Answer:
The correct answer:
$14,000 (b.)
Explanation:
Depreciation is an accounting method of allocation of cost to a tangible asset, where the recorded cost of a fixed asset is reduced in a systemic manner, until the value of the asset becomes zero is negligible.
In the straight-line basis of calculating depreciation, the difference between the cost of an asset and its expected salvage value is divided by the number of years it is expected to be used.
Mathematically, it is calculated as:
Depreciation of an asset = (purchase price - salvage value) ÷ estimated useful life.
Purchase price = $160,000
salvage value = $20,000
useful life = 10 years
∴ Depreciation = (160,000 - 20,000) ÷ 10
= 140,000 ÷ 10 = $14,000.
This means that at the end of every year, the value of the equipment reduces by a price worth $14,000.
Answer: 1. Charities
2. Government action the only viable solution
Explanation:
Externalities are the resultant additional effects that are experienced by others as a result of actions by an economic agent who does not bear the extra aformentioned cost or benefit that their actions bring about.
1. Private Solutions to Externalities include any solution independent of the government.
The above Private Solution is Charities because it was a Non-profit Environmental Organization that dealt with the lobbying for the reduction to be acted upon by state agents. These types of organisations are usually Charities.
2. If it is shown that the potential gains are viewed to be quite high as in this case then negotiating with the polluters might not work. In this case Government Intervention is needed to force the polluters to adhere to rules and regulations.
Answer:
1. Machine hours is the Constraints in the given case.
2. Evaluation of Products
Deluxe Regular
Sales Price $1,020 $560
Less: Direct Material $300 $90
Less: Direct Labor $88 $188
Less: Variable Manufacturing $264 $88
Overhead
Less: Variable Operating <u>$111
</u> <u>$65</u>
Expenses
Contribution Margin <u>$257</u> <u>$129
</u>
Contribution Margin as % 292.05% 68.62%
of Direct Labor cost
Conclusion: Hence it is better to produce Deluxe as it gives higher contribution margin as a % of direct labor cost
<u>Workings</u>
Contribution Margin as % of Direct Labor cost
Deluxe = 257/88% = 292.05%
Regular = 129 /188% = 68.62%
Answer:
A) Principal will be repaid earlier than anticipated and will need to be reinvested at lower rates, generating a lower level of income
Explanation:
Because of the lower interest rates, the investor will get his principal back faster. This can now be invested back at the new lower rate.
The loan duration will also reduce in this instance.
Getting quick funds to pay off the old higher interest mortgage will be a smart move. There will now be an investment in the lower interest mortgage.
Answer:
a) Distinguish between the use of Franchising and Joint Venture as modes of entry into other countries by global businesses.
Franchising consists in the licensing of aspects of production and intellectual property to a another party: the franchise.
A Joint Venture is a business union between two or more parties, in which they split profit as well as costs and responsabilities.
b) What are the respective advantages and disadvantages of both strategies?
Franchising can be a quicker way to expand into foreign markets. The flexibility of the method, and the lower capital requirements are the reason why. This can be seen in the success that American fast-food brands have had using this method to expand in global markets.
A Joint-Venture can be more difficult to use for market expansion, however, it can be more profitable, because the profit will not be split among as many parties as in franchising, and more importantly, the firm maintains a higher control of the operation.
