Principle states that inventory costs are expensed as cost of goods sold when inventory is sold

What are the cons of using new residential sales/new home sales as a economic indicator?

rodikova [14]

Answer:

New home sales and existing home sales are released each month at about the same time. Many comparisons are made between the two series, but before doing any comparisons, one must be aware of some definition differences that affect the timing of the statistics.

The Census Bureau collects new home sales based upon the following definition: "A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit." The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction.

Existing home sales data are provided by the National Association of Realtors®. According to them, "the majority of transactions are reported when the sales contract is closed." Most transactions usually involve a mortgage which takes 30-60 days to close. Therefore an existing home sale (closing) most likely involves a sales contract that was signed a month or two prior.

Given the difference in definition, new home sales usually lead existing home sales regarding changes in the residential sales market by a month or two. For example, an existing home sale in January, was probably signed 30 to 45 days earlier which would have been in November or December. This is based on the usual time it takes to obtain and close a mortgage.

Effective with January 2005, the National Association of Realtors created a new monthly series to overcome the lagging effect of the existing home sales definition. This new series is called Pending Home Sales and is based on sales of existing homes where the contract has been signed but the transaction has not been closed, making it roughly equivalent to the new home sales definition. Monthly estimates are expressed as an index where the year 2001 has been set to equal 100.0.

Explanation:

8 0

2 years ago

The Caughlin Company has a long-term debt ratio of .25 and a current ratio of 1.50. Current liabilities are $900, sales are $6,2

bija089 [108]

Answer:

p

Explanation:

3 0

3 years ago

If the production of a good created both external costs and external benefits, but the external costs were greater, without gove

hichkok12 [17]

If the production of a good created both external costs and external benefits, but the external costs were greater, without government intervention, a market economy will not produce the product at all.

In the production and consumption of goods and services, there exist costs that are passed on to a third party. The general public, who is ultimately responsible for paying for them, is in fact subsidizing goods and services with external costs.

External costs are still necessary to be paid for even when they are not included in the product's price. It is ultimately the responsibility of society as a whole to pay for external costs through taxes, accident compensation, medical expenditures, insurance premiums, deterioration in environmental quality, and losses in natural capital.

Usually, the price of goods and services includes External costs, which results in a higher overall cost. Because consumers frequently select the lowest options, clean, sustainable products have a pricing disadvantage.

Learn more about External costs here

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3 0

2 years ago

Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types o

san4es73 [151]

Answer:

Results are below.

Explanation:

First, we need to calculate the plantwide predetermine manufacturing overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

total estimated overhead costs for the period= (625,000 + 900,000 + 105,000 + 175,000 + 300,000 + 75,000)

total estimated overhead costs for the period= $2,180,000

Predetermined manufacturing overhead rate= 2,180,000 / 125,000

Predetermined manufacturing overhead rate= $17.44 per direct labor hour

Now, we can allocate overhead to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Deluxe:

Allocated MOH= 17.44*2,500

Allocated MOH= $43,600

Basic:

Allocated MOH= 17.44*6,000

Allocated MOH= $104,640

6 0

3 years ago

Westwick Inc. is an advertising agency. Its employees are allowed to take decisions and work in ways that will help maximize the

Anna35 [415]

Answer:

C) Organizational plurality 

Explanation:

Organizational plurality is a working environment in which all representatives are encouraged to collaborate in a way that promotes the gains for the company, clients and themselves.

As with the advertising agency, the employees are given chances to follow their decisions and maximize their experience.

5 0

3 years ago