The data below represents a demand schedule.
| Product Price ($) | Quantity Demanded |
| 6 | 0 |
| 5 | 1 |
| 4 | 2 |
| 3 |
3 |
| 2 | 4 |
| 1 | 5 |
| 0 | 6 |
In the diagram below, draw a demand curve.
Use the line tool to graphically show Demand. This line
should only contain the two endpoints.
Use the midpoint formula for Ed to determine price
elasticity of demand for each of the four possible $1 price
changes.
Instructions: Input the your answers as positive values
(absolute values). Round your answers to
two decimal places.
Moving from $5 to $4: Ed =
Moving from $4 to $3: Ed =
Moving from $3 to $2: Ed =
Moving from $2 to $1: Ed =
b. What can you conclude about the relationship
between the slope of the above demand curve and its
elasticity?
The demand curve above has a constant slope of (Click to
select)-11∞0, but elasticity (Click to select)increasesdecreases as
we move down the curve.
c. Explain in a nontechnical way why demand is
elastic in the upper left segment of the demand curve and inelastic
in the lower right segment.
Instructions: You may select more than one answer. Click
the box with a check mark for correct answers and click to empty
the box for the wrong answers.
| When the initial P is high and Q is low, a unit change in P is a low percentage change, while a unit change in Q is a high percentage change. The percentage change in quantity exceeds the percentage change in price, making demand elastic | |
| When the initial P is low and Q is high, a unit change in P is a high percentage change, while a unit change in Q is a low percentage change. The percentage change in quantity is less than the percentage change in price, making demand inelastic | |
| When the initial P is low and Q is high, a unit change in P is a high percentage change, while a unit change in Q is a low percentage change. The percentage change in quantity is less than the percentage change in price, making demand elastic | |
| When the initial P is high and Q is low, a unit change in P is a low percentage change, while a unit change in Q is a high percentage change. The percentage change in quantity exceeds the percentage change in price, making demand inelastic |
In: Economics
Ethics and the Manager, Understanding the Impact of Percentage Completion on Profit—Weighted-Average Method LO4–2, LO4–3, LO4–4
Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and get an additional bonus equal to 5% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders.
Shortly after the beginning of the new year, Mary received a phone call from Gary that went like this:
1. Gary:How’s it going, Mary?
2. Mary:Fine, Gary. How’s it going with you?
3. Gary:Great! I just got the preliminary profit figures for the division for last year and we are within $200,000 of making the year’s target profits. All we have to do is pull a few strings, and we’ll be over the top!
4. Mary:What do you mean?
5. Gary:Well, one thing that would be easy to change is your estimate of the percentage completion of your ending work in process inventories.
6. Mary:I don’t know if I can do that, Gary. Those percentage completion figures are supplied by Tom Winthrop, my lead supervisor, who I have always trusted to provide us with good estimates. Besides, I have already sent the percentage completion figures to corporate headquarters.Page 181
7. Gary:You can always tell them there was a mistake. Think about it, Mary. All of us managers are doing as much as we can to pull this bonus out of the hat. You may not want the bonus check, but the rest of us sure could use it.
The final processing department in Mary’s production facility began the year with no work in process inventory. During the year, 210,000 units were transferred in from the prior processing department and 200,000 units were completed and sold. Costs transferred in from the prior department totaled $39,375,000. No materials are added in the final processing department. A total of $20,807,500 of conversion cost was incurred in the final processing department during the year.
Required:
1. Tom Winthrop estimated that the units in ending work in process inventory in the final processing department were 30% complete with respect to the conversion costs of the final processing department. If this estimate of the percentage completion is used, what would be the cost of goods sold for the year?
2. Does Gary Stevens want the estimated percentage completion to be increased or decreased? Explain why.
3. What percentage completion would result in increasing reported net operating income by $200,000 over the net operating income that would be reported if the 30% figure were used?
4. Do you think Mary James should go along with the request to alter estimates of the percentage completion? Why or why not? (Note: besides the fact that manipulating numbers to meet an earnings goal is wrong tell me A) how it would negatively impact shareholders’ B) which financial statements would be impacted and how would it impact those statements C) what would be the potential ramifications if the auditors discovered the estimate manipulation D) how might the auditors discover the estimate manipulation and E) and what might happen if other employees found out about the estimate manipulation?
5. If you were Mary, name three options you would have in dealing with this situation?
6. If you are Mary what is your opinion of Gary after this conversation?
7. Would you likely/not likely support a promotion for Gary within the company? Why or Why not?
8. Are there any legal consequences to Mary if she changes the completion percentage?
9. What percentage chance (0 – 100%) do you give yourself that you will be faced with an ethical dilemma in your career within the first 10 years post-graduation?
