GEM Limited has a single product Flicks. The company normally produces and sells 80,000 units of Flicks each year at a price of $240 per unit. The company’s unit costs at this level of activity are as follow: Direct material $57.00 Direct labour 60.00 Variable manufacturing overhead 16.80 Fixed manufacturing overhead 30.00 Variable selling and administrative costs 10.20 Fixed selling and administrative costs 27.00 Total unit cost $201.00 GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase in fixed manufacturing overhead. Required: (a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties and other special costs associated with this order would total $42 000. The only selling costs that would be associated with the order would be a shipping cost of $9.00 per unit. What would be the minimum acceptable unit price for GEM to consider this order? (hint: GEM would not accept the order if it would reduce the company’s profit) (b) The company has 200 units of Flicks on hand that were produced two months ago. Due to blemishes on the units, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular sales channels, what would be the relevant cost for setting the minimum price? Explain. (c) “All future costs are relevant in decision making.” Do you agree? Explain.
In: Accounting
GEM Limited has a single product Flicks. The company normally produces and sells 80,000 units of Flicks each year at a price of $240 per unit. The company’s unit costs at this level of activity are as follow: Direct material Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative costs Fixed selling and administrative costs Total unit cost $57.00 60.00 16.80 30.00 10.20 27.00 $201.00 GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase in fixed manufacturing overhead. Required: (a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties and other special costs associated with this order would total $42 000. The only selling costs that would be associated with the order would be a shipping cost of $9.00 per unit. What would be the minimum acceptable unit price for GEM to consider this order? (hint: GEM would not accept the order if it would reduce the company’s profit) (b) The company has 200 units of Flicks on hand that were produced two months ago. Due to blemishes on the units, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular sales channels, what would be the relevant cost for setting the minimum price? Explain. (c) “All future costs are relevant in decision making.” Do you agree?
In: Accounting
Jillian owns a call option on WAN stock with a strike price of $20 a share. Currently, WAN is selling for $24.50 a share. Jillian would like to profit on this option but is not permitted to exercise the option for another two weeks. She believes the stock will decline in value before the two weeks is up. What should she do?
Multiple Choice
Sell her option today
Place an order to exercise her option on its expiration date
Purchase an additional call option on WAN today with a strike price of $20
Place an order to exercise her option as soon as she is permitted to do so
Convert her American option into a European option
Jeff owns an American put option on 100 shares of ABC stock. The option has a strike price of $32.50 and a September expiration date. The stock has recently been declining in value, currently sells for $27.65 per share, and is expected to continue declining in value. Ignore all costs and taxes. If today is Wednesday, August 14, he:
Multiple Choice
cannot exercise his option even though he would like to do so.
should hold his option until September.
can exercise his option and earn a profit.
should exercise his option today and then sell the shares of stock on the September expiration date.
should let his option expire unless the stock price increases above $32.50 a share.
In: Finance
Situation: The Ipod Touch has been out for two years now and a
lot of data has been collected.
Relevant Relationship:
There is a functional relationship between Price of an IPod
Touch,pp and Weekly Demand,ss.
Below is a table of data that have been collected
| Price,pp,($) | Weekly Demand,ss,(1,000s) |
|---|---|
| 150 | 207 |
| 170 | 209 |
| 190 | 195 |
| 210 | 192 |
| 230 | 182 |
| 250 | 170 |
A.. Find the linear model that best fits this data using regression
and enter the model below
(for entry round the linear parameter value to nearest 0.01 and
constant parameter to nearest 1)
s=T(p)=s=T(p)=
B. The squared correlation coefficient r2r2 was Select an answer
below above 0.95
(note: values less than 0.95 MAY mean the model is not appropriate
for making predictions)
Now answer these two questions using the UNROUNDED model
parameters
C. What does the model predict will be the weekly demand if the
price of an ipod touch is $170 ? (nearest 100)
D. According to the model at what should the price be set in order
to have a weekly demand of 191,000 ipod Touches? $ (nearest
$1)
Note: In the "real" world Apple sold about 20 million Ipod Touch's
from Sept. 2007-Sept. 2009 Answer
In: Statistics and Probability
Please show steps
| Madison Inc. was incorporated in the State of Delaware in May 2018 and received authorization to issue 200,000 shares of $3 Par Value Common Stock and 20,000 Preferred Stock, Par Value $50 per share. Prepare journal entries to record the following transactions. |
| (a) On June 15, 2018 Madison Inc. issued 75,000 common shares with a Market price of $10 | ||||||||||||||||||||||||||||||||||||||||||||
| (b) On July 8, 2018 Madison Inc. issued 500 common shares to Mr. Maddox in settlement of Professional Services provided at a fee of $7,800 | ||||||||||||||||||||||||||||||||||||||||||||
| c On July 18, 2018 Mr. Herve agreed to exchange a Building he owns with a fair value of $700,000 for 39,500 shares. Madison Inc. shares are actively traded at $15 per share on the stock exchange. | ||||||||||||||||||||||||||||||||||||||||||||
| (d) On July 1, 2018 Madison Inc. issued 50,000 shares for cash at a Market price of $19 per share | ||||||||||||||||||||||||||||||||||||||||||||
|
(e) On November 10 Mr. Warren, a prominent investor agreed to exchange a piece of land assessed and valued by the City of Maryland at $800,000 for 12,000 of the preferred stock. The market price of the preferred stock is not known.
|
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In: Accounting
KNM Company is specialty manufacturer of a wide variety of industrial chemicals and adhesives. Much of the raw material is purchased in bulk from other chemical companies. One of the chemicals, X2, is prepared in one of KNM’s own plants, the X2 unit. X2 is shipped to other KNM plants at a given internal price.
