Option B, unmodified The auditors should provide a separate explanation of the atypical circumstances and provide an opinion when financial GAAP statements deviate from.
The auditors unmodified should provide an explanation of the atypical circumstances in a separate paragraph and provide their opinion when financial statements deviate from GAAP since doing so would otherwise be misleading. In unmodified the event that there is a significant deviation from GAAP in the financial statements, the auditor should specifically describe the type of divergence and, if determinable, GAAP the dollar implications. Auditors must explain why they are unable to offer an unqualified opinion.
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Lester sold a warehouse with an original cost of $150,000 for $230,000. The warehouse had accumulated depreciation of $40,000. The recognized gain on the sale was $ . The amount of the gain that is unrecaptured Section 1250 gain is $ and will be taxed at a maximum rate of percent. The remaining $ will be taxed at a maximum rate of 20%.
Answer:
Recognized Gain:
= Selling price - Net book value
= 230,000 - (150,000 - 40,000)
= $120,000
The amount of the gain that is unrecaptured Section 1250 gain:
= Selling Price - Cost of asset - Accumulated depreciation
= 230,000 - 150,000 - 40,000
= $40,000
Tax will be maximum rate of 25% as per IRS rules.
The cash to be charged at maximum of 20% is:
= Gain - Section 1250 gain
= 120,000 - 40,000
= $80,000
ALL the questions in this assignment will be assessed using a rubric with marks awarded for
displaying logic and coherence: sound knowledge of content, including at least three academie
articles - sourced from credible sources, application of theory, and adherence to SBS referencing
guidelines
Question 1 [30]
Write an essay to demonstrate your understanding of the economies of scale in a supply chain with
reference to cycle inventory by arguing whether a toothpaste manufacturer wanting to offer quantity
discounts to maximise its profit should offer lot-size-based or volume-based quantity discounts if it
wants to maximise total supply chain profits at the same time. Discuss the concepts of lot-size-based
and volume-based quantity discounts and summarise under what circumstances lot-size-based and
volume-based quantity discounts are applicable before you argue the case of the toothpaste
nanufacturer
uestion 2 [35]
Explanation:
Material prices, ordering costs, and keeping costs are the three major expense groups for the supermarket's inventory strategy. The money spent to Proctor and Gamble on the materials themselves is known as the material expense. Ordering prices, also known as procurement costs, are charged when a customer requests supplies from a retailer and are fixed so that they do not change depending on the scale of the order. Fixed examples include the following:
The costs include the time it takes to put the order, deal with the paperwork that comes with it, and the cost of shipping the order. The holding cost is the cost of keeping a single unit in inventory for a set amount of time, normally a year. This expense is subjective and covers the cost of capital as well as all of the costs of physically handling material, such as shrinkage, spoilage, or obsolescence, insurance, the cost of capital, the cost of storage space, and so on.
You are a manager at Baroque Space, a costume design company. Recently, your boss asked you to hire a new seamstress. You are now ready to begin recruiting. You know that if you useexternal recruiting, you will be likely to bring new skills into the company, so you decide to use that approach. Which of the following actions could you take to implement your decision?
a. Design a career path
b. Publish an advertisement on an Internet job site
c. Contact a local college recruiting office
Answer: Design a career path
Explanation:
The action that can be taken to implement the decision is having a career path.
A career path simply refers to the path taken by employees in an organization. This is essential as it'll make the worker have a smooth transition while performing their roles.
