Technological know-how is a typical entry barrier in industries that are embryonic, where economies of scale exist. The entry barriers are obstacles that make it difficult or costly for new companies to establish themselves in the market.
These barriers limit the number of competitors that can compete in a given industry, resulting in higher prices and profits for existing businesses. It also influences market concentration, which is the number of sellers in the market.
Technological know-how is one of the most common barriers to entry. Industries in their embryonic stage are the ones where technological knowledge is crucial. Entrepreneurs who want to enter these industries will find it difficult to obtain the knowledge they need to be successful.
As a result, they might be unable to begin a company in that industry because of their inability to obtain the necessary knowledge. Therefore, technological know-how is a typical entry barrier in industries that are embryonic and where economies of scale exist.
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Suppose that an industry is composed of 50 identical firms (no entry possible)
Now assume that only 30 of the 50 firms constitute a competitive fringe, while the other 20 firms form a cartel. Find the supply curve of the competitive fringe. What is the quantity supply at p=12? ( the firms forming a cartel act as if they were one firm)
Find the residual demand curve of the cartel consisting of the remaining 20 firms (which act as if they were one firm). What is the quantity demand at p=20?
( residual demand gives as the difference, for every p, between total demand and fringe supply.)
Find the marginal revenue curve facing the cartel. What is at =50?
[The marginal revenue curve has twice the slope of the inverse demand curve p().]
Find the marginal cost curve of the cartel. What is at =20?
[ The cost curve, not the marginal cost curve, for a single firm, is given by: ()=+10+122, where A is some constant. The monopolist’s multi-plant problem can be used to solve the marginal cost of the cartel.]
.Find the cartel output and price
Find the industry output and the total industry profits (assuming fixed costs are zero).
An industry comprises of 50 similar firms and there is no entry possible. It is assumed that only 30 of the 50 firms form a competitive fringe while the remaining 20 firms form a cartel.
The quantity supply at p=12 for the competitive fringe is calculated below:Let us assume that the total industry supply is given by QS = 30q where q is the quantity supplied by the competitive fringe. Since all the firms in the competitive fringe are identical, the individual supply for each firm is q=Qs/30.
The supply curve for the competitive fringe is given by
[tex]QS=Qs = 30(q) = 30(Qs/30) = Qs. At price p=12[/tex]
The quantity supply at which this price is given by Qs = 12/2 = 6.
The residual demand curve of the cartel comprising of the remaining 20 firms is given by DR = QD - QS where QD is the total industry demand which is given by QD = 50p and QS is the supply of the competitive fringe given by QS = 30q. Therefore
[tex]DR = QD - QS = 50p - 30qAt price p=20[/tex]
The quantity demanded is given by
[tex]QD = 50(20) = 1000 and QS = 30(q) = 30(Qs/30) = Qs. DR = QD - QS = 1000 - Qs[/tex]
The slope of the inverse demand curve is -1/2. Therefore, the slope of the marginal revenue curve is -1.
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Suppose there are two goods, pizza and beverage. Suppose
alp=5082, atp=957, alb=2513, atb=1808, Pp=12400, and Pb=10600. What
is the equilibrium wage?
The equilibrium wage is approximately 1872.22.
To determine the equilibrium wage, we need to use the concept of marginal product of labor (MPL) and marginal revenue product (MRP).
The formula for MRP is MRP = MPL * MR, where MPL represents the marginal product of labor and MR represents the marginal revenue.
Given the data provided, we have alp (average labor productivity for pizza) as 5082, atp (average total productivity for pizza) as 957, alb (average labor productivity for beverage) as 2513, and atb (average total productivity for beverage) as 1808.
To calculate the equilibrium wage, we need to compare the MRP for each good and find the point where they are equal. Let's assume the wage rate is denoted as W.
For pizza: MRPp = MPLp * MRp = (alp / atp) * Pp
For beverage: MRPb = MPLb * MRb = (alb / atb) * Pb
To find the equilibrium wage, we need to set MRPp equal to MRPb:
(alp / atp) * Pp = (alb / atb) * Pb
Substituting the given values, we have:
(5082 / 957) * 12400 = (2513 / 1808) * 10600
Simplifying the equation, we find:
W = (2513 / 1808) * (10600 * 957 / 5082) ≈ 1872.22
Therefore, the equilibrium wage is approximately 1872.22.
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The following data is available relating to the performance of a hedge fund and the market portfolio. The risk-free rate of return during the sample period was 4.07%. What is the Jensen measure of performance evaluation (in percentage) for the hedge fund?
Hedge Fund Market Portfolio
Average return 11.14% 9.53%
Standard deviations of returns 38.10% 8.96%
Beta 1.34 1.00
The Jensen measure of performance evaluation (in percentage) for the hedge fund is 1.38%. The formula to calculate Jensen Measure of Performance Evaluation is given by;Jensen Measure of Performance Evaluation = Portfolio Return - [Risk-Free Rate + Beta x (Market Return - Risk-Free Rate)]
Where, Portfolio Return = Average Return of the Hedge Fund; Market Return = Average Return of the Market PortfolioRisk-Free Rate = 4.07%; Beta = (Standard Deviation of Returns of Hedge Fund / Standard Deviation of Returns of Market Portfolio)The given data for hedge fund and market portfolio can be tabulated as;
Hedge Fund Market Portfolio
Average return 11.14% 9.53%.
Standard deviations of returns 38.10% 8.96%
Beta 1.34 1.00
Beta = 38.10% / 8.96% = 4.25
Jensen Measure of Performance Evaluation = 11.14% - [4.07% + 1.34 x (9.53% - 4.07%)] = 1.38%. Therefore, the Jensen measure of performance evaluation (in percentage) for the hedge fund is 1.38%.
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Xavier and his wife Maria have total W-2 income of $95,856. They will file their tax return as married filing jointly. They had a total of $7,974 withheld from their paychecks for federal income tax. Determine the amount of refund or additional tax due upon filing their tax return. Note: Input your answer as a positive number. Use the appropriate Tax Tables.
Xavier and his wife Maria have a total W-2 income of $95,856 and will file their tax return as married filing jointly. They had $7,974 withheld from their pay checks for federal income tax.
To determine the amount of refund or additional tax due upon filing their tax return, we can follow these steps:
1. Calculate taxable income:
Gross income = $95,856
Standard deduction = $24,800
Taxable income = Gross income - standard deduction
= $95,856 - $24,800
= $71,056
2. Calculate tax liability:
Taxable income = $71,056
Married filing jointly tax brackets (2020):
The tax liability is $8,966.
3. Calculate refund or additional tax due:
Refund or additional tax = tax liability - federal income tax withheld
= $8,966 - $7,974
= $992
Therefore, upon filing their tax return, Xavier and Maria will have a refund of $992 or an additional tax due of $992, depending on the amount of federal income tax withheld.
