In the Keynesian-cross model, actual expenditures differ from planned expenditures by the amount of:
1 answer:
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Answer:
a) the order size of item X should be 137 units
b) the annual ordering cost for item X is $ 272.99
c) the annual holding cost for item X is $ 274
Explanation:
Given the data in the question;
a) Whenever item X is ordered, what should the order size be?
The Economic Order quality EOQ is the optimum quantity that should normally be ordered, its is expressed as;
= √( 2DS/H)
where D is the annual demand, S is set up cost and H is the holding cost.
given that; the annual demand is 1700 units and the holding cost is $4 per unit per year, cost of placing order is $22.
So, we use the Economic Order quality EOQ;
= √( 2DS/H)
we substitute
= √( (2 × 1700 × 22 ) / 4)
= √( 74800 / 4 )
= √18700
= 136.75 ≈ 137 units
Therefore, the order size of item X should be 137 units
b) What is the annual cost for ordering item X.
Annual ordering cost = actual number of placed orders × cost of each order
Annual ordering cost = D/Q × s
we substitute
Annual ordering cost = (1700 / 137) × 22
Annual ordering cost = 12.408759 × 22
Annual ordering cost = 272.99
Therefore, the annual ordering cost for item X is $ 272.99
c) What is the annual cost for storing item X.
Holding cost = average inventory × cost of storage per unit
Holding cost = Q/2 × H
we substitute
Holding cost = 137/2 × 4
Holding cost = 68.5 × 4
Holding cost = $ 274
Therefore, the annual holding cost for item X is $ 274
Answer:
Answer is explained in the explanation section below.
Explanation:
Note: This question is incomplete and lacks necessary data to solve for this question. However I have found similar question on the internet and I will be using that data. Besides, I have attached the data used in the attachment below.
Solution:
1. The debt-to-equity ratio is the best way to assess financial risk. A higher debt-to-equity ratio indicates a higher level of financial risk. This ratio represents the willingness of the equity of the owners to fulfil their obligations.
Formula used:
Debt-to-equity ratio = Total liabilities divided by owner's equity
For Clobes:
Total liabilities = 100,000
Owners' equity = 200,000
Debt-to-equity ratio = 100000/200000 = 0.5
For Snyder:
Total liabilities = 300,000
Owners' equity = 200,000
Debt-to-equity ratio = 300000/200000 = 1.5
For Welz:
Total liabilities = 300,000
Owners' equity = 100,000
Debt-to-equity ratio = 300000/100000 = 3
Welz faces the greatest financial risk because it has the highest debt-to-equity ratio. It has a debt-to-equity ratio of three. Even though it depends on the industry, a company's debt-to-equity ratio should be between 1 and 1.5 if it is considered optimal. In this case, Welz's financial risk is considerably higher.
2. calculate Return on Equity(ROE)
Formula used:
ROE = Net income / Owner's equity
For Clobes:
Net income = 25,000
Owners' equity = 200,000
ROE = 25,000 / 200000 = 0.125
For Snyder:
Net income = 30,000
Owners' equity = 200,000
ROE = 30000 / 200000 = 0.15
For Welz:
Net income = 20,000
Owners' equity = 200,000
ROE = 20000 / 100000 = 0.2
Welz has the highest return of equity (ROE) of 0.2.
As a result, Welz is the most profitable company.
3. Return on assets:
Formula used
Return on Assets = Net income / Total assets
For Clobes:
Net income = 25,000
Total assets = 300,000
Return on Assets = 25,000 / 300000 = 0.08
For Snyder:
Net income = 30,000
Total assets = 500000
Return on Assets = 30000 / 500000 = 0.06
For Welz:
Net income = 20,000
Total assets = 400,000
Return on Assets = 20000 / 400000 = 0.05
Hence,
Clobes has the highest return on assets, which is 0.08.
