You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) 20,000 June (budget) 50,000 February (actual) 26,000 July (budget) 30,000 March (actual) 40,000 August (budget) 28,000 April (budget) 65,000 September (budget) 25,000 May (budget) 100,000 The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable: Sales commissions 4 % of sales Fixed: Advertising $ 200,000 Rent $ 18,000 Salaries $ 106,000 Utilities $ 7,000 Insurance $ 3,000 Depreciation $ 14,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet as of March 31 is given below: Assets Cash $ 74,000 Accounts receivable ($26,000 February sales; $320,000 March sales) 346,000 Inventory 104,000 Prepaid insurance 21,000 Property and equipment (net) 950,000 Total assets $ 1,495,000 Liabilities and Stockholders’ Equity Accounts payable $ 100,000 Dividends payable 15,000 Common stock 800,000 Retained earnings 580,000 Total liabilities and stockholders’ equity $ 1,495,000 The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $50,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

(I already answered the first required questions 1A-D, just need Required 2-4)

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $50,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

What is (are) Driving U.S. Health Care Spending?

A. Suppliers have increasing leverage to negotiate higher wages and fees

B. Lower Copayment/coinsurance decreases the cost to the consumer and may incentivize/ raise usage (Moral Hazard)

C. A mix of price (P) and use (Q)

D. All of the above.

E. None of the above

Assume firms become more pessimistic about the future and respond by decreasing investment spending. The Aggregate Demand/Aggregate Supply model suggests that if the Federal Reserve wishes to offset the short run consequences of the decrease in investment it should

Group of answer choices

Decrease the money supply in order to increase interest rates.

Increase the money supply in order to increase interest rates.

Decrease the money supply in order to decrease interest rates.

Increase the money supply in order to decrease interest rates.

1.As the interest sensitivity of investment spending increases,

Select one:

A. monetary policy has a larger effect on output.

B. the multiplier increases.

C. fiscal policy has a larger effect on output.

D. monetary policy has smaller effect on output.

2.Which of the following is an advantage of currency board system?

Select one:

A. Max seigniorage.

B. Exchange rate stability .

C. Monetary autonomy.

D. Full capacity of LLR.

3.Expansionary monetary policies, all else remaining the same, will

Select one:

A. shift the aggregate demand curve to the left.

B. move the economy up a fixed aggregate demand curve.

C. shift the aggregate demand curve to the right.

D. move the economy down a fixed aggregate demand curve.

4.Which of the following is listed on the liability side of the Federal Reserve balance sheet?

Select one:

A. deposits of depoitory institutions

B. gold

C. loans to depository institutions

D. U.S. government securities

5.Risk-based deposit insurance premiums

Select one:

A. reduce moral hazard incentives.

B. encourage banks to hold more excess reserves

C. reduce the adverse selection problem for regulators.

D. has no effect on banks' behavior.

Watch the following youtube video posted on the course syllabus entitled “How Tax and Spending Policies Can Reduce Poverty and Inequality” available at the following link https://www.youtube.com/watch?v=78t8GgjTcIA&feature=youtu.be. Then answer the following questions.

1. What are the two economic issues the government fiscal policy addresses in this video? (2 points)

2. Think of yourself as an economist who is given the task of addressing the issue(s) at hand.

a. What alternatives can you use to address the issue? Explain briefly. (4 points)

b. What are the pros and cons of each of them? (4 points)

please i need examples between country about inequality

What is the Japanese general trend of public spending? Has Japanese fiscal policy been expansionary or contractionary? Furthermore, has the Japanese government recently experienced a budget surplus or deficit? Is the government highly indebted? In the current macroeconomic situation, recommend ONE OTHER (other than fiscal and monetary policy settings) policy action that the Japanese government should take. Be specific about your recommended policy action. What do you think about the effectiveness of your policy suggestion? Why?

17. After spending ten years as an assistant manager for a large restaurant chain, Ray Clark has decided

    to become his own boss. The owner of a local submarine sandwich store wants to sell the store to Ray for $65,000 to be paid in installments of $13,000 in each of the next five years. According to the current owner, the store brings in revenue of about $110,000 per year and incurs operating costs of about 63% of sales. Thus, once the store is paid for, Ray should make about $35,000–$40,000 per year before taxes. Until the store is paid for, he will make substantially less—but he will be his own boss. Realizing that some uncertainty is involved in this decision, Ray wants to simulate what level of net income he can expect to earn during the next five years as he operates and pays for the store. In particular, he wants to see what could happen if sales are allowed to vary uniformly between $90,000 and $120,000, and if operating costs are allowed to vary uniformly between 60% and 65% of sales. Assume that Ray’s payments for the store are not deductible for tax purposes and that he is in the 28% tax bracket.

18. Create a spreadsheet model to simulate the annual net income Ray would receive during each of the next five years if he decides to buy the store.

19. Given the money he has in savings, Ray thinks he can get by for the next five years if he can make at least $12,000 from the store each year. Replicate the model 500 times and track: 1) the minimum amount of money Ray makes over the five-year period represented by each replication, and 2) the total amount Ray makes during the five-year period represented by each replication.

20. What is the probability that Ray will make at least $12,000 in each of the next five years?

21. What is the probability that Ray will make at least $60,000 total over the next five years?

***using @RISK***

The US corporate sector cuts spending sharply due to expectations of low future sales and tight financial conditions. Use (appropriate variants of ) the DD–AA diagram to study the following scenarios related to this shock, in terms of US real activity (GDP) and the nominal exchange rate.

Design a fiscal policy response, aimed at restoring full employment. What fiscal policy instrument would your plan use?

According to Hall, consumption spending follows a random walk. 1. What determines changes in consumption in this case? 2. What is the implication of following a random walk for predicting changes in consumption? What is the impact on current consumption of a temporary tax cut according to: 3. the Keynesian consumption function? 4. the permanent-income hypothesis?