In: Accounting
Suppose you are the only owner of a chain of coffee shops near universities. Your current cafés are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance:
Financial update as of June 15
| • | Your existing business generates $87,000 in EBIT. |
| • | The corporate tax rate applicable to your business is 25%. |
| • | The depreciation expense reported in the financial statements is $16,571. |
| • | You don’t need to spend any money for new equipment in your existing cafés; however, you do need $13,050 of additional cash. |
| • | You also need to purchase $6,960 in additional supplies—such as tableclothes and napkins, and more formal tableware—on credit. |
| • | It is also estimated that your accruals, including taxes and wages payable, will increase by $4,350. |
Based on your evaluation you have in free cash flow.
Can a company have negative free cash flow?
Yes
No
In: Finance
| Please Choose The apparent depth of the object is less than the real depth. The apparent depth of the object is greater than the real depth. There is no difference between the apparent depth and the actual depth of the object. |
In: Physics
A bank loans Kellie's Print Shop $350,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is
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In: Economics
The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house, they will place a down payment of $59,000 on the house. They estimate they will get an annual net rental profit of $10,000 after their mortgage and expenses are paid. After 20 years, they plan to pass the rental home along to their children, so assume the home has negligible salvage value. What would be the ERR if the Petersik family decides to invest in a rental home, assuming they keep the home for 20 years? Assume their MARR is 12%.
In: Finance
The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house, they will place a down payment of $62,000 on the house. They estimate they will get an annual net rental profit of $7,500 after their mortgage and expenses are paid. After 18 years, they plan to pass the rental home along to their children, so assume the home has negligible salvage value. What would be the ERR if the Petersik family decides to invest in a rental home, assuming they keep the home for 18 years? Assume their MARR is 14%.
In: Finance
It is April, and Hans Anderson is planting his barley crop near Plunkett, Saskatchewan. He is concerned about losing his farm if his operations result in a loss at the end of the season. He expects to harvest 3,000 tonnes of barley and sell it in October. Futures contracts are available for October delivery with a futures price of $200 per tonne. Options with strike price of $200 per tonne are also available; puts cost $16 and calls cost $18.
a.Describe how Hans can fully hedge using futures contracts.
b. Given the strategy in a), what will be the total net amount received by Hans (for all 3,000 tonnes) if the price of barley in October is as follows:i .$150 per tonne; ii. $200 per tonne; iii. $250 per tonne
c. Describe how Hans can fully hedge using options.
d. Given the strategy in (c), what will be the total net amount received by Hans (for all 3,000 tonnes) if the price of barley in October is as follows:i. $150 per tonne; ii. $200 per tonne; iii. $250 per tonne
e. Hans has asked for your advice regarding hedging. Discuss how the each of the following individually will influence your advice.
i. Hans does not expect to have much cash available between May and September.
ii. Hans thinks there is a 25% chance his crop will be destroyed by hail before he has a chance to harvest it.
iii. Hans's farming business will go bankrupt if his net revenues in October do not cover his costs. He estimates his costs will be $600,000. If his business goes bankrupt, Hans's bank will foreclose and take his house and farm.
iv. Hans's farming business will go bankrupt if his net revenues in October do not cover his costs. He estimates his costs will be $800,000. If his business goes bankrupt, Hans's bank will foreclose and take his house and farm.
In: Finance
Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,300 $ 0.07 Maintenance $ 0.25 Wages and salaries $ 4,000 $ 0.30 Depreciation $ 8,500 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.02 For example, electricity costs are $1,300 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,600 Revenue $ 59,050 Expenses: Cleaning supplies 6,450 Electricity 1,865 Maintenance 2,365 Wages and salaries 6,910 Depreciation 8,500 Rent 2,100 Administrative expenses 1,770 Total expense 29,960 Net operating income $ 29,090 Required: Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
Godfather Pizza is a popular pizza restaurant near a university campus. This pizza shop is very popular as the price is reasonable, and the quality of the pizza is excellent. It has broad range of varieties, which students can choose the type of dough and topping. The everyday sales activity is high, which keep this pizza shop busy. However, Greg Taylor, the accountant noticed that there is a small profit compares to the sales. Greg starts analyzing the efficiency of the business, particularly inventory practices. He noticed that the owner had more than 60 items regularly carried in inventory. Of these items, the most expensive to buy and carry was cheese. Cheese was ordered in blocks at $27.50 per block. Annual usage totals 16 000 blocks.
Upon questioning the owner, Greg found that there are problems in managing the cheese. The size of the order was usually 600 blocks. The cost of carrying one block of cheese is 10% of its purchase price. It took 7 ten days to receive a new order when placed, which was done whenever the inventory of cheese dropped to 500 blocks. It costs $50 to place and receive an order.
Godfather Pizza stays open five days a week and operates 50 weeks a year. It closes during public holiday and Christmas day.
Requirements:
In: Finance