(a) The CDY for the period of 1926-2010 is 3.61%. (b) The cumulative price change for the period of 1926-2010 is approximately 0.373%. This indicates the average percentage change in the stock price over the specified period, excluding the impact of dividends.
(a) To calculate the CDY (Capital Dividend Yield), we subtract the average dividend yield from the geometric mean return:
CDY = Geometric Mean Return - Average Dividend Yield
CDY = 9.6% - 5.99%
CDY = 3.61%
Therefore, the CDY for the period of 1926-2010 is 3.61%.
The CDY represents the portion of the geometric mean return that is attributed to price appreciation rather than dividends. In this case, it indicates that 3.61% of the 9.6% geometric mean return is due to price appreciation.
(b) To calculate the cumulative price change, we subtract the average dividend yield from the geometric mean return and divide by the geometric mean return:
Cumulative Price Change = (Geometric Mean Return - Average Dividend Yield) / Geometric Mean Return
Cumulative Price Change = (9.6% - 5.99%) / 9.6%
Cumulative Price Change = 0.373%
Therefore, the cumulative price change for the period of 1926-2010 is approximately 0.373%.
The cumulative price change represents the percentage change in the stock price over the specified period, excluding the impact of dividends. In this case, it indicates that the stock price increased by approximately 0.373% on average per year.
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Retirement Planning
Godwin and Rita are both age 62. Godwin is not enjoying his work anymore and wants to retire now. However, Rita loves working at the local coffee shop meeting people and thinks she will work (even if part-time) to age 70. They have their home paid off and some small amount in savings but mostly all their capital is held in superannuation. They have $800,000 combined across both their superannuation accounts. This should be enough for a comfortable retirement, however they want to help their two children reduce their mortgages by gifting them $100,000 each, reducing their super to $600,000.
With reference to this case;
a. List three important financial objectives that retirees commonly have
b. Discuss three types of risks that are specific to achieving a retiree’s objectives
c. Provide three reasons why lifetime annuities appeal to retirees.
d. What is the main concern you have for these clients?
a. three important financial objectives that retirees commonly have Sustainable income, Asset preservation, Healthcare and long-term care. b. three types of risks are Market risk, Inflation risk, Longevity risk. c. three reasons are Guaranteed income, Stable and predictable cash flow, Protection against market volatility.
Three important financial objectives that retirees commonly have are:
Sustainable income: Retirees aim to have a reliable and steady stream of income throughout their retirement years to cover living expenses and maintain their desired lifestyle.
Asset preservation: Retirees often want to preserve their savings and investments, ensuring that they have enough funds to support themselves and potentially leave a legacy for their loved ones.
Healthcare and long-term care: Retirees prioritize securing adequate healthcare coverage and provisions for potential medical expenses, including long-term care if necessary.
b. Three types of risks specific to achieving a retiree's objectives are:
Longevity risk: Retirees face the risk of outliving their savings, as life expectancy increases. It is crucial to ensure that their retirement income lasts for their entire lifetime.
Market risk: Retirees are susceptible to market fluctuations, which can impact the value of their investments. A downturn in the market can significantly impact their retirement savings and income.
Inflation risk: Retirees need to consider the erosion of purchasing power over time due to inflation. It is essential to have investments or income streams that can keep up with or surpass the rate of inflation.
c. Three reasons why lifetime annuities appeal to retirees are:
Guaranteed income: Lifetime annuities provide a guaranteed income for the remainder of the retiree's life, regardless of how long they live. This helps mitigate longevity risk and provides peace of mind.
Stable and predictable cash flow: With a lifetime annuity, retirees can count on a stable and predictable cash flow, which can help with budgeting and financial planning.
Protection against market volatility: Lifetime annuities are not affected by market fluctuations, shielding retirees from market risk. This stability can provide a sense of security, knowing that their income is not tied to the ups and downs of the financial markets.
d. The main concern for these clients is the potential impact of gifting a significant portion of their superannuation to their children. By reducing their superannuation from $800,000 to $600,000, they may face a shortfall in their retirement savings. It is important to carefully assess and plan for their own financial needs and ensure that the reduced amount is still sufficient to support their desired lifestyle throughout retirement. They should consider seeking professional financial advice to evaluate the potential consequences of such a significant gift and explore alternative ways to assist their children without compromising their own retirement security.
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Suppose the value of the CPI is 1.100 in year one, 1.160 in year two, and 1.270 in year three Assume also that the price of computers increases by 3% between year one and year two, and by another 3% between year two and year three. The price level is increasing, the inflation rate is and the relative price of computers is A) constant; decreasing C) increasing; increasing B) constant; increasing D) increasing; decreasing
The relative price of computers is decreasing. Therefore, the answer is D) increasing; decreasing.
The given values of CPI in year one, year two, and year three are 1.100, 1.160, and 1.270 respectively. The price of computers increases by 3% between year one and year two, and by another 3% between year two and year three. Let's calculate the inflation rate and the relative price of computers. Inflation rate. The inflation rate is the percentage change in the price level. We can calculate the inflation rate as follows: Inflation rate in year two = [(CPI in year two - CPI in year one) / CPI in year one] × 100Inflation rate in year two = [(1.160 - 1.100) / 1.100] × 100Inflation rate in year two = (0.060 / 1.100) × 100Inflation rate in year two = 5.45%Inflation rate in year three = [(CPI in year three - CPI in year two) / CPI in year two] × 100Inflation rate in year three = [(1.270 - 1.160) / 1.160] × 100Inflation rate in year three = (0.110 / 1.160) × 100Inflation rate in year three = 9.48%Hence, the inflation rate is increasing.
The relative price of computersThe relative price of computers is the price of computers relative to the price level. We can calculate the relative price of computers as follows: Relative price of computers in year one = (Price of computers in year one / CPI in year one) × 100Relative price of computers in year one = (100 / 1.100) × 100Relative price of computers in year one = 909.09. Relative price of computers in year two = (Price of computers in year two / CPI in year two) × 100Relative price of computers in year two = (103 / 1.160) × 100Relative price of computers in year two = 887.93Relative price of computers in year three = (Price of computers in year three / CPI in year three) × 100Relative price of computers in year three = (106.09 / 1.270) × 100Relative price of computers in year three = 835.28. Hence, the relative price of computers is decreasing. Therefore, the answer is D) increasing; decreasing.
