3-All of the following are possible explanations for the increase in U.S. government budget deficits as a percentage of GDP since 2000 EXCEPT

A.increases in payments for entitlements.

B.increases in tax revenues.

C.decreases in tax rates.

D.increases in government spending.

11-Which of the following is an example of a stock ​variable?

A.The government debt.

B.Income

C.Investment.

D.Saving.

12-Which of the following is a stock​ variable?

A.money supply

B.wealth

C.public debt

D.all of the above

15-Which of the following statements is TRUE about the historical relationship between the trade deficits and government budget​ deficits?

A.There is a positive relationship between trade deficits and budget deficits.

B.There is no relationship between trade deficits and budget deficits.

C.There is a negative relationship between trade deficits and budget deficits.

D.A relationship exists only when there is a balanced budget.

18-The public debt is

A.a situation in which the​ government's spending is exactly equal to the total taxes and other revenues it collects during a given time period.

B.all federal government debt irrespective of who owns it.

C.an excess of government spending over government revenues during a given time period.

D.the total value of all outstanding federal government securities.

The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing overhead. The firm traces all direct costs to products, and it assigns overhead based on direct labor hours. The company budgeted $15,000 variable overhead and 2,500 direct labor hours to manufacture 5,000 pairs of boots in March. The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on variable overhead during the month. For March the Platter Valley factory of Bybee Industries budgeted $90,000 of fixed overhead. Its practical capacity is 2,500 direct labor hours per month (to manufacture 5,000 pairs of boots). The actual fixed overhead incurred for the month was $92,000.

a. Provide appropriate journal entries to record the variable overhead spending and efficiency variances.

b. The Platter Valley factory of Bybee Industries uses a three-variance analysis of the total factory overhead variance.

Required: 1. Compute the total overhead spending variance, the efficiency variance, and the fixed overhead production volume variance.

2.Determine the spending variances (both variable and fixed), the efficiency variance, and the fixed overhead production volume variance.

Suppose that GE is trying to prevent Maytag from entering the market for high efficiency clothes dryers. Even though high efficiency dryers are more costly to produce, they are also more profitable as they command sufficiently higher prices from consumers. The following payoffs table shows the annual profits for GE and Maytag for the advertising spending and entry decisions that they are facing.

Based on this information, can GE successfully prevent Maytag from entering this market by increasing its advertising levels? What is the equilibrium outcome in this game?

Suppose that an analyst at GE is convinced that just a little bit more advertising by GE, say another $2m, would be sufficient to deter enough customers from buying Maytag, thus, yield less than $0 profits for Maytag in the event it enters. Suppose that spending an extra $2m on advertising by GE will reduce its expected profits by $1.5 m, regardless of whether Maytag enters or stays out. Would this additional spending on advertising achieve the effect of deterring Maytag from entering? Should GE pursue this option?

Variance

Part A

The following standard costs per unit have been established by John, Inc.:

• Material (3 kilograms at $2 per kilogram)    $ 6.00
• Direct labor (2 hours at $12 per hour) $ 24.00

During the month, John produced 1,100 units, which was 100 more units than planned.

They used 3,400 kilograms and 2,050 hours to do so.

Total actual materials spending was $6,460, while total actual labor spending was $27,675.

Required

Choose EITHER materials OR labor, and compute the following variances:

• Spending
• Efficiency
• Activity

Be sure to denote which you chose (materials or labor) and label each variance as favorable or unfavorable.

Part B

Meghan Company sells two products – Deluxe and Ultra.

The following information was gathered about the two products:

Required

Calculate the three main revenue variances for the Meghan product.

Be sure to label the variances by name, as well as “favorable” or “unfavorable.”

If there is insufficient information to calculate any of the variances, please denote that clearly.

Each question has 6-7 parts, depending on the work. Please answer every part. Thank you.

-

What is the formula for the Average Propensity to Consume (APC)?

