The correct answer would be, The Law of Demand.
Prices are much higher than formerly. Siemienas says, 'Yes my prices are high, if nobody buys, i bring my prices down. This is the market rule'. This rule best describes The Law of Demand.
Explanation:
In the field of economics, there are two basic concepts of Demand and Supply.
According to The Law of Demand, When the price of the good or service increases, the demand for that product or service decreases, and if price of the good or service decreases, the demand for that product or service increases, keeping all other factors constant.
So this is what Siemienas says that if the demand for his product will decrease, he will decrease the price of the product in order to maintain the sales of his company.
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Answer: c. The activity is abnormally dangerous
Explanation:
Strict liability is also referred to as the absolute liability, and this term means legal responsibility for injury or damages, despite the fact that the individual or business that's found strictly liable wasn't negligent or probably at fault for the injury to damages.
In this case, if Earth Movers, Inc., uses dynamite to prepare land for highway projects, a strict liability is imposed on this activity because it is abnormally dangerous.
Answer:
d. a $10,000 decrease.
Explanation:
The computation of the impact on the income is given below:
In case of making the product
= Direct material + direct labor + variable manufacturing overhead + rented
= $100,000 + $160,000 + $60,000 + $10,000
= $330,000
And, in case of buying the product
= 20,000 × $17
= $340,000
So there is a decrease of $10,000
Answer:
a. -$210,000
b. $455,000
Explanation:
a. Company's net income
Sales. 2,275,000
Less:
Cost of goods sold
1,285,000
Administrative and selling expenses
535,000
Depreciation expense
420,000
EBIT
35,000
Less interest
245,000
Taxable income
-$210,000
Taxes 21%
Nil
Net income
-$210,000
b. The operating cash flow for the year
OCF = EBIT + depreciation - taxes
OCF = 35,000 + 420,000 - 0
OCF = $455,000
c. Net income was negative due to the deductibility of interest expense and depreciation.
The actual operating cash flow was positive due to the fact that depreciation is a non cash expense, and also interest is a financing and not an operating expense.