Pittman Framing's cost formula for its supplies cost is $1,110 per month plus $11 per frame. For the month of November, the company planned for activity of 621 frames, but the actual level of activity was 611 frames. The actual supplies cost for the month was $8,250. The spending variance for supplies cost in November would be closest to:
Answer:
See below
Explanation:
Spending variance for supplies = Standard cost - Actual cost
Standard cost formulae = $1,110 per month + $11 per frame
Standard cost for actual output = $1,110 + ($11 × 611)
= $1,110 + $6,721
= $7,831
But actual cost = $8,250
Therefore,
Spending variance would be
= $7,831 - $8,250
= $419 unfavourable
The spending variance for supplies cost in November is closest to $419 unfavourable
The present value of lease payments should be used by the lessee in determining the amount of a lease liability under a lease classified by the lessee as a(n) Finance Lease Operating Lease Finance Lease Yes Operating Lease Yes Finance Lease Yes Operating Lease No Finance Lease No Operating Lease No Finance Lease No Operating Lease Yes
Answer:
Finance Lease Yes Operating Lease Yes
Explanation:
The lease payments present value should be used for measuring the liability under a capital lease. In the case of the operating lease, the liability when occured at the time when the rent expense should be recorded but not be paid. In addition to this, it is recorded at the actual value of cash that should be paid not the present value
Therefore the first option is correct
Job Order Cost Accounting Entries for a Service Business Media Connect Inc. provides advertising services for clients across the nation. Media Connect is presently working on four projects, each for a different client. Media Connect accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 40% of media purchases. On April 1, the four advertising projects had the following accumulated costs:
April 1 Balances
First Bank $40,000
Reliable Airlines 18,000
Motel 26 33,000
Blue Mountain Beverages 27,000
During April, Media Connect incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
Direct Labor Media Purchases
First Bank $115,000 $ 480,000
Reliable Airlines 84,000 320,000
Motel 26 110,000 200,000
Blue Mountain Beverages 125,000 300,000
At the end of April, both the First Bank and Reliable Airlines campaigns were completed. The costs of completed campaigns are added to the cost of services account. Determine each of the following for the month:
a. Direct labor costs.
b. Media purchases.
c. Overhead applied.
d. Cost of completed First Bank and Reliable Airlines campaigns.
Total Costs
First Bank $
Reliable Airlines $
Answer:
A. $434,000
B. $1,300,000
C. $520,000
D. First bank $827,000
Reliable Airlines $550,000
Explanation:
A. Calculation to determine the Direct labor costs.
Direct Labor
First Bank $115,000
Reliable Airlines 84,000
Motel 26 110,000
Blue Mountain Beverages 125,000
Total $434,000
B. Calculation to determine the Media purchases
Media Purchases
First Bank $ 480,000
Reliable Airlines 320,000
Motel 26 200,000
Blue Mountain Beverages 300,000
Total $1,300,000
C. Calculation to determine the Overhead applied
Overhead applied=$1,300,000*40%
Overhead applied=$520,000
D. Calculation to determine the Total cost for First bank and Reliable Airlines
First bank=$40,000+$115,000+$ 480,000+($ 480,000*40%)
First bank=$40,000+$115,000+$ 480,000+$192,000
First bank=$827,000
Reliable Airlines=$18,000+84,000+320,000+(320,000*40%)
Reliable Airlines=$18,000+84,000+320,000+$128,000
Reliable Airlines=$550,000
Therefore Total cost for is First bank $827,000 and Reliable Airlines is $550,000
XYZ Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products: Standard Super Budgeted sales in units 2,160 540 Budgeted selling price $500 $1,500 Budgeted contribution margin per unit $80 $250 Actual sales in units 1,820 980 Actual selling price $550 $1,400 The total sales-mix variance in terms of the contribution margin is ________.
Answer:
Sales mix variance= $71,400F
Explanation:
A sales mix variance occurs when products are sold in a mix different from the standard mix. It can be calculated as follows:
Step 1: Actual total quantity sold = 1,820 + 980 =2,800
Step 2: Divide the actual total quantity sold into standard mix
Standard- 2160/2160+54)×2,800=2,240
Super -(540/2160+540)×2,800=560
Step 3: calculate mix variance as tabulated below
Product Std mix Actual mix Mix var Cont. Magin Mix Vari
Standard 2,240 1,820 420U 80 33,600 U
Super 560 980 420 F 250 105,000 F
Variance 71,400F
Sales mix variance= $71,400F
Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system? I. In a cost center, managers are responsible for controlling costs but not revenue. II. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent. III. To be effective, a good responsibility accounting system must help managers to plan and to control. IV. Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
Answer:
I. In a cost center, managers are responsible for controlling costs but not revenue.
ii. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
iii. To be effective, a good responsibility accounting system must help managers to plan and to control
Explanation:
Sunland Company just began business and made the following four inventory purchases in June: June 1 153 units $1071 June 10 204 units 1632 June 15 204 units 1836 June 28 153 units 1530 $6069 A physical count of merchandise inventory on June 30 reveals that there are 204 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is
Answer:
the ending inventory is $1,734
Explanation:
The computation of the amount allocated to the ending inventory is shown below:
But before that the average per unit is
= Total amount ÷ total units
= $6,069 ÷ (153 + 204 + 204 + 153)
= $8.5
Since the ending inventory units is 204 units
So, the ending inventory is
= $8.5 ×204 units
= $1,734
hence, the ending inventory is $1,734
A newspaper report states the following: "On March 2, Bastiaan Vanacker was arrested for indecent exposure"; However, what really happened was that someone called Sebastian Van Akker was arrested on March first for indecent exposure. The journalist made a mistake when reading the police report. Both Vanacker and Van Akker sue the newspaper for libel. Given libel jurisprudence, which of the following is most likely to happen? They both are private figures.