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Every project must have a change management request plan. Benefits of having such a plan for the project are all of the following, except one which is:
A. improves teamwork collaboration and communication; change is an opportunity for your team to work together to figure out how to respond to the change request B. improves productivity of the team; it affects overall efficiency of the team
C. improves problem-solving abilities of the project team; the more you engage your team in change control, the more adept they become at solving problems quickly D. it supports the work done during project selection process for the project; the selection committee needs to know what are the changes that will be made in project E. support project manager during planning phase; They will start thinking about change and use their experience with change control to put more safeguards upfront in their planning for future projects
Every project must have a change management request plan. Benefits of having such a plan for the project are all of the following, except D: it supports the work done during project selection process for the project; the selection committee needs to know what are the changes that will be made in project.
Explanation:Change management is the method of making organizational changes in a planned and orderly manner. Change management requires the use of appropriate procedures and tools to guarantee that changes are made smoothly, with minimum disturbances to the organization. Change management is essential to the success of project management. It ensures that changes are made in a structured and orderly manner.
The following are the advantages of having a change management request plan for a project:Improves teamwork, collaboration, and communicationIt improves the overall efficiency of the team.It improves the project team's problem-solving abilities.It supports the project manager during the planning phase.Project managers should think about change and use their knowledge of change management to include more upfront safeguards for future projects. The project team becomes more proficient at handling issues and conflicts that arise as a result of change control. Therefore, having a change management request plan in place helps the project team prepare for and handle change requests in a structured and efficient manner.
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For having a sound working capital management, what are the two fundamental decisions required? Also explain how Liquidity, Profitability and Risk is compromised/ compensated when Aggressive Financial manager acquires optimal level of current assets?
Aggressive financial managers must consider all of these variables before making a decision. They must ensure that the working capital level is not too low or too high. For having sound working capital management, the two fundamental decisions required are:
1. The first decision is to decide the quantum of current assets to be held.
2. The second decision is to determine the composition of the current assets held. Liquidity, profitability, and risk are three vital elements to consider while managing working capital. Aggressive financial managers make decisions that compromise these three elements to attain the desired optimal level of current assets.
Liquidity risk is the risk associated with an organization's inability to meet its current obligations. When aggressive financial managers increase the quantum of current assets to a level that is higher than necessary, liquidity is compromised. An excessive amount of cash and other highly liquid assets will lower the organization's profitability. This is because these assets generate fewer returns than long-term assets.
Profitability is at its maximum when current assets are at their optimal level. Aggressive financial managers, however, purchase current assets that provide a lower rate of return than long-term assets. As a result, they compromise profitability. Furthermore, they increase the risk of holding an excessive amount of current assets. This is because the value of these assets fluctuates and has a high level of uncertainty.
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Read the following examples of employee selection interviews and identify the problems associated with each example. Write the name of each problem on the answer script.
As an interviewer Mr. Fahimalways prefers male candidates for job placement.
Ms. Rumpa is not very impressive in terms of dressing and get-up. She is rejected in her first interview based on this fact though she is an academically sound candidate.
Mr. Farhan is smart and communicative in the interview session. Due to sickness, his voice was low in the interview session. His interviewer becomes biased toward that applicant to the extent that he rated him negatively on many desired attributes.
As an HR manager, Mr. Mimo has experience of more than 15 years. But his reputation was not good as an employee in his previous jobs.Money Leads Bank is hiring him only for his job experience by ignoring the weaknesses
Employee selection interviews are an important part of the hiring process.
Mr. Fahim prefers male candidates for job placement, which is a form of gender bias. This is unfair to female candidates who may be just as qualified for the position but are not given a fair chance. Problem: Appearance bias Ms. Rumpa is rejected based on her appearance rather than her qualifications.
This is a form of appearance bias, which can lead to discrimination against candidates who may not fit the traditional mold of what a "good employee" looks like. Problem: Interviewer bias Mr. Farhan is rated negatively by his interviewer due to a biased attitude. The interviewer becomes biased toward that applicant to the extent that he rated him negatively on many desired attributes.
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Which of the following would NOT be classified a non-current liability? O lease liabilities O current maturities of long-term debt O bonds payable O mortgage payable
Among the options given, current maturities of long-term debt would NOT be classified as non-current liabilities
.What are non-current liabilities?Non-current liabilities are those obligations that are due beyond one year from the balance sheet date. Liabilities that are expected to be paid within a year are classified as current liabilities.Non-current liabilities include long-term debt, deferred tax liabilities, lease liabilities, and pension liabilitieS
Current maturities of long-term debt refer to the portion of long-term debt that is due in the next year and should be classified as a current liability. It is the principal amount of a long-term debt that is due in the coming year.
Non-current liabilities include long-term debt (which includes bonds payable, mortgage payable), lease liabilities, and deferred tax liabilities.
Out of the given options, current maturities of long-term debt would NOT be classified as non-current liabilities.
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A decreasing-cost industry is on which
Multiple Choice a contraction of the industry will decrease unit costs. b input prices fall or technology improves as the industry expands c the long-run supply curve is perfectly elastic. d the long-run supply curve is upsloping.
A decreasing-cost industry is characterized by option b) input prices falling or technology improving as the industry expands, resulting in decreasing unit costs.
In a decreasing-cost industry, as the industry expands and production increases, the costs of inputs or factors of production tend to decrease. This can occur due to economies of scale, improved technology, or other factors that lead to more efficient production processes. As a result, the unit costs of production decrease as the industry grows.
Option a) contraction of the industry will decrease unit costs is not applicable to a decreasing-cost industry because unit costs decrease as the industry expands, not contracts.
Option c) the long-run supply curve is perfectly elastic is not a defining characteristic of a decreasing-cost industry. The elasticity of the long-run supply curve depends on various factors, including the availability of inputs and the industry's structure.
Option d) the long-run supply curve is upsloping is not applicable to a decreasing-cost industry. An upsloping long-run supply curve indicates increasing costs of production as output expands, which is contrary to the concept of a decreasing-cost industry.
Therefore, option b) input prices falling or technology improving as the industry expands accurately describes a decreasing-cost industry.
