As a production manager of Chifwamba enterprise, you are given the following output, price and total cost data facing a firm.
|
Output |
Total Cost |
Price |
Fixed Cost (FC) |
Variable Cost (VC) |
Marginal Cost (MC) |
Average Fixed Cost (AFC) |
Average Variable Cost (AVC) |
Marginal Revenue (MR) |
Total Revenue (TR) |
Total Economic Profit |
|
0 |
50 |
134 |
||||||||
|
1 |
100 |
132 |
||||||||
|
2 |
128 |
130 |
||||||||
|
3 |
148 |
128 |
||||||||
|
4 |
162 |
126 |
||||||||
|
5 |
180 |
124 |
||||||||
|
6 |
200 |
122 |
||||||||
|
7 |
225 |
120 |
||||||||
|
8 |
254 |
118 |
||||||||
|
9 |
292 |
116 |
||||||||
|
10 |
350 |
114 |
||||||||
|
11 |
385 |
112 |
In: Economics
Explain what happens to saving, investment, and the real interest rate in each of the following scenarios in a closed economy. Illustrate your answer using a saving-investment diagram. Label the axes and curves clearly.
a) Real money supply increases
b) The tax code changes so that business firms face higher tax rates on their revenue (offset by other lump-sum tax changes so there’s no overall change in tax revenue). The rise in taxes reduces desired investment, shifting the Id curve to the left: in equilibrium, this reduce real interest rate, reducing saving as well as investment.
c) Current output rises The rise in output raises desired saving, shifting the Sd curve to the right; in equilibrium, this reduces the real interest rate, increasing investment as well.
d) The average educational level rises, inducing an increase in the future marginal productivity of capital. The rise in future marginal productivity of capital raises desired investment, shifting the Id curve to the right; in equilibrium, this raises the real interest rate, increasing saving as well as investment.
In: Economics
ABC Company reported the following account balances at December 31, 2019: Accounts receivable ......... $33,000 Equipment ................... $47,000 Notes payable ............... $15,000 Utilities expense ........... $23,000 Dividends ................... $18,000 Trademark ................... $16,000 Retained earnings ........... $58,000 (at January 1, 2019) Rental revenue .............. $19,000 Land ........................ ? Cost of goods sold .......... $36,000 Supplies .................... $21,000 Accumulated depreciation .... $11,000 Income tax expense .......... $12,000 Common stock ................ $94,000 Copyright ................... ? Utilities payable ........... $13,000 Sales revenue ............... $90,000 Cash ........................ $19,000 Mortgage payable ............ $17,000 Advertising expense ......... $10,000 Inventory ................... ? Accounts payable ............ $47,000 The following additional information is available: 1. The total P-P-E at December 31, 2019 was equal to 140% of the total current liabilities at December 31, 2019. 2. Total current assets at December 31, 2019 amounted to $111,000. 3. The note payable was a 3-year loan taken out on March 1, 2017. 4. The mortgage payable was a 15-year loan taken out on May 1, 2010. Calculate the balance in the copyright account at December 31, 2019.
In: Accounting
Harlow Company reported the following account balances at December 31, 2019: Cash $25,000 Retained Earnings $53,000 (at January 1, 2019) Advertising Expense $22,000 Cost of Goods Sold $29,000 Rental Revenue $13,000 Copyright $28,000 Supplies $12,000 Accounts Payable $50,000 Common Stock $91,000 Accounts Receivable $15,000 Notes Payable $68,000 Income Tax Expense $12,000 Inventory $59,000 Dividends $11,000 Salaries Expense $14,000 Sales Revenue $97,000 Building $43,000 Trademark $81,000 Mortgage Payable $35,000 Equipment $56,000 The following additional information is available: 1. The note payable was a 3-year loan taken out on March 1, 2017. 2. The mortgage payable was a 15-year loan taken out on May 1, 2010. Calculate Harlow Company's total intangible assets at December 31, 2019.
Calculate Harlow Company's total assets at December 31, 2019.
Calculate Harlow Company's total current liabilities at December 31, 2019.
Calculate Harlow Company's total stockholder's equity at December 31, 2019.
In: Accounting
The Ivanhoe Hotel opened for business on May 1, 2022. Here is
its trial balance before adjustment on May 31.
| IVANHOE
HOTEL Trial Balance May 31, 2022 |
||||||
|---|---|---|---|---|---|---|
|
Debit |
Credit |
|||||
|
Cash |
$ 2,613 | |||||
|
Supplies |
2,600 | |||||
|
Prepaid Insurance |
1,800 | |||||
|
Land |
15,113 | |||||
|
Buildings |
70,000 | |||||
|
Equipment |
16,800 | |||||
|
Accounts Payable |
$ 4,813 | |||||
|
Unearned Rent Revenue |
3,300 | |||||
|
Mortgage Payable |
36,000 | |||||
|
Common Stock |
60,113 | |||||
|
Rent Revenue |
9,000 | |||||
|
Salaries and Wages Expense |
3,000 | |||||
|
Utilities Expense |
800 | |||||
|
Advertising Expense |
500 |
|||||
|
$113,226 |
$113,226 |
|||||
Other data:
| 1. | Insurance expires at the rate of $360 per month. | |
| 2. | A count of supplies shows $1,180 of unused supplies on May 31. | |
| 3. | (a) Annual depreciation is $2,760 on the building. | |
| (b) Annual depreciation is $2,160 on equipment. | ||
| 4. | The mortgage interest rate is 5%. (The mortgage was taken out on May 1.) | |
| 5. | Unearned rent of $2,670 has been earned. | |
| 6. | Salaries of $710 are accrued and unpaid at May 31. |
Prepare a retained earnings statement for the month of May.