Group of answer choices

consumption divided by income

the change in consumption divided by a change in income

income divided by consumption

the change in income to a change in consumption

None of the above

-

How does the size of the Marginal Propensity to Consume (MPC) affect the size of the multiplier ?

Group of answer choices

There is NO RELATIONSHIP between the two.

MPC * the Multiplier = 1

The multiplier becomes SMALLER as MPC becomes larger.

MPC + the Multiplier = 1

The multiplier becomes LARGER as MPC becomes larger.

-

How does the size of the Marginal Propensity to Save (MPS) affect the size of the multiplier ?

Group of answer choices

There is NO RELATIONSHIP between the two.

The multiplier becomes LARGER as MPS becomes larger.

The multiplier becomes SMALLER as MPS becomes larger.

MPS + the Multiplier = 1

MPS * the Multiplier = 1

-

What is the formula for the multiplier associated with investment ?

Group of answer choices

1/(1+MPC)

1/ (1+MPS)

None of the above

1 / MPC

1 / MPS

-

What is the relationship between the tax multiplier and the government spending multiplier?

Group of answer choices

There is NO relationship between the two multipliers.

In absolute terms, both are EQUAL.

In absolute terms, the government spending multiplier is LARGER.

In absolute terms, the tax multiplier is LARGER.

-

According to Keynes, what determines the autonomous level (i.e. “fixed level”) of business Investment?

Group of answer choices

“shadow prices”

“animal spirits”

“wildcat strikes”

“monkey business”

“irrational exuberance”

-

“Crowding out” refers to …

Group of answer choices

an increase in private investment driving out consumption.

an increase in consumption driving out private investment.

an increase in government spending driving out private investment.

an increase in private investment driving out government spending.

an increase in government spending driving out consumption.

-

Suppose Investment increases by $200, if MPC = .6, what will be the change in equilibrium income?

Group of answer choices

+ $300

+$1,200

+ $500

+ $120

+ $200

-

Suppose Taxes increase by $300, if MPC = .75, what will be the change in equilibrium income?

Group of answer choices

+ $300

- $225

- $300

+ $225

- $900

5. Fiscal policy, the money market, and aggregate demand Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve ( AD1 ). Suppose the government increases its purchases by $2.5 billion. Use the green line (triangle symbol) on the following graph to show the aggregate demand curve ( AD2 ) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve ( AD2 ) is parallel to AD1 . You can see the slope of AD1 by selecting it on the following graph. AD 2 AD 3 100 102 104 106 108 110 112 114 116 116 114 112 110 108 106 104 102 100 PRICE LEVEL OUTPUT (Billions of dollars) AD 1 The following graph shows the money market in equilibrium at an interest rate of 3% and a quantity of money equal to $15 billion. Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. Money Demand Money Supply 0 5 10 15 20 25 30 6 5 4 3 2 1 0 INTEREST RATE MONEY (Billions of dollars) Money Demand Money Supply Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines by $0.5 billion. The change in the interest rate (according to the change you made to the money market in the previous scenario) therefore causes the level of investment spending to by . After the multiplier effect is accounted for, the change in investment spending will cause the quantity of output demanded to by at each price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is known as the effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve ( AD3 ) after accounting for the impact of the increase in government purchases on the interest rate and the level of investment spending. Hint: Be sure your final aggregate demand curve ( AD3 ) is parallel to AD1 and AD2 . You can see the slopes of AD1 and AD2 by selecting them on the graph.

Waterways Corporation is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers.

Sales:

Waterways wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $2.40.

Other Information:

The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Waterways can pay the entire amount. A $250,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

e. Prepare a manufacturing overhead budget and a cash budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

Corporation is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers.

Sales:

Waterways wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $2.40.

Other Information:

The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Waterways can pay the entire amount. A $250,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.

Waterways for Chapter 9

Waterways Corporation is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers.

Sales:

Waterways wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $2.40.

Other Information:

The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Waterways can pay the entire amount. A $250,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.