Answer:
Option "D" is correct.
Explanation:
Option "D" is correct because When a person or member dissociates then the person loses the right to manage, losses the right to act, ceases from their duty of loyalty, ceases from the duty of care immediately if any event occurs after dissociation and the member has the right to find their interest. Therefore, from the given options it can be seen that the duty of care remains intact when only to that event that had occurred before the dissociation.
5. What is the purpose of a Job Cost Sheet? What type of information is included in one?
Answer:
The purpose of a job cost sheet is to record the various costs that went into the manufacturing of a product or the provision of a service. This will enable the company know how much the process cost so that the company can understand the cost of the product better and make informed decisions based on this.
The information generally included in a job cost sheet include:
Direct labor hours Direct materials used and their costMaterial requisition number Manufacturing overhead rate and the basis (eg labor hours or machine hours).Total cost of production.Current information for the Healey Company follows : Beginning raw materials inventory Raw material purchases Ending raw materials inventory Beginning work in process inventory Ending work in process inventory Direct labor Total factory overhead $ 15,700 60,500 17,100 22,900 28,500 43,30030,500 All raw materials used were traceable to specific units of product . Healey Company's direct materials used for the year is :
Answer:
$59,100
Explanation:
Given the above information, the computation of direct materials used is seen below.
Direct materials used = Beginning raw materials inventory + Purchase of raw material - Ending raw material inventory
= $15,700 + $60,500 - $17,100
= $59,100
Therefore, Healey company's direct materials used for the year $59,100
Correct the single error in each of the following sentence. A week later, you browses through the trend reports
Answer:
A week later, you browse through the trend reports.
A high Power Distance Index score implies that the people who hold power in a country are entitled to privileges.
a. True
b. False
Answer:
a. True
Explanation:
The Power-Distance Index refers to the relationship and interaction between a high ranking individual and a low ranking individual. The index depends on how a low ranking individual reacts to a high ranking individual.
It measures the degree where the members of a society or group accepts the hierarchy of the power and the authority.
Thus according to the high power distance index score, individuals with high power are entitled to number of privileges in a country or in society.
Hence the answer is TRUE.
The following data relate to Lebeaux Corporation for the year just ended: Sales revenue $ 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative costs 50,000 Fixed selling and administrative cost 75,000 Which of the following statements is correct?
A) Lebeaux's variable-costing income statement would show a gross margin of $270,000.
B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000.
D) Lebeaux's absorption costing income statement would show a gross margin of $330,000.
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000.
Answer:
B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.
Explanation:
See below the Statements that are produced under Absorption and Variable Costing methods.
Absorption Costing
Sales revenue $750,000
Less Cost of goods sold :
Variable portion $370,000
Fixed portion $110,000 ($480,000)
Gross Profit $270,000
Variable Costing
Sales revenue $750,000
Less Variable Costs :
Variable portion - Cost of Sales $370,000
Variable selling and administrative costs $50,000 ($420,000)
Contribution $330,000
therefore,
The only correct statement is : Lebeaux's variable costing income statement would show a contribution margin of $330,000
The race to the bottom scenario of global environmental degradation is explained roughly like this: a. Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution. b. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution. c. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. d. Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.
Answer:
The answer is "Option c".
Explanation:
When there is racing to a bottom scenario, this should be stated that the multinationals looking for profit are shifting production from such countries with strict environmental regulations to minimize the order, thus generating revenue, that's why the profit-based corporations relocate their manufacturing from strong environmental regulations to low standard countries and thereby lower their costs and increase profits.
Q1. SISKO & Co. Ltd commences business and issues one million shares with a nominal value of Le3 each. The company allows its allottees to pay Le1.25 on allotment and the remainder at a later date. All the allottees chose to do this and all the shares are sold. What is JEMILEX & Co. Ltd's paid-up share capital? A. Le1.25 million B. Le3 million C. Le1.75 million D. Le500,000 Q2. Cash Balance Le15,000; Trade Receivables Le35,000; Inventory Le40,000; Trade Payables Le24,000 and Bank Overdraft is Le6,000. Current Ratio will be : (A) 3.75:1 (B) 3:1 (C) 1:3 (D) 1 : 3.75
Answer:
SISKO & Co. Ltd.
