One of the most important things to establish in business from your first day is:
This refers to the quality that your business partners are able to trust you and you are accountable and you as a business person has good ethics and can be relied on.
With this in mind, we can see that the first thing to establish in business is credibility.
Therefore, the correct answer is option B
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Delivery and receipt of merchandise $76 per delivery
Shelf-stocking $19 per hour
Customer support and assistance $0.15 per item sold
The revenues, cost of goods sold, store support costs, activities that account for the store support costs, and activity-area usage of the three product lines are as follows:
Baked Goods Milk and Fruit Juice Frozen Products
Financial data
Revenues $60,000 $66,500 $50,500
Cost of goods sold $41,000 $51,000 $32,000
Store support $12,300 $15,300 $9,600
Activity-area usage (cost-allocation base)
Ordering (purchase orders) 44 24 14
Delivery (deliveries) 120 60 36
Shelf-stocking (hours) 170 150 20
Customer support (items sold) 15,400 20,200 7,960
Under its simple costing system, FS allocated support costs to products at the rate of 30% of the cost of goods sold.
Required:
1. Use the simple costing system to prepare a product-line profitability report for FS.
2. Use the ABC system to prepare a product-line profitability report for FS.
3. What new insights does the ABC system in requirement 2 provide to FS managers?
Answer:(1) Baked Goods profit $6,700, Milk and Fruit juice profit $200, Frozen Products profit $8,900 (2) Baked Goods profit $160, Milk and Fruit juice profit $2,870, Frozen Products Profit $12,860. (3) it provide insight to FS managers that Frozen Products is the most profitable among the three product lines.
Explanation:
(1) Baked Goods. Milk and Fruit juice. Frozen Products
$ $ $
Revenue. 60,000. 66,500. 50,500
Less : Cost of good sold 41,000. 51,000. 32,000
------------- -------------- ---------------
Gross Margin. 19,000. 15,500. 18,500
Less: Store Support. 12,300. 15,300. 9,600
----------- ------------ -------------
Profit. 6,700. 200. 8,900
------------- --------------- ----------------'
(2)
Baked Goods. Milk and Fruit juice. Frozen Products
$ $ $
Revenue. 60,000. 66,500. 50,500
Less Cost of good sold 41,000. 51,000. 32,000
------------- ---------------- -----------
Contribution. 19,000. 15,500. 18,500
Less Overhead
Ordering cost. 4,180. 2,280. 1,,330
Delivery&Receipt. 9,120. 4,560. 2,736
Shelf Stocking. 3,230. 2,850. 380
Customer Support & Assistant 2,310. 3,030. 1,194
------------ -------------- ------------
Profit. 160. 2,870. 12,860
------------------ ----------------- ---------------
(3) The new insight to FS managers is that Frozen Products is the most profitable among the three products lines
Workings
Ordering cost ($95 × 44) = 4,180 ($95 × 24) = 2,280 ($95 × 14) = 1,330
Delivery &Receipt ($76 × 120) = 9,120 ($76 × 60) = 4,560 ($76 × 36) = 2,736
Shelf Stocking ($19 × 170) = 3,230 ($19 × 150) = 2,850 ( $19 × 20) = 380
Customer Support &Assistant ($0.15 × 15,400) = 2,310 ($0.15 × 20,200) = 3,030 ($0.15 × 7,960)= 1,194
To prepare a product-line profitability report for FS, first, use the simple costing system by allocating support costs to products at a rate of 30% of the cost of goods sold. Second, use the ABC system by calculating the total activity cost for each product line and allocating it based on activity-area usage. The ABC system provides more insights into cost drivers and helps in analyzing profitability.
1. Simple costing system:
Under the simple costing system, FS allocates support costs to products at a rate of 30% of the cost of goods sold. To prepare a product-line profitability report, we need to calculate the support costs allocated to each product line by multiplying their respective cost of goods sold by 30%. Then, subtract the allocated support costs from the revenues to determine the profitability.
2. ABC costing system:
Under the ABC costing system, we need to calculate the total activity cost for each product line by multiplying the activity cost rate with the respective activity-area usage. Then, allocate the total activity costs to each product line based on their activity-area usage. Finally, subtract the allocated support costs from the revenues to determine the profitability.
