Most private entities prefer prices to be set up according to customers’ willingness to pay. It is, however, often the case that product costing techniques are applied in practice as a basis for determining prices. This is done by, for example, displaying these techniques during negotiations. It is also the case in many industries that stable prices ensure trust and help build up long-term customer relationships. Assume that the product account of a particular company includes material costs, labor costs, and capital costs. The company operates in a country with a low level of inflation (2-3% per year). Both material and labor costs follow inflation. The company is in doubt as to which method should be used for computing capital costs in the product account. a) Based on the course literature, explain what is meant by capital costs. Briefly describe the diverse methods for calculating capital costs and explain how these methods handle cases of price increases.
A.Construct a numerical example in order to illustrate the differences in the methods.
B. What recommendations would you provide to the company? Make your own assumptions if and when needed.
Answers
Capital costs refer to the expenses associated with the use of capital in a business, including the cost of funds used for investments. Different methods for calculating capital costs exist, such as the cost of debt, cost of equity, and weighted average cost of capital (WACC). These methods handle cases of price increases differently, impacting the determination of product costs.
Capital costs represent the expenses incurred by a company for utilizing capital in its operations. It includes the cost of both debt and equity financing. The diverse methods for calculating capital costs include the cost of debt, which considers the interest expense on borrowed funds, and the cost of equity, which accounts for the return expected by shareholders. The weighted average cost of capital (WACC) combines the cost of debt and equity based on their respective proportions in the company's capital structure.
In cases of price increases, the methods for calculating capital costs may respond differently. For example, the cost of debt is generally fixed over the borrowing period, so it may not directly reflect price increases. On the other hand, the cost of equity can be influenced by inflation expectations and market conditions. The WACC considers the overall cost of capital and its components, which may be adjusted based on inflation and changing market conditions.
To illustrate the differences, let's consider a company with a cost of debt at 5% and a cost of equity at 10%. If there is a price increase due to inflation, the cost of debt remains the same, while the cost of equity may be influenced by inflation expectations, resulting in a potential adjustment.
The recommendations for the company would depend on its specific circumstances. Factors such as the company's risk profile, availability and cost of capital, market conditions, and pricing strategy should be considered. It may be beneficial for the company to evaluate different methods and assess their impact on product costing and pricing decisions. Additionally, the company should regularly review and update its capital cost calculations to ensure they align with the prevailing market conditions and company-specific factors.
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Related Questions
Sam is paying off his eight-year, $15,360 loan in semiannual installments. The loan has an interest rate of 9. 58%, compounded semiannually, and a service charge of $1,294. 64. Once the loan has been fully paid off, what percentage of the total finance charge will the service charge be?.
Answers
The ideal response the service charge will make up 15.68% of the total finance charge.
Finance Charge, often known as the cost of borrowing or cost of credit, refers to the interest or fees that have accrued on the approved credit capacity; occasionally, there is also a flat charge for the charge. However, the majority of the time, it is the ratio of borrowing from an extended line of credit.
Finance charge overall
Given,
Sam makes semi-annual payments on a $15,360 loan.
$15,360 is amount A.
9.58% is the interest rate
Semi-annual compounding
Therefore, rate= 9.58%/2 = 4.79%.
number of cycles, n
P being a recurring payment,
Sam's total payment over 16 periods was
Since the service charge equals $1,294.64,
Total finance charge equals the sum of the payment plus the service fee.
Service fees will make up 15.68% of the total finance fees.
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The labor-supply curve is affected by the trade-off between labor and leisure.
a. True
b. False
Answers
TRUE.
The labor-supply curve is affected by the trade-off between labor and leisure.
The opportunity cost of leisure depends on the wage rate, it increases and people supply more labor. Main factors determining the labor supply curve how desirable the work appears to its employees relative to the alternatives available in the market.
Other factors that encourages are government policies and procedures that are labor and trade effective or not. The quantity of workers trained for a particular job specifications. The number of workers in economy and the education required further.
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A rising GDP and a falling unemployment rate are most likely indicators that an economy is in which phase of the business cycle?
answer: expansion
Answers
A rising GDP and a falling unemployment rate are most likely indicators that an economy is in the expansion phase of the business cycle.
During the expansion phase, the economy experiences an increase in economic activity and employment opportunities, resulting in a rise in GDP and a decline in unemployment rate. This phase is typically characterized by increased consumer and business spending, rising stock prices, and increasing confidence in the economy. The expansion phase is usually followed by the peak, recession, and trough phases in the business cycle.