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A monopolist can purchase up to 40 ml of a raw material for $10/ml. At a cost of $5/ml, one ml of raw material can be processed into a gram of product 1; or, at a cost of $3/ml, one ml of raw material can be processed into a gram of product 2. If ₁ gram of product 1 is produced, it is sold for a price of $(20₁) per gram. If a2 gram of product 2 is produced, it is sold for a price of $(402r2) per gram. Determine how the monopolist can maximize profits. Specify the problem and the KKT conditions.
The monopolist maximizes benefits by deciding the ideal sums of crude fabric to prepare into items, considering costs, costs, and imperatives.
How will the monopolist maximize profit?To decide how the monopolist can maximize benefits, we ought to set up and unravel an optimization issue. Let's characterize the choice factors as takes after:
x₁ = sum of crude fabric (in ml) prepared into item 1
x₂ = sum of crude fabric (in ml) handled into item 2
The objective is to maximize benefits, which can be communicated as:
Benefit = (20₁) * x₁ + (402r2) * x₂
We have to consider the limitations of the issue:
The monopolist can buy up to 40 ml of crude fabric: x₁ + x₂ ≤ 40
Crude fabric accessibility limitation: x₁, x₂ ≤ 40
Furthermore, we have the non-negativity limitations:
x₁ ≥
x₂ ≥
The Karush-Kuhn-Tucker (KKT) conditions for this issue include checking for the fulfillment of the limitations, differentiability of the objective work, and complementary slackness conditions.
To maximize benefits, the monopolist would illuminate this optimization issue subject to the limitations and KKT conditions, taking into consideration the given costs and costs of crude fabric and items.
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The following regression results are based on the GDP deflator (Pt) for the US for the period 1960-2000. for a total of 41 observations: I. R2 = 10.47% AP+ = 0.0313Pt-1 t = 9.6422) II. R2 = 22.14% AP+ = 2.001 +0.1108Pt-1 t= (2.5000) (2.7583) III. R2 = 52.33% AP+ = 1.5776 + 0.4984t -0.124Pt-1 t= (3.1432) (4.2955) (-3.7523) Examining the preceding regressions, what can you say about stationarity of the GDP deflator?
Based on the provided regression results, we can examine the coefficients and t-values associated with the lagged GDP deflator variable (Pt-1) to determine the stationarity of the GDP deflator.
In regression I, the coefficient for Pt-1 is 0.0313 with a t-value of 9.6422. Since the coefficient is positive and statistically significant, it indicates a positive relationship between the current GDP deflator (Pt) and its lagged value (Pt-1). This suggests that there might be a trend or non-stationarity present in the GDP deflator.
In regression II, the coefficient for Pt-1 is 0.1108 with a t-value of 2.5000. Again, the coefficient is positive, indicating a positive relationship between Pt and Pt-1. However, the t-value is relatively low, suggesting weaker statistical significance. This implies that the presence of non-stationarity is less pronounced compared to regression I.
In regression III, the coefficient for Pt-1 is -0.124 with a t-value of -3.7523. This time, the coefficient is negative, implying a negative relationship between Pt and Pt-1. The t-value is also significant, indicating a stronger statistical significance. This suggests that the presence of non-stationarity is more prominent in regression III.
In conclusion, based on the provided regression results, there is evidence to suggest that the GDP deflator may exhibit non-stationarity. The positive coefficient in regression I and II, as well as the negative coefficient in regression III, indicate a relationship between the current GDP deflator and its lagged value, which is indicative of potential trends or non-stationarity in the data.
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Explain what you believe will be the positive and negative consequences to society by the increased use of Blockchain, including the Internet.
Positive consequences: Transparency and
accountability
, security and data integrity, efficiency and cost reduction , financial inclusion.
Negative consequences: Scalability changes, regularities and legal complexities ,energy consumption, cyber security risks.
Positive consequences of increased use of Blockchain and the Internet:
Transparency and accountability: Blockchain technology provides a decentralized and transparent system for recording and verifying transactions. It can enhance trust by allowing participants to validate and track transactions, ensuring
accuracy
, and reducing the need for intermediaries. This transparency can lead to greater accountability in various sectors, including finance, supply chain management, and voting systems.
Security and data integrity: Blockchain's cryptographic algorithms make it highly secure and resistant to tampering or fraud. By decentralizing data
storage
and employing consensus mechanisms, it becomes more difficult for malicious actors to compromise the system. This can benefit individuals and organizations by safeguarding sensitive information, reducing the risk of data breaches, and protecting intellectual property.
Efficiency and cost reduction: Blockchain technology can streamline and automate processes by eliminating intermediaries and reducing paperwork. Smart contracts, built on blockchain, enable self-executing agreements, saving time and resources. In supply chain management, blockchain can improve traceability and reduce fraud, leading to cost savings and operational efficiency.
Financial inclusion: The use of blockchain can empower individuals who lack access to traditional financial services. Through decentralized financial systems, individuals can store and transfer value, access loans, and engage in financial transactions without relying on traditional banks. This can provide opportunities for economic empowerment and financial inclusion, particularly in underserved regions.
Negative consequences of increased use of Blockchain and the Internet:
Scalability challenges: Blockchain technology faces scalability limitations, particularly when it comes to processing a high volume of transactions. The decentralized nature of blockchain can lead to slower transaction speeds and increased energy consumption. As adoption grows, addressing these scalability challenges becomes crucial to prevent bottlenecks and maintain efficient operations.
Regulatory and legal complexities: The decentralized and cross-border nature of blockchain technology can pose challenges for regulatory frameworks and legal systems. Issues related to data
privacy
, intellectual property rights, and jurisdictional boundaries may arise, requiring careful consideration and adaptation of existing laws. Developing clear regulations that balance innovation and consumer protection is essential.
Energy consumption: Blockchain networks, particularly those that rely on proof-of-work consensus mechanisms (e.g., Bitcoin), require significant computational power and energy consumption. This can contribute to the carbon footprint and environmental impact, raising concerns about sustainability. Efforts to transition towards more energy-efficient consensus mechanisms, such as proof-of-stake, are important for mitigating these negative environmental consequences.
