Answer and Explanation:
(a) Reserve requirement
10%[ RR of $10,000 is 10% of DD of $100,000]
(b)
i All ER [of $5,000] would disappear and they would have only the RR of $10,000.
iiThe M1 MS would not change and the MS
will includes currency and DD of the public.
The $5,000 Luis withdrew [currency] is still M1.
iii When Luis withdrew $5,000, that simply means that RR was now $9,500.
Hence RR will be decrease by $500 and the remainder of the $5,000 withdrawal was taken from excess leaving only 500 currently in ER.
C.They can borrow from another bank which is either from Fed Funds Rate or from the Fed Discount Rate.
1. Regulation is most likely to occur in a market characterized as
a. monopolistically competitive.
b. perfectly competitive.
c. oligopolistic.
2. Regulation is most likely to occur in a market with a Herfindahl–Hirschman Index (HHI) of
a. 100
b. 1000
c. 5
d. 2500
3. Regulation is more likely to occur in
a. broadly defined markets.
b. narrowly defined markets.
Answer:
c. oligopolistic.
d. 2500
a. broadly defined markets.
Explanation:
An oligopoly is when there are few large firms in an industry. There are high barriers to entry of firms into the industry. The firms set the market price. Because, the firms may sometimes engage in activities such as setting high prices to maximise profits which is disadvantageous to consumers, government sometimes have to intervene in their activities.
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Firms ams consumers are price takers. There are no barriers to entry of exit of firms
A monopolistically competitive firm is characterised by many buyers and sellers of differentiated goods.
The HHI index is used to determine the concentration ratio of firms in an industry.
An industry with HHI of less than 1,500 is considered to be a competitive, an HHI of 1,500 to 2,500 to be a moderately concentrated, and an HHI of 2,500 or greater to be a highly concentrated industries . Regulation usually occurs in highly concentrated industries.
In broadly defined markets, it is more difficult to find close subsituites for goods and services so demand is usually inelastic. Because demand is relatively inelastic, firms might have the incentive to increase prices of their goods to maximise profits. This is why regulation might be necessary.
I hope my answer helps you
Final answer:
Regulation is most likely in oligopolistic markets characterized by a small number of dominating firms, as well as in markets with a high Herfindahl–Hirschman Index (HHI), specifically a value like 2500. Lastly, regulation is more common in narrowly defined markets, where market power can have a substantial impact on consumers and overall market health.
Explanation:
Regulation is most likely to occur in market structures where there are few firms with significant market power or in industries where there are high barriers to entry, leading to scenarios where consumers might suffer due to high prices or restricted outputs. The Herfindahl–Hirschman Index (HHI) measures market concentration and can influence the likelihood of regulation. A higher HHI suggests greater market concentration and thus a higher chance of regulation.
Oligopolistic markets are more likely to be regulated because a small number of firms can dominate the market, leading to anticompetitive behaviors.A market with a high HHI value, such as 2500, suggests high market concentration and is thus more likely to experience regulation.Regulation is more likely to occur in narrowly defined markets, where specific industries or sectors have greater potential to affect consumer welfare and economic efficiency due to limited competition.Johnson Bakery agrees to supply Higgen’s Restaurant with all the bread that it requires for one year. When a shortage causes the price of wheat to rise sharply, Johnson can continue supplying bread only at a much higher price. The parties agree to modify the contract so that the buyer will pay a higher price. The change is
a. enforceable as long a the parties voluntarily agreed to the modification.
b. uneforceable due to the preexisting duty rule
c. unenforceable because Johnson is taking advantage of a shortage to boost profits
d. unenforceable because a valid contract already exists
Answer:
The correct answer to the following question will be "Option A".
Explanation:
It is indeed a legally enforceable arrangement among two or even more, individuals, where it would be usually made up through one party, can make a bid, as well as the other party signaling approval. The parties 'agreements describe there rights & obligations.The parties have agreed to amend the deal to make the seller charge a larger amount. The move is enforceable however soon as when the parties willingly consent to either the amendment.The other solutions have no relation with the specified scenario. So choice A is the right solution to that.
Final answer:
A voluntarily agreed upon modification of a contract due to an unforeseen increase in costs, like the one between Johnson Bakery and Higgen’s Restaurant, is generally enforceable. The agreement must be made in good faith and without coercion to align with the Uniform Commercial Code (UCC) governing commercial transactions.
Explanation:
When Johnson Bakery and Higgen’s Restaurant agree to modify their contract due to the unforeseen rise in the cost of wheat, this change is generally considered enforceable as long as the modification is made voluntarily by both parties. This is because both parties are entering into the new agreement freely, acknowledging the change in circumstances that affects the performance of the original contract. However, it's important to note that under the Uniform Commercial Code (UCC), which governs commercial transactions, a contract for the sale of goods can be modified without new consideration if the modification is made in good faith. This assumes that such modifications are not a result of coercion or unfair pressure.
Suppose that you are the manager of a production department that uses 1600 boxes of specific parts per year. The supplier quotes you a price of $8.50 per box for an order size of 499 boxes or less, a price of $8.00 per box for orders of 500 to 1499 boxes, and a price of $7.50 per box for an order of 1,500 or more boxes. You assign a holding cost of 25 percent of the price to this inventory. What order quantity would you use if the objective is to minimize total annual costs of holding, purchasing, and ordering? Assume ordering cost is $200/order.
Answer:
1,500 or more boxes
Explanation:
To calculate which order quantity would minimize total cost, we will support the calculation by using the formulae of Economic Order Quantity (EOQ).