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An ad agency tracks the complaints, by week received, about the billboards in its city: This exercise contains only parts a,b, and c. a) The type of control chart that is best to monitor this process is b) Using z=3, the control chart limits for this process are (assume that the historical complaints rate is unknown): UCL c
= complaints per week (round your response to two decimal places).
A) P-chart is utilized when the inquiry reveals details about the process's sample size. B) The Average attributable value of complaints per week is the p-chart's centerline (CL). We may estimate the centerline using the average of the observed complaint rates as the historical complaint rate is unknown. C) It is evident that all of the complaint's points fall inside the 15.97 and 0 control limits. As a result, the process has been under control as per the control limitations.
The calculation is as follows:
Calculate the control limits for a C-type control using the formula presented below: Upper control limit (UCL) = Average attribute value + zx Average attribute value = 6+6+7+11+5+11 +3x.15.97
15.97 is the upper control limit.
Average value of characteristics divided by zx is the lower control limit (LCL). Average value of qualities = 6 + 6 + 7 + 11 + 5 + 11
3x 6 6 =-0.64
The minimum is 0.
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Suppose the market for corn in Banana Republic is competitive The market demand function for corn is Qd=10−0.5P and the market supply function is Qs=P−2, both measured in billions of bushels per year. (a) Calculate the equilibrium price and quantity. (b) At the equilibrium at part (1a), what is the consumer surplus? producer surplus? dead weight loss? Show all of those numerically and graphically. (c) Suppose the government imposes an specific tax of $6 per unit to raise government tax revenue. Analyze the problem by shifting the demand curve. What will the new equilibrium quantity be? What price will buyers pay? What price will sellers receive? Show all of those numerically and graphically. Calculate the consumer surplus, producer surplus, government tax revenue and DWL. (d) Ignore part (1c). Suppose the government imposes a price floor of $10 per bushel. What is the new equilibrium quantity? What is the consumer surplus? producer surplus? dead weight loss? Show all of these numerically and graphically. (e) Ignore part (1c)and (1d). Suppose the government imposes a price ceiling of $6 per bushel. What is the new equilibrium quantity? What is the consumer surplus? producer surplus? dead weight loss? Show all of these numerically and graphically.
Consumer surplus is the term used to describe situations where consumers pay less for a commodity or service than they did would be willing to. The economic concept of marginal utility, defined as the additional enjoyment a customer receives from purchasing one more unit of an item or service, serves as the foundation for consumer surplus.
Consumer surplus is a key idea in economics and is defined as the discrepancy between what a consumer is willing to pay and what the consumer actually pays to purchase a good.
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Graphical representations of the different scenarios will help visualize the changes in the equilibrium price, quantity, consumer surplus, producer surplus, and deadweight loss.
(a) Calculate the equilibrium price and quantity:
To find the equilibrium price and quantity, we set the quantity demanded equal to the quantity supplied and solve for the price.
Market demand function: Qd = 10 - 0.5P
Market supply function: Qs = P - 2
Setting Qd equal to Qs:
10 - 0.5P = P - 2
Simplifying the equation:
10 + 2 = 1.5P
12 = 1.5P
Dividing by 1.5:
P = 12 / 1.5
P = 8
Substituting the price back into either the demand or supply function to find the quantity:
Qd = 10 - 0.5(8)
Qd = 10 - 4
Qd = 6
Therefore, the equilibrium price is $8 per bushel, and the equilibrium quantity is 6 billion bushels.
(b) At the equilibrium, let's calculate the consumer surplus, producer surplus, and deadweight loss.
Consumer Surplus:
To calculate the consumer surplus, we need to find the area below the demand curve and above the equilibrium price.
Consumer Surplus = (1/2) * (Equilibrium Quantity) * (Equilibrium Price)
Consumer Surplus = (1/2) * 6 * 8
Consumer Surplus = 24
Producer Surplus:
To calculate the producer surplus, we need to find the area above the supply curve and below the equilibrium price.
Producer Surplus = (1/2) * (Equilibrium Quantity) * (Equilibrium Price)
Producer Surplus = (1/2) * 6 * 8
Producer Surplus = 24
Deadweight Loss:
Deadweight Loss represents the loss of total surplus due to the market not being at the equilibrium. In a perfectly competitive market, there is no deadweight loss.
Since the consumer surplus and producer surplus are equal, both are 24, and the deadweight loss is 0.
(c) Suppose the government imposes a specific tax of $6 per unit to raise government tax revenue.
To analyze the impact of the tax, we shift the demand curve down by the amount of the tax. The new demand function becomes:
New Demand Function: Qd = 10 - 0.5(P + 6)
To find the new equilibrium quantity and prices, we equate the new demand function with the supply function:
10 - 0.5(P + 6) = P - 2
Simplifying the equation:
10 - 0.5P - 3 = P - 2
7 - 0.5P = P - 2
Simplifying further:
9 = 1.5P
P = 6
Substituting the price back into either the demand or supply function to find the quantity:
Qd = 10 - 0.5(6 + 6)
Qd = 7
The new equilibrium quantity is 7 billion bushels, the price buyers pay is $6 per bushel, and the price sellers receive is $6 - $6 (the tax per unit) = $0 per bushel.
To calculate the consumer surplus, producer surplus, government tax revenue, and deadweight loss, we need additional information on the demand and supply functions after the tax is imposed.
(d) Suppose the government imposes a price floor of $10 per bushel.
With a price floor of $10, the equilibrium price of $8 is below the floor, so it becomes binding. The price will be set at $10, and the quantity traded will be determined by the supply function.
Setting the price at $10:
Qs = P - 2
Qs = 10 - 2
Qs = 8
The new equilibrium quantity is 8 billion bushels.
Consumer Surplus:
To calculate the consumer surplus, we need to find the area below the demand curve and above the price floor ($10).
Consumer Surplus = (1/2) * (Equilibrium Quantity) * (Price Floor - Equilibrium Price)
Consumer Surplus = (1/2) * 6 * (10 - 8)
Consumer Surplus = 6
Producer Surplus:
To calculate the producer surplus, we need to find the area above the supply curve and below the equilibrium price.
Producer Surplus = (1/2) * (Equilibrium Quantity) * (Equilibrium Price - Price Floor)
Producer Surplus = (1/2) * 6 * (8 - 10)
Producer Surplus = -6
Deadweight Loss:
The deadweight loss can be calculated as the difference between the consumer surplus and producer surplus.
Deadweight Loss = |Consumer Surplus - Producer Surplus|
Deadweight Loss = |6 - (-6)|
Deadweight Loss = 12
(e) Suppose the government imposes a price ceiling of $6 per bushel.
