Answer:
The correct answer is option (A).
Explanation:
According to the scenario, the computation of the given data are as follows:
First, we will calculate the Market risk premium, then
Market risk premium = (Required return - Risk free rate ) ÷ beta
= ( 9.50% - 4.20%) ÷ 1.05 = 5.048%
So, now Required rate of return for new portfolio = Risk free rate + Beta of new portfolio × Market premium risk
Where, Beta of new portfolio = (10 ÷ 18.5) × 1.05 + (8.5 ÷ 18.5) × 0.65
= 0.5676 + 0.2986
= 0.8662
By putting the value, we get
Required rate of return = 4.20% + 0.8662 × 5.048%
= 8.57%
Answer:
B. overstate the predetermined overhead rate.
Explanation:
As we know
The Predetermined overhead rate would be equal to
Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours or machine hours)
In the given question, the direct labor cost is used for computing the predetermined overhead rate which is already wrong.
To find out the predetermined overhead rate, we always use the indirect cost instead of direct cost
This error could overstate the predetermined overhead rate as it would increase the indirect labor due to which overhead is also increased. So, automatically the rate would also be increased.
Answer:
Expense must be recognized in July
Explanation:
The reason is that the expense must be recognized in the month in which the supplies are used because the accrual concept says that the expenses must be realized when they are incurred. Incurred means that the consideration received has been used. For example if I pay the telecommunication network in June to give 4G internet and the services are delivered in the month July then the expenses will be realized in the month in which the services were used and that is July for internet facilities. So in this case the supplies are used in the month of July which is in-accordance with the accrual concept.
Answer:
$16,440
Explanation:
If Bruce is able to work 600 hours per year, his salary will be $3,600 (= $6 x 600), but he will lose $2,160 (= $3,600 x 60%) of welfare stipend.
His total welfare stipend is $15,000 if he is not able to work during the year.
Bruce's total income = $15,000 + $3,600 - $2,160 = $16,440
Answer:
The answer is: B) The reduction in economic surplus resulting from a market not being in competitive equilibrium.
Explanation:
Deadweight loss is an economic cost to society as a whole when market inefficiencies occur preventing it from reaching its equilibrium point. Market inefficiencies are caused by incorrect allocation of resources.
For example if a price ceiling is established, suppliers will tend to lower the quantity supplied while the quantity demanded either increases or stays the same. That economic deficiency resulting from an unsatisfied demand is what we call deadweight loss.
Other causes for deadweight loss are price floors (reduction of the quantity demanded) and taxation (shifts on the demand or supply curves).