The business cycle refers to the fluctuation of economic activity in an economy over time. It is typically characterized by alternating periods of expansion and contraction, with the peak, recession, and trough phases in between. Various factors contribute to the business cycle, including consumer spending, business investment, and government policies.
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a developing country that exports nearly 75 of all its raw materials has
Answers
A developing country that exports nearly 75% of all its raw materials faces certain challenges. A developing country that relies heavily on raw material exports should consider a range of strategies to promote sustainable and diversified economic growth.
Such a country may be heavily reliant on the export of raw materials, which can make it vulnerable to fluctuations in global commodity prices. Additionally, a focus on raw material exports can result in a lack of diversification in the economy, which can limit long-term growth prospects.
To address these challenges, the country may need to consider strategies to diversify its economy and promote the development of value-added industries. This could involve investing in education and training programs to develop a skilled workforce, promoting entrepreneurship and innovation, and improving infrastructure to facilitate business growth.
Another consideration is the impact of raw material extraction on the environment and local communities. The country may need to implement policies and regulations to ensure that extraction activities are conducted in a sustainable and socially responsible manner.
Overall, a developing country that relies heavily on raw material exports should consider a range of strategies to promote sustainable and diversified economic growth.
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jingle company signs a 6-month, $20,000 note. stated interest rate is 8% payable at the maturity date. interest incurred on the note is calculated as
Answers
The interest that Jingle Company will incur on the note is calculated as $800.
Interest Expense is incurred as payment for the use of the funds for a period of six months at 8% annual interest.
Data and Calculations:
Note Payable = $20,000
Stated interest rate = 8%
Payment period = 6 months
Interest incurred = $800 ($20,000 x 8% x 6/12)
Thus, since the maturity date of the note is in six months, the interest incurred by Jingle Company is $800.
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Which of the following statements is true?
A. Rapid growth spurs increases in market share and profits and thus, is always a blessing.
B. Firms that grow rapidly only very rarely encounter financial problems.
C. The cash flows generated in a given time period are equal to the profits reported.
D. Profits provide assurance that cash flow will be sufficient to maintain solvency.
E. Due to required cash investments in current assets, fast-growing and profitable companies can literally "grow broke".
F. None of the above.
Answers
The statement that is true among the given options is E. Due to required cash investments in current assets, fast-growing and profitable companies can literally "grow broke."
While rapid growth can bring benefits such as increased market share and profits (option A), it can also create challenges for companies. Fast-growing firms often need to invest heavily in current assets, such as inventory and accounts receivable, to support their expansion. These investments require cash outflows, which can strain the company's liquidity and potentially lead to cash flow problems.
Option B, stating that firms that grow rapidly only very rarely encounter financial problems, is not necessarily true. Rapid growth can put a strain on a company's financial resources, and if not managed properly, it can lead to financial challenges.
Option C, stating that cash flows generated in a given time period are equal to the profits reported, is not always true. Cash flows and profits can differ due to non-cash expenses, timing differences, and other factors.
Option D, stating that profits provide assurance that cash flow will be sufficient to maintain solvency, is not necessarily true. Profits do not guarantee sufficient cash flow, as cash flow depends on various factors such as working capital management, capital expenditures, and debt service obligations.
Therefore, the most accurate statement among the given options is E. Due to required cash investments in current assets, fast-growing and profitable companies can literally "grow broke."
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How do producers and consumers think similarly and differently about price?
Answers
Answer:
hsjshsbajakiaiauahabwj
Explanation:
jqbavsysuaiqjqnabahahai
You are a marketing consultant to a firm that would like to target members of Generation X. Your advice is for it to: emphasize freedom from work and commitment develop a personal service that will appeal to these time-poor consumers avoid topics dealing with materialistic possessions clearly state to the audience that Generation X is the intended target of all marketing communications emphasize the baby boom culture
Answers
To effectively target Generation X, it is crucial to understand and cater to their preferences. Emphasize freedom, provide personal services, avoid excessive materialism, clearly state the target audience, and focus on Generation X's unique characteristics rather than assuming a strong connection to the baby boomer culture.
As a marketing consultant, my advice for targeting Generation X would be to emphasize freedom from work and commitment, develop a personal service that appeals to time-poor consumers, avoid focusing solely on materialistic possessions, and clearly state in marketing communications that Generation X is the intended target audience.
However, I would not recommend emphasizing the baby boom culture as a primary strategy. Here's why:
Emphasize freedom from work and commitment: Generation X values work-life balance and independence. Highlighting products or services that provide convenience, flexibility, and the ability to maintain personal and professional commitments would resonate well with this generation.
Develop a personal service for time-poor consumers: Generation X is often juggling multiple responsibilities, including work, family, and personal pursuits. Offering personalized services that save time and cater to their specific needs can be highly appealing.
