Suppose Congress decides to increase government spending and taxes by equal amounts. Use the IS-LM AD-SRAS-LRAS model to illustrate graphically the short run impact of the increase in government spending and taxes on output and interest rates, prices, consumption, unemployment rate and investment in short run. Explain clearly which curve would shift and why. What will be the long run impact of this increase in government spending and taxes on output and interest rates, prices, consumption, unemployment rate and investment. Show the appropriate movement of curves both for the short run and the long run. Be sure to label: i. the axes; ii. the curves; iii. The initial equilibrium values; iv. The direction the curves shift; and v. the short run equilibrium values and vi. The long run equilibrium values.
How can the Fed keep the economy from falling into a recession/boom due to the increase in government spending and taxes? Use a second IS-LM-SRAS-LRAS model to illustrate graphically the impact of both fiscal policy of increase in government spending and taxes and the monetary policy which prevents output from falling/rising. Be sure to label: i. the axes; ii. the curves; iii. The initial equilibrium values; iv. The direction the curves shift; and v. the terminal equilibrium values.
Use the Mundell-Fleming model (draw the appropriate graphs and show on the graphs as well) to predict what would happen to aggregate income, the exchange rate, and the trade balance under both floating and fixed exchange rates in response to the shock of a sudden decrease in exports in a small open economy.
In: Economics
| Chapter 8: Applying Excel | |||||||
| Data | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | 1 | 2 | ||
| Budgeted unit sales | 40,000 | 60,000 | 100,000 | 50,000 | 70,000 | 80,000 | |
| • Selling price per unit | $8 | per unit | |||||
| • Accounts receivable, beginning balance | $65,000 | ||||||
| • Sales collected in the quarter sales are made | 75% | ||||||
| • Sales collected in the quarter after sales are made | 25% | ||||||
| • Desired ending finished goods inventory is | 30% | of the budgeted unit sales of the next quarter | |||||
| • Finished goods inventory, beginning | 12,000 | units | |||||
| • Raw materials required to produce one unit | 5 | pounds | |||||
| • Desired ending inventory of raw materials is | 10% | of the next quarter's production needs | |||||
| • Raw materials inventory, beginning | 23,000 | pounds | |||||
| • Raw material costs | $0.80 | per pound | |||||
| • Raw materials purchases are paid | 60% | in the quarter the purchases are made | |||||
| and | 40% | in the quarter following purchase | |||||
| • Accounts payable for raw materials, beginning balance | $81,500 | ||||||
| Enter a formula into each of the cells marked with a ? below | |||||||
| Review Problem: Budget Schedules | |||||||
| Construct the sales budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | 1 | 2 | ||
| Budgeted unit sales | ? | ? | ? | ? | ? | ? | |
| Selling price per unit | ? | ? | ? | ? | ? | ? | |
| Total sales | ? | ? | ? | ? | ? | ? | |
| Construct the schedule of expected cash collections | Year 2 Quarter | ||||||
| 1 | 2 | 3 | 4 | Year | |||
| Accounts receivable, beginning balance | ? | ? | |||||
| First-quarter sales | ? | ? | ? | ||||
| Second-quarter sales | ? | ? | ? | ||||
| Third-quarter sales | ? | ? | ? | ||||
| Fourth-quarter sales | ? | ? | |||||
| Total cash collections | ? | ? | ? | ? | ? | ||
| Construct the production budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | Year | 1 | 2 | |
| Budgeted unit sales | ? | ? | ? | ? | ? | ? | ? |
| Add desired finished goods inventory | ? | ? | ? | ? | ? | ? | |
| Total needs | ? | ? | ? | ? | ? | ? | |
| Less beginning inventory | ? | ? | ? | ? | ? | ? | |
| Required production | ? | ? | ? | ? | ? | ? | |
| Construct the raw materials purchases budget | Year 2 Quarter | Year 3 Quarter | |||||
| 1 | 2 | 3 | 4 | Year | 1 | ||
| Required production (units) | ? | ? | ? | ? | ? | ? | |
| Raw materials required to produce one unit | ? | ? | ? | ? | ? | ? | |
| Production needs (pounds) | ? | ? | ? | ? | ? | ? | |
| Add desired ending inventory of raw materials (pounds) | ? | ? | ? | ? | ? | ||
| Total needs (pounds) | ? | ? | ? | ? | ? | ||
| Less beginning inventory of raw materials (pounds) | ? | ? | ? | ? | ? | ||
| Raw materials to be purchased | ? | ? | ? | ? | ? | ||
| Cost of raw materials per pound | ? | ? | ? | ? | ? | ||
| Cost of raw materials to be purchased | ? | ? | ? | ? | ? | ||
| Construct the schedule of expected cash payments | Year 2 Quarter | ||||||
| 1 | 2 | 3 | 4 | Year | |||
| Accounts payable, beginning balance | ? | ? | |||||
| First-quarter purchases | ? | ? | ? | ||||
| Second-quarter purchases | ? | ? | ? | ||||
| Third-quarter purchases | ? | ? | ? | ||||
| Fourth-quarter purchases | ? | ? | |||||
| Total cash disbursements | ? | ? | ? | ? | ? | ||
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year: First Quarter Second Quarter Third Quarter Fourth Quarter Sales $ 1,100,000 $ 1,320,000 $ 1,540,000 $ 1,760,000 Cost of goods sold 410,000 490,000 560,000 610,000 Administrative costs 270,000 165,000 170,000 180,000 Advertising costs 0 140,000 0 0 Executive bonuses 0 0 0 60,000 Provision for bad debts 0 0 0 56,000 Annual maintenance costs 64,000 0 0 0 Additional Information • First-quarter administrative costs include the $120,000 annual insurance premium. • Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year. • No special items affect income during the year. • Noventis estimates an effective income tax rate for the year of 40 percent. a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year:
First Quarter Second Quarter Third Quarter Fourth Quarter
Sales $ 1,100,000 $ 1,320,000 $ 1,540,000 $ 1,760,000
Cost of goods sold 410,000 490,000 560,000 610,000
Administrative costs 270,000 165,000 170,000 180,000
Advertising costs 0 140,000 0 0
Executive bonuses 0 0 0 60,000
Provision for bad debts 0 0 0 56,000
Annual maintenance costs 64,000 0 0 0
Additional Information • First-quarter administrative costs include the $120,000 annual insurance premium. • Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year. • No special items affect income during the year. • Noventis estimates an effective income tax rate for the year of 40 percent. a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.