With a price ceiling of $6, the equilibrium price of $8 is above the ceiling, so it becomes binding. The price will be set at $6, and the quantity traded will be determined by the demand function.
Setting the price at $6:
Qd = 10 - 0.5P
Qd = 10 - 0.5(6)
Qd = 7
The new equilibrium quantity is 7 billion bushels.
Consumer Surplus:
To calculate the consumer surplus, we need to find the area below the demand curve and above the price ceiling.
Consumer Surplus = (1/2) * (Equilibrium Quantity) * (Equilibrium Price - Price Ceiling)
Consumer Surplus = (1/2) * 7 * (8 - 6)
Consumer Surplus = 7
Graphical representations of the different scenarios will help visualize the changes in the equilibrium price, quantity, consumer surplus, producer surplus, and deadweight loss.
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Explain any three differences between inflation and recession.
Inflation and Recession are two economic situations with quite different attributes. The three differences between inflation and recession are given below.
Definition:Inflation refers to the continuous increase in the overall level of prices of commodities in the economy, whereas Recession refers to the situation when the economy experiences a decline in production for two consecutive quarters.2. Economic Situation:Inflation is a type of situation where the economy experiences a rise in the price level of goods and services.
In contrast, Recession occurs due to factors like a decrease in demand, low investment, increased unemployment, and so on. Hence, both inflation and recession can occur due to various factors.These are the three differences between inflation and recession.
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Apply What You’ve Learned - Managing Income Taxes
Demonstrate your knowledge of the U.S. tax system by answering the following questions:
Experts describe the U.S. tax system as being a progressive system. This means that:
every taxpayer in the United States pays the same tax rate on their taxable income.
a greater tax rate is applied to the last dollar of taxable income than on the first dollar of taxable income.
only those taxpayers that earn income will incur income taxes.
a smaller tax rate is applied to the last dollar of earned income than on the first dollar of taxable income.
Which of the following equations represent the correct formula for computing a taxpayer’s taxable income? Check all that apply.
Taxable income = Total income - Exclusions - Adjustments to income - Deductions - Exemptions
Taxable income = Gross income - Adjustments to income - Deductions - Exemptions
Taxable income = Adjusted gross income - (Deductions + Exemptions)
Taxable income = Total income - Exclusions
Taxable income = Adjusted gross income - Tax credits
Taxable income = Total income + Deductions and Exemptions
Taxable income = Gross income - Adjustments
Taxable income = Gross income - Exclusions
Which of the following must be included in the computation of a taxpayer’s taxable income?
Interest and dividend income
Withdrawals from state-sponsored Section 529 plans (prepaid tuition and savings) used for education
Child support payments received
Veterans’ benefits
Home ownership can provide significant income tax savings compared to renting a comparable home. This is because a taxpayer’s tax deductible.
The contributions or expenses associated with cannot be paid with pre-tax dollars, and therefore, cannot reduce your taxable income
Out-of-pocket medical and dental expenses are tax deductible if in excess of
20% of adjusted gross income
15% of gross income
10% of taxable income
10% of adjusted gross income
Which of the following is not considered tobe a tax-sheltered investment?
An investment in government savings bonds
A Roth IRA account
An investment in a mutual fund
An investment in tax-exempt municipal bonds
Why is a refundable tax credit more valuable than a tax deduction or a nonrefundable tax credit?
It may reduce your tax liability to below zero (provide a refund).
It reduces tax liability by one dollar for every dollar of the credit.
It may be taken even if you do not itemize deductions.
All of these are reasons.
Scenario: You are 33 years old, single, earn $55,000 per year, and are in the 25% tax bracket. You want to understand the federal tax system and plan ahead so as not to pay unnecessary sums to the government in taxes. For this tax year, you contributed $1,500 to an employer-sponsored 401(k), paid student loan interest of $900, had out-of-pocket medical and dental expenses of $2,000, made gifts to charity of $1,500, and made rent payments totalling $10,200 during the year.
Based on your personal information provided above, complete the following table to determine your taxable income.
Hint: Remember that the U.S Tax Code provides for a standard deduction of $6,300 and a personal exemption of $4,050. Enter adjustments, deductions, and exemptions as negative numbers. If your answer is zero, enter "0".
Taxable income calculation
Total income Less: Adjustments to income Adjusted gross income Less: Deductions Subtotal Less: Exemptions Taxable income
Taxable income for the tax year would be $42,250, which will be used to calculate your income tax liability.
Based on the information provided, let's calculate your taxable income using the given table:
Taxable income calculation
Total income $55,000
Less: Adjustments to income
Employer-sponsored 401(k) contribution -$1,500
Student loan interest deduction -$900
Adjusted gross income $52,600
Less: Deductions
Standard deduction -$6,300
Subtotal $46,300
Less: Exemptions
Personal exemption -$4,050
Taxable income $42,250
Therefore, based on the given information, your taxable income for the tax year would be $42,250. This is the amount on which your income tax liability will be calculated.
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Discuss the marketing strategies an organisation could use in the mature stage of the product life cycle
The product life cycle concept explains the steps a product goes through from its inception to its demise. The life cycle stages are introduction, growth, maturity, and decline. During the maturity stage, it becomes challenging to market a product.
At this point, the product's sales growth rate has slowed, and the product has reached its peak. Here are some marketing strategies that an organization could use in the mature stage of the product life cycle.1. Increase Market ShareThe organization could increase market share by introducing more innovative ways to improve the product's quality, features, and performance.
Repositioning the ProductThe organization could reposition the product by targeting a new market segment or by changing the product's perception. The organization could also introduce new packaging or improve the product's labeling.5. Increase the Product's Life SpanThe organization could increase the product's life span by finding new uses for the product or by introducing complementary products to extend the product's life cycle. For instance, the organization could introduce new accessories or complementary products that would work well with the product.
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The Hand-To-Mouth Company (HTM) has $250,000 in cash, no inventory, and a 80 percent learning curve. To reduce complexity of this problem, ignore hiring and training costs associated with dramatically increased production. Employees are paid $20 per hour every Friday for that week's work. HTM has received an order to build 1,000 desks over the next 14 weeks. Materials cost $450 per desk. Suppliers make deliveries each Monday and insist on cash upon delivery. The first desk takes 100 hours of direct labor to build. HTM will be paid $1,600 per desk two weeks after the desk is delivered. Should HTM take this order?
After receiving the order, the company would make a profit of $325,000. HTM should thus accept the order.
The calculation is as follows:
Number of desks: 1,000, revenue
$1,600 in revenue per desk
Total income: $1,600,000 ($1,000 * $1,600).