1. The paid-up share capital is:
A. Le1.25 million
2. Current Ratio will be:
(B) 3:1
Explanation:
a) Data and Calculations:
Issued share capital = 1,000,000 shares
Allotment = Le1.25 per share
Paid-up share capital = Le1.25 million (Le1.25 * 1,000,000)
Current Ratio:
Cash Balance Le15,000
Trade Receivables Le35,000
Inventory Le40,000
Total current assets Le90,000
Current liabilities:
Trade Payables Le24,000
Bank Overdraft Le6,000
Total current liabilities Le30,000
Current ratio = Current assets/Current liabilities
= Le90,000/Le30,000
= 3:1
The trial balance of Beautiful Tots Child Care does not balance.
BEAUTIFUL TOTS CHILD CARE
Trial Balance August 31, 2018
Balance
Account Title Debit Credit
Cash 7,900
Accounts Receivable 6,700
Office Supplies 1,000
Prepaid Insurance 300
Equipment 91,500
Accounts Payable 3,400
Notes Payable 45,000
Common stock 57,000
Dividends 5000
Service Revenue 12,350
Salaries Expense 4,400
Rent Expense 750
Total 117,550 S117,750
The following errors are detected:
a. Cash is understated by $1,500.
b. A $4,100 debit to Accounts Receivable was posted as a credit.
c. A $1,400 purchase of office supplies on account was neither journalized nor posted.
d. Equipment was incorrectly transferred from the ledger as $91,500. It should have been transferred as $83,000.
e. Salaries Expense is overstated by $700.
f. A $300 cash payment for advertising expense was neither journalized nor posted.
g. A $200 cash dividend was incorrectly journalized as $2,000.
h. Service Revenue was understated by $4,100.
i. A 12-month insurance policy was posted as a $1,900 credit to Prepaid Insurance.
Cash was posted correctly.
Prepare the corrected trial balance as of August 31, 2018. Journal entries are not required.
Answer:
Corrected Trial Balance
Particulars Debit Credit
Cash $10,900
Account receivable $14900 (6700+8200)
Office supplies $2400 (1000+1400)
Prepaid insurance $4100 (300+3800)
Equipment $83000
Account payable $4800 (3400+1400)
Notes payable $45000
Trumball common stock $57000
Trumball dividend $3200 (5000+200-2000)
Service revenue $16450 (12350+4100)
Salaries expense $3700 (4400-700)
Rent expense $750
Advertising expense $300
Total $123,250 $123,250
You are given the following facts about a 40% owner of an S corporation, and you are asked to prepare her ending stock basis.
Owner's beginning stock basis $36,800
Increase in AAA 32,000
Increase in OAA 6,300
Payroll tax penalty 2,140
Tax-exempt interest income 4,800
Life insurance premiums paid (nondeductible) 2,700
Owner's purchases of additional stock 22,000
Answer:
$74,120
Explanation:
Preparation of her ending stock basis
ENDING STOCK BASIS:
Beginning stock basis $36,800
Add:Increase in AAA $12,800
(.40 * $32,000)
Add:Increase in OAA $2,520
(.40 * $6,300)
Add:Stock purchase $22,000
Total Ending stock basis $74,120
Therefore her ending stock basis is $74,120
Identify whether a debit or credit results in the indicated change for each of the following accounts.
a. To increase Land
b. To decrease Cash
c. To increase Fees Earned (Revenues)
d. To increase Office Expense
e. To decrease Unearned Revenue
f. To decrease Prepaid Rent
g. To increase Notes Payable
h. To decrease Accounts Receivable
i. To increase Common Stock
j. To increase Store Equipment
Answer:
a. To increase Land - Debit
b. To decrease Cash - Credit
c. To increase Fees Earned (Revenues) - Credit
d. To increase Office Expense - Debit
e. To decrease Unearned Revenue - Debit
f. To decrease Prepaid Rent - Credit
g. To increase Notes Payable - Credit
h. To decrease Accounts Receivable - Credit
i. To increase Common Stock - Credit
j. To increase Store Equipment - Debit
Explanation:
Debit gives details of spending, sum owed , amount to balance which is usually recorded to the left side of an account entry book while credit gives the details of income, amount earned or made on sale, spending cut and revenue and is usually placed to the right hand column of an account entry.