EOQ = √2 x Demand x Ordering Cost / Holding Cost
Order Size 499 or less
EOQ = √2 x 1,600 x 200 / 8.5 x 25%
EOQ = √640,000 / 2.125
EOQ = √301,176
EOQ = 549
Total Cost = 1,600 / 549 x 200 + (549 / 4) x (8.5 x 25%) + 1,600 x 8.5
Total Cost = 583 + 292 + 13,600
Total Cost = $14,475
Order Size 500 to 1,499
EOQ = √2 x 1,600 x 200 / 8 x 25%
EOQ = √640,000 / 2
EOQ = √320,000
EOQ = 566
Total Cost = 1,600 / 500 x 200 + (500 / 2) x (8 x 25%) + 1,600 x 8
Total Cost = 640 + 500 + 12,800
Total Cost = $13,940
Order Size 1,500 or more
EOQ = √2 x 1,600 x 200 / 7.5 x 25%
EOQ = √640,000 / 1.875
EOQ = √341,333
EOQ = 584
Total Cost = 1,600 / 1500 x 200 + (1500 / 2) x (7.5 x 25%) + 1,600 x 7.5
Total Cost = 213 + 1,406 + 12,000
Total Cost = $13,619
Hence, the total cost is minimized at the order quantity of 1,500 or more.
Marshmallow Systems is a start-up equipment manufacturer, and its main product is a smartphone. The firm sells the smartphone at cost, that is, the price is exactly the actual cost of production. The firm's intention behind pricing the phone this way is to build its customer base. In the context of pricing models, the strategy used by Marshmallow Systems is the:________
Answer: Loss leader strategy
Explanation:
A loss leader is one of the type of pricing based strategy in which the various types of products and the services are offering at low price in the market for the purpose of attracting the new consumers or users.
The main objective of the loss leader strategy is that the brands and products are offers at below its actual market cost due to the competition level in the market and to attract the consumers towards their business.
According to the given question, the Marshmallow system is one of the start up manufacturing company and the main product business of this company is smartphone. So, on the basis of the given context of the pricing model the Marshmallow company is using the loss leader strategy for attract the users.
Therefore, Loss leader strategy is the correct answer.
Final answer:
Marshmallow Systems employs a penetration pricing strategy by selling its smartphone at the production cost to build its customer base, contrasting with markup or premium pricing strategies. This approach aims to quickly gain market share in a competitive environment, prioritizing customer acquisition over immediate profits.
Explanation:
The strategy used by Marshmallow Systems, where the firm sells its main product, a smartphone, at the actual cost of production to build its customer base, is known as penetration pricing. This pricing strategy is often employed to enter the market by setting low prices to attract customers and develop or expand the market presence. Unlike other pricing models that may involve markups or varying prices for different customers, Marshmallow Systems' approach aims to penetrate the competitive market quickly by making their product financially accessible, thereby gaining market share before possibly adjusting prices in the future to achieve profitability.
Such a strategy contrasts with markup pricing, where firms set prices higher than the marginal cost to make a profit, or premium pricing, used by companies that position their offerings as high-end products. Penetration pricing is particularly useful in markets with fierce competition and where consumer adoption is critical to a new company's success. By aligning the price with the production cost, Marshmallow Systems ensures the focus remains on customer acquisition over immediate profit generation, setting the stage for future financial strategies.
On December 31, 2020, Kingbird Company had $1,216,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,500 shares of its common stock for $42 per share, receiving $1,071,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $145,000 cash, are used to liquidate the $1,216,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021. Show how the $1,216,000 of short-term debt should be presented on the December 31, 2020, balance sheet. (Enter account name only and do not provide descriptive information.)
Answer and Explanation:
The presentation of short term debt is presented below:
Kingbird Company
Partial Balance sheet
December 31, 2020
Particulars Amount ($)
Current Liabilities :
Notes Payable $145,000
Long term Debt :
Notes Payable 1,216,000
Notes Payable is come from is
= $1,216,000 - $1,071,000
= $145,000
The company's total notes payable is $1,216,000, out of which $1,071,000 are shown as a issue of common stock and $145,000 are liquidate using cash.
g In the discussion case, Ikea's Sustainable Cotton Supply Chain, which statement accurately describes IKEA's supply chain? a. The long and complex chain involved farming, ginning, spinning, weaving, and stitching. b. The supply chain was long but all steps flowed easily across only a few locations. c. The company's supply chain was self-contained with IKEA owning all steps in the process. d. Nearly 100 percent of IKEA's cotton was sourced from just two countries, India and China.
Final answer:
Option A.) IKEA's supply chain for cotton is long and complex, involving multiple stages such as farming, ginning, spinning, weaving, and stitching, and it is not limited to two countries or a self-contained process.
Explanation:
The statement that accurately describes IKEA's supply chain is a. The long and complex chain involved farming, ginning, spinning, weaving, and stitching. IKEA's supply chain for cotton is not self-contained, and their cotton sourcing is not limited to just two countries. Rather, the supply chain includes multiple steps such as the extraction of raw materials (farming), the acquisition of components, and the production stages, including ginning, spinning, weaving, and stitching. These stages require coordination and occur across different locations, which makes the supply chain lengthy and complex. The complexity of this supply chain reflects the common pattern observed in the global economy, where specialization and the splitting up of the value chain allow various firms to focus on particular parts of the production process.
You have just completed a $ 24 comma 000 feasibility study for a new coffee shop in some retail space you own. You bought the space two years ago for $ 105 comma 000, and if you sold it today, you would net $ 117 comma 000 after taxes. Outfitting the space for a coffee shop would require a capital expenditure of $ 25 comma 000 plus an initial investment of $ 5 comma 000 in inventory. What is the correct initial cash flow for your analysis of the coffee shop opportunity?
Answer:
$147,000
Explanation:
Data given
Capital expenditure = $25,000
Opportunity cost = $117,000
Increase in net working capital = $5,000
The computation of initial cash flow is shown below:-
Free cash flow = Capital expenditure + Opportunity cost + Increase in net working capital
= $25,000 + $117,000 + $5,000
= $147,000
Therefore for computing the free cash flow we simply applied the above formula.
Which of these is NOT an example of price discrimination?
a. college book publishers giving a price discount to faculty airlines
b. charging less for people who stay over on a Saturday night colleges
c. giving some students more financial aid than they do other students
d. gas stations charging more for gasoline with higher octane and additional additives
Answer:
Giving some students more financial aid than they do other students.