In: Accounting
The Ivanhoe Hotel opened for business on May 1, 2022. Here is
its trial balance before adjustment on May 31.
| IVANHOE
HOTEL Trial Balance May 31, 2022 |
||||||
|---|---|---|---|---|---|---|
|
Debit |
Credit |
|||||
|
Cash |
$ 2,613 | |||||
|
Supplies |
2,600 | |||||
|
Prepaid Insurance |
1,800 | |||||
|
Land |
15,113 | |||||
|
Buildings |
70,000 | |||||
|
Equipment |
16,800 | |||||
|
Accounts Payable |
$ 4,813 | |||||
|
Unearned Rent Revenue |
3,300 | |||||
|
Mortgage Payable |
36,000 | |||||
|
Common Stock |
60,113 | |||||
|
Rent Revenue |
9,000 | |||||
|
Salaries and Wages Expense |
3,000 | |||||
|
Utilities Expense |
800 | |||||
|
Advertising Expense |
500 |
|||||
|
$113,226 |
$113,226 |
|||||
Other data:
| 1. | Insurance expires at the rate of $360 per month. | |
| 2. | A count of supplies shows $1,180 of unused supplies on May 31. | |
| 3. | (a) Annual depreciation is $2,760 on the building. | |
| (b) Annual depreciation is $2,160 on equipment. | ||
| 4. | The mortgage interest rate is 5%. (The mortgage was taken out on May 1.) | |
| 5. | Unearned rent of $2,670 has been earned. | |
| 6. | Salaries of $710 are accrued and unpaid at May 31. |
Prepare an adjusted trial balance on May 31.
In: Accounting
Suppose that, in the absence of insurance, the daily demand for visits to a clinic is given by Qd = 200 – 0.5P, where c is the coinsurance rate and P is the price charged by the clinic.
a. Calculate the quantity demanded when P is $100.
b. Calculate daily revenues when P is $100. Now assume that customers pay a coinsurance rate,
c. You will need to modify the demand function to account for the coinsurance. See page 105 of the Bernell text for some tips. c. Calculate the quantity demanded when P is $100 and the coinsurance rate is 0.4.
d. Calculate the daily revenue for the values given in (c). e. Calculate the quantity demanded when P is $100 and the coinsurance rate is 0.8.
f. Calculate the daily revenue for the values given in
(e). Assume the clinic’s daily capacity is 100 customers.
g. Calculate the price the clinic should set to exactly use its entire capacity when there is no insurance (i.e., the coinsurance rate is 1).
h. Calculate the price the clinic should set to exactly use its entire capacity when there is a coinsurance rate of 0.8
In: Economics
The following are correct description for the special cases of a Linear Demand, EXCEPT:
Question 3 options:
|
A linear demand has price elasticities that range from zero to plus infinity. |
|
|
In the Linear Demand, the upper portion of the demand is Elastic. |
|
|
The Linear Demand generates the same revenue at any point in the demand. |
|
|
For a Linear Demand, revenue is maximized when Price Elasticity equals One. |
The following are true statements about a Supply Curve that is Highly Inelastic, EXCEPT:
Question 4 options:
|
It refers to the case where there is high Total Cost of Production. |
|
|
It reflects typically a case of high Adjustment Cost in Production. |
|
|
The Supply Curve is Highly Vertical. |
|
|
Over the supply curve, the change in quantity is less than proportional than the change in price. |
The following are correct descriptions about a Price Ceiling, EXCEPT:
Question 5 options:
|
Is the regulated price imposed below the market price that would prevail in equilibrium. |
|
|
A price ceiling will reduce producer's surplus if the regulated price prevails. |
|
|
A price ceiling will create an excess of supply. |
|
|
A price ceiling could lead to an increase in producer's surplus, if a black market emerges. |
In: Economics
True or False
1) Journal entries must be made to record the reconciling items on the bank side of the reconciliation.
2) An outstanding check is a check issued by the company and recorded on its books, but not yet paid by its bank.
3) On a bank reconciliation, deposits in transit are subtracted on the book side of the reconciliation.
4) If the bank reconciliation includes a bank service charge, a journal entry is required which debits Cash and credits Miscellaneous expense.
5) If the bank reconciliation includes a deposit in transit, a journal entry is required which includes a debit to cash.
6) If the bank reconciliation includes outstanding checks, no journal entries are required.
7) If the bank reconciliation includes a book error, no journal entries are required.
8) Journal entries that are necessitated by reconciling items on the book side of the reconciliation all include either a debit to Cash or a credit to Cash.
9) If the bank reconciliation includes interest revenue, a journal entry is required which debits Cash and credits Interest revenue.
10) In a bank reconciliation, a book error will be shown on the bank side of the reconciliation.
In: Accounting
Your company is analyzing the potential purchase of a new set of tractors for over-the-road use with a MACRS depreciable life of 3 years. The new tractors will replace the existing tractors. Depreciation charges will be $27,500 in year 1; $38,000 in year 2; $11,500 in year 3; and $5,700 in year 4. Estimated revenues and expenses are shown in the following table for the new and the old tractors. The company will pay an estimated 34% tax rate. Assume expenses depreciation and interest.
New Tractor Old Tractor
Year Revenue Expenses Revenue Expenses
1 $400,000 $320,000 $350,000 $290,000
2 410,000 320,000 350,000 290,000
3 420,000 320,000 350,000 290,000
(A)Compute operating cash flows (best to set up a table) associated with both the new and the old tractors. Don’t forget to include depreciation in year 4.
(B)Determine the incremental (relevant) operating cash flows as a result of the tractors’ replacement (best to set up a table).
(C)From the results in part B, show the time line of incremental operating cash flows.
In: Finance