Examples could include concierge services, online platforms that simplify tasks, or subscription services tailored to their preferences.
Avoid focusing solely on materialistic possessions: While material possessions may have some appeal, Generation X tends to value experiences and meaningful connections. Highlight the experiential benefits of products or services, such as creating memories, fostering relationships, or enabling personal growth.
Clearly state the target audience: It is important to communicate explicitly that the marketing efforts are targeted towards Generation X. This helps build a sense of identification and resonates with their unique preferences and values. Tailor the messaging, visuals, and channels to align with Generation X's communication preferences.
Avoid emphasizing the baby boom culture: While Generation X shares some cultural references and experiences with the baby boomer generation, they have their own distinct characteristics.
It is more effective to focus on Generation X's specific values, needs, and aspirations rather than assuming they primarily identify with the baby boom culture.
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If a cartel is formed in order to maximize the total profits of its members, it will:____.
Answers
If a cartel is formed in order to maximize the total profits of its members, it will charge the same price and produce the same quantity as a monopoly.
In oligopolistic markets, corporations form a cartel to enjoy Monopoly earnings, Monopolies produce an amount and fee at a price at which the earnings maximizes given the firm's price feature, and the marketplace call for a curve, as a result, any other quantity or fee apart from the monopoly will no longer maximize income.
A monopoly is a scenario wherein there is a single dealer inside the marketplace. In traditional economic analysis, the monopoly case is taken because of the polar opposite of perfect competition. By way of definition, the demand curve dealing with the monopolist is the enterprise demand curve which is downward sloping
A monopoly is a firm that's the sole supplier of its product, and in which there are no close substitutes. An unregulated monopoly has marketplace power and can influence prices. Examples: Microsoft and home windows, DeBeers and diamonds, your local natural gas agency.
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why is enterprise important to a country ?
Answers
Answer:
New and improved products, services, or technology from entrepreneurs enable new markets to be developed and new wealth to be created. Additionally, increased employment and higher earnings contribute to better national income in the form of higher tax revenue and higher government spending.
Explanation:
here is your answer if you like my answer please follow
Suppose that the least amount of goods and services that Scott will consume in a year is $40,000. Scott tends to save $0.30 o
every dollar of disposable income that he makes. Use the given line to graph Scott's consumption function for disposable
income levels between $0 and $200,000. Move each endpoint to the appropriate spot on the graph.
Answers
Answer:
Explanation:
Answer:
Explanation:
What program would be likely to help a person prepare for teacher certification?
O a master's degree in Psychology
O a bachelor's degree in Education
O a one-year technical school certificate
O an associate degree from a community college
Answers
Answer: The answer is a bachelor’s degree in Education.
Explanation:
To help a person prepare for teacher certification is likely program is a bachelor's degree in Education.
A Bachelor of Education (B. Ed.) is a professional undergraduate degree that qualifies graduates to work as teachers in educational institutions.
In other nations, like Tanzania and Kenya, the student must do additional activities like fieldwork and research in order to be completely qualified to teach.
Tests for the licenses or certificates necessary for instructors in some places may also be administered concurrently with or after it.
Therefore, the correct option is "a bachelor's degree in Education".
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If you were starting a new business describe at least three departments to the company that you would need right away why are these departments so important
Answers
Answer:
Explanation:
These departments are as follow:-
1) Admin
2) Administrative
3) HOD (Head Of Departments)
Tsunamet Cosmetics is highly responsive to its customers. This is one of the advantages of _________ organizations.
Answers
Tsunamet Cosmetics' high responsiveness to its customers is one of the advantages of agile organizations.
Agile organizations are characterized by their ability to respond quickly and effectively to changing circumstances, such as shifting customer preferences or market conditions. They are often characterized by a flat organizational structure, decentralized decision-making, and a focus on continuous learning and improvement. By being highly responsive to their customers, agile organizations are able to provide better customer service, build stronger customer relationships, and adapt more quickly to changing market conditions. This can give them a competitive advantage over more rigid and hierarchical organizations that may be slower to respond to customer needs or changing market conditions.
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At any given hotel, one of the largest departments is housekeeping.
True
False
Answers
Answer:
True
Explanation:
Pablo runs a small car washing business in his neighborhood on the weekends. This
past weekend, Pablo earned $284. Prior to opening his car wash, he needed to stock
up on soap, sponges, and towels which cost him $46. He also had his son help him
with the car washing and paid him $25 for his help. What was Pablo's net income for
this past weekend?
Answers
$213
Gross is the total amount earned before expenses, net is the amount earned after expenses.