Explanation:
Price discrimination can be defined as a pricing strategy whereby customers are charged different price for a similar good or service. In price discrimination, a certain group of customers may be asked to pay a high amount of money while another group will pay a lesser amount.
Price discrimination makes it possible for low income customers to purchase goods at a cheaper price, this is usually achieved from the collection of coupons.
Price discrimination also lowers congestion in the market as it helps to control the demand of a product.
Net Present Value Method
AM Express Inc. is considering the purchase of an additional delivery vehicle for $55,000 on January 1, 2014. The truck is expected to have a five-year life with an expected residual value of $15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $58,000 per year for each of the next five years. A driver will cost $42,000 in 2014, with an expected annual salary increase of $1,000 for each year thereafter. The annual operating costs for the truck are estimated to be $3,000 per year.
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
Determine the expected annual net cash flows from the delivery truck investment for 2014.
revenue. 58000
less Driver cost. (42000)
less annual salary. ( 1000)
less annual cost. (3000)
earning before deprecation. 12000
less deprecation 55000 - 15000/5 = (8000)
earnings after depreciation. 4000
since there is no taxation you can go on and calculate net present value by using this formular
NPV = PVCIF - PVCOF
Which of the following mechanical principles must be adopted by organizations creating a lean production system? a. Implementing smooth production to support efficient operation. b. Acquiring a large stock of inventory to avoid stock out. c. Avoiding the use of signaling as a means to replenish stock. d. Planning larger lot sizes to support higher inventory levels.
Answer:
a. Implementing smooth production to support efficient operation.
Explanation:
Lean production is a manufacturing methodology that is focused on integrating activities that are designed to provide massive quantity with high quality production using minimal resources, raw materials, finished products and work-in-process features.
Lean production is basically a supply management process aimed at elimination of waste as much as possible.
It is a Just-in-Time (JIT) concept developed in 1930 by the automobile manufacturing company, Toyota in Japan.
Hence, organizations creating a lean production system should adopt implementing smooth production to support efficient operation.
Cullumber Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers.
During the month of June, the following merchandising transactions occurred.
June 1 Purchased books on account for $2,160 (including freight) from Catlin
Publishers, terms 2/10, n/30.
3 Sold books on account to Garfunkel Bookstore for $1,000. The cost of
the merchandise sold was $800.
6 Received $60 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,700. The cost of the
merchandise sold was $950.
20 Purchased books on account for $900 from Priceless Book Publishers,
terms 3/15, n/30.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $1,950. The cost of the
merchandise sold was $980.
30 Granted General Bookstore $140 credit for books returned costing $50.
Required:
Journalize the transactions for the month of June for Cullumber Warehouse, using a perpetual inventory system. (If no entry is required, write "No Entry" for the account titles and enter 0 for the amounts. )
Answer and Explanation:
The journal entries are shown below:
On Jun 1
Merchandise Inventory $2,160
To accounts payable $2,160
(Being the purchased books on account is recorded)
On Jun 3
Accounts receivable $1,000
To sales revenue $1,000
(Being the credit sales is recorded)
Cost of goods sold $800
To Merchandise Inventory $800
(Being the cost of merchandise sold is recorded)
On Jun 6
Accounts payable $60
To Merchandise Inventory $60
(Being books returned is recorded)
On Jun 9
Accounts payable $2,100 ($2,160 - $60)
To Merchandise Inventory ($2,100 × 2%) $42
To cash $2,058
(Being payment fully paid at discount)
On Jun 15
Cash $1,000
To accounts receivable $1,000
(Being received payment is recorded)
On Jun 17
Accounts receivable $1,700
To sales revenue $1,700
(Being the credit sales is recorded )
Cost of goods sold $950
To Merchandise Inventory $950
(Being the cost of merchandise sold is recorded)
On Jun 20
Merchandise Inventory $900
To accounts payable $900
(Being the purchases made on account is recorded)
On Jun 24
Cash $1,666
Sales Discounts ($1,700 × 2%) $34
To Accounts receivable $1,700
(Being the payment received fully at discount is recorded)
On Jun 26
Accounts payable $900
To Merchandise Inventory ($900 × 3%) $27
To cash $873
(Being the payment is recorded)
On Jun 28
Accounts receivable $1,950
To sales revenue $1,950
(Being the credit sales is recorded)
Cost of goods sold $980
To Merchandise Inventory $980
(Being the cost of merchandise sold is recorded)
On Jun 30
Sales returns and allowances $140
To accounts receivable $ 140
(Being the sales returns is recorded)
Merchandise Inventory $50
To cost of goods sold $50
(Being the cost of merchandise returned is recorded)
Detailed journal entries for Cullumber Warehouse's transactions in June using a perpetual inventory system.
Journal Entries for Cullumber Warehouse for June:
Purchased books on account:Debit Purchases $2,160Credit Accounts Payable $2,160Sold books on account:Debit Accounts Receivable $1,000Credit Sales $1,000Debit Cost of Goods Sold $800Credit Inventory $800Received credit for returned books:Debit Accounts Payable $60Credit Inventory $60Paid Catlin Publishers:Debit Accounts Payable $2,100Credit Cash $2,100Received payment from Garfunkel Bookstore:Debit Cash $1,000Credit Accounts Receivable $1,000Sold books on account to Bell Tower:Debit Accounts Receivable $1,700Credit Sales $1,700Debit Cost of Goods Sold $950Credit Inventory $950Purchased books on account from Priceless Book Publishers:Debit Purchases $900Credit Accounts Payable $900Received payment from Bell Tower:Debit Cash $1,700Credit Accounts Receivable $1,700Paid Priceless Book Publishers:Debit Accounts Payable $900Credit Cash $900Sold books on account to General Bookstore:Debit Accounts Receivable $1,950Credit Sales $1,950Debit Cost of Goods Sold $980Credit Inventory $980Granted credit for returned books to General Bookstore:Debit Sales Returns and Allowances $140Credit Accounts Receivable $140Debit Inventory $50Credit Cost of Goods Sold $50The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in south western style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows.