Costs: The first desk will cost $200 in direct labor (100 hours at $20 per hour).Direct labor expenses for additional desks: 80 crease in the learning curve Cost of all direct labor: total direct labor expenses across all desks, Cost of materials per desk: $450
Cost of all the materials: 1000 desks multiplied by the materials cost of $450 each equals $450,000.
Direct labor cost plus material costs equals total expenses.
Flow of funds: Inflow of funds: Desk revenue
Cost of materials (paid for in full upon delivery)
Cash inflow minus Cash Outflow equals Net Cash Flow
Profitability: Revenue minus all expenditures equals profit.If HTM to accept the order, the cash flow and profitability estimates will be examined.
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It is better for the company to deny the offer since it can’t afford to manufacture that amount of desks.
The HTM Company has a total of $250,000 in cash and 80 percent of the learning curve, with no inventory. To decrease the complexity of this issue, the expense of employing and educating the dramatically increased production labor is overlooked.
The employees are paid $20 every hour on Friday for the previous week's work. Materials for each desk cost $450. Every Monday, suppliers deliver goods and need payment in cash upon delivery. The first desk takes 100 hours of direct labor to manufacture. HTM will receive $1,600 per desk two weeks after delivery.
To build 1,000 desks over the following 14 weeks, HTM has received an order. Now let's check whether HTM should take the order or not.
HTM's income statement for every desk will be:
Revenue for every desk = $1,600
Materials Cost = $450
Direct Labor = 100 hours * $20 per hour
= $2,000
Total Cost
= $450 + $2,000
= $2,450
Profit per desk = $1,600 - $2,450
= -$850
The negative profit per desk shows that HTM is losing $850 on every desk that is being sold.
Therefore, to manufacture 1,000 desks over 14 weeks, HTM should not accept the order. Also, the cash on hand of HTM, which is $250,000, may not be enough to finance all the expenses of the order.
Therefore, it is better for the company to deny the offer since it can’t afford to manufacture that amount of desks.
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For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? there are many close substitutes for this good The good is a luxury The market for the good is broadly defined The relevant time horizon is long.
Based on the given information, the statement that is most likely applicable to this good is: "There are many close substitutes for this good."
When the price of a good increases and the quantity demanded decreases, it suggests that consumers have options to switch to other similar products or substitutes. If there are many close substitutes available, consumers can easily switch to alternatives when the price of the good increases, resulting in a decrease in quantity demanded.
The other statements are less likely based on the given information:
The good being a luxury: The information provided does not indicate whether the good is a luxury or a necessity. The price elasticity of demand (percentage change in quantity demanded relative to the percentage change in price) can vary across different types of goods.
The market for the good being broadly defined: The information does not provide any insights into the market size or the scope of the market for the good.
The relevant time horizon being long: The information does not specify the time horizon over which the price increase and quantity demanded decrease occur. The time horizon is not directly related to the price elasticity of demand.
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Star Bhd is a leader in the marketing of premium heavy equipment in Malaysia and Brunei. The company offers full range of construction equipment and earth moving machinery such as backhoe loaders, dozers, wheel excavators and many more. On 5 October 2020, Earth Bhd purchased a wheel loader under hire purchase agreement from Star Bhd. The cash price of the loader was RM245,500 and the interest charged was 8% per annum. Earth Bhd paid 20% of the cash price as a deposit. The hire purchase period was 36 months and the instalments are paid at the end of each month starting from 31 October 2020. The depreciation charge is 10% per year. Both companies close their accounts on 31 December every year. Earth Bhd uses gross method to account for the hire purchase and employs sum-of-the-years digits (SYD) method to recognise the interest expense on the instalment payment date. In May 2021, Earth Bhd faced financial distress to pay the installment because many construction projects have been postponed due to Movement Control Order (MCO). The company was unable to pay the hire purchase instalments for May and June 2021. After sending "the notice of intention to repossess" to Earth Bhd, Star Bhd repossessed the machine on 3 August 2021 by incurring the repossession cost of RM1,500. The market price of the machine at the repossession date was RM75,000 and the selling cost was RM550. REQUIRED: (Round all numbers to the nearest RM and show details of workings) (a) Calculate the hire purchase price and the monthly instalment for Earth Bhd. (b) Prepare all related journal entries for Earth Bhd on the date of repossession.
a. The hire purchase price for Earth Bhd is RM196,400 and the monthly instalment is RM6,772.60.
b. All related journal entries for Earth Bhd on the date of repossession has been prepared.
How do we calculate?a.
Cash price of the loader = RM245,500
Deposit paid = 20% of the cash price = 0.20 * RM245,500 = RM49,100
Balance to be financed = Cash price - Deposit = RM245,500 - RM49,100 = RM196,400
Interest rate per annum = 8%
Hire purchase period = 36 months
Interest expense for the first year = Balance * Interest rate = RM196,400 * 8% = RM15,712
Depreciation expense for the first year = Cash price * Depreciation rate = RM245,500 * 10% = RM24,550
Principal repayment for the first year = Monthly instalment - Interest expense - Depreciation expense
The present value of an annuity:
PMT = PV * i / (1 - (1 + i)[tex]^-^n[/tex]
i = 8% / 12 = 0.67%
n = 36
PMT = RM196,400 * 0.67% / (1 - (1 + 0.67%)[tex]^(^-^3^6^)^)[/tex]
PMT = RM6,772.60
(b) The Journal entries for Earth Bhd on the date of repossession is shown as :
To reverse the Hire Purchase Payable and Hire Purchase Interest Payable:
Dr. = Hire Purchase Payable
Dr. = Hire Purchase Interest Payable
Cr. = Machinery (Repossessed)
To record the repossession cost is :
Dr. = Repossession Cost
Cr. = Bank/Cash
loss on repossession record :
Dr.= Loss on Repossession
Cr.= Machinery (Repossessed)
Cr. = Accumulated Depreciation
selling cost recording is:
Dr. = Selling Cost
Cr. = Cash/Accounts Receivable
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How could a SAYGO (Save as you go) tax system help support intergenerational wellbeing in a particular country?. Please use economic analysis
The Save As You Go (SAYGO) tax system is a system in which income tax is collected from an individual's salary in a staggered manner. This means that the tax is collected in smaller amounts from the individual on a regular basis, rather than in one lump sum at the end of the year. The goal of this system is to make it easier for people to manage their taxes and to make tax collection more efficient. SAYGO can help support intergenerational wellbeing by providing a stable source of revenue for the government. This revenue can then be used to fund programs and services that support the needs of all generations.