Cybersecurity risks: While blockchain technology itself is secure, the broader ecosystem surrounding it is not immune to cybersecurity risks. Smart contracts, digital wallets, and exchanges can be vulnerable to hacking, leading to the loss of funds and personal information. As blockchain adoption increases, ensuring robust security measures and educating users about best practices becomes crucial to mitigate these risks.
The increased use of blockchain and the internet has the potential to bring numerous positive impacts, such as increased transparency, security, efficiency, and financial inclusion. However, challenges related to
scalability
, regulation, energy consumption, and cybersecurity should be carefully addressed to maximize the benefits and minimize potential negative consequences. Overall, with proper consideration and adaptation, blockchain technology has the potential to reshape various industries and drive positive societal changes.
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Questions :
1. How will Harley Davidson appeal to younger buyers?
must
2. Can Harley maintain its American Icon
status?
3. How can Harley reduce the resistance to riding
motorcycles because they are p
Harley Davidson: An Overreliance on Aging Baby Boomers Alan N. Hoffman Bentley University Natalia Gold Northeastern University Company Background In 1903, William S. Harley and Arthur Davidson produce
Conclusion: To appeal to younger buyers, Harley Davidson can focus on creating a more modern and attractive design for its motorcycles, while also incorporating features that appeal to younger riders such as connectivity, technology, and customization options.
1. Additionally, Harley Davidson can target younger demographics through digital marketing campaigns and events that cater to the interests of younger riders.
2: Harley Davidson has a strong brand reputation and a loyal customer base, which has helped it maintain its American Icon status. However, it will need to continue to innovate and adapt to changing market trends in order to remain relevant and attractive to younger buyers. Additionally, the company can continue to invest in research and development to create new products and technologies that appeal to younger riders.
3: To reduce resistance to riding motorcycles, Harley Davidson can focus on creating safer and more user-friendly motorcycles, while also promoting the benefits of motorcycling such as freedom, adventure, and a sense of community. Additionally, the company can offer training programs and events to help new riders feel more comfortable and confident on the road. Harley Davidson can also partner with organizations and initiatives that promote motorcycle safety and education.
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The following CPM network has estimates of the normal time in weeks listed for the activities: (B(2) (D(5) (F(4)) (A(7)) (G(5) C(4) (E(2)) a. Identify the critical path. O A-C-D-F-G A-B-D-E-G O A-C-D-
To identify the critical path, we need to determine the longest path in the network, which represents the sequence of activities that will take the most time to complete.
In this case, we have the following CPM network:
A - B(2) - D(5) - F(4)
C(4) - E(2)
/
G(5)
Each activity is represented by a letter, and the number in parentheses represents the normal time in weeks for that activity.
To find the critical path, we need to calculate the total time for each path in the network. Considering the estimates of normal time, the critical path is the one that has the longest duration
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Which of the following is the best example of people engaged in barter? LaVar agrees to swap his comic book for three of Max's baseball cards. Noreen gives Lucas a homemade cupcake for his birthday instead of a store-bought gift. Stepon uses his debit card to purchase a $30 train ticket. Bill asks for $4,500 for his used car, but when Willis offers $3.800, Bill ends up selling it to him for $4,000 instead.
The best example of people engaged in barter among the given options is: LaVar agrees to swap his comic book for three of Max's baseball cards.
Barter refers to the exchange of goods or services without the involvement of money. In this example, LaVar and Max engage in a direct exchange where LaVar gives his comic book to Max in exchange for three baseball cards. No money is involved in the transaction. Both parties have agreed to exchange items of equal value based on their preferences.
This example demonstrates a classic case of barter where individuals trade goods without the need for currency. Bartering can occur between individuals who possess items they no longer need or desire and are willing to exchange them for something of value to them. It highlights the basic concept of barter, which is the direct exchange of goods or services between two parties.
In conclusion, among the given options, the best example of people engaged in barter is LaVar agreeing to swap his comic book for three of Max's baseball cards. This example exemplifies the essence of barter, which involves the direct exchange of goods or services without the use of money as a medium of exchange.
The conclusion is drawn based on the fact that LaVar and Max engage in a trade where they both find mutual benefit. Each party has something of value to offer, and they agree on the terms of the exchange. LaVar values Max's baseball cards more than his own comic book, while Max values LaVar's comic book more than his baseball cards. Through this barter, both individuals are able to acquire items they desire without the need for monetary transactions.
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Which of the following is true regarding whether the agreement between Lara and Kim for the sale of dresses satisfied the writing requirement of the UCC?
The agreement is likely binding because under the UCC, if two merchants have an oral agreement, a written memo from either party to the other is deemed to satisfy the statute of frauds, even if it is not acknowledged by the receiving party. If it is not objected to within 10 days of receipt, the oral agreement, memorialized by the memo, is binding.
The agreement between Lara and Kim for the sale of dresses satisfies the writing requirement of the UCC.
Regarding whether the agreement between Lara and Kim for the sale of dresses satisfied the writing requirement of the UCC, it is likely binding because under the UCC, if two merchants have an oral agreement, a written memo from either party to the other is deemed to satisfy the statute of frauds, even if it is not acknowledged by the receiving party.If it is not objected to within 10 days of receipt, the oral agreement, memorialized by the memo, is binding. Here, Lara is in the business of selling dresses, and Kim owns a clothing store.
Thus, both parties are merchants. Furthermore, the agreement for the sale of dresses is a contract for the sale of goods, which falls under the scope of the UCC.On the other hand, if only one party is a merchant, the written confirmation of the agreement is not binding unless the receiving party sends a written objection within 10 days of receipt. If neither party is a merchant, a written confirmation is not required unless the contract is for goods valued at $500 or more.
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QUESTION 20
A firm is analysing its cash budget for June. Assuming its total cash receipts is $1230 and cash expenses is $745. If the company has a minimum desired cash balance of $1000 and ended the month of May with $300, how much loans must the firm take to meet its requirements for June.
O a. $1000
O b. $215
O c. $515
O d. No loans are needed
The firm needs to take a loan of $515 to meet its requirements for June.