Percent of Total Sales Contribution Margin Ratio
Appetizers 15% 70%
Main entrees 50% 25%
Desserts 10% 80%
Beverages 25% 80%
Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $116,000. The company has fixed costs of $1,417,000 per year.
Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income.
Answer and Explanation:
The computation of total restaurant sales and the sales of each product line is shown below:-
Sales = (Net income + Fixed costs + variable costs)
Let sales be "x"
Sales = ($1,417,000 + $116,000) ÷ 0.51
= $3,005,882.35
Total sales Contribution Contribution Each product
Margin Margin ratio sales
Appetizers 15% 70% 10.50% $450,882.353
Main entrees 50% 25% 12.50% $1,502,941.18
Desserts 10% 80% 8.00% $300,588.235
Beverages 25% 80% 20% $751,470.588
51.00% $3,005,882.36
For computing the Contribution Margin ratio we simply multiply the total sales with contribution margin of every product.
Final answer:
To reach a target net income of $116,000 at The Grand Inn, the total sales needed are calculated as $3,003,921.57. This is based on a weighted average contribution margin ratio of 51%. Accordingly, sales for Appetizers, Main Entrees, Desserts, and Beverages would need to be $450,588.24, $1,501,960.79, $300,392.16, and $750,980.39, respectively.
Explanation:
To achieve the desired target net income of $116,000 at The Grand Inn restaurant, with fixed costs of $1,417,000 per year, first, we must calculate the total amount of sales needed. This involves using the contribution margin ratio (CMR) for each product line, which accounts for the percentage of each sale that contributes to covering fixed costs and generating profit.
The formula to calculate the total sales (TS) needed to achieve the target net income (TNI) is:
TS = (Fixed Costs + Target Net Income) / Overall Contribution Margin Ratio
To find the 'Overall Contribution Margin Ratio', we take the weighted average of the CMR of each product line, considering their respective sales mixes. The calculation is as follows:
Appetizers: 15% x 70% = 10.5%
Main Entrees: 50% x 25% = 12.5%
Desserts: 10% x 80% = 8%
Beverages: 25% x 80% = 20%
Overall CMR = 10.5% + 12.5% + 8% + 20% = 51%
TS = ($1,417,000 + $116,000) / 0.51 = $3,003,921.57
To calculate sales for each product line:
Appetizer Sales = 15% of Total Sales = 0.15 x $3,003,921.57 = $450,588.24
Main Entree Sales = 50% of Total Sales = 0.50 x $3,003,921.57 = $1,501,960.79
Dessert Sales = 10% of Total Sales = 0.10 x $3,003,921.57 = $300,392.16
Beverage Sales = 25% of Total Sales = 0.25 x $3,003,921.57 = $750,980.39
Therefore, The Grand Inn would have to generate total sales of $3,003,921.57 with each product line contributing sales according to their respective percentages to meet the desired target net income.
Pel Museum, a not-for-profit organization, received a contribution of historical artifacts, it need not recognize the contribution if the artifacts are to be sold and the proceeds used to ___________.
Group of answer choices:
O Acquire other items for collections.
O Support general museum activities.
O Repair existing collections.
O Purchase buildings to house collections.
Answer:
Acquire other items for collection.
Explanation:
A museum is a building where historical and scientific artifacts are kept. A museum is very important for the preservation of our cultural heritage.
The Pel museum which is a non-profit organisation does not need to make public any form of contribution that is made to an artifact. The amount of money gotten from the sale of these artifacts should be used to acquire other items for collection.
Which of the following statements is FALSE?A conclusion of the CAPM that investors should hold the market portfolio only if they have high quality information.The CAPM assumption of homogeneous expectations is not necessarily a good description of the real world.Even naive investors with no information should hold the market portfolio.A conclusion of the CAPM that investors should hold the market portfolio even if they do not have high trading skills.
Answer:
A conclusion of the CAMP that investors should hold the market portfolio only if they have high quality information.
Explanation:
The capital asset pricing model(CAMP) can be defined as a model that is greatly utilized in the financial industry. It is used to evaluate the relationship that exists between the expected return on stocks and the risks involved in investing in security. This model operates widely on the fact that an investor should receive a high amount of profit when they invest their money on high risk investments.
CAMP can be described as a tool that is used by various investors to determine if an investment is free of risk.
CAMP means capital asset pricing, however, it is a widely used approach in the financial business. It is used to assess the link between the projected return on stocks and the risks associated with security investment.
The correct option is A conclusion of the CAMP that investors should hold the market portfolio only if they have high-quality information.
This is the correct option because this is the only statement that is false regarding the CAPM in the context. This concept is based on the idea that if an investor puts all funds into high-risk ventures, they should make a lot of money.
To know more about the statements of CAPM, refer to the link below:
https://brainly.com/question/13736458
Novamalt Inc., a manufacturer of health drinks, plans to introduce its new range of woman health drinks into the market. It involves a specialized marketing research firm to forecast the sales of this product. The research firm analyzes past buying behavior of customers and uses time-series analysis for making the sales forecasts. Which of the following information bases is being used by the research firm in this scenario?A) what people sayB) what people doC) what people have doneD) what people will do
E) what people speculate
Answer:
The correct answer is the option C: what people have done.
Explanation:
To begin with, in order to accomplish that type of analyzes the researcher will need to carefully investigate about what the people have done in the past regarding the subject of interest such as, purchase behavior and post purchase behavior as well. Therefore that, in that order, the most important information to gather is the one that clarifies what the people have done in the past so in that way the researcher will be able to understand them better.
Final answer:
The research firm is using information based on what people have done (past buying behavior) to forecast sales of a new health drink for women through time-series analysis.
