
June $387,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $387,000 x 40% = $154,800
Collection from June's credit sales = $232,200 x 20% = $46,440
Collection from May's credit sales = $202,200 x 50% = $101,100
Collection from April's credit sales = $179,400 x 26% = $46,644
Total cash collections during June = $348,984
Month DM purchases
April $44,000
May $55,000
June $55,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $55,000 x 50% = $27,500
Cash payments for May's purchases = $27,500 x 40% = $11,000
Cash payments for April's purchases = $22,000 x 60% = $13,200
Total cash payments during June = $51,700
2) Month Sales
April $299,000
May $337,000
June $387,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $387,000 x 40% = $154,800
Collection from June's credit sales = $232,200 x 30% = $69,660
Collection from May's credit sales = $202,200 x 50% = $101,100
Collection from April's credit sales = $179,400 x 18% = $32,292
Total cash collections during June = $357,852
It would be worth to pay the collector since the 2% reduction in uncollectible accounts is worth much more than the $1,000 that he/she earns.
3) Month DM purchases
April $44,000
May $55,000
June $55,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $55,000 x 40% = $22,000
Cash payments for May's purchases = $33,000 x 40% = $13,200
Cash payments for April's purchases = $26,400 x 60% = $15,840
Total cash payments during June = $51,040
Cash payments will decrease a little in June.
Aidan was just hired to work for a federal agency in the procurement department. Aidan shops for the best buys possible and finds a great deal. Aidan returns to the office and informs the supervisor about this discovery. Aidan’s boss tells him to be sure that the Buy American Act is satisfied. What does Aidan find when researching this law?
Answer:
he found out that unless the price is a certain percentage that is higher than the price of the equivalent foreign product, federal agencies must buy products with at least 50% of the components made in the U.S.A.
Explanation:
Speaker City designs and manufactures highend home theater speakers. Speaker City uses a standard variable overhead rate of hours per unit at a cost of per hour. Data for the month of June shows that Speaker City produced units and recorded actual variable overhead costs of . What is the total variable overhead variance for the month of June?
Answer: $18,100 unfavorable
Explanation: It should be noted that the total variable overhead variance for the month of June is $18,100. Nonetheless, to our surprise it appears unfavourable despite the fact that Speaker City uses a standard variable overhead rate of hours per unit at a cost of per hour.
If the price level increases by 0.2 percent for every $100 billion increase in the money supply, by how much might prices rise if the Fed increases total reserves by $80 billion and the reserve requirement is 0.05?
Answer:
Increase in price level = 3.2%
Explanation:
Given:
Price level increases = 0.2
Reserves = $80 billion
Reserve requirement =0.05?
Computation:
Increase in money = Increase in reserves / Reserve ratio
Increase in money = $80 billion / 0.05
Increase in money = 1,600
And
Increase in price level = (Increase in money / 100) x 0.2%
Increase in price level = (1,600 / 100) x 0.2%
Increase in price level = 3.2%
Shoppers on Amazon have differing needs that must be satisfied during the exchange, which often include the need for information, convenience, variety, and/or pre- or postsale services. These needs are collectively referred to as
Answer: buyer requirements
Explanation: Differing needs such as the need for information, convenience, variety, and/or pre- or postsale services that must be satisfied during an exchange are collectively known as buyer requirements which aid both buyers and sellers in the ordering process as they allow the seller to ask for any information needed to complete an order while allowing the buyer to communicate his/her needs to ensure that every order specification is met.
On September 1, 2003, Time Magazine sold 600 one-year subscriptions for $81 each. The total amount received was credited to Unearned subscriptions revenue. What would be the required adjusting entry at December 31, 2003
Answer:
Total subscriptions revenue for the period= 4 months (September 1 - December 31)
= (600 * $81) * 4/12
= $48,600 * 4/12
= $16,200
Hence adjusting entry would be:
Deferred subscriptions revenue a/c Dr $16,200
To Subscriptions revenue Cr $16,200
Think back to the elements that result in the creation of SMART goals (Specific, Measurable, Achievable, Realistic, and Time-bound) and rewrite the goals below, making them smarter.
Origional Goal Statement
Revised Goal Statement
Our team will finish the product roll-out on schedule.____________
We intend to save the company $20,000 next month. ___________
Our new initiative will increase customer satisfaction.____________
Our team will hit its numbers.____________-
Answer:
SMART Goals
Rewriting Goal Statements:
Original Goal Statement:
Our team will finish the product roll-out on schedule.____________
Revised Goal Statement:
To finish the product roll-out on schedule, our team will finalize all activities on August 31, 2020.
Original Goal Statement:
We intend to save the company $20,000 next month. ___________
Revised Goal Statement:
To save the company $20,000 next month, we intend to reduce overall expenses.