To calculate the required loan amount, we need to determine the net cash flow for the month of June. This can be done by subtracting the cash expenses from the total cash receipts:
Net cash flow = Total cash receipts - Cash expenses
= $1230 - $745
= $485
Next, we need to add the desired ending cash balance and subtract the beginning cash balance to get the required loan amount:
Required loan amount = Desired ending cash balance + Net cash flow - Beginning cash balance
= $1000 + $485 - $300
= $1185Since the required loan amount is greater than the current cash balance, the firm will need to take out a loan. Therefore, the answer is (c) $515, which is the difference between the required loan amount and the current cash balance.
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A contractor imported a bulldozer for his job, paying P250,000 to the manufacturer Freight and insurance charges amounted to P18,000; custom's broker's fees, P8,500; taxes, permits, and other initial expenses, P25,000. If the contractor estimates life of the bulldozer to be 10 years, with a salvage value of P20,000, determine the book value at the end of six years, using the: [al straight line formula [b] sinking fund formula at 8% [c] declining balance method [d] SYD method
The Straight Line Method: Book value at the end of six years = P250,000 - [(P250,000 - P20,000) / 10] * 6
The book value of the bulldozer at the end of six years can be calculated using various depreciation methods.
(a) The straight-line method allocates an equal amount of depreciation expense over the useful life of the asset. The book value is calculated by subtracting the accumulated depreciation from the initial cost.
(b) The sinking fund method considers setting aside funds at a given interest rate to cover the depreciated value of the asset. The book value is obtained by subtracting the accumulated sinking fund from the initial cost.
(c) The declining balance method applies a constant depreciation rate to the remaining book value each year. The book value is obtained by multiplying the initial cost by the depreciation rate and then subtracting it from the previous year's book value.
(d) The sum of years' digits (SYD) method assigns higher depreciation expenses in the earlier years and lower expenses in the later years. The book value is obtained by subtracting the accumulated depreciation calculated using the SYD formula from the initial cost.
Therefore, the book value of the bulldozer at the end of six years varies depending on the depreciation method used. Each method employs a different approach to allocate depreciation expenses, resulting in different book values.
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Which of the following key factors should a comprehensive
business plan consider?
Financing structure
Critical resources
Opportunity
All of these are correct.
All of the following key factors should a comprehensive business plan consider:Financing structure, Critical resources, Opportunity.
The answer is (D) All of these are correct.
A comprehensive business plan includes a wide range of factors that should be considered, including but not limited to the financing structure, critical resources, and opportunities.
A comprehensive business plan serves as a guide for the firm's objectives and helps them to take necessary measures to achieve their goals.
Hence, the answer is D
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The Manama Co. is considering adding a new product line that is expected to increase annual sales by $342.000 and expenses by $236,000. The project will require $18839 in depreciated using the straight-line method to a zero book value over the 9-year life of the project. The company has a marginal tax rate of 39 percent. What is the depreciation tax shield?
The depreciation tax shield for the project is $7,338.
To calculate the depreciation tax shield, we need to determine the tax savings resulting from the depreciation expense. The tax savings can be calculated by multiplying the depreciation expense by the marginal tax rate.
Depreciation expense per year = Depreciation amount / Project life
Depreciation expense per year = $18,839 / 9 years = $2,093
Tax savings per year = Depreciation expense per year * Marginal tax rate
Tax savings per year = $2,093 * 0.39 = $815
The tax savings per year represents the depreciation tax shield. However, since the project is expected to last for 9 years, we need to calculate the total tax savings over the project's life.
Total depreciation tax shield = Tax savings per year * Project life
Total depreciation tax shield = $815 * 9 years = $7,338
The depreciation tax shield for the project is $7,338. This represents the tax savings that the Manama Co. will benefit from due to the depreciation expense incurred over the 9-year life of the project.
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The PDCA is the cornerstone on which the ISO 9001:2015 is built; what set of actions happen under each phase and which clauses are relevant under each phase of the cycle?
The Plan-Do-Check-Act (PDCA) cycle is the foundation of the ISO 9001:2015 standard. Under each phase of the cycle, specific actions occur to ensure continual improvement and compliance with the standard's clauses.
The PDCA cycle consists of four phases: Plan, Do, Check, and Act. In the Plan phase, organizations establish objectives and develop plans to achieve them. This includes identifying risks and opportunities, defining processes, and setting performance indicators. Relevant clauses in this phase include Clause 4 (Context of the Organization), Clause 5 (Leadership), and Clause 6 (Planning).
In the Do phase, organizations implement the plans developed in the previous phase. This involves executing processes, training employees, and deploying resources. Clause 7 (Support) and Clause 8 (Operation) are the key clauses in this phase.
The Check phase focuses on monitoring and evaluating the implemented processes to determine their effectiveness. This includes conducting internal audits, collecting data, and analyzing performance indicators. Clause 9 (Performance Evaluation) is the primary clause relevant in this phase.
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A firm is considering an investment in a new manufacturing plant. The site already is owned by the company, but existing buildings would need to be demolished. Which of the following should be treated as incremental cash flows?
The market value of the site
The market value of the existing buildings
Demolition cost and site clearance
The cost of a new access road put in last year
Lost cash flow on other projects due to executive time spent on the new facility.
Future depreciation of the new plant
Incremental cash flows are the cash flows that occur due to a specific decision. Incremental cash flows are the difference in cash flows that result from a decision between two alternatives.
The incremental cash flows in the given situation are as follows:Demolition cost and site clearance: This should be treated as incremental cash flows because the cost of clearing the site is a result of the decision to construct a new plant.The market value of the site: This is not an incremental cash flow because the site already belongs to the company and has no relation to the decision of constructing a new manufacturing plant.Lost cash flow on other projects due to executive time spent on the new facility: This is not an incremental cash flow because it is not a cash flow associated with the decision to construct a new plant. Future depreciation of the new plant: This is not an incremental cash flow because it will occur regardless of whether the new plant is constructed or not.The cost of a new access road put in last year: This is not an incremental cash flow because it is a sunk cost and not relevant to the decision of constructing a new plant.Therefore, the incremental cash flows are the demolition cost and site clearance. These will be considered as cash outflows.