3. Explain the success of the training program using Conditioning Theory and Social Cognitive Theory. For each theory: A. How do you explain why the training program was not effective? B. How could the program be improved by using some of the concepts from each theory.
Answer:
you just explain how smart it is.
it can add more tecnoligy
Explanation:
Tia and Sam are partners who solely own T and S Florist. As owners, they can:______.
a. claim the organization as their legal property.
b. can't sell the company.
c. claim only limited liability.
d. avoid taking any legal responsibility for T and S.
e. decide not to pay a dividend to their stockholders.
Answer:
A
Explanation:
Suppose the stock of Host Hotels & Resorts is currently trading for per share. a. If Host issued a stock dividend, what would its new share price be? b. If Host does a 3:2 stock split, what would its new share price be?
Answer:
A. $16.67 per share
B. $13.33 per share
C. $60.00 per share
Explanation:
a. Calculation to determine what will its new share price be If Host issued a 20% stock dividend
Using this formula
New share price (stock dividend) = Old price / (1 + Stock dividend rate)
Let plug in the formula
New share price (stock dividend) =$20/(1+0.20)
New share price (stock dividend) =$20/1.20
New share price(stock dividend) =$16.67 per share
Therefore If Host issued a stock dividend, its new share price will be $16.67 per share
b. Calculation to determine what will its new share price be If Host does a 3:2 stock split
Using this formula
New share price=Old price/Stock split
Let plug in the formula
New share price=$20/(3/2)
New share price=$20/1.5
New share price= $13.33 per share
Therefore If Host does a 3:2 stock split its new share price will be $13.33 per share
c. Calculation to determine what will its new share price be If Host does a 1:3 reverse split
Using this formula
New share price=Old price/Reverse split
Let plug in the formula
New share price=$20/(1/3)
New share price=$20/0.33333
New share price= $60.00 per share
Therefore If Host does a 1:3 reverse split its new share price will be $60.00 per share
g What is the after-tax yield on a one-year corporate bond with a 7 percent yield if your marginal federal income tax rate is 40% 2.8% 4.2% 5% 5.3% 6.2%
Answer: 4.2%
Explanation:
Bonds are debt instruments which means that the interest paid on bonds is tax deductible. After the tax is deducted, the after tax yield shows the actual yield being paid on the bond given the tax rate.
The after tax yield on a bond is calculated by the formula:
= Before tax yield * ( 1 - Tax rate)
= 7% * ( 1 - 40%)
= 4.2%
What is the expected constant growth rate of dividends for a stock currently priced at Php 50, that is expected to pay a dividend of Php 5 next year, and has a required return of 20%?
Answer: 10%
Explanation:
Using the Gordon Growth Model, the price of a stock can be calculated as follows:
Price = Next dividend / (Required return - growth rate)
Notice that we are provided with all the figures in the formula above except the growth rate so we can calculate the growth rate with these figures:
50 = 5 / (20% - growth rate)
50 * (20% - growth rate) = 5
20% - growth rate = 5 / 50
-growth rate = 10% - 20%
-Growth rate / -1 = -10% / -1
Growth rate = 10%
Included on the board of directors of Microsoft are Dina Dublon, former chief financial officer of JP Morgan Chase , the president of Harvey Mudd college Maria M. Klawe, and the vice chairman of Bank of America Charles H. Noski. These three board members do not have a direct management role with Microsoft and are therefore referred to as
Answer:
Microsoft
These three board members do not have a direct management role with Microsoft and are therefore referred to as
Non-executive directors.
Explanation:
The non-executive directors of a company's board of directors are board members without management responsibilities. They are also referred to as independent or external directors since they are not involved in the daily running of the entity. They are different from executive directors in so many ways. Given their unique positions, they bring broader insight and perspective to the board of directors, helping the entity to set strategic directions. They also play independent roles in board sub-committees, especially remuneration, audit, risk, and performance monitoring.
On January 1, Year 1, a contractor began work on a $3.2 million construction contract that is expected to be completed in 3 years. The contractor concludes that it is appropriate to recognize revenue over time using the input method based on costs incurred (cost-to-cost method). At the inception date, the estimated cost of construction was $2.4 million. The following data relate to the actual and expected construction costs:
Year 1 Year 2 Year 3
Cost incurred $720,000 $1,170,000 $1,110,000
Expected future costs $1,680,000 $810,000 $0
For this long-term construction contract, the contractor needs to calculate the estimated dollar values of the revenue and gross profit (loss) to be recognized each year.