We must subtract the amount of money earned by the amount of money spent. 71-284=213
Sid Brutality is the lead guitarist and singer for a popular and successful rock group known as Bad Aftertaste. Bad Aftertaste practices twice a month at Sid’s home. Sid’s neighbor, Kate, is trying to sell her home. Does Kate need to provide written disclosure that Bad Aftertaste practices nearby?
Answers
Considering the situation described above, Yes, Kate needs to provide written disclosure that Bad Aftertaste practices nearby.
What is Written Disclosure?A Written Disclosure is a written agreement that is made to state the nature of the condition of items that forms the major part of the contract.
Given that Bad Aftertaste practices are nearby and the noise or sound of the band may affect the new neighbor or occupant of the building, it is expected that the potential buyer is aware of the nature of the building.
Written disclosure should be made and delivered to the buyer before acceptance is made. it must be dated and signed.
Hence, in this case, it is concluded that the correct answer is Yes; Kate needs to provide written disclosure that Bad Aftertaste practices nearby.
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costs of scrap and rework are classified as a. appraisal costs. b. internal failure costs. c. external failure costs. d. prevention costs.
Answers
The costs of scrap and rework are classified as internal failure costs.
Internal failure costs refer to the expenses incurred due to defects or issues identified within the organization's processes or products before they reach the customer. Scrap costs arise when defective or non-conforming products or materials are discarded or rendered unusable. Rework costs occur when defective products are identified and require additional work to rectify the issues.On the other hand, appraisal costs (option a) are associated with activities aimed at evaluating, inspecting, or testing products or services to ensure conformance to quality standards. External failure costs (option c) arise when defects or issues are identified by customers after the product has been delivered, resulting in warranty claims, returns, or loss of reputation. Prevention costs (option d) are expenses incurred to prevent or minimize the occurrence of defects and failures in the first place, such as quality planning, training, and process improvement initiatives.
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Which of the following is a source of risk for businesses?
O A. Stakeholder interests that affect the community
O B. Profit goals that are not realistic
O C. Government regulations that set minimum wages
D. Dividend analyses that show lost earnings
Answers
Answer:
Giver regulations that set minimum wages
Explanation:
A P E X
1. A cylinder contains600cc of ideal gas at 27°C and 650mm of pressure At constant pressure, the
volume of gas at 0°C is
(1 Point)
273cc
546cc
819cc
1365cc
Answers
Answer:
\(546\ \text{cc}\)
Explanation:
\(V_1\) = Initial volume of gas = 600 cc
\(V_2\) = Final volume of gas
\(T_1\) = Initial temperature of gas = \((27+273.15)\ \text{K}\)
\(T_2\) = Final temperature of gas = \((0+273.15)\ \text{K}\)
We know that
\(V\propto T\)
So
\(\dfrac{V_2}{V_1}=\dfrac{T_2}{T_1}\\\Rightarrow V_2=V_1\dfrac{T_2}{T_1}\\\Rightarrow V_2=600\dfrac{0+273.15}{27+273.15}\\\Rightarrow V_2=546\ \text{cc}\)
The volume of gas at the given temperature is \(546\ \text{cc}\)
If a 20% increase results in a price of $6.36, what was the price before?
Answers
Answer:
$5.09 cents
Explanation:
Given the following question:
20% of 6.36
In order to find the answer, we will calculate using the formula for percentages then subtract that answer from the initial amount to have our answer.
\(\frac{p\times n}{100}\)
\(\frac{20\times6.36}{100}=20\times6.36=127.2\div100=1.272\)
\(=1.272\)
Round:
\(1.272\)
\(2 < 5\)
\(1.27\)
Now subtract:
\(6.36-1.27=5.09\)
\(=5.09\)
After a 20% decrease the price is now "$5.09 cents." Which means this was the price before the 20% increase.
Hope this helps.
How did we know that Volkswagen is cheating? Who found out and how did they found out
Answers
Answer: can you be more specific please?
Explanation:
Answer:
Explanation:
Volkswagen was caught by independent testing carried out by a clean-air advocacy group, The International Council on Clean Transportation, which tested the cars because it thought they were such a great example of how diesel could be a clean fuel.
What is the difference between the
Standard Unemployment Rate and the
Real Unemployment Rate?
Answers
Answer:
The U-3 is the rate most often reported in the media. For the U-3 rate, the Bureau of Labor Statistics only counts people without jobs who are in the labor force. The U-6, or real unemployment rate, includes the underemployed, the marginally attached, and discouraged workers.According to Santangelo, “the difference between the official rate of unemployment (14.7 percent) and what's referred to as U-6 (22.8 percent), which is much closer to the truth, is generally 10 percent.” The April jobs report showed the difference to be slightly less but still significant.