Explanation:
In the context of Novamalt Inc. enlisting a specialized marketing research firm to forecast the sales of its new range of woman health drinks, the marketing firm is utilizing past buying behavior of customers to make sales forecasts through time-series analysis. Thus, the correct answer to which information base is being used by the research firm in this scenario is C) what people have done. By analyzing historical data, the firm is able to project future sales trends, drawing on the assumption that past consumer behavior can be an indicator of future decisions in similar contexts.
Market research is integral to understanding and predicting consumer behavior, which is why companies often rely on time-series analysis and other statistical methods. These methods allow businesses to be better prepared for future scenarios and supports the overall strategic planning process.
Blossom Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter’s operating profits, by product, and for the company as a whole, were as follows: Square Round Total Sales revenue $11,000 $6,600 $17,600 Variable expenses 4,400 2,900 7,300 Contribution margin 6,600 3,700 10,300 Fixed expenses 2,750 4,200 6,950 Operating income $ 3,850 $(500 ) $ 3,350 Forty percent of the Round Game’s fixed costs could have been avoided if the game had not been produced or sold. If the Round Game had been discontinued before the last quarter, what would operating income have been for the company as a whole?
Answer:
Blossom Trivia Co.
Quarter Operating Income for the whole company with Round Game discontinued:
Sales Revenue = $11,000
Variable expenses = $4,400
Contribution margin = $6,600
Fixed expenses = $5,270 ($2,750 + 60% of $4,200)
Operating Income = $1,330
Explanation:
If Round Game had been discontinued, the company would have lost $2020 ($3,700 - $1680). This is the difference between the contribution made by Round Game to its relevant fixed cost of $1,680 or 40% of allocated fixed costs.
The implication is that business decisions should not be based solely on the net operating income. More analysis and investigation need to be undertaken whenever decisions to discontinue a product line is being contemplated.
From our analysis above, Blossom Trivia Co. would have been worse-off in operating income if Round Game was discontinued without deep analysis.
Though, Round Game was allocated fixed cost of $4,200, what was relevantly incurred by Round Game as a product line was $1,680.
Blossom, Inc. acquired 20% of Nash Corporation's voting stock on January 1, 2021 for $870000. During 2021, Nash earned $361000 and paid dividends of $224000. Blossom's 20% interest in Nash gives Blossom the ability to exercise significant influence over Nash's operating and financial policies. During 2022, Nash earned $461000 and paid cash dividends of $124000 on April 1 and $124000 on October 1. On July 1, 2022, Blossom sold half of its stock in Nash for $621000 cash. Before income taxes, what amount should Blossom include in its 2021 income statement as a result of the investment?
Answer:
$72,200
Explanation:
For computing the amount included in the income statement as an investment we need to applied the equity method which is shown below:
= Earned amount × given percentage
= $361,000 × 20%
= $72,200
We simply multiply the earned amount by Nash with the acquiring percentage i.e 20% so that the amount could come and the same is to be included in the income statement
Blossom, Inc. should include $72,200 in its 2021 income statement as a result of its 20% investment in Nash Corporation. This amount represents Blossom's share of Nash's earnings for the year.
To determine the amount Blossom, Inc. should include in its 2021 income statement due to its investment in Nash Corporation under the equity method, follow these steps:
Calculate Blossom's share of Nash's 2021 earnings:For the income statement, Blossom, Inc. should report $72,200 as income from its investment in Nash Corporation for the year 2021.
On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt obligations which were outstanding during all of 2021: Construction loan, 10% $ 1,500,000 Long-term note, 9% 2,000,000 Long-term note, 6% 4,000,000 Required: Calculate the amount of interest capitalized in 2021 for the building using the specific interest method.
The interest capitalized for Marjlee Company in 2021 for the building is $150,000, computed by applying the construction loan's interest rate (10%) to the full loan amount ($1,500,000).
To calculate interest capitalized for Marjlee Company in 2021 under the specific interest method, we first need to apply the interest rates to the respective debt amounts that are directly related to the construction of the building. Since the construction loan is explicitly for the building, we use its full amount at the interest rate given. Other long-term notes may not be specific to the construction, and the question doesn’t specify that they are, so we will only consider the construction loan for this method.
The interest on the construction loan is calculated as:
Construction Loan Amount: $1,500,000
Interest Rate: 10%
Interest Expense: $1,500,000 x 10% = $150,000
This interest expense of $150,000 on the construction loan would be capitalized as part of the cost of the building.
On Pine Branch Department Stores' most recent balance sheet, the balance of its inventory at the beginning of the year was $ 18000. At the end of the year, the inventory balance was $ 21500. During that year, its cost of goods sold was $ 61000. All purchases of inventory throughout the year were on account. What was the total of Pine Branch's purchases during the year? Pine Branch's total purchases during the year were $
Answer:
$64,500= purchases
Explanation:
Giving the following information:
beginning inventory= $18,000
Ending inventory= $21,500
Cost of goods sold= $61,000.
To calculate the purchases during the year, we need to use the following formula:
COGS= beginning inventory + purchases - ending inventory
61,000= 18,000 + purchases - 21,500
64,500= purchases
Final answer:
Explanation on calculating Pine Branch Department Stores' total purchases during the year.
Explanation:
**Pine Branch Department Stores' Total Purchases Calculation:**
Calculate the Cost of Goods Sold (COGS) by subtracting the ending inventory from the beginning inventory value: $21,500 - $18,000 = $3,500.
Then, determine the total purchases by adding the COGS to the beginning inventory value: $3,500 + $61,000 = $64,500.
Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays. This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes. The following information is available to use in deciding whether to purchase the new backhoes.
Old Backhoes New Backhoes
Purchase cost when new $90,000 $202,784
Salvage value now $41,600
Investment in major overhaul needed in next year $55,510
Salvage value in 8 years $15,000 $90,000
Remaining life 8 years 8 years
Net cash flow generated each year $30,500 $43,800
(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)
(1) Using the net present value method for buying new or keeping the old
(2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.)
(3) Comparing the profitability index for each choice.
(4) Calculate the internal rate of return factor for the new and old blackhoes.