For example, the revenue generated by SAYGO could be used to fund healthcare and education programs that benefit both young and old people. In this way, SAYGO could help promote the overall wellbeing of the population. Economic Analysis: The SAYGO system has a number of benefits that make it an attractive option for governments looking to support intergenerational wellbeing. Firstly, it provides a stable source of revenue for the government. This revenue can then be used to fund programs and services that benefit all generations, such as healthcare, education, and infrastructure development. Secondly, it encourages people to save money, which can help support intergenerational wellbeing by promoting financial stability and reducing poverty. Finally, it makes the tax system more efficient by reducing the administrative burden on both taxpayers and the government. Overall, the SAYGO system has the potential to be a valuable tool for promoting intergenerational wellbeing in a particular country.
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Wildhorse co. ’s trial balance at december 31 shows supplies $8,850 and supplies expense $0. On december 31, there are $2,050 of supplies on hand
Wildhorse Co. had supplies worth $8,850 according to their trial balance at December 31. However, there were $2,050 worth of supplies remaining on hand at the end of December 31. The supplies expense was not recorded on the trial balance.
The supplies account on the trial balance represents the initial value of supplies purchased or acquired. In this case, it shows a balance of $8,850. However, this amount does not reflect the actual supplies remaining at the end of the period.
To determine the supplies expense, we need to calculate the difference between the initial supplies value and the supplies on hand. Therefore, the supplies expense can be calculated as $8,850 - $2,050 = $6,800. This expense should be recorded in the appropriate account to accurately reflect the consumption of supplies during the period.
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CHABROS INIERNATIONAL GROUP: A WORLD OF WOOD 1. INTRODUCTION CHABROS INTERNATIONAL GROUP is a Lebanese Group with a business model whose core focus is on veneers as its best selling premium products, but with expanding opportunities in the lumber market, the company has also succeeded in establishing a firm footing in this market. With declining sales in its first established subsidiary, the company is affected by financial crises in 2009 , December. The company's first acquisition of Serbian sawmill whose production in all was bought by MENA subsidiaries came into the crises impact too as it was generating a fewer sales as much as 50% of the total sales to the MENA subsidiaries. The problems and strategic issue faced by the organization is that its profits were dependant on external factors (currency pegging) due to its dual nature business model, which was vencer and lumber manufacturer along with veneer and lumber wholesaler. The lumber market is expanding at fast pace which in itself present an opportunity for the CHABROS International. Moreover, CHABROS International doesn't have well-known brand recognition in the region where they serve, which can be a threat to its existence. All of this needs to be dealt quickly given two major alternative suggestions that include: closing parts of the Serbian Saw mills or to re-boost CHABROS International "s sales by expanding in markets they already operate in, considering Morocco as a best fit to their expansion strategy. The analysis revolves around the external and internal environment factors, and drags a suitable alternative for the CHABROS International to deal with the prevailing financial crises. In addition to this, evaluation of the current marketing mix will be done to better picture the future for CHABROS International. 2. ANALYSIS - Discuss two major issues and management problems challenging CHABROS International Group? - What motivated CHAMI to expand CHABROS' operations internationally? - What strategy did he follow: International, multinational, global or transnational? 1. What was Chami's Motivation: 2. What was Chami's Earlier Strategy: 3. What was Chami's Later Strategy: - What strategies/options were available to CHABROS to overcome the financial; crisis?
2 major issues and management problems challenging CHABROS International Group are:
1. CHABROS International Group faced many issues and management problems such as declining sales in its first established subsidiary and financial crises in December 2009, affecting the Serbian sawmill whose production in all was bought by MENA subsidiaries.
2. The profits of CHABROS were dependent on external factors (currency pegging) due to its dual nature business model, which was veneer and lumber manufacturer along with veneer and lumber wholesaler. What motivated Chami to expand CHABROS' operations internationally? The motivation of Chami to expand CHABROS' operations internationally is to establish a firm footing in the lumber market.
With the expanding opportunities in the lumber market, the company has also succeeded in establishing its firm footing in this market. What strategy did Chami follow: International, multinational, global, or transnational? Chami followed a global strategy. What was Chami's motivation Chami's motivation was to establish a firm footing in the lumber market. What was Chami's earlier strategy? Chami's earlier strategy was to focus on veneers as its best selling premium products.
What was Chami's later strategy? Chami's later strategy was to expand in markets they already operate in, considering Morocco as the best fit to their expansion strategy. What strategies/options were available to CHABROS to overcome the financial crisis? Two major strategies/options available to CHABROS to overcome the financial crisis are closing parts of the Serbian sawmills or re-boosting CHABROS International's sales by expanding in markets they already operate in, considering Morocco.
As the best fit to their expansion strategy. The analysis revolves around the external and internal environment factors, and drags a suitable alternative for the CHABROS International to deal with the prevailing financial crises.
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Scanning your-memory for previous experiences with products or brands occurs during which stage of the consumer purchase decision process? Q. information search purchase decision alternative evaluation postpurchase behavior problem recognition QUESTION 7 The personal, social, and economic significance of the purchase to the consumer, which is known as the level of may cause him or her to skip or minimize one ormore stages in the purchase decision process. aspiration cognitive dissonance motivation situational influences involvement QUESTION 8 A reference group that a person wishes to be a member of or wishes to be identified with is referred to as a(n) preference associative aspiration integrated QUESTION 9 Consumer behavior refers to the aspects of a consumer's decision-making processes that cannot be measured. the actions a person takes in purchasing and using products and services, including the mental and social processes before and after them. the five stages a buyer passes through in making choices about which product and service to investigate, purchase, and consume. the mental and social processes related to purchasing that are innate in a person from birth those purchasing behaviors that result from repeated experience and reasoning QUESTION 10 Situational influences refer to the temporary impediments to a consumer's purchase decision psychological concepts that are useful for irterpreting buying processes and directing marketing efforts the feelings of postpurchase anviety that can arise from a namber of different factors induding social surroundings, physical surroundings. psychological effects, and precedent states. both the objective and subjective attributes a consumer uses to campare different products and brands Chick Save and Subimit to save and nubmit. Cick Shere All Annurrs to save all annuer:.
Scanning a consumer's memory for previous experiences with products or brands occurs during the information search stage of the consumer purchase decision process.
The consumer purchase decision process consists of several stages, and information search is one of them. During this stage, consumers gather information about different products or brands to make an informed decision. Scanning their memory for previous experiences with products or brands is part of this information search process. By recalling past experiences, consumers can evaluate the performance, quality, and satisfaction they obtained from certain products or brands. This information helps them make comparisons and judgments, ultimately influencing their purchasing decision. By utilizing their memory, consumers can draw upon their past experiences to guide their current decision-making process.
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If a firm has achieved its target cash balance the net present value is: A. positive because the cash balance is positive. B. zero because increasing the cash balance increases the interest cost. C. negative because the cash balance has a financing cost. D. positive because decreasing the cash decreases the cost of illiquidity.