Complete the contractor's long-term construction contract using the information above.
Revenue Gross Profit (loss)
Year 1
Year 2
Year 3
Answer:
Contractor's Long-term Construction Contract Table:
Revenue Gross Profit (loss)
Year 1 $960,000 $240,000
Year 2 $1,386,667 $216,667
Year 3 $853,333 ($256,667)
Total $3,200,000 $200,000
Explanation:
a) Data and Calculations:
Contract price = $3.2 million
Estimated cost of construction = $2.4 million
Actual and expected construction costs:
Year 1 Year 2 Year 3
Cost incurred $720,000 $1,170,000 $1,110,000
Expected future costs $1,680,000 $810,000 $0
Revenue $
Year 1 = $720,000/$2,400,000 * $3.2 million = $960,000
Year 2 = $1,170,000/$2,700,000 * $3.2 million = $1,386,667
Year 3 = $853,333
Revenue Gross Profit (loss)
Year 1 $960,000 $240,000 ($960,000 - $720,000)
Year 2 $1,386,667 $216,667 ($1,386,667 - $1,170,000)
Year 3 $853,333 ($256,667) ($853,333 - $1,110,000)
Total $3,200,000 $200,000 ($3,200,000 - $3,000,000)
In the interest formulas, a simple interest can be used in any of the single payment formulas as long as the 'n values correspond to the interest period?
A) True
B) False
Answer:
False
Explanation:
Apart from simple interest, compound interest can be used for single payments
the formula for compound interest is : future value - present value
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
The formula for simple interest : amount x time x interest rate
Assume that 1000 is to be received in 2 years at the interest rate of 10%
Simple interest = 1000 x 2 x 0.1 = 200
Compound interest
1000 x (1.1)^2 = 1210
1210 = 1000 = 210
Assume that per capita income is growing at different rates in the following countries: Nepal, 0.7 percent; Kenya, 1.3 percent; Singapore, 6.9 percent; Egypt, 3.8 percent. How long will it take for each country to double its income per person
Answer:
100 years
53.8 years
10.1 years
18.4 years
Explanation:
country to double given its growth rate
Number of year for GDP to double = 70 / growth rate of country
1. 70 / 0.7 = 100
2. 70 / 1.3 = 53.8
3. 70 / 6.9 = 10.1
4. 70 / 3.8 = 18.4
Students submitting initial CPT applications should allow at least ____ business days for their CPT application to be reviewed. one (1) five (5) ten (10) thirty (30)
Answer:
The answer is "thirty (30)".
Explanation:
Students applying for initial CPT must allow their CPT application to also be examined for at least 30 working days.
It's Curricular Practical Training (CPT) is an outside study/stage probably understand to the subject. The student that is still learning in a certain program always is open to it.
Indeed, during the first semester, undergraduates could qualify for CPT because it is indeed a significant part of a graduate degree.
The review of all applications takes about 30 business days.
You are a delivery manager introducing a new product from your unit to the market. What steps should you take to mitigate any IP risks in your product?
Answer:
Explanation:
There are various steps that you should take to make sure that your product does not violate any IPs. First, you should make sure that those involved with the product sign an NDA. This document prevents these individuals from talking about the product with others, which prevents it's details from leaking and allowing competitors to beat you to market by releasing their own version of your product first. The other step that you should take would be to patent the design and trademark the name of the product. Doing so will make sure that the product is unique and that it does not interfere with already existant IP's, as well as preventing others from infringing on your product.
Mambo Inc. has credit sales of $140,000 in May, $170,000 in June, and $190,000 in July. Mambo collects cash on account 70% in the month of sale and 30% in the month following the sale. What would the cash collections be for June
Answer: $161,000
Explanation:
Mambo collects cash on account 70% in the month of sale and 30% in the month following the sale.
This means that in June, Mambo will collect 70% of the June credit sales in addition to 30% of May's sales.