a. Bastiaan Vanacker wins a libel suit , Sebastian Van Akker loses.
b. Sebastian Van Akker wins a libel suit, Bastiaan Vanacker loses a libel suit.
c. They both win a libel suit.
d. They both lose a libel suit
Answer:
a. Bastiaan Vanacker wins a libel suit , Sebastian Van Akker loses.
Explanation:
Libel is where a defamatory statement has been published and that statement is false, this will result in the person able to claim libel charges.
This means that if information about someone is publicised (specially a private figure) for any criminal act and which could lead to damage that person's reputation seriously without any proper evidence or even false evidence then this would become ground for a libel case.
Such as in this case where a journalist reported that Bastiaan Vanacker was arrested for indecent exposure even though this was not really the case. As confirmed through the police report which the journalist had misread. This libel suit filed by Bastiaan Vanacker would be won, as his reputation has been damaged to the falsely alleged report published in the newspaper.
However, in the case of Sebastian Van Akker, who had actually committed the crime and no information was mentioned about him in the newspaper, will lose the libel suit filed. This is due to the fact that he was not defamed for any act which he himself had not conducted.
Elizabeth (25 years old) studied music education in college and graduated a year ago. She currently works as a music teacher at a year-round private middle school. Her gross pay is $28800 a year, or $2400 a month. After taxes, health insurance, and other paycheck deductions, her net pay is $24600 a year. Based on recommended guidelines, how much money should Elizabeth be saving each month
Based on her gross pay, the amount that Elizabeth should be saving each month is $288.
Recommended savings rateIt is recommended that one saves at least 12% of their gross salary each month to allow them cater for emergencies.
Elizabeth savings per monthHer savings would therefore be:
= Gross monthly pay x 12%
= 2,400 x 12%
= $288
In conclusion, she should save $288.
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All of the following are cash and cash equivalents, EXCEPT *
Savings deposit
Money maker placement
Cash to be paid by a debtor
Currency that is legal tender
Answer:
money maker placements
Reuse of large amounts of copyrighted film in a documentary would not constitute a copyright infringement.
a) True
b)False
Answer:
B. False
Explanation:
I majored in Business
What do we call an item that is essential for survival in economics?
A Needs
B Wants
C scarcity
D opportunity cost
Answer:
A) Needs
Explanation:
Joint products A and B emerge from common processing that costs $116,000 and yields 4,000 units of Product A and 2,800 units of Product B. Product A can be sold for $280 per unit. Product B can be sold for $100 per unit. How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values
Answer:
Apportioned joint cost to A=$92,800
Explanation:
Joint costs are the costs incurred up until the split-off where two or more products result from the same production process. These common costs need to be apportioned among the joint products using any of the following basis:
physical unitsRelative sales value basis.The relative value basis apportions joint costs using the proportion of product individual sales value to the the total sales value.
Total sales value = (280×4,000) + (100×2,800) =1400000
Apportioned joint cost to A =(1,120,000/1,400,000)× 116,000=92800
Apportioned joint cost to A=$92,800
Cal Cookie Company (CCC) has 100 million shares of $1 par common stock authorized. The transactions below caused changes in CCC's outstanding shares.
January 4, 2016 Repurchased and retired 1 million shares at $8 per share
June 25, 2016 Repurchased and retired 2 million shares at $2 per share
Prior to the transactions, CCC's shareholder's equity included the following:
Common stock, 80 million shares at $1 par $80,000,000
Paid-in-Capital - excess of par160,000,000
Retained Earnings 120,000,000
Required:
Record entries for the above transactions. Please show work
Answer and Explanation:
The journal entries are shown below:
On January 4, 2016
Common capital (1 million × $1 per share) $1,000,000
Paid in capital excess of par (1 million × $160,000,000 ÷ $80,000,000) $2,000,000
Retained earnings (difference) $5,000,000
To Cash (1 million × $8) $8,000,000
(Being repurchase & retired shares are recorded)
On June 25,2016
Common capital (2 million × $1 per share) $2,000,000
Paid in capital excess of par ( 2 million × $2) $4,000,000
To Cash (2 million × $2) $4,000,000
To Retained earnings (difference) $2,000,000
(Being repurchase & retired shares are recorded)
You are considering a project in Honduras that would generate 1.5 million dollars in cash flows per year going forever. The cost of the project is 8 million dollars. The discount rate for the project is 12%. You believe that there is some probability of expropriation prior to the 4th year (after the 3rd cash flow). Which of the following fully describes when this is a good project?