Original Goal Statement:
Our new initiative will increase customer satisfaction._
Revised Goal Statement:
To increase customer satisfaction today, our new initiative must be customer-focused.
Original Goal Statement:
Our team will hit its numbers.____________
Revised Goal Statement:
To hit its numbers this month, our team must redouble its marketing efforts.
Explanation:
A SMART goal statement starts with an action word with an impact that is time-bound. SMART means: Specific, Measurable, Achievable, Realistic, and Time-bound. SMART goal statements can be used to improve desired outcomes when they are followed through. A SMART goal statement is fundamental to success. It is the basis for a team or an individual to plan their work and evaluate its success.
The given original goal statements can be revised as per the SMART goal guidelines would be as follows:
1). In order to complete the product roll-out on schedule, the team will ensure that all the orders are concluded by 20th January.
2). To save the cost of $20,000 next month, our aim will be to reduce miscellaneous expenses.
3). To implement our new initiative of consumer satisfaction, we will focus on consumer-oriented strategies.
4). To hit the numbers this month, the team should be more focused on the timely delivery of the goods.
SMART goals are characterized as the goals that lay emphasis on the action to be carried forward along with a specification of the time. Such goals are very crucial to ensure that the intended target is achieved effectively and efficiently. The word "SMART" itself implies the goals that are certain, evaluable, realistic, and with a time limit. These goals promote adequate planning and achievement of success.
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A safety capacity is a reserve created for unanticipated events. When is a safety capacity used?
A. During the holidays
B. During preventive maintenance and the holidays.
C. Whenever demand surges, there are material shortages, and equipment failure
D. None of the above.
Answer:
C. Whenever demand surges, there are material shortages, and equipment failure
Explanation:
The safety capacity is developed for the events that are not predicted. It can be used for various things like - shortage of materials, break down of machinery and equipment, the power supply is not available at the current time.
Therefore in the given case, option C is chosen as it fits the current situation
Hence, the other options are to be ignored
g For Sunland Company, sales is $2600000, fixed expenses are $780000, and the contribution margin ratio is 36%. What are the total variable expenses?
Answer:
Total variable expenses = $1,664,000
Explanation:
The computation of the variable expenses is shown below:
As we know that
Contribution margin ratio = Contribution margin ÷ Sales
0.36 = Contribution margin ÷ $2,600,000
So, the contribution margin is
= $2,600,000 × 0.36
= $936,000
Now the contribution margin is
Contribution margin = Sales - variable cost
$936,000 = $2,600,000 - variable cost
So, the variable expense is
= $2,600,000 - $936,000
= $1,664,000
How many dollars must you invest now at an APR of 4.6% with monthly compounding to have $8000 in six years? Round your answer to the nearest dollar.
Answer:
$6,073.853
Explanation:
For computing the amount invested now we need to determine the present value by applying the present value formula i.e. to be shown in the attachment
Provided that
Future value = $8,000
Rate of interest = 4.6% ÷ 12 months = 0.3833%
NPER = 6 years × 12 months = 72 months
PMT = $0
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $6,073.853
Occasionally, ________________ may lead to pure monopoly; in other market conditions, they may limit competition ______________________. *
Answer:
barriers to entry; to a few oligopoly firms.
Explanation:
Occasionally, barriers to entry may lead to pure monopoly; in other market conditions, they may limit competition to a few oligopoly firms.
Monopoly can be defined as a type of market in which there is a single seller of a unique product. This sellers typically do not face any competition from others.
This ultimately implies that, when there are barriers to entry it may result in monopolistic competition among the sellers of goods having no close substitutes. These barriers consist of economies of scale, network externalities, copyright law, trademark, patent, governmental policies etc.
Suppose instead that an emissions tax is placed directly on consumers. Under what conditions will producers also bear some of the burden of this tax
Answer:
Emissions Tax on consumers:
Assuming that the demand for the product under which the emissions tax is placed directly on consumers is elastic, then producers will also bear some of the burden of this tax in lost sales. Warehouse costs will skyrocket as consumers literally boycott the products and producers are forced to stop further production. These have far-reaching implications.
Explanation:
By placing the burden on consumers directly, consumers will spend more for the same quantity of goods, if there are no substitutes. Such tax is usually levied to discourage consumption of certain goods.
Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2,940 per month plus $35 per boat. For the month of September, the company planned for activity of 73 boats, but the actual level of activity was 29 boats. The actual cleaning equipment and supplies for the month was $4,010. The activity variance for cleaning equipment and supplies in September would be closest to:
Answer:
$1,540
Explanation:
Calculation for the activity variance for cleaning equipment and supplies in September
First step is to calculate for theFlexible budget
Using this formula
Flexible budget =[Cleaning equipment and supplies +(Amount per boat ×Actual level of activity)
Let plug in the formula
Flexible budget =[$2,940 + ($35 × 29)]
Flexible budget =$2,940+$1,105
Flexible budget =$3,955
Second step is to calculate for the Planning budget using this is formula
Planning budget =[Cleaning equipment and supplies +(Amount per boat ×Planned activity ]
Let plug in the formula
Planning budget= [$2,940 + ($35 × 73)]
Planning budget=$2,940+$2,555
Planning budget=$5,495
Now let calculate for the activity variance
Using this formula
Activity variance=Flexible budget-Planning budget
Let plug in the formula
Activity variance=$3,955-$5,495
Activity variance=$1,540 Favorable
Therefore the Activity variance for cleaning equipment and supplies in September is closest to:$1,540 Favourable reason been that the flexible budget is lesser than the planning budget
On June 1, Noonan Inc. issues 4,000 shares of no-par common stock at a cash price of S6 per share. Journalize the issuance of the shares assuming the stock has a stated value of $1 per share. BE11-4 Lei Inc.'s $10 par value common stock is actively traded at a market price of $15 r share. Lei issues 5,000 shares to purchase land advertised for sale at $85,000. Journal- ize the issuance of the stock in acquiring the land.
Answer: Please see explanation column for answers.
Explanation:
a)Journal to record issuance of the shares at a stated value of $1
Date Account and explanation Debit Credit
june 6 Cash $24,000
Common stock at $1 stated value $4000
Paid in capital in excess of stated value $20,000
Calculation:
Cash = issued shares x price per share
4000 x $6 = $24,000
paid in capital in excess pf par stated value = $6- $1 x 4000 = $20,000
b)Journal to record issuance of the stock in acquiring the land.
Date Account and explanation Debit Credit
Land $85,000
Common stock at $10 (5000 x 10) $50,000
Paid in capital in excess of par value $35,000
Calculation:
cash to purchase land = issued shares x price per share
85,000= 5000 x $
$ = 85,000 /5000 = $17
Paid in capital in excess of par value $17-10 x 5000 = $35,000
Based on the information given the appropriate journal entry to record Noonan Inc. and Lei transactions are:
a. Noonan Inc Journal entry
Debit Cash $24,000
(4000 x $6)
Credit Common stock $4,000
(4,000×$1)
Credit Paid in capital in excess of stated value - common stock $20,000
[($6-$1)×4,000]
(To record issuance of shares)
b. Lei Journal entry
Debit Land $75,000
($15×5,000)
Credit Common stock $50,000
($10×5,000)
Credit paid in capital in excess of par-common stock $25,000
[($15-$10)×5,000]
(To record issuance of stock)
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Slumber is considering eliminating the pillows product line. If this line is eliminated, Slumber will be able to eliminate of total fixed costs. How would this business decision impact operating income?
Complete Question:
The income statement for Slumber Company is divided by its two product lines, blankets and pillows, as follows:
Narrative Blanket Pillow Total
Revenue $620,000 $300,000 $920,000
Variable cost ($455,000) ($241,000) ($696,000)
Contribution $165,000 $59,000 $224,000
Fixed cost ($74,000) ($74,000) ($148,000)
Operating Income $91,000 ($15,000) $76,000
Slumber is considering eliminating the pillows product line. If this line is eliminated, Slumber will be able to eliminate $74,000 of total fixed costs. How would this business decision impact operating income?
A. increase of $15,000 in operating income
B. increase of $133,000 in operating income
C. increase of $74,000 in operating income
D. decrease of $59,000 in operating income
Answer:
A. increase of $15,000 in operating income
Explanation:
We can see that if the we continue both product line then the profit is $76k which is lower than the profit of $91k generated from continuing Blankets product line only. If we abandon the pillow production then the loss that pillow manufacturing is producing will be totally eliminated which is $15k. The reason is that fixed cost is specific fixed cost which means it can be eliminated if the company abandons the production of pillow product line. Hence the operating income will increase by $15,000 ($91k - $76k). Option A is correct here.
If firms in a competitive market are making zero economic profits, the long-run market supply curve:______.
Answer:
the long-run market supply curve and the short-run market supply curve and the demand curve all intersect at the same point.
Explanation:
here are the options to this question
the long-run market supply curve and the short-run market supply curve and the demand curve all intersect at the same point.
is above the point where the short-run market supply curve and the demand curve intersect.
shifts upward. is below the point where the short-run market supply curve and the demand curve intersect.
shifts downward.
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
When the market earns zero economic profits, the long-run market supply curve and the short-run market supply curve and the demand curve all intersect at the same point.