June's collections are therefore:
= (70% * June sales) + (30% * May sales)
= (170,000 * 70%) + (140,000 * 30%)
= 119,000 + 42,000
= $161,000
Four fundamental factors affect the cost of money: (1) the return that borrowers expect to earn on their investments, (2) the preference of savers to spend their income in the current period rather than delay their consumption until some future period, (3) the risks associated with the investment, and (4) expected inflation. Consider the following statements that address these factors, and indicate which you think are true.
Statement 1: The onset of 5% inflation means that your receipt of a $100 interest payment allows you to purchase only $95 worth of goods and services.
Statement 2: For the average rational investor or saver, there is an indirect, or inverse, relationship between the amount of risk exhibited by a security and the risk premium that would be required by the investor or saver.
Statement 3: On average and everything else held constant, rational savers and investors prefer to invest $1,500 to acquire an asset that will pay annual cash flows of $300 per year rather than an otherwise identical asset that will pay $500 per year.
Statement 4: The actual relationship between the risk-free rate of return (r*) and the expected future inflation rate or inflation premium (IP) is actually multiplicative-that is, [(1 + rRF) x (1 + IP)]-1-but it is often simplified to reflect an additive relationship.
The true statements are:
a. 2 and 3
b. 2 and 4
c. 1 and 4
d. 1 and 3
Answer:
The true statements are:
c. 1 and 4
Explanation:
The actual interest rate paid to savers depends on
(1) the expected rate of return on invested capital
(2) time preferences for current consumption versus future consumption
(3) the riskiness of the loan
(4) the expected future inflation rate
We can conclude that if an investment is facing a higher risk and inflation rate, then the expected interest rate will be higher than for a low-risk, low inflation-facing investment.
The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45.
20Y3 20Y2 20Y1
Accounts receivable, end of year $725,000 $650,000 $600,000
Sales on account 5,637,500 4,687,500
a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Assume a 365-day year. 20Y3 20Y2 1.
b. The collection of accounts receivable has___. This can be seen in both the___in accounts receivable turnover and the____in the collection period.
Answer:
1. 20Y3 20Y2
A Sales on account $5,637,500 $4,687,500
B Beginning Accounts receivables $650,000 $600,000
C Ending accounts receivables $725,000 $650,000
Average accounts receivables $687,500 $625,000 [D=(B+C) / 2[
Accounts receivables Turnover 8.2 7.5 [E=A/D]
No of days in sales receivables 44.5 48.7 [F=365 / E]
2. The collection of account receivables has INCREASED. This can be seen in both the INCREASE in accounts receivables turnover and the DECREASE in collection period.
A manufacturer produces two types of computer software, Word processing (W) and Spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the maximum price each retail outlet is willing to pay for each individual software product.
Product W Product S
Retail #1 $170 $105
Retail #2 $95 $135
What is the optimal pricing strategy that will maximize revenue for the manufacturer, given the maximum the retail outlets are willing to pay?
a. Bundle both products (W and S) and sell them at $275.
b. Price product W at $95 and Product S at $105.
c. Price product W at $170 and Product S at $170.
d. Price product W at $170 and Product S at $135.
e. Bundle both products (W and S) and sell them at $230.
Answer:
e. Bundle both products (W and S) and sell them at $230.
Explanation:
Calculation to determine the optimal pricing strategy that will maximize revenue for the manufacturer
Using this formula
Optimal pricing=Retail #2 Product W+ Retail #2 Product S
Let plug in the formula
Optimal pricing=$95+$135
Optimal pricing=$230
Therefore based on the above calculation the OPTIMAL PRICING STRATEGY that will MAXIMIZE REVENUE for the manufacturer, given the MAXIMUM the retail outlets are willing to pay will be to BUNDLE BOTH PRODUCTS (W and S) AND SELL THEM AT $230.
Each of the following would be a period cost except: Group of answer choices the salary of the company president's secretary. the cost of a general accounting office. depreciation of a machine used in manufacturing. sales commissions.
Answer:
depreciation of a machine used in manufacturing.
Explanation:
A periodic system of inventory can be defined as a method of financial accounting, that typically involves updating informations about an inventory on a periodic basis (at specific intervals) as the sales or purchases are being made by the customers, through the use of either an enterprise management software applications or a digitized point-of-sale equipment.
Periodic cost are costs that occur or arise on a periodic basis such as quarterly.