(5) Comparing the internal rate of return for each choice to the required 8% discount rate.
Answer:
Explanation:
Step 1
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2
Compute the net present value to make decision for buying the new Backhoes or keeping the old
Mike is the Director of Human Resources for a 120-employee family-owned manufacturing firm. Mike has been quite busy the last year reforming the benefit offerings to comply with recent changes in healthcare laws. Given the many changes, Mike took the opportunity to completely overhaul the employee benefits program including replacing the old medical plans with three brand-new plans. Mike is preparing to tell employees about their new benefit offerings a few months prior to the benefits open-enrollment period. Given the number of employees, he decides to design a nicely formatted PowerPoint slide deck explaining the changes and to send this presentation via email to all employees. One day into the open-enrollment period, his inbox is flooded with over 50 emails from confused employees. Mike is puzzled, but realizes he may have made a mistake in communication. Which of the following BEST describes the primary communication mistake he made?
Mike's primary communication mistake was the lack of clarity and simplicity in explaining the new benefits program to employees.
The primary communication mistake Mike made was lack of clarity and simplicity in his email communication about the new benefits program. Rather than inundating employees with a lengthy PowerPoint presentation, he should have utilized clear, concise language and visual aids to explain the changes effectively. Additionally, incorporating interactive sessions or Q&A opportunities could have helped clarify any confusion in a more engaging manner.
Blue Packaging Company (BPC) expects to pay a dividend of $1.28 in exactly one year. BPC has recently invested in multiple wealth increasing projects and expects its operating cash flow to increase dramatically for a few years. BPC expects a dividend growth rate of 50% during years 2, 3, and 4. After that high growth period, a normal growth rate of 3.1% will occur. BPC shareholders require a 14.7% return. The value of BPC stock is closest to:
Answer:
$29.16
Explanation:
Present value (PV) of year 1 dividend = $1.28 / (1.147)^1 = $1.11595466434176
Year 2 dividend = $1.28 * 1.5 = $1.92
PV of year 2 dividend = $1.92 / (1.147)^2 = $1.4594001713275
Year 3 dividend = $1.92 * 1.5 = $2.88
PV of year 3 dividend = $2.88 / (1.147)^3 = $1.90854425195401
Year 4 dividend = $2.88 * 1.5 = $4.32
PV of year 4 dividend = $4.32 / (1.147)^4 = $2.49591663289539
Price at year 4 = (4.32 * 1.031) / (0.147 - 0.031) = $38.39586206896550
PV of price at year 4 = $38.39586206896550 / (1.147)^4 = $22.1835349009927
Current price = $1.11595466434176 + $1.4594001713275 + $1.90854425195401 + $2.49591663289539 + $22.1835349009927 = $29.16
To find the value of Blue Packaging Company (BPC) stock, we calculate the present value of dividends during a high growth phase at a 50% growth rate for three years and a normal growth rate of 3.1% thereafter, all discounted at a required rate of return of 14.7%.
The value of Blue Packaging Company (BPC) stock can be calculated using a dividend discount model (DDM), considering both a high growth phase and a normal growth phase. The high growth phase dividends are projected at a 50% growth rate for years 2, 3, and 4, and a normal growth rate of 3.1% thereafter. To calculate the present value of the stock, we must discount these expected dividends at the required rate of return of 14.7%.
We first calculate the dividends for the high growth period:
Next, we calculate the terminal value of dividends at the end of year 4 using the Gordon growth formula, which gives us the present value of all dividends expected to grow at the normal rate indefinitely from year 5 onwards:
Terminal Value at end of Year 4 = Dividend at Year 5 / (Required Rate of Return - Normal Growth Rate)Terminal Value at end of Year 4 = $4.32 * (1 + 0.031) / (0.147 - 0.031) = $35.32Now, we discount all dividends (years 1-4) and terminal value back to the present value using the required rate of return:
PV of Year 1 Dividend = $1.28 / (1 + 0.147)PV of Year 2 Dividend = $1.92 / (1 + 0.147)^2PV of Year 3 Dividend = $2.88 / (1 + 0.147)^3PV of Year 4 Dividend including Terminal Value = ($4.32 + $35.32) / (1 + 0.147)^4Finally, we sum these present values to get the estimated stock value:
Stock Value = PV of Year 1 Dividend + PV of Year 2 Dividend + PV of Year 3 Dividend + PV of Year 4 Dividend including Terminal ValuePerforming these calculations, we determine the closest value of BPC stock.
Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $36,000, $34,000 and $26,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $42,000, $33,000 and $19,000 respectively. Direct material purchases were $580,000. Direct labor was $202,000 for the year. Factory overhead was $144,000. Prepare a cost of goods sold budget for Sleep Tight, Inc.
Answer:
Opening finished goods Inventory $36,000
Add Cost of Goods Manufactured $944,000
Less Closing finished goods Inventory ($42,000)
Cost of Goods Sold $938,000
Explanation:
Step 1 Calculate Raw Material Costs requisitioned for manufacturing.
Materials Requisites = Opening Raw Materials Inventory + Purchases of Raw Materials - Closing Stock of Raw Materials
= $36,000+$580,000-$19,000
= $ 597,000
Step 2 Calculate Cost of Goods Manufactured
Raw Materials $597,000
Direct labor $202,000
Factory overhead $144,000
Add Opening work in process Inventory $34,000
Less Closing work in process Inventory ($33,000)
Cost of Goods Manufactured $944,000
Step 3 Calculate the Cost of Goods Sold
Opening finished goods Inventory $36,000
Add Cost of Goods Manufactured $944,000
Less Closing finished goods Inventory ($42,000)
Cost of Goods Sold $938,000
Answer:
Sleep Tight, Inc.