a. This is a good project if the probability of expropriation is larger than 0.33
b. This is a good project if the probability of expropriation is smaller than 0.33
c. This is a good project if the probability of expropriation is smaller than 0.5
d. This is a good project if the probability of expropriation is smaller than 0.66 7.
Answer:
c. This is a good project if the probability of expropriation is smaller than 0.5
Explanation:
initial outlay = $8,000,000
if no expropriation, NPV = -$8,000,000 + $1,500,000/0.12 = $4,500,000
if the risk of expropriation is 0.33:
NPV = $925,211
if the risk of expropriation is 0.5:
NPV = -$425,265
the breakeven risk = 44.6%
Phelps, Inc. had assets of $71,028, liabilities of $16,084, and 11,130 shares of outstanding common stock at December 31, 2017. Net income for 2017 was $8,236. The company had assets of $83,529, liabilities of $19,293, 10,897 shares of outstanding common stock, and its stock was trading at a price of $10 per share at December 31, 2018. Net income for 2018 was $10,114.
Required:
a. Calculate EPS for 2018.
b. Calculate ROE for 2018.
c. Calculate the Price/Earnings Ratio for 2018.
Answer:
a. Earning per share = Net income / Average no of shares outstanding
Average no of shares outstanding = (Beginning shares + Ending share)/2 = (11,130 + 10,897) / 2 = 11,013.5.
Earning per share = $10,114/11,013.5 shares = $0.9183
b. Return on equity = Net income / Average stockholders equity
Stockholders equity 2017 = $71,028-$16,084 = $54,944
Stockholders equity 2018 = $83,529-$19,293 = $64,236
Average Stockholders equity = ($54,944+$64,236)/2 = $59,590
Return on equity = $10,114/$59,590
Return on equity = 0.1697265
Return on equity = 16.97%
c. Price earnings ratio = Market price per share / Earnings per share
Price earnings ratio = $10/$0.9183
Price earnings ratio = 10.88968746596973
Price earnings ratio = 10.89
how can the size of the industrial/service sector and the agriculture employment rate indicate the level of industrialization?
Answer:
The more electricity, communications, and transportation used in a nation's economy, it will give them a more developed country and a greater potential for increased industrialization
Warranty Costs Milford Company sells a motor that carries a three-month unconditional warranty against product failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of the product warranty period, four percent of the units sold will require repair at an average cost of $60 per unit. The following data reflect Milford's recent experience:
October November December Dec. 31 Total 23,000 22,000 25,000 70,000 Units sold Known product failures from sales in: October November December 120 460 180 130 160 220 350 210 210
Calculate, and prepare a journal entry to record, the estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records. Credit General Journal Date Description Dec.31 Product Warranty Expense Estimated Liability for Product Warranty To provide for estimated future warranty expense. $ Debit 64,800 $ 0 64,800
Answer and Explanation:
The computation of the estimated liability and the journal entry is given below:
But before that following calculations need to be done
The Estimated defective units is
= 70,000 × 4%
= 2,800 units
the actual defective units is
= 460 + 350 + 210
= 1,020 units
The no of unclaimed units is
= 2,800 - 1,020
= 1,780 units
Now the warranty expense is
= 1,780 units × $60 per unit
= $106,800
Now the journal entry is given below:
Product warranty expense Dr $106,800
To Estimated liability $106,800
(Being estimated liability is recorded)
vProblem 10-4 Partnership Formation (LO 10.2) Elaine's original basis in the Hornbeam Partnership was $40,000. Her share of the taxable income from the partnership since she purchased the interest has been $70,000, and Elaine has received $80,000 in cash distributions from the partnership. Elaine did not recognize any gains as a result of the distributions. In the current year, Hornbeam also allocated $1,000 of tax-exempt interest to Elaine. Calculate Elaine's current basis in her partnership interest. $fill in the blank 1
Answer: $31000
Explanation:
Elaine's current basis in her partnership interest will be calculated as:
= Value of original basis + (interest purchased - Cash received) + tax exempt interest
= $40000 + ($70000 - $80000) + $1000
= $40000 - $10000 + $1000
= $31000
Type the correct answer in the box. Spell all words correctly.