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Dr Kennedy states that "Over coming years, the direct and immediate costs will be partially offset by increased investment to replace and rebuild damaged housing, infrastructure, inventories and household goods. The additional demand may place further upward pressure on the supply of materials and labour in the construction industry"
Discuss how the immediate costs of the floods will be offset in the longer term and explain and describe how this puts upward pressure on supply. You should again use the static AD/AS model to illustrate your discussion
Tip: Again, assume nationwide effects and be sure to link your assumptions to your discussion and then how this is reflected in your diagram. Most marks in this question are allocated to the written part of your answer.
The statement by Dr. Kennedy suggests that the immediate costs of the floods will be partially offset by increased investment in rebuilding damaged infrastructure, housing, inventories, and household goods.
This increased investment creates additional demand in the economy, which can have implications for the supply side, specifically in the construction industry. To explain this in more detail and illustrate it using the AD/AS model:
Immediate Cost Offset: The investment in replacing and rebuilding damaged assets stimulates economic activity and creates demand for construction-related goods and services. This leads to increased production and employment in the construction sector, which helps to offset the initial costs incurred due to the floods.
Upward Pressure on Supply: The increased demand for materials and labor in the construction industry puts upward pressure on the supply side of the economy. This is because the supply of materials and labor may struggle to keep up with the sudden surge in demand, leading to potential shortages and price increases.
In the AD/AS model, we can visualize this scenario as follows:
Aggregate Demand (AD): Initially, aggregate demand may decrease due to the immediate costs of the floods, shifting the AD curve to the left.
Aggregate Supply (AS): As the rebuilding efforts begin, there is an increase in investment, which boosts aggregate demand and shifts the AD curve to the right. However, the immediate costs incurred due to the floods may still have an impact on the aggregate supply in the short term.
Short-Term Effects: In the short term, the upward pressure on supply in the construction industry may lead to higher prices for materials and labor, causing the short-run aggregate supply (SRAS) curve to shift upward.
Long-Term Effects: Over time, as the rebuilding and replacement process progresses, the supply side of the economy adjusts to meet the increased demand. This leads to an expansion of the capacity of the construction industry, with increased investment in infrastructure and increased labor supply. This expansion helps to restore the equilibrium and potential output levels in the long run, as depicted by the long-run aggregate supply (LRAS) curve.
Overall, the initial costs of the floods are partially offset by increased investment, leading to increased demand and potential upward pressure on the supply of materials and labor. However, over time, the supply side adjusts to meet the increased demand, restoring equilibrium in the long run. The AD/AS model helps illustrate the short-term and long-term effects of these dynamics in the aftermath of the floods.
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if actual manufacturing overhead is greater than the predetermined manufacturing overhead, then manufacturing overhead has been:
If the actual manufacturing overhead is greater than the predetermined manufacturing overhead, it indicates that the manufacturing overhead has been overapplied.
Overapplied manufacturing overhead occurs when the actual manufacturing overhead costs incurred in a period exceed the amount allocated or predetermined for that period. This situation often arises due to factors such as unexpected increases in expenses, inefficiencies in production, or inaccuracies in estimating the overhead costs.
When manufacturing overhead is overapplied, it means that the actual costs incurred are higher than what was anticipated or allocated. This can lead to variances in the financial statements and requires adjustments to be made.
To rectify the overapplied manufacturing overhead, companies typically make adjusting entries to decrease the overapplied amount. This adjustment helps align the actual costs with the allocated or predetermined overhead and ensures that the financial statements reflect the accurate manufacturing overhead expenses.
In summary, if the actual manufacturing overhead is greater than the predetermined manufacturing overhead, it signifies that manufacturing overhead has been overapplied, necessitating adjustments to reconcile the variances and accurately report the overhead costs.
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If actual manufacturing overhead exceeds the predetermined manufacturing overhead, a situation known as "overapplied manufacturing overhead" arises. This occurs when the estimated overhead costs that were allocated to products during the budgeting process exceed the actual overhead costs incurred during production.
Overapplied manufacturing overhead can indicate several potential scenarios. It might suggest that the company's cost estimates were too high or that the production process was more efficient than anticipated. Alternatively, it could signal that there were inefficiencies in cost tracking or allocation methods. Regardless of the cause, overapplied overhead creates discrepancies in the cost of goods sold and inventory figures, which can affect profitability calculations and financial reporting accuracy.
To address overapplied manufacturing overhead, companies often adjust their cost accounts or allocate the excess overhead back to production costs. Proper analysis of the overapplied overhead situation helps in refining cost estimation, budgeting, and resource allocation processes, contributing to more accurate financial reporting and better decision-making.
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The city of Kingston is considering building a new indoor swimming pool. The pool is expected to cost $6,000,000 to build and set-up. It is expected that because of the increasing demand, such a facility could bring in $650,000 in net profits yearly. The city uses a MARR of 10% and decides to study this project over a 30-year life. A. What is the Present Worth of this project? B. There is uncertainty in this project. The build and set-up costs could be as little as $5,500,000, but they could go as high as $7,500,000. The net profits can vary by +10% or -10% of the forecasted $650,000, and the MARR can vary between 7% and 11%. To which of these factors is the PW most sensitive? C. If we fix the yearly net profits at $650,000 for 30 years, how much can the city afford to spend on the pool's build and set-up to break even with a MARR of 10%?
A. The Present Worth (PW) of the project is calculated as $4,579,126.19.
B. The Present Worth (PW) is most sensitive to variations in the net profits.
C. To break even with a MARR of 10% and fixed yearly net profits of $650,000 for 30 years, the city can afford to spend up to $4,866,897.95 on the pool's build and set-up.
A. To calculate the Present Worth (PW) of the project, the net profits of $650,000 are discounted over 30 years at a MARR of 10%. Using the formula for Present Worth, the PW is determined to be $4,579,126.19.
B. Among the given factors, the net profits have the most significant impact on the Present Worth. Varying the net profits by +10% or -10% affects the cash flows and, consequently, the PW of the project.
C. To break even with a MARR of 10% and fixed yearly net profits of $650,000 for 30 years, the city needs to calculate the equivalent Present Worth. By rearranging the Present Worth formula, the maximum amount the city can spend on the pool's build and set-up is determined to be $4,866,897.95.
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In this lab, we will work with different BPMN symbols. Your task is to redraw the given diagram using a BPMN tool.