Cost of Goods Sold Budget:
RAW MATERIALS COSTS
January 1 Inventory of materials = $26,000
Direct Materials Purchases = $580,000
Less December 31 Inventory = $19,000
Cost of Materials used in production = $587,000
PRODUCTION COSTS
January 1 work in process = $34,000
Cost of materials used in production = $587,000
Direct Labour = $202,000
Factory Overhead = $144,000
less December 31 work in process = $33,000
Cost of goods produced = $934,000
FINISHED GOODS COSTS
January 1 Finished Goods = $36,000
Cost of goods produced = $934,000
less December 31 Finished Goods = $42,000
Cost of Goods Sold = $928,000
Explanation:
An alternative way to prepare the above budget would be to add all the opening inventories to purchases, direct labour, and factory overhead. From the total, deduct the closing inventories.
January 1 Inventory of materials = $26,000
January 1 work in process = $34,000
January 1 Finished Goods = $36,000
Direct Materials Purchases = $580,00
Direct Labour = $202,000
Factory Overhead = $144,000
a) Total = $1,022,000
less:
December 31 Inventory = $19,000
December 31 work in process = $33,000
December 31 Finished Goods = $42,000
b) Total = $94,000
Cost of Goods Sold (a-b) = $928,000
However, this second approach is lacking in details. As such, it is not very informative. The first arrangement displayed the cost of raw materials used for production, cost of goods produced, and then the cost of goods sold.
Mattix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.
Answer:
net income $116
+ depreciation (359 - 347 + 1) $13
change in current assets:
+ decrease in accounts receivables $1
+ decrease in inventory $1
change in current liabilities:
+ increase in accounts payables $4
- decrease in accrued liabilities ($4)
+ increase in taxes payable $1
net cash provided by operating activities $132
Explanation:
ending beginning
Assets
Cash and cash equivalents $ 23 $ 22
Accounts receivable 39 40
Inventory 43 44
Property, plant, and equipment 587 500
Less accumulated depreciation 359 347
Total assets $ 333 $ 259
Liabilities and stockholders' equity:
Accounts payable $ 30 $ 26
Accrued liabilities 15 18
Income taxes payable 39 40
Bonds payable 109 120
Common stock 51 50
Retained earnings 89 5
Total liabilities and stockholders' equity $ 333 $ 259
Income Statement Sales $ 972
Cost of goods sold 620
Gross margin 352
Selling and administrative expense 200
Net operating income 152
Gain on sale of equipment 14
Income before taxes 166
Income taxes 50
Net income $ 116
The adoption of a tighter, more anti-inflationary monetary policy might be politically unpopular because the Fed will:
A. increase the target inflation rate, decreasing the real interest rate at every rate of inflation, causing an inflationary gap and lowering unemployment above the natural rate.
B. lower the target inflation rate, increasing the real interest rate at every rate of inflation, causing a recessionary gap and increasing unemployment above the natural rate.
C. increase the target inflation rate, lowering the real interest rate at every rate of inflation, causing a recessionary gap and increasing unemployment above the natural rate.
D. lower the target inflation rate, increasing the real interest rate at every rate of inflation, causing an inflationary gap and increasing unemployment below the natural rate.
Answer:
The correct answer is B)
This is almost self explanatory.
Explanation:
A tighter and more anti-inflationary monetary policy will be politically unpopular because it reduces the amount of money in circulation.
Business owners will cringe at it because the rate at which they can access capital or investible funds from the commercial banks or other financial institutions will have taken an upward spiral.
Because business owners can no longer leverage off bank funds to operate their businesses, many may lay off workers thus creating unemployment.
Those who are being unemployed have less and less to spend and, this sort of economic move will attract unsavoury political responses though it is executed for the greater good.
On the other hand,
When there is too much money in circulation, it triggers inflation, in turn, reduces the spending power of businesses and consumers.
As inflation increases, and real income (purchasing power) reduces, Labour Unions begin to agitate for increment in their labour rates or wages. This puts a strain on the businesses who either increase and suffer lower bottom lines or are forced to cut down on demand for labour to satisfy the new wage rate being demanded.
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Prescott Pharmaceuticals makes a number of generic versions of drugs. When Cymbalta (Duloxetine) lost its patent, Prescott invested $500,000 to obtain FDA approval and $100,000 to certify one of its production lines for its production. Production of the drug will cost $2,000,000. Marginal costs for the tablet are $0.10 and they sell for $0.40 per tablet. But many firms have entered and now make Duloxetine causing sales to fall off. Prescott anticipates that it could use this production line for other drugs losing patent protection shortly. If forecasted sales are 5 million tablets, what is the breakeven price? Should Prescott discontinue selling this product?
Answer:
Prescott discontinue selling this product
Explanation:
Production cost per tablet = $2,000,00 / 5,000,000 = $0.40
Marginal costs per tablet = $0.10
Total avoidable cost per tablet = $0.40 + $0.10 = $0.50
Since the total avoidable cost per tablet of $0.50 is higher than the selling price of $0.40 per tablet, Prescott discontinue selling t.his product
Note that $500,000 to obtain FDA approval and $100,000 to certify one of production lines for its production are sunk costs which are not avoidable. They are therefore not considered in the decision making.
On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $98,700; Allowance for Doubtful Accounts, credit balance of $1,111. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?
Answer: $4,811
Explanation:
Assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible that would be,
= 6% * 98,700
= $5,922
The Allowance for Doubtful Accounts acts as a buffer for the business when bad debts are incurred.
Bad debts are taken from the Allowance as the Allowance has already been removed from the Receivables.
In cases where Bad debts exceed the buffer in the Allowance for Doubtful Debt Account we take everything in it and the remaining bad debt amount is debited to Bad Debt expense.
That would be,
= 5,922 - 1,111
= $4,811
$4,811 is the amount that should be debited to Bad Debts Expense.
Colliers, Inc., has 110,000 shares of cumulative preferred stock outstanding. The preferred stock pays dividends in the amount of $2 per share, but because of cash flow problems, the company did not pay any dividends last year. The board of directors plans to pay dividends in the amount of $620,000 this year.
a. What amount will go to preferred stockholders?b. How much of the cash dividends will be available for common stockholders?