In: Accounting
In: Accounting
On January 1, 2019 the DAYUMSON Company budget committee has reached agreement on the following data for the 6 months ending June 30,2019.
|
Sales units |
First quarter 5,000; second quarter 6,000; third quarter 7,000 |
|
Ending raw materials inventory |
40% of the next quarter’s production requirements |
|
Ending finished goods inventory |
30% of the next quarter’s expected sales units |
|
Third-quarter 2019 production |
7,500 units |
The ending raw materials and finished goods inventories at December 31, 2018, follow the same percentage relationships to production and sales that occur in 2019. Two pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $ 5 per pound.
Instructions:
In: Accounting
Exercise 21-6 (Part Level Submission)
On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017.
| Sales units: | First quarter 5,000; second quarter 6,900; third quarter 7,300 | |
| Ending raw materials inventory: | 40% of the next quarter’s production requirements | |
| Ending finished goods inventory: | 25% of the next quarter’s expected sales units | |
| Third-quarter production: | 7,360 units. |
The ending raw materials and finished goods inventories at December
31, 2016, follow the same percentage relationships to production
and sales that occur in 2017. 3 pounds of raw materials are
required to make each unit of finished goods. Raw materials
purchased are expected to cost $6 per pound.
A. Prepare a production budget by quarters for the 6-month
period ended June 30, 2017.
B.Prepare a production budget by quarters for the 6-month period ended June 30, 2017.
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year:
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||
| Sales | $ | 1,400,000 | $ | 1,680,000 | $ | 1,960,000 | $ | 2,240,000 | ||||
| Cost of goods sold | 444,000 | 524,000 | 594,000 | 644,000 | ||||||||
| Administrative costs | 450,000 | 255,000 | 260,000 | 270,000 | ||||||||
| Advertising costs | 0 | 140,000 | 0 | 0 | ||||||||
| Executive bonuses | 0 | 0 | 0 | 84,000 | ||||||||
| Provision for bad debts | 0 | 0 | 0 | 50,000 | ||||||||
| Annual maintenance costs | 68,000 | 0 | 0 | 0 | ||||||||
Additional Information
First-quarter administrative costs include the $190,000 annual insurance premium.
Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
No special items affect income during the year.
Noventis estimates an effective income tax rate for the year of 40 percent.
A. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year
B. Assume the actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.
| net income | ||
| a. | 1st quarter | |
| 2nd quarter | ||
| 3rd quarter | ||
| 4th quarter | ||
| b. |
1st quarter |
|
| 2nd quarter | ||
| 3rd quarter | ||
| 4th quarter |
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year:
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||
| Sales | $ | 1,500,000 | $ | 1,800,000 | $ | 2,100,000 | $ | 2,400,000 | ||||
| Cost of goods sold | 450,000 | 530,000 | 600,000 | 650,000 | ||||||||
| Administrative costs | 350,000 | 205,000 | 210,000 | 220,000 | ||||||||
| Advertising costs | 0 | 180,000 | 0 | 0 | ||||||||
| Executive bonuses | 0 | 0 | 0 | 92,000 | ||||||||
| Provision for bad debts | 0 | 0 | 0 | 72,000 | ||||||||
| Annual maintenance costs | 80,000 | 0 | 0 | 0 | ||||||||
Additional Information
First-quarter administrative costs include the $200,000 annual insurance premium.
Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
No special items affect income during the year.
Noventis estimates an effective income tax rate for the year of 40 percent.
A. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.
B. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.
|
In: Accounting
Noventis Corporation prepared the following estimates for the four quarters of the current year:
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||
| Sales | $ | 1,500,000 | $ | 1,800,000 | $ | 2,100,000 | $ | 2,400,000 | ||||
| Cost of goods sold | 450,000 | 530,000 | 600,000 | 650,000 | ||||||||
| Administrative costs | 350,000 | 205,000 | 210,000 | 220,000 | ||||||||
| Advertising costs | 0 | 180,000 | 0 | 0 | ||||||||
| Executive bonuses | 0 | 0 | 0 | 92,000 | ||||||||
| Provision for bad debts | 0 | 0 | 0 | 72,000 | ||||||||
| Annual maintenance costs | 80,000 | 0 | 0 | 0 | ||||||||
Additional Information
First-quarter administrative costs include the $200,000 annual insurance premium.
Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
No special items affect income during the year.
Noventis estimates an effective income tax rate for the year of 40 percent.
Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year.
Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 38 percent. Determine the amount of net income to be reported each quarter of the current year.
Net Income
a.1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
b.1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
.
In: Accounting