If a firm has achieved its target cash balance, the net present value is positive because decreasing the cash decreases the cost of illiquidity. Illiquidity is the degree to which a business lacks cash to fulfill its short-term obligations.
When firms hold excess cash balances, they are exposed to the negative consequences of illiquidity costs.The theory of finance suggests that companies should set a target cash balance in order to prevent the negative consequences of holding excess cash on hand. The target cash balance is determined by balancing the cost of holding cash with the cost of illiquidity, which occurs when the firm does not have enough cash on hand to meet its obligations.
In addition, the target cash balance is influenced by factors such as the company's level of risk, level of investment, and the degree of uncertainty about future cash flows. The firm's value is increased by reaching its target cash balance. Thus, if a firm has achieved its target cash balance, the net present value is positive because decreasing the cash decreases the cost of illiquidity.
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The price elasticity of demand for a good is 0.450.45. This product could be a necessity True False
The price elasticity of demand for a good refers to the percentage change in quantity demanded divided by the percentage change in price of that good. If the value of the price elasticity of demand for a good is less than 1, the good is considered to be inelastic.
Conversely, if the value is greater than 1, the good is considered to be elastic. If the value of price elasticity of demand for a good is exactly equal to 1, the good is said to have unit elasticity.
When the price elasticity of demand for a good is between 0 and 1, then the good is considered to be a necessity because the quantity demanded will change only slightly in response to a change in the price of the good. Therefore, if the price elasticity of demand for a good is 0.45, the good is considered to be a necessity.
This is because the percentage change in the quantity demanded is less than the percentage change in price of the good, indicating that demand is not very sensitive to changes in price.
Therefore, the statement "This product could be a necessity" is true.
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The manager of a pizza shop must forecast weekly demand for special
pizzas so that he can order pizza shells weekly. Recent demand has
been:
Week
No. of
Special Pizzas
1
50
2
65
3
53
The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been recorded.
Week 1 had 50 special pizzas ordered, week 2 had 65 special pizzas ordered and week 3 had 53 special pizzas ordered. To forecast the weekly demand for special pizzas for the upcoming weeks, the manager must use a combination of quantitative and qualitative techniques. Some of these methods are moving averages, regression analysis, and the Delphi method. But for the purpose of this question, we can use the Simple Moving Average method. The simple moving average formula is given as follows:
SMA = ∑ Demand / NWhere SMA is the Simple Moving Average, Demand is the total number of special pizzas ordered, and N is the number of weeks. For this particular pizza shop, the forecasted demand for special pizzas for week 4 can be calculated using the simple moving average formula:
SMA = (50 + 65 + 53) / 3= 168 / 3= 56
SMA = (65 + 53 + 56) / 3= 174 / 3= 58
The forecasted demand for special pizzas for week 5 is 58. And so on. The simple moving average method is useful when there is a steady demand for products, but it may not be accurate when demand is changing rapidly. In such cases, other methods may be more appropriate.
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List and describe the sources of risk that may occur in the value chain between producers and customers.
The value chain includes a series of interconnected activities that businesses undertake to satisfy the demands of customers. These activities include product design, manufacturing, distribution, sales, and marketing, among others.
The value chain involves several risks, including financial, technical, and environmental risks, among others. Let's discuss these risks in more detail:Financial risks: This risk refers to the possibility of loss from adverse fluctuations in financial markets, such as interest rates, exchange rates, and commodity prices. For example, a business that is heavily reliant on oil imports may be at risk of loss if oil prices rise suddenly.
Similarly, a business that relies on debt financing may be at risk of insolvency if interest rates rise suddenly.Technical risks: These risks refer to the possibility of loss from technical failures, such as equipment breakdowns, software malfunctions, and system crashes.
For example, a company that uses cloud-based storage systems may be at risk of data loss if there is a system crash. Similarly, a business that relies on complex manufacturing processes may be at risk of product failure if there are technical failures in the production process.Environmental risks: This risk refers to the possibility of loss from environmental disasters such as pollution, natural disasters, and climate change.
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The production planner for Fine Coffees, Inc. produces two coffee blends: American (A) and British (B). He can only get 300 pounds of Colombian beans per week and 200 pounds of Dominican beans per week. Each pound of American blend coffee requires 12 ounces of Colombian beans and 4 ounces of Dominican beans, while. a pound of British blend coffee uses 8 ounces of each type of bean. Profits for the American blend are $2.00 per pound, and profits for the British blend are $1.00 per pound. The goal of Fine Coffees, Inc. is to maximize profits. What is the objective function? A) P= 12A +8B. B) P = A + 2B. OC) P = 4A+8B. OD) P=8A+12B. E) P = 2A + B.
Question 6
The production planner for Fine Coffees, Inc. produces two coffee blends: American (A) and British (B). He can only get 300 pounds of Colombian beans per week and 200 pounds of Dominican beans per week. Each pound of American blend coffee requires 12 ounces of Colombian beans and 4 ounces of Dominican beans, while a pound of British blend coffee uses 8 ounces of each type of bean. Profits for the American blend are $2.00 per pound, and profits for the British blend are $1.00 per pound. The goal of Fine Coffees, Inc. is to maximize profits. What is the constraint for Dominican beans? A) 4A+8B ≤ 3,200. B) 8A+ 4B ≤ 3,200. OC) 4A+8B ≤ 4,800. OD) 8A+12B ≤ 4,800. E) 12A +8B ≤ 4,800. Question 7 A snack food manufacturer buys corn for tortilla chips from two cooperatives, one in lowa and one in Illinois. The price per unit of the lowa corn is $6.00 and the price per unit of the Illinois corn is $5.50. The manufacturer needs at least 12,000 units of corn. The lowa cooperative can supply up to 8000 units, and the Illinois cooperative can supply at least 6000 units. Develop constraints for these conditions. Let x₁ = the number of units from lowa Let x2 = the number of units from Illinois Which one is NOT one of the constraints in mathematical model? a) x₁ ≤ 8000 Ob) 6x₁ + 5.5x22 12,000 Oc) x₁ + x 2 ≥ 12,000 d) x₁ ≥ 6000
The constraint that is NOT one of the constraints in the mathematical model is b) 6x₁ + 5.5x₂ ≤ 12,000.
6 - The objective function is the mathematical expression that represents the goal of maximizing profits. In this case, the objective function is to maximize profits, so we need to determine the expression that represents the total profit based on the quantities of the two coffee blends produced.
Let A represent the quantity of American blend coffee and B represent the quantity of British blend coffee. The profits for the American blend are $2.00 per pound, and the profits for the British blend are $1.00 per pound.