Answer:
a. The amount that will go to preferred stockholders will be $444,000
b. The amount of the cash dividends that will be available for common stockholders is $180,000
Explanation:
a. In order to calculate the amount that will go to preferred stockholders we would have to use the following formula:
Total Dividend to be paid=(Number of Shares×Amount of dividend per share)× Number of years
=(110,000×$2)×2
=$220,000×2
=$444,000
The amount that will go to preferred stockholders will be $444,000
b. In order to calculate the amount of the cash dividends that will be available for common stockholders we would have to use the following formula:
Total Dividend to be paid=Dividend planned to be paid by board−
Dividend paid to Cumulative preferred stockholders
=$620,000−$440,000
=$180,000
The amount of the cash dividends that will be available for common stockholders is $180,000
Answer:
a) Dividends to preferred stockholders = 440,000 USD
b) Dividends for common stockholders = 180,000 USD
Explanation:
Shares of Cumulative preferred Stock outstanding = 110,000 Shares
a) Amount to preferred stockholders
Dividend to be paid = No: of shares x amount of dividend per share x Time period in years
So, we have:
No: of shares = 110,000 Shares
Amount of dividend per share = 2 USD
Time period in years = 2 years
Let's plug in the values in the formula:
Dividend to be paid = 110,000 x 2 x2
Dividend to be paid = 440,000 USD
440,000 USD amount will go to preferred stockholders.
b) Cash Dividends for Common Stockholders:
Cash dividends for common stockholders is just the difference between the number of dividends board of directors planned to pay with the dividends for the preferred stockholders.
Here's the formula:
Dividends for common stockholders = Dividends Board of Directors planned to pay - Dividends for preferred stockholders
So, we have:
Dividends Board of Directors planned to pay = 620,000 USD
Dividends for preferred stockholders = 440,000 USD
Let's plug in the values into the formula:
Dividends for common stockholders = Dividends Board of Directors planned to pay - Dividends for preferred stockholders
Dividends for common stockholders = 620,000 USD - 440,000 USD
Dividends for common stockholders = 180,000 USD
180,000 USD amount will go to common stockholders.
Presented below is information related to Teal Mountain , Inc. Date End-of-Year Inventory (End-of-Year Prices) Price Index December 31, 2017 $1,250,000 100 December 31, 2018 1,575,000 105 December 31, 2019 1,573,000 110 December 31, 2020 1,872,000 117 Compute the ending inventory for Teal Mountain , Inc. for 2017 through 2020 using the dollar-value LIFO method.
Answer:
2017 $1,250,000
2018 $1,512,500
2019 $1,439,000
2020 $1,637,900
Explanation:
The computation of ending inventory is shown below:-
Year Inventory Price index Inventory at base Change from prior
at end year year years
2017 $1,250,000 100 $1,250,000 0
2018 $1,575,000 105 $1,500,000 $250,000
2019 $1,573,000 110 $1,430,000 ($70,000)
2020 $1,872,000 117 $1,600,000 $170,000
Inventory at base year prices
2017 = $1,250,000 ÷ 100 × 100 = $1,250,000
2018 = $1,575,000 ÷ 105 × 100 = $1,500,000
2019 = $1,573,000 ÷ 110 × 100 = $1,430,000
2020 = $1,872,000 ÷ 117 × 100 = $1,600,000
So, dollar value ending inventory
2017 $1,250,000 × 1.0 = $1,250,000
$1,250,000
2018 $1,250,000 × 1.0 = $1,250,000
$250,000 × 1.05 = $262,500
$1,512,500
2019 $1,250,000 × 1.0 = $1,250,000
($250,000 - $70,000) × 1.05 = $189,000
$1,439,000
2020 $1,250,000 × 1.0 = $1,250,000
($250,000 - $70,000) × 1.05 = $189,000
$170,000 × 1.17 = $198,900
$1,637,900
2017 $1,250,000
2018 $1,512,500
2019 $1,439,000
2020 $1,637,900
You own Souvenir Gallore, a souvenir shop on Lane Avenue. You would like to do an ABC analysis based on annual dollar usage. You sell the following list of retail items in your store. Items Annual demand (units) Unit cost Greeting cards 1000 $1.50 Key chains 967 $2.50 Scented candles 700 $5.00 Caps 700 $8.50 Calendars 650 $9.00 Watches 1020 $65.00 The ABC class that Calendars belong to is ___________
Calendar belongs to B category
Computation of ABC class:
Items Annual demand Unit cost Total cost Category
Watches 1,020 $65 $66,300 A
Caps 700 $8.5 $5,950 A
Calendars 650 $9 $5,850 B
Scented
candles 700 $5 $3,500 B
Key chain 967 $2.5 $2,417.5 C
Greeting
cards 1,000 $1.5 $1,500 C
Here, for computing the total we simply multiply the annual demand with unit cost of each items. Also we have categorized the A, B and C into values which means A has highest value, B is lower than A and C has the lowest value in compare of A and B.
Therefore, as per the requirement the Calendar belongs to B category.
Learn more about demand here: https://brainly.com/question/24353844
The ABC class that Calendars belong to is likely 'B' or 'C' based on the provided annual demand and unit cost, although additional information such as total expenditure on other items is necessary for precise categorization.
In ABC analysis, inventory items are categorized into three classes ('A', 'B', 'C') based on their annual consumption value, with 'A' being the most valuable (typically the top 10-20% by value), 'C' the least valuable (typically the bottom 50-70% by value), and 'B' falling in between. To determine which class a particular item falls into, you need to calculate the annual dollar usage by multiplying the annual demand by the unit cost. For Calendars, this would be 650 units multiplied by $9.00, resulting in a total of $5,850. To finalize the categorization, one would compare this amount with that of other items, ranking them all and then applying thresholds to designate each class. Without the full context of expenditure on other items, it's difficult to definitively assign a class, but since Calendars do not have the highest unit cost nor the largest demand, they are unlikely to be classified as 'A' items and typically might fall into 'B' or 'C'.