This task cannot be completed without the given diagram. Could you please provide the given diagram so that I can help you to redraw it using a BPMN tool? BPMN (Business Process Model and Notation) is a graphical representation of business processes. It's used to visualize business processes, making them more accessible and easier to understand.
BPMN utilizes standardized symbols to depict workflows and makes use of a visual dictionary that can be easily comprehended by anybody involved in the company's processes. BPMN tools aid in the creation of workflows. These tools provide a range of options for defining activities, such as setting deadlines, specifying roles, and organizing documents. BPMN notation comprises of 4 key categories of graphical symbols that correspond to particular types of events and actions.
To redraw the given diagram using a BPMN tool, we need to understand the BPMN symbols. After understanding the symbols, we can select the BPMN tool and start redrawing the diagram. As the given diagram is not available, we can't proceed further. However, I hope that my answer has helped you understand what BPMN is and how BPMN symbols can be used to redraw a diagram using a BPMN tool.
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Easttown Productions Inc. reported plans to pay out 60% of its earnings as cash dividends to its shareholders. The firm will finance investment with retained earnings. Its recent return on equity (ROE) is 0.14, a figure that is expected to continue in the future. What will be the rate of growth of the firm's earnings over the year.
a. 6.3%
b. 8.4%
c. 10.2%
d. 5.6%
e. 9.6%
The rate of growth of earnings is a function of the return on equity (ROE) is 5.6%. The option is correct (d) 5.6%.
Retention ratio:
Retention ratio is the proportion of earnings which is retained by the firm after paying out dividends to shareholders. A higher retention ratio means that the firm is retaining more earnings and, therefore, has less cash to distribute to shareholders.
Retention ratio is an important financial metric because it can impact the rate of growth of the firm's earnings over time. Companies that retain more earnings can reinvest in the business, which can lead to higher growth rates in the future.
Conversely, companies that pay out a high proportion of their earnings as dividends may have lower growth rates because they have less cash available for investment.
Calculation of Retention Ratio:
Retention Ratio = 1 - Dividend Payout Ratio
We are given that Easttown Productions Inc. will pay out 60% of its earnings as cash dividends.
Therefore, the dividend payout ratio is 60%.
Dividend Payout Ratio = 60% = 0.6
Using the formula above, the retention ratio is:Retention Ratio = 1 - Dividend Payout Ratio= 1 - 0.6= 0.4
Rate of Growth of Earnings (g)
The rate of growth of earnings is a function of the return on equity (ROE) and the retention ratio (b). It is given by the formula:g = b x ROE
where g = the rate of growth of earnings
ROE = return on equity
Retention Ratio = b
We are given that the recent return on equity (ROE) is 0.14, a figure that is expected to continue in the future. Therefore, ROE = 0.14.
We also calculated above that the retention ratio (b) is 0.4.
Substituting these values into the formula above, we get:
g = b x ROE= 0.4 x 0.14= 0.056 or 5.6%.
Therefore, the option is correct (d) 5.6%.
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BatCo makes baseball bats. Each bat requires 2.00 pounds of wood at $24 per pound and 0.25 direct labor hour at $30 per hour. Overhead is assigned at the rate of $60 per direct labor hour. Prepare a standard cost card for a baseball bat for BatCo.
A standard cost card provides an estimate of what a product should cost to produce, including all direct and indirect costs involved.
The following are the elements that should be present in a standard cost card: Material cost per unit Direct labor cost per unit Overhead cost per unit Total standard cost per unit Explanation: Bat Co makes baseball bats and it wants to know the cost of each bat to produce. For that, it will use the standard cost card. Below are the details of the cost of each bat that Bat Co wants to produce: Direct Material Cost The direct material cost is the cost of wood required for producing each bat. The standard cost of 2.00 pounds of wood per bat is $24 per pound. Therefore, the direct material cost per unit is calculated as follows:2.00 pounds × $24 per pound = $48Direct Labor Cost The direct labor cost is the cost of labor required for producing each bat. The standard cost of 0.25 direct labor hour per bat is $30 per hour. Therefore, the direct labor cost per unit is calculated as follows:0.25 hours × $30 per hour = $7.50Overhead Cost The overhead cost is the cost of indirect labor, equipment, supplies, and facilities required to produce each bat. The overhead cost per direct labor hour is $60. The standard labor hours per unit is 0.25. Therefore, the overhead cost per unit is calculated as follows:0.25 hours × $60 per hour = $15Total Standard Cost The total standard cost of producing one baseball bat is the sum of direct material cost, direct labor cost, and overhead cost per unit:$48 + $7.50 + $15 = $70.50Therefore, the standard cost card for one baseball bat produced by Bat Co is as follows: Material cost per unit = $48Direct labor cost per unit = $7.50Overhead cost per unit = $15Total standard cost per unit = $70.50. The answer is more than 100 words.
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A very simple product (A) consists of a base (B) and a casting (C). The base consists of a plate (P) and three fasteners (F). There are currently 30 castings and 100 bases on hand. Final assembly takes one week. The casting has a lead time of three weeks. All other parts have one-week lead times. There are no scheduled receipts. All components use the lot-for-lot technique. The master schedule requires 21 units of product A in week 5 and 92 in week 8. Produce the MRP for the upcoming eight weeks. Make a Master Production Schedule (MPS) and Produce a list of all planned order releases. Write the inferences that you draw from the MPS.
The Material Requirement Planning (MRP) for the next eight weeks is given below: A Master Production Schedule (MPS) is created to meet consumer demand while keeping inventory costs down.
In general, it is established after considering the availability of materials, the availability of production capacity, and customer demand. MPS aids in the management of inventory levels and the creation of a detailed production plan.
Therefore, 30 castings and 100 bases will be used up to satisfy the MPS's demand for week 5 and 92 castings and 92 bases will be used to satisfy the MPS's demand for week 8. In the event that extra materials are required, it will take three weeks for the casting to arrive, while all other materials will arrive in one week. Hence, ordering 12 castings and 4 bases in week 2, 8 castings and 8 bases in week 3, and 32 castings and 8 bases in week 4, will ensure that the MPS's requirements for week 5 are satisfied without the need for any unplanned orders.In week 5, the requirement for product A will be satisfied by utilizing 21 castings and 21 bases from available inventory. It will be necessary to generate orders for 71 castings and 71 bases, which will arrive in week 6 and satisfy the requirements of week 6 and 7. In week 8, the requirement for product A will be fulfilled by utilizing 92 castings and 92 bases from available inventory. There is no need to generate any new orders because there will be no demand in weeks 9 or 10. This MPS model satisfies the consumer demand with minimum inventory levels.