3. New insights from ABC system:
The ABC system provides a more accurate and detailed view of the costs associated with each product line. It allows FS managers to identify the activities that contribute the most to the total support costs and analyze the profitability of each product line based on these cost drivers. This insight helps in making informed decisions regarding product line management and pricing strategies.
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Answer:
$9,416.75
Explanation:
Present value is the sum of discounted cash flows.
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = $2500
Cash flow in year 3 = 0
Cash flow in year 4 = $2500
Cash flow in year 5 = 0
Cash flow in year 6 = $2500
Cash flow in year 7 = 0
Cash flow in year 8 = $2500
Cash flow in year 9 = 0
Cash flow in year 10 = $2500
Present value = $9416.75
To find the PV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
The present value of the annuity payments that Marcos receives is approximately $11,614.58, using the given 5% discount rate and considering the biennial payment structure.
To calculate the present value of an annuity where payments are made every two years, we can use the present value of an ordinary annuity formula. Since payments are made every two years, we adjust our calculations to reflect this. Given the discount rate of 5% and the next payment due to be in two years, we will use this rate for our calculations.
Here's how to find the present value of the annuity that Marcos receives. We would use the following formula for the present value (PV) of an ordinary annuity:
PV = Pmt * [(1 - (1 + r)^-n) / r]
Where Pmt is the annuity payment, r is the discount rate per compounding period, and n is the total number of compounding periods.
Marcos's annuity:
Using these details, we calculate:
PV = $2,500 * [(1 - (1 + 0.025)^-5) / 0.025]
PV = $2,500 * 4.64583... (factor obtained from the formula)
PV ≈ $11,614.58
So the present value of the annuity that Marcos receives is approximately $11,614.58.
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if the tax rate is 23%, the amount of the annual tax shield on debt will be $87,975.
Total Interest = Total Bonds * Face Value * Coupon Rate
Total Interest = (5,000 bonds*$ 1,000) * 7.65%
Total Interest = $5,000,000 * 7.65%
Total Interest = $ 382,500
Annual Tax Shield =Total Interest * Tax Rate
Annual Tax Shield = $382,500*23%
Annual Tax Shield = $87,975
In conclusion, if the tax rate is 23%, the amount of the annual tax shield on debt is $87,975.
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Dunkin Donuts' actions of taste testing, research, and consumer feedback represent 'Market Research'. This process helps them collect and analyze data about consumer preferences, trends, and competition, thereby assisting them in making informed product decisions.
In the context of Dunkin Donuts' actions, this represents Market Research. Market Research is the process of gathering and analyzing data about the market, including information about customer preferences, trends, and competing products. For a company like Dunkin Donuts, this helps to ensure that they are meeting consumer demand, staying ahead of trends, and maintaining a competitive edge in the donut and coffee market. For example, they might survey customers about their preferred donut flavors, or test new product offerings in select locations to see how they perform. Based on the feedback, they make decisions on what to offer on a wider scale.
Answer: D) cyclical
Explanation:
Cyclical Demand is difficult to predict because it goes according to the business cycle and hence is affected on a Macro Economic scale by events at a National or International level.
This means that something could be in demand today but the demand could fall or rise sharply based on the stage of the business cycle the economy is in.
Answer:
insiders can cheat the market.
Explanation:
They can do things on the inside to make a stock go up or down. this can be an advantage to buying in low and selling high. Elon Musk did something similar, (put this in your answer for a kick) as he used his social influence to lower his stock, by saying its "overpriced" making people sell it. when the stock fell, more investors used the buying in low strategy, and he split the stock to allow smaller investors to buy into the stock, giving him 8 BILLION dollars in one market day. (I LOVE THE STOCK MARKET, IF YOU WANT TO LEARN POST A COMMENT AND I WILL TEACH YOU A LOT!!)
Insider trading is a threat to financial markets because it disrupts the fairness and transparency necessary in these markets. It involves using confidential info to make advantageous trades, giving some an unfair advantage and undermining trust in the market.
Insider trading is indeed considered a threat to the functionality of financial markets. This is primarily due to the nature of insider trading, where confidential, non-public information about a company is used to make advantageous trades. This information imbalance disrupts the fairness and transparency that the financial markets rely on to operate efficiently. For instance, if a company's internal member knows something crucial that could significantly impact the company's stock price and trades based on this information before it is publicly released, then they have an unfair advantage over other market participants. This can lead to a lack of confidence and trust in the market, which is detrimental to the smooth functioning of financial markets.
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