Answer: b. stocking quantity of product B is higher.
Explanation:
We are using the Newsvendor model and are told that the products have identical cost, retail price, and demand parameters and the same short selling season.
Using this model, it is important to understand 2 terminologies for this question, Overage cost and Underage costs.
Overage Costs is the cost of unused inventor and is calculated by subtracting Salvage Value from the cost price.
Underage costs are costs arising from unmet Demand. In this scenario they are the same because both products share the same demand.
The Overage costs for the products are,
Overage cost for Product X =100-75
=25%
Overage cost for Product Y = 20%
When deciding which product to stick more of we look at the one with the higher CRITICAL RATIO.
The formula of which is,
= Cu/(Cu+Co)
Where,
Cu is the Underage cost,
Co is the Overage cost
As earlier mentioned, both have the same Underage cost meaning that B will give a higher CRITICAL ratio as it's Co is smaller.
Product B should therefore be stocked more than Product A.
Answer:
Stocking quantity of product B is higher
Explanation:
Overage cost for Product A(Co)=100-75=25%
Overage cost for Product B (Co)=20%
The underage cost (Cu) for both the products is same hence critical ratio i.e, Cu/(Cu+Co) is lower for product A than Product B which means product B should will be stocked more compare to product A
So the correct answer will be stocking quantity of product B is higher
Answer:
I would issue stock because it is cheaper than borrowing.
Explanation:
First of all, issuing stock does not represent the obligation to pay interest over a long period of time, which can become very expensive if market conditions become adverse. Besides, if the company is small, it probably does not have the most advantageous financial conditions according to the banks, and the interest rate could be relatively high.
Besides, borrowing would mean increasing the liabilities in the financial statements, which could make the company less attractive for future investors.
Issuing stock does have the disadvantage of dilluting control of the company, because now stockholders own a piece of the company and could demand changes in management, and a different company strategy.
Answer:
2. Google is an example for this type of business.
Explanation:
These terms (MIS, Value driven business, E-Business, and information security) are interlinked in today technological era of businesses.
As the example is given above about google, it is being explained right here.
As we all know google is a technology based organization which is working on the concept of Management information system. Its recent case study shows that how this organization is a value driven business.
Google actually, takes really care about its employees, it has all necessary facilities to offer for its employees such as on-site doctors, cafeteria led by famous chefs, so that means they are value driven business too.
it is also providing E-business facilities to other businesses. And its information security is one of the top on list.
Answer:
The depreciation expense for Year 1 is $9880
Explanation:
The cost of equipment to be recorded in the books is the price at which it was purchased and the cost incurred to bring it to intended use that is the installation cost. Thus, the cost of the equipment in the books will be recorded as,
Equipment = 88000 + 4000 = $84000
The insurance and maintenance are recurring expenses and are not capitalized.
The depreciation rate under units of production method is,
Depreciation rate = (cost - salvage value) / estimated useful life in units
Depreciation rate = (84000 - 8000) / 100000 = $0.76 per unit
The depreciation expense for Year 1 = 0.76 * 13000 = $9880
Answer:
$10,920
Explanation:
Cost of equipment = List price of equipment + Cost of installation and testing
$88,000 + $4,000 = $92,000
Salvage value = $8,000
Depreciation cost of equipment = Cost of equipment - salvage value
$92,000 - $8,000 = $84,000
Estimated unit of production = 100,000 units
Year 1 units produced = 13,000 units
Depreciation = $84,000 * 13,000 / 100,000
= $10,920
Answer:
The correct option is D
Explanation:
Variable cost is the corporate cost or an expense which varies in proportion or relation to the production output. Increase or decrease in the variable cost grounded on the production volume of the company or firm, which in short means that increase or rise in variable cost and the production increases and fall in variable cost, production decreases.
Therefore, the cost which changes or varies in the proportion to change in the volume of the activity is known or referred as variable cost.
a. Journalize any required 2016 entries for the bond investment.
b. How much cash interest will Astro Mile receive each year from CoteCorp?
c. How much interest revenue will Astro Mile report during 2016 on this bond investment?
Answer:
Dr bond investment $1,400,000
Cr cash $1,400,000
Cash interest is $112,000.00
Interest revenue for the year is also $ 112,000.00
Explanation:
The cash paid for the investment is $1,400,000, this would be debited to bond investment and credited to cash since it is an outflow of cash from the business.
At six-month interval, coupon receivable=$1,400,000*8%*1/2=$ 56,000.00
annual coupon receivable=$ 56,000.00 *2=$ 112,000.00
B. 70.0%
C. 24.0%
D. 38.7%
Answer:
Option (B) is correct.
Explanation:
Given that,
Total Assets = $23,610
Interest-Bearing Debt (market value) = $11,070
Average borrowing rate for debt = 10.2%
Common Equity:
Book Value = $6,150
Market Value = $25,830
Marginal Income Tax Rate = 37%
Market Beta = 1.73
Hence,
Weight on equity capital = Equity ÷ (Debt + Equity)
= 25,830 ÷ (11,070 + 25,830)
= 25,830 ÷ 36,900
= 70%
Therefore, the weight on equity capital is 70%.