Why is the cost of goods sold account part of a trading business only?
The cost of goods sold account is part of a trading business, but not seen in the income statement of a service business. This is because in a
service business, no
goods are sold to the consumers.
Answer:
Indeed, the cost of goods sold account is part of a trading business, but not seen in the income statement of a service business, because in a service business, no material goods are sold to the consumers. In this way, contrary to what happens in the sale of goods, in the sale of services the seller does not offer a material with a previous production cost to the buyer, but rather offers the performance of a certain task, with which there is no material component in the offer, but rather an execution of an act and the knowledge of how to carry out said execution by the person providing the service.
Samra lives in and attends a university in Brazil. Next semester, she plans to study abroad in Mongolia.
Therefore, Samra will demand and will supply_________ .
WatchMe is a manufacturer of designer watches based in Brazil. Though the watches are produced exclusively in Brazil, they are sold throughout the world. WatchMe does an especially robust business in Mongolia. Therefore, WatchMe will demand and will supply_________.
Answer:
A.) Mongolian tögrög , Brazilian real
B.) Brazilian real, Mongolian tögrög
Explanation:
Currency of Brazil is Brazilian real
Currency of Mongolia is Mongolian tögrög
A.)
Samra lives in and attends a university in Brazil. Next semester, she plans to study abroad in Mongolia.
Therefore, Samra will demand Mongolian tögrög and will supply Brazilian real.
B.)
Watch Me is a manufacturer of designer watches based in Brazil. Though the watches are produced exclusively in Brazil, they are sold throughout the world. Watch Me does an especially robust business in Mongolia. Therefore, Watch Me will demand Brazilian real and will supply Mongolian tögrög
Reason -
For the first part, samra is in need of Mongolian currency in order to make her plan in action to study abroad but at present she is holding with her Brazilian currency, so hereby the demand is considered of Mongolian currency and supply accordingly will be of Brazilian currency to complete the transaction.
For the second part, Watch Me is manufacturer based in Brazil and all the operations related to manufacture occurred exclusively in Brazil , so when sale of watches done in Mongolian currency , there is need to remit the sale consideration to the Brazil . Accordingly he has to change the Mongolian currency to Brazilian currency and as a result he is in demand of Brazilian real by way of supplying Mongolian currency in exchange.
Read the scenario and answer the following questions:
Maria works for a toy manufacturer and is responding to the claim of a disgruntled customer. The customer is upset because the Interactive toy he purchased for his child stopped working the day of the purchase. The customer tried replacing the batteries, but that would not fix the problem. Maria knows that there have been issues with this product, and she decides to write an adjustment message. Which of the following sentences would be appropriate for Maria to include in her adjustment message?
a. I wasn't personally responsible for the defect, but I'll see what I can do.
b. Perhaps your child did something to the toy to cause it to stop working.
c. You can use the enclosed voucher to purchase a new product of your choice.
d. I promise this will never happen again.
Answer: You can use the enclosed voucher to purchase a new product of your choice
Explanation:
An adjustment message simply refers to the response that is written with respect to a claim letter which was made against a business or organization.
The appropriate sentence that Maria should include in her adjustment message will be that "You can use the enclosed voucher to purchase a new product of your choice".
This will help calm the customer down and the customer will be happy to know that she can make another purchase with the voucher.
Other options such as "I wasn't personally responsible for the defect, but I'll see what I can do", and "Perhaps your child did something to the toy to cause it to stop working" will make the customer angrier.
Therefore, the correct option is C.