Each of the above mentioned costs would be a period cost except depreciation of a machine used in manufacturing.
When the economy is in a recession, expansionary fiscal policy can be used to stimulate and encourage economic growth. Which of the following scenarios represent expansionary fiscal policies from both a supply and demand perspective at the same time? When choosing the answer, please look if it meets three description, expansionary, fiscal policies, and involving both the supply side and the demand side. (There could be more than one answer).
A. The government lowers tax rates and undertakes a replacement of old bridges and roads.
B.The government lowers tax rates and issues a partial refund of taxes that have already been paid.
C. The government raises tax rates and reduces unemployment insurance payments.
D. The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes.
Answer:
A
Explanation:
Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.
Discretionary fiscal policies can either be expansionary or contractionary
Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.
If taxes are cut, disposable income increases and demand increases. this is an example of demand side
On the other hand, if a replacement project is undertaken, the demand for labour increases. this is an example of supply side
Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes
Karr, Inc., reported net income of $300,000 for 2011. Changes occurred in several balance sheet accounts as follows:
Equipment $25,000 Increase
Inventories $20,000 decrease
Accumulated depreciation 40,000 Increase
Accounts receivable 15,000 Increase
Note payable 30,000 increase
Accounts payable 5,000 decrease
Additional Information:
a. During 2011 Karr sold equipment costing $25,000, with accumulated depreciation of $12,000, for a gain of $5,000.
b. In December 2011 Karr purchased equipment costing $50,000, with $20,000 cash and a 12% note payable of $30,000.
c. Depreciation expense for the year was $52,000.
Required:
1. In Karr’s 2011 statement of cash flows, calculate net cash provided by operating activities.
2. In Karr’s 2011 statement of cash flows, calculate net cash used in investing activities.
Answer:Cash flow from operating activities = $347,000
Net cash used in Investing:= -$2,000
Explanation:
1.
The net cash provided by operating activities by Karr, Inc., reported in 2011
Account Titles and explanation Amount
Net income $300,000
Adjustments made
Add:
Depreciation expense $52,000
Decrease in inventory $20,000
Less:
Increase in account receivable -$15,000
Decrease in account payable -$5,000
Gain on sale of equipment -$5,000
Cash flow from operating activities $347,000
2. Net cash used in Investing:
Sales of equipment =cost -depreciation + gain of sale
Sales of equipment 18,000(($25,000-$12,000+$5,000)
Purchase of Equipment 20,000
Net cash used in Investing:= -$2,000
company name ends with NPC
Assume the supply function of ice cream is written as: Qs = 100 + 20P - 5Pm, where Qs is the quantity supplied, P is the price of ice cream, and Pm is the price of milk ($/gallon). When the milk price is $10, the quantity supplied is 100. Suppose milk price decreased by 20% due to the policy change, how will the Qs change?
Answer:
The Qs will increase by 460 units which also represents a 460% increase in Qs.
Explanation:
Step 1: Calculation of price of ice cream, P, when price is $10 and the quantity supplied is 100.
Given:
Qs = 100 + 20P - 5Pm ……………….. (1)
Where:
Qs = 100
P = ?
Pm = $10, or 10
Substituting the values into equation (1) and solve for P, we have:
100 = 100 + 20P - (5 * 10)
100 = 100 + 20P - 50
100 - 100 + 50 = 20P
50 = 20P
P = 50 / 2 = 2.50
Step 2: Calculation of new Qs, Qs1, when milk price, Pm, decreased by 20%.
This implies that we have:
Qs1 = ?
P = 2.50
Pm = $10 * (100% - Percentage decrease in Pm) = $10 * (100% - 20%) = $8, or 8
Substituting the values into equation (1) in Step 1 above and Qs1 for Qs to calculate Qs1, we have:
Qs1 = 100 + (20 * 2.50) - (5 * 8)
Qs1 = 100 + 50 - 40
Qs1 = 110
Step 3: Calculation of change in the Qs when milk price, Pm, decreased by 20%.
Change in Qs expressed in unit = Qs1 - Qs = 110 - 100 = 10
Change in Qs expressed in percentage = ((Qs1 - Qs) / Qs) * 100 = ((110 - 100) / 100) * 100 = 10%
Therefore, the Qs will increase by 10 units which also represents a 10% increase in Qs.