Explanation:
Finley Co. Is looking for a new office location and sees a building with a fair value of $400,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to $80,000. Finley offers to buy both the building and the equipment for $450,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment
Answers
The amounts Finley should record in the separate accounts for building and equipment will be $ 375,000 and $ 75,000 respectively.
Elaborating :Building $375,000
Equipment $75,000
Total $450,000
Building: $450,000 / $480,000 × $400,000 = $375,000
Equipment: $450,000 / $480,000 × $80,000 = $75,000
Separate accounts:An insurance company holds a separate accounting and reporting account that is not part of its general account but rather "separate." An investor can select an investment category based on his or her individual risk tolerance and desire for performance with a separate account.
What is the difference between a separate and a general account?The primary distinction between the two types of accounts can be summarized as follows: a general account is subject to the insurance company's creditors, whereas a separate account is not.
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An account is balanced when
Answers
Answer:
When total debits exceed total credits, the account indicates a debit balance.
Explanation:
Answer:
an account is balance when total debits exceed total credits.
Explanation:
this means the account indicates a debit balance
Which is an example of a small business showing social responsibility to individuals within the company?
A. starting an office recycling program
B. developing sustainable business practice
C. donating money to local organizations
D. allowing employees to work from home
Answers
Starting an office recycling program, developing sustainable business practice and donating money to local organizations are examples of a small business showing social responsibility to individuals within the company.
Company have a social responsibility to the communities in which they operate. This includes ensuring that they are good corporate citizens, providing support for local causes and charities, and protecting the environment.
Sustainable business is a term that is often used to describe businesses that are environmentally friendly or that have a positive social impact.
Hence, the correct options are "A, B & C".
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Leslie’s firm collected a huge amount of data. Over time, the employees felt that the applications slowed down. What should Leslie do with the data?
A.
archive rarely used data
B.
delete old data
C.
make duplicate copies of the data
D.
outsource the data
E.
look for patterns in the data
Answers
Answer:
A.
Explanation:
Data archiving is a method used to move data that is no longer in use. In this method, a business archive its old data to a separate storage device for long-term retention of the data.
Data that is no longer actively used but is important for regulatory or operational purposes such as emails, files, records, etc. can not be deleted. So, the business opts for the data archiving method.
In the given case, Leslie should also go for data archiving. There are two ways of archiving the data. One, tape archiving and cloud archiving.
Therefore, option A is correct.
What is total amount spent on wages and salary before any tax is being taken? [those ernings above £40000 are paying 40% income tax on income tax over £40000 and 20% on anything below £40000
Answers
Answer: hello your question is open ended hence I will give you a more general answer
answer : $12,000 * number of workers or $24,000 * number of workers
Explanation:
Income taxes are taxes been levied directly on the income earned by the tax payer.
According to Tax rules there is a certain amount of income an individual would have to earned before any tax will be taken, incomes below $12,000 are tax free ( for singles ) and $24,000 for married individuals ; Hence the Total amount spent on wages and salary before tax is being taken = $12,000 * number of workers or $24,000 * number of workers . ( unless otherwise stated )
PLS HELP WILL GIVE BRAINLIEST!!!!
which of the following questions might be asked by an economist who is using critical thinking to a solve a problem?
a. All of these choices are correct.
b.Which principles of command economy have the most negative effects on competition?
c.How could social security and Medicare better use their resources to expand benefits?
d.How might a hurricane in Florida affect the prices of crops grown in the state?
Answers
Answer:
the answer is A because all are correct
The question that might be asked by an economist who is using critical thinking to solve a problem is whether All of these choices are correct. Thus the correct option is A.
What is critical thinking?When using their critical thinking skills, people can decide for themselves what they should indeed or are not supposed to believe. They possess the capacity to reflect and engage in individualism in order to reach well-informed decisions.
Which tenets of the command economy harm competition the most? How Social Security and Medicare could use their resources more effectively to increase payouts will aid economists in finding a solution to a problem.
This questions helps him to identify better answers through research and helps economists to find a better conclusion to deliver an optimum solution to the problem.
Therefore, option A is appropriate.
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When deciding on what to wear each day, most people use the decision-making process.
Т
F
Answers
Answer:
False
Explanation:
The decision-making process is a complex process that requires the user to go through seven in-depth steps before coming to a conclusion. This would be used in a business setting by an employee such as a CEO before making important decisions such as cutting a product line or adding a new department. Deciding what to wear each day is a decision, but does not require the in-depth thought process and research that is included in the decision-making process.