The KNM plant in KSA requires 20,000 barrels of X2 per month and can purchase from outside the firm for $300 per barrel. KNM’s X2 unit has a capacity of 40,000 barrels per month and is presently selling that quantity to outside buyers at $330 per barrel. The difference between the X2 unit’s price of $330 and the competitors’ price of $300 is due to short-term pricing strategy only; the materials are equivalent in quality and functionality. The X2 unit’s selling cost is $10 per barrel, and the X2 unit’s variable cost of manufacturing is $180 per barrel.
Required:
In: Accounting
Henry is planning to purchase a Treasury bond with a coupon rate of 2.05% and face value of $100. The maturity date of the bond is 15 May 2033. (a) If Henry purchased this bond on 7 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.31% p.a. compounded half-yearly.
(a) If Henry purchased this bond on 7 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.31% p.a. compounded half-yearly.
a. 97.79
b. 97.6960
c. 96.6707
d. 97.6952
(b) If Henry purchased this bond on 7 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.31% p.a. compounded half-yearly. Henry needs to pay 23.5% on coupon payment as tax payment and tax are paid immediately.
a. 91.3804
b. 91.3796
c. 91.6423
d. 90.5959
(c) If Henry purchased this bond on 7 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.31% p.a. compounded half-yearly. Henry needs to pay 23.5% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately.
a. 74.7368
b. 88.7183
c. 89.6585
d. 97.6799
In: Accounting
GEM Limited has a single product Flicks. The company normally produces and sells 80,000 units of Flicks each year at a price of $240 per unit. The company’s unit costs at this level of activity are as follow:
Direct material $57.00
Direct labor 60.00
Variable manufacturing overhead 16.80
Fixed manufacturing overhead 30.00
Variable selling and administrative costs 10.20
Fixed selling and administrative costs 27.00
Total unit cost $201.00
GEM has sufficient capacity to produce 100 000 units of Flicks a year without any increase in fixed manufacturing overhead.
Required:
(a) GEM has an opportunity to sell 10 000 units to an overseas customer. Import duties and other special costs associated with this order would total $42 000. The only selling costs that would be associated with the order would be a shipping cost of $9.00 per unit. What would be the minimum acceptable unit price for GEM to consider this order? (hint: GEM would not accept the order if it would reduce the company’s profit)
(b) The company has 200 units of Flicks on hand that was produced two months ago. Due to blemishes on the units, it will be impossible to sell these units at the normal price. If the company wishes to sell them through regular sales channels, what would be the relevant cost for setting the minimum price? Explain.
(c) “All future costs are relevant in decision making.” Do you agree? Explain.
In: Accounting
(a) According to the law of one price, if the exchange rate between British pound and Australian dollar is £1 = $2, a laptop that is sold for £500 in London, calculate what should be the selling price of the same laptop in Sydney?
(b) After six months, if the price of the laptop in question (a) above expected to decrease from £500 to £450 in London and the price of the same laptop decreases to $810 in Sydney, calculate the 6 months forward exchange rate in pound/dollar and dollar/pound. Comment about the changes in the values of the two currencies.
(c) Given your answers to (a) and (b) above, and given that the current interest rate in Australia is 4 per cent per annum, what would you expect the current interest rate to be in UK?
(d) If UK’s nominal interest rate is 15% and inflation rate is 5%, calculate the real interest rate in UK?
(e) You are a Manager of an international business firm in
Sydney. Your firm has exported
some goods in Japan, the export earning ¥1,000,000 is receivable by
next 3 month. Current
exchange rate is $1 = ¥100. You expect that the Japanese Yen may
depreciate to $1 = ¥120
by the next 3 months.
Required:
(i) Explain the implication(s) to your business if Yen
depreciates.
(ii) Except buying forward and using swaps, explain the
collection strategy you will take to
minimize your business risk if any due to the expected change in
the exchange rate.
In: Finance
Consider the market for oil in Staubovia. Domestic demand for oil can be represented by P=100-2QDanddomestic supply of oil can be represented by P=25+3QS, where Q is measured in millions of barrels. (2 graphs)
a .Calculate the equilibrium price and quantity, showing all necessary work. Graph the market for oil on graph 1, being sure to properly label axes, curves, intercepts, and equilibrium.
Suppose that Staubovia imports oil, and that the world price for oil is $40 per barrel
b. Calculate how many barrels of oil are imported, and label these imports Itrade this on graph 1.
c. Suppose now that President Staub decides to impose an import quota. After the import quota, the price of a barrel of oil is now $58 Calculate how many barrels of oil are imported with the import quota, and label these imports Iquota on graph 1.
d. Calculate and label the quota rent, QR, that results from this policy. Who does the quota rent go to?
e. Show graphically how producer, consumer, and total surplus would change in Staubovia as a result of imposing the quota. You do not need to calculate the changes in surplus. Who in Staubovia is better off and who is worse off after this policy?
f. On Graph 2, show how this policy would affect Staubovia's output and price level in the short-run.
In: Economics