To calculate the total profit, we multiply the quantity of each blend by its respective profit and sum them up:
P = 2A + B
Therefore, the correct answer is E) P = 2A + B.
7 - Let x₁ represent the number of units from Iowa and x₂ represent the number of units from Illinois.
The constraints in this scenario are as follows:
a) x₁ ≤ 8000: This constraint represents the maximum supply limit from Iowa, stating that the number of units from Iowa cannot exceed 8000. It is a valid constraint.
Ob) 6x₁ + 5.5x₂ ≤ 12,000: This constraint represents the minimum requirement of 12,000 units of corn. It combines the quantities from both Iowa and Illinois, weighted by their respective prices, and sets a maximum limit of 12,000 units. It is a valid constraint.
Oc) x₁ + x₂ ≥ 12,000: This constraint represents the minimum requirement of 12,000 units of corn. It states that the total combined units from both Iowa and Illinois must be greater than or equal to 12,000 units. It is a valid constraint.
d) x₁ ≥ 6000: This constraint represents the minimum supply limit from Illinois, stating that the number of units from Illinois cannot be less than 6000. However, the expression "- 150" is not necessary and seems to be a typo. So, the correct constraint should be x₁ ≥ 6000. It is a valid constraint.
Therefore, the constraint that is NOT one of the constraints in the mathematical model is b) 6x₁ + 5.5x₂ ≤ 12,000.
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Random variable x has the probability function f(x)= 9
x
, for x=1,2 or 6. What is the expected value of x ?
The expected value of x in this case can be found by using the formula given below:
Expected Value = Σ(x * f(x))Here, x can take the values 1, 2, or 6 and f(x) is given by the probability function:f(x) = 9/x
Sowe can write the expected value of x as follows:Expected Value of
[tex]x = (1 * f(1)) + (2 * f(2)) + (6 * f(6))[/tex]
Expected Value of
[tex]x = (1 * 9/1) + (2 * 9/2) + (6 * 9/6)[/tex]
Expected Value of
[tex]x = (1 * 9/1) + (2 * 9/2) + (6 * 9/6)[/tex]
Therefore, the expected value of x is 27.
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Please help to define the SMART Marketing goals for the B2B2C company.
Setting SMART marketing goals helps the B2B2C company focus on specific objectives, track progress effectively, and ensure goals are realistic and aligned with the business strategy.
SMART marketing goals for a B2B2C company should be specific, measurable, achievable, relevant, and time-bound. Here is an example:
Specific: Increase website traffic and lead generation for the B2B2C company by targeting decision-makers in the retail industry.
Measurable: Achieve a 20% increase in website traffic and generate 50 qualified leads per month through targeted marketing campaigns.
Achievable: Implement SEO optimization techniques, create compelling content, and leverage social media and email marketing to drive website traffic and capture leads.
Relevant: Align marketing efforts with the company's business model, focusing on B2B partnerships and acquiring B2C customers through those partnerships.
Time-bound: Achieve the goals within a 6-month period, monitoring progress monthly and making necessary adjustments to strategies and tactics.
By setting SMART marketing goals, the B2B2C company can focus its efforts on specific objectives, track progress effectively, and ensure that the goals are realistic and aligned with the overall business strategy.
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Identify the business objective that we should focus on to achieve business growth for company - coca-cola
Coca-Cola can achieve business growth by focusing on market expansion into emerging economies and diversifying its product portfolio to cater to changing consumer preferences and tap into new customer segments.
To achieve business growth for Coca-Cola, a key business objective to focus on would be market expansion and diversification. This objective involves targeting new markets and expanding the company's product portfolio to reach a wider consumer base and increase revenue streams.
Firstly, Coca-Cola can focus on expanding into emerging markets with growing economies and rising consumer purchasing power. By tailoring its marketing strategies and product offerings to meet the unique preferences and needs of these markets, Coca-Cola can tap into previously untapped customer segments and gain a competitive advantage.
Additionally, diversifying the product portfolio can help Coca-Cola appeal to a broader range of consumers and adapt to changing consumer preferences. This could involve introducing healthier beverage options, exploring new drink categories, or expanding into complementary markets such as snacks or functional beverages.
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The ride-share app Uber uses a complex algorithm to determine how much a ride will cost – the price takes into account variables such as time of day, volume of traffic on the roads, and so on. During the busiest times of day, the app implements something known as surge pricing, increasing prices to reflect the increased quantity of rides being demanded. Periods of surge pricing generally coincide with the times of day when most people are commuting to/from their day jobs, increasing the population of people in transit while also increasing the number of people available to work as Uber drivers.
a) Create a graphical depiction of the market for Uber rides as it enters a period of surge pricing. Explain the impacts to market price and quantity.
b) Discuss what you think the price elasticity of demand for ride-sharing apps will be during these surge pricing periods (and explain why)? Do you think this elasticity will be the same or different during non-surge periods?
c) How do you think the price elasticity of demand for ride-share during the morning commute to work will compare to the elasticity during the afternoon commute home (and explain why)?
a) In a graphical depiction of the market for Uber rides during surge pricing, the demand curve would shift upward and to the left, indicating a higher price and potentially lower quantity demanded.
b) The price elasticity of demand for ride-sharing apps during surge pricing periods is likely to be relatively high (elastic). This is because surge pricing usually occurs during peak hours when there is a greater availability of substitutes for transportation, such as public transit or traditional taxis. When prices increase significantly during surge pricing, customers may be more likely to explore alternative options, resulting in a relatively larger decrease in quantity demanded.
c) The price elasticity of demand for ride-share during the morning commute to work is likely to be higher compared to the elasticity during the afternoon commute home. This is because the morning commute is typically more time-sensitive and rigid, with individuals needing to reach their workplaces at specific times. Therefore, there may be a higher responsiveness to price changes during the morning commute as people may have less flexibility in choosing alternative modes of transportation.
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Pick any product or service in the real world and analyze it based on the Triple Bottom Line (similar to the class activity involving the smartphone gun). Provide one positive (AND one negative) aspect of the product/service for EACH component of the Triple Bottom line. There should be a total of 6 details provided about the product/service.
One product that can be analyzed based on the Triple Bottom Line is the electric car. The Triple Bottom Line approach evaluates a company's performance based on its social, environmental, and economic impact.
Positive: The electric car has the potential to create new jobs and economic opportunities in the renewable energy sector. It also reduces the country's dependence on foreign oil, which can save money on imports.
Negative: The high cost of electric cars makes them unaffordable for many consumers, which could limit their potential economic benefits. The lack of charging infrastructure and long charging times may also limit the widespread adoption of electric cars, which could negatively impact the electric car industry's growth.