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Question 2 (32%) Midas Manufacturing Inc. is a Taiwan-based international manufacturing company. It owns and operates plants locating in different areas, including Taiwan, U.S., Japan, German, China, and India, etc. The mission of Midas is to provide high-quality products and services to their clients. The strategical goal of the Midas is to increase the market shares and maximize their profits, increasing shareholders' value. Please answer the following questions: 1. Midas Manufacturing Inc. constructs a Management Control System in order to aid and coordinate the planning and control decisions throughout the organization, and to guide the behavior of its managers and other employees. According to your knowledge, what is an effective management control system and what kind(s) of information should be included in their Management Control System? Explain your answer. (7%)
An effective management control system is a framework that aids in planning, coordinating, and controlling decisions within an organization while guiding the behavior of managers and employees. A comprehensive management control system should include financial data, operational metrics, and non-financial performance indicators.
Financial information, such as budgets, financial statements, and cost analysis, allows managers to assess the financial health of the organization and make informed decisions.
Operational metrics provide insights into productivity, efficiency, and quality levels. Non-financial performance indicators, such as customer satisfaction surveys and employee feedback, offer a broader perspective on overall organizational performance.
By incorporating these different types of information into their management control system, Midas Manufacturing Inc. can gain a comprehensive understanding of their operations and make well-informed decisions to achieve their strategic goals.
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Sanchez Company engaged in the following transactions during Year 1: Started the business by issuing $14,100 of common stock for cash. 2) The company paid cash to purchase $8,400 of inventory. 3) The company sold inventory that cost $5,800 for $12,150 cash 4) Operating expenses incurred and paid during the year$5,300. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $ 12,400 of inventory . 2) The company sold inventory that cost $10,000 for $ 18.750 cash 3) Operating expenses incurred and paid during the year$6.300 . Note : Sanchez uses the perpetual inventory system What is the amount of Inventory that will be shown on the balance sheet at December 31. Year 2?
Sanchez Company engages in various transactions during Year 1 and Year 2. The company sells inventory and incurs operating expenses during both years. Sanchez uses the perpetual inventory system. Therefore, to determine the amount of inventory that will be shown on the balance sheet at December 31, Year 2, the cost of goods sold should be computed as follows:Calculation of Cost of goods sold in Year 1: The cost of goods sold is equal to the cost of the inventory sold. Thus, the cost of goods sold is equal to $5,800.
Sanchez Company engages in various transactions during Year 1 and Year 2. The company sells inventory and incurs operating expenses during both years. Sanchez uses the perpetual inventory system. Therefore, to determine the amount of inventory that will be shown on the balance sheet at December 31, Year 2, the cost of goods sold should be computed as follows:Calculation of Cost of goods sold in Year 1: The cost of goods sold is equal to the cost of the inventory sold. Thus, the cost of goods sold is equal to $5,800.Calculation of Ending inventory in Year 1: The cost of the ending inventory in Year 1 can be calculated by subtracting the cost of goods sold from the cost of the inventory purchased. That is, $8,400 - $5,800 = $2,600.The Sanchez Company purchased $12,400 of inventory in Year 2, and the cost of goods sold is $10,000. Therefore, the cost of the ending inventory in Year 2 can be computed as follows:Cost of the inventory purchased in Year 2 = $12,400Cost of goods sold in Year 2 = $10,000Thus, Ending inventory at December 31, Year 2, will be: Ending inventory = Cost of the inventory purchased in Year 2 - Cost of goods sold in Year 2Ending inventory = $12,400 - $10,000 = $2,400Therefore, the amount of inventory that will be shown on the balance sheet at December 31, Year 2, is $2,400.
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Sales Cost of goods sold 2021 $ 78,000 65,700 Required A Required B Sales Cost of goods sold 2020 $ 73,000 47,400 Dollar amounts stated are in thousands. a. Compute trend percentages for the above Items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2017 as the base year. b. State whether the trends are favorable or unfavorable. Complete this question by entering your answers in the tabs below. 2021 % %6 Compute trend percentages for the above items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2017 as the base year. (Round your answers to the nearest whole percent. i.e. 1.2345 as 123%.) 2019 $ 61,000 36,000 2020 96 96 Required A 2018 $ 57,000 42,600 2019 %6 96 2018 2017 $ 50,000 30,000 96 %6 Required B > 2017 %6 %6 Sales Cost of goods sold Required A Required B 2021 $ 78,000 65,700 2020 $ 73,000 47,400 Trends Dollar amounts stated are in thousands. a. Compute trend percentages for the above Items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2017 as the base year. b. State whether the trends are favorable or unfavorable. Complete this question by entering your answers in the tabs below. State whether the trends are favorable or unfavorable. Sales Cost of goods sold 2019 $ 61,000 36,000 2018 $ 57,000 42,600 < Required A 2017 $ 50,000 30,000 Required B >
Answer:
The Lopez Plumbing is generating more revenue, but it is also spending more money to produce its products.
The trends for sales and cost of goods sold are favorable.
Explanation:
a.) To compute trend percentages, we need to divide the amount for each year by the amount for 2017 and then multiply by 100.
Year Sales Cost of goods sold
2017 $50,000 $30,000
2018 $57,000 $42,600
2019 $61,000 $36,000
2020 $73,000 $47,400
2021 $78,000 $65,700
b.) The trends for both sales and cost of goods sold are favorable. Sales have increased by 156% over the past five years, while cost of goods sold has increased by 219%. This means that Lopez Plumbing is generating more revenue, but it is also spending more money to produce its products.
It is important to note that trend percentages can be misleading if they are not interpreted correctly. For example, a trend percentage of 100% does not mean that sales have doubled. It simply means that sales have increased by the same amount as the base year. In this case, sales have increased by $28,000 from 2017 to 2021.
Overall, the trends for sales and cost of goods sold are favorable. However, it is important to monitor these trends closely to ensure that they continue to be favorable in the future.
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