Financial information is presented below: Operating expenses $ 63000 Sales returns and allowances 2000 Sales discounts 5000 Sales revenue 156000 Cost of goods sold 104000 The amount of net sales on the income statement would be
Answer:
$149,000
Explanation:
The computation of the amount of net sales is shown below:
= Sales revenue - sales return & allowance - sales discount
= $156,000 - $2,000 - $5,000
= $149,000
We simply deduct the two items from the sales revenue so that the net sales revenue could be come and the same would be reported on the income statement
Blu-Rays can be produced at a constant marginal cost of $5 per disk, and Superhero Studios is releasing the Blu-Rays for its last two major films. The Blu-Ray for Obscure-Man is priced at $20 per disk, and the Blu-Ray for Team-Up Flick 17: The Final Chapter, Part 1 is priced at $30 per disk. What are the price elasticities of demand for these two movies
Answer:
Obscure-Man = -1.33Team-Up Flick 17: The Final Chapter, Part 1 = -1.2Explanation:
Price elasticity based on the variables given here, can be calculated using the formula:
= Price / (Marginal cost - Price)
Obscure-Man:
= 20/ (5 - 20)
= -1.33
Team-Up Flick 17: The Final Chapter, Part 1:
= 30 / (5 - 30)
= -1.2
Sanders Corporation has the following shares outstanding: 8,000 shares of $50 par value, six percent preferred stock and 50,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company declares its regular $3 per share cash dividend on the preferred stock and a $2.2 per share cash dividend on the common stock. Three weeks later, the company pays the dividends.
a. Prepare the journal entry for the declaration of the cash dividends.
b. Prepare the journal entry for the payment of the cash dividends.
Answer:
A. Dr Cash $134,000
Cr Dividend payable-preferred stock $24,000
Cr Dividend payable-common stock $110,000
b. Dr Dividend payable- preferred stock $24,000
Dr Dividend payable- common stock $110,000
Cr Cash $134,000
Explanation:
a. Preparation of the journal entry for the declaration of the cash dividends.
Dr Cash $134,000
($24,000+$110,000)
Cr Dividend payable-preferred stock $24,000
($3 x 8,000)
Cr Dividend payable-common stock $110,000
($2.20 x 50,000)
( To record declaration of $3 dividend on preferred stock and $2.20 on common stock)
b. Preparation or the journal entry for the payment of the cash dividends.
Dr Dividend payable- preferred stock $24,000
($3 x 8,000)
Dr Dividend payable- common stock $110,000
($2.20 x 50,000)
Cr Cash $134,000
($24,000+$110,000)
(To record payment of dividends on preferred and common stock)
Producer surplus is best defined as _________________. Select the correct answer below: the profit of producers when they make more goods than are demanded the profit of producers when there are too many producers for a certain demand in a market the profit that producers make above the cost of production the intangible profits producers make in addition to the goods they sell
Answer:
the profit that producers make above the cost of production.
Explanation:
Producer surplus is best defined as the profit that producers make above the cost of production.
Basically, it is the total amount of money that a particular producer of goods and services benefits (gains) from selling at the market price.
In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.
The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.
how can a writer be grief when writing professional letters
A. By adding a writer be brief when writing professional letters
B. By adding background information
C. By avoiding words that end in " Ize or ton"
D. By writing a concise letters that addresses your purpose
Answer:
D. By writing a concise letters that addresses your purpose
Explanation:
Got it right.
Mount Snow Inc. operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 15% return on the company's $115 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $43,500,000 for the ski season. The resort serves 900,000 skiers and snowboarders each season. Variable costs are $10 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices. Assume that Mount Snow's reputation has diminished and other resorts in the vicinity are charging only $66 per lift ticket. Mount Snow has become a price-taker and won't be able to charge more than its competitors. At the market price, Mount Snow's managers believe they will still serve 900,000 skiers and snowboarders each season.
Requried:
a. Would Mount Snow emphasize target costing or cost-plus pricing. Why?
b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
Answer:
Mount Snow Inc.
a. Mount Snow would emphasize cost-plus pricing and not target costing. The target costing considered the investors expected returns on investment. Based on the target returns, customers were then charged any fee to meet the target profit, including all other costs. Now that Mount Snow is a price-taker, it cannot meet the target returns. It can only work with the cost-plus pricing strategy in order to rein in its costs.
b. As a price-taker, Mount Snow cannot charge more than $66. It should charge $66.
Explanation:
a) Data and Calculations:
Investors expected return on investment = 15%
Cost of investment = $115,000,000
Ski Season's Fixed costs = $43,500,000
No of skiers and snowboarders served = 900,000
Variable costs per guest = $10
Charges by other resorts in the vicinity = $66 per lift ticket
Total expected revenue $59,400,000 ($66 * 900,000)
Total variable costs = $9,000,000
Fixed costs = 43,500,000
Total costs = $52,500,000
Profit = $6,900,000
Target profit = $17,250,000 ($115,000,000 * 15%)