In conclusion, the electric car has several positive and negative aspects based on the Triple Bottom Line. While it has the potential to benefit society and the environment, it also has economic limitations that may hinder its potential. To maximize the advantages of the electric car, policymakers and industry stakeholders must work together to address these challenges and create an environment that promotes the widespread adoption of this innovative technology.
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Why is a classified stock used by companies? What is meant by intrinsic value? Which is more important intrinsic value or market value? What are the things that affect a company's value? Why do companies pay dividends? Who determines how much and whether or not dividends are paid? What effect does dividends have of the stock? What is a preferred stock? How is it different from a common stock?
Companies use classified stock for various reasons. One such reason is that classified stock allows companies to maintain control of the company without actually owning a majority of the company.
Classified stock, or class A stock, generally has greater voting power per share than common stock. So, companies can maintain their voting power with a relatively small percentage of the overall shares. In addition, classified stock can be used to prevent hostile takeovers.
If a company has classified stock, it can be more difficult for an outside entity to acquire a controlling stake in the company without the consent of the board or the majority shareholder. Intrinsic value is a measure of a company's actual worth. This value is determined by analyzing a company's assets, cash flow, and other tangible and intangible factors. Intrinsic value is generally considered more important than market value.
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Chard Ltd. issues 5,000 $100 par value preference shares for
cash at $118 per share. Instructions: Journalize the issuance of
the preference shares.
By journalizing the issuance of the preference shares as described above, Chard Ltd. accurately records the increase in its capital and cash resulting from the sale of the shares.
To journalize the issuance of the preference shares by Chard Ltd., we need to record the increase in the company's capital and cash from the sale of the shares. Here's how the entry would look:
Date: [Date of Issuance]
Preference Shares Receivable [Debit]: $590,000
Common Shares [Credit]: $500,000
Additional Paid-in Capital [Credit]: $90,000
Cash [Credit]: $590,000
Preference Shares Receivable [Debit]: This account represents the value of the preference shares issued by Chard Ltd. It increases by multiplying the number of shares (5,000) by the par value ($100) per share, resulting in $500,000.
Common Shares [Credit]: This account represents the par value of the preference shares issued. It increases by $500,000 to reflect the par value of the shares issued.
Additional Paid-in Capital [Credit]: The difference between the issue price ($118) and the par value ($100) per share is considered additional paid-in capital. Since the shares were issued at a premium, this account increases by $90,000.
Cash [Credit]: This account represents the cash received from the sale of the preference shares. It increases by $590,000, which is the total cash received from issuing the shares.
By recording these journal entries, Chard Ltd. properly reflects the issuance of preference shares and the corresponding increase in its capital and cash.
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CASE 4.4 National Football League Management Council v. Brady, 820 F.3d 527 (2d Cir. 2016) 13
had not met the high standard required for courts to limited to determining whether the arbitration provacate arbitration awards. This was particularly true ceedings and award met the minimum legal stanwhen the arbitration was held pursuant to a union dards... These standards do not require perfection contract. The court rejected the trial court's conclu- in arbitration awards. Rather, they dictate that even sions about improper notice to Brady because it was outside the proper scope of a court’s review in labor arbitration cases.
if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within
the bounds of his bargained-for authority."
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The case 4.4 National Football League Management Council v. Brady, 820 F.3d 527 (2d Cir. 2016) is a case that involved labor arbitration cases.
What does this mean?The arbitration was held pursuant to a union contract.
It should be noted that the court rejected the trial court's conclusions about improper notice to Brady because it was outside the proper scope of a court’s review in labor arbitration cases.The court ruled that the parties had not met the high standard required for courts to limit the review of arbitration proceedings and awards. This was particularly true when the arbitration was held pursuant to a union contract. The standards did not require perfection in arbitration awards.Rather, they dictated that even if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of his bargained-for authority.
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Financial Feasibility analysis (In-class):
o Jane, the head nurse on the surgery recovery floor, is going to place a request to update
the current Hospital Management system to a new version that will create a report from
data already in the patient record system. This report should be sent to new printers (cost
per printer is approximately $2,000) located just outside each of 12 patient's rooms. The
hospital is having 60 patient rooms in total).
o Jane feels that a graphical report that combines the patient record of pain and pain
medication received is absolutely necessary for the doctors and nursing staff to make
proper medical decisions concerning patient recovery. Nurses already record the date,
time, and severity of pain each time the patient complains or notifies them of discomfort.
o The pharmacy nurse records the amount of pain medication administered to each patient
immediately after administration. Jane feels that combining these two pieces of
information will improve medical decision making and provide better care to the patient.
o The IS manager has approved $50,000 for the development of the system including
(Project manager, Software Developers, Graphic Designers, and System Analyst) and
estimates that maintaining the system for the next three years will cost $3,000 per year.
o In addition, this method will increase the accuracy of data gathering and reporting by 10%
per year for three years and reduce pharmacy costs by 2% in the first three years of
introduction. Current expenses credited to inaccurate data gathering and reporting are
$100,000 per year. Pharmacy costs are currently $1 million.
o Interest rate is 3%
Expert Answer
The financial feasibility analysis is a study that examines the economic potential of a project based on the data collected during the examination of the project's technical, managerial, and economic aspects.
When it comes to healthcare, financial feasibility analysis is important since it establishes whether a project is worth investing in or not.
To determine the feasibility of the project under consideration, the following financial analysis must be completed: Investment ExpensesThe initial expenses of implementing the project are known as investment expenditures. The following are the investment expenses involved in the current scenario:Expenses of the Patient Record System update to the new version: $50,000Cost of 12 printers: 12 x $2,000 = $24,000 Total Investment Expenses = $74,000 (Investment expenses are a one-time expense)Operating Expenses;Annual expenses incurred to keep the project up and running are known as operating expenditures.
In the present situation, the following are the operating expenses: Operating expenses for maintenance of the system: $3,000 per year increased accuracy in data collection and reporting: 10% reduction in $100,000 expenses = $10,000 (Annual savings)Reduction in pharmacy costs: 2% reduction in $1,000,000 expenses = $20,000 (Annual savings)Total Annual Operating Expenses = $33,000 (Annual expenses)Total Annual Savings = $30,000 (Annual savings)Net Cash Flow.
The net cash flow is calculated by subtracting annual expenditures from annual savings. As a result, the net cash flow in the present scenario will be:$30,000 - $33,000 = -$3,000.The negative value indicates that the project is not financially feasible since it will cost the hospital more to implement than it will save in the long run.In addition, the interest rate of 3% must be taken into account to calculate the project's net present value (NPV).
NPV = present value of net cash inflows - present value of net cash outflows. If NPV is a positive amount, it indicates that the project is financially feasible. If the NPV is negative, it indicates that the project is not financially feasible.
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